HANCOCK JOHN SERIES INC, N14EL24, 1995-09-07

HANCOCK JOHN SERIES INC
N14EL24, 1995-09-07

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<PAGE> 1
File Nos. 33- and 811-5254.

As filed with the Securities and Exchange Commission on September 7, 1995.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. / /
---

Post-Effective Amendment No. / /
---

(Check appropriate box or boxes)

JOHN HANCOCK SERIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)

101 Huntington Avenue, Boston, Massachusetts 02199-7603
- --------------------------------------------------------------------------------
(Address of principal executive office) Zip Code

(617) 375-1700
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)

With a copy to:
---------------
Thomas H. Drohan, Esq. Jeffrey N. Carp, Esq.
John Hancock Advisers, Inc. Hale and Dorr
101 Huntington Avenue 60 State Street
Boston, MA 02199 Boston, MA 02109
- --------------------------------------------------------------------------------
(Name and address of agent for service)

Approximate Date of Proposed Public Offering: As soon as practicable after the
effectiveness of the registration statement.

No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended. This Registration Statement relates to shares previously registered
on Form N-1A (File Nos. 33-16048 and 811-5254.

It is proposed that this filing will become effective on October 7, 1995
pursuant to Rule 488 under the Securities Act of 1933.
<PAGE> 2
JOHN HANCOCK SERIES, INC.
on behalf of
John Hancock Money Market Fund B
(as proposed to be renamed, John Hancock Money Market Fund)

CROSS-REFERENCE SHEET

Items Required by Form N-14

PART A
- ------
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
- -------- ------------ ------------------
<S> <C> <C>
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE OF
Cover Page of Prospectus PROSPECTUS

2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus

3. Synopsis and Risk Factors SUMMARY; RISK FACTORS AND SPECIAL
CONSIDERATIONS

4. Information About the INFORMATION CONCERNING THE MEETING;
Transaction PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION;
CAPITALIZATION

5. Information About the PROSPECTUS COVER PAGE: INTRODUCTION;
Registrant SUMMARY; BUSINESS OF MONEY MARKET
FUND

6. Information About the PROSPECTUS COVER PAGE: INTRODUCTION;
Company Being Acquired SUMMARY; BUSINESS OF CASH MANAGEMENT
FUND

7. Voting Information PROSPECTUS COVER PAGE; NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS;
SUMMARY; INFORMATION CONCERNING THE
MEETING

8. Interest of Certain Persons NONE
and Experts

9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters

</TABLE>
<PAGE> 3

PART B
- ------
<TABLE>
<CAPTION>
Caption in Statement of
Item No. Item Caption Additional Information
- -------- ------------ -----------------------
<S> <C> <C>
10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. Additional Information ADDITIONAL INFORMATION ABOUT
About the Registrant MONEY MARKET FUND

13. Additional Information About ADDITIONAL INFORMATION ABOUT
the Company Being Acquired CASH MANAGEMENT FUND

14. Financial Statements ADDITIONAL INFORMATION ABOUT MONEY
MARKET FUND; ADDITIONAL INFORMATION
ABOUT CASH MANAGEMENT FUND; PRO
FORMA COMBINED FINANCIAL STATEMENTS
</TABLE>

PART C
- ------
<TABLE>
<CAPTION>
Item No. Item Caption
- -------- ------------
<S> <C> <C>
15. Indemnification INDEMNIFICATION

16. Exhibits EXHIBITS

17. Undertakings UNDERTAKINGS
</TABLE>

-2-
<PAGE> 4

October 9, 1995

Dear Fellow Cash Management Fund Shareholder:

As you may know, recent acquisitions have created some overlaps in the John
Hancock family of funds. This is the case with the money market funds we now
offer. To address this situation and to better support our money market fund
shareholders, your Fund's Trustees propose merging the John Hancock Cash
Management Fund into the John Hancock Money Market Fund, a fund with identical
investment objectives.

We believe this merger is important for you and John Hancock Cash Management
Fund for the following reasons:

o JOHN HANCOCK MONEY MARKET FUND HAS A MORE MODERN STRUCTURE AND IS
BETTER POSITIONED FOR GROWGH OF ASSETS OVER TIME than is John Hancock
Cash Management Fund. This means there is more opportunity for
economies of scale in the consolidated fund after the merger than in
John Hancock Cash Management Fund if the merger does not occur.

To further lower costs by raising assets in as broad a market as
possible, many mutual funds charge a 12b-1 distribution fee to
compensate their selling brokers. Like many of its counterparts, the
John Hancock Money Market Fund pays selling brokers a 12b-1 fee of
0.15% from Class A assets.

o GREATER PORTFOLIO DIVERSIFICATION. Because the John Hancock Money
Market Fund will have a larger asset base as a result of the merger,
greater diversification of the investment portfolio can be achieved
than is currently possible for either Fund.

You may be aware that your Fund has a management fee of .40%, which has not
changed since the Fund's inception in 1979. Introduced in 1987, the John
Hancock Money Market Fund has a management fee of 0.50% to reflect the
incrensing costs of research and administrative support needed in today's
complex financial markets. However, PLEASE BE ADVISED THAT THE MANAGEMENT
COMPANY HAS AGREED TO AN INDEFINITE FEE REDUCTION OF .10% TO KEEP THE MONEY
MARKET FUND'S MANAGEMENT FEE THE SAME AS THAT OF THE CASH MANAGEMENT FUND.

YOUR VOTE IS IMPORTANT!

At a special meeting of shareholders to be held on November 15, 1995 at 9:15
A.M., you will be asked to approve the merger of the John Hancock Cash
Management Fund into the John Hancock Money Market Fund.

Your Board of Trustees has approved the proposed merger and recommends that
shareholders approve it as well.

We urge you to consider this proposal and to vote by completing, signing and
returning the enclosed proxy ballot form to us immediately. Your prompt
response will help avoid additional mailings at the Fund's expense. For your
convenience, we have provided a postage-paid envelope.

If you have questions, please call your financial advisor or your John Hancock
Funds Customet Service Representative at 1-800-225-5291, Monday through Friday
between 8:00 A.M. and 8:00 P.M. Eastern time.

Sincerely,

Edward J. Boudreau, Jr.
Chairman and CEO

<PAGE> 5

JOHN HANCOCK CASH MANAGEMENT FUND
101 Huntington Avenue
Boston, Massachusetts 02199

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 15, 1995

Notice is hereby given that a Special Meeting of Shareholders
(the "Meeting") of John Hancock Cash Management Fund ("Cash
Management Fund"), a Massachusetts business trust, will be held at
101 Huntington Avenue, Boston, Massachusetts 02199 on Wednesday,
November 15, 1995 at 9:15 a.m., Boston time, and at any
adjournment thereof, for the following purposes:

1. To consider and act upon a proposal to approve an
Agreement and Plan of Reorganization between Cash Management Fund
and John Hancock Series, Inc. (the "Company"), a Maryland
corporation, on behalf of John Hancock Money Market Fund ("Money
Market Fund"), providing for Money Market Fund's acquisition of
all of Cash Management Fund's assets in exchange solely for
assumption of Cash Management Fund's liabilities, and the issuance
of Class A shares of Money Market Fund to Cash Management Fund for
distribution to its shareholders.

2. To consider and act upon any other matters that may
properly come before the Meeting or any adjournment of the
Meeting.

The Board of Trustees has fixed the close of business on
September 29, 1995 as the record date to determine the
shareholders who are entitled to receive this notice and to vote
at the Meeting and any adjournment of the Meeting.

If you cannot attend the Meeting in person, please complete,
date and sign the enclosed proxy and return it to John Hancock
Investor Services Corporation, 101 Huntington Avenue, Boston,
Massachusetts 02199 in the enclosed envelope. It is important
that you exercise your right to vote. THE ENCLOSED PROXY IS BEING
SOLICITED BY THE BOARD OF TRUSTEES OF JOHN HANCOCK CASH MANAGEMENT
FUND.

By order of the Board of Trustees,

THOMAS H. DROHAN, Secretary
Boston, Massachusetts
October 9, 1995
<PAGE> 6

JOHN HANCOCK CASH MANAGEMENT FUND

PROXY STATEMENT
______________________

JOHN HANCOCK MONEY MARKET FUND

PROSPECTUS
______________________

This Proxy Statement and Prospectus sets forth the
information you should know before voting on the proposed
reorganization of John Hancock Cash Management Fund ("Cash
Management Fund") into John Hancock Money Market Fund ("Money
Market Fund"). Please read it carefully and retain it for future
reference. Money Market Fund is a series of John Hancock Series,
Inc., a Maryland corporation (the "Company").

This Proxy Statement and Prospectus is accompanied by the
Prospectus of Money Market Fund for Class A and Class B shares,
dated September 12, 1995 (EXHIBIT A hereto). Information about
Cash Management Fund's shares is incorporated by reference from
the Cash Management Fund Prospectus which is available at no
charge upon request to Cash Management Fund at 1-800-225-5291.

A Statement of Additional Information, dated October 9, 1995,
relating to this Proxy Statement and Prospectus, and containing
additional information about each of Money Market Fund and Cash
Management Fund, including historical financial statements, is on
file with the Securities and Exchange Commission ("SEC"). It is
available from Money Market Fund upon telephone request and at no
charge at the toll-free number stated above. The Statement of
Additional Information is incorporated by reference into this
Prospectus.

This Proxy Statement and Prospectus relates to Class A shares
of common stock, par value of $0.01 per share (the "Money Market
Fund Class A Shares"), of Money Market Fund which will be issued
in exchange for all of Cash Management Fund's assets. In exchange
for these assets, Money Market Fund will also assume all of the
liabilities of Cash Management Fund.

The Money Market Fund Class A Shares issued to Cash
Management Fund for distribution to Cash Management Fund's
shareholders will have an aggregate net asset value equal to that
of Cash Management Fund's shares. The asset values of Cash
Management Fund and Money Market Fund will be determined at the
close of business (4:00 p.m. Eastern Time) on the Closing Date (as
defined below) for purposes of the proposed reorganization.

Following the receipt of Money Market Fund Class A Shares
(1) Cash Management Fund will be liquidated, (2) Cash Management
Fund will distribute these Money Market Fund Class A Shares to
Cash Management Fund's shareholders pro rata in exchange for their
shares of Cash Management Fund and (3) Cash Management Fund will
<PAGE> 7

be terminated. Consequently, Cash Management Fund shareholders
will become Class A shareholders of Money Market Fund. These
transactions are collectively referred to in this Proxy Statement
and Prospectus as the "Reorganization." The Reorganization is
being structured as a tax-free reorganization so that, in the
opinion of tax counsel, no gain or loss will be recognized by
Money Market Fund, Cash Management Fund or the shareholders of
Cash Management Fund. The terms and conditions of the
Reorganization are more fully described in this Proxy Statement
and Prospectus, and in the Agreement and Plan of Reorganization
that is attached as EXHIBIT B.

Money Market Fund is a diversified series of the Company, an
open-end management investment company organized as a Maryland
corporation in 1987. Money Market Fund seeks to provide maximum
current income consistent with capital preservation and liquidity.
Money Market Fund seeks to obtain this objective by investing in
money market instruments including, but not limited to, U.S.
Government, municipal and foreign governmental securities;
obligations of supranational organizations (e.g., the World Bank
and the International Monetary Fund); obligations of U.S. and
foreign banks and other lending institutions; corporate
obligations; and repurchase and reverse repurchase agreements.

The principal place of business of both Money Market Fund and
Cash Management Fund is at 101 Huntington Avenue, Boston,
Massachusetts 02199. Their toll-free telephone number is 1-800-
225-5291.

SHARES OF MONEY MARKET FUND ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE SHARES OF
MONEY MARKET FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN MONEY MARKET FUND IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO
ASSURANCE THAT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.

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

The date of this Proxy Statement and Prospectus is October 9,
1995.

-2-
<PAGE> 8

<TABLE>

TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
INTRODUCTION............................................. 1
SUMMARY.................................................. 2
RISK FACTORS AND SPECIAL CONSIDERATIONS.................. 20
INFORMATION CONCERNING THE MEETING....................... 21
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION 22
CAPITALIZATION........................................... 27
BUSINESS OF CASH MANAGEMENT FUND......................... 28
General............................................. 28
Investment Objective and Policies................... 28
Trustees............................................ 28
Investment Adviser and Distributor.................. 28
Expenses............................................ 28
Custodian and Transfer Agent........................ 29
Cash Management Fund Shares......................... 29
Purchase of Cash Management Fund Shares............. 29
Redemption of Cash Management Fund Shares........... 29
Dividends, Distributions and Taxes.................. 29
BUSINESS OF MONEY MARKET FUND............................ 29
Investment Objective and Policies................... 30
Directors........................................... 30
Investment Adviser and Distributor.................. 30
Expenses............................................ 30
Custodian and Transfer Agent........................ 30
Money Market Fund Shares............................ 30
Purchase of Money Market Fund Shares................ 30
Redemption of Money Market Fund Shares.............. 30
Dividends, Distributions and Taxes.................. 31
EXPERTS.................................................. 31
AVAILABLE INFORMATION.................................... 31
EXHIBIT B................................................ B-1

</TABLE>

-i-
<PAGE> 9

EXHIBITS

A - Prospectus of John Hancock Money Market Fund for Class A and
Class B shares, dated September 12, 1995 (attached to this
document).

B - Agreement and Plan of Reorganization by and between John
Hancock Cash Management Fund and John Hancock Series, Inc.,
on behalf of John Hancock Money Market Fund (attached to this
document).

-ii-
<PAGE> 10

PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK CASH MANAGEMENT FUND
TO BE HELD ON NOVEMBER 15, 1995

INTRODUCTION

This Proxy Statement and Prospectus is furnished in
connection with the solicitation of proxies by the Board of
Trustees of Cash Management Fund (the "Board of Trustees"). The
proxies will be voted at the Special Meeting of Shareholders (the
"Meeting") of Cash Management Fund to be held at 101 Huntington
Avenue, Boston, Massachusetts 02199 on Wednesday, November 15,
1995 at 9:15 a.m., Boston time, and at any adjournment or
adjournments of the Meeting. The purposes of the Meeting are set
forth in the accompanying Notice of Special Meeting of
Shareholders.

This Proxy Statement and Prospectus incorporates by reference
the Prospectus of Cash Management Fund, dated February 1, 1995
(the "Cash Management Fund Prospectus"), and includes the
prospectus of Money Market Fund for Class A and Class B shares,
dated September 12, 1995 (the "Money Market Fund Prospectus").
The Cash Management Fund Prospectus is available upon request.
Money Market Fund's Annual Report to Shareholders and Semi-Annual
Report to Shareholders were previously sent to shareholders of
Money Market Fund on or about December 31, 1994 and June 30, 1995,
respectively. Cash Management Fund's Annual Report to
Shareholders and Semi-Annual Report to Shareholders were
previously sent to shareholders of Cash Management Fund on or
about November 30, 1994 and May 31, 1995, respectively.

As of August 31, 1995, _______ shares of beneficial interest
of Cash Management Fund were outstanding. Shareholders of record
on September 29, 1995 (the "Record Date") are entitled to notice
of and to vote at the Meeting.

All properly executed proxies received by management prior to
the Meeting, unless revoked, will be voted at the Meeting
according to the instructions on the proxies. If no instructions
are given, shares of Cash Management Fund represented by proxies
will be voted FOR the proposal (the "Proposal") to approve the
Agreement and Plan of Reorganization (the "Agreement") between
Cash Management Fund and the Company, on behalf of Money Market
Fund.

The Board of Trustees knows of no business to be presented
for consideration at the Meeting other than that mentioned in the
immediately preceding paragraph. If other business is properly
brought before the Meeting, proxies will be voted according to the
best judgment of the persons named as proxies.

-1-
<PAGE> 11

In addition to the mailing of these proxy materials, proxies
may be solicited in person or by telephone by Trustees, officers
and employees of Cash Management Fund; by personnel of Cash
Management Fund's investment adviser, John Hancock Advisers, Inc.
(the "Adviser"), and its transfer agent, John Hancock Investor
Services Corporation ("Investor Services"); or by broker-dealer
firms. Investor Services has agreed to provide proxy solicitation
services to Cash Management Fund at a cost of approximately
$5,000. Investor Services is providing this proxy solicitation
service to Cash Management Fund at a lower cost than would be
charged by a third party solicitation firm.

Cash Management Fund and Money Market Fund (each, a "Fund"
and collectively, the "Funds") will each bear its own fees and
expenses in connection with the Reorganization discussed in this
Proxy Statement and Prospectus.

The information concerning Cash Management Fund in this Proxy
Statement and Prospectus has been supplied by Cash Management
Fund. The information concerning Money Market Fund in this Proxy
Statement and Prospectus has been supplied by the Company.

SUMMARY

The following is a summary of certain information contained
elsewhere in this Proxy Statement and Prospectus. The summary is
qualified by reference to the more complete information contained
in this Proxy Statement and Prospectus, and in the EXHIBITS
attached to or included with this document. Please read this
entire Proxy Statement and Prospectus carefully.

REASONS FOR THE PROPOSED REORGANIZATION

Cash Management Fund's Board of Trustees has determined that
the proposed Reorganization is in the long-term best interests of
Cash Management Fund and its shareholders. In making this
determination, the Trustees considered several relevant factors.

Based on information provided by the Adviser, the Board of
Trustees has concluded that it will not be advantageous to Cash
Management Fund's shareholders to continue to operate and market
Cash Management Fund separately from Money Market Fund because
Money Market Fund is better positioned for sustained growth of
assets than is Cash Management Fund. Although the investment
objectives of the two Funds are identical and the investment
policies are substantially similar, Money Market Fund has a more
modern distribution structure than Cash Management Fund. As a
result, it is expected that there will be an increased marketing
effort by selling brokers with respect to Money Market Fund shares
and a reduced marketing effort by selling brokers with respect to
Cash Management Fund shares.

-2-
<PAGE> 12

Money Market Fund's Board of Directors has authorized the
Fund's adoption of a multiple class distribution system featuring
three classes of shares targeting three separate distribution
channels. Each class of shares of Money Market Fund, including
the Money Market Fund Class A Shares that will be issued to Cash
Management Fund for distribution to its shareholders in the
Reorganization, pays a Rule 12b-1 distribution fee pursuant to a
plan of distribution adopted in accordance with Rule 12b-1 under
the Investment Company Act of 1940 (the "Investment Company Act").
Unlike Money Market Fund, Cash Management Fund is authorized by
the Fund's organizational documents to issue only a single class
of shares. Cash Management Fund's single class of shares is
comparable to the Money Market Fund Class A Shares and is also
subject to a Rule 12b-1 plan and fee. However, pursuant to a
voluntary agreement between Cash Management Fund and its
distributor, the Rule 12b-1 fee has never been imposed on the Cash
Management Fund shares.

Rule 12b-1 fees are used by a mutual fund's distributor to
compensate selling brokers who provide distribution services to
the mutual fund and account maintenance services to the fund's
shareholders. Accordingly, payment of Rule 12b-1 fees by each
class of shares of Money Market Fund makes it possible for Money
Market Fund to attract assets in as broad a market as possible.

The Adviser has apprised the Cash Management Fund Board of
Trustees that, for these reasons, Money Market Fund will be the
preferred choice of selling brokers who distribute shares of John
Hancock mutual funds. Money Market Fund will also be the
preferred exchange vehicle for John Hancock mutual fund
shareholders. The Adviser believes that, because of Money Market
Fund's more favorable distribution system, the assets of Money
Market Fund will grow significantly over time. At the same time,
the Adviser believes that the assets of Cash Management Fund will
decline to the extent that new sales do not completely offset
redemptions. New sales of Cash Management Fund are likely to
suffer because Money Market Fund with its modern distribution
system and its payment of Rule 12b-1 fees to selling brokers is
better positioned for growth of assets and will, therefore,
compete more successfully than Cash Management Fund for limited
investor dollars.

The Adviser believes that the decrease in the asset size of
Cash Management Fund will result over time in the Fund's
shareholders paying higher fees and expenses because there will be
a loss of economies of scale. For example, the management fee of
Cash Management Fund has several breakpoints that cause a
reduction in the fee when the Fund's assets reach a certain size.
A reduction in the Fund's assets will deny the benefit of these
breakpoints to the Fund and its shareholders. Similarly, custody,

-3-
<PAGE> 13

legal and accounting fees paid by the Fund that might have been
proportionately reduced on a per share basis as the Fund's assets
continued to increase will not be so reduced and may increase
proportionately as the Fund's assets decline.

The Board of Trustees also considered that shareholders of
both Funds may be better served by a fund offering greater
diversification. To the extent that the Funds' assets are
combined into a single portfolio and a larger asset base is
created as a result of the Reorganization, greater diversification
of Money Market Fund's investment portfolio can be achieved than
is currently possible in either Fund. Greater diversification is
expected to be beneficial to shareholders of both Funds, because
it may reduce the negative effect which the adverse performance of
any one security may have on the performance of the entire
portfolio.

Finally, the Board of Trustees believes that the Money Market
Fund Class A Shares received in the Reorganization will provide
existing Cash Management Fund shareholders with substantially the
same investment advantages that they currently enjoy at a
comparable level of risk.

In connection with its evaluation of the reasons for the
Reorganization, the Board of Trustees also considered the fact
that the management fee of Money Market Fund is higher than the
management fee of Cash Management Fund. However, if the
shareholders of Cash Management Fund approve the Reorganization,
the Adviser has agreed to limit the Money Market management fee to
an annual rate of 0.40% of the Fund's average daily net assets.
This rate is the same as that paid by Cash Management Fund during
its most recently completed fiscal year. For a discussion of the
effects of the Reorganization on the payment of management fees
and Rule 12b-1 fees on the assets of Cash Management Fund acquired
by Money Market Fund, See "Summary--Reorganization--Effect of The
Reorganization-Rule 12b-1 Fees and Management Fees" below.

THE FUNDS' EXPENSES

Both Funds and their shareholders are subject to various fees
and expenses. The two tables set forth below show the shareholder
transaction and operating expenses of shares of Cash Management
Fund and Class A and Class B shares of Money Market Fund and the
effect of applicable expense limitations. With respect to Cash
Management Fund, these expenses are based on fees and expenses
incurred during the Fund's fiscal year ended September 30, 1994.
With respect to Money Market Fund, these expenses are based on
fees and expenses incurred with respect to the Fund's Class B
shares for the Fund's fiscal year ended October 31, 1994. No
Class A shares of Money Market Fund were outstanding during the
period.

-4-
<PAGE> 14

<TABLE>
CASH MANAGEMENT FUND
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(As a percentage of offering price)............. None
Maximum sales charge imposed on reinvested
dividends....................................... None
Maximum deferred sales charge..................... None
Redemption fees+.................................. None
Exchange fee...................................... None

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fees................................... 0.40%
12b-1 fee (net of reduction)*..................... 0.00%
Other expenses**.................................. 0.51%
Total Fund operating expenses*.................... 0.91%
<FN>
* The Fund and its distributor have agreed not to impose the
Rule 12b-1 fee. Absent such an agreement, the Rule 12b-1
fee would be 0.15% of average daily net assets and total
Fund operating expenses would be 1.06%.

** Other expenses include transfer agent, legal, audit, custody
and other expenses.

+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
MONEY MARKET FUND
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(As a percentage of offering price)............. None None
Maximum sales charge imposed on reinvested
dividends....................................... None None
Maximum deferred sales charge..................... None 5.00%
Redemption fees+.................................. None None
Exchange fee...................................... None None

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fee ................................... 0.50% 0.50%
12b-1 fee (net of reduction: Class A shares)*.... 0.15% 1.00%
Other expenses**.................................. 0.56% 0.56%
Total Fund operating expenses
(net of reduction: Class A shares)***.......... 1.21% 2.06%
<FN>
* The amount of the 12b-1 fee used to cover service expenses
will be up to 0.15% and 0.25% of the Fund's average net
assets attributable to Class A and Class B shares,
</TABLE>

-5-
<PAGE> 15

respectively, and any remaining portion (up to 0.75% with
respect to Class B shares) will be used to cover
distribution expenses.

** Other expenses include transfer agent, legal, audit, custody
and other expenses.

*** Total Fund operating expenses in the table reflect the
current agreement between the Fund and its distributor. In
the future, the Class A distribution fee could increase to
0.25%, in which case the total Fund operating expenses of
Class A shares would be 1.31%.

+ Redemption by wire fee (currently $4.00) not included.

<TABLE>
MONEY MARKET FUND (PRO FORMA)

The table set forth below shows the pro forma operating
expenses of Class A and Class B shares of Money Market Fund which
assumes that the Reorganization took place on March 31, 1995.
These expenses are based on fees and expenses incurred during the
Funds' most recently completed fiscal years.
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fee (net of reduction)................. 0.40% 0.40%
12b-1 fee (net of reduction: Class A shares)*.... 0.15% 1.00%
Other expenses**.................................. 0.44% 0.44%
Total Fund operating expenses
(net of reductions)***.......................... 0.99% 1.84%
<FN>
* The amount of the 12b-1 fee used to cover service expenses
will be up to 0.15% and 0.25% of the Fund's average net
assets attributable to Class A and Class B shares,
respectively, and any remaining portion (up to 0.75% with
respect to Class B shares) will be used to cover
distribution expenses.

** Other expenses include transfer agent, legal, audit, custody
and other expenses.

*** Total Fund operating expenses in the table reflect the
current agreements to limit the management fee and Class A
distribution fee between the Fund and its adviser and
distributor, respectively. In the absence of such
agreements, the management fee could increase to 0.50% and
the Class A distribution fee could increase to 0.25%, in
which case the total Fund operating expenses of Class A
shares and Class B shares would be 1.19% and 1.94%,
respectively.
</TABLE>

-6-
<PAGE> 16

If the Reorganization is consummated, the actual total
operating expenses of Class A and Class B shares of Money Market
Fund may vary from the pro forma operating expenses indicated
above due to changes in the net asset values of Cash Management
Fund and/or Money Market Fund between March 31, 1995 and the
Closing Date (defined below).

<TABLE>
EXAMPLE

The following example illustrates the expenses you would pay
on a $1,000 investment under the existing fees for each of Cash
Management Fund and Class A and Class B shares of Money Market
Fund and under the pro forma fees if the Reorganization had
occurred on March 31, 1995. The example assumes (1) a 5% annual
return and (2) redemption at the end of each time period.

<CAPTION>
Cash Class A Class B Shares Pro Forma Pro Forma
Management Shares Money Shares Money Class A Class B
Fund Market Fund Market Fund Shares Shares
---------- ------------ -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 year $ 9 $ 12 $ 71 $ 10 $ 68
3 years 29 38 95 32 88
5 years 50 67 131 55 120
10 years 112 147 217 121 194
</TABLE>
Assuming there is no redemption at the end of each time period,
the expenses you would pay on the same investment would be as follows:
<TABLE>
<CAPTION>
Cash Class A Class B Shares Pro Forma Pro Forma
Management Shares Money Shares Money Class A Class B
Fund Market Fund Market Fund Shares Shares
---------- ------------ -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 year $ 9 $ 12 $ 21 $ 10 $ 19
3 years 29 38 65 32 58
5 years 50 67 111 55 100
10 years 112 147 217 121 194
</TABLE>

The purpose of this example and the tables set forth above is
to assist investors in understanding the various costs and
expenses of investing in shares of each of the Funds and what such
costs would be had the Reorganization occurred. The example above
should not be considered a representation of future expenses of
the Funds or of Money Market Fund after the Reorganization.
Actual expenses may vary from year to year and may be higher or
lower than those shown above.

THE FUNDS' INVESTMENT ADVISER

John Hancock Advisers, Inc. acts as investment adviser to
both Cash Management Fund and Money Market Fund.

-7-
<PAGE> 17

BUSINESS OF CASH MANAGEMENT FUND

Cash Management Fund is a diversified open-end management
investment company organized as a Massachusetts business trust in
1979. As of March 31, 1995, Cash Management Fund's net assets
were $255,237,358.

BUSINESS OF MONEY MARKET FUND

Money Market Fund is a diversified series of the Company, an
open-end management investment company organized as a Maryland
corporation in 1987. As of March 31, 1995, Money Market Fund's
net assets (attributable to Class B shares only) were $62,118,754.

COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES OF CASH
MANAGEMENT FUND AND MONEY MARKET FUND

Cash Management Fund: The investment objective of Cash
Management Fund is to provide maximum current income, consistent
with capital preservation and liquidity. The Fund invests in high
quality, U.S. dollar-denominated instruments of U.S. and foreign
issuers, including the following types of securities: U.S.
Government securities; bank investments (e.g., certificates of
deposit and bankers' acceptances issued by foreign branches of
major U.S. and foreign commercial banks and foreign banks with
branch offices in the U.S.); commercial paper and corporate
obligations; repurchase agreements and time deposits.

At the time the Fund acquires its investments, they will be
rated in one of the two highest rating categories for short-term
debt obligations assigned by at least two nationally recognized
statistical rating organizations (or one rating organization if
the obligation was rated by only one such organization). These
high quality securities are divided into "first tier" and "second
tier" securities. First tier securities have received the highest
rating from at least two rating organizations (or one, if only one
has rated the security). Second tier securities have received
ratings within the two highest categories from at least two rating
agencies (or one, if only one has rated the security), but do not
qualify as first tier securities. The Fund may also purchase
securities which are unrated if the Adviser determines that such
securities are of comparable quality to rated securities. The
Fund may not purchase any second tier security if, as a result of
its purchase (a) more than 5% of its total assets would be
invested in second tier securities or (b) more than 1% of its
total assets or $1 million (whichever is greater) would be
invested in the second tier securities of a single issuer.

All of the Fund's investments mature in 397 days or less.
The Fund maintains an average dollar-weighted portfolio maturity
of 90 days or less.

-8-
<PAGE> 18

Money Market Fund: The investment objective of Money Market
Fund is also to provide maximum current income, consistent with
capital preservation and liquidity. The Fund invests in money
market instruments denominated in U.S. dollars including, but not
limited to, the following: U.S. Government, municipal and foreign
governmental securities; obligations of supranational
organizations (e.g., the World Bank and the International Monetary
Fund); obligations of U.S. and foreign banks and other lending
institutions; corporate obligations; and repurchase agreements and
reverse repurchase agreements. As a fundamental policy, the Fund
may not invest more than 25% of its total assets in obligations
issued by foreign banks and foreign branches of U.S. banks when
the Adviser has determined that the U.S. bank is not
unconditionally responsible for the payment obligations of the
foreign branch.

All of the Fund's investments mature in 397 days or less.
The Fund maintains an average dollar-weighted portfolio maturity
of 90 days or less.

Cash Management Fund's investment objective is fundamental
and may not be changed without shareholder approval. Money Market
Fund's investment objective is non-fundamental and may be changed
by a vote of the Fund's Board of Directors. Prior to the
implementation of a change to the investment objective of Money
Market Fund, the Fund's prospectus and statement of additional
information will be revised or supplemented.

In considering whether to approve the Reorganization, you
should consider any differences between the two Funds' investment
policies. For a discussion of the risks associated with an

-9-
<PAGE> 19

investment in the Funds, see "Risk Factors and Special
Considerations."

<TABLE>
<CAPTION>
CASH MANAGEMENT FUND MONEY MARKET FUND
<S> <C> <C>
Investment The Fund seeks to provide The Fund seeks to provide
Objective (no maximum current income, maximum current income
change): consistent with capital consistent with capital
preservation and preservation and
liquidity. liquidity.

Primary The securities in which The Fund seeks to achieve
Investments: the Fund invests include its objective by
the following types of investing in money market
high quality, U.S. instruments including,
dollar-denominated but not limited to:
instruments of U.S. and
foreign issuers:
(1) U.S. Government,
(1) U.S. Government municipal and foreign
Securities; governmental securities;

(2) bank investments such (2) obligations of
as certificates of supranational
deposit and bankers' organizations (e.g., the
acceptances, issued by World Bank and the
foreign branches of major International Monetary
American and foreign Fund), obligations of
commercial banks and U.S. and foreign banks
foreign banks with branch and other lending
offices in the United institutions;
States;

(3) commercial paper and (3) corporate
corporate obligations; obligations; and

(4) repurchase (4) repurchase
agreements; and agreements.

(5) time deposits.

Other None. The Fund may lend
Investments: portfolio securities,
enter into reverse
repurchase agreements and
purchase securities on a
forward commitment or
when-issued basis.
</TABLE>

-10-
<PAGE> 20

<TABLE>

<S> <C> <C>
Fundamental No comparable As a fundamental policy,
Investment restriction. the Fund may not invest
Restrictions: more than 25% of its
total assets in
obligations issued by (1)
foreign banks and (2)
foreign branches of U.S.
banks if the Adviser has
determined that the U.S.
bank is not
unconditionally
responsible for the
payment obligations of
the foreign branch.
</TABLE>

FORM OF ORGANIZATION

Cash Management Fund is a Massachusetts business trust
organized in 1979. Money Market Fund is one of six separate
series of the Company, a Maryland corporation organized in 1987.
After the Reorganization, Cash Management Fund's shareholders will
become Class A shareholders of Money Market Fund and therefore
will become subject to Maryland law and the Company's Articles of
Organization ("Articles"). Although there are some differences
between the laws and organizational document provisions applicable
to each Fund with respect to rights of shareholders, the only
material differences relate to shareholder voting requirements.
The shareholder voting requirements differ as follows: (i)
amending the Declaration of Trust of Cash Management Fund requires
the approval of the lesser of (a) 67% or more of the shares
present at a meeting, if more than 50% of the shares of the Fund
are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Fund, while amending the Articles of the
Company requires the vote of the majority of the Company's
outstanding shares; (ii) removing a Trustee of Cash Management
Fund requires the vote of two-thirds of all outstanding shares of
the Fund, while removing a Director of the Company requires the
vote of the majority of the Company's outstanding shares; and
(iii) most other matters submitted to shareholders of Cash
Management Fund require the vote of a majority of shares present
at a meeting at which there is a quorum, while most other matters
submitted to shareholders of Money Market Fund require the vote of
a majority of outstanding shares of the Fund or the Company, as
appropriate.

Each share of a series of the Company represents an equal
proportionate interest in the assets belonging to that series.
The liabilities attributable to Money Market Fund are not charged
against the assets of the other series of the Company. Shares of
Money Market Fund and each other series of the Company are voted
separately with respect to matters pertaining to that series, but

-11-
<PAGE> 21

all shares vote together for the election of the Company's
Directors and the ratification of the Company's independent
accountants.

Money Market Fund has authorized and outstanding Class A,
Class B and Class S shares of common stock. Cash Management Fund
has authorized only one class of shares. The shares of each class
of Money Market Fund represent an interest in the same portfolio
of investments of that Fund. Except as stated below, each class
of Money Market Fund has equal rights as to voting, redemption,
dividends and liquidation. Each class of Money Market Fund bears
different distribution fees and may bear other expenses properly
attributable to that class, has different minimum investment
requirements and may be entitled to different services. Class S
shares are offered only through certain brokers. Class A, Class B
and Class S shareholders of Money Market Fund have exclusive
voting rights with respect to the Rule 12b-1 distribution plan
relating to their respective class of shares. For additional
discussion of Class B shares of Money Market Fund, see the Money
Market Fund Prospectus. For additional discussion of Class S
shares of Money Market Fund, see "Organization and Management of
the Fund" in the Money Market Fund Prospectus.

SALES CHARGES AND DISTRIBUTION AND SERVICES FEES

Sales Charges. Shares of Cash Management Fund and Class A
shares of Money Market Fund are sold without a sales charge at
their net asset value per share, which will normally be $1.00.

Money Market Fund Class A Shares acquired by Cash Management
Fund's shareholders pursuant to the Reorganization will not be
subject to any initial sales charge or contingent deferred sales
charge ("CDSC") at the time of the Reorganization.

Distribution and Service Fees. Both Funds have adopted
distribution plans pursuant to Rule 12b-1 under the Investment
Company Act. Under these plans, each Fund may pay fees to John
Hancock Funds, Inc. ("John Hancock Funds") to reimburse
distribution and service expenses in connection with the Funds'
shares. With respect to shares of Cash Management Fund, these
fees are payable at an annual rate of up to 0.15% of the average
daily net assets of the Fund. Cash Management Fund and John
Hancock Funds have agreed since 1983 not to impose these fees.
With respect to Money Market Fund Class A Shares, these fees are
payable at an annual rate of up to 0.15% of the average daily net
assets attributable to the Money Market Fund Class A Shares. In
the future, the fee with respect to Money Market Fund Class A
Shares may increase to 0.25%.

-12-
<PAGE> 22

PURCHASES AND EXCHANGES

Shares of Cash Management Fund and Class A shares of Money
Market Fund may be purchased through certain broker-dealers and
through John Hancock Funds at their net asset value per share,
which will normally be $1.00. The minimum initial investment in
shares of Cash Management Fund is $1,500 ($250 for group
investments and $500 for retirement plans). The minimum initial
investment in Class A shares of Money Market Fund is $1,000 ($250
for group investments and retirement plans). In anticipation of
the Reorganization, after the Record Date, no new accounts may be
opened in Cash Management Fund. Existing shareholders of Cash
Management Fund may continue to acquire shares of the Fund after
the Record Date by direct purchase, through a monthly automatic
accumulation plan and through the reinvestment of dividends and
distributions.

Shareholders of Cash Management Fund may exchange their
shares for Class A shares of other John Hancock funds at net asset
value plus any front-end sales charges which may be applicable to
the fund into which the Cash Management Fund shares are exchanged.
For this purpose, the shares of John Hancock funds with only one
class of shares are treated as Class A shares whether or not they
have been so designated. Shares of Cash Management Fund acquired
by exchanging shares of other John Hancock funds that are subject
to a CDSC may be exchanged at net asset value only for Class B
shares of another John Hancock fund. Shares of any fund acquired
by exchange that are subject to a CDSC will incur the CDSC upon
redemption. The rate of this charge will be the rate in effect
for the exchanged shares at the time of the exchange.

Class A shareholders of Money Market Fund may exchange their
shares for Class A shares of other John Hancock funds at net asset
value plus any front-end sales charges which may be applicable to
the fund into which the Money Market Fund Class A Shares are being
exchanged. For this purpose, shares of John Hancock funds with
only one class of shares are treated as Class A shares whether or
not they have been so designated. Class A shares of any fund
acquired by exchange that are subject to a CDSC will incur the
CDSC upon redemption. The rate of this charge will be the rate in
effect for the Class A shares at the time of the exchange.

If shareholders of Cash Management Fund vote to approve the
Reorganization, each shareholder of the Fund who acquired his or
her shares of Cash Management Fund as a result of an exchange from
Class B shares of another John Hancock fund will receive Money
Market Fund Class A Shares in the Reorganization. These shares
will be subject to any applicable CDSC upon redemption and these
shares may only be exchanged for Class B shares of other John
Hancock funds.

-13-
<PAGE> 23

<TABLE>
MANAGEMENT FEES

Cash Management Fund pays management fees to the Adviser as
follows:
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 0.40%
Next $250,000,000 0.35%
Next $250,000,000 0.30%
Amount over $750,000,000 0.25%
</TABLE>

During the fiscal year ended September 30, 1994, Cash
Management Fund paid investment management fees of $816,306 to the
Adviser.

<TABLE>
Money Market Fund pays management fees to the Adviser as
follows:
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First$500,000,000 0.50%
Next $250,000,000 0.425%
Next $250,000,000 0.375%
Next $500,000,000 0.35%
Next $500,000,000 0.325%
Next $500,000,000 0.30%
Over $2,500,000,000 0.275%
</TABLE>

During the fiscal year ended October 31, 1994, Money Market Fund
paid investment management fees of $214,088 to its former
investment adviser.

DISTRIBUTION PROCEDURES

It is the policy of both Funds to declare dividends daily and
to pay dividends monthly from net investment income. Each Fund
also distributes annually all of its other taxable income,
including any net short-term and long-term capital gains it has
realized. Cash Management Fund will make, immediately prior to
the Closing Date (as defined below), a distribution of any net
income and net realized capital gains it has not yet distributed.

REINVESTMENT OPTIONS

Unless an election is made to receive cash, the shareholders
of both Funds automatically reinvest all of their respective
dividends and capital gain distributions in additional shares of
the same class, if applicable, of the same Fund. These
reinvestments are made at the net asset value per share and are
not subject to any sales charge.

-14-
<PAGE> 24

REDEMPTION PROCEDURES

Shares of Cash Management Fund and Money Market Fund Class A
Shares may be redeemed on any day that the respective Fund is open
for business at a price equal to the net asset value of the shares
next determined after receipt of a redemption request in good
order, less any applicable CDSC. Alternatively, holders of Cash
Management Fund shares and Money Market Fund Class A Shares may
sell their shares through securities dealers, who may charge a
fee. Redemptions and repurchases of Money Market Fund Class A
Shares that are subject to a CDSC and redemptions and repurchases
of shares of Cash Management Fund received by an exchange for
shares of a John Hancock fund with a CDSC are subject to the
applicable CDSC, if any. Shares of Cash Management Fund may be
redeemed up to and including the Closing Date (as defined below).

REORGANIZATION

Effect of the Reorganization--General. Pursuant to the terms
of the Agreement, the proposed Reorganization will consist of the
acquisition by Money Market Fund of all the assets of Cash
Management Fund in exchange solely for (i) the assumption by Money
Market Fund of all the liabilities of Cash Management Fund and
(ii) the issuance of Money Market Fund Class A Shares equal to the
value of these assets, less the amount of these liabilities, to
Cash Management Fund. As part of the liquidation process, Cash
Management Fund will immediately distribute to its shareholders
these Money Market Fund Class A Shares in exchange for their
shares of Cash Management Fund. Consequently, shareholders of
Cash Management Fund will become Class A shareholders of Money
Market Fund. If any Cash Management Fund shares were subject to a
CDSC, then the Money Market Fund Class A Shares received in
exchange therefore will be subject to the same CDSC, including all
terms and conditions for computing and applying such CDSC. After
completion of the Reorganization, the existence of Cash Management
Fund will be terminated.

The Reorganization will become effective as of 5:00 p.m. on
the closing date, scheduled for November 17, 1995, or another date
on or before December 31, 1995 as authorized representatives of
the Funds may agree (the "Closing Date"). The Money Market Fund
Class A Shares issued to Cash Management Fund for distribution to
Cash Management Fund's shareholders will have an aggregate net
asset value equal to that of Cash Management Fund's shares. For
purposes of the Reorganization, the Funds' respective asset values
will be determined as of the close of business (4:00 p.m. Eastern
Time) on the Closing Date.

Effect of the Reorganization--Rule 12b-1 Fees and Management
Fees. After the Reorganization, the assets of Cash Management
Fund acquired by Money Market Fund will be subject to Money Market
Fund's Rule 12b-1 fee of 0.15% of average daily net assets

-15-
<PAGE> 25

attributable to Class A shares. The Reorganization will also have
the effect of increasing the management fee on assets of Cash
Management Fund acquired by Money Market Fund to an annual rate of
0.50% of average daily net assets. However, if the Cash Manage-
ment Fund's shareholders approve the Reorganization, the Adviser
has agreed to limit Money Market Fund's management fee to an
annual rate of 0.40% of the Fund's average daily net assets.
Furthermore, the Adviser has agreed not to terminate the agreement
with respect to the management fee without the prior approval of
the Board of Trustees serving as such to a majority of the
following investment companies and their series (including
successor funds thereto): John Hancock Capital Series, John
Hancock Income Securities Trust, John Hancock Investors Trust,
John Hancock Limited Term Government Fund, John Hancock Sovereign
Bond Fund, John Hancock Special Equities Fund, John Hancock
Strategic Series, John Hancock Tax-Exempt Income Fund, John
Hancock Tax-Exempt Series Fund and John Hancock World Fund.

As a result of the Reorganization, the assets of Money Market
Fund Class A shares attributable to Cash Management Fund will pay
total annual operating expenses of 0.99% after giving effect to
the fee limitations. While higher than the total operating
expenses of Cash Management Fund, the Adviser believes that this
expense ratio is comparable to expense ratios paid by shareholders
of other money market funds with similar investment objectives and
distribution systems. The Adviser also believes that this expense
ratio will over time be comparable to or lower than the expense
ratio that will be paid by Cash Management Fund's shareholders if
the Reorganization does not take place. As described above under
the caption "Summary--Reasons for the Reorganization," the Adviser
believes that Money Market Fund with its modern distribution sys-
tem that provides for multiple classes of shares and the payment
of Rule 12b-1 fees will effectively compete with Cash Management
Fund for investor resources and that the assets of Cash Management
Fund will decline over time. This decline in assets will cause an
increase in the total annual operating expenses of Cash Management
Fund. The Adviser believes that over time such an increase in
Cash Management Fund's total annual operating expenses is likely
to match or exceed the total annual operating expenses of Money
Market Fund after the Reorganization. See "The Funds' Expenses"
for the comparative fee tables showing the amount of fees and
expenses payable by Cash Management Fund prior to the Reorganiza-
tion and the pro forma amount of fees and expenses proposed to be
paid by Class A Money Market Fund Shares after the Reorganization.

In approving the consequent increase in the management fee on
the assets attributable to Cash Management Fund, the Trustees of
Cash Management Fund, including those Trustees who are not
"interested persons" of the Fund or the Adviser (the "Independent
Trustees"), took into account all such factors as they deemed
relevant. These factors included the fact that the Adviser has
agreed to limit the management fee of Money Market Fund to 0.40%

-16-
<PAGE> 26

of the Fund's average daily net assets while continuing to provide
the same high level of advisory services to the Fund. The
investment management fee schedule applicable to Cash Management
Fund was approved in 1979, prior to the imposition of more
stringent regulation of money market funds by the SEC. Managing a
money market fund to comply with the requirements of these
regulations is more complex because of the more sophisticated
analysis required to evaluate the money market instruments being
considered for purchase. The Trustees also considered information
obtained from Lipper Analytical Services, Inc. relating to the
investment management fees and total expenses paid by other money
market funds comparable to Cash Management Fund and the
performance of those other money market funds.

Set forth below are: (i) Cash Management Fund's investment
management fees, expressed as dollar amounts for a one year period
ending on March 31, 1995; (ii) Money Market Fund's pro forma
investment management fees attributable to Class A shares which
assume the Reorganization had taken place on March 31, 1995; and
(iii) the difference between the actual and pro forma fee figures,
expressed both as dollar amounts and as percentages of Cash
Management Fund's actual management fees as of that year.

<TABLE>
INVESTMENT MANAGEMENT FEE
<CAPTION>
Actual Pro Forma Difference
------ --------- ----------
After giving effect to the Adviser's agreement to limit the
management fee:
<S> <C> <C>
$958,674 $958,674 $0
0%

Without giving effect to the Adviser's agreement to limit the
management fee:

$958,674 $1,198,342 $239,668
25%
</TABLE>

The Independent Trustees also considered specific information
provided by the Adviser relating to the revenues, expenses and
profitability attributable to the management of the assets of Cash
Management Fund before the Reorganization and to the assets
attributable to Cash Management Fund as part of the assets of
Money Market Fund after the Reorganization. The Adviser advised
the Independent Trustees that the data presented was based on
internal allocations of costs and revenues pursuant to methods
which the Adviser believed to be reasonable. However, different
allocation methods might have produced different results. The
Independent Trustees also considered comparative information
relating to the profitability of other investment company
investment managers. The Trustees believe that the Adviser's

-17-
<PAGE> 27

profitability will not be unduly enhanced by completion of the
Reorganization on the terms set forth in this Prospectus/Proxy
Statement.

The Board of Trustees of Cash Management Fund, including the
Independent Trustees, approved the Reorganization, and determined
that it was in the long-term best interests of Cash Management
Fund and that the interests of Cash Management Fund's shareholders
would not be materially diluted as a result of the Reorganization.
Similarly, the Company's Board of Directors, including the
Directors not affiliated with the Fund, approved the
Reorganization, and determined that it was in the best interests
of Money Market Fund and that the interests of Money Market Fund's
shareholders would not be materially diluted as a result of the
Reorganization.

Tax Considerations. The consummation of the Reorganization
is subject to the receipt of an opinion of Hale and Dorr, counsel
to the Funds, satisfactory to Cash Management Fund and the
Company, on behalf of Money Market Fund, as set forth in the
Agreement and substantially to the effect that:

(a) The acquisition by Money Market Fund of all of the
assets of Cash Management Fund solely in exchange for the issuance
of Money Market Fund Class A Shares to Cash Management Fund and
the assumption of all of Cash Management Fund's liabilities by
Money Market Fund, followed by the distribution by Cash Management
Fund, in liquidation of Cash Management Fund, of Money Market Fund
Class A Shares to the shareholders of Cash Management Fund in
exchange for their shares of beneficial interest of Cash
Management Fund and the termination of Cash Management Fund, will
constitute a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and
Cash Management Fund and Money Market Fund will each be "a party
to a reorganization" within the meaning of Section 368(b) of the
Code;

(b) no gain or loss will be recognized by Cash Management
Fund upon (a) the transfer of all of its assets to Money Market
Fund solely in exchange for the issuance of Money Market Fund
Class A Shares to Cash Management Fund, and the assumption of all
of Cash Management Fund's liabilities by Money Market Fund; and
(b) the distribution by Cash Management Fund of these Money Market
Fund Class A Shares to the shareholders of Cash Management Fund;

(c) no gain or loss will be recognized by Money Market Fund
upon the receipt of Cash Management Fund's assets solely in
exchange for the issuance of Money Market Fund Class A Shares to
Cash Management Fund and the assumption of all of Cash Management
Fund's liabilities by Money Market Fund;

-18-
<PAGE> 28

(d) the basis of the assets of Cash Management Fund acquired
by Money Market Fund will be, in each instance, the same as the
basis of those assets in the hands of Cash Management Fund
immediately prior to the transfer;

(e) the tax holding period of the assets of Cash Management
Fund in the hands of Money Market Fund will, in each instance,
include Cash Management Fund's tax holding period for those
assets;

(f) the shareholders of Cash Management Fund will not
recognize gain or loss upon the exchange of all of their shares of
beneficial interest of Cash Management Fund solely for Money
Market Fund Class A Shares as part of the Reorganization;

(g) the basis of the Money Market Fund Class A Shares
received by Cash Management Fund shareholders in the
Reorganization will be the same as the basis of the Cash
Management Fund Shares surrendered in exchange therefor; and

(h) the tax holding period of the Money Market Fund Class A
Shares received by Cash Management Fund shareholders will include,
for each shareholder, the tax holding period for the Cash
Management Fund shares surrendered in exchange therefor, provided
the Cash Management Fund shares were held as capital assets on the
date of the exchange.

Should a favorable opinion of Hale and Dorr as to the above
matters not be available at the time of the Closing, the
authorized representatives of the Funds may proceed with the
Reorganization on a taxable basis. In a reorganization involving
two money market funds, the tax consequences of a taxable
reorganization will be negligible.

THE MEETING

Time, Place and Date. The Meeting will be held on Wednesday,
November 15, 1995, at 101 Huntington Avenue, Boston, Massachusetts
02199, at 9:15 a.m., Boston time.

RECORD DATE

The Record Date for determining shareholders entitled to
notice of and to vote at the Meeting is September 29, 1995.

VOTE REQUIRED

Approval of the Agreement by the shareholders of Cash
Management Fund requires the affirmative vote of a majority of the
shares of Cash Management Fund outstanding and entitled to vote.
For this purpose, a majority of the outstanding shares of Cash
Management Fund means the vote of the lesser of (i) 67% or more of

-19-
<PAGE> 29

the shares present at the Meeting, if the holders of more than 50%
of the shares of the Fund are present or represented by proxy, or
(ii) more than 50% of the outstanding shares of the Fund. The
Reorganization does not require the approval of Money Market
Fund's shareholders. See "Proposal to Approve the Agreement and
Plan of Reorganization--Voting Rights and Required Vote."

RISK FACTORS AND SPECIAL CONSIDERATIONS

The investment objectives of the Funds are identical and the
investment policies of the Funds are substantially similar. For
this reason, the risks associated with an investment in the Funds
are substantially similar. Money Market Fund may purchase
securities on a forward commitment or when-issued basis, while
Cash Management Fund may not. Forward purchases of debt
securities may increase Money Market Fund's overall investment
exposure and involve a risk of loss if the value of the securities
declines before the settlement date.

Each Fund is permitted to invest up to 10% of its net assets
in illiquid securities including repurchase agreements maturing in
more than seven days, restricted securities and securities not
readily marketable.

Each Fund may invest in U.S. dollar-denominated instruments
of foreign and U.S. issuers. Foreign issuers may not be subject
to accounting standards and governmental supervision comparable to
U.S. companies and there is often less publicly available
information about their operations. Foreign markets generally
provide less liquidity than U.S. markets (and thus greater price
volatility), and typically provide fewer regulatory protections
for investors. In addition, foreign branches of U.S. banks may be
subject to less stringent reserve requirements than domestic
branches. U.S. branches of foreign banks and foreign branches of
U.S. banks may provide less public information than, and may not
be subject to the same accounting, auditing and financial
recordkeeping standards as, domestic banks.

Money Market Fund may not invest more than 25% of its total
assets in obligations issued by foreign banks and foreign branches
of U.S. banks where the Adviser has determined that the U.S. bank
is not unconditionally responsible for the payment obligations of
the branch. Cash Management Fund has no such limitation.

Money Market Fund is authorized to invest up to one-third of
its total assets in reverse repurchase agreements while Cash
Management Fund may not invest in such instruments. The use of
reverse repurchase agreements involves leverage. Leverage allows
any investment gains made with the additional monies received to
increase the net asset value of a Fund's shares. However, if the
additional monies received are invested in ways that do not fully

-20-
<PAGE> 30

recover the costs to a Fund of these transactions, the net asset
value of that Fund may fall faster than otherwise would have been
the case.

INFORMATION CONCERNING THE MEETING

SOLICITATION, REVOCATION AND USE OF PROXIES

A majority of Cash Management Fund's outstanding shares that
are entitled to vote will be a quorum for the transaction of
business. A Cash Management Fund shareholder executing and
returning a proxy has the power to revoke it at any time before it
is exercised, by filing a written notice of revocation with Cash
Management Fund's transfer agent, Investor Services, P.O. Box
9116, Boston, Massachusetts 02205-9116, or by returning a duly
executed proxy with a later date before the time of the Meeting.
Any shareholder who has executed a proxy but is present at the
Meeting and wishes to vote in person may revoke his or her proxy
by notifying the Secretary of Cash Management Fund (without
complying with any formalities) at any time before it is voted.
Presence at the Meeting alone will not serve to revoke a
previously executed and returned proxy.

If a quorum is not present in person or by proxy at the time
any session of the Meeting is called to order, the persons named
as proxies may vote those proxies that have been received to
adjourn the Meeting to a later date. If a quorum is present but
there are not sufficient votes in favor of the Proposal, the
persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies with respect
to the Proposal. Any adjournment will require the affirmative
vote of a majority of the shares of Cash Management Fund,
represented in person or by proxy, at the session of the Meeting
to be adjourned. If an adjournment of the Meeting is proposed
because there are not sufficient votes in favor of the
Reorganization, the persons named as proxies will vote those
proxies in favor of the Reorganization in favor of adjournment,
and will vote those proxies against the Reorganization against
adjournment.

In addition to the solicitation of proxies by mail or in
person, Cash Management Fund may also arrange to have votes
recorded by telephone by officers and employees of the Fund or by
personnel of the Adviser or Investor Services. The telephone
voting procedure is designed to authenticate a shareholder's
identity, to allow a shareholder to authorize the voting of shares
in accordance with the shareholder's instructions and to confirm
that the voting instructions have been properly recorded. If
these procedures were subject to a successful legal challenge,
such votes would not be counted at the Meeting. The Fund has not
sought to obtain an opinion of counsel on this matter and is
unaware of any such challenge at this time. A shareholder will be

-21-
<PAGE> 31

called on a recorded line at the telephone number in the Fund's
account records and will be asked the shareholder's Social
Security number or other identifying information. The shareholder
will then be given an opportunity to authorize proxies to vote his
shares at the Meeting in accordance with the shareholder's
instructions. To ensure that the shareholder's instructions have
been recorded correctly, the shareholder will also receive a
confirmation of the voting instructions in the mail. A special
toll-free number will be available in case the voting information
contained in the confirmation is incorrect. If the shareholder
decides after voting by telephone to attend the Meeting, the
shareholder can revoke the proxy at that time and vote the shares
at the Meeting.

OUTSTANDING SHARES AND COMMON STOCK

At the close of business on August 31, 1995, _______ shares
of beneficial interest of Cash Management Fund were outstanding
and entitled to vote. Only Cash Management Fund shareholders of
record at the close of business on September 29, 1995 (the "Record
Date") are entitled to notice of and to vote at the Meeting and
any adjournment of the Meeting. As of August 31, 1995, _______
Class B shares of common stock of Money Market Fund were
outstanding. No Class A or Class S shares of Money Market Fund
were outstanding on August 31, 1995.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF
CASH MANAGEMENT FUND AND MONEY MARKET FUND

To the knowledge of Cash Management Fund, as of August 31,
1995, the following persons owned of record or beneficially 5% or
more of the outstanding shares of Cash Management Fund:
_____________________.

To the knowledge of the Company, as of August 31, 1995, the
following persons owned of record or beneficially 5% or more of
the outstanding Class B shares of Money Market Fund: . The
percentage of the outstanding Class B shares of Money Market Fund
owned by these shareholders will not change as a result of the
Reorganization.

As of August 31, 1995, the Trustees and officers of Cash
Management Fund, as a group, owned in the aggregate less than 1%
of the outstanding shares of beneficial interest of Cash
Management Fund. As of August 31, 1995, the Directors and
officers of the Company, as a group, owned in the aggregate less
than 1% of the outstanding Class B shares of common stock of Money
Market Fund.

-22-
<PAGE> 32

PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION

The shareholders of Cash Management Fund are being asked to
approve the Agreement, a copy which is attached as EXHIBIT B. The
Reorganization will consist of: (a) the transfer of all of Cash
Management Fund's assets to Money Market Fund, in exchange solely
for the issuance of Money Market Fund Class A Shares to Cash
Management Fund and the assumption of Cash Management Fund's
liabilities by Money Market Fund, (b) the subsequent distribution
by Cash Management Fund, as part of its liquidation, of the Money
Market Fund Class A Shares to Cash Management Fund's shareholders
and (c) the termination of Cash Management Fund's existence. The
Money Market Fund Class A Shares issued upon the consummation of
the Reorganization will have an aggregate net asset value equal to
that of Cash Management Fund's shares. As noted above, the asset
values of Cash Management Fund and Money Market Fund will be
determined at the close of business (4:00 p.m. Eastern Time) on
the Closing Date for purposes of the Reorganization. See
"Description of Agreement" below.

Pursuant to the Agreement, Cash Management Fund will
liquidate and distribute the Money Market Fund Class A Shares
received, as described above, pro rata to the shareholders of
record determined as of the close of regular trading on the New
York Stock Exchange on the Closing Date. The result of the
transfer of assets will be that Money Market Fund will add to its
portfolio the net assets of Cash Management Fund. Shareholders of
Cash Management Fund will become Class A shareholders of Money
Market Fund. If any Cash Management Fund shares were subject to a
CDSC, then the Money Market Fund Class A Shares received in
exchange therefore will be subject to the same CDSC, including all
terms and conditions for computing and applying such CDSC.

The Agreement and the Reorganization were approved by the
Board of Trustees of Cash Management Fund at a meeting held on
August 28, 1995. The Agreement and the Reorganization were
approved by the Board of Directors of the Company on behalf of
Money Market Fund at a meeting held on September 11, 1995. In
connection with their approval of the Reorganization, the Board of
Trustees considered several matters described in greater detail
above under the caption "Summary--Reasons for the Proposed
Reorganization."

The Board of Trustees also considered the fact that the
Adviser and John Hancock Funds will receive certain benefits from
the Reorganization. The consolidated portfolio management effort
might result in time savings for the Adviser and the preparation
of fewer prospectuses, reports and regulatory filings. The
Trustees, however, do not believe that this consideration will
amount to a significant economic benefit. As described above
under the caption "Summary--Reorganization-Effect of the

-23-
<PAGE> 33

Reorganization-Rule 12b-1 Fees and Management Fees," the
imposition of the Rule 12b-1 fee on that portion of assets
contributed to Money Market Fund by Cash Management Fund will
immediately result in an increase in revenues attributable to
Rule 12b-1 fees for John Hancock Funds. However, those revenues
will be used to reimburse John Hancock Funds for its distribution
related activities on behalf of Money Market Fund and to
compensate selling brokers for their account maintenance services
on behalf of Money Market Fund shareholders.

BOARDS' EVALUATION AND RECOMMENDATION

On the basis of the factors described above and other
factors, the Board of Trustees, including a majority of the
Trustees who are not "interested persons" (as defined in the
Investment Company Act) of the Fund, determined that the
Reorganization is in the long-term best interests of Cash
Management Fund and that the interests of Cash Management Fund's
shareholders will not be materially diluted as a result of the
Reorganization. On the same basis, the Board of Directors of the
Company, including a majority of the Directors who are not
"interested persons" (as defined in the Investment Company Act) of
the Fund, determined that the Reorganization is in the best
interests of Money Market Fund and that the interests of Money
Market Fund's shareholders will not be materially diluted as a
result of the Reorganization.

THE TRUSTEES OF JOHN HANCOCK CASH MANAGEMENT FUND RECOMMEND
THAT THE SHAREHOLDERS OF JOHN HANCOCK CASH MANAGEMENT FUND VOTE
FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF
REORGANIZATION.

DESCRIPTION OF AGREEMENT

The following description of the Agreement is a summary, does
not purport to be complete, and is subject in all respects to the
provisions of the Agreement, and is qualified in its entirety by
reference to the Agreement. A copy of the Agreement is attached
to this Proxy Statement and Prospectus as EXHIBIT B and should be
read in its entirety. Paragraph references are to appropriate
provisions of the Agreement.

Method of Carrying Out Reorganization. If Cash Management
Fund shareholders approve the Agreement, the Reorganization will
be consummated promptly after the various conditions to the
obligations of each of the parties are satisfied (see Agreement,
paragraphs 6 through 8). The Reorganization will be completed on
the Closing Date (as defined above).

On the Closing Date, Cash Management Fund will transfer all
of its assets to Money Market Fund in exchange for Money Market
Fund Class A Shares with an aggregate net asset value equal to the

-24-
<PAGE> 34

value of the assets delivered, less the liabilities of Cash
Management Fund assumed, as of the close of business on the
Closing Date (see Agreement, paragraphs 1 and 2).

The value of Cash Management Fund's assets and Money Market
Fund's net asset values per Class A share will be determined
according to the valuation procedures set forth in Cash Management
Fund's Declaration of Trust and By-Laws and in the Money Market
Fund Prospectus, respectively (see "Share Price" in the Money
Market Fund Prospectus). No initial sales charge or CDSC will be
imposed upon delivery of the Money Market Fund Class A Shares in
exchange for the assets of Cash Management Fund.

Surrender of Share Certificates. Cash Management Fund
shareholders whose shares are represented by one or more share
certificates should, prior to the Closing Date, either surrender
their certificates to Cash Management Fund or deliver to Cash
Management Fund an affidavit with respect to lost certificates, in
the form and accompanied by the surety bonds that Cash Management
Fund may require (collectively, an "Affidavit"). On the Closing
Date, all certificates which have not been surrendered will be
deemed to be cancelled, will no longer evidence ownership of Cash
Management Fund's shares and will evidence ownership of Money
Market Fund Class A Shares. Shareholders may not redeem or
transfer Money Market Fund Class A Shares received in the
Reorganization until they have surrendered their Cash Management
Fund share certificates or delivered an Affidavit relating to
them. Money Market Fund will not issue share certificates in the
Reorganization.

Conditions Precedent to Closing. The obligation of Cash
Management Fund to consummate the Reorganization is subject to the
satisfaction of certain conditions precedent, including the
Company's performance of all acts and undertakings required under
the Agreement and the receipt of all consents, orders and permits
necessary to consummate the Reorganization (see Agreement,
paragraphs 6 through 8).

The obligation of Money Market Fund to consummate the
Reorganization is subject to the satisfaction of certain
conditions precedent, including Cash Management Fund's performance
of all acts and undertakings to be performed under the Agreement,
the receipt of certain documents and financial statements from
Cash Management Fund, and the receipt of all consents, orders and
permits necessary to consummate the Reorganization (see Agreement,
paragraphs 6 through 8).

The obligations of both parties are subject to the receipt of
approval and authorization of the Agreement by the requisite vote
of the holders of the outstanding shares of beneficial interest of
Cash Management Fund in accordance with the provisions of the
Fund's Declaration of Trust, as amended, and By-Laws (as described

-25-
<PAGE> 35

in the section captioned "Voting Rights and Required Vote") and
the receipt of a favorable opinion of Hale and Dorr as to the
federal income tax consequences of the Reorganization. (See
Agreement, paragraph 8).

Termination of Agreement. The Agreement may be terminated,
whether or not approval of Cash Management Fund's shareholders has
been obtained, by mutual agreement of the parties. In addition,
either party may terminate its obligations under the Agreement at
or prior to the Closing Date, because of a material breach by the
other party of any representations, warranties or agreements
contained in the Agreement, or if a condition precedent in the
Agreement has not been met.

Expenses of the Reorganization. Money Market Fund and Cash
Management Fund will each be responsible for its own expenses
incurred in connection with entering into and carrying out the
provisions of the Agreement, whether or not the Reorganization is
consummated.

Tax Considerations. The consummation of the Reorganization
is subject to the receipt of a favorable opinion of Hale and Dorr,
counsel to the Funds, satisfactory to Cash Management Fund and to
the Company on behalf of Money Market Fund and described above
under the caption "Summary--Reorganization-Tax Considerations."
Should a favorable opinion of Hale and Dorr as to the above
matters not be available at the time of the Closing, the
authorized representatives of the Funds may proceed with the
Reorganization on a taxable basis. In a reorganization involving
two money market funds, the tax consequences of a taxable
reorganization will be negligible.

VOTING RIGHTS AND REQUIRED VOTE

Each Cash Management Fund share is entitled to one vote.
Approval of the Proposal requires the affirmative vote of a
majority of the shares of Cash Management Fund outstanding and
entitled to vote. For this purpose, a majority of the outstanding
shares of Cash Management Fund means the vote of the lesser of (i)
67% or more of the shares of the Fund present at the Meeting, if
the holders of more than 50% of the shares of the Fund are present
or represented by proxy, or (ii) more than 50% of the outstanding
shares of the Fund.

Shares of beneficial interest of Cash Management Fund
represented in person or by proxy, including shares which abstain
or do not vote with respect to the Proposal, will be counted for
purposes of determining whether a quorum is present at the
Meeting. Accordingly, an abstention from voting has the same
effect as a vote against the Proposal. However, if a broker or
nominee holding shares in "street name" indicates on the proxy
card that it does not have discretionary authority to vote on the

-26-
<PAGE> 36

Proposal, those shares will not be considered as present and
entitled to vote with respect to the Proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining
whether the Proposal has been adopted pursuant to clause (i) in
the immediately preceding paragraph, provided that the holders of
more than 50% of the outstanding shares (excluding the "broker
non-votes") are present or represented. However, for purposes of
determining whether the Agreement has been adopted pursuant to
clause (ii) in the immediately preceding paragraph, a "broker
non-vote" has the same effect as a vote against the Agreement
because shares represented by a "broker non-vote" are considered
to be outstanding shares.

If the requisite approval of shareholders is not obtained,
Cash Management Fund will continue to engage in business as a
registered open-end, management investment company and the Board
of Trustees will consider what further action may be appropriate.

<TABLE>
CAPITALIZATION

The following table sets forth the capitalization of each
Fund as of March 31, 1995, and the pro forma combined
capitalization of both Funds as if the Reorganization had occurred
on such date. With respect to Money Market Fund, the table
includes only Class B shares as no Class A shares were outstanding
on March 31, 1995. The table reflects pro forma exchange ratios
of approximately one Money Market Fund share being issued for each
share of Cash Management Fund. If the Reorganization is
consummated, the actual exchange ratios on the Closing Date are
not expected to vary from those indicated.

<CAPTION>
Money Market
Cash Fund (Class B Pro Forma
Management Fund Shares) Combined
--------------- ------------- ---------
<S> <C> <C> <C>
Net Assets......... $255,237,358 $62,118,754 $317,356,112

Net Asset Value
Per Share........ $1.00 $1.00 $1.00

Shares
Outstanding........ 255,237,358 62,118,754 317,356,112
</TABLE>

COMPARATIVE PERFORMANCE INFORMATION

YIELD AND EFFECTIVE YIELD

The following table shows the average yield and effective
yield achieved by each Fund for the seven day and twelve month

-27-
<PAGE> 37

periods ended March 31, 1995. These figures are computed in
accordance with the SEC's standard formula.

<TABLE>
<CAPTION>
Average Yield Effective Yield
------------- ---------------
Seven Days Thirty Days Seven Days Thirty days
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
FUND 1995 1995 1995 1995
---- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Cash
Management
Fund 5.35% 5.33% 5.49% 5.46%

Money
Market
Fund (Class B) 4.00% 3.99% 4.06% 4.05%
</TABLE>

BUSINESS OF CASH MANAGEMENT FUND

GENERAL

For a discussion of the organization and operation of Cash
Management Fund, see "Investment Objective and Policies" and
"Organization and Management of the Fund" in the Cash Management
Fund Prospectus.

INVESTMENT OBJECTIVE AND POLICIES

For a discussion of Cash Management Fund's investment
objective and policies, see "Investment Objective and Policies" in
the Cash Management Fund Prospectus.

TRUSTEES

For a discussion of the responsibilities of the Board of
Trustees, see "Organization and Management of the Fund" in the Cash
Management Fund Prospectus.

INVESTMENT ADVISER AND DISTRIBUTOR

For a discussion regarding Cash Management Fund's investment
adviser and distributor, see "Organization and Management of the
Fund," "How to Buy Shares" and "Share Price" in the Cash Management
Fund Prospectus.

EXPENSES

For a discussion of Cash Management Fund's expenses, see
"Expense Information" and "The Fund's Expenses" in the Cash
Management Fund Prospectus.

-28-
<PAGE> 38

CUSTODIAN AND TRANSFER AGENT

Cash Management Fund's custodian is State Street Bank and
Trust Company. Cash Management Fund's transfer agent is John
Hancock Investor Services Corporation.

CASH MANAGEMENT FUND SHARES

For a discussion of Cash Management Fund's shares of
beneficial interest, see "Organization and Management of the Fund"
in the Cash Management Fund Prospectus.

PURCHASE OF CASH MANAGEMENT FUND SHARES

For a discussion of how shares of Cash Management Fund may be
purchased or exchanged, see "How to Buy Shares" and "Additional
Services and Programs" in the Cash Management Fund Prospectus. In
anticipation of the Reorganization, after the Record Date, no new
accounts may be opened in Cash Management Fund. Existing
shareholders of Cash Management Fund may continue to acquire shares
of the Fund after the Record Date by direct purchase, through a
monthly automatic accumulation plan and through reinvestment of
dividends and distributions.

REDEMPTION OF CASH MANAGEMENT FUND SHARES

For a discussion of how shares of Cash Management Fund may be
redeemed (other than in the Reorganization), see "How to Redeem
Shares" in the Cash Management Fund Prospectus. Cash Management
Fund shareholders whose shares are represented by share
certificates will be required to surrender their certificates for
cancellation or deliver an affidavit of loss accompanied by an
adequate surety bond to Investor Services in order to redeem Money
Market Fund Class A Shares received in the Reorganization.

DIVIDENDS, DISTRIBUTIONS AND TAXES

For a discussion of Cash Management Fund's policy with
respect to dividends, distributions and taxes, see "Dividends and
Taxes" in the Cash Management Fund Prospectus.

BUSINESS OF MONEY MARKET FUND

For a discussion of the organization and current operation of
Money Market Fund, see "Investment Objective and Policies" and
"Organization and Management of the Fund" in the Money Market Fund
Prospectus.

-29-
<PAGE> 39

INVESTMENT OBJECTIVE AND POLICIES

For a discussion of Money Market Fund's investment objective
and policies, see "Investment Objective and Policies" in the Money
Market Fund Prospectus.

DIRECTORS

For a discussion of the responsibilities of the Board of
Directors, see "Organization and Management of the Fund" in the
Money Market Fund Prospectus.

INVESTMENT ADVISER AND DISTRIBUTOR

For a discussion regarding Money Market Fund's investment
adviser and distributor, see "Organization and Management of the
Fund," "How to Buy Shares" and "Share Price" in the Money Market
Fund Prospectus.

EXPENSES

For a discussion of Money Market Fund's expenses, see
"Expense Information" and "The Fund's Expenses" in the Money Market
Fund Prospectus.

CUSTODIAN AND TRANSFER AGENT

Money Market Fund's custodian is State Street Bank and Trust
Company. Money Market Fund's transfer agent is John Hancock
Investor Services Corporation.

MONEY MARKET FUND SHARES

For a discussion of Money Market Fund Shares, see
"Organization and Management of the Fund" in the Money Market Fund
Prospectus.

PURCHASE OF MONEY MARKET FUND SHARES

For a discussion of how Class A and Class B shares of Money
Market Fund may be purchased or exchanged, see "How to Buy Shares"
and "Additional Services and Programs" in the Money Market Fund
Prospectus.

REDEMPTION OF MONEY MARKET FUND SHARES

For a discussion of how Class A and Class B shares of Money
Market Fund may be redeemed, see "How to Redeem Shares" in the
Money Market Fund Prospectus. Former shareholders of Cash
Management Fund whose shares are represented by share certificates
will be required to surrender their certificates for cancellation

-30-
<PAGE> 40

or deliver an affidavit of loss accompanied by an adequate surety
bond to Investor Services in order to redeem Money Market Fund
Class A Shares received in the Reorganization.

DIVIDENDS, DISTRIBUTIONS AND TAXES

For a discussion of Money Market Fund's policy with respect
to dividends, distributions and taxes, see "Dividends and Taxes" in
the Money Market Fund Prospectus.

EXPERTS

The respective financial statements and the financial
highlights of Money Market Fund as of October 31, 1994 and for the
year then ended and Cash Management Fund as of September 30, 1994
and for the year then ended, incorporated by reference into the
Proxy Statement and Prospectus, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon
appearing in the Statement of Additional Information, and are
included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Each Fund is subject to the informational requirements of the
Securities Exchange Act of 1934 and the Investment Company Act, and
in accordance therewith files reports, proxy statements and other
information with the SEC. These reports, proxy statements and
other information filed by Cash Management Fund and the Company, on
behalf of Money Market Fund, can be inspected and copied (at
prescribed rates) at the public reference facilities of the SEC at
450 Fifth Street, N.W., Washington, D.C., and at the following
regional offices: Chicago (500 West Madison Street, Suite 1400,
Chicago, Illinois); and New York (7 World Trade Center, Suite 1300,
New York, New York). Copies of such material can also be obtained
by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.

-31-
<PAGE> 41
EXHIBIT A

JOHN HANCOCK
MONEY MARKET
FUND

CLASS A AND CLASS B SHARES
PROSPECTUS
SEPTEMBER 12, 1995
- --------------------------------------------------------------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Yield Information..................................................................... 4
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 6
The Fund's Expenses................................................................... 6
Dividends and Taxes................................................................... 8
How to Buy Shares..................................................................... 9
Share Price........................................................................... 10
How to Redeem Shares.................................................................. 13
Additional Services and Programs...................................................... 14
Investments, Techniques and Risk Factors.............................................. 17
</TABLE>
This Prospectus sets forth the information about John Hancock Money Market
Fund (the "Fund"), a diversified series of John Hancock Series, Inc. (the
"Company"), that you should know before investing. Please read and retain it for
future reference.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Additional information about the Fund and the Company has been filed with the
Securities and Exchange Commission (the "SEC"). You can obtain a copy of the
Fund's Statement of Additional Information, dated September 12, 1995, and
incorporated by reference into this Prospectus, free of charge by writing or
telephoning: John Hancock Investor Services Corporation, P.O. Box 9116, Boston,
Massachusetts 02205-9116, 1-800-225-5291 (1-800-554-6713 TDD).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 42
<TABLE>
EXPENSE INFORMATION
The purpose of the following information is to help you to understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Class A and Class B shares of the Fund. The operating expenses included
in the table and hypothetical example below are based on fees and expenses of
the Class B shares for the fiscal year ended October 31, 1994. No Class A shares
were actually outstanding during the period. Actual fees and expenses of Class A
and Class B shares in the future may be greater or less than those indicated.
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)...................... None None
Maximum sales charge imposed on reinvested dividends............................................... None None
Deferred sales load................................................................................ None 5.00%
Redemption fee+.................................................................................... None None
Exchange fee....................................................................................... None None

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fee..................................................................................... 0.50% 0.50%
12b-1 fee*......................................................................................... 0.15% 1.00%
Other expenses**................................................................................... 0.74% 0.56%
Total Fund operating expenses (net of reduction)***................................................ 1.39% 2.06%
<FN>
*The amount of the 12b-1 fee used to cover service expenses will be up to
0.15% and 0.25% of the Fund's average net assets attributable to Class A and
Class B shares, respectively, and any remaining portion will be used to cover
distribution expenses.

**Other Expenses include transfer agent, legal, audit, custody and other
expenses.

***Total Fund operating expenses in the table reflect the current agreement
between the Fund and the Fund's distributor. In the future, the Class A
distribution fee could increase to 0.25%, in which case the total Fund
operating expenses of Class A shares would be 1.49%.

+Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares................................................................. $14 $ 44 $ 76 $ 166
Class B Shares
-- Assuming complete redemption at end of period........................... $71 $ 95 $131 $ 206
-- Assuming no redemption.................................................. $21 $ 65 $111 $ 206
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown).
The Fund's payment of a distribution fee may result in a long-term shareholder
indirectly paying more than the economic equivalent of the maximum front-end
sales charge permitted under the National Association of Securities Dealers,
Inc.'s Rules of Fair Practice.
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contracts."

2
<PAGE> 43
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS
The information in the following table of financial highlights has been
audited by Ernst & Young LLP, the Fund's independent auditors, whose unqualified
report is included in the Statement of Additional Information. Class A shares
are a new class of shares; no financial highlights exist for Class A shares.
Further information about the performance of the Fund is contained in the Fund's
Annual Report to shareholders which may be obtained free of charge by writing or
telephoning John Hancock Investor Services Corporation ("Investor Services") at
the address or telephone number listed on the front page of this Prospectus.
Selected data for a Class B share outstanding throughout each period is as
follows:
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
APRIL 30, 1995 --------------------------------------------------------------------------------- OCTOBER 31,
(UNAUDITED)(1) 1994 1993 1992 1991 1990 1989 1988 1987(2)
--------------- --------- --------- --------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning
of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income....... $ 0.02 0.018 0.009 0.017 0.045 0.061 0.072 0.059 0.0007
LESS
DISTRIBUTIONS
Dividends
from net
investment
income....... (0.02) (0.018) (0.009) (0.017) (0.045) (0.061) (0.072) (0.059) (0.0007)
------- ------- ------- ------- ------- ------- ------- ------- --------
Net asset
value, end
of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ========
Total
Return(3)... 1.88% 1.87% 0.85% 1.73% 4.61% 6.30% 7.40% 6.06% 0.06%
======= ======= ======= ======= ======= ======= ======= ======= ========
RATIOS AND
SUPPLEMENTAL
DATA
Ratio of
expenses to
average net
assets....... 2.07%* 2.06% 2.44% 2.47% 2.23% 2.31% 2.59% 2.41% 0.03%
Ratio of
expense
reduction
to average
net assets... -- -- -- -- (0.12)% (0.15)% (0.47)% (0.90)% (0.02)%
------- ------- ------- ------- ------- ------- ------- ------- --------
Ratio of net
expenses to
average net
assets....... 2.07%* 2.06% 2.44% 2.47% 2.11% 2.16% 2.12% 1.51% 0.01%
======= ======= ======= ======= ======= ======= ======= ======= ========
Ratio of net
investment
income to
average net
assets....... 3.76%* 1.97% 0.85% 1.69% 4.45% 6.11% 7.16% 6.01% 0.07%
Net Assets,
end of
period (in
thousands)... $56,522 $58,366 $31,546 $31,480 $20,763 $21,099 $13,610 $ 7,692 $ 2,535
<FN>
- ---------------
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser to the Fund.

(2) Financial highlights, including total return, are for the period from
October 26, 1987 (date of the Fund's initial offering of shares to the
public) to October 31, 1987 and have not been annualized.

(3) Total return does not include the effect of the contingent deferred sales
charge.
* Annualized basis.

</TABLE>
3
<PAGE> 44
YIELD INFORMATION
For the seven days ended April 30, 1995, the Fund's annualized yield and
effective yield on Class B shares was 4.04% and 4.12%, respectively. On April
30, 1995, the Fund's average portfolio maturity was 37 days.
Current information on the Fund's annualized yield during a recent seven-day
period may be obtained by calling the Easi-Line at 1-800-338-8080 or a John
Hancock customer service representative, 1-800-225-5291.
The yield of Class A and Class B shares will be calculated separately and,
because each class is subject to different expenses, the yield may differ with
respect to that class for the same period. For information on how the Fund
calculates its annualized yield see the Statement of Additional Information.
INVESTMENT OBJECTIVE AND POLICIES
- -------------------------------------------------------------------------------
THE FUND SEEKS TO PROVIDE MAXIMUM CURRENT
INCOME CONSISTENT WITH CAPITAL
PRESERVATION AND LIQUIDITY.
- -------------------------------------------------------------------------------
The Fund seeks to provide maximum current income consistent with capital
preservation and liquidity. The Fund's investments will be subject to the market
fluctuations and risks inherent in all securities, and there is no assurance
that the investment objective will always be achieved.
The Fund seeks to achieve its objective by investing in money market instruments
including, but not limited to, U.S. Government, municipal and foreign
governmental securities; obligations of supranational organizations (e.g. the
World Bank and the International Monetary Fund); obligations of U.S. and foreign
banks and other lending institutions; corporate obligations; repurchase
agreements and reverse repurchase agreements. As a fundamental policy, the Fund
may not invest more than 25% of its total assets in obligations issued by (i)
foreign banks or (ii) foreign branches of U.S. banks where John Hancock
Advisers, Inc. (the "Adviser"), the Fund's investment adviser, has determined
that the U.S. bank is not unconditionally responsible for the payment
obligations of the foreign branch. All of the Fund's investments will be
denominated in U.S. dollars.
- -------------------------------------------------------------------------------
THE FUND INVESTS ONLY IN HIGH-QUALITY
SECURITIES BELIEVED TO PRESENT MINIMAL
CREDIT RISKS, UNDER PROCEDURES ADOPTED BY
THE BOARD OF DIRECTORS.
- -------------------------------------------------------------------------------
At the time the Fund acquires its investments, they will be rated (or issued by
an issuer that is rated with respect to a comparable class of short-term debt
obligations) in one of the two highest rating categories for short-term debt
obligations assigned by at least two nationally recognized rating organizations
(or one rating organization if the obligation was rated by only one such
organization). These high quality securities are divided into "first tier" and
"second tier" securities. First tier securities have received the highest rating
from at least two rating organizations (or one, if only one has rated the
security). Second tier securities have received ratings within the two highest
categories from at least two rating agencies (or one, if only one has rated the
security), but do not qualify as first tier securities. The Fund may also
purchase obligations that are not rated, but are determined by the Adviser,
based on procedures adopted by the Fund's Board of Directors, to be of
comparable quality to rated first or second tier securities. The Fund may not
purchase any second tier security if, as a result of its purchase (a) more than
5% of its total assets would be invested in second tier securities or

4
<PAGE> 45
(b) more than 1% of its total assets or $1 million (whichever is greater) would
be invested in the second tier securities of a single issuer. For a
description of the ratings assigned by the rating organizations, see the
Statement of Additional Information.

- -------------------------------------------------------------------------------
BY LIMITING THE MATURITY OF ITS
INVESTMENTS, THE FUND SEEKS TO LESSEN THE
CHANGES IN THE VALUE OF ITS ASSETS CAUSED
BY MARKET FACTORS.
- -------------------------------------------------------------------------------
All of the Fund's investments will mature in 397 days or less. The Fund will
maintain an average dollar-weighted portfolio maturity of 90 days or less.
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES THAT MAY
HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
The Fund has adopted certain investment restrictions that are enumerated in
detail in the Statement of Additional Information, where they are classified as
fundamental or nonfundamental. Those restrictions designated as fundamental may
not be changed without shareholder approval. The Fund's investment objective
and, except as otherwise expressly provided, its investment policies are
nonfundamental and may be changed by a vote of the Board of Directors without
shareholder approval. Notwithstanding the Fund's fundamental investment
restriction prohibiting investments in other investment companies, the Fund may,
pursuant to an order granted by the SEC, invest in other investment companies in
connection with a deferred compensation plan for the non-interested directors of
the John Hancock funds.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------

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

See "Investments, Techniques and Risk Factors" for more information about the
Fund's investments.

5
<PAGE> 46
ORGANIZATION AND MANAGEMENT OF THE FUND
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS ELECTS OFFICERS AND
RETAINS THE INVESTMENT ADVISER WHO IS
RESPONSIBLE FOR THE DAY-TO-DAY OPERATIONS
OF THE FUND, SUBJECT TO THE BOARD OF
DIRECTORS' POLICIES AND SUPERVISION.
- -------------------------------------------------------------------------------
The Fund is a diversified series of the Company, which is an open-end management
investment company organized as a Maryland corporation in 1987. The Company
reserves the right to create and issue a number of series of shares, or funds or
classes of these series, which are separately managed and have different
investment objectives. The Directors have authorized the issuance of three
classes of the Fund, designated Class A, Class B and Class S. The shares of each
class represent an interest in the same portfolio of investments of the Fund.
Each class has equal rights as to voting, redemption, dividends and liquidation.
However, each class is subject to different fees and expenses (which affect
performance), has different minimum investment requirements, is entitled to
different services and, in the case of Class S shares, may be offered only
through certain brokers. Also, Class A, Class B and Class S shareholders have
exclusive voting rights with respect to their distribution plans. Information
regarding Class S shares may be obtained from an investor's sales representative
or from the Fund by calling the number on the back cover of this Prospectus. The
Company is not required to and does not intend to hold annual meetings of
shareholders, although special meetings may be held for such purposes as
electing or removing Directors, changing fundamental policies or approving a
management contract. The Fund, under certain circumstances, will assist in
shareholder communications with other shareholders of the Fund.
- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds") distributes shares for all of the John Hancock mutual
funds through brokers who have arrangements with John Hancock Funds ("Selling
Brokers"). Certain Fund officers are also officers of the Adviser and John
Hancock Funds.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser based on a stated percentage of the Fund's average daily net assets.
During the fiscal year ended October 31, 1994, the Fund paid advisory fees in an
amount equal to 0.50% of the Fund's average daily net assets to the Fund's
former investment adviser.

6
<PAGE> 47

- -------------------------------------------------------------------------------
THE FUND PAYS DISTRIBUTION AND SERVICE
FEES FOR MARKETING AND SALES-RELATED
SHAREHOLDER SERVICING.
- -------------------------------------------------------------------------------

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, John Hancock Funds and the Fund have agreed to
limit the distribution and service fees pursuant to the Plans to 0.15% of the
Class A shares' average daily net assets and to 1.00% of the Class B shares'
average daily net assets. In the future, the Class A distribution fee could
increase to 0.25%. In the case of the Class A Plan and the Class B Plan, up to
0.15% and 0.25%, respectively, is for service expenses and the remaining amount
is for distribution expenses. The distribution fees will be used to reimburse
John Hancock Funds for its distribution expenses, including but not limited to:
(i) initial and ongoing sales compensation to Selling Brokers and others
(including affiliates of John Hancock Funds) engaged in the sale of Fund shares;
(ii) marketing, promotional and overhead expenses incurred in connection with
the distribution of Fund shares; (iii) unreimbursed distribution expenses under
the Fund's prior distribution plans for Class B shares; (iv) distribution
expenses incurred by other investment companies which sell all or substantially
all of their assets to, merge with or otherwise engage in a reorganization
transaction with the Fund; and (v) with respect to Class B shares only, interest
expenses on unreimbursed distribution expenses. The service fees will be used to
compensate Selling Brokers for providing personal and account maintenance
services to shareholders.

In the event John Hancock Funds is not fully reimbursed for payments it makes or
expenses it incurs under the Class A Plan, these expenses will not be carried
beyond one year from the date they were incurred. Unreimbursed expenses under
the Class B Plan will be carried forward together with interest on the balance
of these unreimbursed expenses.

For the fiscal year ended October 31, 1994, an aggregate of $1,233,281 of
distribution expenses or 2.88% of the average net assets of the Fund's Class B
shares was not reimbursed or recovered by John Hancock Funds through the receipt
of deferred sales charges or Rule 12b-1 fees in prior periods.

The higher ongoing distribution fee of Class B shares will cause these shares to
have higher expenses than Class A shares. To the extent that any dividends are
paid by the Fund, these higher expenses will also result in lower dividends than
those paid on Class A shares.

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

7
<PAGE> 48
DIVIDENDS AND TAXES
- -------------------------------------------------------------------------------
THE FUND GENERALLY DECLARES DIVIDENDS
DAILY AND DISTRIBUTES DIVIDENDS MONTHLY.
- -------------------------------------------------------------------------------
DIVIDENDS. The Fund generally declares dividends daily and distributes
dividends monthly, representing all or substantially all of its net investment
income. The Fund will distribute net realized capital gains, if any, at least
annually.

Dividends are reinvested in additional shares of your class unless you elect the
option to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividend on these shares will be lower than those on the Class A
shares. See "Share Price."

TAXATION. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income. Dividends from the Fund's
net long-term capital gains, if any, are taxable as long-term capital gain. The
Fund does not anticipate that it will generally realize any long-term capital
gains. Dividends are taxable, whether received in cash or reinvested in
additional shares. Certain dividends may be paid by the Fund in January of a
given year but may be treated as if you received them the previous December. The
Fund will send you a statement by January 31 showing the federal tax status of
the dividends you received for the prior year.

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

In addition to Federal taxes, you may be subject to state and local or foreign
taxes with respect to your investment in and distributions from the Fund. A
state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the Fund's distributions are
derived from interest on (or, in the case of intangibles 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. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax rules not described herein. You should consult your
tax adviser for specific advice.

8
<PAGE> 49
HOW TO BUY SHARES

Initial purchases of Class A shares of the Fund may be made either directly or
by exchanging amounts invested in Class A shares of another John Hancock mutual
fund into Class A shares of the Fund.

Class B shares of the Fund may not be purchased directly. Due to the fee under
the distribution plan and the contingent deferred sales charge, Class B shares
of the Fund are intended only as a temporary investment pending exchanges into
Class B shares of other John Hancock mutual funds. If your investment goals have
changed after your initial investment in another John Hancock mutual fund, you
may choose to exchange fund shares temporarily for shares in a short-term, high-
grade money market portfolio like the Fund. Once you decide upon your new
investment goals, you can exchange the Class B shares of the Fund for Class B
shares of another John Hancock fund that matches your investment goals.
Investments in Class B shares of the Fund, unlike investments in most money
market funds, are subject to certain contingent deferred sales charges. If you
do not intend to exchange your shares of the Fund for Class B shares of another
John Hancock mutual fund, you should purchase Class A shares.
- -------------------------------------------------------------------------------
OPENING AN ACCOUNT
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are making an initial purchase of Class A
shares or exchanging Class B shares of another John Hancock mutual fund for Class
B shares of the Fund. If you do not specify which class of shares you are
purchasing, Investor Services will assume that you are investing in Class A
shares.
- ---------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation, P.O. Box 9115, Boston, MA 02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Money Market Fund
Your Account Number Name(s) under which account is
registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A SHARES
- -------------------------------------------------------------------------------
PROGRAM 2. The amount you elect to invest will be automatically withdrawn
(MAAP) from your bank or credit union account.
(CLASS A
SHARES ONLY)
- ---------------------------------------------------------------------------------
</TABLE>

9
<PAGE> 50
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional Class A shares by calling Investor Services
toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, your account number,
and the amount you wish to invest in Class A shares.
4. Your investment normally will be credited to your account the
business day following your phone request.
- -------------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- -------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Money Market Fund
Class A shares
Your Account Number
Name(s) under which account is registered
- -------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 p.m., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made to Investor Services.
- -------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
YOU WILL RECEIVE STATEMENTS REGARDING YOUR
ACCOUNT, WHICH YOU SHOULD KEEP TO HELP
WITH YOUR PERSONAL RECORDKEEPING.
- -------------------------------------------------------------------------------

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

SHARE PRICE

- -------------------------------------------------------------------------------
THE PRICE OF YOUR SHARES IS THEIR NET
ASSET VALUE PER SHARE, WHICH WILL NORMALLY
BE CONSTANT AT $1.00.
- -------------------------------------------------------------------------------
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued at amortized cost, which the Board of Directors has
determined

10
<PAGE> 51
approximates market value. Under the amortized cost pricing method, a
portfolio investment is valued at its cost and thereafter any discount or
premium is amortized to maturity, regardless of the impact of fluctuating
interest rates on the market value of the investment. Amortized cost pricing
facilitates the maintenance of a $1.00 constant net asset value per share, but,
of course, this cannot be guaranteed.

The NAV is calculated twice daily, at 12:00 noon Eastern time and as of the
close of regular trading on the New York Stock Exchange (the "Exchange")
(generally at 4:00 P.M., New York time) on each day that the Exchange is open.

The price you pay for shares of the Fund equals the NAV computed after your
investment is accepted in good order by John Hancock Funds, which will normally
be constant at $1.00 per share. You will not incur a sales charge when you
purchase Class A shares or exchange into Class B shares of the Fund, but Class B
shares are subject to a contingent deferred sales charge if you redeem them
within six years of original purchase. See "Contingent Deferred Sales Charge --
Class B Shares" below. If you buy shares of the Fund through a Selling Broker,
the Selling Broker must receive your investment before the close of regular
trading on the Exchange and transmit it to John Hancock Funds before its close
of business to receive that day's price.

CLASS B SHARES -- CONTINGENT DEFERRED SALES CHARGE. Class B shares are offered
at net asset value per share without an initial sales charge. However, Class B
shares will be subject upon redemption to the contingent deferred sales charge
("CDSC") set forth in the prospectus of the John Hancock fund from which you
initially exchanged your shares in order to acquire Class B shares of the Fund.
You may be eligible for a waiver of the CDSC as described below. This charge
will be assessed on an amount equal to the lesser of the current market value or
the original purchase cost of the Class B shares being redeemed. Accordingly,
you will not be assessed a CDSC on increases in account value above the initial
purchase price, including Class B shares derived from dividend reinvestment. The
amount of the CDSC, if any, will vary depending on the number of years from the
time you purchased Class B shares of another John Hancock mutual fund which were
subsequently exchanged into Class B shares of the Fund until the time you redeem
your Class B shares of the Fund. Solely for the purpose of determining this
holding period, any payments you make during the month will be aggregated and
deemed to have been made on the last day of the month.

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 Class B shares you have
held beyond the applicable CDSC redemption period or those you acquired through
reinvestment of dividends, and next from the Class B shares you have held the
longest during the CDSC redemption period. The CDSC is waived on redemptions in
certain circumstances. See discussion "Waiver of Contingent Deferred Sales
Charges" below.

11
<PAGE> 52
- -------------------------------------------------------------------------------
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON
CLASS B SHARE REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------
WAIVER OF CONTINGENT DEFERRED SALES CHARGES. The CDSC will be waived on
redemptions of Class B shares, unless indicated otherwise, in these
circumstances:

- - Redemptions of Class B shares made under Systematic Withdrawal Plan (see "How
to Redeem Shares"), as long as your annual redemptions do not exceed 10% of
your account value, at the time you establish your Systematic Withdrawal Plan
and 10% of the value of your subsequent investments (less redemptions) in that
account at the time you notify Investor Services.

- - Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
the life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Code.
- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.
- - Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans including those qualified under
Section 401(a) of the Code, custodial accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.
- - Redemptions due to death or disability.
- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.
- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $500 invested in the Fund.
- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

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

CONVERSION OF CLASS B SHARES. Your Class B shares and an appropriate portion of
reinvested dividends on those shares will be converted into Class A shares
automatically. This will occur no later than the month following eight years
after the shares were purchased, and will result in lower annual distribution
fees. If you exchanged Class B shares into the Fund from another John Hancock
fund, the calculation will be based on the time you purchased Class B shares in
the original fund.

12
<PAGE> 53
HOW TO REDEEM SHARES

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

Once your shares are redeemed, the Fund generally sends you payment on the next
business day. Under unusual circumstances, the Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities laws.
<TABLE>
- ------------------------------------------------------------------------------------
<S> <C>
BY CHECK You may elect the checkwriting privilege which allows you to
write checks in amounts from a minimum of $100. Checks may not be
written against shares in your account which have been purchased
within the last 10 days, except for shares purchased by wire
transfer (which are immediately available).
- ------------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from 8:00
A.M. to 4:00 P.M. (New York time), Monday through Friday,
excluding days on which the Exchange is closed. Investor Services
employs the following procedures to confirm that instructions
received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and
other relevant information may be requested. In addition,
telephone instructions are recorded.

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

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

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

During periods of extreme economic conditions or market changes,
telephone requests may be difficult to implement due to a large
volume of calls. During these times, you should consider placing
redemption requests in writing or use EASI-Line. EASI-Line's
telephone number is 1-800-338-8080.
- ------------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the Fund,
redemption proceeds of $1,000 or more can be wired on the next
business day to your designated bank account, and a fee
(currently $4.00) will be deducted. You may also use electronic
funds transfer to your assigned bank account, and the funds are
usually collectible after two business days. Your bank may or may
not charge a fee for this service. Redemptions of less than
$1,000 will be sent by check or electronic funds transfer.

This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- ------------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying the name
of the Fund, the dollar amount or the number of shares to be
redeemed, your name, class of shares, your account number and the
additional requirements listed below that apply to your
particular account.
- ------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 54
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized to
(Uniform Gifts or Transfer to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaranteed.

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

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

If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
</TABLE>
- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund
by verifying the signature on your request. It may not be provided by a
notary public. If the net asset value of the shares redeemed is $100,000 or
less, John Hancock Funds may guarantee the signature. The following
institutions may provide you with a signature guarantee, provided that
the institution meets credit standards established by Investor Services: (i)
a bank; (ii) a securities broker or dealer, including a government or
municipal securities broker or dealer, that is a member of a clearing
corporation or meets certain net capital requirements; (iii) a credit union
having authority to issue signature guarantees; (iv) a savings and loan
association, a building and loan association, a cooperative bank, a federal
savings bank or association; or (v) a national securities exchange, a
registered securities exchange or a clearing agency.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
If you have certificates for your shares, you must submit them with your
stock power or a letter of instructions. Unless you specify to the
contrary, any outstanding Class A shares will be redeemed before Class B
shares. You may not redeem certificated shares by telephone.

Due to the proportionately high cost of maintaining small accounts, the Fund
reserves the right to redeem at net asset value all shares in an account
which holds less than $500 (except accounts under retirement plans) and to
mail the proceeds to the shareholder, or the transfer agent may impose an
annual fee of $10.00. No account will be involuntarily redeemed or
additional fee imposed, if the value of the account is in excess of the
Fund's minimum initial investment or if the value of the account falls below
the required minimum as a result of market action. No CDSC will be imposed
on involuntary redemptions of shares.

Shareholders will be notified before these redemptions are to be made or
this fee is imposed and will have 60 days to purchase additional shares to
bring their account balance up to the required minimum. Unless the number of
shares acquired by further purchases and dividend reinvestments, if any,
exceeds the number of shares redeemed, repeated redemptions from a smaller
account may eventually trigger this policy.
- -------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE
- -------------------------------------------------------------------------------
YOU MAY EXCHANGE SHARES OF THE FUND ONLY
FOR SHARES OF THE SAME CLASS OF ANOTHER
JOHN HANCOCK FUND.
- -------------------------------------------------------------------------------
John Hancock offers other funds with a wide range of investment goals. Contact
your registered representative or Selling Broker and request a prospectus for
the John Hancock funds that interest you. Read the prospectus carefully before
exchanging your shares. You can exchange shares of each class of the Fund only
for shares of the same class of another John Hancock fund. For this purpose,
John Hancock funds with only one class of shares will be treated as Class A,
whether or not they have been so designated.

Exchanges between funds with shares that are not subject to a CDSC are based on
their respective net asset values. No sales charge or transaction charge is

14
<PAGE> 55

imposed. Class B shares of the Fund may be exchanged into Class B shares of
another John Hancock fund without incurring the CDSC; however, these shares will
be subject to the CDSC schedule of the shares acquired (except that exchanges
into John Hancock Short-Term Strategic Income Fund, John Hancock Limited-Term
Government Fund and John Hancock Intermediate Government Fund will be subject to
the initial fund's CDSC unless your initial investment in the Fund resulted from
an exchange from one of those funds, in which case the exchange will be subject
to the respective CDSC schedule set forth in one of these funds' prospectuses).
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.

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

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

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP) (CLASS A SHARES ONLY)
- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC INVESTMENTS AND
SIMPLIFY YOUR INVESTING.
- -------------------------------------------------------------------------------
1. You can authorize an investment to be automatically withdrawn each month
from your bank, for investment in Class A shares of the Fund under the
"Automatic Investing" and "Bank Information" sections of the Account
Privileges Application.

Sign your request exactly as the account is registered.

2. Mail the request and information to:

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

15
<PAGE> 56

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

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

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

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

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

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

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

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

-- the name and class of the Fund whose shares you currently own

-- your account number

-- the name(s) in which the account is registered

-- the name of the fund in which you wish your exchange to be invested

-- the number of shares, all shares or dollar amount you wish to exchange

Sign your request exactly as the account is registered.

2. Mail the request and information to:

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

16
<PAGE> 57
SYSTEMATIC WITHDRAWAL PLAN

- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH IRS REGULATIONS.
- -------------------------------------------------------------------------------

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

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

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

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

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

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

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

INVESTMENTS, TECHNIQUES AND RISK FACTORS

SECURITIES OF FOREIGN ISSUERS. Foreign issuers may not be subject to accounting
standards and government supervision comparable to U.S. companies and there is
often less publicly available information about their operations. Foreign
markets generally provide less liquidity than U.S. markets (and thus potentially
greater price volatility), and typically provide fewer regulatory protections
for investors. Foreign securities can also be affected by political or financial
instability abroad. Foreign branches of United States banks may be subject to
less stringent reserve requirements than domestic branches. United States
branches and agencies of foreign banks and foreign branches of United States
banks may provide less public information than, and may not be subject to, the
same accounting, auditing and financial record-keeping standards as domestic
banks.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its net
assets in illiquid investments, which include repurchase agreements maturing in
more than seven days, restricted securities and securities not readily
marketable. The Fund may also invest up to 10% of its assets in restricted
securities eligible for resale to certain institutional investors pursuant to
Rule 144A under the Securities Act of 1933.

17
<PAGE> 58

LENDING OF SECURITIES. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the loaned securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, 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 in excess of 30% of its total assets.

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

18
<PAGE> 59

JOHN HANCOCK
JOHN HANCOCK MONEY MARKET
MONEY MARKET FUND FUND

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts
02199-7603
CLASS A AND CLASS B SHARES
PRINCIPAL DISTRIBUTOR PROSPECTUS
John Hancock Funds, Inc. SEPTEMBER 12, 1995
101 Huntington Avenue
Boston, Massachusetts
02199-7603
A MONEY MARKET FUND
THAT SEEKS TO PROVIDE
CUSTODIAN MAXIMUM CURRENT INCOME
Investors Bank & Trust Company CONSISTENT WITH
24 Federal Street CAPITAL PRESERVATION
Boston, Massachusetts 02110 AND LIQUIDITY.

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

INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption

For TDD call 1-800-554-6713
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
[LOGO] Printed on Recycled Paper TELEPHONE 1-800-225-5291
<PAGE> 60

EXHIBIT B

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made this 9th day of October, 1995, by and between John Hancock
Series, Inc., a Maryland corporation (the "Company"), on behalf of
John Hancock Money Market Fund (the "Acquiring Fund") and John
Hancock Cash Management Fund (the "Acquired Fund"), a Massachusetts
business trust, each with their principal place of business at
101 Huntington Avenue, Boston, Massachusetts 02199. The Acquiring
Fund and the Acquired Fund are sometimes referred to collectively
herein as the "Funds" and individually as a "Fund."

This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of the transfer of all of the assets of
the Acquired Fund to the Acquiring Fund in exchange solely for the
issuance of Class A shares of common stock, $.01 par value, of the
Acquiring Fund (the "Acquiring Fund Class A Shares") to the
Acquired Fund and the assumption by the Acquiring Fund of all of
the liabilities of the Acquired Fund, followed by the distribution
by the Acquired Fund, on or promptly after the Closing Date
hereinafter referred to, of the Acquiring Fund Class A Shares to
the shareholders of the Acquired Fund in liquidation and
termination of the Acquired Fund as provided herein, all upon the
terms and conditions set forth in this Agreement.

In consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and
agree as follows:

1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
ASSUMPTION OF LIABILITIES AND ISSUANCE OF ACQUIRING FUND
CLASS A SHARES; LIQUIDATION OF THE ACQUIRED FUND

1.1 The Acquired Fund will transfer all of its assets
(consisting, without limitation, of portfolio securities and
instruments, dividends and interest receivables, cash and other
assets), as set forth in the statement of assets and liabilities
referred to in Paragraph 7.2 hereof (the "Statement of Assets and
Liabilities"), to the Acquiring Fund free and clear of all liens
and encumbrances, except as otherwise provided herein, in exchange
for (i) the assumption by the Acquiring Fund of the known and
unknown liabilities of the Acquired Fund, including the liabilities
set forth in the Statement of Assets and Liabilities (the "Acquired
Fund Liabilities"), which shall be assigned and transferred to the
Acquiring Fund by the Acquired Fund and assumed by the Acquiring
Fund, and (ii) delivery by the Acquiring Fund to the Acquired Fund,
<PAGE> 61

for distribution pro rata by the Acquired Fund to its shareholders
in proportion to their respective ownership of shares of beneficial
interest of the Acquired Fund, as of the close of business on the
closing date (the "Closing Date"), of a number of the Acquiring
Fund Class A Shares having an aggregate net asset value equal to
the value of the assets, less such liabilities (herein referred to
as the "net value of the assets"), assumed, assigned and delivered,
all determined as provided in Paragraph 2.1 hereof and as of a date
and time as specified therein. Such transactions shall take place
at the closing provided for in Paragraph 3.1 hereof (the
"Closing"). All computations shall be provided by State Street
Bank and Trust Company (the "Custodian"), as custodian and pricing
agent for the Acquiring Fund and the Acquired Fund.

1.2 The Acquired Fund has provided the Acquiring Fund with a
list of the current securities holdings of the Acquired Fund as of
the date of execution of this Agreement. The Acquired Fund
reserves the right to sell any of these securities (except to the
extent sales may be limited by representations made in connection
with issuance of the tax opinion provided for in paragraph 8.6
hereof) but will not, without the prior approval of the Acquiring
Fund, acquire any additional securities other than securities of
the type in which the Acquiring Fund is permitted to invest.

1.3 The Acquiring Fund and the Acquired Fund shall each bear
its own expenses in connection with the transactions contemplated
by this Agreement.

1.4 On or as soon after the Closing Date as is conveniently
practicable (the "Liquidation Date"), the Acquired Fund will
liquidate and distribute pro rata to shareholders of record (the
"Acquired Fund shareholders"), determined as of the close of
regular trading on the New York Stock Exchange on the Closing Date,
the Acquiring Fund Class A Shares received by the Acquired Fund
pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring
Fund Class A Shares then credited to the account of the Acquired
Fund on the books of the Acquiring Fund, to open accounts on the
share records of the Acquiring Fund in the names of the Acquired
Fund shareholders and representing the respective pro rata number
of Acquiring Fund Class A Shares due such shareholders. All
Acquired Fund shareholders will receive Acquiring Fund Class A
Shares. If shares of the Acquired Fund acquired in an exchange
from another mutual fund are subject to a contingent deferred sales
charge ("CDSC") immediately prior to the Closing, the successor
Acquiring Fund Class A Shares received in the Reorganization shall
be subject to the same CDSC, including all terms and conditions for
computing and applying such CDSC. The Acquiring Fund shall not
issue certificates representing Acquiring Fund Class A Shares in
connection with such exchange.

B-2
<PAGE> 62

1.5 The Acquired Fund shareholders holding certificates
representing their ownership of shares of beneficial interest of
the Acquired Fund shall surrender such certificates or deliver an
affidavit with respect to lost certificates in such form and
accompanied by such surety bonds as the Acquired Fund may require
(collectively, an "Affidavit"), to John Hancock Investor Services
Corporation prior to the Closing Date. Any Acquired Fund share
certificate which remains outstanding on the Closing Date shall be
deemed to be cancelled, shall no longer evidence ownership of
shares of beneficial interest of the Acquired Fund and shall
evidence ownership of Acquiring Fund Class A Shares. Unless and
until any such certificate shall be so surrendered or an Affidavit
relating thereto shall be delivered, dividends and other
distributions payable by the Acquiring Fund subsequent to the
Liquidation Date with respect to Acquiring Fund Class A Shares
shall be paid to the holder of such certificate(s), but such
shareholders may not redeem or transfer Acquiring Fund Class A
Shares received in the Reorganization. The Acquiring Fund will not
issue stock certificates in the Reorganization.

1.6 Any transfer taxes payable upon issuance of Acquiring
Fund Class A Shares in a name other than the registered holder of
the Acquired Fund Shares on the books of the Acquired Fund as of
that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Class A Shares are
to be issued and transferred.

1.7 The existence of the Acquired Fund shall be terminated
as promptly as practicable following the Liquidation Date.

1.8 Any reporting responsibility of the Acquired Fund,
including, but not limited to, the responsibility for filing of
regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "Commission"), any state
securities commissions, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Fund.

2. VALUATION

2.1 The net asset values of the Acquiring Fund Class A
Shares and the net values of the assets and liabilities of the
Acquired Fund to be transferred or assumed shall, in each case, be
determined as of the close of business (4:00 p.m. Boston time) on
the Closing Date. The net asset values of the Acquiring Fund Class
A Shares shall be computed by the Custodian in the manner set forth
in the Company's Articles of Organization ("Articles"), as amended,
or By-laws and the Acquiring Fund's then-current prospectus and
statement of additional information and shall be computed in each
case to not fewer than four decimal places. The net values of the
assets of the Acquired Fund to be transferred shall be computed by

B-3
<PAGE> 63

the Custodian by calculating the value of the assets transferred by
the Acquired Fund and by subtracting therefrom the amount of the
liabilities assigned and transferred to and assumed by the
Acquiring Fund on the Closing Date, said assets and liabilities to
be valued in the manner set forth in the Acquired Fund's then-
current prospectus and statement of additional information and
shall be computed in each case to not fewer than four decimal
places.

2.2 The number of Acquiring Fund Class A Shares to be issued
(including fractional shares, if any) in exchange for the Acquired
Fund's assets shall be determined by dividing the value of the
Acquired Fund's assets, less the liabilities assumed by the
Acquiring Fund, by the Acquiring Fund's net asset value per Class A
share, all as determined in accordance with Paragraph 2.1 hereof.

2.3 All computations of value shall be made by the Custodian
in accordance with its regular practice under Rule 2a-7.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be November 17, 1995 or such
other date on or before December 31, 1995 as the parties may agree.
The Closing shall be held as of 5:00 p.m. at the offices of the
Company, 101 Huntington Avenue, Boston, Massachusetts 02199, or at
such other time and/or place as the parties may agree.

3.2 Portfolio securities that are not held in book-entry
form in the name of the Custodian as record holder for the Acquired
Fund shall be presented by the Acquired Fund to the Custodian for
examination no later than five business days preceding the Closing
Date. Portfolio securities which are not held in book-entry form
shall be delivered by the Acquired Fund to the Custodian for the
account of the Acquiring Fund on the Closing Date, duly endorsed in
proper form for transfer, in such condition as to constitute good
delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock
transfer stamps or a check for the appropriate purchase price
thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Acquired Fund shall be delivered
to the Acquiring Fund by the Custodian by recording the transfer of
beneficial ownership thereof on its records. The cash delivered
shall be in the form of currency or by the Custodian crediting the
Acquiring Fund's account maintained with the Custodian with
immediately available funds.

3.3 In the event that on the Closing Date (a) the New York
Stock Exchange shall be closed to trading or trading thereon shall
be restricted or (b) trading or the reporting of trading on said
Exchange or elsewhere shall be disrupted so that accurate appraisal
of the value of the net assets of the Acquiring Fund or the

B-4
<PAGE> 64

Acquired Fund is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored; provided
that if trading shall not be fully resumed and reporting restored
on or before December 31, 1995, this Agreement may be terminated by
the Acquiring Fund or by the Acquired Fund upon the giving of
written notice to the other party.

3.4 The Acquired Fund shall deliver at the Closing a list of
the names, addresses, federal taxpayer identification numbers and
backup withholding and nonresident alien withholding status of the
Acquired Fund shareholders and the number of outstanding shares of
the Acquired Fund owned by each such shareholder, all as of the
close of business on the Closing Date, certified by its Treasurer,
Secretary or other authorized officer (the "Shareholder List").
The Acquiring Fund shall issue and deliver to the Acquired Fund a
confirmation evidencing the Acquiring Fund Class A Shares to be
credited on the Closing Date, or provide evidence satisfactory to
the Acquired Fund that such Acquiring Fund Class A Shares have been
credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates,
receipts or other documents as such other party or its counsel may
reasonably request.

4. REPRESENTATIONS AND WARRANTIES

4.1 The Acquired Fund represents, warrants and covenants to
the Acquiring Fund as follows:

(a) The Acquired Fund is a voluntary association with
transferable shares of the type commonly referred to as a
business trust, duly organized and validly existing under the
laws of The Commonwealth of Massachusetts and has the power
to own all of its properties and assets and, subject to
approval by the shareholders of the Acquired Fund, to carry
out the transactions contemplated by this Agreement. The
Acquired Fund is not required to qualify to do business in
any jurisdiction in which it is not so qualified or where
failure to qualify would subject it to any material liability
or disability. The Acquired Fund has all necessary federal,
state and local authorizations to own all of its properties
and assets and to carry on its business as now being
conducted;

(b) The Acquired Fund is a registered investment
company classified as a management company and its
registration with the Commission as an investment company
under the Investment Company Act of 1940, as amended (the
"1940 Act"), is in full force and effect. The Acquired Fund
is a diversified fund;

B-5
<PAGE> 65

(c) The Acquired Fund is not, and the execution,
delivery and performance of its obligations under this
Agreement will not result, in violation of any provision of
the Acquired Fund's Declaration of Trust, as amended, or By-
Laws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Acquired Fund is a
party or by which it is bound;

(d) Except as otherwise disclosed in writing and
accepted by the Acquiring Fund, no material litigation or
administrative proceeding or investigation of or before any
court or governmental body is currently pending or threatened
against the Acquired Fund or any of the Acquired Fund's
properties or assets. The Acquired Fund knows of no facts
which might form the basis for the institution of such
proceedings, and the Acquired Fund is not a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects the Acquired Fund's business or its ability to
consummate the transactions herein contemplated;

(e) The Acquired Fund has no material contracts or
other commitments (other than this Agreement or agreements
for the purchase of securities entered into in the ordinary
course of business and consistent with its obligations under
this Agreement) which will not be terminated without
liability to the Acquired Fund at or prior to the Closing
Date;

(f) The unaudited statement of assets and liabilities,
including the schedule of investments, of the Acquired Fund
as of March 31, 1995 and the related statement of operations
(copies of which have been furnished to the Acquiring Fund)
present fairly in all material respects the financial
condition of the Acquired Fund as of March 31, 1995 and the
results of its operations for the period then ended in
accordance with generally accepted accounting principles
consistently applied, and there were no known actual or
contingent liabilities of the Acquired Fund as of the
respective dates thereof not disclosed therein;

(g) Since March 31, 1995, there has not been any
material adverse change in the Acquired Fund's financial
condition, assets, liabilities, or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the
Acquiring Fund;

B-6
<PAGE> 66

(h) At the date hereof and by the Closing Date, all
federal, state and other tax returns and reports, including
information returns and payee statements, of the Acquired
Fund required by law to have been filed or furnished by such
dates shall have been filed or furnished, and all federal,
state and other taxes, interest and penalties shall have been
paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Acquired Fund's
knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns or
reports;

(i) The Acquired Fund has elected to be treated as a
regulated investment company for federal income tax purposes,
has qualified as such for each taxable year of its operation
and will qualify as such as of the Closing Date with respect
to its final taxable year ending on the Closing Date;

(j) The authorized capital of the Acquired Fund
consists of unlimited number of shares of beneficial
interest, no par value. There is only one class of shares of
the Acquired Fund. All issued and outstanding shares of
beneficial interest of the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Acquired
Fund. All of the issued and outstanding shares of beneficial
interest of the Acquired Fund will, at the time of Closing,
be held by the persons and in the amounts and classes set
forth in the Shareholder List submitted to the Acquiring Fund
pursuant to Paragraph 3.4 hereof. The Acquired Fund does not
have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of beneficial
interest, nor is there outstanding any security convertible
into any of its shares of beneficial interest;

(k) At the Closing Date, the Acquired Fund will have
good and marketable title to the assets to be transferred to
the Acquiring Fund pursuant to Paragraph 1.1 hereof, and full
right, power and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment
for such assets, the Acquiring Fund will acquire good and
marketable title thereto subject to no restrictions on the
full transfer thereof, including such restrictions as might
arise under the Securities Act of 1933, as amended (the "1933
Act");

(l) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action
on the part of the Acquired Fund, and this Agreement
constitutes a valid and binding obligation of the Acquired
Fund enforceable in accordance with its terms, subject to the
approval of the Acquired Fund's shareholders;

B-7
<PAGE> 67

(m) The information to be furnished by the Acquired
Fund to the Acquiring Fund for use in applications for
orders, registration statements, proxy materials and other
documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with
federal securities and other laws and regulations thereunder
applicable thereto;

(n) The proxy statement of the Acquired Fund
(the "Proxy Statement") to be included in the Registration
Statement referred to in Paragraphs 4.2(c) and 5.7 hereof
(other than written information furnished by the Acquiring
Fund for inclusion therein, as covered by the Acquiring
Fund's warranty in Paragraph 4.2(m) hereof), on the effective
date of the Registration Statement, on the date of the
meeting of the Acquired Fund shareholders and on the Closing
Date, shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which such statements were made,
not misleading;

(o) No consent, approval, authorization or order of any
court or governmental authority is required for the
consummation by the Acquired Fund of the transactions
contemplated by this Agreement;

(p) All of the issued and outstanding shares of
beneficial interest of the Acquired Fund have been offered
for sale and sold in conformity with all applicable federal
and state securities laws;

(q) The prospectus of the Acquired Fund, dated February
1, 1995 (the "Acquired Fund Prospectus"), previously
furnished to the Acquiring Fund, does not contain any untrue
statements of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which
they were made, not misleading.

4.2 The Company on behalf of the Acquiring Fund represents,
warrants and covenants to the Acquired Fund as follows:

(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland and has the power to own all of its
properties and assets and to carry out the Agreement.
Neither the Company nor the Acquiring Fund is required to
qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would subject it to
any material liability or disability. The Company has all

B-8
<PAGE> 68

necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as
now being conducted;

(b) The Company is a registered investment company
classified as a management company and its registration with
the Commission as an investment company under the 1940 Act is
in full force and effect. The Acquiring Fund is a
diversified series of the Company;

(c) The prospectus (the "Acquiring Fund Prospectus")
and statement of additional information for Class A and
Class B shares of the Acquiring Fund, each dated
September 12, 1995, and any amendments or supplements thereto
on or prior to the Closing Date, and the Registration
Statement on Form N-14 to be filed in connection with this
Agreement (the "Registration Statement") (other than written
information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in
Paragraph 4.1(m) hereof) will conform in all material
respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission
thereunder, the Acquiring Fund Prospectus does not include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading and the
Registration Statement will not include any untrue statement
of material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;

(d) At the Closing Date, the Company on behalf of the
Acquiring Fund will have good and marketable title to the
assets of the Acquiring Fund;

(e) The Company and the Acquiring Fund are not, and the
execution, delivery and performance of their obligations
under this Agreement will not result, in violation of any
provisions of the Company's Articles, as amended, or By-laws
or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Company or the Acquiring
Fund is a party or by which the Company or the Acquiring Fund
is bound;

(f) Except as otherwise disclosed in writing and
accepted by the Acquired Fund, no material litigation or
administrative proceeding or investigation of or before any
court or governmental body is currently pending or threatened
against the Company or the Acquiring Fund or any of the
Acquiring Fund's properties or assets. The Company knows of

B-9
<PAGE> 69

no facts which might form the basis for the institution of
such proceedings, and neither the Company nor the Acquiring
Fund is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund's
business or its ability to consummate the transactions herein
contemplated;

(g) The unaudited statement of assets and liabilities,
including the schedule of investments, of the Acquiring Fund
as of April 30, 1995 and the related statement of operations
(copies of which have been furnished to the Acquired Fund),
present fairly in all material respects the financial
condition of the Acquiring Fund as of April 30, 1995 and the
results of its operations for the period then ended in
accordance with generally accepted accounting principles
consistently applied, and there were no known actual or
contingent liabilities of the Acquiring Fund as of the
respective dates thereof not disclosed herein;

(h) Since April 30, 1995, there has not been any
material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any
incurrence by the Company on behalf of the Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed to and
accepted by the Acquired Fund;

(i) The Acquiring Fund has elected to be treated as a
regulated investment company for federal income tax purposes,
has qualified as such for each taxable year of its operation
and will qualify as such as of the Closing Date;

(j) The authorized capital of the Company consists of
six billion five hundred million (6,500,000,000) shares of
common stock, par value $.01 per share, divided into six
series, including the Acquiring Fund. The shares of the
Acquiring Fund are divided into three classes, Class A, Class
B and Class S. All issued and outstanding shares of common
stock of the Acquiring Fund are, and at the Closing Date will
be, duly and validly issued and outstanding, fully paid and
nonassessable by the Company. The Acquiring Fund does not
have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of common stock,
nor is there outstanding any security convertible into any of
its shares of common stock;

B-10
<PAGE> 70

(k) The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on
the part of the Company on behalf of the Acquiring Fund, and
this Agreement constitutes a valid and binding obligation of
the Acquiring Fund enforceable in accordance with its terms;

(l) The Acquiring Fund Class A Shares to be issued and
delivered to the Acquired Fund pursuant to the terms of this
Agreement, when so issued and delivered, will be duly and
validly issued shares of common stock of the Acquiring Fund
and will be fully paid and nonassessable by the Company;

(m) The information to be furnished by the Acquiring
Fund for use in applications for orders, registration
statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated
hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and
regulations applicable thereto; and

(n) No consent, approval, authorization or order of any
court or governmental authority is required for the
consummation by the Acquiring Fund of the transactions
contemplated by the Agreement, except for the registration of
the Acquiring Fund Class A Shares under the 1933 Act, the
1940 Act and under state securities laws.

5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

5.1 Except as expressly contemplated herein to the contrary,
the Acquired Fund and the Company, on behalf of Acquiring Fund,
will operate their respective businesses in the ordinary course
between the date hereof and the Closing Date, it being understood
that such ordinary course of business will include customary
dividends and distributions and any other distributions necessary
or desirable to avoid federal income or excise taxes.

5.2 The Acquired Fund will call a meeting of the Acquired
Fund shareholders to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the
transactions contemplated herein.

5.3 The Acquired Fund covenants that the Acquiring Fund
Class A Shares to be issued hereunder are not being acquired by
the Acquired Fund for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.

5.4 The Acquired Fund will provide such information within
its possession or reasonably obtainable as the Company on behalf
of the Acquiring Fund requests concerning the beneficial ownership
of the Acquired Fund's shares of beneficial interest.

B-11
<PAGE> 71

5.5 Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund each shall take, or cause to
be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.

5.6 The Acquired Fund shall furnish to the Company on behalf
of the Acquiring Fund on the Closing Date the Statement of Assets
and Liabilities of the Acquired Fund as of the Closing Date, which
statement shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall be certified
by the Acquired Fund's Treasurer or Assistant Treasurer. As
promptly as practicable but in any case within 60 days after the
Closing Date, the Acquired Fund shall furnish to the Acquiring
Fund, in such form as is reasonably satisfactory to the Company, a
statement of the earnings and profits of the Acquired Fund for
federal income tax purposes and of any capital loss carryovers and
other items that will be carried over to the Acquiring Fund as a
result of Section 381 of the Code, and which statement will be
certified by the President of the Acquired Fund.

5.7 The Company on behalf of the Acquiring Fund will prepare
and file with the Commission the Registration Statement in
compliance with the 1933 Act and the 1940 Act in connection with
the issuance of the Acquiring Fund Class A Shares as contemplated
herein.

5.8 The Acquired Fund will prepare a Proxy Statement, to be
included in the Registration Statement in compliance with the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act and the rules and regulations thereunder
(collectively, the "Acts") in connection with the special meeting
of shareholders of the Acquired Fund to consider approval of this
Agreement.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

The obligations of the Acquired Fund to complete the
transactions provided for herein shall be, at its election,
subject to the performance by the Company on behalf of the
Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto,
the following further conditions:

6.1 All representations and warranties of the Company
on behalf of the Acquiring Fund contained in this Agreement
shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and
as of the Closing Date; and

B-12
<PAGE> 72

6.2 The Company on behalf of the Acquiring Fund shall
have delivered to the Acquired Fund a certificate executed in
its name by the Company's President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing
Date, to the effect that the representations and warranties
of the Company on behalf of the Acquiring Fund made in this
Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON BEHALF
OF THE ACQUIRING FUND

The obligations of the Company on behalf of the Acquiring
Fund to complete the transactions provided for herein shall be, at
its election, subject to the performance by the Acquired Fund of
all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following
conditions:

7.1 All representations and warranties of the Acquired
Fund contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as
they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;

7.2 The Acquired Fund shall have delivered to the
Company on behalf of the Acquiring Fund the Statement of
Assets and Liabilities of the Acquired Fund, together with a
list of its portfolio securities showing the federal income
tax bases and holding periods of such securities, as of the
Closing Date, certified by the Treasurer or Assistant
Treasurer of the Acquired Fund;

7.3 The Acquired Fund shall have delivered to the
Company on behalf of the Acquiring Fund on the Closing Date a
certificate executed in the name of the Acquired Fund by a
President or Vice President and a Treasurer or Assistant
Treasurer of the Acquired Fund, in form and substance
satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and
warranties of the Acquired Fund in this Agreement are true
and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Company on
behalf of the Acquiring Fund shall reasonably request; and

B-13
<PAGE> 73

7.4 At or prior to the Closing Date, the Acquired
Fund's investment adviser, or an affiliate thereof, shall
have made all payments, or applied all credits, to the
Acquired Fund required by any applicable contractual or
state-imposed expense limitation.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY,
THE ACQUIRING FUND AND THE ACQUIRED FUND

The obligations of the Company, the Acquiring Fund and the
Acquired Fund hereunder are each subject to the further conditions
that on or before the Closing Date:

8.1 The Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of
the outstanding shares of beneficial interest of the Acquired Fund
in accordance with the provisions of the Acquired Fund's
Declaration of Trust, as amended, and By-Laws, and certified
copies of the resolutions evidencing such approval by the Acquired
Fund's shareholders shall have been delivered by the Acquired Fund
to the Company on behalf of the Acquiring Fund;

8.2 On the Closing Date no action, suit or other proceeding
shall be pending before any court or governmental agency in which
it is sought to restrain or prohibit, or obtain changes or other
relief in connection with, this Agreement or the transactions
contemplated herein;

8.3 All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory
authorities (including those of the Commission and of state Blue
Sky and securities authorities, including "no-action" positions of
such federal or state authorities) deemed necessary by the
Acquired Fund and the Company to permit consummation, in all
material respects, of the transactions contemplated hereby shall
have been obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of a material
adverse effect on the assets or properties of the Acquiring Fund
or the Acquired Fund, provided that either party hereto may waive
any such conditions for itself;

8.4 The Registration Statement shall have become effective
under the 1933 Act and the 1940 Act and no stop orders suspending
the effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act or the 1940 Act;

B-14
<PAGE> 74

8.5 The Acquired Fund shall have distributed to its
shareholders all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code) for its taxable year
ending on the Closing Date and all of its net capital gain (as
such term is used in Section 852(b)(3)(C) of the Code), after
reduction by any available capital loss carryforward, for its
taxable year ending on the Closing Date; and

8.6 The parties shall have received an opinion of
Messrs. Hale and Dorr, satisfactory to the Acquired Fund and the
Company on behalf of the Acquiring Fund, substantially to the
effect that for federal income tax purposes:

(a) The acquisition by the Acquiring Fund of all of the
assets of the Acquired Fund solely in exchange for the
issuance of Acquiring Fund Class A Shares to the Acquired
Fund and the assumption of all of the Acquired Fund
Liabilities by the Acquiring Fund, followed by the
distribution by the Acquired Fund, in liquidation of the
Acquired Fund, of Acquiring Fund Class A Shares to the
shareholders of the Acquired Fund in exchange for their
shares of beneficial interest of the Acquired Fund and the
termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Fund and the Acquiring Fund will each
be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;

(b) No gain or loss will be recognized by the Acquired
Fund upon (i) the transfer of all of its assets to the
Acquiring Fund solely in exchange for the issuance of
Acquiring Fund Class A Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the
Acquiring Fund; and (ii) the distribution by the Acquired
Fund of such Acquiring Fund Class A Shares to the
shareholders of the Acquired Fund;

(c) No gain or loss will be recognized by the Acquiring
Fund upon the receipt of the assets of the Acquired Fund
solely in exchange for the issuance of the Acquiring Fund
Class A Shares to the Acquired Fund and the assumption of all
of the Acquired Fund Liabilities by the Acquiring Fund;

(d) The basis of the assets of the Acquired Fund
acquired by the Acquiring Fund will be, in each instance, the
same as the basis of those assets in the hands of the
Acquired Fund immediately prior to the transfer;

(e) The tax holding period of the assets of the
Acquired Fund in the hands of the Acquiring Fund will, in
each instance, include the Acquired Fund's tax holding period
for those assets;

B-15
<PAGE> 75

(f) The shareholders of the Acquired Fund will not
recognize gain or loss upon the exchange of all of their
shares of the Acquired Fund solely for Acquiring Fund Class A
Shares as part of the transaction;

(g) The basis of the Acquiring Fund Class A Shares
received by the Acquired Fund shareholders in the transaction
will be the same as the basis of the shares of beneficial
interest of the Acquired Fund surrendered in exchange
therefor; and

(h) The tax holding period of the Acquiring Fund Class
A Shares received by the Acquired Fund shareholders will
include, for each shareholder, the tax holding period for the
shares of the Acquired Fund surrendered in exchange therefor,
provided that the Acquired Fund shares were held as capital
assets on the date of the exchange.

The Company, on behalf of the Acquiring Fund, and the
Acquired Fund, agree to make and provide representations with
respect to the Acquiring Fund and the Acquired Fund, respectively,
which are reasonably necessary to enable Hale and Dorr to deliver
an opinion substantially as set forth in this Paragraph 8.6.

9. BROKERAGE FEES AND EXPENSES

9.1 The Company, on behalf of the Acquiring Fund, and the
Acquired Fund, represent and warrant to the Acquired Fund and the
Acquiring Fund, respectively, that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.

9.2 The Acquiring Fund and the Acquired Fund shall each be
liable solely for its own expenses incurred in connection with
entering into and carrying out the provisions of this Agreement
whether or not the transactions contemplated hereby are
consummated.

10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Company, on behalf of the Acquiring Fund, and the
Acquired Fund agree that neither party has made any
representation, warranty or covenant not set forth herein or
referred to in Paragraph 4 hereof and that this Agreement
constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained
in this Agreement or in any document delivered pursuant hereto or
in connection herewith shall survive the consummation of the
transactions contemplated hereunder.

B-16
<PAGE> 76

11. TERMINATION

11.1 This Agreement may be terminated by the mutual
agreement of the Company, on behalf of the Acquiring Fund, and the
Acquired Fund. In addition, either party may at its option
terminate this Agreement at or prior to the Closing Date:

(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;

(b) because of a condition herein expressed to be
precedent to the obligations of the terminating party which
has not been met and which reasonably appears will not or
cannot be met;

(c) by resolution of the Company's Board of Directors
if circumstances should develop that, in the good faith
opinion of such Board, make proceeding with the Agreement not
in the best interests of the Acquiring Fund's shareholders;
or

(d) by resolution of the Acquired Fund's Board of
Trustees if circumstances should develop that, in the good
faith opinion of such Board, make proceeding with the
Agreement not in the best interests of the Acquired Fund's
shareholders.

11.2 In the event of any such termination, there shall be no
liability for damages on the part of the Company, the Acquiring
Fund or the Acquired Fund, or the Directors, Trustees or officers
of the Company or the Trust, but each party shall bear the
expenses incurred by it incidental to the preparation and carrying
out of this Agreement.

12. AMENDMENTS

This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon by the authorized
officers of the Trust and the Company. However, following the
meeting of shareholders of the Acquired Fund held pursuant to
Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for
determining the number of Acquiring Fund Class A Shares to be
received by the Acquired Fund shareholders under this Agreement to
the detriment of such shareholders without their further approval;
provided that nothing contained in this Article 12 shall be
construed to prohibit the parties from amending this Agreement to
change the Closing Date.

B-17
<PAGE> 77

13. NOTICES

Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall
be given by prepaid telegraph, telecopy or certified mail
addressed to the Acquiring Fund or to the Acquired Fund, each at
101 Huntington Avenue, Boston, Massachusetts 02199, Attention:
President, and, in either case, with copies to Hale and Dorr,
60 State Street, Boston, Massachusetts 02109, Attention:
Pamela J. Wilson, Esq.

14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

14.1 The article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.

14.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.

14.3 This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.

14.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the prior
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies
under or by reason of this Agreement.

B-18
<PAGE> 78

IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed as of the date first set forth above
by its President or Vice President and has caused its corporate
seal to be affixed hereto.

JOHN HANCOCK SERIES, INC. on behalf
of JOHN HANCOCK MONEY MARKET FUND

By: /s/ Anne C. Hodsdon
-----------------------------------
Name: Anne C. Hodsdon
Title: President

JOHN HANCOCK CASH MANAGEMENT FUND

By: /s/ Thomas H. Drohan
-----------------------------------
Name: Thomas H. Drohan
Title: Senior Vice President

B-19

<PAGE> 79

JOHN HANCOCK CASH MANAGEMENT FUND
101 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02199
SPECIAL MEETING OF THE SHAREHOLDERS - NOVEMBER 15, 1995
PROXY SOLICITATION BY THE BOARD OF TRUSTEES

The undersigned, revoking previous proxies, hereby appoint(s) Edward J.
Boudreau, Jr., Thomas H. Drohan and James B. Little, with full power of
substitution in each, to vote all the shares of beneficial interest of John
Hancock Cash Management Fund ("Cash Management Fund" or the "Fund") which the
undersigned is (are) entitled to vote at the Special Meeting of Shareholders
(the "Meeting") of Cash Management Fund to be held at 101 Huntington Avenue,
Boston, Massachusetts, on November 15, 1995 at 9:15 a.m., Boston time, and at
any adjournment of the Meeting. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting, or, if only one votes and
acts, then by that one. Receipt of the Proxy Statement dated October 9, 1995 is
hereby acknowledged. If not revoked, this proxy shall be voted:

PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE

Date __________________, 1995

NOTE: Signature(s) should
agree with name(s) printed
herein. When signing as
attorney, executor,
administrator, trustee or
guardian, please give your full
title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.

-------------------------------
Signature(s)

<PAGE> 80

VOTE THIS PROXY CARD TODAY! YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE
EXPENSE OF ADDITIONAL MAILINGS.

THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSAL 1 IF NO SPECIFICATION IS
MADE BELOW. AS TO ANY OTHER MATTER, SAID PROXY OR PROXIES SHALL VOTE IN
ACCORDANCE WITH THEIR BEST JUDGEMENT. PLEASE VOTE BY FILLING IN THE APPROPRIATE
BOXES BELOW, AS SHOWN, USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT USE RED
INK.

(1) To approve an Agreement and Plan of Reorganization
between John Hancock Series, Inc., on behalf of John
Hancock Money Market Fund, and John Hancock Cash
Management Fund, providing for John Hancock Money Market
Fund's acquisition of all John Hancock Cash Management
Fund's assets in exchange solely for assumption of John
Hancock Cash Management Fund's liabilities, and the
issuance of Class A shares of John Hancock Money Market
Fund to John Hancock Cash Management Fund for
distribution to its shareholders.

FOR / / AGAINST / / ABSTAIN / /

PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.

<PAGE> 81

PART B

STATEMENT OF ADDITIONAL INFORMATION

JOHN HANCOCK MONEY MARKET FUND

October 9, 1995

This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the related Proxy Statement and Prospectus (also dated
October 9, 1995) relating to Class A shares of John Hancock Money Market Fund
("Money Market Fund") to be issued in exchange for all of the net assets of John
Hancock Cash Management Fund ("Cash Management Fund"). Please retain this
Statement of Additional Information for future reference. A copy of the Proxy
Statement and Prospectus can be obtained free of charge by calling Shareholder
Services at 1-800-225-5291 or by written request to Money Market Fund at 101
Huntington Avenue, Boston, Massachusetts 02199.

TABLE OF CONTENTS
Page
----
<S> <C>
Introduction...........................................

Additional Information About Money Market Fund.........
General Information and History
Investment Objective and Policies
Management of Money Market Fund
Control Persons and Principal Holders of Shares
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Common Stock
Purchase, Redemption and Pricing of Money Market Fund Stock
Underwriters
Calculation of Performance Data
Financial Statements

Additional Information about Cash Management Fund......
General Information and History
Investment Objective and Policies
Management of Cash Management Fund
Investment Advisory and Other Services
</TABLE>

<PAGE> 82

Brokerage Allocation and Other Practices
Shares of Beneficial Interest
Purchase, Redemption and Pricing of
Cash Management Fund Shares
Underwriters
Calculation of Performance Data
Financial Statements

EXHIBITS

A - Statement of Additional Information, dated September 12, 1995, of John
Hancock Money Market Fund including audited financial statements as of
October 31, 1994 and unaudited financial statements as of April 30, 1995.

B - Statement of Additional Information, dated February 1, 1995, of John
Hancock Cash Management Fund including audited financial statements as of
September 30, 1994 and unaudited financial statements as of March 31, 1995.

C - Pro Forma Combined Financial Statements at March 31, 1995 and for the
period then ended of Money Market Fund and Cash Management Fund.

<PAGE> 83

INTRODUCTION

This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated October 5, 1995
(the "Proxy Statement and Prospectus"). The Proxy Statement and Prospectus has
been sent to the shareholders of Cash Management Fund in connection with the
solicitation by the management of Cash Management Fund of proxies to be voted at
the Special Meeting of Shareholders of Cash Management Fund to be held on
November 15, 1995. This Statement of Additional Information incorporates by
reference the statement of additional information of Cash Management Fund, dated
February 1, 1995 (the "Cash Management Fund SAI"), and the statement of
additional information of Money Market Fund, dated September 12, 1995 (the
"Money Market Fund SAI"). The Cash Management Fund SAI and the Money Market
Fund SAI are included with this Statement of Additional Information.

ADDITIONAL INFORMATION ABOUT MONEY MARKET FUND

General Information and History

For additional information about Money Market Fund generally and its
history, see "Organization of the Corporation" in the Money Market Fund SAI.

Investment Objective and Policies

For additional information about Money Market Fund's investment
objective, policies and restrictions see "Investment Objective and Policies" and
"Investment Restrictions" in the Money Market Fund SAI.

Management of Money Market Fund

For additional information about the Money Market Fund's Board of
Directors, officers and management personnel, see "Those Responsible for
Management" in the Money Market Fund SAI.

Control Persons and Principal Holders of Shares

For additional information about control persons of Money Market Fund
and principal holders of common stock of Money Market Fund see "Those
Responsible for Management" in the Money Market Fund SAI.

<PAGE> 84

Investment Advisory and Other Services

For additional information about Money Market Fund's investment adviser,
custodian, transfer agent and independent accountants, see "Investment Advisory
and Other Services," "Distribution Contract," "Transfer Agent Services,"
"Custody of Portfolio" and "Independent Auditors" in the Money Market Fund SAI.

Brokerage Allocation and Other Practices

For additional information about Money Market Fund's brokerage
allocation practices, see "Brokerage Allocation" in the Money Market Fund SAI.

Common Stock

For additional information about the voting rights and other
characteristics of common stock, $.01 par value, of Money Market Fund, see
"Description of the Corporation's Shares" in the Money Market Fund SAI.

Purchase, Redemption and Pricing of Money Market Fund Shares

For additional information about the determination of net asset value,
see "Net Asset Value" in the Money Market Fund SAI.

Underwriters

For additional information about Money Market Fund's principal
underwriter and the distribution contract between the principal underwriter and
Money Market Fund, see "Distribution Contract" in the Money Market Fund SAI.

Calculation of Performance Data

For additional information about the investment performance of Money
Market Fund, see "Calculation of Performance" in the Money Market Fund SAI.

Financial Statements

Audited financial statements of Money Market Fund at October 31, 1994,
and unaudited financial statements at April 30, 1995, are attached to the Money
Market Fund SAI.

<PAGE> 85

Pro Forma combined financial statements at March 31, 1995 for Money
Market Fund as though the Reorganization had occurred on March 31, 1995 are
attached hereto.

ADDITIONAL INFORMATION ABOUT CASH MANAGEMENT FUND

General Information and History

For additional information about Cash Management Fund generally and its
history, see "Organization of the Fund" in the Cash Management Fund SAI.

Investment Objectives and Policies

For additional information about Cash Management Fund's investment
objectives and policies, see "Investment Objective and Policies", "Fundamental
Investment Restrictions" and "Non- Fundamental Investment Restrictions" in the
Cash Management Fund SAI.

Management of Cash Management Fund

For additional information about Cash Management Fund's Board of
Trustees, officers and management personnel, see "Those Responsible for
Management" in the Cash Management Fund SAI.

Investment Advisory and Other Services

For additional information about Cash Management Fund's investment
adviser, custodian, transfer agent and independent accountants, see "Investment
Advisory and Other Services," "Distribution Contract," "Transfer Agent Service,"
"Custody of Portfolio" and "Independent Auditors" in the Cash Management Fund
SAI.

Brokerage Allocation and Other Practices

For additional information about Cash Management Fund's brokerage
allocation practices, see "Brokerage Allocation" in the Cash Management Fund
SAI.

Shares of Beneficial Interest

For additional information about the voting rights and other
characteristics of Cash Management Fund's shares of beneficial interest, see
"Description of the Fund's Shares" in the Cash Management Fund SAI.

<PAGE> 86

Purchase, Redemption and Pricing of Cash Management Fund Shares

For additional information about the net asset value of Cash Management
Fund's shares, see "Amortized Cost Method of Portfolio Valuation" in the Cash
Management Fund SAI.

Underwriters

For additional information about Cash Management Fund's principal
underwriter and the distribution contract between the principal underwriter and
Cash Management Fund, see "Distribution Contract" in the Cash Management Fund
SAI.

Calculation of Performance Data

For additional information about the investment performance of Cash
Management Fund, see "Calculation of Yield" in the Cash Management Fund SAI.

Financial Statements

Audited financial statements of Cash Management Fund at September 30,
1994 and unaudited financial statements at March 31, 1995 are attached to the
Cash Management Fund SAI.

<PAGE> 87

JOHN HANCOCK SERIES, INC.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

consisting of six series,
JOHN HANCOCK MONEY MARKET FUND
JOHN HANCOCK GLOBAL RESOURCES FUND
JOHN HANCOCK GOVERNMENT INCOME FUND
JOHN HANCOCK HIGH YIELD BOND FUND
JOHN HANCOCK HIGH YIELD TAX-FREE FUND
JOHN HANCOCK EMERGING GROWTH FUND

(each, a "Fund" and collectively, the "Funds")

CLASS A AND CLASS B SHARES

STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 12, 1995
This Statement of Additional Information ("SAI") provides information
about John Hancock Series, Inc. (the "Corporation") and the Funds, in addition
to the information that is contained in the John Hancock Money Market Fund
Class A and Class B Prospectus (the "Money Market Fund Prospectus") dated
September 12, 1995 and in the Prospectuses of each of the other Funds dated May
15, 1995 (collectively with the Money Market Fund Prospectus, the
"Prospectuses").

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

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

<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Organization of the Corporation.......................... 3
Investment Objectives and Policies....................... 3
Certain Investment Practices............................. 4
Investment Restrictions.................................. 24
Those Responsible for Management......................... 29
Investment Advisory and Other Services................... 37
Distribution Contract.................................... 41
Net Asset Value.......................................... 45
Initial Sales Charge on Class A Shares................... 47
Deferred Sales Charge on Class B Shares.................. 48

</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
<S> <C>
Special Redemptions...................................... 49
Additional Services and Programs......................... 49
Description of the Corporation's Shares.................. 50
Tax Status............................................... 52
Calculation of Performance............................... 57
Brokerage Allocation..................................... 59
Transfer Agent Services.................................. 62
Custody of Porftolio..................................... 62
Independent Auditors..................................... 62
Appendix................................................. A-1
Financial Statements..................................... F-1

</TABLE>

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<PAGE> 89

ORGANIZATION OF THE CORPORATION

The Corporation is an open-end management investment company organized
as a Maryland corporation on June 22, 1987. The Corporation currently has six
series: John Hancock Emerging Growth Fund, John Hancock Global Resources Fund,
John Hancock Government Income Fund, John Hancock High Yield Bond Fund, John
Hancock High Yield Tax-Free Fund and John Hancock Money Market Fund. Prior to
September 12, 1995, the John Hancock Money Market Fund was called John Hancock
Money Market Fund B. Prior to December 22, 1994, the Funds were called
Transamerica Emerging Growth Fund, Transamerica Global Resources Fund,
Transamerica Government Income Fund, Transamerica High Yield Bond Fund,
Transamerica High Yield Tax-Free Fund and Transamerica Money Market Fund.

Each Fund is managed by John Hancock Advisers, Inc. (the "Adviser"), a
wholly-owned indirect subsidiary of John Hancock Mutual Life Insurance Company
(the "Life Company"), chartered in 1862 with national headquarters at John
Hancock Place, Boston, Massachusetts. John Hancock Funds, Inc. ("John Hancock
Funds") acts as principal distributor of the shares of the Funds.

INVESTMENT OBJECTIVES AND POLICIES

JOHN HANCOCK MONEY MARKET FUND ("Money Market Fund") seeks to provide maximum
current income consistent with capital preservation and liquidity. The Fund's
investments will be subject to the market fluctuation and risks inherent in all
securities.

JOHN HANCOCK GLOBAL RESOURCES FUND'S ("Global Resources Fund") investment
objectives are to protect the purchasing power of shareholders' capital and to
achieve growth of capital. The first of these objectives means that the Fund
seeks to protect generally shareholders' invested capital against erosion of the
value of the U.S. dollar through inflation. Current income will not be a
primary consideration in selecting securities. However, it will be an important
factor in making selections among securities believed otherwise comparable by
the Adviser.
Investment Philosophy of Global Resources Fund. The Adviser believes
that, based upon past performance, the securities of specific companies that
hold different types of substantial resource assets or engage in
resource-related or energy-related activities may move relatively independently
of one another during different stages of inflationary or deflationary cycles
because of different degrees of demand for, or market values of, their
respective resource holdings or resource-related or energy-related business
during particular portions of such cycles. For example, during the period 1976
to 1980, the prices of oil company stocks increased relatively more than the
prices of coal company stocks when compared to the performance of relevant stock
market indices. The Adviser will seek to identify companies or asset-based
securities which it believes are attractively priced relative to the intrinsic
value of the underlying resource assets or resource-related or energy-related
business or are especially well positioned to benefit during particular portions
of inflationary or deflationary cycles. It is expected that when management of
the Fund anticipates significant economic, political or financial instability,
such as high inflationary or deflationary pressures or major dislocations in the
foreign currency exchange markets, the Fund may, in seeking to protect the
purchasing power of shareholders' capital, invest a majority of its assets in
companies that explore for, extract, process or deal in gold or in asset-based
securities indexed to the value of gold bullion. Such a switch in investment
strategies could result in substantial liquidation of portfolio securities and
significant transaction costs. The Fund's approach of active investment
management enables it to switch its emphasis among

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<PAGE> 90
various industry groups, depending upon the Adviser's outlook with respect to
prevailing trends and developments. The Fund may seek to hedge its portfolio
partially by writing covered call options or purchasing put options on its
portfolio holdings.
JOHN HANCOCK GOVERNMENT INCOME FUND'S ("Government Income Fund") investment
objective is to earn a high level of current income consistent with preservation
of capital by investing primarily in securities that are issued or guaranteed as
to principal and interest by the U.S. Government, its agencies or
instrumentalities. The Fund may seek to enhance its current return and may seek
to hedge against changes in interest rates by engaging in transactions involving
options (subject to certain limits), futures and options on futures. The Fund
expects that under normal market conditions it will invest at least 80% of its
total assets in U.S. Government securities (and related repurchase agreements
and forward commitments).

JOHN HANCOCK HIGH YIELD BOND FUND'S ("High Yield Bond Fund") primary investment
objective is to maximize current income without assuming undue risk by investing
in a diversified portfolio consisting primarily of lower-rated, high yielding,
fixed income securities, such as: domestic and foreign corporate bonds;
debentures and notes; convertible securities; preferred stocks; and domestic and
foreign government obligations. As a secondary objective, the Fund seeks
capital appreciation, but only when it is consistent with the primary objective
of maximizing current income.

JOHN HANCOCK HIGH YIELD TAX-FREE FUND'S ("High Yield Tax-Free Fund") primary
investment objective is to obtain a high level of current income that is largely
exempt from federal income taxes and is consistent with the preservation of
capital. The Fund pursues this objective by normally investing substantially
all of its assets in medium and lower quality obligations, including bonds,
notes and commercial paper, issued by or on behalf of states, territories and
possessions of the United States, The District of Columbia and their political
subdivisions, agencies or instrumentalities, the interest on which is exempt
from federal income tax ("tax- exempt securities"). The Fund seeks as its
secondary objective preservation of capital by purchasing and selling interest
rate futures contracts ("financial futures") and tax-exempt bond index futures
contracts ("index futures"), and by purchasing and writing put and call options
on debt securities, financial futures, tax-exempt bond indices and index futures
to hedge against changes in the general level of interest rates.
JOHN HANCOCK EMERGING GROWTH FUND ("Emerging Growth Fund") seeks long-term
growth of capital through investing primarily (at least 80% of its assets in
normal circumstances) in the common stocks of rapidly growing small-sized
companies (those with a market capitalization of $500 million or less) to
medium-sized companies (those with a market capitalization of up to $1 billion.)
Current income is not a factor of consequence in the selection of stocks for the
Fund.

There can be no assurance that the Funds will achieve their respective
investment objectives.

CERTAIN INVESTMENT PRACTICES

GOVERNMENT SECURITIES. Each Fund may invest in U.S. Government
securities, which are obligations issued or guaranteed by the U.S. Government
and its agencies, authorities or instrumentalities. Certain U.S. Government
securities, including U.S. Treasury bills, notes and bonds, and Government
National Mortgage Association certificates ("Ginnie Maes"), are supported by the
full faith and credit of the United States. Certain other U.S. Government

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<PAGE> 91

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

CUSTODIAL RECEIPTS. The Funds may each acquire custodial receipts in
respect of U.S. government securities. Such custodial receipts evidence
ownership of future interest payments, principal payments or both on certain
notes or bonds. These custodial receipts are known by various names, including
Treasury Receipts, Treasury Investors Growth Receipts ("TIGRs"), and
Certificates of Accrual on Treasury Securities ("CATS"). For certain securities
law purposes, custodial receipts are not considered U.S. government securities.
BANK AND CORPORATE OBLIGATIONS. Each of the Funds may invest in
commercial paper. Commercial paper represents short-term unsecured promissory
notes issued in bearer form by banks or bank holding companies, corporations and
finance companies. The commercial paper purchased by the Funds consists of
direct U.S. dollar denominated obligations of domestic or foreign issuers. Bank
obligations in which a Fund may invest include certificates of deposit, bankers'
acceptances and fixed time deposits. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a definite
period of time and earning a specified return.
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity. Fixed time deposits
are bank obligations payable at a stated maturity date and bearing interest at a
fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but
may be subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation. There are no
contractual restrictions on the right to transfer a beneficial interest in a
fixed time deposit to a third party, although there is no market for such
deposits. Bank notes and bankers' acceptances rank junior to domestic deposit
liabilities of the bank and pari passu with other senior, unsecured obligations
of the bank. Bank notes are not insured by the Federal Deposit Insurance
Corporation or any other insurer. Deposit notes are insured by the Federal
Deposit Insurance Corporation only to the extent of $100,000 per depositor per
bank.
MUNICIPAL OBLIGATIONS. Money Market Fund, High Yield Bond Fund and High
Yield Tax-Free Fund may invest in a variety of municipal obligations which
consist of municipal bonds, municipal notes and municipal commercial paper.
Municipal Bonds. Municipal bonds are issued to obtain funds for various
public purposes including the construction of a wide range of public facilities
such as airports, highways, bridges, schools, hospitals, housing, mass
transportation, streets and water and sewer works. Other public purposes for
which municipal bonds may be issued include refunding outstanding obligations,
obtaining funds for general operating expenses and obtaining funds to lend to
other public institutions and facilities. In addition, certain types of
industrial development bonds are issued by or on behalf of public authorities to
obtain funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on them is
exempt from federal income tax. The payment of principal and interest by
issuers of certain obligations purchased by a Fund may be guaranteed by a letter
of credit, note repurchase agreement, insurance or other credit facility
agreement offered by a bank or other financial

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<PAGE> 92

institution. Such guarantees and the creditworthiness of guarantors will
be considered by the Adviser in determining whether a municipal obligation meets
the Fund's investment quality requirements. No assurance can be given that a
municipality or guarantor will be able to satisfy the payment of principal or
interest on a municipal obligation.
Municipal Notes. Municipal notes are short-term obligations of
municipalities, generally with a maturity ranging from six months to three
years. The principal types of such notes include tax, bond and revenue
anticipation notes and project notes.
Municipal Commercial Paper. Municipal commercial paper is a short-term
obligation of a municipality, generally issued at a discount with a maturity of
less than one year. Such paper is likely to be issued to meet seasonal working
capital needs of a municipality or interim construction financing. Municipal
commercial paper is backed in many cases by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks and other institutions.
Federal tax legislation enacted in the 1980's placed substantial new
restrictions on the issuance of the bonds described above and in some cases
eliminated the ability of state or local governments to issue municipal
obligations for some of the above purposes. Such restrictions do not affect the
Federal income tax treatment of municipal obligations in which a Fund may invest
which were issued prior to the effective dates of the provisions imposing such
restrictions. The effect of these restrictions may be to reduce the volume of
newly issued municipal obligations.
Issuers of municipal obligations are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Act, and laws, if any, which may be
enacted by Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations. There is also the possibility that as a result of
litigation or other conditions the power or ability of any one or more issuers
to pay when due the principal of and interest on their municipal obligations may
be affected.
The yields of municipal bonds depend upon, among other things, general
money market conditions, general conditions of the municipal bond market, size
of a particular offering, the maturity of the obligation and rating of the
issue. The ratings of Standard & Poor's Ratings Group ("S&P"), Moody's
Investors Service, Inc. ("Moody's") and Fitch Investors Service ("Fitch")
represent their respective opinions on the quality of the municipal bonds they
undertake to rate. It should be emphasized, however, that ratings are general
and not absolute standards of quality. Consequently, municipal bond with the
same maturity, coupon and rating may have different yields and municipal bonds
of the same maturity and coupon with different ratings may have the same yield.
See the Appendix for a description of ratings. Many issuers of securities
choose not to have their obligations rated. Although unrated securities
eligible for purchase by a Fund must be determined to be comparable in quality
to securities having certain specified ratings, the market for unrated
securities may not be as broad as for rated securities since many investors rely
on rating organizations for credit appraisal.
MORTGAGE-BACKED SECURITIES. Government Income Fund and High Yield Bond
Fund may invest in mortgage pass-through certificates and multiple-class
pass-through securities, such as real estate mortgage investment conduits
("REMIC") pass-through certificates, collateralized mortgage obligations
("CMOs") and stripped mortgage-backed securities ("SMBS"), and other types of
"Mortgage-Backed Securities" that may be available in the future.

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<PAGE> 93

GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage
pass-through securities represent participation interests in pools of
residential mortgage loans and are issued by U.S. Governmental or private
lenders and guaranteed by the U.S. Government or one of its agencies or
instrumentalities, including but not limited to the Government National Mortgage
Association ("Ginnie Mae"), the Federal National Mortgage Association ("Fannie
Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie
Mae certificates are guaranteed by the full faith and credit of the U.S.
Government for timely payment of principal and interest on the certificates.
Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered and
privately owned corporation, for full and timely payment of principal and
interest on the certificates. Freddie Mac certificates are guaranteed by
Freddie Mac, a corporate instrumentality of the U.S. Government, for timely
payment of interest and the ultimate collection of all principal of the related
mortgage loans.

MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE
OBLIGATIONS. CMOs and REMIC pass-through or participation certificates may be
issued by, among others, U.S. Government agencies and instrumentalities as well
as private lenders. CMOs and REMIC certificates are issued in multiple classes
and the principal of and interest on the mortgage assets may be allocated among
the several classes of CMOs or REMIC certificates in various ways. Each class of
CMOs or REMIC certificates, often referred to as a "tranche," is issued at a
specific adjustable or fixed interest rate and must be fully retired no later
than its final distribution date. Generally, interest is paid or accrues on all
classes of CMOs or REMIC certificates on a monthly basis.

Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie
Mac certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on CMOs
is provided from payments of principal and interest on collateral of mortgaged
assets and any reinvestment income thereon.

A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code of 1986, as amended (the "Code") and invests in certain
mortgages primarily secured by interests in real property and other permitted
investments.

STRIPPED MORTGAGE-BACKED SECURITIES. SMBS are derivative multiple-class
mortgage- backed securities. SMBS are usually structured with two classes that
receive different proportions of interest and principal distributions on a pool
of mortgage assets. A typical SMBS will have one class receiving some of the
interest and most of the principal, while the other class will receive most of
the interest and the remaining principal. In the most extreme case, one class
will receive all of the interest (the "interest only" class) while the other
class will receive all of the principal (the "principal only" class). The
yields and market risk of interest only and principal only SMBS, respectively,
may be more volatile than those of other fixed income securities. The staff of
the SEC considers privately issued SMBS to be illiquid.

STRUCTURED OR HYBRID NOTES. Government Income Fund, High Yield Bond
Fund and High Yield Tax-Free 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 benchmarks include stock prices, currency exchange rates and
physical commodity prices. Investing in a structured note allows a 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, a Fund may forego all

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<PAGE> 94

or part of the interest and principal that would be payable on a comparable
conventional note; a 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.

RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in
Mortgage- Backed Securities involves certain risks, including the failure of a
counter-party to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. In addition, investing in the
lowest tranche of CMOs and REMIC certificates involves risks similar to those
associated with investing in equity securities. Further, the yield
characteristics of Mortgage-Backed Securities differ from those of traditional
fixed income securities. The major differences typically include more frequent
interest and principal payments (usually monthly), the adjustability of interest
rates, and the possibility that prepayments of principal may be made
substantially earlier than their final distribution dates.

Prepayment rates are influenced by changes in current interest rates and
a variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, a Fund may fail to recoup fully its
investment in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental, agency or other guarantee. When a Fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may receive a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. Government securities as a means of "locking
in" interest rates.

Conversely, in a rising interest rate environment, a declining
prepayment rate will extend the average life of many Mortgage-Backed Securities.
This possibility is often referred to as extension risk. Extending the average
life of a Mortgage-Backed Security increases the risk of depreciation due to
future increases in market interest rates.

RISK ASSOCIATED WITH SPECIFIC TYPES OF DERIVATIVE DEBT SECURITIES.
Different types of derivative debt securities are subject to different
combinations of prepayment, extension and/or interest rate risk. Conventional
mortgage pass-through securities and sequential pay CMOs are subject to all of
these risks, but are typically not leveraged. Thus, the magnitude of exposure
may be less than for more leveraged Mortgage-Backed Securities.

The risk of early prepayments is the primary risk associated with
interest only debt securities ("IOs"), super floaters, other leveraged floating
rate instruments and Mortgage-Backed Securities purchased at a premium to their
par value. In some instances, early prepayments may result in a complete loss
of investment in certain of these securities. The primary risks associated with
certain other derivative debt securities are the potential extension of average
life and/or depreciation due to rising interest rates.

These securities include floating rate securities based on the Cost of
Funds Index ("COFI floaters"), other "lagging rate" floating rate securities,
floating rate securities that are subject to a maximum interest rate ("capped
floaters"), Mortgage-Backed Securities purchased at a discount, leveraged
inverse floating rate securities ("inverse floaters"), principal only debt
securities ("POs"), certain residual or support tranches of CMOs and index
amortizing notes. Index amortizing notes are not Mortgage-Backed Securities,
but are subject to extension risk resulting from the issuer's failure to
exercise its option to call or redeem the notes before their stated

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maturity date. Leveraged inverse IOs combine several elements of the
Mortgage-Backed Securities described above and thus present an especially
intense combination of prepayment, extension and interest rate risks.

Planned amortization class ("PAC") and target amortization class ("TAC")
CMO bonds 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." To the extent that prepayment
rates remain within these prepayment ranges, the residual or support tranches of
PAC and TAC CMOs assume the extra prepayment, extension and interest rate risk
associated with the underlying mortgage assets.

Other types of floating rate derivative debt securities present more
complex types of interest rate risks. For example, range floaters are subject
to the risk that the coupon will be reduced to below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to depreciation in the
event of an unfavorable change in the spread between two designated interest
rates. X-reset floaters have a coupon that remains fixed for more than one
accrual period. Thus, the type of risk involved in these securities depends on
the terms of each individual X-reset floater.

ASSET-BACKED SECURITIES. Government Income Fund and High Yield Bond Fund
may invest a portion of their assets in asset-backed securities which are rated
in one of the two highest rating categories by a nationally recognized
statistical rating organization (e.g., S&P or Moody's) or if not so rated, of
equivalent investment quality in the opinion of the Adviser.
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, a Fund's ability to maintain positions in
such 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 servicers to retain possession of the underlying obligations. If the
servicer 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.
ASSET-BASED SECURITIES. Global Resources Fund may invest in debt
securities, preferred stocks or convertible securities, the principal amount,
redemption terms or conversion terms of which are related to the market price of
some resource asset such as gold bullion. For the purposes of the Fund's
investment policies, these securities are referred to as asset-based securities.

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If the asset-based security is backed by a bank letter of credit or
other similar facility, the Adviser may take such backing into account in
determining the credit quality of the asset-based security. Although an
asset-based security and the related natural resource asset generally are
expected to move in the same direction, there may not be perfect correlation in
the two price movements. Asset-based securities may not be secured by a
security interest in or claim on the underlying natural resource assets. The
Fund's holdings of such securities may not generate appreciable current income
and the return from such securities primarily will be from any profit on the
sale, maturity or conversion thereof at a time when the price of the related
asset is higher than it was when the Fund purchased such securities.
The asset-based securities in which the Fund may invest may bear
interest or pay preferred dividends at below market (or even relatively
nominal) rates. Certain asset-based securities may be payable at maturity in
cash at the stated principal amount or, at the option of the holder, directly
in a stated amount of the asset to which it is related. In such instance,
because the Fund presently does not intend to invest directly in natural
resource assets other than gold bullion, the Fund would sell the asset-based
security in the secondary market, to the extent one exists, prior to maturity
if the value of the stated amount of the asset exceeds the stated principal
amount and thereby realize the appreciation in the underlying asset.
The Fund will not acquire asset-based securities for which no
established secondary trading market exists if at the time of acquisition more
than 10% of its total assets are invested in securities which are not readily
marketable. The Fund may invest in asset-based securities without limit when
it has the right to sell such securities to the issuer or a stand-by bank or
broker and receive the principal amount or redemption price thereof less
transaction costs on no more than seven days notice or when the Fund has the
right to convert such securities into a readily marketable security in which it
could otherwise invest upon not more than seven days notice.

SPECIAL CONSIDERATIONS RELATED TO INVESTMENT IN GOLD. Under certain
circumstances, Global Resources Fund may invest a majority of its assets in
gold, gold related securities or securities of gold-related companies. Based
on historic experience, during periods of economic or financial instability the
securities of such companies may be subject to extreme price fluctuations,
reflecting the high volatility of gold prices during such periods. Gold may be
affected by unpredictable international monetary and political policies, social
conditions within a particular country, trade imbalances or trade or currency
restrictions between countries. In addition, the instability of gold prices
may result in volatile earnings of gold-related companies which, in turn, may
affect adversely the financial condition of such companies. Gold mining
companies also are subject to the risks generally associated with mining
operations.

The major producers of gold include the Republic of South Africa,
Russia, Canada, the United States, Brazil and Australia. Sales of gold by
Russia are largely unpredictable and often relate to political and economic
considerations rather than to market forces. Economic, social and political
developments within South Africa may affect significantly South African gold
production and the markets for South African gold which may in turn
significantly affect the price of gold.

The Fund is currently authorized to invest up to 10% of its assets in
gold bullion and coins, although it does not currently intend to invest in
coins. The Fund may seek to increase this limit to 25% through negotiation
with a certain state which imposes the 10% limit as a condition for qualifying
the shares of the Fund for sale in that state.

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Investments in gold may help to hedge against inflation and major
fluctuations in the Fund's shares because at certain times the price of gold
has fluctuated less widely than the value of the securities which are permitted
investments. When the Fund purchases bullion, the Adviser currently intends
that it will be only in a form that is readily marketable and that it will be
delivered to and stored with a qualified U.S. bank. An investment in bullion
earns no investment income and involves higher custody and transaction costs
than investments in securities. The Fund will also incur the cost of insurance
in connection with holding gold. The market for gold bullion is presently
unregulated which could affect the ability of the Fund to acquire or dispose of
gold bullion. In order to qualify as a regulated investment company for
federal income taxes, the Fund may receive no more than 10% of its yearly gross
income from gains caused by selling gold bullion or coins and from certain
other sources that do not produce "qualifying" income. The Fund may be
required, therefore, either to hold its gold bullion or sell it at a loss, or
to sell its portfolio securities at a gain, when it would not otherwise do so
for investment reasons. The Fund may also purchase precious metal warehouse
receipts that may be convertible into cash or gold bullion as an alternative to
a direct investment in gold. Whereas gold bullion is traded in the form of
contracts to buy or sell bullion which are in the nature of futures or
commodities contracts, warehouse receipts represent ownership of a specified
quantity of identified gold bars held in storage. Although ownership of gold
in this manner entails storage and insurance expense, there is an active
over-the-counter market in such receipts so that they are a liquid investment.
For purposes of the Fund's investment limitations, such warehouse receipts
would be considered to be equivalent to direct investments in the precious
metals.
FOREIGN SECURITIES AND EMERGING COUNTRIES. Emerging Growth Fund,
Global Resources Fund and High Yield Bond Fund may invest in securities of
foreign issuers. These Funds may also invest in debt and equity securities of
corporate and governmental issuers of countries with emerging economies or
securities markets. Government Income Fund may invest in foreign currency
denominated securities of foreign governments considered stable by the Adviser
and may hedge such investments through various options and futures transactions
involving foreign currencies. Money Market Fund may invest in foreign
securities and in certificates of deposit, bankers' acceptances and fixed time
deposits and other obligations issued by foreign banks and their U.S. and
foreign branches and foreign branches of U.S. banks. Money Market Fund may
also invest in municipal instruments backed by letters of credit issued by
certain of such banks. Under current Securities and Exchange Commission ("SEC")
rules relating to the use of the amortized cost method of portfolio securities
valuation, Money Market Fund is restricted to purchasing U.S. dollar
denominated securities.
Investing in obligations of non-U.S. issuers and foreign banks,
particularly securities of issuers located in emerging countries, may entail
greater risks than investing in similar securities of U.S. issuers. These
risks include (i) social, political and economic instability; (ii) the small
current size of the markets for many such securities and the currently low or
nonexistent volume of trading, which may result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict a
Fund's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
Investing in securities of non-U.S. companies may entail additional
risks due to the potential political and economic instability of certain
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Fund could lose its entire investment in any
such country.

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In addition, even though opportunities for investment may exist in
foreign countries, and in particular emerging markets, any change in the
leadership or policies of the governments of those countries or in the
leadership or policies of any other government which exercises a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian
regimes, the governments of a number of Latin American countries previously
expropriated large quantities of real and personal property similar to the
property which may be represented by the securities purchased by the Funds.
The claims of property owners against those governments were never finally
settled. There can be no assurance that any property represented by foreign
securities purchased by a Fund will not also be expropriated, nationalized, or
otherwise confiscated. If such confiscation were to occur, a Fund could lose a
substantial portion of its investments in such countries. A Fund's investments
would similarly be adversely affected by exchange control regulation in any of
those countries.
Certain countries in which the Funds may invest may have vocal
minorities that advocate radical religious or revolutionary philosophies or
support ethnic independence. Any disturbance on the part of such individuals
could carry the potential for widespread destruction or confiscation of
property owned by individuals and entities foreign to such country and could
cause the loss of a Fund's investment in those countries.
Certain countries prohibit or impose substantial restrictions on
investments in their capital markets, particularly their equity markets, by
foreign entities such as the Funds. As illustrations, certain countries
require governmental approval prior to investments by foreign persons, or limit
the amount of investment by foreign persons in a particular company, or limit
the investment by foreign persons to only a specific class of securities of a
company that may have less advantageous terms than securities of the company
available for purchase by nationals. Moreover, the national policies of
certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income,
capital or the proceeds of securities sales by foreign investors. A Fund could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and
profits appearing on the financial statements of such a company may not reflect
its financial position or results of operations in the way they would be
reflected had such financial statements been prepared in accordance with U.S.
generally accepted accounting principles. Most foreign securities held by the
Funds will not be registered with the SEC and such issuers thereof will not be
subject to the SEC's reporting requirements. Thus, there will be less
available information concerning foreign issuers of securities held by the
Funds than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Adviser or Subadviser will take
appropriate steps to evaluate the proposed investment, which may include
on-site inspection of the issuer, interviews with its management and
consultations with accountants, bankers and other specialists. There is
substantially less publicly available information about foreign companies than
there are reports and ratings published about U.S. companies and the U.S.
government. In addition, where public information is available, it may be less
reliable than such information regarding U.S. issuers.

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Because the Funds (other than Money Market Fund) may invest, and Global
Resources Fund will (under normal circumstances) invest a substantial portion
of their total assets, in securities which are denominated or quoted in foreign
currencies, the strength or weakness of the U.S. dollar against such currencies
may account for part of the Funds' investment performance. A decline in the
value of any particular currency against the U.S. dollar will cause a decline
in the U.S. dollar value of a Fund's holdings of securities denominated in such
currency and, therefore, will cause an overall decline in the Fund's net asset
value and any net investment income and capital gains to be distributed in U.S.
dollars to shareholders of the Fund.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the movement
of interest rates, the pace of business activity in certain other countries and
the U.S., and other economic and financial conditions affecting the world
economy.
Although the Funds value their respective assets daily in terms of U.S.
dollars, the Funds do not intend to convert their holdings of foreign
currencies into U.S. dollars on a daily basis. However, the Funds may do so
from time to time, and investors should be aware of the costs of currency
conversion. Although currency dealers do not charge a fee for conversion, they
do realize a profit based on the difference ("spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to sell that currency to the dealer.
Securities of foreign issuers, and in particular many emerging country
issuers, may be less liquid and their prices more volatile than securities of
comparable U.S. issuers. In addition, foreign securities exchanges and brokers
are generally subject to less governmental supervision and regulation than in
the U.S., and foreign securities exchange transactions are usually subject to
fixed commissions, which are generally higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund
are uninvested and no return is earned thereon. The inability of a Fund to
make intended security purchases due to settlement problems could cause the
Fund to miss attractive investment opportunities. Inability to dispose of a
portfolio security due to settlement problems either could result in losses to
a Fund due to subsequent declines in value of the portfolio security or, if the
Fund has entered into a contract to sell the security could result in possible
liability to the purchaser.
The Funds' investment income or, in some cases, capital gains from
foreign issuers may be subject to foreign withholding or other taxes, thereby
reducing the Funds' net investment income and/or net realized capital gains.
See "Tax Status."
DEPOSITARY RECEIPTS. As discussed in the Prospectuses, Emerging Growth
Fund, Global Resources Fund and High Yield Bond Fund may invest in the
securities of foreign issuers in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") or other securities convertible
into securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted but rather in the currency of the market in which they are traded.
ADRs are receipts typically issued by an American bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs are receipts issued in Europe by banks or depositories which evidence a
similar ownership arrangement. Generally, ADRs, in registered form, are
designed for use in U.S. securities markets and EDRs, in bearer form, are
designed for use in European securities markets.

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OPTIONS ON FOREIGN CURRENCIES. Global Resources Fund may purchase and
write put and call options on foreign currencies for the purpose of protecting
against declines in the dollar value of portfolio securities and against
increases in the dollar cost of securities to be acquired.
As in the case of other types of options, however, the writing of an
option on foreign currency will constitute only a partial hedge, such as the
amount of the premium received and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs.
Options on foreign currencies are traded in a manner substantially
similar to options on securities. In particular, an option on foreign currency
provides the holder with the right to purchase, in the case of a call option,
or to sell, in the case of a put option, a stated quantity of a particular
currency for a fixed price up to a stated expiration date. The writer of the
option undertakes the obligation to deliver, in the case of a call option, or
to purchase, in the case of a put option, the quantity of the currency called
for in the option, upon exercise of the option by the holder.
As in the case of other types of options, the holder of an option on
foreign currency is required to pay a one-time, non-refundable premium, which
represents the cost of purchasing the option. The holder can lose the entire
amount of this premium, as well as related transaction costs, but not more than
this amount. The writer of the option, in contrast, generally is required to
make initial and variation margin payments similar to margin deposits required
in the trading of futures contracts and the writing of other types of options.
The writer is therefore subject to risk of loss beyond the amount originally
invested and above the value of the option at the time it is entered into.
Certain options on foreign currencies like forward contracts are traded
over-the-counter through financial institutions acting as market-makers in such
options and the underlying currencies. Such transactions therefore involve
risks not generally associated with exchange- traded instruments. Options on
foreign currencies may also be traded on national securities exchanges
regulated by the SEC or commodities exchanges regulated by the Commodity
Futures Trading Commission.
FORWARD FOREIGN CURRENCY CONTRACTS. Emerging Growth Fund, Global
Resources Fund and High Yield Bond Fund may engage in forward foreign currency
transactions. Generally, the foreign currency exchange transactions of the
Funds 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. A
Fund may also deal in forward foreign currency exchange contracts involving
currencies of the different countries in which it may invest as a hedge against
possible variations in the foreign exchange rate between these currencies.
This is accomplished through contractual agreements to purchase or sell a
specified currency at a specified future date and price set at the time of the
contract. The Funds' dealings in forward foreign currency exchange contracts
will be limited to hedging either specified transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward foreign
currency contracts with respect to specific receivables or payables of a 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. A 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. The Board of Directors
has adopted a policy of monitoring the Funds' foreign currency contract income
to assure that the Funds qualify as regulated investment companies under the
Code. The Fund will not engage in speculative forward foreign currency
exchange transactions.

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If a Fund purchases a forward contract, its custodian bank will
segregate cash or high grade liquid debt securities in a separate account of
the Fund in an amount equal to the value of the Fund's total assets committed
to the consummation of such forward contract. Those assets will be valued at
market daily and if the value of the securities in the separate account
declines, additional cash or securities will be placed in the account so that
the value of the account will be equal to the amount of the Fund's commitment
with respect to such contracts.
Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency rises. Moreover, it
may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates.
The cost to a Fund of engaging in foreign currency exchange
transactions varies with such factors as the currency involved, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency are usually conducted on a principal basis, no
fees or commissions are involved.

REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
A repurchase agreement is a contract under which the Fund would acquire a
security for a relatively short period (generally not more than seven days)
subject to the obligation of the seller to repurchase and the Fund to resell
such security at a fixed time and price (representing the Fund's cost plus
interest). The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with securities dealers. The Adviser
will continuously monitor the creditworthiness of the parties with whom the
Fund enters into repurchase agreements. The Fund has established a procedure
providing that the securities serving as collateral for each repurchase
agreement must be delivered to the Fund's custodian either physically or in
book-entry form and that the collateral must be marked to market daily to
ensure that each repurchase agreement is fully collateralized at all times. In
the event of bankruptcy or other default by a seller of a repurchase agreement,
the Fund could experience delays in liquidating the underlying securities and
could experience losses, including the possible decline in the value of the
underlying securities during the period which the Fund seeks to enforce its
rights thereto, possible subnormal levels of income and lack of access to
income during this period, and the expense of enforcing its rights. The Fund
will not invest in a repurchase agreement maturing in more than seven days, if
such investment, together with other illiquid securities held by the Fund
(including restricted securities) would exceed 10% of the Fund's total assets.

REVERSE REPURCHASE AGREEMENTS. Each Fund may also enter into reverse
repurchase agreements which involve the sale of government securities held in
its portfolio to a bank or securities firm 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. The Fund
will use proceeds obtained from the sale of securities pursuant to reverse
repurchase agreements to purchase other investments. The use of borrowed funds
to make investments is a practice known as "leverage," which is considered
speculative. Use of reverse repurchase agreements is an investment technique
that is intended to increase income. Thus, a Fund will enter into a reverse
repurchase agreement only when the Adviser determines that the interest income
to be earned from the investment of the proceeds is greater than the interest
expense of the transaction. However, there is a risk that interest expense will
nevertheless exceed the income earned. Reverse repurchase agreements involve
the risk that the market value of securities purchased by a 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. A Fund will also
continue to be subject to the

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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, a Fund will establish and maintain with the Fund's custodian a
separate account consisting of highly liquid, marketable securities in an
amount at least equal to the repurchase prices of the securities (plus any
accrued interest thereon) under such agreements. In addition, a Fund will not
enter into reverse repurchase agreements and other borrowings exceeding in
the aggregate more than 33 1/3% of the market value of its total net assets.
A Fund will enter into reverse repurchase agreements only with selected
registered broker/dealers or with federally insured banks or savings and loan
associations which are approved in advance as being creditworthy by the Board
of Directors. Under procedures established by the Board of Directors, the
Adviser will monitor the creditworthiness of the firms involved.

FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. Each Fund (other than
Money Market 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. A
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, a Fund contracts to
purchase securities for a fixed price at a future date beyond customary
settlement time.

When a 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 Funds losing
the opportunity to obtain a price and yield considered to be advantageous. The
purchase of securities on a when-issued and 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 a 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, high grade debt 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, a Fund may enter into offsetting
contracts for the forward sale of other securities that it owns.

SHORT SALES. Global Resources 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 and may be required to pay a
premium.

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

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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 U.S. Government securities equal to the difference
between (a) the market value of the securities sold short at the time they were
sold short and (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 (1) 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, and (2) the amount deposited in it plus the amount
deposited with the broker as collateral will not be less than the market value
of the securities at the time they were sold short.

Short selling may produce higher than normal portfolio turnover which
may result in increased transaction costs to the Fund and may result in gains
from the sale of securities deemed to have been held for less than three
months, which gains must be less than 30% of the Fund's gross income in order
for the Fund to qualify as a regulated investment company under the Code.

LOWER RATED HIGH YIELD DEBT OBLIGATIONS. Emerging Growth Fund,
Government Income Fund, High Yield Bond Fund and High Yield Tax-Free Fund may
invest in high yielding, fixed income securities rated below investment grade
(e.g., rated Baa or lower by Moody's or BBB or lower by S&P.

Ratings are based largely on the historical financial condition of the
issuer. Consequently, the rating assigned to any particular security is not
necessarily a reflection of the issuer's current financial condition, which may
be better or worse than the rating would indicate.

See the Appendix to this SAI which describes the characteristics of
corporate bonds in the various rating categories. The Fund may invest in
comparable quality unrated securities which, in the opinion of the Adviser,
offer comparable yields and risks to those securities which are rated.

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

The market price and liquidity of lower rated fixed income securities
generally respond to short term corporate and market developments to a greater
extent than do the price and liquidity of higher rated securities because such
developments are perceived to have a more direct relationship to the ability of
an issuer of such lower rated securities to meet its ongoing debt obligations.

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

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CREDIT AND INTEREST RATE RISKS. In addition to the information
contained in the Prospectuses, investors should note that while ratings by a
rating institution provide a generally useful guide to credit risks, they do
not, nor do they purport to, offer any criteria for evaluating interest rate
risk. Changes in the general level of interest rates cause fluctuations in the
prices of fixed-income securities already outstanding and will therefore result
in fluctuation in net asset value of the shares of Funds to the extent such the
Funds invest in these securities. The extent of the fluctuation is determined
by a complex interaction of a number of factors. The Adviser will evaluate
those factors it considers relevant and will make portfolio changes when it
deems it appropriate in seeking to reduce the risk of depreciation in the value
of a Fund's portfolio. However, in seeking to achieve a Fund's primary
objectives, there will be times, such as during periods of rising interest
rates, when depreciation and realization of comparable losses on securities in
the portfolio will be unavoidable. Moreover, medium and lower-rated securities
and unrated securities of comparable quality tend to be subject to wider
fluctuations in yield and market values than higher rated securities. Such
fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the net asset value of the
Fund's portfolio. Other risks of lower quality securities include:

(i) subordination to the prior claims of banks and other senior lenders
and

(ii) the operation of mandatory sinking fund or call/redemption
provisions during periods of declining interest rates whereby
the Funds may reinvest premature redemption proceeds in lower
yielding portfolio securities.

In determining which securities to purchase or hold in a Fund's
portfolio (including, in the case of High Yield Bond Fund, investments in
either unrated or rated securities which are in default) and in seeking to
reduce credit and interest rate risk consistent with a Fund's investment
objective and policies, the Adviser will rely on information from various
sources, including: the rating of the security; research, analysis and
appraisals of brokers and dealers; the views of the Fund's Directors and others
regarding economic developments and interest rate trends; and the Adviser's own
analysis of factors it deems relevant as it pertains to achieving a Fund's
investment objective(s).

PURCHASES OF WARRANTS. Emerging Growth Fund's and Global Resources
Fund's investment policies permit the purchase of rights and warrants, which
represent rights to purchase the common stock of companies at designated
prices. No such purchase will be made by a Fund, however, if the Fund's
holdings of warrants (valued at lower of cost or market) would exceed 5% of the
value of the Fund's total net assets as a result of the purchase. In addition,
no Fund will purchase a warrant or right which is not listed on the New York or
American Stock Exchanges if the purchase would result in the Fund's owning
unlisted warrants in an amount exceeding 2% of its net assets.
CONVERTIBLE SECURITIES. Emerging Growth Fund, Global Resources Fund
and High Yield Bond Fund may invest in convertible securities. Convertible
securities are securities that may be converted at either a stated price or
stated rate into underlying shares of common stock of the same issuer.
Convertible securities have general characteristics similar to both fixed
income and equity securities. Although to a lesser extent than with straight
debt securities, the market value of convertible securities tends to decline as
interest rated increase, and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value of
the underlying common stocks and therefore will also react to variations in the
general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and
consequently may not experience market value declines to the same extent as the
underlying

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<PAGE> 105

common stock. When the market price of the underlying common stock increases,
the prices of the convertible securities tend to rise as a reflection of the
value of the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer. However, the issuers of
convertible securities may default on their obligations.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS. Government Income Fund and High
Yield Bond Fund may enter into mortgage "dollar roll" transactions with
selected banks and broker-dealers pursuant to which a Fund sells
Mortgage-Backed Securities for delivery in the future (generally within 30
days) and simultaneously contracts to repurchase substantially similar (same
type, coupon and maturity) securities on a specified future date. These Funds
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 securities. Dollar rolls in which the Funds may invest will be limited
to covered rolls.

For financial reporting and tax purposes, the Funds propose to treat
mortgage dollar rolls as two separate transactions; one involving the purchase
of a security and a separate transaction involving a sale. The Funds do not
currently intend to enter into mortgage dollar rolls that are accounted for as
a financing. Mortgage dollar rolls involve certain risks including the
following: if the broker-dealer to whom a Fund sells the security becomes
insolvent, the Fund's right to purchase or repurchase the Mortgage-Backed
Securities subject to the mortgage dollar roll may be restricted and the
instrument which the Fund is required to repurchase may be worth less than an
instrument which the Fund originally held. Successful use of mortgage dollar
rolls will depend upon the Adviser's ability to predict correctly interest
rates and mortgage prepayments. For these reasons, there is no assurance that
mortgage dollar rolls can be successfully employed.

FINANCIAL FUTURES CONTRACTS. To the extent set forth in their
Prospectuses, the Funds (other than Money Market Fund) may buy and sell futures
contracts (and related options) on stocks, stock indices, debt securities,
currencies, interest rate indices, and other instruments. Each Fund may hedge
its portfolio by selling or purchasing financial futures contracts as an offset
against the effects of changes in interest rates or in security or foreign
currency values. Although other techniques could be used to reduce exposure to
interest rate fluctuations, a Fund may be able to hedge its exposure more
effectively and perhaps at a lower cost by using financial futures contracts.
The Funds may enter into financial futures contracts for hedging and other non-
speculative purposes to the extent permitted by regulations of the Commodity
Futures Trading Commission ("CFTC").

Financial futures contracts have been designed by boards of trade which
have been designated "contract markets" by the CFTC. Futures contracts are
traded on these markets in a manner that is similar to the way a stock is
traded on a stock exchange. The boards of trade, through their clearing
corporations, guarantee that the contracts will be performed. Currently,
financial futures contracts are based on interest rate instruments such as
long-term U.S. Treasury bonds, U.S. Treasury notes, Government National
Mortgage Association ("GNMA") modified pass-through mortgage-backed securities,
three-month U.S. Treasury bills, 90-day commercial paper, bank certificates of
deposit and Eurodollar certificates of deposit. It is expected that if other
financial futures contracts are developed and traded the Funds may engage in
transactions in such contracts.

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<PAGE> 106

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

At the time a Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
Government securities, known as "initial margin," ranging upward from 1.1% of
the value of the financial futures contract being traded. The margin required
for a financial futures contract is set by the board of trade or exchange on
which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the financial futures contract which is returned to the Fund
upon termination of the contract, assuming all contractual obligations have
been satisfied. The Funds expect to earn interest income on their initial
margin deposits. Each day, the futures contract is valued at the official
settlement price of the board of trade or exchange on which it is traded.
Subsequent payments, known as "variation margin," to and from the broker are
made on a daily basis as the market price of the financial futures contract
fluctuates. This process is known as "mark to market." Variation margin does
not represent a borrowing or lending by the Funds but is instead settlement
between the Funds and the broker of the amount one would owe the other if the
financial futures contract expired. In computing net asset value, the Funds
will mark to market their respective open financial futures positions.

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

A decision as to whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge may be unsuccessful to
some degree because of market behavior or unexpected interest rate trends. The
Funds will bear the risk that the price of the securities being hedged will not
move in complete correlation with the price of the futures contracts used as a
hedging instrument. Although the Adviser believes that the use of financial
futures contracts will benefit the Funds, an incorrect prediction could result
in a loss on both the hedged securities in the respective Fund's portfolio and
the hedging vehicle so that the Fund's return might have been better had
hedging not been attempted. However, in the absence of the ability to hedge,
the Adviser might have taken portfolio actions in anticipation of the same
market movements with similar investment results but, presumably, at greater
transaction costs. The low

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<PAGE> 107

margin deposits required for futures transactions permit an extremely high
degree of leverage. A relatively small movement in a futures contract may
result in losses or gains in excess of the amount invested.

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

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

OPTIONS ON FINANCIAL FUTURES CONTRACTS. To the extent set forth in
their Prospectuses, the Funds (other than Money Market Fund) may buy and sell
options on financial futures contracts on stocks, stock indices, debt
securities, currencies, interest rate indices, and other instruments. An option
on a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract at a specified exercise price
at any time during the period of the option. Upon exercise, the writer of the
option delivers the futures contract to the holder at the exercise price. The
Funds would be required to deposit with their custodian initial and variation
margin with respect to put and call options on futures contracts written by
them. Options on futures contracts involve risks similar to the risks relating
to transactions in financial futures contracts. Also, an option purchased by a
Fund may expire worthless, in which case a Fund would lose the premium it paid
for the option.

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

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<PAGE> 108

As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Funds to elect to comply with a
different test, under which the aggregate initial margin and premiums required
to establish nonhedging positions in futures contracts and options on futures
will not exceed 5% of the net asset value of the respective 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. The Funds will engage in transactions in futures contracts only to
the extent such transactions are consistent with the requirements of the Code
for maintaining their qualifications as regulated investment companies for
Federal income tax purposes.

When the Funds purchase financial futures contracts, or write put
options or purchase call options thereon, cash or liquid, high grade debt
securities will be deposited in a segregated account with the Funds' custodian
in an amount that, together with the amount of initial and variation margin
held in the account of its broker, equals the market value of the futures
contracts.

OPTIONS TRANSACTIONS. To the extent set forth in their Prospectuses,
the Funds (other than Money Market Fund) may write listed and over-the-counter
covered call options and covered put options on securities in order to earn
additional income from the premiums received. In addition, the Funds may
purchase listed and over-the-counter call and put options. The extent to which
covered options will be used by the Funds will depend upon market conditions
and the availability of alternative strategies.

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

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

When writing listed and over-the-counter covered put options on
securities, the Funds would earn income from the premiums received. If a
covered put option is not exercised, the Funds would keep the option premium
and the assets maintained to cover the option. If the option is exercised and
the exercise price, including transaction costs, exceeds the market price of
the underlying security, a Fund would realize a loss, but the amount of the
loss would be reduced by the amount of the option premium.

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

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

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

OVER-THE-COUNTER OPTIONS. Funds that may engage in options
transactions may engage in options transactions on exchanges and in the
over-the-counter markets. In general, exchange- traded options are third-party
contracts (i.e., performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) with standardized strike prices and
expiration dates. Over-the-counter ("OTC") transactions are two-party contracts
with price and terms negotiated by the buyer and seller. A Fund will acquire
only those OTC options for which management believes the Fund can receive on
each business day at least two separate bids or offers (one of which will be
from an entity other than a party to the option) or those OTC options valued by
an independent pricing service. The Funds will write and purchase OTC options
only with member banks of the Federal Reserve System and primary dealers in
U.S. Government securities or their affiliates which have capital of at least
$50 million or whose obligations are guaranteed by an entity having capital of
at least $50 million. The SEC has taken the position that OTC options are
illiquid securities subject to each Fund's restriction that illiquid securities
are limited to not more than 10% of the Fund's net assets. The SEC, however,
has a partial exemption from the above restrictions on transactions in OTC
options. The SEC allows a Fund to exclude from the 10% limitation on illiquid
securities a portion of the value of the OTC options written by the Fund,
provided that certain conditions are met. First, the other party to the OTC
options has to be a primary U.S. Government securities dealer designated as
such by the Federal Reserve Bank. Second, the Fund must have an absolute
contractual right to repurchase the OTC options at a formula price. If the
above conditions are met, a Fund may treat as illiquid only that portion of the
OTC option's value (and the value of its underlying securities) which is equal
to the formula price for repurchasing the OTC option, less the OTC option's
intrinsic value.

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INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions upon
its investments as set forth below which cannot be changed as to any Fund
without the approval of the holders of a majority of that Fund's outstanding
shares. A majority for this purpose means: (a) more than 50% of the
outstanding shares of a Fund, or (b) 67% or more of the shares represented at a
meeting where more than 50% of the outstanding shares of a Fund are
represented, whichever is less. If a percentage restriction or rating
restriction on investment or utilization of assets is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of a Fund's portfolio securities or a later
change in the rating of a portfolio security will not be considered a violation
of policy.

For the purpose of these restrictions, High Yield Bond Fund, Government
Income Fund and Money Market Fund are referred to as the "Fixed Income Funds"
and Emerging Growth Fund and Global Resources Fund are referred to as the
"Equity Funds." The restrictions applicable to High Yield Tax-Free Fund are
set out subsequently.

Each Fixed Income Fund and each Equity Fund may not:

(1) Borrow money in an amount in excess of 33-1/3% of its total
assets, and then only as a temporary measure for extraordinary or emergency
purposes (except that it may enter into a reverse repurchase agreement within
the limits described in the Prospectus or this SAI), or pledge, mortgage or
hypothecate an amount of its assets (taken at market value) in excess of 15% of
its total assets, in each case taken at the lower of cost or market value. For
the purpose of this restriction, collateral arrangements with respect to
options, futures contracts, options on futures contracts and collateral
arrangements with respect to initial and variation margins are not considered a
pledge of assets.

(2) Underwrite securities issued by other persons except insofar as
such Fund may technically be deemed an underwriter under the Securities Act of
1933 in selling a portfolio security.

(3) Purchase or retain real estate (including limited partnership
interests but excluding securities of companies, such as real estate investment
trusts, which deal in real estate or interests therein and securities secured
by real estate), or mineral leases, commodities or commodity contracts except,
in the case of Resources Fund, precious metals (except contracts for the future
delivery of fixed income securities, stock index and currency futures and
options on such futures) in the ordinary course of its business. Each Fund
reserves the freedom of action to hold and to sell real estate or mineral
leases, commodities or commodity contracts acquired as a result of the
ownership of securities.

(4) Invest in direct participation interests in oil, gas or other
mineral exploration or development programs.

(5) Make loans to other persons except by the purchase of obligations
in which such Fund is authorized to invest and by entering into repurchase
agreements; provided that a Fund may lend its portfolio securities not in
excess of 30% of its total assets (taken at market value). Not more than 10% of
a Fund's total assets (taken at market value) will be subject to repurchase
agreements maturing in more than seven days. For these purposes the purchase
of all or a portion

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<PAGE> 111

of an issue of debt securities shall not be considered the making of a loan.
In addition, the Equity Funds may purchase a portion of an issue of debt
securities of types commonly distributed privately to financial institutions.

(6) Purchase the securities of any issuer if such purchase, at the
time thereof, would cause more than 5% of its total assets (taken at market
value) to be invested in the securities of such issuer, other than securities
issued or guaranteed by the United States or, in the case of the Fixed Income
Funds, any state or political subdivision thereof, or any political subdivision
of any such state, or any agency or instrumentality of the United States, any
state or political subdivision thereof, or any political subdivision of any
such state. In applying these limitations, a guarantee of a security will not
be considered a security of the guarantor, provided that the value of all
securities issued or guaranteed by that guarantor, and owned by the Fund, does
not exceed 10% of the Fund's total assets. In determining the issuer of a
security, each state and each political subdivision agency, and instrumentality
of each state and each multi-state agency of which such state is a member is a
separate issuer. Where securities are backed only by assets and revenues of a
particular instrumentality, facility or subdivision, such entity is considered
the issuer.

(7) Invest in companies for the purpose of exercising control or
management.

(8) Purchase or retain in its portfolio any securities issued by an
issuer any of whose officers, directors, trustees or security holders is an
officer or Director of such Fund, or is a member, partner, officer or Director
of the Adviser, if after the purchase of the securities of such issuer by such
Fund one or more of such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, all taken at market value, of such issuer, and
such persons owning more than 1/2 of 1% of such shares or securities together
own beneficially more than 5% of such shares or securities, or both, all taken
at market value.

(9) Purchase any securities or evidences of interest therein on
margin, except that each Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of securities and each Fund
(other than the Money Market Fund) may make deposits on margin in connection
with Futures Contracts and related options.

(10) Sell any security which such Fund does not own unless by virtue of
its ownership of other securities it has at the time of sale a right to obtain
securities without payment of further consideration equivalent in kind and
amount to the securities sold and provided that if such right is conditional
the sale is made upon equivalent conditions.

(11) Purchase securities issued by any other investment company or
investment trust except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase, though not made in
the open market, is part of a plan of merger or consolidation; provided,
however, that a Fund will not purchase such securities if such purchase at the
time thereof would cause more than 10% of its total assets (taken at market
value) to be invested in the securities of such issuers; and, provided,
further, that a Fund will not purchase securities issued by an open-end
investment company.

(12) Knowingly invest in securities which are subject to legal or
contractual restrictions on resale or for which there is no readily available
market (e.g., trading in the security is suspended or market makers do not
exist or will not entertain bids or offers), except for repurchase agreements,
if, as a result thereof more than 10% of such Fund's total assets (taken at
market value) would be so invested. (The Staff of the Securities and Exchange
Commission has taken the

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<PAGE> 112

position that a money market fund may not invest more than 10% of its net
assets in illiquid securities. The Money Market Fund has undertaken with the
Staff to require, that as a matter of operating policy, it will not invest in
illiquid securities in an amount exceeding 10% of its net assets.)
(13) Issue any senior security (as that term is defined in the
Investment Company Act of 1940 (the "1940 Act")) if such issuance is
specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder. For the purpose of this restriction, collateral
arrangements with respect to options, Futures Contracts and Options on futures
contracts and collateral arrangements with respect to initial and variation
margins are not deemed to be the issuance of a senior security.
In addition, no Fixed Income Fund (except for Money Market Fund and
High Yield Bond Fund) may invest more than 25% of its total assets (taken at
market value) in the securities of issuers engaged in any one industry. Money
Market Fund may not invest more than 25% of its total assets in obligations
issued by (i) foreign banks or (ii) foreign branches of U.S. banks where the
Adviser has determined that the U.S. bank is not unconditionally responsible
for the payment obligations of the foreign branch. High Yield Bond Fund may
not invest more than 25% of its total assets (taken at market value) in the
securities of issuers engaged in any one industry, except that High Yield Bond
Fund may invest up to 40% of the value of its total assets in the securities of
issuers engaged in the electric utility and telephone industries. Obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities are not subject to the Fixed Income Fund's limitations on
industry concentration. Determinations of industries for purposes of the
foregoing limitations are made in accordance with specific industry codes set
forth in the Standard Industrial Classification Manual and without considering
groups of industries (e.g., all utilities or all finance companies) to be an
industry. Also, a Fixed Income Fund may not purchase securities of any issuer
(other than securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities) if such purchase, at the time thereof, would
cause a Fund to hold more than 10% of any class of securities of such issuer.
For this purpose, all indebtedness of an issuer (for the Money Market Fund, all
indebtedness of an issuer maturing in less than one year) shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class.

In addition, an Equity Fund may not:

(1) Concentrate its investments in any particular industry, but if it
is deemed appropriate for the attainment of its investment objective, such Fund
may invest up to 25% of its assets (taken at market value at the time of each
investment) in securities of issuers in any one industry.

(2) Purchase voting securities of any issuer if such purchase, at the
time thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held by such Fund; or purchase securities of any issuer if
such purchase at the time thereof would cause more than 10% of any class of
securities of such issuer to be held by such Fund. For this purpose all
indebtedness of an issuer shall be deemed a single class and all preferred
stock of an issuer shall be deemed a single class. In applying these
limitations, a guarantee of a security will not be considered a security of the
guarantor, provided that the value of all securities issued or guaranteed by
that guarantor, and owned by the Fund, does not exceed 10% of the Fund's total
assets. In determining the issuer of a security, each state and each political
subdivision agency, and instrumentality of each state and each multi-state
agency of which such state is a member is a separate issuer. Where securities
are backed only by assets and revenues of a particular instrumentality,
facility or subdivision, such entity is considered the issuer.

-26-
<PAGE> 113

High Yield Tax-Free Fund may not:

(1) Borrow money except from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests that might
otherwise require the untimely disposition of securities, in an amount up to
15% of the value of the Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing was made. While borrowings exceed 5% of the value of the
Fund's total assets, the Fund will not purchase any additional securities.
Interest paid on borrowings will reduce the Fund's net investment income. The
borrowing restriction set forth above does not prohibit the use of reverse
repurchase agreements, in an amount (including any borrowings) not to exceed
33-1/3% of net assets.

(2) Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 10% of the value of its total assets but only to
secure borrowings for temporary or emergency purposes as may be necessary in
connection with maintaining collateral in connection with writing put or call
options or making initial margin deposits in connection with the purchase or
sale of financial futures or index futures contracts and related options.

(3) Purchase securities (except obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) if the purchase would
cause the Fund at the time to have more than 5% of the value of its total
assets invested in the securities of any one issuer or to own more than 10% of
the outstanding debt securities of any one issuer; provided, however, that up
to 25% of the value of the Fund's asset may be invested without regard to these
restrictions.

(4) Purchase or retain the securities of any issuer, if to the
knowledge of the Fund, any officer or director of the Fund or its Adviser owns
more than 1/2 of 1% of the outstanding securities of such issuer, and all such
officers and directors own in the aggregate more than 5% of the outstanding
securities of such issuer.

(5) Write, purchase or sell puts, calls or combinations thereof,
except put and call options on debt securities, futures contracts based on debt
securities, indices of debt securities and futures contracts based on indices
of debt securities, sell securities on margin or make short sales of securities
or maintain a short position, unless at all times when a short position is open
it owns an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short, and
unless not more than 10% of the Fund's net assets (taken at current value) is
held as collateral for such sales at any one time.

(6) Underwrite the securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security.

(7) Purchase the securities of any issuer if as a result more than 10%
of the value of the Fund's total assets would be invested in securities that
are subject to legal or contractual restrictions on resale ("restricted
securities") and in securities for which there are no readily available market
quotations; or enter into a repurchase agreement maturing in more than seven
days, if as a result such repurchase agreement together with restricted
securities and securities for which there are no readily available market
quotations would constitute more than 10% of the Fund's total assets.

-27-
<PAGE> 114
(8) Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, except commodities and
commodities contracts which are necessary to enable the Fund to engage in
permitted futures and options transactions necessary to implement hedging
strategies, or oil and gas interests, but this shall not prevent the Fund from
investing in municipal obligations secured by real estate or interests in real
estate.
(9) Make loans to others, except insofar as the Fund may enter in
repurchase agreements as set forth in the Prospectus or this SAI. The purchase
of an issue of publicly distributed bonds or other securities, whether or not
the purchase was made upon the original issuance of securities, is not to be
considered the making of a loan.
(10) Invest more than 25% of its assets in the securities of the
"issuers" in any single industry; provided that there shall be no limitation on
the purchase of municipal obligations and obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities. For purposes
of this limitation and that set forth in investment restriction (3) above, when
the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and a security is backed only by the assets and revenues of the
entity, the entity would be deemed to be the sole issuer of the security.
Similarly, in the case of an industrial development or pollution control bond,
if that bond is backed only by the assets and revenues of the nongovernmental
user, then such non governmental user would be deemed to be the sole issuer.
If, however, in either case, the creating government or some other entity
guarantees a security, such a guarantee would be considered a separate security
and would be treated as an issue of such government or other entity.
(11) Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets,
and except for the purchase, to the extent permitted by Section 12 of the 1940
Act, of shares of registered unit investment trusts whose assets consist
substantially of municipal obligations.

(12) Invest more than 5% of the value of its total assets in the
securities of issuers having a record, including predecessors, of fewer than
three years of continuous operation, except obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities, unless the
securities are rated by a nationally recognized rating service.

(13) Invest for the purpose of exercising control or management of
another company.

(14) Issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder. For the purpose of this restriction,
collateral arrangements with respect to options, futures contracts and options
on futures contracts and collateral arrangements with respect to initial and
variation margins are not deemed to be the issuance of a senior security.

OTHER OPERATING POLICIES

Each of the Equity Funds (whose investment restrictions permit holdings
in warrants not to exceed 10% of its assets) may, due to an undertaking with a
state in the Fund's shares are currently qualified for sale, purchase warrants
not to exceed 5% of such Fund's net assets. Included within that amount, but
not exceeding 2% of a Fund's net assets, may be warrants for which there is no
public market. Any such warrants which are attached to securities at the time
such securities are acquired by a Fund will be deemed to be without value for
the purpose of this restriction.

-28-
<PAGE> 115

Each Fund (other than High Yield Tax-Free Fund) will not invest more
than 5% of its total assets in companies which, including their respective
predecessors, have a record of less than three years' continuous operation.

In order to comply with certain state regulatory policies, no Fund
will, as a matter of operating policy, pledge, mortgage or hypothecate its
portfolio securities if the percentage of securities so pledged, mortgaged or
hypothecated would exceed 15%.

In order to comply with certain state regulatory policies, the cost of
investments in options, financial futures, stock index futures and currency
futures, other than those acquired for hedging purposes, may not exceed 10% of
a Fund's total net assets.

These operating policies are not fundamental and may be changed without
shareholder approval. In order to comply with certain state regulatory
practices, certain policies, if changed, would require advance written notice
to shareholders.

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

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Corporation is managed by its Directors who elect
officers who are responsible for the day-to-day operations of the Corporation
and the Funds and who execute policies formulated by the Directors. Several of
the officers and Directors of the Corporation are also officers and directors
of the Adviser or officers and directors of John Hancock Funds.

Set forth below is the principal occupation or employment of the
Directors and principal officers of the Corporation during the past five years:

POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS THE CORPORATION DURING PAST FIVE YEARS
- ---------------- ------------------ -----------------------
Edward J. Boudreau, Jr.* Director, Chairman Chairman and Chief Executive
101 Huntington Avenue and Chief Officer, the Adviser and The
Boston, MA 02199 Executive Berkeley Financial Group
Officer(1)(2) ("The Berkeley Group");
Chairman, NM Capital
Management, Inc. ("NM
Capital"); John Hancock
Advisers International Limited
("Advisers International");
John Hancock Funds, Inc.;
John Hancock Investor
Services Corporation

-29-
<PAGE> 116

("Investor Services"); and
Sovereign Asset Management
Corporation ("SAMCorp");
(hereinafter the Adviser, the
Berkeley Group, NM Capital,
Advisers International, John
Hancock Funds, Inc., Investor
Services and SAMCorp are
collectively referred to as the
"Affiliated Companies");
Chairman, First Signature
Bank & Trust; Director, John
Hancock Freedom Securities
Corporation, John Hancock
Capital Corporation, New
England/Canada Business
Council; Member, Investment
Company Institute Board of
Governors; Trustee, Museum
of Science; President, the
Adviser (until July 1992);
Trustee or Director of other
investment companies
managed by the Adviser; and
Chairman, John Hancock
Distributors, Inc. (until April,
1994).

James F. Carlin Director Chairman and CEO, Carlin
233 West Central Street Consolidated, Inc. (insurance);
Natick, MA 01760 Director, Arbella Mutual
Insurance Company
(insurance), Consolidated
Group Trust (group health
plan), Carlin Insurance
Agency, Inc. and West
Insurance Agency, Inc.;
Receiver, the City of Chelsea
(until August 1992); and
Trustee or Director of other
investment companies
managed by the Adviser.
William H. Cunningham Director Chancellor, University of
601 Colorado Street Texas System and former
O'Henry Hall President of the University of
Austin, TX 78701 Texas, Austin, Texas; Regents
Chair in Higher Education
Leadership; James L. Bayless
Chair for Free Enterprise;
Professor of Marketing and
Dean College of Business
Administration/Graduate

-30-
<PAGE> 117

School of Business
(1983-1985); Centennial Chair
in Business Education
Leadership, 1983-1985;
Director, LaQuinta Motor Inns,
Inc. (hotel management
company); Director,
Jefferson-Pilot Corporation
(diversified life insurance
company); Director,
Freeport-McMoran Inc. (oil
and gas company); Director,
Barton Creek Properties, Inc.
(1988-1990) (real estate
development) and LBJ
Foundation Board (education
foundation); Advisory
Director, Texas Commerce
Bank - Austin; and Trustee or
Director of other investment
companies managed by the
Adviser.
Charles L. Ladner Director(3) Director, Energy North, Inc.
UGI Corporation (public utility holding
460 North Gulph Road company); Senior Vice
King of Prussia, PA 19406 President, Finance UGI Corp.
(public utility holding
company) (until 1992); and
Trustee or Director of other
investment companies
managed by the Adviser.
Leo E. Linbeck, Jr. Director Chairman, President, Chief
3810 W. Alabama Executive Officer and
Houston, TX 77027 Director, Linbeck Corporation
(a holding company engaged
in various phases of the
construction industry and
warehousing interests);
Director and Chairman,
Federal Reserve Bank of
Dallas; Chairman of the Board
and Chief Executive Officer,
Linbeck Construction
Corporation; Director,
Panhandle Eastern Corporation
(a diversified energy
company); Director, Daniel
Industries, Inc. (manufacturer
of gas measuring products and
energy related equipment);
Director, GeoQuest

-31-
<PAGE> 118

International, Inc. (a
geophysical consulting firm);
Director, Greater Houston
Partnership; and Trustee or
Director of other investment
companies managed by the
Adviser.
Patricia P. McCarter Director(3) Director and Secretary, the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer); and Trustee or
Malvern, PA 19355 Director of other investment
companies managed by the
Adviser.
Steven R. Pruchansky Director(1)(3) Director and Treasurer, Mast
360 Horse Creek Drive, #208 Holdings, Inc.; Director,
Naples, FL 33942 First Signature Bank & Trust
Company (until August 1991);
General Partner, Mast Realty
Trust; President, Maxwell
Building Corp. (until 1991);
and Trustee or Director of
other investment companies
managed by the Adviser.
Norman H. Smith Director(3) Lieutenant General, USMC,
Rt. 1, Box 249 E Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve
Affairs, Headquarters Marine
Corps; Commanding General
III Marine Expeditionary
Force/3rd Marine Division
(retired 1991); and Trustee or
Director of other investment
companies managed by the
Adviser.
John P. Toolan Director(3) Director, The Smith Barney
13 Chadwell Place Muni Bond Funds, The Smith
Morristown, NJ 07960 Barney Tax-Free Money Fund,
Inc., Vantage Money Market
Funds (mutual funds), The
Inefficient-Market Fund, Inc.
(closed-end investment
company) and Smith Barney
Trust Company of Florida;
Chairman, Smith Barney Trust
Company (retired December,
1991); Director, Smith Barney,
Inc., Mutual Management
Company and Smith, Barney
Advisers, Inc. (investment

-32-
<PAGE> 119

advisers) (retired 1991); and
Senior Executive Vice
President, Director and
member of the Executive
Committee, Smith Barney,
Harris Upham & Co.,
Incorporated (investment
bankers) (until 1991); and
Trustee or Director of other
investment companies
managed by the Adviser.

Robert G. Freedman* Vice Chairman Chief Investment Officer,
101 Huntington Avenue and Chief the Adviser
Boston, MA 02199 Investment
Officer(2)
Anne C. Hodsdon* President(2) President, the Adviser.
101 Huntington Avenue
Boston, MA 02199

James B. Little* Senior Vice Senior Vice President, the
101 Huntington Avenue President and Adviser.
Boston, MA 02199 Chief Financial
Officer

Thomas H. Drohan* Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary, the Adviser.
Boston, MA 02199 Secretary

Michael P. DiCarlo* Senior Vice Senior Vice President, the
101 Huntington Avenue President(2) Adviser.
Boston, MA 02199

Edgar Larsen* Senior Vice Senior Vice President, the
101 Huntington Avenue President Adviser.
Boston, MA 02199

B.J. Willingham* Senior Vice Senior Vice President, the
101 Huntington Avenue President Adviser. Formerly, Director
Boston, MA 02199 and Chief Investment Officer
of Transamerica Fund
Management Company.

James J. Stokowski* Vice President Vice President, the Adviser.
101 Huntington Avenue and Treasurer
Boston, MA 02199

-33-
<PAGE> 120

Susan S. Newton* Vice President Vice President and Assistant
101 Huntington Avenue and Compliance Secretary, the Adviser.
Boston, MA 02199 Officer

John A. Morin* Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199

* An "interested person" of the Corporation, as such term is defined in the
1940 Act.

(1) Member of the Executive Committee.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committee.

All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Directors 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.

As of June 30, 1995, there were 131,823,202 shares of the Corporation
outstanding and officers and Directors as a group beneficially owned less
than 1% of the outstanding shares of the Corporation and of each of the Funds.
On such date, the following shareholders were the only record holders and
beneficial owners of 5% or more of the shares of the respective Funds:

<TABLE>
NUMBER OF SHARES HELD (EXPRESSED AS PERCENTAGE OF FUND'S OUTSTANDING SHARES)

<S> <C>
Emerging Growth Fund:

Class A

762,184 Shares National Westminster Bank PLC as
16.30% Trustee of American Smaller Companies Trust
Juno Court
24 Prescott Street
London, England E18BB

749,017 Shares Merrill Lynch Pierce Fenner & Smith
16.02% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

Class B

3,009,616 Shares Merrill Lynch Pierce Fenner & Smith
27.55% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

Global Resources Fund:

Class B

151,841 Shares Merrill Lynch Pierce Fenner & Smith
7.06% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

Government Income Fund:

Class A

16,946 Shares JHMLICO Custodian
29.13% FBO Kathleen L. Russell IRA R/O
4775 River College Drive
Sacramento, California 95841-4247

8,517 Shares Bruno Barelare &
14.64% Helen D. Barelare JT TEN
1424 Montclair
Birmingham, Alabama 35210-2208

8,040 Shares Max P. Clay, Jr. &
13.82% Max P. Clay, Sr. JTWROS
P.O. Box 11
Pell City, Alabama 35125-0011

3,960 Shares Russell L. Mitchell, IRA
6.81% Sutro & Co. CUST
1615 Newhall Avenue
Cambria, California 93428-5505

3,836 Shares Rauscher Pierce REFSNES CUST
6.60% FBO Clara Yamacka
942 Mira Valley
Monterey Park, California 91754-4825

3,451 Shares Richard W. Russell &
5.93% Helen F. Russell JT TEN
349 Ash Space 44
Carpinteria, CA 93013-2232

Class B

3,081,649 Shares Merrill Lynch Pierce Fenner & Smith
12.34% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

High Yield Bond Fund:

Class B

2,027,483 Shares Merrill Lynch Pierce Fenner & Smith
8.46% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

High Yield Tax-Free Fund:

Class B

2,911,838 Shares Merrill Lynch Pierce Fenner & Smith
17.48% 4800 Deerlake Drive East
Jacksonville, Florida 32246-6484

</TABLE>

-34-

<PAGE> 121

At such date, no other person(s), owned of record or was known by the
Corporation to beneficially own as much as 5% of the outstanding shares of the
Corporation or of any of the Funds.

As of December 22, 1994, the Directors have established an Advisory
Board which acts to facilitate a smooth transition of management over a
two-year period (between Transamerica Fund Management Company ("TFMC"), the
prior investment adviser, and the Adviser). The members of the Advisory Board
are distinct from the Board of Directors, do not serve the Funds in any other
capacity and are persons who have no power to determine what securities are
purchased or sold and behalf of the Funds. Each member of the Advisory Board
may be contacted at 101 Huntington Avenue, Boston, Massachusetts 02199.

Members of the Advisory Board and their respective principal
occupations during the past five years are as follows:

R. Trent Campbell, President, FMS, Inc. (financial and management services);
former Chairman of the Board, Mosher Steel Company.

Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman from Texas;
co-founder, Houston Parents' League; former board member of various
civic and cultural organizations in Houston, including the Houston
Symphony, Museum of Fine Arts and YWCA. Mrs. Bentsen is presently
active in various civic and cultural activities in the Washington,
D.C. area, including membership on the Area Board for The March of
Dimes and is a National Trustee for the Botanic Gardens of Washington,
D. C.

Thomas R. Powers, Formerly Chairman of the Board, President and Chief Executive
Officer, TFMC; Director, West Central Advisory Board, Texas Commerce
Bank; Trustee, Memorial Hospital System; Chairman of the Board of
Regents of Baylor University; Member, Board of Governors, National
Association of Securities Dealers, Inc.; Formerly, Chairman, Investment
Company Institute; formerly, President, Houston Chapter of Financial
Executive Institute.

Thomas B. McDade, Chairman and Director, TransTexas Gas Company; Director,
Houston Industries and Houston Lighting and Power Company; Director,
TransAmerican Companies (natural gas producer and transportation);
Member, Board of Managers, Harris County Hospital District;
Advisory Director, Commercial State Bank, El Campo; Advisory Director,
First National Bank of Bryan; Advisory Director, Sterling Bancshares;
Former Director and Vice Chairman, Texas Commerce Bancshares; and Vice
Chairman, Texas Commerce Bank.

COMPENSATION OF THE BOARD OF DIRECTORS AND ADVISORY BOARD. The
following tables provide information regarding the compensation paid by the
Fund and the 22 other investment companies in the John Hancock Fund Complex to
the Independent Directors and the Advisory Board members for their services.
Mr. Boudreau, a non-Independent Director, and each of the officers of the Funds
are interested persons of the Adviser, are compensated by the Adviser and
received no compensation from the Funds for their services.

-35-

<PAGE> 122
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement from all Funds in
Aggregate Benefits Accrued John Hancock
Compensation as Part of the Fund Complex to
Directors from the Funds Funds' Expenses Directors**
- --------- -------------- ---------------- -----------------
<S> <C> <C> <C>
James F. Carlin $ 0 $0 $ 60,450
William H. Cunningham $18,750* $0 $ 0
Charles L. Ladner $ 0 $0 $ 60,450
Leo E. Linbeck, Jr. $26,500* $0 $ 0
Patricia P. McCarter $ 0 $0 $ 60,200
Steven R. Pruchansky $ 0 $0 $ 62,450
Norman H. Smith $ 0 $0 $ 62,450
John P. Toolan $ 0 $0 $ 60,450
Total $45,250 $0 $366,450
<FN>
* Messrs. Linbeck and Cunningham, the only current Directors who were Directors for the fiscal year ended
October 31, 1994, were each paid directors' fees by the Funds pursuant to different compensation
arrangements then in effect, in the amount of:
$5,200 and $3,800, respectively, from Government Income Fund; $5,200 and $3,800, respectively, from High
Yield Bond Fund;
$5,200 and $3,800, respectively, from High Yield Tax-Free Fund; $5,200 and $3,800, respectively, from
Emerging Growth Fund;
$2,100 and $1,150, respectively, from Global Resources Fund; and $3,600 and $2,400, respectively, from
Money Market Fund.

** The total compensation paid by the John Hancock Fund Complex to the Independent Directors is as of the
calendar year ended December 31, 1994. (The Funds were not part of the John Hancock Fund Complex
until December 22, 1994 and Messrs. Cunningham and Linbeck were not trustees or directors of any funds in
the John Hancock Fund Complex prior to December 22, 1994.)

</TABLE>

-36-
<PAGE> 123
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement from all Funds in
Aggregate Benefits Accrued John Hancock
Compensation as Part of the Fund Complex to
Advisory Board*** from the Funds Funds' Expenses Directors***
- ----------------- -------------- ---------------- ------------------
<S> <C> <C> <C>
R. Trent Campbell $21,049 $0 $ 54,000
Mrs. Lloyd Bentsen $21,049 $0 $ 54,000
Thomas R. Powers $21,049 $0 $ 54,000
Thomas B. McDade $21,049 $0 $ 54,000
TOTAL $84,196 $0 $216,000
<FN>
*** Estimated for the Funds' current fiscal year ending October 31, 1995.
</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Funds' Prospectuses, the Funds receive their
investment advice from the Adviser. Investors should refer to the Prospectuses
for a description of certain information concerning the Funds' investment
management contracts. Each of the Directors and principal officers affiliated
with the Corporation who is also an affiliated person of the Adviser is named
above, together with the capacity in which such person is affiliated with the
Corporation and the Adviser.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and has more than $13 billion in total assets
under management in its capacity as investment adviser to the Funds and the
other mutual funds and publicly traded investment companies in the John Hancock
group of funds having a combined total of over 1,060,000 shareholders. The
Adviser is a wholly-owned subsidiary of The Berkeley Financial Group, which is
in turn a wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which is
in turn a wholly-owned subsidiary of John Hancock Mutual Life Insurance Company
(the "Life Company"), one of the most recognized and respected financial
institutions in the nation. With total assets under management of over $80
billion, the Life Company is one of the ten largest life insurance companies in
the United States, and carries Standard & Poor's and A.M. Best's highest
ratings. Founded in 1862, the Life Company has been serving clients for over
130 years.

As described in the Prospectuses, the Corporation, on behalf of each
Fund, has entered into investment management contracts with the Adviser. Under
each investment management contract, the Adviser provides the Funds with (i) a
continuous investment program, consistent with each Fund's stated investment
objective and policies, (ii) supervision of all aspects of each Fund's
operations except those that are delegated to a custodian, transfer agent or
other agent and (iii) such executive, administrative and clerical personnel,
officers and equipment as are necessary for the conduct of their business. The
Adviser is responsible for the day-to-day management of each Fund's portfolio
assets.

-37-
<PAGE> 124

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

Under the terms of the investment management contracts with the
Corporation, on behalf of each Fund, the Adviser provides the Corporation with
office space, equipment and supplies and other facilities required for the
business of the Funds. The Adviser pays the compensation of all officers and
employees of the Corporation, and pays the expenses of clerical services
relating to the administration of the Funds. All expenses which are not
specifically paid by the Adviser and which are incurred in the operation of the
Funds including, but not limited to, (i) the fees of the Directors of the
Corporation who are not "interested persons," as such term is defined in the
1940 Act (the "Independent Directors"), (ii) the fees of the members of the
Corporation's Advisory Board (described above) and (iii) the continuous public
offering of the shares of each Fund are borne by the Funds.

<TABLE>
As provided by the investment management contracts, each Fund pays the
Adviser an investment management fee, which is accrued daily and paid monthly in
arrears at the following rates of the Funds' average daily net assets:

<S> <C>
JOHN HANCOCK EMERGING GROWTH FUND FEE
JOHN HANCOCK GLOBAL RESOURCES FUND (ANNUAL RATE)
-------------

Average Daily Net Assets 0.75%

JOHN HANCOCK GOVERNMENT INCOME FUND
FEE
AVERAGE DAILY NET ASSETS (ANNUAL RATE)
- ------------------------ -------------
The first $200 million 0.65%
The next $300 million 0.625%
Over $500 million 0.60%

JOHN HANCOCK HIGH YIELD TAX-FREE FUND
JOHN HANCOCK HIGH YIELD BOND FUND
FEE
AVERAGE DAILY NET ASSETS (ANNUAL RATE)
- ------------------------ -------------
The first $75 million 0.625%
The next $75 million 0.5625%
Over $150 million 0.50%

JOHN HANCOCK MONEY MARKET FUND
FEE
AVERAGE DAILY NET ASSETS (ANNUAL RATE)
- ------------------------ -------------
The first $500 million 0.50%
The next $250 million 0.425%
The next $250 million 0.375%
The next $500 million 0.35%
</TABLE>

-38-
<PAGE> 125

The next $500 million 0.325%
The next $500 million 0.30%
Over $2.5 billion 0.275%

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

In the event normal operating expenses of a Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where such
Fund is registered to sell shares of common stock, the fee payable to the
Adviser will be reduced to the extent of such excess and the Adviser will make
any additional arrangements necessary to eliminate any remaining excess
expenses. The most restrictive limit applicable to the Funds is 2.5% of the
first $30,000,000 of a Fund's average daily net asset value, 2% of the next
$70,000,000 of such assets and 1.5% of the remaining average daily net asset
value.

Pursuant to the investment management contracts, the Adviser is not
liable for any error of judgment or mistake of law or for any loss suffered by a
Fund in connection with the matters to which their respective contracts relate,
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 its reckless
disregard of the obligations and duties under the applicable contract.

The initial term of the investment management contracts expires on
December 22, 1996, and will continue in effect from year to year thereafter if
approved annually by a vote of a majority of the Independent Directors, cast in
person at a meeting called for the purpose of voting on such approval, and by
either a majority of the Directors or the holders of a majority of the affected
Fund's outstanding voting securities. Each management contract may be
terminated without penalty on 60 days' notice at the option of either party or
by vote of a majority of the outstanding voting securities of the Fund. Each
management contract terminates automatically in the event of its assignment.

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

Under the investment management contracts, the Funds may use the name
"John Hancock" or any name derived from or similar to it only for as long as the
investment management contract or any extension, renewal or amendment thereof
remains in effect. If a Fund's investment management contract is no longer in
effect, the Fund (to the extent that it lawfully can) will cease to use such
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.

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For the fiscal years ended October 31, 1994(a), 1993(b) and 1992(c),
advisory fees payable by the Funds to TFMC, each Fund's former investment
adviser, were as follows:

(1) Emerging Growth Fund - (a) $2,706,438 (b) $1,668,514 and (c)
$809,284

(2) Global Resources Fund - (a) $220,869 (b) $95,411 and (c) $57,774

(3) Government Income Fund - (a) $1,728,997 (b) $1,698,937 and (c)
$1,197,515

(4) High Yield Bond Fund - (a) $976,834 (b) $777,673 and (c) $550,109

(5) High Yield Tax-Free Fund - (a) $886,380 (b) $541,737 and (c)
$370,020

(6) Money Market Fund - (a) $214,088 (b) $142,298 and (c) $133,127

During the six-month period ended October 31, 1993 and the fiscal year
ended October 31, 1994, TFMC paid subadvisory fees to Transamerica Investment
Services, Inc., its former subadviser, of $34,536 and $71,992, respectively.
High Yield Tax-Free Fund made no payments of subadvisory fees during these
periods.

ADMINISTRATIVE SERVICES AGREEMENT. The Corporation, on behalf of each
Fund, was a party to an administrative services agreement with TFMC (the
"Services Agreement"), pursuant to which TFMC performed bookkeeping and
accounting services and functions, including preparing and maintaining various
accounting books, records and other documents and keeping such general ledgers
and portfolio accounts as are reasonably necessary for the operation of the
Funds. Other administrative services included communications in response to
shareholder inquiries and certain printing expenses of various financial
reports. In addition, such staff and office space, facilities and equipment was
provided as necessary to provide administrative services to the Funds. The
Services Agreement was amended in connection with the appointment of the Adviser
as adviser to the Fund to permit services under the Agreement to be provided to
the Funds by the Adviser and its affiliates. The Services Agreement was
terminated during the current fiscal year.

The following amounts for each of the following Funds for their
respective periods reflect (a) the total of administrative services fees paid
and of such amount, (b) the amount of which was paid to TFMC and (c) the amount
paid for certain data processing and pricing information services:

EMERGING GROWTH FUND

(1) for the fiscal year ended October 31, 1994 - (a) $222,044;
(b) $192,019; and (c) $30,025.

(2) for the fiscal year ended October 31, 1993 - (a) $157,911;
(b) $134,656; and (c) $23,255.

(3) for the fiscal year ended October 31, 1992 - (a) $100,346;
(b) $81,923; and (c) $18,423.

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GLOBAL RESOURCES FUND

(1) for the fiscal year ended October 31, 1994 - (a) $54,259;
(b) $43,512; and (c) $10,747.

(2) for the fiscal year ended October 31, 1993 - (a) $44,306;
(b) 34,515; and (c) $9,791.

(3) for the fiscal year ended October 31, 1992 - (a) $48,816;
(b) $38,916; and (c) $9,900.

GOVERNMENT INCOME FUND

(1) for the fiscal year ended October 31, 1994 - (a) $132,786;
(b) $107,246; and (c) $25,540.

(2) for the fiscal year ended October 31, 1993 - (a) $116,354;
(b) $90,782; and (c) $25,572.

(3) for the fiscal year ended October 31, 1992 - (a) $86,781;
(b) $62,627; and (c) $24,154.

HIGH YIELD BOND FUND

(1) for the fiscal year ended October 31, 1994 - (a) $100,822;
(b) $80,593; and (c) $20,229.

(2) for the fiscal year ended October 31, 1993 - (a) $82,030;
(b) $64,844; and (c) $17,186.

(3) for the fiscal year ended October 31, 1992 - (a) $69,403;
(b) $52,920; and (c) $16,483.

HIGH YIELD TAX-FREE FUND

(1) for the fiscal year ended October 31, 1994 - (a) $88,709;
(b) $60,488; and (c) $28,221.

(2) for the fiscal year ended October 31, 1993 - (a) $69,485;
(b) 46,591; and (c) $22,894.

(3) for the fiscal year ended October 31, 1992 - (a) $63,272;
(b) $40,793; and (c) $22,479.

MONEY MARKET FUND
(1) for the fiscal year ended October 31, 1994 - (a) $46,621;
(b) $36,221; and (c) $10,400.

(2) for the fiscal year ended October 31, 1993 - (a) $42,511;
(b) $32,451; and (c) $10,060.

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(3) for the fiscal year ended October 31, 1992 - (a) $51,109;
(b) $40,808; and (c) $10,301.

DISTRIBUTION CONTRACT

DISTRIBUTION AGREEMENT. As discussed in the Prospectuses, each Fund's
shares are sold on a continuous basis at the public offering price. John
Hancock Funds, a wholly-owned subsidiary of the Adviser, has the exclusive
right, pursuant to the Distribution Agreement dated December 22, 1994 (the
"Distribution Agreement"), to purchase shares from the Funds at net asset value
for resale to the public or to broker-dealers at the public offering price.
Upon notice to all broker-dealers with whom it has sales agreements ("Selling
Brokers"), John Hancock Funds may allow such Selling Brokers up to the full
applicable sales charge during periods specified in such notice. During these
periods, such Selling Brokers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933.

The Distribution Agreement was initially adopted by the affirmative vote
of the Corporation's Board of Directors including the vote a majority of
Directors who are not parties to the agreement or interested persons of any such
party, cast in person at a meeting called for such purpose. The Distribution
Agreement shall continue in effect with respect to each Fund until December 22,
1996 and from year to year if approved by either the vote of the Fund's
shareholders or the Board of Directors including the vote of a majority of the
Directors who are not parties to the agreement or interested persons of any such
party, cast in person at a meeting called for such purpose. The Distribution
Agreement may be terminated at any time as to one or more of the Funds, without
penalty, by either party upon sixty (60) days' written notice or by a vote of a
majority of the outstanding voting securities of the affected Fund and
terminates automatically in the case of an assignment by John Hancock Funds.

For the fiscal year ended October 31, 1994, the following amounts for
each of Emerging Growth and High Yield Bond Fund reflect (a) the total
underwriting commissions for sales of the Fund's Class A shares and (b) the
portion of such amount retained by the Fund's former distributor, Transamerica
Fund Distributors, Inc. In each case, the remainder of such underwriting
commissions was reallowed to dealers.

EMERGING GROWTH FUND

(a) $1,042,959 and (b) $65,421.

HIGH YIELD BOND FUND

(a) $324,876 and (b) $23,651.

The other Funds did not have Class A shares outstanding for the year ended
October 31, 1994, and Emerging Growth Fund and High Yield Bond Fund did not
have Class A shares outstanding for the years prior to the year ended October
31, 1994.

DISTRIBUTION PLAN. The Board of Directors approved distribution plans
pursuant to Rule 12b-1 under the 1940 Act for Class A Shares ("Class A Plans")
and Class B Shares ("Class B Plans") of each Fund. Such Plans were approved by
a majority of the outstanding shares of each respective class of each Fund
(except for the Class A Plan for Money Market Fund) on December 16, 1994 and
became effective on December 22, 1994. The Class A Plan for Money Market Fund
was approved by the sole shareholder of the Class A shares of the Fund on
September 12, 1995 and became effective on September 12, 1995.

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<PAGE> 129
Under each Class A Plan, the distribution or service fee will not exceed
an annual rate of 0.25% of the average daily net asset value of the Class A
shares of a Fund (determined in accordance with the Fund's Prospectus as from
time to time in effect). Money Market Fund has determined that it will pay
distribution and service fees of 0.15% to John Hancock Funds but may in the
future determine to pay up to 0.25% under the Class A Plan. Any expenses under
the Class A Plan not reimbursed within 12 months of being presented to the Fund
for repayment are forfeited and not carried over to future years. Under each
Class B Plan, the distribution or services fee to be paid by the applicable Fund
will not exceed an annual rate of 1.00% of the average daily net assets of the
Class B shares of the Fund (in each case, determined in accordance with such
Fund's prospectus as from time to time in effect); provided that the portion of
such fee used to cover Service Expenses (described below) shall not exceed an
annual rate of 0.25% of the average daily net asset value of the Class B Shares
of the Fund. In accordance with generally accepted accounting principles, the
Fund does not treat unreimbursed distribution expenses attributable to Class B
shares as a liability of the Fund and does not reduce the current net assets of
Class B by such amount although the amount may be payable under the Class B Plan
in the future.
Under the Plans, expenditures shall be calculated and accrued daily and
paid monthly or at such other intervals as the Directors shall determine. The
fee may be spent by John Hancock Funds on Distribution Expenses or Service
Expenses. "Distribution Expenses" include any activities or expenses primarily
intended to result in the sale of shares of the relevant class of the Fund,
including, but not limited to: (i) initial and ongoing sales compensation
payable out of such fee as such compensation is received by John Hancock Funds
or by Selling Brokers, (ii) direct out-of-pocket expenses incurred in connection
with the distribution of shares, including expenses related to printing of
prospectuses and reports; (iii) preparation, printing and distribution of sales
literature and advertising material; (iv) an allocation of overhead and other
branch office expenses of John Hancock Funds related to the distribution of Fund
Shares; (v) distribution expenses that were incurred by the Fund's former
distributor and not recovered through payments under the Class A or Class B
former plans or through receipt of contingent deferred sales charges ("CDSCs");
and (vi) in the event that any other investment company (the "Acquired Fund")
sells all or substantially all of its assets, merges with or otherwise engages
in a combination with the Fund, distribution expenses originally incurred in
connection with the distribution of the Acquired Fund's shares. Service
Expenses under the Plans include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of John Hancock
Funds) and others who furnish personal and shareholder account maintenance
services to shareholders of the relevant class of the Fund.
For the fiscal year ended October 31, 1994, total payments made by
Emerging Growth Fund under the Fund's former Class A Rule 12b-1 plan to the
former distributor amounted to $277,671 and of such amount (1) $9,627, (2)
$126,857, (3) $8,204, (4) $16,712 and (5) $116,271 represented payments for (1)
advertising, (2) payments to dealers and for dealer meetings, (3) cost of
prospectuses and shareholder reports, (4) various sales literature and (5)
service fees, respectively. For the fiscal year ended October 31, 1994, total
payments made by High Yield Bond Fund under the Fund's former Class A Rule 12b-1
plan to the former distributor amounted to $20,179 and of such amount (1) $68,
(2) $5,975, (3) $383, (4) $1,431 and (5) $12,322 represented payments for (1)
advertising, (2) payments to dealers and for dealer meetings, (3) cost of
prospectuses and shareholder reports, (4) various sales literature and (5)
service fees, respectively. There were no Class A shares of the Money Market
Fund during this period.
The following amounts for each of the Funds for the fiscal year ending
October 31, 1994 represent each Fund's total payments to the former distributor
made pursuant to its Class B Plan and of such amounts, portions representing:

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<PAGE> 130

(1) total of service fees shown as
(a) service fees paid to brokers and dealers; and
(b) service fees paid to the former distributor

(2) total of distribution fees shown as:
(a) dealer commission payments;
(b) underwriting fee; and
(c) carrying charge (separate distribution fee).

EMERGING GROWTH FUND (CLASS B SHARES) - $2,497,907 total;

(1) $639,690; a) $401,762, and b) $237,928 and

(2) $1,858,217; a) $916,075, b) $229,019 and c) $713,123.

GLOBAL RESOURCES FUND (CLASS B SHARES) - $281,482 total;

(1) $70,523; a) $40,920, and b) $29,603 and

(2) $210,959; a) $124,689 b) $31,172 and c) $55,098.

GOVERNMENT INCOME FUND (CLASS B SHARES) - $2,685,298, total;

(1) $671,915; a) $538,084, and b) $133,831 and

(2) $2,013,382; a) $944,718, b) 236,179 and c) $832,485

HIGH YIELD BOND FUND (CLASS B SHARES) - $1,583,989 total;

(1) $390,708; a) $288,075, and b) $102,633 and

(2) $1,193,281; a) $591,135, b) $147,784 and c) $454,362

HIGH YIELD TAX-FREE FUND (CLASS B SHARES) - $1,408,352 total;

(1) $360,232; a) $192,666, and b) $167,566 and

(2) $1,048,120; a) $511,586, b) $127,896 and c) $408,638.

MONEY MARKET FUND - $428,177 total;
(1) $107,432; a) $92,386, and b) $15,046 and

(2) $320,745; a) $182,732, b) $45,683 and c) $92,330.

The following amounts for each of the Funds for the fiscal years ended
October 31, 1994, 1993 and 1992 represent amounts of CDSCs from redemptions of
the Fund's shares as received by the former distributor: (a) Emerging Growth
Fund (Class B Shares) - $382,553, $288,843 and $130,276; (b) Global Resources
Fund (Class B Shares) - $68,696, $27,393 and $31,801; (c) Government Income Fund
(Class B Shares) - $766,358, $518,924 and $398,691; (d) High Yield Bond Fund
(Class B Shares) - $387,591, $408,082 and $316,349; (e) High Yield Tax-Free Fund
(Class B Shares) - $253,265, $99,725 and $142,804; and (f) Money Market Fund
(Class B shares) - $343,829, $211,332 and $271,728.

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<PAGE> 131
Each of the Plans provides that it will continue in effect only so long
as its continuance is approved at least annually by a majority of both the
Directors and the Independent Directors. Each of the Plans provides that it may
be terminated without penalty (a) by vote of a majority of the Independent
Directors, (b) by a majority of the respective Class' outstanding voting
securities upon 60 days' written notice to John Hancock Funds, and (c)
automatically in the event of assignment. Each of the Plans further provides
that it may not be amended to increase the maximum amount of the fees for the
services described therein without the approval of a majority of the outstanding
shares of the class of the Fund which has voting rights with respect to the
Plan. Each of the Plans provides that no material amendment to the Plan will, in
any event, be effective unless it is approved by a majority vote of the
Directors and the Independent Directors of the Corporation. The holders of
Class A Shares and Class B Shares have exclusive voting rights with respect to
the Plan applicable to their respective class of shares. In adopting the Plans,
the Board of Directors has determined that, in their judgment, there is a
reasonable likelihood that each Plan will benefit the holders of the applicable
class of shares of the affected Fund.

Information regarding the services rendered under the Plans and the
Distribution Agreement and the amounts paid therefore by the respective Class of
the Funds are provided to, and reviewed by, the Board of Directors on a
quarterly basis. In its quarterly review, the Board of Directors considers the
continued appropriateness of the Plans and the Distribution Agreement and the
level of compensation provided therein.

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of the shares of
the Funds, 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 mean
between the current closing bid and asked prices.

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 Directors.

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 the Fund's NAV.

The Funds will not price their securities on the following national
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. On any day an
international market is closed and the New York Stock Exchange is open, any
foreign securities will be valued at the prior day's close with the current
day's exchange rate. Trading of foreign securities may take place on Saturdays
and U.S. business holidays on which a Fund's NAV is not calculated.
Consequently, a Fund's portfolio securities

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<PAGE> 132

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.

AMORTIZED COST METHOD OF PORTFOLIO VALUATION

Money Market Fund utilizes the amortized cost valuation method of
valuing portfolio instruments in the absence of extraordinary or unusual
circumstances. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the Fund.
The Directors will from time to time review the extent of any deviation of the
net asset value, as determined on the basis of the amortized cost method, from
net asset value as it would be determined on the basis of available market
quotations. If any deviation occurs which may result in unfairness either to
new investors or existing shareholders, the Directors will take such actions as
they deem appropriate to eliminate or reduce such unfairness to the extent
reasonably practicable. These actions may include selling portfolio instruments
prior to maturity to realize gains or losses or to shorten the Fund's average
portfolio maturity, withholding dividends, splitting, combining or otherwise
recapitalizing outstanding shares or utilizing available market quotations to
determine net asset value per share.

Since a dividend is declared to shareholders each time net asset value
is determined, the net asset value per share of each class of the Money Market
Fund will normally remain constant at $1.00 per share. There is no assurance
that the Fund can maintain the $1.00 per share value. Monthly, any increase in
the value of a shareholder's investment in either class from dividends is
reflected as an increase in the number of shares of such class in the
shareholder's account or is distributed as cash if a shareholder has so
elected.
It is expected that the Fund's net income will be positive each time it
is determined. However, if because of a sudden rise in interest rates or for any
other reason the net income of the Fund determined at any time is a negative
amount, the Fund will offset the negative amount against income and accrued
during the month for each shareholder account. If at the time of payment of a
distribution such negative amount exceeds a shareholder's portion of accrued
income, the Fund may reduce the number of its outstanding shares by treating the
shareholder as having contributed to the capital of the Fund that number of full
or fractional shares which represent the amount of excess. By investing in
either class of shares of the Fund, shareholders are deemed to have agreed to
make such a contribution. This procedure permits the Fund to maintain its net
asset value at $1.00 per share.

If in the view of the Directors it is inadvisable to continue the
practice of maintaining net asset value at $1.00 per share, the Directors
reserve the right to alter the procedures for determining net asset value. The
Fund will notify shareholders of any such alteration.

The Fund is permitted to redeem shares of either class in kind.
Nevertheless, the Fund has filed with the Securities and Exchange Commission a
notification of election committing itself to pay in cash on redemption by a
shareholder of record, limited during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period.

The Fund will not price its securities on the following national
holidays: New Year's Day; President's Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day and Christmas Day.

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INITIAL SALES CHARGE ON CLASS A SHARES

Class A shares of the Funds (except for Money Market 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"). Class A shares of Money Market Fund will
be sold at their net asset value without a sales charge. Share certificates
will not be issued unless requested by the shareholder in writing, and then only
will be issued for full shares. The Directors reserve the right to change or
waive a 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.

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

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

WITHOUT SALES CHARGE. As described in the Prospectuses, Class A shares
of the Funds may be sold without a sales charge to certain persons described in
the Prospectuses.

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

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

LETTER OF INTENTION. The reduced sales loads are also applicable to
investments made over a specified period pursuant to a Letter of Intention
(LOI), which should be read carefully prior to its execution by an investor.
Each Fund (other than Money Market 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 period of thirteen (13) months.
Investors who are using the Fund as a funding medium for a qualified retirement
plan, however, may opt to make the necessary investments called for by the LOI
over a forty-eight (48) month period. These qualified retirement plans include
IRA's, SEP, SARSEP, TSA, 401(k) plans, TSA plans and 457 plans. Such an
investment (including accumulations and combinations) must aggregate $100,000 or
more invested during the specified period from the date of the LOI or from a
date within ninety

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(90) days prior thereto, upon written request to Investor Services ($50,000 in
the case of Emerging Growth Fund and Global Resources Fund). 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 with the specified
period (either 13 or 48 months), the sales charge applicable will not be higher
than that which would have been applied (including accumulations and
combinations) had the LOI been for the amount actually invested.

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

DEFERRED SALES CHARGE ON CLASS B SHARES

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

CONTINGENT DEFERRED SALES CHARGE. Class B shares which are redeemed
within six years of purchase will be subject to a CDSC at the rates set forth in
the Funds' respective Prospectuses as a percentage of the dollar amount subject
to the CDSC. The charge will be assessed on an amount equal to the lesser of
the current market value or the original purchase cost of the Class B shares
being redeemed. Accordingly, no CDSC will be imposed on increases in account
value above the initial purchase prices, including Class B shares derived from
reinvestment of dividends or capital gains distributions.

The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month. Class B shares of Money Market Fund will be subject upon
redemption to the CDSC set forth in the Prospectus of the John Hancock fund from
which the investor initially exchanged his/her shares.

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

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SPECIAL REDEMPTIONS

Although the Funds would not normally do so, each Fund has the right to
pay the redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Directors. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any
such security would be valued for the purpose of making such payment at the same
value as used in determining the Fund's net asset value. Each Fund has elected
to be governed by Rule 18f-1 under the 1940 Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund during any 90-day period for any one account.

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE. As described more fully in the Prospectuses, the
Funds permit exchanges of shares of any class for shares of the same class in
any other John Hancock fund offering that class.

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

MONTHLY AUTOMATIC ACCUMULATION PROGRAM ("MAAP"). This program is
explained fully in each Fund's Prospectus and the Account Privileges
Application. The program, as it relates to automatic investment checks, is
subject to the following conditions:

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

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

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

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

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

DESCRIPTION OF THE CORPORATION'S SHARES

Each Fund operates as one series of the Corporation. All shares of
stock of the Corporation ($.01 par value per share) have equal voting rights
among shares of the same series (except that each class of shares within a
series has sole voting rights with respect to matters solely affecting that
class). On September 12, 1995, the Corporation's Articles of Incorporation were
amended to increase the authorized common stock of the Corporation from
375,000,000 to 1,000,000,000 shares of Class A Common Stock, from 625,000,000 to
1,300,000,000 shares of Class B Common Stock; and from 0 to 1,000,000,000 shares
of Class S Common Stock. No shares of any series or class have pre-emptive or
conversion rights. Each series of shares represents interests in a separate
portfolio of investments. Each is entitled to all income and gains (or losses)
and bears all of the expenses associated with the operations of that portfolio
except that each class of a series bears its own transfer agency fees. Common
expenses of the Corporation are allocated among the series, based upon the
respective net assets or ratably or a combination of both whichever is more
appropriate, of each series.

The Board of Directors is authorized to create additional series of
shares and classes within any series at any time without approval by
shareholders. Six series of shares representing interests in the Corporation
are presently authorized.

Each share of each series or class of the Corporation represents an
equal proportionate interest with each other share in that series or class, none
having priority or preference over other shares of the same series or class.
The interest of investors in the various series or classes of the Corporation is
separate and distinct. All consideration received for the sales of shares of a
particular series or class of the Corporation, all assets in which such
consideration is invested and all income, earnings and profits derived from such
investments will be allocated to and belong to that series or class. As such,
each share is entitled to dividends and distributions out of the net income
belonging to that series or class as declared by the Board of Directors. The
assets of each series are segregated on the Corporation's books and are charged
with the liabilities of that series and with a share of the Corporation's
general liabilities.

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The Board of Directors determines those assets and liabilities deemed to
be general assets or liabilities of the Corporation, and these items are
allocated among each series in proportion to the relative total net assets of
each series. In the unlikely event that the liabilities allocable to a series
exceed the assets of that series, the amount to be deemed available for
distribution to each affected series shall be determined by the Board of
Directors in order to effect an equitable allocation among each series of the
Corporation.

In accordance with a multiple class plan adopted pursuant to Rule 18f-3
under the 1940 Act, the directors of the Corporation have authorized the
issuance of two classes of common stock for each Fund, designated as Class A and
Class B shares, and, in the case of the Money Market Fund has authorized the
issuance of a third class of common stock, designated as Class S shares. Class
A, Class B shares and, in the case of Money Market Fund, Class S shares each
represent an interest in the same assets of the respective Funds and are
identical in all respects except that each class bears certain expenses related
to the distribution of such shares and certain expenses related to transfer
agency services and have exclusive voting rights with respect to matters
relating to the distribution expenditures. The Directors of the Corporation may
classify and reclassify the shares of all Funds into additional classes of
common stock at a future date.
VOTING RIGHTS. Each shareholder of the Corporation is entitled to a
full vote for each full share held (and fractional votes for fractional
shares). Shareholders of each series or class vote separately from other
shareholders of the Corporation with respect to all matters which affect
solely the interests ofthat series or class. After Directors have been
elected by shareholders, they will continue to serve indefinitely and they
may appoint their own successors, provided that always at least a majority
of the Directors have been elected by the Corporation's shareholders.
The voting rights of stockholders are not cumulative, so that the holders
of more than 50 percent of the shares voting can, if they choose, elect
all Directors being selected, while the holders of
the remaining shares would be unable to elect any Directors. It is the
intention of the Corporation not to hold annual meetings of shareholders. The
Directors may call annual or special meetings of shareholders of the Corporation
or any class of series for action by shareholder vote as may be required by the
Investment Company Act of 1940. Pursuant to an undertaking to the Securities
and Exchange Commission, the Corporation will call a meeting of shareholders for
any purpose, including voting to remove one or more Director, on the written
request of the holders of at least 10% of outstanding shares of the
Corporation. The Funds, under certain circumstances, will assist shareholders
with communications including shareholder proposals.

DIRECTOR AND OFFICER LIABILITY. Under the Corporation's Articles of
Incorporation and the Maryland General Corporation Law, the directors, officers,
employees and agents of the Corporation are entitled to indemnification under
certain circumstances against liabilities, claims and expenses arising from any
threatened, pending or completed action, suit or proceeding to which they are
made parties by reason of the fact that they are or were such directors,
officers, employees or agents of the Corporation except as such liability may
arise from their own bad faith, willful misfeasance, gross negligence or
reckless disregard of duties.

The Corporation is not required to issue stock certificates. The
Corporation shall continue without limitation of time subject to the provisions
in the Articles of Incorporation concerning termination by action of the
shareholders.

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TAX STATUS

Each Fund is treated as a separate entity for accounting and tax
purposes. Each Fund has qualified and elected to be treated as a "regulated
investment company" under Subchapter M of the Code, and intends to continue to
so qualify in the future. 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, each Fund will not be
subject to Federal income tax on taxable income (including net realized capital
gains) which is distributed to shareholders at least annually in accordance with
the timing requirements of the Code.

Each 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.
Each Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.

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

Distributions of tax-exempt interest ("exempt-interest dividends")
timely designated as such by High Yield Tax-Free Fund will be treated as
tax-exempt interest under the Code, provided that such Fund qualifies as a
regulated investment company and at least 50% of the value of its assets at the
end of each quarter of its taxable year is invested in tax-exempt obligations.
Shareholders are required to report their receipt of tax-exempt interest,
including such distributions, on their Federal income tax returns. The portion
of High Yield Tax-Free Fund's distributions designated as exempt-interest
dividends may differ from the actual percentage that its tax-exempt income
comprised of its total income during the period of any particular shareholder's
investment. High Yield Tax-Free Fund will report to shareholders the amount
designated as exempt-interest dividends for each year.

Interest income from certain types of tax-exempt bonds that are private
activity bonds in which High Yield Tax-Free Fund may invest is treated as an
item of tax preference for purposes of the Federal alternative minimum tax. To
the extent that High Yield Tax-Free Fund invests in these types of tax-exempt
bonds, shareholders will be required to treat as an item of tax preference for
Federal alternative minimum purposes that part of such Fund's exempt-interest
dividends which is derived from interest on these tax-exempt bonds.
Exempt-interest dividends derived from interest income from all tax-exempt bonds
may be included in corporate "adjusted current earnings" for purposes of
computing the alternative minimum tax liability, if any, of corporate
shareholders of High Yield Tax-Free Fund.

If Global Resources Fund or Emerging Growth Fund acquires stock in
certain non-U.S. corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), that Fund could be
subject to Federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would

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not be able to pass through to its shareholders any credit or deduction for such
a tax. Certain elections may, if available, ameliorate these adverse tax
consequences, but any such election would require the applicable Fund to
recognize taxable income or gain without the concurrent receipt of cash. Any
Fund that is permitted to acquire stock in foreign corporations may limit and/
or manage its holdings in passive foreign investment companies to minimize its
tax liability or maximize its return from these investments.

Foreign exchange gains and losses realized by Emerging Growth Fund,
Global Resources Fund, Government Income Fund or High Yield Bond Fund in
connection with certain transactions involving foreign currency-denominated debt
securities, certain foreign currency futures and 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. Any
such transactions that are not directly related to a Fund's investment in stock
or securities, possibly including speculative currency positions or currency
derivatives not used for hedging purposes, may increase the amount of gain it is
deemed to recognize from the sale of certain investments held for less than
three months, which gain is limited under the Code to less than 30% of its
annual gross income, and 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 annual gross income. Income from investments in commodities,
such as gold and certain related derivative instruments, is also not treated as
qualifying income under this test. If the net foreign exchange loss for a year
treated as ordinary loss under Section 988 were to exceed a Fund's investment
company taxable income computed without regard to such loss but after
considering the post-October loss regulations (i.e., all of the Fund's net
income other than any excess of net long-term capital gain over net short-term
capital loss) the resulting overall ordinary loss for such year would not be
deductible by the Fund or its shareholders in future years.

Global Resources Fund, Emerging Growth Fund, Government Income Fund and
High Yield Bond Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to their investments in foreign securities. 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 such taxes, subject to certain provisions and
limitations contained in the Code. Specifically, if more than 50% of the value
of a 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 actually received) their pro rata shares of foreign income taxes paid
by the Fund even though not actually received by them, and (ii) treat such
respective pro rata portions as foreign income taxes paid by them. Global
Resources Fund or Emerging Growth Fund may, but the other Funds probably will
not satisfy this 50% requirement.

If a Fund makes this election, shareholders may then deduct such pro
rata portions of foreign income 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 foreign income 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 tax credit for such
foreign taxes may be required to treat a portion of dividends received from the
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 that a Fund files the election described above,
its shareholders will be notified of the amount of (i) each shareholder's pro
rata share of foreign income taxes paid by the Fund and (ii) the

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portion of Fund dividends which represents income from each foreign country. A
Fund that cannot or does not make this election may deduct such taxes in
computing its taxable income.

The amount of a 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 such Fund to
dispose of portfolio securities or enter into options or futures transactions
that will generate capital gains. At the time of an investor's purchase of Fund
shares, a portion of the purchase price is often attributable to realized or
unrealized appreciation in the Fund's portfolio or, in the case of Global
Resources Fund and Emerging Growth Fund, to undistributed taxable income of the
Fund. Consequently, subsequent distributions 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 of shares of a Fund (including by exercise of the
exchange privilege) a shareholder may realize a taxable gain or loss depending
upon his basis in his shares, except that a redemption of shares of Money Market
Fund may not result in a gain or loss if the Fund always successfully maintains
a constant net asset value per share, although a loss may still arise if a CDSC
is paid. Any gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands and will be long-term or
short-term, depending upon the shareholder's tax holding period for the shares.
A sales charge paid in purchasing Class A shares of a 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 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. Such
disregarded load 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 same 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
an election to reinvest dividends in additional shares. 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 disallowed (in the case of High Yield Tax-Free Fund) to
the extent of all exempt-interest dividends paid with respect to such shares
and, if not thus disallowed, will (in the case of any Fund) be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain with respect to such shares.

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

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For Federal income tax purposes, each Fund is generally permitted to
carry forward a net capital loss in any year to offset its own 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 applicable Fund and, as noted
above, would not be distributed as such to shareholders. As of October 31,
1994, Emerging Growth Fund had capital loss carryforwards of $17,163,122, of
which $1,477,890 will expire in 1996, $177,369 will expire in 1998, $2,304,137
will expire in 2000, $4,446,419 will expire in 2001 and $8,817,307 will expire
in 2002. As of October 31, 1994, Global Resources Fund had capital loss
carryforwards of $106,861, of which $16,520 will expire in 2000 and $90,341 will
expire in 2002. As of December 31, 1994, Government Income Fund, High Yield Bond
Fund and High Yield Tax-Free Fund had capital loss carryforwards of $15,347,195,
$9,184,252 and $2,785,979, respectively, all of which will expire in 2002.

Interest on indebtedness incurred by a shareholder to purchase or carry
shares of High Yield Tax-Free Fund will not be deductible for Federal income tax
purposes to the extent it is deemed related to exempt-interest dividends paid by
such Fund. Pursuant to published guidelines, the Internal Revenue Service may
deem indebtedness to have been incurred for the purpose of purchasing or
carrying shares of this Fund even though the borrowed funds may not be directly
traceable to the purchase of shares.

For purposes of the dividends-received deduction available to
corporations, dividends received by a Fund, if any, from U.S. domestic
corporations in respect of the stock of such corporations held by the Fund, for
U.S. Federal income tax purposes, for at least 46 days (91 days in the case of
certain preferred stock) and distributed and designated by the Fund may be
treated as qualifying dividends. Only Emerging Growth Fund or Global Resources
Fund may sometimes have any significant portion of its distributions treated as
qualifying dividends. Corporate shareholders must meet the minimum holding
period requirement stated above (46 or 91 days) with respect to their shares of
the applicable Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends-received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative minimum tax liability. Additionally,
any corporate shareholder should consult its tax adviser regarding the
possibility that its basis in its shares may be reduced, for Federal income tax
purposes, by reason of "extraordinary dividends" received with respect to the
shares, for the purpose of computing its gain or loss on redemption or other
disposition of the shares.
Each Fund that invests in certain PIKs, zero coupon securities or
certain increasing rate securities (an, in general, any other securities with
original issue discount or with market discount if the Fund elects to include
market discount in income currently) must accrue income on such investments
prior to the receipt of the corresponding cash payments. However, each Fund
must distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, a Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.

Investments in debt obligations that are at risk of or in default
presents special tax issues for any Fund that may hold such obligations, such as
High Yield Bond Fund and High Yield Tax- Free Fund. Tax rules are not entirely
clear about issues such as when the Funds 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

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obligations in a workout context are taxable. These and other issues will be
addressed by any Fund that may hold such obligations in order to reduce
the risk of distributing insufficient income to preserve its status as a
regulated investment company and seek to avoid becoming subject to Federal
income or excise tax.

Limitations imposed by the Code on regulated investment companies like
the Funds may restrict a Fund's ability to enter into futures, options and
currency forward transactions.

Certain options, futures and forward foreign currency transactions
undertaken by a Fund may cause such 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 certain
currency forwards, options and futures, as ordinary income or loss) and timing
of some capital gains and losses realized by the Fund. Also, certain of a
Fund's losses on its transactions involving options, futures and forward foreign
currency contracts and/or offsetting portfolio positions may be deferred rather
than being taken into account currently in calculating the Fund's taxable income
or gains. These transactions may therefore affect the amount, timing and
character of a Fund's distributions to shareholders. Certain of the applicable
tax rules may be modified if the Fund is eligible and chooses to make one or
more of certain tax elections that may be available. The Funds will take into
account the special tax rules (including consideration of available elections)
applicable to options, futures or forward contracts in order to minimize any
potential adverse tax consequences.

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

The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under
such law. The discussion does not address special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions. Dividends, capital gain distributions, and
ownership of or gains realized on the redemption (including an exchange) of 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, a Fund in their
particular circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which
their investment in a 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 a Fund and, unless an effective IRS Form W-8 or authorized
substitute is on file, to 31% backup withholding on certain other payments from
the Fund. Non- U.S. investors should consult their tax advisers regarding such
treatment and the application of foreign taxes to an investment in the Funds.

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

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CALCULATION OF PERFORMANCE

YIELD (EXCEPT FOR THE MONEY MARKET FUND). For the 30-day period ended
December 31, 1994, the yields of (a) High Yield Bond Fund's Class A and Class B
shares were 11.55% and 11.35%, respectively, (b) High Yield Tax-Free Fund's
Class A and Class B shares were 6.71% and 6.28%, respectively and (c) Government
Income Fund's Class A and Class B shares were 6.14% and 5.64%, respectively.
The performance of High Yield Bond Fund's Class A and Class B shares quoted (1)
partially reflects an increase due to significant declines in prices of certain
bonds held in the Fund's portfolio due to current adverse market conditions and
(2) may not reflect the actual income stream investors can expect if portfolio
issuers experience financial difficulties. For a thorough explanation,
investors may obtain further information from their broker.

Each Fund's (except for Money Market Fund) 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, according to the following standard formula:

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

High Yield Tax-Free Fund may advertise a tax-equivalent yield, which is
computed by dividing that portion of the yield of that Fund which is tax-exempt
by one minus a stated income tax rate and adding the product to that portion, if
any, of the yield of the Fund that is not tax- exempt. The tax-equivalent
yields for the High Yield Tax-Free Fund's Class A and Class B Shares at the 36%
federal income tax rate for the 30-day period ended December 31, 1994 were
10.48% and 9.81%, respectively.

MONEY MARKET FUND YIELD. For the purposes of calculating yield for both
classes of Money Market Fund, daily income per share consists of interest and
discount earned on the Fund's investments less provision for amortization of
premiums and applicable expenses, divided by the number of shares outstanding,
but does not include realized or unrealized appreciation or depreciation.
In any case in which the Fund reports its annualized yield, it will also
furnish information as to the average portfolio maturities of the Fund. It will
also report any material effect of realized gains or losses or unrealized
appreciation on dividends which have been excluded from the computation of
yield.
Yield calculations are based on the value of a hypothetical preexisting
account with exactly one share at the beginning of the seven day period. Yield
is computed by determining the net change in the value of the account during the
base period and dividing the net change by the value of the account at the
beginning of the base period to obtain the base period return. Base period is
multiplied by 365/7 and the resulting figure is carried to the nearest 100th of
a percent.

-57-
<PAGE> 144
Net change in account value during the base period includes dividends declared
on the original share, dividends declared on any shares purchased with
dividends of that share and any account or sales charges that would affect an
account of average size, but excludes any capital changes.
Effective yield is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical preexisting account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1
The yield of the Fund is not fixed or guaranteed. Yield quotations
should not be considered to be representations of yield of the Fund for any
period in the future. The yield of the Fund is a function of available interest
rates on money market instruments, which can be expected to fluctuate, as well
as of the quality, maturity and types of portfolio instruments held by the Fund
and of changes in operating expenses. The Fund's yield may be affected if,
through net sales of its shares, there is a net investment of new money in the
Fund which the Fund invests at interest rates different from that being earned
on current portfolio instruments. Yield could also vary if the Fund experiences
net redemptions, which may require the disposition of some of the Fund's current
portfolio instruments.
TOTAL RETURN. Each Fund's total return is computed by finding the
average annual compounded rate of return over the 1-year, 5-year, and 10-year
periods that would equate the initial amount invested to the ending redeemable
value according to the following formula:

P(1+T)n = ERV

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

T= average annual total return

n= number of years

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

In the case of Class A shares or Class B shares, this calculation
assumes the maximum sales charge is included in the initial investment or the
CDSC is applied at the end of the period. This calculation also assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The "distribution rate" is determined by
annualizing the result of dividing the declared dividends of a Fund during the
period stated by the maximum offering price or net asset value at the end of the
period.

The total return in the case of Class B shares of each Fund is
calculated by determining the net asset value of all shares held at the end of
the period for each share held from the beginning of the period (assuming
reinvestment of all dividends and distributions at net asset value during the
period and the deduction of any applicable contingent deferred sales charge as
if the shares were redeemed at the end of the period), subtracting the maximum
offering price (net asset value per share) per share at the beginning of such
period and then dividing the result by the

-58-
<PAGE> 145

maximum offering price (net asset value per share) per share at the beginning of
the same period. Total return for Class A shares of each of Emerging Growth
Fund, Global Resources Fund, Government Income Fund, High Yield Bond Fund and
High Yield Tax-Free Fund is calculated in the same manner except the maximum
offering price reflects the deduction of the maximum initial sales charge and
the redemption value is at net asset value.

In addition to average annual total returns, a 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 maximum sales
charge on Class A shares or the CDSC on Class B shares into account. A Fund's
"distribution rate" is determined by annualizing the result of dividing the
declared dividends of the Fund during the stated period by the maximum offering
price or net asset value at the end of the period. Excluding a Fund's sales
charge on Class A shares and the CDSC on Class B shares from a total return
calculation produces a higher total return figure.

From time to time, in reports and promotional literature, a 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 approximately 1,700 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.

Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S, etc. will
also be utilized. A 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 a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of a
Fund for any period in the future. The performance of a 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 a
Fund's performance.

BROKERAGE ALLOCATION

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

-59-
<PAGE> 146

Each 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 NASD and other policies that
the Directors may determine, the Adviser may consider sales of shares of the
Funds as a factor in the selection of broker-dealers to execute a Fund's
portfolio transactions.

Purchase of securities for Government Income Fund, High Yield Bond Fund
and High Yield Tax-Free Fund are normally principal transactions made directly
from the issuer or from an underwriter or market maker for which no brokerage
commissions are usually paid. Purchases from underwriters will include a
commission or concession paid by the issuer to the underwriter, and purchases
and sales from dealers serving as market makers will usually include a mark up
or mark down. Purchases and sales of options and futures will be effected
through brokers who charge a commission for their services and are reflected in
amounts for Government Income Fund and High Yield Bond Fund below.

To the extent consistent with the foregoing, each 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 Funds. The Funds will make no commitments to allocate
portfolio transactions upon any prescribed basis. While the Corporation's
officers will be primarily responsible for the allocation of each 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
Directors.

Brokerage commissions of those Funds which pay such commissions for
their respective reporting periods, as follows, amounted to:

EMERGING GROWTH FUND - (a) $318,023 for the fiscal year ended October
31, 1994; (b) $330,454 for the fiscal year ended October 31, 1993; and
(c) $182,533 for the fiscal year ended October 31, 1992.

GLOBAL RESOURCES FUND - (a) $148,469 for the fiscal year ended October
31, 1994; (b) $54,463 for the fiscal year ended October 31, 1993; and
(c) $29,204 for the fiscal year ended October 31, 1992.

GOVERNMENT INCOME FUND - (a) $96,931 for the fiscal year ended October
31, 1994; (b) $254,859 for the fiscal year ended October 31, 1993; and
(c) $140,463 for the fiscal year ended October 31, 1992.

HIGH YIELD BOND FUND - (a) $2,320 for the fiscal year ended October 31,
1994; (b) $13,050 for the fiscal year ended October 31, 1993; and (c) $0
for the fiscal year ended October 31, 1992.

-60-
<PAGE> 147

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 Directors that the price is
reasonable in light of the services provided and to policies that the Directors
may adopt from time to time. During the fiscal year ended October 31, 1994, the
Funds did not pay commissions as compensation to any brokers for research
services such as industry, economic and company reviews and evaluations of
securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its subsidiaries,
three of which, Tucker Anthony Incorporated ("Tucker Anthony") John Hancock
Distributors, Inc. ("John Hancock Distributors") and Sutro & Company, Inc.
("Sutro"), are broker-dealers ("Affiliated Brokers"). 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
Tucker Anthony, Sutro or John Hancock Distributors. During the year ended
October 31, 1994, the Fund did not execute any portfolio transactions with then
affiliated brokers.

Any of the Affiliated Brokers may act as broker for a Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Directors pursuant to the 1940 Act.
Commissions paid to an Affiliated Broker must be at least as favorable as those
which the Directors 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 a Fund as determined by
a majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Funds, the Adviser or the Affiliated Brokers. Because the
Adviser, which is affiliated with the Affiliated Brokers, has, as an investment
adviser to the Fund, the obligation to provide investment management services,
which includes elements of research and related investment skills, such research
and related skills will not be used by the Affiliated Brokers as a basis for
negotiating commissions at a rate higher than that determined in accordance with
the above criteria. The Funds will not effect principal transactions with
Affiliated Brokers. The Funds may, however, purchase securities from other
members of underwriting syndicates of which Tucker Anthony and Sutro are
members, but only in accordance with the policy set forth above and procedures
adopted and reviewed periodically by the Directors.

Brokerage or other transactions costs of a Fund are generally
commensurate with the rate of portfolio activity. The portfolio turnover rates
for each of the following Funds for (a) the fiscal year ended October 31, 1994
and (b) the fiscal year ending October 31, 1993 were:

EMERGING GROWTH FUND - (a) 25% and (b) 29%.

GLOBAL RESOURCES FUND - (a) 96% and (b) 83%.

GOVERNMENT INCOME FUND - (a) 92% and (b) 138%.

HIGH YIELD BOND FUND - (a) 153%* and (b) 204%*.

-61-
<PAGE> 148

HIGH YIELD TAX-FREE FUND - (a) 62% and (b) 100%.

* Higher turnover rates were due to volatile market conditions.

TRANSFER AGENT SERVICES

John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Company, is the
transfer and dividend paying agent for the Funds. Emerging Growth Fund and
Global Resources Fund pay Investor Services monthly a transfer agent fee equal
to $16 per account for the Class A Shares and $18.50 per account for the Class B
shares on an annual basis, plus out-of-pocket expenses. Government Income Fund
and High Yield Bond Fund pay Investor Services monthly a transfer agent fee
equal to $20 per account for the Class A shares and $22.50 per account for the
Class B shares on an annual basis, plus out-of-pocket expenses. High Yield
Tax-Free Fund pays Investor Services monthly a transfer agent fee of $19 per
account for the Class A shares and $21.50 per account for the Class B shares on
an annual basis, plus out-of-pocket expenses. Money Market Fund pays Investor
Services monthly a transfer agent fee of $25 per account for the Class A shares
and $27 per account for the Class B shares on an annual basis, plus
out-of-pocket expenses.

CUSTODY OF PORTFOLIO

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

INDEPENDENT AUDITORS

The independent auditors of the Funds are Ernst & Young LLP, 200
Clarendon Street, Boston, Massachusetts 02116. The independent auditors audit
and render an opinion on the Funds' annual financial statements and prepares the
Funds' annual income tax returns. The financial statements of the Funds
included in the Prospectuses and this Statement of Additional Information have
been audited by Ernst & Young LLP for the periods indicated in their report
thereon appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

-62-
<PAGE> 149

APPENDIX A

CORPORATE AND TAX-EXEMPT BOND RATINGS

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S)

Aaa, Aa, A AND Baa - Tax-exempt bonds rated Aaa are judged to be of the
"best quality." The rating of Aa is assigned to bonds that are of "high quality
by all standards," but long-term risks appear somewhat larger than Aaa rated
bonds. The Aaa and Aa rated bonds are generally known as "high grade bonds."
The foregoing ratings for tax-exempt bonds are rated conditionally. Bonds for
which the security depends upon the completion of some act or upon the
fulfillment of some condition are rated conditionally. These are bonds secured
by (a) earnings of projects under construction, (b) earnings of projects
unseasoned in operation experience, (c) rentals that begin when facilities are
completed, or (d) payments to which some other limiting condition attaches. Such
conditional ratings denote the probable credit stature upon completion of
construction or elimination of the basis of the condition. Bonds rated A are
considered as upper medium grade obligations. Principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future. Bonds rated Baa are considered a medium
grade obligations; i.e., they are neither highly protected or 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.

STANDARD & POOR'S RATINGS GROUP ("S&P")

AAA, AA, A AND BBB - Bonds rated AAA bear the highest rating assigned to
debt obligations, which indicates an extremely strong capacity to pay principal
and interest. Bonds rated AA are considered "high grade," are only slightly
less marked than those of AAA ratings and have the second strongest capacity for
payment of debt service. Bonds rated A have a strong capacity to pay principal
and interest, although they are somewhat susceptible to the adverse effects of
changes in circumstances and economic conditions. The foregoing ratings are
sometimes followed by a "p" indicating that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the bonds being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. Although a provisional rating addresses credit quality subsequent to
completion of the project, it makes no comment on the likelihood of, or the risk
of default upon failure of, such completion. Bonds rated BBB are regarded as
having an adequate capacity to repay principal and pay interest. Whereas they
normally exhibit protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to repay principal
and pay interest for bonds in this category than for bonds in the A category.

FITCH INVESTORS SERVICE ("FITCH")

AAA, AA, A, BBB - Bonds rated AAA are considered to be investment grade
and of the highest quality. The obligor has an extraordinary ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
high quality. The obligor's ability to pay interest and repay principal, while
very strong, is somewhat less than for AAA rated securities or more subject to
possible

A-1
<PAGE> 150

change over the term of the issue. Bonds rated A are considered to be
investment grade and of good quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings. Bonds rated BBB are considered to be investment grade and of
satisfactory quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken this ability than bonds with
higher ratings.

TAX-EXEMPT NOTE RATINGS

MOODY'S - MIG-1 AND MIG-2. Notes rated MIG-1 are judged to be of the
best quality, enjoying strong protection from established cash flow or funds for
their services or from established and broad-based access to the market for
refinancing or both. Notes rated MIG-2 are judged to be of high quality with
ample margins of protection, though not as large as MIG-1.

S&P - SP-1 AND SP-2. SP-1 denotes a very strong or strong capacity to
pay principal and interest. Issues determined to possess overwhelming safety
characteristics are given a plus (+) designation (SP-1+). SP-2 denotes a
satisfactory capacity to pay principal and interest.

FITCH - FIN-1 AND FIN-2. Notes assigned FIN-1 are regarded as having
the strongest degree of assurance for timely payment. A plus symbol may be used
to indicate relative standing. Notes assigned FIN-2 reflect a degree of
assurance for timely payment only slightly less in degree than the highest
category.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

MOODY'S - Commercial Paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Prime-1, indicates highest quality repayment
capacity of rated issue and Prime-2 indicates higher quality.

S&P - Commercial Paper ratings are a current assessment of the
likelihood of timely payment of debts having an original maturity of no more
than 365 days. Issues rated A have the greatest capacity for a timely payment
and the designation 1, 2 and 3 indicates the relative degree of safety. Issues
rated "A-1+" are those with an "overwhelming degree of credit protection."

FITCH - Commercial Paper ratings reflect current appraisal of the degree
of assurance of timely payment. F-1 issues are regarded as having the strongest
degree of assurance for timely payment. (+) is used to designate the relative
position of an issuer within the rating category. F-2 issues reflect an
assurance of timely payment only slightly less in degree than the strongest
issues. The symbol (LOC) may follow either category and indicates that a letter
of credit issued by a commercial bank is attached to the commercial paper note.

OTHER CONSIDERATIONS - The ratings of S&P, Moody's, and Fitch represent
their respective opinions of the quality of the municipal securities they
undertake to rate. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, municipal securities
with the same maturity, coupon and ratings may have different yields and
municipal securities of the same maturity and coupon with different ratings may
have the same yield.

A-2
<PAGE> 151

FINANCIAL STATEMENTS
--------------------

F-1
<PAGE> 152
MONEY MARKET FUND B
<TABLE>
STATEMENT OF NET ASSETS
<CAPTION>
October 31, 1994
FACE
ISSUER AMOUNT VALUE
- -------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER - 69.04%
- ---------------------------
BUSINESS CREDIT
INSTITUTIONS - 8.56%
Chevron Oil Finance Co.
5.050% due 11/08/94 .............. $3,000,000 $ 2,997,054
Coca-Cola Financial Corp.
4.850% due 11/14/94 .............. 2,000,000 1,996,497
-----------
4,993,551
CONSUMER CYCLICALS - 8.55%
Toys "R" Us, Inc.
4.880% due 11/29/94 .............. 2,500,000 2,490,511
Wal-Mart Stores, Inc.
4.750% due 11/02/94 .............. 2,500,000 2,499,670
-----------
4,990,181
CONSUMER GOODS &
SERVICES - 11.72%
Cargill Inc.
4.950% to 4.960% due
11/07/94 ........................ 3,000,000 2,997,523
Coca Cola Co.
4.770% to 5.050% due
11/04/94 to 11/18/94 ............ 993,000 991,703
Hershey Foods Corp.
4.800% due 11/01/94 .............. 2,000,000 2,000,000
Procter & Gamble Co.
5.000% due 11/01/94 .............. 850,000 850,000
-----------
6,839,226
FINANCIAL SERVICES - 5.13%
General Electric Capital Corp.
4.880% to 4.970% due
11/04/94 to 12/05/94 ............ 3,000,000 2,994,563

HEALTH CARE - 10.08%
Abbott Laboratories
4.800% to 4.950% due
11/22/94 to 12/06/94 ............ 2,500,000 2,489,981
Schering Corp.
4.750% to 4.800% due
11/02/94 to 12/15/94............. 2,400,000 2,397,389
Warner-Lambert Co.
4.870% due 11/28/94............... 1,000,000 996,348
-----------
5,883,718
INDUSTRIAL - 3.43%
Donnelley (R.R.) & Sons Co.
4.980% due 11/03/94 .............. 1,000,000 999,723
E.I. duPont deNemours & Co.
4.920% due 11/03/94 .............. 1,000,000 999,727
-----------
1,999,450
TECHNOLOGY-RELATED - 15.18%
American Telephone &
Telegraph Co.
4.800% to 5.280% due
11/18/94 to 01/03/95.............. 1,995,000 1,982,734
Bellsouth
Telecommunications Inc.
4.850% to 4.950% due
11/16/94 to 11/23/94 ............. 2,395,000 2,388,258
Motorola, Inc.
4.880% due 11/14/94 ............... 2,500,000 2,495,594
Raytheon Co.
4.850% due 11/21/94 ............... 2,000,000 1,994,611
-----------
8,861,197
UTILITIES - 6.39%
Laclede Gas Co.
4.920% due 11/09/94 ............... 2,000,000 1,997,813
Madison Gas & Electric Co.
4.850% to 4.950% due
11/15/94 to 11/21/94 ............. 1,739,000 1,734,793
-----------
3,732,606
-----------
TOTAL COMMERCIAL PAPER
(Cost $40,294,492) .................. 40,294,492
</TABLE>
3
<PAGE> 153
<TABLE>
STATEMENT OF NET ASSETS

<CAPTION>
Continued

FACE
ISSUER AMOUNT VALUE
- -------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
- ----------------------
OBLIGATIONS - 31.21%
- ----------------------
FEDERAL FARM CREDIT
BANK - 4.16%
3.500% to 5.410% due
11/15/94 to 04/13/95 ............. 2,445,000 2,428,712

FEDERAL HOME LOAN
BANK - 5.94%
4.900% to 5.630% due
11/04/94 to 03/30/95 ............. 3,495,000 3,463,629

FEDERAL HOME LOAN
MORTGAGE
CORPORATION - 6.15%
3.960% to 5.570% due
11/03/94 to 05/22/95 ............. 3,615,000 3,590,533

FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 14.96%
4.650% to 5.220% due
11/10/94 to 03/20/95 ............. 8,780,000 8,733,278
-----------

TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $18,216,152) .................. 18,216,152
-----------

TOTAL INVESTMENTS - 100.25%
(Cost $58,510,644) .................. 58,510,644

CASH AND OTHER ASSETS,
LESS LIABILITIES - (0.25)% ........ (145,055)
-----------
NET ASSETS, at value,
equivalent to $1.00 per
share for 58,365,589
shares ($.01 par value)
of capital stock
outstanding - 100.00% ............ $58,365,589
===========
</TABLE>

See Notes to Financial Statements.

4
<PAGE> 154
STATEMENT OF OPERATIONS / STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
STATEMENT OF OPERATIONS
Year Ended October 31, 1994
<S> <C> <C>
INVESTMENT INCOME
Interest ......................... $1,725,382

EXPENSES
Distribution expenses ............ $428,177
Management fees .................. 214,088
Transfer agent fees .............. 93,330
Administrative service fees ...... 46,621
Registration fees ................ 35,616
Shareholder reports .............. 19,295
Directors' fees and expenses ..... 16,553
Custodian fees ................... 15,692
Audit and legal fees ............. 9,221
Miscellaneous .................... 4,582 883,175
-------- ----------
NET INVESTMENT INCOME ............ $ 842,207
==========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income ...... $ 842,207 $ 242,168

DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income ...... (842,207) (242,168)

CAPITAL SHARE
TRANSACTIONS
Increase in capital shares
outstanding .............. 26,819,423 65,794
----------- -----------
Increase in net assets ..... 26,819,423 65,794

NET ASSETS
Beginning of year .......... 31,546,166 31,480,372
----------- -----------
End of year ................ $58,365,589 $31,546,166
=========== ===========

</TABLE>
5

See Notes to Financial Statements.

<PAGE> 155
<TABLE>
FINANCIAL HIGHLIGHTS

<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per share income and capital changes for a share outstanding
during each year:
Net asset value, beginning of year .......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income ....................................... 0.018 0.009 0.017 0.045 0.061

LESS DISTRIBUTIONS
Dividends from net investment income ........................ (0.018) (0.009) (0.017) (0.045) (0.061)
------- ------- ------- ------- -------
Net asset value, end of year ................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return(1) ............................................. 1.87% 0.85% 1.73% 4.61% 6.30%
======= ======= ======= ======= =======

RATIOS AND SUPPLEMENTAL DATA
Ratio of expenses to average net assets ..................... 2.06% 2.44% 2.47% 2.23% 2.31%
Ratio of expense reimbursement to average net assets ........ - - - (0.12)% (0.15)%
------- ------- ------- ------- -------
Ratio of net expenses to average net assets ................. 2.06% 2.44% 2.47% 2.11% 2.16%
======= ======= ======= ======= =======
Ratio of net investment income to average net assets ........ 1.97% 0.85% 1.69% 4.45% 6.11%
Net Assets, end of year (in thousands) ...................... $58,366 $31,546 $31,480 $20,763 $21,099
<FN>
(1) Total return does not include the effect of the contingent deferred sales charge.

</TABLE>

See Notes to Financial Statements.

<PAGE> 156
NOTES TO FINANCIAL STATEMENTS

October 31, 1994

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

Transamerica Series, Inc. (the "Issuer"), formerly Transamerica Special Series,
Inc., is a diversified, open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Issuer operates as a series
fund, currently issuing six series of shares. On May 20, 1994, the shareholders
of the Issuer approved changes to the name of the Issuer and to the names of
each of the series of the Issuer. These changes became effective on June 15,
1994.
Transamerica Money Market Fund B (the "Fund"), formerly Transamerica
Special Money Market Fund, is one of the series of the Issuer. The Fund made its
initial offering of shares to the public on October 26, 1987. The following is a
summary of significant accounting policies consistently followed by the Fund.
(1) The Fund values its investment securities at amortized cost
(original cost plus amortized discount or accrued interest).
(2) With respect to U.S. government and U.S. government agency
securities in which the Fund may invest, only U.S. Treasury and Government
National Mortgage Association (GNMA) issues are backed by the full faith and
credit of the U.S. government. All other government issues are backed by the
issuing agencies and their general ability to borrow from the U.S. government.
(3) Security transactions are accounted for on the trade date. Interest
income is accrued daily. The identified cost of securities at October 31, 1994
is the same for both financial reporting and federal income tax purposes.
(4) Distributions of the Fund are computed daily and reinvested in Fund
shares or paid to shareholders monthly. Income distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Distributions payable to shareholders at October 31, 1994
were $9,668.
(5) No provision for federal income taxes has been made since it is the
Fund's intention to distribute all of its taxable income and profits to its
shareholders and to comply with the requirements applicable to regulated
investment companies and the minimum distribution requirements of the Internal
Revenue Code.
(6) The Fund reports custodian fees net of credits and charges resulting
from cash positions in the custodial accounts greater than or less than the
amounts required to settle portfolio transactions. For the year ended October
31, 1994, these amounts were $1,375 and $1,558, respectively.

<TABLE>
NOTE B - MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

The Fund's management fee is payable monthly to Transamerica Fund Management
Company (the "Investment Adviser") and is calculated based on the following
schedule:

<CAPTION>
AVERAGE DAILY
NET ASSETS
(in millions) ANNUAL RATE
------------- -----------
<S> <C>
First $500 0.500%
Next $250 0.425%
Next $250 0.375%
Next $500 0.350%
Next $500 0.325%
Next $500 0.300%
Over $2,500 0.275%
</TABLE>
At October 31, 1994, the management fee payable to the Investment
Adviser was $25,029.
The Investment Adviser provides administrative services to the Fund
pursuant to an administrative service agreement. During the year ended October
31, 1994, the Fund paid or accrued $36,221 to the Investment Adviser for these
services, of which $3,326 was payable at October 31, 1994.
The Fund paid no compensation directly to any officer. Certain officers
and a director of the Issuer are affiliated with the Investment Adviser.
During the year ended October 31, 1994, the Fund paid legal fees of $799
to Baker & Botts. A partner with Baker & Botts is an officer of the Issuer.

NOTE C - PLAN OF DISTRIBUTION

Pursuant to Rule 12b-1 of the Investment Company Act of 1940, the Fund is
authorized to finance activities related to the distribution of its shares. The
distribution plan, together with the contingent deferred sales charge, complies
with the regulations covering maximum sales charges assessed by mutual funds
distributed through securities dealers that are NASD members.
The plan permits payments to Transamerica Fund Distributors, Inc. (the
"Distributor"), an affiliate of the Investment Adviser and principal underwriter
of the Fund, of up to 0.25% annually of average daily net assets for certain
distribution costs such as service fees paid to dealers, production and
distribution of prospectuses to prospective investors, services provided to new
and existing shareholders and other distribution related activities. During the
year ended

7
<PAGE> 157
NOTES TO FINANCIAL STATEMENTS

Continued

NOTE C (Continued)

October 31, 1994, payments made to the Distributor of $107,432 or 0.25% were
related to the above activities.

The plan also permits reimbursement to the Distributor up to 0.75%
annually of average daily net assets for costs related to compensation paid to
securities dealers, in place of an initial sales charge to investors. These
costs are based upon a commission payment charge of 5% of the value of shares
sold (excluding shares acquired through reinvestment), reduced by the amount of
contingent deferred sales charges (CDSC) that have been received by the
Distributor on redemptions of shares. These costs also include a charge of
interest (carrying charge) at an annual rate of 1% over the prevailing prime
rate to the extent cumulative commission payment charges, plus any previous
carrying charges, less CDSC received by the Distributor, have not been paid in
full by the Fund. For the year ended October 31, 1994, the Fund reimbursed the
Distributor $320,745 or 0.75% for such costs. For the year ended October 31,
1994, the Distributor received $343,829 in CDSC. At October 31, 1994, the
balance of unrecovered costs was $1,233,281.

At October 31, 1994, the Fund had $53,504 payable to the Distributor
pursuant to the above distribution plan.

-----------------------------------
<TABLE>
NOTE D - CAPITAL AND RELATED TRANSACTIONS

A summary of the capital stock transactions follows:
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993
---------------------------- ----------------------------
SHARES DOLLARS SHARES DOLLARS
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ......................................... 237,416,247 $ 237,416,247 162,110,025 $ 162,110,025
Shares issued in reinvestment of distributions ...... 683,416 683,416 208,860 208,860
Shares redeemed ..................................... (211,280,240) (211,280,240) (162,253,091) (162,253,091)
------------ ------------- ------------ -------------
Net increase in capital shares outstanding .......... 26,819,423 $ 26,819,423 65,794 $ 65,794
============ ============= ============ =============
</TABLE>

At October 31, 1994, net assets were comprised of $58,365,589 in capital
paid-in, representing 58,365,589 shares of Common Stock outstanding (150,000,000
shares authorized).

8
<PAGE> 158

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
John Hancock Money Market Fund B,
a series of John Hancock Series, Inc.

We have audited the accompanying statement of net assets of John Hancock Money
Market Fund B, formerly Transamerica Money Market Fund B, a series of John
Hancock Series, Inc., formerly Transamerica Series, Inc., as of October 31,
1994, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Money Market Fund B, a series of John Hancock Series,
Inc., at October 31, 1994, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Houston, Texas
December 2, 1994

<PAGE> 159

Financial Statements

John Hancock Funds - Money Market Fund B

<TABLE>

STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $36,423,414) $36,423,414
Negotiable bank certificates of deposit
(cost - $4,000,089).............................. 4,000,089
Bankers' acceptances (cost - $1,982,274) 1,982,274
Corporate interest-bearing obligations
(cost - $992,740)................................ 992,740
U.S. government obligations (cost - $5,736,722).. 5,736,722
Joint repurchase agreement (cost - $10,750,000) 10,750,000
-----------
59,885,239
Cash............................................... 68
Interest receivable................................ 209,416
Miscellaneous assets............................... 13,767
-----------

Total Assets.................. 60,108,490
----------------------------------------------------
Liabilities:
Payable for investments purchased.................. 3,500,000
Payable to John Hancock Advisers, Inc. and
affiliates - Note B................................ 27,875
Accounts payable and accrued expenses.............. 58,488
-----------
Total Liabilities............. 3,586,363
----------------------------------------------------
Net Assets:
Capital paid-in.................................... 56,522,127
-----------
Net Assets.................... $56,522,127
====================================================

Net Asset Value, Offering Price and
Redemption Price Per Share:
(based on 56,522,127 shares of beneficial
interest outstanding - 150,000,000 shares
authorized with $0.01 per share par value)........... $ 1.00
===========================================================================

</TABLE>

THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON APRIL 30, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE
AS OF THAT DATE.

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND.

<TABLE>

STATEMENT OF OPERATIONS
Six months ended April 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
INVESTMENT INCOME:
Interest........................................... $ 1,603,318
-----------

Expenses:
Distribution/service fee - Note B................ 275,387
Investment management fee - Note B............... 137,693
Transfer agent fee - Note B...................... 52,718
Registration and filing fees..................... 34,813
Custodian fee.................................... 30,526
Auditing fee..................................... 14,530
Printing......................................... 6,789
Trustees' fees................................... 6,308
Shareholder service fee.......................... 4,374
Advisory board fee............................... 2,207
Legal fees....................................... 1,976
Miscellaneous.................................... 1,754
-----------
Total Expenses............... 569,075
---------------------------------------------------

Net Investment Income........ 1,034,243
===================================================

Net Increase in Net Assets
Resulting from Operations.... $ 1,034,243
===================================================

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

5
<PAGE> 160

Financial Statements
John Hancock Funds - Money Market Fund B

<TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1995 OCTOBER 31,
(UNAUDITED) 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income......................................................... $ 1,034,243 $ 842,207
--------------- ---------------

DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0187 and $0.0180 per share, respectively) ( 1,034,243) ( 842,207)
--------------- ---------------

FROM FUND SHARE TRANSACTIONS - Net*................................................. ( 1,843,462) 26,819,423
--------------- ---------------

NET ASSETS:
Beginning of period........................................................... 58,365,589 31,546,166
--------------- ---------------
End of period................................................................. $ 56,522,127 $ 58,365,589
=============== ===============

* ANALYSIS OF FUND SHARE TRANSACTIONS:

Shares sold................................................................... $ 117,586,279 $ 237,416,247
Shares issued to shareholders in reinvestment of distributions................ 828,944 683,416
--------------- ---------------
118,415,223 238,099,663
Less shares repurchased....................................................... ( 120,258,685) ( 211,280,240)
--------------- ---------------
Net increase (decrease)....................................................... $( 1,843,462) $ 26,819,423
=============== ===============
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, DISTRIBUTIONS PAID TO SHAREHOLDERS AND ANY
INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE
ILLUSTRATES THE NUMBER OF FUND SHARES SOLD, REINVESTED AND REDEEMED DURING
THE LAST TWO PERIODS.

SEE NOTES TO FINANCIAL STATEMENTS.

6
<PAGE> 161

Financial Statements

John Hancock Funds - Money Market Fund B

<TABLE>

FINANCIAL HIGHLIGHTS

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

SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1995(b) ------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
---------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Net Investment Income.............................. 0.02 0.02 0.01 0.02 0.05 0.06
Less Distributions:
Dividends from Net Investment Income............... (0.02) (0.02) (0.01) (0.02) (0.05) (0.06)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======

Total Investment Return at Net Asset Value......... 1.88% 1.87% 0.85% 1.73% 4.61% 6.30%
Total Adjusted Investment Return at
Net Asset Value (a).............................. ..... ..... ..... ..... 4.49%(c) 6.15%(c)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).......... $56,522 $58,366 $31,546 $31,480 $20,763 $21,099
Ratio of Expenses to Average Net Assets ........... 2.07%* 2.06% 2.44% 2.47% 2.11% 2.16%
Ratio of Adjusted Expenses to Average Net Assets... ..... ..... ..... ..... 2.23% 2.31%
Ratio of Net Investment Income to Average
Net Assets (a)................................... 3.76%* 1.97% 0.85% 1.69% 4.57% 6.26%
Ratio of Adjusted Net Investment Income to
Average Net Assets (a)........................... ..... ..... ..... ..... 4.45% 6.11%

<FN>

* On an annualized basis.
(a) On an unreimbursed basis without expense reduction.
(b) On December 22, 1994 John Hancock Advisers, Inc. became the Investment Adviser of the Fund.
(c) Unaudited.

</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF NET INVESTMENT INCOME AND
DIVIDENDS ON A SINGLE SHARE FOR THE PERIOD INDICATED. ADDITIONALLY, IMPORTANT
RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE FINANCIAL STATEMENTS ARE
EXPRESSED IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 162

Financial Statements
John Hancock Funds - Money Market Fund B

<TABLE>

SCHEDULE OF INVESTMENTS
April 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY MONEY MARKET
FUND B ON APRIL 30, 1995. IT'S DIVIDED INTO SIX TYPES OF SHORT-TERM INVESTMENTS. MOST
CATEGORIES OF SHORT-TERM INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUP.

PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
AUTOMOTIVE (5.08%)
Ford Motor Credit Co., 05-22-95.................................................. 6.020% Tier 1 $ 2,900 $ 2,870,903
-----------
BANKING (5.08%)
Norwest Corp.,
06-16-95................................................................... 6.000 Tier 1 2,900 2,871,000
-----------

BANKING - FOREIGN (0.37%)
Deutsche Bank Financial, Inc.,
05-01-95................................................................... 6.050 Tier 1 211 209,121
-----------

BROKER SERVICES (15.04%)
Bear Stearns Cos., Inc.,
06-20-95................................................................... 6.000 Tier 1 3,000 2,970,000
Goldman Sachs Group, L.P.,
06-01-95................................................................... 6.100 Tier 1 2,400 2,365,027
Merrill Lynch & Co., Inc.,
05-22-95................................................................... 6.030 Tier 1 300 296,985
Merrill Lynch & Co., Inc.,
06-12-95................................................................... 6.020 Tier 1 1,000 990,970
Merrill Lynch & Co., Inc.,
06-19-95................................................................... 6.010 Tier 1 1,900 1,880,968
-----------
8,503,950
-----------
FINANCE (3.51%)
American Honda Finance Corp.,
06-01-95................................................................... 6.050 Tier 1 2,000 1,981,178
-----------
INSURANCE (5.08%)
American General Finance Corp.,
06-12-95................................................................... 6.000 Tier 1 2,900 2,871,000
-----------
MORTGAGE BANKING (5.10%)
Countrywide Funding Corp.,
05-12-95................................................................... 6.040 Tier 1 2,900 2,885,403
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 163
Financial Statements
John Hancock Funds - Money Market Fund B

PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
RETAIL STORES (10.18%)
Dayton Hudson Corp.,
06-16-95..................................................................... 6.020% Tier 1 $ 2,900 $ 2,870,903
Sears Roebuck Acceptance Corp.,
05-12-95..................................................................... 6.000 Tier 1 2,900 2,885,500
-----------
5,756,403
-----------
TOBACCO (5.29%)
Philip Morris Cos., Inc.,
05-05-95..................................................................... 6.000 Tier 13,000 2,987,500
-----------
UTILITIES (9.71%)
Pennsylvania Power & Light Co.,
05-09-95..................................................................... 5.970 Tier 1 2,000 1,995,356
Public Service Electric & Gas Co.,
05-09-95..................................................................... 6.000 Tier 1 2,900 2,894,200
U.S. West Communications, Inc.,
05-02-95..................................................................... 6.000 Tier 1 600 597,400
-----------
5,486,956
-----------
TOTAL COMMERCIAL PAPER
(Cost $36,423,414) ( 64.44%) 36,423,414
------- -----------
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
U.S. BRANCHES OF FOREIGN BANKS (7.08%)
Industrial Bank of Japan Ltd.,
06-21-95..................................................................... 6.250 Tier 1 2,000 2,000,076
Sanwa Bank Ltd.,
05-25-95..................................................................... 6.040 Tier 1 2,000 2,000,013
-----------
4,000,089

TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $4,000,089) ( 7.08%) 4,000,089
------- -----------
BANKERS' ACCEPTANCES
U.S. BRANCHES OF FOREIGN BANKS (3.51%)
Bank of Tokyo Ltd.,
06-05-95..................................................................... 6.020 Tier 1 2,000 1,982,274
-----------

TOTAL BANKERS' ACCEPTANCES
(Cost $1,982,274) ( 3.51%) 1,982,274
------- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 164

Financial Statements
John Hancock Funds - Money Market Fund B

PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE INTEREST-BEARING OBLIGATIONS
Finance (1.75%)
General Electric Capital Corp.,
11-15-95................................................................... 5.250% Tier 1 $ 1,000 $ 992,740
-----------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $992,740) ( 1.75%) 992,740
------- -----------

U. S. GOVERNMENT OBLIGATIONS
Governmental - U. S. Agencies (10.15%)
Federal Farm Credit Bank,
08-01-95................................................................... 6.650 Tier 1 1,000 1,000,083
Federal Farm Credit Bank,
11-01-95................................................................... 6.100 Tier 1 3,500 3,500,000
Federal Home Loan Mortgage Corp.,
05-22-95................................................................... 7.438 Tier 1 250 241,684
Federal National Mortgage Association,
05-22-95................................................................... 6.340 Tier 1 485 473,128
Federal National Mortgage Association,
06-15-95................................................................... 6.549 Tier 1 540 521,827
-----------
5,736,722
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $5,736,722) ( 10.15%) 5,736,722
------- -----------
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase agreement
transaction with BT Securities Corp. -
Dated 04-28-95, Due 05-01-95
(secured by U.S. Treasury Bond,
10.75% Due 08-15-05 and U.S.
Treasury Note, 6.875% Due 10-31-96)............................. 5.960 10,750 10,750,000
------- -----------
TOTAL JOINT REPURCHASE AGREEMENT ( 19.02%) 10,750,000
------- -----------
TOTAL INVESTMENTS (105.95%) $59,885,239
======= ===========
<FN>

*Quality ratings indicate the categories of eligible securities, as defined by Rule 2a-7 of the U.S. Securities and Exchange
Commission, owned by the Fund. The percentage shown for each investment category is the total value of that category expressed
as a percentage of total net assets of the Fund.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 165

Notes to Financial Statements
John Hancock Funds - Money Market Fund B

(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Series, Inc. (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940, as
amended. The Trust consists of six series portfolios: John Hancock Money
Market Fund B (the "Fund"), John Hancock Emerging Growth Fund, John Hancock
Global Resources Fund, John Hancock High Yield Tax Free Fund, John Hancock
High Yield Bond Fund and John Hancock Government Income Fund. The Trustees
may authorize the creation of additional Funds from time to time to satisfy
various investment objectives. Effective December 22, 1994 (see Note B), the
Trust and Funds changed names by replacing the word Transamerica with John
Hancock.

Significant accounting policies of the Fund are as follows:

VALUATION OF INVESTMENTS The Trustees have determined appropriate methods for
valuing portfolio securities. Accordingly, portfolio securities are valued at
amortized cost, in accordance with Rule 2a-7 of the Investment Company Act of
1940, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of the difference between the
principal amount due at maturity and the cost of the security to the Fund.
Interest income on certain portfolio securities such as negotiable bank
certificates of deposit and interest bearing notes is accrued daily and
included in interest receivable.

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

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

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies. It will not be subject to Federal income tax on taxable earnings
which are distributed to shareholders.

DIVIDENDS The Fund's net investment income is declared daily as dividends to
shareholders of record as of the close of business on the preceding day and
distributed monthly.

NOTE B -
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
On December 22, 1994, the Adviser became the investment adviser for the Fund
with approval of the Trustees and shareholders of the Fund. The Fund's former
investment manager was Transamerica Fund Management Company ("TFMC").

Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment program
equivalent, on an annual basis, to the sum of (a) 0.50% of the first
$500,000,000 of the Fund's average daily net asset value, (b) 0.425% of the
next $250,000,000, (c) 0.375% of the next $250,000,000, (d) 0.350% of the next
$500,000,000, (e) 0.325% of the next $500,000,000, (f) 0.300% of the next
$500,000,000 and (g) 0.275% of the Fund's average daily net asset value in
excess of $2,500,000,000. This fee structure is consistent with the former
agreement with TFMC. For the period ended April 30, 1995, the advisory fee
earned by the Adviser and TFMC amounted to $87,082 and $50,611, respectively,
resulting in a total fee of $137,693.

11
<PAGE> 166
Notes to Financial Statements
John Hancock Funds - Money Market Fund B

The Adviser and TFMC, for their respective periods, provided
administrative services to the Fund pursuant to an administrative service
agreement through January 16, 1995 on which day the agreement was terminated.

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

On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a
wholly-owned subsidiary of the Adviser, became the principal underwriter of
the Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD")
served as the principal underwriter and distributor of the Fund.

Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds, formerly TFD, and are used in
whole or in part to defray its expenses related to providing distribution
related services to the Fund in connection with the sale of Class B shares.
For the period ended April 30, 1995, contingent deferred sales charges
amounted to $302,060.

In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Accordingly,
the Fund will make payments for distribution and service expenses which in
total will not exceed on an annual basis 1.00% of the Fund's average daily
net assets to reimburse for its distribution/service costs. Up to a maximum
of 0.25% of such payments may be service fees as defined by the amended Rules
of Fair Practice of the National Association of Securities Dealers. Under the
amended Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1
payments could occur under certain circumstances. This fee structure and plan
is similar to the former arrangement with TFD.

The Board of Trustees approved a shareholder servicing agreement
between the Fund and John Hancock Investor Services Corporation ("Investor
Services"), a wholly owned subsidiary of The Berkeley Financial Group, for
the period between December 22, 1994 and May 12, 1995, inclusive under which
Investor Services processed telephone transactions on behalf of the Fund. As of
May 15, 1995, the Fund entered into a full service transfer agent agreement
with Investor Services. Prior to this date The Shareholder Services Group was
the transfer agent. The Fund will pay Investor Services a fee based on
transaction volume and number of shareholder accounts.

A partner with Baker & Botts was an officer of the Trust until
December 22, 1994. During the period ended April 30, 1995, legal fees paid to
Baker & Botts amounted to $688.

Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser
and its affiliates as well as Trustee of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees paid for
1995, the unaffiliated Trustees may elect to defer their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation
Plan. The Fund will make investments into other John Hancock Funds, as
applicable, to cover its liability with regard to the deferred compensation.
Investments to cover the Fund's deferred compensation liability will be
recorded on the Fund's books as other assets. The deferred compensation
liability will be marked to market on a periodic basis and income earned by
the investment will be recorded on the Fund's books.

The Fund has an independent advisory board composed of certain
members of the former Transamerica Board of Trustees who provide advice to
the current Trustees in order to facilitate a smooth management transition
for which the Fund pays the advisory board and its counsel a fee.

12
<PAGE> 167
Notes to Financial Statements
John Hancock Funds - Money Market Fund B

NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, including discount earned
on investment securities, during the period ended April 30, 1995 aggregated
$1,348,016,627 and $1,332,603,541, respectively. The cost of investments
owned at April 30, 1995 for Federal income tax purposes was $59,885,239.

SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 168
JOHN HANCOCK
CASH MANAGEMENT FUND

STATEMENT OF
ADDITIONAL INFORMATION

FEBRUARY 1, 1995

This Statement of Additional Information provides information about
John Hancock Cash Management Fund (the "Fund") in addition to the information
that is contained in the Fund's Prospectus, dated February 1, 1995.

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

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Cross-
Statement of referenced to
Additional Captions in
Information Prospectus
Page Page
<S> <C> <C>
Organization of the Fund 2 6
Investment Objective And Policies 2 4
Fundamental Investment Restrictions 3 4
Non-Fundamental Investment Restrictions 4 4
Ratings 6 4
Those Responsible for Management 9 6
Investment Advisory And Other Services 14 6
Distribution Contract 16 6
Amortized Cost Method of Portfolio Valuation 18 ---
Tax Status 19 7
Description Of The Fund's Shares 21 ---
Calculation Of Yield 22 3
Brokerage Allocation 23 ---
Transfer Agent Service 25 ---
</TABLE>

Page 1
<PAGE> 169

<TABLE>
<S> <C> <C>
Custody of Portfolio 25 ---
Independent Auditors 25 ---
Financial Statement. 25 3
</TABLE>

ORGANIZATION OF THE FUND

John Hancock Cash Management Fund (the "Fund") is a diversified open-end
management investment company organized in 1979 by John Hancock Advisers, Inc.
(the "Adviser"). The Adviser is an indirect wholly-owned subsidiary of John
Hancock Mutual Life Insurance Company (the "Life Insurance Company"), a
Massachusetts life insurance company chartered in 1862, with national
headquarters at John Hancock Place, Boston, Massachusetts. On February 1,
1991, the Fund changed its name from John Hancock Cash Management Trust.

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide maximum current income consistent
with capital preservation and liquidity. As described in the Fund's Prospectus
under the caption "Investment Objective and Policies," the Fund seeks to
achieve this objective by investing in a portfolio of high quality money market
obligations. The types of investments that the Fund will make are described in
the Prospectus. A more detailed description of the types of obligations in
which the Fund invests is as follows:

United States Government Obligations -- are bills, certificates of
indebtedness, notes and bonds issued or guaranteed as to principal or interest
by the United States or by agencies or authorities controlled or supervised by
and acting as instruments of the United States Government established under the
authority granted by Congress, including, but not limited to, the Government
National Mortgage Association, the Tennessee Valley Authority, the Bank for
Cooperatives, the Farmers Home Administration, Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Land Banks, Farm Credit Banks and the
Federal National Mortgage Association. Some obligations of United States
Government agencies, authorities and other instrumentalities are supported by
the full faith and credit of the United States Treasury; others by the right of
the issuer to borrow from the Treasury; and others only by the credit of the
issuing agency, authority or other instrumentality.

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

Page 2
<PAGE> 170

Certificates of Deposit -- are certificates issued against funds deposited in a
bank, are for a definite period of time, earn a specified rate of return and
are normally negotiable.

Bankers' Acceptances -- are short-term credit instruments issued by
corporations to finance the import, export, transfer or storage of goods. They
are termed "accepted" when a bank guarantees their payment at maturity. These
instruments reflect the obligations of both the bank and drawer to pay the face
amount of the instrument at maturity.

Commercial Paper -- refers to promissory notes issued by corporations to
finance their short-term credit needs.

Corporate Obligations -- include bonds and notes issued by corporations in
order to finance longer term credit needs.

Time Deposits -- are non-negotiable deposits maintained for up to seven days at
a stated interest rate. The Fund intends to invest only in those Time Deposits
which mature in under seven days. If the Fund purchases Time Deposits maturing
in seven days or more, it will treat those longer-term Time Deposits as
illiquid.

FUNDAMENTAL INVESTMENT RESTRICTIONS

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

The Fund observes the following fundamental restrictions. The Fund may not:

(1) Purchase any security (other than United States Government
obligations in which the Fund is permitted to invest and repurchase
agreements collateralized by obligations of the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 5% of the
Fund's total assets (taken at current value) would be invested in
securities of a single issuer.

(2) Purchase any security (other than United States Government
obligations and obligations issued or guaranteed by United States
banks and savings and loan association and their branches outside of
the United States and by U.S. branches or agencies of foreign banks
subject to U.S. Federal or state regulation in which the Fund is
permitted to invest and repurchase agreements collateralized by such
U.S. Government obligations or bank obligations) if, as a result, more
than 25% of the Fund's total assets (taken at current value) would be
invested in any one industry. For purposes of this restriction,
telephone, water, gas and electric public utilities are each regarded
as separate industries; and wholly-owned finance companies are
considered to be in the industry of their parents if their activities
are primarily related to financing the activities of their parents.

Page 3
<PAGE> 171

(3) Purchase any security (other than United States Government
obligations in which the Fund is permitted to invest) if, as a result,
the Fund would hold more than 10% of the outstanding voting securities
of an issuer.

(4) Borrow money, except as a temporary measure for extraordinary or
emergency purposes (but not for the purpose of investment) up to an
amount not in excess of 5% of its total assets (taken at current
value).

(5) Pledge, mortgage or hypothecate more than 33% of its total assets
(taken at current value).

(6) Make loans, except that the Fund may lend portfolio securities in
accordance with its investment policies. The Fund does not, for this
purpose, consider repurchase agreements, the purchase of all or a
portion of an issue of bonds, bank obligations, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, to be the making of a loan.

(7) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts, or real estate. This
restriction does not prevent the Fund from purchasing securities of
corporate or governmental entities secured by real estate or
marketable interest therein or readily marketable securities of
companies investing in real estate and of companies which are
principally engaged in the business of buying or selling such leases,
rights or contracts.

(8) Act as an underwriter except to the extent that, in connection
with the disposition of portfolio securities, it may be deemed to be
an underwriter under the Federal securities laws.

(9) Write or purchase puts, calls or combinations thereof.

(10) Enter into repurchase agreements maturing in more than seven
days or purchase securities which are not readily marketable if as a
result more than 10% in market value of the assets of the Fund would
be invested in such securities.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

The following restrictions are designated as non-fundamental and may be changed
by the Board of Trustees without shareholders' approval.

The Fund may not:

(a) Purchase securities on margin (but it may obtain short-term
credits as may be necessary for the clearance of purchases and sales
of securities).

Page 4
<PAGE> 172

(b) Make short sales of securities unless at all times while the
short position is open the Fund holds securities (or has the right to
obtain securities without payment of further consideration) equivalent
in kind and amount to those sold. The Fund's short positions will not
at the time of any short sale aggregate in total sale prices more than
10% of its total assets (taken at current value).

(c) Invest more than 5% of its total assets (taken at current value)
in securities of businesses (including predecessors) which have a
record of less than three years of continuous operations unless such
securities have been rated within the top two rating categories at
least one nationally recognized statistical rating organization.

(d) Purchase or retain securities of any issuer if to the knowledge
of the Fund, officers and Trustees or officers and directors of any
investment adviser to the Fund who individually own beneficially more
than -1/2 of 1% of the securities of the issuer, together own
beneficially more than 5% of such securities outstanding.

(e) Make investments for the purpose of exercising control or
management.

(f) Participate in a joint or joint-and-several basis in any trading
account in securities. 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.

(g) Purchase the securities of any other investment company if, as a
result, (1) more than 10% of the Fund's total assets would be invested
in securities of investment companies, (ii) such purchase would result
in more than 3% of the total outstanding voting securities of any one
such investment company being held by the Fund, or (iii) more than 5%
of the Fund's total assets would be invested in any investment
company.

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

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

Page 5
<PAGE> 173

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 cost of the Fund's
assets will not be considered a violation of the restriction.

The Fund, consistent with its investment objective, will attempt to maximize
yield through portfolio trading. This may involve selling portfolio instruments
to take advantage of disparities of yields in different segments of the high
grade money market or among particular instruments within the same segment of
the market. As a result, the Fund may have significant portfolio turnover.

RATINGS

As is described in the Fund's Prospectus, the Fund's investments in high
quality commercial paper and corporate obligations are limited by reference to
the applicable ratings of Moody's, Standard & Poor's, Duff and Phelps, Fitch's
IBCA Limited and IBCA, Inc. and Thompson Bankwatch. These ratings are
described as follows:

MOODY'S INVESTORS SERVICE, INC.

P-1. Issuers have a superior capacity for repayment of short-term promissory
obligations. Prime-1 or P-1 repayment capacity will normally be evidenced by
the following characteristics:

Leading market positions in well established industries.

High rates of return on funds employed.

Conservative capitalization structures with moderate reliance on debt
and ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

Well established access to a range of financial markets and assured sources of
alternate liquidity.

P-2: Issuers 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.

Page 6
<PAGE> 174

STANDARD & POOR'S RATINGS GROUP

A-1: Standard & Poor's Commercial Paper ratings are current assessments of the
likelihood of timely payment of debts having an original maturity of no more
than 365 days. The A-1 designation indicates the degree of safety regarding
timely payment is very strong. Those issues determined to possess overwhelming
safety characteristics will be denoted with a plus (+) sign designation.

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

DUFF & PHELPS, INC.

DUFF 1: Commercial paper and certificates of deposit rated DUFF 1 are
considered to have a very high certainty of timely payment. Liquidity factors
are considered excellent and are supported by strong fundamental protection
factors. Risk factors are minor.
DUFF 2: Commercial paper and certificates of deposit rated DUFF 2 are
considered to have a good certainty of timely payment. Liquidity factors and
company fundamentals are considered sound. Although ongoing internal funds needs
may enlarge total financing requirements, access to capital markets is good and
risk factors are small.

Duff and Phelps applies a plus and minus rating scale, DUFF 1 PLUS, DUFF 1 AND
DUFF 1 minus in the DUFF 1 top grade category for commercial paper and
certificates of deposit. The rating DUFF 1 plus indicates that the security
has the highest certainty of timely payment, short-term liquidity is clearly
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations; the rating DUFF 1 indicates a very high certainty of timely
payment, liquidity factors are excellent and risk factors are minimal; and the
rating Duff 1 minus indicates a high certainty of timely payment, liquidity
factors are strong and risk factors are very small.

FITCH INVESTORS SERVICE CORP.

Short-term debt obligations payable on demand or with original maturities of up
to three years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes may be rated F-1 or F-2
by Fitch.

F-1: Short-term debt obligations rated F-1 are considered to be of very strong
credit quality. Those issues determined to possess exceptionally strong credit
quality and having the strongest degree of assurance for timely payment will
be denoted with a plus ("+") sign designation.

F-2: Short-term debt obligations rated F-2 are considered to be of good credit
quality. Issues assigned this rating have a satisfactory degree of assurance
for timely payment, but the margin of safety is not as great as for issued
assigned 'F-1+' and 'F- 1' ratings.

Page 7
<PAGE> 175

IBCA LIMITED AND IBCA INC.

A1: Short-term obligations rated A1 are supported by a very strong capacity
for timely repayment. A plus ("+") sign is added to those issues determined to
possess the highest capacity for timely payment.
A2. Short term obligations rated A2 are supported by a strong capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.

THOMSON BANKWATCH

The Thomson Bankwatch short-term ratings apply to commercial paper, other
senior short-term obligations and deposit obligations of the entities to which
the rating has been assigned. The Thomson Bankwatch short-term rating applies
only to unsecured instruments that have a maturity of one year or less.

The Thomson Bankwatch short-term ratings specifically assess the likelihood of
an untimely payment of principal or interest.

TBW-1: The highest category; indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.

TBW-2: The second highest category; while the degree of safety regarding
timely payment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".

BOND RATINGS. Moody's describes its three highest ratings for corporate bonds
as follows:

"Bonds which are rated 'Aaa' are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as 'gilt edge.' Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most likely to impair the
fundamentally strong position of such issues.

"Bonds which are rated 'Aa' are judged to be of high quality by all
standards. Together with the 'Aaa' group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
'Aaa' securities or fluctuation of protective elements may be of
grater amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in 'Aaa' securities.
"Bonds which are rated 'A' possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future."

Page 8
<PAGE> 176

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

"AAA. This is the highest rating assigned by Standard & Poor's and indicates an
extremely strong capacity to pay interest and repay principal.
"AA. Bonds rated 'AA' also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degrees."

"A. Bonds rated 'A' have a strong capacity to pay principal and interest
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions."

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Fund is managed by the Trustees of the Fund 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 or directors of the Fund's Adviser or
officers or directors of the Fund's principal distributor, John Hancock Funds,
Inc. ("John Hancock Funds").

Page 9
<PAGE> 177

The following table sets forth the principal occupation or employment of the
Trustees and principal officers of the Fund during the past five years:

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

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

Page 10
<PAGE> 178

<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ---------------- ------------- --------------------------
<S> <C> <C>
Dennis S. Aronowitz Trustee (4) Professor of Law, Boston University School
Boston University of Law; Trustee, Brookline Savings Bank;
Boston, Massachusetts Director, Boston University Center for
Banking Law Studies (until 1990).

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

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

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

Bayard Henry Trustee (4) Corporate Advisor; Director, Fiduciary
121 High Street Trust Company (a trust company); Director,
Boston, Massachusetts Groundwater Technology, Inc.
(remediation); Samuel Cabot, Inc.;
Advisor, Corning Capital Corp.
</TABLE>

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

Page 11
<PAGE> 179

<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ---------------- ------------- --------------------------
<S> <C> <C>
*Richard S. Scipione Trustee (3) General Counsel, the Life Insurance
John Hancock Place Company; Director, the Adviser, the
P.O. Box 111 Affiliated Companies, John Hancock
Boston, Massachusetts Distributors, Inc., JH Networking Insurance
Agency, Inc., John Hancock Subsidiaries,
Inc., SAMCorp, NM Capital and John Hancock
Property and Casualty Insurance and its
affiliates (until November, 1993); Trustee;
The Berkeley Group; Director, John Hancock
Home Mortgages Corp. and John Hancock
Financial Access, Inc. (until July 1990).

Edward J. Spellman Trustee (4) Partner, KPMG Peat Marwick (retired June
259C Commercial Bld. 1990).
Suite 200
Lauderdale by the Sea, FL

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

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

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

*James K. Ho Senior Vice President Senior Vice President, the Adviser.
101 Huntington Avenue (2)
Boston, Massachusetts
</TABLE>

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

Page 12
<PAGE> 180

<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ---------------- ------------- --------------------------
<S> <C> <C>
*James B. Little Senior Vice President and Senior Vice President, the Adviser.
101 Huntington Avenue Chief Financial Officer (2)
Boston, Massachusetts

*Michael P. DiCarlo Senior Vice President (2) Senior Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts

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

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

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

*Anne M. McDonley Vice President Vice President, the Adviser; Vice
101 Huntington Avenue President and Treasurer of First
Boston, Massachusetts Signature Bank and Trust Company (until
August, 1992).
</TABLE>

Page 13
<PAGE> 181

As of the date of this Statement of Additional Information, the
officers and Trustees of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.

All of the officers listed are officers or employees of the Adviser
and/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.

Each of the Trustees and principal officers of the Fund who is also an
affiliated person of the Adviser is named above, together with the capacity in
which such person is affiliated with the Fund and the Adviser.

The following table provides information regarding the compensation
paid by the Funds and the other investment companies in the John Hancock Fund
Complex to the Independent Trustees for their services for each Fund's 1994
fiscal year. The two non- Independent Trustees, Messrs. Boudreau and Scipione,
and each of the officers of the Funds are interested persons of the Adviser,
are compensated by the Adviser and receive no compensation from the Funds for
their services.

<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FOR THE FUND
RETIREMENT ESTIMATED AND JOHN
AGGREGATE BENEFITS ACCRUED ANNUAL HANCOCK FUND
COMPENSATION AS PART OF EACH BENEFITS UPON COMPLEX TO
INDEPENDENT TRUSTEES FOR THE FUND FUND'S EXPENSES RETIREMENT TRUSTEES
-------------------- ------------ --------------- ---------- --------
<S> <C> <C> <C> <C>
DENNIS S. ARONOWITZ $ 3,104 $-- $-- $ 60,950
RICHARD P. CHAPMAN, JR. 3,176 -- -- 62,950
WILLIAM J. COSGROVE 3,081 -- -- 60,950
GAIL D. FOSLER 2,200 -- -- 60,950
BAYARD HENRY 3,175 -- -- 62,950
EDWARD J. SPELLMAN 3,081 -- -- 60,950
------- --------
$17,817 $-- $-- $369,700
======= === === ========
</TABLE>

(1) The total compensation paid by the other investment companies in the John
Hancock Fund Complex to the Independent Trustees is as of the calendar
year ended December 31, 1994.

INVESTMENT ADVISORY AND OTHER SERVICES

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

Page 14
<PAGE> 182

the conduct of its business. The Adviser is responsible for the day to day
management of the Fund's portfolio assets, subject to the supervision of the
Trustees.

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

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

Under the terms of the investment management contract with the Fund,
the Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. Effective January 3, 1994, the Adviser
has permanently waived the payment of any officers' salaries either directly or
through reimbursement by the Fund.

All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Fund (including fees of Independent
Trustees) and the continuous public offering of the shares of the Fund are
borne by the Fund.

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

<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 0.40%
Next $250,000,000 0.35%
Next $250,000,000 0.30%
Amount over $750,000,000 0.25%
</TABLE>

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.

Page 15
<PAGE> 183

On September 30, 1994, the net assets of the Fund were $223,899,374.
For the years ended September 30, 1992, 1993, and 1994 the Adviser received a
fee of $908,059, $768,910 and $816,306 respectively.

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

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

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has approximately $13 billion
in assets under management in its capacity as investment adviser to the Fund
and the other mutual funds and publicly traded investment companies in the John
Hancock group of funds having a combined total of over 1,060,000 shareholders.
The Adviser is an affiliate of the Life Insurance Company, one of the most
recognized and respected financial institutions in the nation. With total
assets under management of $80 billion, the Life Insurance Company is one of
the ten largest life insurance companies in the United States, and carries
Standard & Poor's and A.M. Best's highest ratings. Founded in 1862, the Life
Insurance Company has been serving clients for over 130 years.

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

DISTRIBUTION CONTRACT

The Fund has a distribution contract with John Hancock Funds. Under
the contract, John Hancock Funds is obligated to use its best efforts to sell
shares on behalf of the Fund. Shares of

Page 16
<PAGE> 184

the Fund are also sold by selected broker-dealers (the "Selling Brokers") which
have entered into selling agency agreements with John Hancock Funds. John
Hancock Funds accepts orders for the purchase of the shares of the Fund which
are continually offered at net asset value (normally $1.00 per share). The Fund
is a no-load fund and John Hancock Funds and Selling Brokers' representatives
do not receive any sales commissions in connection with the sales of shares of
the Fund.

Pursuant to a plan (the "Plan") adopted by the Trustees of the Fund and
approved by shareholders in accordance with the provisions of Rule 12b-1 under
the Investment Company Act, the Fund is authorized to pay John Hancock Funds
monthly a fee (the "Sales Fee") for services which include using its best
efforts to sell the Fund's shares, responding to inquiries from prospective
investors and preparing and bearing the cost of promotional material for use by
John Hancock Funds' representatives and advertising. The monthly Sales Fee is
approximately equivalent on an annualized basis to .10% of the average daily
net asset value of the Fund.

Under the Plan the Fund is also authorized to pay John Hancock Funds a
monthly fee (the "Service Fee"), for certain shareholder services rendered by
John Hancock Funds. The services of John Hancock Funds covered by the Service
Fee include, among others, processing new account applications and orders for
the purchase and redemption of shares which are received by John Hancock Funds
(these orders do not include checkwriting redemptions), processing requests
with respect to the shareholder services described in the Fund's Prospectus,
responding to telephone and written inquiries from shareholders, furnishing
yield information by toll-free telephone and furnishing the Fund's Prospectus
and this Statement of Additional Information to other than existing
shareholders. In no event will the Service Fee exceed an amount approximately
equivalent, on an annualized basis, to .05% of the average daily net asset
value of the Fund. Effective January 1, 1984, the Trustees voted to suspend
indefinitely the Service Fee portion of the plan and to continue the suspension
of the Sales Fee portion of the Plan, which suspension has been in effect since
July 1, 1983.

The Plan provides that it will continue in effect only so long as its
continuance is approved at least annually by a majority of both the Trustees
and the Trustees who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Plan (the "Independent
Trustees"). The Plan provides that it may be terminated without penalty (a) by
vote of a majority of the Independent Trustees, (b) by a vote of a majority of
the Fund's outstanding voting securities upon 60 days' written notice to John
Hancock Funds and (c) automatically in the event of assignment. It further
provides that it may not be amended to increase the maximum amount of the fees
for the services described therein without the approval of a majority of the
outstanding voting securities of the Fund. It also provides that no material
amendment to the Plan will, in any event, be effective unless it is approved by
a majority vote of the Trustees and the Independent Trustees of the Fund.

In adopting the Plan the Trustees concluded that, in their judgment,
there is a reasonable likelihood that the Plan will benefit the Fund's
shareholders.

Page 17
<PAGE> 185

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

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

AMORTIZED COST METHOD OF PORTFOLIO VALUATION

The Fund utilizes the amortized cost valuation method of valuing
portfolio instruments in the absence of extraordinary or unusual circumstances.
Under the amortized cost method, assets are valued by amortizing daily over the
remaining life of an instrument the difference between the principal amount due
at maturity and the cost of the instrument to the Fund. The Trustees will from
time to time review the extent of any deviation of the net asset value, as
determined on the basis of the amortized cost method, from net asset value as
it would be determined on the basis of available market quotations. If any
deviation occurs which may result in unfairness either to new investors or
existing shareholders, the Trustees will take such actions as they deem
appropriate to eliminate or reduce such unfairness to the extent reasonably
practicable. These actions may include selling portfolio instruments prior to
maturity to realize gains or losses or to shorten the Fund's average portfolio
maturity, withholding dividends, splitting, combining or otherwise
recapitalizing outstanding shares or utilizing available market quotations to
determine net asset value per share.

Since a dividend is declared to shareholders each time net asset value
is determined, the net asset value per share of the Fund will normally remain
constant at $1.00 per share. There is no assurance that the Fund can maintain
the $1.00 per share value. Monthly, any increase in the value of a
shareholder's investment from dividends is reflected as an increase in the
number of shares in the shareholder's account or is distributed as cash if a
shareholder has so elected.

It is expected that the Fund's net income will be positive each day it
is determined. However, if because of a sudden rise in interest rates or for
any other reason the net income of the Fund determined at any time is a
negative amount, the Fund will offset the negative amount against income
accrued during the month for each shareholder account. If at the time of
payment of a distribution such negative amount exceeds a shareholder's portion
of accrued income, the Fund may reduce the number of its outstanding shares by
treating the shareholder as having contributed to the capital of the Fund that
number of full or fractional shares which represent the

Page 18
<PAGE> 186

amount of excess. By investing in the Fund, shareholders are deemed to have
agreed to make such a contribution. This procedure permits the Fund to
maintain its net asset value at $1.00 per share.

If in the view of the Trustees it is inadvisable to continue the
practice of maintaining net asset value at $1.00 per share, the Trustees
reserve the right to alter the procedures for determining net asset value. The
Fund will notify shareholders of any such alteration.

The Fund is permitted to redeem shares in kind. Nevertheless, the
Fund has filed with the Securities and Exchange Commission a notification of
election committing itself to pay in cash on redemption by a shareholder of
record, limited during any 90-day period to the lesser of $250,000 or 1% of the
net asset value of the Fund at the beginning of such period.

The Fund will not price its securities on the following national
holidays: New Year's Day; President's Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day and Christmas Day.

TAX STATUS

The Fund has qualified and has elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and intends to continue to so qualify in the future. As
such and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions and the diversification
of its assets, the Fund will not be subject to Federal income tax on taxable
income (including net realized capital gains, if any) which is distributed to
shareholders at least annually.

Distributions from net investment income (which includes original
issue discount and accrued, recognized market discount) and net realized
short-term capital gains, as computed for Federal income tax purposes, will be
taxable as described in the Prospectus whether taken in shares or in cash.
Although the Fund does not expect to realize any net long-term capital gains,
distributions from such gains, if any, would be taxable as long-term capital
gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in the
shares so received equal to the amount of cash they would have received had
they taken the distribution in cash.

Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder ordinarily will not realize a taxable gain or loss if,
as anticipated, the Fund maintains a constant net asset value per share. If
the Fund is not successful in maintaining a constant net asset value per share,
a redemption may produce a taxable gain or loss.

Distributions from the Fund will not qualify for the
dividends-received deduction for corporate shareholders.

For Federal income tax purposes, the Fund is permitted to carry
forward a net realized capital loss in any year to offset net realized capital
gains, if any, during the eight years following

Page 19
<PAGE> 187

the year of the loss. To the extent subsequent net realized capital gains are
offset by such losses, they would not result in Federal income tax liability to
the Fund and would not be distributed as such to shareholders.

The Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to its investments, if any, in foreign
securities. Tax conventions between certain countries and the United States
may reduce or eliminate such taxes.

If more than 50% of the value of the total assets of the Fund at the
close of any taxable year consists of 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 actually received) their pro rata
shares of foreign income taxes paid by the Fund even though not actually
received, and (ii) treat such respective pro rata portions as foreign income
taxes paid by them.

If the election is made, shareholders of the Fund may then deduct such
pro rata portions of foreign income 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 foreign taxes paid by Fund, although such
shareholders will be required to include their shares of such taxes in gross
income. Shareholders who claim a foreign tax credit for such foreign taxes may
be required to treat a portion of dividends received from the 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 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 foreign income taxes paid by the Fund and (ii) the portion of Fund
dividends which represent income from each foreign country.

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

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

The foregoing discussion relates solely to U.S. Federal income tax
laws applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporation, partnerships, trusts or estates) subject to tax under
such law. The discussion does not address special tax rules

Page 20
<PAGE> 188

applicable to certain classes of investors, such as tax-exempt entities,
insurance companies and financial institutions. Dividends, capital gain
distributions (if any), and ownership of or gains realized (if any) on the
exchange or redemption of shares of the Fund may also be subject to state and
local taxes. Shareholders should consult their own tax advisers as to the
Federal, state or local tax consequences of ownership of shares of the Fund in
particular circumstances.

Foreign investors not engaged in U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above, including a
possible 30% U.S. withholding tax (or lower treaty rate) on dividends
representing ordinary income, and should consult their tax advisers regarding
such treatment and the application of foreign taxes to an investment in the
Fund.

DESCRIPTION OF THE FUND'S SHARES

The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional transferable shares of beneficial interest
without par value. Each share represents an equal proportionate interest in
the Fund with each other share. Upon liquidation of the Fund, holders are
entitled to share pro rata in the net assets of the Fund available for
distribution to such holders. Shares have no preemptive or conversion rights.
Shares are fully paid and nonassessable by the Fund.

The shareholders of the Fund are entitled to a full vote for each full
share held and to a fractional vote for fractional shares. The Trustees
themselves have the power to alter the number and the terms of office of the
Trustees, to lengthen their own terms, or to make their terms of unlimited
duration, subject to certain removal procedures, and to appoint their own
successors; provided that at least a majority of Trustees have been elected by
the shareholders. The voting rights of shareholders are not cumulative so that
holders of more than 50% of the shares voting can, if they choose, elect all
Trustees being selected while the holders of the remaining shares would be
unable to elect any Trustees. It is the intention of the Fund not to hold
annual meetings of shareholders. The Trustees may call special meetings of the
shareholders for action by shareholder vote as may be required by either the
Investment Company Act or the Declaration of Trust.

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

Under Massachusetts law, shareholders of a Massachusetts business
trust could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the

Page 21
<PAGE> 189

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

CALCULATION OF YIELD

For the purposes of calculating yield, daily income per share consists
of interest and discount earned on the Fund's investments less provision for
amortization of premiums and applicable expenses, divided by the number of
shares outstanding, but does not include realized or unrealized appreciation or
depreciation.

In any case in which the Fund reports its annualized yield, it will
also furnish information as to the average portfolio maturities of the Fund.
It will also report any material effect of realized gains or losses or
unrealized appreciation on dividends which have been excluded from the
computation of yield.

Yield calculations are based on the value of a hypothetical
preexisting account with exactly one share at the beginning of the seven day
period. Yield is computed by determining the net change in the value of the
account during the base period and dividing the net change by the value of the
account at the beginning of the base period to obtain the base period return.
Base period is multiplied by 365/7 and the resulting figure is carried to the
nearest 100th of a percent. Net change in account value during the base period
includes dividends declared on the original share, dividends declared on any
shares purchased with dividends of that share and any account or sales charges
that would affect an account of average size, but excludes any capital changes.

Effective yield is computed by determining the net change, exclusive
of capital changes, in the value of a hypothetical preexisting account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula: EFFECTIVE YIELD =
[(BASE PERIOD RETURN + 1)365/7]-1

The yield of the Fund is not fixed or guaranteed. Yield quotations
should not be considered to be representations of yield of the Fund for any
period in the future. The yield of the Fund is a function of available
interest rates on money market instruments, which can be expected to fluctuate,
as well as of the quality, maturity and types of portfolio instruments held by
the Fund and of changes in operating expenses. The Fund's yield may be
affected if, through net sales of its shares, there is a net investment of new
money in the Fund which the Fund invests at interest rates different from that
being earned on current portfolio instruments. Yield could also vary if the
Fund experiences net redemptions, which may require the disposition of some of
the Fund's current portfolio instruments.

Page 22
<PAGE> 190

From time to time, in reports and promotional literature, the Fund's
yield and total return will be ranked or compared to indices of mutual funds
and bank deposit vehicles such as Lipper Analytical Services, Inc.
"Lipper--Fixed Income Fund Performance Analysis," a monthly publication which
tracks net assets, total return, and yield on approximately 1,000 fixed income
mutual funds in the United States or "IBC/Donahue's Money Fund Report," a
similar publication. Comparisons may also be made to bank Certificates of
Deposit, which differ from mutual funds like 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. Unlike CDs, which are insured as to principal, an investment in the
Fund is not insured or guaranteed.

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

BROKERAGE ALLOCATION

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

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

To the extent consistent with the foregoing, the Fund will be governed
in the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Adviser of the Fund and their value and expected contribution to the
performance of the Fund. It is not possible to place a dollar value on
information and services to be received from brokers and dealers, since it is
only supplementary to the research efforts of the Adviser. The receipt of
research information is not expected to reduce significantly the expenses of
the Adviser. The research information and

Page 23
<PAGE> 191

statistical assistance furnished by brokers and dealers may benefit the Life
Insurance Company or other advisory clients of the Adviser, and, conversely,
brokerage commissions and spreads paid by other advisory clients of the Adviser
may result in research information and statistical assistance beneficial to the
Fund. The Fund will not make commitments to allocate portfolio transactions
upon any prescribed basis. While the Adviser will be primarily responsible for
the allocation of the Fund's brokerage business, the policies and practices of
the Adviser in this regard must be consistent with the foregoing and will at
all times be subject to review by the Trustees.

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.

The Adviser's indirect parent, the Life Insurance Company, is the
indirect sole shareholder of John Hancock Freedom Securities Corporation and
its subsidiaries, two of which, Tucker Anthony Incorporated ("Tucker Anthony"),
Sutro & Company, Inc. ("Sutro") and John Hancock Distributors,
Inc.("Distributors"), are broker-dealers ("Affiliated Brokers). Pursuant to
procedures adopted by the Trustees of the Fund and consistent with the above
policy of obtaining best net results, the Fund may execute portfolio
transactions with or through Affiliated Brokers. During the fiscal year ended
September 30, 1994, the Fund did not execute portfolio transactions through
Affiliated Brokers.

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

Page 24
<PAGE> 192

TRANSFER AGENT SERVICE

John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the John Hancock Mutual Life
Insurance Company, is the transfer and dividend paying agent for the Fund. The
Fund pays Investor Services an annual fee of $25.00 per shareholder account.

CUSTODY OF PORTFOLIO

Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and State Street Bank & Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110. Under the custodian agreement, State
Street Bank & Trust Company performs custody, portfolio and fund accounting
services.

INDEPENDENT AUDITORS

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

Page 25
<PAGE> 193
FINANCIAL STATEMENTS
John Hancock Mutual Funds - Cash Management Fund

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1994
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $95,383,488)........................ $ 95,383,488
Negotiable bank certificates of deposit
(cost - $45,990,456)....................................... 45,990,456
Bankers' acceptances (cost - $6,490,223)..................... 6,490,223
Corporate interest-bearing obligations
(cost - $68,577,411)....................................... 68,577,411
U.S. government obligations (cost - $6,248,264).............. 6,248,264
------------
222,689,842
Cash........................................................... 188,097
Interest receivable............................................ 1,693,861
------------
Total Assets............................ 224,571,800
-------------------------------------------------------
LIABILITIES:
Dividend payable............................................... 472,562
Payable to John Hancock Advisers, Inc. and affiliates -
Note B....................................................... 151,721
Accounts payable and accrued expenses.......................... 48,143
------------
Total Liabilities....................... 672,426
-------------------------------------------------------
NET ASSETS:
Capital paid-in................................................ 223,899,374
------------
Net Assets.............................. $223,899,374
=======================================================

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
(based on 223,899,374 shares of beneficial interest
outstanding - unlimited number of shares authorized
with no par value)............................................. $ 1.00
==============================================================================
</TABLE>
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON SEPTEMBER 30, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE PER SHARE AS OF THAT DATE.

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND FOR THE PERIOD.
<TABLE>
STATEMENT OF OPERATIONS
Year ended September 30, 1994
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
INVESTMENT INCOME:
Interest........................................ $7,941,136
----------

Expenses:
Transfer agent fee - Note B................... 918,345
Investment management fee - Note B............ 816,306
Custodian fee................................. 72,066
Registration and filing fees.................. 36,064
Auditing fee.................................. 30,798
Printing...................................... 26,537
Trustees' fees................................ 17,837
Miscellaneous................................. 11,129
Administration fee - Note B................... 7,341
Legal fees.................................... 3,155
----------
Total Expenses............................ 1,939,578
----------------------------------------------------------
Net Investment Income..................... 6,001,558
----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations................. $6,001,558
==========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 194
FINANCIAL STATEMENTS
John Hancock Mutual Funds - Cash Management Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income................................................................... $ 6,001,558 $ 4,705,532
------------- -------------
Net Increase in Net Assets Resulting from Operations.................................. 6,001,558 4,705,532
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0291 and $0.0244 per share, respectively)...... (6,001,558) (4,705,532)
------------- -------------

FROM FUND SHARE TRANSACTIONS -- NET*...................................................... 40,190,579 (18,191,103)
------------- -------------

NET ASSETS:
Beginning of year....................................................................... 183,708,795 201,899,898
------------- -------------
End of year............................................................................. $ 223,899,374 $ 183,708,795
============= =============

* ANALYSIS OF FUND SHARE TRANSACTIONS AT $1 PER SHARE:

Shares sold............................................................................. 674,344,812 322,737,203
Shares issued to shareholders in reinvestment of distributions.......................... 5,410,901 4,606,969
------------- -------------
679,755,713 327,344,172
Less shares repurchased................................................................. (639,565,134) (345,535,275)
------------- -------------
Net increase (decrease)................................................................. 40,190,579 (18,191,103)
============= =============
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S
NET ASSETS HAVE CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE
DIFFERENCE REFLECTS EARNINGS LESS EXPENSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED
IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD,
REINVESTED AND REDEEMED DURING THE LAST TWO PERIODS.

SEE NOTES TO FINANCIAL STATEMENTS.
7

<PAGE> 195
FINANCIAL STATEMENTS

John Hancock Mutual Funds - Cash Management Fund

<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout
the year indicated, investment returns, key ratios and supplemental data
are listed as follows:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Year.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net Investment Income....................................... 0.03 0.02 0.04 0.06 0.08
-------- -------- -------- -------- --------

Less Distributions:
Dividends from Net Investment Income........................ (0.03) (0.02) (0.04) (0.06) (0.08)
-------- -------- -------- -------- --------

Net Asset Value, End of Year................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========

Total Investment Return at Net Asset Value.................. 2.95% 2.47% 3.77% 6.23% 7.87%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Year (000's omitted)..................... $223,899 $183,709 $201,900 $250,847 $281,213
Ratio of Expenses to Average Net Assets..................... 0.95% 0.98% 0.95% 0.90% 0.88%
Ratio of Net Investment Income to Average Net Assets........ 2.94% 2.45% 3.75% 6.08% 7.51%
</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF NET INVESTMENT INCOME AND
DIVIDENDS ON A SINGLE SHARE FOR THE PERIOD INDICATED. ADDITIONALLY,
IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE FINANCIAL
STATEMENTS ARE EXPRESSED IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.
8

<PAGE> 196
FINANCIAL STATEMENTS

John Hancock Mutual Funds - Cash Management Fund

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
THE FUND ON SEPTEMBER 30, 1994. IT'S DIVIDED INTO FIVE TYPES OF SHORT-TERM
INVESTMENTS. MOST CATEGORIES OF SHORT-TERM INVESTMENTS ARE FURTHER BROKEN
DOWN BY INDUSTRY GROUP.

<TABLE>
SCHEDULE OF INVESTMENTS
September 30, 1994
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
AUTOMOTIVE (0.66%)
Ford Motor Credit Co.,
10-21-94...................... 4.900% Tier 1 $1,480 $ 1,475,971
-----------
BANKING (2.55%)
Morgan (J.P.) & Co., Inc.,
10-05-94...................... 4.610 Tier 1 2,750 2,748,591
Morgan (J.P.) & Co., Inc.,
12-30-94...................... 4.900 Tier 1 3,000 2,963,250
-----------
5,711,841
-----------

BANKING - FOREIGN (1.34%)
Industrial Bank of Japan Ltd.,
10-11-94...................... 4.790 Tier 1 3,000 2,996,008
-----------
BROKER SERVICES (3.56%)
Bear Stearns Cos., Inc.,
10-17-94...................... 4.800 Tier 1 5,000 4,989,333
Bear Stearns Cos., Inc.,
12-01-94...................... 4.800 Tier 1 2,000 1,983,733
Merrill Lynch & Co., Inc.,
10-27-94...................... 4.900 Tier 1 1,000 996,461
-----------
7,969,527
-----------
FINANCE (2.74%)
Household Finance Corp.,
10-12-94...................... 4.550 Tier 1 3,000 2,995,829
IBM Credit Corp.,
10-28-94...................... 4.820 Tier 1 736 733,339
ITT Financial Corp.,
10-07-94...................... 4.800 Tier 1 2,400 2,398,080
-----------
6,127,248
-----------
MORTGAGE BANKING (4.06%)
Countrywide Funding Corp.,
10-04-94...................... 4.800 Tier 1 2,000 1,999,200
Countrywide Funding Corp.,
10-04-94...................... 5.050 Tier 1 3,000 2,998,737
Countrywide Funding Corp.,
10-07-94...................... 5.050 Tier 1 2,107 2,105,227
PNC Funding Corp.,
12-05-94...................... 4.670 Tier 1 2,000 1,983,136
-----------
9,086,300
-----------

PAPER (3.56%)
Weyerhaeuser Co.,
10-18-94...................... 4.790% Tier 1 8,000 7,981,904
-----------
RETAIL STORES (9.79%)
Dayton Hudson Corp.,
10-03-94...................... 4.800 Tier 1 2,000 1,999,467
Dayton Hudson Corp.,
10-14-94...................... 4.810 Tier 1 2,000 1,996,526
Dayton Hudson Corp.,
10-19-94...................... 4.830 Tier 1 4,000 3,990,340
Dayton Hudson Corp.,
10-19-94...................... 5.000 Tier 1 370 369,075
Dayton Hudson Corp.,
11-08-94...................... 4.780 Tier 1 2,000 1,989,909
Dayton Hudson Corp.,
11-28-94...................... 5.050 Tier 1 830 823,247
Sears Roebuck Acceptance
Corp.,
10-21-94...................... 4.820 Tier 1 4,800 4,787,146
Sears Roebuck Acceptance
Corp.,
10-28-94...................... 4.800 Tier 1 3,000 2,989,200
Sears Roebuck Acceptance
Corp.,
11-30-94...................... 4.850 Tier 1 3,000 2,975,750
-----------
21,920,660
-----------
UTILITIES (14.34%)
GTE Northwest Inc.,
10-07-94...................... 4.830 Tier 1 5,000 4,995,975
GTE Northwest Inc.,
10-07-94...................... 4.890 Tier 1 300 299,756
NYNEX Corp.,
10-04-94...................... 5.100 Tier 1 900 899,618

</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 197
FINANCIAL STATEMENTS

NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
U.S. BRANCHES OF FOREIGN BANKS (15.63%)
ABN AmRo Bank N.V.,
12-21-94............................... 4.790 Tier 1 5,000 4,998,997
Banque Nationale de Paris,
10-07-94............................... 4.500 Tier 1 3,000 2,999,929
Banque Nationale de Paris,
10-14-94............................... 3.510 Tier 1 1,000 999,546
Credit Suisse,
01-24-95............................... 3.560 Tier 1 1,000 994,835
Royal Bank of Canada,
10-28-94............................... 3.500 Tier 1 1,000 998,925
Sanwa Bank Ltd.,
10-06-94............................... 4.810 Tier 1 2,000 2,000,003
Sanwa Bank Ltd.,
10-11-94............................... 4.820 Tier 1 3,000 2,999,981
Sanwa Bank Ltd.,
10-13-94............................... 4.820 Tier 1 3,000 3,000,000
Sanwa Bank Ltd.,
10-26-94............................... 5.020 Tier 1 2,000 2,000,028
Societe Generale N.A., Inc.,
10-11-94............................... 4.740 Tier 1 3,000 3,000,098
Societe Generale N.A., Inc.,
12-19-94............................... 4.780 Tier 1 2,000 1,999,552
Sumitomo Bank Ltd.,
10-03-94............................... 4.810 Tier 1 4,000 4,000,002

U.S. BRANCHES OF FOREIGN BANKS (CONTINUED)
Sumitomo Bank Ltd.,
10-11-94............................... 4.830% Tier 1 5,000 4,999,821
-----------
34,991,717
-----------
U.S. DOLLAR EURO CERTIFICATES (4.91%)
Barclays Bank, PLC,
12-01-94............................... 4.890 Tier 1 2,000 1,999,759
Morgan (J.P.) & Co., Inc.,
12-14-94............................... 4.940 Tier 1 5,000 4,999,871
Societe Generale N.A., Inc.,
10-03-94............................... 4.790 Tier 1 3,000 2,999,979
Toronto Dominion Bank Ltd.,
01-03-95............................... 5.100 Tier 1 1,000 999,130
-----------
10,998,739
-----------
TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $45,990,456) (20.54%) 45,990,456
------ -----------

BANKERS' ACCEPTANCES
U.S. BANKS (2.90%)
Corestates Bank, NA ,
10-03-94............................... 4.900 Tier 1 2,000 1,999,456
Corestates Bank, NA ,
10-11-94............................... 4.600 Tier 1 3,000 2,996,167
Republic National Bank
of New York,
10-28-94............................... 4.800 Tier 1 1,500 1,494,600
-----------
6,490,223
-----------
TOTAL BANKERS' ACCEPTANCES
(Cost $6,490,223) (2.90%) 6,490,223
------ -----------

CORPORATE INTEREST BEARING OBLIGATIONS
AUTOMOTIVE (4.70%)
General Motors Acceptance Corp.,
10-17-94............................... 8.700 Tier 1 2,000 2,003,253
General Motors Acceptance Corp.,
11-04-94............................... 5.900 Tier 1 1,000 1,000,670
General Motors Acceptance Corp.,
01-18-95............................... 6.350 Tier 1 5,000 5,015,437
General Motors Acceptance Corp.,
01-30-95............................... 5.800 Tier 1 2,500 2,503,373
-----------
10,522,733
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 198
FINANCIAL STATEMENTS

John Hancock Mutual Funds - Cash Management Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
BANKING (6.26%)
Bankers Trust Co.,
01-16-95............................... 5.250% Tier 1 $2,500 $ 2,500,986
First Chicago Corp.
National Bank,
12-02-94**............................. 5.520 Tier 1 2,500 2,500,508
National Bank of Detroit,
10-07-94............................... 4.600 Tier 1 2,000 2,000,006
Security Pacific Corp.,
12-27-94............................... 8.330 Tier 1 6,970 7,022,554
------------
14,024,054
------------
BEVERAGE (1.12%)
PepsiCo Inc.,
12-15-94............................... 5.875 Tier 1 2,500 2,502,873
------------
BROKER SERVICES (4.56%)
Merrill Lynch & Co., Inc.,
11-01-94............................... 7.125 Tier 1 200 200,568
Merrill Lynch & Co., Inc.,
03-30-95**............................. 5.070 Tier 1 5,000 5,000,000
Merrill Lynch & Co., Inc.,
04-26-95**............................. 5.070 Tier 1 5,000 5,000,000
------------
10,200,568
------------
FINANCE (9.10%)
Associates Corp. of
North America,
11-15-94............................... 9.000 Tier 1 1,000 1,006,462
Associates Corp. of
North America,
12-01-94............................... 6.625 Tier 1 300 301,447
Beneficial Corp.,
02-08-95............................... 9.350 Tier 1 2,500 2,548,497
CIT Group Holdings Inc.,
01-24-95**............................. 5.000 Tier 1 8,500 8,497,703
General Electric
Capital Corp.,
01-14-95............................... 8.250 Tier 1 1,500 1,518,796
International Business
Machines Credit Corp.,
02-17-95**............................. 4.970 Tier 1 5,000 5,000,000
ITT Financial Corp.,
10-01-94............................... 7.125 Tier 1 1,510 1,510,000
------------
20,382,905
------------
INSURANCE (1.62%)
American General
Finance Corp.,
11-21-94............................... 5.300% Tier 1 1,500 1,501,008
American General
Finance Corp.,
12-15-94............................... 9.500 Tier 1 1,000 1,008,623
American General
Finance Corp.,
01-15-95............................... 8.375 Tier 1 1,100 1,114,655
------------
3,624,286
------------
OIL (0.13%)
Exxon Capital Corp.,
10-15-94............................... 8.250 Tier 1 300 300,530
------------
TOBACCO (0.90%)
Philip Morris Cos., Inc.,
11-15-94............................... 8.750 Tier 1 2,000 2,009,000
------------
UTILITIES (2.24%)
Pacific Gas and Electric Co.,
12-20-94............................... 6.020 Tier 1 5,000 5,010,462
------------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $68,577,411) (30.63%) 68,577,411
------ ------------
U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (2.79%)
Tennessee Valley Authority,
10-03-94............................... 5.000 Tier 1 6,250 6,248,264
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $6,248,264) (2.79%) 6,248,264
------ ------------
TOTAL INVESTMENTS (99.46%) $222,689,842
===== ============
<FN>
* Quality ratings indicate the categories of eligible securities, as defined
by Rule 2a-7 of the Investment Company Act of 1940, owned by the Fund.
** Variable rate note, interest rate effective September 30, 1994.
The percentage shown for each investment category is the total value of
that category expressed as a percentage of total net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 199
NOTES TO FINANCIAL STATEMENTS

John Hancock Mutual Funds - Cash Management Fund

NOTE A --
ACCOUNTING POLICIES
John Hancock Cash Management Fund (the "Fund") is an open-end investment
management company, registered under the Investment Company Act of 1940.
Significant accounting policies of the Fund are as follows:

VALUATION OF INVESTMENTS The Trustees have determined appropriate methods
for valuing portfolio securities. Accordingly, portfolio securities are
valued at amortized cost, in accordance with Rule 2a-7 of the Investment
Company Act of 1940, which approximates market value. The amortized cost
method involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of the difference
between the principal amount due at maturity and the cost of the security
to the Fund. Interest income on certain portfolio securities such as
negotiable bank certificates of deposit and interest bearing notes is
accrued daily and included in interest receivable.

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

FEDERAL INCOME TAX The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies. It will not be subject to Federal income tax on taxable earnings
which are distributed to shareholders.

DIVIDENDS The Fund's net investment income is declared daily as dividends
to shareholders of record as of the close of business on the preceding day
and distributed monthly.

NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program
equivalent, on an annual basis, to the sum of (a) 0.40% of the first
$250,000,000 of the Fund's average daily net asset value, (b) 0.35% of the
next $250,000,000, (c) 0.30% of the next $250,000,000 and (d) 0.25% of the
Fund's average daily net asset value in excess of $750,000,000.

Prior to January 1, 1994, the Fund reimbursed the Adviser for the
compensation of the Fund's president, Compliance Officer, and Secretary for
administrative services provided by them to the Fund (administration fee).
Effective January 1, 1994, this fee was eliminated. In the event normal
operating expenses of the Fund, exclusive of certain expenses prescribed by
state law, are in excess of the most restrictive state limit where the Fund is
registered to sell shares of beneficial interest, the fee payable to the Adviser
will be reduced to the extent of such excess and the Adviser will make
additional arrangements necessary to eliminate any remaining excess expenses.
The current limits are 2.5% of the first $30,000,000 of the Fund's average daily
net asset value, 2.0% of the next $70,000,000 and 1.5% of the remaining average
daily net asset value.

The Fund has a distribution agreement with John Hancock Broker
Distribution Services, Inc. ("Broker Services"), a wholly-owned subsidiary of
the Adviser. In addition, to compensate Broker Services for the services it
provides as distributor of the Fund, the Fund has

12
<PAGE> 200
NOTES TO FINANCIAL STATEMENTS
John Hancock Mutual Funds - Cash Management Fund

adopted a Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to Broker
Services for distribution and service expenses at an annual rate not to
exceed 0.10% of the Fund's daily net assets to reimburse Broker Services
for its distribution/service costs. Up to a maximum of 0.05% may be service
fees as defined by the amended Rules of Fair Practice of the National
Association of Securities Dealers, which became effective July 7, 1993.
Under the amended Rules of Fair Practice, curtailment of a portion of the
Fund's 12b-1 payments could occur under certain circumstances. The Trustees
have voted to suspend both the service fee and the sales fee of the Plan
indefinitely.
The Fund has a transfer agent agreement with John Hancock Fund Services,
Inc. ("Fund Services"), a wholly-owned subsidiary of The Berkeley Financial
Group. The Fund pays Fund Services a monthly transfer agent fee equivalent, on
an annual basis, to 0.45% of the Fund's average daily net asset value, plus out
of pocket expenses incurred by Fund Services on behalf of the Fund for proxy
mailings.
Messrs. Edward J. Boudreau, Jr., Francis C. Cleary, Jr., and Richard S.
Scipione are directors and/or officers of the Adviser, and/or its affiliates, as
well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne
by the Fund.

NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, including discount earned on
investment securities, other than obligations of the U.S. government and its
agencies, for the year ended September 30, 1994, aggregated $5,446,755,361
and $5,405,684,269, respectively. Purchases and proceeds from maturities of
obligations of the U.S. government and its agencies for the year ended September
30, 1994, aggregated $39,112,080 and $43,900,000, respectively.
The cost of investments owned at September 30, 1994, for Federal income
tax purposes was $222,689,842.

<PAGE> 201

John Hancock Mutual Funds - Cash Management Fund

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Trustees and Shareholders
John Hancock Cash Management Fund

We have audited the accompanying statement of assets and liabilities of
John Hancock Cash Management Fund (the "Fund"), including the schedule of
investments, as of September 30, 1994, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Cash Management Fund at September 30, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.

/S/ ERNST & YOUNG, LLP

Boston, Massachusetts
October 28, 1994

TAX INFORMATION NOTICE (UNAUDITED)

For Federal income tax purposes, the following information is furnished
with respect to the dividends of the Fund during its fiscal year ended
September 30, 1994. All of the dividends paid for the fiscal year are
taxable as ordinary income. None of the 1994 dividends qualify for the
dividends received deduction available to
corporations.
Shareholders will be mailed a 1994 U.S. Treasury Department Form
1099-DIV in January of 1995. This will reflect the total of all distributions
which are taxable for calendar year 1994.

<PAGE> 202

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

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

<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $159,457,517) . . . . . . . . . . . . $159,457,517
Negotiable bank certificates of deposit
(cost - $50,522,738) . . . . . . . . . . . . . . . . . . . . 50,522,738
Bankers' acceptances (cost - $3,665,787) . . . . . . . . . . . 3,665,787
Corporate interest-bearing obligations
(cost - $40,516,736) . . . . . . . . . . . . . . . . . . . . 40,516,736
U.S. government obligations (cost - $5,000,532) . . . . . . . 5,000,532
------------
259,163,310
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448,000
Interest receivable . . . . . . . . . . . . . . . . . . . . . . 1,262,216
------------
Total Assets . . . . . . . . . . . . 260,873,526
--------------------------------------------------
LIABILITIES:
Payable for investments purchased . . . . . . . . . . . . . . . 4,697,591
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . 733,815
Payable to John Hancock Advisers, Inc. and affiliates -
Note B . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,849
Accounts payable and accrued expenses . . . . . . . . . . . . . 4,913
------------
Total Liabilities . . . . . . . . . 5,636,168
--------------------------------------------------
NET ASSETS:
Capital paid-in . . . . . . . . . . . . . . . . . . . . . . . . 255,237,358
------------
Net Assets . . . . . . . . . . . . . $255,237,358
==================================================

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
(based on 255,237,358 shares of beneficial interest
outstanding - unlimited number of shares authorized
with no par value) . . . . . . . . . . . . . . . . . . . . . . . $ 1.00
===============================================================================
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND FOR THE PERIOD.

<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,861,617
------------
Expenses:
Transfer agent fee - Note B . . . . . . . . . . . . . . . . . 514,658
Investment management fee - Note B . . . . . . . . . . . . . 479,337
Custodian fee . . . . . . . . . . . . . . . . . . . . . . . . 33,484
Registration and filing fees . . . . . . . . . . . . . . . . 17,223
Auditing fee . . . . . . . . . . . . . . . . . . . . . . . . 14,357
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . 14,073
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . 10,304
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 3,729
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . 3,197
------------
Total Expenses . . . . . . . . . . . 1,090,362
--------------------------------------------------
Net Investment Income . . . . . . . 5,771,255
--------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . . $ 5,771,255
==================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

5
<PAGE> 203

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

<TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
---------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,771,255 $ 6,001,558
------------- -------------
Net Increase in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . 5,771,255 6,001,558
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0238 and $0.0291 per share, respectively) . . (5,771,255) (6,001,558)
------------- -------------

FROM FUND SHARE TRANSACTIONS -- NET* . . . . . . . . . . . . . . . . . . . . . . . . . . 31,337,984 40,190,579
------------- -------------

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223,899,374 183,708,795
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 255,237,358 $ 223,899,374
============= =============

*ANALYSIS OF FUND SHARE TRANSACTIONS AT $1 PER SHARE:

Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,768,773 674,344,812
Shares issued to shareholders in reinvestment of distributions . . . . . . . . . . . . 4,509,963 5,410,901
------------- -------------
327,278,736 679,755,713
Less shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (295,940,752) (639,565,134)
------------- -------------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,337,984 40,190,579
============= =============
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR
DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES
THE NUMBER OF FUND SHARES SOLD, REINVESTED AND REDEEMED DURING THE LAST TWO
PERIODS.

SEE NOTES TO FINANCIAL STATEMENTS.

6
<PAGE> 204

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund
<TABLE>

FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1995 -----------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
---------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net Investment Income . . . . . . . . . . . . . . . . . 0.02 0.03 0.02 0.04 0.06 0.08
-------- -------- -------- -------- -------- --------

Less Distributions:
Dividends from Net Investment Income . . . . . . . . . (0.02) (0.03) (0.02) (0.04) (0.06) (0.08)
-------- -------- -------- -------- -------- --------

Net Asset Value, End of Period . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value . . . . . . 2.40%(a) 2.95% 2.47% 3.77% 6.23% 7.87%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) . . . . . . . $255,237 $223,899 $183,709 $201,900 $250,847 $281,213
Ratio of Expenses to Average Net Assets . . . . . . . . 0.91%* 0.95% 0.98% 0.95% 0.90% 0.88%
Ratio of Net Investment Income to Average Net Assets . 4.82%* 2.94% 2.45% 3.75% 6.08% 7.51%
</TABLE>

* On an annualized basis.
(a) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 205

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON MARCH 31, 1995. IT'S DIVIDED INTO FIVE TYPES OF SHORT-TERM INVESTMENTS.
MOST CATEGORIES OF SHORT-TERM INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUP.

SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

<S> <C> <C> <C> <C>
COMMERCIAL PAPER
BANKING (1.57%)
Corestates Financial Corp.,
04-07-95 . . . . . . . . . . . 6.060% Tier 1 $4,000 $ 3,995,960
------------
BANKING - FOREIGN (4.67%)
BNP U.S Finance Corp.,
07-03-95 . . . . . . . . . . . 6.200 Tier 1 2,000 1,967,967
Mitsubishi Bank Ltd.,
06-05-95 . . . . . . . . . . . 6.050 Tier 1 3,000 2,967,229
Societe Generale
Acceptance N.V
06-19-95 . . . . . . . . . . . 6.230 Tier 1 2,000 1,972,657
Swedish Export Credit
Corp., 04-03-95 . . . . . . . 6.020 Tier 1 5,000 4,998,328
------------
11,906,181
------------
BROKER SERVICES (10.81%)
Bear Stearns Cos., Inc.,
04-13-95 . . . . . . . . . . . 6.000 Tier 1 5,000 4,990,000
Bear Stearns Cos., Inc.,
04-19-95 . . . . . . . . . . . 6.000 Tier 1 5,000 4,985,000
Goldman Sachs Group.,
L.P. 04-20-95 . . . . . . . . 5.970 Tier 1 5,000 4,984,246
Goldman Sachs Group.,
L.P. 06-01-95 . . . . . . . . 6.100 Tier 1 5,000 4,948,319
Merrill Lynch & Co., Inc.,
04-03-95 . . . . . . . . . . . 6.400 Tier 1 1,000 999,644
Merrill Lynch & Co., Inc.,
04-07-95 . . . . . . . . . . . 6.100 Tier 1 5,000 4,994,917
Merrill Lynch & Co., Inc.,
04-10-95 . . . . . . . . . . . 6.000 Tier 1 1,700 1,697,450
------------
27,599,576
------------
DRUGS (2.31%)
Warner Lambert Co.,
04-04-95 . . . . . . . . . . . 5.970 Tier 1 5,900 5,897,065
------------
FINANCE (12.53%)
American Express Credit
Corp., 04-06-95 . . . . . . . 6.050 Tier 1 8,000 7,993,278
American Honda Finance
Corp., 04-03-95 . . . . . . . 6.050 Tier 1 2,600 2,599,126
American Honda Finance
Corp., 04-12-95 . . . . . . . 6.050 Tier 1 5,000 4,990,757
American Honda Finance
Corp., 04-14-95 . . . . . . . 6.030 Tier 1 5,100 5,088,895
Beneficial Corp.,
04-10-95 . . . . . . . . . . . 6.000 Tier 1 2,000 1,997,000
General Electric Capital
Corp., 04-10-95 . . . . . . . 5.930 Tier 1 4,390 4,383,492
General Electric Capital
Corp., 07-25-95 . . . . . . . 6.420 Tier 1 3,000 2,938,475
General Electric Capital
Corp., 10-26-95 . . . . . . . 6.460 Tier 1 2,055 1,978,298
------------
31,969,321
------------
FOOD (0.16%)
Heinz [H.J.] Co.,
04-03-95 . . . . . . . . . . . 6.400 Tier 1 420 419,851
------------
INSURANCE (3.13%)
American General Finance
Corp., 04-03-95 . . . . . . . 6.200 Tier 1 8,000 7,997,244
------------

MORTGAGE BANKING (3.13%)
Countrywide Funding Corp.,
04-04-95 . . . . . . . . . . . 6.000 Tier 1 5,000 4,997,500
Countrywide Funding Corp.,
04-11-95 . . . . . . . . . . . 6.150 Tier 1 3,000 2,994,875
------------
7,992,375
------------
RETAIL STORES (10.71%)
Dayton Hudson Corp.,
04-27-95 . . . . . . . . . . . 6.030 Tier 1 8,000 7,965,160
Dayton Hudson Corp.,
04-28-95 . . . . . . . . . . . 6.030 Tier 1 3,000 2,986,432
Penney [J.C.] Funding Corp.,
04-06-95 . . . . . . . . . . . 6.150 Tier 1 4,700 4,697,591
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 206

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

<S> <C> <C> <C> <C>
RETAIL STORES (CONTINUED)
Sears Roebuck Acceptance
Corp., 04-13-95 . . . . . . . 6.000% Tier 1 $4,000 $ 3,992,000
Sears Roebuck Acceptance
Corp., 04-17-95 . . . . . . . 6.000 Tier 1 7,700 7,679,467
------------
27,320,650
------------
UTILITIES (13.46%)
Bell Atlantic Financial
Services., 04-11-95 . . . . . 6.000 Tier 1 1,847 1,843,922
BellSouth Telecommunications,
Inc., 04-25-95 . . . . . . . . 5.950 Tier 1 8,000 7,968,267
NYNEX Corp.,
04-17-95 . . . . . . . . . . . 6.050 Tier 1 3,000 2,991,933
NYNEX Corp.,
04-20-95 . . . . . . . . . . . 6.000 Tier 1 5,000 4,984,167
NYNEX Corp.,
04-28-95 . . . . . . . . . . . 6.050 Tier 1 3,600 3,583,665
Oklahoma Gas & Electric
Co., 04-10-95 . . . . . . . . 6.050 Tier 1 5,000 4,992,437
Pennsylvania Power &
Light Co., 04-04-95 . . . . . 6.300 Tier 1 2,000 1,998,950
Pennsylvania Power &
Light Co., 04-05-95 . . . . . 6.070 Tier 1 6,000 5,995,953
------------
34,359,294
------------
TOTAL COMMERCIAL PAPER
(Cost $159,457,517) (62.48%) 159,457,517
------ ------------

NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
U.S. BANKS (2.15%)
PNC Bank NA.,
04-26-95 . . . . . . . . . . . 5.900 Tier 1 5,500 5,499,079
------------
U.S BRANCHES OF FOREIGN BANKS (13.72%)
Bank of Tokyo Ltd.,
04-03-95 . . . . . . . . . . . 6.060 Tier 1 4,000 4,000,004
Banque Nationale de Paris.,
04-03-95 . . . . . . . . . . . 6.100 Tier 1 5,000 5,000,002
Banque Nationale de Paris.,
04-03-95 . . . . . . . . . . . 6.020 Tier 1 2,000 1,999,999
Banque Nationale de Paris.,
04-12-95 . . . . . . . . . . . 6.250 Tier 1 3,000 3,000,111
Industrial Bank of Japan Ltd.,
06-21-95 . . . . . . . . . . . 6.250 Tier 1 3,000 3,000,168
National Westminster Bank.,
04-17-95 . . . . . . . . . . . 6.560 Tier 1 3,000 3,000,529
Sanwa Bank Ltd.,
04-17-95 . . . . . . . . . . . 6.080 Tier 1 2,000 2,000,009
Sanwa Bank Ltd.,
04-24-95 . . . . . . . . . . . 6.080 Tier 1 5,000 5,000,064
Sanwa Bank Ltd.,
04-28-95 . . . . . . . . . . . 6.270 Tier 1 4,000 4,000,353
Sanwa Bank Ltd.,
05-12-95 . . . . . . . . . . . 5.680 Tier 1 1,000 998,985
Societe Generale N.A., Inc.,
01-08-96 . . . . . . . . . . . 7.650 Tier 1 3,000 3,013,364
------------
35,013,588
------------
U.S BRANCHES OF FOREIGN BANKS TIME DEPOSIT (0.78%)
Societe Generale N.A., Inc.,
04-03-95 . . . . . . . . . . . 6.400 Tier 1 2,000 2,000,000
------------
U.S. DOLLAR EURO CERTIFICATES (3.14%)
ABN AmRo Bank N.V
04-26-95 . . . . . . . . . . . 5.880 Tier 1 1,000 999,533
Mitsubishi Bank Ltd.,
05-01-95 . . . . . . . . . . . 6.260 Tier 1 5,000 5,000,551
Union Bank of Switzerland.,
12-29-95 . . . . . . . . . . . 7.510 Tier 1 2,000 2,009,987
------------
8,010,071
------------
TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $50,522,738) (19.79%) 50,522,738
------ ------------

BANKERS' ACCEPTANCES
U.S BRANCHES OF FOREIGN BANKS (1.44%)
Bank of Tokyo Ltd.,
07-20-95 . . . . . . . . . . . 6.450 Tier 1 1,700 1,666,496
Industrial Bank of Japan
Ltd., 04-03-95 . . . . . . . . 6.380 Tier 1 2,000 1,999,291
------------
3,665,787
------------
TOTAL BANKERS' ACCEPTANCES
(Cost $3,665,787) (1.44%) 3,665,787
------ ------------

CORPORATE INTEREST BEARING OBLIGATIONS
AUTOMOTIVE (6.07%)
Ford Motor Credit Co.,
12-01-95 . . . . . . . . . . . 6.125 Tier 1 3,000 2,988,095
Ford Motor Credit Co.,
12-15-95 . . . . . . . . . . . 9.125 Tier 1 1,850 1,878,654
General Motors Acceptance
Corp., 06-08-95 . . . . . . . 9.250 Tier 1 1,000 1,004,794
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 207

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

<S> <C> <C> <C> <C>
AUTOMOTIVE (CONTINUED)
General Motors Acceptance
Corp., 08-01-95 . . . . . . . 8.750% Tier 1 $2,000 $ 2,012,217
General Motors Acceptance
Corp., 02-01-96 . . . . . . . 8.750 Tier 1 3,000 3,039,861
General Motors Acceptance
Corp., 03-13-96 . . . . . . . 9.125 Tier 1 3,000 3,054,682
General Motors Acceptance
Corp., 03-20-96 . . . . . . . 8.800 Tier 1 1,500 1,521,902
------------
15,500,205
------------
BANKING (6.26%)
Bankers Trust Co.,
09-01-95** . . . . . . . . . . 6.360 Tier 1 4,000 4,000,000
First Chicago Corp.
National Bank,
11-08-95** . . . . . . . . . . 6.020 Tier 1 5,000 4,996,857
PNC Bank NA.,
08-07-95** . . . . . . . . . . 6.010 Tier 1 5,000 4,998,891
National Bank of Oregon
10-30-95 . . . . . . . . . . . 5.400 Tier 1 2,000 1,983,007
------------
15,978,755
------------
BROKER SERVICES (1.96%)
Merrill Lynch & Co., Inc.,
04-26-95** . . . . . . . . . . 5.970 Tier 1 5,000 5,000,000
------------
CHEMICAL (1.19%)
Monsanto Corp.,
12-21-95 . . . . . . . . . . . 8.750 Tier 1 3,000 3,040,209
------------
RETAIL STORES (0.39%)
Sears Roebuck Acceptance
Corp., 12-15-95 . . . . . . . 6.590 Tier 1 1,000 997,567
------------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $40,516,736) (15.87%) 40,516,736
------- ------------
U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (1.96%)
Federal Farm
Credit Bank.,
08-01-95 . . . . . . . . . . . 6.650 Tier 1 5,000 5,000,532
------------
TOTAL U.S GOVERNMENT OBLIGATIONS
(Cost $5,000,532) (1.96%) 5,000,532
------- ------------
TOTAL INVESTMENTS (101.54%) $259,163,310
======= ============
</TABLE>

*Quality ratings indicate the categories of eligible securities, as defined by
Rule 2a-7 of the U.S. Securities and Exchange Commission, owned by the Fund.

**Floating rate note, interest rate effective March 31, 1995.

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

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE> 208

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

(UNAUDITED)

NOTE A --
ACCOUNTING POLICIES

John Hancock Cash Management Fund (the "Fund") is an open-end investment
management company, registered under the Investment Company Act of 1940.
Significant accounting policies of the Fund are as follows:

VALUATION OF INVESTMENTS The Trustees have determined appropriate methods for
valuing portfolio securities. Accordingly, portfolio securities are valued at
amortized cost, in accordance with Rule 2a-7 of the Investment Company Act of
1940, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the security to the Fund. Interest income on
certain portfolio securities such as negotiable bank certificates of deposit and
interest bearing notes is accrued daily and included in interest receivable.

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

INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.

FEDERAL INCOME TAX The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies. It
will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders.

DIVIDENDS The Fund's net investment income is declared daily as dividends to
shareholders of record as of the close of business on the preceding day and
distributed monthly.

NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS

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

The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1, 1995, JH
Funds was known as John Hancock Broker Distribution Services, Inc. In addition,
to compensate JH Funds for the services it provides as distributor of the Fund,
the Fund

11
<PAGE> 209

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

has adopted a Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH Funds for
distribution and service expenses at an annual rate not to exceed 0.10% of the
Fund's daily net assets to reimburse JH Funds for its distribution/service
costs. Up to a maximum of 0.05% may be service fees as defined by the amended
Rules of Fair Practice of the National Association of Securities Dealers. Under
the amended Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1
payments could occur under certain circumstances. The Trustees have voted to
suspend both the service fee and the sales fee of the Plan indefinitely.

The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, Investor Services was known
as John Hancock Fund Services, Inc. Effective January 1, 1995, the Fund pays
transfer agent fees based on transaction volume and the number of shareholder
accounts. Prior to January 1, 1995, the Fund paid Investor Services a monthly
transfer agent fee equivalent, on an annual basis, to 0.45% of the Fund's
average daily net asset value, plus out of pocket expenses incurred by Investor
Services on behalf of the Fund for proxy mailings.

Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione are directors
and/or officers of the Adviser, and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the Fund.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales and maturities, including discount earned on
investment securities during the period ended March 31, 1995, aggregated
$2,119,515,947 and $2,087,438,056, respectively.

The cost of investments owned at March 31, 1995, for Federal income tax
purposes was $259,163,310.

12
<PAGE> 210
<TABLE>
JOHN HANCOCK MONEY MARKET FUND
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES EXHIBIT C
MARCH 31, 1995 ---------

JOHN HANCOCK JOHN HANCOCK PRO
MONEY MARKET CASH MANAGEMENT FORMA
FUND FUND ADJUSTMENTS COMBINED
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments at value $62,297,413 $259,163,310 $ - $321,460,723
Cash 495 448,000 - 448,495
Receivable for shares sold 0 0 - 0
Interest receivable 45,956 1,262,216 - 1,308,172
Receivable from John Hancock Advisers, Inc. 0 0 - 0
Receivable for investments sold 0 0 - 0
Other Assets 13,768 0 - 13,768
----------- ------------ ------------- ------------
Total assets 62,357,632 260,873,526 - 323,231,159
----------- ------------ ------------- ------------

LIABILITIES
Payable for investment purchased 0 4,697,591 - 4,697,591
Dividend Payable 171,133 733,815 - 904,948
Payable to J. Hancock Advisers, Inc. 0 199,849
Accounts payable and accrued expenses 67,745 4,913 - 72,659
----------- ------------ ------------- ------------
Total liabilities 238,878 5,636,168 - 5,675,198
----------- ------------ ------------- ------------

CAPITAL PAID-IN $62,118,754 $255,237,358 - $317,356,112
Net unrealized depreciation
of investments and financial futures contracts 0 0 - $0
Accumulated net realized gain (loss)
on investments and financial futures contracts 0 0 - 0
Undistributed net investment income 0 0 - 0
----------- ------------ ------------- ------------
Net assets $62,118,754 $255,237,358 - $317,356,112
=========== ============ ============= ============

NET ASSETS:
Money Market Fund
Class A - $ - $ 255,237,358 a $255,237,358
Class B 62,118,754 - - $62,118,754

Cash Management - 255,237,358 (255,237,358) a 0
----------- ------------ ------------- ------------
$62,118,754 $255,237,358 $0 $317,356,112
=========== ============ ============= ============
SHARES OUTSTANDING:
Money Market Fund
Class A - $ - 255,237,358 a 255,237,358
Class B 62,118,754 - - 62,118,754

Cash Management - 255,237,358 (255,237,358) a 0
----------- ------------ ------------- ------------

NET ASSET VALUE PER SHARE:
Money Market Fund
Class A - - $1.00
Class B $1.00 $1.00

Cash Management - $1.00 - -
----------- ------------ ------------- ------------
</TABLE>

See Notes to Pro-Forma Combined Financial Statements
<PAGE> 211
<TABLE>
JOHN HANCOCK MONEY MARKET FUND
PRO-FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1995
EXHIBIT C
---------

<CAPTION>
JOHN HANCOCK JOHN HANCOCK
MONEY MARKET CASH MANAGEMENT
FUND FUND PRO
YEAR ENDED YEAR ENDED FORMA
MARCH 31, 1995 * MARCH 31, 1995 ** ADJUSTMENTS COMBINED
---------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $3,206,636 $13,723,234 $ - $16,929,870
---------- ----------- --------- -----------
Total 3,206,636 13,723,234 - 16,929,870
---------- ----------- --------- -----------

Expenses
Investment management fee 275,386 958,674 (55,077) b 1,178,983
Distribution fee-
Class A - - 360,490 c 360,490
Class B 550,774 - - 550,774
Transfer agent fee (e)
Class A - 1,029,316 - 1,029,316
Class B 114,184 - - 114,184
Custodian fee 61,052 66,968 (57,500) d 70,520
Registration and filing fees 69,626 34,446 (30,000) d 74,072
Advisory board fee 4,414 - - 4,414
Auditing fee 29,060 28,714 (25,000) d 32,774
Legal fees 3,952 6,394 (2,500) d 7,846
Printing 13,578 28,146 (11,500) d 30,224
Directors' fee 12,616 20,608 (12,000) d 21,224
Miscellaneous 3,508 7,458 (2,500) d 8,466
---------- ----------- --------- -----------

Total expenses 1,138,150 2,180,724 164,413 3,483,287

---------- ----------- --------- -----------
Net investment income 2,068,486 11,542,510 (164,413) 13,446,583
---------- ----------- --------- -----------

Net Increase (Decrease) in Net Assets
Resulting from Operations $2,068,486 $11,542,510 $(164,413) $13,446,583
========== =========== ========= ===========
<FN>
* Actual income and expense numbers annualized using 5 months actuals (11/1/94-3/31/95).
* * Actual income and expense numbers annualized using 6 months actuals (10/1/94-3/31/95).
</TABLE>

<PAGE> 212
EXHIBIT C
---------

JOHN HANCOCK MONEY MARKET FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
MARCH 31, 1995

Pro forma information is intended to provide shareholders of the John Hancock
Money Market Fund (JHMM) and John Hancock Cash Management Fund (JHCM) with
information about the impact of the proposed merger by indicating how the
merger might have affected information had the merger been consummated as of
March 31, 1994.

The pro forma combined statements of assets and liabilities and results of
operations as of March 31, 1995, have been prepared to reflect the merger
of JHMM and JHCM after giving effect to pro forma adjustments described in the
notes listed below.

(a) Issuance of JHMM Class A shares in exchange for all of the outstanding
Class A shares of JHCM.

(b) The investment advisory fee was adjusted to reflect the application of
the fee structure in effect for JHMM, which includes 0.10% fee
reduction.

(d) The actual expenses incurred by JHMM and JHCM for various expenses
included on a pro forma basis were reduced to reflect the estimated
savings arising from the merger.

(e) The transfer agent fee for Class A and Class B shares is the total of
the respective individual fund's transfer agent fees. The main
criteria in determining the transfer agent fees for a specific class is
the number of shareholder accounts.

<PAGE> 213
John Hancock Mutual Funds - Money Market B Fund
<TABLE>
EXHIBIT C
---------
SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
PAR VALUE
INTEREST QUALITY (000's
ISSUER, DESCRIPTION RATE RATINGS * OMITTED) VALUE
- ------------------- ---- --------- -------- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
AUTOMOTIVE (4.63%)
Ford Motor Credit Co.,
05-22-95 6.020% Tier 1 $2,900 $2,875,268
----------
BANKING (0.80%)
Morgan (J.P.) & Co., Inc.
04-13-95 6.000 Tier 1 500 499,000
----------

BANKING - FOREIGN (0.34%)
Deutsche Bank Financial, Inc.,
05-01-95 6.050 Tier 1 211 209,936
----------

BROKER SERVICES (8.48%)
Goldman Sachs Group, L.P.,
06-01-95 6.100 Tier 1 2,400 2,375,193
Merrill Lynch & Co., Inc.,
04-19-95 6.000 Tier 1 2,600 2,592,200
Merrill Lynch & Co., Inc.,
05-22-95 6.030 Tier 1 300 297,437
----------
5,264,830
----------

FINANCE (12.07%)
American Express Credit Corp.
04-03-95 6.050 Tier 1 2,400 2,399,193
American Honda Finance Corp.,
04-03-95 6.000 Tier 1 1,700 1,699,433
American Honda Finance Corp.,
04-17-95 6.050 Tier 1 1,000 997,311
CIT Group Holdings, Inc.
04-03-95 6.020 Tier 1 2,400 2,399,197
----------
7,495,134
----------

MORTGAGE BANKING (4.82%)
Countrywide Funding Corp.,
04-07-95 6.080 Tier 1 3,000 2,996,960
----------

RETAIL STORES (4.66%)
Sears Roebuck Acceptance Corp.,
04-10-95 6.000 Tier 1 2,900 2,895,650
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 214
John Hancock Mutual Funds - Money Market B Fund
<TABLE>
EXHIBIT C
---------
SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
PAR VALUE
INTEREST QUALITY (000's
ISSUER, DESCRIPTION RATE RATINGS * OMITTED) VALUE
- ------------------- ---- --------- -------- -----
<S> <C> <C> <C> <C>
TOBACCO (4.34%)
Philip Morris Cos., Inc.,
04-05-95 5.970% Tier 1 $2,700 $ 2,698,209
-----------

UTILITIES (8.20%)
BellSouth Telecommunications, Inc.
04-17-95 6.000 Tier 1 169 168,549
NYNEX Corp.
04-20-95 6.000 Tier 1 2,400 2,392,400
NYNEX Corp.
04-20-95 6.070 Tier 1 136 135,564
Oklahoma Gas & Electric Co.
04-04-95 6.000 Tier 1 400 399,800
Pennsylvania Power & Light Co.,
04-05-95 6.070 Tier 1 2,000 1,998,651
-----------
5,094,964
-----------

TOTAL COMMERCIAL PAPER
(Cost $30,029,953) (48.34%) 30,029,953
--------- -----------

NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
U.S. BRANCHES OF FOREIGN BANKS (6.44%)
Industrial Bank of Japan Ltd.,
06-21-95 6.250 Tier 1 2,000 2,000,116
Sanwa Bank Ltd.,
04-17-95 6.080 Tier 1 2,000 2,000,018
-----------
4,000,134
-----------

TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $4,000,135) (6.44%) 4,000,135
--------- -----------

CORPORATE INTEREST-BEARING OBLIGATIONS
FINANCE (1.60%)
General Electric Capital Corp.,
11-15-95 5.250 Tier 1 1,000 991,724
-----------

TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $991,724) (1.60%) 991,724
--------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 215
John Hancock Mutual Funds - Money Market B Fund
<TABLE>
EXHIBIT C
---------
SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
PAR VALUE
INTEREST QUALITY (000's
ISSUER, DESCRIPTION RATE RATINGS * OMITTED) VALUE
- ------------------- ---- --------- -------- -----
<S> <C> <C> <C> <C>

U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (37.20%)
Federal Farm Credit Bank,
04-13-95 6.240% Tier 1 $ 365 $ 364,241
Federal Farm Credit Bank,
04-13-95 12.172 Tier 1 250 249,583
Federal Farm Credit Bank,
04-21-95 6.010 Tier 1 500 498,330
Federal Farm Credit Bank,
08-01-95 6.650 Tier 1 1,000 1,000,107
Federal Home Loan Bank Corp.,
04-03-95 6.000 Tier 1 1,120 1,119,627
Federal Home Loan Bank Corp.,
04-04-95 6.260 Tier 1 550 549,713
Federal Home Loan Bank Corp.,
04-13-95 6.000 Tier 1 500 499,000
Federal Home Loan Mortgage Corp.,
04-03-95 6.000 Tier 1 5,000 4,998,333
Federal Home Loan Mortgage Corp.,
04-06-95 6.210 Tier 1 300 299,741
Federal Home Loan Mortgage Corp.,
04-24-95 6.697 Tier 1 1,175 1,170,601
Federal Home Loan Mortgage Corp.,
05-22-95 7.438 Tier 1 250 248,027
Federal National Mortgage Association,
04-03-95 6.000 Tier 1 5,000 4,998,333
Federal National Mortgage Association,
04-03-95 6.050 Tier 1 5,000 4,998,320
Federal National Mortgage Association,
04-05-95 7.516 Tier 1 500 499,688
Federal National Mortgage Association,
04-18-95 6.240 Tier 1 600 598,232
Federal National Mortgage Association,
05-22-95 6.340 Tier 1 485 480,644
Federal National Mortgage Association,
06-15-95 6.549 Tier 1 540 533,081
-----------
23,105,601
-----------
TOTAL U. S. GOVERNMENT OBLIGATIONS
(Cost $23,105,601) (37.20%) 23,105,601
--------- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 216
John Hancock Mutual Funds - Money Market B Fund
<TABLE>
EXHIBIT C
---------
SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
PAR VALUE
INTEREST QUALITY (000's
ISSUER, DESCRIPTION RATE RATINGS * OMITTED) VALUE
- ------------------- ---- --------- -------- -----
<S> <C> <C> <C> <C>
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase agreement
transaction with UBS Securities, Inc.,
Dated 03-31-95, Due 04-03-95
(Secured by U.S. Treasury Bond,
6.250% Due 08-15-23, and by U.S.
Treasury Notes, 5.250% Due 07-31-98,
6.500% Due 04-30-99, 9.125% Due
05-15-99, and 8.000% Due 05-15-01) 6.125% $ 4,170 $ 4,170,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $4,170,000) (6.71%) 4,170,000
---------- -----------
TOTAL INVESTMENTS (100.29%) $62,297,413
========== ===========
<FN>

* Quality ratings indicate the categories of eligible securities, as defined by Rule 2a - 7 of the U.S.
Securities and Exchange Commission, owned by the Fund.
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 217
EXHIBIT C

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 218
EXHIBIT C

FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 219
EXHIBIT C
FINANCIAL STATEMENTS

John Hancock Funds - Cash Management Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- --------- -----

*Quality ratings indicate the categories of eligible securities, as defined by
Rule 2a-7 of the U.S. Securities and Exchange Commission, owned by the Fund.

**Floating rate note, interest rate effective March 31, 1995.

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

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE> 220
PART C

OTHER INFORMATION

ITEM 15. INDEMNIFICATION

No change from the information set forth in Item 27 of the Registration
Statement of John Hancock Series, Inc. (the "Registrant") on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940 (File Nos.
33-16048 and 811-5254), which information is incorporated herein by reference.

ITEM 16. EXHIBITS:

1.1 Registrant's Articles of Filed as Exhibit 1(a) to
Incorporation dated June 22, Registrant's Registration
1987 Statement on Form N-1A and
incorporated herein by
reference.

1.2 Articles of Amendment and Filed as Exhibit 1(b) to
Restatement dated Registrant's Registration
July 1, 1987 Statement on Form N-1A and
incorporated herein by
reference.

1.3 Articles of Amendment dated Filed as Exhibit 1(c) to
July 24, 1987. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.4 Articles Supplementary dated Filed as Exhibit 1(d) to
August 6, 1987. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.5 Articles Supplementary dated Filed as Exhibit 1(e) to
October 8, 1987. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.6 Articles Supplementary dated Filed as Exhibit 1(f) to
June 16, 1989. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.
<PAGE> 221

1.7 Articles Supplementary Filed as Exhibit 1(g) to
Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.8 Articles Supplementary dated Filed as Exhibit 1(h) to
October 22, 1993. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.9 Articles Supplementary dated Filed as Exhibit 1(i) to
May 7, 1994. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

1.10 Articles Supplementary dated Filed as Exhibit 1(j) to
December 22, 1994. Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

2. Amended By-Laws of Registrant. Filed as Exhibit 2 to
Registrant's Registration
Statement on Form N-1A and
incorporated herein by
reference.

3. Not applicable.

4. Form of Agreement and Plan of Filed herewith as Exhibit B
Reorganization between the to the Proxy Statement and
Registrant, on behalf of John Prospectus included as Part A
Hancock Money Market Fund and of this Registration
John Hancock Cash Management Statement.
Fund.

5. Not applicable.

6. Investment Management Contract Filed as Exhibit 5(a)(4) to
between the Registrant, on Registrant's Registration
behalf of John Hancock Money Statement on Form N-1A and
Market Fund and John Hancock incorporated herein by
Advisers, Inc. reference.

7.1 Distribution Agreement between Filed as Exhibit 6(a) to
the Registrant and John Hancock Registrant's Registration
Funds, Inc. (formerly named Statement on Form N-1A and
John Hancock Broker incorporated herein by
Distribution Services, Inc.). reference.

- 2 -

<PAGE> 222

7.2 Form of Soliciting Dealer Filed as Exhibit 6(b) to
Agreement between John Hancock Registrant's Registration
Funds, Inc. and Selected Statement on Form N-1A and
Dealers incorporated herein by
reference.

7.3 Form of Financial Institution Filed as Exhibit 6(c) to
Sales and Service Agreement Registrant's Registration
between John Hancock Funds, Statement on Form N-1A and
Inc. and Selected Financial incorporated herein by
Institutions. reference.

8. Not applicable.

9. Master Custodian Agreement Filed as Exhibit 8 to
between John Hancock Mutual Registrant's Registration
Funds (including Registrant) Statement on Form N-1A and
and Investors Bank and Trust. incorporated by reference
herein.

10.1 Class A Distribution Plan Filed as Exhibit 15(a)(vi) to
between John Hancock Money Registrant's Registration
Market Fund and John Hancock Statement on Form N-1A and
Funds, Inc. incorporated herein by
reference.

10.2 Class B Distribution Plan Filed as Exhibit 15(b)(i) to
between John Hancock Money Registrant's Registration
Market Fund and John Hancock Statement on Form N-1A and
Funds, Inc. incorporated herein by
reference.

11. Opinion as to legality of Filed herewith as Exhibit 11.
shares, and consent.

12. Form of opinion as to tax Filed herewith as Exhibit 12.
matters, and consent.

13. Not applicable.

14. Consents of Ernst & Young LLP Filed herewith as Exhibit 14.
regarding the audited financial
statements and highlights of
John Hancock Money Market Fund
and John Hancock Cash
Management Fund.

15. Not applicable.

- 3 -

<PAGE> 223

16. Powers of Attorney. Filed as addendum to signa-
ture pages of Registrant's
Registration Statement on
Form N-1A and incorporated
herein by reference.

17. Declaration of the Registrant Filed herewith as Exhibit 17.
pursuant to Rule 24f-2 under
the Investment Company Act of
1940.

18. Prospectus of John Hancock Cash Filed herewith as Exhibit 18.
Management Fund dated
February 1, 1995.

ITEM 17. UNDERTAKINGS.

(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of 1933,
as amended (the "1933 Act"), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.

- 4 -

<PAGE> 224

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and The
Commonwealth of Massachusetts, on the 29th day of August, 1995.

JOHN HANCOCK SERIES, INC.

By:/s/Edward J. Boudreau, Jr.
------------------------------------
Edward J. Boudreau, Jr.
Chairman and Director

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:

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

/s/Edward J. Boudreau, Jr. Chairman and Director ) August 29, 1995
-------------------------- (Principal Executive )
Edward J. Boudreau, Jr. Officer) )
)
)
/s/James B. Little Senior Vice President ) August 29, 1995
-------------------------- and Chief Financial )
James B. Little Officer (Principal )
Financial and )
Accounting Officer) )
)
)
Directors: )
)
James F. Carlin* Director )
-------------------------- )
James F. Carlin )
)
William H. Cunningham* Director )
-------------------------- )
William H. Cunningham )
)
)
Charles L. Ladner* Director )
-------------------------- )
Charles L. Ladner )

- 5 -
<PAGE> 225

)
)
Leo E. Linbeck, Jr.* Director )
-------------------------- )
Leo E. Linbeck, Jr. )
)
)
Patricia P. McCarter* Director )
-------------------------- )
Patricia P. McCarter )
)
)
Steven R. Pruchansky* Director )
__________________________ )
Steven R. Pruchansky )
)
)
Norman H. Smith* Director )
-------------------------- )
Norman H. Smith )
)
)
John P. Toolan* Director )
-------------------------- )
John P. Toolan )
)
)
______________

*By:/s/Thomas H. Drohan August 29, 1995
----------------------
Thomas H. Drohan,
Attorney-in-fact

- 6 -

<PAGE> 226

EXHIBIT INDEX

The following exhibits are filed as part of this Registration Statement.

EXHIBIT NO. DESCRIPTION

4. Form of Agreement and Plan of Reorganization between the
Registrant, on behalf of John Hancock Money Market Fund,
and John Hancock Cash Management Fund (filed as Exhibit B to
Part A of this Registration Statement).

11. Opinion as to legality of shares, and consent.

12. Form of opinion as to tax matters, and consent.

14. Consent of Ernst & Young LLP regarding the audited financial
statements and highlights of John Hancock Money Market Fund and
John Hancock Cash Management Fund.

17. Declaration of the Registrant pursuant to Rule 24f-2 under the
Investment Company Act of 1940.

18. Prospectus of John Hancock Cash Management Fund dated February 1,
1995.

- 7 -

<PAGE> 1
EXHIBIT 11

PIPER & MARBURY
L.L.P.

CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET

BALTIMORE, MARYLAND 21201-3018

410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
LONDON
EASTON, MD

September 6, 1995

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: John Hancock Series, Inc. - John Hancock Money Market Fund B
------------------------------------------------------------

Dear Sirs:

We have acted as Maryland counsel to John Hancock Series, Inc., a
Maryland corporation (the "Company"), in connection with the Company's
Registration Statement on Form N-14, including all amendments or supplements
thereto, filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act"), and the issuance of shares of Class A
Common Stock of the John Hancock Money Market Fund B, a series of the Company
(the "Shares"), pursuant to such Registration Statement. The Registration
Statement relates to a reorganization involving the John Hancock Money Market
Fund B series of the Company.

In this capacity, we have examined the Company's charter and by-laws,
a draft of an Agreement and Plan of Reorganization by and between John Hancock
Series, Inc., on behalf of John Hancock Money Market Fund B, and John Hancock
Cash Management Fund, a Massachusetts business trust, pursuant to which the
Shares will be issued, the proceedings of the Board of Directors of the Company
relating to the issuance of the Shares and such other statutes, certificates,
instruments and documents relating to the Company and matters of law as we
have deemed necessary to the issuance of this opinion. In such examination, we
have assumed the genuineness of all signatures, the conformity of final
documents in all material respects to the versions thereof submitted to us in
draft form, the authenticity of all documents submitted to us as originals, and
the conformity with originals of all documents submitted to us as copies.

Based upon the foregoing, and limited in all respects to applicable
Maryland law, we are of the opinion and advise you that:

<PAGE> 2
Securities and Exchange Commission
September 6, 1995
Page 2

1. The Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Maryland.

2. The Shares to be issued by the Company pursuant to the
Registration Statement have been duly authorized and, when issued as
contemplated in the Registration Statement, will be validly issued, fully paid
and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission thereunder.

Very truly yours,

/s/ Piper & Marbury L.L.P.

<PAGE> 1
EXHIBIT 12

________________ , 1995

Board of Trustees
John Hancock Cash Management Fund
101 Huntington Avenue
Boston, Massachusetts 02199

Board of Directors
John Hancock Series, Inc., on behalf of
John Hancock Money Market Fund
101 Huntington Avenue
Boston, Massachusetts 02199

Dear Members of the Board of Trustees and the Board of Directors:

You have requested our opinion regarding the federal income
tax consequences of the acquisition by John Hancock Money Market
Fund ("Acquiring Fund"), a series of John Hancock Series, Inc.
(the "Company"), of all of the assets of John Hancock Cash
Management Fund ("Acquired Fund"), a Massachusetts business trust,
in exchange solely for (i) the assumption by Acquiring Fund of all
of the liabilities of Acquired Fund and (ii) the issuance of
Class A shares of voting common stock of Acquiring Fund (the
"Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of
the Acquiring Fund Shares to the shareholders of Acquired Fund and
the termination of Acquired Fund (the foregoing together
constituting the "reorganization" or the "transaction").

In rendering this opinion, we have examined and relied upon
(i) the prospectus for Acquired Fund, dated February 1, 1995, (ii)
the statement of additional information for Acquired Fund, dated
February 1, 1995, (iii) the prospectus for the Class A and Class B
shares of Acquiring Fund, dated September 12, 1995, (iv) the
statement of additional information for the Class A and Class B
shares of Acquiring Fund, dated September 12, 1995, (v) the
registration statement on Form N-14 of the Company relating to the
transaction (the "Registration Statement") filed with the
Securities and Exchange Commission (the "SEC") on September ___,
<PAGE> 2

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 2

1995, (vi) the proxy statement and prospectus relating to the
transaction dated October 5, 1995 (the "Proxy Statement"), (vii)
the Agreement and Plan of Reorganization, made October 5, 1995,
between the Company, on behalf of Acquiring Fund, and Acquired
Fund (the "Agreement"), (viii) the representation letters on
behalf of Acquiring Fund and Acquired Fund referred to below and
(ix) such other documents as we deemed appropriate. We have
assumed that all parties to the Agreement have acted and will act
in accordance with the terms of the Agreement and all other
documents relating to the transaction.

The conclusions expressed herein represent our judgment
regarding the proper treatment of Acquiring Fund, Acquired Fund
and the shareholders of Acquired Fund on the basis of our analysis
of the Internal Revenue Code of 1986, as amended (the "Code"),
case law, Treasury regulations and the rulings and other
pronouncements of the Internal Revenue Service (the "Service")
which exist at the time this opinion is rendered, all of which are
subject to prospective or retroactive change. Our opinion
represents our best judgment regarding the issues presented and is
not binding upon the Service or any court. Moreover, our opinion
does not provide any assurance that a position taken in reliance
on such opinion will not be challenged by the Service and does not
constitute any representation or warranty that such position, if
so challenged, will not be rejected by a court.

FACTS
-----

Acquiring Fund is a series of a corporation, the Company,
which was established under the laws of Maryland in 1987 and is
registered as an open-end investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Company has
several separate series and may create additional series in the
future. Each series of the Company has separate assets and
liabilities from those of each other series. Each such series is
treated as a separate corporation and regulated investment company
pursuant to Section 851(h) of the Code.

Acquiring Fund commenced operations on October 26, 1987. The
investment objective of Acquiring Fund is to provide maximum
current income, consistent with capital preservation and
liquidity. Acquiring Fund invests in money market instruments
denominated in U.S. dollars including, but not limited to, U.S.
Government, municipal, and foreign governmental securities;
obligations of supranational organizations (e.g., the World Bank
and the International Monetary Fund); obligations of U.S. and
foreign banks and other lending institutions; corporate
obligations; and repurchase or reverse repurchase agreements.
<PAGE> 3

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 3

Acquiring Fund seeks to maintain a constant net asset value per
share equal to $1.00.

Acquired Fund is a business trust which was established under
the laws of The Commonwealth of Massachusetts in 1979 and is
registered as an open-end investment company under the 1940 Act.
Acquired Fund has operated as an investment company since its
inception.

Acquired Fund's investment objective is the same as that of
Acquiring Fund. Acquired Fund invests in high quality, U.S.
dollar-denominated instruments of U.S. and foreign issuers,
including U.S. Government securities, bank investments (e.g.,
certain certificates of deposit and bankers' acceptances),
commercial paper, corporate obligations, repurchase agreements and
time deposits. Acquired Fund also seeks to maintain a constant
net asset value per share equal to $1.00.

The steps comprising the reorganization, as set forth in the
Agreement, are as follows:

(i) Acquired Fund will transfer to Acquiring Fund all
of its assets (consisting, without limitation, of portfolio
securities and instruments, dividend and interest receivables,
cash and other assets). In exchange for the assets transferred to
it, Acquiring Fund will (A) assume all of the liabilities of
Acquired Fund (comprising all of its known and unknown liabilities
and referred to hereinafter as the "Acquired Fund Liabilities")
and (B) issue Acquiring Fund Shares to Acquired Fund that have an
aggregate net asset value equal to the value of the assets
transferred to Acquiring Fund by Acquired Fund, less the value of
the Acquired Fund Liabilities assumed by Acquiring Fund.

(ii) Promptly after the transfer of its assets to
Acquiring Fund, Acquired Fund will distribute in liquidation the
Acquiring Fund Shares it receives in the exchange to Acquired Fund
shareholders pro rata in exchange for their surrender of their
shares of Acquired Fund ("Acquired Fund Shares").

(iii) After such exchanges, liquidation and distribution,
the existence of Acquired Fund will be promptly terminated in
accordance with Massachusetts law.

The Agreement and the transactions contemplated thereby were
approved by the Board of Directors of the Company at a meeting
held on September 11, 1995. The Company's shareholders are not
required and were not asked to approve the transaction. The
Agreement and the transactions contemplated thereby were approved
<PAGE> 4

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 4

by the Board of Trustees of Acquired Fund at a meeting held on
August 28, 1995, subject to the approval of the shareholders of
Acquired Fund. Acquired Fund shareholders approved the
transaction at a meeting held on November 15, 1995.

Massachusetts law does not provide dissenters' rights for
Acquired Fund shareholders in the transaction. Additionally, it
is the position of the Division of Investment Management of the
SEC that appraisal rights, in contexts such as the reorganization,
are inconsistent with Rule 22c-1 under the 1940 Act and are
therefore preempted and invalidated by such rule. Consequently,
Acquired Fund shareholders will not have dissenters' or appraisal
rights in the transaction.

Our opinions set forth below are subject to the following
factual assumptions being true on the date the transaction is
consummated, i.e., the date of this opinion letter. Authorized
representatives of Acquiring Fund and Acquired Fund have
represented to us by letters of even date herewith that the
following assumptions are true on this date:

(a) Acquiring Fund has no plan or intention to redeem or
otherwise reacquire any of the Acquiring Fund Shares received by
shareholders of Acquired Fund in the transaction except in
connection with its legal obligation under Section 22(e) of the
1940 Act as a registered open-end investment company to redeem its
own shares.

(b) After the transaction, Acquiring Fund will continue the
historic business of Acquired Fund and will use all of the assets
acquired from Acquired Fund in the ordinary course of a business.

(c) Acquiring Fund has no plan or intention to sell or
otherwise dispose of any assets of Acquired Fund acquired in the
transaction, except for dispositions made in the ordinary course
of its business or to maintain its qualification as a regulated
investment company under Subchapter M of the Code.

(d) The shareholders of Acquiring Fund and the shareholders
of Acquired Fund will bear their respective expenses, if any, in
connection with the transaction.

(e) Acquiring Fund and Acquired Fund will each bear its own
expenses incurred in connection with the transaction. Any
liabilities of Acquired Fund attributable to such expenses that
remain unpaid on the closing date of the transaction and are
assumed by Acquiring Fund in the transaction are attributable to
Acquired Fund's expenses that are solely and directly related to
<PAGE> 5

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 5

the transaction in accordance with the guidelines established in
Rev. Rul. 73-54, 1973-1 C.B. 187.

(f) There is no indebtedness between Acquiring Fund and
Acquired Fund.

(g) Acquired Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified
as a regulated investment company for each taxable year since its
inception, and qualifies as such for its final taxable year ending
on the closing date of the transaction.

(h) Acquiring Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified
as a regulated investment company for each taxable year since its
inception, and qualifies as such as of the date of the
transaction.

(i) Neither Acquiring Fund nor Acquired Fund is under the
jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.

(j) Acquiring Fund does not own and since its inception has
not owned, directly or indirectly, any shares of Acquired Fund.

(k) Acquiring Fund will not pay cash in lieu of fractional
shares in connection with the transaction.

(l) As of the date of the transaction, the fair market value
of the Acquiring Fund Shares issued to Acquired Fund in exchange
for the assets of Acquired Fund is approximately equal to the fair
market value of the assets of Acquired Fund received by Acquiring
Fund, minus the value of the Acquired Fund Liabilities assumed by
Acquiring Fund.

(m) Acquired Fund shareholders will be in control (within
the meaning of Sections 368(a)(2)(H) and 304(c) of the Code, which
provide that control means the ownership of shares possessing at
least 50% of the total combined voting power of all classes of
shares that are entitled to vote or at least 50% of the total
value of shares of all classes) of Acquiring Fund after the
transaction, and to the best knowledge of management of Acquired
Fund, there is no intention on the part of any shareholders of
Acquired Fund to redeem, sell, exchange, or otherwise dispose of a
number of the shares of Acquiring Fund received in the transaction
that would affect the retention of control of Acquiring Fund by
former shareholders of Acquired Fund after consummation of the
transaction.
<PAGE> 6

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 6

(n) At the time of the transaction, Acquiring Fund does not
have outstanding any warrants, options, convertible securities, or
any other type of right pursuant to which any person could acquire
shares of Acquiring Fund that, if exercised or converted, would
affect the acquisition or retention of control (within the meaning
of Sections 368(a)(2)(H) and 304(c) of the Code) of Acquiring Fund
by the shareholders of Acquired Fund.

(o) The principal business purposes of the transaction are
to combine the assets of Acquiring Fund and Acquired Fund in order
to eliminate the adverse effects on Acquired Fund of an
anticipated preference by current and potential investors for
Acquiring Fund resulting from Acquiring Fund's more modern and
more effective distribution structure and to increase diversification.

(p) As of the date of the transaction, the fair market value
of the Acquiring Fund Shares received by each holder of Acquired
Fund Shares is approximately equal to the fair market value of the
Acquired Fund Shares surrendered by such shareholder.

(q) There is no plan or intention on the part of any
shareholder of Acquired Fund that owns beneficially 5% or more of
the Acquired Fund Shares and, to the best knowledge of management
of Acquired Fund, there is no plan or intention on the part of the
remaining shareholders of Acquired Fund to sell, redeem, exchange
or otherwise dispose of a number of the Acquiring Fund Shares
received in the transaction that would reduce the aggregate
ownership of the Acquiring Fund Shares by former Acquired Fund
shareholders to a number of shares having a value, as of the date
of the transaction, of less than fifty percent (50%) of the value
of all of the formerly outstanding Acquired Fund Shares as of the
same date. Shares of Acquired Fund and Acquiring Fund held by
Acquired Fund shareholders and sold, redeemed, exchanged or
disposed of prior or subsequent to the transaction as part of the
plan of reorganization are taken into account for purposes of this
representation.

(r) Acquired Fund assets transferred to Acquiring Fund
comprise at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair
market value of the gross assets held by Acquired Fund immediately
prior to the transaction. For purposes of this representation,
amounts used by Acquired Fund to pay its outstanding liabilities,
including reorganization expenses, and all redemptions and
distributions (except for redemptions in the ordinary course of
business upon demand of a shareholder that Acquired Fund is
required to make as an open-end investment company pursuant to
<PAGE> 7

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 7

Section 22(e) of the 1940 Act and regular, normal dividends, which
dividends include any final distribution of previously
undistributed investment company taxable income and net capital
gain for Acquired Fund's final taxable year ending on the closing
date of the transaction) made by Acquired Fund immediately
preceding the transaction are taken into account as assets of
Acquired Fund held immediately prior to the transaction.

(s) The Acquired Fund Liabilities assumed by Acquiring Fund
plus the liabilities, if any, to which the transferred assets are
subject were incurred by Acquired Fund in the ordinary course of
its business or are expenses of the transaction.

(t) The fair market value of the Acquired Fund assets
transferred to Acquiring Fund equals or exceeds the sum of the
Acquired Fund Liabilities assumed by Acquiring Fund and the amount
of liabilities, if any, to which the transferred assets are
subject.

(u) The total adjusted basis of the Acquired Fund assets
transferred to Acquiring Fund equals or exceeds the sum of the
Acquired Fund Liabilities assumed by Acquiring Fund and the amount
of liabilities, if any, to which the transferred assets are
subject.

(v) Acquired Fund does not pay compensation to any
shareholder-employee.

(w) Acquired Fund has no outstanding warrants, options,
convertible securities or any other type of right pursuant to
which any person could acquire Acquired Fund Shares.

OPINION
-------

On the basis of and subject to the foregoing and in reliance
upon the representations described above, we are of the opinion
that

(a) The acquisition by Acquiring Fund of all of the assets
of Acquired Fund solely in exchange for the issuance of Acquiring
Fund Shares to Acquired Fund and the assumption of all of the
Acquired Fund Liabilities by Acquiring Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of
Acquiring Fund Shares to Acquired Fund shareholders in exchange
for their Acquired Fund Shares and the termination of Acquired
Fund, will constitute a "reorganization" within the meaning of
Section 368(a)(1)(D) of the Code. Acquiring Fund and Acquired
<PAGE> 8

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 8

Fund will each be "a party to a reorganization" within the meaning
of Section 368(b) of the Code.

(b) No gain or loss will be recognized by Acquired Fund upon
(i) the transfer of all of its assets to Acquiring Fund solely in
exchange for the issuance of Acquiring Fund Shares to Acquired
Fund and the assumption of all of the Acquired Fund Liabilities by
Acquiring Fund and (ii) the distribution by Acquired Fund of such
Acquiring Fund Shares to the shareholders of Acquired Fund
(Sections 361(a) and 361(c) of the Code).

(c) No gain or loss will be recognized by Acquiring Fund
upon the receipt of the assets of Acquired Fund solely in exchange
for the issuance of Acquiring Fund Shares to Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by Acquiring
Fund (Section 1032(a) of the Code).

(d) The basis of the assets of Acquired Fund acquired by
Acquiring Fund will be, in each instance, the same as the basis of
such assets in the hands of Acquired Fund immediately prior to the
transfer (Section 362(b) of the Code).

(e) The tax holding period of the assets of Acquired Fund in
the hands of Acquiring Fund will, in each instance, include
Acquired Fund's tax holding period for those assets (Section
1223(2) of the Code).

(f) The shareholders of Acquired Fund will not recognize
gain or loss upon the exchange of all of their Acquired Fund
Shares solely for Acquiring Fund Shares as part of the transaction
(Section 354(a)(l) of the Code).

(g) The basis of the Acquiring Fund Shares received by the
Acquired Fund shareholders in the transaction will be the same as
the basis of the Acquired Fund Shares surrendered in exchange
therefor (Section 358(a)(1) of the Code).

(h) The tax holding period of the Acquiring Fund Shares
received by Acquired Fund shareholders will include, for each
shareholder, the tax holding period for the Acquired Fund Shares
surrendered in exchange therefor, provided the Acquired Fund
Shares were held as capital assets on the date of the exchange
(Section 1223(1) of the Code).

No opinion is expressed or implied regarding the federal
income tax consequences to Acquiring Fund, Acquired Fund or
<PAGE> 9

Board of Trustees and Board of Directors
John Hancock Cash Management Fund and
John Hancock Series, Inc.
_______________ , 1995
Page 9

Acquired Fund shareholders of any conditions existing at the time
of, effects resulting from, or other aspects of the transaction
except as expressly set forth above.

Very truly yours,

Hale and Dorr

<PAGE> 1
EXHIBIT 14

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Experts" in the
Proxy Statement and Prospectus of John Hancock Series, Inc., "The Fund's
Financial Highlights" in the Class A and Class B Shares Prospectus dated
September 12, 1995 of John Hancock Money Market Fund, "Independent Auditors" in
the Statement of Additional Information dated September 12, 1995 of John
Hancock Money Market Fund, "Independent Auditors" in the Statement of
Additional Information dated February 1, 1995 of John Hancock Cash Management
Fund and "The Fund's Financial Highlights" in the Prospectus of John Hancock
Cash Management Fund dated February 1, 1995, and to the use, in this
Registration Statement (Form N-14) dated September 7, 1995, of our report on
the financial statements and financial highlights of John Hancock Cash
Management Fund dated October 28, 1994 and our report on the financial
statements and financial highlights of John Hancock Money Market Fund B, a
series of John Hancock Series, Inc. dated December 2, 1994.

ERNST & YOUNG LLP

Boston, Massachusetts
September 7, 1995

<PAGE> 1

EXHIBIT 17
Registration No. 33-16048
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________

FORM N-1A

REGISTRATION STATEMENT UNDER / X /

THE SECURITIES AT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 1 / X /

and

REGISTRATION STATEMENT UNDER

THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 1
(Check appropriate box or boxes)
________________

CRITERION SPECIAL SERIES, INC.
(Exact name of registrant as specified in charter)

1000 Louisiana
Houston, Texas 77002
(Address of principal executive offices)
Registrant's Telephone Number -- (713) 751-2400

Thomas R. Powers
1000 Louisiana
Houston, Texas 77002
(Name and Address of Agent for Service)

Copies to:

John W. Belash, Esq. Robert L. Stillwell, Esq.
Gordon Hurwitz Butowsky Weitzen Baker & Bots
Shalov & Wein 3000 One Shell Plaza
101 Park Avenue Suite 3121
New York, NY 10178 Houston, Texas 77002

Approximate date of commencement of proposed public offering:
as soon as practicable after the effective date of this
Registration Statement.

It is proposed that this filing will be come effective:
60 days after filing pursuant to paragraph (c).
________________

Registrant has registered, pursuant to Rule 24f-2(a)(1) under the
Investment Company Act of 1940, an indefinite number of shares under the
Securities Act of 1933, and will file a rule 24f-2 Notice by December 31, 1987
for its fiscal year ending October 31, 1987.

<PAGE> 1
EXHIBIT 99.18

JOHN HANCOCK
CASH
MANAGEMENT
FUND

PROSPECTUS
FEBRUARY 1, 1995
<TABLE>
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
--
<S> <C>
Expense Information .................................................... 2
The Fund's Financial Highlights ........................................ 3
Investment Objective and Policies ...................................... 4
Organization and Management of the Fund ................................ 6
The Fund's Expenses .................................................... 6
Dividends and Taxes .................................................... 7
How to Buy Shares ...................................................... 8
Share Price ............................................................ 9
How to Redeem Shares ................................................... 9
Additional Services and Programs ....................................... 12
</TABLE>

This Prospectus sets forth information about John Hancock Cash Management
Fund (the "Fund") that you should know before investing. Please read and retain
it for future reference.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.

Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated February 1, 1995, and incorporated by reference
into this Prospectus, free of charge upon request by writing or telephoning:
John Hancock Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts
02205-9116, 1-800-225-5291, (1-800-554-6713 TDD).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 2

EXPENSE INFORMATION
The purpose of the following information is to help you to understand the
various fees and expenses you will bear directly or indirectly when you purchase
shares of the Fund. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Fund's fiscal
year ended September 30, 1994, adjusted to reflect current fees and expenses.
Actual fees and expenses may be greater or less than those shown.

<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum sales charge imposed on purchases (as a percentage of offering price) .......................... None
Maximum sales charge imposed on reinvested dividends (as a percentage of offering price) ............... None
Redemption fees (as a percentage of amount redeemed, if applicable) .................................... None
Exchange fee ........................................................................................... None

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fees .......................................................................................... 0.40%
12b-1 fees ............................................................................................... 0.00%
Other expenses ........................................................................................... 0.51%
-----
Total Fund operating expenses ............................................................................ 0.91%
<FN>
- ---------
*Redemption by wire fee of (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated
period of years on a hypothetical $1,000 investment,
assuming 5% annual return: ........................... $9 $29 $50 $112
<FN>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)
</TABLE>

The management fees referred to above are more fully explained in this
Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the caption "Investment Advisory and Other
Services."
<PAGE> 3
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS

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

Selected data for each Fund share outstanding throughout the year indicated:

<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net Asset Value,
Beginning of Year ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Investment
Income .......... 0.03 0.02 0.04 0.06 0.08 0.08 0.06 0.05 0.07 0.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from
Net Investment
Income (0.03) (0.02) (0.04) (0.06) (0.08) (0.08) (0.06) (0.05) (0.07) (0.08)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Investment
Return at Net Asset
Value ............ 2.95% 2.47% 3.77% 6.23% 7.87% 8.55% 6.57% 5.49% 6.72% 8.21%

RATIOS AND SUPPLEMENTAL DATA
Net Assets,
End of Year
(000's omitted) $223,899 $183,709 $201,900 $250,847 $281,213 $274,086 $248,913 $259,193 $309,885 $365,683
Ratio of Expenses
to Average Net
Assets............. 0.95% 0.98% 0.95% 0.90% 0.88% 0.88% 0.98% 0.98% 0.88% 0.98%
Ratio of Net
Investment Income
to Average Net
Assets .......... 2.94% 2.45% 3.75% 6.08% 7.51% 8.31% 6.38% 5.34% 6.54% 7.94%
</TABLE>

YIELD INFORMATION
For the seven days ended September 30, 1994, the Fund's annualized yield and
effective yield were 3.94% and 3.99%, respectively. On September 30, 1994, the
Fund's average portfolio maturity was 31 days.

Current information on the Fund's annualized yield during a recent seven-day
period may be obtained by calling the Easi-Line at 1-800-338-8080 or a customer
service representative, 1-800-225-5291.

For information on how the Fund calculates its annualized yield see the
Statement of Additional Information.
<PAGE> 4

INVESTMENT OBJECTIVE AND POLICIES

THE FUND SEEKS MAXIMUM CURRENT INCOME, CONSISTENT WITH CAPITAL PRESERVATION AND
LIQUIDITY.

The Fund's investment objective is to provide maximum current income, consistent
with capital preservation and liquidity. The Fund's investments will be subject
to the market fluctuations and risks inherent in all securities, and there is no
assurance that the investment objective will always be achieved.

ALL OF THE FUND'S INVESTMENTS ARE HIGH QUALITY MONEY MARKET INSTRUMENTS.

The types of securities in which the Fund invests include the following types
of high quality, U.S. dollar-denominated instruments of U.S. and foreign
issuers:

Government Securities--These are obligations issued or guaranteed as to
principal or interest by the issuing government, or its agency, authority or
instrumentality.

Bank Investments--These include certificates of deposit and bankers acceptances
of United States banks and savings and loan associations which at the date of
the investment have capital, surplus and undivided profits (as of the date of
their most recent published financial statements) in excess of $100,000,000,
including U.S. dollar denominated obligations of foreign branches of United
States banks; United States and foreign branches or agencies of foreign banks
and certificates of deposit of such banks and savings and loan associations
regardless of size, provided that the amount of the deposit does not exceed
$100,000 for any one bank or savings and loan association and that the payment
of the principal is insured by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation.

Commercial Paper and Corporate Obligations--These include notes and bonds issued
by corporations to finance their credit needs.

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

Time Deposits--These are non-negotiable bank deposits maintained for up to seven
days at a stated interest rate. Time deposits may be withdrawn on demand,
although early withdrawals may be subject to penalties.

THE FUND INVESTS ONLY IN HIGH-QUALITY SECURITIES BELIEVED TO PRESENT MINIMAL
CREDIT RISKS, UNDER PROCEDURES ADOPTED BY THE TRUSTEES.

At the time the Fund acquires its investments, they will be rated (or issued by
an issuer that is rated with respect to a comparable class of short-term debt
obligations in one of the two highest rating categories for short-term debt
obligations assigned by at least two of the following rating organizations (or
one rating organization if the obligation was rated by only one such
organization): Duff and Phelps, Inc. ("D&P"), Fitch Investors Services, Inc.
("Fitch"), Moody's Investors Service Inc. ("Moody's"), Standard & Poor's Ratings
Group ("S&P"), IBCA Limited and IBCA Inc. ("IBCA"), and Thompson Bankwatch
("Bankwatch"). These high quality securities are divided into "first tier" and
"second tier" securities. First tier securities have received the highest rating
from at least two rating organizations (or one, if only one has rated the
security). Second tier securities have received ratings within the two highest
categories from at least two rating agencies (or one, if only one has rated the
security), but do not qualify as first tier securities. The Fund may also
purchase obligations which are not rated, but are determined by the Fund's
adviser, based on procedures adopted by the Fund's Trustees, to be of comparable
quality to rated first or second tier securities. The Fund may not purchase any
second tier security if, as a result of its purchase (a) more than 5% of its
total assets would be invested in second tier securities or (b) more than 1% of
its total assets or $1 million (whichever is greater) would be invested in the
second tier securities of a single issuer. For a description of the ratings
assigned by the rating organizations, see the Statement of Additional
Information.
<PAGE> 5
RESTRICTED SECURITIES. The Fund may purchase restricted securities, which can be
offered and sold to "qualified institutional buyers" under Rule 144A under the
Securities Act of 1933 (the "Securities Act"). These purchases are subject to an
investment restriction limiting all illiquid securities held by the Fund to not
more than 10% of the Fund's net assets. The Trustees will carefully monitor the
Fund's investments in Rule 144A securities, focusing on certain factors,
including valuation, liquidity and availability of information. Investing in
Rule 144A securities could have the effect of reducing the level of liquidity in
the Fund, to the extent that qualified institutional buyers lose interest in
purchasing these securities for a time.

BY LIMITING THE MATURITY OF ITS INVESTMENTS, THE FUND SEEKS TO LESSEN THE
CHANGES IN THE VALUE OF ITS ASSETS CAUSED BY MARKET FACTORS.

All of the Fund's investments will mature in 397 days or less. The Fund will
maintain an average dollar weighted portfolio maturity of 90 days or less.

The Fund may use short-term trading of securities as a means of furthering its
investment objective. 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 changes in interest rates
or other economic trends and developments, or to take advantage of yield
disparities between various fixed-income securities in order to realize capital
gains or improve income.

THE FUND'S DOLLAR-DENOMINATED INVESTMENTS IN FOREIGN SECURITIES MAY INVOLVE
GREATER OPPORTUNITY FOR INCOME BUT A HIGHER DEGREE OF RISK.

SECURITIES OF FOREIGN ISSUERS. Although the Fund's adviser carefully considers
the following factors when making investments, the Fund does not limit the
amount of its assets which can be invested in any one type of instrument or in
any foreign country. Foreign issuers may not be subject to accounting standards
and government supervision comparable to U.S. companies and there is often less
publicly available information about their operations. Foreign markets generally
provide less liquidity than U.S. markets (and thus potentially greater price
volatility), and typically provide fewer regulatory protections for investors.
Foreign securities can also be affected by political or financial instability
abroad. Foreign branches of United States banks may be subject to less stringent
reserve requirements than domestic branches. United States branches and agencies
of foreign banks and foreign branches of United States banks may provide less
public information than, and may not be subject to the same accounting, auditing
and financial record-keeping standards as domestic banks.

THE FUND FOLLOWS CERTAIN OTHER POLICIES THAT MAY HELP REDUCE INVESTMENT RISK.

The Fund's investment objective and certain of its investment restrictions
(which are identified in the Statement of Additional Information) are
fundamental and may not be changed without shareholder approval. All other
investment policies and restrictions are not fundamental and may be changed by
the Fund's Trustees without shareholder approval.

BROKERS ARE CHOSEN ON BEST PRICE AND EXECUTION.

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

ORGANIZATION AND MANAGEMENT OF THE FUND

THE TRUSTEES ELECT OFFICERS AND RETAIN THE INVESTMENT ADVISER WHO IS RESPONSIBLE
FOR THE DAY-TO-DAY OPERATIONS OF THE FUND, SUBJECT TO THE TRUSTEES' POLICIES AND
SUPERVISION.

The Fund is a diversified open-end investment management company organized as a
Massachusetts business trust in 1979. The Fund has an unlimited number of
authorized shares of beneficial interest, all of which are of one class and have
equal rights as to voting, redemption, dividends, and liquidation. Shareholders
<PAGE> 6
have certain voting rights to remove Trustees. The Fund is not required and does
not intend to hold annual shareholder meetings, although special meetings may be
held for such purposes as electing or removing Trustees, changing fundamental
investment restrictions and policies or approving a management contract.

JOHN HANCOCK ADVISERS, INC. ADVISES MUTUAL FUNDS HAVING A TOTAL VALUE OF
APPROXIMATELY $13 BILLION.

The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Insurance Company, a financial services company. It provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds") distributes shares for all of the John Hancock mutual
funds through selected broker-dealers ("Selling Brokers"). Certain Fund officers
are also officers of the Adviser and John Hancock Funds.

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

THE FUND'S EXPENSES

FOR THE 1994 FISCAL YEAR, THE ADVISER'S TOTAL FEE WAS 0.40% OF THE FUND'S
AVERAGE DAILY NET ASSET VALUE.

For managing its investments and business affairs, the Fund pays a fee to the
Adviser which is based on a stated percentage of the Fund's average daily net
asset value.

The Fund may pay distribution expenses to reimburse John Hancock Funds for
marketing and sales-related shareholder servicing. The Fund has adopted a
distribution plan (the "Plan") under Rule 12b-1 under the Investment Company Act
of 1940. Under the Plan, John Hancock Funds may receive a sales fee and a
service fee equal to a maximum annual rate of 0.10% and 0.05%, respectively, of
the average daily net asset value of the Fund. Payment of both fees has been
indefinitely suspended since 1983.

The Fund's total expenses for the year ended September 30, 1994, were 0.95% of
average daily net asset value.

DIVIDENDS AND TAXES
Dividends from the Fund's net investment income are declared daily and paid
monthly. You will begin earning income on the day following receipt in good
order by State Street Bank of payment for Fund shares. Dividends are reinvested
in additional shares unless you elect the option to receive them in cash. If you
elect the cash option and the U.S. Postal Service cannot deliver your checks,
your election will be converted to the reinvestment option.

TAXATION. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income. These dividends are taxable
whether you take them in cash or reinvest in additional shares. The Fund does
not expect to realize any long-term capital gains. Certain dividends may be paid
in January of a given year, but they may be taxable to you as if you received
them the previous December 31. The Fund will send you a statement by January 31
showing the tax status of the dividends you received for the prior year.

The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to Federal income taxes on any net investment income and net realized
capital gains that are distributed to its shareholders at least annually. On the
account application, you must certify that the social security or other taxpayer
identification number you provide is your correct number and that you are not
subject to back-up withholding of Federal income tax. If you do not provide this
information or are otherwise subject to this withholding, the Fund may be
required to withhold 31% of your dividends.

In addition to Federal taxes, you may be subject to state, local or foreign
taxes, with respect to your investment in and distributions from the Fund. In
<PAGE> 7
many states, any portion of the Fund's dividends that represents interest
received by the Fund on direct U.S. Government obligations is exempt from income
tax. You should consult your tax adviser for specific advice.

HOW TO BUY SHARES
- ------------------------------------------------------------------------------

OPENING AN ACCOUNT.

The minimum initial investment is $1,500 ($250 for group investments or $500
for retirement plans). Complete the application attached to this Prospectus.
- ------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor
Services Corporation ("Investor Services").
2. Deliver the completed application and check to
your registered representative or Selling Broker,
or mail it directly to Investor Services.
- ------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your
registered representative or Selling Broker, or
by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Cash Management Fund
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your
registered representative or Selling Broker, or
mail it directly to Investor Services.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES.

MONTHLY AUTOMATIC 1. Complete the "Automatic Investing" and "Bank
ACCUMULATION Information" sectionsAccount Privileges
PROGRAM (MAAP) Application designating a bank account from which
funds may be drawn.
2. The amount you elect to invest will be
automatically withdrawn from your bank or credit
union account.
- ------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank
Information" section on the Account Privileges
Application designating a bank account from which
funds may be drawn. Note that in order to invest
by phone, your account must be in a bank or
credit union that is a member of the Automated
Clearing House System (ACH).
2. After your authorization form has been processed,
you may purchase additional shares by calling
Investor Services toll-free at 1-800-225-5291.
3. Give the Investor Services representative the
name(s) in which your account is registered, the
Fund name and account number and the amount you
wish to invest.
4. Your investment normally will be credited to your
account the business day following your phone
request.
- ------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included in
your account statement or include note with your
investment listing the name of the Fund, your
account number and the name(s) in which the
account is registered.
2. Make your check payable to John Hancock Investor
Services Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
<PAGE> 8
or deliver it to your registered representative
or Selling Broker.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Cash Management Fund
Your Account Number
Name(s) under which account is registered
- ------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Wire purchases normally take two or more
hours to complete and, to be accepted the same day, must be received by 4:00
p.m., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued.
- ------------------------------------------------------------------------------

YOU WILL RECEIVE STATEMENTS REGARDING YOUR ACCOUNT WHICH YOU SHOULD KEEP TO HELP
WITH YOUR PERSONAL RECORDKEEPING.

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

SHARE PRICE

THE OFFERING PRICE OF YOUR SHARES IS THEIR NET ASSET VALUE WHICH WILL NORMALLY
BE CONSTANT AT $1.00.

The net asset value ("NAV") is the value of one share. The NAV per share is
calculated by dividing the net assets of the Fund by the number of outstanding
shares. The NAV is calculated once daily as of the close of regular trading of
the New York Stock Exchange (generally at 4:00 p.m., New York time) on each day
that the Exchange is open.

The Fund uses the amortized cost method of valuing portfolio instruments. Under
amortized cost valuation, assets are valued by amortizing daily over the
remaining life of an instrument the difference between the principal amount due
at maturity and the cost of the instrument to the Fund. There is no assurance
that the Fund can maintain the $1.00 per share net asset value.

The price you pay for shares of the Fund equals the NAV computed after your
investment is accepted in good order by John Hancock Funds, which will normally
be constant at $1.00 per share. There is no sales charge. If you buy shares of
the Fund through a Selling Broker, the Selling Broker must receive your
investment before the close of regular trading on the New York Stock Exchange
and transmit it to John Hancock Funds prior to its close of business to receive
that day's price.

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

TO ASSURE ACCEPTANCE OF YOUR REDEMPTION REQUEST, PLEASE FOLLOW THESE PROCEDURES.

- ------------------------------------------------------------------------------
BY CHECK You may elect the checkwriting privilege which allows you to write
checks in amounts from a minimum of $100. Checks may not be written against
shares in your account which have been purchased within the last 10 days, except
<PAGE> 9
for shares purchased by wire transfer (which are immediately available).
- ------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are automatically eligible for the telephone
redemption privilege. Call 1-800-225- 5291, from 8:00 A.M. to 4:00 P.M. (New
York time), Monday through Friday, excluding days on which the New York Stock
Exchange is closed. John Hancock Funds employs the following procedures to
confirm that instructions received by telephone are genuine. Your name, the
account number, taxpayer identification number applicable to the account and
other relevant information may be requested. In addition, telephone instructions
are recorded.

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

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

Telephone redemption is not available for IRAs or other tax-qualified retirement
plans or shares of the Fund that are in certificate form. During periods of
extreme economic conditions or market changes, telephone requests may be
difficult to implement due to a large volume of calls.

During these times you should consider placing redemption requests in writing or
using EASI-Line. EASI-Line's telephone number is 1-800-338-8080.
- ------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the Fund,
redemption proceeds of $1,000 or more can be wired on the next business day to
your designated bank account, and a fee (currently $4.00) will be deducted. You
may also use electronic funds transfer to your assigned bank account, and the
funds are usually collectible after two business days. Your bank may or may not
charge a fee for this service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.

This feature may be elected by completing the "Telephone Redemption" section on
the Account Privileges Application attached to this Prospectus.
- ------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying the name of
the Fund, the dollar amount or the number of shares to be redeemed, your name,
your account number and the additional requirements listed below that apply to
your particular account.
- ------------------------------------------------------------------------------

<TABLE>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
- -------------------- -------------
Individual, Joint Tenants, A letter of instruction signed (with titles
Sole Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaranteed.

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

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

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

A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the on your request. It may not be provided by a notary public. If the
net asset value of the shares redeemed is $100,000 or less, Investor Services
may guarantee the signature. The following institutions may provide you with a
<PAGE> 10
signature guarantee, provided that any such institution meets credit standards
established by John Hancock Funds: (i) a bank; (ii) a securities broker or
dealer, including a government or municipal securities broker or dealer, that is
a member of a clearing corporation or meets certain net capital requirements;
(iii) a credit union having authority to issue signature guarantees; (iv) a
savings and loan association, a building and loan association, a cooperative
bank, a federal savings bank or association; or (v) a national securities
exchange, a registered securities exchange or a clearing agency.
- ------------------------------------------------------------------------------

<TABLE>
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.

<S> <C>
THROUGH YOUR BROKER Your broker may be able to initiate
the redemption. Contact your instructions.
</TABLE>
- ------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. You may not redeem certificated shares by
telephone.
- ------------------------------------------------------------------------------
Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 1,000 shares (except accounts under retirement plans) and to
mail the proceeds to the shareholder, or the transfer agent may impose an annual
fee of $10.00.

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

YOU MAY EXCHANGE SHARES OF THE FUND FOR SHARES IN ANOTHER JOHN HANCOCK FUND.

If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares.

Exchanges from the Fund into a John Hancock fund which carries a front end sales
charge will be subject to the sales charge described in the other fund's
Prospectus (generally, 4.5% or 5.0%). Shares of the Fund acquired by exchange of
shares of another fund on which a front-end sales charge was previously paid are
exchanged at net asset value. However, shares of the Fund acquired through an
exchange of Class B shares will continue to be subject to a contingent deferred
sales charge upon redemption. The rate of this charge will be the rate in effect
for the Class B shares at the time of exchange. Shares purchased through the
reinvestment of dividends in the Fund are exchanged at the public offering
price.

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

An exchange of shares is treated as a redemption of one fund and the purchase of
another for Federal income tax purposes. An exchange will not ordinarily result
in a gain or loss if the Fund has maintained a constant net asset value.

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

Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
<PAGE> 11
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.

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

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

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

Sign your request exactly as the account is registered.

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

SYSTEMATIC WITHDRAWAL PLAN

YOU CAN PAY ROUTINE BILLS FROM YOUR ACCOUNT OR MAKE PERIODIC DISBURSEMENTS FROM
YOUR RETIREMENT ACCOUNT TO COMPLY WITH IRS REGULATIONS.

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

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

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

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

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

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

YOU CAN MAKE AUTOMATIC INVESTMENTS AND SIMPLIFY YOUR INVESTING.

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

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

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

4. There is no charge to you for this program, and there is no cost to the
Fund.
<PAGE> 12
5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

RETIREMENT PLANS
1. You may use the Fund as a funding medium for various types of qualified
retirement plans, including Individual Retirement Accounts, Keogh Plans (H.R.
10), Pension and Profit-Sharing Plans (including 401(k) Plans), Tax Sheltered
Annuity Retirement Plans and 457 Plans.

2. The initial investment minimum or aggregate minimum for any of the above
plans is $500. However, accounts being established as group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.
<PAGE> 13

JOHN HANCOCK CASH MANAGEMENT FUND JOHN HANCOCK
INVESTMENT ADVISER CASH
John Hancock Advisers, Inc. MANAGEMENT
101 Huntington Avenue FUND
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc. PROSPECTUS
101 Huntington Avenue FEBRUARY 1, 1995
Boston, Massachusetts 02199-7603
A MONEY MARKET FUND SEEKING TO PROVIDE
CUSTODIAN MAXIMUM CURRENT INCOME CONSISTENT WITH
State Street Bank and Trust Company CAPITAL PRESERVATION AND LIQUIDITY
225 Franklin Street
Boston, Massachusetts 02110
101 HUNTINGTON AVENUE
TRANSFER AGENT BOSTON, MASSACHUSETTS 02199-7603
John Hancock Investor TELEPHONE 1-800-225-5291
Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
TDD call 1-800-225-6713

JHD-2400P 6/95 [LOGO] Printed on Recycled Paper