<PAGE>
John Hancock Discovery Fund
Supplement to Class A and Class B Prospectus dated December 1, 1994
The "Qualifying for a Reduced Sales Charge" section under SHARE PRICE is
supplemented as follows:
Effective March 15, 1995, participant directed defined contribution
plans with at least 100 eligible employees at the inception of the Fund
account may purchase Class A shares of the Fund without an initial sales
charge but if the shares are redeemed within 12 months after the end of
the calendar year in which the purchase was made, a contingent deferred
sales charge will be imposed at the rate for Class A shares described in
the prospectus.
March 15, 1995
<PAGE>
<PAGE>
JOHN HANCOCK
DISCOVERY FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
DECEMBER 1, 1994
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
--
Expense Information .................................................... 2
The Fund's Financial Highlights ........................................ 3
Investment Objective and Policies ...................................... 4
Organization and Management of the Fund ................................ 7
Alternative Purchase Arrangements ...................................... 7
The Fund's Expenses .................................................... 9
Dividends and Taxes .................................................... 10
Performance ............................................................ 10
How to Buy Shares ...................................................... 11
Share Price ............................................................ 13
How to Redeem Shares ................................................... 18
Additional Services and Programs ....................................... 20
This Prospectus sets forth information about John Hancock Discovery Fund
(the "Fund"), a series of Freedom Investment Trust III, that you should know
before investing. Please read and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated December 1, 1994, and incorporated by reference
into this Prospectus, free of charge by writing or telephoning: John Hancock
Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291, (1-800-554-6713 TDD).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
The purpose of the following information is to help you to understand the
various fees and expenses that 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 of Class A and Class B
shares of the Fund for the fiscal year ended July 31, 1994. Actual fees and
expenses may be greater or less than those indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of
offering price) ............................................... 5.00% None
Maximum sales charge imposed on reinvested dividends ............ None None
Maximum deferred sales charge ................................... None<F1> 5.00%
Redemption fee<F3> .............................................. None None
Exchange fee .................................................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fee .................................................. 1.00% 1.00%
12b-1 fee<F2> ................................................... 0.30% 1.00%
0.71% 0.67%
Other expenses .................................................. ---- ----
2.01% 2.67%
Total Fund operating expenses ................................... ==== ====
<FN>
<F1> No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed, as described under the caption "Share Price," in the
event of certain redemption transactions within one year of purchase.
<F2> The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of average daily net assets, and the remaining portion will be used
to cover distribution expenses.
<F3> 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 on a $1,000
investment, assuming a 5% annual return throughout
the periods and reinvestment of all dividends:
Class A Shares ....................................... $69 $110 $153 $272
Class B Shares
--Assuming complete redemption at end of period .... $77 $113 $161 $284
--Assuming no redemption ........................... $27 $ 83 $141 $284
</TABLE>
- ---------
(The example should not be considered as a representation of past or future
expenses or future investment returns. Actual expenses may be greater or less
than 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 Rules of Fair Practice.
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights for each of the two years in the
period ended July 31, 1994 has been audited by Ernst & Young LLP, the Fund's
independent auditors whose unqualified report is included in the Fund's 1994
Annual Report and is included in the Statement of Additional Information. The
Fund's Financial Highlights were audited by Price Waterhouse LLP for the period
ended July 31, 1992. 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,
at the address or telephone number listed on the front page of this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
-----------------------------------------------
1994 1993 1992<F2>
---- ---- -------
<S> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .............. $ 10.81 $ 8.95 $ 9.40
------- ------- -------
Net Investment Loss ............................... (0.16)<F4> (0.16) (0.05)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions ... (0.43) 2.15 (0.40)
------- ------- -------
Total from Investment Operations ............ (0.59) 1.99 (0.45)
------- ------- -------
Less Distributions:
Distributions from Net Relized Gain on
Investments Sold .............................. (1.66) (0.13) --
------- ------- -------
Net Asset Value, End of Period .................... $ 8.56 $ 10.81 $ 8.95
------- ------- -------
Total Investment Return at Net Asset Value ........ (6.45%) 22.33% (4.79%)<F3>
------- ------- -------
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) ....... $ 3,226 $ 4,692 $ 3,866
Ratio of Expenses to Average Net Assets ......... 2.01% 2.17% 1.78%<F1>
Ratio of Net Investment Loss to Average Net
Assets ........................................ (1.64%) (1.61%) (1.20%)<F1>
Portfolio Turnover Rate ......................... 108% 148% 138%
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .............. $ 10.65 $ 8.87 $ 8.00
------- ------- -------
Net Investment Loss ............................... (0.22)<F4> (0.23) (0.11)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions ... (0.43) 2.14 0.98
------- ------- -------
Total from Investment Operations ............ (0.65) 1.91 0.87
------- ------- -------
Less Distributions:
Distributions from Net Relized Gain on
Investments ................................... (1.66) (0.13) --
------- ------- -------
Net Asset Value, End of Period .................... $ 8.34 $ 10.65 $ 8.87
======= ======= =======
Total Investment Return at Net Asset Value ........ (7.18%) 21.63% 10.88%<F3>
------- ------- -------
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) ....... $26,539 $38,672 $34,636
Ratio of Expenses to Average Net Assets ......... 2.62% 2.86% 2.56%<F1>
Ratio of Net Investment Loss to Average Net
Assets ........................................ (2.24%) (2.26%) (1.56%)<F1>
Portfolio Turnover Rate ......................... 108% 148% 138%
<FN>
- ---------
<F1> On an annualized basis.
<F2> Class A and Class B shares commenced operations on January 3, 1992 and
August 30, 1991, respectively.
<F3> Not annualized.
<F4> On average month end shares outstanding.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE LONG-TERM GROWTH OF CAPITAL
THROUGH INVESTMENT PRIMARILY IN COMMON STOCKS OF SMALL TO MEDIUM-SIZED
COMPANIES.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to achieve long-term growth of capital
through investment primarily in common stocks of small to medium-sized
companies, which are believed by the Fund's managers to offer superior prospects
for growth. Any income received on the Fund's investments will be incidental to
the Fund's objective of long-term growth of capital. There are market
fluctuations and risks in any investment, and therefore there is no assurance
that the Fund will achieve its investment objective.
John Hancock Advisers, Inc. (the "Adviser") believes that small to medium-sized
companies often have earnings growth rates which exceed those of larger
companies, and that these growth rates may lead to more rapid share price
appreciation. The market valuation of these companies tends to fluctuate during
economic or market cycles, presenting attractive investment opportunities as the
cycles develop. The Adviser constantly monitors the markets looking for
companies that are creating new technologies, a unique or proprietary product or
a profitable market niche.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities, including common stock, preferred stock and
investment grade debt securities convertible into common stock (as described
below). The Fund will invest primarily in small to medium-sized companies whose
securities are traded on domestic stock exchanges or in the over-the-counter
market. Small to medium-sized companies include companies with a market
capitalization of between $50 million to $1.5 billion. The selection of
portfolio investments by the Adviser will focus on companies with broad market
opportunities and consistent or accelerating earnings growth. These companies
may be in a relatively early stage of development, but have usually established
a record of profitability and a strong financial position. They may possess a
new technology, a unique or proprietary product, or a profitable market
niche--all of which help drive strong unit volume growth, profitability and
ultimately earnings per share growth. Other desirable attributes of portfolio
investments may include participation by a company in an industrial sector with
a favorable secular growth outlook (e.g., medical/healthcare, communications,
technology, etc.), a capable management team with a significant equity stake in
its company, and financial cash flows sufficient to sustain estimated growth
rates.
The Fund may invest up to 25% of its assets in the securities of foreign
issuers, including securities in the form of sponsored or unsponsored American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs) or other
securities convertible into securities of foreign issuers. 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 which evidence a similar ownership arrangement. Issuers of
unsponsored ADRs are not contractually obligated to disclose material
information, including financial information, in the United States. Generally,
ADRs are designed for use in the United States securities markets and EDRs are
designed for use in European securities markets.
To avoid the need to sell equity securities in the portfolio to provide funds
for redemption, and to give the Fund the flexibility to take advantage of
investment opportunities, the Fund may invest up to 15% of its net assets in
short-term (less than one year) investment grade (i.e., rated at the time of
purchase AAA, AA, A or BBB by Standard & Poor's Rating Group or Aaa, Aa, A or
Baa by Moody's Investors Service, Inc.) debt securities of corporations (such as
commercial paper, notes, bonds or debentures), certificates of deposit, money
market securities, U.S. Government agency securities, or repurchase agreements
which are fully collateralized by U.S. Government obligations. When the Adviser
believes that abnormal financial conditions warrant it, up to 80% of the Fund's
assets may be temporarily invested in these securities rated in the three
highest categories for defensive purposes. Medium grade obligations (i.e., BBB
or Baa) lack outstanding investment characteristics and, in fact, have
speculative characteristics. In the event these securities are subsequently
downgraded below the three highest ratings, the Adviser will consider this event
when it determines whether the Fund should continue to hold the securities. See
Appendix A to the Statement of Additional Information for a description of the
various ratings of investment grade debt securities.
THE FUND MAY EMPLOY CERTAIN INVESTMENT STRATEGIES TO HELP ACHIEVE ITS INVESTMENT
OBJECTIVE.
SECURITIES OF FOREIGN ISSUERS. The Fund may invest up to 25% of its total assets
in securities of foreign issuers with the foregoing characteristics. Investments
in foreign securities may involve a greater degree of risk than those in
domestic securities due to exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of expropriation, nationalization, confiscatory taxation or
political, economic or social instability. Some foreign companies are not
generally subject to the same uniform accounting, auditing and financial
reporting requirements as domestic companies; also foreign regulation may differ
considerably from domestic regulation of stock exchanges, brokers and
securities. Additionally, because foreign securities may be denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Fund's net asset value, the value of dividends and
interest earned, gains and losses realized on the sale of securities, and any
net investment income and gains that the Fund distributes to shareholders.
Securities transactions undertaken in some foreign markets may not be settled
promptly. Therefore, the Fund's investments on foreign exchanges may be less
liquid and subject to the risk of fluctuating currency exchange rates pending
settlement.
OPTIONS TRANSACTIONS. The Fund may purchase listed put and call options on
securities and foreign currencies. However, no more than an aggregate of 5% of
the Fund's total assets, measured by the amount of the premium, will be invested
in these options.
FUTURES TRANSACTIONS FOR HEDGING PURPOSES. Although it has no present intention
to engage in these strategies, the Fund has also reserved the right to purchase
or write (sell) financial futures contracts and related options that are traded
on a U.S. exchange or board of trade, for hedging purposes (i.e., to reduce the
risks of fluctuations in the value of the Fund's portfolio). Before the Fund
will invest in any futures contracts or related options, shareholders of the
Fund will be notified and the Prospectus will be supplemented accordingly.
The Fund's ability to use options and futures contracts, either to earn income
successfully or to hedge, will depend on the Adviser's ability to predict
accurately the future direction of stock market prices, interest rate changes,
currency rate fluctuations and other market factors. There is no assurance that
a liquid market for options and futures will always exist. In addition, the Fund
could be prevented from opening or realizing the benefits of closing out an
options or futures position because of position limits or limits on daily price
fluctuations imposed by an exchange. See the Statement of Additional Information
for further discussion of options and futures transactions, including tax
effects and investment risks.
FOREIGN CURRENCY TRANSACTIONS FOR HEDGING PURPOSES. The Fund may enter into
transactions in foreign currencies or in forward foreign currency exchange
contracts, but may only in connection with its hedging strategies. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a price set at the time of the contract.
The Fund will not enter into a forward contract with a term greater than one
year or commit more than 25% of the value of its total assets to these
contracts. Although certain strategies could minimize the risk of loss due to a
decline in the value of the hedged foreign currency, they could also limit any
potential gain which might result from an increase in the value of the currency.
See the Statement of Additional Information for further discussion of the uses
and risks of forward foreign currency exchange contracts.
RESTRICTED SECURITIES. The Fund may purchase restricted securities, including
those eligible for resale to "qualified institutional buyers" pursuant to Rule
144A under the Securities Act of 1933 (the "Securities Act"). These purchases
are subject to a nonfundamental 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 these securities,
focusing on certain factors, including valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers lose interest in purchasing these restricted securities for a time.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys a security
subject to the right and obligation to sell it back to the issuer at the same
price plus accrued interest. 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 or prevented from
liquidating the collateral.
The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information, where they are classified as
fundamental or non-fundamental. The Fund's investment objective and those
investment restrictions designated as fundamental may not be changed without
shareholder approval. All other restrictions and investment policies are
nonfundamental and can be changed by a vote of the Trustees without shareholder
approval.
A high rate of portfolio turnover (greater than 100%) involves correspondingly
greater brokerage expense which will be borne by the Fund and may, under certain
circumstances, make it more difficult for the Fund to qualify as a regulated
investment company under the Internal Revenue Code. The Fund's portfolio
turnover rates for recent periods are shown in the section "The Fund's Financial
Highlights."
An investment in the Fund may involve greater risk than investment in a fund
emphasizing larger companies. The securities of small and medium-sized companies
may be subject to more volatile market movements than those of larger, more
established companies or the stock market averages in general. Because of these
factors, the Fund believes that its shares are suitable for investment by
persons who are in a financial position to assume above-average investment risk
in search of above-average long-term reward, and who can invest without concern
for current income. The Fund is not intended as a complete investment program,
but is most appropriately considered as only one portion of your overall
investment portfolio.
BROKERS ARE CHOSEN BASED 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 shares of the Fund. Pursuant to procedures
determined by the Trustees, the Adviser may place securities transactions with
brokers affiliated with the Adviser. These brokers include Tucker Anthony
Incorporated and Sutro & Company Inc. which are indirectly owned by John Hancock
Mutual 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 series of Freedom Investment Trust III, an open-end
management investment company organized as a Massachusetts business trust in
1989 (the "Trust"). The Trust reserves the right to create and issue a number of
series of shares, or funds or classes of shares of those series, which are
separately managed and have different investment objectives. The Trust is not
required and does not intend to hold annual meetings of shareholders, although
special meetings may be held for such purposes as electing or removing Trustees,
changing fundamental policies or approving a management contract. The Fund,
under certain circumstances, will assist in shareholder communications with
other shareholders.
JOHN HANCOCK ADVISERS, INC. ADVISES INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF APPROXIMATELY $10 BILLION.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
John Hancock Mutual Life Insurance Company, a financial services company. The
Adviser provides the Fund, and other investment companies in the John Hancock
group of funds, with investment research and portfolio management services. John
Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of the
John Hancock funds directly and through selected broker-dealers ("Selling
Brokers"). Freedom Distributors Corporation, a co-distributor of the Fund, is
also an indirect subsidiary of John Hancock Mutual Life Insurance Company
(together with John Hancock Funds, the "Distributor"). Certain Fund officers are
also officers of the Adviser and John Hancock Funds.
Day-to-day management of the Fund is carried out by Bernice S. Behar, supported
by an investment team from the Adviser's equity group, headed by Michael P.
DiCarlo. Ms. Behar has been with the Adviser since 1991 and prior to that was a
portfolio manager and investment analyst with Sanyo Securities America.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge Alternative,"
Class A shares) or on a contingent deferred basis (see "Contingent Deferred
Sales Charge Alternative," Class B shares). If you do not specify on your
account application which class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.
INVESTMENTS IN CLASS A SHARES ARE SUBJECT TO AN INITIAL SALES CHARGE.
CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount you purchase is $1 million or more. If
you purchase $1 million or more of Class A shares, you will not be subject to an
initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.30% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price -- Qualifying for a Reduced Sales Charge."
INVESTMENTS IN CLASS B SHARES ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE.
CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause the shares to have a higher expense ratio
than that of Class A shares. To the extent that any dividends are paid by the
Fund, these higher expenses will also result in lower dividends than those paid
on Class A shares.
Class B shares are not available to full service defined contribution plans
administered by John Hancock Investor Services Corporation or John Hancock
Mutual Life Insurance Company with more than 100 eligible employees at the
inception of the Fund account.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
YOU SHOULD CONSIDER WHICH CLASS OF SHARES WILL BE MORE BENEFICIAL FOR YOU.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time; and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on the inside cover page of this Prospectus shows examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for reduced sales charges. See "Share Price --
Qualifying for a Reduced Sales Charge."
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent any
dividends are paid. However, because initial sales charges are deducted at the
time of purchase, you would not have all of your funds invested initially and,
therefore, would initially own fewer shares. If you do not qualify for reduced
initial sales charges and expect to maintain your investment for an extended
period of time, you might consider purchasing Class A shares because the
accumulated distribution and service charges on Class B shares may exceed the
initial sales charge and accumulated distribution and service charges on Class A
shares during the life of your investment.
Alternatively, you might determine that it would be more advantageous to
purchase Class B shares in order to have all your funds invested initially.
However, you would be subject to higher distribution charges and, for a six-year
period, a CDSC.
In the case of Class A shares, the distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and the ongoing distribution and service fees. In
the case of Class B shares, the expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the Class B
shares' CDSC and ongoing distribution and service fees are the same as those of
the Class A shares' initial sales charge and ongoing distribution and service
fees. Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.
Dividends, if any on Class A and Class B shares will be calculated in the same
manner, at the same time, and on the same day, and will be in the same amount,
except for differences resulting from the fact that each class will bear only
its own distribution and service fees, shareholder meeting expenses and any
incremental transfer agency costs. See "Dividends and Taxes."
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which for the fiscal year ended July 31, 1994, was 1.00% of the
Fund's average daily net asset value. This fee is higher than those charged to
most other mutual funds but is comparable to those charged to funds with a
similar investment objective.
THE FUND PAYS DISTRIBUTION AND SERVICE FEES FOR MARKETING AND SALES- RELATED
SHAREHOLDER SERVICING.
The Class A and Class B shareholders have adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under the Plan, the Fund will pay distribution and service fees at
an aggregate annual rate of up to 0.30% of the Class A shares' average daily net
assets and an aggregate annual rate of up to 1.00% of the Class B shares'
average daily net assets. In each case, up to 0.25% is for service expenses and
the remaining amount is for distribution expenses. The distribution fees will be
used to reimburse the Distributor for its distribution expenses, including but
not limited to: (i) initial and ongoing sales compensation to Selling Brokers
and others (including affiliates of the Distributor) engaged in the sale of Fund
shares; (ii) marketing, promotional and overhead expenses incurred in connection
with the distribution of Fund shares; and (iii) with respect to Class B shares
only, interest expenses on unreimbursed distribution expenses. The service fees
will be used to compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event the Distributor is not fully
reimbursed for payments or expenses incurred by it under the Plan, these
expenses will not be carried beyond twelve months 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 July 31, 1994 an aggregate of $701,851 of distribution
expenses or 2.07% of the average net assets of the Class B shares of the Fund,
was not reimbursed or recovered by the Distributor through the receipt of
deferred sales charges or 12b-1 fees in prior periods.
For the fiscal year ended July 31, 1994 the total expenses for Class A shares
and Class B shares, respectively, were 2.01% and 2.62% of average net assets.
DIVIDENDS AND TAXES
DIVIDENDS. Dividends from the Fund's net investment income and capital gains, if
any, are generally declared 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 dividends on these shares
will be lower than those of Class A shares. See "Share Price."
TAXATION. Dividends from the Fund's net investment income, certain net foreign
exchange gains, and net short-term capital gains are taxable to you as ordinary
income, and dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains. These dividends are taxable whether you take them in
cash or reinvest them in additional shares. Certain dividends paid by the Fund
in January of a given year will be taxable to you as if you received them the
prior December. 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.
When you redeem (sell) or exchange shares, you may realize a gain or loss.
On the account application, you must certify that your social security or other
taxpayer identification number you provide is correct and that you are not
subject to 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, redemptions and exchanges.
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. In
many states, any portion of the Fund's dividends that represents interest
received by the Fund on direct U.S. Government obligations may be exempt from
tax. You should consult your tax advisor for specific advice.
PERFORMANCE
THE FUND MAY ADVERTISE ITS TOTAL RETURN.
Total return is based on the overall change in value of a hypothetical
investment in shares of the Fund. The Fund's total return shows the overall
dollar or percentage change in value, assuming the reinvestment of all
dividends. Cumulative total return shows the Fund's performance over a period of
time. Average annual total return shows the cumulative return divided over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that it is not the same as actual year-to-year results.
Total return for Class A shares includes the effect of paying the maximum sales
charge (except as shown in "The Fund's Financial Highlights"). Investments at
lower sales charges would result in higher performance figures. Total return for
the Class B shares reflects deduction of the applicable contingent deferred
sales charge imposed on a redemption of shares held for the applicable period.
All calculations assume that all dividends are reinvested at net asset value on
the reinvestment dates during the periods. The total return of Class A and Class
B shares will be calculated separately and, because each class is subject to
certain different expenses, the total return with respect to that class for the
same period may differ. The relative performance of the Class A and Class B
shares will be affected by a variety of factors, including the higher operating
expenses attributable to the Class B shares, whether the Fund's investment
performance is better in the earlier or later portions of the period measured,
and the level of net assets of the classes during the period. The Fund will
include the total return of both classes in any advertisement or promotional
materials including Fund performance data. Total return is an historical
calculation and is not an indication of future performance. The value of the
Fund's shares, when redeemed, may be more or less than their original cost. See
"Factors to Consider in Choosing an Alternative." Further information about the
performance of the Fund is contained in the Fund's Annual Report to
Shareholders.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The minimum initial investment in Class A or Class B shares is $1,000 and $500
for retirement plans).
Complete the Account Application attached to this Prospectus. Indicate whether
you are buying Class A or Class B shares. If you do not specify which class of
shares you are purchasing, it will be assumed you are investing in Class A
shares.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT.
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, Selling Broker, or mail it
directly to Investor Services.
- --------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your
registered representative, 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 Discovery Fund
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative, Selling Broker or mail it directly to
Investor Services.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MONTHLY AUTOMATIC 1. Complete the "Automatic Investing" and "Bank
ACCUMULATION Information" sections on the Account Privileges
PROGRAM (MAAP) Application, designating a bank account from which
your funds may be drawn.
2. The amount you elect to invest will be automatically
withdrawn from your bank or credit union account.
- ------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information"
section on the Account Privileges Application,
designating a bank account from which your funds may
be drawn. Note that in order to invest by phone, you
must be in a bank or credit union that is a member of
the Automated Clearing House system (ACH).
2. After your authorization form has been processed, you
may purchase additional Class A or Class B shares by
calling Investor Services toll-free at
1-800-225-5291.
3. Give the Investor Services representative the name(s)
in which your account is registered, the Fund name,
the class of shares you own, your 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 on your
account statement or include a note with your
investment listing the name of the Fund, the class,
your account number and the name(s) in which the
account is registered.
2. Make your check payable to John Hancock Investor
Services Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or
Selling Broker.
- --------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Discovery Fund
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- --------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price listed or the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the 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 in writing to Investor Services.
- --------------------------------------------------------------------------------
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 PLUS A SALES CHARGE,
IF APPLICABLE, WHICH WILL VARY WITH THE PURCHASE ALTERNATIVE YOU CHOOSE.
The net asset value (the "NAV") is the value of one share. The NAV per share is
calculated by determining the net assets of each class of shares of the Fund,
and dividing that figure by the number of outstanding shares of that class.This
will be different for each class to the extent that the different amounts of
undistributed income are accrued on shares of each class between dividend
declarations.
Securities in the Fund's portfolio are generally valued at their last exchange
sale price, as provided by a pricing service which utilizes electronic pricing
techniques. If no sale has occurred on the date assets are valued, or if the
security is traded only in the over-the-counter market, it will normally be
valued at the mean between the current closing bid and asked prices. Fixed
income securities are generally valued by a pricing service which uses
electronic pricing techniques based on general institutional trading. Some
securities are valued at fair value based on procedures approved by the
Trustees, and for certain other securities, the amortized cost method is used if
the Trustees determine in good faith that amortized cost approximates fair value
as described more fully in the Statement of Additional Information. Any assets
or liabilities expressed in terms of foreign currencies are translated into
United States dollars by State Street 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 NAV is calculated once daily as of
the close of regular trading on the New York Stock Exchange (generally at 4:00
p.m., New York time) on each day that the Exchange is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your investment before the close of regular trading on the New York
Stock Exchange and transmit it to John Hancock Funds before its close of
business to receive that day's offering price.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge paid at the
time of purchase, as follows:
COMBINED
SALES CHARGE REALLOWANCE REALLOWANCE
SALES CHARGE AS A AND SERVICE TO SELLING
AS A PERCENTAGE FEE AS A BROKER AS
AMOUNT INVESTED PERCENTAGE OF THE PERCENTAGE A PERCENTAGE
INCLUDING SALES OF OFFERING AMOUNT OF OFFERING OF OFFERING
CHARGE PRICE INVESTED PRICE(+) PRICE(*)
- --------------- ------------- ------------- ----------- ------------
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to
$249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to
$499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to
$999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed may be deemed to be an underwriter under the Securities Act of
1933.
(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions made within one year of
purchase.
(***) John Hancock Funds may pay a commission and first year's service fee (as
described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of Class A shares of $1 million or more in the
aggregate as follows: 1% on sales up to $4,999,999, 0.50% on the next $5
million and 0.25% on $10 million and over.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter, it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.
Sales charges ARE NOT APPLIED to any dividends which are reinvested in
additional shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of the accounts attributable to these
brokers.
In addition to the reallowance allowed to all Selling Brokers, John Hancock
Funds will pay the following: round trip airfare to a resort will be offered to
each registered representative of a Selling Broker (if the Selling Broker has
agreed to participate) who sells certain amounts of shares of John Hancock
funds. John Hancock Funds will make these incentive payments out of its own
resources. Other than distribution fees, the Fund does not bear distribution
expenses.
Under certain circumstances as described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."
CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more of the Fund's Class A shares will be
made at net asset value with no initial sales charge, but if the shares are
redeemed within 12 months after the end of the calendar month in which the
purchase was made (the contingent deferred sales charge period), a contingent
deferred sales charge will be imposed. The rate of the CDSC will depend on the
amount invested as follows:
AMOUNT INVESTED CDSC RATE
---------------- ---------
$1 Million to $4,999,999 1.00%
Next $5 Million to $9,999,999 0.50%
Amounts of $10 Million and over 0.25%
The contingent deferred sales charge will be assessed on an amount equal to the
lesser of (1) the current market value or (2) the original purchase cost of the
redeemed Class A shares. Accordingly, no CDSC will be imposed on increases in
account value above the initial purchase price, including any dividends which
have been reinvested in additional shares.
In determining whether a CDSC is applicable to a redemption of Class A shares,
the calculation will be determined in a manner that results in the lowest
possible rate being charged. Therefore, it will be assumed that the redemption
is first made from any shares in the shareholder's account that are not subject
to the CDSC. The CDSC is waived on redemptions in certain circumstances. See
"Waiver of Contingent Deferred Sales Charge" below.
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE ON YOUR INVESTMENT IN CLASS A SHARES.
QUALIFYING FOR A REDUCED SALES CHARGE -- CLASS A SHARES. If you invest more than
$50,000 in Class A shares of the Fund or a combination of John Hancock funds
(except money market funds), you may qualify for a reduced sales charge on your
investments through a LETTER OF INTENTION. You may also be able to use the
ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to take advantage of the value
of your previous investments in shares of John Hancock funds in meeting the
breakpoints for a reduced sales charge. For the ACCUMULATION PRIVILEGE and
COMBINATION PRIVILEGE the applicable sales charge will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock mutual fund you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
EXAMPLE:
If you hold Class A shares of a John Hancock mutual fund with a net asset value
of $20,000 and, subsequently, invested $30,000 in Class A shares of the Fund,
the sales charge on this subsequent investment would be 4.50% and not 5.00% (the
rate that would otherwise be applicable to investments of less than $50,000.
(See "Initial Sales Charge Alternative -- Class A shares.")
CLASS A SHARES MAY BE AVAILABLE WITHOUT A SALES CHARGE TO CERTAIN INDIVIDUALS
AND ORGANIZATIONS.
If you fall under one of the following categories, you may purchase Class A
shares of the Fund without paying a sales charge:
* A Trustee/Director or officer of the Trust/Company; a Director or officer of
the Adviser and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees or
Directors of any of the foregoing; a member of the immediate family of any of
the foregoing; or any Fund, pension, profit sharing or other benefit plan for
the individuals described above.
* Any state, county, city or any instrumentality, department, authority or
agency of these entities which is prohibited by applicable investment laws
from paying a sales charge or commission when it purchases shares of any
registered investment management company.*
* A bank, trust company, credit union, savings institution or other type of
depository institution, its trust department or common trust funds if it is
purchasing $1 million or more for non-discretionary customers or accounts.*
* A broker, dealer or registered investment adviser that has entered into an
agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
* A former participant in an employee benefit plan with John Hancock Mutual
funds, when s/he withdraws from his/her plan and transfers any or all of
his/her plan distributions to the Fund.
Class A shares may also be purchased without an initial sales charge in
connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
- ----------
*For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES. Class B shares
are offered at net asset value per share without an initial sales charge, so
that your entire initial investment will go to work at the time of purchase.
However, Class B shares redeemed within six years of purchase will be subject to
a CDSC at the rates set forth below. This charge will be assessed on an amount
equal to the lesser of the current market value or the original purchase cost of
the shares being redeemed. Accordingly, you will not be assessed a CDSC on
increases in account value above the initial purchase price, including shares
derived from dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
reinvestment of dividends, and next from the shares you have held the longest
during the six-year period.
EXAMPLE:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:
* Proceeds of 50 shares redeemed at $12 per share $600
* Minus proceeds of 10 shares not subject to CDSC because they
were acquired through dividend reinvestment (10 x $12) -120
* Minus appreciation on remaining shares, also not subject to
CDSC (40 x $2) - 80
----
* Amount subject to CDSC $400
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds will
use all or part of them to defray its expenses related to providing the Fund
with distribution services in connection with the sale of the Class B shares,
such as compensating selected Selling Brokers for selling Class B shares. The
combination of the CDSC and the distribution and service fees makes it possible
for the Fund to sell the Class B shares without an initial sales charge.
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining 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.
CONTINGENT
DEFERRED SALES
CHARGE AS A
PERCENTAGE
YEAR IN WHICH CLASS B SHARES OF DOLLAR AMOUNT
REDEEMED FOLLOWING PURCHASE SUBJECT TO CDSC
- --------------------------- ----------------
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale and thereafter the service fee is paid in arrears.
If you purchased Class B shares prior to January 1, 1994, the applicable CDSC as
a percentage of the amount redeemed will be: 4% for redemptions during the first
year after purchase, 3.5% for redemptions during the second year, 3% for
redemptions during the third year, 2.5% for redemptions during the fourth year,
2% for redemptions during the fifth year, 1% for redemptions during the sixth
year, and no CDSC for the seventh year and thereafter.
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON CLASS B SHARE REDEMPTIONS WILL BE
WAIVED.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a CDSC,
unless indicated otherwise, in the circumstances defined below:
* Redemptions of Class B shares made under a Systematic Withdrawal Plan (see
"How to Redeem Shares"), as long as your annual redemptions do not exceed 10%
of your account value at the time you established your Systematic Withdrawal
Plan and 10% of the value of subsequent investments (less redemptions) in that
account at the time you notify Investor Services. This waiver does not apply
to Systematic Withdrawal Plan redemptions of Class A shares that are subject
to a CDSC.
* Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
your life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Internal Revenue Code (the "Code").
* Redemptions made to effect mandatory distributions under the Code after age 70
1/2 from a tax-deferred retirement plan.
* Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans, including those qualified under
Section 401(a) of the Code, custodial accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.
* Redemptions due to death or disability.
* Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.
* Redemptions made pursuant to the Fund's right to liquidate your account if you
own fewer than 50 shares.
* Redemptions made under 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 no later than the month following eight years after the shares
were purchased, resulting in lower annual distribution fees. If you exchanged
Class B shares into this Fund from another John Hancock fund, the conversion
will be based on the time you purchase the shares in the original fund.
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. When you redeem your shares, you will generally realize a gain or
loss depending on the difference between what you paid for them and what you
receive for them, subject to certain tax rules. Under unusual circumstances, the
Fund may suspend redemptions or postpone payment for up to seven days or longer,
as permitted by Federal securities laws.
- --------------------------------------------------------------------------------
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. 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. In addition, telephone
instructions are recorded.
You may redeem up to $100,000 by telephone, but the
address on the account must not have changed for the last
30 days. A check will be mailed to the exact name(s) and
address shown on the account.
If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made 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 is a telephone number which 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 collectable after two
business days. Your bank may or may not charge for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
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, class of shares, your
account number, and the additional requirements listed
below that apply to your particular account.
- --------------------------------------------------------------------------------
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
Individual, Joint Tenants, Sole A letter of instruction signed (with
Proprietorship, Custodial titles where applicable) by all
(Uniform Gifts or Transfer to persons authorized to sign for the
Minors Act), General Partners. account, exactly as it is 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.
- --------------------------------------------------------------------------------
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 any such 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 him or her instructions.
- --------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. Redemptions
of certificated shares may not be made 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 fewer than 50 shares (except accounts under retirement plans) and to mail
the proceeds to the shareholder, or the transfer agent may impose an annual fee
of $10.00. No account will be involuntarily redeemed or any additional fee
imposed, if the value of the account is in excess of the Fund's minimum initial
investment. No CDSC will be imposed on involuntary redemptions of shares.
Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account up to the required minimum. Unless the number of shares acquired
by additional purchases and any dividend reinvestments, exceeds the number of
shares redeemed, repeated redemptions from a smaller account may eventually
trigger this redemption policy.
- --------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
YOU MAY EXCHANGE SHARES OF THE FUND ONLY FOR SHARES OF THE SAME CLASS IN ANOTHER
JOHN HANCOCK MUTUAL 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 mutual 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
mutual fund. For this purpose, John Hancock mutual funds with only one class of
shares will be treated as Class A whether or not they have been so designated.
Exchanges between funds which are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund which are subject to a CDSC may be exchanged for
Class B shares of another John Hancock fund without incurring the CDSC; however
the shares will be subject to the CDSC schedule of the shares acquired (except
shares exchanged into John Hancock Short-Term Strategic Income Fund and John
Hancock Limited Term Government Fund, which will be subject to the initial
fund's CDSC). For purposes of computing the CDSC payable upon redemption of
shares acquired in an exchange, the holding period of the original shares is
added to the holding period of the shares acquired in an exchange.
You may exchange Class B shares of the Fund into John Hancock Cash Management
Fund at net asset value. Shares so acquired will continue to be subject to a
CDSC upon redemption. The rate of the CDSC will be the rate in effect on the
original fund at the time of the exchange.
If you exchange Class B shares purchased prior to January 1, 1994 (except shares
of John Hancock Short-Term Strategic Income Fund and John Hancock Limited Term
Government Fund which will be subject to the initial fund's CDSC) for Class B
shares of any other John Hancock fund, you will continue to be subject to the
CDSC schedule that was in effect when they were purchased. See "Contingent
Deferred Sales Charge Alternative -- Class B shares."
The Fund reserves the right to require that you keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a gain or loss.
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.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give prior notice whenever it is reasonably
able to do so, it may impose these restrictions at any time.
BY TELEPHONE
1. When you 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 and class of the fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or the dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
REINVESTMENT PRIVILEGE
IF YOU REDEEM SHARES OF THE FUND, YOU MAY BE ABLE TO REINVEST THE PROCEEDS IN
SHARES OF THIS OR ANOTHER JOHN HANCOCK FUND WITHOUT PAYING AN ADDITIONAL SALES
CHARGE.
1. You will not be subject to a sales charge on Class A shares reinvested in any
John Hancock fund that is otherwise subject to a sales charge as long as you
invest within 120 days of the redemption date. If you paid a CDSC upon a
redemption, you may reinvest at net asset value in the same class of shares
from which you redeemed within 120 days. Your account will be credited with
the amount of the CDSC that was charged previously and the reinvested shares
will continue to be subject to a CDSC. For purposes of computing the CDSC
payable upon a subsequent redemption, the holding period of the shares you
acquired through reinvestment will include the holding period of the redeemed
shares.
2. Any portion of the redemption may be reinvested in the Fund or in any of the
other John Hancock funds, subject to the minimum investment limit of that
fund.
3. To reinvest, you must notify Investor Services in writing. Include the
account name, account number and class from which your shares were originally
redeemed.
SYSTEMATIC WITHDRAWAL PLAN
YOU CAN PAY ROUTINE BILLS FROM YOUR ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS FROM
YOUR RETIREMENT ACCOUNTS TO COMPLY WITH IRS REGULATIONS.
1. You may elect the Systematic Withdrawal Plan at any time by completing the
attached Account Privileges Application which is attached to this Prospectus.
You can also obtain the 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
on a selected monthly basis and they can be sent to you or any other
designated payee.
4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.
5. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional shares, because you may be subject to initial
sales charges on purchases of Class A shares or you will be subject to a CDSC
imposed on redemptions of Class B shares. In addition, your redemptions are
taxable events.
6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)
YOU CAN MAKE AUTOMATIC INVESTMENTS AND SIMPLIFY YOUR INVESTING.
1. You may authorize an investment to be drawn automatically drawn each month
from your bank for investment under the "Automatic Investing" and "Bank
Information" sections on the Account Privileges Application.
2. You may also authorize automatic investing 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.
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.
GROUP INVESTMENT PROGRAM
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS MAY ESTABLISH ACCOUNTS.
1. An individual account will be established for each participant, but the sales
charge for Class A shares will be based on the aggregate dollar amount of all
participants' investments. To determine how to qualify for this program,
contact your registered representative or call 1-800-225-5291.
2. The initial aggregate investment of all participants in the group must be at
least $250.
3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.
RETIREMENT PLANS
1. You may use the Fund 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) or TSA Plans), and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of these 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>
JOHN HANCOCK DISCOVERY FUND
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Fund, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services, Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
For: TDD call 1-800-544-6713
JHD -- 3400P 12/94
JOHN HANCOCK
DISCOVERY
FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
DECEMBER 1, 1994
A MUTUAL FUND SEEKING
LONG-TERM GROWTH OF
CAPITAL THROUGH INVESTMENT
PRIMARILY IN COMMON STOCKS
OF SMALL TO MEDIUM-SIZED
COMPANIES, WHICH ARE BELIEVED
BY THE FUND'S MANAGERS TO
OFFER SUPERIOR PROSPECTS FOR
GROWTH.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
[LOGO] Printed on Recycled Paper
