-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PCeQ/wi6tWdKu0IHZ8OJ9/zO+d/nuOpEEFHs73aXYvwOiWEhmpkwZTWX79zBgPFi XeY9SXoZ9iLTGH6hz9eBnQ== 0001010521-07-000354.txt : 20070426 0001010521-07-000354.hdr.sgml : 20070426 20070426143713 ACCESSION NUMBER: 0001010521-07-000354 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20070426 DATE AS OF CHANGE: 20070426 EFFECTIVENESS DATE: 20070426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN EQUITY TRUST CENTRAL INDEX KEY: 0000750741 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-92548 FILM NUMBER: 07790799 BUSINESS ADDRESS: STREET 1: 601 CONGRESS STREET CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 617-663-3000 MAIL ADDRESS: STREET 1: C/O JOHN HANCOCK FUNDS STREET 2: 601 CONGRESS STREET CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: HANCOCK JOHN SPECIAL EQUITIES FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HANCOCK JOHN SPECIAL EQUITIES TRUST DATE OF NAME CHANGE: 19901218 0000750741 S000000625 Growth Trends Fund C000001776 Class A JGTAX C000001777 Class B JGTBX C000001778 Class C JGTCX 0000750741 S000000626 Small Cap Fund C000001779 Class A DSISX C000001780 Class B DSBSX C000001781 Class C DSCSX C000001782 Class I DSIIX 497 1 equity.txt EQUITY TRUST [LOGO] John Hancock(R) - ---------------------- Mutual Funds John Hancock Equity Funds ================================================================================ CLASS A, CLASS B AND CLASS C SHARES Balanced Fund Classic Value Fund Classic Value Fund II Core Equity Fund Growth Trends Fund Large Cap Equity Fund Large Cap Select Fund Mid Cap Equity Fund Multi Cap Growth Fund Small Cap Fund Small Cap Equity Fund Small Cap Intrinsic Value Fund Sovereign Investors Fund U.S. Global Leaders Growth Fund - -------------------------------------------------------------------------------- Prospectus 5.1.2007 ================================================================================ As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these funds or determined whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime. Contents - --------------------------------------------------------------------------------
JOHN HANCOCK EQUITY FUNDS ------------------------------------------------------------------------ Balanced Fund 4 Classic Value Fund 6 Classic Value Fund II 8 Core Equity Fund 10 Growth Trends Fund 12 Large Cap Equity Fund 14 Large Cap Select Fund 16 Mid Cap Equity Fund 18 Multi Cap Growth Fund 20 Small Cap Fund 22 Small Cap Equity Fund 24 Small Cap Intrinsic Value Fund 26 Sovereign Investors Fund 28 U.S. Global Leaders Growth Fund 30 YOUR ACCOUNT ------------------------------------------------------------------------ Choosing a share class 32 How sales charges are calculated 32 Sales charge reductions and waivers 33 Opening an account 35 Buying shares 36 Selling shares 37 Transaction policies 39 Dividends and account policies 41 Additional investor services 42 FUND DETAILS ------------------------------------------------------------------------ Business structure 43 Management biographies 45 Financial highlights 47 APPENDIX ------------------------------------------------------------------------ Historical performance of corresponding John Hancock Classic Value Fund 74 Historical performance of corresponding MFC Global (U.S.) Small Cap Opportunity Composite 76 FOR MORE INFORMATION BACK COVER ------------------------------------------------------------------------
Overview - -------------------------------------------------------------------------------- John Hancock Equity Funds These funds seek long-term growth by investing primarily in common stocks. However, the Balanced Fund also makes significant investments in fixed-income securities. Each fund has its own strategy and its own risk profile. Who may want to invest These funds may be appropriate for investors who: o have longer time horizons; o want to diversify their portfolios; o are seeking funds for the equity portion of an asset allocation portfolio; o are investing for retirement or other goals that are many years in the future. Equity funds may NOT be appropriate if you: o are investing with a shorter time horizon in mind; o are uncomfortable with an investment that may go up and down in value. Risks of mutual funds Mutual funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Because you could lose money by investing in these funds, be sure to read all risk disclosure carefully before investing. The management firm All John Hancock equity funds are managed by John Hancock Advisers, LLC. Founded in 1968, John Hancock Advisers is a wholly owned subsidiary of John Hancock Financial Services, Inc. (a subsidiary of Manulife Financial Corporation) and as of December 31, 2006, managed approximately $40 billion in assets. FUND INFORMATION KEY - ----------------------------------------------- Concise fund-by-fund descriptions begin on the next page. Each description provides the following information: [CLIP ART] Goal and strategy The fund's particular investment goals and the strategies it intends to use in pursuing those goals [CLIP ART] Past performance The fund's total return, measured year-by-year and over time [CLIP ART] Main risks The major risk factors associated with the fund [CLIP ART] Your expenses The overall costs borne by an investor in the fund, including sales charges and annual expenses Balanced Fund [CLIP ART] GOAL AND STRATEGY The fund seeks current income, long-term growth of capital and income and preservation of capital. To pursue these goals, the fund allocates its investments among a diversified mix of debt and equity securities. The fund normally invests at least 25% of assets in equity securities and at least 25% of assets in senior debt securities. With regard to the fund's equity securities, the management team looks for companies that appear to be undervalued compared to their historical valuations relative to the market. The management team uses fundamental financial analysis and proprietary financial models to identify companies of any size that are selling at a discount as measured by ratios such as price-to-book, price-to-earnings and price-to-sales. The management team then looks for a positive catalyst in a company's near-term outlook that they believe will accelerate earnings or improve the value of the company's assets. These positive catalysts may include, but are not limited to: new, improved or unique products or services; new or rapidly expanding markets for the company's products; new management; changes in the economic, financial, political or regulatory environment affecting the company; or a business strategy not recognized by the marketplace. The management team also considers an issuer's dividend-paying prospects and overall financial strength. The fund's debt securities are used to enhance current income and provide some added stability. The fund's investments in bonds of any maturity are primarily investment grade (rated BBB or above and their unrated equivalents). However, up to 20% of assets may be in junk bonds rated as low as C and their unrated equivalents. Although the fund invests primarily in U.S. securities, it may invest up to 3 5% of assets in foreign securities. The fund may also make limited use of certain derivatives (investments whose value is based on indexes, securities or currencies). In abnormal market conditions, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad- based market indexes for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '98, 11.40% Worst quarter: Q2 `02, -12.88% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Lehman Brothers Government/Credit Bond Index, an unmanaged index of U.S. government, U.S. corporate and Yankee bonds. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- 20.79% 14.01% 3.89% -1.83% -5.23% -18.19% 18.21% 6.78% 13.36% 13.75% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of 1 year 5 years 10 years Class C - -------------------------------------------------------------------------------- Class A before tax 8.09% 4.82% 5.35% -- - -------------------------------------------------------------------------------- Class A after tax on distributions 5.87% 3.71% 3.88% -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 5.53% 3.53% 3.83% -- - -------------------------------------------------------------------------------- Class B before tax 7.97% 4.85% 5.30% -- - -------------------------------------------------------------------------------- Class C before tax (began 5-3-99) 11.96% 5.18% -- 2.03% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.19% 8.42% 2.22% - -------------------------------------------------------------------------------- Lehman Brothers Government/ Credit Bond Index 3.78% 5.17% 6.26% 5.81% - --------------------------------------------------------------------------------
4 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Stocks of small- and medium-capitalization companies can be more volatile than those of larger companies. o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Any bonds held by the fund could be downgraded in credit quality or go into default. In addition, bond prices generally fall when interest rates rise; this risk is greater for longer maturity bonds. Junk bond prices can fall on bad news about the issuer, an industry or the economy in general. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C - -------------------------------------------------------------------------------- Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.60% 0.60% 0.60% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.38% 0.38% 0.38% - -------------------------------------------------------------------------------- Total fund operating expenses 1.28% 1.98% 1.98% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $624 $886 $1,167 $1,968 - -------------------------------------------------------------------------------- Class B with redemption $701 $921 $1,268 $2,126 - -------------------------------------------------------------------------------- Class B without redemption $201 $621 $1,068 $2,126 - -------------------------------------------------------------------------------- Class C with redemption $301 $621 $1,068 $2,306 - -------------------------------------------------------------------------------- Class C without redemption $201 $621 $1,068 $2,306 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." - ----------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Joined fund team in 2004 Day-to-day purchase and sale decisions Roger C. Hamilton Joined fund team in 2003 Analysis of specific issuers Jeffrey N. Given, CFA Joined fund team in 2006 Analysis of specific issuers Timothy M. Malloy Joined fund team in 2006 Analysis of specific issues See page 45 for the management biographies. FUND CODES Class A Ticker SVBAX CUSIP 47803P104 Newspaper BalA SEC number 811-0560 JH fund number 36 Class B Ticker SVBBX CUSIP 47803P203 Newspaper BalB SEC number 811-0560 JH fund number 136 Class C Ticker SVBCX CUSIP 47803P708 Newspaper -- SEC number 811-0560 JH fund number 536
5 Classic Value Fund This fund is generally closed to new investors (see "OPENING AN ACCOUNT" on page 35 for details). [CLIP ART] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its net assets in domestic equity securities. In managing the portfolio, the subadviser seeks to identify companies that it believes are currently undervalued relative to the market, based on estimated future earnings and cash flow. These companies generally have market values at valuation ratios, such as price-to-book, below market average, as defined by the Standard & Poor's 500 Index. In choosing individual securities, the subadviser screens a dynamic universe of the 500 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $6.1 billion.) Using fundamental research and a proprietary computer model, the sub-adviser ranks these companies from the cheapest to the most expensive on the basis of current share price to the subadviser's estimate of normal long-term earnings power. The subadviser's management team intensively evaluates the cheapest companies to construct a portfolio of stocks that the subadviser believes generally have the following characteristics: o cheap on the basis of current price to estimated normal level of earnings o current earnings below normal levels o a sound plan to restore earnings to normal o a sustainable business advantage Before investing, the subadviser considers the value of an entire business relative to its price. The subadviser views itself as a long-term business investor, rather than a stock buyer. This systematic process is intended to ensure that the fund's portfolio avoids the emotional inputs that can lead to overvalued securities. The subadviser approaches sell decisions from the same disciplined framework. The subadviser generally sells a security when it reaches fair value, there are more attractive opportunities or there is a change in company fundamentals. Under normal market conditions, the fund is almost entirely invested in stocks. The fund may invest in securities of foreign issuers. In abnormal market conditions, the fund may invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of the fund's risks. Year-by-year and average annual figures for the period prior to November 8, 2002 reflect the actual performance of the sole class of Pzena Focused Value Fund, the fund's predecessor. On November 8, 2002, the fund acquired all of the assets of Pzena Focused Value Fund pursuant to an agreement and plan of reorganization in exchange for Class A shares of the fund. The average annual returns for Class A have been restated to reflect applicable sales charges. This adjustment will have the effect of reducing the previously reported performance of the Pzena Focused Value Fund. Year-by-year and index figures do not reflect sales charges and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. The performance of Pzena Focused Value Fund reflects stocks selected from the largest 1,000 publicly traded U.S. companies, whereas the fund invests in stocks selected from the 500 largest such companies. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q2 '99, 30.73% Worst quarter: Q3 `98, -21.97% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Value Index, an unmanaged index of stocks in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with low price-to-book ratios. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------ 24.57% -5.67% 0.29% 35.88% 13.07% -6.37% 36.25% 14.28% 8.81% 16.54% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of 1 year 5 years 10 years Class B Class C - -------------------------------------------------------------------------------- Class A before tax (began 6-24-96) 10.69% 11.92% 12.26% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions 9.86% 11.38% 11.41% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 7.53% 10.17% 10.46% -- -- - -------------------------------------------------------------------------------- Class B before tax (began 11-11-02) 10.68% -- -- 18.61% -- - -------------------------------------------------------------------------------- Class C before tax (began 11-11-02) 14.64% -- -- -- 18.88% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 6.19% 8.42% 14.41% 14.41% - -------------------------------------------------------------------------------- Russell 1000 Value Index* 22.24% 10.86% 11.00% 18.85% 18.85% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund also compared its performance to the Standard & Poor's 500 Index. After this date, the fund changed the index to which it compares its performance to a single index, the Russell 1000 Value Index, which better represents the fund and its investment universe versus the Standard & Poor's 500 Index. 6 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. The fund focuses on value stocks, which could underperform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the subadviser's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o In a down market, higher-risk securities could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.83% 0.83% 0.83% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.25% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.22% 0.22% 0.22% - -------------------------------------------------------------------------------- Total fund operating expenses 1.30% 2.05% 2.05% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.00% 0.00% 0.00% - -------------------------------------------------------------------------------- Net annual operating expenses 1.30% 2.05% 2.05% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $626 $891 $1,177 $1,989 - -------------------------------------------------------------------------------- Class B with redemption $708 $943 $1,303 $2,187 - -------------------------------------------------------------------------------- Class B without redemption $208 $643 $1,103 $2,187 - -------------------------------------------------------------------------------- Class C with redemption $308 $643 $1,103 $2,379 - -------------------------------------------------------------------------------- Class C without redemption $208 $643 $1,103 $2,379 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." - ---------------------------------------------- SUBADVISER Pzena Investment Management, LLC Responsible for day-to-day investment management Founded in 1995 Supervised by the adviser PORTFOLIO MANAGERS Richard S. Pzena Managed fund since it began in 1996 John P. Goetz Managed fund since it began in 1996 Antonio DeSpirito III Joined fund team in 2006 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES Class A Ticker PZFVX CUSIP 409902780 Newspaper ClassicValA SEC number 811-1677 JH fund number 38 Class B Ticker JCVBX CUSIP 409902772 Newspaper ClassicValB SEC number 811-1677 JH fund number 138 Class C Ticker JCVCX CUSIP 409902764 Newspaper -- SEC number 811-1677 JH fund number 538
7 Classic Value Fund II [CLIP ART] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its net assets in domestic equity securities. In managing the portfolio, the subadviser seeks to identify companies that it believes are currently undervalued relative to the market, based on estimated future earnings and cash flow. These companies generally have market values at valuation ratios, such as price-to-book, below market average, as defined by the Standard & Poor's 500 Index. In choosing domestic securities, the subadviser screens a dynamic universe of the 400 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $8.5 billion.) Using fundamental research and a proprietary computer model, the subadviser ranks these companies from the cheapest to the most expensive on the basis of current share price to the subadviser's estimate of long-term earnings power. The subadviser's management team intensively evaluates the cheapest companies to construct a portfolio of stocks that the subadviser believes generally have the following characteristics: o cheap on the basis of current price to estimated normal level of earnings o current earnings below normal levels o a sound plan to restore earnings to normal o a sustainable business advantage. Before investing, the subadviser considers the value of an entire business relative to its price. The subadviser views itself as a long-term business investor, rather than a stock buyer. This systematic process is intended to ensure that the fund's portfolio avoids the emotional inputs that can lead to overvalued securities. The subadviser approaches sell decisions from the same disciplined framework. The subadviser generally sells a security when it reaches fair value, there are more attractive opportunities or there is a change in company fundamentals. Under normal market conditions, the fund is almost entirely invested in stocks. The fund may invest in securities of foreign issuers. In abnormal market conditions, the fund may invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE This section normally shows how the fund's total return has varied from year to year, along with a broad-based market index for reference. Because the fund has existed for less than a full calendar year, there is no past performance to report. 8 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. The fund focuses on value stocks, which could underperform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the subadviser's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o In a down market, higher-risk securities could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. The figures below show estimated annual expenses. Actual expenses may be greater or less.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.80% 0.80% 0.80% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.25% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 1.19% 1.19% 1.19% - -------------------------------------------------------------------------------- Total fund operating expenses 2.24% 2.99% 2.99% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.94% 0.94% 0.94% - -------------------------------------------------------------------------------- Net annual operating expenses 1.30% 2.05% 2.05% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only, and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $626 $1,079 $1,558 $2,876 - -------------------------------------------------------------------------------- Class B with redemption $708 $1,136 $1,690 $3,065 - -------------------------------------------------------------------------------- Class B without redemption $208 $836 $1,490 $3,065 - -------------------------------------------------------------------------------- Class C with redemption $308 $836 $1,490 $3,242 - -------------------------------------------------------------------------------- Class C without redemption $208 $836 $1,490 $3,242 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER - ----------------------------------------------- Pzena Investment Management, LLC Responsible for day-to-day investment management Founded in 1995 Supervised by the adviser PORTFOLIO MANAGERS Richard S. Pzena Managed fund since inception John P. Goetz Managed fund since inception Antonio DeSpirito III Managed fund since inception Managers share investment strategy and decisions. See page 45 for the management biographies. FUND CODES Class A Ticker JHVAX CUSIP 409902442 Newspaper -- SEC number 811-1677 JH fund number 35 Class B Ticker JHTBX CUSIP 409902434 Newspaper -- SEC number 811-1677 JH fund number 135 Class C Ticker JHNCX CUSIP 409902426 Newspaper -- SEC number 811-1677 JH fund number 535
9 Core Equity Fund [CLIP ART] GOAL AND STRATEGY The fund seeks above-average total return (capital appreciation plus income). To pursue this goal, the fund normally invests at least 80% of its assets in a diversified portfolio of equity securities (including common and preferred stocks, ADRs and their equivalents) which are primarily large-capitalization stocks. The managers select from a menu of stocks of approximately 1,000 companies that capture the characteristics of the broad market. In managing the portfolio, the portfolio managers seek to invest in stocks that are believed to have improving fundamentals and attractive valuations. The subadviser's investment research team performs fundamental research, develops financial projections and monitors consensus-based fundamental financial data. This information is utilized in a sector-based, multi-factor series of valuation models. These proprietary models use this financial data to rank the stocks according to their combination of: o value, meaning they appear to be underpriced; o improving fundamentals, meaning they show potential for strong growth. The portfolio managers construct and manage the portfolio using the ranked list. This process results in a portfolio of approximately 75 to 160 stocks. The fund generally sells stocks that fall into the bottom 20% of the ranked list. In normal circumstances, the fund is almost entirely invested in stocks. The fund may invest in dollar-denominated foreign securities and make limited use of certain derivatives (investments whose value is based on indexes or securities). In abnormal circumstances, the fund may temporarily invest more than 20% of its assets in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '98, 24.17% Worst quarter: Q3 `02, -16.89% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Index, an unmanaged index of the 1,000 largest companies in the Russell 3000 Index. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL] ================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------ 29.19% 28.84% 12.37% -7.75% -10.87% -22.85% 23.67% 8.78% 7.60% 13.29%
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of 1 year 5 years 10 years Class C - ------------------------------------------------------------------------------- Class A before tax 7.64% 3.75% 6.34% -- - -------------------------------------------------------------------------------- Class A after tax on distributions 7.64% 3.75% 6.02% -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 4.97% 3.22% 5.40% -- - -------------------------------------------------------------------------------- Class B before tax 7.54% 3.74% 6.29% -- - -------------------------------------------------------------------------------- Class C before tax (began 5-1-98) 11.51% 4.08% -- 2.22% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 6.19% 8.42% 4.38% - -------------------------------------------------------------------------------- Russell 1000 Index* 15.46% 6.82% 8.64% 4.83%+ - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund compared its performance to the Standard & Poor's 500 Index. The fund changed the index to which it compares its performance to the Russell 1000 Index which will allow for a broader investment universe. + Return as of closest month end to inception date. 10 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on small- or medium-capitalization stocks. The fund's management strategy has a significant influence on fund performance. If the investment research team's research analyses turn out to be inaccurate, or if the proprietary computer models do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially inadequate or inaccurate financial information, and social or political instability. [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.75% 0.75% 0.75% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.42% 0.42% 0.42% - -------------------------------------------------------------------------------- Total fund operating expenses 1.47% 2.17% 2.17% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $642 $942 $1,263 $2,170 - -------------------------------------------------------------------------------- Class B with redemption $720 $979 $1,364 $2,326 - -------------------------------------------------------------------------------- Class B without redemption $220 $679 $1,164 $2,326 - -------------------------------------------------------------------------------- Class C with redemption $320 $679 $1,164 $2,503 - -------------------------------------------------------------------------------- Class C without redemption $220 $679 $1,164 $2,503 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." - -------------------------------------------- SUBADVISER Independence Investments LLC Responsible for day-to-day investment management A subsidiary of Convergent Capital Management LLC Founded in 1982 Supervised by the adviser PORTFOLIO MANAGERS John C. Forelli, CFA Joined fund team in 2004 Jay C. Leu, CFA Joined fund team in 2004 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES Class A Ticker JHDCX CUSIP 409902707 Newspaper CoreEqA SEC number 811-1677 JH fund number 25 Class B Ticker JHIDX CUSIP 409902806 Newspaper CoreEqB SEC number 811-1677 JH fund number 125 Class C Ticker JHCEX CUSIP 409902863 Newspaper CoreEqC SEC number 811-1677 JH fund number 525
11 Growth Trends Fund [CLIP ART] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests approximately one-third of assets in equity securities (including common and preferred stocks and their equivalents) of U.S. and foreign companies in each of the following sectors: financial services, healthcare and technology. Due to changes in market values, assets will be allocated as needed in order to attempt to achieve a one-third weighting in each sector. The fund attempts to concentrate its investments within each of the three sectors in 20 to 35 companies. Companies in the financial services sector include banks, insurance companies, brokerage firms and financial holding companies. Healthcare companies include pharmaceutical, medical technology, managed care, biotechnology and biochemical research and development companies. Companies in the technology sector are typically in fields such as computer software and hardware, Internet services, telecommunications and data management and storage. In managing the portfolio, the management team focuses primarily on stock selection rather than industry allocation. The management team seeks to identify companies positioned to benefit from economic and social trends. They use fundamental financial analysis to identify individual companies of any size that appear most attractive in terms of earnings stability, growth potential, business changes and valuation. The fund may invest in certain higher-risk securities, including investments in emerging market countries and securities that are not publicly offered or traded, called restricted securities. The fund may use certain derivatives (investments whose value is based on indexes, securities or currencies). In abnormal market conditions, the fund may temporarily invest extensively in investment-grade short-term securities for defensive purposes. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q2 `03, 18.93% Worst quarter: Q1 `01, -23.27% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- -26.89% -31.42% 30.61% 5.56% 7.24% 8.44% - -------------------------------------------------------------------------------- ================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of Life of 1 year 5 years Class A Class B Class C - -------------------------------------------------------------------------------- Class A before tax (began 9-22-00) 3.06% 0.87% -6.13% -- -- - ------------------------------------------------------------------------------- Class A after tax on distributions 3.06% 0.87% -6.14% -- -- - ------------------------------------------------------------------------------- Class A after tax on distributions, with sale 1.99% 0.74% -5.07% -- -- - ------------------------------------------------------------------------------- Class B before tax (began 9-22-00) 2.80% 0.81% -- -6.03% -- - ------------------------------------------------------------------------------- Class C before tax (began 9-22-00) 6.80% 1.19% -- -- -6.03% - ------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.19% 1.35% 1.35% 1.35% - -------------------------------------------------------------------------------
12 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. It may fluctuate more widely than it would in a fund that is diversified across several sectors. The fund's management strategy significantly influences performance, especially because this fund focuses on a few sectors of the economy. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of financial services, healthcare and technology companies as a group may fall out of favor with the market, causing the fund to underperform investments that focus on other types of stocks or economic sectors. Companies in each sector may face special risks. Falling or rising interest rates or deteriorating economic conditions could cause bank and financial service company stocks to suffer losses. Healthcare companies are strongly affected by worldwide scientific or technological developments and changes in governmental policies. Technology companies are subject to intense competition, making products quickly obsolete. Some technology companies are smaller and may have limited product lines and financial and managerial resources, making them more vulnerable to isolated business setbacks. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Stocks of small- and medium-capitalization companies can be more volatile than those of larger companies. o Certain derivatives could produce disproportionate losses. o In a down market, emerging market securities, other higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability; these risks are more significant in emerging markets. [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 1.00% 1.00% 1.00% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.70% 0.70% 0.70% - -------------------------------------------------------------------------------- Total fund operating expenses 2.00% 2.70% 2.70% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-29-08) 0.35% 0.35% 0.35% - -------------------------------------------------------------------------------- Net annual operating expenses 1.65% 2.35% 2.35% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 29, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $659 $1,064 $1,493 $2,684 - -------------------------------------------------------------------------------- Class B with redemption $738 $1,105 $1,599 $2,837 - -------------------------------------------------------------------------------- Class B without redemption $238 $805 $1,399 $2,837 - -------------------------------------------------------------------------------- Class C with redemption $338 $805 $1,399 $3,006 - -------------------------------------------------------------------------------- Class C without redemption $238 $805 $1,399 $3,006 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER - ------------------------------------------- MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS FINANCIAL SERVICES - ------------------------------------------- Lisa A. Welch Joined fund team in 2000 Roger C. Hamilton Joined fund team in 2006 Financial services portfolio managers share investment strategy and decisions. HEALTHCARE -- Timothy E. Keefe, CFA - ------------------------------------------- Joined fund team in 2007; Healthcare portfolio manager TECHNOLOGY -- Thomas P. Norton, CFA - ------------------------------------------- Joined fund team in 2006; Technology portfolio manager See page 45 for the management biographies. FUND CODES Class A Ticker JGTAX CUSIP 41014V109 Newspaper GTrendA SEC number 811-4079 JH fund number 46 Class B Ticker JGTBX CUSIP 41014V208 Newspaper GTrendB SEC number 811-4079 JH fund number 146 Class C Ticker JGTCX CUSIP 41014V307 Newspaper GTrendC SEC number 811-4079 JH fund number 546
13 Large Cap Equity Fund [CLIP ART] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of large-capitalization companies (companies in the capitalization range of the Standard & Poor's 500 Index, which was $1.41 billion to $446.9 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the management team looks for companies that are undervalued and/or offer the potential for above-average earnings growth. The management team employs a combination of proprietary financial models and bottom-up, fundamental financial research to identify companies that are selling at what appear to be substantial discounts to their long-term intrinsic value. These companies often have identifiable catalysts for growth, such as new products, business reorganizations or mergers. The fund manages risk by typically holding between 50 and 150 large companies that are diversified across industry sectors. The management team also uses fundamental financial analysis to identify individual companies with substantial cash flows, reliable revenue streams, superior competitive positions and strong management. The fund may attempt to take advantage of short-term market volatility by investing in corporate restructurings or pending acquisitions. The fund may invest up to 20% of its assets in bonds of any maturity, with up to 15% of net assets in junk bonds rated as low as CC/Ca and their unrated equivalents. In selecting bonds, the management team looks for the most favorable risk/return ratios. The fund may invest up to 35% of assets in foreign securities. The fund may also make limited use of certain derivatives (investments whose value is based on indexes, securities or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '99, 31.65% Worst quarter: Q3 `01, -24.00% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- 36.71% 15.94% 37.89% -2.93% -3.36% -37.83% 23.29% 4.14% 16.26% 20.22% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of 1 year 5 years 10 years Class C - -------------------------------------------------------------------------------- Class A before tax 14.20% 1.16% 8.07% -- - -------------------------------------------------------------------------------- Class A after tax on distributions 14.20% 1.14% 6.62% -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 9.23% 0.97% 6.39% -- - -------------------------------------------------------------------------------- Class B before tax 14.32% 1.07% 7.99% -- - -------------------------------------------------------------------------------- Class C before tax (began 5-1-98) 18.32% 1.45% -- 3.70% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.19% 8.42% 4.38% - --------------------------------------------------------------------------------
14 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. o Any bonds held by the fund could be downgraded in credit rating or go into default. Bond prices generally fall when interest rates rise, and longer maturity will increase volatility. Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) ================================================================================ Class A Class B Class C - ------------------------------------------------------------------------------- Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.625% 0.625% 0.625% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.25% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.355% 0.355% 0.355% - -------------------------------------------------------------------------------- Total fund operating expenses 1.23% 1.98% 1.98% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $619 $871 $1,142 $1,914 - -------------------------------------------------------------------------------- Class B with redemption $701 $921 $1,268 $2,113 - -------------------------------------------------------------------------------- Class B without redemption $201 $621 $1,068 $2,113 - -------------------------------------------------------------------------------- Class C with redemption $301 $621 $1,068 $2,306 - -------------------------------------------------------------------------------- Class C without redemption $201 $621 $1,068 $2,306 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Rejoined fund team in 2004 Day-to-day purchase and sale decisions Roger C. Hamilton Joined fund team in 2004 Analysis of specific issuers Timothy M. Malloy Joined fund team in 2006 Analysis of specific issuers See page 45 for the management biographies. FUND CODES Class A Ticker TAGRX CUSIP 41013P103 Newspaper LgCpEqA SEC number 811-0560 JH fund number 50 Class B Ticker TSGWX CUSIP 41013P202 Newspaper LgCpEqB SEC number 811-0560 JH fund number 150 Class C Ticker JHLVX CUSIP 41013P301 Newspaper LgCpEqC SEC number 811-0560 JH fund number 550
15 Large Cap Select Fund [CLIP ART] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of large-capitalization companies (companies with market capitalizations in excess of $5 billion). The fund invests primarily in U.S.-based companies whose growth, cash flow, earnings and dividend attributes are attractive and whose securities are reasonably priced and have the potential for capital appreciation, in the opinion of the management team. In managing the portfolio, the management team looks for companies with strong balance sheets and sustainable earnings growth. In evaluating the prospects for a company's growth and earnings, the management team considers, among other things, the company's historical performance and growth strategy, the growth rate of the industries in which it operates and the markets into which it sells, the nature of its competitive environment, technological developments and trends in market share. In attempting to determine reasonable price levels for a company's securities, the management team utilizes a variety of measurement methods, including discounted cash flow analysis of expected earnings streams and an evaluation of the company's price-to-earnings ratio. Under normal market conditions, the fund invests substantially all of its assets in equity securities (common and preferred stocks and their equivalents). In abnormal conditions, the fund may invest extensively in investment-grade short-term securities. In these and other cases, the fund may not achieve its goal. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help to provide an indication of the fund's risks. Year-by-year and average annual figures for the period prior to August 22, 2003 reflect the actual performance of the sole class of M.S.B. Fund, Inc., the fund's predecessor. On August 22, 2003, the fund acquired all of the assets of M.S.B. Fund, Inc., pursuant to an agreement and plan of reorganization in exchange for Class A shares of the fund. The average annual returns for Class A have been restated to reflect applicable sales charges. This adjustment will have the effect of reducing the previously reported performance of the M.S.B. Fund, Inc. Year-by-year and index figures do not reflect sales charges and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '98, 22.56% Worst quarter: Q3 `02, -12.82% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- 28.88% 31.45% 5.79% 5.68% -3.73% -15.08% 17.15% 5.17% -2.38% 14.37% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of 1 year 5 years 10 years Class B Class C - -------------------------------------------------------------------------------- Class A before tax 8.63% 2.10% 7.30% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions 7.65% 1.58% 6.22% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 6.39% 1.64% 5.99% -- -- - -------------------------------------------------------------------------------- Class B before tax (began 8-25-03) 8.52% -- -- 6.32% -- - -------------------------------------------------------------------------------- Class C before tax (began 8-25-03) 12.52% -- -- -- 7.09% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.19% 8.42% 13.24% 13.24% - --------------------------------------------------------------------------------
16 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the management team's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. - -------------------------------------------------------------------------------- [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.75% 0.75% 0.75% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.25% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.48% 0.48% 0.48% - -------------------------------------------------------------------------------- Total fund operating expenses 1.48% 2.23% 2.23% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.13% 0.13% 0.13% - -------------------------------------------------------------------------------- Net annual operating expenses 1.35% 2.10% 2.10% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $631 $932 $1,256 $2,169 - -------------------------------------------------------------------------------- Class B with redemption $713 $985 $1,383 $2,365 - -------------------------------------------------------------------------------- Class B without redemption $213 $685 $1,183 $2,365 - -------------------------------------------------------------------------------- Class C with redemption $313 $685 $1,183 $2,554 - -------------------------------------------------------------------------------- Class C without redemption $213 $685 $1,183 $2,554 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." - -------------------------------------------------------------------------------- SUBADVISER Shay Assets Management, Inc. Responsible for day-to-day investment management Founded in 1981 Supervised by the adviser PORTFOLIO MANAGERS John J. McCabe Managed fund since 1991 Mark F. Trautman Managed fund since 1993 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES Class A Ticker MSBFX CUSIP 409902749 Newspaper -- SEC number 811-1677 JH fund number 49 Class B Ticker JHLBX CUSIP 409902731 Newspaper -- SEC number 811-1677 JH fund number 149 Class C Ticker JHLCX CUSIP 409902723 Newspaper -- SEC number 811-1677 JH fund number 549
17 Mid Cap Equity Fund [CLIP ART] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of medium-capitalization companies (companies in the capitalization range of the Standard & Poor's MidCap 400 Index, which was $500 million to $10.62 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. The fund will primarily invest in securities of U.S. companies. In managing the portfolio, the management team emphasizes a bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for companies that possess a combination of strong earnings growth rates and attractive valuations. These companies often exhibit financial strength by means of sound balance sheets and other financial statements. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams and strong competitive positions. To a lesser extent, the team also utilizes technical analysis to assess short- and long-term market trends. The management team also looks for companies with strong senior management and coherent business strategies. The fund may also make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows the fund's calendar year total return, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total return for Class C has been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 `04, 9.66% Worst quarter: Q2 `06, -7.20% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's MidCap 400 Index, an unmanaged index of 400 domestic stocks of medium-sized companies. Standard & Poor's MidCap 400/Citigroup Growth Index, an unmanaged index comprised of stocks representing approximately half of the S&P MidCap 400 Index that have been identified as being on the growth end of the growth-value spectrum. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 2004 2005 2006 - -------------------------------------------------------------------------------- 12.06% 16.85% 5.29% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of Life of 1 year Class A Class B Class C - -------------------------------------------------------------------------------- Class A before tax (began 8-4-03) 0.04% 13.14% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions -0.52% 11.64% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 0.79% 10.90% -- -- - -------------------------------------------------------------------------------- Class B before tax (began 8-4-03) -0.28% -- 13.65% -- - -------------------------------------------------------------------------------- Class C before tax (began 8-4-03) 3.72% -- -- 14.29% - -------------------------------------------------------------------------------- Standard & Poor's MidCap 400 Index* 10.31% 16.99% 16.99% 16.99% - -------------------------------------------------------------------------------- Standard & Poor's MidCap 400/ Citigroup Growth Index* 5.90% 13.81% 13.81% 13.81% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund compared its performance to the Standard & Poor's MidCap 400 Index. After this date, the fund changed the index to which it compares its performance to a single index, the Standard & Poor's MidCap 400/Citigroup Growth Index, which better represents the fund and its strategy of investment in mid-cap growth stocks. 18 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Medium-capitalization stocks tend to be more volatile than stocks of larger companies, and as a group could fall out of favor with the market causing the fund to underperform investments that focus either on small- or large-capitalization stocks. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses(3) Class A Class B Class C - -------------------------------------------------------------------------------- Management fee 0.80% 0.80% 0.80% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 3.15% 3.15% 3.15% - -------------------------------------------------------------------------------- Total fund operating expenses 4.25% 4.95% 4.95% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-28-08) 2.87% 2.87% 2.87% - -------------------------------------------------------------------------------- Net annual operating expenses 1.38% 2.08% 2.08% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 28, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $633 $1,476 $2,332 $4,528 - -------------------------------------------------------------------------------- Class B with redemption $711 $1,530 $2,451 $4,668 - -------------------------------------------------------------------------------- Class B without redemption $211 $1,230 $2,251 $4,668 - -------------------------------------------------------------------------------- Class C with redemption $311 $1,230 $2,251 $4,806 - -------------------------------------------------------------------------------- Class C without redemption $211 $1,230 $2,251 $4,806 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." (3) Expense information in this table has been restated to reflect current fees. SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Henry E. Mehlman, CFA Managed fund since it began in 2003 Alan E. Norton, CFA Managed fund since it began in 2003 Managers share portfolio management responsibilities See page 45 for the management biographies. FUND CODES Class A Ticker JCEAX CUSIP 478032741 Newspaper -- SEC number 811-3392 JH fund number 81 Class B Ticker JCEBX CUSIP 478032733 Newspaper -- SEC number 811-3392 JH fund number 181 Class C Ticker JCECX CUSIP 478032725 Newspaper -- SEC number 811-3392 JH fund number 581
19 Multi Cap Growth Fund [CLIP ART] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests in a diversified portfolio of growth-oriented stocks of U.S. and foreign companies of any size. In managing the portfolio, the manager focuses primarily on stocks, selecting companies that are expected to have above-average growth. In choosing individual securities, the manager uses fundamental financial analysis to identify companies with improving business fundamentals, such as revenue growth, profitability and improving cash flows. The manager also looks for companies with strong senior management and coherent business strategies. He generally maintains personal contact with the senior management of the companies the fund invests in. The fund may invest in preferred stocks and other types of equity securities. The fund may also make limited use of certain derivatives (investments whose value is based on indexes or currencies). In abnormal market conditions, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 `01, 25.85% Worst quarter: Q1 `01, -28.42% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Russell 1000 Growth Index, an unmanaged index of growth stocks in the Russell 1000 Index (an unmanaged index of the 1,000 largest-capitalization U.S. stocks). Russell 2000 Growth Index, an unmanaged index containing those stocks from the Russell 2000 Index (an unmanaged index of 2,000 U.S. small-capitalization stocks) with a greater-than-average growth orientation. Russell 3000 Growth Index, an unmanaged index that measures the performance of Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- -23.89% -25.53% 34.10% 14.23% 3.46% 12.85% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of Life of 1 year 5 years Class A Class B Class C - -------------------------------------------------------------------------------- Class A before tax (began 12-1-00) 7.21% 4.82% -0.34% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions 7.01% 4.63% -0.49% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 4.95% 4.04% -0.37% -- -- - -------------------------------------------------------------------------------- Class B before tax (began 12-1-00) 7.06% 4.83% -- -0.18% -- - -------------------------------------------------------------------------------- Class C before tax (began 12-1-00) 11.06% 5.16% -- -- -0.18% - -------------------------------------------------------------------------------- Russell 1000 Growth Index* 9.07% 2.69% -2.19% -2.19% -2.19% - -------------------------------------------------------------------------------- Russell 2000 Growth Index* 13.35% 6.93% 4.45% 4.45% 4.45% - -------------------------------------------------------------------------------- Russell 3000 Growth Index* 9.46% 3.02% -1.56%+ -1.56%+ -1.56%+
* Prior to December 29, 2006, the fund compared its performance to both the Russell 1000 Growth Index and the Russell 2000 Growth Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Russell 3000 Growth Index, which incorporates all holdings that are in the Russell 1000 and Russell 2000 Indexes and is commonly used by other funds that invest across small, mid and large market capitalizations. + Return as of closest month end to inception date. 20 [COPY ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. The fund focuses on growth stocks, which could underperform value stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the manager's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of small- and medium-size companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price; this risk could also affect small-capitalization stocks, especially those with low trading volumes. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.75% 0.75% 0.75% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.92% 0.92% 0.92% - -------------------------------------------------------------------------------- Total fund operating expenses 1.97% 2.67% 2.67% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-29-08) 0.57% 0.57% 0.57% - -------------------------------------------------------------------------------- Net annual operating expenses 1.40% 2.10% 2.10% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 29, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only, and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $635 $1,035 $1,459 $2,637 - -------------------------------------------------------------------------------- Class B with redemption $713 $1,075 $1,564 $2,791 - -------------------------------------------------------------------------------- Class B without redemption $213 $775 $1,364 $2,791 - -------------------------------------------------------------------------------- Class C with redemption $313 $775 $1,364 $2,961 - -------------------------------------------------------------------------------- Class C without redemption $213 $775 $1,364 $2,961 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGER Thomas P. Norton, CFA Joined fund team in 2006 See page 45 for the management biographies. FUND CODES Class A Ticker JMGAX CUSIP 478032709 Newspaper -- SEC number 811-3392 JH fund number 10 Class B Ticker JMGBX CUSIP 478032808 Newspaper -- SEC number 811-3392 JH fund number 110 Class C Ticker JMGCX CUSIP 478032881 Newspaper -- SEC number 811-3392 JH fund number 510
21 Small Cap Fund [CLIP ART] GOAL AND STRATEGY The fund seeks capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (which, for purposes of this fund, are those companies with market capitalizations under $2 billion, or market capitalizations within the range of market capitalization of the companies in the Russell 2000 Index or the Standard & Poor's Small Cap 600 Index). In managing the portfolio, the portfolio manager selects securities using a bottom-up selection process that focuses on stocks of statistically undervalued yet promising companies that he believes are likely to show improving fundamental prospects with an identifiable catalyst for change. Such catalysts may include, but are not limited to, a new product, new management, regulatory changes, industry or company restructuring or a strategic acquisition. The portfolio manager attempts to identify undervalued securities using quantitative screening parameters, including various financial ratios and "earnings per share" revisions, which measure the change in earnings estimate expectations. The portfolio manager additionally narrows the list of stocks using fundamental security analysis, which may include on-site visits, outside research and analytical judgment. The fund may sell a security if, among other reasons, it reaches the target price set by the portfolio manager; the manager decides that the stock is statistically overvalued; or the portfolio manager believes earnings expectations or the fundamental outlook for the company have deteriorated. The fund may purchase other types of securities that are not primary investment vehicles, such as U.S. dollar-denominated foreign securities and ADRs, certain exchange-traded funds ("ETFs") and certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [CLIP ART] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of the fund's risks. Year-by-year and average annual figures for the period prior to December 3, 2004, reflect the actual performance of the sole class of Independence Small Cap Portfolio, the fund's predecessor. On December 3, 2004, the fund acquired all of the assets of Independence Small Cap Portfolio, pursuant to an agreement and plan of reorganization in exchange for Class A shares of the fund. The average annual returns for Class A have been restated to reflect applicable sales charges. This adjustment will have the effect of reducing the previously reported performance of the Independence Small Cap Portfolio. Year-by-year and index figures do not reflect sales charges and would be lower if they did. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. For the periods prior to June 24, 2002, the performance shown represents the performance of the UAM Independence Small Cap Portfolio (the "UAM Portfolio"). On June 24, 2002, Independence Small Cap Portfolio acquired all of the assets of the UAM Portfolio, which had the same investment adviser and portfolio management team, identical investment objectives and strategies and substantially similar fees and expenses as Independence Small Cap Portfolio. Class A, total returns Best quarter: Q2 `01, 25.55% Worst quarter: Q3 `02, -16.97% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's Small Cap 600 Index, an unmanaged index of 600 U.S. small- sized companies. Russell 2000 Index, an unmanaged index of 2,000 U.S. small-capitalization companies. [DATA BELOW IS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
================================================================================ Class A calendar year total returns (without sales charges) ================================================================================ 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- 4.59% 16.43% 16.55% -15.23% 34.62% 23.60% 4.29% 7.26% - --------------------------------------------------------------------------------
================================================================================ Average annual total returns (including sales charge) for periods ending 12-31-06 ================================================================================ Life of Life of Life of 1 year 5 years Class A Class B Class C - -------------------------------------------------------------------------------- Class A before tax (began 12-16-98) 1.90% 8.43% 10.75% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions 1.90% 7.57% 9.07% -- -- - -------------------------------------------------------------------------------- Class A after tax on distributions, with sale 1.23% 6.90% 8.64% -- -- - -------------------------------------------------------------------------------- Class B before tax (began 12-6-04) 1.57% -- -- 5.56% -- - -------------------------------------------------------------------------------- Class C before tax (began 12-6-04) 5.57% -- -- -- 6.92% - -------------------------------------------------------------------------------- Standard & Poor's Small Cap 600 Index 15.12% 12.50% 12.90% 12.02%* 12.02%* - -------------------------------------------------------------------------------- Russell 2000 Index 18.37% 11.39% 10.53% 11.98% 11.98% - --------------------------------------------------------------------------------
* Return as of closest month end to inception date. 22 [CLIP ART] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on medium- or large-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the manager's security selection strategies or the quantitative screening parameters do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult for the fund to sell these securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Foreign investments carry additional risks, including potentially inadequate or inaccurate financial information, and social or political instability. o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. - -------------------------------------------------------------------------------- [CLIP ART] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
================================================================================ Shareholder transaction expenses(1) Class A Class B Class C ================================================================================ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none - -------------------------------------------------------------------------------- Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00% - -------------------------------------------------------------------------------- ================================================================================ Annual operating expenses Class A Class B Class C ================================================================================ Management fee 0.90% 0.90% 0.90% - -------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.30% 1.00% 1.00% - -------------------------------------------------------------------------------- Other expenses 0.40% 0.40% 0.40% - -------------------------------------------------------------------------------- Total fund operating expenses 1.60% 2.30% 2.30% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-29-08) 0.00% 0.00% 0.00% - -------------------------------------------------------------------------------- Net annual operating expenses 1.60% 2.30% 2.30% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 29, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
================================================================================ Expenses Year 1 Year 3 Year 5 Year 10 ================================================================================ Class A $655 $980 $1,327 $2,305 - -------------------------------------------------------------------------------- Class B with redemption $733 $1,018 $1,430 $2,461 - -------------------------------------------------------------------------------- Class B without redemption $233 $718 $1,230 $2,461 - -------------------------------------------------------------------------------- Class C with redemption $333 $718 $1,230 $2,636 - -------------------------------------------------------------------------------- Class C without redemption $233 $718 $1,230 $2,636 - --------------------------------------------------------------------------------
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER Independence Investments LLC Responsible for day-to-day investment management A subsidiary of Convergent Capital Management LLC Founded in 1982 Supervised by the adviser PORTFOLIO MANAGER Charles S. Glovsky, CFA Managed fund since 1998 See page 45 for the management biographies. FUND CODES Class A Ticker DSISX CUSIP 41014V802 Newspaper -- SEC number 811-4079 JH fund number 82 Class B Ticker DSBSX CUSIP 41014V885 Newspaper -- SEC number 811-4079 JH fund number 182 Class C Ticker DSCSX CUSIP 41014V877 Newspaper -- SEC number 811-4079 JH fund number 582
23 Small Cap Equity Fund [GRAGHIC] GOAL AND STRATEGY The fund seeks capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (companies in the capitalization range of the Russell 2000 Index, which was $68 million to $3.1 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the management team emphasizes a bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for U.S. and foreign companies that possess a combination of strong earning growth rates and reasonable valuations. These companies often exhibit financial strength by means of sound balance sheets and other financial statements. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams and strong competitive positions. To a lesser extent, the team also utilizes technical analysis to assess short- and long-term market trends. The management team also looks for companies with strong senior management and coherent business strategies. They generally maintain personal contact with the senior management of the companies the fund invests in. The fund diversifies across industry sectors. The fund may not invest more than 5% of assets in any one security. The fund may invest up to 15% of assets in a basket of foreign securities or in bonds of any maturity rated as low as CC/Ca and their unrated equivalents (bonds below BBB/Baa are considered junk bonds). The fund may make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies) and may short-sell up to 15% of the fund's assets for non-speculative purposes to manage volatility. Under normal conditions, the fund may not invest more than 10% of assets in cash or cash equivalents. In abnormal circumstances, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [GRAGHIC] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 `99, 47.75% Worst quarter: Q3 `01, -33.72% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Russell 2000 Index, an unmanaged index of 2,000 U.S. small-capitalization stocks. Standard & Poor's Small Cap 600 Index, an unmanaged index of 600 U.S. small-sized companies. Russell 2000 Growth Index, an unmanaged index of stocks in the Russell 2000 Index with high price-to-book ratios and higher forecasted values. [THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL] - -------------------------------------------------------------------------------- Class A calendar year total returns (without sales charges) - -------------------------------------------------------------------------------- 1997 25.25% 1998 -2.10% 1999 98.25% 2000 -6.26% 2001 10.97% 2002 -44.33% 2003 48.91% 2004 12.86% 2005 8.23% 2006 6.84%
- -------------------------------------------------------------------------------- Average annual total returns (including sales charge) for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year 5 years 10 years Class C Class A before tax 1.50% 0.55% 10.03% -- Class A after tax on distributions 1.50% 0.55% 9.21% -- Class A after tax on distributions, with sale 0.97% 0.47% 8.41% -- Class B before tax 1.13% 0.49% 9.98% -- Class C before tax (began 5-1-98) 5.13% 0.88% -- 7.50% - ----------------------------------------------------------------------------------------- Russell 2000 Index* 18.37% 11.39% 9.44% 7.10% Standard & Poor's Small Cap 600 Index* 15.12% 12.50% 11.58% 9.05% Russell 2000 Growth Index* 13.35% 6.93% 4.88% 2.73%
* Prior to December 29, 2006, the fund compared its performance to both the Russell 2000 Index and the Standard & Poor's Small Cap 600 Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Russell 2000 Growth Index, which better represents the fund and its strategy of investment in small-cap growth stocks. 24 [GRAPHIC] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on medium- or large-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the management teams security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more established companies, it may be difficult for the fund to sell these securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives, such as short sales, could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. o Any bonds held by the fund could be downgraded in credit quality or go into default. In addition, bond prices generally fall when interest rates rise; this risk is greater for longer maturity bonds. Junk bond prices can fall on bad news about the issuer, an industry or the economy in general. - -------------------------------------------------------------------------------- [GRAPHIC] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
- ----------------------------------------------------------------------------------- Shareholder transaction expenses(1) Class A Class B Class C - ----------------------------------------------------------------------------------- Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00%
- ----------------------------------------------------------------------------------- Annual operating expenses Class A Class B Class C - ----------------------------------------------------------------------------------- Management fee 0.70% 0.70% 0.70% Distribution and service (12b-1) fees 0.30% 1.00% 1.00% Other expenses 0.42% 0.42% 0.42% Total fund operating expenses 1.42% 2.12% 2.12%
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- ---------------------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - ---------------------------------------------------------------------------------------------- Class A $637 $927 $1,238 $2,117 Class B with redemption $715 $964 $1,339 $2,274 Class B without redemption $215 $664 $1,139 $2,274 Class C with redemption $315 $664 $1,139 $2,452 Class C without redemption $215 $664 $1,139 $2,452
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." - -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Alan E. Norton, CFA Joined fund team in 2002 Henry E. Mehlman, CFA Joined fund team in 2002 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES Class A Ticker SPVAX CUSIP 409905700 Newspaper SmCpEqA SEC number 811-3999 JH fund number 37 Class B Ticker SPVBX CUSIP 409905809 Newspaper SmCpEqB SEC number 811-3999 JH fund number 137 Class C Ticker SPVCX CUSIP 409905882 Newspaper SmCpEqC SEC number 811-3999 JH fund number 537
25 Small Cap Intrinsic Value Fund [GOAL] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (companies in the capitalization range of the Russell 2000 Index, which was $68 million to $3.1 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the management team emphasizes a value-oriented bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for companies that are selling at what appear to be substantial discounts to their long-term intrinsic values. These companies often have identifiable catalysts for growth, such as new products, business reorganizations or mergers. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams, strong competitive positions and strong management. The fund may attempt to take advantage of short-term market volatility by investing in corporate restructurings or pending acquisitions. The fund may invest up to 35% of assets in foreign securities. The fund may invest up to 20% of assets in bonds of any maturity rated as low as CC/Ca and their unrated equivalents (bonds below BBB/Baa are considered junk bonds). The fund may make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [GOAL] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help to provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '06, 14.82% Worst quarter: Q3 '06, -1.77% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Russell 2000 Value Index, an unmanaged index which offers investors access to the small-cap segment of the U.S. equity universe. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set. The Russell 2000 includes the smallest 2000 securities in the Russell 3000. Class A calendar year total returns (without sales charges) [THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL] 2006 28.99%
- -------------------------------------------------------------------------------- Average annual total returns (including sales charge) for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of Life of Life of 1 year Class A Class B Class C Class A before tax (began 2-28-05) 22.54% 21.81% -- -- Class A after tax on distributions 21.65% 19.60% -- -- Class A after tax on distributions, with sale 14.69% 17.36% -- -- Class B before tax (began 2-28-05) 23.20% -- 22.72% -- Class C before tax (began 2-28-05) 27.20% -- -- 24.54% Russell 2000 Value Index 23.48% 16.24% 16.24% 16.24%
26 [GRAPHIC] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on medium- or large-capitalization stocks. Similarly, value stocks could under-perform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the management team's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more established companies, it may be difficult for the fund to sell its securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. o Any bonds held by the fund could be downgraded in credit quality or go into default. Bond prices generally fall when interest rates rise and longer-maturity will increase volatility Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [GRAPHIC] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
- ------------------------------------------------------------------------------------------- Shareholder transaction expenses(1) Class A Class B Class C - ------------------------------------------------------------------------------------------- Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00%
- ------------------------------------------------------------------------------------------- Annual operating expenses(3) Class A Class B Class C - ------------------------------------------------------------------------------------------- Management fee 0.90% 0.90% 0.90% Distribution and service (12b-1) fees 0.30% 1.00% 1.00% Other expenses 1.03% 1.03% 1.03% Total fund operating expenses 2.23% 2.93% 2.93% Contractual expense reimbursement (at least until 4-30-08) 0.58% 0.58% 0.58% Net annual operating expenses 1.65% 2.35% 2.35%
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- ------------------------------------------------------------------------------------------------------ Expenses Year 1 Year 3 Year 5 Year 10 - ------------------------------------------------------------------------------------------------------ Class A $659 $1,109 $1,585 $2,893 Class B with redemption $738 $1,152 $1,692 $3,045 Class B without redemption $238 $ 852 $1,492 $3,045 Class C with redemption $338 $ 852 $1,492 $3,211 Class C without redemption $238 $ 852 $1,492 $3,211
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." (3) Expense information in this table has been restated to reflect current fees. - -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Managed fund since it began in 2005 Timothy M. Malloy Managed fund since it began in 2005 Managers share investment strategy decisions See page 45 for the management biographies. FUND CODES Class A Ticker JHIAX CUSIP 41013P848 Newspaper -- SEC number 811-0560 JH fund number 64 Class B Ticker JCIBX CUSIP 41013P830 Newspaper -- SEC number 811-0560 JH fund number 164 Class C Ticker JSICX CUSIP 41013P822 Newspaper -- SEC number 811-0560 JH fund number 564
27 Sovereign Investors Fund [GRAPHIC] GOAL AND STRATEGY The fund seeks long-term growth of capital and income without assuming undue market risks. To pursue this goal, the fund normally invests at least 80% of its stock investments in a diversified portfolio of companies with market capitalizations within the range of the Standard & Poor's 500 Index. On December 31, 2006, that range was $1.41 billion to $446.9 billion. At least 65% of the fund's stock investments are "dividend performers" -- companies whose dividend payments have increased steadily for ten years. In managing the portfolio, the management team uses fundamental financial analysis to identify individual companies with high-quality income statements, substantial cash reserves and identifiable catalysts for growth, which may be new products or benefits from industrywide growth. The management team generally visits companies to evaluate the strength and consistency of their management strategy. Finally, the management team looks for stocks that are reasonably priced relative to their earnings and industry. The fund may not invest more than 5% of assets in any one security. The fund may invest in bonds of any maturity, with up to 5% of assets in junk bonds rated as low as C and their unrated equivalents. The fund typically invests in U.S. companies but may invest in dollar-denominated foreign securities. It may also make limited use of certain derivatives (investments whose value is based on indexes). Under normal conditions, the fund may not invest more than 10% of assets in cash or cash equivalents. In abnormal market conditions, the fund may temporarily invest extensively in investment-grade short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [GRAPHIC] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help provide an indication of the fund's risks. The average annual figures reflect sales charges; the year-by-year and index figures do not and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '98, 15.56% Worst quarter: Q3 '02, -13.87% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. - -------------------------------------------------------------------------------- Class A calendar year total returns (without sales charges) - -------------------------------------------------------------------------------- [THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL] 1997 29.14% 1998 15.62% 1999 5.91% 2000 4.08% 2001 -6.06% 2002 -18.68% 2003 19.55% 2004 5.23% 2005 2.28% 2006 14.67%
- -------------------------------------------------------------------------------- Average annual total returns (including sales charge) for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year 5 years 10 years Class C Class A before tax 8.96% 2.65% 5.83% -- Class A after tax on distributions 6.96% 1.73% 4.34% -- Class A after tax on distributions, with sale 7.94% 1.99% 4.47% -- Class B before tax 8.92% 2.64% 5.77% -- Class C before tax (began 5-1-98) 12.90% 2.99% -- 2.47% Standard & Poor's 500 Index 15.79% 6.19% 8.42% 4.38%
28 [GRAPHIC] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on small- or medium-capitalization stocks. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o Certain derivatives could produce disproportionate losses. o In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including inadequate or inaccurate financial information, and social or political instability. o Any bonds held by the fund could be downgraded in credit rating or go into default. Bond prices generally fall when interest rates rise and longer maturity will increase volatility. Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [GRAPHIC] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
- ------------------------------------------------------------------------------------ Shareholder transaction expenses(1) Class A Class B Class C - ------------------------------------------------------------------------------------ Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00%
- ------------------------------------------------------------------------------------ Annual operating expenses Class A Class B Class C - ------------------------------------------------------------------------------------ Management fee 0.59% 0.59% 0.59% Distribution and service (12b-1) fees 0.30% 1.00% 1.00% Other expenses 0.27% 0.27% 0.27% Total fund operating expenses 1.16% 1.86% 1.86%
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- ------------------------------------------------------------------------------------------------ Expenses Year 1 Year 3 Year 5 Year 10 - ------------------------------------------------------------------------------------------------ Class A $612 $850 $1,106 $1,839 Class B with redemption $689 $885 $1,206 $1,997 Class B without redemption $189 $585 $1,006 $1,997 Class C with redemption $289 $585 $1,006 $2,180 Class C without redemption $189 $585 $1,006 $2,180
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER Sovereign Asset Management LLC a division of MFC Global Investment Management (U.S.), LLC Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS John F. Snyder III Joined fund team in 1983 Barry H. Evans, CFA Joined fund team in 1996 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES
Class A Ticker SOVIX CUSIP 47803P302 Newspaper SvInvA SEC number 811-0560 JH fund number 29 Class B Ticker SOVBX CUSIP 47803P401 Newspaper SvInvB SEC number 811-0560 JH fund number 129 Class C Ticker SOVCX CUSIP 47803P609 Newspaper -- SEC number 811-0560 JH fund number 529
29 U.S. Global Leaders Growth Fund [GRAPHIC] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund invests primarily in common stocks of "U.S. Global Leaders." Under normal market conditions, at least 80% of the fund's assets will be invested in stocks of companies the managers regard as U.S. Global Leaders. The management team considers U.S. Global Leaders to be U.S. companies with multinational operations that typically exhibit the following key sustainable growth characteristics: o Hold leading market shares of their relevant industries that result in higher profit margins and high investment returns. o Supply consumable products or services so that their revenue streams are recurring. The management team seeks to identify companies with superior long-term earnings prospects and to continue to own them as long as the managers believe they will continue to enjoy favorable prospects for capital growth and are not overvalued in the marketplace. As a result of its investment strategy, the fund typically invests in large-capitalization companies (companies in the capitalization range of the Standard & Poor's 500 Index, which was $1.41 billion to $446.9 billion as of December 31, 2006). The fund is non-diversified, which allows it to make larger investments in individual companies. The fund may invest in other types of equity securities and foreign stocks. In abnormal circumstances, the fund may temporarily invest in short-term cash equivalents. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [GRAPHIC] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of the fund's risks. Year-by-year and average annual figures for the period prior to May 17, 2002 reflect the actual performance of the sole class of U.S. Global Leaders Growth Fund, the fund's predecessor. On May 17, 2002, the fund acquired all of the assets of U.S. Global Leaders Growth Fund pursuant to an agreement and plan of reorganization in exchange for Class A shares of the fund. The average annual returns for Class A have been restated to reflect applicable sales charges. This adjustment will have the effect of reducing the previously reported performance of the U.S. Global Leaders Growth Fund. Year-by-year and index figures do not reflect sales charges and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class A, total returns Best quarter: Q4 '98, 29.43% Worst quarter: Q3 '98, -16.69% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Growth Index, an unmanaged index of companies in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with high price-to-book ratios and higher forecasted growth values. - -------------------------------------------------------------------------------- Class A calendar year total returns (without sales charges) - -------------------------------------------------------------------------------- [THE FOLLOWING DATA IS A REPRESENTATION OF A BAR CHART IN THE PRINTED MATERIAL] 1997 40.68% 1998 31.98% 1999 7.88% 2000 4.15% 2001 -6.83% 2002 -14.51% 2003 19.24% 2004 8.51% 2005 2.16% 2006 1.44%
- -------------------------------------------------------------------------------- Average annual total returns (including sales charge) for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of Life of 1 year 5 years 10 years Class B Class C Class A before tax -3.64% 1.72% 7.79% -- -- Class A after tax on distributions -3.64% 1.70% 7.78% -- -- Class A after tax on distributions, with sale -2.37% 1.46% 6.90% -- -- Class B before tax (began 5-20-02) -4.32% -- -- 1.32% -- Class C before tax (began 5-20-02) -0.32% -- -- -- 1.73% Standard & Poor's 500 Index* 15.79% 6.19% 8.42% 7.76% 7.76% Russell 1000 Growth Index* 9.07% 2.69% 5.44% 5.18% 5.18%
* As of December 29, 2006, the fund is adding the Russell 1000 Growth Index, another benchmark that the Fund is being measured against on both the consultant and institutional side. 30 [GRAPHIC] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. Similarly, growth stocks could underperform value stocks. Companies that have substantial multinational operations may be affected by fluctuations in currency exchange rates and by economic and political conditions in foreign countries. These conditions may include restrictions on monetary repatriation and possible seizure, nationalization or expropriation of assets. To the extent the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: o If the fund invests heavily in a single issuer, its performance could suffer significantly from adverse events affecting that issuer. o In a down market, higher-risk securities could become harder to value or to sell at a fair price. o Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [GRAPHIC] YOUR EXPENSES Transaction expenses are charged directly to your account. Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly.
- -------------------------------------------------------------------------------------------- Shareholder transaction expenses(1) Class A Class B Class C - -------------------------------------------------------------------------------------------- Maximum front-end sales charge (load) on purchases as a % of purchase price 5.00% none none Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less none(2) 5.00% 1.00%
- -------------------------------------------------------------------------------------------- Annual operating expenses Class A Class B Class C - -------------------------------------------------------------------------------------------- Management fee 0.75% 0.75% 0.75% Distribution and service (12b-1) fees 0.25% 1.00% 1.00% Other expenses 0.31% 0.31% 0.31% Total fund operating expenses 1.31% 2.06% 2.06% Contractual expense reimbursement (at least until 4-30-08) 0.03% 0.03% 0.03% Net annual operating expenses 1.28% 2.03% 2.03%
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------------------------------- Class A $624 $892 $1,180 $1,998 Class B with redemption $706 $943 $1,306 $2,195 Class B without redemption $206 $643 $1,106 $2,195 Class C with redemption $306 $643 $1,106 $2,387 Class C without redemption $206 $643 $1,106 $2,387
(1) A $4.00 fee will be charged for wire redemptions. (2) Except for investments of $1 million or more; see "How sales charges are calculated." SUBADVISER Sustainable Growth Advisers, LP Responsible for day-to-day investment management Founded in 2003 Supervised by the adviser PORTFOLIO MANAGERS Gordon M. Marchand, CFA, CIC Managed fund since 1995 George P. Fraise Joined fund team in 2000 Robert L. Rohn Joined fund team in 2003 Managers share investment strategy and decisions See page 45 for the management biographies. FUND CODES Class A Ticker USGLX CUSIP 409902830 Newspaper USGlobLdrs SEC number 811-1677 JH fund number 26 Class B Ticker USLBX CUSIP 409902822 Newspaper -- SEC number 811-1677 JH fund number 126 Class C Ticker USLCX CUSIP 409902814 Newspaper -- SEC number 811-1677 JH fund number 526
31 - -------------------------------------------------------------------------------- Your account CHOOSING A SHARE CLASS Each share class has its own cost structure, including a Rule 12b-1 plan that allows it to pay fees for the sale, distribution and service of its shares. Your financial representative can help you decide which share class is best for you. - -------------------------------------------------------------------------------- Class A - -------------------------------------------------------------------------------- o A front-end sales charge, as described in the section HOW SALES CHARGES ARE CALCULATED o Distribution and service (12b-1) fees of 0.30% (0.25% for Classic Value, Classic Value II, Large Cap Equity, Large Cap Select and U.S. Global Leaders Growth) - -------------------------------------------------------------------------------- Class B - -------------------------------------------------------------------------------- o No front-end sales charge; all your money goes to work for you right away o Distribution and service (12b-1) fees of 1.00% o A deferred sales charge, as described in the section HOW SALES CHARGES ARE CALCULATED o Automatic conversion to Class A shares after eight years, thus reducing future annual expenses - -------------------------------------------------------------------------------- Class C - -------------------------------------------------------------------------------- o No front-end sales charge; all your money goes to work for you right away o Distribution and service (12b-1) fees of 1.00% o A 1.00% contingent deferred sales charge on shares sold within one year of purchase o No automatic conversion to Class A shares, so annual expenses continue at the Class C level throughout the life of your investment The maximum amount you may invest in Class B shares with any single purchase request is $99,999, and the maximum amount you may invest in Class C shares with any single purchase is $999,999. Signature Services may accept a purchase request for Class B shares for $100,000 or more or for Class C shares for $1,000,000 or more when the purchase is pursuant to the Reinstatement Privilege (see SALES CHARGE REDUCTIONS AND WAIVERS). For actual past expenses of each share class, see the fund-by-fund information earlier in this prospectus. Because 12b-1 fees are paid on an ongoing basis, they will increase the cost of your investment and may cost shareholders more than other types of sales charges. Other classes of shares of the funds, which have their own expense structure, may be offered in separate prospectuses. Your broker-dealer or agent may charge you a fee to effect transactions in fund shares. Additional payments to financial intermediaries Shares of the funds are primarily sold through financial intermediaries (firms), such as brokers, banks, registered investment advisers, financial planners and retirement plan administrators. These firms may be compensated for selling shares of the funds in two principal ways: o directly, by the payment of sales commissions, if any, and o indirectly, as a result of the fund paying Rule 12b-1 fees Certain firms may request, and the distributor may agree to make, payments in addition to sales commissions and 12b-1 fees out of the distributor's own resources. These additional payments are sometimes referred to as "revenue sharing." These payments assist in our efforts to promote the sale of the funds' shares. The distributor agrees with the firm on the methods for calculating any additional compensation, which may include the level of sales or assets attributable to the firm. Not all firms receive additional compensation, and the amount of compensation varies. These payments could be significant to a firm. The distributor determines which firms to support and the extent of the payments it is willing to make. The distributor generally chooses to compensate firms that have a strong capability to distribute shares of the funds and that are willing to cooperate with the distributor's promotional efforts. The distributor hopes to benefit from revenue sharing by increasing the funds' net assets, which, as well as benefiting the funds, would result in additional management and other fees for the investment adviser and its affiliates. In consideration for revenue sharing, a firm may feature certain funds in its sales system or give preferential access to members of its sales force or management. In addition, the firm may agree to participate in the distributor's marketing efforts by allowing us to participate in conferences, seminars or other programs attended by the intermediary's sales force. Although an intermediary may seek revenue sharing payments to offset costs incurred by the firm in servicing its clients that have invested in the funds, the intermediary may earn a profit on these payments. Revenue sharing payments may provide your firm with an incentive to favor the funds. The Statement of Additional Information (SAI) discusses the distributor's revenue sharing arrangements in more detail. Your intermediary may charge you additional fees other than those disclosed in this prospectus. You can ask your firm about any payments it receives from the distributor or the funds, as well as about fees and/or commissions it charges. The distributor, investment adviser and their affiliates may have other relationships with your firm relating to the provisions of services to the funds, such as providing omnibus account services, transaction processing services or effecting portfolio transactions for funds. If your intermediary provides these services, the investment adviser or the funds may compensate the intermediary for these services. In addition, your intermediary may have other compensated relationships with the investment adviser or its affiliates that are not related to the funds. - -------------------------------------------------------------------------------- HOW SALES CHARGES ARE CALCULATED Class A Sales charges are as follows: - -------------------------------------------------------------------------------- Class A sales charges - --------------------------------------------------------------------------------
As a % of As a % of your Your investment offering price* investment Up to $49,999 5.00% 5.26% $50,000 - $99,999 4.50% 4.71% $100,000 - $249,999 3.50% 3.63% $250,000 - $499,999 2.50% 2.56% $500,000 - $999,999 2.00% 2.04% $1,000,000 and over See next page
*Offering price is the net asset value per share plus any initial sales charge. 32 YOUR ACCOUNT You may qualify for a reduced Class A sales charge if you own or are purchasing Class A, Class B, Class C, Class I or Class R shares of John Hancock open-end mutual funds. To receive the reduced sales charge, you must tell your broker or financial representative at the time you purchase a fund's Class A shares about any other John Hancock mutual funds held by you, your spouse or your children under the age of 21 living in the same household. This includes investments held in a retirement account, an employee benefit plan or with a broker or financial representative other than the one handling your current purchase. John Hancock will credit the combined value, at the current offering price, of all eligible accounts to determine whether you qualify for a reduced sales charge on your current purchase. You may need to provide documentation for these accounts, such as an account statement. For more information about these reduced sales charges, you may visit the funds' Web site at www.jhfunds.com. You may also consult your broker or financial representative, or refer to the section entitled "Initial Sales Charge on Class A Shares" in a fund's SAI. You may request an SAI from your broker or financial representative, access the funds' Web site at www.jhfunds.com, or call John Hancock Signature Services, Inc. (Signature Services), the funds' transfer agent, at 1-800-225-5291. Investments of $1 million or more Class A shares are available with no front-end sales charge. There is a contingent deferred sales charge (CDSC) on any Class A shares upon which a commission or finder's fee was paid that are sold within one year of purchase, as follows: - -------------------------------------------------------------------------------- Class A deferred charges on $1 million + investments - --------------------------------------------------------------------------------
CDSC on shares Your investment being sold First $1M - $4,999,999 1.00% Next $1 - $5M above that 0.50% Next $1 or more above that 0.25%
For purposes of this CDSC, all purchases made during a calendar month are counted as having been made on the first day of that month. The CDSC is based on the lesser of the original purchase cost or the current market value of the shares being sold, and is not charged on shares you acquired by reinvesting your dividends. To keep your CDSC as low as possible, each time you place a request to sell shares, we will first sell any shares in your account that are not subject to a CDSC. Class B and Class C Shares are offered at their net asset value per share, without any initial sales charge. A CDSC may be charged if a commission has been paid and you sell Class B or Class C shares within a certain time after you bought them, as described in the tables below. There is no CDSC on shares acquired through reinvestment of dividends. The CDSC is based on the original purchase cost or the current market value of the shares being sold, whichever is less. The CDSCs are as follows: - -------------------------------------------------------------------------------- Class B deferred charges - --------------------------------------------------------------------------------
CDSC on shares Years after purchase being sold 1st year 5.00% 2nd year 4.00% 3rd or 4th year 3.00% 5th year 2.00% 6th year 1.00% After 6th year none
- -------------------------------------------------------------------------------- Class C deferred charges - --------------------------------------------------------------------------------
Years after purchase CDSC 1st year 1.00% After 1st year none
For purposes of these CDSCs, all purchases made during a calendar month are counted as having been made on the first day of that month. To keep your CDSC as low as possible, each time you place a request to sell shares, we will first sell any shares in your account that carry no CDSC. If there are not enough of these to meet your request, we will sell those shares that have the lowest CDSC. - -------------------------------------------------------------------------------- SALES CHARGE REDUCTIONS AND WAIVERS Reducing your Class A sales charges There are several ways you can combine multiple purchases of Class A shares of John Hancock funds to take advantage of the breakpoints in the sales charge schedule. The first three ways can be combined in any manner. o Accumulation Privilege - lets you add the value of any class of shares of any John Hancock funds you already own to the amount of your next Class A investment for the purpose of calculating the sales charge. However, Class A shares of money market funds will not qualify unless you have already paid a sales charge on those shares. o Letter of Intention - lets you purchase Class A shares of a fund over a 13-month period and receive the same sales charge as if all shares had been purchased at once. You can use a Letter of Intention to qualify for reduced sales charges if you plan to invest at least $50,000 in a fund's Class A shares during the next 13 months. The calculation of this amount would include accumulation and combinations as well as your current holdings of all classes of John Hancock funds, which includes any reinvestment of dividends and capital gains distributions. However, Class A shares of money market funds will be excluded unless you have already paid a sales charge. When you sign this letter, the funds agree to charge you the reduced sales charges listed above. Completing a Letter of Intention does not obligate you to purchase additional shares. However, if you do not buy enough shares to qualify for the lower sales charges by the earlier of the end of the 13-month period or when you sell your shares, your sales charges will be recalculated to reflect your actual purchase level. Also available for retirement plan investors is a 48-month Letter of Intention, described in the SAI. YOUR ACCOUNT 33 o Combination Privilege -- lets you combine shares of all funds for purposes of calculating the Class A sales charge. To utilize any reduction you must: Complete the appropriate section of your application, or contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Group Investment Program A group may be treated as a single purchaser under the accumulation and combination privileges. Each investor has an individual account, but the group's investments are lumped together for sales charge purposes, making the investors potentially eligible for reduced sales charges. There is no charge or obligation to invest (although initial investments per account opened must satisfy minimum initial investment requirements specified in the section OPENING AN ACCOUNT), and individual investors may close their accounts at any time. To utilize this program you must: Contact your financial representative or Signature Services to find out how to qualify. Consult the SAI for additional details (see the back cover of this prospectus). CDSC waivers As long as Signature Services is notified at the time you sell, the CDSC for each share class will generally be waived in the following cases: o to make payments through certain systematic withdrawal plans o certain retirement plans participating in Merrill Lynch, The Princeton Retirement Group, Inc., or PruSolutions(SM) programs o redemptions pursuant to a fund's right to liquidate an account less than $1,000 o redemptions of Class A shares made after one year from the inception of a retirement plan at John Hancock o to make certain distributions from a retirement plan o because of shareholder death or disability To utilize a waiver you must: Contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Reinstatement privilege If you sell shares of a John Hancock fund, you may reinvest some or all of the proceeds back into the same share class of the same John Hancock fund and account from which it was removed, within 120 days without a sales charge, as long as Signature Services or your financial representative is notified before you reinvest. If you paid a CDSC when you sold your shares, you will be credited with the amount of the CDSC. To utilize this privilege you must: Contact your financial representative or Signature Services. Waivers for certain investors Class A shares may be offered without front-end sales charges or CDSCs to various individuals and institutions, including: o selling brokers and their employees and sales representatives (and their Immediate Family, as defined in the SAI) o financial representatives utilizing fund shares in fee-based or wrap investment products under a signed fee-based or wrap agreement with John Hancock Funds, LLC o fund trustees and other individuals who are affiliated with these or other John Hancock funds (and their Immediate Family, as defined in the SAI) o individuals transferring assets held in a SIMPLE IRA, SEP, or SARSEP invested in John Hancock funds directly to an IRA o individuals converting assets held in an IRA, SIMPLE IRA, SEP or SARSEP invested in John Hancock funds directly to a ROTH IRA o individuals recharacterizing assets from an IRA, ROTH IRA, SEP, SARSEP, or SIMPLE IRA invested in John Hancock funds back to the original account type from which it was converted o participants in certain retirement plans with at least 100 eligible employees (one-year CDSC applies) o participants in certain 529 plans that have a signed agreement with John Hancock Funds, LLC (one-year CDSC may apply) o certain retirement plans participating in Merrill Lynch, The Princeton Retirement Group, Inc., or PruSolutions(SM) programs. Class A shares of John Hancock Classic Value Fund may be offered without front-end sales charges or CDSCs to any shareholder account of Pzena Focused Value Fund registered on this fund's books in the shareholder's name as of November 8, 2002. Class A shares of John Hancock Large Cap Select Fund may be offered without front-end sales charges or CDSCs to any shareholder account of M.S.B. Fund, Inc. registered on this fund's books in the shareholder's name as of August 22, 2003. Class A shares of Small Cap Fund may be offered without front-end sales charges or CDSCs to any shareholder account of the Independence Small Cap Portfolio as of December 3, 2004 (including shareholder accounts held in a broker's name or other omnibus account). Class A shares of John Hancock U.S. Global Leaders Growth Fund may be offered without front-end sales charges or CDSCs to any shareholder account of U.S. Global Leaders Growth Fund registered on this fund's books in the shareholder's name as of May 17, 2002. To utilize a waiver you must: Contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Other waivers Front-end sales charges and CDSCs are generally not imposed in connection with the following transactions: o exchanges from one John Hancock fund to the same class of any other John Hancock fund (see "Transaction Policies" in this prospectus for additional details); o dividend reinvestments (see "Dividends and Account Policies" in this prospectus for additional details). 34 YOUR ACCOUNT - -------------------------------------------------------------------------------- OPENING AN ACCOUNT 1 Read this prospectus carefully. 2 Determine how much you want to invest. The minimum initial investments for the John Hancock funds are as follows: o All John Hancock funds except the Classic Value Fund o non-retirement account: $1,000 o retirement account: $500 o group investments: $250 o Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must invest at least $25 a month o there is no minimum initial investment for fee-based or wrap accounts of selling firms who have executed a fee-based or wrap agreement with John Hancock Funds, LLC o Classic Value Fund Effective the close of business on December 13, 2006, the John Hancock Classic Value Fund (the "Fund") was closed to new investors, except as provided below. Shareholders holding accounts in the Fund as of the close of business on December 13, 2006, may continue to purchase additional shares in the Fund into those accounts after that date. Investors who did not maintain an account in the Fund as of the close of business on December 13, 2006, generally will not be permitted to establish an account in the Fund except that new Fund accounts may be established by: o participants in most group employer retirement plans (and their successor plans) if the Fund had been established (or was in the process of being established) as an investment option under the plans (or under another plan sponsored by the same employer) by September 15, 2006; o participants in certain 529 plans that have a signed agreement with John Hancock Funds and offer the Fund as a plan option prior to September 15, 2006 (or were in the process of being established prior to September 15, 2006); o individuals or institutions that invest in certain fee-based investment products or mutual fund wrap programs where the Fund has been on a recommended list or in an asset allocation model since, on or before November 30, 2006, through a broker, dealer, financial planner, consultant or registered investment advisor that has entered into a signed agreement with John Hancock Funds but only for such period as the Fund remains on such list or model; and o employees of Pzena Investment Management, LLC. 3 All shareholders must complete the account application, carefully following the instructions. If you have any questions, please contact your financial representative or call Signature Services at 1-800-225-5291. 4 Complete the appropriate parts of the account privileges application. By applying for privileges now, you can avoid the delay and inconvenience of having to file an additional application if you want to add privileges later. 5 Make your initial investment using the table on the next page. You and your financial representative can initiate any purchase, exchange or sale of shares. Important information about opening a new account To help the government fight the funding of terrorism and money laundering activities, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), requires all financial institutions to obtain, verify and record information that identifies each person or entity that opens an account. For individual investors opening an account: When you open an account, you will be asked for your name, residential address, date of birth and Social Security number. For investors other than individuals: When you open an account, you will be asked for the name of the entity, its principal place of business and taxpayer identification number (TIN) and may be requested to provide information on persons with authority or control over the account such as name, residential address, date of birth and Social Security number. You may also be asked to provide documents, such as articles of incorporation, trust instruments or partnership agreements and other information that will help Signature Services identify the entity. Please see the Mutual Fund Account Application for more details. YOUR ACCOUNT 35 - -------------------------------------------------------------------------------- Buying shares - --------------------------------------------------------------------------------
Opening an account Adding to an account - --------------------------------------------------------------------------------------------------------------------------- By check - --------------------------------------------------------------------------------------------------------------------------- [GRAPHIC] o Make out a check for the investment amount, o Make out a check for the investment amount, payable to "John Hancock Signature Services, payable to "John Hancock Signature Services, Inc." Inc." o Deliver the check and your completed o Fill out the detachable investment slip from application to your financial representative, an account statement. If no slip is or mail them to Signature Services (address available, include a note specifying the fund below). name, your share class, your account number and the name(s) in which the account is registered. o Deliver the check and your investment slip or note to your financial representative, or mail them to Signature Services (address below). - --------------------------------------------------------------------------------------------------------------------------- By exchange - --------------------------------------------------------------------------------------------------------------------------- [GRAPHIC] o Call your financial representative or o Log on to www.jhfunds.com to process Signature Services to request an exchange. exchanges between funds. o Call EASI-Line for automated service 24 hours a day at 1-800-338-8080. o Call your financial representative or Signature Services to request an exchange. - --------------------------------------------------------------------------------------------------------------------------- By wire - --------------------------------------------------------------------------------------------------------------------------- [GRAPHIC] o Deliver your completed application to your o Obtain wiring instructions by calling financial representative, or mail it to Signature Services. Signature Services. o Instruct your bank to wire the amount of your o Obtain your account number by calling your investment. financial representative or Signature Services. Specify the fund name, your choice of share class, the new account number and the name(s) in which o Obtain wiring instructions by calling the accounts is registered. Your bank may charge a Signature Services. fee to wire funds. Specify the fund name, the share class, the new account number and the name(s) in which the accounts is registered. Your bank may charge a fee to wire funds. - --------------------------------------------------------------------------------------------------------------------------- By Internet - --------------------------------------------------------------------------------------------------------------------------- [GRAPHIC] See "By exchange" and "By wire." o Verify that your bank or credit union is a member of the Automated Clearing House (ACH) system. o Complete the "Bank Information" section on your account application. o Log on to www.jhfunds.com to initiate purchases using your authorized bank account. - --------------------------------------------------------------------------------------------------------------------------- By phone - --------------------------------------------------------------------------------------------------------------------------- [GRAPHIC] See "By exchange" and "By wire." o Verify that your bank or credit union is a member of the Automated Clearing House (ACH) system. o Complete the "Bank Information" section on your account application. o Call EASI-Line for automated service 24 hours a at 1-800-338-8080. o Call your financial representative or call Signature Services between 8 A.M. and 7 P.M., Eastern Time on most business days. To open or add to an account using the Monthly Automatic Accumulation Program, see "Additional investor services."
- ----------------------------------------------------------- Address: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 Phone Number: 1-800-225-5291 Or contact your financial representative for instructions and assistance. - ----------------------------------------------------------- 36 YOUR ACCOUNT - -------------------------------------------------------------------------------- Selling shares - --------------------------------------------------------------------------------
To sell some or all of your shares - ------------------------------------------------------------------------------------------------------------------------ By letter - ------------------------------------------------------------------------------------------------------------------------ [GRAPHIC] o Accounts of any type. o Write a letter of instruction or complete a stock power indicating the fund name, your o Sales of any amount. share class, your account number, the name(s) in which the account is registered and the dollar value or number of shares you wish to sell. o Include all signatures and any additional documents that may be required (see next page). o Mail the materials to Signature Services. o A check will be mailed to the name(s) and address in which the account is registered, or otherwise according to your letter of instruction. - ------------------------------------------------------------------------------------------------------------------------ By Internet - ------------------------------------------------------------------------------------------------------------------------ [GRAPHIC] o Most accounts. o Log on to www.jhfunds.com to initiate redemptions from your funds. o Sales of up to $100,000. - ------------------------------------------------------------------------------------------------------------------------ By phone - ------------------------------------------------------------------------------------------------------------------------ [GRAPHIC] o Most accounts. o Call EASI-Line for automated service 24 hours a day at 1-800-338-8080. o Sales of up to $100,000. o Call your financial representative or call Signature Services between 8 A.M. and 7 P.M., Eastern Time on most business days. - ------------------------------------------------------------------------------------------------------------------------ By wire or electronic funds transfer (EFT) - ------------------------------------------------------------------------------------------------------------------------ [GRAPHIC] o Requests by letter to sell any amount. o To verify that the Internet or telephone redemption privilege is in place on an o Requests by Internet or phone to sell up to account or to request the form to add it to $100,000. an existing account, call Signature Services. o Funds requested by wire will generally be wired next business day. A $4 fee will be deducted from your account. Your bank may also charge a fee for this service. o Funds requested by EFT are generally available by the second business day. Your bank may charge you a fee for this service. - ------------------------------------------------------------------------------------------------------------------------ By exchange - ------------------------------------------------------------------------------------------------------------------------ [GRAPHIC] o Accounts of any type. o Obtain a current prospectus for the fund into which you are exchanging by Internet or by o Sales of any amount. calling your financial representative or Signature Services. o Log on to www.jhfunds.com to process exchanges between your funds. o Call EASI-Line for automated service 24 hours a day at 1-800-338-8080. o Call your financial representative or Signature Services to request an exchange.
To sell shares through a systematic withdrawal plan, see "Additional investor services." YOUR ACCOUNT 37 Selling shares in writing In certain circumstances, you will need to make your request to sell shares in writing. You may need to include additional items with your request, unless they were previously provided to Signature Services and are still accurate. These items are shown in the table below. You may also need to include a signature guarantee, which protects you against fraudulent orders. You will need a signature guarantee if: o your address of record has changed within the past 30 days; o you are selling more than $100,000 worth of shares (this requirement is waived for certain entities operating under a signed fax trading agreement with John Hancock); o you are requesting payment other than by a check mailed to the address of record and payable to the registered owner(s). You will need to obtain your signature guarantee from a member of the Signature Guarantee Medallion Program. Most brokers and securities dealers are members of this program. A notary public CANNOT provide a signature guarantee.
- ---------------------------------------------------------------------------------------------------------- Seller Requirements for written requests [GRAPHIC] - ---------------------------------------------------------------------------------------------------------- Owners of individual, joint or UGMA/UTMA accounts o Letter of instruction. (custodial accounts for minors). o On the letter, the signatures of all persons authorized to sign for the account, exactly as the account is registered. o Medallion signature guarantee if applicable (see above). Owners of corporate, sole proprietorship, general o Letter of instruction. partner or association accounts. o Corporate business/organization resolution certified within the past 12 months or a John Hancock Funds business/organization certification form. o On the letter and the resolution, the signature of the person(s) authorized to sign for the account. o Medallion signature guarantee if applicable (see above). Owners or trustees of trust accounts. o Letter of instruction. o On the letter, the signature(s) of the trustee(s). o Copy of the trust document certified within the past 12 months or a John Hancock Funds trust certification form. o Medallion signature guarantee if applicable (see above). Joint tenancy shareholders with rights of o Letter of instruction signed by surviving survivorship with a deceased co-tenant(s). tenant. o Copy of death certificate. o Medallion signature guarantee if applicable (see above). o Inheritance tax waiver (if applicable). Executors of shareholder estates. o Letter of instruction signed by executor. o Copy of order appointing executor, certified within the past 12 months. o Medallion signature guarantee if applicable (see above). o Inheritance tax waiver (if applicable). Administrators, conservators, guardians and other o Call 1-800-225-5291 for instructions. sellers or account types not listed above.
- --------------------------------------------------------- Address: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 Phone Number: 1-800-225-5291 Or contact your financial representative for instructions and assistance. - --------------------------------------------------------- 38 YOUR ACCOUNT - -------------------------------------------------------------------------------- TRANSACTION POLICIES Valuation of shares The net asset value (NAV) per share for each fund and class is determined each business day at the close of regular trading on the New York Stock Exchange (typically 4:00 P.M., Eastern Time). Each fund generally values its portfolio of equity securities, fixed-income securities and other investments using closing market prices or readily available market quotations. When closing market prices or market quotations are not readily available or are considered by the Adviser to be unreliable, a fund may use a security's fair value. Fair value is the valuation of a security determined on the basis of factors other than market value in accordance with procedures approved by the board of trustees. All methods of determining the value of a security used by a fund, including those discussed below, on a basis other than market value, are forms of fair value. The use of fair value pricing by a fund may cause the NAV of its shares to differ from the NAV that would be calculated only using market prices. The Adviser may determine that the closing market price no longer accurately reflects the value of a security for a variety of reasons that affect either the relevant securities markets generally or the specific issuer. For example, with respect to non-U.S. securities held by a fund, developments relating to specific events, the securities markets or the specific issuer may occur between the time the primary market closes and the time the fund determines its NAV. In those circumstances when the fund believes the price of the security may be affected, the fund uses the fair value of the security. In certain circumstances a fund may use a pricing service for this purpose. Foreign stocks or other portfolio securities held by a fund may trade on U.S. holidays and weekends, even though the fund's shares will not be priced on those days. This may change the fund's NAV on days when you cannot buy or sell fund shares. For market prices, quotations and some fair value methods, the funds rely upon securities prices provided by pricing services. Certain types of securities, including some fixed-income securities, are regularly priced using fair value rather than market prices. The funds use a pricing matrix to determine the value of fixed-income securities that do not trade daily. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities and historical trading patterns in the market for fixed-income securities. The funds value debt securities with remaining maturities of 60 days or less at amortized cost. For more information on the valuation of shares, please see the SAI. Buy and sell prices When you buy shares, you pay the NAV plus any applicable sales charges, as described earlier. When you sell shares, you receive the NAV minus any applicable deferred sales charges. Execution of requests Each fund is open on those days when the New York Stock Exchange is open, typically Monday through Friday. Buy and sell requests are executed at the next NAV to be calculated after Signature Services receives your request in good order. In unusual circumstances, the funds have the right to redeem in kind. At times of peak activity, it may be difficult to place requests by phone. During these times, consider using EASI-Line, accessing www.jhfunds.com or sending your request in writing. In unusual circumstances, any fund may temporarily suspend the processing of sell requests, or may postpone payment of proceeds for up to three business days or longer, as allowed by federal securities laws. Telephone transactions For your protection, telephone requests may be recorded in order to verify their accuracy. Also for your protection, telephone redemption transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. Proceeds from telephone transactions can only be mailed to the address of record. Exchanges You may exchange shares of one John Hancock fund for shares of the same class of any other, generally without paying any additional sales charges. The registration for both accounts involved must be identical. Class B and Class C shares will continue to age from the original date and will retain the same CDSC rate. A CDSC rate that has increased will drop again with a future exchange into a fund with a lower rate. A fund may change or cancel its exchange policies at any time upon 60 days' notice to its shareholders. For further details, see "Additional Services and Programs" in the SAI (see the back cover of this prospectus). Excessive trading The funds are intended for long-term investment purposes only and do not knowingly accept shareholders who engage in "market timing" or other types of excessive short-term trading. Short-term trading into and out of a fund can disrupt portfolio investment strategies and may increase fund expenses for all shareholders, including long-term shareholders who do not generate these costs. Right to reject or restrict purchase and exchange orders Purchases and exchanges should be made primarily for investment purposes. The funds reserve the right to restrict, reject or cancel (with respect to cancellations, within one day of the order), for any reason and without any prior notice, any purchase or exchange order, including transactions representing excessive trading and transactions accepted by any shareholder's financial intermediary. For example, the funds may in their discretion restrict, reject or cancel a purchase or exchange order even if the transaction is not subject to the specific "Limitation on exchange activity" described below if the funds or their agents determine that accepting the order could interfere with the efficient management of a fund's portfolio or otherwise not be in the fund's best interest in light of unusual trading activity related to your account. In the event that the funds reject or cancel an exchange request, neither the redemption nor the purchase side of the exchange will be processed. If you would like the redemption request to be processed even if the purchase order is rejected, you should submit separate redemption and purchase orders rather than placing an exchange order. The funds reserve the right to delay for up to one business day, consistent with applicable law, the processing of exchange requests in the event that, in the funds' judgment, such delay would be in the funds' best interest, in which case both the redemption and purchase side of the exchange will receive the funds' NAVs at the conclusion of the delay period. The funds, through their agents in their sole discretion, may impose these remedial actions at the account-holder level or the underlying shareholder level. YOUR ACCOUNT 39 Exchange limitation policies The funds' boards of trustees have adopted the following policies and procedures by which the funds, subject to the limitations described below, takes steps reasonably designed to curtail excessive trading practices. Limitation on exchange activity The funds, through their agents, undertake to use their best efforts to exercise the funds' right to restrict, reject or cancel purchase and exchange orders, as described above, if an account holder, who purchases or exchanges into a fund account in an amount of $5,000 or more, exchanges $1,000 or more out of that fund account within 30 calendar days on three occasions during any 12-month period. Nothing in this paragraph limits the right of the funds to refuse any purchase or exchange order, as discussed above under "Right to reject or restrict purchase and exchange orders." Exchanges made on the same day in the same account are aggregated for purposes of counting the number and dollar amount of exchanges made by the account holder. The exchange limits referenced above will not be imposed or may be modified under certain circumstances. For example, these exchange limits may be modified for accounts held by certain retirement plans to conform to plan exchange limits, ERISA considerations or Department of Labor regulations. Certain automated or pre-established exchange, asset-allocation and dollar-cost-averaging programs are not subject to these exchange limits. These programs are excluded from the exchange limitation because the funds believe that they are advantageous to shareholders and do not offer an effective means for market timing or excessive trading strategies. These investment tools involve regular and predetermined purchase or redemption requests made well in advance of any knowledge of events affecting the market on the date of the purchase or redemption. These exchange limits are subject to the funds' ability to monitor exchange activity, as discussed under "Limitation on the ability to detect and curtail excessive trading practices" below. Depending upon the composition of a fund's shareholder accounts and in light of the limitations on the ability of the funds to detect and curtail excessive trading practices, a significant percentage of a fund's shareholders may not be subject to the exchange limitation policy described above. In applying the exchange limitation policy, the funds consider information available to them at the time and reserve the right to consider trading activity in a single account or multiple accounts under common ownership, control or influence. Limitation on the ability to detect and curtail excessive trading practices Shareholders seeking to engage in excessive trading practices sometimes deploy a variety of strategies to avoid detection, and, despite the efforts of the funds to prevent their excessive trading, there is no guarantee that the funds or their agents will be able to identify such shareholders or curtail their trading practices. The ability of the funds and their agents to detect and curtail excessive trading practices may also be limited by operational systems and technological limitations. Because the funds will not always be able to detect frequent trading activity, investors should not assume that the funds will be able to detect or prevent all frequent trading or other practices that disadvantage the funds. For example, the ability of the funds to monitor trades that are placed by omnibus or other nominee accounts is severely limited in those instances in which the financial intermediary, including a financial adviser, broker, retirement plan administrator or fee-based program sponsor, maintains the records of a fund's underlying beneficial owners. Omnibus or other nominee account arrangements are common forms of holding shares of a fund, particularly among certain financial intermediaries such as financial advisers, brokers, retirement plan administrators or fee-based program sponsors. These arrangements often permit the financial intermediary to aggregate their clients' transactions and ownership positions and do not identify the particular underlying shareholder(s) to the fund. Excessive trading risk To the extent that the funds or their agents are unable to curtail excessive trading practices in a fund, these practices may interfere with the efficient management of a fund's portfolio and may result in a fund engaging in certain activities to a greater extent than it otherwise would, such as maintaining higher cash balances, using its line of credit and engaging in portfolio transactions. Increased portfolio transactions and use of the line of credit would correspondingly increase a fund's operating costs and decrease a fund's investment performance. Maintenance of higher levels of cash balances would likewise result in lower fund investment performance during periods of rising markets. While excessive trading can potentially occur in any fund, certain types of funds are more likely than others to be targets of excessive trading. For example: o A fund that invests a significant portion of its assets in small-or mid-capitalization stocks or securities in particular industries, that may trade infrequently or are fair valued as discussed under "Valuation of shares," entails a greater risk of excessive trading, as investors may seek to trade fund shares in an effort to benefit from their understanding of the value of those types of securities (referred to as price arbitrage). o A fund that invests a material portion of its assets in securities of non-U.S. issuers may be a potential target for excessive trading if investors seek to engage in price arbitrage based upon general trends in the securities markets that occur subsequent to the close of the primary market for such securities. o A fund that invests a significant portion of its assets in below investment-grade (junk) bonds that may trade infrequently or are fair valued as discussed under "Valuation of shares" entails a greater risk of excessive trading, as investors may seek to trade fund shares in an effort to benefit from their understanding of the value of those types of securities. Any frequent trading strategies may interfere with efficient management of a fund's portfolio. A fund that invests in the types of securities discussed above may be exposed to this risk to a greater degree than a fund that invests in highly liquid securities. These risks would be less significant, for example, in a fund that primarily invests in U.S. government securities, money market instruments, investment-grade corporate issuers or large-capitalization U.S. equity securities. Any successful price arbitrage may cause dilution in the value of the fund shares held by other shareholders. Account information John Hancock Funds, LLC is required by law to obtain information for verifying an account holder's identity. For example, an individual will be required to supply 40 YOUR ACCOUNT name, residential address, date of birth and Social Security number. If you do not provide the required information, we may not be able to open your account. If verification is unsuccessful, John Hancock Funds, LLC may close your account, redeem your shares at the next NAV minus any applicable sales charges and take any other steps that it deems reasonable. Certificated shares The funds no longer issue share certificates. Shares are electronically recorded. Any existing certificated shares can only be sold by returning the certificated shares to Signature Services along with a letter of instruction or a stock power and a signature guarantee. Sales in advance of purchase payments When you place a request to sell shares for which the purchase money has not yet been collected, the request will be executed in a timely fashion, but the fund will not release the proceeds to you until your purchase payment clears. This may take up to ten business days after the purchase. - -------------------------------------------------------------------------------- DIVIDENDS AND ACCOUNT POLICIES Account statements In general, you will receive account statements as follows: o after every transaction (except a dividend reinvestment, automatic investment or systematic withdrawal) that affects your account balance; o after any changes of name or address of the registered owner(s); o in all other circumstances, every quarter. Every year you should also receive, if applicable, a Form 1099 tax information statement, mailed by January 31. Dividends The funds generally distribute most or all of their net earnings annually in the form of dividends. Balanced Fund and Sovereign Investors Fund typically declare and pay income dividends quarterly. All other funds declare and pay any income dividends annually. Any capital gains are distributed annually. Dividend reinvestments Most investors have their dividends reinvested in additional shares of the same fund and class. If you choose this option or if you do not indicate any choice, your dividends will be reinvested on the dividend record date. Alternatively, you can choose to have a check for your dividends and capital gains in the amount of $10 or more mailed to you. However, if the check is not deliverable or the combined dividend and capital gains amount is less than $10, your proceeds will be reinvested. If five or more of your dividend or capital gains checks remain uncashed after 180 days, all subsequent dividends and capital gains will be reinvested. No front-end sales charge or CDSC will be imposed on shares derived from reinvestment of dividends or capital gains distributions. Taxability of dividends Dividends you receive from a fund, whether reinvested or taken as cash, are generally considered taxable. Dividends from a fund's short-term capital gains are taxable as ordinary income. Dividends from a fund's long-term capital gains are taxable at a lower rate. Whether gains are short term or long term depends on the fund's holding period. Some dividends paid in January may be taxable as if they had been paid the previous December. The Form 1099 that is mailed to you every January details your dividends and their federal tax category, although you should verify your tax liability with your tax professional. Taxability of transactions Any time you sell or exchange shares, it is considered a taxable event for you. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or a loss on the transaction. You are responsible for any tax liabilities generated by your transactions. Small accounts (non-retirement only) If you draw down a non-retirement account so that its total value is less than $1,000, you may be asked to purchase more shares within 30 days. If you do not take action, your fund may close out your account and mail you the proceeds. Alternatively, your fund may charge you $20 a year to maintain your account. You will not be charged a CDSC if your account is closed for this reason. Your account will not be closed or charged this fee if its drop in value is due to fund performance or the effects of sales charges. If your account balance is $100 or less and no action is taken, the account will be liquidated. YOUR ACCOUNT 41 - -------------------------------------------------------------------------------- ADDITIONAL INVESTOR SERVICES Monthly Automatic Accumulation Program (MAAP) MAAP lets you set up regular investments from your paycheck or bank account to the John Hancock fund(s) of your choice. You determine the frequency and amount of your investments, and you can terminate your program at any time. To establish: o Complete the appropriate parts of your account application. o If you are using MAAP to open an account, make out a check for your first investment amount payable to "John Hancock Signature Services, Inc." in an amount satisfying the applicable minimum initial investment requirements specified in OPENING AN ACCOUNT. Deliver your check and application to your financial representative or Signature Services. Systematic withdrawal plan This plan may be used for routine bill payments or periodic withdrawals from your account. To establish: o Make sure you have at least $5,000 worth of shares in your account. o Make sure you are not planning to invest more money in this account (buying shares during a period when you are also selling shares of the same fund is not advantageous to you, because of sales charges). o Specify the payee(s). The payee may be yourself or any other party, and there is no limit to the number of payees you may have, as long as they are all on the same payment schedule. o Determine the schedule: monthly, quarterly, semiannually, annually or in certain selected months. o Fill out the relevant part of the account application. To add a systematic withdrawal plan to an existing account, contact your financial representative or Signature Services. Retirement plans John Hancock funds offer a range of retirement plans, including traditional and ROTH IRAs, Coverdell ESAs, SIMPLE plans and SEPs. Using these plans, you can invest in any John Hancock fund (except tax-free income funds) with a low minimum investment of $500 (except Classic Value) or, for some group plans, no minimum investment at all. To find out more, call Signature Services at 1-800-225-5291. Fund securities The funds' portfolio securities disclosure policy can be found in each fund's SAI and on the funds' Web site, www.jhfunds.com. The funds' Web site also lists fund holdings. Portfolio holding information is posted on the fund's Web site each month on a one-month lag and is available on the funds' Web site until a fund files its next Form N-CSR or Form N-Q with the Securities and Exchange Commission (SEC). Portfolio holding information as filed with the SEC on Forms N-CSR and N-Q is also made available on the funds' Web site. 42 YOUR ACCOUNT Fund details - -------------------------------------------------------------------------------- BUSINESS STRUCTURE The diagram below shows the basic business structure used by the John Hancock equity funds. Each fund's board of trustees oversees the fund's business activities and retains the services of the various firms that carry out the fund's operations. The trustees of the Balanced, Classic Value, Classic Value II, Growth Trends, Large Cap Equity, Large Cap Select, Mid Cap Equity, Multi Cap Growth, Small Cap, Small Cap Intrinsic Value and U.S. Global Leaders Growth Funds have the power to change these funds' respective investment goals without shareholder approval. The trustees of Core Equity, Large Cap Equity, Large Cap Select, Mid Cap Equity, Small Cap, Small Cap Equity, Small Cap Intrinsic Value and U.S. Global Leaders Growth Funds have the power to change the focus of each fund's 80% investment policy without shareholder approval. A fund will provide written notice to shareholders at least 60 days prior to a change in its 80% investment policy. Classic Value II, Core Equity and Small Cap Funds rely on an order from the SEC permitting the Adviser, subject to Board approval, to appoint a subadviser or change the terms of a subadvisory agreement pursuant to an agreement that is not approved by the shareholders. The funds, therefore, are able to change subadviser or the fees paid to the subadviser from time to time without the expense and delays associated with obtaining shareholder approval of the change. This order does not, however, permit the Adviser to appoint a subadviser that is an affiliate of the Adviser or the fund (other than by reason of serving as subadviser to the portfolio) (an "Affiliated Subadviser") or to change a subadvisory fee of an Affiliated Subadviser without the approval of shareholders. |------------| |Shareholders|---------------------------| |------------| | | | |-- | | | |------------------------------------------------| | | | Financial services firms and | | | | their representatives | | | | | | | |--| Advise current and prospective share- | | | Distribution and | | holders on their fund investments, often | | | shareholder services | | in the context of an overall financial plan. | | | | |------------------------------------------------| | | | | | | | | |-------------------------------------------| |------------------------------------------| | | Principal distributor | | Transfer agent | | | John Hancock Funds, LLC | | John Hancock Signature Services, Inc. | | | | | | | | Markets the funds and distributes shares | | Handles shareholder services, including | | |through selling brokers, financial planners| |recordkeeping and statements, distribution| | | and other financial representatives. | | of dividends and processing of buy and | |-- |-------------------------------------------| | sell requests. | | |------------------------------------------| | | ---------------------------------------------------------- | |---------------------------------| | | Subadvisers | | |--------------------------------------| -| | Independence Investments LLC | |--------------------------------| | | Custodian | | | 53 State Street | | Investment adviser | | | | | | Boston, MA 02109 | | | | | The Bank of New York | | | | | John Hancock Advisers, LLC | | | One Wall Street | Asset | | Pzena Investment Management, LLC|--| 601 Congress Street | | | New York, NY 10286 | management | | 120 West 45(th) Street | | Boston, MA 02210-2805 | | | | | | New York, NY 10036 | | | | |Holds the funds' assets, settles all | | | | |Manages the funds' business and | | |portfolio trades and collects most of | | | Shay Assets Management, Inc. | | investment activities. | | | the valuation data required for | | | 230 West Monroe Street | |--------------------------------| | | calculating each fund's NAV. | | | Chicago, IL 60606 | | | |--------------------------------------| -| | | | | | | MFC Global Investment | ---------------------------------------- | Management (U.S.), LLC | | | 101 Huntington Avenue | |-----------------------------| | Boston, MA 02199 | | Trustees | | | |Oversee the funds' activities| | Sustainable Growth Advisers, LP | |-----------------------------| | 3 Stamford Plaza | | 301 Tresser Blvd., Suite 1310 | | Stamford, CT 06901 | | | | Provide portfolio management to | | certain funds. | |---------------------------------|
FUND DETAILS 43 Management fees The management fees paid to the investment adviser by the John Hancock equity funds last fiscal year are as follows:
- -------------------------------------------------------------------------------- Fund % of net assets - -------------------------------------------------------------------------------- Balanced 0.60% Classic Value 0.83 Classic Value II 0.00* Core Equity 0.75 Growth Trends 0.65* Large Cap Equity 0.625 Large Cap Select 0.62* Mid Cap Equity 0.00* Multi Cap Growth 0.18* Small Cap 0.90 Small Cap Equity 0.70 Small Cap Intrinsic Value 0.32* Sovereign Investors 0.59 U.S. Global Leaders Growth 0.72*
*After expense reimbursement. A discussion regarding the basis for the board of trustees approving each fund's investment advisory agreement is available in each fund's annual or semiannual report to shareholders, as follows: Annual report dated December 31, 2006 Balanced Fund, Classic Value Fund, Classic Value Fund II, Core Equity Fund, Large Cap Equity Fund, Large Cap Select Fund, Small Cap Intrinsic Value Fund, Sovereign Investors Fund, U.S. Global Leaders Growth Fund Annual report dated October 31, 2006 Growth Trends Fund, Mid Cap Equity Fund, Multi Cap Growth Fund, Small Cap Fund, Small Cap Equity Fund Subadvisers Independence Investments LLC (Independence), subadvises Core Equity Fund and Small Cap Fund. Founded in 1982, Independence is a subsidiary of Convergent Capital Management LLC, a wholly owned subsidiary of City National Corporation and managed approximately $8 billion in assets as of December 31, 2006. Pzena Investment Management, LLC (PIM) subadvises Classic Value Fund and Classic Value Fund II and was investment adviser to Classic Value Fund's predecessor fund, Pzena Focused Value Fund. PIM was founded in 1995 and is controlled by Richard S. Pzena, Managing Principal, Chief Executive Officer and Co-Chief Investment Officer. PIM provides investment advisory services to individual and institutional investors and, as of December 31, 2006, had total assets under management of approximately $27.3 billion. Shay Assets Management, Inc. (SAM) subadvises Large Cap Select Fund. SAM was founded in 1981 and is controlled by Rodger D. Shay, Chairman. SAM managed approximately $3.5 billion in assets as of December 31, 2006, and was the investment adviser to the fund's predecessor, M.S.B. Fund, Inc. MFC Global Investment Management (U.S.), LLC (MFC Global (U.S.)), subadvises Balanced, Growth Trends, Large Cap Equity, Mid Cap Equity, Multi Cap Growth, Small Cap Equity, Small Cap Intrinsic Value and Sovereign Investors Funds. Prior to October 1, 2006, MFC Global (U.S.) was known as Sovereign Asset Management LLC. MFC Global (U.S.) was founded in 1979 and provides investment advisory services to individual and institutional investors. MFC Global (U.S.) is a wholly owned subsidiary of John Hancock Financial Services, Inc. (a subsidiary of Manulife Financial Corporation) and, as of December 31, 2006, had total assets under management of approximately $26 billion. Sustainable Growth Advisers, LP (SGA) subadvises U.S. Global Leaders Growth Fund. SGA is a Delaware limited partnership founded in 2003 to provide investment advice to private accounts of institutional and individual clients, private investment companies and mutual funds. George P. Fraise, Gordon M. Marchand and Robert L. Rohn each own 24% of SGA. Total assets under management by SGA principals as of December 31, 2006 were approximately $3.5 billion. 44 FUND DETAILS MANAGEMENT BIOGRAPHIES - -------------------------------------------------------------------------------- Below is an alphabetical list of the portfolio managers for the John Hancock equity funds, including a brief summary of their business careers over the past five years. The SAI for each fund includes additional information about its portfolio manager(s), including information about their compensation, accounts they manage (other than the fund) and their ownership of fund shares, if any. Antonio DeSpirito III - ---------------------------------------------- Principal and portfolio manager, Pzena Investment Management, LLC (since 1996) Joined subadviser in 1996 Began business career in 1993 Barry H. Evans, CFA - ---------------------------------------------- President, chief fixed income officer and chief operating officer, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Senior vice president, chief fixed income officer and chief operating officer, John Hancock Advisers, LLC (1986-2005) Began business career in 1986 John C. Forelli, CFA - ---------------------------------------------- Senior vice president, Independence Investments LLC Joined subadviser in 1990 Began business career in 1984 George P. Fraise - ---------------------------------------------- Principal, Sustainable Growth Advisers, LP (since 2003) Executive vice president, Yeager, Wood & Marshall, Inc. (2000-2003) Began business career in 1987 Jeffrey N. Given, CFA - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Second vice president, John Hancock Advisers, LLC (1993-2005) Began business career in 1993 Charles S. Glovsky - ---------------------------------------------- Senior vice president, Independence Investments LLC Joined subadviser in 2000 Began business career in 1979 John P. Goetz - ---------------------------------------------- Managing principal (since 1997) and co-chief investment officer (since 2005), Pzena Investment Management, LLC Director of research, Pzena Investment Management, LLC (1996-2005) Joined subadviser in 1996 Began business career in 1979 Roger C. Hamilton - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Vice president and portfolio manager, John Hancock Advisers, LLC (2003-2005) Analyst, John Hancock Advisers, LLC (1994-2003) Began business career in 1980 Timothy E. Keefe, CFA - ---------------------------------------------- Executive vice president and chief equity officer, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Senior vice president and chief equity officer, John Hancock Advisers, LLC (2004-2005) Partner and portfolio manager, Thomas Weisel Partners (2000-2004) Began business career in 1987 Jay C. Leu, CFA - ---------------------------------------------- Principal and senior vice president, Independence Investments LLC Joined subadviser in 1997 Began business career in 1987 Timothy M. Malloy - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Second vice president, John Hancock Advisers, LLC (2004-2005) Investment analyst, Thomas Weisel Partners (2000-2004) Began business career in 1993 Gordon M. Marchand, CFA, CIC - ---------------------------------------------- Principal, Sustainable Growth Advisers, LP (since 2003) Chief financial and operating officer, Yeager, Wood & Marshall, Inc. (1984-2003) Began business career in 1977 John J. McCabe - ---------------------------------------------- Senior vice president, Shay Assets Management, Inc. Joined subadviser in 1995 Began business career in 1965 Henry E. Mehlman, CFA - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Vice president, John Hancock Advisers, LLC (2002-2005) Senior portfolio manager, The Colony Group (2001-2002) Began business career in 1972 Alan E. Norton, CFA - ---------------------------------------------- Senior vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Senior vice president, John Hancock Advisers, LLC (2002-2005) Senior portfolio manager, The Colony Group (2001-2002) Began business career in 1987 Thomas P. Norton, CFA - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Vice president, John Hancock Advisers, LLC (2002-2005) Investment manager, Baring Asset Management (1997-2002) Began business career in 1986 Richard S. Pzena - ---------------------------------------------- Founder, managing principal, chief executive officer (since 1995) and co-chief investment officer (since 2005), Pzena Investment Management, LLC Began business career in 1980 Robert L. Rohn - ---------------------------------------------- Principal, Sustainable Growth Advisers, LP (since 2003) Chairman and chief executive officer, W.P. Stewart, Inc. (1991-2003) Began business career in 1983 FUND DETAILS 45 - -------------------------------------------------------------------------------- MANAGEMENT BIOGRAPHIES (continued) John F. Snyder III - ---------------------------------------------- Executive vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 1983 Executive vice president, John Hancock Advisers, LLC (1991-2005) Began business career in 1971 Mark F. Trautman - ---------------------------------------------- Vice president, Shay Assets Management, Inc. Joined subadviser in 1995 Began business career in 1986 Lisa A. Welch - ---------------------------------------------- Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Vice president and portfolio manager, John Hancock Advisers, LLC (2002-2005) Analyst, John Hancock Advisers, LLC (1996-2002) Began business career in 1986 46 FUND DETAILS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS These tables detail the performance of each fund's share classes, including total return information showing how much an investment in the fund has increased or decreased each year. Balanced Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 audited by Deloitte-Touche LLP and for the year ended 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.02 $ 9.61 $ 11.15 $ 11.67 $ 12.60 Net investment income(2) 0.23 0.17 0.19 0.13 0.18 Net realized and unrealized gain (loss) on investments (2.40) 1.56 0.56 1.41 1.54 Total from investment operations (2.17) 1.73 0.75 1.54 1.72 Less distributions From net investment income (0.24) (0.19) (0.23) (0.16) (0.20) From net realized gain -- -- -- (0.45) (0.73) (0.24) (0.19) (0.23) (0.61) (0.93) Net asset value, end of period $ 9.61 $ 11.15 $ 11.67 $ 12.60 $ 13.39 Total return(3)(%) (18.19) 18.21 6.78(4) 13.36(4) 13.75(4) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 85 $ 88 $ 86 $ 92 $ 111 Ratio of net expenses to average net assets (%) 1.39 1.41 1.35 1.35 1.28 Ratio of gross expenses to average net assets (%) 1.39 1.41 1.39(5) 1.37 5 1.28(5) Ratio of net investment income to average net assets (%) 2.15 1.70 1.72 1.13 1.35 Portfolio turnover (%) 86 60 56 88 60
CLASS B SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.01 $ 9.61 $ 11.15 $ 11.67 $ 12.60 Net investment income(2) 0.16 0.10 0.11 0.05 0.09 Net realized and unrealized gain (loss) on investments (2.40) 1.56 0.56 1.41 1.54 Total from investment operations (2.24) 1.66 0.67 1.46 1.63 Less distributions From net investment income (0.16) (0.12) (0.15) (0.08) (0.11) From net realized gain -- -- -- (0.45) (0.73) (0.16) (0.12) (0.15) (0.53) (0.84) Net asset value, end of period $ 9.61 $ 11.15 $ 11.67 $ 12.60 $ 13.39 Total return(3)(%) (18.71) 17.42 6.05(4) 12.59(4) 12.97(4) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 28 $ 30 $ 27 $ 27 $ 27 Ratio of net expenses to average net assets (%) 2.09 2.11 2.04 2.05 1.97 Ratio of gross expenses to average net assets (%) 2.09 2.11 2.08(5) 2.07(5) 1.97(5) Ratio of net investment income to average net assets (%) 1.44 1.00 1.03 0.43 0.66 Portfolio turnover (%) 86 60 56 88 60
FUND DETAILS 47 Balanced Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.01 $ 9.61 $ 11.15 $ 11.67 $ 12.60 Net investment income(2) 0.16 0.10 0.11 0.05 0.09 Net realized and unrealized gain (loss) on investments (2.40) 1.56 0.56 1.41 1.54 Total from investment operations (2.24) 1.66 0.67 1.46 1.63 Less distributions From net investment income (0.16) (0.12) (0.15) (0.08) (0.11) From net realized gain -- -- -- (0.45) (0.73) (0.16) (0.12) (0.15) (0.53) (0.84) Net asset value, end of period $ 9.61 $ 11.15 $ 11.67 $ 12.60 $ 13.39 Total return(3)(%) (18.71) 17.42 6.04(4) 12.59(4) 12.96(4) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 2 $ 4 $ 5 $ 6 $ 10 Ratio of net expenses to average net assets (%) 2.09 2.11 2.05 2.05 1.97 Ratio of gross expenses to average net assets (%) 2.09 2.11 2.09(5) 2.07(5) 1.97(5) Ratio of net investment income to average net assets (%) 1.46 0.99 1.00 0.43 0.64 Portfolio turnover (%) 86 60 56 88 60
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total return would have been lower had certain expenses not been reduced during the periods shown. (5) Does not take into consideration expense reductions during the periods shown. 48 FUND DETAILS Classic Value Fund Figures for the years ended 12-31-02, 12-31-03, 12-31-04, 12-31-05 and 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 4-30-02(1) 12-31-02(2,3) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 16.08 $ 18.16 $ 15.07 $ 20.27 $ 23.01 $ 24.64 Net investment income(4) 0.05 0.05 0.20 0.17 0.15 0.23 Net realized and unrealized gain (loss) on investments 2.42 (2.68) 5.25 2.73 1.88 3.84 Total from investment operations 2.47 (2.63) 5.45 2.90 2.03 4.07 Less distributions From net investment income (0.06) (0.02) (0.13) (0.09) (0.10) (0.19) From net realized gain (0.33) (0.44) (0.12) (0.07) (0.30) (0.85) (0.39) (0.46) (0.25) (0.16) (0.40) (1.04) Net asset value, end of period $ 18.16 $ 15.07 $ 20.27 $ 23.01 $ 24.64 $ 27.67 Total return(5)(%) 15.67(6) (14.00)(6,7) 36.25(6) 14.28(6) 8.81(6) 16.54 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 22 $ 22 $ 145 $ 1,223 $ 3,017 $ 5,987 Ratio of net expenses to average net assets (%) 1.25 1.27(8) 1.16 1.30 1.32 1.30 Ratio of gross expenses to average net assets (%) 2.01(9) 2.57(8,9) 1.52(9) 1.40(9) 1.36(9) 1.30 Ratio of net investment income to average net assets (%) 0.34 0.44(8) 1.13 0.81 0.65 0.89 Portfolio turnover (%) 38 47(7) 25 16 27 20
CLASS B SHARES PERIOD ENDED 12-31-02(10) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.11 $ 15.05 $ 20.24 $ 22.89 $ 24.42 Net investment income (loss)(4) --(11) 0.07 0.01 (0.03) 0.04 Net realized and unrealized gain on investments 0.94 5.24 2.71 1.86 3.79 Total from investment operations 0.94 5.31 2.72 1.83 3.83 Less distributions From net investment income -- --(11) -- -- -- From net realized gain -- (0.12) (0.07) (0.30) (0.85) -- (0.12) (0.07) (0.30) (0.85) Net asset value, end of period $ 15.05 $ 20.24 $ 22.89 $ 24.42 $ 27.40 Total return(5)(%) 6.66(6,7) 35.36(6) 13.44(6) 7.99(6) 15.68 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 1 $ 47 $ 200 $ 296 $ 332 Ratio of net expenses to average net assets (%) 2.10(8) 1.91 2.05 2.07 2.01 Ratio of gross expenses to average net assets (%) 6.82(8,9) 2.27(9) 2.15(9) 2.11(9) 2.01 Ratio of net investment income (loss) to average net assets (%) (0.06)(8) 0.38 0.03 (0.11) 0.17 Portfolio turnover (%) 47(7) 25 16 27 20
FUND DETAILS 49 Classic Value Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-02(10) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.11 $ 15.05 $ 20.24 $ 22.89 $ 24.42 Net investment income (loss)(4) --(11) 0.07 0.01 (0.02) 0.03 Net realized and unrealized gain on investments 0.94 5.24 2.71 1.85 3.79 Total from investment operations 0.94 5.31 2.72 1.83 3.82 Less distributions From net investment income -- --(11) -- -- -- From net realized gain -- (0.12) (0.07) (0.30) (0.85) -- (0.12) (0.07) (0.30) (0.85) Net asset value, end of period $ 15.05 $ 20.24 $ 22.89 $ 24.42 $ 27.39 Total return(5)(%) 6.66(6,7) 35.36(6) 13.44(6) 7.99(6) 15.64 - ------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 1 $ 82 $ 423 $ 832 $ 1,132 Ratio of net expenses to average net assets (%) 2.10(8) 1.91 2.05 2.07 2.05 Ratio of gross expenses to average net assets (%) 6.82(8,9) 2.26(9) 2.15(9) 2.11(9) 2.05 Ratio of net investment income (loss) to average net assets (%) (0.10)(8) 0.39 0.04 (0.10) 0.13 Portfolio turnover (%) 47(7) 25 16 27 20
(1) Audited by previous auditors. (2) Effective 11-8-02, shareholders of the former Pzena Focused Value Fund became owners of an equal number of full and fractional shares of Class A shares of the John Hancock Classic Value Fund. Additionally, the accounting and performance history of the former Pzena Focused Value Fund was redesignated as that of Class A of John Hancock Classic Value Fund. (3) Effective 12-31-02, the fiscal year changed from April 30 to December 31. (4) Based on the average of the shares outstanding. (5) Assumes dividend reinvestment and does not reflect the effect of sales charges. (6) Total returns would have been lower had certain expenses not been reduced during the periods shown. (7) Not annualized. (8) Annualized. (9) Does not take into consideration expense reductions during the periods shown. (10) Class B and Class C shares began operations on 11-11-02. (11) Less that $0.01 per share. 50 FUND DETAILS Classic Value Fund II Figures audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-06(1) - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.00 Net investment income(2) 0.03 Net realized and unrealized gain on investments 1.40 Total from investment operations 1.43 Less distributions From net investment income (0.01) From net realized gain (0.03) (0.04) Net asset value, end of period $ 11.39 Total return(3)(%) 14.29(4,7) - ---------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 39 Ratio of net expenses to average net assets (%) 1.30(5) Ratio of gross expenses to average net assets (%) 2.24(5,6) Ratio of net investment income to average net assets (%) 0.63(5) Portfolio turnover (%) 12(7)
CLASS B SHARES PERIOD ENDED 12-31-06(1) - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.00 Net investment loss(2) (0.01) Net realized and unrealized gain on investments 1.40 Total from investment operations 1.39 Less distributions From net realized gain (0.03) Net asset value, end of period $ 11.36 Total return(3)(%) 13.86(4,7) - ---------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 6 Ratio of net expenses to average net assets (%) 2.05(5) Ratio of gross expenses to average net assets (%) 2.99(5,6) Ratio of net investment loss to average net assets (%) (0.11)(5) Portfolio turnover (%) 12(7)
FUND DETAILS 51 Classic Value Fund II (continued)
CLASS C SHARES PERIOD ENDED 12-31-06(1) - --------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - --------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 Net investment loss(2) (0.01) Net realized and unrealized gain on investments 1.40 Total from investment operations 1.39 Less distributions From net realized gain (0.03) Net asset value, end of period $11.36 Total return(3)(%) 13.86(4),(7) - --------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 15 Ratio of net expenses to average net assets (%) 2.05(5) Ratio of gross expenses to average net assets (%) 2.99(5),(6) Ratio of net investment loss to average net assets (%) (0.15)(5) Portfolio turnover (%) 12(7)
(1) Beginning of operations from 7-7-06 through 12-31-06. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Annualized. (6) Does not take into consideration expense reductions during the periods shown. (7) Not annualized. 52 FUND DETAILS Core Equity Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-02 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 26.61 $ 20.53 $ 25.39 $ 27.62 $ 29.72 Net investment income (loss)(1) (0.02) --(2) 0.10 0.01 0.09 Net realized and unrealized gain (loss) on investments (6.06) 4.86 2.13 2.09 3.86 Total from investment operations (6.08) 4.86 2.23 2.10 3.95 Net asset value, end of period $ 20.53 $ 25.39 $ 27.62 $ 29.72 $ 33.67 Total return(3)(%) (22.85) 23.67 8.78(4) 7.60(4) 13.29(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 184 $ 201 $ 193 $ 195 $ 198 Ratio of net expenses to average net assets (%) 1.60 1.61 1.52 1.47 1.47 Ratio of gross expenses to average net assets (%) 1.60 1.61 1.57(5) 1.52(5) 1.50(5) Ratio of net investment income (loss) to average net assets (%) (0.10) (0.02) 0.41 0.03 0.28 Portfolio turnover (%) 64(6) 70 68 54 78 CLASS B SHARES PERIOD ENDED 12-31-02 12-31-03 12-31-04 12-31-05 12-31-06 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 25.71 $ 19.70 $ 24.19 $ 26.12 $ 27.91 Net investment loss(1) (0.18) (0.15) (0.08) (0.18) (0.13) Net realized and unrealized gain (loss) on investments (5.83) 4.64 2.01 1.97 3.63 Total from investment operations (6.01) 4.49 1.93 1.79 3.50 Net asset value, end of period $ 19.70 $ 24.19 $ 26.12 $ 27.91 $ 31.41 Total return(3)(%) (23.38) 22.79 7.98(4) 6.85(4) 12.54(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 253 $ 252 $ 197 $ 140 $ 101 Ratio of net expenses to average net assets (%) 2.30 2.31 2.22 2.18 2.17 Ratio of gross expenses to average net assets (%) 2.30 2.31 2.27(5) 2.23(5) 2.20(5) Ratio of net investment loss to average net assets (%) (0.80) (0.72) (0.33) (0.68) (0.44) Portfolio turnover (%) 64(6) 70 68 54 78
FUND DETAILS 53 Core Equity Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-02 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $25.70 $19.69 $24.18 $26.11 $27.90 Net investment loss(1) (0.18) (0.15) (0.08) (0.18) (0.13) Net realized and unrealized gain (loss) on investments (5.83) 4.64 2.01 1.97 3.62 Total from investment operations (6.01) 4.49 1.93 1.79 3.49 Net asset value, end of period $19.69 $24.18 $26.11 $27.90 $31.39 Total return(3)(%) (23.39) 22.80 7.98(4) 6.86(4) 12.51(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 23 $ 24 $ 20 $ 16 $ 14 Ratio of net expenses to average net assets (%) 2.30 2.31 2.22 2.18 2.17 Ratio of gross expenses to average net assets (%) 2.30 2.31 2.27(5) 2.23(5) 2.20(5) Ratio of net investment loss to average net assets (%) (0.80) (0.72) (0.31) (0.68) (0.43) Portfolio turnover (%) 64(6) 70 68 54 78
(1) Based on the average of the shares outstanding. (2) Less than $0.01 per share. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Does not take into consideration expense reductions during the periods shown. (6) Excludes merger activity. 54 FUND DETAILS Growth Trends Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 10-31-02 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 5.87 $ 4.49 $ 5.51 $ 5.67 $ 6.27 Net Investment loss(1) (0.05) (0.03) (0.04) --(2),(6) (0.03) Net realized and unrealized gain (loss) on investments (1.33) 1.05 0.20 0.60 0.67 Total from investment operations (1.38) 1.02 0.16 0.60 0.64 Net asset value, end of period $ 4.49 $ 5.51 $ 5.67 $ 6.27 $ 6.91 Total return(3),(4)(%) (23.51) 22.72 2.90 10.58 10.21 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 65 $ 69 $ 58 $ 46 $ 40 Ratio of net expenses to average net assets (%) 1.65 1.65 1.65 1.65 1.65 Ratio of gross expenses to average net assets(5)(%) 1.88 2.02 1.86 1.95 2.00 Ratio of net investment income (loss) to average net assets (%) (0.91) (0.64) (0.62) 0.01(6) (0.48) Portfolio turnover (%) 68 76 40 27 70 CLASS B SHARES PERIOD ENDED 10-31-02 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 5.83 $ 4.42 $ 5.40 $ 5.51 $ 6.06 Net Investment loss(1) (0.09) (0.06) (0.07) (0.04)(6) (0.07) Net realized and unrealized gain (loss) on investments (1.32) 1.04 0.18 0.59 0.63 Total from investment operations (1.41) 0.98 0.11 0.55 0.56 Net asset value, end of period $ 4.42 $ 5.40 $ 5.51 $ 6.06 $ 6.62 Total return(3),(4)(%) (24.19) 22.17 2.04 9.98 9.24 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 102 $ 104 $ 85 $ 66 $ 53 Ratio of net expenses to average net assets (%) 2.35 2.35 2.35 2.35 2.35 Ratio of gross expenses to average net assets(5)(%) 2.58 2.72 2.56 2.65 2.70 Ratio of net investment loss to average net assets (%) (1.61) (1.34) (1.32) (0.67)(6) (1.18) Portfolio turnover (%) 68 76 40 27 70 CLASS C SHARES PERIOD ENDED 10-31-02 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 5.83 $ 4.42 $ 5.40 $ 5.51 $ 6.06 Net Investment loss(1) (0.09) (0.06) (0.07) (0.04)(6) (0.07) Net realized and unrealized gain (loss) on investments (1.32) 1.04 0.18 0.59 0.63 Total from investment operations (1.41) 0.98 0.11 0.55 0.56 Net asset value, end of period $ 4.42 $ 5.40 $ 5.51 $ 6.06 $ 6.62 Total return(3),(4)(%) (24.19) 22.17 2.04 9.98 9.24 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 42 $ 41 $ 31 $ 23 $ 19 Ratio of net expenses to average net assets (%) 2.35 2.35 2.35 2.35 2.35 Ratio of gross expenses to average net assets(5)(%) 2.58 2.72 2.56 2.65 2.70 Ratio of net investment loss to average net assets (%) (1.61) (1.34) (1.32) (0.66)(6) (1.17) Portfolio turnover (%) 68 76 40 27 70
(1) Based on the average of the shares outstanding. (2) Less than $0.01 per share. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Does not take into consideration expense reductions during the periods shown. (6) Net investment loss per share and ratio of net investment loss to average net assets reflects a special dividend received by the Fund which amounted to the following amounts:
Percentage Per share of net assets Class A $0.04 0.61% Class B 0.04 0.62 Class C 0.04 0.62
FUND DETAILS 55 Large Cap Equity Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 audited by Deloitte & Touche LLP and for the year ended 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $19.10 $11.85 $14.61 $15.19 $17.66 Net investment income (loss)(2) --(3) 0.01 0.06 (0.02) (0.04) Net realized and unrealized gain (loss) on investments (7.23) 2.75 0.54 2.49 3.61 Total from investment operations (7.23) 2.76 0.60 2.47 3.57 Less distributions From net investment income -- -- (0.02) -- -- From net realized gain (0.02) -- -- -- -- (0.02) -- (0.02) -- -- Net asset value, end of period $11.85 $14.61 $15.19 $17.66 $21.23 Total return(4)(%) (37.83) 23.29 4.14(5) 16.26(5) 20.22(5) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 365 $ 376 $ 325 $ 343 $ 463 Ratio of net expenses to average net assets (%) 1.28 1.35 1.29 1.25 1.21 Ratio of gross expenses to average net assets (%) 1.28 1.35 1.34(6) 1.30(6) 1.23(6) Ratio of net investment income (loss) to average net assets (%) 0.02 0.10 0.44 (0.12) (0.22) Portfolio turnover (%) 114 140 97 74 78 CLASS B SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $18.55 $11.42 $13.98 $14.45 $ 16.67 Net investment loss(2) (0.11) (0.08) (0.05) (0.13) (0.18) Net realized and unrealized gain (loss) on investments (7.00) 2.64 0.52 2.35 3.40 Total from investment operations (7.11) 2.56 0.47 2.22 3.22 Less distributions From net realized gain (0.02) -- -- -- -- Net asset value, end of period $11.42 $13.98 $14.45 $16.67 $ 19.89 Total return(4)(%) (38.31) 22.42 3.36(5) 15.36(5) 19.32(5) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 290 $ 267 $ 196 $ 153 $ 118 Ratio of net expenses to average net assets (%) 2.03 2.10 2.04 2.01 1.96 Ratio of gross expenses to average net assets (%) 2.03 2.10 2.09(6) 2.06(6) 1.98(6) Ratio of net investment loss to average net assets (%) (0.74) (0.66) (0.35) (0.88) (0.98) Portfolio turnover (%) 114 140 97 74 78
56 FUNDDETAILS Large Cap Equity Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 18.55 $11.42 $13.98 $14.45 $ 16.67 Net investment loss(2) (0.11) (0.08) (0.05) (0.13) (0.18) Net realized and unrealized gain (loss) on investments (7.00) 2.64 0.52 2.35 3.40 Total from investment (7.11) 2.56 0.47 2.22 3.22 Less distributions From net realized gain (0.02) -- -- -- -- Net asset value, end of period $ 11.42 $13.98 $14.45 $16.67 $ 19.89 Total return(4)(%) (38.31) 22.42 3.36(5) 15.36(5) 19.32(5) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 40 $ 35 $ 25 $ 20 $ 34 Ratio of net expenses to average net assets (%) 2.03 2.10 2.04 2.01 1.96 Ratio of gross expenses to average net assets (%) 2.03 2.10 2.09(6) 2.06(6) 1.98(6) Ratio of net investment loss to average net assets (%) (0.75) (0.66) (0.36) (0.87) (0.97) Portfolio turnover (%) 114 140 97 74 78
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Less than $0.01 per share. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Does not take into consideration expense reductions during the periods shown. FUND DETAILS 57 Large Cap Select Fund Figures for the years ended 12-31-03, 12-31-04, 12-31-05 and 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-02(1) 12-31-03(2) 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 18.78 $15.27 $17.80 $18.44 $ 17.60 Net investment income (loss)(3) --(4) (0.01) 0.08 0.05 0.08 Net realized and unrealized gain (loss) on investments (2.83) 2.63 0.84 (0.48 2.46 Total from investment operations (2.83) 2.62 0.92 (0.43) 2.54 Less distributions From net investment income -- -- (0.07) (0.04) (0.08) From net realized gain (0.68) (0.09) (0.21) (0.37) (0.86) (0.68) (0.09) (0.28) (0.41) (0.94) Net asset value, end of period $ 15.27 $17.80 $18.44 $17.60 $ 19.20 Total return(5),(6)(%) (15.08) 17.15 5.17 (2.38) 14.37 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 50 $ 55 $ 65 $ 58 $ 60 Ratio of net expenses to average net assets (%) 1.38 1.51 1.34 1.36 1.35 Ratio of gross expenses to average net assets(7)(%) 1.48 1.89 1.44 1.47 1.48 Ratio of net investment income (loss) to average net assets (%) (0.01) (0.03) 0.45 0.26 0.46 Portfolio turnover (%) 18 22 13 23 12 CLASS B SHARES PERIOD ENDED 12-31-03(8) 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $16.29 $17.76 $18.33 $ 17.39 Net investment loss(3) (0.03) (0.03) (0.09) (0.05) Net realized and unrealized gain (loss) on investments 1.59 0.81 (0.48) 2.41 Total from investment operations 1.56 0.78 (0.57) 2.36 Less distributions From net realized gain (0.09) (0.21) (0.37) (0.86) Net asset value, end of period $17.76 $18.33 $17.39 $ 18.89 Total return(5),(6)(%) 9.57(9) 4.40 (3.14) 13.52 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 2 $ 6 $ 5 $ 4 Ratio of net expenses to average net assets (%) 2.13(10) 2.09 2.11 2.10 Ratio of gross expenses to average net assets(7)(%) 3.02(10) 2.19 2.22 2.23 Ratio of net investment loss to average net assets (%) (0.49) (0.18) (0.50) (0.29) Portfolio turnover (%) 22(9) 13 23 12
58 FUND DETAILS Large Cap Select Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-03(8) 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 16.29 $17.76 $18.33 $17.39 Net investment loss(3) (0.03) --(4) (0.09) (0.05) Net realized and unrealized gain (loss) on investments 1.59 0.78 (0.48) 2.41 Total from investment operations 1.56 0.78 (0.57) 2.36 Less distributions From net realized gain (0.09) (0.21) (0.37) (0.86) Net asset value, end of period $ 17.76 $18.33 $17.39 $18.89 Total return(5),(6)(%) 9.57(9) 4.40 (3.14) 13.52 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 1 $ 6 $ 7 $ 3 Ratio of net expenses to average net assets (%) 2.13(10) 2.09 2.11 2.10 Ratio of gross expenses to average net assets(7)(%) 3.02(10) 2.19 2.22 2.23 Ratio of net investment loss to average net assets (%) (0.45)(10) (0.01) (0.49) (0.30) Portfolio turnover (%) 22(9) 13 23 12
(1) Audited by previous auditor. (2) Effective 8-25-03, shareholders of the former M.S.B. Fund, Inc. became owners of an equal number of full and fractional Class A shares of the John Hancock Large Cap Select Fund. Additionally, the accounting and performance history of the former M.S.B. Fund, Inc. was redesignated as that of Class A of John Hancock Large Cap Select Fund. (3) Based on the average of the shares outstanding. (4) Less than $0.01 per share. (5) Assumes dividend reinvestment and does not reflect the effect of sales charges. (6) Total returns would have been lower had certain expenses not been reduced during the periods shown. (7) Does not take into consideration expense reductions during the periods shown. (8) Class B and Class C shares began operations on 8-25-03. (9) Not annualized. (10) Annualized. FUND DETAILS 59 Mid Cap Equity Fund Figures for the years ended 10-31-03, 10-31-04 and 10-31-05 audited by Deloitte & Touche LLP and for the year ended 10-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 10-31-03(1),(2) 10-31-04(2) 10-31-05(2) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.00 $11.35 $11.61 $13.38 Net investment loss(3) (0.01) (0.06) (0.08) (0.08) Net realized and unrealized gain on investments 1.36 0.50 2.38 1.38 Total from investment operations 1.35 0.44 2.30 1.30 Less distributions From net realized gain -- (0.18) (0.53) (1.74) Net asset value, end of period $ 11.35 $11.61 $13.38 $12.94 Total return(4),(5)(%) 13.50(6) 3.92 20.31 10.31 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 2 $ 2 $ 2 $ 3 Ratio of net expenses to average net assets (%) 1.20(7) 1.20 1.20 1.38 Ratio of gross expenses to average net assets(8)(%) 6.20(7) 2.42 2.97 4.25 Ratio of net investment loss to average net assets (%) (0.57)(7) (0.56) (0.65) (0.66) Portfolio turnover (%) 48(6) 46 63 47 CLASS B SHARES PERIOD ENDED 10-31-03(1),(2) 10-31-04(2) 10-31-05(2) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.00 $11.33 $11.54 $13.23 Net investment loss(3) (0.03) (0.12) (0.14) (0.17) Net realized and unrealized gain on investments 1.36 0.51 2.36 1.38 Total from investment operations 1.33 0.39 2.22 1.21 Less distributions From net realized gain -- (0.18) (0.53) (1.74) Net asset value, end of period $ 11.33 $11.54 $13.23 $12.70 Total return(4),(5)(%) 13.30(6) 3.49 19.72 9.67 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) --(9) --(9) --(9) $ 1 Ratio of net expenses to average net assets (%) 1.90(7) 1.65 1.65 2.05 Ratio of gross expenses to average net assets(8)(%) 6.90(7) 2.87 3.42 4.92 Ratio of net investment loss to average net assets (%) (1.27)(7) (1.01) (1.10) (1.35) Portfolio turnover (%) 48(6) 46 63 47
60 FUND DETAILS Mid Cap Equity Fund (continued)
CLASS C SHARES PERIOD ENDED 10-31-03(1),(2) 10-31-04(2) 10-31-05(2) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $10.00 $11.33 $11.54 $13.23 Net investment loss(3) (0.03) (0.12) (0.14) (0.16) Net realized and unrealized gain on investments 1.36 0.51 2.36 1.38 Total from investment operations 1.33 0.39 2.22 1.22 Less distributions From net realized gain -- (0.18) (0.53) (1.74) Net asset value, end of period $11.33 $11.54 $13.23 $12.71 Total return(4),(5)(%) 13.30(6) 3.49 19.72 9.76 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) --(9) --(9) --(9) --(9) Ratio of net expenses to average net assets (%) 1.90(7) 1.65 1.65 1.98 Ratio of gross expenses to average net assets(8)(%) 6.90(7) 2.87 3.42 4.85 Ratio of net investment loss to average net assets (%) (1.27)(7) (1.01) (1.10) (1.28) Portfolio turnover (%) 48(6) 46 63 47
(1) Class A, Class B and Class C shares began operations on 8-4-03. (2) Audited by previous auditor. (3) Based on the average of the shares outstanding. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Not annualized. (7) Annualized. (8) Does not take into consideration expense reductions during the periods shown. (9) Less than $500,000. FUND DETAILS 61 Multi Cap Growth Fund Figures for the years ended 10-31-03, 10-31-04 and 10-31-05 audited by Deloitte & Touche LLP and for the years ended 10-31-02 and 10-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 10-31-02(1) 10-31-03(1) 10-31-04(1) 10-31-05(1) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 6.78 $ 5.71 $ 7.33 $ 7.92 $ 8.56 Net investment loss(2) (0.06) (0.03) (0.05) (0.03) (0.06) Net realized and unrealized gain (loss) on investments (0.91) 1.65 0.64 0.67 1.68 Total from investment operations (0.97) 1.62 0.59 0.64 1.62 Less distributions From net investment income (0.10) -- -- -- -- Net asset value, end of period $ 5.71 $ 7.33 $ 7.92 $ 8.56 $ 10.18 Total return(3),(4)(%) (14.24) 28.37 8.05 8.08 18.93 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 2 $ 3 $ 5 $ 6 $ 7 Ratio of net expenses to average net assets (%) 1.40 1.40 1.40 1.40 1.40 Ratio of gross expenses to average net assets(5)(%) 4.05 3.29 2.51 2.40 1.97 Ratio of net investment loss to average net assets (%) (0.96) (0.55) (0.71) (0.40) (0.60) Portfolio turnover (%) 103 66 64 56 24 CLASS B SHARES PERIOD ENDED 10-31-02(1) 10-31-03(1) 10-31-04(1) 10-31-05(1) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 6.74 $ 5.68 $ 7.24 $ 7.77 $ 8.34 Net investment loss(2) (0.11) (0.08) (0.10) (0.09) (0.12) Net realized and unrealized gain (loss) on investments (0.89) 1.64 0.63 0.66 1.63 Total from investment operations (1.00) 1.56 0.53 0.57 1.51 Less distributions From net investment income (0.06) -- -- -- -- Net asset value, end of period $ 5.68 $ 7.24 $ 7.77 $ 8.34 $ 9.85 Total return(3),(4)(%) (14.80) 27.46 7.32 7.34 18.11 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 1 $ 3 $ 3 $ 3 $ 4 Ratio of net expenses to average net assets (%) 2.10 2.10 2.06 2.10 2.07 Ratio of gross expenses to average net assets(5)(%) 4.75 3.99 3.17 3.10 2.64 Ratio of net investment loss to average net assets (%) (1.66) (1.27) (1.37) (1.04) (1.26) Portfolio turnover (%) 103 66 64 56 24
62 FUND DETAILS Multi Cap Growth Fund (continued)
CLASS C SHARES PERIOD ENDED 10-31-02(1) 10-31-03(1) 10-31-04(1) 10-31-05(1) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 6.74 $ 5.68 $ 7.24 $ 7.77 $ 8.34 Net investment loss(2) (0.11) (0.08) (0.11) (0.08) (0.12) Net realized and unrealized gain (loss) on investments (0.89) 1.64 0.64 0.65 1.62 Total from investment operations (1.00) 1.56 0.53 0.57 1.50 Less distributions From net investment income (0.06) -- -- -- -- Net asset value, end of period $ 5.68 $ 7.24 $ 7.77 $ 8.34 $ 9.84 Total return(3),(4)(%) (14.79) 27.46 7.32 7.34 17.99 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 1 $ 1 $ 2 $ 1 $ 2 Ratio of net expenses to average net assets (%) 2.09 2.10 2.10 2.10 2.10 Ratio of gross expenses to average net assets(5)(%) 4.74 3.99 3.21 3.10 2.67 Ratio of net investment loss to average net assets (%) (1.65) (1.26) (1.39) (0.99) (1.30) Portfolio turnover (%) 103 66 64 56 24
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Does not take into consideration expense reductions during the periods shown. FUND DETAILS 63 Small Cap Fund Figures were audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 10-31-02(1) 10-31-03 10-31-04 10-31-05(2) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.99 $ 8.22 $10.06 $11.44 $ 11.56 Net investment loss(3) (0.16) (0.05) (0.09) (0.11) (0.12) Net realized and unrealized gain on investments 0.36(4) 2.22 1.61 1.61 1.24 Total from investment operations 0.20 2.17 1.52 1.50 1.12 Less distributions From net realized gain (4.97) (0.33) (0.14) (1.38) (0.05) Net asset value, end of period $ 8.22 $10.06 $11.44 $11.56 $ 12.63 Total return(5),(6)(%) (3.59) 27.41 15.25 13.44 9.71 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 11 $ 16 $ 28 $ 105 $ 162 Ratio of net expenses to average net assets (%) 2.28 1.18 1.23 1.57 1.59 Ratio of gross expenses to average net assets(7)(%) 2.69 2.60 2.23 1.65 1.60 Ratio of net investment loss to average net assets (%) (1.92) (0.57) (0.80) (0.99) (0.98) Portfolio turnover (%) 92 79 129 145 74 CLASS B SHARES PERIOD ENDED 10-31-05(2),(8) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net investment loss(3) (0.17) (0.20) Net realized and unrealized gain on investments 0.45 1.23 Total from investment operations 0.28 1.03 Less distributions From net realized gain -- (0.05) Net asset value, end of period $ 11.49 $ 12.47 Total return(5),(6)(%) 2.50(9) 8.99 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 9 $ 11 Ratio of net expenses to average net assets (%) 2.27 2.29 Ratio of gross expenses to average net assets(7)(%) 2.35 2.30 Ratio of net investment loss to average net assets (%) (1.67)(10) (1.67) Portfolio turnover (%) 145(9) 74
64 FUND DETAILS Small Cap Fund (continued)
CLASS C SHARES PERIOD ENDED 10-31-05(5),(8) 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 11.21 $ 11.49 Net investment loss(3) (0.17) (0.20) Net realized and unrealized gain on investments 0.45 1.23 Total from investment operations 0.28 1.03 Less distributions From net realized gain -- (0.05) Net asset value, end of period $ 11.49 $ 12.47 Total return(5),(6)(%) 2.50(9) 8.99 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 31 $ 44 Ratio of net expenses to average net assets (%) 2.27(10) 2.29 Ratio of gross expenses to average net assets(7)(%) 2.35(10) 2.30 Ratio of net investment loss to average net assets (%) (1.67)(10) (1.68) Portfolio turnover (%) 145(9) 74
(1) On 6-24-02, the Advisors' Inner Circle Fund Independence Small Cap Portfolio acquired the assets and liabilities of the UAM Independence Small Cap Portfolio, a series of the UAM Funds, Inc. The operations of the Advisers' Inner Circle Fund Independence Small Cap Portfolio prior to the acquisition were those of the predecessor fund, the UAM Independence Small Cap Portfolio. (2) Effective 12-3-04, shareholders of the former Independence Small Cap Portfolio became owners of an equal number of full and fractional Class A shares of the John Hancock Small Cap Fund. Additionally, the accounting and performance history of the Independence Small Cap Portfolio was redesignated as that of Class A shares of John Hancock Small Cap Fund. (3) Based on the average of the shares outstanding. (4) The per share amount does not accord with the aggregate net losses on investments because of the sales and repurchase of the Fund's shares in relation to fluctuating market value of the investments in the Fund. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Assumes dividend reinvestment and does not reflect the effect of sales charges. (7) Does not take into consideration expense reductions during the periods shown. (8) Class B and Class C shares began operations on 12-6-04. (9) Not annualized. (10) Annualized. FUND DETAILS 65 Small Cap Equity Fund Figures for the years ended 10-31-03, 10-31-04, 10-31-05 and 10-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 10-31-02(1) 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 16.59 $11.43 $15.61 $ 17.38 $ 20.00 Net investment loss(2) (0.16) (0.12) (0.13) (0.20) (0.21) Net realized and unrealized gain (loss) on investments (4.83) 4.30 1.90 2.82 2.21 Total from investment operations (4.99) 4.18 1.77 2.62 2.00 Less distributions From net realized gain (0.17) -- -- -- -- Net asset value, end of period $ 11.43 $15.61 $17.38 $ 20.00 $ 22.00 Total return(3)(%) (30.44) 36.57 11.34(4) 15.07(4) 10.00(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 201 $ 220 $ 213 $ 214 $ 620 Ratio of net expenses to average net assets (%) 1.58 1.83 1.48 1.42 1.40 Ratio of gross expenses to average net assets (%) 1.58 1.83 1.51(5) 1.47(5) 1.42(5) Ratio of net investment loss to average net assets (%) (1.00) (0.91) (0.79) (1.05) (1.00) Portfolio turnover (%) 44 52 54 38 30 CLASS B SHARES PERIOD ENDED 10-31-02(1) 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 16.02 $10.96 $14.85 $ 16.43 $ 18.77 Net investment loss(2) (0.26) (0.19) (0.24) (0.31) (0.34) Net realized and unrealized gain (loss) on investments (4.63) 4.08 1.82 2.65 2.07 Total from investment operations (4.89) 3.89 1.58 2.34 1.73 Less distributions From net realized gain (0.17) -- -- -- -- Net asset value, end of period $ 10.96 $14.85 $16.43 $ 18.77 $ 20.50 Total return(3)(%) (30.90) 35.49 10.64(4) 14.24(4) 9.22(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 175 $ 191 $ 168 $ 140 $ 189 Ratio of net expenses to average net assets (%) 2.28 2.53 2.18 2.12 2.10 Ratio of gross expenses to average net assets (%) 2.28 2.53 2.21(5) 2.17(5) 2.12(5) Ratio of net investment loss to average net assets (%) (1.70) (1.61) (1.48) (1.75) (1.71) Portfolio turnover (%) 44 52 54 38 30
66 FUND DETAILS Small Cap Equity Fund (continued)
CLASS C SHARES PERIOD ENDED 10-31-02(1) 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 16.02 $10.96 $14.86 $ 16.43 18.97 Net investment loss(2) (0.26) (0.20) (0.24) (0.31) (0.35) Net realized and unrealized gain (loss) on investments (4.63) 4.10 1.81 2.65 2.08 Total from investment operations (4.89) 3.90 1.57 2.34 1.73 Less distributions From net realized gain (0.17) -- -- -- -- Net asset value, end of period $ 10.96 $14.86 $16.43 $ 18.77 $ 20.50 Total return(3)(%) (30.90) 35.58 10.57(4) 14.24(4) 9.22(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 63 $ 74 $ 59 $ 48 $ 54 Ratio of net expenses to average net assets (%) 2.28 2.52 2.17 2.12 2.10 Ratio of gross expenses to average net assets (%) 2.28 2.52 2.20(5) 2.17(5) 2.12(5) Ratio of net investment loss to average net assets (%) (1.70) (1.61) (1.47) (1.75) (1.71) Portfolio turnover (%) 44 52 54 38 30
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Does not take into consideration expense reductions during the periods shown. FUND DETAILS 67 Small Cap Intrinsic Value Fund Figures for the year ended 12-31-05 audited by Deloitte & Touche LLP and for the year ended 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-05(1,2) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.00 $10.86 Net investment loss(3) (0.01) (0.07)(10) Net realized and unrealized gain on investments 1.72 3.21 Total from investment operations 1.71 3.14 Less Distributions From net realized gain (0.85) (0.30) Net asset value, end of period $ 10.86 $13.70 Total return(4),(6)(%) 17.28(5) 28.99 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 3 $ 30 Ratio of net expenses to average net assets (%) 1.45(7) 1.65 Ratio of gross expenses to average net assets(8)(%) 4.89(7) 2.23 Ratio of net investment loss to average net assets (%) (0.08)(7) (0.58)(10) Portfolio turnover (%) 97(5) 82 CLASS B SHARES PERIOD ENDED 12-31-05(1,2) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.00 $10.81 Net investment loss(3) (0.05) (0.16)(10) Net realized and unrealized gain on investments 1.71 3.20 Total from investment operations 1.66 3.04 Less distributions From net realized gain (0.85) (0.30) Net asset value, end of period $ 10.81 $13.55 Total return(4),(6)(%) 16.78(5) 28.20 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) --(9) $ 3 Ratio of net expenses to average net assets (%) 1.95(7) 2.35 Ratio of gross expenses to average net assets(8)(%) 5.39(7) 2.93 Ratio of net investment loss to average net assets (%) (0.57)(7) (1.25)(10) Portfolio turnover (%) 97(5) 82
68 FUND DETAILS Small Cap Intrinsic Value Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-05(1,2) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 10.00 $10.81 Net investment loss(3) (0.05) (0.16)(10) Net realized and unrealized gain on investments 1.71 3.20 Total from investment operations 1.66 3.04 Less distributions From net realized gain (0.85) (0.30) Net asset value, end of period $ 10.81 $13.55 Total return(4),(6)(%) 16.78(5) 28.20 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) --(9) $ 8 Ratio of net expenses to average net assets (%) 1.95(7) 2.35 Ratio of gross expenses to average net assets(8)(%) 5.39(7) 2.93 Ratio of net investment loss to average net assets (%) (0.57)(7) (1.27)(10) Portfolio turnover (%) 97(5) 82
(1) Audited by previous auditor. (2) Beginning of operations from 2-28-05 through 12-31-05. (3) Based on the average of the shares outstanding during the period. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Not annualized. (6) Total return would have been lower had certain expenses not been reduced during the period shown. (7) Annualized. (8) Does not take into consideration expense reductions during the period shown. (9) Less than $500,000. (10) Net investment loss per share and ratio of net investment loss to average net assets reflects a special dividend received by the Fund which amounted to the following amounts:
Percentage Per share of net assets - --------------------------------------------------------------- Class A $0.03 0.27% - --------------------------------------------------------------- Class B 0.03 0.27 - --------------------------------------------------------------- Class C 0.03 0.27 - ---------------------------------------------------------------
FUND DETAILS 69 Sovereign Investors Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 audited by Deloitte & Touche LLP and for the year ended 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 19.88 $ 15.81 $ 18.74 $ 19.54 $ 18.51 Net investment income(2) 0.24 0.14 0.17 0.18 0.20 Net realized and unrealized gain (loss) on investments (3.94) 2.93 0.80 0.27 2.51 Total from investment operations (3.70) 3.07 0.97 0.45 2.71 Less distributions From net investment income (0.25) (0.14) (0.17) (0.18) (0.21) From net realized gain (0.12) -- -- (1.30) (2.07) (0.37) (0.14) (0.17) (1.48) (2.28) Net asset value, end of period $ 15.81 $ 18.74 $ 19.54 $ 18.51 $ 18.94 Total return(3)(%) (18.68) 19.55 5.23 2.28(4) 14.67(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 908 $ 998 $ 936 $ 818 $ 810 Ratio of net expenses to average net assets (%) 1.17 1.24 1.20 1.19 1.16 Ratio of gross expenses to average net assets (%) 1.17 1.24 1.20 1.20 1.17 Ratio of net investment income to average net assets (%) 1.36 0.85 0.91 0.92 1.04 Portfolio turnover (%) 85 47 20 30 36 CLASS B SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 19.86 $ 15.79 $ 18.71 $ 19.49 $ 18.46 Net investment income(2) 0.12 0.03 0.03 0.04 0.07 Net realized and unrealized gain (loss) on investments (3.94) 2.92 0.80 0.27 2.50 Total from investment operations (3.82) 2.95 0.83 0.31 2.57 Less distributions From net investment income (0.13) (0.03) (0.05) (0.04) (0.07) From net realized gain (0.12) -- -- (1.30) (2.07) (0.25) (0.03) (0.05) (1.34) (2.14) Net asset value, end of period $ 15.79 $ 18.71 $ 19.49 $ 18.46 $ 18.89 Total return(3)(%) (19.29) 18.75 4.45 1.57(4) 13.92(4) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $ 328 $ 315 $ 232 $ 155 $ 111 Ratio of net expenses to average net assets (%) 1.87 1.94 1.90 1.89 1.86 Ratio of gross expenses to average net assets (%) 1.87 1.94 1.90 1.90(5) 1.87(5) Ratio of net investment income to average net assets (%) 0.65 0.16 0.18 0.21 0.34 Portfolio turnover (%) 85 47 20 30 36
70 FUND DETAILS Sovereign Investors Fund (continued)
CLASS C SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12- 31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 19.88 $ 15.81 $ 18.73 $ 19.52 $ 18.49 Net investment income(2) 0.12 0.03 0.04 0.04 0.07 Net realized and unrealized gain (loss) on investments (3.94) 2.92 0.80 0.27 2.50 Total from investment operations (3.82) 2.95 0.84 0.31 2.57 Less distributions From net investment income (0.13) (0.03) (0.05) (0.04) (0.07) From net realized gain (0.12) -- -- (1.30) (2.07) (0.25) (0.03) (0.05) (1.34) (2.14) Net asset value, end of period $ 15.81 $ 18.73 $ 19.52 $ 18.49 $ 18.92 Total return(3)(%) (19.27) 18.73 4.50 1.57(4) 13.90(4) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 24 $ 32 $ 27 $ 17 $ 15 Ratio of net expenses to average net assets (%) 1.87 1.94 1.90 1.89 1.86 Ratio of gross expenses to average net assets (%) 1.87 1.94 1.90 1.90(5) 1.87(5) Ratio of net investment income to average net assets (%) 0.67 0.14 0.19 0.21 0.34 Portfolio turnover (%) 85 47 20 30 36
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total return would have been lower had certain expenses not been reduced during the period shown. (5) Does not take into consideration expense reductions during the period shown. FUND DETAILS 71 U.S. Global Leaders Growth Fund Figures for the years ended 12-31-03, 12-31-04, 12-31-05 and 12-31-06 audited by PricewaterhouseCoopers LLP.
CLASS A SHARES PERIOD ENDED 6-30-02(1,2) 12-31-02(1,3) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 24.98 $ 24.03 $ 21.57 $ 25.72 $ 27.84 $ 28.44 Net investment income (loss)(4) (0.09) 0.01 --(5) 0.15 (0.04) --(5) Net realized and unrealized gain (loss) on investments (0.86) (2.47) 4.15 2.04 0.64 0.41 Total from investment operations (0.95) (2.46) 4.15 2.19 0.60 0.41 Less distributions From net investment income -- -- -- (0.07) -- -- Net asset value, end of period $ 24.03 $ 21.57 $ 25.72 $ 27.84 $ 28.44 $ 28.85 Total return(6)(%) (3.80)(7) (10.24)(7,8) 19.24(7) 8.51 2.16(7) 1.44(7) - ------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 150 $ 237 $392 $ 893 $ 1,271 $ 1,263 Ratio of net expenses to average net assets (%) 1.37 1.27 9 1.35 1.32 1.28 1.28 Ratio of gross expenses to average net assets (%) 1.40(10) 1.36(9,10) 1.36(10) 1.32 1.33(10) 1.32(10) Ratio of net investment income (loss) to average net assets (%) (0.36) 0.07(9) (0.02) 0.57 (0.14) --(5) Portfolio turnover (%) 3 1(8) 15 16 28(11) 34
CLASS B SHARES PERIOD ENDED 6-30-02(1,12) 12-31-02(1,3) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.81 $ 24.01 $ 21.47 $ 25.41 $ 27.36 $ 27.75 Net investment loss(4) (0.02) (0.07) (0.18) (0.05) (0.24) (0.20) Net realized and unrealized gain (loss) on investments (1.78) (2.47) 4.12 2.00 0.63 0.39 Total from investment operations (1.80) (2.54) 3.94 1.95 0.39 0.19 Net asset value, end of period $ 24.01 $ 21.47 $ 25.41 $ 27.36 $ 27.75 $ 27.94 Total return(6)(%) (6.97)(7,8) (10.58)(7,8) 18.35(7) 7.67 1.43(7) 0.68(7) - ------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 12 $ 73 $ 164 $ 208 $ 218 $ 151 Ratio of net expenses to average net assets (%) 2.13(9) 2.02(9) 2.10 2.07 2.03 2.03 Ratio of gross expenses to average net assets (%) 2.39(9,10) 2.11(9,10) 2.11(10) 2.07 2.08(10) 2.07(10) Ratio of net investment loss to average net assets (%) (0.93)(9) (0.67)(9) (0.77) (0.21) (0.88) (0.75) Portfolio turnover (%) 3 1(8) 15 16 28(11) 34
72 FUND DETAILS U.S. Global Leaders Growth Fund (continued)
CLASS C SHARES PERIOD ENDED 6-30-02(1,12) 12-31-02(1,3) 12-31-03 12-31-04 12-31-05 12-31-06 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $25.81 $ 24.01 $ 21.47 $ 25.41 $27.36 $27.75 Net investment loss(4) (0.02) (0.07) (0.18) (0.04) (0.24) (0.20) Net realized and unrealized gain (loss) on investments (1.78) (2.47) 4.12 1.99 0.63 0.39 Total from investment operations (1.80) (2.54) 3.94 1.95 0.39 0.19 Net asset value, end of period $24.01 $ 21.47 $ 25.41 $ 27.36 $27.75 $27.94 Total return(6)(%) (6.97)(7,8) (10.58)(7,8) 18.35(7) 7.67 1.43(7) 0.68(7) - --------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 6 $ 49 $ 160 $ 246 $ 284 $ 186 Ratio of net expenses to average net assets (%) 2.12(9) 2.02(9) 2.10 2.07 2.03 2.03 Ratio of gross expenses to average net assets (%) 2.38(9,10) 2.11(9,10) 2.11(10) 2.07 2.08(10) 2.07(10) Ratio of net investment loss to average net assets (%) (0.96)(9) (0.67)(9) (0.77) (0.17) (0.88) (0.75) Portfolio turnover (%) 3 1(8) 15 16 28(11) 34
(1) Audited by previous auditor. (2) Effective 5-17-02, shareholders of the former U.S. Global Leaders Growth Fund became owners of that number of full and fractional shares of Class A shares of the John Hancock U.S. Global Leaders Growth Fund. Additionally, the accounting and performance history of the former U.S. Global Leaders Growth Fund was redesignated as that of Class A of John Hancock U.S. Global Leaders Growth Fund. (3) Effective 12-31-02, the fiscal year changed from June 30 to December 31. (4) Based on the average of the shares outstanding. (5) Less than $0.01 per share. (6) Assumes dividend reinvestment and does not reflect the effect of sales charges. (7) Total returns would have been lower had certain expenses not been reduced during the periods shown. (8) Not annualized. (9) Annualized. (10) Does not take into consideration expense reductions during the periods shown. (11) Excludes merger activity. (12) Class B and Class C shares began operations on 5-20-02. FUND DETAILS 73 Appendix - -------------------------------------------------------------------------------- Historical Performance of Corresponding John Hancock Classic Value Fund The John Hancock Classic Value Fund II (Classic Value II), a series of John Hancock Funds (JHF), commenced operations on July 7, 2006, and has no performance information to present in the prospectus. Classic Value II is similar to another fund of JHF, Classic Value Fund (Classic Value). Classic Value II is subadvised by the same investment adviser as Classic Value and has the same portfolio manager(s) and substantially the same investment objective, policies and restrictions as Classic Value. In choosing domestic securities for Classic Value II, the subadviser screens a dynamic universe of the 400 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $8.5 billion.) In choosing individual securities for Classic Value, the subadviser screens a dynamic universe of the 500 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $6.1 billion.) This Appendix presents historical performance information for the Class A, Class B and Class C shares of Classic Value. Because of the similarities between Classic Value II and Classic Value, this information may help provide an indication of Classic Value II's risks by showing how a similar fund has performed historically. The performance of Classic Value, however, does not represent, and is not a substitute for, the performance of Classic Value II, and you should not assume that Classic Value II will have the same future performance as Classic Value. The future performance of Classic Value II may be greater or less than the performance of Classic Value due to, among other things, the number of the holdings in and composition of the portfolio in Classic Value II, as well as the asset size and cash flow differences between Classic Value II and Classic Value. Performance information -- a bar chart and a table -- is presented on the following pages for the shares of Classic Value that correspond to Classic Value II. The bar chart shows how Classic Value's total return has varied from year to year, while the table shows performance of its Class A, Class B and Class C shares over time (as compared with broad-based market indexes for reference). All figures assume dividend reinvestment. The performance shown in the bar charts and tables would also be lower if the adviser to Classic Value had not reimbursed certain expenses of those funds during the periods shown. The Class A, Class B and Class C shares of Classic Value have front-end or deferred sales charges. The Class A, Class B and Class C shares of Classic Value II have the same front-end or deferred sales charges as Classic Value. The other expenses of the Class A, Class B and Class C shares of Classic Value, including their Rule 12b-1 fees, are substantially the same for Classic Value II's Class A, Class B and Class C shares. An index is unmanaged and it is not possible to invest directly in an index. As such, year-by-year index figures do not account for any sales charges, fees or fund expenses. As indicated above, past performance does not indicate future results. 74 FUND DETAILS John Hancock Funds: Classic Value Fund Corresponding to: Classic Value Fund II Class A, total returns Best quarter: Q2 '99, 30.73% Worst quarter: Q3 `98, -21.97% After-tax returns After-tax returns are shown for Class A shares only and would be different for the other classes. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Value Index, an unmanaged index of stocks in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with low price-to-book ratios. MORNINGSTAR RATING(TM) * * * * Overall rating for Classic Value Fund as of December 31, 2006. Morningstar ratings measure risk-adjusted returns. The Overall Morningstar Rating(TM) for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics. The Classic Value Fund (Class A) was rated 3 stars out of 1,111, 5 stars out of 835 and 5 stars out of 397 large value funds for the 3-, 5- and 10-year periods ended December 31, 2006, respectively. For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating(TM) based on a Morningstar Risk-Adjusted Return that accounts for variation in a fund's monthly performance (including effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category, the next 22.5%, 35%, 22.5% and the bottom 10% receive 5, 4, 3, 2 or 1 star, respectively. (Each share class is counted as a fraction of 1 fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) Past performance is no guarantee of future results. The Class A, B and C shares of the Classic Value Fund II currently do not have a Morningstar rating. Any future ratings assigned to Classic Value Fund II may be different from the Morningstar Rating(TM) for the Class A, B and C shares of the corresponding Classic Value Fund. Net assets of Classic Value Fund as of December 31, 2006: $9,037,272,530 PAST PERFORMANCE The graph shows how Classic Value Fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of Classic Value Fund's risks. Year-by-year and average annual figures for the period prior to November 8, 2002 reflect the actual performance of the sole class of Pzena Focused Value Fund, Classic Value Fund's predecessor. On November 8, 2002, Classic Value Fund acquired all of the assets of Pzena Focused Value Fund pursuant to an agreement and plan of reorganization in exchange for Class A shares of Classic Value Fund. The average annual returns for Class A have been restated to reflect applicable sales charges. This adjustment will have the effect of reducing the previously reported performance of the Pzena Focused Value Fund. Year-by-year and index figures do not reflect sales charges and would be lower if they did. The average annual total returns for Class C have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. All figures assume dividend reinvestment. The performance of Pzena Focused Value Fund reflects stocks selected from the largest 1,000 publicly traded U.S. companies, whereas Classic Value Fund invests in stocks selected from the 500 largest such companies. Past performance before and after taxes does not indicate future results. - -------------------------------------------------------------------------------- Class A calendar year total returns (without sales charges) - -------------------------------------------------------------------------------- 1997 24.57% 1998 -5.67% 1999 0.29% 2000 35.88% 2001 13.07% 2002 -6.37% 2003 36.25% 2004 14.28% 2005 8.81% 2006 16.54%
Life of Life of 1 year 3 year 5 year 10 year Class B Class C - ------------------------------------------------------------------------------------- Average annual total returns (including sales charge) for periods ending 12-31-06 - ------------------------------------------------------------------------------------- Class A before tax 10.69% 11.24% 11.92% 12.26% -- -- Class A after tax on distributions 9.86% 10.76% 11.38% 11.41% -- -- Class A after tax on distributions, with sale 7.53% 9.52% 10.17% 10.46% -- -- Class B before tax (began 11-11-02) 10.68% 11.52% -- -- 18.61% -- Class C before tax (began 11-11-02) 14.64% 12.31% -- -- -- 18.88% - -------------------------------------------------------------------------------------- Average annual total returns (without sales charges) for periods ending 12-31-06 - -------------------------------------------------------------------------------------- Class A before tax 16.54% 13.16% 13.08% 12.84% -- -- Class A after tax on distributions 15.66% 12.67% 12.53% 11.98% -- -- Class A after tax on distributions, with sale 11.36% 11.20% 11.20% 10.99% -- -- Standard & Poor's 500 Index* 15.79% 10.44% 6.19% 8.42% 14.41% 14.41% Russell 1000 Value Index* 22.24% 15.09% 10.86% 11.00% 18.85% 18.85%
* Prior to December 29, 2006, the fund also compared its performance to the Standard & Poor's 500 Index. After this date, the fund changed the index to which it compares its performance to a single index, the Russell 1000 Value Index, which better represents the fund and its investment universe versus the Standard & Poor's 500 Index. FUND DETAILS 75 Appendix - -------------------------------------------------------------------------------- Historical Performance of Corresponding MFC Global (U.S.) Small Cap Opportunity Composite The following table presents the past performance of the MFC Global (U.S.) Small Cap Opportunity Composite performance information (the "Composite"), which consists of an account managed by MFC Global (U.S.), which serves as the subadviser to the John Hancock Small Cap Intrinisic Value Fund (the "Fund"). The Composite is comprised of all fee paying accounts under discretionary management by MFC Global (U.S.) that have investment objectives, policies and strategies substantially similar to those of the Fund. MFC Global (U.S.) has prepared and presented the historical performance shown. Because the gross performance data shown in the table does not reflect the deduction of investment advisory fees paid by the account comprising the Composite and certain other expenses which would be applicable to mutual funds, the net performance data may be more relevant to potential investors in the Fund in their analysis of the historical experience of MFC Global (U.S.) in managing small cap portfolios, with investment objectives, policies and strategies substantially similar to those of the Fund. The Composite and the Index returns are calculated net of withholding taxes on dividends, interest and capital gains. Net returns for the Composite are additionally net of investment management fees. Fees and expenses of the Fund differ from and will be higher than those used to calculate the net performance of the Composite. Accordingly, use of the Fund's estimated expenses in the Composite would have lowered the Composite's performance results. The historical performance of the MFC Global (U.S.) Small Cap Opportunity composite is not, and is not a substitute for, the performance of the Fund and is not necessarily indicative of the Fund's future results. You should not assume that the Fund will have the same future performance as the Composite. Future performance of the Fund may be greater or less than the performance of the Composite due to, among other things, differences in fees and expenses, asset size and cash flows. Because of the similarities between the Fund and the Composite, this information may help provide an indication of the Fund's risks. The Fund's actual performance may vary significantly from the past performance of the Composite. While the account comprising the Composite may incur inflows and outflows of cash from clients, there can be no assurance that the continuous offering of the Fund's shares and the Fund's obligation to redeem its shares will not adversely impact the Fund's performance. Also, the account comprising the Composite is not subject to the investment limitations, diversification requirements and other restrictions imposed by the Investment Company Act of 1940 and the Internal Revenue Code or the Fund's fundamental investment restrictions. If these limitations, requirements and restrictions were applicable to the account in the Composite, they may have had an adverse affect on the performance results of the Composite. Total returns (gross of fees): Best quarter: Q2 `03, 17.88% Worst quarter: Q3 `02, -15.17% - -------------------------------------------------------------------------------- Calendar year total returns - --------------------------------------------------------------------------------
Gross of fees Net of fees 2002 -3.68% -4.64% 2003 51.76% 50.30% 2004 14.43% 13.36% 2005 15.84% 14.85% 2006 28.76% 27.50%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Since 1 year inception* SCO Composite -- Gross of fees 28.76% 20.81% SCO Composite -- Net of fees 27.50% 19.67% - -------------------------------------------------------------------------------- Russell 2000(R) Index 18.37% 12.50%
*The Composite's inception date was December 1, 2001. Index (reflect no fees or taxes) Russell 2000(R) Index, an unmanaged index consisting of the smallest 2,000 stocks in the Russell 3000 Index, which represents 98% of the investable U.S. equity market. 76 FUND DETAILS For more information Two documents are available that offer further information on John Hancock equity funds: Annual/Semiannual Report to Shareholders Includes financial statements, a discussion of the market conditions and investment strategies that significantly affected performance, as well as the auditors' report (in annual report only). Statement of Additional Information (SAI) The SAI contains more detailed information on all aspects of the funds. Each fund's SAI includes a summary of the fund's policy regarding disclosure of its portfolio holdings as well as legal and regulatory matters. The current annual report is included in the SAI as well as legal and regulatory matters. A current SAI has been filed with the Securities and Exchange Commission (SEC) and is incorporated by reference into (is legally a part of) this prospectus. To request a free copy of the current annual/semiannual report or the SAI, please contact John Hancock: By mail: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By phone: 1-800-225-5291 By EASI-Line: 1-800-338-8080 By TDD: 1-800-554-6713 In addition, you may visit the funds' Web site at www.jhfunds.com to obtain a free copy of a prospectus, SAI, annual or semiannual report or to request other information. Or you may view or obtain these documents from the SEC: By mail: Public Reference Section Securities and Exchange Commission Washington, DC 20549-0102 (duplicating fee required) In person: at the SEC's Public Reference Room in Washington, DC. For access to the Reference Room call 1-202-551-8090 By electronic request: publicinfo@sec.gov (duplicating fee required) On the Internet: www.sec.gov (C)2007 JOHN HANCOCK FUNDS, LLC EQTPN 5/07 [Logo] John Hancock the future is yours John Hancock Funds, LLC MEMBER NASD 601 Congress Street Boston, MA 02210-2805 www.jhfunds.com - ----------------------------------- Now available: electronic delivery www.jhfunds.com/edelivery - ----------------------------------- [LOGO] John Hancock(R) -------------- MUTUAL FUNDS John Hancock Equity Funds - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS I - -------------------------------------------------------------------------------- Balanced Fund Classic Value Fund Classic Value Fund II Core Equity Fund Large Cap Equity Fund Large Cap Select Fund Mid Cap Equity Fund Small Cap Fund Small Cap Equity Fund Small Cap Intrinsic Value Fund Sovereign Investors Fund U.S. Global Leaders Growth Fund - -------------------------------------------------------------------------------- Prospectus 5.1.2007 - -------------------------------------------------------------------------------- As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these funds or determined whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime. Contents - -------------------------------------------------------------------------------- JOHN HANCOCK EQUITY FUNDS - -------------------------------------------------------------------------------- Balanced Fund 4 Classic Value Fund 6 Classic Value Fund II 8 Core Equity Fund 10 Large Cap Equity Fund 12 Large Cap Select Fund 14 Mid Cap Equity Fund 16 Small Cap Fund 18 Small Cap Equity Fund 20 Small Cap Intrinsic Value Fund 22 Sovereign Investors Fund 24 U.S. Global Leaders Growth Fund 26 YOUR ACCOUNT - -------------------------------------------------------------------------------- Who can buy shares 28 Opening an account 28 Buying shares 30 Selling shares 31 Transaction policies 33 Dividends and account policies 35 Additional investor services 35 FUND DETAILS - -------------------------------------------------------------------------------- Business structure 36 Management biographies 37 Financial highlights 38 APPENDIX - -------------------------------------------------------------------------------- Historical performance of corresponding John Hancock Classic Value Fund 50 Historical performance of corresponding MFC Global (U.S.) Small Cap Opportunity Composite 52 FOR MORE INFORMATION BACK COVER - --------------------------------------------------------------------------------
Overview - -------------------------------------------------------------------------------- John Hancock Equity Funds These funds offer clearly defined investment strategies, each focusing on a particular market segment and following a disciplined investment process. Blended together or selected individually, these funds are designed to meet the needs of investors seeking risk-managed investment strategies from seasoned professional portfolio managers. Risks of mutual funds Mutual funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Because you could lose money by investing in these funds, be sure to read all risk disclosure carefully before investing. The management firm All John Hancock equity funds are managed by John Hancock Advisers, LLC. Founded in 1968, John Hancock Advisers is a wholly owned subsidiary of John Hancock Financial Services, Inc. (a subsidiary of Manulife Financial Corporation) and as of December 31, 2006, managed approximately $40 billion in assets. FUND INFORMATION KEY - -------------------------------------------------------------------------------- Concise fund-by-fund descriptions begin on the next page. Each description provides the following information: [graphic] Goal and strategy The fund's particular investment goals and the strategies it intends to use in pursuing those goals [graphic] Past performance The fund's total return, measured year-by-year and over time [graphic] Main risks The major risk factors associated with the fund [graphic] Your expenses The overall costs borne by an investor in the fund, including sales charges and annual expenses Balanced Fund [graphic] GOAL AND STRATEGY The fund seeks current income, long-term growth of capital and income and preservation of capital. To pursue these goals, the fund allocates its investments among a diversified mix of debt and equity securities. The fund normally invests at least 25% of assets in equity securities and at least 25% of assets in senior debt securities. With regard to the fund's equity securities, the management team looks for companies that appear to be undervalued compared to their historical valuations relative to the market. The management team uses fundamental financial analysis and proprietary financial models to identify companies of any size that are selling at a discount as measured by ratios such as price-to-book, price-to-earnings and price-to-sales. The management team then looks for a positive catalyst in a company's near-term outlook that they believe will accelerate earnings or improve the value of the company's assets. These positive catalysts may include, but are not limited to: new, improved or unique products or services; new or rapidly expanding markets for the company's products; new management; changes in the economic, financial, political or regulatory environment affecting the company; or a business strategy not recognized by the marketplace. The management team also considers an issuer's dividend-paying prospects and overall financial strength. The fund's debt securities are used to enhance current income and provide some added stability. The fund's investments in bonds of any maturity are primarily investment grade (rated BBB or above and their unrated equivalents). However, up to 20% of assets may be in junk bonds rated as low as C and their unrated equivalents. Although the fund invests primarily in U.S. securities, it may invest up to 35% of assets in foreign securities. The fund may also make limited use of certain derivatives (investments whose value is based on indexes, securities or currencies). In abnormal market conditions, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 9.92% Worst quarter: Q1 '03, -0.71% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Lehman Brothers Government/Credit Bond Index, an unmanaged index of U.S. government, U.S. corporate and Yankee bonds. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2003 18.87% 2004 7.31% 2005 14.02% 2006 14.29%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 3-1-02) 14.29% 6.81% - -------------------------------------------------------------------------------- Class I after tax on distributions 11.76% 5.46% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 9.56% 5.11% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.67% - -------------------------------------------------------------------------------- Lehman Brothers Government/Credit Bond Index 3.78% 5.11% - --------------------------------------------------------------------------------
4 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. In addition, if the manager's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Stocks of small- and medium-capitalization companies can be more volatile than those of larger companies. |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Any bonds held by the fund could be downgraded in credit quality or go into default. In addition, bond prices generally fall when interest rates rise; this risk is greater for longer maturity bonds. Junk bond prices can fall on bad news about the issuer, an industry or the economy in general. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.60% - -------------------------------------------------------------------------------- Other expenses 0.20% - -------------------------------------------------------------------------------- Total fund operating expenses 0.80% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $82 $255 $444 $990
- -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Joined fund team in 2004 Day-to-day purchase and sale decisions Roger C. Hamilton Joined fund team in 2003 Analysis of specific issuers Jeffrey N. Given, CFA Joined fund team in 2006 Analysis of specific issuers Timothy M. Malloy Joined fund team in 2006 Analysis of specific issuers See page 37 for the management biographies. FUND CODES Class I Ticker SVBIX CUSIP 47803P807 Newspaper -- SEC number 811-0560 JH fund number 432
5 Classic Value Fund Fund is generally closed to new investors (see "OPENING AN ACCOUNT" on page 28 for details). [graphic] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its net assets in domestic equity securities. In managing the portfolio, the subadviser seeks to identify companies that it believes are currently undervalued relative to the market, based on estimated future earnings and cash flow. These companies generally have market values at valuation ratios, such as price-to-book, below market average, as defined by the Standard & Poor's 500 Index. In choosing individual securities, the subadviser screens a dynamic universe of the 500 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $6.1 billion.) Using fundamental research and a proprietary computer model, the subadviser ranks these companies from the cheapest to the most expensive on the basis of current share price to the subadviser's estimate of normal long-term earnings power. The subadviser's management team intensively evaluates the cheapest companies to construct a portfolio of stocks that the subadviser believes generally have the following characteristics: |_| cheap on the basis of current price to estimated normal level of earnings |_| current earnings below normal levels |_| a sound plan to restore earnings to normal |_| a sustainable business advantage Before investing, the subadviser considers the value of an entire business relative to its price. The subadviser views itself as a long-term business investor, rather than a stock buyer. This systematic process is intended to ensure that the fund's portfolio avoids the emotional inputs that can lead to overvalued securities. The subadviser approaches sell decisions from the same disciplined framework. The subadviser generally sells a security when it reaches fair value, there are more attractive opportunities or there is a change in company fundamentals. Under normal market conditions, the fund is almost entirely invested in stocks. The fund may invest in securities of foreign issuers. In abnormal market conditions, the fund may invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of the fund's risks. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 20.72% Worst quarter: Q1 '03, -5.57% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Value Index, an unmanaged index of stocks in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with low price-to-book ratios. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2003 36.81% 2004 14.77% 2005 9.28% 2006 17.01%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 11-11-02) 17.01% 20.27% - -------------------------------------------------------------------------------- Class I after tax on distributions 15.97% 19.62% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 11.66% 17.55% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 14.41% - -------------------------------------------------------------------------------- Russell 1000 Value Index* 22.24% 18.85% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund also compared its performance to the Standard & Poor's 500 Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Russell 1000 Value Index, which better represents the fund and its investment universe versus the Standard & Poor's 500 Index. 6 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. The fund focuses on value stocks, which could underperform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the subadviser's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| In a down market, higher-risk securities could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.83% - -------------------------------------------------------------------------------- Other expenses 0.11% - -------------------------------------------------------------------------------- Total fund operating expenses 0.94% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.05% - -------------------------------------------------------------------------------- Net annual operating expenses 0.89% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only, and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $91 $295 $515 $1,150
- -------------------------------------------------------------------------------- SUBADVISER Pzena Investment Management, LLC Responsible for day-to-day investment management Founded in 1995 Supervised by the adviser PORTFOLIO MANAGERS Richard S. Pzena Managed fund since it began in 1996 John P. Goetz Managed fund since it began in 1996 Antonio DeSpirito III Joined fund team in 2006 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JCVIX CUSIP 409902756 Newspaper -- SEC number 811-1677 JH fund number 438
7 Classic Value Fund II [graphic] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its net assets in domestic equity securities. In managing the portfolio, the subadviser seeks to identify companies that it believes are currently undervalued relative to the market, based on estimated future earnings and cash flow. These companies generally have market values at valuation ratios, such as price-to-book, below market average, as defined by the Standard & Poor's 500 Index. In choosing domestic securities, the subadviser screens a dynamic universe of the 400 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $8.5 billion.) Using fundamental research and a proprietary computer model, the subadviser ranks these companies from the cheapest to the most expensive on the basis of current share price to the subadviser's estimate of long-term earnings power. The subadviser's management team intensively evaluates the cheapest companies to construct a portfolio of stocks that the subadviser believes generally have the following characteristics: |_| cheap on the basis of current price to estimated normal level of earnings |_| current earnings below normal levels |_| a sound plan to restore earnings to normal |_| a sustainable business advantage Before investing, the subadviser considers the value of an entire business relative to its price. The subadviser views itself as a long-term business investor, rather than a stock buyer. This systematic process is intended to ensure that the fund's portfolio avoids the emotional inputs that can lead to overvalued securities. The subadviser approaches sell decisions from the same disciplined framework. The subadviser generally sells a security when it reaches fair value, there are more attractive opportunities or there is a change in company fundamentals. Under normal market conditions, the fund is almost entirely invested in stocks. The fund may invest in securities of foreign issuers. In abnormal market conditions, the fund may invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE This section normally shows how the fund's total return has varied from year to year, along with a broad-based market index for reference. Because the fund has existed for less than a full calendar year, there is no past performance to report. 8 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. The fund focuses on value stocks, which could underperform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the subadviser's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| In a down market, higher-risk securities could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. The figures below show estimated annual operating expenses. Actual expenses may be greater or less. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.80% - -------------------------------------------------------------------------------- Other expenses 1.08% - -------------------------------------------------------------------------------- Total fund operating expenses 1.88% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.94% - -------------------------------------------------------------------------------- Net annual operating expenses 0.94% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only, and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $96 $499 $929 $2,124
- -------------------------------------------------------------------------------- SUBADVISER Pzena Investment Management, LLC Responsible for day-to-day investment management Founded in 1995 Supervised by the adviser PORTFOLIO MANAGERS Richard S. Pzena Managed fund since inception John P. Goetz Managed fund since inception Antonio DeSpirito III Managed fund since inception Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JHNIX CUSIP 409902392 Newspaper -- SEC number 811-1677 JH fund number 435
9 Core Equity Fund [graphic] GOAL AND STRATEGY The fund seeks above-average total return (capital appreciation plus income). To pursue this goal, the fund normally invests at least 80% of its assets in a diversified portfolio of equity securities (including common and preferred stocks, ADRs and their equivalents) which are primarily large-capitalization stocks. The managers select from a menu of stocks of approximately 1,000 companies that capture the characteristics of the broad market. In managing the portfolio, the portfolio managers seek to invest in stocks that are believed to have improving fundamentals and attractive valuations. The subadviser's investment research team performs fundamental research, develops financial projections and monitors consensus-based fundamental financial data. This information is utilized in a sector-based, multi-factor series of valuation models. These proprietary models use this financial data to rank the stocks according to their combination of: |_| value, meaning they appear to be underpriced |_| improving fundamentals, meaning they show potential for strong growth The portfolio managers construct and manage the portfolio using the ranked list. This process results in a portfolio of approximately 75 to 160 stocks. The fund generally sells stocks that fall into the bottom 20% of the ranked list. In normal circumstances, the fund is almost entirely invested in stocks. The fund may invest in dollar-denominated foreign securities and make limited use of certain derivatives (investments whose value is based on indexes or securities). In abnormal circumstances, the fund may temporarily invest more than 20% of its assets in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 11.69% Worst quarter: Q1 '03, -3.39% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Index, an unmanaged index of the 1,000 largest companies in the Russell 3000 Index. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2003 24.38% 2004 9.39% 2005 8.19% 2006 13.93%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 3-1-02) 13.93% 5.96% - -------------------------------------------------------------------------------- Class I after tax on distributions 13.93% 5.96% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 9.05% 5.15% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 6.67% - -------------------------------------------------------------------------------- Russell 1000 Index* 15.46% 7.79%+ - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund compared its performance to the Standard & Poor's 500 Index. The fund changed the index to which it compares its performance to the Russell 1000 Index which will allow for a broader investment universe. + Return as of closest month end to inception date. 10 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on small- or medium-capitalization stocks. The fund's management strategy has a significant influence on fund performance. If the investment research team's research analyses turn out to be inaccurate, or if the proprietary computer models do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.75% - -------------------------------------------------------------------------------- Other expenses 0.14% - -------------------------------------------------------------------------------- Total fund operating expenses 0.89% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $91 $284 $493 $1,096
- -------------------------------------------------------------------------------- SUBADVISER Independence Investments LLC Responsible for day-to-day investment management A subsidiary of Convergent Capital Management LLC Founded in 1982 Supervised by the adviser PORTFOLIO MANAGERS John C. Forelli, CFA Joined fund team in 2004 Jay C. Leu, CFA Joined fund team in 2004 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JHCIX CUSIP 409902848 Newspaper -- SEC number 811-1677 JH fund number 423
11 Large Cap Equity Fund [graphic] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of large-capitalization companies (companies in the capitalization range of the Standard & Poor's 500 Index, which was $1.41 billion to $446.9 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the managers look for companies that are undervalued and/or offer the potential for above-average earnings growth. The managers employ a combination of proprietary financial models and bottom-up, fundamental financial research to identify companies that are selling at what appear to be substantial discounts to their long-term intrinsic value. These companies often have identifiable catalysts for growth, such as new products, business reorganizations or mergers. The fund manages risk by typically holding between 50 and 150 large companies that are diversified across industry sectors. The management team also uses fundamental financial analysis to identify individual companies with substantial cash flows, reliable revenue streams, superior competitive positions and strong management. The fund may attempt to take advantage of short-term market volatility by investing in corporate restructurings or pending acquisitions. The fund may invest up to 20% of its assets in bonds of any maturity, with up to 15% of net assets in junk bonds rated as low as CC/Ca and their unrated equivalents. In selecting bonds, the managers look for the most favorable risk/return ratios. The fund may invest up to 35% of assets in foreign securities. The fund may also make limited use of certain derivatives (investments whose value is based on indexes, securities or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows the fund's calendar year total returns, while the table shows performance over time (along with a broad-based market index for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 12.52% Worst quarter: Q2 '02, -19.74% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2002 -37.55% 2003 24.85% 2004 4.68% 2005 16.75% 2006 20.78%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year 5 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 3-1-01) 20.78% 2.85% 1.44% - -------------------------------------------------------------------------------- Class I after tax on distributions 20.78% 2.78% 1.11% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 13.50% 2.40% 1.05% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 6.19% 4.08% - --------------------------------------------------------------------------------
12 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. In addition, if the managers' securities selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, those risks could increase volatility or reduce performance: |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. |_| Any bonds held by the fund could be downgraded in credit rating or go into default. Bond prices generally fall when interest rates rise and longer maturity will increase volatility. Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.625% - -------------------------------------------------------------------------------- Other expenses 0.145% - -------------------------------------------------------------------------------- Total fund operating expenses 0.77% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $79 $246 $428 $954
- -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Rejoined fund team in 2004 Day-to-day purchase and sale decisions Roger C. Hamilton Joined fund team in 2004 Analysis of specific issuers Timothy M. Malloy Joined fund team in 2006 Analysis of specific issuers See page 37 for the management biographies. FUND CODES Class I Ticker JLVIX CUSIP 41013P608 Newspaper -- SEC number 811-0560 JH fund number 450
13 Large Cap Select Fund [graphic] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of large-capitalization companies (companies with market capitalizations in excess of $5 billion). The fund invests primarily in U.S.-based companies whose growth, cash flow, earnings and dividend attributes are attractive and whose securities are reasonably priced and have the potential for capital appreciation, in the opinion of the management team. In managing the portfolio, the management team looks for companies with strong balance sheets and sustainable earnings growth. In evaluating the prospects for a company's growth and earnings, the management team considers, among other things, the company's historical performance and growth strategy, the growth rate of the industries in which it operates and the markets into which it sells, the nature of its competitive environment, technological developments and trends in market share. In attempting to determine reasonable price levels for a company's securities, the management team utilizes a variety of measurement methods, including discounted cash flow analysis of expected earnings streams and an evaluation of the company's price-to-earnings ratio. Under normal market conditions, the fund invests substantially all of its assets in equity securities (common and preferred stocks and their equivalents). In abnormal conditions, the fund may invest extensively in investment-grade, short-term securities. In these and other cases, the fund may not achieve its goal. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows the fund's calendar year total return, while the table shows performance over time (along with a broad-based market index for reference). This information may help to provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q4 '06, 6.70% Worst quarter: Q3 '04, -4.34% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2004 5.54% 2005 -1.98% 2006 14.87%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 8-25-03) 14.87% 8.32% - -------------------------------------------------------------------------------- Class I after tax on distributions 13.68% 7.65% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 10.49% 6.96% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 13.24% - --------------------------------------------------------------------------------
14 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the management team's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.75% - -------------------------------------------------------------------------------- Other expenses 0.33% - -------------------------------------------------------------------------------- Total fund operating expenses 1.08% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.13% - -------------------------------------------------------------------------------- Net fund operating expenses 0.95% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $97 $331 $583 $1,306
- -------------------------------------------------------------------------------- SUBADVISER Shay Assets Management, Inc. Responsible for day-to-day investment management Founded in 1981 Supervised by the adviser PORTFOLIO MANAGERS John J. McCabe Managed fund since 1991 Mark F. Trautman Managed fund since 1993 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JHLIX CUSIP 409902715 Newspaper -- SEC number 811-1677 JH fund number 449
15 Mid Cap Equity Fund [graphic] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of medium-capitalization companies (companies in the capitalization range of the Standard & Poor's MidCap 400 Index, which was $500 million to $10.62 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. The fund will primarily invest in securities of U.S. companies. In managing the portfolio, the management team emphasizes a bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for companies that possess a combination of strong earnings growth rates and attractive valuations. These companies often exhibit financial strength by means of sound balance sheets and other financial statements. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams and strong competitive positions. To a lesser extent, the team also utilizes technical analysis to assess short- and long-term market trends. The management team also looks for companies with strong senior management and coherent business strategies. The fund may also make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows the fund's calendar year total return, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q4 '04, 9.71% Worst quarter: Q2 '06, -7.13% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's MidCap 400 Index, an unmanaged index of 400 domestic stocks of medium-sized companies. Standard & Poor's MidCap 400/Citigroup Growth Index, an unmanaged index comprised of stocks representing approximately half of the S&P MidCap 400 Index that have been identified as being on the growth end of the growth-value spectrum. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2004 12.39% 2005 17.19% 2006 5.88%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 8-4-03) 5.88% 15.28% - -------------------------------------------------------------------------------- Class I after tax on distributions 5.30% 13.77% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 4.62% 12.78% - -------------------------------------------------------------------------------- Standard & Poor's MidCap 400 Index* 10.31% 16.99% - -------------------------------------------------------------------------------- Standard & Poor's MidCap 400/Citigroup Growth Index* 5.90% 13.81% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund also compared its performance to the Standard & Poor's MidCap 400 Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Standard & Poor's MidCap 400/Citigroup Growth Index, which better represents the fund and its strategy of investment in mid-cap growth stocks. 16 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Medium-capitalization stocks tend to be more volatile than stocks of larger companies, and as a group could fall out of favor with the market causing the fund to underperform investments that focus either on small- or on large-capitalization stocks. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses(1) - -------------------------------------------------------------------------------- Management fee 0.80% - -------------------------------------------------------------------------------- Other expenses 3.01% - -------------------------------------------------------------------------------- Total fund operating expenses 3.81% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-29-08) 2.86% - -------------------------------------------------------------------------------- Net annual operating expenses 0.95% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 29, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $97 $899 $1,721 $3,862
(1) Expense information in this table has been restated to reflect current fees. - -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Henry E. Mehlman, CFA Managed fund since it began in 2003 Alan E. Norton, CFA Managed fund since it began in 2003 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JCEIX CUSIP 478032717 Newspaper -- SEC number 811-3390 JH fund number 481
17 Small Cap Fund [graphic] GOAL AND STRATEGY The fund seeks capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (which, for purposes of this fund, are those companies with market capitalizations under $2 billion, or market capitalizations within the range of market capitalization of the companies in the Russell 2000 Index or the Standard & Poor's Small Cap 600 Index). In managing the portfolio, the portfolio manager selects securities using a bottom-up selection process that focuses on stocks of statistically undervalued yet promising companies that he believes are likely to show improving fundamental prospects with an identifiable catalyst for change. Such catalysts may include, but are not limited to, a new product, new management, regulatory changes, industry or company restructuring or a strategic acquisition. The portfolio manager attempts to identify undervalued securities using quantitative screening parameters, including various financial ratios and "earnings per share" revisions, which measure the change in earnings estimate expectations. The portfolio manager additionally narrows the list of stocks using fundamental security analysis, which may include on-site visits, outside research and analytical judgment. The fund may sell a security if, among other reasons, it reaches the target price set by the portfolio manager; the manager decides that the stock is statistically overvalued; or the portfolio manager believes earnings expectations or the fundamental outlook for the company have deteriorated. The fund may purchase other types of securities that are not primary investment vehicles, such as U.S. dollar-denominated foreign securities and ADRs, certain exchange-traded funds (ETFs) and certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q1 '06, 10.27% Worst quarter: Q2 '06, -8.87% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's Small Cap 600 Index, an unmanaged index of 600 U.S. small-sized companies. Russell 2000 Index, an unmanaged index of 2,000 U.S. small-capitalization stocks. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2005 4.72% 2006 7.81%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 12-6-04) 7.81% 8.12% - -------------------------------------------------------------------------------- Class I after tax on distributions 7.81% 8.08% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 5.07% 6.94% - -------------------------------------------------------------------------------- Standard & Poor's Small Cap 600 Index 15.12% 12.02%* - -------------------------------------------------------------------------------- Russell 2000 Index 18.37% 11.98% - --------------------------------------------------------------------------------
* Return as of closest month end to inception date. 18 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on medium- or large-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the manager's security selection strategies or the quantitative screening parameters do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult for the fund to sell these securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Foreign investments carry additional risks, including potentially inadequate or inaccurate financial information, and social or political instability. |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.90% - -------------------------------------------------------------------------------- Other expenses 0.18% - -------------------------------------------------------------------------------- Total fund operating expenses 1.08% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 2-29-08) 0.00% - -------------------------------------------------------------------------------- Net annual operating expenses 1.08% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through February 29, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $110 $343 $595 $1,317
- -------------------------------------------------------------------------------- SUBADVISER Independence Investments LLC Responsible for day-to-day investment management A subsidiary of Convergent Capital Management LLC Founded in 1982 Supervised by the adviser PORTFOLIO MANAGER Charles S. Glovsky, CFA Managed fund since 1998 See page 37 for the management biographies. FUND CODES Class I Ticker DSIIX CUSIP 41014V869 Newspaper -- SEC number 811-4079 JH fund number 482
19 Small Cap Equity Fund [graphic] GOAL AND STRATEGY The fund seeks capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (companies in the capitalization range of the Russell 2000 Index, which was $68 million to $3.1 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the management team emphasizes a bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for U.S. and foreign companies that possess a combination of strong earning growth rates and reasonable valuations. These companies often exhibit financial strength by means of sound balance sheets and other financial statements. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams and strong competitive positions. To a lesser extent, the team also utilizes technical analysis to assess short- and long-term market trends. The management team also looks for companies with strong senior management and coherent business strategies. They generally maintain personal contact with the senior management of the companies the fund invests in. The fund diversifies across industry sectors. The fund may not invest more than 5% of assets in any one security. The fund may invest up to 15% of assets in a basket of foreign securities or in bonds of any maturity rated as low as CC/Ca and their unrated equivalents (bonds below BBB/Baa are considered junk bonds). The fund may make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies) and may short-sell up to 15% of the fund's assets for non-speculative purposes to manage volatility. Under normal conditions, the fund may not invest more than 10% of assets in cash or cash equivalents. In abnormal circumstances, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 20.71% Worst quarter: Q3 '02, -23.88% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Russell 2000 Index, an unmanaged index of 2,000 U.S. small-capitalization stocks. Standard & Poor's Small Cap 600 Index, an unmanaged index of 600 U.S. small-sized companies. Russell 2000 Growth Index, an unmanaged index of stocks in the Russell 2000 Index with high price-to-book ratios and higher forecasted values. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2002 -43.96% 2003 50.22% 2004 13.50% 2005 8.81% 2006 7.49%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year 5 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 8-15-01) 7.49% 2.25% 2.49% - -------------------------------------------------------------------------------- Class I after tax on distributions 7.49% 2.25% 2.46% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 4.87% 1.92% 2.12% - -------------------------------------------------------------------------------- Russell 2000 Index* 18.37% 11.39% 11.07% - -------------------------------------------------------------------------------- Standard & Poor's Small Cap 600 Index* 15.12% 12.50% 12.05% - -------------------------------------------------------------------------------- Russell 2000 Growth Index* 13.35% 6.93% 6.96% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund compared its performance to both the Russell 2000 Index and the Standard & Poor's Small Cap 600 Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Russell 2000 Growth Index, which better represents the fund and its strategy of investment in small-cap growth stocks. 20 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on medium- or large-capitalization stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the management team's security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more established companies, it may be difficult for the fund to sell these securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Certain derivatives, such as short sales, could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. |_| Any bonds held by the fund could be downgraded in credit quality or go into default. In addition, bond prices generally fall when interest rates rise; this risk is greater for longer maturity bonds. Junk bond prices can fall on bad news about the issuer, an industry or the economy in general. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.70% - -------------------------------------------------------------------------------- Other expenses 0.15% - -------------------------------------------------------------------------------- Total fund operating expenses 0.85% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $87 $271 $471 $1,049
- -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Alan E. Norton, CFA Joined fund team in 2002 Henry E. Mehlman, CFA Joined fund team in 2002 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker SPVIX CUSIP 409905841 Newspaper -- SEC number 811-3999 JH fund number 427
21 Small Cap Intrinsic Value Fund [graphic] GOAL AND STRATEGY The fund seeks long-term capital appreciation. To pursue this goal, the fund normally invests at least 80% of its assets in equity securities of small-capitalization companies (companies in the capitalization range of the Russell 2000 Index, which was $68 million to $3.1 billion as of December 31, 2006). Equity securities include common and preferred stocks and their equivalents. In managing the portfolio, the management team emphasizes a value-oriented, bottom-up approach to individual stock selection. With the aid of proprietary financial models, the management team looks for companies that are selling at what appear to be substantial discounts to their long-term intrinsic values. These companies often have identifiable catalysts for growth, such as new products, business reorganizations or mergers. The management team uses fundamental financial analysis of individual companies to identify those with substantial cash flows, reliable revenue streams, strong competitive positions and strong management. The fund may attempt to take advantage of short-term market volatility by investing in corporate restructurings or pending acquisitions. The fund may invest up to 35% of assets in foreign securities. The fund may invest up to 20% of assets in bonds of any maturity rated as low as CC/Ca and their unrated equivalents (bonds below BBB/Baa are considered junk bonds). The fund may make limited use of certain derivatives (investments whose value is based on securities, indexes or currencies). In abnormal circumstances, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with a broad-based market index for reference). This information may help to provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q4 '06, 14.89% Worst quarter: Q3 '06, -1.60% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Russell 2000 Index, offers investors access to the small-cap segment of the U.S. equity universe. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set. The Russell 2000 includes the smallest 2,000 securities in the Russell 3000. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2006 29.55%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 2-15-05) 29.55% 25.72% - -------------------------------------------------------------------------------- Class I after tax on distributions 28.61% 23.46% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 19.25% 20.72% - -------------------------------------------------------------------------------- Russell 2000 Index 18.37% 13.54% - --------------------------------------------------------------------------------
22 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Small-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investment that focus on medium- or large-capitalization stocks. Similarly, value stocks could underperform growth stocks. To the extent that the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. Stocks of smaller companies are more volatile than stocks of larger companies. Many smaller companies have short track records, narrow product lines or niche markets, making them highly vulnerable to isolated business setbacks. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more established companies, it may be difficult for the fund to sell its securities at a desirable price. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. |_| Any bonds held by the fund could be downgraded in credit quality or go into default. Bond prices generally fall when interest rates rise and longer-maturity will increase volatility. Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses(1) - -------------------------------------------------------------------------------- Management fee 0.90% - -------------------------------------------------------------------------------- Other expenses 0.88% - -------------------------------------------------------------------------------- Total fund operating expenses 1.78% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.58% - -------------------------------------------------------------------------------- Net annual operating expenses 1.20% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $122 $504 $910 $2,047
(1) Expense information in this table has been restated to reflect current fees. - -------------------------------------------------------------------------------- SUBADVISER MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC) Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS Timothy E. Keefe, CFA Managed fund since it began in 2005 Timothy M. Malloy Managed fund since it began in 2005 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker JHIIX CUSIP 41013P814 Newspaper -- SEC number 811-0560 JH fund number 464
23 Sovereign Investors Fund [graphic] GOAL AND STRATEGY The fund seeks long-term growth of capital and income without assuming undue market risks. To pursue this goal, the fund normally invests at least 80% of its stock investments in a diversified portfolio of companies with market capitalizations within the range of the Standard & Poor's 500 Index. On December 31, 2006, that range was $1.41 billion to $446.9 billion. At least 65% of the fund's stock investments are "dividend performers" -- companies whose dividend payments have increased steadily for ten years. In managing the portfolio, the managers use fundamental financial analysis to identify individual companies with high-quality income statements, substantial cash reserves and identifiable catalysts for growth, which may be new products or benefits from industrywide growth. The managers generally visit companies to evaluate the strength and consistency of their management strategy. Finally, the managers look for stocks that are reasonably priced relative to their earnings and industry. The fund may not invest more than 5% of assets in any one security. The fund may invest in bonds of any maturity, with up to 5% of assets in junk bonds rated as low as C and their unrated equivalents. The fund typically invests in U.S. companies but may invest in dollar-denominated foreign securities. It may also make limited use of certain derivatives (investments whose value is based on indexes). Under normal conditions, the fund may not invest more than 10% of assets in cash or cash equivalents. In abnormal market conditions, the fund may temporarily invest extensively in investment-grade, short-term securities. In these and other cases, the fund might not achieve its goal. The fund may trade securities actively, which could increase its transaction costs (thus lowering performance) and increase your taxable distributions. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows the fund's calendar year total return, while the table shows performance over time (along with a broad-based market index for reference). This information may help to provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q4 '04, 6.70% Worst quarter: Q3 '04, -2.25% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Index (reflects no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2004 5.73% 2005 2.76% 2006 15.21%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 12-1-03) 15.21% 8.86% - -------------------------------------------------------------------------------- Class I after tax on distributions 12.90% 7.44% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 12.11% 7.24% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index 15.79% 11.58% - --------------------------------------------------------------------------------
24 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock and bond market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on small- or medium-capitalization stocks. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| Certain derivatives could produce disproportionate losses. |_| In a down market, higher-risk securities and derivatives could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including inadequate or inaccurate financial information, and social or political instability. |_| Any bonds held by the fund could be downgraded in credit rating or go into default. Bond prices generally fall when interest rates rise and longer maturity will increase volatility. Junk bond prices can fall on bad news about the economy, an industry or a company. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.59% - -------------------------------------------------------------------------------- Other expenses 0.12% - -------------------------------------------------------------------------------- Total fund operating expenses 0.71% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $73 $227 $395 $883
- -------------------------------------------------------------------------------- SUBADVISER Sovereign Asset Management LLC a division of MFC Global Investment Management (U.S.), LLC Responsible for day-to-day investment management A subsidiary of John Hancock Financial Services, Inc. Founded in 1979 Supervised by the adviser PORTFOLIO MANAGERS John F. Snyder III Joined fund team in 1983 Barry H. Evans, CFA Joined fund team in 1996 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker SOIIX CUSIP 47803P880 Newspaper -- SEC number 811-0560 JH fund number 429
25 U.S. Global Leaders Growth Fund [graphic] GOAL AND STRATEGY The fund seeks long-term growth of capital. To pursue this goal, the fund invests primarily in common stocks of "U.S. Global Leaders." Under normal market conditions, at least 80% of the fund's assets will be invested in stocks of companies the managers regard as U.S. Global Leaders. The managers consider U.S. Global Leaders to be U.S. companies with multinational operations that typically exhibit the following key sustainable growth characteristics: |_| Hold leading market shares of their relevant industries that result in high profit margins and high investment returns. |_| Supply consumable products or services so that their revenue streams are recurring. The managers seek to identify companies with superior long-term earnings prospects and to continue to own them as long as the managers believe they will continue to enjoy favorable prospects for capital growth and are not overvalued in the marketplace. As a result of its investment strategy, the fund typically invests in large-capitalization companies (companies in the capitalization range of the Standard & Poor's 500 Index, which was $1.41 billion to $446.9 billion as of December 31, 2006). The fund is non-diversified, which allows it to make larger investments in individual companies. The fund may invest in other types of equity securities and foreign stocks. In abnormal circumstances, the fund may temporarily invest in short-term cash equivalents. In these and other cases, the fund might not achieve its goal. - -------------------------------------------------------------------------------- [graphic] PAST PERFORMANCE The graph shows how the fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help provide an indication of the fund's risks. All figures assume dividend reinvestment. Past performance before and after taxes does not indicate future results. Class I, total returns Best quarter: Q2 '03, 10.20% Worst quarter: Q2 '06, -7.12% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Growth Index, an unmanaged index of companies in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with high price-to-book ratios and higher forecasted growth values. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2003 19.77% 2004 8.94% 2005 2.64% 2006 1.88%
- -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Life of 1 year Class I - -------------------------------------------------------------------------------- Class I before tax (began 5-20-02) 1.88% 2.92% - -------------------------------------------------------------------------------- Class I after tax on distributions 1.88% 2.86% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 1.22% 2.47% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 7.76% - -------------------------------------------------------------------------------- Russell 1000 Growth Index* 9.07% 5.18% - --------------------------------------------------------------------------------
* As of December 29, 2006, the fund is adding the Russell 1000 Growth Index, another benchmark that the fund is being measured against on both the consultant and institutional side. 26 [graphic] MAIN RISKS The value of your investment will fluctuate in response to stock market movements. The fund's management strategy has a significant influence on fund performance. Large-capitalization stocks as a group could fall out of favor with the market, causing the fund to underperform investments that focus on small- or medium-capitalization stocks. Similarly, growth stocks could underperform value stocks. Companies that have substantial multinational operations may be affected by fluctuations in currency exchange rates and by economic and political conditions in foreign countries. These conditions may include restrictions on monetary repatriation and possible seizure, nationalization or expropriation of assets. To the extent the fund invests in a given industry, its performance will be hurt if that industry performs poorly. In addition, if the managers' security selection strategies do not perform as expected, the fund could underperform its peers or lose money. To the extent that the fund makes investments with additional risks, these risks could increase volatility or reduce performance: |_| If the fund invests heavily in a single issuer, its performance could suffer significantly from adverse events affecting that issuer. |_| In a down market, higher-risk securities could become harder to value or to sell at a fair price. |_| Foreign investments carry additional risks, including potentially unfavorable currency exchange rates, inadequate or inaccurate financial information, and social or political instability. - -------------------------------------------------------------------------------- [graphic] YOUR EXPENSES Operating expenses are paid from the fund's assets and, therefore, are paid by shareholders indirectly. - -------------------------------------------------------------------------------- Annual operating expenses - -------------------------------------------------------------------------------- Management fee 0.75% - -------------------------------------------------------------------------------- Other expenses 0.12% - -------------------------------------------------------------------------------- Total fund operating expenses 0.87% - -------------------------------------------------------------------------------- Contractual expense reimbursement (at least until 4-30-08) 0.03% - -------------------------------------------------------------------------------- Net annual operating expenses 0.84% - --------------------------------------------------------------------------------
The hypothetical example below shows what your expenses would be after the expense reimbursement (through April 30, 2008) if you invested $10,000 over the time frames indicated, assuming you reinvested all distributions and that the average annual return was 5%. The example is for comparison only and does not represent the fund's actual expenses and returns, either past or future.
- -------------------------------------------------------------------------------- Expenses Year 1 Year 3 Year 5 Year 10 - -------------------------------------------------------------------------------- Class I $86 $275 $479 $1,070
- -------------------------------------------------------------------------------- SUBADVISER Sustainable Growth Advisers, LP Responsible for day-to-day investment management Founded in 2003 Supervised by the adviser PORTFOLIO MANAGERS Gordon M. Marchand, CFA, CIC Managed fund since 1995 George P. Fraise Joined fund team in 2000 Robert L. Rohn Joined fund team in 2003 Managers share investment strategy and decisions See page 37 for the management biographies. FUND CODES Class I Ticker USLIX CUSIP 409902798 Newspaper -- SEC number 811-1677 JH fund number 426
27 Your account - -------------------------------------------------------------------------------- WHO CAN BUY SHARES Class I shares are offered without any sales charge to certain types of investors, as noted below, if they also meet the minimum initial investment requirement for purchases of Class I shares -- see OPENING AN ACCOUNT: |_| Retirement and other benefit plans |_| Endowment funds and foundations |_| Any state, county or city, or its instrumentality, department, authority or agency |_| Accounts registered to insurance companies, trust companies and bank trust departments |_| Investment companies both affiliated and not affiliated with the adviser |_| Investors who participate in fee-based, wrap and other investment platform programs |_| Any entity that is considered a corporation for tax purposes |_| Fund trustees and other individuals who are affiliated with these funds or other John Hancock funds - -------------------------------------------------------------------------------- OPENING AN ACCOUNT 1 Read this prospectus carefully. 2 Determine if you are eligible, by referring to "Who can buy shares." 3 Determine how much you want to invest. The minimum initial investment is $250,000. The minimum initial investment requirement may be waived, in the fund's sole discretion, for investors in certain fee-based, wrap or other investment platform programs that do not require the fund to pay any type of administrative payments per shareholder account to any third party. The fund may waive the minimum initial investment for other categories of investors at its discretion. There are no minimum levels for subsequent purchases to existing accounts. John Hancock Classic Value Fund Effective the close of business on December 13, 2006, the John Hancock Classic Value Fund (the Fund) was closed to new investors, except as provided below. Shareholders holding accounts in the Fund as of the close of business on December 13, 2006 may continue to purchase additional shares in the Fund into those accounts after that date. Investors who did not maintain an account in the Fund as of the close of business on December 13, 2006, generally will not be permitted to establish an account in the Fund except that new Fund accounts may be established by: |_| participants in most group employer retirement plans (and their successor plans) if the Fund had been established (or was in the process of being established) as an investment option under the plans (or under another plan sponsored by the same employer) by September 15, 2006; |_| participants in certain 529 plans that have a signed agreement with John Hancock Funds and offer the Fund as a plan option prior to September 15, 2006 (or were in the process of being established prior to September 15, 2006); |_| individuals or institutions that invest in certain fee-based investment products or mutual fund wrap programs where the Fund has been on a recommended list or in an asset allocation model since, on or before November 30, 2006, through a broker, dealer, financial planner, consultant or registered investment advisor that has entered into a signed agreement with John Hancock Funds but only for such period as the Fund remains on such list or model; and |_| employees of Pzena Investment Management. 4 All shareholders must complete the account application, carefully following the instructions. If you have any questions, please contact your financial representative or call Signature Services at 1-888-972-8696. 5 Make your initial investment using the table on the next page. Important information about opening a new account To help the government fight the funding of terrorism and money laundering activities, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), requires all financial institutions to obtain, verify and record information that identifies each person or entity that opens an account. For individual investors opening an account: When you open an account, you will be asked for your name, residential address, date of birth and Social Security number. For investors other than individuals: When you open an account, you will be asked for the name of the entity, its principal place of business and taxpayer identification number (TIN) and may be requested to provide information on persons with authority or control over the account such as name, residential address, date of birth and Social Security number. You may also be asked to provide documents, such as articles of incorporation, trust instruments or partnership agreements and other information that will help Signature Services identify the entity. Please see the Mutual Fund Account Application for more details. Your broker-dealer or agent may charge you a fee to effect transactions in fund shares. Other classes of shares of the funds, which have their own expense structure, may be offered in separate prospectuses. Additional payments to financial intermediaries Shares of the funds are primarily sold through financial intermediaries (firms), such as brokers, banks, registered investment advisers, financial planners and retirement plan administrators. These firms may be compensated for selling shares of the funds in two principal ways: |_| directly, by the payment of sales commissions, if any and |_| indirectly, as a result of the fund paying Rule 12b-1 fees Certain firms may request, and the distributor may agree to make, payments in addition to sales commissions and 12b-1 fees out of the distributor's own resources. These additional payments are sometimes referred to as "revenue sharing." These payments assist in our efforts to promote the sale of the funds' shares. The distributor agrees with the firm on the methods for calculating any additional compensation, 28 YOUR ACCOUNT which may include the level of sales or assets attributable to the firm. Not all firms receive additional compensation, and the amount of compensation varies. These payments could be significant to a firm. The distributor determines which firms to support and the extent of the payments it is willing to make. The distributor generally chooses to compensate firms that have a strong capability to distribute shares of the funds and that are willing to cooperate with the distributor's promotional efforts. The distributor hopes to benefit from revenue sharing by increasing the funds' net assets, which, as well as benefiting the funds, would result in additional management and other fees for the investment adviser and its affiliates. In consideration for revenue sharing, a firm may feature certain funds in its sales system or give preferential access to members of its sales force or management. In addition, the firm may agree to participate in the distributor's marketing efforts by allowing us to participate in conferences, seminars or other programs attended by the intermediary's sales force. Although an intermediary may seek revenue sharing payments to offset costs incurred by the firm in servicing its clients that have invested in the funds, the intermediary may earn a profit on these payments. Revenue sharing payments may provide your firm with an incentive to favor the funds. The Statement of Additional Information (SAI) discusses the distributor's revenue sharing arrangements in more detail. Your intermediary may charge you additional fees other than those disclosed in this prospectus. You can ask your firm about any payments it receives from the distributor or the funds, as well as about fees and/or commissions it charges. The distributor, investment adviser and their affiliates may have other relationships with your firm relating to the provisions of services to the funds, such as providing omnibus account services, transaction processing services or effecting portfolio transactions for funds. If your intermediary provides these services, the investment adviser or the funds may compensate the intermediary for these services. In addition, your intermediary may have other compensated relationships with the investment adviser or its affiliates that are not related to the funds. YOUR ACCOUNT 29 - -------------------------------------------------------------------------------- Buying shares - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- Opening an account Adding to an account - ---------------------------------------------------------------------------------------------------------------------------------- By check [graphic] [_] Make out a check for the investment [_] Make out a check for the investment amount, payable to "John Hancock amount payable to "John Hancock Signature Services, Inc." Signature Services, Inc." [_] If your account statement has a [_] Deliver the check and your detachable investment slip, please completed application to your complete in its entirety. If no financial representative, or mail slip is available, include a note them to Signature Services (address specifying the fund name(s), your below). share class, your account number and the name(s) in which the account is registered. [_] Deliver the check and investment slip or note to your financial representative, or mail them to Signature Services (address below). - ---------------------------------------------------------------------------------------------------------------------------------- By exchange - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] [_] Call your financial representative [_] Call your financial representative or Signature Services to request an or Signature Services to request an exchange. exchange. [_] You may only exchange Class I shares [_] You may only exchange Class I for other Class I shares or Money shares for other Class I shares or Market Fund Class A shares. Money Market Fund Class A shares. - ---------------------------------------------------------------------------------------------------------------------------------- By wire - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] [_] Deliver your completed application [_] Obtain wiring instructions by to your financial representative or calling Signature Services. mail it to Signature Services. [_] Instruct your bank to wire the [_] Obtain your account number by amount of your investment. calling your financial representative or Signature Specify the fund name, the share class, Services. the new account number and the name(s) [_] Obtain wiring instructions by in which the account is registered. Your calling Signature Services. bank may charge a fee to wire funds. Specify the fund name, the share class, the new account number and the name(s) in which the account is registered. Your bank may charge a fee to wire funds. - ---------------------------------------------------------------------------------------------------------------------------------- By phone - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] See "By exchange" and "By wire." [_] Verify that your bank or credit union is a member of the Automated Clearing House (ACH) system. [_] Complete the "To Purchase, Exchange or Redeem Shares via Telephone" and "Bank Information" sections on your account application. [_] Call Signature Services between 8:30 A.M. and 5:00 P.M., Eastern Time on most business days to verify that these features are in place on your account. [_] Call your financial representative or Signature Services with the fund name(s), your share class, your account number, the name(s) in which the account is registered and the amount of your investment.
- ----------------------------------------------- Address: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1001 Boston, MA 02217-1001 Phone Number: 1-888-972-8696 Or contact your financial representative for instructions and assistance. - ----------------------------------------------- 30 YOUR ACCOUNT - -------------------------------------------------------------------------------- Selling shares - --------------------------------------------------------------------------------
To sell some or all of your shares - ---------------------------------------------------------------------------------------------------------------------------------- By letter - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] [_] Sales of any amount. [_] Write a letter of instruction indicating the fund name, your account number, your share class, the name(s) in which the account is registered and the dollar value or number of shares you wish to sell. [_] Include all signatures and any additional documents that may be required (see next page). [_] Mail the materials to Signature Services. [_] A check or wire will be sent according to your letter of instruction. [_] Certain requests will require a Medallion signature guarantee. Please refer to "Selling shares in writing" on the next page. - ---------------------------------------------------------------------------------------------------------------------------------- By phone - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] Amounts up to $100,000: [_] Most accounts. [_] Redemption proceeds of up to $100,000 may be sent by wire or by check. A check will be mailed to the exact name(s) and address on the account. [_] To place your request with a representative at John Hancock Funds, call Signature Services between 8:30 A.M. and 5:00 P.M., Eastern Time on most business days or your financial representative. Amounts up to $5 million: [_] Available to the following types of [_] Redemption proceeds exceeding accounts: custodial accounts held $100,000 must be wired to your by banks, trust companies or designated bank account. broker-dealers; endowments and [_] Redemption proceeds exceeding foundations; corporate accounts; $100,000 and sent by check will group retirement plans; and pension require a letter of instruction accounts (excluding IRAs, 403(b) with a Medallion signature plans and all John Hancock guarantee. Please refer to "Selling custodial retirement accounts). shares in writing" on the next page. - ---------------------------------------------------------------------------------------------------------------------------------- By wire or electronic funds transfer ("EFT") - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] [_] Requests by letter to sell any [_] To verify that the telephone amount. redemption privilege is in place on [_] Qualified requests by phone to sell an account or to request the forms up to $5 million (accounts with to add it to an existing account telephone redemption privileges). call Signature Services. [_] Amounts of $5 million or more will be wired on the next business day. [_] Amounts up to $100,000 may be sent by EFT or by check. Funds from EFT transactions are generally available by the second business day. Your bank may charge a fee for this service. - ---------------------------------------------------------------------------------------------------------------------------------- By exchange - ---------------------------------------------------------------------------------------------------------------------------------- [graphic] [_] Sales of any amount. [_] Obtain a current prospectus for the fund into which you are exchanging by calling your financial representative or Signature Services. [_] You may only exchange Class I shares for other Class I shares or Money Market Fund Class A shares. [_] Call your financial representative or Signature Services to request an exchange.
YOUR ACCOUNT 31 Selling shares in writing In certain circumstances, you will need to make your request to sell shares in writing. You may need to include additional items with your request, as shown in the table below, unless they were previously provided to Signature Services and are still accurate. You may also need to include a Medallion signature guarantee, which protects you against fraudulent orders. You will need a signature guarantee if: |_| your address of record has changed within the past 30 days; |_| you are selling more than $100,000 worth of shares and are requesting payment by check; |_| you are selling more than $5 million worth of shares from the following types of accounts: custodial accounts held by banks, trust companies or broker-dealers; endowments and foundations; corporate accounts; group retirement plans; and pension accounts (excluding IRAs, 403(b) plans and all John Hancock custodial retirement accounts); |_| you are requesting payment other than by a check/wire mailed to the address/bank of record and payable to the registered owner(s). You will need to obtain your Medallion signature guarantee from a member of the Signature Guarantee Medallion Program. Most banks, brokers and securities dealers are members of this program. A notary public CANNOT provide a signature guarantee.
- ---------------------------------------------------------------------------------------------------------------------------------- Seller Requirements for written requests [GRAPHIC] - ---------------------------------------------------------------------------------------------------------------------------------- Owners of individual, joint or UGMA/UTMA accounts (custodial |_| Letter of instruction. accounts for minors). |_| On the letter, the signatures of all persons authorized to sign for the account, exactly as the account is registered. |_| Medallion signature guarantee if applicable (see above). - ---------------------------------------------------------------------------------------------------------------------------------- Owners of corporate, sole proprietorship, general partner or |_| Letter of instruction. association accounts. |_| Corporate business/organization resolution certified within the past 12 months or a John Hancock Funds business/organization certification form. |_| On the letter and the resolution, the signature of the person(s) authorized to sign for the account. |_| Medallion signature guarantee if applicable (see above). - ---------------------------------------------------------------------------------------------------------------------------------- Owners or trustees of retirement plan, pension trust and |_| Letter of instruction. trust accounts. |_| On the letter, the signature(s) of the trustee(s). |_| Copy of the trust document certified within the past 12 months or a John Hancock Funds trust certification form. |_| Medallion signature guarantee if applicable (see above). - ---------------------------------------------------------------------------------------------------------------------------------- Joint tenancy shareholders with rights of survivorship with a |_| Letter of instruction signed by deceased co-tenant(s). surviving tenant. |_| Copy of death certificate. |_| Medallion signature guarantee if applicable (see above). |_| Inheritance tax waiver (if applicable). - ---------------------------------------------------------------------------------------------------------------------------------- Executors of shareholder estates. |_| Letter of instruction signed by executor. |_| Copy of order appointing executor, certified within the past 12 months. |_| Medallion signature guarantee if applicable (see above). |_| Inheritance tax waiver (if applicable). - ---------------------------------------------------------------------------------------------------------------------------------- Administrators, conservators, guardians and other sellers or |_| Call 1-888-972-8696 for instructions. account types not listed above. - ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------- Address: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1001 Boston, MA 02217-1001 Phone Number: 1-888-972-8696 Or contact your financial representative for instructions and assistance. - ----------------------------------------------- 32 YOUR ACCOUNT - -------------------------------------------------------------------------------- TRANSACTION POLICIES Valuation of shares The net asset value (NAV) per share for each fund and class is determined each business day at the close of regular trading on the New York Stock Exchange (typically 4:00 P.M., Eastern Time). Each fund generally values its portfolio of equity securities, fixed-income securities and other investments using closing market prices or readily available market quotations. When closing market prices or market quotations are not readily available or are considered by the Adviser to be unreliable, a fund may use a security's fair value. Fair value is the valuation of a security determined on the basis of factors other than market value in accordance with procedures approved by the board of trustees. All methods of determining the value of a security used by a fund, including those discussed below, on a basis other than market value, are forms of fair value. The use of fair value pricing by a fund may cause the NAV of its shares to differ from the NAV that would be calculated only using market prices. The Adviser may determine that the closing market price no longer accurately reflects the value of a security for a variety of reasons that affect either the relevant securities markets generally or the specific issuer. For example, with respect to non-U.S. securities held by a fund, developments relating to specific events, the securities markets or the specific issuer may occur between the time the primary market closes and the time the fund determines its NAV. In those circumstances when the fund believes the price of the security may be affected, the fund uses the fair value of the security. In certain circumstances a fund may use a pricing service for this purpose. Foreign stocks or other portfolio securities held by a fund may trade on U.S. holidays and weekends, even though the fund's shares will not be priced on those days. This may change the fund's NAV on days when you cannot buy or sell fund shares. For market prices, quotations and some fair value methods, the fund relies upon securities prices provided by pricing services. Certain types of securities, including some fixed-income securities, are regularly priced using fair value rather than market prices. The funds use a pricing matrix to determine the value of fixed-income securities that do not trade daily. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities and historical trading patterns in the market for fixed-income securities. The funds value debt securities with remaining maturities of 60 days or less at amortized cost. For more information on the valuation of shares, please see the SAI. Buy and sell prices When you buy shares, you pay the NAV. When you sell shares, you receive the NAV. Execution of requests Each fund is open on those days when the New York Stock Exchange is open, typically Monday through Friday. Buy and sell requests are executed at the next NAV to be calculated after Signature Services receives your request in good order. In unusual circumstances, the funds have the right to redeem in kind. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing. In unusual circumstances, any fund may temporarily suspend the processing of sell requests, or may postpone payment of proceeds for up to three business days or longer, as allowed by federal securities laws. Telephone transactions For your protection, telephone requests may be recorded in order to verify their accuracy. Also for your protection, telephone redemption transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. Proceeds from telephone transactions can only be mailed to the address of record. Exchanges You may exchange Class I shares for Class I shares of other John Hancock funds or Money Market Fund Class A shares. The registration for both accounts involved must be identical. Note: Once exchanged into Money Market Fund Class A, shares may only be exchanged back to Class I shares. A fund may change or cancel its exchange policies at any time upon 60 days' written notice to its shareholders. For further details, see "Additional Services and Programs" in the SAI (see the back cover of this prospectus). Excessive trading The funds are intended for long-term investment purposes only and do not knowingly accept shareholders who engage in "market timing" or other types of excessive short-term trading. Short-term trading into and out of a fund can disrupt portfolio investment strategies and may increase fund expenses for all shareholders, including long-term shareholders who do not generate these costs. Right to reject or restrict purchase and exchange orders Purchases and exchanges should be made primarily for investment purposes. The funds reserve the right to restrict, reject or cancel (with respect to cancellations, within one day of the order), for any reason and without any prior notice, any purchase or exchange order, including transactions representing excessive trading and transactions accepted by any shareholder's financial intermediary. For example, the funds may in their discretion restrict, reject or cancel a purchase or exchange order even if the transaction is not subject to the specific "Limitation on exchange activity" described below if the funds or their agents determine that accepting the order could interfere with the efficient management of a fund's portfolio or otherwise not be in the fund's best interest in light of unusual trading activity related to your account. In the event that the funds reject or cancel an exchange request, neither the redemption nor the purchase side of the exchange will be processed. If you would like the redemption request to be processed even if the purchase order is rejected, you should submit separate redemption and purchase orders rather than placing an exchange order. The funds reserve the right to delay for up to one business day, consistent with applicable law, the processing of exchange requests in the event that, in the funds' judgment, such delay would be in the funds' best interest, in which case both the redemption and purchase side of the exchange will receive the funds' NAVs at the conclusion of the delay period. The funds, through their agents in their sole discretion, may impose these remedial actions at the account holder level or the underlying shareholder level. YOUR ACCOUNT 33 Exchange limitation policies The funds' boards of trustees have adopted the following policies and procedures by which the funds, subject to the limitations described below, takes steps reasonably designed to curtail excessive trading practices. Limitation on exchange activity The funds, through their agents, undertake to use their best efforts to exercise the funds' right to restrict, reject or cancel purchase and exchange orders, as described above, if an account holder, who purchases or exchanges into a fund account in an amount of $5,000 or more, exchanges $1,000 or more out of that fund account within 30 calendar days on three occasions during any 12-month period. Nothing in this paragraph limits the right of the funds to refuse any purchase or exchange order, as discussed above under "Right to reject or restrict purchase and exchange orders." Exchanges made on the same day in the same account are aggregated for purposes of counting the number and dollar amount of exchanges made by the account holder. The exchange limits referenced above will not be imposed or may be modified under certain circumstances. For example, these exchange limits may be modified for accounts held by certain retirement plans to conform to plan exchange limits, ERISA considerations or Department of Labor regulations. Certain automated or pre-established exchange, asset-allocation and dollar-cost-averaging programs are not subject to these exchange limits. These programs are excluded from the exchange limitation because the funds believe that they are advantageous to shareholders and do not offer an effective means for market timing or excessive trading strategies. These investment tools involve regular and predetermined purchase or redemption requests made well in advance of any knowledge of events affecting the market on the date of the purchase or redemption. These exchange limits are subject to the funds' ability to monitor exchange activity, as discussed under "Limitation on the ability to detect and curtail excessive trading practices" below. Depending upon the composition of a fund's shareholder accounts and in light of the limitations on the ability of the funds to detect and curtail excessive trading practices, a significant percentage of a fund's shareholders may not be subject to the exchange limitation policy described above. In applying the exchange limitation policy, the funds consider information available to them at the time and reserve the right to consider trading activity in a single account or multiple accounts under common ownership, control or influence. Limitation on the ability to detect and curtail excessive trading practices Shareholders seeking to engage in excessive trading practices sometimes deploy a variety of strategies to avoid detection and, despite the efforts of the funds to prevent their excessive trading, there is no guarantee that the funds or their agents will be able to identify such shareholders or curtail their trading practices. The ability of the funds and their agents to detect and curtail excessive trading practices may also be limited by operational systems and technological limitations. Because the funds will not always be able to detect frequent trading activity, investors should not assume that the funds will be able to detect or prevent all frequent trading or other practices that disadvantage the funds. For example, the ability of the funds to monitor trades that are placed by omnibus or other nominee accounts is severely limited in those instances in which the financial intermediary, including a financial adviser, broker, retirement plan administrator or fee-based program sponsor, maintains the records of a fund's underlying beneficial owners. Omnibus or other nominee account arrangements are common forms of holding shares of a fund, particularly among certain financial intermediaries such as financial advisers, brokers, retirement plan administrators or fee-based program sponsors. These arrangements often permit the financial intermediary to aggregate their clients' transactions and ownership positions and do not identify the particular underlying shareholder(s) to the fund. Excessive trading risk To the extent that the funds or their agents are unable to curtail excessive trading practices in a fund, these practices may interfere with the efficient management of a fund's portfolio and may result in a fund engaging in certain activities to a greater extent than it otherwise would, such as maintaining higher cash balances, using its line of credit and engaging in portfolio transactions. Increased portfolio transactions and use of the line of credit would correspondingly increase a fund's operating costs and decrease a fund's investment performance. Maintenance of higher levels of cash balances would likewise result in lower fund investment performance during periods of rising markets. While excessive trading can potentially occur in any fund, certain types of funds are more likely than others to be targets of excessive trading. For example: |_| A fund that invests a significant portion of its assets in small-or mid-capitalization stocks or securities in particular industries, that may trade infrequently or are fair valued as discussed under "Valuation of shares," entails a greater risk of excessive trading, as investors may seek to trade fund shares in an effort to benefit from their understanding of the value of those types of securities (referred to as price arbitrage). |_| A fund that invests a material portion of its assets in securities of non-U.S. issuers may be a potential target for excessive trading if investors seek to engage in price arbitrage based upon general trends in the securities markets that occur subsequent to the close of the primary market for such securities. |_| A fund that invests a significant portion of its assets in below investment-grade (junk) bonds that may trade infrequently or are fair valued as discussed under "Valuation of shares" entails a greater risk of excessive trading, as investors may seek to trade fund shares in an effort to benefit from their understanding of the value of those types of securities. Any frequent trading strategies may interfere with efficient management of a fund's portfolio. A fund that invests in the types of securities discussed above may be exposed to this risk to a greater degree than a fund that invests in highly liquid securities. These risks would be less significant, for example, in a fund that primarily invests in U.S. government securities, money market instruments, investment-grade corporate issuers or large-capitalization U.S. equity securities. Any successful price arbitrage may cause dilution in the value of the fund shares held by other shareholders. 34 YOUR ACCOUNT Account information John Hancock Funds, LLC is required by law to obtain information for verifying an account holder's identity. For example, an individual will be required to supply name, residential address, date of birth and Social Security number. If you do not provide the required information, we may not be able to open your account. If verification is unsuccessful, John Hancock Funds, LLC may close your account, redeem your shares at the next NAV and take any other steps that it deems reasonable. Certificated shares The funds no longer issue share certificates. Shares are electronically recorded. Any existing certificated shares can only be sold by returning the certificated shares to Signature Services along with a letter of instruction or a stock power and a signature guarantee. Sales in advance of purchase payments When you place a request to sell shares for which the purchase money has not yet been collected, the request will be executed in a timely fashion, but a fund will not release the proceeds to you until your purchase payment clears. This may take up to ten business days after the purchase. - -------------------------------------------------------------------------------- DIVIDENDS AND ACCOUNT POLICIES Account statements In general, you will receive account statements as follows: |_| after every transaction (except a dividend reinvestment) that affects your account balance; |_| after any changes of name or address of the registered owner(s); |_| in all other circumstances, at least quarterly. Every year you should also receive, if applicable, a Form 1099 tax information statement, mailed by January 31. Dividends The funds generally distribute most or all of their net earnings annually in the form of dividends. Balanced Fund and Sovereign Investors Fund typically pay income dividends quarterly. All other funds declare and pay any income dividends annually. Any capital gains are distributed annually. Dividend reinvestments Dividends will be reinvested automatically in additional shares of the same fund on the dividend record date. Alternatively, you can choose to have a check for your dividends and capital gains in the amount of $10 or more mailed to you. However, if the check is not deliverable or the combined dividend and capital gains amount is less than $10, your proceeds will be reinvested. If five or more of your dividend or capital gains checks remain uncashed after 180 days, all subsequent dividends and capital gains will be reinvested. Taxability of dividends For investors who are not exempt from federal income taxes, dividends you receive from a fund, whether reinvested or taken as cash, are generally considered taxable. Dividends from a fund's short-term capital gains are taxable as ordinary income. Dividends from a fund's long-term capital gains are taxable at a lower rate. Whether gains are short term or long term depends on the fund's holding period. Some dividends paid in January may be taxable as if they had been paid the previous December. The Form 1099 that is mailed to you every January details your dividends and their federal tax category, although you should verify your tax liability with your tax professional. Taxability of transactions Any time you sell or exchange shares, it is considered a taxable event for you if you are not exempt from federal income taxes. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or a loss on the transaction. You are responsible for any tax liabilities generated by your transactions. - -------------------------------------------------------------------------------- ADDITIONAL INVESTOR SERVICES Fund securities The funds' portfolio securities disclosure policy can be found in each fund's SAI and on the funds' Web site, www.jhfunds.com. The funds' Web site also lists fund holdings. Portfolio holding information is posted on the funds' Web site each month on a one-month lag and is available on the funds' Web site until a fund files its next Form N-CSR or Form N-Q with the Securities and Exchange Commission (SEC). Portfolio holding information as filed with the SEC on Forms N-CSR and N-Q is also made available on the funds' Web site. YOUR ACCOUNT 35 Fund details - -------------------------------------------------------------------------------- BUSINESS STRUCTURE Each fund's board of trustees oversees each fund's business activities and retains the services of the various firms that carry out the fund's operations. The trustees of Balanced, Classic Value, Classic Value II, Large Cap Equity, Large Cap Select, Mid Cap Equity, Small Cap, Small Cap Intrinsic Value and U.S. Global Leaders Growth Funds have the power to change these funds' respective investment goals without shareholder approval. The trustees of Core Equity, Large Cap Equity, Large Cap Select, Mid Cap Equity, Small Cap, Small Cap Equity, Small Cap Intrinsic Value and U.S. Global Leaders Growth Funds have the power to change the focus of each fund's 80% investment policy without shareholder approval. A fund will provide written notice to shareholders at least 60 days prior to a change in its 80% policy. Classic Value II, Core Equity and Small Cap Funds rely on an order from the SEC permitting the Adviser, subject to Board approval, to appoint a subadviser or change the terms of a subadvisory agreement pursuant to an agreement that is not approved by the shareholders. The funds, therefore, are able to change subadviser or the fees paid to the subadviser from time to time without the expense and delays associated with obtaining shareholder approval of the change. This order does not, however, permit the Adviser to appoint a subadviser that is an affiliate of the Adviser or the fund (other than by reason of serving as subadviser to the portfolio) (an "Affiliated Subadviser") or to change a subadvisory fee of an Affiliated Subadviser without the approval of shareholders. The investment adviser John Hancock Advisers, LLC, 601 Congress Street, Boston, MA 02210-2805. Management fees The management fees paid to the investment adviser by the funds last fiscal year are as follows:
- -------------------------------------------------------------------------------- Fund % of net assets - -------------------------------------------------------------------------------- Balanced 0.60% - -------------------------------------------------------------------------------- Classic Value 0.83 - -------------------------------------------------------------------------------- Classic Value II 0.00* - -------------------------------------------------------------------------------- Core Equity 0.75 - -------------------------------------------------------------------------------- Large Cap Equity 0.625 - -------------------------------------------------------------------------------- Large Cap Select 0.62* - -------------------------------------------------------------------------------- Mid Cap Equity 0.00* - -------------------------------------------------------------------------------- Small Cap 0.90 - -------------------------------------------------------------------------------- Small Cap Equity 0.70 - -------------------------------------------------------------------------------- Small Cap Intrinsic Value 0.32* - -------------------------------------------------------------------------------- Sovereign Investors 0.59 - -------------------------------------------------------------------------------- U.S. Global Leaders Growth 0.72* - --------------------------------------------------------------------------------
*After expense reimbursement. A discussion regarding the basis for the board of trustees approving each fund's investment advisory agreement is available in each fund's annual or semiannual report to shareholders, as follows: Annual report dated December 31, 2006 Balanced Fund, Classic Value Fund, Classic Value Fund II, Core Equity Fund, Large Cap Equity Fund, Large Cap Select Fund, Small Cap Intrinsic Value Fund, Sovereign Investors Fund, U.S. Global Leaders Growth Fund Annual report dated October 31, 2006 Mid Cap Equity Fund, Small Cap Fund, Small Cap Equity Fund Subadvisers Independence Investments LLC (Independence), 53 State Street, Boston, MA 02109, subadvises Core Equity Fund and Small Cap Fund. Founded in 1982, Independence is a subsidiary of Convergent Capital Management LLC, a wholly owned subsidiary of City National Corporation and managed approximately $8 billion in assets as of December 31, 2006. Pzena Investment Management, LLC (PIM), 120 West 45th Street, New York, NY 10036, subadvises Classic Value Fund and Classic Value Fund II and was investment adviser to Classic Value's predecessor fund, Pzena Focused Value Fund. PIM was founded in 1995 and is controlled by Richard S. Pzena, Managing Principal, Chief Executive Officer and Co-Chief Investment Officer. PIM provides investment advisory services to individual and institutional investors and, as of December 31, 2006, had total assets under management of approximately $27.3 billion. MFC Global Investment Management (U.S.), LLC (MFC Global (U.S.)), 101 Huntington Avenue, Boston, MA 02199, subadvises Balanced, Large Cap Equity, Mid Cap Equity, Small Cap Equity, Small Cap Intrinsic Value and Sovereign Investors Funds. Prior to October 1, 2006, MFC Global (U.S.) was known as Sovereign Asset Management LLC. MFC Global (U.S.) was founded in 1979 and provides investment advisory services to individual and institutional investors. MFC Global (U.S.) is a wholly owned subsidiary of John Hancock Financial Services, Inc. (a subsidiary of Manulife Financial Corporation) and, as of December 31, 2006, had total assets under management of approximately $26 billion. Shay Assets Management, Inc. (SAM), 230 West Monroe Street, Chicago, IL 60606, subadvises Large Cap Select Fund. SAM was founded in 1981 and is controlled by Rodger D. Shay, Chairman. SAM managed approximately $3.5 billion in assets as of December 31, 2006, and was the investment adviser to the fund's predecessor, M.S.B. Fund, Inc. Sustainable Growth Advisers, LP (SGA), 3 Stamford Plaza, 301 Tresser Blvd., Suite 1310, Stamford, CT 06901, subadvises U.S. Global Leaders Growth Fund. SGA is a Delaware limited partnership founded in 2003 to provide investment advice to private accounts of institutional and individual clients, private investment companies and mutual funds. George P. Fraise, Gordon M. Marchand and Robert L. Rohn each own 24% of SGA. Total assets under management by SGA principals as of December 31, 2006 were approximately $3.5 billion. 36 FUND DETAILS - -------------------------------------------------------------------------------- MANAGEMENT BIOGRAPHIES Below is an alphabetical list of the portfolio managers for the John Hancock equity funds, including a brief summary of their business careers over the past five years. The SAI for each fund includes additional information about its portfolio manager(s), including information about their compensation, accounts they manage (other than the fund) and their ownership of fund shares, if any. Antonio DeSpirito III - ------------------------------------ Principal and portfolio manager, Pzena Investment Management, LLC (since 1996) Joined subadviser in 1996 Began business career in 1993 Barry H. Evans, CFA - ------------------------------------ President, chief fixed income officer and chief operating officer, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Senior vice president, chief fixed income officer and chief operating officer, John Hancock Advisers, LLC (1986-2005) Began business career in 1986 John C. Forelli, CFA - ------------------------------------ Senior vice president, Independence Investment LLC Joined subadviser in 1990 Began business career in 1984 George P. Fraise - ------------------------------------ Principal, Sustainable Growth Advisers, LP (since 2003) Executive vice president, Yeager, Wood & Marshall, Inc. (2000-2003) Began business career in 1987 Jeffrey N. Given, CFA - ------------------------------------ Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Second vice president, John Hancock Advisers, LLC (1998-2005) Began business career in 1993 Charles S. Glovsky, CFA - ------------------------------------ Senior vice president, Independence Investment LLC Joined subadviser in 2000 Began business career in 1979 John P. Goetz - ------------------------------------ Managing principal (since 1997) and co-chief investment officer (since 2005), Pzena Investment Management, LLC Director of research, Pzena Investment Management, LLC (1996-2005) Joined subadviser in 1996 Began business career in 1979 Roger C. Hamilton - ------------------------------------ Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Vice president and portfolio manager, John Hancock Advisers, LLC (2003-2005) Analyst, John Hancock Advisers, LLC (1994-2003) Began business career in 1980 Timothy E. Keefe, CFA - ------------------------------------ Executive vice president and chief equity officer, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Senior vice president and chief equity officer, John Hancock Advisers, LLC (2004-2005) Partner and portfolio manager, Thomas Weisel Partners (2000-2004) Began business career in 1987 Jay C. Leu, CFA - ------------------------------------ Principal and senior vice president, Independence Investment LLC Joined subadviser in 1997 Began business career in 1987 Timothy M. Malloy - ------------------------------------ Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 2005 Second vice president, John Hancock Advisers, LLC (2004-2005) Investment analyst, Thomas Weisel Partners (2000-2004) Began business career in 1993 Gordon M. Marchand, CFA, CIC - ------------------------------------ Principal, Sustainable Growth Advisers, LP (since 2003) Chief financial and operating officer of Yeager, Wood & Marshall, Inc. (1984-2003) Began business career in 1977 John J. McCabe - ------------------------------------ Senior vice president, Shay Assets Management, Inc. Joined subadviser in 1995 Began business career in 1965 Henry E. Mehlman, CFA - ------------------------------------ Vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser 2005 Vice president, John Hancock Advisers, LLC (2002-2005) Senior portfolio manager, The Colony Group (2001-2002) Began business career in 1972 Alan E. Norton, CFA - ------------------------------------ Senior vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser 2005 Vice president, John Hancock Advisers, LLC (2002-2005) Senior portfolio manager, The Colony Group (2001-2002) Began business career in 1987 Richard S. Pzena - ------------------------------------ Founder, managing principal and chief executive officer (since 1995) and co-chief investment officer (since 2005), Pzena Investment Management, LLC Began business career in 1980 Robert L. Rohn - ------------------------------------ Principal, Sustainable Growth Advisers, LP (since 2003) Chairman and chief executive officer, W.P. Stewart, Inc. (1991-2003) Began business career in 1983 John F. Snyder III - ------------------------------------ Executive vice president, MFC Global Investment Management (U.S.), LLC Joined subadviser in 1983 Executive vice president, John Hancock Advisers, LLC (1991-2005) Began business career in 1971 Mark F. Trautman - ------------------------------------ Vice president, Shay Assets Management, Inc. Joined subadviser in 1995 Began business career in 1986 FUND DETAILS 37 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS These tables detail the performance of each fund's Class I shares, including total return information showing how much an investment in the fund has increased or decreased each year. Balanced Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 were audited by Deloitte & Touche LLP and for the year ended 12-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-02(1),(4) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.93 $9.61 $11.15 $11.67 $12.61 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income(2) 0.21 0.23 0.25 0.19 0.24 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (2.26) 1.56 0.55 1.43 1.54 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (2.05) 1.79 0.80 1.62 1.78 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (0.27) (0.25) (0.28) (0.23) (0.26) - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain -- -- -- (0.45) (0.73) - ------------------------------------------------------------------------------------------------------------------------------------ (0.27) (0.25) (0.28) (0.68) (0.99) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $9.61 $11.15 $11.67 $12.61 $13.40 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(3) (%) (17.29)(5) 18.87 7.31 14.02 14.29 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $7 $7 $6 $7 $4 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%) 1.15(6) 0.89 0.83 0.84 0.80 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 2.59(6) 2.22 2.25 1.63 1.81 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 86(5) 60 56 88 60 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Class I shares began operations on 3-1-01. (5) Not annualized. (6) Annualized. 38 FUND DETAILS Classic Value Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-02(1) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $14.11 $15.08 $20.30 $23.05 $24.69 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income(2) 0.03 0.27 0.27 0.26 0.34 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 0.94 5.26 2.73 1.88 3.86 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 0.97 5.53 3.00 2.14 4.20 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income -- (0.19) (0.18) (0.20) (0.31) - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain -- (0.12) (0.07) (0.30) (0.85) - ------------------------------------------------------------------------------------------------------------------------------------ -- (0.31) (0.25) (0.50) (1.16) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $15.08 $20.30 $23.05 $24.69 $27.73 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(3),(4) (%) 6.87(5) 36.81 14.77 9.28 17.01 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $6 $23 $206 $665 $1,567 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 0.77(6) 0.76 0.86 0.89 0.89 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of gross expenses to average net assets(7) (%) 5.49(6) 1.12 1.01 0.98 0.94 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 1.62(6) 1.54 1.25 1.09 1.30 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 47(5) 25 16 27 20 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Class I shares began operations on 11-11-02. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Not annualized. (6) Annualized. (7) Does not take into consideration expense reductions during the periods shown. FUND DETAILS 39 Classic Value Fund II Figures audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-06(1) - ---------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 - ---------------------------------------------------------------------------------------------------------- Net investment income(2) 0.04 - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.41 - ---------------------------------------------------------------------------------------------------------- Total from investment operations 1.45 - ---------------------------------------------------------------------------------------------------------- Less distributions - ---------------------------------------------------------------------------------------------------------- From net investment income (0.03) - ---------------------------------------------------------------------------------------------------------- From net realized gain (0.03) - ---------------------------------------------------------------------------------------------------------- (0.06) - ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.39 - ---------------------------------------------------------------------------------------------------------- Total return(3) (%) 14.50(4),(7) - ---------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $4 - ---------------------------------------------------------------------------------------------------------- Ratio of net expenses to average net assets (%) 0.94(5) - ---------------------------------------------------------------------------------------------------------- Ratio of gross expenses to average net assets (%) 1.88(5),(6) - ---------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 0.74(5) - ---------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 12(7) - ----------------------------------------------------------------------------------------------------------
(1) Beginning of operations from 7-7-06 through 12-31-06. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total returns would have been lower had certain expenses not been reduced during the periods shown. (5) Annualized. (6) Does not take into consideration expense reductions during the periods shown. (7) Not annualized. 40 FUND DETAILS Core Equity Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-02(4) 12-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $26.15 $20.63 $25.66 $28.07 $30.37 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income(1) 0.06 0.12 0.26 0.16 0.22 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (5.58) 4.91 2.15 2.14 4.01 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (5.52) 5.03 2.41 2.30 4.23 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $20.63 $25.66 $28.07 $30.37 $34.60 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(2) (%) (21.11)(5) 24.38 9.39 8.19 13.93 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $2 $2 --(6) --(6) --(6) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%) 1.26(7) 1.06 0.92 0.90 0.89 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 0.33(7) 0.53 1.00 0.54 0.68 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 64(3) 70 68 54 78 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Based on the average of the shares outstanding. (2) Assumes dividend reinvestment and does not reflect the effect of sales charges. (3) Excludes merger activity. (4) Class I shares began operations on 3-1-02. (5) Not annualized. (6) Less than $500,000. (7) Annualized. FUND DETAILS 41 Large Cap Equity Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 were audited by Deloitte & Touche LLP; and figures for the year ended 12-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-02(1) 12-31-03(1) 12-31-04(1) 12-31-05(1) 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $19.11 $11.91 $14.87 $15.46 $18.05 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income(2) 0.07 0.08 0.15 0.06 0.11 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (7.25) 2.88 0.54 2.53 3.64 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (7.18) 2.96 0.69 2.59 3.75 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income -- -- (0.10) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain (0.02) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ (0.02) -- (0.10) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.91 $14.87 $15.46 $18.05 $21.80 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(3) (%) (37.55) 24.85 4.68 16.75 20.78 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $1 --(4) --(4) --(4) $4 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 0.81 0.84 0.79 0.78 0.77 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 0.49 0.62 0.98 0.35 0.54 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 114 140 97 74 78 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Less than $500,000. 42 FUND DETAILS Large Cap Select Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-03(5) 12-31-04 12-31-05 12-31-06 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $16.29 $17.83 $18.46 $17.62 - ----------------------------------------------------------------------------------------------------------------------- Net investment income(1) 0.04 0.15 0.12 0.16 - ----------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1.59 0.84 (0.48) 2.47 - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.63 0.99 (0.36) 2.63 - ----------------------------------------------------------------------------------------------------------------------- Less distributions - ----------------------------------------------------------------------------------------------------------------------- From net investment income -- (0.15) (0.11) (0.16) - ----------------------------------------------------------------------------------------------------------------------- From net realized gain (0.09) (0.21) (0.37) (0.86) - ----------------------------------------------------------------------------------------------------------------------- (0.09) (0.36) (0.48) (1.02) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $17.83 $18.46 $17.62 $19.23 - ----------------------------------------------------------------------------------------------------------------------- Total return(2),(3) (%) 10.00(6) 5.54 (1.98) 14.87 - ----------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $3 $3 $3 $3 - ----------------------------------------------------------------------------------------------------------------------- Ratio of net expenses to average net assets (%) 0.95(7) 0.95 0.95 0.95 - ----------------------------------------------------------------------------------------------------------------------- Ratio of gross expenses to average net assets(4) (%) 1.84(7) 1.05 1.06 1.08 - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 0.61(7) 0.83 0.67 0.85 - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 22(6) 13 23 12 - -----------------------------------------------------------------------------------------------------------------------
(1) Based on the average of the shares outstanding. (2) Assumes dividend reinvestment and does not reflect the effect of sales charges. (3) Total returns would have been lower had certain expenses not been reduced during the periods shown. (4) Does not take into consideration expense reductions during the periods shown. (5) Class I shares began operations on 8-25-03. (6) Not annualized. (7) Annualized. FUND DETAILS 43 Mid Cap Equity Fund Figures for the years ended 10-31-03, 10-31-04 and 10-31-05 were audited by Deloitte & Touche LLP; figures for the year ended 10-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-03(1),(2) 12-31-04(1) 12-31-05(1) 12-31-06 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $11.35 $11.66 $13.47 - ----------------------------------------------------------------------------------------------------------------------- Net investment loss(3) (0.01) (0.03) (0.04) (0.03) - ----------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.36 0.52 2.38 1.40 - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.35 0.49 2.34 1.37 - ----------------------------------------------------------------------------------------------------------------------- Less distributions - ----------------------------------------------------------------------------------------------------------------------- From net realized gain -- (0.18) (0.53) (1.74) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.35 $11.66 $13.47 $13.10 - ----------------------------------------------------------------------------------------------------------------------- Total return(4),(5) (%) 13.50(6) 4.37 20.58 10.82 - ----------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) --(7) --(7) --(7) --(7) - ----------------------------------------------------------------------------------------------------------------------- Ratio of net expenses to average net assets (%) 0.90(8) 0.90 0.90 0.94 - ----------------------------------------------------------------------------------------------------------------------- Ratio of gross expenses to average net assets(9) (%) 5.90(8) 2.12 2.67 3.81 - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (0.27)(8) (0.26) (0.35) (0.23) - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 48(6) 46 63 47 - -----------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Class I shares began operations on 8-4-03. (3) Based on the average of the shares outstanding. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Not annualized. (7) Less than $500,000. (8) Annualized. (9) Does not take into consideration expense reductions during the periods shown. 44 FUND DETAILS Small Cap Fund Figures audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 10-31-05(1) 10-31-06 - ------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.21 $11.60 - ------------------------------------------------------------------------------------------------------------ Net investment loss(2) (0.05) (0.06) - ------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 0.44 1.24 - ------------------------------------------------------------------------------------------------------------ Total from investment operations 0.39 1.18 - ------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------ From net realized gain -- (0.05) - ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.60 $12.73 - ------------------------------------------------------------------------------------------------------------ Total return(3),(4) (%) 3.48(5) 10.20 - ------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $34 $40 - ------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 1.10(6) 1.08 - ------------------------------------------------------------------------------------------------------------ Ratio of gross expenses to average net assets (%) 1.18(6),(7) 1.08 - ------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (0.53)(6) (0.47) - ------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 145 74 - ------------------------------------------------------------------------------------------------------------
(1) Class I shares began operations on 12-6-04. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Total return would have been lower had certain expenses not been reduced during the period shown. (5) Not annualized. (6) Annualized. (7) Does not take into consideration expense reductions during the period shown. FUND DETAILS 45 Small Cap Equity Fund Figures for the years ended 10-31-03, 10-31-04, 10-31-05 and 10-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 10-31-02(1) 10-31-03 10-31-04 10-31-05 10-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $16.61 $11.53 $15.86 $17.77 $20.56 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment loss(2) (0.09) (0.02) (0.03) (0.10) (0.10) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (4.82) 4.35 1.94 2.89 2.27 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (4.91) 4.33 1.91 2.79 2.17 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain (0.17) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.53 $15.86 $17.77 $20.56 $22.73 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(3) (%) (29.91) 37.55 12.04 15.70 10.55 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $14 $17 $21 $25 $23 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 1.28 1.03 0.86 0.87 0.85 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (0.69) (0.12) (0.19) (0.50) (0.45) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 44 52 54 38 30 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. 46 FUND DETAILS Small Cap Intrinsic Value Fund Figures for the period ended 12-31-05 were audited by Deloitte & Touche LLP; figures for the year ended 12-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-05(1),(2) 12-31-06 - ------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $10.00 $10.89 - ------------------------------------------------------------------------------------------------------------ Net investment income (loss)(3) 0.02 (0.03)(10) - ------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.72 3.24 - ------------------------------------------------------------------------------------------------------------ Total from investment operations 1.74 3.21 - ------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------ From net realized gain (0.85) (0.30) - ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.89 $13.80 - ------------------------------------------------------------------------------------------------------------ Total return(4),(6) (%) 17.58(5) 29.55 - ------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) --(9) $1 - ------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 1.15(7) 1.20 - ------------------------------------------------------------------------------------------------------------ Ratio of gross expenses to average net assets(8) (%) 4.59(7) 1.78 - ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) 0.22(7) (0.27)(10) - ------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97(5) 82 - ------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Beginning of operations from 2-28-05 through 12-31-05. (3) Based on the average of the shares outstanding during the period. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Not annualized. (6) Total return would have been lower had certain expenses not been reduced during the period shown. (7) Annualized. (8) Does not take into consideration expense reductions during the period shown. (9) Less than $500,000. (10) Net investment loss per share and ratio of net investment loss to average net assets reflects a special dividend received by the Fund which amounted to the following amounts:
Percentage Per share of net assets ---------------------------------------------------------------- Class I 0.03 0.23 ----------------------------------------------------------------
FUND DETAILS 47 Sovereign Investors Fund Figures for the years ended 12-31-03, 12-31-04 and 12-31-05 were audited by Deloitte & Touche LLP; figures for the year ended 12-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 12-31-03(1),(4) 12-31-04(1) 12-31-05(1) 12-31-06 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $18.09 $18.74 $19.54 $18.51 - ----------------------------------------------------------------------------------------------------------------------- Net investment income(2) 0.01 0.26 0.27 0.28 - ----------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 0.67 0.80 0.27 2.52 - ----------------------------------------------------------------------------------------------------------------------- Total from investment operations 0.68 1.06 0.54 2.80 - ----------------------------------------------------------------------------------------------------------------------- Less distributions - ----------------------------------------------------------------------------------------------------------------------- From net investment income (0.03) (0.26) (0.27) (0.31) - ----------------------------------------------------------------------------------------------------------------------- From net realized gain -- -- (1.30) (2.07) - ----------------------------------------------------------------------------------------------------------------------- (0.03) (0.26) (1.57) (2.38) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $18.74 $19.54 $18.51 $18.93 - ----------------------------------------------------------------------------------------------------------------------- Total return(3) (%) 3.78(5) 5.73 2.76 15.21 - ----------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $3 $3 $3 --(7) - ----------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) 0.70(6) 0.72 0.72 0.71 - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 0.92(6) 1.38 1.40 1.44 - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 47(5) 20 30 36 - -----------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Class I shares began operations on 12-1-03. (5) Not annualized. (6) Annualized. (7) Less than $500,000. 48 FUND DETAILS U.S. Global Leaders Growth Fund Figures for the years ended 12-31-03, 12-31-04, 12-31-05 and 12-31-06 were audited by PricewaterhouseCoopers LLP.
CLASS I SHARES PERIOD ENDED 6-30-02(1),(10) 12-31-02(1),(2) 2-31-03 12-31-04 12-31-05 12-31-06 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $25.81 $24.04 $21.60 $25.87 $28.00 $28.74 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income(3) 0.01 0.02 0.10 0.25 0.08 0.12 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (1.78) (2.46) 4.17 2.06 0.66 0.42 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations (1.77) (2.44) 4.27 2.31 0.74 0.54 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income -- -- -- (0.18) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $24.04 $21.60 $25.87 $28.00 $28.74 $29.28 - ------------------------------------------------------------------------------------------------------------------------------------ Total return(4) (%) (6.86)(5),(6) (10.15)(5),(6) 19.77 8.94 2.64(5) 1.88(5) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in millions) $5 $6 $5 $8 $13 $18 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net expenses to average net assets (%) 0.91(7) 1.11(7) 0.90 0.90 0.85 0.84 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of gross expenses to average net assets (%) 1.17(7,8) 1.20(7,8) 0.90 0.90 0.90(8) 0.87(8) - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 0.21(7) 0.22(7) 0.43 0.94 0.30 0.43 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 3(6) 1(6) 15 16 28(9) 34 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Audited by previous auditor. (2) Effective 12-31-02, the fiscal year changed from June 30 to December 31. (3) Based on the average of the shares outstanding. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Not annualized. (7) Annualized. (8) Does not take into consideration expense reductions during the periods shown. (9) Excludes merger activity. (10) Class I shares began operations on 5-20-02. FUND DETAILS 49 Appendix - -------------------------------------------------------------------------------- Historical Performance of Corresponding John Hancock Classic Value Fund The John Hancock Classic Value Fund II (Classic Value II), a series of John Hancock Funds (JHF), commenced operations on July 7, 2006, and has no performance information to present in the prospectus. Classic Value II is similar to another fund of JHF, the Classic Value Fund (Classic Value). Classic Value II is subadvised by the same investment adviser as Classic Value and has the same portfolio manager(s) and substantially the same investment objective, policies and restrictions as Classic Value. In choosing domestic securities for Classic Value II, the subadviser screens a dynamic universe of the 400 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $8.5 billion.) In choosing individual securities for Classic Value, the subadviser screens a dynamic universe of the 500 largest publicly traded U.S. companies. (As of December 31, 2006, this included companies with market values above approximately $6.1 billion.) This Appendix presents historical performance information for the Class I shares of Classic Value. Because of the similarities between Classic Value II and Classic Value, this information may help provide an indication of Classic Value II's risks by showing how a similar fund has performed historically. The performance of Classic Value, however, does not represent, and is not a substitute for, the performance of Classic Value II, and you should not assume that Classic Value II will have the same future performance as Classic Value. The future performance of Classic Value II may be greater or less than the performance of Classic Value due to, among other things, the number of the holdings in and composition of the portfolio in Classic Value II, as well as the asset size and cash flow differences between Classic Value II and Classic Value. Performance information -- a bar chart and a table -- is presented on the following pages for the shares of Classic Value that correspond to Classic Value II. The bar chart shows how Classic Value's total return has varied from year to year, while the table shows performance of its Class I shares over time (as compared with a broad-based market index for reference). All figures assume dividend reinvestment. The performance shown in the bar charts and tables would also be lower if the adviser to Classic Value had not reimbursed certain expenses of those funds during the periods shown. The Class I shares of Classic Value do not have front-end or deferred sales charges. The Class I shares of Classic Value II also do not have front-end or deferred sales charges. The other expenses of the Class I shares of Classic Value, are substantially the same for Classic Value II's Class I shares. An index is unmanaged and it is not possible to invest directly in an index. As such, year-by-year index figures do not account for any sales charges, fees or fund expenses. As indicated above, past performance does not indicate future results. 50 FUND DETAILS John Hancock Funds: Classic Value Fund Corresponding to: Classic Value Fund II Classic Value Fund Class I, total returns Best quarter: Q2 '03, 20.72% Worst quarter: Q1 '03, -5.57% After-tax returns After-tax returns are shown for Class I shares. They are calculated using the historical highest individual federal marginal income-tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Indexes (reflect no fees or taxes) Standard & Poor's 500 Index, an unmanaged index that includes 500 widely traded stocks. Russell 1000 Value Index, an unmanaged index of stocks in the Russell 1000 Index (the 1,000 largest U.S. publicly traded companies) with low price-to-book ratios. MORNINGSTAR RATING(TM) * * * Overall rating for Classic Value Fund as of December 31, 2006. Morningstar ratings measure risk-adjusted returns. The Overall Morningstar Rating(TM) for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics. The Classic Value Fund (Class I) was rated 3 stars out of 1,111 large value funds for the 3-year period ended December 31, 2006. For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating(TM) based on a Morningstar Risk-Adjusted Return that accounts for variation in a fund's monthly performance (including effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category, the next 22.5%, 35%, 22.5% and the bottom 10% receive 5, 4, 3, 2 or 1 star, respectively. (Each share class is counted as a fraction of 1 fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) Past performance is no guarantee of future results. The Class I shares of Classic Value Fund II currently do not have a Morningstar rating. Any future ratings assigned to Classic Value Fund II may be different from the Morningstar Rating(TM) for the Class I shares of the corresponding Classic Value Fund. Net assets of Classic Value Fund as of December 31, 2006: $9,037,272,530 PAST PERFORMANCE The graph shows how Classic Value Fund's total return has varied from year to year, while the table shows performance over time (along with broad-based market indexes for reference). This information may help to provide an indication of Classic Value Fund's risks. Past performance before and after taxes does not indicate future results. [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Class I calendar year total returns - -------------------------------------------------------------------------------- 2003 36.81% 2004 14.77% 2005 9.28% 2006 17.01%
Life of 1 year 3 year Class I - -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - -------------------------------------------------------------------------------- Class I before tax (began 11-11-02) 17.01% 13.64% 20.27% - -------------------------------------------------------------------------------- Class I after tax on distributions 15.97% 12.99% 19.62% - -------------------------------------------------------------------------------- Class I after tax on distributions, with sale 11.66% 11.52% 17.55% - -------------------------------------------------------------------------------- Standard & Poor's 500 Index* 15.79% 10.44% 14.41% - -------------------------------------------------------------------------------- Russell 1000 Value Index* 22.24% 15.09% 18.85% - --------------------------------------------------------------------------------
* Prior to December 29, 2006, the fund also compared its performance to the Standard & Poor's 500 Index. After this date, the fund changed the indexes to which it compares its performance to a single index, the Russell 1000 Value Index, which better represents the fund and its investment universe versus the Standard & Poor's 500 Index. FUND DETAILS 51 Appendix - -------------------------------------------------------------------------------- Historical Performance of Corresponding MFC Global (U.S.) Small Cap Opportunity Composite The following table presents the past performance of the MFC Global (U.S.) Small Cap Opportunity Composite performance information (the "Composite"), which consists of an account managed by MFC Global (U.S.), which serves as the subadviser to the John Hancock Small Cap Intrinsic Value Fund (the "Fund"). The Composite is comprised of all fee paying accounts under discretionary management by MFC Global (U.S.) that have investment objectives, policies and strategies substantially similar to those of the Fund. MFC Global (U.S.) has prepared and presented the historical performance shown. Because the gross performance data shown in the table does not reflect the deduction of investment advisory fees paid by the account comprising the Composite and certain other expenses which would be applicable to mutual funds, the net performance data may be more relevant to potential investors in the Fund in their analysis of the historical experience of MFC Global (U.S.) in managing small cap portfolios, with investment objectives, policies and strategies substantially similar to those of the Fund. The Composite and the Index returns are calculated net of withholding taxes on dividends, interest and capital gains. Net returns for the Composite are additionally net of investment management fees. Fees and expenses of the Fund differ from and will be higher than those used to calculate the net performance of the Composite. Accordingly, use of the Fund's estimated expenses in the Composite would have lowered the Composite's performance results. The historical performance of the MFC Global (U.S.) Small Cap Opportunity composite is not, and is not a substitute for, the performance of the Fund and is not necessarily indicative of the Fund's future results. You should not assume that the Fund will have the same future performance as the Composite. Future performance of the Fund may be greater or less than the performance of the Composite due to, among other things, differences in fees and expenses, asset size and cash flows. Because of the similarities between the Fund and the Composite, this information may help provide an indication of the Fund's risks. The Fund's actual performance may vary significantly from the past performance of the Composite. While the account comprising the Composite may incur inflows and outflows of cash from clients, there can be no assurance that the continuous offering of the Fund's shares and the Fund's obligation to redeem its shares will not adversely impact the Fund's performance. Also, the account comprising the Composite is not subject to the investment limitations, diversification requirements and other restrictions imposed by the Investment Company Act of 1940 and the Internal Revenue Code or the Fund's fundamental investment restrictions. If these limitations, requirements and restrictions were applicable to the account in the Composite, they may have had an adverse affect on the performance results of the Composite. Total returns (gross of fees): Best quarter: Q2 '03, 17.88% Worst quarter: Q3 '02, -15.77% [BELOW DATA REPRESENTS BAR CHART IN PRINTED COPY] - -------------------------------------------------------------------------------- Calendar year total returns - -------------------------------------------------------------------------------- 2002 -3.68% -4.64% 2003 51.76% 50.30% 2004 14.43% 13.36% 2005 15.84% 14.85% 2006 28.76% 27.50%
[_] Gross of fees [_] Net of fees - -------------------------------------------------------------------------------- Average annual total returns for periods ending 12-31-06 - --------------------------------------------------------------------------------
Since 1 year inception* SCO Composite -- Gross of fees 28.76% 20.81% - -------------------------------------------------------------------------------- SCO Composite -- Net of fees 27.50% 19.67% - -------------------------------------------------------------------------------- Russell 2000(R) Index 18.37% 12.50% - --------------------------------------------------------------------------------
* The Composite's inception date was December 1, 2001. Index (reflect no fees or taxes) Russell 2000(R) Index, an unmanaged index consisting of the smallest 2,000 stocks in the Russell 3000 Index, which represents 98% of the investable U.S. equity market. 52 FUND DETAILS For more information - -------------------------------------------------------------------------------- Two documents are available that offer further information on John Hancock equity funds: Annual/Semiannual Report to Shareholders Includes financial statements, a discussion of the market conditions and investment strategies that significantly affected performance, as well as the auditors' report (in annual report only). Statement of Additional Information (SAI) The SAI contains more detailed information on all aspects of the funds. Each fund's Statement of Additional Information includes a summary of the fund's policy regarding disclosure of its portfolio holdings as well as legal and regulatory matters. The current annual report is included in the SAI. A current SAI has been filed with the Securities and Exchange Commission (SEC) and is incorporated by reference into (is legally a part of) this prospectus. To request a free copy of the current annual/semiannual report or the SAI, please contact John Hancock: By mail: John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1001 Boston, MA 02217-1001 By phone: 1-800-972-8696 By EASI-Line: 1-800-597-1897 By TDD: 1-800-554-6713 In addition, you may visit the funds' Web site at www.jhfunds.com to obtain a free copy of a prospectus, SAI, annual or semiannual report or to request other information. Or you may view or obtain these documents from the SEC: By mail: Public Reference Section Securities and Exchange Commission Washington, DC 20549-0102 (duplicating fee required) In person: at the SEC's Public Reference Room in Washington, DC. For access to the Reference Room call 1-202-551-8090 By electronic request: publicinfo@sec.gov (duplicating fee required) On the Internet: www.sec.gov (C)2007 JOHN HANCOCK FUNDS, LLC KEQPN 5/07 - -------------------------------------------------------------------------------- John Hancock(R) [LOGO] - -------------------- the future is yours John Hancock Funds, LLC MEMBER NASD 601 Congress Street Boston, MA 02210-2805 www.jhfunds.com - -------------------------------------- Now available: electronic delivery www.jhfunds.com/edelivery - -------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----