HANCOCK JOHN BOND FUND, N-30D, 1995-05-30

HANCOCK JOHN BOND FUND
N-30D, 1995-05-30

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<PAGE> 1
JOHN HANCOCK FUNDS

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

Adjustable
U.S.
Government

ANNUAL REPORT

March 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee

OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Frederick L. Cavanaugh
Senior Vice President
James K. Ho
Senior Vice President
Barry Evans
Vice President
Anne McDonley
Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer

CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111

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

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109

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

CHAIRMAN'S MESSAGE

DEAR FELLOW SHAREHOLDERS:

[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]

We're excited about the opportunities this acquisition will bring to
shareholders. The combined firms form a larger, more competitive organization
with more than $13 billion in assets under management and more than 1 million
shareholders. Now with 50 open-end funds, 8 closed-end funds and a full array of
retirement and private account services, John Hancock Funds offers you a broader
selection of investment choices to meet your long-term financial needs. What's
more, the union of the Hancock and Transamerica investment teams gives you
access to some of the top talent in the industry.

The Transamerica name is changing, but the commitment to serving you as
a valued shareholder isn't. Here at John Hancock Funds, our motto is: "We
invest in quality first." It has to do with the way we invest your money and the
way we work with you. Not only do we strive to ensure that your investments are
well-managed, we also take pride in providing the highest quality customer
service. We can't guarantee investment performance; nobody can. The quality of
our service, however, depends totally on us. That is something that we can
guarantee.

In mid-May, we anticipate that all of the Transamerica funds will be
fully integrated into John Hancock's internal shareholder service organization,
John Hancock Investor Services. At that time, not only will you gain exchange
privileges into all John Hancock funds, but your account will be handled by one
of the top-rated service organizations in the industry. To show you how
seriously we take our commitment to quality, you will have access to our service
guarantee. If we make an error in processing a transaction in your account, we
will deposit $25 into it. Or if you have a retirement account, we will waive the
annual fee.

We value your business and look forward to serving your investment needs
in the years to come.

Sincerely,

/s/ Edward J. Boudreau, Jr.
---------------------------

EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2
<PAGE> 3
BY BARRY H. EVANS FOR THE PORTFOLIO MANAGEMENT TEAM

JOHN HANCOCK
ADJUSTABLE
U.S. GOVERNMENT TRUST

REALITY CHECK FOR BOND INVESTORS

"The past 12 months have been hard on many bond investors, especially those who
had grown accustomed to double-digit returns during the early 1990s. As the
economic expansion quickened and both short-term and long-term interest rates
rose, bond prices fell through most of 1994. Though they started to rebound in
the first quarter of this year, many bonds ended the 12-month period with
negative returns.

Investors in John Hancock Adjustable U.S. Government Trust not only
avoided losses, but they did significantly better than investors in most other
funds with a similar objective. For the year ended March 31, 1995, the Fund's
Class A and Class B shares rose 3.98% and 3.33%, respectively, at net asset
value. Those returns compared to a loss of 0.54% for the average adjustable-rate
mortgage fund, according to Lipper Analytical Services.(1)

A VOLATILE CLIMATE FOR BONDS

In early February of 1994, just before the period began, the Federal Reserve
embarked on a new policy designed to dampen economic growth. It raised the
federal funds rate -- the rate banks charge each other for overnight loans --
one-quarter point to 3.25%. That turned out to be the first in a series of rate
hikes by the Fed. Two more quarter-point increases followed in March and April,
two half-point increases in May and August, a three-quarter-point hike in
November, and another half-point increase in February 1995. By the end of the
period, the federal funds rate was 6.00%.

[A 2 1/2" x 3" photo of Barry H. Evans at bottom right. Caption reads: "Barry H.
Evans, Portfolio Manager."]

[CAPTION]
"THE PAST 12 MONTHS HAVE BEEN HARD ON MANY BOND INVESTORS..."

3
<PAGE> 4
John Hancock Funds - Adjustable U.S. Government Fund

[Pie chart with the heading "Portfolio Diversification" at top
of left hand column. The chart is divided into two sections.
Going from left to right: Adjustable-Rate Mortgage-Backed
Securities 98%; Short-Term Investments 2%. A footnote below
states "As a percentage of net assets on March 31, 1995."]

An additional factor was the continuing decline in the value of the
dollar against certain key overseas currencies, notably the German mark and the
Japanese yen. A falling dollar is worrisome to bond investors for two reasons.
First, it raises the price of imports, which can boost inflation. Second, it
puts pressure on the United States to protect its currency by raising interest
rates.

Finally, during the past year the world's financial markets were rocked
by a series of unexpected and dramatic events, including the precipitous decline
last spring of many high-flying emerging markets in Latin America and Southeast
Asia; the bankruptcy of Orange County, California; the devaluation of the
Mexican peso; and the collapse of Britain's Barings Bank. To the extent such
events contributed to investors' uncertainty about the future, they added to the
upward pressure on interest rates.

TIMELY ROTATION TO HIGHER-COUPON ADJUSTABLES HELPS PERFORMANCE

At the end of March, about 98% of the Fund's assets were in
adjustable-rate mortgages; the balance was in cash. The Fund's average duration
was 2.25 years. Duration measures the extent to which the price of a bond -- or
in this case, a bond fund -- will rise or fall with changes in interest rates.
The longer the duration, the more its price will fluctuate. Had the Fund's
duration been longer than it was earlier this year -- when bond prices began to
rebound -- our performance might have been stronger. Lately, amid signs of a
fading economy, we have been slowly extending the Fund's duration in hopes of
improving total return.

The key to the Fund's above-average performance was a timely rotation
into higher-coupon adjustable-rate mortgages. Last year, interest rates rose an
average of two percentage points. The problem with adjustables is that most can
reset only once a year by a maximum of one percentage point. By moving into
higher-coupon adjustables at the appropriate time, the Fund was able to keep
pace with prevailing rates.

Moreover, the Fund was able to take advantage of the widespread selling
of adjustable-rate mortgages by banks as they prepared for their year-end audits
by federal regulators. The Fund lowered its cash position and increased its
holdings in adjustables in late 1994. That move paid off when adjustables
rebounded in the first two months of 1995.

[CAPTION]
"... ABOUT 98% OF THE FUND'S ASSETS WERE IN ADJUSTABLE RATE MORTGAGES..."

4
<PAGE> 5
John Hancock Funds - Adjustable U.S. Government Fund

[Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the year ended March 31, 1995." The
chart is scaled in increments of 2% from left to right, with -4% on the left
and 4% on the right. Within the chart, there are three solid bars. The first
represents the 3.98% total return for John Hancock Adjustable U.S. Government
Trust: Class A. The second represents the 3.33% total return for John Hancock
Adjustable U.S. Government Trust: Class B. The third represents -0.54% return
for the average adjustable-rate mortgage fund." A footnote below reads: "Total
returns for John Hancock Adjustable U.S. Government Trust are at net asset
value with all distributions reinvested. The average adjustable-rate mortgage
fund is tracked by Lipper Analytical Services.(1) See following page for
historical performance information."]

BRIGHTER OUTLOOK FOR THE REST OF '95

By the end of March, the current economic expansion was 48 months old, a
significant milestone given that the average post-war expansion has lasted only
45 months. Meanwhile, signs were accumulating that after seven rate hikes in
little more than a year, the Fed's monetary policy was finally doing what it was
designed to do and the economy was indeed slowing down. That said, we think
there may be one more inflation spike coming our way. But if so, it's more apt
to signal the peak in the cycle than the first step in a fresh surge, and so
we'd likely view it as a buying opportunity.

Overall, we see a more favorable climate for bonds developing, marked by
slower economic growth and gently falling long-term interest rates. Barring a
recession -- which is not in our current forecast -- we see the yield on the
30-year Treasury bond settling somewhere around 7% instead of dipping as low as
6% again. Government securities may outperform corporate securities, for which
credit risk can be an issue in a slowing economy. And mortgage securities --
which do best under stable interest-rate conditions -- may perform best of all.
Given the favorable climate, we'll be looking for more opportunities in the
months ahead to extend our duration slightly.

In February 1995, Barry H. Evans began managing John Hancock Adjustable
U.S. Government Fund. Mr. Evans, who joined John Hancock in 1986, is a vice
president and head of the company's government fixed-income department.

- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is
lower.

[CAPTION]
"... WE SEE A MORE FAVORABLE CLIMATE FOR BONDS ..."

5
<PAGE> 6
NOTES TO PERFORMANCE INFORMATION

John Hancock Funds - Adjustable U.S. Government Trust

In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the period ended March 31, 1995,
with all distributions reinvested in shares. The average annualized total
returns for Class A Shares for the 1-year period and since inception on December
31, 1991 were 0.33% and 3.35%, respectively, and reflect payment of the maximum
sales charge of 3.50%. The average annualized total returns for Class B shares
for the 1-year and since inception on December 31, 1991 were 0.33% and 3.24%,
respectively, and reflect the applicable contingent deferred sales charge
(maximum contingent deferred sales charge is 3% and declines to 0% over 5
years). The standard SEC yields for the 31-day period ended March 31, 1995 for
Class A and Class B shares were 6.20% and 5.78%, respectively. All performance
data shown represent past performance and should not be considered indicative of
future performance. Returns and principal values of Fund investments will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Performance is affected by a 12b-1 plan.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND

[Adjustable U.S. Government Trust
Class A shares

Line chart with the heading Adjustable U.S. Government Trust: Class A,
representing the growth of a hypothetical $10,000 investment over the life of
the fund. Within the chart are three lines.

The first line represents the value of the Lehman Government
Bond Index and is equal to $12,218** as of March 31, 1995. The
second line represents the value of the hypothetical $10,000
investment made in the Adjustable U.S. Government Trust on
December 31, 1991, before sales charge, and is equal to
$11,308 as of March 31, 1995. The third line represents the
Adjustable U.S. Government Trust after sales charge and is
equal to $10,916 as of March 31, 1995. The fourth line
represents the value of the Lipper Adjustable Rate Mortgage
Fund Index and is equal to $10,782* as of March 31, 1995.

Adjustable U.S. Government Trust
Class B shares

Line chart with the heading Adjustable U.S. Government Trust:
Class B, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
three lines.

The first line represents the value of the Lehman Government
Bond Index and is equal to $12,218** as of March 31, 1995.
The second line represents the value of the hypothetical
$10,000 investment made in the Adjustable U.S. Government
Trust on December 31, 1991, before contingent deferred sales
charge, and is equal to $11,291 as of March 31, 1995. The
third line represents the Adjustable U.S. Government Trust
after contingent deferred sales charge and is equal to $11,092
as of March 31, 1995. The fourth line represents the Lipper
Adjustable Rate Mortgage Fund Index and is equal to $10,782*.

*The Lipper Adjustable Rate Mortgage Fund Index is a
non-weighted index and invests in at least 65% of assets in
adjustable rate mortgage securities or other securities
collateralized by or representing an interest in mortgages.]

**The Lehman Government Bond Index is an unmanaged index, which
measures the performance of U.S. Treasury bonds and U.S.
Government Agency bonds.

6
<PAGE> 7

FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust (Fund)

THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON MARCH 31, 1995. YOU'LL ALSO
FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF THAT
DATE.

<TABLE>
Statement of Assets and Liabilities
March 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in corresponding Portfolio, at value
2,296,605 shares (cost - $22,807,641) - Note A ............ $ 22,460,793
Dividends receivable from Portfolio ....................... 138,216
Receivable from John Hancock Advisers, Inc. -
Note B .................................................. 40,491

Deferred organization expenses - Note A ................... 16,956
Miscellaneous assets ...................................... 8,829
-----------
Total Assets ............................. 22,665,285
-----------------------------------------------------------
LIABILITIES:
Dividend payable ............................................ 48,360
Payable for Trust shares repurchased ........................ 142,111
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................... 365
Accounts payable and accrued expenses ....................... 19,033
-----------
Total Liabilities ........................ 209,869
-----------------------------------------------------------
NET ASSETS:
Capital paid-in ............................................. 23,573,736
Accumulated net realized loss on investments ................ (787,809)
Net unrealized depreciation of investments .................. (346,848)
Undistributed net investment income ......................... 16,337
-----------
Net Assets ............................... $ 22,455,416
===========================================================
NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 per share par value, respectively)
Class A - $12,949,755/1,323,395 ............................. $ 9.79
==============================================================================
Class B - $9,505,661/971,446 ................................ $ 9.79
==============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($9.79 x 103.63%) ................................. $ 10.15
==============================================================================
<FN>
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.

<TABLE>
STATEMENT OF OPERATIONS
Year ended March 31, 1995
<S> <C>
INVESTMENT INCOME:
Net Investment income from corresponding Portfolio -
Note A ................................................... $1,481,341
----------
Expenses:
Distribution/service fee - Note B
Class A .............................................. 44,214
Class B .............................................. 98,958
Transfer agent fee ....................................... 41,914
Investment management fee - Note B ....................... 28,682
Registration and filing fees ............................. 24,999
Custodian fee ............................................ 18,512
Printing ................................................. 11,488
Organization expense - Note A ............................ 9,704
Auditing fee ............................................. 8,000
Trustees' fees ........................................... 7,837
Miscellaneous ............................................ 3,004
Legal fees ............................................... 2,500
Advisory board fee ....................................... 257
----------
Total Expenses ........................... 300,069
Less expenses reimbursable
by John Hancock Advisers,
Inc. - Note B ............................ (156,818)
-----------------------------------------------------------
Net Expenses ............................. 143,251
-----------------------------------------------------------
Net Investment Income .................... 1,338,090
-----------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO NOTE A

Net realized loss on investments sold ...................... (520,533)
Change in net unrealized appreciation/depreciation
of investments ........................................... 111,364
-----------
Net Realized and Unrealized
Loss on Investments from
Corresponding Portfolio .................. (409,169)
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ................ $ 928,921
===========================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 8
FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust (Fund)

<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1995 1994
------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........................................................................ $ 1,338,090 $ 1,792,759
Net realized loss on investments sold from corresponding Portfolio ........................... (520,533) (210,326)
Change in net unrealized appreciation/depreciation of investments
from corresponding Portfolio ............................................................... 111,364 (453,740)
------------ ------------
Net Increase in Net Assets Resulting from Operations ....................................... 928,921 1,128,693
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.4823 and $0.4103 per share, respectively) .................................... (858,632) (1,297,489)
Class B - ($0.4220 and $0.3446 per share, respectively) .................................... (466,720) (495,495)
------------ ------------
Total Distributions to Shareholders ....................................................... (1,325,352) (1,792,984)
------------ ------------

FROM FUND SHARE TRANSACTIONS -- NET* .......................................................... (13,084,232) (10,425,306)
------------ ------------
NET ASSETS:
Beginning of period .......................................................................... 35,936,079 47,025,676
------------ ------------
End of period (including undistributed net investment income of $16,337 and $3,599,
respectively) .............................................................................. $ 22,455,416 $ 35,936,079
============ ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>

CLASS B
Shares sold ................................................... 244,622 $ 2,378,527 604,333 $ 6,069,244
Shares issued to shareholders in reinvestment
of distributions ............................................ 30,065 293,677 32,414 324,874
---------- ------------ ------------ ------------
274,687 2,672,204 636,747 6,394,118
Less shares repurchased ....................................... (478,404) (4,661,466) (829,920) (8,308,760)
---------- ------------ ------------ ------------
Net decrease .................................................. (203,717) $ (1,989,262) (193,173) $ (1,914,642)
========== ============ ============ ============
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE
FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD, REINVESTED AND
REDEEMED DURING THE LAST TWO PERIODS, ALONG WITH THE CORRESPONDING DOLLAR
VALUES.

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Adjustable U.S. Government Trust (Fund)

<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows. The per share amounts and ratios which are shown reflect income and
expenses including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
- --------------------------------------------------------------------------------
<CAPTION>

FOR THE PERIOD
DECEMBER 31, 1991
YEAR ENDED MARCH 31, (COMMENCEMENT
----------------------------- OF OPERATIONS)
1995(d) 1994 1993 TO MARCH 31, 1992
------- ------- ------- -----------------
<S> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ............................. $ 9.89 $ 10.05 $ 10.03 $ 10.00 (b)
Net Investment Income ............................................ 0.49 0.41 0.58 0.17
Net Realized and Unrealized Gain (Loss) on Investments ........... (0.11) (0.16) 0.02 0.03
------- ------- ------- -------
Total from Investment Operations .............................. 0.38 0.25 0.60 0.20
------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income ............................. (0.48) (0.41) (0.58) (0.17)
------- ------- ------- -------
Net Asset Value, End of Period ................................... $ 9.79 $ 9.89 $ 10.05 $ 10.03
======= ======= ======= =======
Total Investment Return at Net Asset Value ....................... 3.98% 2.51% 6.08% 1.96%(c)
Total Adjusted Investment Return at Net Asset Value (a) .......... 3.43% 2.27% 5.53% 0.84%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ........................ $12,950 $24,310 $33,273 $13,775
Ratio of Expenses to Average Net Assets** ........................ 0.80% 0.75% 0.50% 0.50%*
Ratio of Adjusted Expenses to Average Net Assets(a) .............. 1.35% 0.99% 1.05% 1.62%*
Ratio of Net Investment Income to Average Net Assets** ........... 4.91% 4.09% 5.47% 6.47%*
Ratio of Adjusted Net Investment Income to Average Net Assets(a).. 4.36% 3.85% 4.92% 5.35%*
**Expense Reimbursement per share ................................ $ 0.05 $ 0.002 $ 0.06 $ 0.11
</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS, AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE
FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 10

FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust (Fund)

<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
DECEMBER 31, 1991
YEAR ENDED MARCH 31, (COMMENCEMENT
----------------------------- OF OPERATIONS)
1995(d) 1994 1993 TO MARCH 31, 1992
------- ------- ------- -----------------
<S> <C> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ............................ $ 9.89 $ 10.05 $ 10.03 $ 10.00 (b)
Net Investment Income ........................................... 0.43 0.34 0.51 0.15
Net Realized and Unrealized Gain (Loss) on Investments .......... (0.11) (0.16) 0.02 0.03
------ -------- ------- -------
Total from Investment Operations ............................. 0.32 0.18 0.53 0.18
Less Distributions:
Dividends from Net Investment Income ............................ (0.42) (0.34) (0.51) (0.15)
------ -------- ------- -------
Net Asset Value, End of Period .................................. $ 9.79 $ 9.89 $ 10.05 $ 10.03
====== ======== ======= =======
Total Investment Return at Net Asset Value ...................... 3.33% 1.85% 5.40% 1.80%(c)
Total Adjusted Investment Return at Net Asset Value ............. 2.78% 1.61% 4.85% 0.68%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ....................... $9,506 $ 11,626 $13,753 $ 1,630
Ratio of Expenses to Average Net Assets** ....................... 1.45% 1.40% 1.15% 1.15%*
Ratio of Adjusted Expenses to Average Net Assets(a) ............. 2.00% 1.64% 1.70% 2.27%*
Ratio of Net Investment Income to Average Net Assets** .......... 4.26% 3.44% 4.82% 5.85%*
Ratio of Adjusted Net Investment Income to Average Net Assets(a) 3.71% 3.20% 4.27% 4.73%*
** Expense Reimbursement per share ............................... $ 0.05 $ 0.002 $ 0.06 $ 0.11
<FN>
* On an annualized basis.
(a) On an unreimbursed basis.
(b) Initial price to commence operations.
(c) Not annualized.
(d) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE> 11

FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Fund (Portfolio)

THE STATEMENT OF ASSETS AND LIABILITIES IS THE PORTFOLIO'S BALANCE SHEET AND
SHOWS THE VALUE OF WHAT THE PORTFOLIO OWNS, IS DUE AND OWES ON MARCH 31, 1995.
YOU'LL ALSO FIND THE NET ASSET VALUE AS OF THAT DATE.

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
United States government and agencies obligations
(cost - $22,027,578) ........................... $ 21,864,201
Joint repurchase agreement (cost - $457,000) ..... 457,000
Corporate savings account ........................ 139
------------
22,321,340
Receivable for investments sold .................... 84,585
Interest receivable ................................ 186,357
Receivable from John Hancock Advisers, Inc. -
Note B............................................ 15,733
------------
Total Assets .................... 22,608,015
------------------------------------------------
LIABILITIES:
Dividend payable ................................... 138,216
Payable to John Hancock Advisers, Inc. - Note B .... 17,191
Accounts payable and accrued expenses .............. 3,138
------------
Total Liabilities ............... 158,545
------------------------------------------------
NET ASSETS:
Capital paid-in .................................... 23,587,934
Accumulated net realized loss on investments ....... (991,632)
Net unrealized depreciation of investments ......... (163,377)
Undistributed net investment income ................ 16,545
------------
Net Assets ...................... $ 22,449,470
================================================
NET ASSET VALUE PER SHARE:
(Based on 2,296,605 shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 per share par value) ................... $ 9.78
==================================================================
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE PORTFOLIO'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE PORTFOLIO. IT ALSO SHOWS NET GAINS
(LOSSES) FOR THE PERIOD STATED.

<TABLE>
STATEMENT OF OPERATIONS
Year ended March 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest .................................................................... $ 1,645,274
-----------

Expenses:
Investment management fee - Note B ........................................ 114,779
Custodian fee ............................................................. 55,332
Organization expense - Note A ............................................. 9,208
Auditing fee .............................................................. 7,999
Printing .................................................................. 4,266
Trustees' fees ............................................................ 4,087
Legal fees ................................................................ 2,500
Miscellaneous ............................................................. 1,695
Transfer agent fee ........................................................ 518
Advisory board fee ........................................................ 257
-----------
Total Expenses ........................................... 200,641
Less expenses reimbursable
by John Hancock Advisers,
Inc. - Note B ............................................ (57,170)
------------------------------------------------------------------------
Net Expenses ............................................. 143,471
------------------------------------------------------------------------
Net Investment Income .................................... 1,501,803
------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold ....................................... (720,821)
Change in net unrealized appreciation/depreciation
of investments ............................................................ 286,551
-----------
Net Realized and Unrealized
Loss on Investments ...................................... (434,270)
------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ................................ $ 1,067,533
========================================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

11
<PAGE> 12
FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Fund (Portfolio)

<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1995 1994
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ................................................................... $ 1,501,803 $ 1,973,460
Net realized loss on investments sold ................................................... (720,821) (143,030)
Change in net unrealized appreciation/depreciation of investments ....................... 286,551 (492,360)
------------ ------------
Net Increase in Net Assets Resulting from Operations .................................. 1,067,533 1,338,070
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.4250 and $0.4357 per share, respectively) ...... (1,481,230) (1,997,044)
Distributions in excess of net investment income ........................................ -- (4,028)
------------ ------------
Total Distributions to Shareholders ................................................. (1,481,230) (2,001,072)
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET* ..................................................... (12,957,678) (10,389,677)
------------ ------------

NET ASSETS:
Beginning of period ..................................................................... 35,820,845 46,873,524
------------ ------------
End of Period (including undistributed net investment income of $16,545 and distributions
in excess of net investment income of ($4,028), respectively) ......................... $ 22,449,470 $ 35,820,845
============ ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>

YEAR ENDED MARCH 31,
---------------------------------------------------------
1995 1994
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold .............................................. 633,453 $ 6,228,642 3,000,982 $ 30,100,940
Less shares repurchased................................... (1,959,462) (19,186,320) (4,043,184) (40,490,617)
---------- ------------ ---------- ------------
Net decrease ............................................. (1,326,009) $(12,957,678) (1,042,202) $(10,389,677)
========== ============ ========== ============
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE PORTFOLIO'S
NET ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS
PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS
INVESTED IN THE PORTFOLIO. THE FOOTNOTE ILLUSTRATES THE NUMBER OF PORTFOLIO
SHARES SOLD AND REDEEMED DURING THE LAST TWO PERIODS, ALONG WITH THE
CORRESPONDING DOLLAR VALUES.

SEE NOTES TO FINANCIAL STATEMENTS.

12
<PAGE> 13
FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Fund (Portfolio)

<TABLE>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>

FOR THE PERIOD
DECEMBER 31, 1991
(COMMENCEMENT
YEAR ENDED MARCH 31, OF OPERATIONS)
---------------------------------
1995(b) 1994 1993 TO MARCH 31, 1992
------- ------- ------- -----------------
<S> <C> <C> <C> <C>
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ....................... $22,449 $35,821 $46,874 $15,348
Ratio of Expenses to Average Net Assets ** ...................... 0.50% 0.50% 0.50% 0.50%*
Ratio of Adjusted Expenses to Average Net Assets (a) ............ 0.70% 0.59% 0.62% 0.85%*
Ratio of Net Investment Income to Average Net Assets ............ 5.19% 4.29% 5.53% 6.85%*
Ratio of Adjusted Net Investment Income to Average Net Assets (a) 4.99% 4.20% 5.41% 6.50%*
Portfolio Turnover Rate ......................................... 341% 244% 186% 1%
<FN>
* On an annualized basis.
(a) On an unreimbursed basis.
(b) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Portfolio.
</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZE IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS
PRESENTED IN THE FINANCIAL STATEMENTS BY EXPRESSING THEM IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.

13
<PAGE> 14
FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Fund (Portfolio)

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
THE ADJUSTABLE U.S. GOVERNMENT FUND ON MARCH 31, 1995. IT'S DIVIDED INTO TWO
MAIN CATEGORIES: U.S. GOVERNMENT AND AGENCIES OBLIGATIONS AND SHORT-TERM
INVESTMENTS. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION,
ARE LISTED LAST.

<TABLE>
SCHEDULE OF INVESTMENTS
March 31, 1995
<CAPTION>

PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- ---- -------- -----
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS
FEDERAL HOME LOAN MORTGAGE CORP,
Adjustable Rate Mortgage
Due 10-01-18 ...................... 5.375% $ 155 $ 153,973
Due 05-01-17 ...................... 5.627 12 11,687
Due 02-01-19 ...................... 5.839 32 31,692
Due 10-01-18 ...................... 5.856 283 280,708
Due 05-01-17 ...................... 6.375 54 53,674
Due 08-01-17 ...................... 6.750 22 21,769
Due 01-01-04 ...................... 7.240 505 508,195
Due 10-01-19 ...................... 7.334 2,389 2,419,886
Due 03-01-19 ...................... 7.457 2,057 2,088,314
Due 10-01-18 ...................... 7.750 60 59,435
Due 12-01-01 ...................... 9.500 32 32,958
Due 01-01-01 ...................... 11.000 16 16,982
Due 01-01-11 ...................... 13.000 47 52,582
FEDERAL NATIONAL MORTGAGE ASSOCIATION,
ADJUSTABLE RATE MORTGAGE
Due 12-01-17 ...................... 5.250 243 243,350
Due 05-01-16 ...................... 5.625 7 6,432
Due 07-01-18 ...................... 5.875 228 228,454
Due 04-01-19 ...................... 5.958 80 80,424
Due 05-01-17 ...................... 6.000 54 54,153
Due 04-01-16 ...................... 6.110 554* 552,650
Due 03-01-14 ...................... 6.439 35* 35,463
Due 06-01-14 ...................... 6.439 25 24,466
Due 06-01-19 ...................... 6.887 1,004 1,014,704
Due 06-01-18 ...................... 6.892 1,856* 1,917,288
Due 12-01-21 ...................... 6.912 1,523* 1,539,172
Due 04-01-18 ...................... 6.946 2,722* 2,762,962
Due 07-01-16 ...................... 7.000 47* 47,360
Due 01-01-28 ...................... 7.100 889* 898,134
Due 11-01-13 ...................... 7.120 106 107,109
Due 10-01-19 ...................... 7.160 1,659* 1,676,729
Due 09-01-18 ...................... 7.196 2,199 2,229,739
Due 03-01-27 ...................... 7.350 41 40,154
Due 09-01-18 ...................... 7.623 1,535 1,566,354
Due 05-01-17 ...................... 8.451 259 273,047
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

14
<PAGE> 15
FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Fund
<TABLE>
<CAPTION>

PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- --------- ------
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Government National Mortgage Association,
30 Yr SF Pass thru Ctf 07-15-01................................................... 9.000% $ 17 $ 17,314
30 Yr SF Pass thru Ctf 07-20-04................................................... 10.000 167* 173,340
30 Yr SF Pass thru Ctf 06-15-16................................................... 10.500 47 50,828
30 Yr SF Pass thru Ctf 05-15-15................................................... 11.500 8* 9,363
30 Yr SF Pass thru Ctf 07-15-05 to 05-15-14....................................... 12.000 312 350,375
30 Yr SF Pass thru Ctf 07-15-15................................................... 12.500 67 75,335
GNMA II Due 03-20-18.............................................................. 11.500 144 157,647
-----------
TOTAL U.S. GOVERNMENT AND
AGENCIES OBLIGATIONS
(Cost $22,027,578) (97.39%) 21,864,201
------ -----------

SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (2.04%)
Investment in a joint repurchase
agreement transaction with
U.B.S. Securities Inc. -
Dated 03-31-95, Due 04-03-95
(secured by U.S. Treasury Bonds,
6.25% Due 08-15-23 and by
U.S. Treasury Notes, 5.250%
thru 9.125% due 07-31-98
thru 05-15-01) - Note A........................................................... 6.125 457 457,000
-----------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%................................................................ 139
-----------
TOTAL SHORT-TERM INVESTMENTS (2.04%) 457,139
------ -----------
TOTAL INVESTMENTS (99.43%) $22,321,340
====== ===========
<FN>
* Securities, other than short-term investment, newly added to the portfolio
during the year ended March 31, 1995.

</TABLE>

The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.

SEE NOTES TO FINANCIAL STATEMENTS.

15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust and Fund

NOTE A --
ACCOUNTING POLICIES

John Hancock Bond Fund, (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock Adjustable U.S.
Government Trust (the "Fund"), John Hancock Investment Quality Bond Trust, John
Hancock Government Securities Trust, John Hancock U.S. Government Trust, and
John Hancock Intermediate Government Trust. The Trustees may authorize the
creation of additional Funds from time to time to satisfy various investment
objectives. Effective December 22, 1994, (see Note B), the Trust and Funds
changed names by replacing the word Transamerica with John Hancock.

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemption, dividends, and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a class
which bears distribution/service expenses under the terms of a distribution
plan, have exclusive voting rights regarding such distribution plan. Class A
Shares are subject to an initial sales charge of up to 3.50% and a 12b-1
distribution plan. Class B Shares are subject to a contingent deferred sales
charge and a separate 12b-1 distribution plan. The Portfolio has only one class
of shares.

The Fund invests substantially all of its assets in John Hancock Adjustable
U.S. Government Fund (the "Portfolio"), which has the same investment objective
as the Fund. Because the Fund invests substantially all of its assets in shares
of the Portfolio, certain Portfolio information, including the Fund's share of
Portfolio expenses, is included in these notes and elsewhere in the financial
statements. At March 31, 1995, the Fund owned 100% of the shares of the
Portfolio. The following is a summary of significant accounting policies of the
Fund and the Portfolio.

VALUATION OF INVESTMENTS As of March 31, 1995, the Fund's only investment is
shares of the Portfolio which are valued daily at the net asset value of the
Portfolio at the close of trading on the New York Stock Exchange. Securities
held by the Portfolio are valued on the basis of market quotations, valuations
provided by independent pricing services or, at fair value as determined in
good faith in accordance with procedures approved by the Trustees. Short-term
debt investments maturing within 60 days are valued by the Portfolio at
amortized cost which approximates market value.

JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Portfolio, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., a wholly-owned subsidiary of The Berkeley Financial Group, may participate
in a joint repurchase agreement transaction. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Portfolio's
custodian bank receives delivery of the underlying securities for the joint
account on the Portfolio's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.

INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.

DISCOUNT ON SECURITIES The Portfolio accretes discount from par value on
securities from either the date of issue or the date of purchase over the life
of the security, as required by the Internal Revenue Code.

FEDERAL INCOME TAXES The Fund and Portfolio's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute all of their respective taxable income,
including any net realized gain on investments, to their respective
shareholders. Therefore, no federal income tax provision is required for either
the Fund or Portfolio. For federal income tax purposes at December 31, 1994, the
Fund has approximately $562,000 of capital loss carryforwards available, to the
extent provided by regulations, to offset future net realized capital gains. If
such carryforwards are used by the Fund, no capital gain distrib-

16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust and Fund

utions will be made. The Fund's capital loss carryforwards expire as follows:
2001 - $107,000 and 2002 - $455,000. The Portfolio has approximately $906,000 of
capital loss carryforwards available which expire as follows: 2000 -- $56,000,
2001 -- $23,000 and 2002 - $827,000. The Fund's and the Portfolio's tax year end
are December 31.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
held by the Portfolio is recorded on the accrual basis.

The Fund and Portfolio record all distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund, if any,
with respect to each class of shares will be calculated in the same manner, at
the same time and will be in the same amount, except for the effect of expenses
that may be applied differently to each class as explained previously.

EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund and/or Portfolio. Expenses which are not identifiable to a
specific Fund and/or Portfolio are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and type of
expense and the relative sizes of the Funds and/or Portfolio.

CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares of the Fund based on the appropriate net assets of the respective
classes. Distribution/service fees if any, are calculated daily at the class
level of the Fund based on the appropriate net assets of each class of the Fund
and the specific expense rate(s) applicable to each class of the Fund.

ORGANIZATION EXPENSE Expenses incurred in connection with the organization of
the Fund and Portfolio have been capitalized and are being charged to operations
ratably over a period not to exceed five years which began with the commencement
of operations of the Fund and Portfolio.

RECLASSIFICATIONS Certain reclassifications have been made to 1994 amounts to
permit comparisons to the 1995 presentations.

NOTE B --
MANAGEMENT FEE,
ADMINISTRATIVE SERVICES AND TRANSACTIONS
WITH AFFILIATES AND OTHERS

On December 22, 1994, John Hancock Advisers, Inc. (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, became the investment adviser
for the Fund and Portfolio with approval of the Trustees and shareholders of the
Fund. The former investment manager was Transamerica Fund Management Company
("TFMC").

Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, to
0.50% of the Fund's average daily net asset value. Of this amount 0.40%
represents investment advisory fees paid by the Portfolio and indirectly by the
Fund through its investment in the Portfolio. The remaining 0.10% is for
administrative fees paid directly by the Fund. This fee structure is consistent
with the former agreement with TFMC. For the period ended March 31, 1995, the
Fund's fee earned by the Adviser and TFMC amounted to $7,171 and $21,511,
respectively, resulting in a total fee of $28,682. The Portfolio's advisory fee
earned by the Adviser and TFMC amounted to $28,694 and $86,085, respectively,
resulting in a total fee of $114,779.

The Adviser and TFMC, for their respective periods, provided administrative
services to the Fund and Portfolio pursuant to an administrative service
agreement through January 16, 1995 on which day the agreement was terminated.

In the event normal operating expenses of the Fund and Portfolio, exclusive
of certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund and Portfolio is registered to sell
shares of beneficial interest, the fee payable to the Adviser will be reduced to
the extent of such excess and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits are
2.5% of the first $30,000,000 of the Fund's and Portfolio's average daily net
asset value, 2.0% of the next $70,000,000 and 1.5% of the remaining average
daily net asset value.

17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust and Fund

The Adviser and TFMC, for their respective periods, voluntarily agreed to
limit the Fund's and Portfolio's expenses further to the extent required to
prevent the aggregate expenses of the Fund and Portfolio from exceeding on an
annual basis 0.75% and 1.40% of the average daily net asset value of Class A and
Class B shares, respectively. Accordingly, for the period ended March 31, 1995,
the reduction to the Adviser's and TFMC's fees, collectively with any amounts
not borne by the Fund by virtue of the most restrictive state expense limit,
amounted to $39,206 and $117,612, respectively. The reduction to the Adviser's
and TFMC's fees amounted to $14,294 and $42,876, respectively for the Portfolio.
The voluntary waivers may be discontinued at any time.

On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a wholly-owned
subsidiary of the Adviser, became the principal underwriter of the Fund. Prior
to this date, Transamerica Fund Distributors, Inc. ("TFD") served as the
principal underwriter and distributor of the Fund. For the period ended March
31, 1995, JH Funds and TFD received net sales charges of $24,555 with regard to
sales of Class A shares of the Fund. Out of this amount, $4,090 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, and $20,465 was paid as sales commissions to unrelated broker-dealers.

Class B shares of the Fund which are redeemed within six years of purchase
will be subject to a contingent deferred sales charge ("CDSC") at declining
rates beginning at 3.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds, formerly TFD, and are used in whole or in
part to defray its expenses related to providing distribution related services
to the Fund in connection with the sale of Class B shares. For the period ended
March 31, 1995, contingent deferred sales charges amounted to $54,072.

In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments for distribution
and service expenses which in total will not exceed on an annual basis 0.25% of
the Fund's average daily net assets attributable to Class A shares and 1.00% of
the Fund's average daily net assets attributable to Class B shares, to reimburse
for its distribution/service costs. Up to a maximum of 0.25% of such payments
may be service fees as defined by the amended Rules of Fair Practice of the
National Association of Securities Dealers which became effective July 7, 1993.
Under the amended Rules of Fair Practice, curtailment of a portion of the Fund's
12b-1 payments could occur under certain circumstances. This fee structure and
plan is similar to the former arrangement with TFD.

The Board of Trustees approved a shareholder servicing agreement between the
Fund and John Hancock Investor Services Corporation ("Investor Services"), a
wholly-owned subsidiary of The Berkeley Financial Group, for the period between
December 22, 1994 and May 12, 1995, inclusive under which Investor Services
processed telephone transactions on behalf of the Fund. As of May 15, 1995, the
Fund and the Portfolio entered into a full service transfer agent agreement with
Investor Services. Prior to this date, The Shareholder Services Group was the
transfer agent. The Fund and the Portfolio will pay Investor Services a fee
based on transaction volume and number of shareholder accounts.

A partner with Baker & Botts was an officer of the Trust, until December 22,
1994. During the period ended March 31, 1995, the Fund and the Portfolio paid
legal fees of $3,878 to Baker & Botts.

Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser and its
affiliates as well as Trustee of the Fund and Portfolio. The compensation of
unaffiliated Trustees is borne by the Fund and Portfolio. Effective with the
fees paid for 1995, the unaffiliated Trustees may elect to defer their receipt
of this compensation under the John Hancock Group of Funds Deferred Compensation
Plan. The Fund and Portfolio will make investments into other John Hancock
Funds, as applicable, to cover its liability with regard to the deferred
compensation. Investments to cover the deferred compensation

18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Adjustable U.S. Government Trust and Fund

liability will be recorded on the books as other assets. The deferred
compensation liability will be marked to market on a periodic basis and income
earned by the investment will be recorded on the books.

The Fund and Portfolio have an independent advisory board composed of certain
members of the former Transamerica Board of Trustees who provide advice to the
current Trustees in order to facilitate a smooth management transition for which
the Fund and Portfolio pay a fee to the advisory board and its counsel.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities by the Portfolio, other than
short-term obligations, during the period ended March 31, 1995 aggregated
$93,321,962 and $103,295,732, respectively.

The cost of investments owned by the Portfolio at March 31, 1995 for Federal
income tax purposes was $22,484,578. Gross unrealized appreciation and
depreciation of investments aggregated $72,906, and $236,283, respectively,
resulting in net unrealized depreciation of $163,377.

19
<PAGE> 20

John Hancock Funds - Adjustable U.S. Government Trust and Fund

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

To the Trustees and Shareholders of
John Hancock Bond Fund --
John Hancock Adjustable U.S. Government Fund and
John Hancock Adjustable U.S. Government Trust

We have audited the accompanying statements of assets and liabilities
of John Hancock Adjustable U.S. Government Fund (the Portfolio) and John Hancock
Adjustable U.S. Government Trust (the Fund) (formerly the Transamerica
Adjustable U.S. Government Fund and Transamerica U.S. Government Trust,
respectively), two of the six portfolios constituting John Hancock Bond Fund
(formerly Transamerica Bond Fund), (the Trust), including the schedule of
investments of the Portfolio, as of March 31, 1995, and the related statements
of operations for the year then ended and the statements of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended and for the
period from December 31, 1991 (commencement of operations) to March 31, 1992.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures for the Portfolio included confirmation of securities
owned by the Portfolio as of March 31, 1995, by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the respective financial
positions of the John Hancock Adjustable U.S. Government Fund and the John
Hancock Adjustable U.S. Government Trust, at March 31, 1995, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended and their financial highlights
for each of the three years in the period then ended and for the period from
December 31, 1991 to March 31, 1992, in conformity with generally accepted
accounting principles.

ERNST & YOUNG LLP

Boston, Massachusetts
May 15, 1995

20
<PAGE> 21
ADDITIONAL INFORMATION

John Hancock Funds - Adjustable U.S. Government Trust

On December 16, 1994 , a special meeting of John Hancock (formerly Transamerica)
Bond Fund (the "Trust") in respect of John Hancock (formerly Transamerica)
Adjustable U.S. Government Trust (the "Fund") was held involving the election of
trustees and certain other matters concerning the Fund.

Specifically, shareholder's first approved a new investment management
agreement between the Trust on behalf of the Fund and John Hancock Advisers,
Inc. on substantially similar terms of the prior investment management
agreement, to take effect on December 22, 1994, the date of the consummation of
the acquisition of Transamerica Fund Management Company by The Berkeley
Financial Group. The shareholder votes tallied were 1,530,513 FOR, 41,165
AGAINST and 39,324 ABSTAINING.

The shareholders next approved new Plans of Distribution for each Class A and
Class B shares of the Fund, also effective on December 22, 1994, and also on
substantially the same terms as the prior Plans of Distribution. The Class A
shareholder votes tallied were 1,054,852 FOR, 40,836 AGAINST and 25,569
ABSTAINING. The Class B shareholder votes tallied were 529,095 FOR, 651 AGAINST
and 19,048 ABSTAINING.

The shareholders also voted to ratify the selection of Ernst & Young, LLP as
independent auditors for the Fund for the fiscal year ending March 31, 1995, and
the votes tallied were 1,546,114 FOR, 33,626 AGAINST and 33,626 ABSTAINING.

Lastly, the following trustees were elected to serve until their respective
successors shall become duly elected and qualified, with the votes tabulated as
indicated:

NAME OF TRUSTEE FOR WITHHOLD
- --------------- --- --------
<S> <C> <C>
Edward J. Boudreau, Jr. ........ 1,512,555 98,449
James F. Carlin ................ 1,512,555 98,449
William H. Cunningham .......... 1,512,555 98,449
Charles L. Ladner .............. 1,512,555 98,449
Leo E. Linbeck, Jr. ............ 1,512,555 98,449
Patricia P. McCarter ........... 1,512,555 98,449
Steven R. Pruchansky ........... 1,512,555 98,449
Norman H. Smith ................ 1,512,555 98,449
John P. Toolan ................. 1,512,555 98,449
</TABLE>

TAX INFORMATION NOTICE (UNAUDITED)

For Federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund during their tax year ended December 31,
1994. All of the dividends paid for the tax year are taxable as ordinary income.
None of the 1994 dividends qualify for the dividends received deduction
available to corporations.

Shareholders will be mailed a 1995 U.S. Treasury Department Form 1099-DIV in
January 1996. This will reflect the total of all distributions which are taxable
for calendar year 1995.

21
<PAGE> 22
NOTES

John Hancock Funds - Adjustable U.S. Government

22
<PAGE> 23
NOTES

John Hancock Funds - Adjustable U.S. Government

23
<PAGE> 24

[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
Brockton, MA
Permit No. 582

[A 1/2" by 1/2" John Hancock Funds Logo in upper left hand corner of the page.
A box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]

- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Adjustable U.S. Government. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.

[A recycled logo in lower left hand corner with the caption "Printed on Recycled
Paper."]

JHF T320A 03/95
<PAGE> 25
John Hancock Funds
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

U.S.
GOVERNMENT
TRUST

ANNUAL REPORT

March 31, 1995
<PAGE> 26
Chairman's Message

TRUSTEES
Edward J. Boudreau, Jr
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Senior Vice President and
Chief Investment Officer
Anne C. Hodsdon
Executive Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Frederick L. Cavanaugh
Senior Vice President
James K. Ho
Senior Vice President
Anne McDonley
Vice President
Barry Evans
Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

[A 1 1/4" X 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]

DEAR FELLOW SHAREHOLDERS:

On behalf of our nearly 700 associates, I'm delighted to welcome you to
John Hancock Funds. As you all know, Transamerica Fund Management Company was
acquired by John Hancock Funds on December 22, 1994, following a favorable
shareholder vote. At that time, all of the Transamerica mutual funds became
part of the John Hancock family of funds.
We're excited about the opportunities this acquisition will bring to
shareholders. The combined firms form a larger, more competitive organization
with more than $13 billion in assets under management and more than 1 million
shareholders. Now with 50 open-end funds, 8 closed-end funds and a full array
of retirement and private account services, John Hancock Funds offers you a
broader selection of investment choices to meet your long-term financial
needs. What's more, the union of the Hancock and Transamerica investment
teams gives you access to some of the top talent in the industry.
The Transamerica name is changing, but the commitment to serving you
as a valued shareholder isn't. Here at John Hancock Funds, our motto is: "We
invest in quality first." It has to do with the way we invest your money and
the way we work with you. Not only do we strive to ensure that your
investments are well-managed, we also take pride in providing the highest
quality customer service. We can't guarantee investment performance; nobody
can. The quality of our service, however, depends totally on us. That is
something that we can guarantee.
In mid-May, we anticipate that all of the Transamerica funds will be
fully integrated into John Hancock's internal shareholder service
organization, John Hancock Investor Services. At that time, not only will you
gain exchange privileges into all John Hancock funds, but your account will
be handled by one of the top-rated service organizations in the industry. To
show you how seriously we take our commitment to quality, you will have
access to our service guarantee. If we make an error in processing a transacti
on in your account, we will deposit $25 into it. Or if you have a retirement
account, we will waive the annual fee.
We value your business and look forward to serving your investment
needs in the years to come.

Sincerely,

/s/ Edward J. Boudreau, Jr

EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE> 27
BY BARRY H. EVANS
FOR THE PORTFOLIO MANAGEMENT TEAM
JOHN HANCOCK
U.S.GOVERNMENT
TRUST

Reality check for bond investors
--------------------------------

The past 12 months have been hard on many bond investors, especially
those who had grown accustomed to double-digit returns during the early
1990s. As the economic expansion quickened and both short-term and long-term
interest rates rose, bond prices fell through most of 1994. Though they
started to rebound in the first quarter of this year, many bonds ended the
12-month period with negative returns.
Investors in John Hancock U.S. Government Trust not only avoided
losses, but they came out farther ahead than investors in most other funds
with a similar objective. For the year ended March 31, 1995, the Fund's
Class A shares rose 3.68% at net asset value, compared to a gain of 2.95%
for the average U.S. government bond fund, according to Lipper Analytical
Services. 1

A VOLATILE CLIMATE FOR BONDS
In early February 1994, just before the period began, the Federal Reserve
embarked on a new policy designed to dampen economic growth.
It raised the federal funds rate - the rate banks charge each other for
overnight loans - one-quarter point to 3.25%. That was the first in a series
of rate hikes by the Fed. Two more quarter-point increases followed in March
and April, two half-point increases in May and August, a three-quarter-point
hike in November, and another half-point increase in February

[A 2 1/2" x 2 1/2" photo of Barry H. Evans at bottom right. Caption reads:
"Barry H. Evans, Portfolio Manager."]

"THE PAST 12 MONTHS HAVE BEEN HARD ON MANY BOND INVESTORS."

3
<PAGE> 28

John Hancock Funds - U.S. Government Trust

"... NEARLY 80% OF THE FUND'S ASSETS WERE
IN MORTGAGE-BACKED SECURITIES ."

[Bar chart with heading "Fund Performance" at top of left hand column. Under
the heading is the footnote: "For the year ended March 31, 1995." The chart
is scaled in increments of 2% from bottom to top, with 4% at the top and
0% at the bottom. Within the chart, there are two solid bars. The first
represents the 3.68% total return for John Hancock U.S. Government Trust:
Class A. The second represents the 2.95% total return for the average U.S.
government bond fund." Footnote below reads: "The total return for John
Hancock U.S. Government Trust: Class A is at net asset value with all
disributions reinvested. The total return for John Hancock U.S. Government
Trust: Class B was 4.28% at net asset value since inception on September 30,
1994. The average U.S. government bond fund is tracked by Lipper Analytical
Services. (1) See page 6 for historical performance information."]

The total return for John Hancock U.S. Government Trust: Class A is at net
asset value with all distributions reinvested. The total return for John
Hancock U.S. Government Trust: Class B was 4.28% at net asset value since
inception on September 30, 1994. The average U.S. government bond fund is
tracked by Lipper Analytical Services.1 See page 6 for historical performance
information.

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

1995. By the end of the period, the federal funds rate was 6.00%.

Meanwhile, as economic growth continued at a surprisingly brisk pace
and investors fretted about inflation, long-term interest rates were
climbing, too. The yield on the 30-year U.S. Treasury bond, which had dipped
below 6% as recently as the fall of 1993, topped 8% in the fall of 1994.
Because interest rates and bond prices move in opposite directions, the
upshot of all the rate increases was falling bond prices at both ends of the
yield curve.
An additional factor was the continuing decline in the value of the
dollar against certain key currencies, notably the German mark and the
Japanese yen. A falling dollar is worrisome to bond investors for two
reasons. First, it raises the price of imports, which can boost inflation.
Second, it puts pressure on the United States to protect its currency by
raising interest rates.
Finally, during the past year the world's financial markets were
rocked by a series of unexpected and dramatic events, including the
precipitous decline last spring of many high-flying emerging markets in Latin
America and Southeast Asia; the bankruptcy of Orange County, California; the
devaluation of the Mexican peso; and the collapse of Britain's Barings
Bank. To the extent such events contributed to investors' uncertainty about
the future, they added to the upward pressure on interest rates.

MORTGAGE-BACKED SECURITIES HELP PERFORMANCE
At the end of March, nearly 80% of the Fund's assets were in mortgage-backed
securities issued by the Government National Mortgage Association - known as
Ginnie Maes. With an average coupon rate of around 9%, the Fund's Ginnie Mae
holdings offered more income at comparable maturities than Treasuries and
were hurt less by rising interest rates. Moreover, as mortgage rates have
risen from their historic lows in the fall of 1993, the pace of mortgage
prepayments has slowed, improving the performance of mortgage securities.
The remaining 20% of the Fund was in U.S. Treasury securities.
Treasuries rebounded during the last three months of the period as inflation
fears dissipated and long-term interest rates fell. The Fund's average
duration at the

- --------------------------------------------------------------------------------
1Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is
lower.

<PAGE> 29
John Hancock Funds - U.S. Government Trust

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

[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into two sections. Going from left to right:
Mortgage-Backed Securities 80%; U.S. Treasury Bonds 20%. A footnote below
states "As a percentage of net assets on March 31, 1995."

As a percentage of net assets on March 31, 1995
- --------------------------------------------------------------------------------

end of March was around four years. Duration measures the extent to which the
price of a bond - or in this case, a bond fund - will rise or fall with
changes in interest rates. The longer the duration, the more the price
will fluctuate. Had the Fund's duration been longer than it was in November -
when long-term rates began their retreat - our performance might have been
stronger. Lately, amid signs of a fading economy, we have been slowly
extending the Fund's duration in hopes of improving total return.

BRIGHTER OUTLOOK FOR THE REST OF '95
By the end of March, the current economic expansion was 48 months old, a
significant milestone given that the average post-war expansion has lasted
only 45 months. Meanwhile, signs were accumulating that after seven
interest-rate hikes in little more than a year, the Fed's monetary policy was
finally doing what it was designed to do and the economy was indeed slowing
down. That said, we think there may be one more inflation spike coming our
way. But if so, it's more apt to signal the peak in the cycle than the first
step in a fresh surge. We'd likely view it as a buying opportunity.
Overall, we see a more favorable climate for bonds developing, marked
by slower economic growth and gently falling long-term interest rates.
Barring a recession - which is not in our current forecast - we see the rate
on the 30-year Treasury bond settling somewhere around 7% instead of dipping
as low as 6% again. Government securities may outperform corporate securities,
for which credit risk can be an issue in a slowing economy. And mortgage
securities - which do best under stable interest-rate conditions - may perform
best of all. We'll be looking for more opportunities in the months ahead to
extend duration slightly and perhaps increase the Fund's stake in mortgages.

In February 1995, Barry H. Evans began managing John Hancock U.S.
Government Trust. Mr. Evans, who joined John Hancock in 1986, is a vice
president and head of the company's government fixed-income department.

"... we see a more favorable climate for bonds ."

5
<PAGE> 30

NOTES TO PERFORMANCE INFORMATION

John Hancock Funds - U.S. Government Trust

In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the periods ended March 31,
1995, with all distributions reinvested in shares. The average annualized
total returns for Class A shares for the 1-year and 5-year periods, and since
inception on 12/31/85 were (1.27%), 6.63% and 6.38%, respectively, and
reflect payment of the maximum sales charge of 4.75%. On May 15, 1995, the
maximum sales charge will be lowered to 4.50%. Total return (not annualized)
since inception on September 4, 1994 for Class B shares was (0.72%) and
reflects the applicable contingent deferred sales charge (maximum contingent
deferred sales charge is 5% and declines to 0% over 6 years). The standard
SECyield for the 30-day period ended March 31, 1995 for Class A and Class B
shares was 5.52% and 5.05%, respectively. All performance data shown
represent past performance and should not be considered indicative of future
performance. Returns and principal values of Fund investments will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Performance is affected by a 12b-1 plan.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND
(OR MOST RECENT TEN YEARS)

U.S. Government Trust
Class A shares

Line chart with the heading U.S. Government Trust: Class A,
representing the growth of a hypothetical $10,000 investment over the life of
the fund (or most recent 10 years). Within the chart are three lines.

The first line represents the value of the Lehman Government Bond Index
and is equal to $21,683* as of March 31, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the U.S. Government Trust
on December 31, 1985, before sales charge, and is equal to $18,609 as of March
31, 1995. The third line represents the U.S. Government Trust after sales
charge and is equal to $17,723 as of March 31, 1995.

U.S. Government Trust
Class B shares

Line chart with the heading U.S. Government Trust: Class B,
representing the growth of a hypothetical $10,000 investment over the life of
the fund (or most recent 10 years). Within the chart are three lines.

The first line represents the value of the hypothetical $10,000
investment made in the U.S. Government Trust on September 4, 1994, before
contingent deferred sales charge, and is equal to $10,428 as of March 31, 1995.
The second line represents the value of the Lehman Government Bond Index and is
equal to $10,359* as of March 31, 1995. The third line represents U.S.
Government Trust after contingent deferred sales charge and is equal to $9,928
as of March 31, 1995.

*The Lehman Government Bond Index is an unmanaged index, which measures
the performance of U.S. Treasury bonds and U.S. Government Agency bonds.

6
<PAGE> 31
FINANCIAL STATEMENTS

John Hancock Funds - U.S. Government Trust

The STATEMENT OF ASSETS AND LIABILITIES is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on March 31, 1995. You'll
also find the net asset value and the maximum offering price per share as of
that date.

The STATEMENT OF OPERATIONS summarizes the Fund's investment income earned
and expenses incurred in operating the Fund.
It also shows net gains (losses) for the period stated.

<TABLE>

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments at value - Note C:
U.S. government and agencies
securities (cost - $17,602,355) $17,558,149
Joint repurchase agreement (cost - $77,000)....... 77,000
Corporate savings account......................... 546
-----------
17,635,695
Receivable for shares sold.......................... 1,820
Interest receivable................................. 239,020
Other assets........................................ 5,992
-----------
Total Assets 17,882,527
--------------------------------------------------------
LIABILITIES:
Dividend payable.................................... 73,521
Payable to John Hancock Advisers, Inc.
and affiliates - Note B............................. 13,437
Accounts payable and accrued expenses............... 14,662
-----------
Total Liabilities 101,620
--------------------------------------------------------
NET ASSETS:
Capital paid-in..................................... 71,585,634
Accumulated net realized loss on investments and
financial futures contracts......................... (53,759,415)
Net unrealized depreciation of investments ......... (44,206)
Distributions in excess of net investment income.... (1,106)
-----------
Net Assets ......................... $17,780,907
========================================================

NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 per share par value, respectively)
Class A - $17,582,147/2,290,672 .................... $ 7.68
------------------------------------------------------------------------
Class B - $198,760/25,882........................... $ 7.68
------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($7.68 x 104.99%)......................... $ 8.06
------------------------------------------------------------------------

<FN>

** On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
** Class B shares commenced operations on September 30, 1994.

</TABLE>

<TABLE>

STATEMENT OF OPERATIONS
Year ended March 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
Investment Income:
Interest.............................................. $1,932,680
----------
Expenses:
Investment management fee - Note B.................. 135,102
Distribution/service fee - Note B
Class A......................................... 51,811
Class B **...................................... 491
Custodian fee....................................... 58,211
Interest expense.................................... 35,620
Registration and filing fees........................ 27,254
Auditing fee........................................ 23,901
Transfer agent fee.................................. 14,850
Printing............................................ 10,278
Trustees' fees...................................... 6,393
Legal fees.......................................... 2,078
Miscellaneous....................................... 1,559
Advisory Board Fee.................................. 379
----------
Total Expenses................. 367,927
-----------------------------------------------------
Net Investment Income.......... 1,564,753
-----------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold................ (2,458,310)
Net realized gain on financial futures contracts..... 17,960
Change in net unrealized appreciation/depreciation
of investments....................................... 1,503,049
Change in net unrealized appreciation/depreciation
of financial futures contracts....................... (13,750)
----------
Net Realized and Unrealized
Loss on Investments............. (951,051)
------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations....... $ 613,702
======================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 32
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------
1995 1994
------- -------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................................................................. $ 1,564,753 $ 1,515,561
Net realized gain (loss) on investments sold and financial futures contracts....................... (2,440,350) 205,404
Change in net unrealized appreciation/depreciation of investments and financial futures contracts 1,489,299 (1,650,540)
----------- -----------
Net Increase in Net Assets Resulting from Operations...................................... 613,702 70,425
----------- -----------
Distributions to Shareholders:
Dividends from net investment income
Class A - ($0.5678 and $0.6056 per share, respectively)........................................ (1,549,572) (1,576,907)
Class B ** - ($0.2490 and none per share, respectively)........................................ (3,939) ....
Distributions in excess of net investment income
Class A - ($0.0050 and $0.0042 per share, respectively)........................................ (1,106) (11,242)
----------- -----------
Total Distributions to Shareholders............................................................ (1,554,617) (1,588,149)
----------- -----------

From Fund Share Transactions - Net*................................................................... (5,018,515) 7,098,572
----------- -----------
NET ASSETS:
Beginning of period................................................................................ 23,740,337 18,159,489
----------- -----------
End of period (including distributions in excess of net investment income of $1,106 and
$11,242, respectively)........................................................................... $17,780,907 $23,740,337
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
* ANALYSIS OF FUND SHARE TRANSACTIONS: YEAR ENDED MARCH 31,
------------------------------------------------------
1995 1994
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................................................... 384,350 $ 2,961,231 1,260,831 $10,724,985
Shares issued to shareholders in reinvestment of distributions...... 58,661 450,381 51,515 433,356
----------- ----------- ----------- -----------
443,011 3,411,612 1,312,346 11,158,341
Less shares repurchased............................................. (1,126,066) (8,625,358) (478,553) (4,059,769)
----------- ----------- ----------- -----------
Net increase (decrease)............................................. (683,055) $(5,213,746) 833,793 $ 7,098,572
=========== =========== =========== ===========
CLASS B **
Shares sold......................................................... 27,216 $ 205,317
Shares issued to shareholders in reinvestment of distributions 34 263
----------- -----------
27,250 205,580
Less shares repurchased................................ (1,368) (10,349)
----------- -----------
Net increase........................................... 25,882 $ 195,231
=========== ===========
<FN>

** Class B shares commenced operations on September 30, 1994.

</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS FISCAL YEAR. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES,
DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY
SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF
FUND SHARES SOLD, REINVESTED AND REDEEMED DURING THE LAST TWO YEARS, ALONG
WITH THE CORRESPONDING DOLLAR VALUES.

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 33

<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the periods indicated, investment returns, key ratios and
supplemental data are listed as follows:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------
1995(f) 1994 1993 1992 1991
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period......................... $ 7.98 $ 8.49 $ 8.16 $ 8.34 $ 8.18
------- ------- ------- ------- -------
Net Investment Income........................................ 0.58 0.58 0.61 0.87(a) 0.90
Net Realized and Unrealized Gain (Loss) on Investments and
Financial Futures Contracts ................................. (0.31) (0.48) 0.43 (0.22) 0.11
------- ------- ------- ------- -------
Total from Investment Operations......................... 0.27 0.10 1.04 0.65 1.01
------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income......................... (0.57) (0.61) (0.71) (0.83) (0.85)
------- ------- ------- ------- -------

Net Asset Value, End of Period............................... $ 7.68 $ 7.98 $ 8.49 $ 8.16 $ 8.34
======= ======= ======= ======= =======

Total Investment Return at Net Asset Value................... 3.68% 1.05% 13.13% 8.05% 13.04%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................... $17,582 $23,740 $18,159 $21,184 $123,493
Ratio of Expenses to Average Net Assets (b).................. 1.59%(b) 1.37% 1.31% 1.08% 1.13%
Ratio of Net Investment Income to Average Net Assets......... 7.69% 6.86% 7.07% 10.48% 10.72%
Portfolio Turnover Rate...................................... 438% 264% 342% 179% 154%

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 34
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

FINANCIAL HIGHLIGHTS (continued)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
FOR THE PERIOD
SEPTEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO MARCH 31,
1995(f)
------------------
<S> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period....................................................... $ 7.61(c)
-------
Net Investment Income...................................................................... 0.26(a)
Net Realized and Unrealized Gain (Loss) on Investments and Financial Futures Contracts .... 0.06(d)
-------
Total from Investment Operations....................................................... 0.32
-------
Less Distributions:
Dividends from Net Investment Income....................................................... (0.25)
-------
Net Asset Value, End of Period............................................................. $ 7.68
=======
Total Investment Return at Net Asset Value................................................. 4.28%(e)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................................................. $ 199
Ratio of Expenses to Average Net Assets (b)................................................ 2.34%*(b)
Ratio of Net Investment Income to Average Net Assets....................................... 6.94%*
Portfolio Turnover Rate.................................................................... 438%
<FN>
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Excluding interest expense, which equalled 0.17% for the year ended March 31, 1995, 0.04% for the year ended
March 31, 1994 and 0.17% for the year ended March 31, 1992.
(c) Initial price to commence operations.
(d) May not accord to amounts shown elsewhere in the financial statements.
(e) Not annualized.
(f) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 35

<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

SCHEDULE OF INVESTMENTS
March 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The SCHEDULE OF INVESTMENTS is a complete list of all securities owned by U.S. Government Trust on March 31, 1995. The
schedule consists of two main categories: U.S. government and agencies securities and short-term investments. Short-term
investments, which represent the Fund's "cash" position, are listed last.

<CAPTION>
PAR VALUE
INTEREST MATURITY (000's MARKET
ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- ------------------- -------- -------- --------- -------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES SECURITIES
GOVERNMENTAL - U.S. (19.27%)
United States Treasury, Bond.................................. 12.625% 05-15-95 $2,910* $2,930,923
United States Treasury, Bond.................................... 12.000 08-15-13 360* 495,508
----------
3,426,431
----------
GOVERNMENTAL - U.S. AGENCIES (79.48%)
Government National Mortgage Association,
30 Yr SF Pass Thru Ctf...................................... 7.500 04-15-09 to 2,468* 2,389,956
05-15-24
30 Yr SF Pass Thru Ctf...................................... 8.000 05-15-24 to 3,989* 3,953,863
11-15-24
30 Yr SF Pass Thru Ctf...................................... 8.500 05-15-24 3,387* 3,436,056
30 Yr SF Pass Thru Ctf...................................... 9.000 04-15-16 to 3,999* 4,147,979
01-15-17
30 Yr SF Pass Thru Ctf ..................................... 9.500 10-15-19 11 11,407
30 Yr SF Pass Thru Ctf ..................................... 12.000 01-15-15 1 903
30 Yr SF Pass Thru Ctf...................................... 13.000 02-15-11 to 122 138,113
08-15-15
30 Yr SF Pass Thru Ctf...................................... 15.000 05-15-12 to 6 7,319
09-15-12
30 Yr SF Pass Thru Ctf ..................................... 15.500 11-15-11 41 46,122
----------
14,131,718
----------
TOTAL U.S. GOVERNMENT AND
AGENCIES SECURITIES
(Cost $17,602,355) (98.75%) 17,558,149
----------

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 36
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust
PAR VALUE
INTEREST MATURITY (000's MARKET
ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- ------------------- -------- -------- --------- -------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (0.43%)
Investment in a joint repurchase agreement
transaction with U.B.S. Securities Inc.,
Dated 03-31-95, Due 04-03-95 (secured by
U. S. Treasury Bond 6.250%, due 08-15-23,
and U.S Treasury Notes, 5.250% thru 9.125%
due 07-31-98 thru 05-15-01) - Note A......................... 6.125% 04-03-95 $77 $ 77,000
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account Current Rate 3.00%.......... 546
-----------
TOTAL SHORT-TERM INVESTMENTS (0.43%) 77,546
------ -----------
TOTAL INVESTMENTS (99.18%) $17,635,695
====== ===========
<FN>
* Securities, other than short-term investments, newly added to the portfolio during the period ended March 31, 1995.
The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 37

NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

NOTE A -
ACCOUNTING POLICIES
John Hancock Bond Fund, (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock U.S. Government Trust
(the "Fund"), John Hancock Investment Quality Bond Trust, John Hancock
Government Securities Trust, John Hancock Intermediate Government Trust and
John Hancock Adjustable Government Trust. The Trustees may authorize the
creation of additional Funds from time to time to satisfy various investment
objectives. Effective December 22, 1994, the Trust and Funds changed names by
replacing the word Transamerica with John Hancock (see Note B).
The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal
rights to voting, redemption, dividends, and liquidation, except that certain
expenses, subject to the approval of the Trustees, may be applied differently
to each class of shares in accordance with current regulations of the
Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class which bears distribution/service expenses under the
terms of a distribution plan, have exclusive voting rights regarding such
distribution plan. Class A Shares are subject to an initial sales charge of
up to 4.75% and a 12b-1 distribution plan. Class B Shares are subject to a
contingent deferred sales charge and a separate 12b-1 distribution plan. On
September 30, 1994, Class B shares were sold to commence class activity.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing
services or, at fair value as determined in good faith in accordance with
procedures approved by the Trustees. Short-term debt investments maturing
within 60 days are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., a wholly-owned subsidiary of The Berkeley Financial Group, may
participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring
that the agreement is fully collateralized at all times.
REVERSE REPURCHASE AGREEMENT Prior to December 22, 1994 the
Fund entered into reverse repurchase agreements which involved the sale of
securities held by the Fund to a bank or securities firm with an agreement
that the Fund would buy back the securities at a fixed future date at a fixed
price plus an agreed amount of "interest" which was reflected in the
repurchase price. Reverse repurchase agreements are considered to be
borrowings by the Fund and the Fund used the proceeds obtained from the sale
of securities to purchase other investments. Effective December 22, 1994, the
Fund discontinued investing in reverse repurchase agreements.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked" prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked-to-market to reflect the current market
value of the written option.
The Fund may use option contracts to manage its exposure to the
financial markets. Writing puts and buying calls will tend to increase the
Fund's exposure to the underlying instrument and buying puts

13
<PAGE> 38

NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

and writing calls will tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments.
The maximum exposure to loss for any purchased options will be
limited to the premium initially paid for the option. In all other cases, the
face (or "notional") amount of each contract at value will reflect the
maximum exposure of the Fund in these contracts, but the actual exposure will
be limited to the change in value of the contract over the period the
contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options
have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter option
contracts, the Fund will continuously monitor the creditworthiness of all its
counterparties.
At any particular time, except for purchased options, market or
credit risk may involve amounts in excess of those reflected in the Fund's
Statement of Assets and Liabilities.
There were no written option transactions for the period ended
March 31, 1995.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates, currency exchange rates and other market
conditions. At the time the Fund enters into a financial futures contract, it
will be required to deposit with its custodian a specified amount of cash or
U.S. government securities, known as "initial margin", equal to a certain
percentage of the value of the financial futures contract being traded. Each
day, the futures contract will be valued at the official settlement price of
the board of trade or U.S. commodities exchange. Subsequent payments, known
as "variation margin", to and from the broker will be made on a daily basis
as the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market", will be
recorded by the Fund as unrealized gains or losses.
When the contracts are closed, the Fund will recognize a gain or
loss. Risks of entering into futures contracts include the possibility that
there may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities. In addition, the Fund could be prevented from opening or
realizing the benefits of closing out futures positions because of position
limits or limits on daily price fluctuations imposed by an exchange.
For Federal income tax purposes, the amount, character and timing of
the Fund's gains and/or losses can be affected as a result of futures
contracts.
At March 31, 1995, there were no open positions in financial futures
contracts.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date
of purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis for both financial
reporting and federal income tax purposes.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities from either the date of issue or the date of purchase over the
life of the security, as required by the Internal Revenue Code.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments, to its shareholders. Therefore, no federal
income tax provision is required. For federal income tax purposes at December
31, 1994, the Fund has approximately $53,505,000 of capital loss
carryforwards available, to the extent provided by regulations, to offset
future net realized capital gains. If such carryforwards are used by the
Fund, no capital gain distributions will be made. The carryforwards expire as
follows: 1996 - $39,800,000, 1997 - $2,986,000, 1998 - $5,413,000, 1999 -
$654,000, 2000 - $2,152,000 and 2002 - $2,500,000. The Fund's tax year end is
December 31.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment
securities is recorded on the accrual basis.

14
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

The Fund records all distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such
distributions are determined in conformity with income tax regulations, which
may differ from generally accepted accounting principles. Dividends paid by
the Fund, if any, with respect to each class of shares will be calculated in
the same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as explai
ned previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable
to an individual Fund. Expenses which are not identifiable to a specific Fund
are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class
of shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level
based on the appropriated net assets of each class and the specific expense
rate(s) applicable to each class.
RECLASSIFICATION Certain reclassifications have been made to 1994 amounts to
permit comparisons to the 1995 presentations.

NOTE B -
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
On December 22, 1994, John Hancock Advisers, Inc. (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, became the investment
management provider for the Fund with approval of the Trustees and
shareholders of the Fund. The Fund's former investment manager was
Transamerica Fund Management Company ("TFMC").
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment program
equivalent, to 0.650% of the first $200,000,000 of the Fund's average daily
net asset value, 0.625% of the next $300,000,000, and 0.600% of the Fund's
average daily net asset value in excess of $500,000,000. This fee structure is
consistent with the former agreement with TFMC. For the period ended
March 31, 1995, the advisory fee earned by the Adviser and TFMC amounted to
$30,022 and $105,080, respectively, resulting in a total fee of $135,102.
The Adviser and TFMC, for their respective periods, provided
administrative services to the Fund pursuant to an administrative service
agreement through January 16, 1995 on which day the agreement was terminated.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares of
beneficial interest, the fee payable to the Adviser will be reduced to the
extent of such excess and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits are
2.5% of the first $30,000,000 of the Fund's average daily net asset value,
2.0% of the next $70,000,000 and 1.5% of the remaining average daily net
asset value.
On December 22, 1994, John Hancock Funds, Inc. ("JH Funds"), a
wholly-owned subsidiary of the Adviser, became the principal underwriter of
the Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD")
served as the principal underwriter and distributor of the Fund. For the
period ended March 31, 1995, JH Funds and TFD received net sales charges of
$33,473 with regard to sales of Class A shares. Out of this amount, $2,778
was retained and used for printing prospectuses, advertising, sales literature
and other purposes and $30,695 was paid as sales commissions to unrelated
broker-dealers.
Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds, formerly TFD, and are used in
whole or in part to defray its expenses related to providing distribution
related services to the Fund

15
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Trust

in connection with the sale of Class B shares. For the period ended
March 31, 1995, contingent deferred sales charges amounted to $187.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
with respect to Class A and Class B pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments for
distribution and service expenses which in total will not exceed on an annual
basis 0.25% of the Fund's average daily net assets attributable to Class A
shares and 1.00% of the Fund's average daily net assets attributable to Class
B shares, to reimburse for its distribution/service costs. Up to a maximum of
0.25% of such payments may be service fees as defined by the amended Rules of
Fair Practice of the National Association of Securities Dealers. Under the
amended Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1
payments could occur under certain circumstances. This fee structure and plan
is similar to the former arrangement with TFD.
The Board of Trustees approved a shareholder servicing agreement
between the Fund and John Hancock Investor Services Corporation ("Investor
Services"), a wholly-owned subsidiary of The Berkeley Financial Group, for
the period between December 22, 1994 and May 12, 1995, inclusive under which
Investor Services processed telephone transactions on behalf of the Fund. As
of May 15, 1995, the Fund entered into a full-service transfer agent
agreement with Investor Services. Prior to this date The Shareholder Services
Group was the transfer agent. The Fund will pay Investor Services a fee based
on transaction volume and number of shareholder accounts.
A partner with Baker & Botts was an officer of the Trust until
December 22, 1994. During the period ended March 31, 1995, legal fees paid to
Baker & Botts amounted to $1,481.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser
and its affiliates as well as Trustee of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees paid for
1995, the unaffiliated Trustees may elect to defer their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation
Plan. The Fund will make investments into other John Hancock Funds, as
applicable, to cover its liability with regard to the deferred compensation.
Investments to cover the Fund's deferred compensation liability will be
recorded on the Fund's books as other assets. The deferred compensation
liability will be marked to market on a periodic basis and income earned by
the investment will be recorded on the Fund's books.
The Fund has an independent advisory board composed of certain
members of the former Transamerica Board of Trustees who provide advice to
the current Trustees in order to facilitate a smooth management transition
for which the Fund pays the advisory board and its counsel a fee.

NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended March 31, 1995 aggregated $71,770,328
and $75,542,685, respectively.
The cost of investments owned at March 31, 1995 for Federal income
tax purposes was $17,679,355. Gross unrealized appreciation and depreciation
of investments aggregated $102,529, and $146,735, respectively, resulting in
net unrealized depreciation of $44,206.

16
<PAGE> 41

John Hancock Funds - U.S. Government Trust

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Bond Fund -
John Hancock U.S. Government Trust

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the John Hancock U.S. Government
Trust (the "Fund"), (formerly the Transamerica U.S. Government Trust), one of
the portfolios constituting John Hancock Bond Fund (the "Trust") (formerly
Transamerica Bond Fund), as of March 31, 1995, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of March 31, 1995, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the John Hancock U.S. Government Trust portfolio of John Hancock
Bond Fund at March 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
May 15, 1995

17
<PAGE> 42

ADDITIONAL INFORMATION

John Hancock Funds - U.S. Government Trust

On December 16, 1994, a special meeting of John Hancock (formerly
Transamerica) Bond Fund (the "Trust") in respect of John Hancock (formerly
Transamerica) U.S. Government Trust (the "Fund") was held involving the
election of trustees and certain other matters concerning the Fund.
Specifically, shareholders first approved a new investment management
agreement between the Trust, on behalf of the Fund, and John Hancock
Advisers, Inc. on substantially similar terms to the prior investment
management agreement, to take effect on December 22, 1994, the date of the
consummation of the acquisition of Transamerica Fund Management Company by
The Berkeley Financial Group. The shareholder votes tallied were 1,393,208
FOR, 5,791 AGAINST and 20,677 ABSTAINING.
The shareholders next approved new Plans of Distribution for
each Class A and Class B Shares of the Fund, also effective on
December 22, 1994 and also on substantially the same terms as the prior Plans
of Distribution. The Class A Shareholder votes tallied were 1,389,195 FOR,
8,267 AGAINST, 19,597 ABSTAINING. The Class B Shareholder votes tallied were
2,617 FOR, 0 AGAINST and 0 ABSTAINING.
The shareholders also voted to ratify the selection of Ernst & Young,
LLP as independent auditors for the Fund for the fiscal year ending March
31, 1995, and the votes were 1,389,572 FOR, 3,341 AGAINST and 3,341
ABSTAINING.

<TABLE>
Lastly, the following trustees were elected to serve until their
respective successors shall become duly elected and qualified, with the votes
tabulated as indicated:

NAME OF TRUSTEE FOR WITHHOLD
- --------------- --- --------
<S> <C> <C>
Edward J. Boudreau, Jr. ...... 1,372,390 47,286
James F. Carlin .............. 1,372,390 47,286
William H. Cunningham ........ 1,372,390 47,286
Charles L. Ladner ............ 1,372,390 47,286
Leo E. Linbeck, Jr............ 1,372,390 47,286
Patricia P. McCarter ......... 1,372,390 47,286
Steven R. Pruchansky.......... 1,372,390 47,286
Norman H. Smith............... 1,372,390 47,286
John P. Toolan................ 1,372,390 47,286

</TABLE>

TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund during its tax year ended December 31,
1994. All of the dividends paid for the fiscal year are taxable as ordinary
income. None of the 1994 dividends qualify for the dividends received
deduction available to corporations.
Shareholders will be mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996. This will reflect the total of all distributions
which are taxable for calendar year 1995.

18
<PAGE> 43

NOTES
John Hancock Funds - U.S. Government Trust

19
<PAGE> 44

[A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page.
A box sectioned in quadarants with a triangle in upper left, a circle in upper
right, a cube in lower left and diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."

Bulk Rate
U.S. Postage
PAID
JOHN HANCOCK FUNDS Brockton, MA
A GLOBAL INVESTMENT MANAGEMENT FIRM Permit No. 582
101 Huntington Avenue Boston, MA 02199-7603

This report is for the information of shareholders of the John
Hancock U.S. Government Trust. It may be used as sales literature when
preceded or accompanied by the current prospectus, which details charges,
investment objectives and operating policies.

A recycled logo in lower left hand corner with the caption
"Printed on Recycled Paper."
<PAGE> 45
John Hancock Funds

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

Intermediate
Government
Trust

ANNUAL REPORT

March 31, 1995

<PAGE> 46

TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee

OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Frederick L. Cavanaugh
Senior Vice President
James K. Ho
Senior Vice President
Anne McDonley
Vice President
Barry Evans
Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer

CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111

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

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109

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

CHAIRMAN'S MESSAGE

DEAR FELLOW SHAREHOLDERS:

[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]

The Transamerica name is changing, but the commitment to serving you as
a valued shareholder isn't. Here at John Hancock Funds, our motto is: "We invest
in quality first." It has to do with the way we invest your money and the way we
work with you. Not only do we strive to ensure that your investments are
well-managed, we also take pride in providing the highest quality customer
service. We can't guarantee investment performance; nobody can. The quality of
our service, however, depends totally on us. That is something that we can
guarantee.

We value your business and look forward to serving your investment needs
in the years to come.

Sincerely,

/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2
<PAGE> 47

BY BARRY H. EVANS FOR THE PORTFOLIO MANAGEMENT TEAM

JOHN HANCOCK
INTERMEDIATE
GOVERNMENT TRUST

Reality check for bond investors

[A 2 1/2" x 2 1/4" photo of Barry H. Evans at bottom right. Caption reads:
"Barry H. Evans, Portfolio Manager."]

Investors in John Hancock Intermediate Government Trust avoided losses,
but slightly lagged investors in most other funds with a similar objective. For
the year ended March 31, 1995, the Fund's Class A shares rose 2.50% at net asset
value, compared to a gain of 3.24% for the average intermediate government bond
fund, according to Lipper Analytical Services.1

A VOLATILE CLIMATE FOR BONDS

In early February 1994, just before the period began, the Federal Reserve
embarked on a new policy designed to dampen economic growth. It raised the
federal funds rate -- the rate banks charge each other for overnight loans --
one-quarter point to 3.25%. That proved to be the first in a series of seven
rate hikes by the Fed. Two more quarter-point increases followed in March and
April, two half-point increases in May and August, a three-quarter-point hike in
November, and another half-point increase in February 1995. By the end of the
period, the federal funds rate was 6.00%.

[CAPTION]
"The past 12 months have been hard on many bond investors..."

<PAGE> 48

John Hancock Funds - Intermediate Government Trust

[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended March 31, 1995." The chart is
scaled in increments of 2% from bottom to top, with 4% on the top and 0% at the
bottom. Within the chart, there are two solid bars. The first represents the
2.50% total return for John Hancock Intermediate Government Trust: Class A. The
second represents the 3.24% total return for the average intermediate government
bond fund. Footnote below reads: "The total return for John Hancock
Intermediate Government Trust: Class A is at net asset value with all
distributions reinvested. Class B shares had a total return of 3.17% since
inception on September 30, 1994. The average intermediate government bond fund
is tracked by Lipper Analytical Services. (1) See page 6 for historical
performance information."]

An additional factor was the continuing decline in the value of the
dollar against certain key currencies, notably the German mark and the Japanese
yen. A falling dollar is worrisome to bond investors for two reasons. First, it
raises the price of imports, which can boost inflation. Second, it puts pressure
on the United States to protect its currency by raising interest rates.

MORTGAGE-BACKED SECURITIES HELP PERFORMANCE

At the end of March, about 62% of the Fund's assets were U.S. Treasury
securities. Treasuries rebounded during the last three months of the period as
inflation fears dissipated and interest rates fell. The Fund's average duration
at the end of March was around 2.7 years. Duration measures the extent to which
the price of a bond -- or in this case, a bond fund -- will rise or fall with
changes in interest rates. The longer the duration, the more the price will
fluctuate. Had the Fund's duration been longer than it was in November -- when
long-term rates began their retreat -- our performance might have been stronger.
Lately, amid signs of a fading economy, we have been slowly extending the Fund's
duration in hopes of improving total return.

About 19% of the Fund was in mortgage-backed securities, which offered
more income at comparable maturities than Treasuries and

[CAPTION]
"... about 62% of the Fund's assets were U.S. Treasury securities."

4
<PAGE> 49

John Hancock Funds - Intermediate Government Trust

[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into three sections. Going from left to right: U.S.
Treasury Securities 62%; Mortgage-Backed Securities 19%; and Short-Term
Investments 19%. A footnote below states: "As a percentage of net assets on
March 31, 1995"]

were hurt less by rising interest rates. Moreover, as mortgage rates have risen
from their historic lows in the fall of 1993, the pace of mortgage prepayments
has slowed, improving the performance of mortgage-backed securities. The final
19% was cash. Balancing cash with longer-term securities helps the Fund preserve
a defensive duration without relying too heavily on shorter-term securities such
as two-year Treasuries. By the end of March, two-year Treasuries offered only
seven-tenths of a point yield advantage over the federal funds rate and seemed
especially vulnerable if the Fed for any reason decided to use interest rates to
defend the dollar.

BRIGHTER OUTLOOK FOR THE REST OF `95

Overall, we see a more favorable climate for bonds developing, marked by
slower economic growth and gently falling long-term interest rates. Barring a
recession -- which is not in our current forecast -- we see the yield on the
30-year Treasury bond settling somewhere around 7% instead of dipping as low as
6% again. Government securities may outperform corporate securities, for which
credit risk can be an issue in a slowing economy. And mortgage securities --
which do best under stable interest-rate conditions -- may perform best of all.
We'll be looking for more opportunities in the months ahead to extend duration
slightly and perhaps increase the Fund's stake in mortgages.

In February 1995, Barry H. Evans began managing John Hancock
Intermediate Government Trust. Mr. Evans, who joined John Hancock in 1986, is a
vice president and head of the company's government fixed-income department.

[CAPTION]
"... we see a more favorable climate for bonds ..."

<PAGE> 50

NOTES TO PERFORMANCE INFORMATION

John Hancock Funds - Intermediate Government Trust

In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the periods ended March 31,
1995, with all distributions reinvested in shares. The average annualized total
returns for Class A Shares for the 1-year and 5-year periods and since inception
on November 3, 1986 were (2.34%), 5.63% and 6.23%, respectively, and reflect
payment of the maximum sales charge of 4.75%. On May 15, 1995, the maximum sales
charge will be lowered to 4.50%. Total return (not annualized) since inception
on September 30, 1994 for Class B shares was (1.83%) and reflects the applicable
contingent deferred sales charge (maximum contingent deferred sales charge is 5%
and declines to 0% over 6 years). The SEC standard yields for the 30-day period
ended March 31, 1995 for Class A and Class B shares were 4.65% and 5.08%,
respectively. The Adviser voluntarily limited the Fund's expenses to 1.30% of
the Fund's daily net asset value. Without the limitation of expenses, the
average annualized total returns for Class A shares for the 1-year and 5-year
periods and since inception on November 3, 1986 would have been (2.74%), 3.36%
and 4.03%, respectively. Total return (not annualized) since inception on
September 30, 1994 for Class B shares would have been (4.03%). All performance
data shown represent past performance and should not be considered indicative of
future performance. Returns and principal values of Fund investments will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Performance is affected by a 12b-1 plan.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND

[John Hancock Intermediate Government Trust
Class A shares

Line chart with the heading John Hancock Intermediate Government Trust: Class A,
representing the growth of a hypothetical $10,000 investment over the life of
the fund. Within the chart are three lines.

The first line represents the value of the Lehman Government Bond Index and is
equal to $18,605* as of March 31, 1995. The second line represents the value of
the hypothetical $10,000 investment made in the John Hancock Intermediate
Government Trust on November 11, 1986, before sales charge, and is equal to
$17,450 as of March 31, 1995. The third line represents the John Hancock
Intermediate Government Trust after sales charge and is equal to $16,620 as of
March 31, 1995.

John Hancock Intermediate Government Trust
Class B shares

Line chart with the heading John Hancock Intermediate Government Trust: Class B,
representing the growth of a hypothetical $10,000 investment over the life of
the fund. Within the chart are three lines.

The first line represents the value of the Lehman Government Bond Index and is
equal to $10,405* as of March 31, 1995. The second line represents the value of
the hypothetical $10,000 investment made in the John Hancock Intermediate
Government Trust on September 30, 1994, before contingent deferred sales charge,
and is equal to $10,317 as of March 31, 1995. The third line represents the
John Hancock Intermediate Government Trust after contingent deferred sales
charge and is equal to $9,817 as of March 31, 1995.

*The Lehman Government Bond Index is an unmanaged index, which measures the
performance of intermediate issues of U.S. Treasury bonds and U.S. Government
Agency bonds.]

6
<PAGE> 51

FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
United States government and agencies
securities (cost - $6,952,078) ........................... $6,704,019
Short-term notes (cost - $161,886) ......................... 161,886
Joint repurchase agreement (cost - $1,311,000) ............. 1,311,000
Corporate savings account .................................. 825
----------
8,177,730

Interest receivable .......................................... 155,262
Other assets ................................................. 4,134
----------
Total Assets .............................. 8,337,126
------------------------------------------------------------
LIABILITIES:
Dividend payable ............................................. 15,802
Payable for shares repurchased ............................... 12,638
Payable to John Hancock Advisers, Inc. .......................
and affiliates - Note B .................................... 3,084
----------
Total Liabilities ......................... 31,524
------------------------------------------------------------
NET ASSETS:
Capital paid-in .............................................. 9,278,943
Accumulated net realized loss on investments ................. (728,942)
Net unrealized depreciation of investments ................... (248,059)
Undistributed net investment income .......................... 3,660
----------
Net Assets ................................ $8,305,602
============================================================
NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest outstanding - unlimited
number of shares authorized with $0.01 per share par value, respectively)
Class A - $8,010,550/862,935 ................................. $ 9.28
===============================================================================
Class B - $295,052/31,786 .................................... $ 9.28
===============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($9.28 x 104.99%) .................................. $ 9.74
===============================================================================
<FN>
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
** Class B shares commenced operations on September 30, 1994.
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND.
IT ALSO SHOWS NET GAINS (LOSSES) FOR THE PERIOD STATED.

<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended March 31, 1995
- -------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest ..................................................... $733,976
--------
Expenses:
Investment management fee - Note B ......................... 45,664
Distribution/service fee - Note B
Class A ................................................... 22,651
Class B** ................................................. 723
Custodian fee .............................................. 39,387
Transfer agent fee ......................................... 12,729
Printing ................................................... 12,641
Registration and filing fees ............................... 11,748
Auditing fee ............................................... 9,499
Miscellaneous .............................................. 1,290
Legal fees ................................................. 850
Trustees' fees ............................................. 497
Advisory Board Fee ......................................... 168
--------
Total Expenses ............................ 157,847
Less Expenses Reimbursable
by John Hancock Advisers,
Inc. - Note B ............................. (38,507)
------------------------------------------------------------
Net Expenses .............................. 119,340
------------------------------------------------------------
Net Investment Income ..................... 614,636
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold ........................ (612,843)
Change in net unrealized appreciation/depreciation
of investments ............................................. 185,575
--------
Net Realized and Unrealized
Loss on Investments ....................... (427,268)
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ................. $187,368
============================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 52

FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
1995 1994
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................................. $ 614,636 $ 297,124
Net realized loss on investments sold............................................................. (612,843) (69,892)
Change in net unrealized appreciation/depreciation of investments................................. 185,575 (448,620)
------------ -----------
Net Increase (Decrease) in Net Assets Resulting from Operations................................. 187,368 (221,388)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income

Class A - ($0.6252 and $0.6376 per share, respectively)......................................... (606,830) (297,773)
Class B - ($0.2785 and none per share, respectively)............................................ (4,486) --
------------ -----------
Total Distributions to Shareholders............................................................. (611,316) (297,773)
------------ -----------

FROM FUND SHARE TRANSACTIONS-- NET*................................................................ (1,010,030) 8,764,243
------------ -----------

NET ASSETS:
Beginning of period............................................................................... 9,739,580 1,494,498
------------ -----------
End of period (including undistributed net investment income of $3,660 and $340, respectively).... $ 8,305,602 $9,739,580
============ ===========
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------------------------
1995 1994
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ...................................................... 143,806 $ 1,366,714 1,005,687 $10,251,058
Shares issued to shareholders in reinvestment of distributions ... 42,067 392,164 20,007 201,939
-------- ----------- --------- -----------
185,873 1,758,878 1,025,694 10,452,997
Less shares repurchased .......................................... (328,696) (3,062,091) (166,042) (1,688,754)
-------- ----------- --------- -----------
Net increase (decrease) .......................................... (142,823) ($1,303,213) 859,652 $ 8,764,243
======== =========== ========= ===========
CLASS B**
Shares sold ...................................................... 40,014 $ 368,660
Shares issued to shareholders in reinvestment of distributions ... 338 3,123
-------- -----------
40,352 371,783
Less shares repurchased .......................................... (8,567) (78,600)
-------- -----------
Net increase ..................................................... 31,785 $ 293,183
======== ===========
<FN>
** Class B shares commenced operations on September 30, 1994.
</TABLE>

THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS FISCAL YEAR. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS
PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS
INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD,
REINVESTED AND REDEEMED DURING THE LAST TWO YEARS, ALONG WITH THE CORRESPONDING
DOLLAR VALUES.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 53

FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------
1995(d) 1994 1993 1992 1991
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.................................... $ 9.68 $10.23 $ 9.84 $ 9.62 $ 9.45
------ ------ ------ ------ ------
Net Investment Income................................................... 0.63 0.63 0.57 0.70 0.78
Net Realized and Unrealized Gain (Loss) on Investments.................. (0.40) (0.54) 0.40 0.23 0.17
------ ------ ------ ------ ------
Total from Investment Operations..................................... 0.23 0.09 0.97 0.93 0.95
------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income.................................. (0.63) (0.64) (0.58) (0.71) (0.78)
------ ------ ------ ------ ------
Net Asset Value, End of Period.......................................... $ 9.28 $ 9.68 $10.23 $ 9.84 $ 9.62
====== ====== ====== ====== ======
Total Investment Return at Net Asset Value.............................. 2.50% 0.73% 10.13% 9.89% 10.47%
Total Adjusted Investment Return at Net Asset Value (c)................. 2.08% (0.01%) 7.33% 6.39% 8.44%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)............................... $8,011 $9,740 $1,494 $1,414 $1,537
Ratio of Expenses to Average Net Assets**............................... 1.29% 1.30% 0.45% 0.51% 0.60%
Ratio of Adjusted Expenses to Average Net Assets (c).................... 1.71% 2.04% 3.25% 4.01% 2.63%
Ratio of Net Investment Income to Average Net Assets**.................. 6.68% 6.08% 5.64% 7.12% 8.41%
Ratio of Adjusted Net Investment Income to Average Net Assets (c)....... 6.26% 5.34% 2.84% 3.62% 6.38%
Portfolio Turnover Rate................................................. 74% 89% 73% 169% 97%
**Expense Reimbursement Per Share....................................... $ 0.04 $ 0.08 $ 0.29 $ 0.34 $ 0.20
</TABLE>

THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS AND TOTAL INVESTMENT RETURNS OF THE FUND. IT SHOWS HOW THE
FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 54

FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
SEPTEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO MARCH 31, 1995(d)
----------------------------
CLASS B
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..................................................... $ 9.27(a)
------
Net Investment Income .................................................................... 0.28
Net Realized and Unrealized Gain on Investments .......................................... 0.01(e)
------
Total from Investment Operations ....................................................... 0.29
------
Less Distributions:
Dividends from Net Investment Income ................................................... (0.28)
------
Net Asset Value, End of Period ........................................................... $ 9.28
======
Total Investment Return at Net Asset Value ............................................... 3.17%(b)
Total Adjusted Investment Return at Net Asset Value (c) .................................. 2.75%(b)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ................................................ $ 295
Ratio of Expenses to Average Net Assets** ................................................ 2.04%*
Ratio of Adjusted Expenses to Average Net Assets (c) ..................................... 2.46%*
Ratio of Net Investment Income to Average Net Assets** ................................... 5.93%*
Ratio of Adjusted Net Investment Income to Average Net Assets (c) ........................ 5.51%*
Portfolio Turnover Rate .................................................................. 74%
**Expense Reimbursement Per Share ........................................................ $ 0.02

<FN>
* On an annualized basis.
(a) Initial price to commence operations.
(b) Not annualized.
(c) On an unreimbursed basis without expense reduction.
(d) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.
(e) May not accord to amounts shown elsewhere in the financial statements.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 55

FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

SCHEDULE OF INVESTMENTS
March 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
INTERMEDIATE GOVERNMENT TRUST ON MARCH 31, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES: U.S GOVERNMENT AND AGENCIES SECURITES AND SHORT-TERM INVESTMENTS.
SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED
LAST.

PAR VALUE
INTEREST MATURITY (000'S MARKET
ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES SECURITIES
GOVERNMENTAL - U.S (62.19%)
United States Treasury, Bond...................................................... 9.375% 4-15-96 $ 2,630 $2,703,140
United States Treasury, Bond...................................................... 11.125 8-15-03 1,985 2,462,015
----------
5,165,155
----------

GOVERNMENTAL - U.S AGENCIES (18.53%)
Federal National Mortgage Association............................................. 8.500 8-01-24 1,531* 1,538,864
----------
TOTAL U.S. GOVERNMENT AND
AGENCIES SECURITIES
(Cost $6,952,078) (80.72%) 6,704,019
------- ----------

SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (15.78%)
Investment in a joint repurchase agreement
transaction with U.B.S. Securities Inc.,
Dated 03-31-95, Due 04-03-95 (secured by
U.S. Treasury Bond, 6.250%, due 08-15-23,
and U.S. Treasury Notes, 5.250% thru 9.125%
due 07-31-98, thru 05-15-01)- Note A............................................. 6.125 4-03-95 1,311 1,311,000
----------
SHORT-TERM NOTES (1.95%)
Federal Home Loan Bank............................................................ 6.350 4-05-95 165 161,886
----------
CORPORATE SAVINGS ACCOUNT (0.01%)
Investors Bank & Trust Company Daily Interest Savings Account Current Rate 3.00%.. 825
----------
TOTAL SHORT -TERM INVESTMENTS (17.74%) 1,473,711
------- ----------
TOTAL INVESTMENTS (98.46%) $8,177,730
====== ==========

<FN>
* Security, other than short-term investments, newly added to the portfolio
during the period ended March 31, 1995. The percentage shown for each investment
category is the total value of that category as a percentage of the net assets
of the Fund.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 56

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

NOTE A --
ACCOUNTING POLICIES

John Hancock Bond Fund, (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock Intermediate Government
Trust (the "Fund"), John Hancock Investment Quality Bond Trust, John Hancock
Government Securities Trust, John Hancock U.S. Government Trust and John Hancock
Adjustable Government Trust. The Trustees may authorize the creation of
additional Funds from time to time to satisfy various investment objectives.
Effective December 22, 1994, the Trust and Funds changed names by replacing the
word Transamerica with John Hancock (See Note B).

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemption, dividends, and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a class
which bears distribution/service expenses under the terms of a distribution
plan, have exclusive voting rights regarding such distribution plan. Class A
Shares are subject to an initial sales charge of up to 4.75% and a 12b-1
distribution plan. Class B Shares are subject to a contingent deferred sales
charge and a separate 12b-1 distribution plan. On September 30, 1994, Class B
shares were sold to commence class activity. Significant accounting policies of
the Fund are as follows:

VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.

JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., a wholly-owned subsidiary of The Berkeley Financial Group, may participate
in a joint repurchase agreement transaction. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.

DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
from either the date of issue or the date of purchase over the life of the
security, as required by the Internal Revenue Code.

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, at December 31, 1994, the Fund has
approximately $735,000 of capital loss carryforwards available, to the extent
provided by regulations, to offset future net realized capital gains. If such
carryforward is used by the Fund, no capital gain distributions will be made.
The capital loss carryforwards will expire as follows: 1997 -- $29,000 and 2002
- -- $706,000. The Fund's tax year end is December 31.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis.

The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax

<PAGE> 57

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

regulations, which may differ from generally accepted accounting principles.
Dividends paid by the Fund, if any, with respect to each class of shares will be
calculated in the same manner, at the same time and will be in the same amount,
except for the effect of expenses that may be applied differently to each class
as explained previously.

EXPENSES The majority of the expenses of the Trust are
directly identifiable to an individual Fund. Expenses which are not readily
identifiable to a specific Fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and type of
expense and the relative sizes of the Funds.

CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level based
on the appropriated net assets of each class and the specific expense rate(s)
applicable to each class.

NOTE B --
MANAGEMENT FEE,
ADMINISTRATIVE SERVICES AND
TRANSACTIONS WITH AFFILIATES AND OTHERS

On December 22, 1994, John Hancock Advisers, Inc. (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, became the investment adviser
for the Fund with approval of the Trustees and shareholders of the Fund. The
Fund's former investment manager was Transamerica Fund Management Company
("TFMC").

Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment program
equivalent, to 0.50% of the Fund's average daily net asset value. This fee
structure is consistent with the former agreement with TFMC. For the period
ended March 31, 1995, the advisory fee earned by the Adviser and TFMC amounted
to $10,219 and $35,445, respectively, resulting in a total fee of $45,664.

The Adviser and TFMC, for their respective periods, provided
administrative services to the Fund pursuant to an administrative service
agreement through January 16, 1995 on which day the agreement was terminated.

In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.

The Adviser and TFMC, for their respective periods, voluntarily agreed
to limit the Fund's expenses further to the extent required to prevent expenses
from exceeding 1.30% of the Fund's average daily net asset value. Accordingly,
for the period ended March 31, 1995, the reduction to the Adviser's and TFMC's
fees, collectively with any amounts not borne by the Fund by virtue of the most
restrictive state expense limit, amounted to $10,143 and $28,364 respectively,
resulting in a total reduction of $38,507. The voluntary waiver may be
discontinued at any time.

On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a
wholly-owned subsidiary of the Adviser, became the principal underwriter of the
Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD") served as
the principal underwriter and distributor of the Fund. For the period ended
March 31, 1995, JH Funds and TFD received net sales charges of $34,289 with
regard to sales of Class A shares. Out of this amount, $3,185 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, and $31,104 was paid as sales commissions to unrelated broker-dealers.

<PAGE> 58

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Intermediate Government Trust

expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended March 31, 1995,
there were no contingent deferred sales charges.

In addition, to compensate JH Funds, for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments for distribution
and service expenses which in total will not exceed on an annual basis 0.25% of
the Fund's average daily net assets attributable to Class A shares and 1.00% of
the Fund's average daily net assets attributable to Class B shares, to reimburse
for its distribution/service costs. Up to a maximum of 0.25% of such payments
may be service fees as defined by the amended Rules of Fair Practice of the
National Association of Securities Dealers which became effective July 7, 1993.
Under the amended Rules of Fair Practice, curtailment of a portion of the Fund's
12b-1 payments could occur under certain circumstances. This fee structure and
plan is similar to the former arrangement with TFD.

The Board of Trustees approved a shareholder servicing agreement between
the Fund and John Hancock Investor Services Corporation ("Investor Services"), a
wholly-owned subsidiary of The Berkeley Financial Group, for the period between
December 22, 1994 and May 12, 1995, inclusive under which Investor Services
processed telephone transactions on behalf of the Fund. As of May 15, 1995, the
Fund entered into a full service transfer agent agreement with Investor
Services. Prior to this date The Shareholder Services Group was the transfer
agent. The Fund will pay Investor Services a fee based on transaction volume and
number of shareholder accounts.

A partner with Baker & Botts was an officer of the Trust until December
22, 1994. During the period ended March 31, 1995, legal fees paid to Baker &
Botts amounted to $651.

Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser and
its affiliates as well as Trustee of the Fund. The compensation of unaffiliated
Trustees is borne by the Fund. Effective with the fees paid for 1995, the
unaffiliated Trustees may elect to defer their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund will
make investments into other John Hancock Funds, as applicable, to cover its
liability with regard to the deferred compensation. Investments to cover the
Fund's deferred compensation liability will be recorded on the Fund's books as
other assets. The deferred compensation liability will be marked to market on a
periodic basis and income earned by the investment will be recorded on the
Fund's books.

The Fund has an independent advisory board composed of certain members
of the former Transamerica Board of Trustees who provide advice to the current
Trustees in order to facilitate a smooth management transition for which the
Fund pays the advisory board and its counsel a fee.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended March 31, 1995 aggregated $5,545,730 and
$6,675,284, respectively.

The cost of investments owned at March 31, 1995 for Federal income tax
purposes was $8,424,964. Gross unrealized appreciation and depreciation of
investments aggregated none and $248,059, respectively, resulting in net
unrealized depreciation of $248,059.

<PAGE> 59

John Hancock Funds - Intermediate Government Trust

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

To the Board of Trustees and Shareholders of
John Hancock Bond Fund --
John Hancock Intermediate Government Trust

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Intermediate Government Trust
(formerly Transamerica Intermediate Government Trust) (the "Fund"), one of the
portfolios constituting John Hancock Bond Fund (formerly Transamerica Bond Fund)
(the "Trust"), as of March 31, 1995, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the John Hancock Intermediate Government Trust portfolio of John
Hancock Bond Fund at March 31, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.

Ernest & Young LLP
Boston, Massachusetts
May 15, 1995

<PAGE> 60

ADDITIONAL INFORMATION

John Hancock Funds - Intermediate Government Trust

On December 16, 1994 , a special meeting of John Hancock (formerly Transamerica)
Bond Fund (the "Trust") in respect of John Hancock (formerly Transamerica)
Intermediate Government Trust (the "Fund") was held involving the election of
trustees and certain other matters concerning the Fund.

The shareholders next approved new Plans of Distribution for each Class
A and Class B shares of the Fund, also effective on December 22, 1994, and also
on substantially the same terms as the prior Plans of Distribution. The Class A
shareholder votes tallied were 484,147 FOR, 1,011 AGAINST and 65,282 ABSTAINING.
The Class B shareholder votes tallied were 5,129 FOR, 0 AGAINST and 0
ABSTAINING.

The shareholders also voted to ratify the selection of Ernst & Young ,
LLP as independent auditors for the Fund for the fiscal year ending March 31,
1995, and the votes tallied were 501,152 FOR, 737 AGAINST and 737 ABSTAINING.

Lastly, the following trustees were elected to serve until their
respective successors shall become duly elected and qualified, with the votes
tabulated as indicated:

NAME OF TRUSTEE FOR WITHHOLD
- --------------- --- ---------
Edward J. Boudreau, Jr. ............ 472,745 77,825
James F. Carlin .................... 472,745 77,825
William H. Cunningham .............. 472,745 77,825
Charles L. Ladner .................. 472,745 77,825
Leo E. Linbeck, Jr. ................ 472,745 77,825
Patricia P. McCarter ............... 472,745 77,825
Steven R. Pruchansky ............... 472,745 77,825
Norman H. Smith .................... 472,745 77,825
John P. Toolan ..................... 472,745 77,825

TAX INFORMATION NOTICE (UNAUDITED)

For Federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund during its tax year ended December 31,
1994. All of the dividends paid for the fiscal year are taxable as ordinary
income. None of the 1994 dividends qualify for the dividends received deduction
available to corporations.

Shareholders will be mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996. This will reflect the total of all distributions which
are taxable for calendar year 1995.

<PAGE> 61

NOTES

John Hancock Funds - Intermediate Government Trust

<PAGE> 62

NOTES

John Hancock Funds - Intermediate Government Trust

<PAGE> 63

NOTES

John Hancock Funds - Intermediate Government Trust

<PAGE> 64

[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
Brockton, MA
Permit No. 582

[A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]

- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Intermediate Government Trust. It may be used as sales literature when preceded
or accompanied by the current prospectus, which details charges, investment
objectives and operating policies. CPrinted on Recycled Paper

[A recycled logo in lower left hand corner with the caption "Printed on Recycled
Paper."]

JH T220A 3/95

<PAGE> 65
JOHN HANCOCK FUNDS
- --------------------------------------------------------------------------------

GOVERNMENT
SECURITIES
TRUST

ANNUAL REPORT

March 31, 1995

<PAGE> 66
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee

OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Frederick L. Cavanaugh
Senior Vice President
James K. Ho
Senior Vice President
Anne McDonley
Vice President
Barry Evans
Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer

CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111

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

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109

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

CHAIRMAN'S MESSAGE

DEAR FELLOW SHAREHOLDERS:

[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]

The Transamerica name is changing, but the commitment to serving you as
a valued shareholder isn't. Here at John Hancock Funds, our motto is: "We
invest in quality first." It has to do with the way we invest your money and
the way we work with you. Not only do we strive to ensure that your investments
are well-managed, we also take pride in providing the highest quality customer
service. We can't guarantee investment performance; nobody can. The quality of
our service, however, depends totally on us. That is something that we can
guarantee.

In mid-May, we anticipate that all of the Transamerica funds will be
fully integrated into John Hancock's internal shareholder service organization,
John Hancock Investor Services. At that time, not only will you gain exchange
privileges into all John Hancock funds, but your account will be handled by one
of the top-rated service organizations in the industry. To show you how
seriously we take our commitment to quality, you will have access to our
service guarantee. If we make an error in processing a transaction in your
account, we will deposit $25 into it. Or if you have a retirement account, we
will waive the annual fee.

We value your business and look forward to serving your investment
needs in the years to come.

Sincerely,

/s/ Edward J. Boudreau, Jr.
- ---------------------------

EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2
<PAGE> 67

BY BARRY H. EVANS FOR THE PORTFOLIO MANAGEMENT TEAM

JOHN HANCOCK
GOVERNMENT SECURITIES TRUST

REALITY CHECK FOR BOND INVESTORS

Investors in John Hancock Government Securities Trust not only avoided
losses, but they came out farther ahead than investors in most other funds with
a similar objective. For the year ended March 31, 1995, the Fund's Class A
shares rose 3.49% at net asset value, compared to a gain of 2.95% for the
average U.S. government bond fund, according to Lipper Analytical Services.(1)

A VOLATILE CLIMATE FOR BONDS

In early February 1994, just before the period began, the Federal Reserve
embarked on a new policy designed to dampen economic growth. It raised the
federal funds rate -- the rate banks charge each other for overnight loans --
one-quarter point to 3.25%. That turned out to be the first in a series of rate
hikes by the Fed. Two more quarter-point increases followed in March and April,
two half-point increases in May and August, a three-quarter-point hike in
November, and another half-point increase in February 1995. By the end of the
period, the federal funds rate was 6.00%.

[A 2 1/4" x 3" photo of Barry H. Evans at bottom right. Caption reads:
"Barry H. Evans, Portfolio Manager."]

[CAPTION]
"THE PAST 12 MONTHS HAVE BEEN HARD ON MANY BOND INVESTORS..."

<PAGE> 68

John Hancock Funds - Government Securities Trust

PORTFOLIO DIVERSIFICATION

[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into three sections. Going from left to right:
U.S. Treasury Securities 55%; Mortgage-Backed Securities 38%; and Short-Term
Investments 7%. A footnote below states "As a percentage of net assets on
March 31, 1995."]

Finally, during the past year the world's financial markets were rocked
by a series of unexpected and dramatic events, including the precipitous decline
last spring of many high-flying emerging markets in Latin America and Southeast
Asia; the bankruptcy of Orange County, California; the devaluation of the
Mexican peso; and the collapse of Barings Bank. To the extent such events
contributed to investors' uncertainty about the future, they added to the upward
pressure on interest rates.

MORTGAGE-BACKED SECURITIES HELP PERFORMANCE

At the end of March, nearly 55% of the Fund's assets were in U.S. Treasury
securities. Treasuries rebounded during the last three months of the period as
inflation fears dissipated and interest rates fell. The Fund's average duration
at the end of March was slightly more than five years. Duration measures the
extent to which the price of a bond -- or in this case, a bond fund -- will rise
or fall with changes in interest rates. The longer the duration, the more the
price will fluctuate. Had the Fund's duration been longer than it was in
November -- when long-term rates began their retreat -- our performance might
have been stronger. Lately, amid signs of a fading economy, we have been slowly
extending the Fund's duration in hopes of improving total return.

About 38% of the Fund was in mortgage securities, which offered more
income at comparable maturities than Treasuries and were hurt less by rising
interest rates. Once rates headed back down, the best performers among the
Fund's mortgage investments were well-structured collateralized mortgage
obligations, or CMOs, in which the Fund had an 18% stake. A CMO is a customized
piece of a larger pool of mortgage securities, tailored to reflect a specific
market outlook. With CMOs, an investor can choose the income stream and
potential for gain that best matches his or her

[CAPTION]
"... NEARLY 55% OF THE fUND'S ASSETS WERE IN U.S. TREASURY SECURITIES."

4
<PAGE> 69

John Hancock Funds - Government Securities Trust

FUND PERFORMANCE
For the year ended March 31, 1995

[Bar chart with heading "Fund Performance" at top of left hand column. Under
the heading is the footnote: "For the year ended March 31, 1995." The chart is
scaled in increments of 1% from bottom to top, with 4% on the top and 0% at
the bottom. Within the chart, there are two solid bars. The first represents
the 3.49% total return for John Hancock Government Securities Trust: Class A.
The second represents the 2.95% total return for the average U.S. general
government bond fund." A footnote below reads: "The total return for John
Hancock Government Securities Trust: Class A is at net asset value with all
distributions reinvested. Class B shares had a total return of 4.20% since
inception on September 30, 1994. The average general U.S. government bond fund
is tracked by Lipper Analytical Services. (1) See following page for historical
performance information."]

needs. The CMOs that helped the Fund most were long-duration securities designed
to offer exceptional protection against prepayment risk, or the risk that
borrowers will pay off their mortgages early.

BRIGHTER OUTLOOK FOR THE REST OF `95

Overall, we see a more favorable climate for bonds developing, marked
by slower economic growth and gently falling long-term interest rates. Barring
a recession -- which is not in our current forecast -- we see the yield on the
30-year Treasury bond settling somewhere around 7% instead of dipping as low as
6% again. Government securities may outperform corporate securities, for which
credit risk can be an issue in a slowing economy. And mortgage securities --
which do best under stable interest-rate conditions -- may perform best of all.
We'll be looking for more opportunities in the months ahead to extend duration
slightly and perhaps increase the Fund's stake in mortgages.

In February 1995, Barry H. Evans began managing John Hancock Government
Securities Trust. Mr. Evans, who joined John Hancock in 1986, is a vice
president and head of the company's government fixed-income department.

[CAPTION]
"... WE SEE A MORE FAVORABLE CLIMATE FOR BONDS ..."

5
<PAGE> 70
NOTES TO PERFORMANCE INFORMATION

John Hancock Funds - Government Securities Trust

In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the periods ended March 31, 1995
with all distributions reinvested in shares. The average annual total returns
for Class A shares for the 1-year, 5-year, and 10-year periods were (1.39%),
7.31% and 7.25%, respectively, and reflect payment of the maximum sales charge
of 4.75% for Class A shares. On May 15, 1995, the maximum sales charge will be
lowered to 4.50%. Total return (not annualized) since inception on September 30,
1994 for Class B shares was (0.79%) and reflects the applicable contingent
deferred sales charge (maximum contingent deferred sales charge is 5% and
declines to 0% over 6 years). The SEC standard yields for the 30-day period
ended March 31, 1995 for Class A and Class B shares were 5.92% and 5.55%,
respectively. All performance data shown represent past performance and should
not be considered indicative of future performance. Returns and principal values
of Fund investments will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Performance is affected by a
12b-1 plan.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND (OR MOST
RECENT YEN YEARS)

[Government Securities Trust
Class A shares

Line chart with the heading Government Securities Trust: Class A, representing
the growth of a hypothetical $10,000 investment over the life of the fund (or
most recent 10 years). Within the chart are three lines.

The first line represents the value of the Lehman Government Bond Index and is
equal to $25,572* as of March 31, 1995. The second line represents the value of
the hypothetical $10,000 investment made in the Government Securities Trust on
March 31, 1985, before sales charge, and is equal to $21,128 as of March 31,
1995. The third line represents the Government Securities Trust after sales
charge and is equal to $20,127 as of March 31, 1995.

Government Securities Trust
Class B shares

Line chart with the heading Government Securities Trust: Class B, representing
the growth of a hypothetical $10,000 investment over the life of the fund (or
most recent 10 years). Within the chart are three lines.

The first line represents the value of the Lehman Government Bond Index and is
equal to $10,507* as of March 31, 1995. The second line represents the value of
the hypothetical $10,000 investment made in the Government Securities Trust on
March 30, 1994, before contingent deferred sales charge, and is equal to $10,421
as of March 31, 1995. The third line represents the Government Securities Trust
after contingent deferred sales charge and is equal to $9,921 as of March 31,
1995.

*The Lehman Government Bond Index is an unmanaged index, which measures the
performance of U.S. Treasury bonds and U.S. Government Agency bonds.]

6
<PAGE> 71
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
U.S. government and agencies securities
(cost - $478,153,782).............................. $ 471,521,959
Joint repurchase agreement (cost - $5,819,000)....... 5,819,000
-------------
477,340,959
Cash................................................... 15,932
Receivable for shares sold............................. 48,900
Receivable for investments sold........................ 20,375,176
Interest receivable.................................... 10,626,102
Other assets........................................... 161,157
-------------
Total Assets........................ 508,568,226
---------------------------------------------------
LIABILITIES:

Dividend payable....................................... 1,699,023
Payable for shares repurchased......................... 697,349
Payable for investments purchased...................... 15,218,646
Payable to John Hancock Advisers, Inc. and
affiliates - Note B.................................. 294,367
Accounts payable and accrued expenses.................. 149,422
-------------
Total Liabilities................... 18,058,807
---------------------------------------------------
NET ASSETS:
Capital paid-in........................................ 880,735,120
Accumulated net realized loss on investments and
financial futures contracts.......................... (383,830,716)
Net unrealized depreciation of investments (6,631,823)
Undistributed net investment income.................... 236,838
-------------
Net Assets.......................... $ 490,509,419
===================================================

NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 per share par value, respectively)
Class A - $489,090,058/64,755,573...................... $ 7.55
======================================================================
Class B - $1,419,361/187,890........................... $ 7.55
======================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($7.55 x 104.99%)............................ $ 7.93
======================================================================
<FN>
* On single retail sales of less than $100,000. On sales of $100,000 or more
and on group sales the offering price is reduced.
** Class B shares commenced operations on September 30, 1994.
</TABLE>

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES)
FOR THE PERIOD STATED.

STATEMENT OF OPERATIONS
Year ended March 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest.............................................. $ 50,531,323
------------
Expenses:
Investment management fee - Note B.................. 3,434,718
Distribution/service fee - Note B
Class A............................................ 1,356,913
Class B**.......................................... 2,612
Transfer agent fee.................................. 1,096,899
Interest expense.................................... 504,216
Custodian fee....................................... 266,437
Auditing fee........................................ 102,922
Miscellaneous....................................... 79,055
Legal fees.......................................... 58,579
Printing............................................ 48,978
Trustees' fees...................................... 38,127
Registration and filing fees........................ 37,353
Advisory board fee.................................. 10,008
------------
Total Expenses..................... 7,036,817
---------------------------------------------------
Net Investment Income.............. 43,494,506
---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold................. (52,517,105)
Net realized gain on financial futures contracts...... 1,594,199
Change in net unrealized appreciation/depreciation
of investments...................................... 24,927,172
Change in net unrealized appreciation/depreciation of
financial futures contracts......................... (1,530,187)
------------
Net Realized and Unrealized
Loss on Investments................ (27,525,921)
---------------------------------------------------
Net Increase in Net Assets
Resulting from Operations.......... $ 15,968,585
===================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 72
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................................................................... $ 43,494,506 $ 52,613,498
Net realized loss on investments sold........................................................... (50,922,906) (6,277,923)
Change in net unrealized appreciation/depreciation of investments............................... 23,396,985 (34,101,408)
------------ ------------
Net Increase in Net Assets Resulting from Operations........................................... 15,968,585 12,234,167
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.5940 and $0.6361 per share, respectively)........................................ (42,628,320) (52,613,498)
Class B** - ($0.2688 and none per share, respectively)......................................... (25,389) ...
Distributions in excess of net investment income (none and $0.0029 per share, respectively)..... ... (246,503)
------------ ------------
Total Distributions to Shareholders............................................................ (42,653,709) (52,860,001)
------------ ------------

FROM FUND SHARE TRANSACTIONS -- NET*............................................................. (94,670,248) (65,935,486)

NET ASSETS:
Beginning of period............................................................................. 611,864,791 718,426,111
------------ ------------
End of period - including undistributed net investment income of $236,838 and distributions
in excess of net investment income of ($603,959).............................................. $490,509,419 $611,864,791
============ ============
<FN>
* Analysis of Fund Share Transactions:
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------------
1995 1994
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 3,304,464 $ 25,387,423 9,078,963 $ 76,399,947
Shares issued to shareholders in reinvestment of
distributions............................................... 2,609,288 19,732,195 2,837,038 23,691,543
----------- ------------ ----------- ------------
5,913,752 45,119,618 11,916,001 100,091,490
Less shares repurchased..................................... (18,668,887) (141,186,832) (19,874,838) (166,026,976)
----------- ------------ ----------- -----------
Net decrease............................................... (12,755,135) ($96,067,214) (7,958,837) ($65,935,486)
=========== ============ =========== ============
CLASS B**
Shares sold.................................................. 201,709 $ 1,499,539
Shares issued to shareholders in reinvestment of
distributions............................................... 618 4,651
----------- -----------
202,327 1,504,190

Less shares repurchased..................................... ( 14,437) ( 107,224)
----------- -----------
Net increase................................................ 187,890 $ 1,396,966
=========== ===========
<FN>
** Class B commenced operations on September 30, 1994.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 73
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
listed as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
------------------------------------------------------
1995(e) 1994 1993 1992 1991
CLASS A -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Year............................ $ 7.89 $ 8.41 $ 8.04 $ 8.03 $ 7.87
-------- -------- -------- -------- --------
Net Investment Income......................................... 0.61 0.64 0.66 0.87 0.89
Net Realized and Unrealized Gain (Loss) on Investments and
Financial Futures Contracts................................. (0.36) (0.52) 0.40 (0.09) 0.14
-------- -------- -------- -------- --------
Total from Investment Operations........................... 0.25 0.12 1.06 0.78 1.03
-------- -------- -------- -------- --------

Less Distributions:
Dividends from Net Investment Income........................ (0.59) (0.64) (0.69) (0.77) (0.87)
-------- -------- -------- -------- --------
Net Asset Value, End of Year.................................. $ 7.55 $ 7.89 $ 8.41 $ 8.04 $ 8.03
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value.................... 3.49% 1.26% 13.68% 10.09% 13.87%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Year (000's Omitted)....................... $489,090 $611,865 $718,426 $725,645 $771,826
Ratio of Expenses to Average Net Assets(c).................... 1.20% 1.14% 1.17% 1.21% 1.11%
Ratio of Net Investment Income to Average Net Assets.......... 8.10% 7.60% 7.93% 10.63% 11.13%
Portfolio Turnover Rate....................................... 337% 453% 322% 199% 117%
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 74
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS) TO
MARCH 31, 1995 (e)
CLASS B ------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.................................................................... $ 7.51(a)
------
Net Investment Income................................................................................... 0.28
Net Realized and Unrealized Gain on Investments and Financial Futures Contracts......................... 0.03(d)
------
Total from Investment Operations...................................................................... 0.31
------
Less Distributions:
Dividends from Net Investment Income.................................................................... (0.27)
------
Net Asset Value, End of Period.......................................................................... $ 7.55
======
Total Investment Return at Net Asset Value.............................................................. 4.20%(b)

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's Omitted)............................................................... $1,419
Ratio of Expenses to Average Net Assets(c).............................................................. 1.95%*
Ratio of Net Investment Income to Average Net Assets.................................................... 7.35%*
Portfolio Turnover Rate................................................................................. 337%
<FN>
* On an annualized basis.
(a) Initial price to commence operations.
(b) Not annualized.
(c) Excluding interest expense, which equalled 0.10% for the year ended March 31, 1995, 0.02% for the year ended March 31, 1994,
0.27% for the year ended March 31, 1993 and 0.32% for the year ended March 31, 1992.
(d) May not accord to amounts shown elsewhere in the financial statements.
(e) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 75
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

SCHEDULE OF INVESTMENTS
March 31, 1995

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
GOVERNMENT SECURITIES TRUST ON MARCH 31, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES: U.S. GOVERNMENT AND AGENCIES SECURITIES AND SHORT-TERM INVESTMENTS.

<TABLE>
<CAPTION>
PAR VALUE
INTEREST MATURITY (000'S MARKET
ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES SECURITIES
GOVERNMENTAL - U.S. (54.83%)
United States Treasury, Bond........................ 15.750% 11-15-01 $27,475 $ 39,770,063
United States Treasury, Bond........................ 11.625 11-15-02 27,000* 33,897,690
United States Treasury, Bond........................ 11.875 11-15-03 6,000* 7,749,366
United States Treasury, Bond........................ 11.625 11-15-04 14,000* 18,132,240
United States Treasury, Bond........................ 12.750 11-15-10 7,250* 10,052,567
United States Treasury, Bond........................ 12.000 08-15-13 27,000* 37,150,272
United States Treasury, Bond........................ 8.875 08-15-17 17,000* 19,324,240
United States Treasury, Note........................ 11.250 05-15-95 68,745* 69,142,346
United States Treasury, Note........................ 9.375 04-15-96 32,800* 33,712,168
------------
268,930,952
------------
GOVERNMENTAL - U.S. AGENCIES (41.30%)
Federal Home Loan Mortgage Corp,
CMO REMIC 1575-PG.................................. 6.000 08-15-07 5,444 4,960,845
CMO REMIC 1630-PK.................................. 6.000 11-15-23 11,920 9,476,400
CMO REMIC 1634-PN.................................. 4.500 12-15-23 10,575* 6,896,804
CMO REMIC 1643-PK.................................. 6.500 12-15-23 5,439 4,594,215
CMO REMIC 1667-PE.................................. 6.000 03-15-08 11,750 10,648,438
CMO REMIC 1994-48-E................................ 6.000 11-25-08 3,685 3,222,053
CMO REMIC 1576-PH.................................. 6.000 01-15-08 25,975 23,076,969
CMO REMIC Gold..................................... 9.000 03-01-25 5,100* 5,243,665
Federal National Mortgage Association,
30 Yr Pass Thru Ctf................................ 8.000 11-01-24 4,905* 4,857,324
30 Yr Pass Thru Ctf................................ 8.500 01-01-25 10,000* 10,106,199
GTD REMIC Pass Thru Ctf 1993-71-PH................. 6.500 05-25-08 5,000 4,559,350
GTD REMIC Pass Thru Ctf 1994-51-PV................. 6.000 03-25-24 20,926 16,557,698
GTD REMIC Pass Thru Ctf 1994-62-PK................. 7.000 04-25-24 5,986* 5,329,396
GTD REMIC Pass Thru Ctf X225C-TK................... 6.500 12-25-23 5,032* 4,241,020
STRIP MBS Ser 249 Class 2.......................... 6.500 10-25-23 2,945* 1,048,184
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

11
<PAGE> 76
FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

<TABLE>
<CAPTION>
PAR VALUE
INTEREST MATURITY (000'S MARKET
ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
GOVERNMENTAL - U.S. AGENCIES (CONTINUED)
Government National Mortgage Association,
30 Yr Pass Thru Ctf................................................... 7.500% 06-15-23 to $20,989* $ 20,265,851
05-15-24
30 Yr Pass Thru Ctf................................................... 8.000 01-15-04 to 10,201* 10,124,061
09-15-23
30 Yr Pass Thru Ctf................................................... 8.500 07-15-24 to 19,549* 19,828,978
02-15-25
30 Yr Pass Thru Ctf................................................... 9.000 02-15-25 4,900* 5,057,677
30 Yr Pass Thru Ctf................................................... 9.500 10-15-19 0 376
30 Yr Pass Thru Ctf................................................... 10.000 08-15-19 128 137,145
30 Yr Pass Thru Ctf................................................... 11.000 01-15-14 to 13,245* 14,582,334
12-15-15
30 Yr Pass Thru Ctf................................................... 11.500 08-14-10 101 110,903
30 Yr Pass Thru Ctf................................................... 12.000 01-15-13 to 15 17,378
05-15-15
30 Yr Pass Thru Ctf................................................... 13.000 01-15-11 to 191 214,347
08-15-15
30 Yr Pass Thru Ctf................................................... 14.000 05-15-11 to 56 62,790
07-15-12
30 Yr Pass Thru Ctf................................................... 14.500 06-15-11 to 194 216,502
10-15-12
30 Yr Pass Thru Ctf................................................... 15.000 08-15-11 to 346* 394,183
10-15-12
30 Yr Pass Thru Ctf................................................... 15.500 07-15-11 to 269 304,497
10-15-11
Tennessee Valley Authority,
Pwr Bonds 1994 Ser A.................................................. 7.850 06-15-44 17,500* 16,455,425
------------
202,591,007
------------
TOTAL U.S. GOVERNMENT AND
AGENCIES SECURITIES
(Cost $478,153,782) 96.13% 471,521,959
------- ------------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (1.19%)
Investment in a joint repurchase agreement
transaction with U.B.S. Securities Inc.
Dated 03-31-95, Due 04-03-95 (secured by
U.S. Treasury Bond 6.250% due 08-15-23,
and U.S.Treasury Notes, 5.250% thru 9.125%
due 07-31-98 thru 05-15-01) - Note A.................................. 6.125% 5,819 5,819,000
------------
TOTAL SHORT-TERM INVESTMENTS (1.19%) 5,819,000
------- ------------
TOTAL INVESTMENTS (97.32%) $477,340,959
======= ============
<FN>
* Securities, other than short-terms investments, newly added to the portfolio during the period ended March 31, 1995. The
percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.

12
<PAGE> 77

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

NOTE A --
ACCOUNTING POLICIES

John Hancock Bond Fund, (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock Government Securities
Trust (the "Fund"), John Hancock Investment Quality Bond Trust, John Hancock
U.S. Government Trust, John Hancock Intermediate Government Trust and John
Hancock Adjustable Government Trust. The Trustees may authorize the creation of
additional Funds from time to time to satisfy various investment objectives.
Effective December 22, 1994, the Trust and Funds changed names by replacing the
word Transamerica with John Hancock (See Note B).

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemptions, dividends, and liquidation, except that certain
expenses, subject to the approval of the Trustees, may be applied differently
to each class of shares in accordance with current regulations of the
Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class which bears distribution/service expenses under the
terms of a distribution plan have exclusive voting rights regarding such
distribution plan. Class A Shares are subject to an initial sales charge of up
to 4.75% and a 12b-1 distribution plan. Class B Shares are subject to a
contingent deferred sales charge and a separate 12b-1 distribution plan. On
September 30, 1994, Class B shares were sold to commence class activity.
Significant accounting policies of the Fund are as follows:

REVERSE REPURCHASE AGREEMENT Prior to December 22, 1994 the Fund entered into
reverse repurchase agreements which involve the sale of securities held by the
Fund to a bank or securities firm with an agreement that the Fund will buy back
the securities at a fixed future date at a fixed price plus an agreed amount of
"interest" which may be reflected in the repurchase price. Reverse repurchase
agreements are considered to be borrowings by the Fund and the Fund used the
proceeds obtained from the sale of securities to purchase other investments.
Effective December 22, 1994, the Fund discontinued investing in reverse
repurchase agreements.

OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked' prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked-to-market to reflect the current market
value of the written option.

The Fund may use option contracts to manage its exposure to the stock
market. Writing puts and buying calls will tend to increase the Fund's exposure
to the underlying instrument and buying puts and

13
<PAGE> 78
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

writing calls will tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments.

The maximum exposure to loss for any purchased options will be limited
to the premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.

Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options have
minimal credit risk as the exchanges act as counterparties to each transaction,
and only present liquidity risk in highly unusual market conditions. To
minimize credit and liquidity risks in over-the-counter option contracts, the
Fund will continuously monitor the creditworthiness of all its counterparties.

At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's Statement
of Assets and Liabilities.

There were no written option transactions for the period ended March
31, 1995.

FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates, currency exchange rates and other market
conditions. At the time the Fund enters into a financial futures contract, it
will be required to deposit with its custodian a specified amount of cash or
U.S. government securities, known as "initial margin", equal to a certain
percentage of the value of the financial futures contract being traded. Each
day, the futures contract will be valued at the official settlement price of the
board of trade or U.S. commodities exchange. Subsequent payments, known as
"variation margin", to and from the broker will be made on a daily basis as the
market price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market", will be recorded by the
Fund as unrealized gains or losses.

When the contracts are closed, the Fund will recognize a gain or loss.
Risks of entering into futures contracts include the possibility that there may
be an illiquid market and/or that a change in the value of the contracts may
not correlate with changes in the value of the underlying securities. In
addition, the Fund could be prevented from opening or realizing the benefits of
closing out futures positions because of position limits or limits on daily
price fluctuations imposed by an exchange.

For Federal income tax purposes, the amount, character and timing of
the Fund's gains and/or losses can be affected as a result of futures
contracts.

At March 31, 1995, there were no open positions in financial futures
contracts.

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes at December 31, 1994, the Fund had
approximately $374,800,000 of capital loss carryforwards available, to the
extent provided by regulations, to offset future net realized capital gains. If
such carryforwards are used by the Fund, no capital gain distributions will be
made. The carryforwards expire as follows: 1996 -- $231,900,000, 1997 --
$50,300,000, 1998 -- $19,100,000, 1999 -- $6,900,000 and 2002 -- $66,600,000.
The Fund's tax year end is December 31.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis.

14
<PAGE> 79
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not identifiable to a specific Fund are
allocated in such a manner as deemed equitable, taking into consideration, among
other things, the nature and type of expense and the relative sizes of the
Funds.

RECLASSIFICATION Certain reclassifications have been made to 1994 amounts to
permit comparisons to the 1995 presentations.

NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES AND
OTHERS

Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment program
equivalent, to 0.650% of the first $200,000,000 of the Fund's average daily net
asset value, 0.625% of the next $300,000,000, and 0.600% of the Fund's average
daily net asset value in excess of $500,000,000. This fee structure is
consistent with the former agreement with TFMC. For the period ended March 31,
1995, the advisory fee earned by the Adviser and TFMC amounted to $2,576,039
and $858,679, respectively, resulting in a total fee of $3,434,718.

In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares of beneficial interest,
the fee payable to the Adviser will be reduced to the extent of such excess and
the Adviser will make additional arrangements necessary to eliminate any
remaining excess expenses. The current limits are 2.5% of the first $30,000,000
of the Fund's average daily net asset value, 2.0% of the next $70,000,000 and
1.5% of the remaining average daily net asset value.

On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a
wholly-owned subsidiary of the Adviser, became the principal underwriter of the
Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD") served
as the principal underwriter and distributor of the Fund. For the period ended
March 31, 1995, JH Funds and TFD received net sales charges of $422,993 with
regard to sales of Class A shares. Out of this amount, $47,571 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, and $375,422 was paid as sales commissions to unrelated
broker-dealers.

Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds, formerly TFD, and are used in whole or in
part to defray its expenses related to providing distribution related services
to the

15
<PAGE> 80
NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Government Securities Trust

Fund in connection with the sale of Class B shares. For the period ended March
31, 1995, contingent deferred sales charges amounted to $188.

In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
with respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments for distribution
and service expenses which in total will not exceed on an annual basis 0.25% of
the Fund's average daily net assets attributable to Class A shares and 1.00% of
the Fund's average daily net assets attributable to Class B shares, to
reimburse for its distribution/service costs. Up to a maximum of 0.25% of such
payments may be service fees as defined by the amended Rules of Fair Practice
of the National Association of Securities Dealers which became effective July
7, 1993. Under the amended Rules of Fair Practice, curtailment of a portion of
the Fund's 12b-1 payments could occur under certain circumstances. This fee
structure and plan is similar to the former arrangement with TFD.

The Board of Trustees approved a shareholder servicing agreement
between the Fund and John Hancock Investor Services Corporation ("Investor
Services"), a wholly owned subsidiary of The Berkeley Financial Group, for the
period between December 22, 1994 and May 12, 1995, inclusive under which
Investor Services processed telephone transactions on behalf of the Fund. As of
May 15, 1995, the Fund entered into a full service transfer agent agreement
with Investor Services. Prior to this date The Shareholder Services Group was
the transfer agent. The Fund will pay Investor Services a fee based on
transaction volume and number of shareholder accounts.

A partner with Baker & Botts was an officer of the Trust until December
22, 1994. During the period ended March 31, 1995, legal fees paid to Baker &
Botts amounted to $38,695.

Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser
and its affiliates as well as Trustee of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees paid for
1995, the unaffiliated Trustees may elect to defer their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund will make investments into other John Hancock Funds, as applicable, to
cover its liability with regard to the deferred compensation. Investments to
cover the Fund's deferred compensation liability will be recorded on the Fund's
books as other assets. The deferred compensation liability will be marked to
market on a periodic basis and income earned by the investment will be recorded
on the Fund's books.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended March 31, 1995 aggregated $1,911,894,001
and $2,004,789,657, respectively.

The cost of investments owned at March 31, 1995 for Federal income tax
purposes was $483,972,782. Gross unrealized appreciation and depreciation of
investments aggregated $2,803,716, and $9,435,539, respectively, resulting in
net unrealized depreciation of $6,631,823.

16
<PAGE> 81

John Hancock Funds - Government Securities Trust

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

To the Board of Trustees and Shareholders of
John Hancock Bond Fund --
John Hancock Government Securities Trust

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Government Securities Trust
(formerly the Transamerica Government Securities Trust) (the "Fund"), one of the
portfolios constituting John Hancock Bond Fund (formerly the Transamerica Bond
Fund) (the "Trust"), as of March 31, 1995, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1995, by correspondence with the custodian and brokers, or other
appropriate auditing procedures where replies from brokers were not received.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the John Hancock Government Securities Trust portfolio of John
Hancock Bond Fund at March 31, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of five years in the
period then ended, in conformity with generally accepted accounting principles.

/s/ Ernest & Young LLP
----------------------

Boston, Massachusetts
May 15, 1995

17
<PAGE> 82
ADDITIONAL INFORMATION

John Hancock Funds - Government Securities Trust

On December 16, 1994 , a special meeting of John Hancock (formerly
Transamerica) Bond Fund (the "Trust") in respect of John Hancock (formerly
Transamerica) Government Securities Trust (the "Fund") was held involving the
election of trustees and certain other matters concerning the Fund.

Specifically, shareholder's first approved a new investment management
agreement between the Trust on behalf of the Fund and John Hancock Advisers,
Inc. on substantially similar terms of the prior investment management
agreement, to take effect on December 22, 1994, the date of the consummation of
the acquisition of Transamerica Fund Management Company by The Berkeley
Financial Group. The shareholder votes tallied were 38,402,317 FOR, 672,818
AGAINST and 1,806,546 ABSTAINING.

The shareholders next approved new Plans of Distribution for each Class
A and Class B shares of the Fund, also effective on December 22, 1994, and also
on substantially the same terms as the prior Plans of Distribution. The Class A
shareholder votes tallied were 37,803,389 FOR, 899,806 AGAINST and 2,173,542
ABSTAINING. The Class B shareholder votes tallied were 4,943 FOR, 0 AGAINST and
0 ABSTAINING.

The shareholders also voted to ratify the selection of Ernst & Young,
LLP as independent auditors for the Fund for the fiscal year ending March 31,
1995, and the votes tallied were 41,133,844 FOR, 267,609 AGAINST and 267,609
ABSTAINING.

Lastly, the following trustees were elected to serve until their
respective successors shall become duly elected and qualified, with the votes
tabulated as indicated:

<TABLE>
<CAPTION>
NAME OF TRUSTEE FOR WITHHOLD
- --------------- --- --------
<S> <C> <C>
Edward J. Boudreau, Jr.......... 37,870,304 4,830,497
James F. Carlin................. 37,867,524 4,833,277
William H. Cunningham........... 37,865,290 4,835,511
Charles L. Ladner............... 37,853,411 4,847,390
Leo E. Linbeck, Jr.............. 37,841,025 4,859,776
Patricia P. McCarter............ 37,846,165 4,854,635
Steven R. Pruchansky............ 37,836,871 4,863,930
Norman H. Smith................. 37,847,036 4,853,765
John P. Toolan.................. 37,863,161 4,837,640
</TABLE>

TAX INFORMATION NOTICE (UNAUDITED)

Shareholders will be mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996. This will reflect the total of all distributions
which are taxable for calendar year 1995.

18
<PAGE> 83
NOTES

John Hancock Funds - Government Securities Trust

19
<PAGE> 84
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
Brockton, MA
Permit No. 582

- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Government Securities Trust. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.

[A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."]
<PAGE> 85

JOHN HANCOCK FUNDS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

INVESTMENT
QUALITY
BOND FUND

ANNUAL REPORT

March 31, 1995

<PAGE> 86

CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111

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

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603

LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109

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

CHAIRMAN'S MESSAGE

DEAR FELLOW SHAREHOLDERS:

[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]

We're excited about the opportunities this acquisition will bring to
shareholders. The combined firms form a larger, more competitive organization
with more than $13 billion in assets under management and more than 1 million
shareholders. Now with 50 open-end funds, 8 closed-end funds and a full array
of retirement and private account services, John Hancock Funds offers you a
broader selection of investment choices to meet your long-term financial needs.
What's more, the union of the Hancock and Transamerica investment teams gives
you access to some of the top talent in the industry.

The Transamerica name is changing, but the commitment to serving you as
a valued shareholder isn't. Here at John Hancock Funds, our motto is: "We invest
in quality first." It has to do with the way we invest your money and the way we
work with you. Not only do we strive to ensure that your investments are
well-managed, we also take pride in providing the highest quality customer
service. We can't guarantee investment performance; nobody can. The quality of
our service, however, depends totally on us. That is something that we can
guarantee.

We value your business and look forward to serving your investment needs
in the years to come.

Sincerely,

/s/ Edward J. Boudreau, Jr.
- ---------------------------

EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2
<PAGE> 87

BY JAMES K. HO, SENIOR VICE PRESIDENT
AND PORTFOLIO MANAGER

JOHN HANCOCK
INVESTMENT QUALITY
BOND FUND

AFTER A MISERABLE 1994, BONDS REBOUND;
FAVORABLE CLIMATE SEEN FOR REST OF 1995

Effective January 1, 1995, James K. Ho started managing John Hancock Investment
Quality Bond Fund. Mr. Ho, who joined John Hancock Funds in 1985, is a senior
vice president and serves as the company's senior fixed-income officer. He also
manages John Hancock Sovereign Bond Fund, John Hancock Investors Trust and John
Hancock Income Securities Trust. What follows is a discussion of his strategy
and outlook for the months ahead.

[A 2 1/2" x 3 1/2" photo of James K. Ho at bottom right. Caption reads:
"James K. Ho, Portfolio Manager."]

1994 was one of the worst years on record for bond investors. Surprising
economic growth and persistent fears of inflation (despite modest numbers) led
to higher interest rates and lower bond prices. The downward trend began on
February 4, 1994, when the Federal Reserve reversed its policy and encouraged
the federal funds rate -- what banks charge each other for overnight loans --
to rise from 3.0% to 3.25%. That turned out to be the first in a series of rate
hikes. Two more quarter-point increases followed in March and April, two
half-point increases in May and August, another half-point increase in August
and a three-quarter-point increase in November. That brought the federal funds
rate up to 5.50% by year-end.

[CAPTION]
"BONDS STAGED A STRONG COMEBACK IN THE FIRST QUARTER ..."

3
<PAGE> 88

John Hancock Funds - Investment Quality Bond Fund

[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into six sections. Going from left to right:
High-Quality Corporate Bonds 27%; Foreign Goverment Bonds 11%; Mortgage-Backed
Securities 27%; Short-Term Investments & Other 1%; U.S. Treasury Bonds 20%; and
High-Yield Corporate Bonds 14%. Footnote below states: "As a percentage of net
assets on March 31, 1995."]

Fortunately for bond investors, so far 1995 is turning out much better.
Bonds staged a strong comeback in the first quarter with the benchmark 30-year
Treasury bond jumping 6.6%. What's fueled the upturn is evidence that the Fed's
efforts are slowing the economy without killing it. The Fed's last half-point
increase on February 1, 1995 reinforced investors' belief in the "soft-landing"
scenario -- a slow growing economy with moderate inflation.

A LOOK AT PERFORMANCE

John Hancock Investment Quality Bond Fund ended this volatile period with a
gain but slightly lagged behind its peers. For the year ended March 31, 1995,
the Fund's Class A and B shares had total returns of 1.46% and 0.62%,
respectively, at net asset value. By comparison, the average corporate A-rated
debt fund returned 3.36% for the same period, according to Lipper Analytical
Services.(1)

[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investments"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is Stone
Container followed by an up arrow and the phrase "Rising paper prices." The
second listing is United Airlines followed by an up arrow and the phrase
"Recovery in airlines." The third listing is Cemex followed by a down arrow and
the phrase "Peso crisis hurts Mexican market." A footnote below reads: "See
"Schedule of Investments." Investment holdings are subject to change."]

Two factors accounted for the difference in performance. One, the Fund's
duration was shorter than that of its average peer. Duration measures the
extent to which a fund's share price will fluctate with interest-rate changes.
Generally, the longer the duration, the more the price will fluctuate. Having a
shorter duration certainly helped during last year's downturn, but it held
performance back during the first quarter rally. Two, the Fund had roughly 3% in
emerging market bonds, primarily in Mexico and Brazil. As Mexico's peso crisis
reverbated through Latin America and other emerging markets, those bonds lost
ground.

SHIFTING GEARS

Since we began managing the Fund in January, we've made several tactical
changes to the portfolio. For starters, we sold all of the aforementioned
emerging market bonds and put the proceeds to work into high-yield issues --
those lower-rated bonds with credit quality ratings of BB or lower. We've also
sold some of the smaller, less liquid high-yield bonds in favor of more liquid
ones. By the end of March, roughly 15% of the Fund's assets were in high-yield
bonds. Our focus was on those names that we believe will do well even if the
economy slows. Examples include cable operators like Cablevision and
Continental Cablevision and utilities like Louisiana Power & Light and Long
Island Lighting.

Second, we've shifted to a laddered structure in the portfolio. In other
words, we've spread our

[CAPTION]
"...WE'VE MADE SEVERAL TACTICAL CHANGES TO THE PORTFOLIO."

4
<PAGE> 89

John Hancock Funds - Investment Quality Bond Fund

[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended March 31, 1995." The chart is
scaled in increments of 2% from bottom to top, with 4% on the top and 0% at the
bottom. Within the chart, there are three solid bars. The first represents the
1.46% total return for John Hancock Investment Quality Bond Fund: Class A. The
second represents the 0.62% total return for John Hancock Investment Quality
Bond Fund: Class B. The third represents the 3.36% total return for the average
corporate A-rated debt fund." A footnote below reads: "Total returns for John
Hancock Investment Quality Bond Fund are at net asset value with all
distributions reinvested. The average corporate A-rated debt fund is tracked by
Lipper Analytical Services. (1) See following page for historical performance
information."]

exposure evenly across short, medium and long bonds. As the economy slows and
the yield curve steepens -- as it has started to do in the last few months -- a
laddered structure works best.

Finally, we've maintained the Fund's 27% stake in mortgage-backed
securities, which have been among our best performers during the past year. As
mortgage rates have risen along with interest rates, prepayments have slowed,
boosting the prices of mortgage securities. And with interest rates expected to
remain relatively stable this year, we believe mortgages should continue to
perform well.

A LOOK AHEAD

Whether or not the Fed will be successful in engineering a soft landing remains
to be seen. According to most economic indicators, the economy appears to be
slowing down and inflation seems to be well contained. That said, though, we
think there may be one more inflation spike coming our way. But if so, it's
more apt to signal the peak in the cycle than the first step in a fresh surge.
We'd likely view it as a buying opportunity.

Overall, we see a more favorable environment for bonds developing. The
current bond market rally may have some steam left, but we don't expect it to
last through the end of the year. We do think, however, interest rates are
likely to stabilize with the yield on the 30-year Treasury bond settling
somewhere around 7%. Against that backdrop, bonds should perform well.

As the economy slows down and the yield curve continues to steepen,
we'll keep the Fund laddered. One change we might make is to reduce the Fund's
stake in high-yield bonds in favor of high-quality corporates and Treasuries. In
1994, it was those funds that avoided excess interest-rate risk while taking on
credit risk that outperformed their peers. In 1995, however, the best strategy
may be just the opposite: to take on extra interest-rate risk and minimize
credit risk.

[CAPTION]
"... WE SEE A MORE FAVORABLE ENVIRONMENT FOR BONDS ..."

5
<PAGE> 90
NOTES TO PERFORMANCE INFORMATION

John Hancock Funds - Investment Quality Bond Fund

In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the periods ending March 31,
1995 with all distributions reinvested in shares. The average annualized total
returns for Class A shares for the 1-year, 5-year and 10-year periods were
(3.31%), 7.03% and 8.49%, respectively, and reflect payment of the maximum
sales charge of 4.75%. On May 15, 1995, the maximum sales charge will be
lowered to 4.50%. The average annualized total returns for Class B shares for
the 1-year period and since inception on June 30, 1993 for Class B shares was
(4.38%) and (2.83%), respectively, and reflect the applicable contingent
deferred sales charge (maximum contingent sales charge of 5% declines to 0%
over 6 years). SEC yields for the 30-day period ending March 31, 1995 were
7.31% and 6.92% for Class A and Class B shares, respectively. All performance
data shown represents past performance and should not be considered indicative
of future performance. Returns and principal values of Fund investments will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Performance is affected by a 12b-1 plan.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND
(OR MOST RECENT TEN YEARS)

[John Hancock Investment Quality Bond Fund
Class A Shares

Line chart with the heading John Hancock Investment Quality Bond Fund: Class A,
representing the growth of a hypothetical $10,000 investment over the life of
the fund (or most recent 10 years). Within the chart are three lines.

The first line represents the value of the Lehman Brother Corporate Bond Index
and is equal to $28,440* as of March 31, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the John Hancock Investment
Quality Bond Fund on March 31, 1985, before sales charge, and is equal to
$23,721 as of March 31, 1995. The third line represents the John Hancock
Investment Quality Bond Fund after sales charge and is equal to $23,704 as of
March 31, 1995.

John Hancock Investment Quality Bond Fund
Class B Shares

Line chart with the heading John Hancock Investment Quality Bond Fund: Class B,
representing the growth of a hypothetical $10,000 investment over the life of
the fund (or most recent 10 years). Within the chart are three lines.

The first line represents the value of the Lehman Brother Corporate Bond Index
and is equal to $10,514* as of March 31, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the John Hancock Investment
Quality Bond Fund on June 30, 1993, before contingent deferred sales charge, and
is equal to $9,910 as of March 31, 1995. The third line represents the John
Hancock Investment Quality Bond Fund after contingent deferred sales charge and
is equal to $9,510 as of March 31, 1995.

*The Lehman Brothers Corporate Bond Index is an unmanaged index that mirrors the
investment objectives and characteristics of the Fund.]

<PAGE> 91

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Publicly traded bonds (cost - $91,463,050)...................... $ 88,014,704
Common stocks (cost - $281,580)................................. 281,580
Joint repurchase agreement (cost - $501,000).................... 501,000
Corporate savings account....................................... 727
------------
88,798,011
Cash............................................................. 2,032
Dividends receivable............................................. 14,416
Receivable for investments sold.................................. 5,633,449
Interest receivable.............................................. 2,148,384
Other assets..................................................... 30,084
------------
Total Assets.............................. 96,626,376
--------------------------------------------------------
LIABILITIES:
Payable for investments purchased................................ 6,288,481
Payable for shares repurchased................................... 173,311
Dividend payable................................................. 251,015
Payable to John Hancock Advisers, Inc.
and affiliates - Note B........................................ 73,070
Accounts payable and accrued expenses............................ 34,210
Payable for variation margin - Note A............................ 8,750
------------
Total Liabilities......................... 6,828,837
--------------------------------------------------------
NET ASSETS:
Capital paid-in.................................................. 112,637,723
Accumulated net realized loss on investments,
options, foreign currency transactions and
financial futures contracts.................................... (19,561,609)
Net unrealized depreciation of investments,
foreign currency transactions and financial
futures contracts.............................................. (3,428,659)
Undistributed net investment income.............................. 150,084
------------
Net Assets................................ $ 89,797,539
========================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with $0.01 per share par value, respectively)
Class A - $82,351,006/10,080,512................................. $ 8.17
===============================================================================
Class B - $7,446,533/911,525..................................... $ 8.17
===============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($8.17 x 104.99%)...................................... $ 8.58
===============================================================================
</TABLE>

* On single retail sales of less than $100,000. On sales of $100,000 or more
and on group sales the offering price is reduced.

THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.

STATEMENT OF OPERATIONS
Year ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $14,416)........... $ 8,996,310
-----------
Expenses:
Investment management fee - Note B............................. 576,758
Distribution/service fee - Note B
Class A...................................................... 218,117
Class B...................................................... 69,547
Transfer agent fee............................................. 190,797
Interest expense............................................... 115,720
Custodian fee.................................................. 87,250
Registration and filing fees................................... 29,001
Auditing fee................................................... 27,999
Printing....................................................... 27,913
Trustees' fees................................................. 25,662
Miscellaneous.................................................. 21,793
Legal fees..................................................... 12,420
Advisory board fee............................................. 1,765
-----------
Total Expenses............................. 1,404,742
--------------------------------------------------------
Net Investment Income...................... 7,591,568
--------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS,
FINANCIAL FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investments sold............................ (8,074,205)
Net realized loss on options..................................... (83,436)
Net realized gain on financial futures contracts................. 743,196
Net realized loss on foreign currency transactions............... (366,871)
Change in net unrealized appreciation/depreciation
of investments................................................. 1,587,412
Change in net unrealized appreciation/depreciation
on financial futures contracts................................. (394,844)
Change in net unrealized appreciation/depreciation
of foreign currency transactions............................... 55,838
-----------
Net Realized and Unrealized
Loss on Investments, Options,
Financial Futures Contracts and
Foreign Currency Transactions.............. (6,532,910)
--------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations.................. $ 1,058,658
========================================================
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 92

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.......................................................................... $ 7,591,568 $ 8,401,014
Net realized loss on investments sold, options, financial futures contracts and
foreign currency transactions................................................................ (7,781,316) (994,065)
Change in net unrealized appreciation/depreciation of investments,
financial futures contracts and foreign currency transactions................................ 1,248,406 (5,566,381)
------------ ------------
Net Increase in Net Assets Resulting from Operations........................................ 1,058,658 1,840,568
------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A - ($0.6600 and $0.7020 per share, respectively)...................................... (6,944,803) (8,139,992)
Class B** - ($0.5904 and $0.4842 per share, respectively).................................... (486,623) (210,407)
------------ ------------
Total Distributions to Shareholders........................................................ (7,431,426) (8,350,399)
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET* ............................................................ (5,353,781) (3,802,513)
------------ ------------

NET ASSETS:
Beginning of period............................................................................ 101,524,088 111,836,432
------------ ------------
End of period (including undistributed net investment income and distributions in
excess of net investment income of $150,084 and ($10,058) respectively)...................... $ 89,797,539 $101,524,088
============ ============
</TABLE>

<TABLE>
<CAPTION>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
YEAR ENDED MARCH 31,
----------------------------------------------------------
1995 1994
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................................................ 877,320 $ 7,260,092 1,326,045 $ 12,356,583
Shares issued to shareholders in reinvestment of distributions..... 479,004 3,954,812 498,008 4,601,879
---------- ------------ ---------- ------------
1,356,324 11,214,904 1,824,053 16,958,462
Less shares repurchased............................................ (2,244,995) (18,518,937) (2,933,145) (27,158,357)
---------- ------------ ---------- ------------
Net decrease...................................................... (888,671) $ (7,304,033) (1,109,092) $(10,199,895)
========== ============ ========== ============
CLASS B **
Shares sold........................................................ 463,584 $ 3,861,116 925,617 $ 8,663,960
Shares issued to shareholders in reinvestment of distributions..... 29,471 243,889 13,573 124,743
---------- ------------ ---------- ------------
493,055 4,105,005 939,190 8,788,703
Less shares repurchased............................................ (261,054) (2,154,753) (259,666) (2,391,321)
---------- ------------ ---------- ------------
Net increase...................................................... 232,001 $ 1,950,252 679,524 $ 6,397,382
========== ============ ========== ============
</TABLE>

** Class B shares commenced operations on June 30, 1993.

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 93

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
listed as follows:
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------
1995(b) 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period........................... $ 8.72 $ 9.26 $ 8.93 $ 8.85 $ 8.52
------- ------- -------- ------- -------
Net Investment Income.......................................... 0.66 0.71 0.79 0.80 0.85
Net Realized and Unrealized Gain (Loss) on Investments......... (0.55) (0.55) 0.31 0.11 0.32
------- ------- -------- ------- -------
Total from Investment Operations............................. 0.11 0.16 1.10 0.91 1.17
------- ------- -------- ------- -------
Less Distributions:
Dividends from Net Investment Income........................... (0.66) (0.70) (0.77) (0.83) (0.84)
------- ------- -------- ------- -------
Net Asset Value, End of Period................................. $ 8.17 $ 8.72 $ 9.26 $ 8.93 $ 8.85
======= ======= ======== ======= =======
Total Investment Return at Net Asset Value..................... 1.46% 1.58% 12.77% 10.72% 14.51%
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)...................... $82,351 $95,601 $111,836 $96,516 $84,039
Ratio of Expenses to Average Net Assets (c).................... 1.32% 1.25% 1.24% 1.36% 1.25%
Ratio of Net Investment Income to Average Net Assets........... 8.15% 7.63% 8.47% 8.84% 9.89%
Portfolio Turnover Rate........................................ 202% 242% 191% 316% 134%
</TABLE>

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JUNE 30, 1993
MARCH 31, TO MARCH 31,
1995(b) 1994
---------- -------------
<S> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ......................... $ 8.72 $ 9.31(d)
------- -------
Net Investment Income ......................................... 0.59 0.49
Net Realized and Unrealized Gain (Loss) on Investments ....... (0.55) (0.60)
------- -------
Total from Investment Operations ........................... 0.04 (0.11)
------- -------
Less Distributions:
Dividends from Net Investment Income ......................... (0.59) (0.48)
------- -------
Net Asset Value, End of Period ............................... $ 8.17 $ 8.72
======= =======
Total Investment Return at Net Asset Value ................... 0.62% (1.51%)(a)
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $ 7,447 $ 5,923
Ratio of Expenses to Average Net Assets (c) ................... 2.07% 1.99%*
Ratio of Net Investment Income to Average Net Assets ......... 7.40% 6.58%*
Portfolio Turnover Rate ....................................... 202% 242%
</TABLE>

* On an annualized basis.
(a) Not annualized.
(b) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(c) Excluding interest expense, which equalled 0.12% for the year ended
March 31, 1995, 0.07% for the year ended March 31, 1993 and 0.34% for the
year ended March 31, 1992.
(d) Initial price to commence operations.

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 94

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
INVESTMENT QUALITY BOND FUND ON MARCH 31, 1995. IT'S DIVIDED INTO THREE MAIN
CATEGORIES: PUBLICLY TRADED BONDS, COMMON STOCK AND SHORT-TERM INVESTMENTS. THE
BONDS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. SHORT-TERM INVESTMENTS, WHICH
REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST.

SCHEDULE OF INVESTMENTS
March 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
PUBLICLY TRADED BONDS
BANKS (2.51%)
Barclays North American Capital Corp.,
*Gtd Cap Note 05-15-21............................................... 9.750% AA- $ 500 $ 554,180
International Bank for Reconstruction and Development,
*30 Yr Bond 07-15-17................................................. 9.250 AAA 1,500 1,698,150
-----------
2,252,330
-----------
BROADCASTING (2.99%)
Cablevision Systems Corp.,
*Sr Sub Deb 04-01-04................................................. 10.750 B 1,000 1,030,000
Continental Cablevision, Inc.,
*Sr Sub Deb 06-01-07................................................. 11.000 BB- 625 662,500
Jones Intercable, Inc.,
*Sr Note 03-15-02.................................................... 9.625 BB 750 742,500
Rogers Cablesystems Ltd.,
*Sr Sec Second Priority Note 03-15-05 (R)............................ 10.000 BB+ 250 250,625
-----------
2,685,625
-----------
CHEMICALS (0.63%)
Cemex SA De C.V.,
Note 09-20-01 (R).................................................... 9.500 BB 1,000 567,850
-----------
COMPUTERS (0.36%)
Unisys Corp.,
*Credit Sensitive Note 07-01-97...................................... 13.500 BB- 300 327,750
-----------
FINANCE (1.97%)
Standard Credit Card Master Trust I,
*Class A Credit Card Part Ctf Ser 1995-2 01-07-00.................... 8.625 AAA 750 756,094
World Book Finance, Inc.,
Note 09-01-96........................................................ 8.125 AAA 1,000 1,012,660
-----------
1,768,754
-----------
GOVERNMENTAL - FOREIGN (10.54%)
Brazil, Republic of,
Note IDU Ser A-L 01-01-01............................................ 7.813 NR 1,960 1,435,700
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE> 95

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
GOVERNMENTAL - FOREIGN (CONTINUED)
Nova Scotia, Province of,
SF Deb 05-15-13.................................................... 11.500% A- $2,255 $ 2,555,840
Ontario, Province of,
Deb 11-05-11....................................................... 17.000 AA- 3,750 4,510,275
South Africa, Republic of,
*Note 12-15-99...................................................... 9.625 BB 1,000 960,000
-----------
9,461,815
-----------
GOVERNMENTAL - U.S. (19.66%)
United States Treasury,
Bond 05-15-95...................................................... 12.625 AAA 11,980 12,066,136
*Bond 08-15-05...................................................... 10.750 AAA 2,000 2,490,940
Bond 02-15-23...................................................... 7.125 AAA 3,250 3,097,153
-----------
17,654,229
-----------
GOVERNMENTAL - U.S. AGENCIES (26.71%)
Federal Home Loan Mortgage Corp.,
CMO Remic 1218-G 05-15-14.......................................... 4.500 AAA 1,000 858,120
*CMO Remic 1990-51-H 05-15-21....................................... 5.750 AAA 5,500 4,929,375
*CMO Remic 1994-48 E 11-25-08....................................... 6.000 AAA 5,000 4,371,850
Federal National Mortgage Association,
15 Yr SF Pass thru Ctf 05-01-02.................................... 8.000 AAA 4 3,612
*15 Yr SF Pass thru Ctf 01-01-09 to 09-01-24........................ 8.500 AAA 8,615 8,706,608
Government National Mortgage Association,
*30 Yr SF Pass thru Ctf 10-15-23 to 05-15-24........................ 6.500 AAA 5,022 4,536,124
30 Yr SF Pass thru Ctf 02-15-04.................................... 8.000 AAA 3 3,082
30 Yr SF Pass thru Ctf 02-15-13 to 08-15-13........................ 11.500 AAA 229 254,093
30 Yr SF Pass thru Ctf 03-15-13.................................... 12.000 AAA 98 109,853
30 Yr SF Pass thru Ctf 08-15-10 to 12-15-10........................ 12.500 AAA 103 115,676
*30 Yr SF Pass thru Ctf 11-15-10.................................... 13.000 AAA 33 36,329
30 Yr SF Pass thru Ctf 07-15-11.................................... 15.000 AAA 53 60,962
-----------
23,985,684
-----------
INSURANCE (3.19%)
Massachusetts Mutual Life Insurance Co.,
*Surplus Note 11-15-23 (R).......................................... 7.625 AA- 1,250 1,104,512
New York Life Insurance Co.,
*Surplus Note 12-15-23 (R).......................................... 7.500 AA 2,000 1,757,700
-----------
2,862,212
-----------
LEISURE & RECREATION (1.99%)
Walt Disney Co. (The),
Sr Deb 07-15-03.................................................... 7.550 AA- 2,000 1,787,280
-----------
OIL & GAS (3.03%)
Maxus Energy Corp,
*Medium Term Note 07-11-02.......................................... 10.670 BB- 1,000 851,270
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

11
<PAGE> 96

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
OIL & GAS (CONTINUED)
Norsk Hydro, a.s.,
Deb 06-15-23...................................................... 7.750% A- $2,000 $ 1,871,380
-----------
2,722,650
-----------
PAPER (1.15%)
Fort Howard Corp.,
*Sub Deb 11-01-00.................................................. 12.625 B 1,000 1,032,500
-----------
POLLUTION CONTROL (1.13%)
Waste Management, Inc.,
Note 08-15-96..................................................... 7.875 AA- 1,000 1,010,280
-----------
PUBLISHING (1.04%)
Time Warner Inc.,
*Deb 01-15-13...................................................... 9.125 BBB- 1,000 937,860
-----------
RETAIL (1.23%)
Sears Roebuck & Co,
*Deb 11-01-11...................................................... 9.375 BBB 1,000 1,101,310
-----------
STEEL (2.26%)
UCAR Global Enterprises Inc.,
*Sr Sub Note 01-15-05 (R).......................................... 12.000 B 1,000 1,050,000
Weirton Steel Corp.,
*Sr Note 10-15-99.................................................. 10.875 B 1,000 975,000
-----------
2,025,000
-----------
TELECOMMUNICATIONS (1.08%)
Viatel Inc.,
*Sr Discount Note 01-15-05......................................... 15.000 NR 2,000 972,500
-----------
TOBACCO (1.10%)
RJR Nabisco, Inc.,
*Note 12-01-02..................................................... 8.625 BBB- 1,000 983,790
-----------
TRANSPORTATION (1.00%)
Rail Car Trust No.,
*Trust Note 1992-1, 06-01-04....................................... 7.750 AAA 893 900,350
-----------
UTILITIES (14.45%)
British Columbia Hydro and Power Auth.
(Gtd by Province of British Columbia),
Bond Ser FG 04-15-11.............................................. 15.000 AA+ 2,050 2,310,084
Bond Ser FH 07-15-11.............................................. 15.500 AA+ 225 260,586
Bond Ser FJ 11-15-11.............................................. 15.500 AA+ 1,081 1,276,715
BVPS II Funding Corp.,
*Collateralized Lease Bond 06-01-17................................ 8.890 BB+ 500 434,990
Centragas,
*Sr Sec Note 12-10-10 (R).......................................... 10.650 NR 2,000 1,895,000
First PV Funding Corp.,
*Lease Oblig Ser 1986 B 01-15-16................................... 10.150 B 500 490,000
GTE Corp.,
*Deb 11-01-20...................................................... 10.250 BBB+ 875 978,162
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 97

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
UTILITIES (CONTINUED)
Hydro-Quebec (Gtd by Province of Quebec),
Deb Ser HS 02-01-21............................................. 9.400% A+ $1,500 $ 1,624,230
Long Island Lighting Co.,
*Deb 03-15-03.................................................... 7.050 BB+ 1,000 850,570
Louisiana Power & Light Co.,
*Sec Lease Oblig Bond Ser B 01-02-17............................. 10.670 BBB- 500 521,710
Midland Funding Corp. I,
*Sr Sec Lease Oblig Ser C 07-23-02............................... 10.330 BB- 425 421,188
System Energy Resources,
1st Mtg 04-01-98................................................ 6.000 BBB- 2,000 1,911,700
-----------
12,974,935
-----------
TOTAL PUBLICLY TRADED BONDS
(Cost $91,463,050) (98.02%) 88,014,704
------ -----------
COMMON STOCK
TELECOMMUNICATIONS (0.31%)
Viatel, Inc.,
*Common Stock.................................................... 72,200 281,580
TOTAL COMMON STOCK
(Cost $281,580) (0.31%) 281,580
------ -----------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (0.56%)
Investment in a joint repurchase agreement transaction
with U.B.S. Securities Inc., Dated 03-31-95, Due 04-03-95
(secured by U.S. Treasury Bond, 6.250%, due 08-15-23,
and U.S. Treasury Notes, 5.250% thru 9.125%
due 07-31-98 thru 05-15-01) - Note A............................ 6.125 501 501,000
-----------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% ............................................. 727
-----------
TOTAL SHORT-TERM INVESTMENTS (0.56%) 501,727
------ -----------
TOTAL INVESTMENTS (98.89%) $88,798,011
====== ===========
</TABLE>

NOTES TO THE SCHEDULE OF INVESTMENTS

(R) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. Rule 144A
securities amounted to $6,625,687 as of March 31, 1995. See Note A of the
Notes to Financial Statements for valuation policy.
*Securities, other than short-term investments, newly added to the portfolio
during the year ended March 31, 1995.
**Credit ratings are unaudited and are rated by Moody's Investor Services or
John Hancock Advisers, Inc. where Standard and Poors ratings are not
available.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.

SEE NOTES TO FINANCIAL STATEMENTS.

13
<PAGE> 98

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

NOTE A --
ACCOUNTING POLICIES

John Hancock Bond Fund, (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock Investment Quality Bond
Trust (the "Fund"), John Hancock Government Securities Trust, John Hancock U.S.
Government Trust, John Hancock Intermediate Government Trust and John Hancock
Adjustable Government Trust. The Trustees may authorize the creation of
additional Funds from time to time to satisfy various investment objectives.
Effective December 22, 1994 (see Note B), the Trust and Funds changed names by
replacing the word Transamerica with John Hancock.

The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemption, dividends, and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a class
which bears distribution/service expenses under the terms of a distribution plan
have exclusive voting rights regarding such distribution plan. Class A Shares
are subject to an initial sales charge of up to 4.75% and a 12b-1 distribution
plan. Class B Shares are subject to a contingent deferred sales charge and a
separate 12b-1 distribution plan. On June 30, 1993, Class B shares were sold to
commence class activity. Significant accounting policies of the Fund are as
follows:

JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., a wholly-owned subsidiary of The Berkeley Financial Group, may
participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring
that the agreement is fully collateralized at all times.

REVERSE REPURCHASE AGREEMENT Prior to December 22, 1994, the Fund entered into
reverse repurchase agreements which involve the sale of securities held by the
Fund to a bank or securities firm with an agreement that the Fund will buy back
the securities at a fixed future date at a fixed price plus an agreed amount of
"interest" which may be reflected in the repurchase price. Reverse repurchase
agreements are considered to be borrowings by the Fund and the Fund used the
proceeds obtained from the sale of securities to purchase other investments. On
December 22, 1994, the Fund discontinued investing in reverse repurchase
agreements.

OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked" prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked-to-market to reflect the current market
value of the written option.

The Fund may use option contracts to manage its exposure to the stock
market. Writing puts and buying calls will tend to increase the Fund's exposure
to the underlying instrument and buying puts and

14
<PAGE> 99

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

writing calls will tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments.

Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options have
minimal credit risk as the exchanges act as counterparties to each transaction,
and only present liquidity risk in highly unusual market conditions. To minimize
credit and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.

At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.

There were no written option transactions for the period ended March 31,
1995.

FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates, currency exchange rates and other market
conditions. At the time the Fund enters into a financial futures contract, it
will be required to deposit with its custodian a specified amount of cash or
U.S. government securities, known as "initial margin", equal to a certain
percentage of the value of the financial futures contract being traded. Each
day, the futures contract will be valued at the official settlement price of
the board of trade or U.S. commodities exchange. Subsequent payments, known as
"variation margin", to and from the broker will be made on a daily basis as the
market price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market", will be recorded by the
Fund as unrealized gains or losses.

When the contracts are closed, the Fund will recognize a gain or loss.
Risks of entering into futures contracts include the possibility that there may
be an illiquid market and/or that a change in the value of the contracts may not
correlate with changes in the value of the underlying securities. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange.

For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures contracts.

At March 31, 1995, open positions in financial futures contracts are as
follows:

<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITIONS APPRECIATION
- ---------- -------------- --------- ------------
<S> <C> <C> <C>
JUNE 1995 35 U.S. TREASURY NOTE LONG $19,687
=======
</TABLE>
At March 31, 1995, the Fund has deposited in a segregated account
$6,888,500 par value of U.S. Treasury Bond 12.625%, 5/15/95, and $1,000,000 par
value of FHR, 4.500%, 5/15/14 to cover margin requirements on open financial
futures contracts.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into forward
foreign currency exchange contracts as a hedge against the effect of
fluctuations in currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date at a set price. The aggregate principal amounts of the contracts
are marked-to-market daily at the applicable foreign currency exchange rates.
Any resulting unrealized gains and losses are included in the determination of
the Fund's daily net assets. The Fund records realized gains and losses at the
time the forward foreign currency contract is closed out or offset by a
matching contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and

15
<PAGE> 100

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign currency.
Such contracts normally involve no market risk other than that offset by the
currency amount of the underlying transaction.

At March 31, 1995, there were no open forward foreign currency exchange
contracts.

FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in
terms of foreign currencies are translated into U.S.dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/loss on investments are
translated at the rates prevailing at the dates of the transactions.

The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.

Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.

FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, at December 31, 1994, the Fund has
approximately $17,700,000 of capital loss carryforwards available, to the
extent provided by regulations, to offset future net realized capital gains. If
such carryforwards are used by the Fund, no capital gain distributions will be
made. The carryforwards expire as follows: 1996 -- $3,500,000, 1997 --
$1,400,000, 1998 -- $1,900,000, 2000 -- $800,000 and 2002 -- $10,100,000. The
Fund's tax year end is December 31.

DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis. Foreign income may be subject to foreign
withholding taxes which are accrued as applicable.

EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not readily identifiable to a specific
Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Fund.

16
<PAGE> 101

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

RECLASSIFICATION Certain reclassifications have been made to 1994 amounts to
permit comparisons to 1995 presentations.

NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS

Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment program
equivalent, to 0.6250% of the first $75,000,000 of the Fund's average daily net
asset value, 0.5625% of the next $75,000,000, and 0.5000% of the Fund's average
daily net asset value in excess of $150,000,000. This fee structure is
consistent with the former agreement with TFMC. For the period ended March 31,
1995, the advisory fee earned by the Adviser and TFMC amounted to $144,190 and
$432,568, respectively, resulting in a total fee of $576,758.

On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a
wholly-owned subsidiary of the Adviser, became the principal underwriter of the
Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD") served as
the principal underwriter and distributor of the Fund. For the period ended
March 31, 1995, JH Funds and TFD received net sales charges of $78,495 with
regard to sales of Class A shares. Out of this amount, $8,693 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, and $69,802 was paid as sales commissions to unrelated broker-dealers.

17
<PAGE> 102

NOTES TO FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond Fund

May 12, 1995, inclusive under which Investor Services processed telephone
transactions on behalf of the Fund. As of May 15, 1995, the Fund entered into a
full service transfer agent agreement with Investor Services. Prior to this
date The Shareholder Services Group was the transfer agent. The Fund will pay
Investor Services a fee based on transaction volume and number of shareholder
accounts.

A partner with Baker & Botts was an officer of the Trust until December
22, 1994. During the period ended March 31, 1995, legal fees paid to Baker &
Botts amounted to $7,205.

NOTE C --
INVESTMENT TRANSACTIONS

Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended March 31, 1995 aggregated $184,032,683 and
$187,313,862, respectively.

The cost of investments owned at March 31, 1995 for Federal income tax
purposes was $92,245,630. Gross unrealized appreciation and depreciation of
investments aggregated $478,319, and $3,926,665, respectively, resulting in net
unrealized depreciation of $3,448,346.

18
<PAGE> 103

John Hancock Funds - Investment Quality Bond Fund

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

To the Board of Trustees and Shareholders of
John Hancock Bond --
John Hancock Investment Quality Bond Fund

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Investment Quality Bond Fund
(formerly the Transamerica Investment Quality Bond Fund) (the "Fund"), one of
the portfolios constituting John Hancock Bond Fund (formerly the Transamerica
Bond Fund) (the "Trust"), as of March 31, 1995, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and brokers, or other appropriate
auditing procedures where replies from brokers were not received. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the John Hancock Investment Quality Bond Fund portfolio of John
Hancock Bond Fund at March 31, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.

Ernst & Young LLP
Boston, Massachusetts
May 15, 1995

19
<PAGE> 104

ADDITIONAL INFORMATION

John Hancock Funds - Investment Quality Bond Fund

On December 16, 1994, a special meeting of John Hancock (formerly Transamerica)
Bond Fund (the "Trust") in respect of John Hancock (formerly Transamerica)
Investment Quality Bond Fund (the "Fund") was held involving the election of
trustees and certain other matters concerning the Fund.

Specifically, shareholders first approved a new investment management
agreement between the Trust on behalf of the Fund and John Hancock Advisers,
Inc. on substantially similar terms to the prior investment management
agreement, to take effect on December 22, 1994, the date of the consummation of
the acquisition of Transamerica Fund Management Company by The Berkeley
Financial Group. The shareholder votes tallied were 6,895,192 FOR, 101,276
AGAINST and 351,047 ABSTAINING.

The shareholders next approved new Plans of Distribution for each Class
A and Class B Shares of the Fund, also effective on December 22, 1994 and also
on substantially the same terms as the prior Plans of Distribution. The Class A
Shareholder votes tallied were 6,243,178 FOR, 130,082 AGAINST, 403,690
ABSTAINING. The Class B Shareholder votes tallied were 542,718 FOR, 11,779
AGAINST and 16,068 ABSTAINING.

The shareholders also voted to ratify the selection of Ernst & Young,
LLP as independent auditors for the Fund for the fiscal year ending March 31,
1995, and the votes were 7,091,522 FOR, 46,783 AGAINST and 46,783 ABSTAINING.

Lastly, the following trustees were elected to serve until their
respective successors shall become duly elected and qualified, with the votes
tabulated as indicated:

<TABLE>
<CAPTION>
NAME OF TRUSTEE FOR WITHHOLD
- --------------- --- --------
<S> <C> <C>
Edward J. Boudreau, Jr. ................................ 6,582,352 827,810
James F. Carlin......................................... 6,582,707 827,455
William H. Cunningham................................... 6,583,507 826,655
Charles L. Ladner....................................... 6,581,120 829,041
Leo E. Linbeck, Jr. .................................... 6,582,363 827,799
Patricia P. McCarter.................................... 6,579,957 830,204
Steven R. Pruchansky.................................... 6,580,909 829,252
Norman H. Smith......................................... 6,582,707 827,455
John P. Toolan.......................................... 6,582,707 827,455
</TABLE>

TAX INFORMATION NOTICE (UNAUDITED)

Shareholders will be mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996. This will reflect the total of all distributions which
are taxable for calendar year 1995.

20
<PAGE> 105

NOTES

John Hancock Funds - Investment Quality Bond Fund

21
<PAGE> 106

NOTES

John Hancock Funds - Investment Quality Bond Fund

22
<PAGE> 107

NOTES

John Hancock Funds - Investment Quality Bond Fund

23
<PAGE> 108

[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
Brockton, MA
Permit No. 582

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- -------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Investment Quality Bond Fund. It may be used as sales literature when preceded
or accompanied by the current prospectus, which details charges, investment
objectives and operating policies.

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JHF T120A 03/95