<PAGE> 1
John Hancock Funds
- --------------------------------------------------------------------------------
Intermediate
Maturity
Government
Fund
SEMI-ANNUAL REPORT
September 30, 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
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
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
Investors around the world have been watching Wall Street in awe for the
better part of 1995. Through September, the Dow Jones Industrial Average had
reached record highs and had grown, along with the Standard & Poor's 500-Stock
Index, by more than 20%. Investors who stayed in the market after a
disappointing 1994 have been rewarded.
On another street, Pennsylvania Avenue, one of the hot topics many people are
watching is Medicare reform. While the Congressional rhetoric is just beginning
to heat up, today's Medicare debate should serve as another wake-up call to all
Americans about the need to have a financial plan and to save for retirement.
Whether or not the government changes the way health-care benefits are allotted
to senior citizens, the message is clear: your future security and well-being
lies in your own hands -- not Uncle Sam's.
We know you've heard it a hundred times. Pick up almost any financial
periodical today, and you'll see cover stories on retirement. Many of them will
perhaps scare you or make you think that the task of saving for retirement is
just too daunting. But take heart. We don't believe that and neither do many
financial experts.
Yet retirement planning is not to be taken lightly. To live the way you want
to -- the way you deserve to after all those years of hard work -- you need to
plan and save now, on a regular basis, no matter what your other costs, no
matter how small the amount, no matter what your current age. It may be easier
if you start earlier, but it's never too late.
Building a secure nest egg is indeed doable. Talk to your financial adviser
about establishing your retirement planning roadmap, if you haven't already. And
educate yourself by reading some of the many articles about how to save for
retirement. Take control of your future by saving today. That way, when it comes
time for retirement, you shouldn't have to think about any street but Easy
Street.
Sincerely,
/s/ EDWARD J. BOUDREAU, JR.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
[A 2 1/2" x 3 1/4" photo of Barry H. Evans, bottom right. Caption reads: "Barry
H. Evans."]
BY BARRY H. EVANS FOR THE PORTFOLIO MANAGEMENT TEAM
John Hancock
Intermediate Maturity
Government Fund
Bonds continue up, but climb is rocky
During the summer, shareholders of John Hancock Adjustable U.S. Government Trust
voted to change the investment objective of their Fund, which became John
Hancock Intermediate Maturity Government Fund. Shareholders of two other funds -
John Hancock Intermediate Government Trust and John Hancock U.S. Government
Trust - approved the merger of their funds into John Hancock Intermediate
Maturity Government Fund. These changes became effective September 22, 1995.
So far, 1995 has been the best of times for bond investors. Inflation has stayed
low, and bond prices have risen nicely. It has been a nice reward to patient
bond investors who lived through 1994, the worst year for bonds in recent
memory. But the climb hasn't been straight uphill, especially recently. Since
April, there have been several retreats -- each time when it seemed the economy
might be speeding up.
In May and June, reports of weakness raised the possibility that the economy
was headed into recession. Conflicting signs of strong economic growth caused a
few hiccups. But generally yields fell and bond prices rose. To stimulate the
economy, the Federal Reserve cut short-term interest rates in early July. But
investors had already anticipated the move,
[CAPTION]
"...1995
has been
the best
of times
for bond
investors."
3
<PAGE> 4
John Hancock Funds - Intermediate Maturity Government Fund
[A pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into three sections. Going from top left to right:
U.S. Government Agency Bonds 74%, Other 1%, U.S. Treasury Bonds 25%. A footnote
states: "As a percentage of net assets on September 30, 1995."]
so it had little impact on bond prices. In August, new data showed the economy
wasn't going into recession. Revived inflation fears, coupled with a huge
auction of new Treasury bonds, drove bond prices down to mid-May levels. But in
actuality, inflation stayed in check, so prices returned to their August highs
by the end of September.
TREASURIES BEAT MORTGAGES
Most types of bonds posted gains during the six months from April through
September. Treasuries with 10-year maturities returned 10%, while traditional
mortgage bonds returned 7.56%. Treasuries -- which are more sensitive to changes
in interest rates -- took the lead in the second quarter. But mortgage bonds
rebounded in August as interest rates rose. Adjustable-rate mortgages (ARMs),
however, returned their stated interest rates (or coupons), but their prices
fluctuated little.
During this period, the John Hancock Adjustable U.S. Government Trust (now
known as John Hancock Intermediate Maturity Government Fund) nicely outperformed
its peer group. For the six months ended September 30, 1995, the Fund's Class A
and B shares had total returns of 3.66% and 3.35%, respectively, at net asset
value, compared to the average adjustable-rate mortgage fund's 1.93% return over
the same period, according to Lipper Analytical Services.(1) The Fund benefited
from being more heavily invested in ARMs than most of its peers, with the
balance of its assets in Treasuries, rather than cash. ARMs and Treasuries
generally outperform cash instruments, which are typically less risky but have
lower yields.
HIGHER INCOME, GREATER DIVERSIFICATION
At the end of September, the Fund's investment objective changed. Renamed John
Hancock Intermediate Maturity Government Fund, it gained the flexibility to
invest in securities other than ARMs. Greater diversification enables the Fund
to better pursue a high level of income, while spreading out the risks
associated with sector-specific funds.
Going forward, we plan to keep the Fund's average maturity around five years.
The benefit of five-year Treasuries is that they yield almost as much as 30-year
Treasuries, with much less interest rate risk. To achieve an average maturity of
five years, we'll buy fixed-income securities at opposite ends of the maturity
spectrum in roughly equal weightings. This tactic is known as a barbell strategy
[CAPITON]
"At the
end of
September,
the Fund's
investment
objective
changed."
4
<PAGE> 5
John Hancock Funds - Intermediate Maturity Government Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote "For the six months ended September 30, 1995." The
chart is scaled in increments of 3% from top to bottom with 6% at the top and
0% at the bottom. Within the chart, there are three solid bars. The first
represents the 3.66% total return for John Hancock Intermediate Maturity
Government Fund: Class A. The second represents the 3.35% total return for the
John Hancock Intermediate Maturity Government Fund: Class B. The third
represents the 1.93% total return for the average adjustable-rate mortgage
fund. Footnote below reads: "The total returns for John Hancock Intermediate
Maturity Government Fund are at net asset value with all distributions
reinvested. The average adjustable-rate mortgage fund is tracked by Lipper
Analytical Services. See "A Look at Performance" page for historical
performance information."]
because it's heavy on both ends and light in the middle. On the "short" end will
be ARMs and Treasuries averaging about one year. On the "long" end will be
mortgage bonds and bonds issued by government agencies, both averaging around 10
years. This gives us the benefit of a five-year average maturity, plus more
income.
Soon after the Fund's rebirth, we increased its duration -- a measure of
interest rate risk -- to 3.5 years. When the Fund invested primarily in ARMs,
its average duration was two years. The longer a bond's duration, the more its
price will fluctuate in response to movements in interest rates. The Fund now
has more flexibility to take advantage of falling interest rates and find
shelter when rates are rising.
INCREASE IN TRADITIONAL MORTGAGES,
DECREASE IN ARMS
At the end of September, the Fund had about a 75% stake in mortgages. Of this,
half was in traditional mortgage-backed securities issued by the Government
National Mortgage Association (GNMAs or "Ginnie Maes") and other government
agencies; the other half in ARMs. The rest of the Fund's assets were in
Treasuries and cash.
But change is ahead. First, we plan to increase our stake in traditional
government-issued mortgage-backed securities. We'll focus on mortgages issued
between one and five years ago. They offer less prepayment risk than
newly-issued mortgages, whose holders, still familiar with the relatively
painless refinancing process, are more likely to pay off their mortgage early
and refinance at a lower rate if interest rates keep falling. Prepayments erode
a bond fund's steady level of income, leaving it with money to invest at a
potentially lower rate of return. Another reason we're targeting mortgages
issued between one and five years ago is that they are cheaper than older
mortgages.
Second, we plan to reduce the Fund's investment in ARMs. For those that we do
own, the focus will be on Ginnie Mae ARMs, which are backed by the full faith
and credit of the U.S. government. As a result, they're slightly easier to buy
and sell than ARMs issued by other agencies. We'll also buy mostly ARMs with
coupons that match current rates. They have the advantage of being more liquid
than older coupons and are less likely to be prepaid.
[CAPITON]
"...there are
no engines
to push the
economy into
overdrive."
5
<PAGE> 6
John Hancock Funds - Intermediate Maturity Government Fund
LONG-TERM OPTIMISM
Going into 1996, the bond market's prospects seem bright. Inflation is low, and
there are many reasons to believe it will remain in check. Demand for capital
goods has been fueling the economy's growth, but seems to be waning. Plus, since
consumer debt levels are high right now, we don't expect a flurry of consumer
spending that typically fuels higher prices. So there are no engines to push the
economy into overdrive.
We're optimistic for other reasons as well. If the U.S. government reduces
the deficit, it will be able to borrow at lower rates and cut inflation. And
with U.S. stocks up 27% in the first nine months of 1995, equity investors may
start taking profits by selling some of their stock holdings. If they do, bonds
would be a logical place for them to invest the proceeds. Finally, the dollar
looks like it may be closer to stabilizing relative to foreign currencies. This
could attract more foreign investors to U.S. bonds, since they won't have to
worry as much about losing money when they exchange back into their own
currency. Even if we see volatility in the near term, we'll consider it a buying
opportunity for the strong prospects ahead.
6
<PAGE> 7
A LOOK AT PERFORMANCE
- --------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for John Hancock Intermediate Maturity Government Fund. Total
return is a performance measure that equals the sum of all income and capital
gains dividends, assuming reinvestment of these distributions, and the change in
the price of the Fund's shares, expressed as a percentage of the Fund's shares.
Performance figures include the maximum applicable sales charge of 3% for Class
A shares. The effect of the maximum contingent deferred sales charge for Class B
shares (maximum 3% and declining to 0% over four years) is included in Class B
performance. (Performance is affected by a 12b-1 plan, which commenced on
December 31, 1991 for both Class A and Class B shares.) Remember that all
figures represent past performance and are no guarantee of how the Fund will
perform in the future. Also, keep in mind that the total return and share price
of the Fund's investments will fluctuate. As a result, your Fund's shares may be
worth more or less than their original cost, depending on when you sell them.
Note: Participant-directed defined-contribution plans with at least 100 eligible
employees at inception of the Fund account may purchase Class A shares without
an initial sales charge as of March 15, 1995. If those shares are redeemed,
however, during the year following the calendar year end during which they were
purchased, a contingent deferred sales charge will be assessed.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
ONE LIFE OF
YEAR FUND(1)
---- -------
<S> <C> <C>
John Hancock Intermediate Maturity Government
Fund: Class A 4.01% 13.50%
John Hancock Intermediate Maturity Government
Fund: Class B 3.56% 14.67%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
ONE LIFE OF
YEAR FUND(1)
---- -------
<S> <C> <C>
John Hancock Intermediate Maturity Government
Fund: Class A 4.01% 4.02%
John Hancock Intermediate Maturity Government
Fund: Class B 3.56% 3.72%
</TABLE>
<TABLE>
<CAPTION>
YIELDS
- --------------------------------------------------------------------------------
AS OF SEPTEMBER 30, 1995
SEC 30-DAY
YIELD
-----
<S> <C>
John Hancock Intermediate Maturity Government
Fund: Class A 6.38%
John Hancock Intermediate Maturity Government
Fund: Class B 5.92%
</TABLE>
NOTES TO PERFORMANCE
(1) Class A and Class B shares started on December 31, 1991.
7
<PAGE> 8
WHAT HAPPENED TO A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[ John Hancock Intermediate Maturity Government Fund
Class A shares
Line chart with the heading John Hancock Intermediate Maturity Government
Fund: Class A, representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are four lines.
The third line represents the value of the hypothetical $10,000 investment
made in the John Hancock Intermediate Maturity Government Fund on December 31,
1991, before sales charge, and is equal to $11,951 as of September 30, 1995.
The fourth line represents the John Hancock Intermediate Maturity Government
Fund after sales charge and is equal to $11,350 as of September 30, 1995. The
first line represents the value of the Lehman Government Bond Index and is
equal to $12,975 as of September 30, 1995. The second line represents the
value of the Lipper Intermediate U.S. Government Index and is equal to $12,246
as of September 30, 1995. ]
[ John Hancock Intermediate Maturity Government Fund
Class B shares
Line chart with the heading John Hancock Intermediate Maturity Government
Fund: Class B, representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are four lines.
The third line represents the value of the hypothetical $10,000 investment
made in the John Hancock Intermediate Maturity Government Fund on December 31,
1991, before sales charge, and is equal to $11,667 as of September 30, 1995.
The fourth line represents the John Hancock Intermediate Maturity Government
Fund after sales charge and is equal to $11,467 as of September 30, 1995. The
first line represents the value of the Lehman Government Bond Index and is
equal to $12,975 as of September 30, 1995. The second line represents the
value of the Lipper Intermediate U.S. Government Index and is equal to $12,246
as of September 30, 1995. ]
The charts on the right show how much a $10,000 investment in John Hancock
Intermediate Maturity Government Fund would be worth on September 30, 1995,
assuming you invested on the day each class of shares started and reinvested all
distributions. For comparison, we've shown the same $10,000 investment in both
the Lipper Intermediate U.S. Government Index and Lehman Government Bond Index.
The Lipper Intermediate U.S. Government Index is an equally weighted, unmanaged
index that measures the performance of funds with at least 65% of their assets
in securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities with dollar-weighted average maturities of five to ten years.
The Lehman Government Bond Index is an unmanaged index that measures the
performance of U.S. Treasury bonds and U.S. Government Agency bonds.
[LEGEND]
[SYMBOL] Intermediate Maturity Government Fund
(not including maximum sales charge)
[SYMBOL] Intermediate Maturity Government Fund
(including maximum sales charge)
[SYMBOL] Lehman Government Bond Index
[SYMBOL] Lipper Intermediate U.S. Government Index
8
<PAGE> 9
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments at value - Note C:
United States government and agencies obligations
(cost - $42,358,118) .................................... $ 42,944,700
Cash ....................................................... 99,266
Receivable for investments sold ............................ 11,694
Receivable for shares sold ................................. 24,935
Interest receivable ........................................ 384,932
Receivable for mortgage backed security .................... 33,413
Receivable from John Hancock Advisers, Inc. - Note B ....... 164,852
Deferred organization expenses ............................. 12,110
Miscellaneous assets ....................................... 6,544
------------
Total Assets ............................. 43,682,446
============================================================
LIABILITIES:
Dividend payable ........................................... 7,106
Payable for shares repurchased ............................. 4,410
Payable to John Hancock Advisers, Inc. .....................
and affiliates - Note B ................................... 38,622
Accounts payable and accrued expenses ...................... 141,728
------------
Total Liabilities ........................ 191,866
------------------------------------------------------------
NET ASSETS:
Capital paid-in ............................................ 43,934,714
Accumulated net realized loss on investments ............... (1,053,961)
Net unrealized appreciation of investments ................. 586,582
Undistributed net investment income ........................ 23,245
------------
Net Assets ............................... $ 43,490,580
============================================================
------------------------------------------------------------
NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest
outstanding - unlimited number of shares authorized
with no par value, respectively)
Class A - $33,831,096 / 3,437,852 .......................... $ 9.84
==============================================================================
------------------------------------------------------------------------------
Class B - $9,659,484 / 981,582 ............................. $ 9.84
==============================================================================
------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($9.84 x 103.09%) ................................ $ 10.14
==============================================================================
------------------------------------------------------------------------------
</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 ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON SEPTEMBER 30, 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>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended September 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
INVESTMENT INCOME:
Interest ..................................................... $ 801,578
---------
Expenses:
Investment management fee - Note B .......................... 56,724
Custodian fee ............................................... 45,087
Distribution/service fee - Note B
Class A ................................................... 18,751
Class B ................................................... 43,028
Legal fees .................................................. 42,054
Auditing fee ................................................ 37,049
Printing .................................................... 27,672
Registration and filing fees ................................ 13,643
Transfer agent fee .......................................... 13,411
Organization expense - Note A ............................... 4,846
Miscellaneous ............................................... 1,418
Advisory board fee .......................................... 1,302
=========
Total Expenses ............................. 304,985
Less expenses reimbursable
by John Hancock Advisers,
Inc. - Note B .............................. (188,549)
------------------------------------------------------------
Net Expenses ............................... 116,436
------------------------------------------------------------
Net Investment Income ...................... 685,142
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold ........................ (62,329)
Change in net unrealized appreciation/depreciation
of investments .............................................. 298,141
---------
Net Realized and Unrealized
Gain on Investments ........................ 235,812
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .................. $ 920,954
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1995 MARCH 31,
(UNAUDITED) 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ......................................................................... $ 685,142 $ 1,338,090
Net realized loss on investments sold ......................................................... (62,329) (520,533)
Change in net unrealized appreciation/depreciation of investments ............................. 298,141 111,364
------------ ------------
Net Increase in Net Assets Resulting from Operations ......................................... 920,954 928,921
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.3080 and $0.4823 per share, respectively) ...................................... (435,163) (858,632)
Class B - ($0.2759 and $0.4220 per share, respectively) ...................................... (259,616) (466,720)
------------ ------------
Total Distributions to Shareholders ........................................................ (694,779) (1,325,352)
------------ ------------
FROM FUND SHARE TRANSACTIONS-- NET* ............................................................. 20,808,989 (13,084,232)
------------ ------------
NET ASSETS:
Beginning of period ........................................................................... 22,455,416 35,936,079
------------ ------------
End of period (including undistributed net investment income of
$23,245 and $16,337, respectively) ........................................................... $ 43,490,580 $ 22,455,416
============ ============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1995 MARCH 31,
(UNAUDITED) 1995
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ...................................................... 1,309,659 $ 12,888,035 402,099 $ 3,948,024
Shares issued in reorganization - Note D ......................... 2,305,865 22,643,129 -- --
Shares issued to shareholders in reinvestment of distributions ... 19,351 190,416 53,589 522,853
------------ ------------ ------------ ------------
3,634,875 35,721,580 455,688 4,470,877
Less shares repurchased .......................................... (1,520,418) (14,998,624) (1,590,669) (15,565,847)
------------ ------------ ------------ ------------
Net increase (decrease) .......................................... 2,114,457 $ 20,722,956 (1,134,981) $(11,094,970)
============ ============ ============ ============
CLASS B
Shares sold ...................................................... 67,366 $ 622,778 244,622 $ 2,378,527
Shares issued in reorganization - Note D ......................... 77,218 758,254 -- --
Shares issued to shareholders in reinvestment of distributions ... 16,174 159,155 30,065 293,677
------------ ------------ ------------ ------------
160,758 1,540,187 274,687 2,672,204
Less shares repurchased .......................................... (150,622) (1,454,154) (478,404) (4,661,466)
------------ ------------ ------------ ------------
Net increase (decrease) .......................................... 10,136 $ 86,033 (203,717) $ (1,989,262)
============ ============ ============ ============
</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 THAT SHAREHOLDERS HAVE
INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD,
REINVESTED AND REDEEMED DURING THE PERIOD, ALONG WITH THE CORRESPONDING DOLLAR
VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
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:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS ENDED DECEMBER 31, 1991
SEPTEMBER 30, YEAR ENDED MARCH 31, (COMMENCEMENT
CLASS A 1995(e) ---------------------------------------- OF OPERATIONS)
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 1995(d) 1994 1993 TO MARCH 31, 1992
----------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......... $ 9.79 $ 9.89 $ 10.05 $ 10.03 $ 10.00(b)
---------- ---------- ---------- ---------- ----------
Net Investment Income ........................ 0.31 0.49 0.41 0.58 0.17
Net Realized and Unrealized Gain (Loss)
on Investments .............................. 0.05 (0.11) (0.16) 0.02 0.03
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ............ 0.36 0.38 0.25 0.60 0.20
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ......... (0.31) (0.48) (0.41) (0.58) (0.17)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ............... $ 9.84 $ 9.79 $ 9.89 $ 10.05 $ 10.03
========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value ... 3.66%(c) 3.98% 2.51% 6.08% 1.96%(c)
Total Adjusted Investment Return at Net
Asset Value (a) ............................. 2.84%(c) 3.43% 2.27% 5.53% 0.84%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .... $ 33,831 $12,950 $24,310 $33,273 $13,775
Ratio of Expenses to Average Net Assets ** ... 0.75%* 0.75% 0.75% 0.50% 0.50%*
Ratio of Adjusted Expenses to Average Net
Assets (a) .................................. 2.39%* 1.30% 0.99% 1.05% 1.62%*
Ratio of Net Investment Income to Average
Net Assets ** ............................... 6.51%* 4.91% 4.09% 5.47% 6.47%*
Ratio of Adjusted Net Investment Income to
Average Net Assets (a) ...................... 4.87%* 4.36% 3.85% 4.92% 5.35%*
Portfolio Turnover Rate ...................... 109% 341% 244% 186% 1%
**Expense Reimbursement per share ............ $ 0.07 $ 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.
11
<PAGE> 12
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
FINANCIAL HIGHLIGHTS (continued)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS ENDED DECEMBER 31, 1991
SEPTEMBER 30, YEAR ENDED MARCH 31, (COMMENCEMENT
CLASS B 1995(e) ---------------------------------------- OF OPERATIONS)
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 1995(d) 1994 1993 TO MARCH 31, 1992
----------- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 9.79 $ 9.89 $ 10.05 $ 10.03 $ 10.00(b)
----------- ----------- ----------- ---------- ----------------
Net Investment Income......................... 0.28 0.43 0.34 0.51 0.15
Net Realized and Unrealized Gain (Loss)
on Investments............................... 0.05 (0.11) (0.16) 0.02 0.03
----------- ----------- ----------- ---------- ----------------
Total from Investment Operations............. 0.33 0.32 0.18 0.53 0.18
----------- ----------- ----------- ---------- ----------------
Less Distributions:
Dividends from Net Investment Income.......... (0.28) (0.42) (0.34) (0.51) (0.15)
---------- ----------- ----------- ----------- ----------------
Net Asset Value, End of Period................ $ 9.84 $ 9.79 $ 9.89 $ 10.05 $ 10.03
=========== =========== =========== =========== ================
Total Investment Return at Net Asset Value.... 3.35%(c) 3.33% 1.85% 5.40% 1.80%(c)
Total Adjusted Investment Return at Net
Asset Value.................................. 2.53%(c) 2.78% 1.61% 4.85% 0.68%(c)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)..... $ 9,659 $ 9,506 $11,626 $13,753 $1,630
Ratio of Expenses to Average Net Assets **.... 1.40%* 1.40% 1.40% 1.15% 1.15%*
Ratio of Adjusted Expenses to Average Net
Assets (a)................................... 3.04%* 1.95% 1.64% 1.70% 2.27%*
Ratio of Net Investment Income to Average
Net Assets **................................ 5.11%* 4.26% 3.44% 4.82% 5.85%*
Ratio of Adjusted Net Investment Income to
Average Net Assets (a)....................... 3.47%* 3.71% 3.20% 4.27% 4.73%*
Portfolio Turnover Rate....................... 109% 341% 244% 186% 1%
** Expense Reimbursement per share............ $ 0.07 $ 0.05 $ 0.002 $ 0.06 $ 0.11
</TABLE>
* 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.
(e) As of September 22, 1995 the Fund changed its name from John Hancock
Adjustable U.S. Government Trust to John Hancock Intermediate Maturity
Government Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
SCHEDULE OF INVESTMENTS
September 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
INTERMEDIATE MATURITY GOVERNMENT FUND ON SEPTEMBER 30, 1995. IT CONSISTS OF U.S.
GOVERNMENT AND AGENCIES OBLIGATIONS.
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- --------- ------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS
GOVERNMENTAL - U.S. (24.85%)
United States Treasury, Notes, Due 05-15-00..................................... 8.875% $2,865 $ 3,196,710
United States Treasury, Bond, Due 08-15-03...................................... 11.125 3,685 4,799,123
United States Treasury, Bond, Due 08-15-13...................................... 12.000 1,910 2,810,393
----------
10,806,226
----------
GOVERNMENTAL - U.S. AGENCIES (73.89%)
Federal Home Loan Mortgage Corp,
Adjustable Rate Mortgage
Due 10-01-18.................................................................... 6.197 269 267,304
Due 10-01-18.................................................................... 6.250 144 140,653
Due 05-01-17.................................................................... 6.324 10 10,150
Due 02-01-19.................................................................... 6.391 31 29,884
Due 05-01-17.................................................................... 7.375 54 53,829
Due 05-01-16.................................................................... 7.625 6 6,164
Due 03-01-19.................................................................... 7.639 1,921 1,976,226
Due 10-01-18.................................................................... 7.750 59 59,572
Federal National Mortgage Association,
Adjustable Rate Mortgage
Due 04-01-19.................................................................... 6.065 45 44,595
Due 04-01-16.................................................................... 6.625 492 494,328
Due 03-01-14.................................................................... 6.991 35 35,453
Due 06-01-14.................................................................... 6.991 24 24,565
Due 10-01-10.................................................................... 7.000 2,450* 2,457,656
Due 11-01-13.................................................................... 7.120 104 104,219
Due 03-01-27.................................................................... 7.350 41 40,872
Due 10-01-19.................................................................... 7.563 1,562 1,590,375
Due 10-01-17.................................................................... 7.626 935* 956,211
Due 07-01-16.................................................................... 7.750 46 46,430
Due 09-01-18.................................................................... 7.905 2,083 2,153,354
Due 05-01-17.................................................................... 8.000 52 52,678
Due 09-01-18.................................................................... 8.003 1,469 1,518,855
Due 10-01-17.................................................................... 8.200 246 272,971
Due 06-01-19.................................................................... 8.366 969 1,002,763
Due 08-01-24.................................................................... 8.500 1,517* 1,570,990
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- --------- ------
<S> <C> <C> <C>
GOVERNMENTAL - U.S. AGENCIES (CONTINUED)
Government National Mortgage Association,
30 Yr SF Pass thru Ctf 05-15-24................................................... 7.500% $2,139* $ 2,162,420
30 Yr SF Pass thru Ctf 05-15-24 to 11-15-24....................................... 8.000 3,823* 3,933,796
30 Yr SF Pass thru Ctf 04-15-16 to 01-15-17....................................... 9.000 3,784* 4,023,087
30 Yr SF Pass thru Ctf 05-15-15................................................... 11.500 8 9,462
30 Yr SF Pass thru Ctf 02-15-14................................................... 12.000 25 27,399
30 Yr SF Pass thru Ctf 07-15-15................................................... 12.500 66 75,021
GNMA II Due 07-20-25.............................................................. 7.000 6,846* 6,997,192
-----------
32,138,474
-----------
TOTAL U.S. GOVERNMENT AND
AGENCIES OBLIGATIONS
(Cost $42,358,118) (98.74)% 42,944,700
------ -----------
TOTAL INVESTMENTS (98.74)% $42,944,700
====== ===========
</TABLE>
* Securities other than short-term investments, newly added to the portfolio
during the period ended September 30, 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.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
(UNAUDITED) 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 one series portfolio, John
Hancock Intermediate Maturity Government Fund (the "Fund"). Prior to September
22, 1995, the Fund was known as John Hancock Adjustable U.S. Government Trust
and invested all of its assets in John Hancock Adjustable U.S. Government Fund
(The "Portfolio"), and owned 100% of the shares of the Portfolio. After the
close of business on September 22, 1995, the Portfolio was collapsed into the
Fund in a tax-free reorganization. All assets and liabilities of the Portfolio,
including its securities, retaining their original cost, became assets and
liabilities of the Fund. Income and expenses of the Portfolio for the period
from April 1, 1995 to September 22, 1995 have been combined with those of the
Fund in the Statement of Operations. Also after the close of business on
September 22, 1995, John Hancock U.S. Government Trust and John Hancock
Intermediate Government Trust, which were previously series portfolios of the
Trust, were merged into the Fund, in tax-free reorganizations. Two other series
portfolios of the Trust, John Hancock Investment Quality Bond Fund and John
Hancock Government Securities Trust, were merged into other funds sponsored by
John Hancock on September 15, 1995, also as tax-free reorganizations.
The Trustees have authorized the issuance of two classes of shares 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. Shareholders of a class which bears distribution/service
expenses under the terms of a distribution plan have exclusive voting rights
regarding such distribution plan. Significant accounting policies of the Fund
are as follows:
VALUATION OF INVESTMENTS Securities in the Fund 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. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
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 TAX The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. It is the
policy of the Fund to distribute all of its taxable income, including any net
realized gain on investments, to its shareholders within the prescribed time
periods. Therefore, no federal income or excise tax provision is required. For
federal income tax purposes, at December 31, 1994, the Fund has approximately
$55,146,000 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 Fund's
carryforwards expire as follows: 1996 --
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
$39,800,000, 1997 -- $3,015,000, 1998 -- $5,413,000, 1999 -- $654,000, 2000 --
$2,208,000, 2001 -- $23,000 and 2002 -- $4,033,000. The Fund's tax year end is
December 31.
Of the capital loss carryforward expiring in 1996, 1997, 1998, 1999, 2000 and
2002, $39,800,000, $2,986,000, $5,413,000, $654,000, $2,152,000 and $2,500,000,
respectively, were acquired in the merger with John Hancock U.S. Government
Trust (JHUSGT) and the capital loss carryforward expiring in 1997 and 2002,
$29,000 and $706,000, respectively, were acquired in the merger with John
Hancock Intermediate Government Trust (JHIGT).
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 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 Prior to September 22, 1995, the majority of the expenses of the Trust
were directly identifiable to an individual fund. Expenses which were not
readily identifiable to a specific fund were 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 appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
ORGANIZATION EXPENSE Expenses incurred in connection with the organization of
the Fund have been capitalized and are being charged to operations ratably over
a five-year period that began with the commencement of investment operations of
the Fund.
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 at
an annual basis of 0.50% of the Fund's average daily net asset value. Prior to
September 22, 1995, 0.40% represented investment advisory fees paid by the
Portfolio and indirectly by the Fund through its investment in the Portfolio.
The remaining 0.10% was for administrative fees paid directly by the Fund.
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 has temporarily agreed to limit fund expenses until December 31,
1996, including the management fee, to 0.75% and 1.40% of the average net assets
attributable to the Class A and Class B shares, respectively. Accordingly, the
entire Adviser's fee amounting to $56,724 has been waived and the Adviser has
reimbursed the Fund for the remaining excess expenses of $131,825.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended
September 30, 1995, JH Funds received net sales charges of $7,344 with regard to
sales of Class A shares. Out of this amount, $94 was retained and used for
printing prospectuses, advertising, sales literature and other purposes, $7,250
was paid as sales commissions to unrelated broker-dealers and nothing was paid
as sales commissions to sales personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"). The Adviser's indirect parent,
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
John Hancock Mutual Life Insurance Company, is the indirect sole shareholder of
Distributors and John Hancock Freedom Securities Corporation and its
subsidiaries, which include Tucker Anthony and Sutro, which are broker-dealers.
Class B shares which are redeemed within four 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 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 September 30,
1995, contingent deferred sales charges amounted to $23,297.
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. The Fund has
temporarily limited the distribution and service fees attributable to Class B
shares to 0.90% of average daily net assets. 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.
The Board of Trustees approved a shareholder servicing agreement between the
Fund and John Hancock Investors Services Corporation ("Investor Services"), a
wholly owned subsidiary of The Berkeley Financial Group. The Fund pays Investor
Services a fee based on transaction volume and number of shareholder accounts.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser, and its
affiliates as well as a 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 for tax purposes 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 as regards to the deferred compensation. Investments to
cover the deferred compensation liability will be recorded on the books as an
other asset. 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 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. The Fund pays the
advisory board and its counsel a fee.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities by the Fund, other than
short-term obligations, during the period ended September 30, 1995 aggregated
$35,361,575 and $26,570,542 , respectively.
The cost of investments owned by the Fund at September 30, 1995 for Federal
income tax purposes was $42,358,118. Gross unrealized appreciation and
depreciation of investments aggregated $649,226, and $62,644, respectively,
resulting in net unrealized appreciation of $586,582.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
NOTE D --
REORGANIZATION
On September 8, 1995, the shareholders of John Hancock Intermediate Government
Trust, (JHIGT) approved a plan of reorganization between JHIGT and the Fund
providing for the transfer of substantially all of the assets and liabilities of
JHIGT to the Fund in exchange solely for Class A shares and Class B shares of
the Fund. The acquisition after the close of business on September 22, 1995 was
accounted for as a tax free exchange of 672,093 Class A shares, and 48,918 Class
B shares for the net assets of JHIGT which amounted to $6,599,818 and $480,359
for Class A and Class B shares, respectively, including $89,503 of unrealized
appreciation.
Also on September 8, 1995, the shareholders of John Hancock U.S. Government
Trust, (JHUSGT) approved a plan of reorganization between JHUSGT and the Fund
providing for the transfer of substantially all of the assets and liabilities of
JHUSGT to the Fund in exchange solely for Class A shares and Class B shares of
the Fund. The acquisition after the close of business on September 22, 1995 was
accounted for as a tax free exchange of 1,633,772 Class A shares, and 28,300
Class B shares for the net assets of JHUSGT which amounted to $16,043,311 and
$277,895 for Class A and Class B shares, respectively, including $362,315 of
unrealized appreciation.
After the close of business on September 22, 1995, and prior to the
acquisitions referred to above, the Portfolio collapsed into the Fund in a
tax-free reorganization resulting in increases in the Fund's undistributed net
income of $16,545, unrealized appreciation of investments of $183,471
accumulated net realized loss on investments of $203,823 and capital paid-in of
$3,807.
18
<PAGE> 19
NOTES
- --------------------------------------------------------------------------------
John Hancock Funds - Intermediate Maturity Government Fund
19
<PAGE> 20
[ A 1/2" x 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." ]
[ A recycled logo in lower left hand corner with caption "Printed on Recycled
Paper." ]
[ A Postage logo in the upper right corner which reads "Bulk Rate U.S. Postage
PAID Brockton, MA Permit No. 582" ]
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Intermediate Maturity Government Fund. It may be used as sales literature when
preceded or accompanied by the current prospectus, which details charges,
investment objectives and operating policies.
JHD 550SA 9/95
