<PAGE> 1
Q&A FOR ADJUSTABLE U.S. GOVERNMENT TRUST PROXY
EXPLANATION OF THE PROPOSALS:
1) REMOVAL OF THE MASTER/FEEDER OPERATING STRUCTURE, AND REPLACEMENT WITH A
STRUCTURE TRADITIONAL TO MOST MUTUAL FUNDS.
The two-tier structure (chosen by the Fund's original advisor/distributor)
serves no marketing or operational purpose today, is unwieldy to administer and
creates unnecessary regulatory issues.
- This change will be a tax-free event
- This change will not result in any increase in direct or indirect fees
2) TO APPROVE A NEW INVESTMENT MANAGEMENT CONTRACT FOR THE FUND
The previous contract expires with removal of the old operating structure.
3) TO CHANGE THE FUND'S INVESTMENT OBJECTIVE
- Like other government funds with a strong reliance on adjustable rate
securities, this fund has had limited flexibility in changing interest rate
climates. This has hindered its ability to meet the objective of high
current income.
- Since 1993 the fund has lost 50% of its assets.
- The proposed investment objective changes, to those of an intermediate
government bond fund, will give the fund greater flexibility to pursue an
objective of " a high level of current income consistent with preservation
of capital and maintenance of liquidity."
4) TO AMEND THE FUND'S INVESTMENT RESTRICTION REGARDING INVESTMENT IN ILLIQUID
SECURITIES
This change will bring the Fund into line with other Hancock mutual funds and
keep it competitive with the rest of the industry.
- --------------------------------------------------------------------------------
Q. HOW WILL THESE CHANGES BENEFIT MY INVESTMENT?
- A. These changes are intended to provide the Fund with greater
diversification, and greater flexibility to provide high current income as
well as presevation of capital and liquidity.
FOR INTERNAL USE ONLY
<PAGE> 2
Q. WHAT WILL THE FUND'S NEW NAME BE?
A. In keeping with the modified investment strategy, the Fund's new name will be
John Hancock Intermediate Maturity Government Fund.
THE PROXY PROCESS:
Q. WHEN WERE PROXY STATEMENTS BEING MAILED?
A. Proxies were mailed on or about July 21st.
Q. IF I DON'T SEND IN MY BALLOT, IS IT AN AUTOMATIC "IN FAVOR" VOTE?
No. The only counted votes are those that are officially submitted (eg, by
ballot). In fact, in order to certify a proxy vote, greater than 50% of the
outstanding shares must be voted. If this quorum is not reached, additional
mailings, at your Fund's expense, must be made.
Exercise your right to vote on this important issue to your fund.
Q. WHAT PERCENTAGE IS REQUIRED TO PASS THE VOTE ON EACH PROPOSAL?
A. At least two-thirds of those voting will carry the proxy vote.
IN THE NEWSPAPER:
Q. HOW WILL THE INTERMEDIATE MATURITY GOVERNMENT FUND BE LISTED IN THE PAPER?
A. The Intermediate Maturity Government Fund will be listed under the
JOHN HANCOCK heading and abbreviated as IMGF.
FOR INTERNAL USE ONLY
<PAGE> 3
Q&A FOR GOVERNMENT SECURITIES TRUST
MERGER WITH GOVERNMENT INCOME FUND
A BACKGROUND HISTORY OF GOVERNMENT SECURITIES FUND:
- The Fund has lost nearly $2 billion, or 80% of its assets since 1986
- In the mid-late 80s the Fund followed an aggressive high-yield strategy
as a "government plus" fund. (Options were written on the Fund's treasury
holdings and the premium payments received by the fund were paid out to
enhance shareholder's distributions).
- The resulting volatility experienced by this fund (and all other
government plus funds) caused significant volatility and undermined the
Fund's ability to attract and maintain assets. The Fund's original managers
(Criterion Funds, which later became Transamerica Funds) discarded the
original option writing tactics, followed investment objectives similar to
Government Income, but had not been able to stem the redemptions.
THE MERGER PROPOSAL:
Q. WHY IS THE GOVERNMENT SECURITIES TRUST MERGING WITH GOVERNMENT INCOME FUND?
A. The Trustees voted to merge the Government Securities Trust because they
believe it is in the best interest of the existing shareholders.
- Both funds present substantially similar investment objectives and
investment policies.
Q. HOW WILL THIS MERGER BENEFIT MY INVESTMENT?
A. By merging with the Government Income Fund, existing shareholders should
benefit from the economies of scale in investment research, operations and other
important areas.
- As the surviving high current income government fund, Government Income
should be able to attract more sales to the benefit of all shareholders.
- Combining the assets of the two funds may decrease the operating expenses
as a percentage of the net assets.
<TABLE>
<CAPTION>
Expense Ratio Assets $(mill) Source:
A B A B
<S> <C> <C> <C> <C> <C>
Government Income Fund 1.19% 1.94% $0.5 $233 proxy
Government Securities Fund 1.20% 1.95% $493 $ 2 statements
</TABLE>
THE PROXY/MERGER PROCESS:
Q. WHEN WERE PROXY STATEMENTS BEING MAILED?
A. Proxies were mailed on or about July 21st.
FOR INTERNAL USE ONLY
<PAGE> 4
Q. IF I DON'T SEND IN MY BALLOT, IS IT AN AUTOMATIC "IN FAVOR" VOTE?
No. The only counted votes are those that are officially submitted (eg, by
ballot). In fact, in order to certify a proxy vote, greater than 50% of the
outstanding shares must be voted. If this quorum is not reached, additional
mailings, at your Fund's expense, must be made.
Exercise your right to vote on this important issue to your fund.
Q. WHAT PERCENTAGE IS REQUIRED TO PASS THE VOTE ON EACH MERGER?
A. At least two-thirds of those voting will carry the proxy vote.
Q. WHAT DO I HAVE TO DO IF THE MERGER IS APPROVED?
A. Shareholders without issued share certificates don't need to do anything. If
the proposal is approved, shares of the Government Securites Trust will be
automatically converted into shares of the Government Income Fund. The
conversion will work the same way as an exchange, except that it will not be
treated as a taxable event.
Q. WHAT IF MY SHARES ARE IN CERTIFICATE FORM?
A. Shareholders with certificate shares must return them to John Hancock
Investor Services. (Please be sure and let the broker know if there is an
outstanding certificate.)
Q. IF APPROVED, WHEN WILL THE MERGER TAKE PLACE?
A. If shareholders approve this plan, the merger is expected to take place
following the close of business on September 15, 1995. At that time, we will be
able to provide more information about the conversion.
TAXES:
Q. WILL I HAVE TO PAY TAXES ON THIS MERGER?
A. No this merger will be a non-taxable event.
Q. WILL I BE RECEIVING A CAPITAL GAIN DISTRIBUTION FROM THE GOVERNMENT
SECURITIES FUND/GOVERNMENT INCOME FUND?
A. We do not anticipate that there will be a capital gain payment before the
merger.
IN THE NEWSPAPER:
Q. HOW IS THE GOVERNMENT INCOME FUND LISTED IN THE PAPER?
A. The Government Income Fund is listed under the JOHN HANCOCK heading and is
abbreviated GvInc.
FOR INTERNAL USE ONLY
<PAGE> 5
Q&A FOR INTERMEDIATE GOVERNMENT TRUST
MERGER WITH INTERMEDIATE MATURITY GOVERMENT FUND
(A.K.A ADJUSTABLE U.S. GOVERNMENT TRUST)
ABOUT THE INTERMEDIATE MATURITY GOVERNMENT FUND:
Q. FIRST, WHAT IS THE INTERMEDIATE MATURITY GOVERNMENT FUND?
The Adjustable U.S. Government Trust is being proxied to undergo its own
changes. Its shareholders are being asked to change it to an intermediate
government bond fund. When that is approved, the fund will be renamed
Intermediate Maturity Government Fund. Then (subject to this vote) your fund
will be merged into it.
Q. IF THE ADJUSTABLE U.S. GOVERNMENT TRUST'S SHAREHOLDERS DON'T VOTE FOR THESE
CHANGES, WHAT FUND AM I LEFT WITH?
Your fund's merger will only take place IF Intermediate Maturity Government Fund
is created. (We are confident that the Fund's shareholders will follow the
unanimous recommendation of the Fund's Trustees). If ultimately that fund's
proposals are not accepted, the US Government Trust will continue as is and you
remain a shareholder of the fund.
THE MERGER PROPOSAL:
Q. WHY IS THE INTERMEDIATE GOVERNMENT TRUST MERGING WITH INTERMEDIATE MATURITY
GOVERNMENT FUND?
A. The Trustees voted to merge the Intermediate Government Trust because they
believe it is in the best interest of the existing shareholders.
- Both funds present substantially similar investment objectives and
investment policies.
- Given the Intermediate Government Trust's low asset level (totalling less
than $9 million combined A and B shares, 6/30/95) it has carried a high
level of expenses which hinders the Fund's yield.
Q. HOW WILL THIS MERGER BENEFIT MY INVESTMENT?
A. By merging with the larger Intermed. Matur. Govt., existing shareholders
should benefit from the economies of scale in investment research, operations
and other important areas.
- Combining the assets of the merged funds will decrease the operating
expenses as a percentage of the net assets.
<TABLE>
<CAPTION>
Expense Ratio Assets $(mill) Source:
A B A B
<S> <C> <C> <C> <C> <C>
Intermed. Matur. Govt .80% 1.45% $18 $9 proxy
Intermediate Govt. Trust 1.29% 2.04% $ 8 $0.4 statements
</TABLE>
A lowered expense ratio should benefit the net yield the fund can pay
shareholders.
THE PROXY/MERGER PROCESS:
Q. WHEN WERE PROXY STATEMENTS BEING MAILED?
A. Proxies were mailed on or about July 24th.
FOR INTERNAL USE ONLY
<PAGE> 6
Q. IF I DON'T SEND IN MY BALLOT, IS IT AN AUTOMATIC "IN FAVOR" VOTE?
No. The only counted votes are those that are officially submitted (eg, by
ballot). In fact, in order to certify a proxy vote, greater than 50% of the
outstanding shares must be voted. If this quorum is not reached, additional
mailings, at your Fund's expense, must be made.
Exercise your right to vote on this important issue to your fund.
Q. WHAT PERCENTAGE IS REQUIRED TO PASS THE VOTE ON EACH MERGER?
A. At least two-thirds of those voting will carry the proxy vote.
Q. WHAT DO I HAVE TO DO IF THE MERGER IS APPROVED?
A. Shareholders without issued share certificates don't need to do anything. If
the proposal is approved, shares of the Intermediate Govt. Trust will be
automatically converted into shares of the Intermediate Maturity Government
Fund. The conversion will work the same way as an exchange, except that it will
not be treated as a taxable event.
Q. WHAT IF MY SHARES ARE IN CERTIFICATE FORM?
A. Shareholders with certificate shares must return them to John Hancock
Investor Services. (Please be sure and let the broker know if there is an
outstanding certificate.)
Q. IF APPROVED, WHEN WILL THE MERGER TAKE PLACE?
A. If shareholders approve this plan, the merger is expected to take place
following the close of business on September 22, 1995. At that time, we will be
able to provide more information about the conversion.
TAXES:
Q. WILL I HAVE TO PAY TAXES ON THIS MERGER?
A. No this merger will be a non-taxable event.
Q. WILL I BE RECEIVING A CAPITAL GAIN DISTRIBUTION FROM THIS MERGER.
A. We do not anticipate that there will be a capital gain payment prior to the
merger.
IN THE NEWSPAPER:
Q. HOW WILL THE INTERMEDIATE MATURITY GOVERNMENT FUND BE LISTED IN THE PAPER?
A. The Intermediate Maturity Government Fund will be listed under the JOHN
HANCOCK heading and will be abbreviated IMGF.
FOR INTERNAL USE ONLY
<PAGE> 7
Q&A FOR INVESTMENT QUALITY BOND
MERGER WITH SOVEREIGN BOND FUND
THE MERGER PROPOSAL:
Q. WHY IS THE INVESTMENT QUALITY BOND FUND MERGING WITH SOVEREIGN BOND FUND?
A. The Trustees voted to merge the Investment Quality Bond Fund because they
believe it is in the best interest of the existing shareholders.
- Both funds present substantially similar investment objectives and
investment policies.
- Sovereign Bond Fund has a superior track record and has achieved a larger
asset size.
<TABLE>
<CAPTION>
avg. ann. total returns (6/30/95) A SH. B SH. 1yr. 5 yr 10yr assets $(mill)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sovereign Bond Fund 14.17% 13.54% 9.86% n/a 9.95% n/a $1,431 $60
Investment Quality Bond Fund 10.22% 9.31% 8.56% n/a 8.58% n/a $ 84 $ 8
</TABLE>
- Given the existence of a larger, more successful fund in the same family
with similar objectives, the potential for your fund to attract significant
assets is impeded.
Q. HOW WILL THIS BENEFIT MY INVESTMENT?
A. By merging with the larger Growth Fund, existing shareholders will benefit
from the economies of scale in investment research, operations and other
important areas.
- Combining the assets of the two funds may decrease the operating expenses
as a percentage of the net assets.
<TABLE>
<CAPTION>
Expense Ratio Assets $(mill)
A B A B Source:
<S> <C> <C> <C> <C> <C>
Sovereign Bond Fund 1.18% 1.75% $1,431 $60 proxy
Investment Quality Bond Fund 1.32% 2.07% $ 84 $ 8 statements
</TABLE>
THE PROXY/MERGER PROCESS:
Q. WHEN WERE PROXY STATEMENTS BEING MAILED?
A. Proxies were mailed on or about July 21st.
Q. IF I DON'T SEND IN MY BALLOT, IS IT AN AUTOMATIC "IN FAVOR" VOTE?
No. The only counted votes are those that are officially submitted (eg, by
ballot). In fact, in order to certify a proxy vote, greater than 50% of the
outstanding shares must be voted. If this quorum is not reached, additional
mailings, at your Fund's expense, must be made.
Exercise your right to vote on this important issue to your fund.
FOR INTERNAL USE ONLY
<PAGE> 8
Q. WHAT PERCENTAGE IS REQUIRED TO PASS THE VOTE ON EACH MERGER?
A. At least two-thirds of those voting will carry the proxy vote.
Q. WHAT DO I HAVE TO DO IF THE MERGER IS APPROVED?
A. Shareholders without issued share certificates don't need to do anything. If
the proposal is approved, shares of the Capital Growth Fund will be
automatically converted into shares of the Growth Fund. The conversion will work
the same way as an exchange, except that it will not be treated as a taxable
event.
Q. WHAT IF MY SHARES ARE IN CERTIFICATE FORM?
A. Shareholders with certificate shares must return them to John Hancock
Investor Services. (Please be sure and let the broker know if there is an
outstanding certificate.)
Q. IF APPROVED, WHEN WILL THE MERGER TAKE PLACE?
A. If shareholders approve this plan, the merger is expected to take place
following the close of business on September 15, 1995. At that time, we will be
able to provide more information about the conversion.
TAXES:
Q. WILL I HAVE TO PAY TAXES ON THIS MERGER?
A. No this merger will be a non-taxable event.
Q. WILL I BE RECEIVING A CAPITAL GAIN DISTRIBUTION FROM THE INVESTMENT QUALITY
BOND FUND/SOVERIEGN BOND FUND?
A. We do not anticipate that there will be a capital gain payment prior to the
merger.
IN THE NEWSPAPER:
Q. HOW IS THE SOVEREIGN BOND FUND LISTED IN THE PAPER?
A. The Sovereign Bond Fund is listed under the JOHN HANCOCK heading and is
abbreviated SvBnd.
FOR INTERNAL USE ONLY
<PAGE> 9
Q&A FOR US GOVERNMENT TRUST
MERGER WITH INTERMEDIATE MATURITY GOVERMENT FUND
(A.K.A ADJUSTABLE U.S. GOVERNMENT TRUST)
ABOUT THE INTERMDIATE MATURITY GOVERNMENT FUND:
Q. FIRST, WHAT IS THE INTERMEDIATE MATURITY GOVERNMENT FUND?
The Adjustable U.S. Government Trust is being proxied to undergo its own
changes. Its shareholders are being asked to change it to an intermediate
government bond fund. When that is approved, the fund will be renamed
Intermediate Maturity Government Fund. Then (subject to this vote) your fund
will be merged into it.
Q. IF THE ADJUSTABLE U.S. GOVERNMENT TRUST'S SHAREHOLDERS DON'T VOTE FOR THESE
CHANGES, WHAT FUND AM I LEFT WITH?
Your fund's merger will only take place IF Intermediate Maturity Government Fund
is created. (We are confident that the Fund's shareholders will follow the
unanimous recommendation of the Fund's Trustees). If ultimately that fund's
proposals are not accepted, the US Government Trust will continue as is and you
will remain a shareholder of the fund.
THE MERGER PROPOSAL:
Q WHY IS THE US GOVERNMENT TRUST MERGING WITH INTERMEDIATE MATURITY GOVERNMENT
FUND?
A. The Trustees voted to merge the US Government Trust because they believe it
is in the best interest of the existing shareholders.
- Both funds present substantially similar investment objectives and
investment policies.
US Govt. Trust has lost 95% of its assets since 1986.
- Given the existence of larger more successful funds in the family with
similar objectives, the potential for your fund to attract significant
assets is impeded.
Q. HOW WILL THIS BENEFIT MY INVESTMENT?
A. By merging with the larger Intermed. Matur. Govt., existing shareholders
should benefit from the economies of scale in investment research, operations
and other important areas.
- Combining the assets of the merged funds will decrease the operating
expenses as a percentage of the net assets.
<TABLE>
<CAPTION>
Expense Ratio Assets $(mill.) Source:
A B A B
<S> <C> <C> <C> <C> <C>
Intermed. Matur. Govt .80% 1.45% $18 $9 proxy
US Govt. Trust 1.59% 2.34% $17 $0.3 statements
</TABLE>
A lowered expense ratio should benefit the net yield the fund can pay
shareholders
THE PROXY/MERGER PROCESS:
Q. WHEN WERE PROXY STATEMENTS BEING MAILED?
A. Proxies were mailed on or about July 21st.
FOR INTERNAL USE ONLY
<PAGE> 10
Q. IF I DON'T SEND IN MY BALLOT, IS IT AN AUTOMATIC "IN FAVOR" VOTE?
No. The only counted votes are those that are officially submitted (eg, by
ballot). In fact, in order to certify a proxy vote, greater than 50% of the
outstanding shares must be voted. If this quorum is not reached, additional
mailings, at your Fund's expense, must be made.
Exercise your right to vote on this important issue to your fund.
Q. WHAT PERCENTAGE IS REQUIRED TO PASS THE VOTE ON EACH MERGER?
A. At least two-thirds of those voting will carry the proxy vote.
Q. WHAT DO I HAVE TO DO IF THE MERGER IS APPROVED?
A. Shareholders without issued share certificates don't need to do anything. If
the proposal is approved, shares of the US Govt. Trust will be automatically
converted into shares of the Intermediate Maturity Government Trust . The
conversion will work the same way as an exchange, except that it will not be
treated as a taxable event.
Q. WHAT IF MY SHARES ARE IN CERTIFICATE FORM?
A. Shareholders with certificate shares must return them to John Hancock
Investor Services. (Please be sure and let the broker know if there is an
outstanding certificate.)
Q. IF APPROVED, WHEN WILL THE MERGER TAKE PLACE?
A. If shareholders approve this plan, the merger is expected to take place
following the close of business on September 22, 1995. At that time, we will be
able to provide more information about the conversion.
TAXES:
Q. WILL I HAVE TO PAY TAXES ON THIS MERGER?
A. No this merger will be a non-taxable event.
Q. WILL I BE RECEIVING A CAPITAL GAIN DISTRIBUTION FROM THIS MERGER.
A. We do not anticipate that there will be a capital gain payment prior to the
merger.
IN THE NEWSPAPER:
Q. HOW WILL THE INTERMEDIATE MATURITY GOVERNMENT FUND BE LISTED IN THE PAPER?
A. The Intermediate Maturity Government Fund will be listed under the JOHN
HANCOCK heading and will be abbreviated IMGF.
FOR INTERNAL USE ONLY
