HANCOCK JOHN BOND FUND, 485B24E, 1995-07-17

HANCOCK JOHN BOND FUND
485B24E, 1995-07-17

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<PAGE> 1
Registration No. 2-66906
ICA No. 811-03006

AS FILED ON JULY 17, 1995

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 31 /x/

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 35 /x/

JOHN HANCOCK BOND FUND
(Exact Name of Registrant as Specified in Articles of Incorporation)

101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (617) 375-1700

Thomas H. Drohan, Esq.
John Hancock Advisers, Inc.
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Name and Address of Agent for Service)
__________________________

X It is proposed that this filing will become effective:
- --- immediately upon filing pursuant to paragraph (b)

- --- on July 17, 1995 pursuant to paragraph (b)

- --- 60 days after filing pursuant to paragraph (a)

- --- on [date] pursuant to paragraph (a) of rule 485

<TABLE>
====================================================================================================================================
PROPOSED MAXIMUM PROPOSED AGGREGATE
TITLE OF SECURITIES AMOUNT OF SHARES OFFERING PRICE MAXIMUM AMOUNT OF
BEING REGISTERED BEING REGISTERED PER SHARE** OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Capital Stock................. Indefinite* N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of Capital Stock................. 18,662,390 $10.20 $290,000 $100
====================================================================================================================================
<FN>
* Registrant continues its election of register an indefinite number of shares of its capital stock pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended.
** Registrant elects to calculate the maximum aggregate offering price pursuant to Rule 24c-2. 24,723,143 shares were redeemed
during the fiscal year ended March 31, 1995, 6,089,184 shares were used for reductions pursuant to Paragraph (c) of 24f-2
during the current fiscal year. 18,662,390 shares is the amount of redeemed shares used for reduction in this Amendment.
Pursuant to Rule 457(c) under the Securities Act of 1933, the maximum offering price of $10.20 per share on July 10, 1995 is
the price used as the basis for calculating the registration fee. While no fee is required for the 18,633,959 shares, the
Registant has elected to register, for $100, an additional 290,000 of shares (approxiamtely 28,431 shares at $10.20 per share).
</TABLE>

Registrant has previously elected, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, to register an indefinite number of its shares
of beneficial interest for sale under the Securities Act of 1933 and filed its
Rule 24f-2 Notice on or about May 26, 1995.

<PAGE> 2
JOHN HANCOCK BOND FUND

CROSS REFERENCE SHEET

<TABLE>
Cross Reference Sheet
---------------------

Pursuant to Rule 495(a) under the Securities Act of 1933

<CAPTION>
ITEM NUMBER FORM N-1A, PROSPECTUS CAPTION STATEMENT OF ADDITIONAL
PART A INFORMATION CAPTION
- -------------------------------------------------------------------------------
<S> <C> <C>
1 Front Cover Page *

2 Expense Information; The *
Fund's Expenses; Share Price

3 The Fund's Financial *
Highlights; Performance

4 Investment Objectives and *
Policies; Organization and
Management of the Fund

5 Organization and Management *
of the Fund; The Fund's
Expenses; Back Cover Page

6 Organization and Management *
of the Fund; Dividends and
Taxes; How to Buy Shares; How
to Redeem Shares; Additional
Services and Programs

7 How to Buy Shares; Shares *
Price; Additional Services
and Programs; Alternative
Purchase Arrangements; The
Fund's Expenses; Back Cover
Page

8 How to Redeem Shares *

9 Not Applicable *

10 * Front Cover Page

11 * Table of Contents

12 * Organization of the
Fund

13 * Investment Objectives
and Policies; Certain
Investment Practices;
Investment Restrictions

14 * Those Responsible for
Management

15 * Those Responsible for
Management

</TABLE>

<PAGE> 3

<TABLE>

<S> <C> <C>
16 * Investment Advisory and
Other Services;
Distribution Contract;
Transfer Agent
Services; Custody of
Portfolio; Independent
Auditors

17 * Brokerage Allocation

18 * Description of Fund's
Shares

19 * Net Asset Value;
Additional Services and
Programs

20 * Tax Status

21 * Distribution Contract

22 * Calculation of
Performance

23 * Financial Statements

</TABLE>

<PAGE> 4

JOHN HANCOCK

INVESTMENT QUALITY

BOND FUND

CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS

<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 7
Alternative Purchase Arrangements..................................................... 8
The Fund's Expenses................................................................... 9
Dividends and Taxes................................................................... 10
Performance........................................................................... 11
How to Buy Shares..................................................................... 12
Share Price........................................................................... 14
How to Redeem Shares.................................................................. 20
Additional Services and Programs...................................................... 22
Investments, Techniques and Risk Factors.............................................. 25
</TABLE>

This Prospectus sets forth the information about John Hancock Investment
Quality Bond Fund (the "Fund"), a diversified series of John Hancock Bond Fund
(the "Trust"), that you should know before investing. Please read and retain it
for future reference.

Additional information about the Fund and the Trust has been filed with the
Securities and Exchange Commission (the "SEC"). You can obtain a copy of the
Fund's Statement of Additional Information, dated July 17, 1995 and incorporated
by reference into this Prospectus, free of charge by writing or telephoning:
John Hancock Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts
02205-9116, 1-800-225-5291 (1-800-554-6713 TDD).

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 5

EXPENSE INFORMATION

<TABLE>

The purpose of the following information is to help you to understand the various fees and expenses you will bear, directly
or indirectly, when you purchase Fund shares. The operating expenses included in the table and hypothetical example below are based
on fees and expenses for the Fund's fiscal year ended March 31, 1995 adjusted to reflect current fees and expenses. Actual fees and
expenses in the future of the Class A and Class B shares may be greater or less than those indicated.

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fee........................................................................................ 0.62% 0.62%
12b-1 fee**........................................................................................... 0.25% 1.00%
Other expenses***..................................................................................... 0.45% 0.45%
Total Fund operating expenses......................................................................... 1.32% 2.07%

<FN>
* No sales charge is payable at the time of purchase on investments of $1 million or more, but for these investments a contingent
deferred sales charge may be imposed, as described below under the caption "Share Price," in the event of certain redemption
transactions within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to 0.25% of the Fund's average net assets, and the
remaining portion will be used to cover distribution expenses.
*** Other Expenses include transfer agent, legal, audit, custody and other expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares............................................................... $ 58 $85 $ 114 $197
Class B Shares
-- Assuming complete redemption at end of period......................... $ 71 $95 $ 131 $221
-- Assuming no redemption................................................ $ 21 $65 $ 111 $221

<FN>
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>

The Fund's payment of a distribution fee may result in a long-term shareholder
indirectly paying more than the economic equivalent of the maximum front-end
sales charge permitted under the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "The Trust and Its Management" and
"Distribution Contract."

2
<PAGE> 6
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for each of the periods ended March 31, 1995, and prior, has
been audited by Ernst & Young LLP, the Fund's independent auditors, whose unqualified report is included in the Statement of
Additional Information. Further information about the performance of the shares of the Fund is contained in the Fund's Annual Report
to shareholders which may be obtained free of charge by writing or telephoning John Hancock Investor Services Corporation ("Investor
Services"), at the address or telephone number listed on the front page of this Prospectus.

Selected data for each class of shares outstanding throughout each period is as follows:

<CAPTION>
CLASS A SHARES
---------------------------------------------------------------------------
YEAR ENDED MARCH 31,
---------------------------------------------------------------------------
1995(B) 1994 1993 1992 1991 1990 1989
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........... $8.72 $9.26 $8.93 $8.85 $8.52 $8.77 $9.24
----- ----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income.......................... 0.66 0.71 0.79 0.80 0.85 0.86 0.89
----- ----- ----- ----- ----- ----- -----
Net realized and unrealized gain (loss) on
investments................................... (0.55) (0.55) 0.31 0.11 0.32 (0.22) (0.51)
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations............... 0.11 0.16 1.10 0.91 1.17 0.64 0.38
----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income........... (0.66) (0.70) (0.77) (0.83) (0.84) (0.89) (0.85)
Distributions from realized gains.............. -- -- -- -- -- -- --
Distributions in excess of net investment
income........................................ -- -- -- -- -- -- --
Returns of capital............................. -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- -----
Total Distributions............................ (0.66) (0.70) (0.77) (0.83) (0.84) (0.89) (0.85)
----- ----- ----- ----- ----- ----- -----

Net asset value, end of period................. $8.17 $8.72 $9.26 $8.93 $8.85 $8.52 $8.77
===== ===== ===== ===== ===== ===== =====
TOTAL RETURN................................... 1.46% 1.58% 12.77% 10.72% 14.51% 7.35% 4.39%
===== ===== ===== ===== ===== ===== =====
RATIOS AND SUPPLEMENTAL DATA
Ratio of operating expenses to average
net assets.................................... 1.32% 1.25% 1.24% 1.36% 1.25% 1.18% 1.16%
Ratio of interest expense to average
net assets.................................... 0.12% -- 0.07% 0.34% -- -- --
----- ----- ----- ----- ----- ----- -----
Ratio of total expenses to average
net assets.................................... 1.44% 1.25% 1.31% 1.70% 1.25% 1.18% 1.16%
===== ===== ===== ===== ===== ===== =====
Ratio of net investment income to average net
assets........................................ 8.15% 7.63% 8.47% 8.84% 9.89% 9.64% 9.85%
Portfolio turnover............................. 202% 242% 191% 316% 134% 162% 173%
Net Assets, end of period (in thousands)....... $82,351 $95,601 $111,836 $96,516 $84,039 $88,521 $108,416

CLASS A SHARES CLASS B SHARES
-------------------------------- ----------------------
PERIOD FROM
YEAR ENDED MARCH 31, JUNE 30, 1993
-------------------------------- TO MARCH 31,
1988 1987 1986 1995(B) 1994
-------- -------- -------- ------ -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........... $10.05 $11.18 $9.52 $8.72 $9.31(d)
------ ------ ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income.......................... 0.75 0.75 0.93 0.59 0.49
----- ----- ----- ----- -----
Net realized and unrealized gain (loss) on
investments................................... (0.55) (0.11) 1.87 (0.55) (0.60)
----- ----- ----- ----- -----
Total from Investment Operations............... 0.20 0.64 2.80 (0.04) (0.11)
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income........... (0.75) (0.75) (0.93) (0.59) (0.48)
Distributions from realized gains.............. (0.13) (1.02) (0.21) -- --
Distributions in excess of net investment
income........................................ -- -- -- -- --
Returns of capital............................. (0.13) -- -- -- --
----- ----- ----- ----- -----
Total Distributions............................ (1.01) (1.77) (1.14) (0.59) (0.48)
----- ------ ----- ---- -----
Net asset value, end of period................. $9.24 $10.05 $11.18 $8.17 $8.72
===== ====== ====== ===== =====
TOTAL RETURN................................... 2.47% 6.51% 31.51% 0.62% (1.51)%(a)
===== ====== ====== ===== =====
RATIOS AND SUPPLEMENTAL DATA
Ratio of operating expenses to average
net assets.................................... 1.14% 1.01% 1.01% 2.07% 1.99%*
Ratio of interest expense to average
net assets.................................... -- -- -- 0.12% --
----- ------ ------ ------ -----
Ratio of total expenses to average
net assets.................................... 1.14% 1.01% 1.01% 2.19% 1.99%*
===== ====== ====== ====== =====
Ratio of net investment income to average net
assets........................................ 8.08% 7.08% 9.11% 7.40% 6.58%*
Portfolio turnover............................. 189% 150% 322% 202% 242%
Net Assets, end of period (in thousands)....... $131,682 $161,466 $105,196 $7,447 $5,923
- ---------------
<FN>
* 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.
</TABLE>

3
<PAGE> 7
- -------------------------------------------------------------------------------
THE FUND SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH PRUDENT
RISK AND SAFETY OF PRINCIPAL, PRIMARILY
THROUGH INVESTING IN A DIVERSIFIED
PORTFOLIO OF "INVESTMENT QUALITY" FIXED
INCOME SECURITIES.
- -------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to earn a high level of current income,
consistent with prudent risk and safety of principal, primarily through
investing in a diversified portfolio of "investment quality" fixed income
securities. Under normal market conditions, the Fund pursues this objective by
investing at least 65% of the value of its total assets in "investment quality"
fixed income securities, which include: (1) U.S. dollar denominated debt
securities of foreign and U.S. issuers which are issued in or outside of the
U.S. and are rated within the three highest quality ratings (AAA, AA or A by
Standard & Poor's Ratings Group ("Standard & Poor's") or Aaa, Aa or A by Moody's
Investors Service, Inc. ("Moody's")); (2) obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities ("U.S. Government
securities"); and (3) high quality money market instruments including short-term
obligations of the U.S. Government or its agencies, certificates of deposit,
bankers' acceptances (each being of investment grade) and commercial paper rated
at least P-1 by Moody's or A-1 by Standard & Poor's. The meanings of the various
ratings are explained in Appendix A to the Statement of Additional Information.
Non-rated securities will also be considered for investment by the Fund when
John Hancock Advisers, Inc. (the "Adviser") believes that the issuer's financial
condition, or the protection afforded by the terms of the securities themselves,
limits the risk to the Fund to a degree comparable to that of rated securities
consistent with the Fund's objective and policies. Because of the uncertainty
inherent in all investments, no assurance can be given that the Fund will
achieve its investment objective.

Up to 35% of the value of the Fund's total assets may be held in cash (for
temporary or liquidity purposes such as pending the investment of proceeds of
sales of Fund shares or sales of its portfolio securities) or invested in (1)
publicly offered fixed income securities which are rated lower than the three
highest ratings described above; (2) U.S. dollar denominated foreign fixed
income securities rated lower than the three highest ratings described above;
(3) non-dollar denominated foreign fixed income securities having quality
standards consistent with the Fund's objective and policies; (4) private
placements of fixed income securities so long as such private placements do not
exceed 20% of the Fund's total assets; (5) unrated securities which are
determined by the Adviser to be comparable in quality to securities rated less
than A so long as such unrated securities do not exceed 20% of the Fund's total
assets; (6) taxable municipal securities rated in the four highest ratings
applicable to such securities; (7) convertible fixed income securities within
the four highest ratings applicable to such securities; or (8) money market
instruments that are not of investment grade or rated A-1 or P-1 so long as such
money market investments do not exceed 5% of the Fund's total assets. The Fund
may, from time to time, own common stocks, warrants or other equity securities
as a result of a conversion feature on convertible fixed income securities or as
a result of their being attached to the fixed income security, but does not
intend to make direct purchases of equity securities other than by conversion or
exercise of convertible securities or warrants. As a non-fundamental investment
policy, the Fund will invest, under normal market conditions, at least 65% of
its total assets in corporate and government bonds both domestic and

4
<PAGE> 8

foreign. For purposes of this policy, the term "corporate bonds" is deemed to
mean debt obligations of corporate issuers secured by mortgages or liens on the
property or revenues of the issuers.

The Fund is authorized to invest up to 35% of its assets in both domestic and
foreign debt securities which are rated lower than the three highest ratings
assigned by Standard & Poor's or Moody's; however, the Adviser has determined
that in no event will investments in both domestic and foreign securities rated
lower than BBB by Standard & Poor's or Baa by Moody's ("High Yield/High Risk
Securities") exceed 34% of its assets. Bonds rated BBB by Standard & Poor's or
Baa by Moody's, although of investment quality, may have speculative
characteristics as well. The Fund may invest in securities rated as low as "CCC"
by Standard & Poor's or "Caa" by Moody's only where, in the opinion of the
Adviser, the rating does not reflect the true quality of the credit of the
issuer and is determined by the Adviser to be comparable to securities rated at
least "B" and provided that no more than 5% of the Fund's total assets are
invested in such securities. High yield/high risk securities, also known as
"junk bonds", generally involve greater volatility of price and risk of loss of
principal and income than securities in the higher rating categories and such
securities are considered speculative. See "Investments, Techniques and Risk
Factors" for a discussion of the credit ratings of the debt securities in which
the Fund may invest and their associated risks. The percentage and rating
limitations applicable to the Fund's investments apply at the time of
acquisition of a security based upon the last previous determination of the
Fund's net asset value; any subsequent change in any ratings by a rating service
or change in percentages resulting from market fluctuations or other changes in
total assets will not require elimination of any security from the Fund's
portfolio. However, the Adviser will evaluate and monitor the investment to
determine whether continued investment in the security will assist in meeting
the Fund's investment objective.

When in the opinion of the Adviser, adverse market conditions warrant a
defensive posturing of the Fund's assets, the Fund may temporarily invest all or
a significant portion of its assets in money market instruments, including
commercial paper, certificates of deposit, bankers' acceptances and other
short-term obligations of financial institutions having total assets of at least
$500 million, and short-term obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, which may include securities
purchased subject to repurchase agreements (see "Investments, Techniques and
Risk Factors").

The Fund may invest, subject to the limitations described above, in debt
obligations of foreign issuers, including those issued by foreign governments
and supranational entities (such as the "World Bank"). While the Fund is
permitted to invest significantly in foreign securities, it intends to maintain
investment emphasis in debt securities of domestic issuers and has undertaken
that it will not invest more than 50% of its total assets in foreign securities
without having first given prior notice to shareholders. Investing in foreign
securities represents a greater degree of risk than investing in domestic
securities. The Fund may also enter into forward foreign currency exchange
contracts for the purchase or sale of foreign

5
<PAGE> 9

currency for hedging purposes. See "Investments, Techniques and Risk Factors --
Foreign Securities and Currency Transactions."

Included among domestic debt obligations eligible for purchase by the Fund are
adjustable and/or variable (floating) rate securities, zero coupon bonds,
mortgage related securities (including stripped securities, collateralized
mortgage obligations and multi-class pass through securities), asset-backed
securities and callable bonds. See "Investments, Techniques and Risk Factors."
The Fund will allocate its investments among a number of industries without
concentration in any particular industry.

In pursuing its investment objective, the Fund may, to the extent described
below, purchase and write put and call options on debt securities. In addition,
the Fund may engage in a variety of other techniques in an attempt to protect
against changes in the general level of interest rates. These techniques consist
of the purchase and sale of interest rate futures contracts and options on such
futures. Options and futures contracts derive their value from an underlying
instrument or index and accordingly are known as "derivatives" or "derivative
contracts." These derivative contracts, as well as other types of derivatives
(such as stripped mortgage-backed securities), involve substantial risk
including higher price volatility, liquidity risk and counterparty risk. These
investment techniques and various policies the Fund may employ in seeking to
achieve its investment objective, such as lending its portfolio securities,
entering into repurchase and reverse repurchase agreements, borrowing funds to
invest in securities, and investing in securities of foreign issuers, as well as
high yield/high risk securities, can involve a greater degree of risk than those
inherent in more conservative investment approaches. The Fund will limit its
investments in stripped mortgage-backed securities to 10% of its total assets.
While the Fund is permitted to invest up to 100% of its net assets in other
derivative securities, it does not expect to invest substantially in derivative
securities. See "Investments, Techniques and Risk Factors" for a discussion of
these techniques and their associated risks.

The value of the securities held by the Fund, and therefore the Fund's net asset
value per share, will fluctuate due to various factors, principally interest
rate changes and the ability of the issuers to pay interest and principal of
these obligations. Generally, a rise in interest rates will result in a decrease
in the Fund's net asset value, while a decline in interest rates will result in
an increase in the Fund's net asset value. Therefore, at the time of redemption,
an investor's shares may be worth more or less than their value at the time of
purchase.

- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES WHICH
MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------

The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental or nonfundamental. The Fund's investment objective and fundamental
policies and restrictions may not be changed without the approval of the Fund's
shareholders. The Fund's non-fundamental policies and restrictions, however, may
be changed by a vote of the Trustees without shareholder approval.
Notwithstanding the Fund's fundamental investment restriction prohibiting
investments in other investment companies, the Fund may, pursuant to an order
granted by the SEC, invest in other investment companies in connection with a
deferred compensation

6
<PAGE> 10
plan for the non-interested Trustees of the John Hancock funds. There can be no
assurance that the Fund will achieve its investment objective.

The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Trustees, the Adviser may place securities transactions with brokers
affiliated with the Adviser. The brokers include Tucker Anthony Incorporated,
Sutro and Company, Inc. and John Hancock Distributors, Inc., which are
indirectly owned by the John Hancock Mutual Life Insurance Company (the "Life
Company"), which in turn indirectly owns the Adviser.

- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------

ORGANIZATION AND MANAGEMENT OF THE FUND

The Fund is a diversified series of the Trust, an open-end management investment
company organized as a Massachusetts business trust. The Trust has six series of
shares, one of which is the Fund. The Trust reserves the right to create and
issue a number of series of shares, or funds or classes thereof, which are
separately managed and have different investment objectives. The Trustees have
authorized the issuance of two classes of the Fund, designated Class A and Class
B. The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation. However, each class bears different distribution and
transfer agent fees and other expenses. Also, Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans. The Trust
is not required to and does not intend to hold annual meetings of shareholders,
although special meetings may be held for such purposes as electing or removing
Trustees, changing fundamental policies or approving a management contract. The
Trust, under certain circumstances, will assist in shareholder communications
with other shareholders.

- -------------------------------------------------------------------------------
THE BOARD OF TRUSTEES ELECTS OFFICERS AND
RETAINS THE INVESTMENT ADVISER WHO IS
RESPONSIBLE FOR THE DAY-TO-DAY OPERATIONS
OF THE FUND, SUBJECT TO THE BOARD OF
TRUSTEES' POLICIES AND SUPERVISION.
- -------------------------------------------------------------------------------

The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds") distributes shares for all of the John Hancock mutual
funds through brokers which have arrangements with John Hancock Funds ("Selling
Brokers"). Certain Trust officers are also officers of the Adviser and John
Hancock Funds.

- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING AN AGGREGATE
NET ASSET VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------

All investment decisions for the Fund are made by Mr. James Ho, the Fund's
portfolio manager. Mr. Ho is Senior Vice President of the Adviser. He also
manages the John Hancock Sovereign Bond Fund and directs all taxable fixed
income investment management for the Adviser. He has been associated with the
Adviser since 1985.

In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by

7
<PAGE> 11

personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.

- -------------------------------------------------------------------------------
YOU SHOULD CONSIDER WHICH CLASS OF SHARES
WOULD BE MORE BENEFICIAL TO YOU.
- -------------------------------------------------------------------------------

ALTERNATIVE PURCHASE ARRANGEMENTS

You can purchase shares of the Fund at a price equal to their net asset value
per share plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge Alternative,"
Class A shares) or on a contingent deferred basis (the "Contingent Deferred
Sales Charge Alternative," Class B shares). If you do not specify on your
account application the class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.

- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS A SHARES ARE SUBJECT
TO AN INITIAL SALES CHARGE.
- -------------------------------------------------------------------------------

CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount of your purchase is $1 million or more.
If you purchase $1 million or more of Class A shares, you will not be subject to
an initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.25% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price -- Qualifying for a Reduced Sales Charge."

- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS B SHARES ARE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE.
- -------------------------------------------------------------------------------

CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
those of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will also result in lower dividends than those paid on
Class A shares.

Class B shares are not available for full-service defined contribution plans
administered by Investor Services or the Life Company that had more than 100
eligible employees at the inception of the Fund account.

FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE

8
<PAGE> 12
make this determination, the table under the caption "Expense Information" on
the inside cover page of this Prospectus shows examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for reduced sales charges. See "Share Price --
Qualifying for a Reduced Sales Charge."

Class A shares are subject to lower distribution fees and, accordingly, pay
correspondingly higher dividends per share, to the extent any dividends are
paid. However, because initial sales charges are deducted at the time of
purchase, you would not have all of your funds invested initially and,
therefore, would initially own fewer shares. If you do not qualify for reduced
initial sales charges and expect to maintain your investment for an extended
period of time, you might consider purchasing Class A shares. This is because
the accumulated distribution and service charges on Class B shares may exceed
the initial sales charge and accumulated distribution and service charges on
Class A shares during the life of your investment.

Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you will
be subject to higher distribution and service fees and, for a six-year period, a
CDSC.

In the case of Class A shares, the distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and ongoing distribution and service fees. In the
case of Class B shares, the expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the Class B
shares' CDSC and ongoing distribution and service fees are the same as those of
the Class A shares' initial sales charge and ongoing distribution and service
fees. Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.

Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They also will be in the same
amount, except for differences resulting from each class bearing only its own
distribution and service fees, shareholder meeting expenses and any incremental
transfer agency costs. See "Dividends and Taxes."

<TABLE>

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net assets as follows:

<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $75,000,000...................................................... 0.6250%
Next $75,000,000....................................................... 0.5625%
Amount over $150,000,000............................................... 0.5000%
</TABLE>

9
<PAGE> 13

During the Fund's fiscal year ended March 31, 1994, the advisory fee paid by the
Fund to the Fund's former investment adviser was equal to 0.60% of the Fund's
average daily net assets.

- -------------------------------------------------------------------------------
THE FUND PAYS DISTRIBUTION AND SERVICE
FEES FOR MARKETING AND SALES-RELATED
SHAREHOLDER SERVICING.
- -------------------------------------------------------------------------------

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service fees
at an aggregate annual rate of up to 0.25% of the Class A shares' average daily
net assets and an aggregate annual rate of 1.00% of the Class B shares' average
daily net assets. In each case, up to 0.25% for Class A and Class B shares is
for service expenses and the remaining amount is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares; (ii) marketing, promotional
and overhead expenses incurred in connection with the distribution of Fund
shares; (iii) unreimbursed distribution expenses under the Fund's prior
distribution plans; (iv) distribution expenses incurred by other investment
companies which sell all or substantially all of its assets to, merge or
otherwise engage in a reorganization transaction with the Fund; and (v) with
respect to Class B shares only, interest expenses on unreimbursed distribution
expenses. The service fees will be used to compensate Selling Brokers for
providing personal and account maintenance services to shareholders.

In the event John Hancock Funds is not fully reimbursed for payments it makes or
expenses it incurs under the Class A Plan, these expenses will not be carried
beyond one year from the date they were incurred. Unreimbursed expenses under
the Class B Plan will be carried forward together with interest on the balance
of these unreimbursed expenses. At March 31, 1995, an aggregate of $258,404 of
distribution expenses or 3.78% of the average net assets of the Fund's Class B
shares was not reimbursed or recovered by John Hancock Funds, or the Fund's
prior distributor, through the receipt of deferred sales charges or Rule 12b-1
fees in prior periods.

Information on the Fund's total expenses appears in the Financial Highlights
section of this Prospectus.

DIVIDENDS AND TAXES

- -------------------------------------------------------------------------------
THE FUND GENERALLY DECLARES DIVIDENDS
DAILY AND DISTRIBUTES THEM MONTHLY.
- -------------------------------------------------------------------------------

DIVIDENDS. The Fund generally declares daily and distributes monthly dividends
representing all or substantially all of its net investment income. The Fund
will distribute net realized long-term and short-term capital gains, if any, at
least annually.

Dividends are reinvested in additional shares of your class unless you elect the
option to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividends on these shares will be lower than those on the Class A
shares. See "Share Price."

10
<PAGE> 14

TAXATION. Dividends from the Fund's net investment income, certain net foreign
exchange gains and net short-term capital gains are taxable to you as ordinary
income and dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains. These dividends are taxable whether you take them in
cash or reinvest in additional shares. Certain dividends may be paid in January
of a given year but may be taxable as if you received them the previous
December.

The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to Federal income tax on any net investment income or net realized
capital gains that are distributed to its shareholders within the time period
prescribed by the Code. When you redeem (sell) or exchange shares, you may
realize a taxable gain or loss.

The Fund anticipates that it may be subject to foreign withholding taxes or
other foreign taxes on income (possibly including capital gains) on certain
foreign investments, which will reduce the yield or return from such
investments. The Fund generally does not expect to qualify to pass such taxes
and any associated tax deductions or credits through to its shareholders.
On the account application, you must certify that the social security or other
taxpayer identification number you provide is your correct number and that you
are not subject to backup withholding of Federal income tax. If you do not
provide this information or are otherwise subject to this withholding, the Fund
may be required to withhold 31% of your dividends and the proceeds of
redemptions or exchanges.

In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investment in and distributions from the Fund.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. A state income (and possibly local income and/or
intangible property) tax exemption is generally available to the extent the
Fund's distributions are derived from interest on (or, in the case of
intangibles taxes, the value of its assets is attributable to) certain U.S.
Government obligations, provided in some states that certain thresholds for
holdings of such obligations and/or reporting requirements are satisfied. You
should consult your tax adviser for specific tax advice.

PERFORMANCE

Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30 day period by the maximum
offering price per share on the last day of that period. Yield is also
calculated according to accounting methods that are standardized for all stock
and bond funds. Because yield accounting methods differ from the methods used
for other accounting purposes, the Fund's yield may not equal the income paid on
shares or the income reported in the Fund's financial statements.

- -------------------------------------------------------------------------------
THE FUND MAY ADVERTISE ITS YIELD AND TOTAL
RETURN.
- -------------------------------------------------------------------------------

The Fund's total return shows the overall dollar or percentage change in value
of a hypothetical investment in the Fund, assuming the reinvestment of all
dividends.

11
<PAGE> 15

Cumulative total return shows the Fund's performance over a period of time.
Average annual total return shows the cumulative return divided over the number
of years included in the period. Because average annual total return tends to
smooth out variations in the Fund's performance, you should recognize that it is
not the same as actual year-to-year results.

Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at a lower sales charge would result in
higher performance figures. Total return and yield calculations for Class B
shares reflect the deduction of the applicable CDSC imposed on a redemption of
shares held for the applicable period. All calculations assume that all
dividends are reinvested at net asset value on the reinvestment dates during the
periods. Total return and yield of Class A and Class B shares will be calculated
separately and, because each class is subject to different expenses, the total
return and yield may differ with respect to each class for the same period. The
relative performance of the Class A and Class B shares will be affected by a
variety of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of Class A
and Class B shares in any advertisement or promotional materials including Fund
performance data. The value of Fund shares, when redeemed, may be more or less
than their original cost. Both yield and total return are historical
calculations and are not an indication of future performance. See "Factors to
Consider in Choosing an Alternative."

HOW TO BUY SHARES

- -------------------------------------------------------------------------------
OPENING AN ACCOUNT
- -------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume that you are investing in Class A shares.
- ----------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA,
02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ----------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Investment Quality Bond Fund
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ----------------------------------------------------------------------------------------
</TABLE>

12
<PAGE> 16

<TABLE>
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
- ------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES
- -------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------
PROGRAM
(MAAP) 2. The amount you elect to invest will be automatically withdrawn
from your bank or credit union account.
- ------------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional Class A or Class B shares by calling
Investor Services toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, the class of shares
you own, your account number, and the amount you wish to
invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
- ------------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- ------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Investment Quality Bond Fund
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- ------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made in writing to Investor Services.
- ---------------------------------------------------------------------------------
</TABLE>

You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.

- -------------------------------------------------------------------------------
YOU WILL RECEIVE ACCOUNT STATEMENTS THAT
YOU SHOULD KEEP TO HELP WITH YOUR PERSONAL
RECORDKEEPING.
- -------------------------------------------------------------------------------

13
<PAGE> 17
SHARE PRICE

- -------------------------------------------------------------------------------
THE OFFERING PRICE OF YOUR SHARES IS THEIR
NET ASSET VALUE PLUS A SALES CHARGE, IF
APPLICABLE, WHICH WILL VARY WITH THE
PURCHASE ALTERNATIVE YOU CHOOSE.
- -------------------------------------------------------------------------------

The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. 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
according to procedures approved by the Trustees. Short-term debt investments
maturing within 60 days are valued at amortized cost which the Trustees have
determined approximates market value. Foreign securities are valued on the basis
of quotations from the primary market in which they are traded and are
translated from the local currency into U.S. dollars using current exchange
rates. If quotations are not readily available or, the values have been
materially affected by events occurring after the closing of a foreign market,
assets are valued by a method that the Trustees believes accurately reflects
fair value. The NAV is calculated once daily as of the close of regular trading
on the New York Stock Exchange (generally at 4:00 p.m., New York time) on each
day that the Exchange is open.

Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your investment before the close of regular trading on the New York
Stock Exchange and transmit it to John Hancock Funds before its close of
business to receive that day's offering price.

<TABLE>

INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

(*) Upon notice to Selling Brokers with whom it has sales agreements, John Hancock Funds may reallow an amount up to the full
applicable sales charge. A Selling Broker to whom substantially the entire sales charge is reallowed or who receives these
incentives may be deemed to be an underwriter under the Securities Act of 1933. Other than distribution and service fees,
the Fund does not bear distribution expenses.

(**) No sales charge is payable at the time of purchase of Class A shares of $1 million or more, but a CDSC may be imposed in the
event of certain redemption transactions within one year of purchase.

14
<PAGE> 18

aggregate as follows: 1% on sales to $4,999,999, 0.50% on the next $5
million and 0.25% on $10 million and over.

(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance in an amount equal to 0.25% of the net
assets invested in the Fund at the time of the sale. Thereafter, it pays
the service fee periodically in arrears in an amount up to 0.25% of the
Fund's average annual net assets. Selling Brokers receive the fee as
compensation for providing personal and account maintenance services to
shareholders.

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

In addition, John Hancock Funds will pay certain affiliated Selling Brokers at
an annual rate of up to 0.05% of the daily net assets of accounts attributable
to these brokers.

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."

<TABLE>

CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more of Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the CDSC period), a CDSC will be imposed. The rate of the CDSC will depend on
the amount invested as follows:

<CAPTION>
AMOUNT INVESTED CDSC RATE
--------------- ---------
<S> <C>
$1 million to $4,999,999................................................ 1.00%
Next $5 million to $9,999,999........................................... 0.50%
Amounts of $10 million and over......................................... 0.25%
</TABLE>

The CDSC will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the redeemed Class A shares. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any distributions which have been reinvested in additional
shares.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemptions in certain circumstances. See "Waiver of Contingent Deferred Sales
Charges" below.

15
<PAGE> 19
- -------------------------------------------------------------------------------
YOU MAY QUALIFY FOR A
REDUCED SALES CHARGE ON
YOUR INVESTMENT IN
CLASS A SHARES.
- -------------------------------------------------------------------------------

QUALIFYING FOR A REDUCED SALES CHARGE. If you invest more than $100,000 in
Class A shares of the Fund or a combination of funds within the John Hancock
family of funds (except money market funds), you may qualify for a reduced sales
charge on your investments in Class A shares through a LETTER OF INTENTION. You
may also be able to use the ACCUMULATION PRIVILEGE and the COMBINATION PRIVILEGE
to take advantage of the value of your previous investments in Class A shares of
the John Hancock funds in meeting the breakpoints for a reduced sales charge.
For the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales
charge will be based on the total of:

1. Your current purchase of Class A shares of the Fund.

2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

EXAMPLE:

If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $80,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 3.75% and not 4.50% (the
rate that would otherwise be applicable to investments of less than $100,000.
See "Initial Sales Charge Alternative -- Class A Shares.")

If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

A Trustee or officer of the Fund; a Director or officer of the Adviser and
its affiliates or Selling Brokers; employees or sales representatives of any
of the foregoing; retired officers, employees or Directors of any of the
foregoing; a member of the immediate family of any of the foregoing; or any
fund, pension, profit sharing or other benefit plan for the individuals
described above.

- - Any state, county, city or any instrumentality, department, authority, or
agency of these entities that is prohibited by applicable investment laws from
paying a sales charge or commission when it purchases shares of any registered
investment management company.*

- - A bank, trust company, credit union, savings institution or other type of
depository institution, its trust departments or common trust funds if it is
purchasing $1 million or more for non-discretionary customers or accounts.*

- - A broker, dealer or registered investment adviser that has entered into an
agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to its clients.

- - A former participant in an employee benefit plan with John Hancock Funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.

16
<PAGE> 20

- ------------------
*For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.

Class A shares of the Fund may be purchased without an initial sales charge in
connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.

CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES. Class B shares
are offered at net asset value per share without a sales charge so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates set forth below. This charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestment.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
reinvestment of dividends, and next from the shares you have held the longest
during the six-year period. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.

<TABLE>

EXAMPLE:

You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:

<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share $ 600
- - Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12) -120
- - Minus appreciation on remaining shares, also not subject to
CDSC (40 X $2) - 80
------
- - Amount subject to CDSC $ 400
</TABLE>

Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of Class B shares, such as
compensating Selling Brokers for selling these shares. The combination of the
CDSC and the distribution and service fees makes it possible for the Fund to
sell Class B shares without deducting a sales charge at the time of the
purchase.

The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for the purposes of determining this holding period, any payments you make
during the month will be aggregated and deemed to have been made on the last day
of the month.

17
<PAGE> 21
<TABLE>
<CAPTION>
YEAR IN WHICH
CLASS B SHARES CONTINGENT DEFERRED SALES
REDEEMED FOLLOWING CHARGE AS A PERCENTAGE OF
PURCHASE DOLLAR AMOUNT SUBJECT TO CDSC
- ------------------ -----------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>

A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale, and thereafter the service fee is paid in arrears.

- -------------------------------------------------------------------------------
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON
CLASS B AND CERTAIN CLASS A SHARE
REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------

- - Redemptions of Class B shares made under a Systematic Withdrawal Plan (see
"How to Redeem Shares"), as long as your annual redemptions do not exceed 10%
of your account value at the time you establish your Systematic Withdrawal
Plan and 10% of the value of your subsequent investments (less redemptions) in
that account at the time you notify Investor Services. This waiver does not
apply to Systematic Withdrawal Plan redemptions of Class A shares that are
subject to a CDSC.

- - Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
the life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Code.

- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.

- - Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans including those qualified under
Section 401(a) of the Code, custodial accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.

- - Redemptions due to death or disability.

- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.

- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $100 invested in the Fund.

- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.

18
<PAGE> 22

- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.

If you exchanged Class B shares into the Fund from another John Hancock fund,
the calculation will be based on the time you purchased the shares in the
original fund. The Fund has been advised that the conversion of Class B shares
to Class A shares should not be taxable for Federal income tax purposes and
should not change a shareholder's tax basis or tax holding period for the
converted shares.

19
<PAGE> 23

HOW TO REDEEM SHARES

- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------

You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services, less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently made
by check or Invest-by-Phone have been collected (which may take up to 10
calendar days).

Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and what
you receive for them, subject to certain tax rules. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for up to seven days or
longer, as permitted by Federal securities laws.

<TABLE>
- -----------------------------------------------------------------------------------
<S> <C> <C>
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from 8:00
A.M. to 4:00 P.M. (New York time), Monday through Friday,
excluding days on which the Exchange is closed. Investor Services
employs the following procedures to confirm that instructions
received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and
other relevant information may be requested. In addition,
telephone instructions are recorded.

If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized
or fraudulent telephone instructions. In all other cases, neither
the Fund nor Investor Services will be liable for any loss or
expense for acting upon telephone instructions made in accordance
with the telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that are in
certificated form.

During periods of extreme economic conditions or market changes,
telephone requests may be difficult to implement due to a large
volume of calls. During these times, you should consider placing
redemption requests in writing or use EASI-Line. EASI-Line's
telephone number is 1-800-338-8080.
- -----------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the Fund,
redemption proceeds of $1,000 or more can be wired on the next
business day to your designated bank account, and a fee
(currently $4.00) will be deducted. You may also use electronic
funds transfer to your assigned bank account, and the funds are
usually collectible after two business days. Your bank may or may
not charge a fee for this service. Redemptions of less than
$1,000 will be sent by check or electronic funds transfer.

This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- -----------------------------------------------------------------------------------
</TABLE>

20
<PAGE> 24

<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C> <C>
IN WRITING Send a stock power or "letter of instruction" specifying the name
of the Fund, the dollar amount or the number of shares to be
redeemed, your name, class of shares, your account number and the
additional requirements listed below that apply to your
particular account.
- ---------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
- -------------------- ------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaran-
teed.

Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.

Trusts A letter of instruction signed by the
Trustee(s) with the signature(s) guaranteed.
(If the Trustee's name is not registered on
your account, also provide a copy of the
trust document, certified within the last 60
days.)

-------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
-------------------------------------------------------------------------------

A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less,
John Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or meets certain
net capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v)
a national securities exchange, a registered securities exchange or a clearing
agency.
- ---------------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- ---------------------------------------------------------------------------------------

-------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
-------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instructions. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.

Shareholders will be notified before these redemptions are to be made or this
fee is imposed and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- ---------------------------------------------------------------------------------------
</TABLE>

21
<PAGE> 25

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE

- -------------------------------------------------------------------------------
YOU MAY EXCHANGE SHARES OF THE FUND ONLY
FOR SHARES OF THE SAME CLASS OF ANOTHER
JOHN HANCOCK FUND.
- -------------------------------------------------------------------------------

If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for shares of the same class of another John Hancock fund. For
this purpose, John Hancock funds with only one class of shares will be treated
as Class A, whether or not they have been so designated.

Exchanges between funds with shares that are not subject to a CDSC are based on
their respective net asset values. No sales charge or transaction charge is
imposed. Class B shares of the Fund that are subject to a CDSC may be exchanged
into Class B shares of another John Hancock fund without incurring the CDSC;
however, these shares will be subject to the CDSC schedule of the shares
acquired (except that exchanges into John Hancock Short-Term Strategic Income
Fund, John Hancock Limited-Term Government Fund and John Hancock Adjustable U.S.
Government Trust will be subject to the initial fund's CDSC). For purposes of
computing the CDSC payable upon redemption of shares acquired in an exchange,
the holding period of the original shares is added to the holding period of the
shares acquired in an exchange. However, if you exchange Class B shares
purchased prior to January 1, 1994 for Class B shares of any other John Hancock
Fund, you will be subject to the CDSC schedule in effect on your initial
purchase date.

You may exchange Class B shares of the Fund into shares of a John Hancock money
market fund at net asset value. However, you will continue to be subject to the
same CDSC upon redemption.

An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other

22
<PAGE> 26

restrictions that do not apply to exchanges requested by shareholders directly,
as described above.

Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.

BY TELEPHONE

1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to authorize telephone exchanges.

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

IN WRITING

1. In a letter, request an exchange and list the following:

-- the name and class of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or dollar amount you wish to exchange

Sign your request exactly as the account is registered.

2. Mail the request and information to:

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

23
<PAGE> 27

REINVESTMENT PRIVILEGE

- -------------------------------------------------------------------------------
IF YOU REDEEM SHARES OF THE FUND, YOU MAY
BE ABLE TO REINVEST ALL OR PART OF THE
PROCEEDS IN THE FUND OR ANOTHER JOHN
HANCOCK FUND WITHOUT PAYING AN ADDITIONAL
SALES CHARGE.
- -------------------------------------------------------------------------------

1. You will not be subject to a sales charge on Class A shares reinvested in
shares of any John Hancock fund that is otherwise subject to a sales charge
as long as you reinvest within 120 days from the redemption date. If you paid
a CDSC upon a redemption, you may reinvest at net asset value in the same
class of shares from which you redeemed within 120 days. Your account will be
credited with the amount of the CDSC previously charged, and the reinvested
shares will continue to be subject to a CDSC. For purposes of computing the
CDSC payable upon a subsequent redemption, the holding period of the shares
acquired through reinvestment will include the holding period of the redeemed
shares.

2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, the account number and class from which your shares were originally
redeemed.

SYSTEMATIC WITHDRAWAL PLAN

- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH IRS REGULATIONS.
- -------------------------------------------------------------------------------

1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain this application by calling your registered representative or by
calling 1-800-225-5291.

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.

5. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares, because you may be
subject to initial sales charges on your purchases of Class A shares or to a
CDSC on your redemptions of Class B shares. In addition, your redemptions are
taxable events.

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC INVESTMENTS AND
SIMPLIFY YOUR INVESTING.
- -------------------------------------------------------------------------------

1. You can authorize an investment to be automatically withdrawn each month from
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.

24
<PAGE> 28

2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.

4. There is no charge to you for this program, and there is no cost to the Fund.

5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

GROUP INVESTMENT PROGRAM

- -------------------------------------------------------------------------------
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS
MAY ESTABLISH ACCOUNTS.
- -------------------------------------------------------------------------------

1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.

2. The initial aggregate investment of all participants in the group must be at
least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.

RETIREMENT PLANS

1. You may use the Fund as a funding medium for various types of qualified
retirement plans, including Individual Retirement Accounts, Keough Plans
(H.R. 10), Pension and Profit Sharing Plans (including 401(k) Plans), Tax
Sheltered Annuity Retirement Plans (403(b) Plans) and 457 Plans.

2. The initial investment minimum or aggregate minimum for any of the above
plans is $250. However, accounts being established as group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.

INVESTMENTS, TECHNIQUES AND RISK FACTORS
Unless otherwise specified, each of the Fund's investment practices described in
this section is a non-fundamental policy and may be changed by the Trustees
without shareholder approval.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its total
assets in illiquid investments, which include repurchase agreements maturing in
more than seven days, certain over-the-counter options, certain stripped
mortgage-backed securities, certain restricted securities and securities that
are not readily marketable. The Fund may also invest up to 5% of its total
assets in restricted securities, including restricted securities eligible for
resale to certain institutional investors pursuant to Rule 144A under the
Securities Act of 1933. The Fund's limitation regarding restricted securities is
a fundamental policy.

25
<PAGE> 29

SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading may have the effect of
increasing portfolio turnover rate. Short-term trading of fixed-income
securities should not increase direct transaction costs since fixed-income
securities are normally traded on a principal basis without brokerage
commissions. The Fund does not intend to invest for the purpose of seeking
short-term profits. The Fund's portfolio securities may be changed, however,
without regard to the holding period of these securities (subject to certain tax
restrictions), when the Adviser deems that this action will help achieve the
Fund's objective given a change in an issuer's operations or changes in general
market conditions. A rate of turnover of 100% would occur if the value of the
lesser of purchases and sales of portfolio securities for a particular year
equaled the average monthly value of portfolio securities owned during the year
(excluding short-term securities). A high rate of portfolio turnover (100% or
more) may, under certain circumstances, make it more difficult for the Fund to
qualify as a regulated investment company under the Code. The Fund's portfolio
turnover rate is set forth in the table under "Financial Highlights."

FOREIGN SECURITIES AND CURRENCY TRANSACTIONS. Although the Fund is permitted to
invest up to (i) 100% of its total assets in U.S. dollar denominated fixed
income securities, and (ii) 35% of its total assets in non-dollar denominated
fixed income securities of foreign governmental and other foreign issuers, the
Fund will not invest in foreign securities exceeding 50% of its assets without
prior notice to shareholders. In addition, it is anticipated that under normal
conditions no more than 35% of its total assets will be invested in foreign
securities issued in developing countries and no more than 25% of the Fund's
total assets will be invested in securities issued by any one foreign country.
Foreign securities involve certain risk not associated with the investment in
securities of U.S. issuers. These risks include political or economic
instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of imposition of exchange controls
and the risk of currency fluctuations. Such securities may be less liquid or
subject to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. Government, its
instrumentalities or agencies. In addition, there may be less publicly available
information about a foreign company than about a domestic company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the U.S. and foreign
transaction costs are generally higher than those associated with U.S.
investments. In addition, the values of foreign securities may be affected by
application of foreign laws (including withholding taxes), changes in
governmental administration of economic or monetary policy in the U.S. or
diplomatic relations with foreign countries. Finally, in the event of a default
of any such foreign debt obligations, it may be more difficult for the Fund to
obtain or to enforce a judgment against the issuers of such securities.
Investing in the fixed-income markets of developing countries (i.e., those that
are in the initial stages of industrialization cycle) involves

26
<PAGE> 30

exposure to economic structures that are generally less diverse and mature, and
to political systems that can be expected to have less stability, than those of
developed countries. Historical experience indicates that the markets of
developing countries have been more volatile than the markets of the more mature
economies of developed countries; however, such markets often have provided high
rates of return to investors.

The Fund may purchase foreign currencies on a spot or forward basis in
conjunction with its investments in foreign securities and to hedge against
fluctuations in foreign currencies. The precise matching of foreign currency
exchange transactions and portfolio securities will not generally be possible
since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities and it is
impossible to forecast with precision the change in market value of portfolio
securities. Currency hedging does not eliminate fluctuations in the underlying
prices of the securities, but rather establishes a rate of exchange at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in value of
such currency.

Transactions in foreign securities include currency conversion costs. Foreign
brokerage and custodial costs may be higher than in the United States. See
"Foreign Securities" and "Foreign Currency Transactions" in the Statement of
Additional Information for more information about foreign investments.

OPTIONS AND FUTURES TRANSACTIONS. The Fund may buy and sell options contracts
on debt securities and buy and sell financial futures contracts and options on
futures contracts. Options and futures contracts are bought and sold to manage
the Fund's exposure to changing interest rates and security prices. Some options
and futures strategies, including selling futures and calls and buying puts,
tend to hedge the Fund's investment against price fluctuations. Buying futures
and calls and selling puts tend to increase market exposure. However, as a
fundamental policy, the Fund may buy and sell futures contracts and related
options only for hedging purposes. In addition, as a matter of non-fundamental
policy, the Fund will not invest in a put or call option if as a result the
amount of premiums paid for such options then outstanding would exceed 10% of
the Fund's total assets. Options and futures may be combined with each other or
with forward contracts in order to adjust the risk and return characteristics of
the overall strategy. The Fund may invest in options on debt securities and
futures based on securities or indices, including options and futures traded on
an exchange or board of trade and options not traded on exchanges.

Options and futures can be volatile investments and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could not
close out its positions because of an illiquid secondary market. Options and
futures do not pay interest but may produce capital gains or losses.

27
<PAGE> 31

The Fund will not engage in a transaction in futures or options on futures if,
immediately thereafter, the sum of initial margin deposits and premiums required
to establish positions in futures contracts and options on futures would exceed
5% of the Fund's net assets. The loss incurred by the Fund from investing in
futures contracts and writing options on futures is potentially unlimited. The
Fund's transactions in options and futures contracts may be limited by the
requirements of the Code for qualification as a regulated investment company.
See "Derivative Instruments" in this Prospectus and the Statement of Additional
Information for a further discussion of options and futures transactions,
including tax effects and investment risks.

LENDING OF SECURITIES AND REPURCHASE AGREEMENTS. For the purpose of realizing
additional income, the Fund may lend to broker-dealers portfolio securities
amounting to not more than 33 1/3% of its total assets taken at current value.
The Fund may also enter into repurchase agreements. In a repurchase agreement,
the Fund buys a security subject to the right and obligation to sell it back to
the issuer at the same price plus accrued interest. These transactions must be
fully collateralized at all times. The Fund may reinvest any cash collateral in
short-term liquid debt securities. However, these transactions may involve some
credit risk to the Fund if the other party should default on its obligation and
the Fund is delayed in or prevented from recovering the collateral. Securities
loaned by the Fund will remain subject to fluctuations of market value.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS. The Fund may enter into mortgage "dollar
roll" transactions with selected banks and broker-dealers pursuant to which the
Fund sells mortgage-backed securities and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date. The Fund will only enter into covered rolls. A "covered roll" is a
specific type of dollar roll for which there is an offsetting cash position or a
cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction.

REVERSE REPURCHASE AGREEMENTS AND BORROWING. The Fund may enter into reverse
repurchase agreements and borrow money from banks for investment in securities.
Reverse repurchase agreements involve the sale of a security by the Fund to a
bank or securities firm and its agreement to repurchase the instrument at a
specified time and price plus an agreed amount of interest. The Fund will use
the proceeds to purchase other investments. Reverse repurchase agreements are
considered to be borrowings by the Fund and, as an investment practice, may be
considered speculative.

28
<PAGE> 32

ments exceeding in the aggregate 33 1/3% of the value of its net assets
(including for this purpose other borrowings of the Fund). In addition, the
aggregate amount of borrowings (excluding reverse repurchase agreements), on the
date each borrowing is incurred, may not exceed 20% of the Fund's total assets.
The Fund will enter into reverse repurchase agreements only with selected
registered broker/dealers or with federally insured banks or savings and loan
associations which are approved in advance as being creditworthy by the
Trustees. Under procedures established by the Trustees, the Adviser will monitor
the creditworthiness of the firms involved.

ZERO COUPON BONDS. The Fund may invest in zero coupon U.S. Treasury securities,
such as (1) U.S. Treasury bills, and both notes and bonds which have been
stripped of their unmatured interest coupons and receipts or (ii) certificates
representing interests in such stripped obligations. A zero coupon security pays
no interest in cash to its holder during its life although interest is accrued
currently for federal income tax purposes. Its value to an investor consists of
the difference between its face value at the time of maturity and the price for
which it was acquired, which is generally an amount significantly less than its
face value (sometimes referred to as a "deep discount" price). Investing in zero
coupon U.S. Treasury securities may help to preserve capital during periods of
declining interest rates. For example, if interest rates decline, GNMA
Certificates owned by the Fund which were purchased at greater than par are more
likely to be prepaid, which would cause a loss of principal. In anticipation of
this, the Fund might purchase zero coupon U.S. Treasury securities, the value of
which would be expected to increase when interest rates decline. Zero coupon
U.S. Treasury securities do not entitle the holder to any periodic payments of
interest prior to maturity. Accordingly, such securities usually trade at a deep
discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make periodic distributions of
interest. On the other hand, because there are no periodic interest payments to
be reinvested prior to maturity, zero coupon securities eliminate the
reinvestment risk and lock in a rate of return to maturity. Current federal tax
law requires that a holder (such as the Fund) of a zero coupon security accrue a
portion of the discount at which the security was purchased as income each year
even though the Fund receives no interest payment in cash on the security during
the year. In order to satisfy the income distribution requirements applicable to
regulated investment companies under the Code, the Fund may therefore be
required to obtain cash for distribution corresponding to such accrued income by
selling portfolio securities, possibly under disadvantageous circumstances, or
through borrowing.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent participation
interests in pools of adjustable and fixed mortgage loans which are guaranteed
by agencies or instrumentalities of the U.S. Government. Unlike conventional
debt obligations, mortgage-backed securities provide monthly payments derived
from the monthly interest and principal payments (including any prepayments)
made by the individual borrowers on the pooled mortgage loans. The mortgage
loans underlying mortgage-backed securities are generally subject to a greater
rate of

29
<PAGE> 33

principal prepayments in a declining interest rate environment and to a lesser
rate of principal prepayments in an increasing interest rate environment. Under
certain interest and prepayment rate scenarios, the Fund may fail to recover the
full amount of its investment in mortgage-backed securities notwithstanding any
direct or indirect governmental or agency guarantee. Since faster than expected
prepayments must usually be invested in lower yielding securities,
mortgage-backed securities are less effective than conventional bonds in
"locking in" a specified interest rate. Conversely, in a rising interest rate
environment, a declining prepayment rate will extend the average life of many
mortgage-backed securities. This possibility is often referred to as extension
risk. Extending the average life of a mortgage-backed security increases the
risk of depreciation due to future increases in market interest rates.

The Fund's investments in mortgage-backed securities may include conventional
mortgage pass-through securities, stripped mortgage-backed securities ("SMBS")
and certain classes of multiple class collateralized mortgage obligations
("CMOs" and "REMICs"). The Fund may acquire "regular" interests in REMICs, but
does not intend to acquire "residual" interests in REMICs. The Fund will not
invest more than 10% of its total assets in SMBS. Examples of SMBS include
interest only and principal only and other illiquid securities. Senior CMO
classes will typically have priority over residual CMO classes as to the receipt
of principal and/or interest payments on the underlying mortgages.

The CMO classes in which the Fund may invest include sequential and parallel pay
CMOs, including planned amortization class ("PAC") and target amortization class
("TAC") securities. The Fund may also invest in the floating rate mortgage-
backed securities listed under "Indexed Securities."

INDEXED SECURITIES. The Fund may invest in indexed securities. The interest
rate or, in some cases, the principal payable at the maturity of an indexed
security may change positively or inversely in relation to one or more interest
rates, financial indices or other financial indicators ("reference prices"). An
indexed security may be leveraged to the extent that the magnitude of any change
in the interest rate or principal payable on an indexed security is a multiple
of the change in the reference price. Thus, indexed securities may decline in
value due to adverse market changes in reference prices.

The indexed securities purchased by the Fund may include interest only ("IO")
and principal only ("PO") securities, floating rate securities linked to the
Cost of Funds Index ("COFI floaters"), other "lagging rate" floating rate
securities, floating rate securities that are subject to a maximum interest rate
("capped floaters"), leveraged floating rate securities ("super floaters"),
leveraged inverse floating rate securities ("inverse floaters"), dual index
floaters and range floaters.

30
<PAGE> 34

parallel pay CMOs involve less exposure to prepayment, extension and interest
rate risk than other mortgage-backed securities, provided that prepayment rates
remain within expected prepayment ranges or "collars."

The risk of early prepayments is the primary risk associated with mortgage IOs,
super floaters and other leveraged floating rate mortgage-backed securities. The
primary risks associated with COFI floaters, other "lagging rate" floaters,
capped floaters, inverse floaters, POs and leveraged inverse IOs are the
potential extension of average life and/or depreciation due to rising interest
rates. The residual classes of CMOs are subject to both prepayment and extension
risk.

Other types of floating rate derivative debt securities present more complex
types of interest rate risks. For example, range floaters are subject to the
risk that the coupon will be reduced to below market rates if a designated
interest rate floats outside of a specified interest rate band or collar. Dual
index or yield curve floaters are subject to depreciation in the event of an
unfavorable change in the spread between two designated interest rates.

ASSET-BACKED SECURITIES. The Fund may invest in securities that represent
individual interests in pools of consumer loans and trade receivables similar in
structure to mortgage-backed securities. The assets are securitized either in a
pass-through structure (similar to a mortgage pass-through structure) or in a
pay-through structure (similar to the CMO structure). Although the collateral
supporting asset-backed securities generally is of a shorter maturity than
mortgage loans and historically has been less likely to experience substantial
prepayments, no assurance can be given as to the actual maturity of an
asset-backed security because prepayments of principal may be made at any time.
Payments of principal and interest are typically supported by some form of
credit enhancement, such as a letter of credit, surety bond, limited guarantee
by another entity or have a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally applies to
only a fraction of the asset-backed security's par value until exhausted. If the
credit enhancement of an asset-backed security has been exhausted, and if any
required payments of principal and interest are not made with respect to the
underlying loans, the Fund may experience losses or delays in receiving
payments.

Asset-backed securities entail certain risk similar to and in addition to those
presented by mortgage-backed securities (as discussed above). Asset-backed
securities do not have the benefit of the same type of security interest in the
related collateral. Credit card receivables are generally unsecured and a number
of state and federal consumer credit laws give debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the outstanding
balance. In the case of automobile receivables, there is a risk that the holders
may not have either a proper or first security interest in all of the
obligations backing such receivables due to a large number of vehicles involved
in a typical issuance and technical requirements under state laws. Therefore,
recoveries on repossessed collateral may not always be available to support
payments on the securities. For a further discussion of the risks of investing
in asset-backed securities, see the Statement of Additional Information. The
Fund will invest in asset-backed securi-

31
<PAGE> 35

ties only if they are rated at the time of purchase in the two highest grades by
a nationally recognized statistical rating organization.

RISKS ASSOCIATED WITH OPTIONS, FUTURES AND OTHER DERIVATIVE INSTRUMENTS. The
risks associated with the Fund's transactions in options, futures and other
derivative instruments may include some or all of the following:

Market Risk. Options and futures transactions, as well as other derivative
instruments, involve the risk that the applicable market will move against the
Fund's derivative position and that the Fund will incur a loss. For derivative
contracts other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Fund. Investments in
mortgage-backed and indexed securities are subject to the prepayment, extension,
interest rate and other market risks described above.

Leverage and Volatility Risk. Derivative instruments may increase or leverage
the Fund's exposure to a particular market risk, which may increase the
volatility of the Fund's net asset value. The Fund may partially offset the
leverage inherent in derivative instruments by maintaining a segregated account
consisting of cash and liquid, high grade debt securities, by holding offsetting
portfolio securities or currency positions or by covering written options.

Correlation Risk. The Fund's success in using derivative instruments to hedge
portfolio assets depends on the degree of price correlation between the
derivative instrument and the hedged asset. Imperfect correlation may be caused
by several factors, including temporary price disparities among the trading
markets for the derivative instruments, the assets underlying the derivative
instrument and the Fund's portfolio assets.

Credit Risk. Over-the-counter instruments involve a risk that the issuer or
counterparty will fail to perform its contractual obligations.

Liquidity and Valuation Risk. Some derivative instruments are not readily
marketable or may become illiquid under adverse market conditions. In addition,
during periods of extreme market volatility, an exchange may suspend or limit
trading in an exchange-traded derivative instrument, which may make the contract
temporarily illiquid and difficult to price. The staff of the SEC takes the
position that certain over-the-counter options are subject to the Fund's 10%
limit on illiquid investments. The Fund's ability to terminate over-the-counter
derivative instruments may depend on the cooperation of the counterparties to
these instruments. For derivative instruments that are not heavily traded, the
only source of price quotations may be the selling dealer or counterparty.

LEVERAGE. The use of mortgage dollar rolls and reverse repurchase agreements
involves leverage. Leverage allows any investment gains made with the additional
monies received (in excess of the costs of the mortgage dollar roll or reverse
repurchase agreement) to increase the net asset value of the Fund's shares
faster than would otherwise be the case. On the other hand, if the additional
monies received are invested in ways that do not fully recover the costs of such

32
<PAGE> 36

transactions to the Fund, the net asset value of the Fund would fall faster than
would otherwise be the case.

INVESTMENT GRADE SECURITIES. The Fund may invest in securities that are rated
in the lowest category of "investment grade" (BBB by S&P or Baa by Moody's) or
unrated securities of comparable quality. Securities in the lowest investment
grade are considered medium grade obligations and normally exhibit adequate
protection parameters. However, these securities also have speculative
characteristics. Adverse changes in economic conditions or other circumstances
are more likely to lead to weakened capacity to make principal and interest
payments than in the case of higher grade obligations.

LOWER RATED SECURITIES. The Fund may invest in lower rated, dollar and non-
denominated, debt securities. Debt obligations rated in the lower ratings
categories, or which are unrated, involve greater volatility of price and risk
of loss of principal and income. In addition, lower ratings reflect a greater
possibility of an adverse change in financial condition affecting the ability of
the issuer to make payments of interest and principal.

The market price and liquidity of lower rated fixed-income securities generally
respond to short-term economic, corporate and market developments to a greater
extent than do the price and liquidity of higher rated securities, because these
developments are perceived to have a more direct relationship to the ability of
an issuer of lower rated securities to meet its ongoing debt obligations.

Reduced volume and liquidity in the high yield bond market or the reduced
availability of market quotations will make it more difficult to dispose of the
bonds and to value accurately the Fund's assets. The reduced availability of
reliable, objective data may increase the Fund's reliance on management's
judgment in valuing the high yield bonds. To the extent that the Fund invests in
lower rated securities, achieving the Fund's objective will depend more on the
Adviser's judgment and analysis than would otherwise be the case. In addition,
the Fund's investments in high yield securities may be susceptible to adverse
publicity and investor perceptions, whether or not justified by fundamental
factors. In the past, economic downturns and increases in interest rates have
caused a higher incidence of default by the issuers of these securities and may
do so in the future, particularly with respect to highly leveraged issuers. The
market prices of zero coupon and payment-in-kind bonds are affected to a greater
extent by interest rate changes and thereby tend to be more volatile than
securities which pay interest periodically and in cash. Increasing rate note
securities are typically refinanced by the issuers within a short period of
time. The Fund accrues income on these securities for tax and accounting
purposes, and this income is required to be distributed to shareholders. Because
no cash is received at the time income accrues on these securities, the Fund may
be forced to liquidate other investments or borrow money to make distributions.

33
<PAGE> 37

<TABLE>

RATINGS OF PORTFOLIO SECURITIES. As of the fiscal year ended March 31, 1995,
the Fund's portfolio contained domestic and foreign corporate bonds in the
following rating categories as rated by Standard & Poor's (the percentages
relate to the weighted month-end average value during the three months ended
March 31, 1995 of the bonds in each rating category):

<CAPTION>
RATED
-----
<S> <C>
AAA............................................................... 51.1%
AA................................................................ 16.9%
A................................................................. 8.4%
BBB............................................................... 7.9%
BB................................................................ 5.5%
B................................................................. 9.4%
CCC............................................................... 0.1%
CC................................................................ 0%
C................................................................. 0%
D................................................................. 0%
----
Total Publicly Traded Bonds....................................... 99.3%
Equity Securities................................................. 0.3%
Short-Term Securities............................................. 0.4%
----
Total............................................................. 100%
====
</TABLE>

If a bond was not rated by Standard & Poor's but was rated by Moody's, it is
included in the comparable category. Bonds shown as unrated were not rated by
either Moody's or Standard & Poor's. (The Fund did not hold any unrated
securities at each month end during the three months ended March 31, 1995.) The
Adviser does not rely solely on the ratings of rated securities in making
investment decisions but evaluates other economic and business factors affecting
the issuer as well. The relative proportion of securities in particular rating
categories will fluctuate over time, and the proportions listed above should not
be viewed as representing the Fund's current or future proportionate ownership
of securities in particular categories.

34
<PAGE> 38

(NOTES)
<PAGE> 39

JOHN HANCOCK
JOHN HANCOCK INVESTMENT INVESTMENT
QUALITY BOND FUND QUALITY BOND
FUND

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

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue CLASS A AND CLASS B SHARES
Boston, Massachusetts 02199-7603 PROSPECTUS
JULY 17, 1995

A MUTUAL FUND SEEKING
TO OBTAIN A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH
PRUDENT RISK AND SAFETY OF
CUSTODIAN PRINCIPAL.
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110

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

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
For TDD call 1-800-554-6713 TELEPHONE 1-800-225-5291

4700P 7/95 [RECYCLE LOGO] Printed on Recycled Paper

<PAGE> 40

JOHN HANCOCK

ADJUSTABLE
U.S. GOVERNMENT TRUST

CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS

<CAPTION>
Page
----
<S> <C>
Expense Information.................................................................... 2
The Fund's Financial Highlights........................................................ 3
Investment Objective and Policies...................................................... 4
Investment Structure................................................................... 6
Organization and Management of the Fund and the Portfolio.............................. 7
Alternative Purchase Arrangements...................................................... 8
The Fund's and the Portfolio's Expenses................................................ 10
Dividends and Taxes.................................................................... 11
Performance............................................................................ 12
How to Buy Shares...................................................................... 13
Share Price............................................................................ 14
How to Redeem Shares................................................................... 20
Additional Services and Programs....................................................... 22
Investments, Techniques and Risk Factors............................................... 25
</TABLE>

This Prospectus sets forth the information about John Hancock Adjustable U.S.
Government Trust (the "Fund"), a diversified series of John Hancock Bond Fund
(the "Trust"), that you should know before investing. Please read and retain it
for future reference.

The Fund, unlike many other mutual funds which directly acquire and manage
their own portfolio of securities, seeks to achieve its investment objective by
investing 100% of its assets in Adjustable U.S. Government Fund (the
"Portfolio"). The Portfolio has an identical investment objective and
substantially the same policies and restrictions as the Fund. Investors should
carefully consider this investment approach. For additional information
regarding this investment structure, see "Investment Structure."

The purpose of the following information is to help you to understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Fund and the
Adjustable U.S. Government Fund (the "Portfolio") for the fiscal year ended
March 31, 1995 adjusted to reflect current sales charges. Actual fees and
expenses in the future of Class A and Class B shares may be greater or less than
those indicated.

<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)......................... 3.00% None
Maximum sales charge imposed on reinvested dividends.................................................. None None
Maximum deferred sales charge......................................................................... None* 3.00%
Redemption fee+....................................................................................... None None
Exchange fee.......................................................................................... None None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fee (after expense limitation)............................................................. 0.20% 0.20%
Administration fee (after expense limitation)......................................................... 0.00% 0.00%
12b-1 fee**........................................................................................... 0.25% 0.90%
Other expenses*** (after expense limitation).......................................................... 0.30% 0.30%
------- -------
Total Fund operating expenses (after expense limitation)(a)........................................... 0.75% 1.40%

<FN>

*No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales charge
may be imposed in the event of certain redemption transactions within one
year of purchase.

** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will be
used to cover distribution expenses. The Fund has determined to pay Class B
Rule 12b-1 fees to 0.90% of average net assets attributable to Class B until
December 31, 1996, after which such fees may be increased to as much as
1.00% of such assets and total fund operating expenses would be 2.25% of
such assets.

*** Other expenses include transfer agent, legal, audit, custody and other
expenses.

+ Redemption by wire fee (currently $4.00) not included.
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares................................................................ $ 37 $53 $70 $120
Class B Shares................................................................
-- Assuming complete redemption at end of period.......................... $ 44 $64 $69 $118
-- Assuming no redemption................................................. $ 14 $44 $69 $118
</TABLE>

(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE> 42

THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for the periods
through the year ended March 31, 1995 has been audited by Ernst & Young LLP, the
Fund's independent auditors, whose unqualified report is included in the
Statement of Additional Information. Further information about the performance
of the shares of the Fund is contained in the Annual Report to shareholders
which may be obtained free of charge by writing or telephoning John Hancock
Investor Services Corporation ("Investor Services") at the address or telephone
number listed on the front page of this Prospectus.

Selected data for shares of the Fund outstanding during the periods indicated
is as follows.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
---------------------------------------------------- -----------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1995(d) 1994 1993 1992(f) 1995(d) 1994 1993 1992(f)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING
PERFORMANCE
Net Asset Value,
Beginning of
Period........ $ 9.89 $ 10.05 $ 10.03 $ 10.00(b) $ 9.89 $ 10.05 $ 10.03 $10.00(b)
-------- -------- -------- -------- -------- -------- -------- ------
Net Investment
Income........ 0.49 0.41 0.58 0.17 0.43 0.34 0.51 0.15
Net Realized and
Unrealized
Gain (Loss) on
Investments... (0.11) (0.16) 0.02 0.03 (0.11) (0.16) 0.02 0.03
-------- -------- -------- -------- -------- -------- -------- ------
Total from
Investment
Operations... 0.38 0.25 0.60 0.20 0.32 0.18 0.53 0.18
-------- -------- -------- -------- -------- -------- -------- ------
Less
Distributions:
Dividends from
Net Investment
Income........ (0.48) (0.41) (0.58) (0.17) (0.42) (0.34) (0.51) (0.15)
-------- -------- -------- -------- -------- -------- -------- ------
Net Asset Value,
End of
Period........ $ 9.79 $ 9.89 $ 10.05 $ 10.03 $ 9.79 $ 9.89 $ 10.05 $10.03
======== ======== ======== ======== ======== ======== ======== ========
Total Investment
Return at Net
Asset Value... 3.98% 2.51% 6.08% 1.96%(c) 3.33% 1.85% 5.40% 1.80%(c)
Total Adjusted
Investment
Return at Net
Asset
Value(a)...... 3.43% 2.27% 5.53% 0.84% 2.78% 1.61% 4.85% 0.68%

RATIOS AND
SUPPLEMENTAL
DATA
Net Assets, End
of Period
(000's
omitted)...... $ 12,950 $ 24,310 $ 33,273 $ 13,775 $ 9,506 $ 11,626 $ 13,753 $1,630
Ratio of
Expenses to
Average Net
Assets**(e)... 0.75% 0.75% 0.50% 0.50%* 1.40% 1.40% 1.15% 1.15%*
Ratio of
Adjusted
Expenses to
Average Net
Assets(a)(e)... 1.50% 0.99% 1.05% 1.62%* 2.15% 1.64% 1.70% 2.27%*
Ratio of Net
Investment
Income to
Average Net
Assets**...... 4.91% 4.09% 5.47% 6.47%* 4.26% 3.44% 4.82% 5.85%*
Ratio of
Adjusted Net
Investment
Income to
Average
Assets(a)..... 4.36% 3.85% 4.92% 5.35%* 3.71% 3.20% 4.27% 4.73%*
Portfolio
Turnover
Rate.......... 341% 244% 186% 1% 341% 244% 186% 1%
**Expense
Reimbursement
per share..... $ 0.05 $ 0.002 $ 0.06 $ 0.11 $ 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.
(e) The expenses used in the ratios represent the total expenses of the Fund plus the expenses of the Portfolio which were
incurred indirectly through the Fund's investment in the Portfolio.
(f) For the period December 31, 1991 (Commencement of Operations) to March 31, 1992.
</TABLE>

3
<PAGE> 43

INVESTMENT OBJECTIVE AND POLICIES

- -------------------------------------------------------------------------------
THE FUND SEEKS TO EARN A HIGH LEVEL OF
CURRENT INCOME, CONSISTENT WITH LOW
VOLATILITY OF PRINCIPAL.
- -------------------------------------------------------------------------------

The investment objective of the Fund is to earn a high level of current income,
consistent with low volatility of principal. The Fund seeks to achieve its
investment objective by investing all of its assets in the Portfolio, a
diversified, open end management company which has the same investment objective
and investment restrictions as the Fund and pursues its investment objective by
investing substantially all of its assets in U.S. Government securities, i.e.,
securities which are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.

Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in adjustable rate mortgage securities ("ARMs") and pass-through
securities representing interests in loan pools and having periodic interest
rate resets, which in each case must be U.S. Government securities
(collectively, "Government Agency Adjustable Rate Securities"). The Fund expects
that the Portfolio will be fully invested in Government Agency Adjustable Rate
Securities and in other U.S. Government securities which pay interest at fixed
rates and, as more fully described below, in highly rated (i.e., AAA) debt
securities which pay interest at fixed or adjustable rates.

Since the Fund pursues its investment objective by investing all of its assets
in the Portfolio, the following discussion relates to the investment policies
employed by the Portfolio.

The Portfolio will seek to achieve its objective by normally investing at least
65% of its total assets in Government Agency Adjustable Rate Securities.
Adjustable rate securities, which consist primarily of mortgage-backed
securities ("ARMs"), bear interest at rates that adjust or "reset" at periodic
intervals in conjunction with changes in market levels of interest.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from a pool of mortgage loans
secured by real property. Many mortgage-backed securities derive their value
from an underlying investment structure and accordingly are known as
"derivatives." Derivatives (such as stripped mortgage-backed securities) involve
certain risks including higher price volatility and the possible lack of a
readily available market. The primary issuers or guarantors of these securities
currently are the Government National Mortgage Association ("Ginnie Mae"), the
Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan
Mortgage Corporation ("Freddie Mac"). The Portfolio will limit its investment in
stripped mortgage-backed securities to 10% of its total assets. While the
Portfolio is permitted to invest up to 100% of its assets in other derivative
securities, it does not expect to invest substantially in derivative securities.
See "Investments, Techniques and Risk Factors" for a further description of
mortgage-backed securities and the risks associated with derivatives.

Under normal circumstances, the Portfolio invests at least 80% of its total
assets in U.S. Government securities bearing interest at fixed or adjustable
rates, including collateralized mortgage obligations issued and guaranteed by a
U.S. Government agency ("Government CMOs") and U.S. Treasury securities
originally issued in the form of a face-amount only security paying no interest
("U.S.

4
<PAGE> 44

Government zero coupon securities"), and repurchase agreements and forward
commitments with respect to such securities. The balance of the Portfolio's
assets may be invested in: (i) privately issued collateralized mortgage
obligations ("private CMOs") bearing interest at adjustable rates or fixed
rates; (ii) privately issued mortgage-backed securities (bearing interest at
adjustable rates or fixed rates) which are, at the time of purchase, rated AAA
by Standard & Poor's Ratings Group ("Standard & Poor's"), Aaa by Moody's
Investors Service, Inc. ("Moody's"), AAA by Fitch Investors, Inc. ("Fitch") and
(iii) U.S. Government zero coupon securities created by the separation of the
interest and principal components of a previously issued interest paying
security.

The foregoing policies and practices may involve risks not assumed by more
conservative investment companies such as money market funds and are further
described in this Prospectus under the caption "Investments, Techniques and Risk
Factors." Other types of mortgage-backed securities will likely be developed in
the future and the Portfolio may invest in them if the Portfolio's investment
adviser, John Hancock Advisers, Inc. (the "Adviser"), determines they are
consistent with the Portfolio's investment objectives and policies.

When determined to be appropriate because of market conditions or liquidity
requirements, the Portfolio may, as a defensive measure or for temporary
purposes, invest without limit in high quality short-term securities (e.g., U.S.
Government money market securities rated in the highest category by a nationally
recognized statistical rating organization).

Because the interest rate on ARMs and other adjustable rate securities generally
moves in the same direction as market interest, the market value of these
securities tends to be more stable than that of long-term fixed rate securities.
The Portfolio seeks to reduce volatility of principal and enhance consistency of
its net asset value by structuring its investments so that at least 90% of its
total assets in adjustable rate securities and in fixed rate debt securities
will at the time of purchase have a final maturity or average life of less than
5 years. The Fund believes that by investing in the Portfolio, which maintains a
short to an intermediate duration, it is likely that the Fund will obtain
current income in excess of that of a portfolio of shorter-term or money market
securities but with less volatility in market value (and, consequently, the
Fund's net asset value) than long-term fixed rate mortgage-backed securities.
Duration, a statistic that is expressed in time periods such as years, is a
measure of the exposure of the Fund (and the Portfolio) to changes in interest
rates. Neither the Portfolio nor the Fund maintains a constant net asset value.

The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental or non-fundamental. The Fund's investment objective and the
fundamental policies set forth in the Statement of Additional Information may
not be changed without the approval of the Fund's shareholders. The Fund's non-
fundamental policies and restrictions, including its policy of investing all of
its assets in the Portfolio, however, may be changed by a vote of the Trustees
without shareholder approval, upon 30 days' prior notice to shareholders. There
can be no assurance that either the Fund or the Portfolio will achieve its
respective investment objective.

5
<PAGE> 45
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------

The primary consideration in choosing brokerage firms to carry out the
Portfolio's transactions is execution at the most favorable prices, taking into
account the broker's professional ability and quality of service. Consideration
may also be given to the broker's sales of Fund shares. Pursuant to procedures
determined by the Trustees, the Adviser may place securities transactions with
brokers affiliated with the Adviser. Affiliated brokers include Tucker Anthony
Incorporated, Sutro and Company, Inc. and John Hancock Distributors, Inc., which
are indirectly owned by the John Hancock Mutual Life Insurance Company (the
"Life Company"), which in turn indirectly owns the Adviser.

INVESTMENT STRUCTURE

Investors should be aware that the Fund, unlike other open-end investment
companies which directly acquire and manage their own portfolio of securities,
seeks to achieve its investment objective by investing 100% of its assets in the
Portfolio, a separate mutual fund with the same investment objective and
policies as the Fund. For information concerning the Portfolio, including the
investment objective, policies, restrictions, management and expenses, see
"Investment Objective and Policies," "Organization and Management of the Fund
and the Portfolio," "The Fund's and the Portfolio's Expenses" and "Investments,
Techniques and Risk Factors." The respective investment objectives of the Fund
and the Portfolio may not be changed without a vote of the respective
shareholders of the Fund and the Portfolio.

The Portfolio presently sells its shares only to the Fund and may sell its
shares to other affiliated and non-affiliated mutual funds or institutional
investors ("Accounts"). Investors may contact John Hancock Funds at the address
listed on the back cover to determine if other mutual funds have invested in the
Portfolio and to obtain other pertinent information concerning such Accounts.
All Accounts, including the Fund, will invest in the Portfolio on the same terms
and conditions and will bear a proportionate share of the Portfolio's expenses.
However, other Accounts investing in the Portfolio are not required to sell
their shares at the same public offering price as the Fund due to variations in
sales commissions and other operating expenses in respect of such other
Accounts. Therefore, investors in the Fund should be aware that these
differences may result in differences in returns experienced by investors in the
different Accounts that invest in the Portfolio.

Investors in the Fund should be aware that smaller Accounts, which may include
the Fund, investing in the Portfolio may be materially affected by the actions
of larger Accounts investing in the Portfolio. For example, if a larger Account
redeems the shares it owns in the Portfolio, the remaining Accounts may
experience higher pro-rata operating expenses, thereby producing lower returns.
As a result, the securities held by the Portfolio may become less diverse,
resulting in increased risk. Also, Accounts which have a greater pro-rata
ownership in the Portfolio could have effective voting control over the
operations of the Portfolio. Whenever the Fund is requested to vote on a
fundamental policy or material matter pertaining to

6
<PAGE> 46

the Portfolio, it will hold a special meeting of shareholders and the Trustees
will cast the Fund's entire vote in the same proportion as the shareholders'
votes received.

Certain changes in the Portfolio's or the Fund's fundamental objectives,
policies or restrictions, particularly those requiring shareholder approval if
not made parallel by the Fund or the Portfolio, may require the Fund to redeem
its shares in the Portfolio, which may produce a gain or loss for tax purposes.
Any such redemption could result in a distribution in kind of the portfolio
securities held by the Portfolio (as opposed to a cash distribution). If
securities are so distributed, the Fund could incur brokerage expenses, tax
consequences or other charges in converting the securities to cash. In addition,
distribution in kind may result in a less diversified portfolio of investments
for the Fund and adversely affect the liquidity of the Fund. Additionally, since
two-tier structures involving investment companies have only recently developed,
there exists the possibility of adverse circumstances arising from the absence
of substantial experience with such two-tier investment structures. Further,
there is the possibility that the Fund would be unable to find a substitute
investment vehicle such as the Portfolio or a substitute investment adviser, or
to find one on terms comparable to the arrangement with the Portfolio which
might adversely affect shareholders' investments in the Fund.

ORGANIZATION AND MANAGEMENT OF THE FUND AND THE PORTFOLIO

The Fund and the Portfolio are each a diversified series of the Trust, which is
an open-end management investment company organized as a Massachusetts business
trust in 1984. The Trust reserves the right to create and issue a number of
series of shares, or funds or classes thereof, which are separately managed and
have different investment objectives. The Trustees have authorized the issuance
of two classes of the Fund, designated Class A and Class B. The shares of each
class represent an interest in the same portfolio of investments of the Fund.
Each class has equal rights as to voting, redemption, dividends and liquidation.
However, each class bears different distribution and transfer agent fees and
other expenses. Also, Class A and Class B shareholders have exclusive voting
rights with respect to their distribution plans. The Trust is not required to
and does not intend to hold annual meetings of shareholders, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental policies or approving a management contract. The Trust,
under certain circumstances, will assist in shareholder communications with
other shareholders.

- -------------------------------------------------------------------------------
THE TRUSTEES ELECT OFFICERS AND RETAIN THE
PORTFOLIO'S INVESTMENT ADVISER WHO IS
RESPONSIBLE FOR THE DAY-TO-DAY OPERATIONS
OF THE PORTFOLIO AND THE FUND'S
ADMINISTRATOR WHO IS RESPONSIBLE FOR THE
DAY-TO-DAY OPERATIONS OF THE FUND, EACH
SUBJECT TO THE TRUSTEES' POLICIES AND
SUPERVISION.
- -------------------------------------------------------------------------------

The Fund may withdraw its investment from the Portfolio at any time, if the
Trustees determine that it is in the best interest of the Fund to do so. Upon
any such withdrawal, the Trustees would consider what action might be taken,
including investing all the assets of the Fund in another pooled investment
entity having substantially the same investment objective as the Fund or
retaining an investment adviser to manage the Fund's assets in accordance with
the investment policies previously described for the Portfolio. Should the Fund
invest in another portfolio, such portfolio will have investment restrictions no
less restrictive than

7
<PAGE> 47

the Fund's. (See the Statement of Additional Information for further information
concerning shareholder rights.)

The Trustees may be called upon from time to time to resolve possible conflicts
between the Fund and the Portfolio. Accordingly, the Trustees have formed two
committees, the "Fund Committee" and the "Portfolio Committee," each of whose
respective members are composed entirely of independent trustees who do not
serve on the other Committee. The responsibilities of the Committees are to
monitor and protect the interests of the Fund and the Portfolio, respectively.
In acting on matters on behalf of the Fund (or on behalf of the Portfolio), the
Trustees shall act as recommended by the Fund Committee (or the Portfolio
Committee), as the case may be.

The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the
Portfolio, and other investment companies in the John Hancock group of funds,
with investment research and portfolio management services and also serves as
the Fund's administrator (the "Administrator"). John Hancock Funds, Inc. ("John
Hancock Funds") distributes shares for all of the John Hancock mutual funds
through brokers which have arrangements with John Hancock Funds ("Selling
Brokers"). Certain Trust officers are also officers of the Adviser, the
Administrator and John Hancock Funds.

All investment decisions are made by a committee and no single person is
primarily responsible for making recommendations to the committee.

In order to avoid any conflict with portfolio trades for the Portfolio, the
Adviser and the Portfolio have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of these
restrictions are: preclearance for all personal trades and a ban on the purchase
of initial public offerings, as well as contributions to specified charities of
profits on securities held for less than 91 days. These restrictions are a
continuation of the basic principle that the interests of the Fund and the
Portfolio and their shareholders come first.

ALTERNATIVE PURCHASE ARRANGEMENTS

- -------------------------------------------------------------------------------
AN ALTERNATIVE PURCHASE PLAN ALLOWS YOU TO
CHOOSE THE METHOD OF PAYMENT THAT IS BEST
FOR YOU.
- -------------------------------------------------------------------------------

8
<PAGE> 48

CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
four years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. The amount of the Fund's 12b-1 fee for Class
B shares is currently limited to 0.90% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
those of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will also result in lower dividends than those paid on
Class A shares.

FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE

The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares, given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time, and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on the inside cover page of this Prospectus shows examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for reduced sales charges. See "Share
Price -- Qualifying for a Reduced Sales Charge."

9
<PAGE> 49

In the case of Class A shares, the distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the proceeds
of the initial sales charge and ongoing distribution and service fees. In the
case of Class B shares, the expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as from the CDSC incurred upon
redemption within four years of purchase. The purpose and function of the Class
B shares' CDSC and ongoing distribution and service fees are the same as those
of the Class A shares' initial sales charge and ongoing distribution and service
fees. Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.

THE FUND'S AND THE PORTFOLIO'S EXPENSES
For managing its investment affairs, the Portfolio pays a monthly fee to the
Adviser equal to 0.40% of the Portfolio's average daily net assets. For managing
its business affairs, the Fund pays a monthly fee to the Administrator equal to
0.10% of the Fund's average daily net assets.

During the Portfolio's and the Fund's fiscal year ended March 31, 1995, the
advisory fee and administration fee paid by the Portfolio and the Fund were
equal to 0.20% and 0.00%, respectively, of the Portfolio's and the Fund's
average daily net assets, reflecting the agreement by the Adviser and
Administrator and the Portfolio's and the Fund's previous investment adviser and
administrator to reduce operating expenses and not to impose all or a portion of
their respective management fees and administration fee during that year. In
addition the previous and current administrators reimbursed the Fund 0.45% of
its average net assets in accordance with the agreement. The Adviser and the
Administrator have voluntarily and temporarily agreed to continue to limit the
Fund's aggregate operating expenses until December 31, 1996 and not to impose
their respective management fee and administration fee or to make other
arrangements to the extent necessary to limit the total of the management fees,
administration fees and the aggregate operating expenses of the Fund (not
including transfer agent fees and fees payable by the Fund under a Rule 12b-1
plan, or any other class-specific expenses) to 0.35% of the average net assets
attributable to the Class A and Class B shares, respectively.

- -------------------------------------------------------------------------------
THE FUND PAYS DISTRIBUTION AND SERVICE
FEES FOR MARKETING AND SALES RELATED
SHAREHOLDER SERVICING.
- -------------------------------------------------------------------------------

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service fees
at an aggregate annual rate of up to 0.25% of the Class A shares' average daily
net assets and an aggregate annual rate of 1.00% of the Class B shares' average
daily net assets. The Fund has temporarily determined to limit the distribution
and services fees pursuant to the Class B Plan to 0.90% of average daily net
assets. In each case, up to 0.25% for Class A and Class B shares is for service
expenses and the remaining amount is for distribution expenses. The distribution
fees will be used to reimburse John Hancock Funds for its distribution expenses,
including but not limited to: (i) initial and ongoing sales compensation to
Selling Brokers and others (including affiliates of John Hancock Funds) engaged
in the sale of Fund shares; (ii) marketing, promotional and overhead expenses
incurred in connection with the distribution of Fund shares; (iii) unreimbursed
distribution expenses under the Fund's prior distribution plans; (iv)
distribution expenses incurred by other investment companies which sell all or
substantially all of their assets to, merge with or otherwise engage in a
reorganization transaction with the Fund; and (v) with respect to Class B shares
only, interest expenses on unreimbursed distribution expenses. The service fees
will be used to compensate Selling Brokers for providing personal and account
maintenance services to shareholders.

10
<PAGE> 50

In the event John Hancock Funds is not fully reimbursed for payments it makes or
expenses it incurs under the Class A Plan, these expenses will not be carried
beyond one year from the date they were incurred. Unreimbursed expenses under
the Class B Plan will be carried forward together with interest on the balance
of these unreimbursed expenses. For the fiscal year ended March 31, 1995, an
aggregate of $253,107 of distribution expenses or 2.30% of the average net
assets of the Fund's Class B shares was not reimbursed or recovered by John
Hancock Funds through the receipt of deferred sales charges or Rule 12b-1 fees
in prior periods.

Information on the Fund's and the Portfolio's combined total expenses appears in
the Financial Highlights section of this Prospectus.

DIVIDENDS AND TAXES

TAXATION. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income and dividends from the
Fund's net long-term capital gains are taxable as long-term capital gains. These
dividends are taxable whether you take them in cash or reinvest in additional
shares. Certain dividends may be paid in January of a given year but may be
taxable as if you received them the previous December.

11
<PAGE> 51

When you redeem (sell) or exchange shares, you may realize a taxable gain or
loss.

On the account application, you must certify that the social security or other
taxpayer identification number you provide is your correct number and that you
are not subject to backup withholding of Federal income tax. If you do not
provide this information or are otherwise subject to this withholding, the Fund
may be required to withhold 31% of your dividends and the proceeds of
redemptions or exchanges.

PERFORMANCE

The Fund's total return shows the overall dollar or percentage change in value
of a hypothetical investment in the Fund, assuming the reinvestment of all
dividends. Cumulative total return shows the Fund's performance over a period of
time. Average annual total return shows the cumulative return divided over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that it is not the same as actual year-to-year results.

12
<PAGE> 52
<TABLE>

HOW TO BUY SHARES
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume that you are investing in Class A shares.

-------------------------------------------------------------------------------
OPENING AN ACCOUNT
-------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation, P.O. Box 9115, Boston, MA, 02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Adjustable U.S. Government
Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------

-------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
-------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
PROGRAM 2. The amount you elect to invest will be automatically withdrawn
(MAAP) from your bank or credit union account.
- ---------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional Class A or Class B shares by calling
Investor Services toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, the class of shares
you own, your account number, and the amount you wish to
invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
- ---------------------------------------------------------------------------------------
</TABLE>

13
<PAGE> 53

<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker
- ---------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Adjustable U.S. Government
Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- ---------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made in writing to Investor Services.
- ---------------------------------------------------------------------------------------
</TABLE>

SHARE PRICE

The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the
Portfolio'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 according to procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which the
Trustees have determined approximates market value. The NAVs of each class of
the Fund, and the NAV of the Portfolio are calculated once daily as of the close
of regular trading on the New York Stock Exchange (the "Exchange") (generally at
4:00 P.M., New York time) on each day that the Exchange is open.

14
<PAGE> 54

to John Hancock Funds before its close of business to receive that day's
offering price.

<TABLE>
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed or who receives these incentives may be deemed to be an
underwriter under the Securities Act of 1933. Other than distribution and
service fees, the Fund does not bear distribution expenses.

(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions within one year of purchase.

(***) John Hancock Funds may pay a commission and the first year's service fee
(as described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in aggregate as follows:
1% on sales to $4,999,999, 0.50% on the next $5 million and 0.25% on
amounts of $10 million and over.

(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance in an amount equal to 0.25% of the net
assets invested in the Fund at the time of the sale, and thereafter, it
pays the service fee periodically in arrears in an amount up to 0.25% of
the Fund's average annual net assets. Selling Brokers receive the fee as
compensation for providing personal and account maintenance services to
shareholders.
</TABLE>

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of accounts attributable to these
brokers.

15
<PAGE> 55

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."

<TABLE>

<CAPTION>
AMOUNT INVESTED CDSC RATE
-------------- ---------
<S> <C>
$1 million to $4,999,999...................................................... 1.00%
Next $5 million to $9,999,999................................................. 0.50%
Amounts of $10 million and over............................................... 0.25%
</TABLE>

- -------------------------------------------------------------------------------
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE
ON YOUR INVESTMENT IN CLASS A SHARES.
- -------------------------------------------------------------------------------

1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and

16
<PAGE> 56

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

EXAMPLE:

If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $80,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 2.50% and not 3.00% (the
rate that would otherwise be applicable to investments of less than $100,000.
See "Initial Sales Charge Alternative -- Class A Shares").

If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

- - A Trustee or officer of the Fund; a Director or officer of the Adviser and its
affiliates or Selling Brokers; employees or sales representatives of any of
the foregoing; retired officers, employees or Directors of any of the
foregoing; a member of the immediate family of any of the foregoing; or any
fund, pension, profit sharing or other benefit plan for the individuals
described above.

- - A former participant in an employee benefit plan with John Hancock Funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.

- ------------------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.

CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES. Class B shares
are offered at net asset value per share without a sales charge so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within four years of purchase will be subject to a CDSC
at the rates set forth below. This charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestment.

17
<PAGE> 57

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the four-year CDSC redemption period or those you acquired through
reinvestment of dividends, and next from the shares you have held the longest
during the four-year period. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.

<TABLE>

EXAMPLE:

<S> <C> <C>
- - Proceeds of 50 shares redeemed at $12 per share $ 600
- - Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12) -120
- - Minus appreciation on remaining shares, also not subject to CDSC
(40 X $2) - 80
-----
- - Amount subject to CDSC $ 400
</TABLE>

<TABLE>
<CAPTION>
YEAR IN WHICH
CLASS B SHARES CONTINGENT DEFERRED SALES
REDEEMED FOLLOWING CHARGE AS A PERCENTAGE OF
PURCHASE DOLLAR AMOUNT SUBJECT TO CDSC
- ------------------- -------------------------------
<S> <C>
First 3.0%
Second 2.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter None
</TABLE>

A commission equal to 2.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale, and thereafter the service fee is paid in arrears.

18
<PAGE> 58

- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.

- - Redemptions due to death or disability.

- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.

- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $100 invested in the Fund.

- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.

- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

19
<PAGE> 59

HOW TO REDEEM SHARES

<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C> <C>
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from 8:00
A.M. to 4:00 P.M. (New York time), Monday through Friday,
excluding days on which the Exchange is closed. Investor Services
employs the following procedures to confirm that instructions
received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and
other relevant information may be requested. In addition,
telephone instructions are recorded.

20
<PAGE> 60

<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C> <C>
BY WIRE If you have a telephone redemption form on file with the Fund,
redemption proceeds of $1,000 or more can be wired on the next
business day to your designated bank account, and a fee
(currently $4.00) will be deducted. You may also use electronic
funds transfer to your assigned bank account, and the funds are
usually collectible after two business days. Your bank may or may
not charge a fee for this service. Redemptions of less than
$1,000 will be sent by check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- ---------------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying the name
of the Fund, the dollar amount or the number of shares to be
redeemed, your name, class of shares, your account number and the
additional requirements listed below that apply to your
particular account.
- ---------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaran-
teed.
Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.
Trusts A letter of instruction signed by the
trustee(s) with the signature(s) guaranteed.
(If the trustee's name is not registered on
your account, also provide a copy of the
trust document, certified within the last 60
days.)
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- ---------------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less,
John Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or meets certain
net capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v)
a national securities exchange, a registered securities exchange or a clearing
agency.

- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- ---------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instructions. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.
</TABLE>

- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- -------------------------------------------------------------------------------

<TABLE>
<S> <C>
Due to the proportionately high cost of maintaining small accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds less than $100 (except accounts under retirement plans) and to mail the
proceeds to the shareholder, or the transfer agent may impose an annual fee of
$10.00. No account will be involuntarily redeemed or additional fee imposed,
if the value of the account is in excess of the Fund's minimum initial
investment or if the value of the account falls below the required minimum as
a result of market action. No CDSC will be imposed on involuntary redemptions
of shares.

21
<PAGE> 61

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE

Exchanges between funds with shares that are not subject to a CDSC are based on
their respective net asset values. No sales charge or transaction charge is
imposed. Class B shares of the Fund that are subject to a CDSC may be exchanged
into Class B shares of another John Hancock fund without incurring the CDSC;
however, these shares will be subject to the CDSC schedule of the shares
acquired (except that exchanges into John Hancock Short-Term Strategic Income
Fund, John Hancock Limited-Term Government Fund and the Fund will be subject to
the initial fund's CDSC). For purposes of computing the CDSC payable upon
redemption of shares acquired in an exchange, the holding period of the original
shares is added to the holding period of the shares acquired in an exchange.
However, if you exchange Class B shares purchased prior to January 1, 1994 for
Class B shares of any other John Hancock Fund, you will be subject to the CDSC
schedule in effect on your initial purchase date.

You may exchange Class B shares of the Fund into a John Hancock money market
fund at net asset value. Shares so acquired will continue to be subject to the
same CDSC upon redemption.

The Fund reserves the right to require you to keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege, upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

22
<PAGE> 62

BY TELEPHONE

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

IN WRITING

1. In a letter, request an exchange and list the following:

Sign your request exactly as the account is registered.

2. Mail the request and information to:

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

23
<PAGE> 63

REINVESTMENT PRIVILEGE

- -------------------------------------------------------------------------------
IF YOU REDEEM SHARES OF THE FUND, YOU MAY
BE ABLE TO REINVEST ALL OR PART OF THE
PROCEEDS IN SHARES OF THE FUND OR ANOTHER
JOHN HANCOCK FUND WITHOUT PAYING AN
ADDITIONAL SALES CHARGE.
- -------------------------------------------------------------------------------

2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, the account number and class from which your shares were originally
redeemed.

SYSTEMATIC WITHDRAWAL PLAN

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.

24
<PAGE> 64

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.

4. There is no charge to you for this program, and there is no cost to the Fund.

5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

GROUP INVESTMENT PROGRAM

2. The initial aggregate investment of all participants in the group must be at
least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.

RETIREMENT PLANS

INVESTMENTS, TECHNIQUES AND RISK FACTORS

ADJUSTABLE RATE SECURITIES. Adjustable rate securities purchased by the
Portfolio consist principally of mortgage-backed ("pass-through") securities. A
mortgage-backed pass-through security is formed when mortgages are pooled
together and undivided interests in the pool or pools are sold. The cash flow
from the mortgages is passed through to the holders of the securities in the
form of periodic payments of interest and principal and unscheduled early
payments of principal (i.e., "prepayments"). See "Risks Relating to the
Portfolio's Investments" below. Types of mortgage-backed securities include
Ginnie Mae, Fannie Mae and Freddie

25
<PAGE> 65

Mac pass-through securities. Although these mortgage-backed securities are
guaranteed or issued by U.S. Government agencies or instrumentalities, Fannie
Mae and Freddie Mac securities are not backed by the "full faith and credit" of
the U.S. Government. In such cases, the Portfolio must look principally to the
agency issuing or guaranteeing the security for ultimate payment. Other types of
adjustable rate securities (as described below) include: (1) privately issued
mortgage-backed securities constituting ARMs which are backed by a pool of
conventional adjustable rate mortgage loans; (2) asset-backed securities which
are primarily loan pool securities that are issued and guaranteed by a U.S.
Government agency, such as the Small Business Administration; and (3) CMOs and
multi-class pass-through securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. Other types of mortgage-backed securities
will likely be developed in the future and the Portfolio may invest in them if
the Adviser determines they are consistent with the Portfolio's investment
objective and policies. For further descriptions of both mortgage-backed and
U.S. Government asset-backed securities, see below.

INDICES. The interest rates paid on the adjustable rate securities in which the
Portfolio invests generally are readjusted periodically to an increment over
some predetermined interest rate index. Such readjustments occur at intervals
ranging from one to 60 months. The Portfolio will invest at least 65% of its
total assets in Government Agency Adjustable Rate Securities and other
adjustable rate securities which in the aggregate have an average dollar
weighted time to next interest rate reset of one year or less. There are three
main categories of indices: (1) those based on U.S. Treasury securities; (2)
those derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates; and (3) those based on actively traded or
prominently posted short-term interest rates. Commonly utilized indices include
the one-year constant maturity U.S. Treasury rates, the three-month U.S.
Treasury bill rate, the 180-day U.S. Treasury bill rate, rates on long-term U.S.
Treasury securities, the 11th District Federal Home Loan Bank Costs of Funds,
the National Meridian Cost of Funds, the one-month, three-month, six-month or
one-year London Interbank Offered Rate (LIBOR), the prime rate of a specified
bank, or commercial paper rates. Some indices, such as the one-year constant
maturity U.S. Treasury rate, closely mirror changes in market interest rate
levels. Others, such as the 11th District Federal Home Loan Bank Costs of Funds
Index, tend to lag behind changes in market rate levels and tend to be somewhat
less volatile. The degree of volatility in the market value of the Portfolio's
assets and of the net asset value of the Portfolio's (and the Fund's) shares
will be a function primarily of the length of the adjustment period and the
degree of volatility in the applicable indices. It will also be a function of
the maximum increase or decrease of the interest rate adjustment on any one
adjustment date, in any one year and over the life of the securities. These
maximum increases and decreases are typically referred to as "caps" and
"floors," respectively.

CHARACTERISTICS OF ADJUSTABLE RATE SECURITIES. As the interest rates on the
mortgages or financial assets underlying the Portfolio's investments are reset
periodically, yields of portfolio securities will gradually align themselves to
reflect

26
<PAGE> 66

changes in market rates and should cause the net asset value of the Portfolio
(and the Fund) to fluctuate less dramatically than it would if the Portfolio
invested in more traditional long-term, fixed-rate debt securities. In periods
of substantial short-term volatility in short-term interest rates, the value of
the portfolio may fluctuate more substantially since the caps and floors of the
adjustable rate securities in the Portfolio may not permit the interest rate to
adjust to the full extent of the movements in short-term rates during any one
adjustment period. Accordingly, investors could experience some principal loss
or less gain than might otherwise be achieved if they redeem their shares of the
Fund before the interest rates on the mortgages underlying the Portfolio's
Government ARM securities are adjusted to reflect prevailing market interest
rates. In the event of dramatic increases in interest rates, the lifetime caps
on adjustable rate securities may prevent such securities from adjusting to
prevailing rates over the term of the loan. In this circumstance, the market
value of the adjustable rate securities held by the Portfolio may be
substantially reduced with a corresponding decline in the Portfolio's (and the
Fund's) net asset value.

ARM SECURITIES. Generally, ARMs have a specified maturity date and amortize
principal over their life. ARMs typically provide for a fixed initial interest
rate for either the first 3, 6, 12, 13, 36 or 60 scheduled monthly payments.
Thereafter, the rate of amortization of principal, as well as interest payments
on the remaining principal amount of the ARM, changes in accordance with
movements in a specified index. The amount of interest due to an ARM security
holder is calculated by adding a specified additional amount, the "margin," to
the index, subject to limitations or "caps" on the maximum and minimum interest
that is charged to the mortgagor during the life of the mortgage or to maximum
and minimum changes to that interest rate during a given period. Some
residential mortgage loans restrict periodic adjustments by limiting changes in
the borrower's monthly principal and interest payments rather than limiting
interest rate changes. These payment caps may result in negative amortization.

PRIVATELY ISSUED COLLATERALIZED MORTGAGE OBLIGATIONS ("PRIVATE CMOS"). Private
CMOs are debt obligations collateralized by whole mortgage loans or pass-through
mortgage-backed securities issued or guaranteed by U.S. Government agencies or
issued by private issuers (see discussion of "Privately Issued Mortgage-backed
Securities" below). The issuer of a series of private CMOs may elect to be
treated as a Real Estate Mortgage Investment Conduit ("REMIC"). Multi-class
pass-through securities are equity interests in a trust composed of mortgage
loan or other mortgage-backed securities. Payments of principal and interest on
underlying collateral provides the funds to pay debt service on the CMO or to
make scheduled distributions on the multi-class pass-through security. The term
CMO as used in this Prospectus also includes multi-class pass-through
securities. The Portfolio does not invest in multi-class mortgage securities
which are subordinated to other mortgage securities arising out of the same pool
of mortgages (e.g., "residual" interests). The Portfolio will limit investments
in privately issued CMOs and REMICs which are collateralized by privately issued
mortgage-backed securities or whole loans of private issuers to 5% of its net
assets. The Portfolio will invest in private CMOs and REMICs only if they are
rated

27
<PAGE> 67

in the highest categories by a nationally recognized statistical rating
organization (i.e., AAA by Standard & Poor's or Aaa by Moody's).

Privately issued mortgage-backed securities are structured similarly to, and in
most cases represent interests in, Ginnie Mae, Fannie Mae and Freddie Mac
mortgage-backed securities and are issued by originators of and investors in
mortgage loans, including savings and loan associations, mortgage bankers,
commercial banks, investment banks and special purpose subsidiaries of the
foregoing. The Portfolio will (together with privately issued CMOs and REMICs as
described above) limit investment in privately issued mortgage-backed securities
which do not represent interests in Ginnie Mae or Freddie Mac mortgage
certificates to no more than 5% of its net assets.

U.S. GOVERNMENT ZERO COUPON SECURITIES. U.S. Government zero coupon securities
are created by the separation of the interest and principal components of a
previously issued interest paying security. Investment banks may also strip U.S.
Treasury securities and sell them under proprietary names. Since such securities
may not be as liquid as those which are direct obligations of the U.S.
Government, the Portfolio will not invest more than 10% of its total assets in
privately created zero coupon U.S. Treasuries and will include such securities
in its limitations with respect to illiquid securities.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES ISSUED BY U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES. The mortgage-backed securities purchased by the
Portfolio include not only adjustable rate mortgages but also conventional
30-year fixed rate mortgages, graduated payment mortgages and 15-year mortgages.
All of these mortgages can be used to create pass-through securities.

Certificates of the Government National Mortgage Association (Ginnie Mae
Certificates) are mortgage-backed securities which evidence an undivided
interest in a pool of mortgage loans. Ginnie Mae Certificates differ from bonds
in that principal is paid back monthly by the borrower over the term of the loan
rather than returned in a lump sum at maturity. Ginnie Mae Certificates entitle
the holder to receive a share of all interest and principal prepayments paid and
owed on the mortgage pool, net of fees paid to the "issuer" and Ginnie Mae,
regardless of whether or not the mortgagor actually makes the payment. The
National Housing Act authorized Ginnie Mae to guarantee the timely payment of
principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration (FHA) or the Farmer's Home Administration
(FHMA), or guaranteed by the Veterans Administration (VA). Ginnie Mae
certificates are backed by the full faith and credit of the U.S. Government.
Ginnie Mae is empowered to borrow without limitation from the U.S. Treasury, if
necessary, to make any payments required under its guarantee. In cases where
U.S. Government support of agencies or instrumentalities is discretionary, no
assurance can be given that the U.S. Government will provide financial support,
since it is not legally obligated to do so.

28
<PAGE> 68

from a list of approved seller/servicers. Fannie Mae issues guaranteed mortgage
pass-through certificates (Fannie Mae Certificates). Fannie Mae Certificates
resemble Ginnie Mae Certificates in that each Fannie Mae Certificate represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool. Fannie Mae guarantees timely payment of interest on Fannie Mae
Certificates and the stated principal amount.

The Federal Home Loan Mortgage Corporation was created in 1970 through enactment
of Title III of the Emergency Home Finance Act of 1970. Its purpose is to
promote development of a nationwide secondary market in conventional residential
mortgages. Freddie Mac presently issues two types of mortgage pass-through
securities, mortgage participation certificates (PCs) and guaranteed mortgage
certificates. PCs resemble Ginnie Mae Certificates in that each PC represents a
pro rata share of all interest and principal payments made and owed on the
underlying pool. Freddie Mac guarantees timely monthly payment of interest on
PCs and the stated principal amount.

Government asset-backed securities (which are not mortgage-backed securities)
consist primarily of loan pool securities issued or guaranteed by government
agencies and include pass-through securities collateralized by Small Business
Administration (SBA) guaranteed loans whose interest rates adjust in much the
same fashion as described herein with respect to adjustable rate mortgage
securities. Loans underlying such "Loan pool" securities generally include
commercial loans such as working capital loans and equipment loans. SBA creates
loan pool securities from pools of SBA guaranteed portions of loans. These
securities have a guarantee of timely payment of both principal and interest and
are backed by the full faith and credit of the U.S. Government.

A Government CMO is a debt security issued by a U.S. Government instrumentality
("Government CMO") which is backed by a portfolio of mortgage-backed securities
held under an indenture. The issuer's obligation to make interest and principal
payments is secured by the underlying portfolio of mortgages or mortgage-backed
securities. Government CMOs are issued with a number of classes (at least four)
or series, which have different maturities and which may represent interests in
some or all of the interest or principal on the underlying collateral or a
combination thereof. Government CMOs of different classes are generally retired
in sequence as the underlying mortgage loans in the mortgage pool are repaid. In
the event of sufficient early prepayments on such mortgages, the class or series
of Government CMO first to mature generally will be retired prior to its
maturity. Thus, the early retirement of a particular class or series of
Government CMO held by the Portfolio would have the same effect as the
prepayment of mortgages underlying a mortgage-backed pass-through security.
Among the Government CMO classes available are (1) floating (adjustable) rate
classes which have characteristics similar to ARMs and (2) inverse floating rate
classes whose coupons vary inversely with the rate of some market index. REMICs
are private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property and are similar to CMOs in that they
issue multiple classes of securities. CMOs and REMICs issued by entities other
than U.S.

29
<PAGE> 69

Government agencies or instrumentalities are not considered U.S. Government
securities for purposes of the investment policies of the Fund. Multi-class
pass-through securities are similar to CMOs in that they are generally divided
into several classes; however, they represent equity interests in a pool of
mortgage loans typically held in a trust.

RESTRICTED AND ILLIQUID SECURITIES. The Portfolio may invest up to 10% of its
total assets in illiquid investments, which include repurchase agreements
maturing in more than seven days, certain over-the-counter options, certain
stripped mortgage-backed securities, certain restricted securities and
securities not readily marketable. Although the Portfolio may purchase
restricted securities which can be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act, its present investment
restriction limits such investment to the foregoing 10% limitation.

SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading of fixed-income securities
should not increase direct transaction costs since fixed-income securities are
normally traded on a principal basis without brokerage commissions. Short-term
trading may have the effect of increasing portfolio turnover rate. The Portfolio
does not intend to invest for the purpose of seeking short-term profits. The
Portfolio's investment securities may be changed, however, without regard to the
holding period of these securities (subject to certain tax restrictions), when
the Adviser deems that this action will help achieve the Portfolio's objective
given a change in an issuer's operations or changes in general market
conditions. A rate of turnover of 100% would occur if the value of the lesser of
purchases and sales of investment securities for a particular year equaled the
average monthly value of investment securities owned during the year (excluding
short-term securities). A high rate of portfolio turnover (100% or more) may
make it more difficult for the Portfolio and Fund to qualify as regulated
investment companies under the Code. The Portfolio's portfolio turnover rate is
set forth in the table under "Financial Highlights."

LENDING OF SECURITIES AND REPURCHASE AGREEMENTS. For the purpose of realizing
additional income, the Portfolio may lend to broker-dealers portfolio securities
amounting to not more than 33 1/3% of its total assets taken at current value or
may enter into repurchase agreements. In a repurchase agreement, the Portfolio
buys a security subject to the right and obligation to sell it back to the
issuer at the same price plus accrued interest. These transactions must be fully
collateralized at all times. The Portfolio may reinvest any cash collateral in
short-term, liquid debt securities. However, they may involve some credit risk
to the Portfolio (and, therefore, the Fund) if the other party should default on
its obligation and the Portfolio is delayed in or prevented from recovering the
collateral. Securities loaned by the Portfolio will remain subject to
fluctuations of market value.

WHEN-ISSUED SECURITIES. The Portfolio may purchase securities on a forward
commitment or "when-issued" basis. The Fund will segregate in a separate account
cash or liquid, high grade debt securities equal in value to its forward
commitments and when-issued securities. Purchasing debt securities for future

30
<PAGE> 70

delivery or on a when-issued basis may increase the Fund's overall investment
exposure and involves a risk of loss if the value of the securities declines
before the settlement date.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS. The Portfolio may enter into mortgage
"dollar roll" transactions with selected banks and broker-dealers pursuant to
which the Portfolio sells mortgage-backed securities and simultaneously
contracts to repurchase substantially similar (same type, coupon and maturity)
securities on a specified future date. The Portfolio will only enter into
covered rolls. A "covered roll" is a specific type of dollar roll for which
there is an offsetting cash position or a cash equivalent security position
which matures on or before the forward settlement date of the dollar roll
transaction.

REVERSE REPURCHASE AGREEMENTS. A reverse repurchase agreement involves the sale
of a security by the Portfolio and its agreement to repurchase the instrument at
a specified time and price. The Portfolio will maintain a segregated account
consisting of liquid, high grade debt securities to cover its obligations under
reverse repurchase agreements with selected banks or securities firms approved
in advance by the Trustees. The Portfolio will use the proceeds to purchase
other investments. Reverse repurchase agreements are considered to be borrowings
by the Portfolio and as an investment practice may be considered speculative.
Repurchase agreements magnify the potential for gain or loss on the portfolio
securities of the Portfolio and therefore, increase the possibility of
fluctuation in the Portfolio's (and, therefore, the Fund's) net asset value. The
Portfolio may borrow money for temporary administrative or emergency purposes.
To avoid the potential leveraging effects of the Portfolio's borrowings,
additional investments will not be made while borrowings are in excess of 5% of
the Portfolio's total assets. The Portfolio will limit its investments in
reverse repurchase agreements and other borrowings to no more than 33 1/3% of
its total assets.

RISKS RELATING TO THE PORTFOLIO'S INVESTMENTS. The assets of the Fund are
invested in the Portfolio, the assets of which are constantly being invested in
portfolio securities. The value of the securities held by the Portfolio and,
therefore, the net asset value per share of both the Fund and the Portfolio will
fluctuate with interest rate changes. Therefore, at the time of redemption, an
investor's shares in the Fund may be worth more or less than their value at the
time of purchase. The guarantees of the U.S. Government and its agencies as to
payment of principal and interest of the Portfolio's U.S. Government securities
do not extend to the value or yield of such securities or of the Fund's shares.
Investments of the Portfolio are subject to certain risks.

31
<PAGE> 71

relatively low which could result in a reduction in principal if some securities
were acquired at a premium. On the other hand, when such securities are bought
at a discount both scheduled payments of principal and unscheduled prepayments
will increase and total return will accelerate the recognition of income which,
when distributed to shareholders, will be taxable as ordinary income.

In addition to prepayment characteristics and the interest rate reset features
of mortgage-backed and government asset-backed securities as previously
described (which are also applicable to the mortgage-backed and asset-backed
adjustable rate securities), the market value of adjustable rate securities and,
therefore, the Portfolio's and the Fund's net asset values, respectively, may
vary to the extent that the current interest rate on securities differs from
market interest rates during periods between the interest rate reset dates.
These variations in value occur inversely to changes in the market interest
rates. Thus, if market interest rates fall below the current rate on the
securities, the value of the securities will rise. If investors in the Fund sold
their shares during periods of rising rates before an adjustment occurred, such
investors may suffer some loss. The longer the adjustment intervals on
adjustable rate securities held by the Portfolio, the greater the potential for
fluctuations in the Portfolio's (and the Fund's) net asset value. In addition,
because of their interest rate adjustment feature, adjustable rate securities
are not an effective means of "locking-in" attractive interest rates for periods
in excess of the adjustment period.

Privately issued mortgage-backed securities constituting ARMs are backed by a
pool of conventional adjustable rate mortgage loans. Since privately issued
mortgage-backed securities typically are not guaranteed by an entity having the
credit status of Ginnie Mae, Fannie Mae and Freddie Mac, such securities
generally are structured with one or more types of credit enhancement such as
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches.

Stripped securities are issued at a significant discount from their principal
amount in lieu of paying interest periodically; therefore, their value is
subject to greater fluctuations in response to changes in market interest rates
than bonds which pay interest currently. In addition, stripped securities were
only recently developed, and therefore established trading markets have not yet
been fully developed.

32
<PAGE> 72

(NOTES)
<PAGE> 73

(NOTES)
<PAGE> 74

(NOTES)
<PAGE> 75

JOHN HANCOCK
JOHN HANCOCK ADJUSTABLE ADJUSTABLE
U.S. GOVERNMENT TRUST U.S.
GOVERNMENT
TRUST
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
CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

CUSTODIAN
Investors Bank & Trust Company
24 Federal Street A MUTUAL FUND SEEKING TO
Massachusetts 02110 EARN A HIGH LEVEL OF CURRENT
INCOME CONSISTENT WITH LOW
VOLATILITY OF PRINCIPAL.
TRANSFER AGENT
John Hancock Investor Services
Corporation
P.0. Box 9116
Boston, Massachusetts
02205-9116

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND
AND THE PORTFOLIO

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption 101 HUNTINGTON AVENUE
For TDD call 1-800-554-6713 BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291

5500P 7/95 (RECYCLE LOGO) Printed on Recycled Paper

<PAGE> 76

JOHN HANCOCK
GOVERNMENT
SECURITIES TRUST

CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 6
Alternative Purchase Arrangements..................................................... 7
The Fund's Expenses................................................................... 8
Dividends and Taxes................................................................... 9
Performance........................................................................... 10
How to Buy Shares..................................................................... 11
Share Price........................................................................... 12
How to Redeem Shares.................................................................. 18
Additional Services and Programs...................................................... 20
Investments, Techniques and Risk Factors.............................................. 23
</TABLE>

This Prospectus sets forth the information about John Hancock Government
Securities Trust (the "Fund"), a diversified series of John Hancock Bond Fund
(the "Trust"), that you should know before investing. Please read and retain it
for future reference.

<TABLE>
EXPENSE INFORMATION

The purpose of the following information is to help you to understand the various fees and expenses you will bear, directly
or indirectly, when you purchase Fund shares. The operating expenses included in the table and hypothetical example below are based
on fees and expenses of the Fund's fiscal year ended March 31, 1995, adjusted to reflect current sales charges. Actual fees and
expenses in the future of the Class A and Class B shares may be greater or less than those indicated.

ANNUAL FUND OPERATING EXPENSES (As a percentage of average net assets)
Management fee...................................................................................... 0.63% 0.63%
12b-1 fee**......................................................................................... 0.25% 1.00%
Other expenses***................................................................................... 0.32% 0.32%
Total Fund operating expenses....................................................................... 1.20% 1.95%

<FN>
* No sales charge is payable at the time of purchase on investments of $1 million or more, but for these investments a
contingent deferred sales charge may be imposed, as described below under the caption "Share Price," in the event of certain
redemption transactions within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to 0.25% of the Fund's average net assets, and the
remaining portion will be used to cover distribution expenses.
*** Other Expenses include transfer agent, legal, audit, custody and other expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares............................................................... $ 57 $81 $ 108 $184
Class B Shares
-- Assuming complete redemption at end of period......................... $ 70 $91 $ 125 $208
-- Assuming no redemption................................................ $ 20 $61 $ 105 $208

<FN>
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE> 78

THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for each of the
periods ended March 31, 1995, and prior, has been audited by Ernst & Young LLP,
the Fund's independent auditors, whose unqualified report is included in the
Statement of Additional Information. Further information about the performance
of the Fund is contained in the Fund's Annual Report to shareholders which may
be obtained free of charge by writing or telephoning John Hancock Investor
Services Corporation ("Investor Services"), at the address or telephone number
listed on the front page of this Prospectus.

<TABLE>
Selected data for each class of shares outstanding throughout each period is as follows:

<CAPTION>
CLASS A SHARES
----------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period...... $7.89 $8.41 $8.04 $8.03 $7.87 $8.17 $8.82 $9.52

Net investment income..................... 0.61 0.64 0.66 0.87 0.89 0.88 0.85 0.76
Net realized and unrealized gain (loss) on
investment and financial futures
contracts................................ 0.36 (0.52) 0.40 (0.09) 0.14 (0.27) (0.51) (0.45)
-------- -------- -------- -------- ------- -------- ---------- ----------
Total from Investment Operations.......... 0.25 0.12 1.06 0.78 1.03 0.61 0.34 0.31
-------- -------- -------- -------- -------- -------- ---------- ----------
Less Distributions
Dividends from net investment income...... (0.59) (0.64) (0.69) (0.77) (0.87) (0.88) (0.85) (0.76)
-------- -------- -------- -------- -------- -------- ---------- ----------
Distributions from realized gains......... -- -- -- -- -- -- (0.07) (0.25)
Returns of capital........................ -- -- -- -- -- (0.03) (0.07) --
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Distributions....................... (0.59) (0.64) (0.69) (0.77) (0.87) (0.91) (0.99) (1.01)
-------- -------- -------- -------- -------- -------- ---------- ----------
Net asset value, end of period............ $7.55 $7.89 $8.41 $8.04 $8.03 $7.87 $8.17 $8.82
======== ======== ======== ======== ======== ======== ========== ==========
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE.................................... 3.49% 1.26% 13.68% 10.09% 13.87% 7.54% 4.02% 3.62%
======== ======== ======== ======== ======== ======== ========== ==========
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000's
omitted)................................. $489,090 $611,865 $718,426 $725,645 $771,826 $871,636 $1,140,455 $1,492,491
Ratio of operating expenses to average
net assets............................... 1.20% 1.14% 1.17% 1.21% 1.11% 1.09% 1.09% 1.07%
Ratio of net investment income to average
net assets............................... 8.10% 7.60% 7.93% 10.63% 11.13% 10.58% 9.89% 8.43%
Portfolio turnover........................ 337% 453% 322% 199% 117% 292% 164% 83%

<CAPTION>
CLASS B
SHARES
---------------
FOR THE PERIOD
CLASS A SHARES SEPTEMBER 30,
---------------------- 1994
YEAR ENDED (COMMENCEMENT
MARCH 31, OF OPERATIONS)
---------------------- TO MARCH 31,
1987 1986 1995(E)
---------- ---------- ---------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period...... $10.11 $10.06 $7.51(a)
Net investment income..................... 0.71 0.95 0.28
Net realized and unrealized gain (loss) on
investment and financial futures
contracts................................ (0.15) 0.48 0.03(d)
---------- ---------- ----------
Total from Investment Operations.......... 0.56 1.43 0.31
---------- ---------- ----------
Less Distributions
Dividends from net investment income...... (0.71) (0.95) (0.27)
---------- ---------- ----------
Distributions from realized gains......... (0.44) (0.43) --
Returns of capital........................ -- -- --
---------- ---------- ----------
Total Distributions....................... (1.15) (1.38) (0.27)
---------- ---------- ----------
Net asset value, end of period............ $9.52 $10.11 $7.55
========== ========== ==========
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE.................................... 5.82% 15.35% 4.20%(b)
========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000's
omitted)................................. $2,290,368 $1,641,364 $ 1,419
Ratio of operating expenses to average
net assets............................... 1.03% 1.13% 1.95%*
Ratio of net investment income to average
net assets............................... 7.12% 8.57% 7.35%*
Portfolio turnover........................ 295% 1328% 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>

3
<PAGE> 79

INVESTMENT OBJECTIVE AND POLICIES

- -------------------------------------------------------------------------------
THE FUND SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH SAFETY OF
PRINCIPAL.
- -------------------------------------------------------------------------------

The Fund's investment objective is to seek a high level of current income,
consistent with safety of principal. The Fund seeks to achieve its investment
objective by investing in debt obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government securities").
Because of the uncertainty inherent in all investments, no assurance can be
given that the Fund will achieve its investment objective. U.S. Government
Securities include the following:

1. U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance including U.S. Treasury bills (maturity of
one year or less), U.S. Treasury notes (maturities of one to ten years) and
U.S. Treasury bonds (generally maturities greater than ten years); and

2. Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities which are supported by: (i) the full faith and credit of
the U.S. Government (e.g., securities issued by the Government National
Mortgage Association ("GNMA")); (ii) the right of the issuer to borrow an
amount limited to a specific line of credit from the U.S. Government (e.g.,
securities of the Federal Home Loan Bank Board); or (iii) the credit of the
instrumentality (e.g., bonds issued by the Federal National Mortgage
Association).

While the Fund may invest in any of the foregoing obligations, a substantial
portion of the Fund's assets will be invested in Certificates of GNMA, which are
a type of mortgage-backed security. GNMA Certificates are loans that are issued
by lenders such as mortgage bankers, commercial banks and savings and loan
associations and are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government. GNMA Certificates differ from bonds in that
principal is paid back monthly by the borrower over the term of the loan rather
than returned in a lump sum at maturity. GNMA Certificates are called "pass
through" securities because both interest and principal payments (including
prepayments) are passed through to the holder of the Certificate. Upon receipt,
principal payments will be reinvested by the Fund in additional securities.

The Fund may invest in various types of mortgage-backed securities, such as
collateralized mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs"), other multiclass pass through securities issued or
guaranteed by a U.S. Government agency and stripped mortgage-backed securities.
See "Investments, Techniques and Risk Factors" for a further description of the
types of mortgage-backed securities in which the Fund may invest and associated
risks.

The Fund may engage in a variety of investment techniques in an attempt to
protect against changes in the general level of interest rates. These techniques
include the purchase of put and call options on debt securities and the purchase
and sale of interest rates futures contracts and options on such futures.
Options

4
<PAGE> 80

and futures contracts derive their value from an underlying instrument or index
and accordingly are known as "derivatives" or "derivative contracts." These
derivative contracts, as well as other types of derivatives (such as stripped
mortgage-backed securities), involve substantial risk including higher price
volatility, liquidity risk and counterparty risk. These investment techniques
and various policies the Fund may employ in seeking to achieve its investment
objective, such as lending its portfolio securities, and committing to purchase
securities for which the normal settlement date for the transaction occurs later
than the normal settlement date for the U.S. Treasury obligations, or securities
subject to repurchase and reverse repurchase agreements, may involve a greater
degree of risk than those inherent in more conservative investment approaches.
As a non-fundamental investment policy, the Fund will at all times invest at
least 80% of its total assets in U.S. Government securities. This will serve to
limit the Fund's investments in privately issued CMOs, REMICs and multiclass
pass-through securities, put and call options, futures and options on futures,
and reverse repurchase agreements, in the aggregate, to not more than 20% of its
total assets. In addition, the Fund will not invest more than 10% of its total
assets in stripped mortgage-backed securities. While the Fund is permitted to
invest up to 100% of its net assets in other derivative securities, it does not
expect to invest substantially in derivative securities. See "Investments,
Techniques and Risk Factors" for a discussion of these techniques and their
associated risks.

The Fund's rate of return fluctuates, as does its net asset value per share.
These fluctuations depend largely on changes in the general level of interest
rates. An increase in interest rates will tend to reduce the market values of
securities in which the Fund invests and, therefore, the Fund's net asset value;
whereas a decline in interest rates will tend to increase their values. The Fund
will seek to reduce risks associated with changes in the interest rates through
its transactions in options and futures contracts. However, this technique will
not eliminate such risks and will result in transaction costs to the Fund.
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES WHICH
MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental or non-fundamental. The Fund's investment objective and fundamental
policies and restrictions may not be changed without the approval of the Fund's
shareholders. The Fund's non-fundamental policies and restrictions, however, may
be changed by a vote of the Trustees without shareholder approval.
Notwithstanding the Fund's fundamental investment restriction prohibiting
investments in other investment companies, the Fund may, pursuant to an order
granted by the SEC, invest in other investment companies in connection with a
deferred compensation plan for the non-interested Trustees of the John Hancock
funds. There can be no assurance that the Fund will achieve its investment
objective.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------
The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Trustees, the Fund's investment adviser, John Hancock Advisers, Inc. (the
"Adviser"), may place securities transactions with brokers affiliated with the
Adviser. The brokers include Tucker Anthony Incorporated, Sutro and Company,
Inc. and John Hancock Distributors, Inc., which are indirectly owned by the John
Hancock Mutual Life Insurance Company (the "Life Company"), which in turn
indirectly owns the Adviser.

5
<PAGE> 81

ORGANIZATION AND MANAGEMENT OF THE FUND

The Fund is a diversified series of the Trust, an open-end management investment
company organized as a Massachusetts business trust. The Trust has six series of
shares, one of which is the Fund. The Trust reserves the right to create and
issue a number of series of shares, or funds or classes thereof, which are
separately managed and have different investment objectives. The Trustees have
authorized the issuance of two classes of the Fund, designated Class A and
Class B. The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation. However, each class bears different distribution and
transfer agent fees and other expenses. Also, Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans. The Trust
is not required to and does not intend to hold annual meetings of shareholders,
although special meetings may be held for such purposes as electing or removing
Trustees, changing fundamental policies or approving a management contract. The
Trust, under certain circumstances, will assist in shareholder communications
with other shareholders.

All investment decisions are made by a committee and no single person is
primarily responsible for making recommendations to the committee.

In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.

6
<PAGE> 82

ALTERNATIVE PURCHASE ARRANGEMENTS
- -------------------------------------------------------------------------------
AN ALTERNATIVE PURCHASE PLAN ALLOWS YOU TO
CHOOSE THE METHOD OF PAYMENT THAT IS BEST
FOR YOU.
- -------------------------------------------------------------------------------
You can purchase shares of the Fund at a price equal to their net asset value
per share plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge Alternative,"
Class A shares) or on a contingent deferred basis (the "Contingent Deferred
Sales Charge Alternative," Class B shares). If you do not specify on your
account application the class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS A SHARES ARE SUBJECT
TO AN INITIAL SALES CHARGE.
- -------------------------------------------------------------------------------
CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount of your purchase is $1 million or more.
If you purchase $1 million or more of Class A shares, you will not be subject to
an initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.25% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price -- Qualifying for a Reduced Sales Charge."
- -------------------------------------------------------------------------------
INVESTMENTS IN CLASS B SHARES ARE SUBJECT
TO A CONTINGENT DEFERRED SALES CHARGE.
- -------------------------------------------------------------------------------
CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
those of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will also result in lower dividends than those paid on
Class A shares.

FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
- -------------------------------------------------------------------------------
YOU SHOULD CONSIDER WHICH CLASS OF SHARES
WOULD BE MORE BENEFICIAL TO YOU.
- -------------------------------------------------------------------------------
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares, given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time, and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on the inside cover page of this Prospectus shows examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for reduced sales charges. See "Share
Price -- Qualifying for a Reduced Sales Charge."

Class A shares are subject to lower distribution fees and, accordingly, pay
correspondingly higher dividends per share, to the extent any dividends are
paid.

7
<PAGE> 83

However, because initial sales charges are deducted at the time of purchase, you
would not have all of your funds invested initially and, therefore, would
initially own fewer shares. If you do not qualify for reduced initial sales
charges and expect to maintain your investment for an extended period of time,
you might consider purchasing Class A shares. This is because the accumulated
distribution and service charges on Class B shares may exceed the initial sales
charge and accumulated distribution and service charges on Class A shares during
the life of your investment.

<TABLE>

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net assets as follows:

<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $200,000,000..................................................... 0.650%
Next $300,000,000...................................................... 0.625%
Amount over $500,000,000............................................... 0.600%
</TABLE>

During the Fund's fiscal year ended March 31, 1995, the advisory fee paid by the
Fund to the Fund's former investment adviser was equal to 0.47% of the Fund's
average daily net assets.

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service fees
at an aggregate annual rate of up to 0.25% of the Class A shares' average daily
net assets and an aggregate annual rate of 1.00% of the Class B shares' average
daily net assets. In each case, up to 0.25% for Class A and Class B shares is
for service expenses and the remaining amount is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares; (ii) marketing, promotional
and overhead expenses incurred in connection with the distribution of Fund
shares; (iii) unreimbursed distribution expenses under the Fund's prior
distribution plans; (iv) distribution expenses incurred by other investment
companies which sell all or substantially all of their assets to, merge with or
otherwise engage in a reorganization transaction with the Fund; and (v) with
respect to Class B shares only, interest expenses on unreimbursed distribution
expenses. The service fees will be used to compensate Selling Brokers for
providing personal and account maintenance services to shareholders.

8
<PAGE> 84

Information on the Fund's total expenses appears in the Financial Highlights
section of this Prospectus.

DIVIDENDS AND TAXES
- -------------------------------------------------------------------------------
THE FUND GENERALLY DECLARES DIVIDENDS
DAILY AND DISTRIBUTES THEM MONTHLY.
- -------------------------------------------------------------------------------
DIVIDENDS. The Fund generally declares daily and distributes monthly dividends
representing all or substantially all of its net investment income. The Fund
will distribute net realized long-term and short-term capital gains, if any, at
least annually.

On the account application, you must certify that the social security or other
taxpayer identification number you provide is your correct number and that you
are

9
<PAGE> 85

not subject to backup withholding of Federal income tax. If you do not provide
this information or are otherwise subject to this withholding, the Fund may be
required to withhold 31% of your dividends and the proceeds of redemptions or
exchanges.

PERFORMANCE

10
<PAGE> 86

when redeemed, may be more or less than their original cost. Both yield and
total return are historical calculations and are not an indication of future
performance. See "Factors to Consider in Choosing an Alternative."

<TABLE>

HOW TO BUY SHARES
- ---------------------------------------------------------------------------------------
OPENING AN ACCOUNT
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume that you are investing in Class A shares.
- ---------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA
02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Government Securities Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
- ---------------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
PROGRAM
(MAAP) 2. The amount you elect to invest will be automatically withdrawn
from your bank or credit union account.
- ---------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional Class A or Class B shares by calling
Investor Services toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, the class of shares
you own, your account number, and the amount you wish to
invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
- ---------------------------------------------------------------------------------------
</TABLE>

11
<PAGE> 87
<TABLE>
- --------------------------------------------------------------------------------------
BUYING ADDITIONAL
CLASS A AND CLASS B
SHARES (CONTINUED)
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of share you own, your account
number and the name(s) in which the account is registered.
- --------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- --------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Government Securities Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- --------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made in writing to Investor Services.
- --------------------------------------------------------------------------------------
</TABLE>

SHARE PRICE

12
<PAGE> 88

Exchange and transmit it to John Hancock Funds before its close of business to
receive that day's offering price.

<TABLE>

INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed or who receives these incentives may be deemed to be an
underwriter under the Securities Act of 1933. Other than distribution and
service fees, the Fund does not bear distribution expenses.

(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions within one year of purchase.

(***) John Hancock Funds may pay a commission and the first year's service fee
(as described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of Class A shares of $1 million or more in
aggregate as follows: 1% on sales to $4,999,999, 0.50% on the next $5
million and 0.25% on $10 million and over.

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

In addition, John Hancock Funds will pay certain affiliated Selling Brokers at
an annual rate of up to 0.05% of the daily net assets of accounts attributable
to these brokers.

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."

13
<PAGE> 89
<TABLE>

Existing full service clients of the Life Company who were group annuity
contract holders as of September 1, 1994, and participant directed defined
contribution plans with at least 100 eligible employees at the inception of the
Fund account may purchase Class A shares with no initial sales charge. However,
if the shares are redeemed within 12 months after the end of the calendar year
in which the purchase was made, a CDSC will be imposed at the above rate.
The CDSC will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the redeemed Class A shares. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any distributions which have been reinvested in additional
shares.

1. Your current purchase of Class A shares of the Fund.

2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

14
<PAGE> 90

EXAMPLE:

If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $80,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 3.75% and not 4.50%, (the
rate that would otherwise be applicable to investments of less than $100,000.
See "Initial Sales Charge Alternative -- Class A Shares.")

- -------------------------------------------------------------------------------
CLASS A SHARES MAY BE AVAILABLE WITHOUT A
SALES CHARGE TO CERTAIN INDIVIDUALS AND
ORGANIZATIONS.
- -------------------------------------------------------------------------------
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

- - A former participant in an employee benefit plan with John Hancock Funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.

In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will

15
<PAGE> 91

be assumed that your redemption comes first from shares you have held beyond the
six-year CDSC redemption period or those you acquired through reinvestment of
dividends, and next from the shares you have held the longest during the
six-year period. The CDSC is waived on redemptions in certain circumstances. See
the discussion "Waiver of Contingent Deferred Sales Charges" below.

<TABLE>

EXAMPLE:

<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share........................ $ 600
- - Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12)...................... -120
- - Minus appreciation on remaining shares, also not subject to CDSC
(40 X $2).............................................................. - 80
------
+ Amount subject to CDSC................................................. $ 400
</TABLE>

<TABLE>
<CAPTION>
YEAR IN WHICH
CLASS B SHARES CONTINGENT DEFERRED SALES
REDEEMED FOLLOWING CHARGE AS A PERCENTAGE OF
PURCHASE DOLLAR AMOUNT SUBJECT TO CDSC
- ------------------ -----------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>

16
<PAGE> 92

WAIVER OF CONTINGENT DEFERRED SALES CHARGES. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a CDSC,
unless indicated otherwise, in these circumstances:
- -------------------------------------------------------------------------------
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON
CLASS B AND CERTAIN CLASS A SHARE
REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------
- - Redemptions of Class B shares made under a Systematic Withdrawal Plan (see
"How to Redeem Shares"), as long as your annual redemptions do not exceed 10%
of your account value at the time you establish your Systematic Withdrawal
Plan and 10% of the value of your subsequent investments (less redemptions) in
that account at the time you notify Investor Services. This waiver does not
apply to Systematic Withdrawal Plan redemptions of Class A shares that are
subject to a CDSC.

- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.

- - Redemptions due to death or disability.

- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.

- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $100 invested in the Fund.

- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.

- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

If you exchanged Class B shares into the Fund from another John Hancock fund,
the calculation will be based on the time you purchased the shares in the
original

17
<PAGE> 93

fund. The Fund has been advised that the conversion of Class B shares to Class A
shares should not be taxable for Federal income tax purposes and should not
change a shareholder's tax basis or tax holding period for the converted shares.

HOW TO REDEEM SHARES

<TABLE>
- -------------------------------------------------------------------------------------
<S> <C> <C>
BY CHECK You may elect the checkwriting privilege which allows you
to write checks in amounts from a minimum of $100. Checks
may not be written against shares in your account which
have been purchased within the last 10 days, except for
shares purchased by wire transfer (which are immediately
available).
- -------------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.

If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificated form.

18
<PAGE> 94
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired on
the next business day to your designated bank account, and
a fee (currently $4.00) will be deducted. You may also use
electronic funds transfer to your assigned bank account,
and the funds are usually collectible after two business
days. Your bank may or may not charge a fee for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- ---------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, class of shares, your
account number and the additional requirements listed below
that apply to your particular account.
- ---------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
--------------------------------- --------------------------------------------
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaran-
teed.
Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.
Trusts A letter of instruction signed by the
Trustee(s) with the signature(s) guaranteed.
(If the Trustee's name is not registered on
your account, also provide a copy of the
trust document, certified within the last 60
days.)

If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- ---------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- -------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- ---------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instructions. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.

19
<PAGE> 95

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE

However, if you exchange Class B shares purchased prior to January 1, 1994 for
Class B shares of any other John Hancock fund, you will be subject to the CDSC
schedule in effect on your initial purchase date.

You may exchange Class B shares of the Fund into shares of a John Hancock money
market fund net asset value. However, you will continue to be subject to the
same CDSC upon redemption.

An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

20
<PAGE> 96

restrictions that do not apply to exchanges requested by shareholders directly,
as described above.

BY TELEPHONE

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

IN WRITING

1. In a letter, request an exchange and list the following:
-- the name and class of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or dollar amount you wish to exchange

Sign your request exactly as the account is registered.

2. Mail the request and information to:

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

21
<PAGE> 97

REINVESTMENT PRIVILEGE

2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, the account number and class from which your shares were originally
redeemed.

SYSTEMATIC WITHDRAWAL PLAN

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

22
<PAGE> 98

2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.

4. There is no charge to you for this program, and there is no cost to the Fund.

5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

GROUP INVESTMENT PROGRAM
- -------------------------------------------------------------------------------
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS
MAY ESTABLISH ACCOUNTS.
- -------------------------------------------------------------------------------
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.

2. The initial aggregate investment of all participants in the group must be at
least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.

RETIREMENT PLANS

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its total
assets in illiquid investments, which include repurchase agreements maturing in
more than seven days, certain over-the-counter options, certain stripped
mortgage-backed securities, certain restricted securities and securities that
are not readily marketable. The Fund may also invest up to 10% of its total
assets in restricted securities, including restricted securities eligible for
resale to certain institutional investors pursuant to Rule 144A under the
Securities Act of 1933. The

23
<PAGE> 99

Fund's limitations regarding restricted and illiquid securities are fundamental
policies.

SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading may have the effect of
increasing portfolio turnover rate. Short-term trading of fixed-income
securities should not increase direct transaction costs since fixed-income
securities are normally traded on a principal basis without commissions. The
Fund may engage in short-term trading in response to changes in interest rates
or other economic trends and developments, or to take advantage of yield
disparities between various securities in which the Fund may invest in order to
improve income. Short-term trading may increase portfolio turnover. A rate of
turnover of 100% would occur if the value of the lesser of purchases and sales
of portfolio securities for a particular year equaled the average monthly value
of portfolio securities owned during the year (excluding short-term securities).
A high rate of portfolio turnover (100% or more) may, under certain
circumstances, make it more difficult for the Fund to qualify as a regulated
investment company under the Code. The Fund's portfolio turnover rate is set
forth in the table under "Financial Highlights."

OPTIONS AND FUTURES TRANSACTIONS. The Fund may buy options contracts on debt
securities and buy and sell financial futures contracts and options on futures
contracts. Options and futures contracts are bought and sold to manage the
Fund's exposure to changing interest rates and security prices. Some options and
futures strategies, including selling futures and buying puts, tend to hedge the
Fund's investment against price fluctuations. Buying futures and calls tends to
increase market exposure. However, as a fundamental policy, the Fund may buy and
sell futures contracts and related options only for hedging purposes. In
addition, as a non-fundamental policy, the Fund will not invest in put and call
options if, as a result, the amount of premiums paid for such options then
outstanding would exceed 10% of the Fund's total assets. Options and futures may
be combined with each other or with forward contracts in order to adjust the
risk and return characteristics of the overall strategy. The Fund may invest in
options on debt securities and futures based on securities or indices, including
options and futures traded on an exchange or board of trade and options not
traded on exchanges.

Options and futures can be volatile investments and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments or if it could not
close out its positions because of an illiquid secondary market. Options and
futures do not pay interest but may produce capital gains or losses.

The Fund is authorized to, but presently does not intend to, engage in certain
investment techniques involving the sale of covered call and secured put options
for the purpose of generating additional income. (See the Statement of
Additional Information for a discussion of these techniques.) In addition, the
Fund will not

24
<PAGE> 100

engage in such transactions without first having given shareholders written
notice at least 60 days in advance thereof.

The Fund will not engage in a transaction in futures or options on futures if,
immediately thereafter, the sum of initial margin deposits and premiums required
to establish positions in futures contracts and options on futures would exceed
5% of the Fund's net assets. The loss incurred by the Fund investing in futures
contracts and writing options on futures is potentially unlimited. The Fund's
transactions in options and futures contracts may be limited by the requirements
of the Code for qualification as a regulated investment company. See "Derivative
Investments" below and the Statement of Additional Information for a further
discussion of options and futures transactions, including tax effects and
investment risks.

These transactions must be fully collateralized at all times. The Fund may
reinvest any cash collateral in short-term liquid debt securities. However,
these transactions may involve some credit risk to the Fund if the other party
should default on its obligation and the Fund is delayed in or prevented from
recovering the collateral. Securities loaned by the Fund will remain subject to
fluctuations of market value.

SECURITIES TRANSACTIONS SUBJECT TO DELAYED SETTLEMENT. The Fund may from time
to time commit to purchase securities for which the normal settlement date
occurs later than the settlement date which is normal for U.S. Treasury
obligations. The payment and interest rate received on such securities are fixed
at the time the buyer enters into the commitment. Although the Fund will enter
into commitments to purchase such securities only with the intention of actually
acquiring the securities, the Fund may sell these securities before the
settlement date. Securities purchased on a when-issued basis can involve a risk
that the yields available in the market when delivery takes place may be higher
than those obtained in the transaction itself. There are no limitations on the
percentage of the Fund's assets which may be invested in such securities.
However, it is not expected that more than 10% of the Fund's assets would be so
invested at any time.

25
<PAGE> 101

cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements which involve the sale of a security by the Fund to a bank or
securities firm and its agreement to repurchase the instrument at a specified
time and price plus an agreed amount of interest. The Fund will use the proceeds
to purchase other investments. Reverse repurchase agreements are considered to
be borrowings by the Fund and, as an investment practice, may be considered
speculative.

Thus, the Fund will enter into a reverse repurchase agreement only when the
Adviser determines that the interest income to be earned from the investment of
the proceeds is greater than the interest expense and associated risks of the
transaction. To minimize various risks associated with reverse repurchase
agreements, the Fund will establish and maintain with the Custodian a separate
account consisting of cash or liquid, high grade debt securities in an amount at
least equal to the repurchase prices of the securities (plus any accrued
interest thereon) under such agreements. Although the Fund's investment
restrictions provide that the Fund would not enter into reverse repurchase
agreements exceeding in the aggregate 33 1/3 of the value of its net assets
(including, for this purpose, other borrowings of the Fund), this limitation
shall not exceed 20% of the Fund's total assets. The Fund will enter into
reverse repurchase agreements only with selected registered broker/dealers or
with federally insured banks or savings and loan associations which are approved
in advance as being creditworthy by the Trustees. Under procedures established
by the Trustees, the Adviser will monitor the creditworthiness of the firms
involved.

ZERO COUPON BONDS. The Fund may invest in zero coupon U.S. Treasury securities,
such as (i) U.S. Treasury bills, and both notes and bonds which have been
stripped of their unmatured interest coupons and receipts or (ii) certificates
representing interests in such stripped obligations. A zero coupon security pays
no interest in cash to its holder during its life although interest is accrued
currently for federal income tax purposes. Its value to an investor consists of
the difference between its face value at the time of maturity and the price for
which it was acquired, which is generally an amount significantly less than its
face value (sometimes referred to as a "deep discount" price). Investing in
"zero coupon" U.S. Treasury securities may help to preserve capital during
periods of declining interest rates. For example, if interest rates decline,
GNMA Certificates owned by the Fund which were purchased at greater than par are
more likely to be prepaid, which would cause a loss of principal. In
anticipation of this, the Fund might purchase zero coupon U.S. Treasury
securities, the value of which would be expected to increase when interest rates
decline. Zero coupon U.S. Treasury securities do not entitle the holder to any
periodic payments of interest prior to maturity. Accordingly, such securities
usually trade at a deep discount from their face or par value and will be
subject to greater fluctuations of market value in response to changing interest
rates than debt obligations of comparable maturities which make periodic
distributions of interest. On the other hand, because there are no periodic
interest payments to be reinvested prior to maturity, zero coupon securities
eliminate the reinvestment risk and lock in a

26
<PAGE> 102

rate of return to maturity. Current federal tax law requires that a holder (such
as the Fund) of a zero coupon security accrue a portion of the discount at which
the security was purchased as income each year even though the Fund receives no
interest payment in cash on the security during the year. In order to satisfy
the income distribution requirements applicable to regulated investment
companies under the Code, the Fund may therefore be required to obtain cash for
distribution corresponding to such accrued income by selling portfolio
securities, possibly under disadvantageous circumstances, or through borrowing.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent participation
interests in pools of adjustable and fixed mortgage loans. Unlike conventional
debt obligations, mortgage-backed securities provide monthly payments derived
from the monthly interest and principal payments (including any prepayments)
made by the individual borrowers on the pooled mortgage loans. The mortgage
loans underlying mortgage-backed securities are generally subject to a greater
rate of principal prepayments in a declining interest rate environment and to a
lesser rate of principal prepayments in an increasing interest rate environment.
Under certain interest and prepayment rate scenarios, the Fund may fail to
recover the full amount of its investment in mortgage-backed securities
notwithstanding any direct or indirect governmental or agency guarantee. Since
faster than expected prepayments must usually be invested in lower yielding
securities, mortgage-backed securities are less effective than conventional
bonds in "locking in" a specified interest rate. Conversely, in a rising
interest rate environment, a declining prepayment rate will extend the average
life of many mortgage-backed securities. This possibility is often referred to
as extension risk. Extending the average life of a mortgage-backed security
increases the risk of depreciation due to future increases in market interest
rates.

The Fund's investments in mortgage-backed securities may include conventional
mortgage pass-through securities, stripped mortgage-backed securities ("SMBS")
and certain classes of multiple class collateralized mortgage obligations
("CMOs" and "REMICs"). REMICs own mortgages and elect REMIC status under the
Code and are similar to CMOs in that they are generally divided into several
classes; however, they represent interests in the pool of mortgages typically
held in a trust. The Fund may acquire "regular" interests in REMICs but does not
intend to acquire "residual" interests in REMICs. Examples of SMBS include
interest only and principal only securities. Senior CMO classes will typically
have priority over residual CMO classes as to the receipt of principal and/or
interest payments on the underlying mortgages.

STRIPPED MORTGAGE-BACKED SECURITIES. The Fund may invest up to 10% of its total
assets in stripped mortgage-related and mortgage-backed securities ("Stripped
Mortgage Securities"). Stripped Mortgage Securities are derivative multiclass
mortgage securities that are issued by agencies or instrumentalities of

27
<PAGE> 103

the U.S. Government, or by private originators of, or investors in, mortgage
loans, including mortgage banks, commercial banks, investment banks and special
purpose subsidiaries of the foregoing. Stripped Mortgage Securities are usually
structured with two classes that receive different proportions of the interest
and principal distributions on a pool of mortgage assets. A common type of
Stripped Mortgage Securities will have one class receiving some of the interest
and most of the principal from the mortgage assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest (the interest-only or
"IO" class), while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO class is extremely
sensitive to the rate of principal payments (including prepayments) on the
related underlying mortgage assets, and a rapid rate of principal payments may
have a material adverse effect on the securities' yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Fund may fail to recoup fully its initial investment in an IO.
Furthermore, if the underlying mortgage assets experience slower than
anticipated prepayments of principal, the yield of a PO will be affected more
severely than would be the case with a traditional mortgage-backed security. IOs
and POs have exhibited large price changes in response to changes in interest
rates and are considered to be volatile in nature.

The indexed securities purchased by the Fund may include IO and PO securities,
floating rate securities linked to the Cost of Funds Index ("COFI floaters"),
other "lagging rate" floating rate securities, floating rate securities that are
subject to a maximum interest rate ("capped floaters"), leveraged floating rate
securities ("super floaters"), leveraged inverse floating rate securities
("inverse floaters"), dual index floaters and range floaters.

RISKS OF MORTGAGE-BACKED AND INDEXED SECURITIES. Different types of derivative
debt securities are subject to different combinations of prepayment, extension,
interest rate and/or other market risks. Conventional mortgage pass-through
securities and sequential pay CMOs are subject to all of these risks, but are
typically not leveraged. PACs, TACs and other senior classes of sequential and
parallel pay CMOs involve less exposure to prepayment, extension and interest
rate risk than other mortgage-backed securities, provided that prepayment rates
remain within expected prepayment ranges or "collars."

28
<PAGE> 104

of average life and/or depreciation due to rising interest rates. The residual
classes of CMOs are subject to both prepayment and extension risk.

Market Risks. Options and futures transactions, as well as other derivative
instruments, involve the risk that the applicable market will move against the
Fund's derivative position and that the Fund will incur a loss. For derivative
contracts other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Fund. Investments in
mortgage-backed and indexed securities are subject to the prepayment, extension,
interest rate and other market risks described above.

Correlation Risk. A Fund's success in using derivative instruments to hedge
portfolio assets depends on the degree of price correlation between the
derivative instrument and the hedged asset. Imperfect correlation may be caused
by several factors, including temporary price disparities among the trading
markets for the derivative instruments, the assets underlying the derivative
instrument and the Fund's portfolio assets.

Credit Risk. Over-the-counter instruments involve a risk that the issuer or
counterparty will fail to perform its contractual obligations.

Liquidity and Valuation Risk. Some derivative instruments are not readily
marketable or may become illiquid under adverse market conditions. In addition,
during periods of extreme market volatility, and exchange may suspend or limit
trading in an exchange-traded derivative instrument, which may make the contract
temporarily illiquid and difficult to price. The staff of the SEC takes the
position that certain over-the-counter options are subject to the Fund's 10%
limit on illiquid investments. The Fund's ability to terminate over-the-counter
derivative instruments may depend on the cooperation of the counterparties to
these instruments. For derivative instruments that are not heavily traded, the
only source of price quotations may be the selling dealer or counterparty.

29
<PAGE> 105

LEVERAGE. The use of reverse repurchase agreements and mortgage dollar rolls
involves leverage. Leverage allows any investment gains made with the additional
monies received (in excess of the costs of the mortgage dollar roll or the
reverse repurchase agreement) to increase the net asset value of the Fund's
shares faster than would otherwise be the case. On the other hand, if the
additional monies received are invested in ways that do not fully recover the
costs of such transactions to the Fund, the net asset value of the Fund would
fall faster than would otherwise be the case.

30
<PAGE> 106

(NOTES)
<PAGE> 107

JOHN HANCOCK
JOHN HANCOCK GOVERNMENT
GOVERNMENT SECURITIES TRUST SECURITIES
TRUST

INVESTMENT ADVISER
John Hancock Advisers, Inc.

101 Huntington Avenue
Boston, Massachusetts
02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue CLASS A AND CLASS B SHARES
Boston, Massachusetts 02199-7603 PROSPECTUS
JULY 17, 1995

CUSTODIAN A MUTUAL FUND SEEKING
Investors Bank & Trust Company TO OBTAIN A HIGH LEVEL OF
24 Federal Street CURRENT INCOME CONSISTENT WITH
Boston, Massachusetts 02110 SAFETY OF PRINCIPAL.

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

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
101 HUNTINGTON AVENUE
For TDD call 1-800-554-6713 BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291

4500P 7/95 [RECYCLE LOGO] Printed on Recycled Paper

<PAGE> 108

JOHN HANCOCK
INTERMEDIATE
GOVERNMENT TRUST

CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

<TABLE>
- --------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 7
Alternative Purchase Arrangements..................................................... 8
The Fund's Expenses................................................................... 10
Dividends and Taxes................................................................... 11
Performance........................................................................... 12
How to Buy Shares..................................................................... 13
Share Price........................................................................... 14
How to Redeem Shares.................................................................. 20
Additional Services and Programs...................................................... 22
Investments, Techniques and Risk Factors.............................................. 26
</TABLE>

This Prospectus sets forth the information about John Hancock Intermediate
Government Trust (the "Fund"), a diversified series of John Hancock Bond Fund
(the "Trust"), that you should know before investing. Please read and retain it
for future reference.

The purpose of the following information is to help you to understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Fund's fiscal
year ended March 31, 1995, adjusted to reflect current fees and expenses. Actual
fees and expenses in the future of the Class A and Class B shares may be greater
or less than those indicated.

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)....................... 4.50% None
Maximum sales charge imposed on reinvested dividends................................................ None None
Maximum deferred sales charge....................................................................... None* 5.00%
Redemption fee+..................................................................................... None None
Exchange fee........................................................................................ None None

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fee (after expense limitation)........................................................... 0.09% 0.09%
12b-1 fee**......................................................................................... 0.25% 1.00%
Other expenses***................................................................................... 0.96% 0.96%
------- -------
Total Fund operating expenses(a) (after expense limitation)......................................... 1.30% 2.05%

<FN>

(a) Expenses reflect a temporary agreement by the Adviser to limit expenses, not
including transfer agent fees, Rule 12b-1 fees or any other class-specific
expenses. Without such a limitation, the management fee and total fund
operating expenses of the Class A and Class B shares, respectively, would
have been estimated as 0.50% and 0.50%, and 1.71% and 2.46%.
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed in the event of certain redemption transactions within
one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will be
used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares............................................................. $ 58 $84 $ 113 $195
Class B Shares
-- Assuming complete redemption at end of period....................... $ 71 $94 $ 130 $219
-- Assuming no redemption.............................................. $ 21 $64 $ 110 $219
</TABLE>

(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE> 110
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for each of the
periods ended March 31, 1995, and prior, has been audited by Ernst & Young LLP,
the Fund's independent auditors, whose unqualified report is included in the
Statement of Additional Information. Further information about the performance
of the Class A shares of the Fund is contained in the Fund's Annual Report to
shareholders which may be obtained free of charge by writing or telephoning John
Hancock Investor Services Corporation ("Investor Services"), at the address or
telephone number listed on the front page of this Prospectus.

Selected data for each class of shares outstanding throughout each period is
as follows:

<CAPTION>
CLASS B
CLASS A SHARES SHARES
------------------------------------------------------------------------------------------ ----------
PERIOD PERIOD
YEAR ENDED MARCH 31, ENDED ENDED
------------------------------------------------------------------ MARCH 31, MARCH 31,
1995(6) 1994 1993 1992 1991 1990 1989 1988 1987(1) 1995(3)(6)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE INCOME AND
CAPITAL CHANGES FOR A
SHARE OUTSTANDING DURING
EACH PERIOD:
Net asset value, beginning
of period............... $ 9.68 $10.23 $ 9.84 $ 9.62 $ 9.45 $ 9.38 $ 9.69 $ 9.83 $10.00(7) $ 9.27(7)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income..... 0.63 0.63 0.57 0.70 0.78 0.86 0.79 0.79 0.36 0.28
Net realized and
unrealized gain (loss)
on investments.......... (0.40) (0.54) 0.40 0.23 0.17 0.08 (0.32) (0.14) (0.17) 0.01(2)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
Total from Investment
Operations.............. 0.23 0.09 0.97 0.93 0.95 0.94 0.47 0.65 0.19 0.29
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
LESS DISTRIBUTIONS
Dividends from net
investment income....... (0.63) (0.64) (0.58) (0.71) (0.78) (0.87) (0.78) (0.79) (0.36) (0.28)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
Net asset value, end of
period.................. $ 9.28 $ 9.68 $10.23 $ 9.84 $ 9.62 $ 9.45 $ 9.38 $ 9.69 $ 9.83 $ 9.28
====== ====== ====== ====== ====== ====== ====== ====== ========== =========
TOTAL RETURN at net asset
value................... 2.50% 0.73% 10.13% 9.89% 10.47% 10.32% 5.06% 7.03% 1.91% 3.17%(5)
====== ====== ====== ====== ====== ====== ====== ====== ========== =========
Total adjusted return at
net asset value(4)...... 2.08% (0.01)% 7.33% 6.39% 8.44% 8.88% 4.06% 1.73% (1.41)% 2.75%(5)
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
RATIOS AND SUPPLEMENTAL
DATA
Ratio of expenses to
average net assets(4)... 1.71% 2.04% 3.25% 4.01% 2.63% 1.96% 1.39% 5.30% 3.34% 2.46%*
Ratio of expense reduction
to average
net assets.............. (0.42)% (0.74)% (2.80)% (3.50)% (2.03)% (1.44)% (1.00)% (5.30)% (3.23)% (0.42)*
------ ------ ------ ------ ------ ------ ------ ------ ---------- ----------
Ratio of net expenses to
average
net assets.............. 1.29% 1.30% 0.45% 0.51% 0.60% 0.52% 0.39% 0.00% 0.11% (2.04)%*
====== ====== ====== ====== ====== ====== ====== ====== ========== =========
Ratio of net investment
income to average
net assets.............. 6.68% 6.08% 5.64% 7.12% 8.41% 9.16% 8.27% 8.46% 3.60% 5.93%*
Ratio of adjusted net
investment income to
average net assets(4)... 6.26% 5.34% 2.84% 3.62% 6.38% 7.72% 7.27% 3.16% 0.37% 5.51%*
Portfolio turnover........ 74% 89% 73% 169% 97% 19% 535% 384% 118% 74%
Net Assets, end of period
(in thousands).......... $8,011 $9,740 $1,494 $1,414 $1,537 $2,655 $7,341 $1,552 $ 507 $ 295

<FN>
- ---------------

(1) Financial highlights are for the period from November 3, 1986 (the date of
the Fund's initial offering of Class A shares to the public) to March 31,
1987 and have not been annualized.
(2) May not accord to amounts shown elsewhere in the financial statements.
(3) For the period September 30, 1994 (Commencement of Operations of Class B
Shares) to March 31, 1995.
(4) On an unreimbursed basis without expense reduction.
(5) Not annualized.
(6) On December 22, 1994, John Hancock Advisers, Inc. become the investment
adviser of the Fund.
(7) Initial price to commence operations.
* On an annualized basis.
</TABLE>

3
<PAGE> 111

INVESTMENT OBJECTIVE AND POLICIES

- -------------------------------------------------------------------------------
THE FUND SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH
PRESERVATION OF CAPITAL AND MAINTENANCE OF
LIQUIDITY.
- -------------------------------------------------------------------------------

The investment objective of the Fund is to achieve a high level of current
income, consistent with preservation of capital and maintenance of liquidity.
The Fund seeks to achieve its investment objective by investing in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities") whose dollar-weighted average
portfolio maturity or average life (under normal market conditions) is between
one and ten years. Because of the uncertainty inherent in all investments, no
assurance can be given that the Fund will achieve its investment objective. The
Fund has undertaken that it (i) will maintain an overall portfolio maturity of
not less than three years and (ii) will not alter such undertaking without first
approving a change in the name of the Fund which deletes the descriptive term
"Intermediate" from the resulting name. U.S. Government securities consist of
the following:

1. U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance, including U.S. Treasury bills (maturity of
one year or less), U.S. Treasury notes (maturity of one to ten years), and
U.S. Treasury bonds (generally maturities greater than ten years); and

While, as a non-fundamental investment policy, the Fund may invest in any of the
foregoing obligations, it is currently anticipated that a substantial portion of
the Fund's assets will be invested in mortgage pass-through securities set forth
in (2) above. Mortgage-backed securities derive their value from an underlying
investment structure and accordingly are known as "derivatives." Derivatives
(such as stripped mortgage-backed securities) involve substantial risk including
higher price volatility and the possible lack of a readily available market.
Types of mortgage-backed securities include securities issued or guaranteed by
GNMA, FNMA, and the Federal Home Loan Mortgage Corporation ("FHLMC"). Although
these mortgage-backed securities are guaranteed or issued by U.S. Government
agencies or instrumentalities, FNMA and FHLMC securities are not backed by the
"full faith and credit" of the U.S. Government. In such cases, the Fund must
look principally to the agency issuing or guaranteeing the security for ultimate
payment. Mortgage pass-through securities are securities representing interest
in "pools" of mortgage loans. Monthly payments of interest and principal by the
individual borrowers on mortgages are passed through to the holders of the
securities (net of fees paid to the issuer or guarantor of the securities) as
the mortgages in the underlying mortgage pools are paid off. The average lives
of the mortgage pass-through securities are variable when issued because their
average lives depend on prepayment rates. The average life of these securities
is likely to be substantially shorter than their stated final maturity as a
result of unscheduled principal

4
<PAGE> 112

prepayments. Prepayments on underlying mortgages result in a loss of anticipated
interest, and all or part of a premium, if any has been paid, and the actual
yield (or total return) to the Fund may be different than the quoted yield on
the securities. Mortgage prepayments generally increase with declining interest
rates and decrease with rising interest rates. Like other fixed income
securities, when interest rates rise the value of a mortgage pass-through
security generally will decline; however, when interest rates are declining, the
value of mortgage pass-through securities with prepayment features may not
increase as much as that of other fixed income securities. In cases where U.S.
Government support of agencies or instrumentalities is discretionary, no
assurance can be given that the U.S. Government will provide financial support,
since it is not legally obligated to do so.

STRIPPED MORTGAGE-BACKED SECURITIES

The Fund may acquire stripped mortgage-backed securities ("SMBS") which are
issued and guaranteed by U.S. Government agencies or instrumentalities. For
example, Class 1 and Class 2 stripped mortgage-backed securities ("SMBS
Certificates") are issued by the FNMA. Since Class 1 Certificates generally
benefit from declining interest rates and Class 2 Certificates generally benefit
from rising interest rates, these securities can provide an effective way to
stabilize portfolio value. SMBS Certificates represent beneficial interests in
principal distributions and interest distributions on certain FNMA guaranteed
mortgage pass-through certificates which represent all or part of the beneficial
interests in pools of first lien, single family (one-to-four family residential
property), fixed-rate residential mortgage loans. The original principal amount
of each SMBS Class 1 Certificate represents the amount payable over the life of
the Certificate from principal distributions on the underlying mortgage-backed
securities held by FNMA in its capacity as Trustee of the SMBS trust. Interest
distributions allocable to the SMBS Class 2 Certificates consist of interest at
the pass-through rate specified on the aggregate amount thereof which will
always be equal to the aggregate outstanding principal amount of each associated
issue of SMBS Class 1 Certificates.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS PASS-THROUGH SECURITIES

The Fund may invest a portion of its assets in collateralized mortgage
obligations or "CMOs," which are debt obligations collateralized by mortgage
loans or mortgage pass-through securities (such collateral collectively herein
referred to as "Mortgage Assets"). Mortgage Assets underlying CMOs purchased by
the Fund must be U.S. Government securities. The Fund may also invest a portion
of its assets in multi-class pass-through securities which are issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities. Unless the context indicates otherwise, all references herein
to CMOs include multi-class pass-through securities. Payments of principal and
interest on the Mortgage Assets, and any reinvestment income thereon, provide
the funds to pay debt service on the CMOs or make scheduled distributions on the
multi-class pass-through securities.

5
<PAGE> 113

In a CMO, a series of bonds or certificates is usually issued in multiple
classes with different maturities. Each class of CMO, often referred to as a
"tranche," is issued at a specific fixed or floating coupon rate and has a
stated maturity or final distribution date. Principal prepayments on the
Mortgage Assets may cause the CMOs to be retired substantially earlier than
their stated maturities or final distribution dates, resulting in a loss of all
or part of the premium, if any has been paid.

In addition to the risks associated with prepayments previously described,
prepayment on the Mortgage Assets can be expected to accelerate during periods
of declining interest rates and thus impair the Fund's ability to reinvest the
proceeds in securities with comparable yields. In addition, the U.S. Government
guarantee as to payment of principal and interest of the Fund's U.S. Government
mortgage-backed securities, (which does not extend to the Fund's other asset-
backed securities), does not extend to the value or yield of such securities or
of the Fund's shares of beneficial interest. SMBS Certificates involve risks in
addition to those associated with regular mortgage-backed securities. A rate of
principal payments on the underlying mortgage loans slower than the rate
anticipated by an investor in calculating the initial yield to maturity on an
SMBS Certificate, which could result from stable or rising interest rates (which
would tend to reduce the market value of the Certificate), will, by delaying the
distribution of principal, reduce the yield to maturity on SMBS Class 1
Certificates (principal) purchased at a discount from their original principal
amount and increase the yield to maturity on SMBS Class 2 Certificates (income).
Payments of principal on the underlying mortgage loans at rates faster than the
rate anticipated by investors, which could result from falling interest rates or
from transfers of the underlying property, will, conversely, accelerate
distributions of principal and thereby reduce the yield to maturity on SMBS
Class 2 Certificates (income) and increase the yield to maturity on SMBS Class 1
Certificates (principal). Sufficiently high prepayment rates could result in
purchasers of SMBS Class 2 Certificates (income) not recovering the full amount
of their initial investment. Yields on SMBS Certificates will be extremely
sensitive to actual or anticipated prepayment experienced on the underlying
mortgage loans and significant fluctuations in interest rates may result in
major fluctuations in the market value of such Certificates.

The investment techniques and various policies the Fund may employ in seeking to
achieve its investment objective, such as lending portfolio securities,
securities transactions subject to delayed settlement, options and futures
transactions, mortgage "dollar roll" transactions, or repurchase and reverse
repurchase agreements, may involve a greater degree of risk than those inherent
in more conservative investment approaches. As a non-fundamental investment
policy, the Fund will at all times invest at least 80% of its total assets in
U.S. Government securities. This will serve to limit the Fund's investments in
these investment techniques, in the aggregate, to not more than 20% of the
Fund's total assets. The Fund will limit its investments in stripped
mortgage-backed securities to 10% of its total assets. While the Fund is
permitted to invest up to 100% of its net assets in other derivative securities,
it does not expect to invest substantially in derivative

6
<PAGE> 114

securities. See "Investments, Techniques and Risk Factors" for a discussion of
these techniques and their associated risks.

The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental. The Fund's investment objective and fundamental policies (such as
the policy concerning the securities in which the Fund may invest as described
above) and restrictions may not be changed without the approval of the Fund's
shareholders. The Fund's non-fundamental investment policies and restrictions,
however, may be changed by a vote of the Trustees without shareholder approval.
Notwithstanding the Fund's fundamental investment restriction prohibiting
investments in other investment companies, the Fund may, pursuant to an order
granted by the SEC, invest in other investment companies in connection with a
deferred compensation plan for the non-interested Trustees of the John Hancock
funds. There can be no assurance that the Fund will achieve its investment
objective.

The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Trustees, the Fund's investment adviser, John Hancock Advisers, Inc. (the
"Adviser"), may place securities transactions with brokers affiliated with the
Adviser. The brokers include Tucker Anthony Incorporated, Sutro and Company,
Inc. and John Hancock Distributors, Inc., which are indirectly owned by the John
Hancock Mutual Life Insurance Company (the "Life Company"), which in turn
indirectly owns the Adviser.

ORGANIZATION AND MANAGEMENT OF THE FUND

The Fund is a diversified series of the Trust, an open-end management investment
company organized as a Massachusetts business trust. The Trust has six series of
shares, one of which is the Fund. The Trust reserves the right to create and
issue a number of series of shares, or funds or classes thereof, which are
separately managed and have different investment objectives. The Trustees have
authorized the issuance of two classes of the Fund, designated Class A and
Class B. The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation. However, each class bears different distribution and
transfer agent fees and other expenses. Also, Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans. The Trust
is not required to and does

7
<PAGE> 115
not intend to hold annual meetings of shareholders, although special meetings
may be held for such purposes as electing or removing Trustees, changing
fundamental policies or approving a management contract. The Trust, under
certain circumstances, will assist in shareholder communications with other
shareholders.

All investment decisions are made by a committee and no single person is
primarily responsible for making recommendations to the committee.

ALTERNATIVE PURCHASE ARRANGEMENTS

8
<PAGE> 116
annual rate of up to 1.00% of the Fund's average daily net assets attributable
to the Class B shares. Investing in Class B shares permits all of your dollars
to work from the time you make your investment, buy the higher ongoing
distribution fee will cause these shares to have higher expenses than those of
Class A shares. To the extent that any dividends are paid by the Fund, these
higher expenses will also result in lower dividends than those paid on Class A
shares.

FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE

9
<PAGE> 117

personnel distributing the Fund's shares may receive different compensation for
selling each class of shares.

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is equal on an annual basis to 0.50% of the Fund's average
daily net assets. During the Fund's fiscal year ended March 31, 1995, the Fund's
former investment adviser agreed not to impose $38,507 of their advisory fee
resulting in an advisory fee paid by the Fund equal to 0.08% of average net
assets.

The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service fees
at an aggregate annual rate of up to 0.25% of the Class A shares' average daily
net assets and an aggregate annual rate of 1.00% of the Class B shares' average
daily net assets. In each case, up to 0.25% for Class A and Class B shares is
for service expenses and the remaining amount is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares; (ii) marketing, promotional
and overhead expenses incurred in connection with the distribution of Fund
shares; (iii) unreimbursed distribution expenses under the Fund's prior
distribution plans; (iv) distribution expenses incurred by other investment
companies which sell all or substantially all of their assets to, merge with or
otherwise engage in a reorganization transaction with the Fund; and (v) with
respect to Class B shares only, interest expenses on unreimbursed distribution
expenses. The service fees will be used to compensate Selling Brokers for
providing personal and account maintenance services to shareholders.

The Adviser has voluntarily and temporarily agreed to limit the Fund's aggregate
operating expenses and to reduce its advisory fee to the extent necessary to
limit the total of the advisory fee and aggregate operating expenses of the Fund
(not including transfer agent fees and fees payable by the Fund under a Rule
12b-1 plan or any other class-specific expenses) to 0.91% of the average net
assets attributable to the Class A and Class B shares, respectively.

10
<PAGE> 118

Information on the Fund's total expenses appears in the Financial Highlights
section of this Prospectus.

DIVIDENDS AND TAXES

11
<PAGE> 119

PERFORMANCE

12
<PAGE> 120
<TABLE>

HOW TO BUY SHARES

- -------------------------------------------------------------------------------------
OPENING AN ACCOUNT
- -------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume that you are investing in Class A shares.

- -------------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA
02205-9115.

2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- -------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.

2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Intermediate Government Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered

3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.

- -------------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
PROGRAM
(MAAP) 2. The amount you elect to invest will be automatically withdrawn
from your bank or credit union account.

- -------------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).

2. After your authorization form has been processed, you may
purchase additional Class A or Class B shares by calling
Investor Services toll-free 1-800-225-5291.

3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, the class of shares
you own, your account number, and the amount you wish to
invest.

4. Your investment normally will be credited to your account the
business day following your phone request.
- -------------------------------------------------------------------------------------
</TABLE>

13
<PAGE> 121

<TABLE>
- -------------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES (CONTINUED)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of shares you own, your account
number and the name(s) in which the account is registered.

2. Make your check payable to John Hancock Investor Services
Corporation.

3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- -------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Intermediate Government Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- -------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made in writing to Investor Services.
- -------------------------------------------------------------------------------------
</TABLE>

SHARE PRICE

14
<PAGE> 122

Exchange and transmit it to John Hancock Funds before its close of business to
receive that day's offering price.

<TABLE>

INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed or who receives these incentives may be deemed to be an
underwriter under the Securities Act of 1933. Other than distribution and
service fees, the Fund does not bear distribution expenses.

(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions within one year of purchase.

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

In addition, John Hancock Funds will pay certain affiliated Selling Brokers at
an annual rate of up to 0.05% of the daily net assets of accounts attributable
to these brokers.

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."

CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more of Class A shares will be made

15
<PAGE> 123

at net asset value with no initial sales charge, but if the shares are redeemed
within 12 months after the end of the calendar month in which the purchase was
made (the CDSC period), a CDSC will be imposed. The rate of the CDSC will depend
on the amount invested as follows:

<TABLE>
<CAPTION>
AMOUNT INVESTED CDSC RATE
--------------- ---------
<S> <C>
$1 million to $4,999,999................................................ 1.00%
Next $5 million to $9,999,999........................................... 0.50%
Amounts of $10 million and over......................................... 0.25%
</TABLE>

1. Your current purchase of Class A shares of the Fund.

2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

EXAMPLE:

If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $80,000 in Class A shares of the Fund, the

16
<PAGE> 124

sales charge on this subsequent investment would be 3.75% and not 4.50% (the
rate that would otherwise be applicable to investments of less than $100,000.
See "Initial Sales Charge Alternative -- Class A Shares.")

If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

- - A former participant in an employee benefit plan with John Hancock Funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.
- ---------------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.

17
<PAGE> 125

reinvestment of dividends, and next from the shares you have held the longest
during the six-year period. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.

<TABLE>

EXAMPLE:

<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share $ 600
- - Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12) -120
- - Minus appreciation on remaining shares, also not subject to CDSC
(40 X $2) - 80
------
- - Amount subject to CDSC $ 400
</TABLE>

<TABLE>
<CAPTION>
YEAR IN WHICH
CLASS B SHARES CONTINGENT DEFERRED SALES
REDEEMED FOLLOWING CHARGE AS A PERCENTAGE OF
PURCHASE DOLLAR AMOUNT SUBJECT TO CDSC
- ------------------ -----------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>

18
<PAGE> 126
- -------------------------------------------------------------------------------
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON CLASS B AND
CERTAIN CLASS A SHARE REDEMPTIONS WILL BE WAIVED.
- -------------------------------------------------------------------------------

- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.

- - Redemptions due to death or disability.

- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.

- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $100 invested in the Fund.

- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.

- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

19
<PAGE> 127

calculation will be based on the time you purchased the shares in the original
fund. The Fund has been advised that the conversion of Class B shares to Class A
shares should not be taxable for Federal income tax purposes and should not
change a shareholder's tax basis or tax holding period for the converted shares.

HOW TO REDEEM SHARES

<TABLE>
- -------------------------------------------------------------------------------------
<S> <C>
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.

If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificated form.

20
<PAGE> 128
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired on
the next business day to your designated bank account, and
a fee (currently $4.00) will be deducted. You may also use
electronic funds transfer to your assigned bank account,
and the funds are usually collectable after two business
days. Your bank may or may not charge a fee for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
attached to the Prospectus.
- -------------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, class of shares, your
account number and the additional requirements listed below
that apply to your particular account.
- -------------------------------------------------------------------------------------
</TABLE>

Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.

- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------

A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
</TABLE>

21
<PAGE> 129

<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- -------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.

- ---------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instructions. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE

Exchanges between funds with shares that are not subject to a CDSC are based on
their respective net asset values. No sales charge or transaction charge is
imposed. Class B shares of the Fund that are subject to a CDSC may be exchanged
into Class B shares of another John Hancock fund without incurring the CDSC;
however, these shares will be subject to the CDSC schedule of the shares
acquired (except that exchanges into John Hancock Short-Term Strategic Income
Fund, John Hancock Limited-Term Government Fund and John Hancock Adjustable U.S.
Government Trust will be subject to the initial fund's CDSC). For purposes of
computing the CDSC payable upon redemption of shares acquired in an exchange,
the holding period of the original shares is added to the holding period of the
shares acquired in an exchange. However, if you exchange Class B shares
purchased prior to January 1, 1994 for Class B shares of any other John Hancock
fund, you will be subject to the CDSC schedule in effect on your initial
purchase date.

You may exchange Class B shares of the Fund into shares of a John Hancock money
market fund at net asset value. However, you will continue to be subject to the
same CDSC upon redemption.

22
<PAGE> 130

An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

BY TELEPHONE

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

23
<PAGE> 131

IN WRITING

1. In a letter, request an exchange and list the following:

Sign your request exactly as the account is registered.

2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

REINVESTMENT PRIVILEGE

2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, the account number and class from which your shares were originally
redeemed.

SYSTEMATIC WITHDRAWAL PLAN

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

24
<PAGE> 132

4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.

4. There is no charge to you for this program, and there is no cost to the Fund.

5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

GROUP INVESTMENT PROGRAM

2. The initial aggregate investment of all participants in the group must be at
least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.

RETIREMENT PLANS

25
<PAGE> 133

INVESTMENTS, TECHNIQUES AND RISK FACTORS

Unless otherwise specified, each of the Fund's investment practices described in
this section and in the Statement of Additional Information is deemed to be a
fundamental policy and may not be changed without shareholder approval.

LENDING OF SECURITIES AND REPURCHASE AGREEMENTS. For the purpose of realizing
additional income, the Fund may lend, to broker-dealers or to federally insured
banks or savings and loans, portfolio securities amounting to not more than
33 1/3% of its total assets taken at current value. The Fund may also enter into
repurchase agreements with registered brokers or dealers or with federally
insured banks or savings and loans which are deemed to be creditworthy by the
Adviser.

These transactions must be fully collateralized at all times. The Fund may
reinvest any cash collateral in short-term highly liquid debt securities.
However, these transactions may involve some credit risk to the Fund if the
other party should default on its obligation and the Fund is delayed in or
prevented from recovering the collateral. Securities loaned by the Fund will
remain subject to fluctuations of market value.

In a repurchase agreement, the Fund buys a security subject to the right and
obligation to sell it back to the issuer at the same price plus accrued
interest. The Fund may enter into repurchase agreements only with respect to
U.S. Government securities with maturities of three and one half years or less.
The Fund will not invest in a repurchase agreement maturing in more than seven
(7) days, if such investment, together with any other illiquid securities held
by the Fund (including restricted securities), would exceed 10% of the Fund's
total assets.

SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading may have the effect of
increasing portfolio turnover rate. Short-term trading of fixed-income
securities should not increase direct transaction costs since fixed-income
securities are normally traded on a principal basis without brokerage
commissions. The Fund does not intend to invest for the purpose of seeking
short-term profits. The Fund's portfolio securities may be changed, however,
without regard to the holding period of these securities (subject to certain tax
restrictions), when the Adviser deems that this action will help achieve the
Fund's objective given a change in an issuer's operations or changes in general
market conditions. The Fund's portfolio turnover rate is set forth in the table
under the caption "Financial Highlights."

ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 10% of its total
assets in illiquid investments, which include repurchase agreements maturing in
more than seven days, certain over-the-counter options, certain stripped
mortgage-backed securities, certain restricted securities and securities that
are not readily marketable.

26
<PAGE> 134

In no event, however, will the settlement date occur later than the 29th day
after the trade date. The payment and interest rate received on such securities
are fixed at the time the buyer enters into the commitment. Although the Fund
will only enter into commitments to purchase such securities with the intention
of actually acquiring the securities, the Fund may sell these securities before
the settlement date. Such securities can involve a risk that the yields
available in the market when delivery takes place may be higher than those
obtained in the transaction itself. It is not expected that at any one time more
than 10% of the Fund's assets would be so invested.

WHEN-ISSUED SECURITIES. The Fund may purchase securities on a forward or
"when-issued" basis. When the Fund engages in when-issued transactions, it
relies on the seller or the buyer, as the case may be, to consummate the
transaction. Failure to consummate the transaction may result in the Fund's
losing the opportunity to obtain an advantageous price and yield. Although the
Fund is not limited to the amount of government securities for which it has such
commitments, it is expected that under normal circumstances not more than 10% of
the Fund's total assets will be committed to such purchases.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements which involve the sale of a security by the Fund to a bank or
securities firm and its agreement to repurchase the instrument at a specified
time and price plus an agreed amount of interest. The Fund will use the proceeds
to purchase other investments. Reverse repurchase agreements are considered to
be borrowings by the Fund and as an investment practice may be considered
speculative.

Thus, the Fund will enter into a reverse repurchase agreement only when the
Adviser determines that the interest income to be earned from the investment of
the proceeds is greater than the interest expense of the transaction. To
minimize various risks associated with reverse repurchase agreements, the Fund
will establish and maintain with the Custodian a separate account consisting of
cash or liquid, high grade debt securities in an amount at least equal to the
repurchase prices of the securities (plus any accrued interest thereon) under
such agreements. In addition, the Fund's investment restrictions provide that
the Fund may not enter into reverse repurchase agreements exceeding in the
aggregate 33 1/3% of the value of its total net assets (including for this
purpose other borrowings of the Fund). The Fund will enter into reverse
repurchase agreements only with selected registered broker/dealers or with
federally insured banks or savings and loan associations which are approved in
advance as being creditworthy by the Trustees.

27
<PAGE> 135

Under procedures established by the Trustees, the Adviser will monitor the
creditworthiness of the firms involved.

INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. The Fund may purchase and
sell interest rate futures contracts and purchase put and call options thereon
only as a hedge against changes in the general level of interest rates in
accordance with strategies more specifically described below.

In addition, the Fund may purchase call options and put options on futures
contracts which are traded on a securities exchange or a Board of Trade and
enter into closing transactions with respect to such options to terminate an
existing position. A call option on a futures contract gives the holder the
right to buy and a put option on a future contract gives the holder the right to
sell the underlying futures contract at a specific price (the exercise price)
until the option expires (the expiration date). The price of a call or put
option is called a premium. The writer of an option on a futures contract is
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to futures contracts. Premiums received from the
writing of an option will be included in initial margin. A position in an option
may be terminated by the purchaser prior to expiration by effecting a closing
sale transaction which is the sale of an option of the same series (i.e., the
same exercise price and expiration date) as the option previously purchased. The
premium received by the holder on the closing transaction may be more or less
than the premium paid for the option, resulting in a gain or loss on the
transaction.

The Fund may hedge up to the full value of its portfolio through the use of
options on futures and the sale of futures; provided, however, that the Fund may
not sell futures contracts or purchase or sell related options if immediately
thereafter the sum of the amount of margin deposits on the Fund's existing
futures and related options positions and the amount of premiums paid for
related options (measured at the time of investment) would exceed 5% of the
Fund's net assets.

When the Fund purchases a futures contract or a call option on a futures
contract, an amount of cash or U.S. Government securities equal to the market
value of the futures contract will be deposited in a segregated account with the
Fund's custodian to collateralize the position. See "Derivative Securities and
Asset-Backed Securities" above for a discussion of the risks associated with
futures and related options.

The Trustees may authorize procedures, including numerical limitations, with
regard to such transactions in furtherance of the Fund's investment objective.
Such procedures are not fundamental and may be changed by the Trustees without
the vote of the Fund's shareholders.

28
<PAGE> 136

price. Thus, indexed securities may decline in value due to adverse market
changes in reference prices.

RISKS OF MORTGAGE-BACKED AND INDEXED SECURITIES. Different types of derivative
debt securities are subject to different combinations of prepayment, extension,
interest rate and/or other market risks. Conventional mortgage pass-through
securities and sequential pay CMOs are subject to all of these risks, but are
typically not leveraged. Planned amortization class ("PACs") and target
amortization class ("TACs") and other senior classes of sequential and parallel
pay CMOs involve less exposure to prepayment, extension and interest rate risk
than other mortgage-backed securities, provided that prepayment rates remain
within expected prepayment ranges or "collars."

29
<PAGE> 137

liquid, high grade debt securities, by holding offsetting portfolio securities
or currency positions or by covering written options.

Credit Risk. Over-the-counter instruments involve a risk that the issuer or
counterparty will fail to perform its contractual obligations.

30
<PAGE> 138

(NOTES)
<PAGE> 139

JOHN HANCOCK
JOHN HANCOCK INTERMEDIATE
INTERMEDIATE GOVERNMENT TRUST GOVERNMENT
TRUST

INVESTMENT ADVISER
John Hancock Advisers, Inc.

101 Huntington Avenue
Boston, Massachusetts 02199-7603

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue CLASS A AND CLASS B SHARES
Boston, Massachusetts 02199-7603 PROSPECTUS
JULY 17, 1995

CUSTODIAN
Investors Bank & Trust Company A MUTUAL FUND SEEKING
24 Federal Street TO OBTAIN AS HIGH A LEVEL
Boston, Massachusetts 02110 OF CURRENT INCOME CONSISTENT
WITH THE PRESERVATION OF
CAPITAL AND MAINTENANCE OF
LIQUIDITY.

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

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption

For TDD call 1-800-554-6713 101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291

5100P 5/15 [RECYCLE LOGO] Printed on Recycled Paper

<PAGE> 140

JOHN HANCOCK
U.S. GOVERNMENT
TRUST

CLASS A AND CLASS B SHARES
PROSPECTUS

JULY 17, 1995

<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 8
Alternative Purchase Arrangements..................................................... 9
The Fund's Expenses................................................................... 10
Dividends and Taxes................................................................... 11
Performance........................................................................... 12
How to Buy Shares..................................................................... 13
Share Price........................................................................... 15
How to Redeem Shares.................................................................. 20
Additional Services and Programs...................................................... 22
Investments, Techniques and Risk Factors.............................................. 26
</TABLE>

This Prospectus sets forth the information about John Hancock U.S. Government
Trust (the "Fund"), a diversified series of John Hancock Bond Fund (the
"Trust"), that you should know before investing. Please read and retain it for
future reference.

EXPENSE INFORMATION

The purpose of the following information is to help you to understand the various fees and expenses you will bear, directly
or indirectly, when you purchase Fund shares. The operating expenses included in the table and hypothetical example below are based
on fees and expenses for the Fund's fiscal year ended March 31, 1995, adjusted to reflect current sales charges. The operating
expenses for Class B shares are estimates. Actual fees and expenses in the future of the Class A and Class B shares may be greater
or less than those indicated.

ANNUAL FUND OPERATING EXPENSES (As a percentage of average net assets)
Management fee...................................................................................... 0.65% 0.65%
12b-1 fee**......................................................................................... 0.25% 1.00%
Other expenses***................................................................................... 0.69% 0.69%
Total Fund operating expenses....................................................................... 1.59% 2.34%

<FN>
* No sales charge is payable at the time of purchase on investments of $1 million or more, but for these investments a
contingent deferred sales charge may be imposed, as described below under the caption "Share Price," in the event of certain
redemption transactions within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to 0.25% of the Fund's average net assets, and the
remaining portion will be used to cover distribution expenses.
*** Other Expenses include transfer agent, legal, audit, custody and other expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares............................................................... $60 $ 93 $128 $225
Class B Shares
-- Assuming complete redemption at end of period......................... $74 $103 $145 $249
-- Assuming no redemption................................................ $24 $ 73 $125 $249

<FN>
(This example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than
those shown.)
</TABLE>

The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE> 142
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for each of the
periods ended March 31, 1995, and prior, has been audited by Ernst & Young LLP,
the Fund's independent auditors, whose unqualified report is included in the
Statement of Additional Information. Further information about the performance
of the Class A shares of the Fund is contained in the Fund's Annual Report to
shareholders which may be obtained free of charge by writing or telephoning John
Hancock Investor Services Corporation ("Investor Services"), at the address or
telephone number listed on the front page of this Prospectus.

Selected data for each class of shares outstanding throughout each period is
as follows:
<CAPTION>
CLASS A SHARES
----------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------------------
1995(3) 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of
Period.............................. $ 7.98 $ 8.49 $ 8.16 $ 8.34 $ 8.18 $ 8.38 $ 8.88 $ 9.64 $ 10.18
------- ------- ------- ------- -------- -------- -------- -------- --------
Net Investment Income................ 0.58 0.58 0.61 0.87(2) 0.90 0.89 0.84 0.76 0.71
------- ------- ------- ------- -------- -------- -------- -------- --------
Net Realized and Unrealized Gain
(Loss) on Investment and Financial
Futures Contracts................... (0.31) (0.48) 0.43 (0.22) 0.11 (0.24) (0.45) (0.53) (0.14)
------- ------- ------- ------- -------- -------- -------- -------- --------
Total from Investment Operations..... 0.27 0.10 1.04 0.65 1.01 0.65 0.39 0.23 0.57
------- ------- ------- ------- -------- -------- -------- -------- --------
Less Distributions
Dividends from Net Investment
Income.............................. (0.57) (0.61) (0.71) (0.83) (0.85) (0.85) (0.84) (0.76) (0.71)
Distributions from Realized Gains.... -- -- -- -- -- -- (0.05) (0.23) (0.40)
------- ------- ------- ------- -------- -------- -------- -------- --------
Total Distributions.................. (0.57) (0.61) (0.71) (0.83) (0.85) (0.85) (0.89) (0.99) (1.11)
------- ------- ------- ------- -------- -------- -------- -------- --------
Net Asset Value, End of Period....... $ 7.68 $ 7.98 $ 8.49 $ 8.16 $ 8.34 $ 8.18 $ 8.38 $ 8.88 $ 9.64
======== ======== ======== ======== ========= ========= ========= ========= =========
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE..................... 3.68% 1.05% 13.13% 8.05% 13.04% 7.83% 4.52% 2.70% 6.00%
======== ======== ======== ======== ========= ========= ========= ========= =========
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted)..................... $17,582 $23,740 $18,159 $21,184 $123,493 $154,472 $167,513 $266,213 $351,754
Ratio of Expenses to Average
Net Assets(5)....................... 1.59% 1.37% 1.31% 1.08% 1.13% 1.08% 1.05% 1.04% 0.99%
Ratio of Net Investment Income to
Average
Net Assets.......................... 7.69% 6.86% 7.07% 10.48% 10.72% 10.46% 9.95% 8.29% 7.18%
Portfolio Turnover Rate.............. 438% 264% 342% 179% 154% 244% 195% 84% 364%
<CAPTION>
CLASS B
SHARES
-----------------
FOR THE PERIOD
SEPTEMBER 30,
1994
PERIOD (COMMENCEMENT OF
ENDED OPERATIONS)
MARCH 31, TO MARCH 31,
1986(1) 1995(3)
--------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of
Period.............................. $ 10.00 $7.61(4)
-------- -----
Net Investment Income................ 0.23 0.26(2)
-------- -----
Net Realized and Unrealized Gain
(Loss) on Investment and Financial
Futures Contracts................... 0.25 0.06(7)
--------- -----
Total from Investment Operations..... 0.48 0.32
-------- -----
Less Distributions
Dividends from Net Investment
Income.............................. (0.23 ) (0.25)
Distributions from Realized Gains.... (0.07) --
-------- -----
Total Distributions.................. (0.30) (0.25)
-------- -----
Net Asset Value, End of Period....... $ 10.18 $7.68
======== =====
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE..................... 4.77% 4.28%(8)
========= =====
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted)..................... $50,959 $ 199
Ratio of Expenses to Average
Net Assets(5)....................... 0.06%(6) 2.34%(5)*
Ratio of Net Investment Income to
Average
Net Assets.......................... 2.34% 6.94%
Portfolio Turnover Rate.............. 75% 438%

<FN>
- ---------------

(1) Financial highlights are for the period from December 31, 1984 (the date of
the Fund's initial offering of shares to the public) to March 31, 1986 and
have not been annualized.
(2) On average month-end shares outstanding.
(3) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(4) Initial price to commence operations.
(5) Excluding interest expense, which equaled 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.
(6) Includes Expense Reduction of 0.27%.
(7) May not accord to amounts shown elsewhere in the financial statements.
(8) Not annualized.
* On an annualized basis.
</TABLE>

3
<PAGE> 143

INVESTMENT OBJECTIVE AND POLICIES

(1) U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance, including U.S. Treasury bills (maturity of
one year of less), U.S. Treasury notes (maturity of one to ten years), and
U.S. Treasury bonds (generally maturities greater than ten years); and

(2) Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities which are supported by: (i) the full faith and credit of
the U.S. Government (e.g., securities issued by the Government National
Mortgage Association ("GNMA")); (ii) the right of the issuer to borrow an
amount limited to a specific line of credit from the U.S. Government (e.g.,
securities of the Federal Home Loan Bank Board); or (iii) the credit of the
instrumentality (e.g., bonds issued by the Federal National Mortgage
Association ("FNMA")).

U.S. Government securities include collateralized mortgage obligations ("CMOs")
issued and guaranteed by a U.S. Government agency and U.S. Treasury securities
originally issued in the form of a face-amount only security paying no interest
("U.S. Government Zero Coupon Securities"), each as described below.

While as a non-fundamental investment policy, the Fund invests at least 80% of
its total assets in U.S. Government securities, it is currently anticipated that
a substantial portion of the Fund's assets may be invested in mortgage
pass-through securities set forth in (2) above. However, the Fund has undertaken
to limit (within its 80% limitation) its investment in U.S. Government
securities to those that are backed by the full faith and credit of the U.S.
Government with not less than 65% of its total assets being invested in GNMA
securities. Such undertaking may not be terminated or modified without 60 days
prior written notice having been mailed to shareholders.

Types of mortgage-backed securities include pass-through securities issued or
guaranteed by GNMA, FNMA and the Federal Home Loan Mortgage Corporation
("FHLMC"). Although these mortgage-backed securities are guaranteed or issued by
U.S. Government agencies or instrumentalities, FNMA and FHLMC securities are not
backed by the "full faith and credit" of the U.S. Government. In such cases, the
Fund must look principally to the agency issuing or guaranteeing the security
for ultimate payment. Mortgage pass-through securities are securities
representing interest in "pools" of mortgage loans. Monthly payments of interest
and principal by the individual borrowers on mortgages are passed through to the
holders of the securities (net of fees paid to the issuer or guarantor of the
securities) as the mortgages in the underlying mortgage pools are paid off. The

4
<PAGE> 144

average lives of the mortgage pass-through securities are variable when issued
because their average lives depend on prepayment rates. The average life of
these securities is likely to be substantially shorter than their stated final
maturity as a result of unscheduled principal prepayments. Prepayments on
underlying mortgages result in a loss of anticipated interest, and all or part
of a premium, if any has been paid, and the actual yield (or total return) to
the Fund may be different than the quoted yield on the securities. Mortgage
prepayments generally increase with falling interest rates and decrease with
rising interest rates. Like other fixed income securities, when interest rates
rise the value of a mortgage pass-through security generally will decline;
however, when interest rates are declining, the value of mortgage pass-through
securities with prepayment features may not increase as much as that of other
fixed income securities. In cases where U.S. Government support of agencies or
instrumentalities is discretionary, no assurance can be given that the U.S.
Government will provide financial support, since it is not legally obligated to
do so.

The Fund may acquire stripped mortgage-backed securities which are issued and
guaranteed by U.S. Government agencies or instrumentalities. For example,
Class 1 and Class 2 stripped mortgage-backed securities ("SMBS Certificates")
are issued by FNMA. Since Class 1 Certificates generally benefit from declining
interest rates and Class 2 Certificates generally benefit from rising interest
rates, these securities can provide an effective way to stabilize portfolio
value. SMBS Certificates represent beneficial interests in principal
distributions and interest distributions on certain FNMA guaranteed mortgage
pass-through Certificates which represent all or part of the beneficial
interests in pools of first lien, single family (one-to-four family residential
property), fixed-rate residential mortgage loans. The original principal amount
of each SMBS Class 1 Certificate represents the amount payable over the life of
the Certificate from the principal distributions on the underlying
mortgage-backed securities held by FNMA in its capacity as Trustee of the SMBS
trust. Interest distributions allocable to the SMBS Class 2 Certificates consist
of interest at the pass-through rate specified on the aggregate amount thereof
which will always be equal to the aggregate outstanding principal amount of each
associated issue of SMBS Class 1 Certificates.

The Fund may invest a portion of its assets in collateralized mortgage
obligations or "CMOs", which are debt obligations collateralized by mortgage
loans or mortgage pass-through securities (such collateral collectively herein
referred to as "Mortgage Assets"). Mortgage Assets underlying CMOs purchased by
the Fund must be U.S. Government securities. The Fund may also invest a portion
of its assets in multi-class pass-through securities which are issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities. Unless the context indicates otherwise, all references herein
to CMOs include multi-class pass-through securities. Payments of principal and
interest on the Mortgage Assets, and any reinvestment income thereon, provide
the funds to pay debt service on the CMOs or make scheduled distributions on the
multi-class pass-through securities.

5
<PAGE> 145

In addition to the risks associated with prepayments previously described,
prepayment on the Mortgage Assets can be expected to accelerate during periods
of declining interest rates and thus impair the Fund's ability to reinvest the
proceeds in securities with comparable yields. In addition, the U.S. Government
guarantee as to payment of principal and interest of the Fund's mortgage-backed
securities does not extend to the value or yield of such securities or the
Fund's shares of the beneficial interest. SMBS Certificates involve risks in
addition to those associated with regular mortgage-backed securities. A rate of
principal payments on the underlying mortgage loans slower than the rate
anticipated by an investor in calculating the initial yield to maturity on an
SMBS Certificate, which would result from stable or rising interest rates (which
would tend to reduce the market value of the Certificate), will, by delaying the
distribution of principal, reduce the yield to maturity on SMBS Class 1
Certificates (principal) purchased at a discount from their original principal
amount and increase the yield to maturity on SMBS Class 2 Certificates (income).
Payments of principal on the underlying mortgage loans at rates faster than the
rate anticipated by investors, which could result from falling interest rates or
from transfers of the underlying property, will, conversely, accelerate
distributions of principal and thereby reduce the yield to maturity on SMBS
Class 2 Certificates (income) and increase the yield to maturity on SMBS Class 1
Certificates (principal). Sufficiently high prepayment rates could result in
purchasers of SMBS Class 2 Certificates (income) not recovering the full amount
of their initial investment. Yields on SMBS Certificates will be extremely
sensitive to actual or anticipated prepayment experience on the underlying
mortgage loans and significant fluctuations in interest rates may result in
major fluctuations in the market value of such Certificates.

Mortgage-backed securities derive their value from an underlying investment
structure and accordingly are known as "derivatives." Derivatives (such as
stripped mortgage-backed securities) involve substantial risk including higher
price volatility and the possible lack of a readily available market. The Fund
may engage in a variety of investment techniques in an attempt to protect
against changes in the general level of interest rates. These techniques include
the sale of interest rate futures contracts as well as the purchase of call and
put options on such futures and the purchase of call and put options on debt
securities. These investment techniques and various policies the Fund may employ
in seeking to achieve its investment objective, such as lending its portfolio
securities, and committing to purchase securities for which the normal
settlement date for the transaction occurs later than the normal settlement date
for U.S. Treasury obligations, or securities subject to repurchase and reverse
repurchase agree-

6
<PAGE> 146

ments, may involve a greater degree of risk than those inherent in more
conservative investment approaches. As a matter of non-fundamental policy, the
Fund will, at all times, invest at least 80% of its total assets in U.S.
Government securities. This will serve to limit investments in put and call
options, futures and options on futures, and reverse repurchase agreements, in
the aggregate, to not more than 20% of the Fund's total assets. In addition, as
a fundamental policy, the Fund will not invest more than 10% of its total assets
in CMOs, zero coupon securities, SMBS, complex multi-class pass-through
securities and asset-backed securities. See "Investments, Techniques and Risk
Factors" for a discussion of these techniques and their associated risks.

The specific securities in which the Fund may invest, and the investment
policies which the Fund may employ, meet the criteria necessary to qualify the
shares of the Fund for purchase by the institutions designated as "qualifying
institutions." (See "Qualifying Institutions" in the Statement of Additional
Information.) In order to facilitate investment in the Fund by national banks,
the Fund has undertaken to refrain from investing in those obligations issued by
U.S. Government agencies or instrumentalities which a national bank may not
purchase without limitation (including, but not limited to obligations of the
Tennessee Valley Authority and obligations of the Commodity Credit Corporation
not fully guaranteed by the U.S. Government) unless 60 days' prior written
notice otherwise has been provided to shareholders.

See "Investments, Techniques and Risk Factors" for a further discussion of the
types of securities in which the Fund may invest, the management techniques it
may employ and the associated risk.

The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information where they are classified as
fundamental or nonfundamental. The Fund's investment objective and fundamental
policies and restrictions may not be changed without the approval of the Fund's
shareholders. The Fund's non-fundamental investment policies and restrictions,
however, may be changed by a vote of the Trustees without shareholder approval.
Notwithstanding the Fund's fundamental investment restriction prohibiting
investments in other investment companies, the Fund may, pursuant to an order
granted by the SEC, invest in other investment companies in connection with a
deferred compensation plan for the noninterested Trustees of the John Hancock
funds. There can be no assurance that the Fund will achieve its investment
objective.

7
<PAGE> 147

The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Trustees, the Fund's investment adviser, John Hancock Advisers, Inc. (the
"Adviser"), may place securities transactions with brokers affiliated with the
Adviser. The brokers include Tucker Anthony Incorporated, Sutro and Company,
Inc. and John Hancock Distributors, Inc., which are indirectly owned by the John
Hancock Mutual Life Insurance Company (the "Life Company"), which in turn
indirectly owns the Adviser.

ORGANIZATION AND MANAGEMENT OF THE FUND

The Fund is a diversified series of the Trust, an open-end management investment
company organized as a Massachusetts business trust. The Trust has six series of
shares, one of which is the Fund. The Trust reserves the right to create and
issue a number of series of shares, or funds or classes thereof, which are
separately managed and have different investment objectives. The Trustees have
authorized the issuance of two classes of the Fund, designated Class A and
Class B. The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation. However, each class bears different distribution and
transfer agent fees and other expenses. Also, Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans. The Trust
is not required to and does not intend to hold annual meetings of shareholders,
although special meetings may be held for such purposes as electing or removing
Trustees, changing fundamental policies or approving a management contract. The
Trust, under certain circumstances, will assist in shareholder communications
with other shareholders.

All investment decisions are made by a committee and no single person is
primarily responsible for making recommendations to the committee.

8
<PAGE> 148

ALTERNATIVE PURCHASE ARRANGEMENTS

FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE

9
<PAGE> 149

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net assets as follows:

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -----------------------------------------------------------------------------------
<S> <C>
First $200,000,000..................................................... 0.650%
Next $300,000,000...................................................... 0.625%
Amount over $500,000,000............................................... 0.600%
</TABLE>

During the Fund's fiscal year ended March 31, 1995, the advisory fee paid by the
Fund to the Fund's former investment adviser was equal to 0.65% of the Fund's
average daily net assets.

10
<PAGE> 150
assets and an aggregate annual rate of 1.00% of the Class B shares' average
daily net assets. In each case, up to 0.25% for Class A and Class B shares is
for service expenses and the remaining amount is for distribution expenses. The
distribution fees will be used to reimburse John Hancock Funds for its
distribution expenses, including but not limited to: (i) initial and ongoing
sales compensation to Selling Brokers and others (including affiliates of John
Hancock Funds) engaged in the sale of Fund shares; (ii) marketing, promotional
and overhead expenses incurred in connection with the distribution of Fund
shares; (iii) unreimbursed distribution expenses under the Fund's prior
distribution plans; (iv) distribution expenses incurred by other investment
companies which sell all or substantially all of their assets to, merge with or
otherwise engage in a reorganization transaction with the Fund; and (v) with
respect to Class B shares only, interest expenses on unreimbursed distribution
expenses. The service fees will be used to compensate Selling Brokers for
providing personal and account maintenance services to shareholders.

In the event John Hancock Funds is not fully reimbursed for payments made or
expenses incurred by it under the Class A Plan, these expenses will not be
carried beyond one year from the date they were incurred. Unreimbursed expenses
under the Class B Plan will be carried forward together with interest on the
balance of these unreimbursed expenses.

Information on the Fund's total expenses appears in the Financial Highlights
section of this Prospectus.

DIVIDENDS AND TAXES

11
<PAGE> 151

are distributed to its shareholders within the time period prescribed by the
Code. When you redeem (sell) or exchange shares, you may realize a taxable gain
or loss.

PERFORMANCE

12
<PAGE> 152

and Class B shares will be affected by a variety of factors, including the
higher operating expenses attributable to the Class B shares, whether the Fund's
investment performance is better in the earlier or later portions of the period
measured and the level of net assets of the classes during the period. The Fund
will include the total return of Class A and Class B shares in any advertisement
or promotional materials including Fund performance data. The value of Fund
shares, when redeemed, may be more or less than their original cost. Both yield
and total return are historical calculations and are not an indication of future
performance. See "Factors to Consider in Choosing an Alternative."

<TABLE>
<CAPTION>
HOW TO BUY SHARES
- -------------------------------------------------------------------------------------
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application attached
to this Prospectus. Indicate whether you are purchasing Class A or Class B shares.
If you do not specify which class of shares you are purchasing, Investor Services
will assume that you are investing in Class A shares.

-------------------------------------------------------------------------------
OPENING AN ACCOUNT
-------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------
<S> <C> <C>
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA
02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- -------------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock U.S. Government Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- -------------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application designating a
ACCUMULATION bank account from which funds may be drawn.
PROGRAM
(MAAP) 2. The amount you elect to invest will be automatically withdrawn
from your bank or credit union account.
- -------------------------------------------------------------------------------------

13
<PAGE> 153

<TABLE>
- -------------------------------------------------------------------------------------
<S> <C> <C>
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application designating a bank
account from which your funds may be drawn. Note that in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
- -------------------------------------------------------------------------------------

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

BUYING ADDITIONAL CLASS A AND CLASS B
SHARES (CONTINUED)

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

- -------------------------------------------------------------------------------------
2. After your authorization form has been processed, you may
purchase additional Class A or Class B shares by calling
Investor Services toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, the class of shares
you own, your account number, and the amount you wish to
invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
- -------------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, the class of share you own, your account
number and the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- -------------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock U.S. Government Trust
Class A or Class B shares
Your Account Number
Name(s) under which account is registered
- -------------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued
unless a request is made in writing to Investor Services.
- -------------------------------------------------------------------------------------
</TABLE>

14
<PAGE> 154

SHARE PRICE

<TABLE>

INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:

<CAPTION>
COMBINED
SALES CHARGE AS REALLOWANCE REALLOWANCE TO
SALES CHARGE AS A PERCENTAGE OF AND SERVICE FEE AS SELLING BROKERS AS
AMOUNT INVESTED A PERCENTAGE OF THE AMOUNT A PERCENTAGE OF A PERCENTAGE OF
(INCLUDING SALES CHARGE) OFFERING PRICE INVESTED OFFERING PRICE(+) THE OFFERING PRICE(*)
- ------------------------ ---------------- --------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.00% 3.76%
$100,000 to $249,999 3.75% 3.90% 3.25% 3.01%
$250,000 to $499,999 2.75% 2.83% 2.30% 2.06%
$500,000 to $999,999 2.00% 2.04% 1.75% 1.51%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
<FN>
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed or who receives these incentives may be deemed to be an
underwriter under the Securities Act of 1933. Other than distribution and
service fees, the Fund does not bear distribution expenses.

(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions within one year of purchase.

</TABLE>

15
<PAGE> 155

Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.

In addition, John Hancock Funds will pay certain affiliated Selling Brokers at
an annual rate of up to 0.05% of the daily net assets of accounts attributable
to these brokers.

Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying for a Reduced Sales
Charge."

<TABLE>

<CAPTION>
AMOUNT INVESTED CDSC RATE
--------------- ---------
<S> <C>
$1 million to $4,999,999............................................... 1.00%
Next $5 million to $9,999,999.......................................... 0.50%
Amounts of $10 million and over........................................ 0.25%
</TABLE>

16
<PAGE> 156

1. Your current purchase of Class A shares of the Fund.

2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and

3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."

EXAMPLE:

If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:

17
<PAGE> 157

- - A former participant in an employee benefit plan with John Hancock Funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.

<TABLE>

EXAMPLE:

<S> <C>
- - Proceeds of 50 shares redeemed at $12 per share $ 600
- - Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12) -120
- - Minus appreciation on remaining shares, also not subject to CDSC
(40 X $2) - 80
------
- - Amount subject to CDSC $ 400
</TABLE>

18
<PAGE> 158

during the month will be aggregated and deemed to have been made on the last day
of the month.

<TABLE>
<CAPTION>
YEAR IN WHICH
CLASS B SHARES CONTINGENT DEFERRED SALES
REDEEMED FOLLOWING CHARGE AS A PERCENTAGE OF
PURCHASE DOLLAR AMOUNT SUBJECT TO CDSC
- ------------------ -----------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>

- - Redemptions made to effect mandatory distributions under the Code after age
70 1/2 from a tax-deferred retirement plan.

- - Redemptions due to death or disability.

- - Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this Prospectus.

19
<PAGE> 159

- - Redemptions made pursuant to the Fund's right to liquidate your account if you
have less than $100 invested in the Fund.

- - Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.

- - Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.

CONVERSION OF CLASS B SHARES. Your Class B shares and an appropriate portion of
reinvested dividends on those shares will be converted into Class A shares
automatically. This will occur no later than the month following eight years
after the shares were purchased and will result in lower annual distribution
fees. If you exchanged Class B shares into the Fund from another John Hancock
fund, the calculation will be based on the time you purchased the shares in the
original fund. The Fund has been advised that the conversion of Class B shares
to Class A shares should not be taxable for Federal income tax purposes and
should not change a shareholder's tax basis or tax holding period for the
converted shares.

HOW TO REDEEM SHARES

<TABLE>
- -----------------------------------------------------------------------------------
<S> <C>
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.

You may redeem up to $100,000 by telephone, but the address
on the account must not have changed for the last thirty
days. A check will be mailed to the exact name(s) and
address shown on the account.
- -----------------------------------------------------------------------------------
</TABLE>

<PAGE> 160
<TABLE>
- -------------------------------------------------------------------------------------
<S> <C> <C>
If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.

Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificated form.

During periods of extreme economic conditions or market
changes, telephone requests may be difficult to implement
due to a large volume of calls. During these times, you
should consider placing redemption requests in writing or
use EASI-Line. EASI-Line's telephone number is
1-800-338-8080.
- -------------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired on
the next business day to your designated bank account, and
a fee (currently $4.00) will be deducted. You may also use
electronic funds transfer to your assigned bank account,
and the funds are usually collectable after two business
days. Your bank may or may not charge a fee for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.

This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
attached to the Prospectus.
- -------------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, class of shares, your
account number and the additional requirements listed below
that apply to your particular account.
- -------------------------------------------------------------------------------------
</TABLE>

If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- -------------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
- -------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------

<PAGE> 161
- --------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your
stock power or a letter of instructions. Unless you specify to the
contrary, any outstanding Class A shares will be redeemed before
Class B shares. You may not redeem certificated shares by telephone.

Due to the proportionately high cost of maintaining small accounts, the
Fund reserves the right to redeem at net asset value all shares in an
account which holds less than $100 (except accounts under retirement plans)
and to mail the proceeds to the shareholder, or the transfer agent may
impose an annual fee of $10.00. No account will be involuntarily redeemed
or additional fee imposed, if the value of the account is in excess of the
Fund's minimum initial investment or if the value of the account falls
below the required minimum as a result of market action. No CDSC will be
imposed on involuntary redemptions of shares. Shareholders will be notified
before these redemptions are to be made or this fee is imposed and will
have 30 days to purchase additional shares to bring their account balance
up to the required minimum. Unless the number of shares acquired by further
purchases and dividend reinvestments, if any, exceeds the number of shares
redeemed, repeated redemptions from a smaller account may eventually
trigger this policy.
- --------------------------------------------------------------------------------

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE

Exchanges between funds with shares that are not subject to a CDSC are based on
their respective net asset values. No sales charge or transaction charge is
imposed. Class B shares of the Fund that are subject to a CDSC may be exchanged
into Class B shares of another John Hancock fund without incurring the CDSC;
however, these shares will be subject to the CDSC schedule of the shares
acquired (except that exchanges into John Hancock Short-Term Strategic Income
Fund, John Hancock Limited-Term Government Fund and John Hancock Adjustable U.S.
Government Trust will be subject to the initial fund's CDSC). For purposes of
computing the CDSC payable upon redemption of shares acquired in an exchange,
the holding period of the original shares is added to the holding period of the
shares acquired in an exchange. However, if you exchange Class B shares
purchased prior to January 1, 1994 for Class B shares of any other John Hancock
fund, you will be subject to the CDSC schedule in effect on your initial
purchase date.

You may exchange Class B shares of the Fund into shares of a John Hancock money
market fund at net asset value. However, you will continue to be subject to the
same CDSC upon redemption.

22
<PAGE> 162

An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.

When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.

BY TELEPHONE
1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to authorize telephone exchanges.

2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.

3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.

23
<PAGE> 163

IN WRITING

Sign your request exactly as the account is registered.

2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116

REINVESTMENT PRIVILEGE

- -------------------------------------------------------------------------------
IF YOU REDEEM SHARES OF THE FUND, YOU MAY
BE ABLE TO REINVEST ALL OR PART OF THE
PROCEEDS IN THE FUND
OR ANOTHER JOHN HANCOCK
FUND WITHOUT PAYING AN ADDITIONAL SALES
CHARGE.
- -------------------------------------------------------------------------------

2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.

3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, the account number and class from which your shares were originally
redeemed.

SYSTEMATIC WITHDRAWAL PLAN

- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH
IRS REGULATIONS.
- -------------------------------------------------------------------------------

2. To be eligible, you must have at least $5,000 in your account.

3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.

4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.

24
<PAGE> 164

6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.

3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.

4. There is no charge to you for this program, and there is no cost to the Fund.

5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.

GROUP INVESTMENT PROGRAM

2. The initial aggregate investment of all participants in the group must be at
least $250.

3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at any
time.

RETIREMENT PLANS

25
<PAGE> 165

INVESTMENTS, TECHNIQUES AND RISK FACTORS

LENDING OF SECURITIES AND REPURCHASE AGREEMENTS. For the purpose of realizing
additional income, the Fund may lend, to broker-dealers or to federally insured
banks or savings and loans, portfolio securities amounting to not more than
33 1/3% of its total assets taken at current value. The Fund may also enter into
repurchase agreements. In a repurchase agreement, the Fund buys a security
subject to the right and obligation to sell it back to the issuer at the same
price plus accrued interest.

SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading of fixed-income securities
should not increase direct transaction costs since fixed-income securities are
normally traded on a principal basis without brokerage commissions. Short-term
trading may have the effect of increasing portfolio turnover rate. The Fund may
engage in short-term trading in response to changes in interest rates or other
economic trends and developments, or to take advantage of yield disparities
between various securities in which the Fund may invest in order to improve
income. A rate of turnover of 100% would occur if the value of the lesser of
purchases and sales of portfolio securities for a particular year equaled the
average monthly value of portfolio securities owned during the year (excluding
short-term securities). A high rate of portfolio turnover (100% or more) may,
under certain circumstances, make it more difficult for the Fund to qualify as a
regulated investment company under the Code. The Fund's portfolio turnover rate
is set forth in the table under the caption "Financial Highlights."

26
<PAGE> 166

commitments to purchase such securities with the intention of actually acquiring
the securities, the Fund may sell these securities before the settlement date.
Such securities can involve a risk that the yields available in the market when
delivery takes place may be higher than those obtained in the transaction
itself. There are no limitations on the percentage of the Fund's assets which
may be invested in such securities. However, it is not expected that at any one
time more than 10% of the Fund's assets would be so invested.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements which involve the sale of a security by the Fund to a bank or
securities firm and its agreement to repurchase the instrument at a specified
time and price plus an agreed amount of interest. The Fund will use the proceeds
to purchase other investments. Reverse repurchase agreements are considered to
be borrowings by the Fund and as an investment practice may be considered
speculative.

Thus, the Fund will enter into a reverse repurchase agreement only when the
Adviser determines that the interest income to be earned from the investment of
the proceeds is greater than the interest expense of the transaction. To
minimize various risks associated with reverse repurchase agreements, the Fund
will establish and maintain with the Custodian a separate account consisting of
cash or liquid, high grade debt securities in an amount at least equal to the
repurchase prices of the securities (plus any accrued interest thereon) under
such agreements. Although the Fund's investment restrictions provide that the
Fund may not enter into reverse repurchase agreements exceeding in the aggregate
33 1/3% of the value of its total net assets (including for this purpose other
borrowings of the Fund), this limitation shall not exceed 20% of the Fund's
total assets. The Fund will enter into reverse repurchase agreements only with
selected registered broker/dealers or with federally insured banks or savings
and loan associations which are approved in advance as being creditworthy by the
Trustees. Under procedures established by the Trustees, the Adviser will monitor
the creditworthiness of the firms involved.

27
<PAGE> 167

OPTIONS AND FUTURES TRANSACTIONS. The Fund may buy options contracts on debt
securities and interest rate futures contracts and buy and write (sell) options
on such futures contracts. Options and futures contracts are bought and sold to
manage the Fund's exposure to changing interest rates and security prices. Some
options and futures strategies, including selling futures and buying puts, tend
to hedge the Fund's investment against price fluctuations. Other strategies,
including buying futures and buying calls, tend to increase market exposure.
Options and futures may be combined with each other or with forward contracts in
order to adjust the risk and return characteristics of the overall strategy.

The Fund may invest only in put or call options which are traded on a national
securities exchange (an "Exchange"). The Fund may purchase put options on debt
securities to protect its holdings in an underlying or related security against
a substantial decline in market value. Securities are considered related if
their price movements generally correlate to one another. The Fund may also
purchase call options on debt securities to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to orderly invest in such securities. The Fund may sell put or call
options it has previously purchased, which could result in a net gain or loss
depending on whether the amount received on the sale is more or less than the
premium and other transaction costs paid on the purchase of the put or call
option which is sold. The Fund will not invest in a put or call option if as a
result the amount of premiums paid for such options then outstanding would
exceed 10% of the Fund's total assets.

The Fund may engage in the sale of interest rate futures contracts and call
options thereon and the purchase of put and call options on such futures only as
a hedge against changes in the general level of interest rates. The sale of an
interest rate futures contract obligates the seller to deliver the specific type
of debt security called for in the contract at a specified future time and at a
specified price. The Fund would sell an interest rate futures contract in order
to continue to receive the income from a long-term debt security, while
endeavoring to avoid part or all of the decline in market value of that security
which would accompany an increase in interest rates. Futures contracts may be
purchased only to close an existing short position in a futures contract.

In addition, the Fund may purchase and write call options and purchase put
options on futures contracts which are traded on a securities exchange or a
Board of Trade and enter into closing transactions with respect to such options
to terminate an existing position. The Fund may use options on futures contracts
in connection with hedging strategies. Generally, these strategies would be
employed under the same market conditions in which the Fund uses put and call
options on debt securities. The Fund may hedge up to the full value of its
portfolio through the use of options on futures and the sale of futures;
provided, however, that the Fund may not sell futures contracts or purchase or
sell related options if immediately thereafter the sum of the amount of margin
deposits on the Fund's existing futures and related options positions and the
amount of premiums paid for related options (measured at the time of investment)
would exceed 5% of the Fund's net assets. When the Fund purchases a futures
contract or a call option on a futures contract,

28
<PAGE> 168

an amount of cash or U.S. Government securities equal to the market value of the
futures contract will be deposited in a segregated account with the Fund's
custodian to collateralize the Fund's position.

29
<PAGE> 169

Credit Risk. Over-the-counter instruments involve a risk that the issuer or
counterparty will fail to perform its contractual obligations.

30
<PAGE> 170

repurchase agreement) to increase the net asset value of the Fund's shares
faster than would otherwise be the case. On the other hand, if the additional
monies received are invested in ways that do not fully recover the costs of such
transactions to the Fund, the net asset value of the Fund would fall faster than
would otherwise be the case.

31
<PAGE> 171

JOHN HANCOCK
JOHN HANCOCK U.S. GOVERNMENT
U.S. GOVERNMENT TRUST TRUST

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

CLASS A AND CLASS B SHARES
PRINCIPAL DISTRIBUTOR PROSPECTUS
John Hancock Funds, Inc. JULY 17, 1995
101 Huntington Avenue
Boston, Massachusetts 02199-7603

A MUTUAL FUND SEEKING TO
OBTAIN AS HIGH A LEVEL
OF INTEREST INCOME CONSISTENT
CUSTODIAN WITH SAFETY OF PRINCIPAL.
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110

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

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
101 HUNTINGTON AVENUE
For TDD call 1-800-554-6713 BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291

5400P 7/95 [RECYCLE LOGO] Printed on Recycled Paper

<PAGE> 172

ADJUSTABLE U.S. GOVERNMENT FUND

PROSPECTUS

JULY 17, 1995

- --------------------------------------------------------------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information..................................... 2
The Fund's Financial Highlights......................... 3
Investment Objective and Policies....................... 5
Organization and Management of the Fund................. 6
The Fund's Expenses..................................... 7
Dividends and Taxes..................................... 7
Performance............................................. 8
How to Buy Shares....................................... 9
Share Price............................................. 11
How to Redeem Shares.................................... 11
Additional Information.................................. 14
Investments, Techniques and Risk Factors................ 14
</TABLE>

This Prospectus sets forth the information about Adjustable U.S.
Government Fund (the "Fund"), a diversified series of John Hancock Bond Fund
(the "Trust"), that you should know before investing. Please read and retain
it for future reference.

Additional information about the Fund and the Trust has been filed with
the Securities and Exchange Commission (the "SEC"). You can obtain a copy of
the Fund's Statement of Additional Information, dated July 17, 1995 and
incorporated by reference into this Prospectus, free of charge by writing or
telephoning: John Hancock Investor Services Corporation, P.O. Box 9116,
Boston, Massachusetts 02205-9116, 1-800-225-5291 (1-800-554-6713 TDD).

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY.

1
<PAGE> 173

<TABLE>
EXPENSE INFORMATION

The purpose of the following information is to help you to understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Fund's fiscal
year ended March 31, 1995. Actual fees and expenses in the future may be
greater or less than those indicated.

<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchase
(as a percentage of offering price).............. None
Maximum sales charge imposed on
reinvested dividends............................. None
Maximum deferred sales charge...................... None
Redemption fee_.................................... None
Exchange fee....................................... None

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average
net assets)

Management fees
(net of limitation).............................. 0.20%
12b-1 fee.......................................... None
Other expenses*.................................... 0.30%
----
Total Fund Operating Expenses (net
of limitation)**................................. 0.50%
----

________________

<FN>

* Other Expenses include organization expenses, legal, audit, custody and
other expenses.

** Total Fund operating expenses in the table reflect voluntary and temporary
limitations by the Fund's investment adviser until December 31, 1996.
Without such limitations the Management Fee and Total Fund Operating
Expenses of Fund shares would have been estimated as 0.40% and 0.70%,
respectively.

_ Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
You would pay the following expenses for
the indicated period of years on a
hypothetical $1,000 investment,
assuming 5% annual return............ $5 $16 $28 $63

</TABLE>

(This example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown.)

2
<PAGE> 174

The management fees referred to above are more fully explained in this
Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Purchase of Shares."

<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS

The information in the following table of financial highlights for the
periods ended March 31, 1995, and prior, has been audited by Ernst & Young LLP,
the Fund's independent auditors, whose unqualified report is included in the
Fund's 1995 Annual Report and is included in the Statement of Additional
Information. Further information about the performance of the shares of the Fund
is contained in the Fund's Annual Report to shareholders which may be obtained
free of charge by writing or telephoning John Hancock Investor Services
Corporation ("Investor Services"), at the address or telephone number listed on
the front page of this Prospectus.

Selected data for shares of the Fund outstanding during the periods
indicated is as follows.

<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1995 (3) 1994 1993 1992(1)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.89 $10.05 $10.03 $10.00
------ ------ ------ ------

INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.43 0.43 0.58 0.17
Net realized and unrealized
gain (loss) on investments (0.11) (0.15) 0.02 0.03
------ ------ ------ ------

Total from Investment
Operations 0.32 0.28 0.60 0.20
------ ------ ------ ------

LESS DISTRIBUTIONS
Dividends from net
investment income (0.43) (0.44) (0.58) (0.17)
------ ------ ------ ------

Net asset value,
end of period $ 9.78 $ 9.89 $10.05 $10.03

Total Return 3.24% 2.77% 6.08% 1.96%
------ ------ ------ ------
[/R]
</TABLE>

3
<PAGE> 175
<TABLE>
<CAPTION>

Year Year Year Period
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1995 (3) 1994 1993 1992(1)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
RATIOS AND
SUPPLEMENTAL DATA
Ratio of adjusted expenses
to average net assets 0.70% 0.59% 0.62% 0.85%
Ratio of expense
reimbursement to
average net assets (0.20)% (0.09)% (0.12)% (0.35)%
------- ------- ------- -------

Ratio of net expenses
to average net assets 0.50% 0.50% 0.50% 0.50%
------- ------- ------- -------

Ratio of net
investment income
to average net assets 5.19% 4.29% 5.53% 6.85%(2)

Ratio of net
investment income
to average net assets
on an unreimbursed basis 4.99% 4.20% 5.41% 6.50%(2)

Portfolio turnover 341% 244% 186% 1%

Net Assets, end of period
(in thousands) $22,449 $35,821 $46,874 $15,348

<FN>
- --------------------------------------
(1) Financial highlights are for the period from December 31, 1991
(date of Fund's initial offering of shares to the public) to March 31,
1992, and have been annualized (with the exception of total return).

(2) The ratio of net investment income to average net assets is
computed based on paid shares since only paid shares are entitled to
receive dividends from net investment income.

(3) On December 22, 1994, John Hancock Advisers, Inc. became the
investment adviser of the Portfolio.

</TABLE>

4
<PAGE> 176

INVESTMENT OBJECTIVE AND POLICIES

THE FUND SEEKS TO EARN A HIGH LEVEL OF CURRENT INCOME, CONSISTENT WITH
LOW VOLATILITY OF PRINCIPAL.

The investment objective of the Fund is to earn a high level of current
income, consistent with low volatility of principal. The Fund seeks to achieve
its investment objective by investing substantially all of its assets in U.S.
Government securities, i.e., securities which are issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.

Under normal circumstances, at least 65% of the Fund's assets will be
invested in adjustable rate mortgage securities ("ARMs") and pass-through
securities representing interests in loan pools and having periodic interest
rate resets, which in each case must be U.S. Government securities
(collectively, "Government Agency Adjustable Rate Securities"). The Fund
expects that it will be fully invested in Government Agency Adjustable Rate
Securities and in other U.S. Government securities which pay interest at fixed
rates and, as more fully described below, in highly rated (i.e., AAA) debt
securities which pay interest at fixed or adjustable rates.

The Fund will seek to achieve its objective by normally investing at
least 65% of its total assets in Government Agency Adjustable Rate Securities.
Adjustable rate securities, which consist primarily of mortgage-backed
securities ("ARMs"), bear interest at rates that adjust or "reset" at periodic
intervals in conjunction with changes in market levels of interest.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from a pool of mortgage loans
secured by real property. Many mortgage-backed securities derive their value
from an underlying investment structure and accordingly are known as
"derivatives." Derivatives (such as stripped mortgage-backed securities)
involve certain risks including higher price volatility and the possible lack
of a readily available market. The primary issuers or guarantors of these
securities currently are the Government National Mortgage Association ("Ginnie
Mae"), the Federal National Mortgage Association ("Fannie Mae") and the Federal
Home Loan Mortgage Corporation ("Freddie Mac"). The Fund will limit its
investment in stripped mortgage-backed securities to 10% of its total assets.
While the Fund is permitted to invest up to 100% of its assets in other
derivative securities, it does not expect to invest substantially in
derivative securities. See "Investments, Techniques and Risk Factors" for a
further description of mortgage-backed securities and the risks associated with
derivatives.

Under normal circumstances, the Fund invests at least 80% of its total
assets in U.S. Government securities bearing interest at fixed or adjustable
rates, including collateralized mortgage obligations issued and guaranteed by a
U.S. Government agency ("Government CMOs") and U.S. Treasury securities
originally issued in the form of a face-amount only security paying no interest
("U.S. Government zero coupon securities"), and repurchase agreements and
forward commitments with respect to such securities. The balance of the Fund's
assets may be invested in: (i) privately issued collateralized mortgage
obligations ("private CMOs") bearing interest at adjustable rates or fixed
rates; (ii) privately issued mortgage-backed securities (bearing interest at
adjustable rates or fixed rates) which are, at the time of purchase, rated AAA
by Standard & Poor's Ratings Group ("Standard & Poor's"), Aaa by Moody's
Investors Service, Inc. ("Moody's"), AAA by Fitch Investors, Inc. ("Fitch") and
(iii) U.S. Government zero coupon securities created by the separation of the
interest and principal components of a previously issued interest paying
security.

<PAGE> 177

The foregoing policies and practices may involve risks not assumed by
more conservative investment companies such as money market funds and are
further described in this Prospectus under the caption "Investments, Techniques
and Risk Factors." Other types of mortgage-backed securities will likely be
developed in the future and the Fund may invest in them if the Adviser
determines they are consistent with the Fund's investment objectives and
policies.

When determined to be appropriate because of market conditions or
liquidity requirements, the Fund may, as a defensive measure or for temporary
purposes, invest without limit in high quality short-term securities (e.g.,
U.S. Government money market securities rated in the highest category by a
nationally recognized statistical rating organization).

Because the interest rate on ARMs and other adjustable rate securities
generally moves in the same direction as market interest, the market value of
these securities tends to be more stable than that of long-term fixed rate
securities. The Fund seeks to reduce volatility of principal and enhance
consistency of its net asset value by structuring its investments so that at
least 90% of its total assets in adjustable rate securities and in fixed rate
debt securities will at the time of purchase have a final maturity or average
life of less than 5 years. The Fund believes that by maintaining a short to an
intermediate duration, it is likely that it will obtain current income in
excess of that of a portfolio of shorter-term or money market securities but
with less volatility in market value (and, consequently, the Fund's net asset
value) than long-term fixed rate mortgage-backed securities. Duration, a
statistic that is expressed in time periods such as years, is a measure of the
exposure of the Fund to changes in interest rates. The Fund does not maintain a
constant net asset value.

THE FUND FOLLOWS CERTAIN POLICIES WHICH MAY HELP TO REDUCE INVESTMENT
RISK.

The Fund has adopted certain investment restrictions which are
enumerated in detail in the Statement of Additional Information where they are
classified as fundamental or non-fundamental. The Fund's investment objective
and the fundamental policies set forth in the Statement of Additional
Information may not be changed without the approval of the Fund's shareholders.
The Fund's nonfundamental policies and restrictions, however, may be changed by
a vote of the Trustees without shareholder approval, upon 30 days' prior notice
to shareholders. There can be no assurance that the Fund will achieve its
investment objective.

ORGANIZATION AND MANAGEMENT OF THE FUND

THE TRUSTEES ELECT OFFICERS AND RETAIN THE FUND'S INVESTMENT ADVISER
WHO IS RESPONSIBLE FOR THE DAY-TO-DAY OPERATIONS OF THE FUND SUBJECT TO THE
TRUSTEES' POLICIES AND SUPERVISION.

The Fund is organized as a separate, diversified portfolio of the
Trust, an open-end management investment company organized as a Massachusetts
business trust in 1984. The Trust reserves the right to create and issue a
number of series of shares, or funds or classes thereof, which are separately
managed and have different investment objectives. The Trust is not required to
and does not intend to hold annual meetings of shareholders, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental policies or approving a management contract. The Trust,
under certain circumstances, will assist in shareholder communications with
other shareholders.

<PAGE> 178
JOHN HANCOCK ADVISERS, INC. ADVISES INVESTMENT COMPANIES HAVING AN
AGGREGATE NET ASSET VALUE OF MORE THAN $13 BILLION.

John Hancock Advisers, Inc. (the "Adviser") was organized in 1968 and
is a wholly-owned indirect subsidiary of the John Hancock Mutual Life Insurance
Company, Inc. (the "Life Company"), a financial services company. The Adviser
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. John Hancock
Funds, Inc. ("John Hancock Funds") distributes shares for all of the John
Hancock mutual funds through brokers which have arrangements with John Hancock
Funds. Certain Trust officers are also officers of the Adviser and John Hancock
Funds.

All investment decisions are made by a committee and no single person
is primarily responsible for making recommendations to the committee.

In order to avoid any conflict with portfolio trades for the Fund, the
Adviser and the Fund have adopted extensive restrictions on personal securities
trading by personnel of the Adviser and its affiliates. Some of these
restrictions are: preclearance for all personal trades and a ban on the
purchase of initial public offerings, as well as contributions to specified
charities of profits on securities held for less than 91 days. These
restrictions are a continuation of the basic principle that the interests of
the Fund and its shareholders come first.

THE FUND'S EXPENSES

For managing its investment affairs, the Fund pays a monthly fee to the
Adviser equal on an annual basis to 0.40% of the Fund's average daily net
assets.

During the Fund's fiscal year ended March 31, 1995, the advisory fee
paid by the Fund was equal to 0.20% of the Fund's average daily net assets,
reflecting the agreement by the Fund's previous investment adviser to reduce
operating expenses and not to impose a portion of its management fee during
that year. The Adviser has voluntarily and temporarily agreed to continue to
limit the Fund's aggregate operating expenses until December 31, 1996 and not
to impose its management fee to the extent necessary to limit the total of the
Fund's management fees and the aggregate operating expenses of the Fund to
0.50% of the Fund's average net assets.

DIVIDENDS AND TAXES

THE FUND GENERALLY DECLARES DIVIDENDS DAILY AND DISTRIBUTES THEM
MONTHLY.

DIVIDENDS. The Fund generally declares daily and distributes monthly
dividends representing all or substantially all of its net investment income.
The Fund will distribute net realized long-term and short-term capital gains,
if any, at least annually.

7
<PAGE> 179

Dividends are reinvested in additional Fund shares unless you elect the
option to receive them in cash. If you elect the cash option and the U.S.
Postal Service cannot deliver your checks, your election will be converted to
the reinvestment option.

TAXATION. Dividends from the Fund's net investment income and net
short-term capital gains are taxable to you as ordinary income and dividends
from the Fund's net long-term capital gains are taxable as long-term capital
gain. These dividends are taxable whether you take them in cash or reinvest in
additional shares. Certain dividends may be paid in January of a given year but
may be taxable as if you received them the previous December.

The Fund has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As a regulated investment company, the Fund will
not be subject to Federal income tax on any net investment income or net
realized capital gains that are distributed to its shareholders within the time
period prescribed by the Code.

When you redeem (sell) or exchange shares, you may realize a taxable
gain or loss.

On the account application, you must certify that the social security
or other taxpayer identification number you provide is your correct number and
that you are not subject to backup withholding of Federal income tax. If you do
not provide this information or are otherwise subject to this withholding, the
Fund may be required to withhold 31% of your dividends and the proceeds of
redemptions or exchanges.

In addition to Federal taxes, you may be subject to state, local or
foreign taxes with respect to your investment in and distributions from the
Fund. Non-U.S. shareholders and tax-exempt shareholders are subject to
different tax treatment not described above. A state income (and possibly local
income and/or intangible property) tax exemption is generally available to the
extent the Fund's distributions are derived from interest on (or, in the case
of intangibles taxes, the value of its assets is attributable to) certain U.S.
Government obligations, provided in some states that certain thresholds for
holdings of such obligations and/or reporting requirements are satisfied. You
should consult your tax adviser for specific advice.

PERFORMANCE

THE FUND MAY ADVERTISE ITS YIELD AND TOTAL RETURN.

Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30 day period by the
maximum offering price per share on the last day of that period. Yield is also
calculated according to accounting methods that are standardized for all stock
and bond funds. Because yield accounting methods differ from the methods used
for other accounting purposes, the Fund's yield may not equal the income paid
on shares or the income reported in the Fund's financial statements.

The Fund's total return shows the overall dollar or percentage change
in value of a hypothetical investment in the Fund, assuming the reinvestment of
all dividends. Cumulative total return shows the Fund's performance over a
period of time. Average annual total return shows the cumulative return divided
over the number of years included in the period. Because average annual total
return tends to smooth out variations in the Fund's performance, you should
recognize that it is not the same as actual year-to-year results.

8
<PAGE> 180

The value of Fund shares, when redeemed, may be more or less than their
original cost. Both yield and total return are historical calculations and
are not an indication of future performance.

HOW TO BUY SHARES

- --------------------------------------------------------------------------------
OPENING AN ACCOUNT

The minimum initial investment is $10,000,000. Complete the Account
Application attached to this Prospectus.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BY CHECK

1. Make your check payable to John Hancock Investor Services
Corporation ("Investor Services"), P.O. Box 9115, Boston, MA,
02205-9115.

2. Deliver the completed application and check to your registered
representative or a broker with an agreement with John Hancock
Funds ("Selling Broker") or mail it directly to Investor Services.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BY WIRE

1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.

2. Instruct your bank to wire funds to:

First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: Adjustable U.S. Government Fund
Your Account Number
Name(s) under which account is registered

3. Deliver the completed application to your registered representative
or Selling Broker or mail it directly to Investor Services.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES

MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)

1. Complete the "Automatic Investing" and "Bank Information" sections
on the Account Privileges Application designating a bank account
from which funds may be drawn.

2. The amount you elect to invest will be automatically withdrawn from
your bank or credit union account.
- --------------------------------------------------------------------------------

9
<PAGE> 181

- --------------------------------------------------------------------------------
BY TELEPHONE

1. Complete the "Invest-By-Phone" and "Bank Information" sections on
the Account Privileges Application designating a bank account from
which your funds may be drawn. Note that in order to invest by phone,
your account must be in a bank or credit union that is a member of the
Automated Clearing House system (ACH).

2. After your authorization form has been processed, you may purchase
additional shares by calling Investor Services toll-free
1-800-225-5291.

3. Give the Investor Services representative the name(s) in which your
account is registered, the Fund name, your account number, and the
amount you wish to invest.

4. Your investment normally will be credited to your account the
business day following your phone request.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BY CHECK

1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the name of
the Fund, your account number and the name(s) in which the account
is registered.

2. Make your check payable to John Hancock Investor Services
Corporation.

3. Mail the account information and check to:

John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115

or deliver it to your registered representative or Selling Broker.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BY WIRE

Instruct your bank to wire funds to:

- --------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks
written on foreign banks will delay purchases until U.S. funds are received,
and a collection charge may be imposed. Shares of the Fund are priced at the
offering price based on the net asset value computed after Investor Services
receives notification of the dollar equivalent from the Fund's custodian
bank. Wire purchases normally take two or more hours to complete and, to be
accepted the same day, must be received by 4:00 P.M., New York time. Your
bank may charge a fee to wire funds. Telephone transactions are recorded to
verify information. Certificates are not issued unless a request is made in
writing to Investor Services.
- --------------------------------------------------------------------------------

<PAGE> 182
YOU WILL RECEIVE ACCOUNT STATEMENTS THAT YOU SHOULD KEEP TO HELP WITH
YOUR PERSONAL RECORDKEEPING.

You will receive a statement of your account after any transaction that
affects your share balance or registration (statements related to reinvestment
of dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.

SHARE PRICE

The net asset value per share ("NAV") is the value of one share. The
NAV is calculated by dividing the net assets of the Fund by the number of
outstanding shares of the Fund. 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 according to procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost, which the Board has determined approximates
market value. The NAV of the Fund is calculated once daily as of the close of
regular trading on the New York Stock Exchange (generally at 4:00 P.M., New
York time) on each day that the Exchange is open.

Shares of the Fund are sold at the offering price based on the NAV
computed after your investment request is received in good order by John
Hancock Funds. If you buy shares of the Fund through a Selling Broker, the
Selling Broker must receive your investment before the close of regular trading
on the New York Stock Exchange and transmit it to John Hancock Funds before its
close of business to receive that day's offering price.

HOW TO REDEEM SHARES

TO ASSURE ACCEPTANCE OF YOUR REDEMPTION REQUEST, PLEASE FOLLOW THESE
PROCEDURES.

You may redeem all or a portion of your shares on any business day.
Your shares will be redeemed at the next NAV calculated after your redemption
request is received in good order by Investor Services. The Fund may hold
payment until it is reasonably satisfied that investments recently made by
check or Invest-by-Phone have been collected (which may take up to 10 calendar
days).

<PAGE> 183
Once your shares are redeemed, the Fund generally sends you payment on
the next business day. When you redeem your shares, you may realize a taxable
gain or loss depending usually on the difference between what you paid for them
and what you receive for them, subject to certain tax rules. Under unusual
circumstances, the Fund may suspend redemptions or postpone payment for up to
seven days or longer, as permitted by Federal securities laws.

- --------------------------------------------------------------------------------
BY TELEPHONE

All Fund shareholders are automatically eligible for the telephone
redemption privilege. Call 1-800-225-5291, from 8:00 A.M. to 4:00 P.M. (New
York time), Monday through Friday, excluding days on which the Exchange is
closed. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account
number, taxpayer identification number applicable to the account and other
relevant information may be requested. In addition, telephone instructions
are recorded.

You may redeem up to $100,000 by telephone, but the address on the
account must not have changed for the last thirty days. A check will be
mailed to the exact name(s) and address shown on the account.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized or
fraudulent telephone instructions. In all other cases, neither the Fund nor
Investor Services will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the telephone transaction
procedures mentioned above.

Telephone redemption is not available for IRAs or other tax-qualified
retirement plans or shares of the Fund that are in certificated form.

- --------------------------------------------------------------------------------
BY WIRE

If you have a telephone redemption form on file with the Fund,
redemption proceeds of $1,000 or more can be wired on the next business day
to your designated bank account, and a fee (currently $4.00) will be
deducted. You may also use electronic funds transfer to your assigned bank
account, and the funds are usually collectible after two business days. Your
bank may or may not charge a fee for this service. Redemptions of less than
$1,000 will be sent by check or electronic funds transfer.

This feature may be elected by completing the "Telephone Redemption"
section on the Account Privileges Application included with this Prospectus.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
IN WRITING

Send a stock power or "letter of instruction" specifying the name of the
Fund, the dollar amount or the number of shares to be redeemed, your name,
your account number and the additional requirements listed below that apply
to your particular account.
- --------------------------------------------------------------------------------

12
<PAGE> 184
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
- -------------------- ------------
<S> <C>
Individual, Joint Tenants, A letter of instruction signed
Sole Proprietorship, (with titles where applicable)
Custodial (Uniform by all persons authorized to
Gifts or Transfer to sign for the account, exactly
Minors Act), General as it is registered with the
Partners signature(s) guaranteed.

Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the
signature(s) guaranteed.

Trusts A letter of instruction signed by the Trustee(s)
with the signature(s) guaranteed. (If the
Trustee's name is not registered on your account,
also provide a copy of the trust document,
certified within the last 60 days.)

- --------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.

A signature guarantee is a widely accepted way to protect you and the
Fund by verifying the signature on your request. It may not be provided by a
notary public. If the net asset value of the shares redeemed is $100,000 or
less, John Hancock Funds may guarantee the signature. The following
institutions may provide you with a signature guarantee, provided that the
institution meets credit standards established by Investor Services: (i) a
bank; (ii) a securities broker or dealer, including a government or municipal
securities broker or dealer, that is a member of a clearing corporation or meets
certain net capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS.

THROUGH YOUR BROKER. Your broker may be able to initiate the
redemption. Contact your broker for instructions.

If you have certificates for your shares, you must submit them with your
stock power or a letter of instructions. You may not redeem certificated shares
by telephone.

Shareholders will be notified before these redemptions are to be made or
this fee is imposed and will have 60 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
- --------------------------------------------------------------------------------

13
<PAGE> 185
ADDITIONAL INFORMATION

As of the date of this Prospectus, John Hancock Adjustable U.S.
Government Trust ("Government Trust") owned 100% of the Fund's shares. As sole
shareholder of the Fund, Government Trust has voting control over certain
matters affecting the Fund as provided under the Investment Company Act of
1940. In addition, since each of the Fund and Government Trust is a series of
the Trust, the Trustees may be called upon from time to time to resolve
possible conflicts between the Fund and the Government Trust. Accordingly, the
Trustees have formed two committees, the "Fund Committee" and the "Government
Trust Committee," each of whose respective members are comprised entirely of
independent trustees who do not serve on the other Committee. The
responsibilities of the Committees are to monitor and protect the interests of
the Fund and Government Trust, respectively. In acting on matters on behalf of
the Fund (or on behalf of Government Trust), the Trustees shall act as
recommended by the Fund Committee (or the Government Trust Committee), as the
case may be.

INVESTMENTS, TECHNIQUES AND RISK FACTORS

ADJUSTABLE RATE SECURITIES. Adjustable rate securities purchased by the
Fund consist principally of mortgage-backed ("pass-through") securities. A
mortgage-backed pass-through security is formed when mortgages are pooled
together and undivided interests in the pool or pools are sold. The cash flow
from the mortgages is passed through to the holders of the securities in the
form of periodic payments of interest and principal and unscheduled early
payments of principal (i.e., "prepayments"). See "Risks Relating to the Fund's
Investments" below. Types of mortgage-backed securities include Ginnie Mae,
Fannie Mae and Freddie Mac pass-through securities. Although these
mortgage-backed securities are guaranteed or issued by U.S. Government agencies
or instrumentalities, Fannie Mae and Freddie Mac securities are not backed by
the "full faith and credit" of the U.S. Government. In such cases, the Fund
must look principally to the agency issuing or guaranteeing the security for
ultimate payment. Other types of adjustable rate securities (as described
below) include: (1) privately issued mortgage-backed securities constituting
ARMs which are backed by a pool of conventional adjustable rate mortgage loans;
(2) asset-backed securities which are primarily loan pool securities that are
issued and guaranteed by a U.S. Government agency, such as the Small Business
Administration; and (3) CMOs and multi-class pass-through securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Other
types of mortgage-backed securities will likely be developed in the future and
the Fund may invest in them if the Adviser determines they are consistent with
the Fund's investment objective and policies. For further descriptions of both
mortgage-backed and U.S. Government asset-backed securities, see below.

INDICES. The interest rates paid on the adjustable rate securities in
which the Fund invests generally are readjusted periodically to an increment
over some predetermined interest rate index. Such readjustments occur at
intervals ranging from one to 60 months. The Fund will invest at least 65% of
its total assets in Government Agency Adjustable Rate Securities and other
adjustable rate securities which in the aggregate have an average dollar
weighted time to next interest rate reset of one year or less. There are three
main categories of indices: (1) those based on U.S. Treasury securities; (2)
those derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates; and (3) those based on actively traded or
prominently posted short-term interest rates. Commonly utilized indices include
the one-year constant maturity U.S. Treasury rates, the three-month U.S.
Treasury bill rate, the 180-day U.S. Treasury bill rate, rates on long-term
U.S. Treasury securities, the 11th District Federal Home Loan Bank Costs of
Funds,

14
<PAGE> 186

the National Meridian Cost of Funds, the one-month, three-month, six-month or
one-year London Interbank Offered Rate (LIBOR), the prime rate of a specified
bank, or commercial paper rates. Some indices, such as the one-year constant
maturity U.S. Treasury rate, closely mirror changes in market interest rate
levels. Others, such as the 11th District Federal Home Loan Bank Costs of Funds
Index, tend to lag behind changes in market rate levels and tend to be somewhat
less volatile. The degree of volatility in the market value of the Fund's
assets and of the net asset value of the Fund's shares will be a function
primarily of the length of the adjustment period and the degree of volatility
in the applicable indices. It will also be a function of the maximum increase
or decrease of the interest rate adjustment on any one adjustment date, in any
one year and over the life of the securities. These maximum increases and
decreases are typically referred to as "caps" and "floors," respectively.

CHARACTERISTICS OF ADJUSTABLE RATE SECURITIES. As the interest rates on
the mortgages or financial assets underlying the Fund's investments are reset
periodically, yields of portfolio securities will gradually align themselves to
reflect changes in market rates and should cause the net asset value of the
Fund to fluctuate less dramatically than it would if the Fund invested in more
traditional long-term, fixed-rate debt securities. In periods of substantial
short-term volatility in short-term interest rates, the value of the portfolio
may fluctuate more substantially since the caps and floors of the adjustable
rate securities in the Fund may not permit the interest rate to adjust to the
full extent of the movements in short-term rates during any one adjustment
period. Accordingly, investors could experience some principal loss or less
gain than might otherwise be achieved if they redeem their shares of the Fund
before the interest rates on the mortgages underlying the Fund's Government ARM
securities are adjusted to reflect prevailing market interest rates. In the
event of dramatic increases in interest rates, the lifetime caps on adjustable
rate securities may prevent such securities from adjusting to prevailing rates
over the term of the loan. In this circumstance, the market value of the
adjustable rate securities held by the Fund may be substantially reduced with a
corresponding decline in the Fund's net asset value.

ARM SECURITIES. Generally, ARMs have a specified maturity date and
amortize principal over their life. ARMs typically provide for a fixed initial
interest rate for either the first 3, 6, 12, 13, 36 or 60 scheduled monthly
payments. Thereafter, the rate of amortization of principal, as well as
interest payments on the remaining principal amount of the ARM, changes in
accordance with movements in a specified index. The amount of interest due to
an ARM security holder is calculated by adding a specified additional amount,
the "margin," to the index, subject to limitations or "caps" on the maximum and
minimum interest that is charged to the mortgagor during the life of the
mortgage or to maximum and minimum changes to that interest rate during a given
period. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization.

PRIVATELY ISSUED COLLATERALIZED MORTGAGE OBLIGATIONS ("PRIVATE CMOS").
Private CMOs are debt obligations collateralized by whole mortgage loans or
pass-through mortgage-backed securities issued or guaranteed by U.S. Government
agencies or issued by private issuers (see discussion of "Privately Issued
Mortgage-backed Securities" below). The issuer of a series of private CMOs may
elect to be treated as a Real Estate Mortgage Investment Conduit ("REMIC").
Multi-class pass-through securities are equity interests in a trust composed of
mortgage loan or other mortgage-backed securities. Payments of principal and
interest on underlying collateral provides the funds to pay debt service on the
CMO or to make scheduled distributions on the multi-class pass-through
security. The term CMO as used in this Prospectus also includes multi-class
pass-through securities. The Fund does not invest in multi-class mortgage
securities which are

15
<PAGE> 187
subordinated to other mortgage securities arising out of the same pool of
mortgages (e.g., "residual" interests). The Fund will limit investments in
privately issued CMOs and REMICs which are collateralized by privately issued
mortgage-backed securities or whole loans of private issuers to 5% of its net
assets. The Fund will invest in private CMOs and REMICs only if they are rated
in the highest categories by a nationally recognized statistical rating
organization (i.e., AAA by Standard & Poor's or Aaa by Moody's).

Privately issued mortgage-backed securities are structured similarly
to, and in most cases represent interests in, Ginnie Mae, Fannie Mae and
Freddie Mac mortgage-backed securities and are issued by originators of and
investors in mortgage loans, including savings and loan associations, mortgage
bankers, commercial banks, investment banks and special purpose subsidiaries of
the foregoing. The Fund will (together with privately issued CMOs and REMICs as
described above) limit investment in privately issued mortgage-backed
securities which do not represent interests in Ginnie Mae or Freddie Mac
mortgage certificates to no more than 5% of its net assets.

U.S. GOVERNMENT ZERO COUPON SECURITIES. U.S. Government zero coupon
securities are created by the separation of the interest and principal
components of a previously issued interest paying security. Investment banks
may also strip U.S. Treasury securities and sell them under proprietary names.
Since such securities may not be as liquid as those which are direct
obligations of the U.S. Government, the Fund will not invest more than 10% of
its total assets in privately created zero coupon U.S. Treasuries and will
include such securities in its limitations with respect to illiquid securities.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES ISSUED BY U.S. GOVERNMENT
AGENCIES AND INSTRUMENTALITIES. The mortgage-backed securities purchased by the
Fund include not only adjustable rate mortgages but also conventional 30-year
fixed rate mortgages, graduated payment mortgages and 15-year mortgages. All of
these mortgages can be used to create pass-through securities.

Certificates of the Government National Mortgage Association (Ginnie
Mae Certificates) are mortgage-backed securities which evidence an undivided
interest in a pool of mortgage loans. Ginnie Mae Certificates differ from bonds
in that principal is paid back monthly by the borrower over the term of the
loan rather than returned in a lump sum at maturity. Ginnie Mae Certificates
entitle the holder to receive a share of all interest and principal prepayments
paid and owed on the mortgage pool, net of fees paid to the "issuer" and Ginnie
Mae, regardless of whether or not the mortgagor actually makes the payment. The
National Housing Act authorized Ginnie Mae to guarantee the timely payment of
principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration (FHA) or the Farmer's Home Administration
(FHMA), or guaranteed by the Veterans Administration (VA). Ginnie Mae
certificates are backed by the full faith and credit of the U.S. Government.
Ginnie Mae is empowered to borrow without limitation from the U.S. Treasury, if
necessary, to make any payments required under its guarantee. In cases where
U.S. Government support of agencies or instrumentalities is discretionary, no
assurance can be given that the U.S. Government will provide financial support,
since it is not legally obligated to do so.

Established in 1938 to create a secondary market in mortgages, the
Federal National Mortgage Association ("Fannie Mae") is a government-sponsored
corporation owned entirely by private stockholders that purchases residential
mortgages from a list of approved seller/servicers. Fannie Mae issues
guaranteed mortgage pass-through certificates (Fannie Mae Certificates). Fannie
Mae Certificates resemble Ginnie Mae Certificates in that each Fannie Mae
Certificate represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. Fannie Mae guarantees timely payment of
interest on Fannie Mae Certificates and the stated principal amount.

16
<PAGE> 188

The Federal Home Loan Mortgage Corporation was created in 1970 through
enactment of Title III of the Emergency Home Finance Act of 1970. Its purpose
is to promote development of a nationwide secondary market in conventional
residential mortgages. Freddie Mac presently issues two types of mortgage
pass-through securities, mortgage participation certificates (PCs) and
guaranteed mortgage certificates. PCs resemble Ginnie Mae Certificates in that
each PC represents a pro rata share of all interest and principal payments made
and owed on the underlying pool. Freddie Mac guarantees timely monthly payment
of interest on PCs and the stated principal amount.

Government asset-backed securities (which are not mortgage-backed
securities) consist primarily of loan pool securities issued or guaranteed by
government agencies and include pass-through securities collateralized by Small
Business Administration (SBA) guaranteed loans whose interest rates adjust in
much the same fashion as described herein with respect to adjustable rate
mortgage securities. Loans underlying such "Loan pool" securities generally
include commercial loans such as working capital loans and equipment loans. SBA
creates loan pool securities from pools of SBA guaranteed portions of loans.
These securities have a guarantee of timely payment of both principal and
interest and are backed by the full faith and credit of the U.S. Government.

A Government CMO is a debt security issued by a U.S. Government
instrumentality ("Government CMO") which is backed by a portfolio of mortgage-
backed securities held under an indenture. The issuer's obligation to make
interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. Government CMOs are issued with a
number of classes (at least four) or series, which have different maturities
and which may represent interests in some or all of the interest or principal
on the underlying collateral or a combination thereof. Government CMOs of
different classes are generally retired in sequence as the underlying mortgage
loans in the mortgage pool are repaid. In the event of sufficient early
prepayments on such mortgages, the class or series of Government CMO first to
mature generally will be retired prior to its maturity. Thus, the early
retirement of a particular class or series of Government CMO held by the Fund
would have the same effect as the prepayment of mortgages underlying a
mortgage-backed pass-through security. Among the Government CMO classes
available are (1) floating (adjustable) rate classes which have characteristics
similar to ARMs and (2) inverse floating rate classes whose coupons vary
inversely with the rate of some market index. REMICs are private entities
formed for the purpose of holding a fixed pool of mortgages secured by an
interest in real property and are similar to CMOs in that they issue multiple
classes of securities. CMOs and REMICs issued by entities other than U.S.
Government agencies or instrumentalities are not considered U.S. Government
securities for purposes of the investment policies of the Fund. Multi-class
pass-through securities are similar to CMOs in that they are generally divided
into several classes; however, they represent equity interests in a pool of
mortgage loans typically held in a trust.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of
its total assets in illiquid investments, which include repurchase agreements
maturing in more than seven days, certain over-the-counter options, certain
stripped mortgage-backed securities, certain restricted securities and
securities not readily marketable. Although the Fund may purchase restricted
securities which can be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act, its present investment restriction
limits such investment to the foregoing 10% limitation.

17
<PAGE> 189

SHORT-TERM TRADING AND FUND TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading of fixed-income securities
should not increase direct transaction costs since fixed-income securities are
normally traded on a principal basis without brokerage commissions. Short-term
trading may have the effect of increasing portfolio turnover rate. The Fund
does not intend to invest for the purpose of seeking short-term profits. The
Fund's investment securities may be changed, however, without regard to the
holding period of these securities (subject to certain tax restrictions), when
the Adviser deems that this action will help achieve the Fund's objective given
a change in an issuer's operations or changes in general market conditions. A
rate of turnover of 100% would occur if the value of the lesser of purchases
and sales of investment securities for a particular year equaled the average
monthly value of investment securities owned during the year (excluding
short-term securities). A high rate of portfolio turnover (100% or more) may
make it more difficult for the Fund to qualify as a regulated investment
company under the Code. The Fund's portfolio turnover rate is set forth in the
table under "Financial Highlights."

LENDING OF SECURITIES AND REPURCHASE AGREEMENTS. For the purpose of
realizing additional income, the Fund may lend to broker-dealers portfolio
securities amounting to not more than 33 1/3% of its total assets taken at
current value or may enter into repurchase agreements. In a repurchase
agreement, the Fund buys a security subject to the right and obligation to sell
it back to the issuer at the same price plus accrued interest. These
transactions must be fully collateralized at all times. The Fund may reinvest
any cash collateral in short-term, liquid debt securities. However, they may
involve some credit risk to the Fund if the other party should default on its
obligation and the Fund is delayed in or prevented from recovering the
collateral. Securities loaned by the Fund will remain subject to fluctuations
of market value.

WHEN-ISSUED SECURITIES. The Fund may purchase securities on a forward
commitment or "when-issued" basis. The Fund will segregate in a separate
account cash or liquid, high grade debt securities equal in value to its
forward commitments and when-issued securities. Purchasing debt securities for
future delivery or on a when-issued basis may increase the Fund's overall
investment exposure and involves a risk of loss if the value of the securities
declines before the settlement date.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS. The Fund may enter into mortgage
"dollar roll" transactions with selected banks and broker-dealers pursuant to
which the Fund sells mortgage-backed securities and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. The Fund will only enter into covered rolls. A
"covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures
on or before the forward settlement date of the dollar roll transaction.

REVERSE REPURCHASE AGREEMENTS. A reverse repurchase agreement involves
the sale of a security by the Fund and its agreement to repurchase the
instrument at a specified time and price. The Fund will maintain a segregated
account consisting of liquid, high grade debt securities to cover its
obligations under reverse repurchase agreements with selected banks or
securities firms approved in advance by the Trustees. The Fund will use the
proceeds to purchase other investments. Reverse repurchase agreements are
considered to be borrowings by the Fund and as an investment practice may be
considered speculative. Repurchase agreements magnify the potential for gain or
loss on the portfolio securities of the Fund and therefore, increase the
possibility of fluctuation in the Fund's net asset value. The Fund may borrow
money for temporary administrative or emergency purposes. To avoid the
potential leveraging effects of the Fund's borrowings, additional investments
will not be made while borrowings are in excess of 5% of the Fund's total
assets. The Fund will limit its investments in reverse repurchase agreements
and other borrowings to no more than 33 1/3% of its total assets.

18
<PAGE> 190

RISKS RELATING TO THE FUND'S INVESTMENTS. The assets of the Fund are
constantly being invested in portfolio securities. The value of the securities
held by the Fund and, therefore, its net asset value per share will fluctuate
with interest rate changes. Therefore, at the time of redemption, an investor's
shares in the Fund may be worth more or less than their value at the time of
purchase. The guarantees of the U.S. Government and its agencies as to payment
of principal and interest of the Fund's U.S. Government securities do not
extend to the value or yield of such securities or of the Fund's shares.
Investments of the Fund are subject to certain risks.

Mortgage-backed securities are subject to the prepayment of principal
on the assets underlying these securities. Prepayment rates are affected by
changes in prevailing interest rates and numerous other economic, geographic,
social and other factors. Changes in the rate of prepayments will generally
affect the yield to maturity of the security. Therefore, as a result of these
prepayment characteristics and their effect on the holders of these securities,
the Fund may experience a high rate of prepayment when interest rates decline
and may therefore face the necessity of reinvesting at a time when rates of
return are relatively low which could result in a reduction in principal if
some securities were acquired at a premium. On the other hand, when such
securities are bought at a discount both scheduled payments of principal and
unscheduled prepayments will increase and total return will accelerate the
recognition of income which, when distributed to shareholders, will be taxable
as ordinary income.

In addition to prepayment characteristics and the interest rate reset
features of mortgage-backed and government asset-backed securities as
previously described (which are also applicable to the mortgage-backed and
asset-backed adjustable rate securities), the market value of adjustable rate
securities and, therefore, the Fund's net asset value may vary to the extent
that the current interest rate on securities differs from market interest rates
during periods between the interest rate reset dates. These variations in value
occur inversely to changes in the market interest rates. Thus, if market
interest rates fall below the current rate on the securities, the value of the
securities will rise. If investors in the Fund sold their shares during periods
of rising rates before an adjustment occurred, such investors may suffer some
loss. The longer the adjustment intervals on adjustable rate securities held by
the Fund, the greater the potential for fluctuations in the Fund's net asset
value. In addition, because of their interest rate adjustment feature,
adjustable rate securities are not an effective means of "locking-in"
attractive interest rates for periods in excess of the adjustment period.

Privately issued mortgage-backed securities constituting ARMs are
backed by a pool of conventional adjustable rate mortgage loans. Since
privately issued mortgage-backed securities typically are not guaranteed by an
entity having the credit status of Ginnie Mae, Fannie Mae and Freddie Mac, such
securities generally are structured with one or more types of credit
enhancement such as guarantees, insurance policies or letters of credit
obtained by the issuer or sponsor from third parties, through various means of
structuring the transaction or through a combination of such approaches.

Stripped securities are issued at a significant discount from their
principal amount in lieu of paying interest periodically; therefore, their
value is subject to greater fluctuations in response to changes in market
interest rates than bonds which pay interest currently. In addition, stripped
securities were only recently developed, and therefore established trading
markets have not yet been fully developed.

INVESTMENT RESTRICTIONS. The Fund has adopted certain fundamental
investment restrictions which are described in detail in the Statement of
Additional Information and may not be changed without shareholder approval.
Among the restrictions provided are that the Fund may not borrow money except
for temporary or emergency purposes in an amount not to exceed 33 1/3% of its
total assets so long as additional

19
<PAGE> 191
investments will not be made when borrowings (including reverse repurchase
agreements) are in excess of 5% of the Fund's total assets.

If a percentage restriction, except a restriction regarding borrowing,
on investments or utilization of assets is adhered to at the time an invest
ment is made or assets are utilized, a later change in percentage resulting
from changes in the value of the Fund's portfolio securities will not be
considered a violation of policy.

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<PAGE> 192

ADJUSTABLE U.S. GOVERNMENT FUND ADJUSTABLE U.S. GOVERNMENT FUND

INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue PROSPECTUS
Boston, Massachusetts 02199-7603 JULY 17, 1995

PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc. A MUTUAL FUND SEEKING
101 Huntington Avenue TO OBTAIN A HIGH LEVEL OF
Boston, Massachusetts 02199-7603 CURRENT INCOME CONSISTENT WITH
LOW VOLATILITY OF PRINCIPAL.
CUSTODIAN
Investors Bank
& Trust Company
24 Federal Street
Boston, Massachusetts 02110

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

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

HOW TO OBTAIN INFORMATION
ABOUT THE FUND

For Service Information
For Telephone Exchange
call 1-800-225-5291 101 HUNTINGTON AVENUE
For Investment-by-Phone BOSTON, MASSACHUSETTS 02199-7603
For Telephone Redemption TELEPHONE 1-800-225-5291

For TDD call 1-800-554-6713

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JOHN HANCOCK INVESTMENT QUALITY BOND FUND

JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT TRUST

CLASS A AND CLASS B SHARES

STATEMENT OF ADDITIONAL INFORMATION

JULY 17, 1995

This Statement of Additional Information ("SAI") provides information about
John Hancock Investment Quality Bond Fund ("Quality Bond Fund") and John
Hancock Adjustable U.S. Government Trust ("Adjustable Government Fund")
(individually, a "Fund" and collectively, the "Funds"), each a diversified
series of John Hancock Bond Fund (the "Trust"), in addition to the information
that is contained in each Fund's Prospectus, dated July 17, 1995.

This SAI is not a prospectus. It should be read in conjunction with each
Fund's Prospectus, a copy of which can be obtained free of charge by writing or
telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

<TABLE>
TABLE OF CONTENTS

<CAPTION>
Cross-
Cross- Referenced to
Statement of Referenced to Adjustable
Additional Quality Bond Government Fund
Information Fund Prospectus Prospectus
Page Page Page
---- ---- ----
<S> <C> <C> <C>

Organization of the Trust . . . . . . . . . . . . . . . . . . . . 2 7 7
Investment Objective and Policies . . . . . . . . . . . . . . . . 2 4 4
Certain Investment Practices . . . . . . . . . . . . . . . . . . 4 25 25
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . 12 4 4
Those Responsible for Management . . . . . . . . . . . . . . . . 16 7 7
Investment Advisory and Other Services . . . . . . . . . . . . . 26 7 7
Distribution Contracts . . . . . . . . . . . . . . . . . . . . . 30 7 7
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 33 14 14
Initial Sales Charge on Class A Shares . . . . . . . . . . . . . 34 12 13

</TABLE>

<PAGE> 194

Deferred Sales Charge on Class B Shares . . . . . . . . . . . . . 35 12 13
Special Redemptions . . . . . . . . . . . . . . . . . . . . . . . 36 22 22
Additional Services and Programs . . . . . . . . . . . . . . . . 36 22 22
Description of the Funds' Shares . . . . . . . . . . . . . . . . 37 7 7
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 10 11
Calculation of Performance . . . . . . . . . . . . . . . . . . . 44 11 12
Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . 49 N/A N/A
Transfer Agent Services . . . . . . . . . . . . . . . . . . . . . 51 Back Cover Back Cover
Custody of Portfolio . . . . . . . . . . . . . . . . . . . . . . 51 Back Cover Back Cover
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . 51 Back Cover Back Cover
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 N/A N/A
Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-1 3 3

</TABLE>

ORGANIZATION OF THE TRUST

The Trust is an open-end management investment company organized as a
Massachusetts business trust under a Declaration of Trust dated December 12,
1984. The Trust currently has six series. Prior to December 22, 1994, Quality
Bond Fund was called Transamerica Quality Bond Fund and Adjustable Government
Fund was called Transamerica Adjustable U.S. Government Trust.

Each Fund is managed by John Hancock Advisers, Inc. (the "Adviser"), a
wholly-owned indirect subsidiary of John Hancock Mutual Life Insurance Company
(the "Life Company"), chartered in 1862 with national headquarters at John
Hancock Place, Boston, Massachusetts. John Hancock Funds, Inc. ("John Hancock
Funds") acts as principal distributor of the shares of each Fund.

INVESTMENT OBJECTIVE AND POLICIES

QUALITY BOND FUND

The investment objective of Quality Bond Fund is to earn a high level
of current income consistent with prudent risk and safety of principal.
Quality Bond Fund invests primarily in "investment quality" fixed income
securities rated within the three highest quality ratings assigned by
recognized rating services such as Standard & Poor's Corporation (AAA, AA or A)
or Moody's Investors Service, Inc., (Aaa, Aa or A) and high quality money
market instruments, including commercial paper, certificates of deposit and
bankers' acceptances. In order to hedge against changes in interest rates, the
Fund may also purchase put and call options and engage in transactions
involving interest rate futures contracts and options on such contracts.

The Fund and the Adviser are of the view that the term "investment
quality," in the Fund's name, denotes an overall dollar-weighted average
portfolio composition of investment grade and that investing in securities
rated less than investment grade (e.g., high yield/high risk securities) is
appropriate in respect of its investment objective so long as the
dollar-weighted average quality of

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its portfolio on a annual basis (notwithstanding unusual circumstances) remains
equal to or more than the lowest investment grade category.

The ratings given to securities by rating agencies represent their
respective opinions of the qualities of the securities they undertake to rate
and are a generally accepted barometer of risk. Nonetheless, such ratings are
general and not absolute standards of quality; their limitations include: (1)
ratings are based largely on historical financial data and may not accurately
reflect the current financial outlook of the issuer; (2) frequent occurrence of
a lag between the time a rating is assigned and the time publication of it is
updated; and (3) large differences may be present among the current financial
conditions of issuers within each rating category. For these reasons, the
Adviser does not rely solely on the ratings assigned by recognized rating
agencies in its evaluation and monitoring of the Fund's investments to assure
that the Fund's overall portfolio is constituted in a manner consistent with
the Fund's investment objective and policies. Additionally, credit quality
limitations applicable to securities do not apply to deposits at the bank or
banks in which cash is maintained by the Fund. Many issuers of fixed income
securities choose not to have their obligations rated. Although unrated
securities eligible for purchase by the Fund must be determined to be
comparable in quality to securities having specified ratings, the market for
unrated securities may not be as broad as for rated securities since many
investors rely on rating agencies for credit appraisal. In determining which
securities to purchase or hold in the Fund's portfolio (including rated or
unrated securities) and in seeking to reduce credit and interest rate risk
consistent with the Fund's investment objective and policies, the Adviser will
rely on information from various sources, including: the rating of the
security; research, analysis and appraisals of brokers and dealers; the views
of the Fund's Trustees and others regarding economic developments and interest
rate trends; and the Adviser's own analysis of factors it deems relevant as it
pertains to achieving the Fund's investment objective(s).

SPECIAL CONSIDERATIONS. Although Quality Bond Fund's investment
policies provide that up to 35% of its total assets may be invested in fixed
income securities rated lower than the three highest categories of either
Standard & Poor's Corporation ("S&P") or Moody's Investors Services, Inc.
("Moody's"), the Fund has no present intention of investing more than 34% of
its net assets in securities rated lower than BBB by S&P or Baa by Moody's
("High Yield/High Risk Securities"). In addition to the risks described in the
Prospectus, (1) the value of high yield/high risk securities may be more
susceptible to real and perceived adverse economic or industry conditions; (2)
because of the absence of an established secondary market, these securities may
have a relatively low trading market liquidity; and (3) low liquidity and
adverse conditions could make it difficult at times to sell certain securities
or result in prices less than those used in valuation of such securities held
by the Fund.

ADJUSTABLE GOVERNMENT FUND

Adjustable Government Fund seeks, as its primary investment objective,
a high level of current income consistent with low volatility of principal.
Adjustable Government Fund pursues its investment objective by investing all of
its assets in Adjustable U.S. Government Fund (the "Portfolio"), which in turn
invests in a portfolio consisting primarily of securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities ("U.S. Government

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Securities.") Under normal circumstances, at least 65% of the Portfolio's
total assets will be invested in adjustable rate mortgage securities ("ARMs")
and pass-through securities representing interests in loan pools and having
periodic interest rate resets, which in each case are U.S. Government
Securities. Shares of the Portfolio (which is also a series of the Trust) are
offered by a separate Prospectus and Statement of Additional Information to
institutional investors only.

OBLIGATIONS OF THE UNITED STATES, ITS AGENCIES AND INSTRUMENTALITIES.
In addition to U.S. Government Securities which are adjustable rate mortgage
securities and other pass through securities representing interests in loan
pools and having periodic interest rate resets, Adjustable Government Fund
(through the Portfolio) may invest in a variety of other securities issued or
guaranteed as to principal and interest by the U.S. Government, its agencies
and instrumentalities. U.S. Treasury Bills, notes and bonds are supported by
the full faith and credit of the United States. Other U.S. Government
Securities are supported either by the full faith and credit of the U.S.
Government (such as securities of the Small Business Administration), the right
of the issuer to borrow from the Treasury (such as securities of the Federal
Home Loan Banks), the discretionary authority of the U.S. Government to
purchase the agency's obligations (such as securities of the Federal National
Mortgage Association), or only the credit of the issuer. No assurance can be
given that the U.S. Government will provide financial support to U.S.
Government agencies, authorities or instrumentalities in the future.

Adjustable Government Fund (through the Portfolio) may also invest in
separately U.S. traded principal and interest components of securities
guaranteed or issued by the U.S. Treasury if such components are traded
independently under the Separate Trading of Registered Interest and Principal
of Securities program ("STRIPS").

Other investments of Adjustable Government Fund (and the Portfolio)
are set forth below under "Certain Investment Practices."

CERTAIN INVESTMENT PRACTICES

SINCE ADJUSTABLE GOVERNMENT FUND INVESTS ALL ITS ASSETS IN THE
PORTFOLIO, THE FOLLOWING INVESTMENT POLICY IS APPLICABLE TO BOTH THE PORTFOLIO
AND QUALITY BOND FUND.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional
income, the Quality Bond Fund and the Portfolio may each, from time to time,
lend securities from their portfolios to brokers, dealers and financial
institutions such as banks and trust companies. Such loans will be secured by
collateral consisting of cash or U.S. Government Securities which will be
maintained in an amount equal to at least 100% of the current market value of
the loaned securities. During the period of each loan, each of the Quality
Bond Fund and the Portfolio will receive the income on both the loaned
securities and the collateral and thereby increase their return. Cash
collateral will be invested in short-term high quality debt securities, which
will increase the current income of the Quality Bond Fund or the Portfolio.
The loans will be terminable by each of the Quality Bond Fund and the Portfolio
at any time and by the borrower on one day's notice. Each of the Quality Bond
Fund and the Portfolio will have the right to regain record ownership of loaned
securities to

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<PAGE> 197

exercise beneficial rights such as rights to interest or other distributions or
voting rights on important issues. Each of the Quality Bond Fund and the
Portfolio may pay reasonable fees to persons unaffiliated with the Quality Bond
Fund or the Portfolio for services in arranging such loans. Lending of
portfolio securities involves a risk of failure by the borrower to return the
loaned securities, in which event the Quality Bond Fund or the Portfolio may
incur a loss.

QUALITY BOND FUND

THE FOLLOWING INVESTMENT POLICIES ARE APPLICABLE ONLY TO THE QUALITY
BOND FUND:

LEVERAGE. As described in the Quality Bond Fund's Prospectus, the
Fund may from time to time increase its ownership of fixed income securities by
borrowing money on an unsecured basis to purchase securities, provided that the
aggregate amount of such borrowing, on the date such borrowing is incurred,
does not exceed 20% of the Fund's total assets and only when (i) the cost of
borrowing is below the yield on securities being purchased at the time of such
borrowing or (ii) the cost of borrowing is equal to or greater than the yield
of securities being purchased at such time, if it is anticipated that long-term
interest rates shortly will decline in order that the Fund may benefit from
possible capital appreciation. Borrowings, for temporary purposes, will only
be made for the purpose set forth in (ii) above with the prior approval of the
Trustees.

The extent of borrowing will depend upon the availability of funds, as
well as the cost of borrowing, compared with the possible benefits the Fund
expects to achieve. Any income derived from the borrowed funds used for
investment purposes by the Fund, in excess of the cost of borrowing, may cause
the Fund's net income to rise more rapidly than if borrowing were not used. If
the income derived from the borrowed funds is not sufficient to cover the cost
of borrowing, the Fund's net income may decline more rapidly than if borrowings
were not used. Should the Fund benefit from capital appreciation, any
investment gain made with the additional monies in excess of their net cost to
the Fund may cause the Fund's net asset value to rise faster than would
otherwise be the case. However, if the investment performance on the borrowed
monies fails to cover their net cost to the Fund, the Fund's net asset value
may decrease faster than would otherwise be the case.

FOREIGN SECURITIES. Foreign investments of the Fund, as discussed in
the Prospectus, may include debt securities issued by supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Steel and Coal Community, the Asian
Development Bank, and the Inter-American Development Bank. The government
members or "stockholders" usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional capital
contributions if the supranational entity is unable to repay its borrowing.
Each supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at the
entity's call), reserves and net income. Foreign securities, like other
securities of the Fund, will be held by the Trust's custodian or by any

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<PAGE> 198

sub-custodian which may hereafter be appointed in accordance with applicable
requirements of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules thereunder.

<TABLE>
OPTIONS TRANSACTIONS. The matrix set forth below relates to the use
of certain major strategies involving options to different interest rate
outlooks by the Fund.

<CAPTION>
INTEREST RATE OUTLOOK
---------------------
DECLINING STABLE RISING
INTEREST INTEREST INTEREST
FUND STRATEGIES RATES RATES RATES
- --------------- --------- -------- --------
<S> <C> <C> <C>
Covered Call Writing
Out-of-the Money X
At-the-Money X
In-the-Money X
Purchase of Puts X
Secured Put Writing
Out-of-the-Money X
At the-Money X
In-the-Money X
Purchase of Calls X
</TABLE>

COVERED CALL WRITING. An investor is engaged in covered call writing
when he sells the right to buy a security that he already owns for a fee or
premium. Because he already owns the security, the call is collateralized or
"covered." The exercise price of the call options may be below
("in-the-money"), equal to ("at-the-money"), or above ("out-of-the-money") the
current market value of the underlying securities at the times the options are
written.

PURCHASE OF PUT. A right to sell a security at a specified price for
a specific period of time.

SECURED PUT WRITING. An investor is engaged in secured put writing
when he accepts the obligation to purchase a security at the exercise price for
a fee or premium and holds cash equivalents in reserve to purchase the
securities. Because the cash is reserved if the option is exercised, the put
is "secured." As in covered call writing, the option can be "in," "at" or "out
of the money."

PURCHASE OF CALL. A right to buy a security at a specified price for
a specific period of time.

SECURITIES OPTIONS. An option position may be closed out only on an
Exchange which provides a secondary market for an option of the same series.
Although the Fund will write call and put options only when the Adviser
believes that a liquid secondary market will exist on an Exchange for options
of the same series so that the Fund can effect a closing purchase transaction
if it desires to close out its positions, there can be no assurance that a
liquid secondary market will

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exist for a particular option at any specific time. If a covered call option
writer is unable to effect a closing purchase transaction, it cannot sell the
underlying security until the option expires or the option is exercised.
Accordingly, a covered call option writer may not be able to sell an underlying
security at a time when it might otherwise be advantageous to do so. A secured
put option writer who is unable to effect a closing purchase transaction would
continue to bear the risk of decline in the market price of the underlying
security until the option expires or is exercised. In addition, a secured put
writer would be unable to utilize the amount held in cash or U.S. Government
Securities as security for the put option for other investment purposes until
the exercise or expiration of the option. In connection with the qualification
of the Fund as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), other restrictions on the Fund's ability to
enter into certain option transactions may apply from time to time (see "Tax
Status").

Possible reasons for the absence of a liquid secondary market on an
Exchange include the following: (a) insufficient trading interest in certain
options; (b) restrictions on transactions imposed by an Exchange; (c) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities; (d) inadequacy of the
facilities of an Exchange or a national clearing corporation to handle trading
volume; or (e) a decision by one or more exchanges to discontinue the trading
of options or impose restrictions on types of orders. Although the Options
Clearing Corporation has stated that it believes, based on forecasts provided
by the Exchanges, that its facilities are adequate to handle the volume of
reasonably anticipated options transactions, and although each Exchange has
advised such clearing corporation that it believes that its facilities will
also be adequate to handle reasonably anticipated volume, there can be no
assurance that higher than anticipated trading activity or order flow or other
unforeseen events might not at times render certain of these facilities
inadequate and thereby result in the institution of special trading procedures
or restrictions which could interfere with the Fund's ability to effect closing
purchase transactions with respect to options written by it.

The Fund will engage in over-the-counter ("OTC") option transactions
only with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York. In the event that any OTC option transaction is not
subject to a forward price at which the Fund has the absolute right to
repurchase the OTC option which it has sold, the value of the OTC option
purchased and of the Fund's assets used to "cover" the OTC option will be
considered "illiquid securities." The "formula" on which the forward price
will be based may vary among contracts with different primary dealers, but it
will be based on a multiple of the premium received by the Fund for writing the
option plus the amount, if any, of the option's intrinsic value, i.e., current
market value of the underlying securities minus the option's stock price.

The Fund's securities options transactions may be subject to
limitations established by each of the Exchanges governing the maximum number
of options in each class which may be held by a single investor or group of
investors acting in concert. Thus, the ability of the Fund to enter into
transactions involving options on debt securities may be limited by
transactions engaged in by the Adviser on behalf of its other investment
advisory clients. An Exchange may order the liquidation of positions found to
be in excess of these limits, and it may impose certain other sanctions.

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<PAGE> 200

INTEREST RATE FUTURES CONTRACTS CHARACTERISTICS. Currently, futures
contracts can be purchased and sold with respect to U.S. Treasury bonds, U.S.
Treasury notes, and GNMA's on the Chicago Board of Trade and with respect to
U.S. Treasury bills on the International Monetary Market at the Chicago
Mercantile Exchange.

In contrast to the purchase or sale of a security, no price is paid or
received by Quality Bond Fund upon the purchase or sale of a futures contract.
Rather, the Fund will initially be required to deposit with the Trust's broker
an amount of cash or U.S. Treasury bills equal to approximately 5% of the
contract amount. This is called "initial margin." Such initial margin is in
the nature of a performance bond or good faith deposit on the contract, which
is returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. In addition, because under
current futures industry practice daily variations in gains and losses on open
contracts are required to be reflected in cash in the form of variation margin
payments, the Fund may be required to make additional payments during the term
of the contract to the broker. Such payments would be required in the event
that the price of an underlying debt security declined during the term of a
debt security futures contract purchased by the Fund or in the event that the
price of an underlying debt security has risen during the term of a debt
security futures contract sold by the Fund. In all instances involving the
purchase of futures contracts or call options on futures contracts by the Fund,
an amount of cash together with such other securities as may be permitted by
applicable regulatory authorities to be utilized for such purpose, at least
equal to the market value of the futures contracts, will be deposited in a
segregated account with the Fund's Custodian to collateralize the position. At
any time prior to the expiration of a futures contract, the Fund may elect to
close its position by taking an opposite position which will operate to
terminate the Fund's positions in the futures contract. See "Risks Relating to
Transactions in Futures Contracts" below.

RISKS RELATING TO TRANSACTIONS IN FUTURES CONTRACTS. There are
several risks in connection with the use of interest rate futures contracts by
the Fund. One risk arises due to the imperfect correlation between movements
in the prices of futures contracts and movements in the prices of the
underlying U.S. Government Securities. The price of a futures contract may
move more than or less than the price of the securities being hedged. If the
price of the futures moves less than the price of the securities which are the
subject of the hedge, the hedge will not be fully effective. On the other
hand, if the price of the securities being hedged has moved in an unfavorable
direction to the Fund, the Fund would be in a better position than if it had
not hedged at all. If the price of the future moves more than the price of the
security, the Fund will experience either a gain or loss on the future which
will not be completely offset by movements in the price of the securities which
are the subject of the hedge. In addition to the possibility that there may be
an imperfect correlation between movements in prices of futures contracts and
portfolio securities being hedged, it is also possible that if the Fund has
hedged, the market prices of futures contracts may be affected by certain
factors. If participants in the futures market elect to close out their
contracts through offsetting transactions rather than meet margin deposit
requirements, distortions in the normal relationship between the debt
securities and futures markets could result. Price distortions could also
result if investors in futures contracts opt to make or take delivery of
underlying securities rather than engage in closing transactions due to the
resultant reduction in the liquidity of the futures market. In addition, due
to the fact that, from the

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<PAGE> 201

point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of the
U.S. Government Securities and movements in the prices of futures contracts, a
correct forecast of interest rate trends by the Adviser may still not result in
a successful hedging transaction.

FOREIGN CURRENCY TRANSACTIONS. As discussed in Quality Bond Fund's
Prospectus, securities denominated in non-U.S. currencies, whether issued by a
non-U.S. or a U.S. issuer, may be affected favorably or unfavorably by changes
in currency rates and exchange control regulations, and costs will be incurred
in connection with conversions from one currency into another. Foreign
currency exchange rates are determined by forces of supply and demand on the
foreign exchange markets. These forces are, in turn, affected by the
international balance of payments and other economic and financial conditions;
government intervention; speculation and other factors. Generally, the foreign
currency exchange transactions of the Fund will be conducted on a spot basis
(i.e., cash basis) at the spot rate for purchasing or selling currency
prevailing in the foreign currency exchange market. The Fund may also enter
into forward currency contracts to purchase or sell foreign currencies (i.e.,
non-U.S. currencies) as a hedge against possible variations in foreign exchange
rates. A forward foreign currency exchange contract is an agreement between
the contracting parties to exchange an amount of currency at some future time
at an agreed upon rate. The rate can be higher or lower than the spot rate
between the currencies that are the subject of the contract. A forward
contract generally has no deposit requirement, and such transactions do not
involve commissions. By entering into a forward contract for the purchase or
sale of the amount of foreign currency invested in a foreign security
transaction, the Fund can hedge against possible variations in the value of the
dollar versus the subject currency either between the date the foreign security
is purchased or sold and the date on which payment is made or received or
during the time the Fund holds the foreign security. Hedging against a decline
in the value of a currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions
preclude the opportunity for gain if the value of the hedged currency should
rise. The Fund will not speculate in forward currency contracts. If the Fund
enters into a "position hedging transaction," which is the sale of forward
non-U.S. currency with respect to a portfolio security denominated in such
foreign currency, its custodian bank will place cash or liquid equity or debt
securities in a separate account of the Fund in an amount equal to the value of
the Fund's total assets committed to the consummation of such forward contract.
If the value of the securities placed in the account declines, additional cash
or securities will be placed in the account so that the value of the account
will equal the amount of the Fund's commitments with respect to such contracts.
The Fund will not enter into a forward contract for a term of more than one
year. The Fund will enter into such transactions only to the extent deemed
appropriate by its Adviser.

ADJUSTABLE GOVERNMENT FUND

THE FOLLOWING INVESTMENT POLICIES ARE APPLICABLE ONLY TO THE PORTFOLIO
THROUGH WHICH ADJUSTABLE GOVERNMENT FUND INVESTS ALL ITS ASSETS.

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<PAGE> 202

SECURITIES TRANSACTIONS SUBJECT TO DELAYED SETTLEMENT. As described
under "Investments, Techniques and Risk Factors" in the Prospectus for the
Adjustable Government Fund, securities purchased for which the normal
settlement date occurs later than the settlement date which is normal for U.S.
Treasury obligations and the securities held in the Portfolio are subject to
changes in value (both experiencing appreciation when interest rates decline
and depreciation when interest rates rise) based upon the public's perception
of the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Purchasing securities subject to delayed settlement
can involve a risk that the yields available in the market when the delivery
takes place may actually be higher than those obtained in the transaction
itself. A separate account of the Portfolio consisting of cash or liquid debt
securities equal to the amount of the delayed settlement commitments will be
established at the Trust's custodian bank. For the purpose of determining the
adequacy of the securities in the account, the deposited securities will be
valued at market value using the valuation procedures for all other
investments. If the market or fair value of such securities declines,
additional cash or highly liquid securities will be placed in the account daily
so that the value of the account will equal the amount of such commitments by
the Portfolio. On the settlement date of these delayed settlement securities,
the Portfolio will meet its obligations from then available cash flow, sale of
securities held in the separate account, sale of other securities or, although
it would not normally expect to do so, from sale of the delayed settlement
securities themselves (which may have a value greater or lesser than the
Portfolio's payment obligations). Sale of securities to meet such obligations
will generally result in the realization of capital gains or losses.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Portfolio may
purchase securities on a when- issued or forward commitment basis.
"When-issued" refers to securities whose terms are available and for which a
market exists, but which have not been issued. The Portfolio will engage in
when-issued transactions with respect to securities purchased for its portfolio
in order to obtain what is considered to be an advantageous price and yield at
the time of the transaction. For when-issued transactions, no payment is made
until delivery is due, often a month or more after the purchase. In a forward
commitment transaction, the Portfolio contracts to purchase securities for a
fixed price at a future date beyond customary settlement time.

When the Portfolio engages in forward commitment and when-issued
transactions, it relies on the seller to consummate the transaction. The
failure of the issuer or seller to consummate the transaction may result in the
Portfolio losing the opportunity to obtain a price and yield considered to be
advantageous. The purchase of securities on a when-issued and forward
commitment basis also involves a risk of loss if the value of the security to
be purchased declines prior to the settlement date.

On the date the Portfolio enters into an agreement to purchase
securities on a when-issued or forward commitment basis, the Portfolio will
segregate in a separate account cash or liquid, high grade debt securities
equal in value to the Portfolio's commitment. These assets will be valued
daily at market, and additional cash or securities will be segregated in a
separate account to the extent that the total value of the assets in the
account declines below the amount of the

10
<PAGE> 203

when-issued commitments. Alternatively, the Portfolio may enter into
offsetting contracts for the forward sale of other securities that it owns.

REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase
agreements. A repurchase agreement is a contract under which the Portfolio
would acquire a security for a relatively short period (generally not more than
7 days) subject to the obligation of the seller to repurchase and the Portfolio
to resell such security at a fixed time and price (representing the Portfolio's
cost plus interest). The Portfolio will enter into repurchase agreements only
with member banks of the Federal Reserve System and with securities dealers.
The Adviser will continuously monitor the creditworthiness of the parties with
whom the Portfolio enters into repurchase agreements. The Portfolio has
established a procedure providing that the securities serving as collateral for
each repurchase agreement must be delivered to the Portfolio's custodian either
physically or in book-entry form and that the collateral must be marked to
market daily to ensure that each repurchase agreement is fully collateralized
at all times. In the event of bankruptcy or other default by a seller of a
repurchase agreement, the Portfolio could experience delays in liquidating the
underlying securities and could experience losses, including the possible
decline in the value of the underlying securities during the period in which
the Portfolio seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and the expense of
enforcing its rights.

REVERSE REPURCHASE AGREEMENTS. As briefly described in its
Prospectus, the Portfolio may also enter into reverse repurchase agreements
which involve the sale of securities held in its portfolio to a bank or
securities firm with an agreement that the Portfolio 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 Portfolio. The Portfolio
will use proceeds obtained from the sale of securities pursuant to reverse
repurchase agreements to purchase other investments. The use of borrowed funds
to make investments is a practice known as "leverage," which is considered
speculative. Use of reverse repurchase agreements is an investment technique
that is intended to increase income. Thus, the Portfolio will enter into a
reverse repurchase agreement only when the Adviser determines that the interest
income to be earned from the investment of the proceeds is greater than the
interest expense of the transaction. However there is a risk that interest
expense will nevertheless exceed the income earned. Reverse repurchase
agreements involve the risk that the market value of securities purchased by
the Portfolio with proceeds of the transaction may decline below the repurchase
price of the securities sold by the Portfolio which it is obligated to
repurchase. The Portfolio would also continue to be subject to the risk of a
decline in the market value of the securities sold under the agreements because
it will reacquire those securities upon effecting their repurchase. To
minimize various risks associated with reverse repurchase agreements, the
Portfolio would establish and maintain with the Portfolio's custodian a
separate account consisting of highly liquid, marketable securities in an
amount at least equal to the repurchase prices of the securities (plus any
accrued interest thereon) under such agreements. In addition, the Portfolio
would not enter into reverse repurchase agreements exceeding in the aggregate
33 1/3% of the value of its total net assets (including for this purpose other
borrowings of the Portfolio). The Portfolio will enter into reverse repurchase
agreements only with selected registered broker/dealers or with federally
insured banks or savings and loan associations which

11
<PAGE> 204

are approved in advance as being creditworthy by the Trustees. Under
procedures established by the Trustees, the Adviser will monitor the
creditworthiness of the firms involved.

INVESTMENT RESTRICTIONS

Quality Bond Fund, Adjustable Government Fund and the Portfolio have
each adopted the following fundamental investment restrictions. These
restrictions may not be changed without approval by holders of a "majority of
the outstanding shares" of the applicable Fund. A majority for this purpose
means the holders of: (a) more than 50% of the outstanding shares, or (b) 67%
or more of the shares represented at a meeting where more that 50% of the
outstanding shares are represented, whichever is less. Whenever the Adjustable
Government Fund is requested to vote on a change in a fundamental investment
restriction of the Portfolio, the Adjustable Government Fund will hold a
meeting of its shareholders and will cast a vote as instructed by its
shareholders.

THE QUALITY BOND FUND MAY NOT:

1. Invest more than 25% of total assets in the securities of issuers in
any one industry. For purposes of this restriction, gas, electric,
water and telephone utilities will each be treated as separate
industries. This restriction does not apply to obligations issued or
guaranteed by the United States government, its agencies or
instrumentalities.

2. Make short sales of securities or purchase securities on margin,
except for such short-term loans as are necessary for the clearance of
purchases of portfolio securities. Borrowing for the purpose of
purchasing securities within the limitations described under
"Investments, Techniques and Risk Factors" in the Prospectus to the
Quality Bond Fund shall not be prohibited by this investment
restriction.

3. Engage in the underwriting of securities except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.

4. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities which are
secured by real estate or interests therein.

5. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in securities of companies which invest in or sponsor such programs.

6. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition
of assets.

7. Invest for the purpose of exercising control or management of another
company.

8. Invest in securities of any company if, to the knowledge of the Trust,
any officer or director of the Trust or its Adviser owns more than 1/2
of 1% of the outstanding securities

12
<PAGE> 205

of such company, and all such officers and directors own in the
aggregate more than 5% of the outstanding securities of such company.

9. Issue senior securities, as defined in the 1940 Act, except that the
Fund may enter into repurchase and reverse repurchase agreements, lend
portfolio securities, and leverage and borrow as described under
"Investments, Techniques and Risk Factors" in the Prospectus for the
Fund.

10. Make loans of money or securities, except by (a) the purchase of fixed
income obligations; (b) investing in repurchase agreements; or (c) lending
its portfolio securities. See "Investments, Techniques and Risk Factors"
in the Prospectus for the Fund.

11. Purchase or sell commodities or commodity futures contracts except
financial futures and options on such futures for hedging purposes under
policies developed by the Trust's Board of Trustees.

12. Invest more than 5% of its total assets in the securities of any one
issuer (other than obligations of, or guaranteed by, the U.S. government,
its agencies or instrumentalities) or purchase more than 10% of the voting
securities or more than 10% of any class of securities of any one issuer.

13. Invest more than 5% of its total assets in securities of companies having
a record, together with predecessors, of less than three years continuous
operation. This restriction shall not apply to any obligation of the
United States government, its agencies or instrumentalities.

14. Invest more than 5% of its total assets in restricted securities.

15. Issue senior securities, as defined in the 1940 Act, except that the Fund
may enter into repurchase and reverse repurchase agreements, lend
portfolio securities, and leverage and borrow. For purposes of this
restriction, the Fund will not borrow money except as provided under the
Fund's policies regarding leverage (up to 20% of the Fund's total assets),
and reverse repurchase agreements (up to 33-1/3% of the Fund's net assets)
so long as total borrowings do not exceed 33-1/3% of the Fund's net
assets.

NEITHER THE ADJUSTABLE GOVERNMENT FUND NOR THE PORTFOLIO MAY:

1. borrow money, except that as a temporary measure for extraordinary or
emergency purposes either the Fund or the Portfolio may borrow from
banks in aggregate amounts at any one time outstanding not exceeding
33 1/3% of the total assets (including the amount borrowed) of the
Fund or the Portfolio, respectively, valued at market; and neither the
Fund nor the Portfolio may purchase any securities at any time when
borrowings exceed 5% of the total assets of the Fund or the Portfolio,
respectively (taken at market value). This borrowing restriction does
not prohibit the use of reverse repurchase agreements (see "Reverse
Repurchase Agreements"). For purposes of this investment restriction,
forward

13
<PAGE> 206

commitment transactions shall not constitute borrowings. Interest
paid on any borrowings will reduce the Fund's net investment income;

2. make short sales of securities or purchase any security on margin,
except that the Fund or the Portfolio may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of
securities (this restriction does not apply to securities purchased on
a when-issued basis);

3. underwriter securities issued by other persons, except insofar as the
Fund or the Portfolio may technically be deemed an underwriter under
the Securities Act of 1933 in selling a security, and except that the
Fund may invest all or substantially all of its assets in another
registered investment company having substantially the same investment
objectives as the Fund;

4. make loans to other persons except (a) through the lending of
securities held by the Fund or the Portfolio, (b) through the purchase
of debt securities in accordance with the respective investment
policies of the Fund and the Portfolio (the entry into repurchase
agreements is not considered a loan for purposes of this restriction);

5. with respect to 75% of its total assets, purchase the securities of
any one issuer (except securities issued or guaranteed by the U.S.
Government and its agencies or instrumentalities, as to which there
are no percentage limits or restrictions) if immediately after and as
a result of such purchase (a) more than 5% of the value of its assets
would be invested in that issuer, or (b) the Fund or the Portfolio
would hold more than 10% of the outstanding voting securities of that
issuer, except that the Fund may invest all or substantially all of
its assets in another registered investment company having
substantially the same investment objectives as the Fund;

6. purchase or sell real estate (including limited partnership interests)
other than securities secured by real estate or interests therein
including mortgage-related securities or interests in oil, gas or
mineral leases in the ordinary course of business (the Fund and the
Portfolio each reserves the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities);

7. invest more than 25% of its total assets in the securities of issuers
whose principal business activities are in the same industry
(excluding obligations of the U.S. Government, its agencies and
instrumentalities and repurchase agreements) except that the Fund may
invest all or substantially all of its assets in another registered
investment company having substantially the same objectives as the
Fund;

8. issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder;

14
<PAGE> 207

9. invest in illiquid securities, including repurchase agreements
maturing in more than seven days but excluding securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933, if, as
a result thereof, more than 10% of the net assets (taken at market
value at the time of each investment of the Fund or the Portfolio, as
the case may be) would be invested in such securities, except that the
Fund may invest all or substantially all of its assets in another
registered investment company having substantially the same investment
restrictions as the Fund; or

10. Invest in securities of any company if, to the knowledge of the Trust,
any officer or director of the Trust or its Adviser owns more than 1/2
of 1% of the outstanding securities of such company, and all such
officers and directors own in the aggregate more than 5% of the
outstanding securities of such company.

The Adjustable Government Fund and the Portfolio have also adopted the
following additional operating restrictions that may be required by various
state laws and administrative positions. These operating restrictions are not
fundamental policies and may be changed by the Fund without approval of its
shareholders and by the Portfolio without the approval of the Fund or any other
investors in the Portfolio.

Under those operating restrictions, neither the Fund nor the Portfolio
may:

(a) invest in companies for the purpose of exercising control or
management, except that the Fund may invest all or substantially all
of its assets in another registered investment company having
substantially the same investment restrictions as the Fund;

(b) make investments in the securities of other investment companies,
except that the Fund may invest all or substantially all of its assets
in another registered investment company having substantially the same
investment restrictions as the Fund and except as otherwise permitted
by the 1940 Act or in connection with a merger, consolidation, or
reorganization;

(c) invest in securities of issuers (other than U.S. Government
Securities) having a record of less than three years of continuous
operation (for this purpose, the period of operation of any issuer
shall include the period of operation of any predecessor or
unconditional guarantor of such issuer) if, regarding all securities,
more than 5% of the total assets (taken at market value at the time of
each investment) of the Fund or the Portfolio, as the case may be
would be invested in such securities, except that the Fund may invest
all or substantially all of its assets in another registered
investment company having substantially the same investment
restrictions as the Fund;

(d) invest in commodities and commodity futures contracts, put or call
options or any combination thereof;

15
<PAGE> 208

(e) mortgage, pledge, hypothecate or in any manner transfer, as security
for indebtedness, any securities owned by the Fund or the Portfolio
except as may be necessary in connection with borrowings mentioned in
investment restriction no. 1 above; or

(f) purchase warrants of any issuer, except on a limited basis, if, as a
result, more than 2% of the value of its total assets would be
invested in warrants which are not listed on the New York Stock
Exchange and more than 5% of the value of its total assets would be
invested in warrants, whether or not so listed, such warrants in each
case to be valued at the lesser of cost or market, but assigning no
value in each case to warrants acquired by the Fund in units or
attached to debt securities.

Pursuant to an undertaking with a certain state, neither the Fund nor
the Portfolio will invest more than 15% of its respective net assets in
illiquid and restricted securities so long as shares of the Fund are registered
for sale in such state.

__________________________

THOSE RESPONSIBLE FOR MANAGEMENT

The business of each Fund is managed by the Trustees who elect
officers who are responsible for the day-to-day operations of each Fund and who
execute policies formulated by the Trustees. Several of the officers and
Trustees of Quality Bond Fund, Adjustable Government Fund and the Portfolio are
also officers and directors of the Adviser or officers and directors of John
Hancock Funds.

Set forth below is the principal occupation or employment of the
Trustees and officers of the Trust during the past five years.

16
<PAGE> 209

<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Edward J. Boudreau, Jr.* Trustee, Chairman and Chief
101 Huntington Avenue Chairman and Executive Officer, the
Boston, MA 02199 Chief Executive Adviser and The
Officer(1)(2) Berkeley Financial Group
("The Berkeley Group"); Chairman,
NM Capital Management, Inc. ("NM
Capital"); John Hancock Advisers
International Limited ("Advisers
International"); John Hancock
Funds, Inc.; John Hancock
Investor Services Corporation
("Investor Services"); and
Sovereign Asset Management
Corporation ("SAMCorp");
(hereinafter the Adviser, the
Berkeley Group, NM Capital,
Advisers International, John
Hancock Funds, Inc., Investor
Services and SAMCorp are
collectively referred to as the
"Affiliated Companies");
Chairman, First Signature Bank &
Trust; Director, John Hancock
Freedom Securities Corporation,
John Hancock Capital Corporation,
New England/Canada Business
Council; Member, Investment
Company Institute Board of
Governors; Trustee, Museum of
Science; President, the Adviser
(until July 1992); Trustee or
Director of other investment
companies managed by the Adviser;
and Chairman, John Hancock
Distributors, Inc. (until April,
1994).
</TABLE>

17
<PAGE> 210

<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
James F. Carlin Trustee Chairman and CEO, Carlin
233 West Central Street Consolidated, Inc.
Natick, MA 01760 (insurance); Director, Arbella
Mutual Insurance Company
(insurance), Consolidated Group
Trust (group health plan), Carlin
Insurance
Agency, Inc. and West
Insurance Agency, Inc.;
Receiver, the City of Chelsea
(until August 1992); and
Trustee or Director of other
investment companies managed by
the Adviser.

William H. Cunningham Trustee Chancellor, University of
601 Colorado Street Texas System and former
O'Henry Hall President of the University of
Austin, TX 78701 Texas, Austin, Texas; Regents
Chair in Higher Education
Leadership; James L. Bayless
Chair for Free Enterprise;
Professor of Marketing and Dean
College of Business
Administration/Graduate School of
Business (1983-1985); Centennial
Chair in Business Education
Leadership, 1983-1985; Director,
LaQuinta Motor Inns, Inc. (hotel
management company); Director,
Jefferson-Pilot Corporation
(diversified life insurance
company); Director, Freeport-
McMoran Inc. (oil and gas
company); Director, Barton Creek
Properties, Inc. (1988-1990)
(real estate development) and LBJ
Foundation Board (education
</TABLE>

18
<PAGE> 211

Charles L. Ladner Trustee(3) Director, Energy North, Inc.
UGI Corporation (public utility holding
460 North Gulph Road company); Senior Vice
King of Prussia, PA 19406 President, Finance UGI Corp.
(public utility holding company)
(until 1992); and Trustee or
Director of other
investment companies managed by
the Adviser.

Leo E. Linbeck, Jr. Trustee Chairman, President, Chief
3810 W. Alabama Executive Officer and
Houston, TX 77027 Director, Linbeck Corporation (a
holding company engaged in
various phases of the
construction industry and
warehousing interests); Director
and Chairman, Federal Reserve
Bank of Dallas; Chairman of the
Board and Chief Executive
Officer, Linbeck Construction
Corporation; Director, Panhandle
Eastern Corporation (a
diversified energy company);
Director, Daniel Industries, Inc.
(manufacturer of gas measuring
products and energy related
equipment); Director, GeoQuest
International, Inc. (a
geophysical consulting firm); and
Director, Greater Houston
Partnership.
</TABLE>

19
<PAGE> 212

<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Patricia P. McCarter Trustee(3) Director and Secretary, the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer); and Trustee or
Malvern, PA 19355 Director of other investment
companies managed by the Adviser.

Steven R. Pruchansky Trustee(1)(3) Director and Treasurer, Mast
360 Horse Creek Drive, #208 Holdings, Inc.; Director,
Naples, FL 33942 First Signature Bank & Trust
Company (until August 1991);
General Partner, Mast Realty
Trust; President,
Maxwell Building Corp. (until
1991); and Trustee or Director
of other investment companies
managed by the Adviser.

Norman H. Smith Trustee(3) Lieutenant General, USMC,
Rt. 1, Box 249 E Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve Affairs,
Headquarters Marine Corps;
Commanding General III Marine
Expeditionary Force/3rd Marine
Division (retired 1991); and
Trustee or Director of other
investment companies managed
by the Adviser.

20
<PAGE> 213

<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
December, 1991); Director, Smith
Barney, Inc., Mutual Management
Company and Smith, Barney
Advisers, Inc. (investment
advisers) (retired 1991); and
Senior Executive Vice President,
Director and member of the
Executive Committee, Smith
Barney, Harris Upham & Co.,
Incorporated (investment bankers)
(until 1991); and Trustee or
Director of other
investment companies managed by the Adviser.

Robert G. Freedman* Vice Chairman President and Chief
101 Huntington Avenue and Chief Investment Officer, the
Boston, MA 02199 Investment Adviser.
Officer(2)

Anne C. Hodsdon* President(2) Vice President and Chief
101 Huntington Avenue Operations Officer, the
Boston, MA 02199 Adviser.

James B. Little* Senior Vice Senior Vice President, the
101 Huntington Avenue President and Adviser.
Boston, MA 02199 Chief Financial
Officer

Thomas H. Drohan* Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary, the Adviser.
Boston, MA 02199 Secretary

Michael P. DiCarlo* Senior Vice Senior Vice President, the
101 Huntington Avenue President(2) Adviser.
Boston, MA 02199

Edgar Larsen* Senior Vice Senior Vice President, the
101 Huntington Avenue President Adviser.
Adviser.
Boston, MA 02199
</TABLE>

21
<PAGE> 214
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
B.J. Willingham* Senior Vice Senior Vice President, the
101 Huntington Avenue President Adviser. Formerly, Director
Boston, MA 02199 and Chief Investment Officer of
Transamerica Fund Management Company.

James J. Stokowski* Vice President Vice President, the Adviser.
101 Huntington Avenue and Treasurer
Boston, MA 02199

Susan S. Newton* Vice President Vice President and Assistant
101 Huntington Avenue and Compliance Secretary, the Adviser.
Boston, MA 02199 Officer

John A. Morin* Vice President. Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
<FN>
- ---------------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of Trust, the Executive Committee may generally exercise
most of the powers of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
</TABLE>

All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Trustees and officers may also be officers
and/or directors and/or trustees of one or more of the other funds for which
the Adviser serves as investment adviser.

As of June 30, 1995, there were 9,792,225 Class A shares and 877,221 Class B
shares of the Investment Quality Bond Fund and 1,817,177 Class A shares and
938,578 Class B shares of Adjustable U.S. Government Trust outstanding and
officers and Trustees of the Trust as a group beneficially owned less than 1%
of the outstanding shares of the Trust and of each of the Funds. At such date,
the following shareholders held, as record owner, 5% or more of the shares of
the respective Funds:

22
<PAGE> 215

Percentage Ownership
Investment Quality Bond Fund, Class B: of Outstanding Shares
- -------------------------------------- ---------------------
<S> <C>
Merrill Lynch Pierce Fenner & Smith, Inc. 17.08%
Trade House Account - Book Entry
Team B - 3rd Floor
4800 DeerLake Drive East
Jacksonville, FL 32246-6484

Adjustable U.S. Government Trust, Class A
- -----------------------------------------

NFSC FEBO # A1R-096814 12.42%
First Trust Company TTEE
Perspective Advisory Co
Datalynx #006
P.O. Box 173736
Denver CO 80217-3736

NFSC FEBO # A1R-018473 10.00%
First Trust Corp & Co.
#006-001
Datalynx
P.O. Box 173736
Denver CO 80217-3736

Merrill Lynch Pierce Fenner & Smith, Inc. 9.04%
Trade House Account - Book Entry
Team B - 3rd Floor
PO Box 173736
Jacksonville, FL 32246-6484

NFSC FEBO # A1R-018538 7.04%
First Trust Corp.
#006-002
P.O. Box 173736
Denver CO 80217-3736

NFSC FEBO # A1R-018546 5.85%
First Trust Corp.& Co.
#006-002
P.O. Box 173736
Denver CO 80217-3736

</TABLE>

23
<PAGE> 216

<TABLE>

<S> <C>
San Diego County Credit Union 5.56%
9985 Pacific Hiegits Blvd.
San Diego CA 92121-4337

Standard Savings Bank 5.47%
ATNN Danny Lau
228 W. Garvey Ave
Monterey Park CA 91757-1603

Adjustable U.S. Government Trust, Class B
- -----------------------------------------

Merrill Lynch Pierce Fenner & Smith, Inc. 6.72%
Trade House Account - Book Entry
Team B - 3rd Floor
PO Box 173736
Jacksonville, FL 32246-6484

</TABLE>

As of December 22, 1994, the Trustees have established an Advisory Board
which acts to facilitate a smooth transition of management over a two-year
period (between Transamerica Fund Management Company ("TFMC"), the prior
investment adviser of each Fund, and the Adviser). The members of the Advisory
Board are distinct from the Board of Trustees, do not serve the Funds in any
other capacity and are persons who have no power to determine what securities
are purchased or sold on behalf of a Fund. Each member of the Advisory Board
may be contacted at 101 Huntington Avenue, Boston, Massachusetts 02199.

Members of the Advisory Board and their respective principal occupations
during the past five years are as follows:

R. Trent Campbell, President, FMS, Inc. (financial and management
services); former Chairman of the Board, Mosher Steel Company.

Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman
from Texas; co-founder, Houston Parents' League; former board member
of various civic and cultural organizations in Houston, including the
Houston Symphony, Museum of Fine Arts and YWCA. Mrs. Bentsen is
presently active in various civic and cultural activities in the
Washington, D.C. area, including membership on the Area Board for The
March of Dimes and is a National Trustee for the Botanic Gardens of
Washington, D.C.

Thomas R. Powers, Formerly Chairman of the Board, President and
Chief Executive Officer, TFMC; Director, West Central Advisory Board,
Texas Commerce Bank; Trustee, Memorial Hospital System; Chairman of
the Board of Regents of Baylor University; Member, Board of Governors,
National Association of Securities Dealers, Inc.; Formerly, Chairman,
Investment Company Institute; formerly, President, Houston Chapter of
Financial Executive Institute.

24
<PAGE> 217

Thomas B. McDade, Chairman and Director, TransTexas Gas Company;
Director, Houston Industries and Houston Lighting and Power Company;
Director, TransAmerican Companies (natural gas producer and
transportation); Member, Board of Managers, Harris County Hospital
District; Advisory Director, Commercial State Bank, El Campo; Advisory
Director, First National Bank of Bryan; Advisory Director, Sterling
Bancshares; Former Director and Vice Chairman, Texas Commerce
Bancshares; and Vice Chairman, Texas Commerce Bank.

COMPENSATION OF THE BOARD OF TRUSTEES AND ADVISORY BOARD

<TABLE>

The following table provides information regarding the compensation paid by the Fund and the other investment companies in the John
Hancock Fund Complex to the Independent Trustees and the Advisory Board members for their services. Mr. Boudreau, a
non-Independent Trustee, and each of the officers of the Funds are interested persons of the Adviser, are compensated by the Adviser
and received no compensation from the Funds for their services.

<CAPTION>
Total Compensation
Aggregate Aggregate from all Funds in
Compensation from Compensation from Pension or Retirement John Hancock Fund
Adjustable US Investment Quality Benefits Accrued as Part Complex to
Trustees Government Trust Bond Fund of the Fund s Expenses Trustees**
- -------- ----------------- ------------------ ------------------------ ------------------
<S> <C> <C> <C> <C>
James F. Carlin $ 207 $ 702 $ 0 $ 60,450
William H. Cunningham 1,429 3,603 1,823 0
Charles L. Ladner 224 766 0 60,450
Leo E. Linbeck, Jr. 2,940 6,108 0 0
Patricia P. McCarter 224 766 0 60,200
Steven R. Pruchansky 234 798 0 62,450
Norman H. Smith 234 798 0 62,450
John P. Toolan 0 0 918 60,450
------- -------- ------- ---------
$ 5,492 $ 13,541 $ 2,741 $ 366,450
<FN>

**The total compensation paid by the John Hancock Fund Complex to the Independent Trustees is $366,450 as of the calendar year
ended December 31, 1994. All Trustees/Directors except Messrs. Cunningham and Linbeck are Trustees/Directors of 39 funds in the
John Hancock Fund Complex. Messrs. Cunningham and Linbeck are Trustees/Directors of 21 funds. (The Fund was not part of the John
Hancock Fund Complex until December 22, 1994 and Messrs. Cunningham and Linbeck were not trustees or directors of any funds in the
John Hancock Fund Complex prior to December 22, 1994.)

</TABLE>

25
<PAGE> 218

Total
Aggregate Compensation
Aggregate Compensation from all Funds in
Compensation from from Investment Pension or Retirement John Hancock
Adjustable U.S. Quality Bond Benefits Accrued as Part Fund Complex to
Advisory Board Government Trust Fund of the Fund s Expenses Trustees**
- -------------- ----------------- --------------- ------------------------ -----------------
<S> <C> <C> <C> <C>
R. Trent Campbell $244 $ 1,739 $ 0 $ 54,000
Mrs. Lloyd Bentsen 244 1,739 0 54,000
Thomas R. Powers 244 1,739 0 54,000
Thomas B. McDade 244 1,739 0 54,000
---- ------- --- ---------
TOTAL $976 $ 6,956 0 $ 216,000

</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT MANAGEMENT CONTRACT. Quality Bond Fund and the Portfolio
(referred to under this sub- caption individually as a "Fund," and collectively
as, the "Funds") receive their investment advice from the Adviser. Investors
should refer to the applicable Prospectus for a description of certain
information concerning the investment management contracts. Each of the
Trustees and principal officers affiliated with the Funds who is also an
affiliated person of the Adviser is named above, together with the capacity in
which such person is affiliated with the Funds, the Adviser or TFMC (each
Fund's prior investment adviser).

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and has more than $13 billion in assets under
management in its capacity as investment adviser to the Funds and the other
mutual funds and publicly traded investment companies in the John Hancock group
of funds having a combined total of over 1,060,000 shareholders. The Adviser
is a wholly-owned subsidiary of The Berkeley Financial Group, which is in turn
a wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which is in turn
a wholly-owned subsidiary of the Life Company, one of the most recognized and
respected financial institutions in the nation. With total assets under
management of $80 billion, the Life Company is one of the ten largest life
insurance companies in the United States and carries high ratings fromStandard
& Poor's and A.M. Best. Founded in 1862, the Life Company has been serving
clients for over 130 years.

The Trust on behalf of each Fund has entered into an investment
management contract with the Adviser. Under the investment management
contracts, the Adviser provides the Funds with (i) a continuous investment
program, consistent with each Fund's stated investment objective and policies,
(ii) supervision of all aspects of each Fund's operations except those that are
delegated to a custodian, transfer agent or other agent and (iii) such
executive, administrative and clerical personnel, officers and equipment as are
necessary for the conduct of each Fund's business. The Adviser is responsible
for the day-to-day management of the portfolio assets of Quality Bond Fund and
the Portfolio.

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<PAGE> 219

No person other than the Adviser and its directors and employees
regularly furnishes advice to the Funds with respect to the desirability of a
Fund investing in, purchasing or selling securities. The Adviser may from time
to time receive statistical or other similar factual information, and
information regarding general economic factors and trends, from the Life
Company and its affiliates.

Under the terms of the investment management contract with the Trust
on behalf of each Fund, the Adviser provides the Fund with office space,
equipment and supplies and other facilities and personnel required for the
business of the Fund. The Adviser pays the compensation of all officers and
employees of the Trust and pays the expenses of clerical services relating to
the administration of the Funds. All expenses which are not specifically paid
by the Adviser and which are incurred in the operation of a Fund including, but
not limited to, (i) the fees of the Independent Trustees of the Trust, (ii) the
fees of the members of the Fund's Advisory Board (described above) and (iii)
the continuous public offering of the shares of the Fund are borne by such
Fund. Subject to the conditions set forth in a private letter ruling that the
Funds have received from the Internal Revenue Service relating to their
multiple-class structure, class expenses properly allocable to any Class A or
Class B shares will be borne exclusively by such class of shares.

<TABLE>

As provided by the investment management contract, Quality Bond Fund
pays the Adviser an investment management fee, which is accrued daily and paid
monthly in arrears, equal on an annual basis to a percentage of the Fund's
average daily net asset value as follows:

<CAPTION>
Average Daily Net Assets of Fee
Quality Bond Fund (annual rate)
- ----------------- -------------
<S> <C>
Not exceeding $75 million . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6250%
$75 million but not exceeding $150 million . . . . . . . . . . . . . . . . . 0.5625%
$150 million and over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5000%
</TABLE>

As provided by the investment management contract, the Portfolio pays
the Adviser an investment management fee, which is accrued daily and paid
monthly in arrears, equal on an annual basis to 0.40% of the Portfolio's
average daily net asset value.

The Adviser may voluntarily and temporarily reduce its advisory fee or
make other arrangements to limit a Fund's expenses to a specified percentage of
average daily net assets. The Adviser retains the right to re-impose the
advisory fee and recover any other payments to the extent that, at the end of
any fiscal year, such Fund's annual expenses fall below this limit.

In the event normal operating expenses of a Fund, exclusive of certain
expenses prescribed by state law, are in excess of any 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 any additional arrangements necessary to eliminate any remaining excess
expenses. Currently, the most restrictive limit applicable to the Funds is
2.5% of the first

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<PAGE> 220

$30,000,000 of the Fund's average daily net asset value, 2% of the next
$70,000,000 and 1.5% of the remaining average daily net asset value.

Pursuant to the investment management contract, the Adviser is not
liable to a Fund or its shareholders for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to
which the contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the performance of
its duties or from its reckless disregard of the obligations and duties under
the applicable contract.

The initial term of each investment management contract expires on
December 22, 1996 and each investment management contract will continue in
effect from year to year thereafter if approved annually by a vote of a
majority of the Independent Trustees of the Trust cast in person at a meeting
called for the purpose of voting on such approval, and by either a majority of
the Trustees or the holders of a majority of the Fund's outstanding voting
securities. Each management contract may, on 60 days' written notice, be
terminated at any time without the payment of any penalty to the applicable
Fund by vote of a majority of the outstanding voting securities of such Fund,
by the Trustees or by the Adviser. Each management contract terminates
automatically in the event of its assignment.

Securities held by the Funds may also be held by other funds or
investment advisory clients for which the Adviser or its affiliates provide
investment advice. Because of different investment objectives or other
factors, a particular security may be bought for one or more funds or clients
when one or more are selling the same security. If opportunities for purchase
or sale of securities by the Adviser or for other funds or clients for which
the Adviser renders investment advice arise for consideration at or about the
same time, transactions in such securities will be made, insofar as feasible,
for the respective funds or clients in a manner deemed equitable to all of
them. To the extent that transactions on behalf of more than one client of the
Adviser or its respective affiliates may increase the demand for securities
being purchased or the supply of securities being sold, there may be an adverse
effect on price.

Under the investment management contracts, the Funds may use the name
"John Hancock" or any name derived from or similar to it only for so long as
the applicable investment management contract or any extension, renewal or
amendment thereof remains in effect. If a Fund's investment management
contract is no longer in effect, the Fund (to the extent that it lawfully can)
will cease to use such name or any other name indicating that it is advised by
or otherwise connected with the Adviser. In addition, the Adviser or the Life
Company may grant the non-exclusive right to use the name "John Hancock" or any
similar name to any other corporation or entity, including but not limited to
any investment company of which the Life Company or any subsidiary or affiliate
thereof or any successor to the business of any subsidiary or affiliate thereof
shall be the investment adviser.

For the fiscal years ended March 31, 1993, 1994 and 1995 advisory fees
payable by Quality Bond Fund to TFMC, the Fund's former investment adviser,
amounted to $660,259, $668,868, and 432,568, respectively. During the fiscal
year ended March 31, 1995, advisory fees paid to the Adviser amounted to
$144,190.

28
<PAGE> 221

For the fiscal years ended March 31, 1993, 1994, and 1995, advisory
fees payable by the Portfolio to TFMC, the Portfolio's former investment
adviser, amounted to $123,662, $184,072, and $86,085, respectively; and during
the fiscal year ended March 31, 1995, advisory fees paid to the Adviser
amounted to $28,694. However, a portion of such fees were not imposed pursuant
to the voluntary fee and expense limitation arrangements then in effect (see
"The Portfolio's and the Fund's Expenses" in the Adjustable Government Fund
Prospectus).

Adjustable Government Fund has retained the services of John Hancock
Advisers, Inc. ("John Hancock Advisers") as administrator, but has not retained
its services as an investment adviser since Adjustable Government Fund seeks to
achieve its investment objective by investing all of its assets in the
Portfolio.

ADMINISTRATION AGREEMENT FOR ADJUSTABLE GOVERNMENT FUND. Pursuant to
an administration agreement, dated December 22, 1994, John Hancock Advisers
provides Adjustable Government Fund with general office facilities and
supervises the overall administration of the Fund including, among other
responsibilities, the negotiation of contracts and fees with, and the
monitoring of performance and billings of the independent contractors and
agents of Adjustable Government Fund, the preparation and filing of all
documents required for compliance by Adjustable Government Fund with applicable
laws and regulations and arranging for the maintenance of books and records
(other than accounting books and records) of Adjustable Government Fund. John
Hancock Advisers pays all compensation of the Trustees, officers and employees
of Adjustable Government Fund who are affiliated persons of John Hancock
Advisers.

Under the administration agreement, John Hancock Advisers receives
from Adjustable Government Fund, a fee at an annual rate of 0.10% of the Fund's
average daily net assets, subject to the expense limitation provisions
described below. For the fiscal years ended March 31, 1993, 1994, and 1995,
respectively, administration fees paid by Adjustable Government Fund to TFMC,
the Fund's former administrator, amounted to $30,977, $46,091, and $21,511,
respectively; and John Hancock Advisers received $7,171 for the year ended
March 31, 1995, however, all such fees were not imposed pursuant to the
voluntary fee and expense limitation arrangements then in effect (see "The
Portfolio's and the Fund's Expenses" in the Adjustable Government Fund
Prospectus).

Under the administration agreement, neither John Hancock Advisers nor
its personnel is liable for any error of judgment or mistake of law or for any
act or omission in the administration of Adjustable Government Fund except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or from reckless disregard of its obligations and duties under the
administration agreement.

ADMINISTRATIVE SERVICES AGREEMENT. Each of Quality Bond Fund,
Adjustable Government Fund and the Portfolio was a party to an administrative
services agreement with TFMC (the "Services Agreement"), pursuant to which TFMC
performed bookkeeping and accounting services and functions, including
preparing and maintaining various accounting books, records and other documents
and keeping such general ledgers and portfolio accounts as are

29
<PAGE> 222

reasonably necessary for the operation of Quality Bond Fund, Adjustable
Government Fund or the Portfolio, as the case may be. Other administrative
services included communications in response to shareholder inquiries and
certain printing expenses of various financial reports. In addition, such
staff and office space, facilities and equipment was provided as necessary to
provide the required administrative services. The Services Agreement was
amended in connection with the appointment of the Adviser as adviser to each
Fund and the administrator to Adjustable Government Fund to permit services
under the Agreement to be provided by the Adviser and its affiliates. The
Services Agreement was terminated during the current fiscal year.

For the fiscal years ended March 31, 1993, 1994 and 1995, Quality Bond
Fund paid to TFMC (pursuant to the Services Agreement) $83,509, $82,370, and
$50,685, respectively, of which $66,409, $67,013, and $40,897, respectively,
was paid to TFMC and $17,100, $15,357, and $9,788, respectively, were paid for
certain data processing and pricing information services.

For fiscal years ended March 31, 1993, 1994, and 1995, Adjustable
Government Fund paid to TFMC (pursuant to the Services Agreement) $42,650,
$18,021, and 9,604, respectively, of which $40,524, $14,730 and $8,164,
respectively, was paid to TFMC and $2,126, $3,291 and $1,440, respectively,
were paid for certain data processing and pricing information services.

For fiscal years ended March 31, 1993, 1994, and 1995, the Portfolio
paid TFMC (pursuant to the Services Agreement) $37,033, $38,012, and $24,461,
respectively, of which $26,189, $26,722 and $17,704, respectively, was paid to
TFMC and $10,844, $11,290, and $6,757, respectively, were paid for certain data
processing and pricing information services.

DISTRIBUTION CONTRACTS

DISTRIBUTION CONTRACTS. Each Fund's shares are sold on a continuous
basis at the public offering price. John Hancock Funds, a wholly-owned
subsidiary of the Adviser, has the exclusive right, pursuant to Distribution
Contracts dated December 22, 1994 (the "Distribution Contracts"), to purchase
shares from the Funds at net asset value for resale to the public or to
broker-dealers at the public offering price. Upon notice to all broker-dealers
("Selling Brokers") with whom it has sales agreements, John Hancock Funds may
allow such Selling Brokers up to the full applicable sales charge during
periods specified in such notice. During these periods, such Selling Brokers
may be deemed to be underwriters as that term is defined in the Securities Act
of 1933.

Each Distribution Contract was initially adopted on behalf of the
applicable Fund by the affirmative vote of the Trust's Trustees including the
vote of a majority of Independent Trustees cast in person at a meeting called
for such purpose. Each Distribution Contract shall continue in effect until
December 22, 1994 and from year to year thereafter if approved by either the
vote of the respective Fund's shareholders or the Trustees, including the vote
of a majority of Independent Trustees of any such party, cast in person at a
meeting called for. Each Distribution Contract may be terminated at any time,
without penalty, by either party upon sixty (60) days' written notice or by a
vote of a majority of the outstanding voting securities of the applicable Fund
and terminates automatically in the case of an assignment by John Hancock
Funds.

30
<PAGE> 223

Total underwriting commissions for sales of Quality Bond Fund's Class
A shares for the fiscal years ended March 31, 1993, 1994, and 1995 were
$925,685, $355,258, and $78,495, respectively. Of such amounts $97,163,
$37,666, and $8,693, respectively, were retained by Quality Bond Fund's former
distributor, Transamerica Fund Distributors, Inc. (or the current distributor
in 1995) and the remainder was reallowed to dealers.

Total underwriting commissions for sales of Adjustable Government
Fund's Class A shares for the fiscal years ended March 31, 1993, 1994, and 1995
were $303,663, $59,793 and $24,555, respectively. Of such amounts $37,148,
$7,455, and $4,090, respectively, were retained by Adjustable Government Fund's
former distributor, Transamerica Fund Distributors, Inc. (or the current
distributor in 1995) and the remainder was reallowed to dealers.

DISTRIBUTION PLAN. The Board of Trustees, including the Independent
Trustees of each Fund, approved new distribution plans pursuant to Rule 12b-1
under the 1940 Act for Class A shares ("Class A Plan") and Class B shares
("Class B Plan"). Such Plans were approved by a majority of the outstanding
shares of each respective class on December 16, 1994 and became effective on
December 22, 1994.

Under the Class A Plans, the distribution or service fee will not
exceed an annual rate of 0.25% of the average daily net asset value of the
Class A shares of the Funds (determined in accordance with each Fund's
Prospectus as from time to time in effect). Any expenses under a Fund's Class
A Plan not reimbursed within 12 months of being presented to the Fund for
repayment are forfeited and not carried over to future years. Under a Fund's
Class B Plan, the distribution or service fee to be paid by the Fund will not
exceed an annual rate of 1.00% of the average daily net assets of the Class B
shares of the Fund (determined in accordance with such Fund's prospectus as
from time to time in effect); provided that the portion of such fee used to
cover Service Expenses (described below) shall not exceed an annual rate of
0.25% of the average daily net asset value of the Class B shares of the Fund.
John Hancock Funds has agreed to limit the payment of expenses pursuant to
Adjustable Government Fund's Class B Plan to 0.90% of the average daily net
assets of the Class B shares of such Fund. Under a Fund's Class B Plan, the
fee covers the Distribution and Service Expenses (described below) and interest
expenses on unreimbursed distribution expenses. In accordance with generally
accepted accounting principles, neither Fund treats unreimbursed distribution
expenses attributable to Class B shares as a liability of the Fund and does not
reduce the current net assets of Class B by such amount although the amount may
be payable in the future.

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<PAGE> 224

of John Hancock Funds related to the distribution of Fund shares (v)
distribution expenses that were incurred by a Fund's former distributor and not
recovered through payments under the Class A or Class B former plans or through
receipt of contingent deferred sales charges; and (vi) in the event that any
other investment company (the "Acquired Fund") sells all or substantially all
of its assets to, merges with or otherwise engages in a combination with a
Fund, distribution expenses originally incurred in connection with the
distribution of the Acquired Fund's shares. Service Expenses under the Plans
include payments made to, or on account of, account executives of selected
broker-dealers (including affiliates of John Hancock Funds) and others who
furnish personal and shareholder account maintenance services to shareholders
of the relevant class of the Fund.

During the fiscal year ended March 31, 1995, total payments made under
the Class A Plan by Quality Bond Fund to TFMC amounted to $168,131. Total
payments made under the current Class A rule 12b-1 plan to the current
distributor amounted to $49,986 and, of such amount, (1) $10,053 represented
payments for Advertising and promotion expenses, (2) $463 represented payments
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $181 represented payments for compensation to selling
brokers, (4) $39,199 represented expenses of Distributors (5) $0 represented
interest, carrying, or other finance charges.

During the fiscal year ended March 31, 1995, total payments made under
the Class A Plan by Adjustable Government Fund to TFMC amounted to $35,201.
Total payments made under the current Class A rule 12b-1 plan to the current
distributor amounted to 9,013 and, of such amount, (1) $1,884 represented
payments for Advertising and promotion expenses, (2) $64 represented payments
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $126 represented payments for compensation to selling
brokers, (4) $6,939 represented expenses of Distributors (5) $0 represented
interest, carrying, or other finance charges.

During the fiscal year ended March 31, 1995, total payments made under
the Class B Plan by Quality Bond fund to TFMC amounted to $52,358. Total
payments made under the current Class B Rule 12b-1 plan to the current
distributor amounted to $17,190 and, of such amount, (1) $1,250 represented
payments for Advertising and promotion expenses, (2) $47 represented payments
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $6,975 represented payments for compensation to selling
brokers, (4) 4,553 represented expenses of Distributors (5) $4,365 represented
interest, carrying, or other finance charges.

During the fiscal year ended March 31, 1995, total payments made under
the Class B Plan by Adjustable Government Fund to TFMC amounted to $77,264.
Total payments made under the current Class B Rule 12b-1 plan to the current
distributor amounted to $21,693 and, of such amount, (1) $1,254 represented
payments for Advertising and promotion expenses, (2) $46 represented payments
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $5,027 represented payments for compensation to selling
brokers, (4) $4,892 represented expenses of Distributors (5) $10,474
represented interest, carrying, or other finance charges.

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<PAGE> 225

Each Plan provides that it will continue in effect only so long as its
continuance is approved at least annually by a majority of both the Trustees
and the Independent Trustees. Each Plan provides that it may be terminated (a)
at any time by vote of a majority of the Trustees, a majority of the
Independent Trustees, or a majority of the respective Class' outstanding voting
securities or (b) by John Hancock Funds on 60 days' notice in writing to a
Fund. Each Plan further provides that it may not be amended to increase the
maximum amount of the fees for the services described therein without the
approval of a majority of the outstanding shares of the class of a Fund which
has voting rights with respect to the Plan. Each Plan provides that no
material amendment to the Plan will, in any event, be effective unless it is
approved by a majority vote of the Trustees and the Independent Trustees of the
Trust. The holders of Class A shares and Class B shares have exclusive voting
rights with respect to the Plan applicable to their respective class of shares.
By adopting the Plans, the Board of Trustees has determined that, in its
judgment, there is a reasonable likelihood that each Plan will benefit the
holders of the applicable class of shares of the applicable Fund.

Information regarding the services rendered under the Plans and the
Distribution Contracts and the amounts paid therefore by the respective Class
of each Fund are provided to, and reviewed by, the Board of Trustees on a
quarterly basis. In its quarterly review, the Board of Trustees considers the
continued appropriateness of the Plans and the Distribution Contracts and the
level of compensation provided therein.

When the Trust seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Trustees. The members of the
Committee on Administration are all Independent Trustees and identified in this
Statement of Additional Information under the heading "Those Responsible for
Management."

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable. The NAV of
Adjustable Government Fund will reflect the value of the Portfolio's portfolio
securities.

Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine valuations
for normal institutional size trading units of debt securities without
exclusive reliance upon quoted prices.

Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost, which approximates market
value. If market quotations are not readily available or if in the opinion of
the Adviser any quotation or price is not representative of true market value,
the fair value of the security may be determined in good faith in accordance
with procedures approved by the Trustees.

33
<PAGE> 226

In the case of Quality Bond Fund, any assets or liabilities expressed
in terms of foreign currencies are translated into U.S. dollars by the
custodian bank based on London currency exchange quotations as of 5:00 p.m.,
London time (12:00 noon, New York time) on the date of any determination of
Quality Bond Fund's NAV.

The Funds will not price their securities on the following national
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. On any day
an international market is closed and the New York Stock Exchange is open, any
foreign securities will be valued at the prior day's close with the current
day's exchange rate. Trading of foreign securities may take place on Saturdays
and U.S. business holidays on which a Fund's NAV is not calculated.
Consequently, Quality Bond Fund's portfolio securities may trade and the NAV of
such Fund's redeemable securities may be significantly affected on days when a
shareholder has no access to the Fund.

INITIAL SALES CHARGE ON CLASS A SHARES

INITIAL SALES CHARGE ON CLASS A SHARES. The sales charges applicable
to purchases of Class A shares of a Fund are described in each Fund's Class A
and Class B Prospectus. Methods of obtaining reduced sales charges referred to
generally in the Prospectus are described in detail below. In calculating the
sales charge applicable to current purchases of Class A shares, the investor is
entitled to cumulate current purchases with the greater of the current value
(at offering price) of the Class A shares of a Fund, or if Investor Services is
notified by the investor's dealer or the investor at the time of the purchase,
the cost of the Class A shares owned.

COMBINED PURCHASES. In calculating the sales charge applicable to
purchases of Class A shares made at one time, the purchases will be combined if
made by (a) an individual, his or her spouse and their children under the age
of 21 purchasing securities for his or her own account, (b) a trustee or other
fiduciary purchasing for a single trust, estate or fiduciary account and (c)
certain groups of four or more individuals making use of salary deductions or
similar group methods of payment whose funds are combined for the purchase of
mutual fund shares. Further information about combined purchases, including
certain restrictions on combined group purchases, is available from Investor
Services or a Selling Broker's representative.

WITHOUT SALES CHARGE. As described in each Fund's Prospectus, Class A
shares of a Fund may be sold without a sales charge to certain persons
described in the Prospectus.

ACCUMULATION PRIVILEGE. Investors (including investors combining
purchases) who are already Class A shareholders may also obtain the benefit of
the reduced sales charge by taking into account not only the amount then being
invested but also the purchase price or value of the Class A shares already
held by such person.

COMBINATION PRIVILEGE. Reduced sales charges (according to the
schedule set forth in each Class A and Class B Prospectus) also are available
to an investor based on the aggregate

34
<PAGE> 227

amount of his concurrent and prior investments in Class A shares of a Fund and
shares of all other John Hancock funds which carry a sales charge.

LETTER OF INTENTION. The reduced sales loads are also applicable to
investments made over a specified period pursuant to a Letter of Intention
(LOI), which should be read carefully prior to its execution by an investor.
Each Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a period of thirteen (13) months. Investors who are using the
Funds as funding mediums for a qualified retirement plan, however, may opt to
make the necessary investments called for by the LOI over a forty-eight (48)
month period. These qualified retirement plans include IRA's, SEP, SARSEP,
TSA, 401(k) plans, TSA plans and 457 plans. Such an investment (including
accumulations and combinations) must aggregate $50,000 or more invested during
the specified period from the date of the LOI or from a date within ninety (90)
days prior thereto, upon written request to Investor Services. The sales
charge applicable to all amounts invested under the LOI is computed as if the
aggregate amount intended to be invested had been invested immediately. If
such aggregate amount is not actually invested, the difference in the sales
charge actually paid and the sales charge payable had the LOI not been in
effect is due from the investor. However, for the purchases actually made
within the specified period (either 13 or 48 months), the sales charge
applicable will not be higher than that which would have been applied
(including accumulations and combinations) had the LOI been for the amount
actually invested.

The LOI authorizes Investor Services to hold in escrow sufficient
Class A shares (approximately 5% of the aggregate) to make up any difference in
sales charges on the amount intended to be invested and the amount actually
invested, until such investment is completed within the specified period, at
which time the escrow shares will be released. If the total investment
specified in the LOI is not completed, the Class A shares held in escrow may be
redeemed and the proceeds used as required to pay such sales charge as may be
due. By signing the LOI, the investor authorizes Investor Services to act as
his attorney-in-fact to redeem any escrow shares and adjust the sales charge,
if necessary. A LOI does not constitute a binding commitment by an investor to
purchase, or by a Fund to sell, any additional shares and may be terminated at
any time.

DEFERRED SALES CHARGE ON CLASS A SHARES

Investments in Class B shares are purchased at net asset value per
share without the imposition of a sales charge so that a Fund will receive the
full amount of the purchase payment.

CONTINGENT DEFERRED SALES CHARGE. Class B shares which are redeemed
within six years for Investment Quality Bond Fund and within four years for
Adjustable Government Fund of date of purchase will be subject to a contingent
deferred sales charge ("CDSC") at the rates set forth in the relevant Class A
and Class B Prospectus as a percentage of the dollar amount subject to the
CDSC. The charge will be assessed on an amount equal to the lesser of the
current market value or the original purchase cost of the Class B shares being
redeemed. Accordingly, no CDSC will be imposed on increases in account value
above the initial purchase prices, including Class B shares derived from
reinvestment of dividends or capital gains distributions.

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<PAGE> 228

The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the
time of redemption of such shares. Solely for purposes of determining the
number of years from the time of any payment for the purchases of shares, all
payments during a month will be aggregated and deemed to have been made on the
last day of the month.

Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by John Hancock Funds to defray its expenses related to
providing distribution-related services to a Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees facilitates the ability of a Fund to sell the
Class B shares without a sales charge being deducted at the time of the
purchase. See the relevant Class A and Class B Prospectus for additional
information regarding the CDSC.

SPECIAL REDEMPTIONS

Although it would not normally do so, each Fund has the right to pay
the redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed the Trustees. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any
such securities would be valued for the purposes of making such payment at the
same value as used in determining net asset value. Each Fund has elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which each Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund during any 90 day period for any one account.

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE. As described more fully in each Prospectus, each
Fund permits exchanges of shares of any class of the Fund for shares of the
same class in any other John Hancock fund offering that class.

SYSTEMATIC WITHDRAWAL PLAN. As described briefly in each Class A and
Class B Prospectus, each Fund permits the establishment of a Systematic
Withdrawal Plan. Payments under this plan represent proceeds arising from the
redemption of Fund shares. Since the redemption price of Fund shares may be
more or less than the shareholder's cost, depending upon the market value of
the securities owned by a Fund at the time of redemption, the distribution of
cash pursuant to this plan may result in realization of gain or loss for
purposes of Federal, state and local income taxes. The maintenance of a
Systematic Withdrawal Plan concurrently with purchases of additional Class A or
Class B shares of a Fund could be disadvantageous to a shareholder because of
the initial sales charge payable on such purchases of Class A shares and the
CDSC imposed on redemptions of Class B shares and because redemptions are
taxable events. Therefore, a shareholder should not purchase Fund shares at
the same time as a Systematic Withdrawal Plan is in effect. Each Fund reserves
the right to modify or discontinue the Systematic Withdrawal Plan of any
shareholder on 30 days' prior written notice to such

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shareholder, or to discontinue the availability of such plan in the future.
The shareholder may terminate the plan at any time by giving proper notice to
Investor Services.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM ("MAAP"). This program is
explained fully in each Fund's Class A and Class B Prospectus and the Account
Privileges Application. The program, as it relates to automatic investment
checks, is subject to the following conditions:

The investments will be drawn on or about the day of the month indicated.

The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice
if any investment is not honored by the shareholder's bank. The bank shall be
under no obligation to notify the shareholder as to the non-payment of any
check.

The program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is received
at least five (5) business days prior to the due date of any investment.

REINVESTMENT PRIVILEGE. A shareholder who has redeemed Fund shares
may, within 120 days after the date of redemption, reinvest without payment of
a sales charge any part of the redemption proceeds in shares of the same class
of a Fund or another John Hancock mutual fund, subject to the minimum
investment limit in that fund. The proceeds from the redemption of Class A
shares may be reinvested at net asset value without paying a sales charge in
Class A shares of a Fund or in Class A shares of another John Hancock mutual
fund. If a CDSC was paid upon a redemption, a shareholder may reinvest the
proceeds from that redemption at net asset value in additional shares of the
class from which the redemption was made. The shareholder's account will be
credited with the amount of any CDSC charged upon the prior redemption and the
new shares will continue to be subject to the CDSC. The holding period of the
shares acquired through reinvestment will, for purposes of computing the CDSC
payable upon a subsequent redemption, include the holding period of the
redeemed shares. A Fund may modify or terminate the reinvestment privilege at
any time.

A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes even if the reinvestment privilege is exercised,
and any gain or loss realized by a shareholder on the redemption or other
disposition of Fund shares will be treated for tax purposes as described under
the caption "Tax Status."

DESCRIPTION OF THE FUNDS' SHARES

Ownership in the Funds is represented by transferable shares of
beneficial interest. The Declaration of Trust permits the Trustees to create
an unlimited number of series and classes of shares of the Trust and, with
respect to each series and class, to issue an unlimited number of full or
fractional shares and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial
interests of the series.

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<PAGE> 230

Each share of each series or class of the Trust represents an equal
proportionate interest with each other in that series or class, none having
priority or preference over other shares of the same series or class. The
interest of investors in the various series or classes of the Trust is separate
and distinct. All consideration received for the sales of shares of a
particular series or class of the Trust, all assets in which such consideration
is invested and all income, earnings and profits derived from such investments
will be allocated to and belong to that series or class. As such, each such
share is entitled to dividends and distributions out of the net income
belonging to that series or class as declared by the Board of Trustees. Shares
of the Trust have a par value of $0.01 per share. The assets of each series
are segregated on the Trust's books and are charged with the liabilities of
that series and with a share of the Trust's general liabilities. The Board of
Trustees determines those assets and liabilities deemed to be general assets or
liabilities of the Trust, and these items are allocated among each series in
proportion to the relative total net assets of each series. In the unlikely
event that the liabilities allocable to a series exceed the assets of that
series, all or a portion of such liabilities may have to be borne by the other
series.

Pursuant to the Declaration of Trust, the Trustees have established
six series of shares, including the Funds, and may authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes within any
series (which would be used to distinguish among the rights of different
categories of shareholders, as might be required by future regulations or other
unforeseen circumstances). The four other series of Trust are John Hancock
Adjustable U.S. Government Trust, John Hancock Investment Quality Bond Fund,
John Hancock Government Securities Trust and John Hancock Adjustable U.S.
Government Fund. As of the date of this Statement of Additional Information,
the Trustees have authorized the issuance of two classes of shares of the
Funds, designated as Class A and Class B. Class A and Class B shares of each
Fund represent an equal proportionate interest in the aggregate net asset
values attributable to that class of such Fund. Holders of Class A shares and
Class B shares each have certain exclusive voting rights on matters relating to
the Class A Plan and the Class B Plan, respectively, of the applicable Fund.
The different classes of the Funds may bear different expenses relating to the
cost of holding shareholder meetings necessitated by the exclusive voting
rights of any class of shares.

Dividends paid by the Funds, if any, with respect to each class of
shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that (i) the distribution and
service fees relating to Class A and Class B shares will be borne exclusively
by that Class, (ii) Class B shares will pay higher distribution and service
fees than Class A shares and (iii) each of Class A shares and Class B shares
will bear any class expenses properly allocable to such class of shares,
subject to the conditions set forth in a private letter ruling that the Funds
have received from the Internal Revenue Service relating to their
multiple-class structure. Accordingly, the net asset value per share may vary
depending whether Class A shares or Class B shares are purchased.

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<PAGE> 231

least a majority of the Trustees have been elected by shareholders. The voting
rights of shareholders are not cumulative, so that holders of more than 50% of
the shares voting can, if they choose, elect all Trustees being voted upon,
while the holders of the remaining shares would be unable to elect any
Trustees. Although the Trust need not hold annual meetings of shareholders,
the Trustees may call special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Also, a shareholder's meeting must be called if so requested in writing
by the holders of record of 10% or more of the outstanding shares of the Trust.
In addition, the Trustees may be removed by the action of the holders of record
of two-thirds or more of the outstanding shares.

ADJUSTABLE GOVERNMENT FUND AND THE PORTFOLIO. While shareholders of
the Fund do not have direct voting rights on matters relating to the Portfolio,
shareholders of the Fund do have indirect voting rights in respect of changes
in the fundamental objective and restrictions of the Portfolio the effect of
which "passes through" to the Portfolio. However, investors in other mutual
funds which may in the future invest in the Portfolio (note: information about
such a fund being a Portfolio shareholder is not required to be disclosed in
the Fund's prospectus) may also have similar voting rights which, when
exercised and representing sufficiently large holdings, may give such investors
"indirect" voting control regarding the operations of the portfolio. (The Fund
is presently the only mutual fund investing in the portfolio.) Furthermore,
changes in the fundamental objectives, policies or restrictions of the
Portfolio effected despite a prior disapproval by Shareholders of the Fund,
will cause the Fund to withdraw its investment from the Portfolio which can
result in increased costs and expenses.

SHAREHOLDER LIABILITY. The Declaration of Trust provides that no
Trustee, officer, employee or agent of the Trust is liable to the Trust or any
series or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Trust, except
as such liability may arise from his or its own bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties. It also provides that
all third persons shall look solely to the particular series' property for
satisfaction of claims arising in connection with the affairs of that series.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Trust.

As a Massachusetts business trust, the Trust is not required to issue
share certificates. The Trust shall continue without limitation of time
subject to the provisions in the Declaration of Trust concerning termination by
action of the shareholders.

Under Massachusetts law, shareholders of a Massachusetts business
trust could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the Trust's Declaration of Trust contains
an express disclaimer of shareholder liability for acts, obligations and
affairs of the Trust. The Declaration of Trust also provides for
indemnification out of the Trust's assets for all losses and expenses of any
shareholder held personally liable by reason of being or having been a
shareholder. Liability is therefore limited to circumstances in which the
Trust itself would be unable to meet its obligations, and the possibility of
this occurrence is remote.

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<PAGE> 232

TAX STATUS

Each Fund is treated as a separate entity for accounting and tax
purposes. Each Fund has qualified and elected to be treated as a "regulated
investment company" under Subchapter M of the Code and intends to continue to
so qualify in the future. As such and by complying with the applicable
provisions of the Code regarding the sources of its income, the timing of its
distributions, and the diversification of its assets, each Fund will not be
subject to Federal income tax on its net income (including net short-term and
long-term capital gains) which is distributed to shareholders at least annually
in accordance with the timing requirements of the Code.

Each Fund will be subject to a 4% non-deductible Federal excise tax on
certain amounts not distributed (and not treated as having been distributed) on
a timely basis in accordance with annual minimum distribution requirements.
Each Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.

Distributions from a Fund's current or accumulated earnings and
profits ("E&P"), as computed for Federal income tax purposes, will be taxable
as described in the Funds' Prospectuses whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital
gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in
each share so received equal to the amount of cash they would have received had
they elected to receive the distributions in cash, divided by the number of
shares received.

Foreign exchange gains and losses realized by Quality Bond Fund in
connection with certain transactions involving foreign currency-denominated
debt securities, foreign currency forward contracts, foreign currencies, or
payables or receivables denominated in a foreign currency are subject to
Section 988 of the Code, which generally causes such gains and losses to be
treated as ordinary income and losses and may affect the amount, timing and
character of distributions to shareholders. Any such transactions that are not
directly related to Quality Bond Fund's investment in stock or securities,
possibly including speculative currency positions or currency derivatives not
used for hedging purposes, may increase the amount of gain it is deemed to
recognize from the sale of certain investments held for less than three months,
which gain is limited under the Code to less than 30% of its annual gross
income, and could under future Treasury regulations produce income not among
the types of "qualifying income" from which Quality Bond Fund must derive at
least 90% of its annual gross income. If the net foreign exchange loss for a
year treated as ordinary loss under Section 988 were to exceed Quality Bond
Fund's investment company taxable income computed without regard to such loss
after consideration of regulations governing the treatment of "post-October
losses" (i.e., all of Quality Bond Fund's net income other than any excess of
net long-term capital gain over net short-term capital loss) the resulting
overall ordinary loss for such year would not be deductible by Quality Bond
Fund or its shareholders in future years.

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<PAGE> 233

Quality Bond Fund may be subject to withholding and other taxes
imposed by foreign countries with respect to its investments in foreign
securities. Tax conventions between certain countries and the U.S. may reduce
or eliminate such taxes. Investors may be entitled to claim U.S. foreign tax
credits or deductions with respect to such taxes, subject to certain provisions
and limitations contained in the Code. Specifically, if more than 50% of the
value of Quality Bond Fund's total assets at the close of any taxable year
consists of stock or securities of foreign corporations, Quality Bond Fund may
file an election with the Internal Revenue Service pursuant to which
shareholders of Quality Bond Fund will be required to (i) include in ordinary
gross income (in addition to taxable dividends actually received) their pro
rata shares of foreign income taxes paid by Quality Bond Fund even though not
actually received by them, and (ii) treat such respective pro rata portions as
foreign income taxes paid by them.

If Quality Bond Fund makes this election, shareholders may then deduct
such pro rata portions of foreign income taxes in computing their taxable
incomes, or, alternatively, use them as foreign tax credits, subject to
applicable limitations, against their U.S. Federal income taxes. Shareholders
who do not itemize deductions for Federal income tax purposes will not,
however, be able to deduct their pro rata portion of foreign income taxes paid
by Quality Bond Fund, although such shareholders will be required to include
their share of such taxes in gross income. Shareholders who claim a foreign
tax credit for such foreign taxes may be required to treat a portion of
dividends received from Quality Bond Fund as a separate category of income for
purposes of computing the limitations on the foreign tax credit. Tax-exempt
shareholders will ordinarily not benefit from this election. Each year that
Quality Bond Fund files the election described above, its shareholders will be
notified of the amount of (i) each shareholder's pro rata share of foreign
income taxes paid by Quality Bond Fund and (ii) the portion of Quality Bond
Fund dividends which represents income from each foreign country. If Quality
Bond Fund cannot or does not make this election, it may deduct such taxes in
computing its taxable income.

For each Fund, the amount of net short-term and long-term capital
gains, if any, in any given year will vary depending upon the Adviser's current
investment strategy and whether the Adviser believes it to be in the best
interest of the Fund to dispose of portfolio securities or, in the case of
Quality Bond Fund, enter into options or futures transactions that will
generate capital gains. At the time of an investor's purchase of Fund shares,
a portion of the purchase price is often attributable to realized or unrealized
appreciation in the Fund's portfolio. Consequently, subsequent distributions
from such appreciation may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares, and the distributions in reality
represent a return of a portion of the purchase price.

Upon a redemption of shares of a Fund (including by exercise of the
exchange privilege) a shareholder may realize a taxable gain or loss depending
upon his basis in his shares. Such gain or loss will be treated as capital
gain or loss if the shares are capital assets in the shareholder's hands and
will be long-term or short-term, depending upon the shareholder's tax holding
period for the shares. A sales charge paid in purchasing Class A shares of a
Fund cannot be taken into account for purposes of determining gain or loss on
the redemption or exchange of such shares within 90 days after their purchase
to the extent shares of the Fund or another John Hancock Fund are

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<PAGE> 234

subsequently acquired without payment of a sales charge pursuant to the
reinvestment or exchange privilege. Such disregarded load will result in an
increase in the shareholder's tax basis in the shares subsequently acquired.
Also, any loss realized on a redemption or exchange may be disallowed to the
extent the shares disposed of are replaced with other shares of the same Fund
within a period of 61 days beginning 30 days before and ending 30 days after
the shares are disposed of, such as pursuant to the Dividend Reinvestment Plan.
In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Any loss realized upon the redemption of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.

Although its present intention is to distribute all net short-term and
long-term capital gains, if any, each Fund reserves the right to retain and
reinvest all or any portion of its "net capital gain," which is the excess, as
computed for Federal income tax purposes, of net long-term capital gain over
net short-term capital loss in any year. The Funds will not in any event
distribute net long-term capital gains realized in any year to the extent that
a capital loss is carried forward from prior years against such gain. To the
extent such excess was retained and not exhausted by the carryforward of prior
years' capital losses, it would be subject to Federal income tax in the hands
of a Fund. Each shareholder would be treated for Federal income tax purposes
as if such Fund had distributed to him on the last day of its taxable year his
pro rata share of such excess, and he had paid his pro rata share of the taxes
paid by the Fund and reinvested the remainder in the Fund. Accordingly, each
shareholder would (a) include his pro rata share of such excess as long-term
capital gain income in his return for his taxable year in which the last day of
the Fund's taxable year falls, (b) be entitled either to a tax credit on his
return for, or to a refund of, his pro rata share of the taxes paid by the
Fund, and (c) be entitled to increase the adjusted tax basis for his shares in
the Fund by the difference between his pro rata share of such excess and his
pro rata share of such taxes.

For Federal income tax purposes, each Fund is permitted to
carryforward a net capital loss in any year to offset its own net capital
gains, if any, during the eight years following the year of the loss. To the
extent subsequent net capital gains are offset by such losses, they would not
result in Federal income tax liability to the applicable Fund and, as noted
above, would not be distributed as such to shareholders. Adjustable Government
Fund has $561,927 of capital loss carryforwards as of the tax year ended
December 31, 1994, of which $106,891 expires in 2001 and $455,036 in 2002,
available to offset future net capital gains. Quality Bond Fund has
$17,734,441, of capital loss carryforwards as of the tax year ended December
31, 1994, of which $3,512,860 expires in 1996, $1,409,609 in 1997, $1,909,995
in 1998, $755,945 in 2000 and $10,146,032 in 2002, available to offset future
net capital gains.

The Fund's dividends and capital gain distributions will generally not
qualify for the corporate dividends received deduction.

Each Fund that invests in certain PIKs, zero coupon securities or
certain increasing rate securities (and, in general, any other securities with
original issue discount or with market discount if the Fund elects to include
market discount in income currently) must accrue income on

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<PAGE> 235

such investments prior to the receipt of the corresponding cash payments.
However, each Fund must distribute, at least annually, all or substantially all
of its net income, including such accrued income, to shareholders to qualify as
a regulated investment company under the Code and avoid Federal income and
excise taxes. Therefore, a Fund may have to dispose of its portfolio
securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy distribution requirements.

Investment in debt obligations that are at risk of or in default may
present special tax issues for Quality Bond Fund if it holds any such
obligations. Tax rules are not entirely clear about issues such as when the
Fund may cease to accrue interest, original issue discount, or market discount,
when and to what extent deductions may be taken for bad debts or worthless
securities, how payments received on obligations in default should be allocated
between principal and income, and whether exchanges of debt obligations in a
workout context are taxable. These and other issues will be addressed by
Quality Bond Fund if it holds any such obligations in order to reduce the risk
of distributing insufficient income to preserve its status as a regulated
investment company and seek to avoid becoming subject to Federal income or
excise tax.

The Funds may be required to account for their transactions in forward
rolls in a manner that, under certain circumstances, may limit the extent of
their participation in such transactions.

Limitations imposed by the Code on regulated investment companies like
the Funds may restrict Quality Bond Fund's ability to enter into futures,
options, and currency forward transactions.

Certain forward foreign currency transactions and futures and options
transactions undertaken by Quality Bond Fund may cause the Fund to recognize
gains or losses from marking to market even though its positions have not been
sold or terminated and affect the character as long-term or short-term (or, in
the case of certain currency forwards, as ordinary income or loss) and timing
of some capital gains and losses realized by the Fund. Also, certain of
Quality Bond Fund's losses on its transactions involving forward contracts,
futures and options transactions, and/or offsetting portfolio positions may be
deferred rather than being taken into account currently in calculating the
Fund's taxable income. Certain of the applicable tax rules may be modified if
Quality Bond Fund is eligible and chooses to make one or more of certain tax
elections that may be available. These transactions may therefore affect the
amount, timing and character of the Fund's distributions to shareholders. The
Fund will take into account the special tax rules (including consideration of
available elections) applicable to forward contracts, options and futures
contracts, in order to minimize any potential adverse tax consequences.

The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts

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<PAGE> 236

or estates) subject to tax under such law. The discussion does not address
special tax rules applicable to certain classes of investors, such as
tax-exempt entities, insurance companies, and financial institutions.
Dividends, capital gain distributions, and ownership of or gains realized on
the redemption (including an exchange) of Fund shares may also be subject to
state and local taxes. Shareholders should consult their own tax advisers as
to the Federal, state or local tax consequences of ownership of shares of, and
receipt of distributions from, the Funds in their particular circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which
their investment in a Fund is effectively connected will be subject to U.S.
Federal income tax treatment that is different from that described above.
These investors may be subject to nonresident alien withholding tax at the rate
of 30% (or a lower rate under an applicable tax treaty) on amounts treated as
ordinary dividends from a Fund and, unless an effective IRS Form W-8 or
authorized substitute is on file, to 31% backup withholding on certain other
payments from the Fund. Non-U.S. investors should consult their tax advisers
regarding such treatment and the application of foreign taxes to an investment
in any Fund.

The Funds are not subject to Massachusetts corporate excise or
franchise taxes. Provided that a Fund qualifies as a regulated investment
company under the Code, it will also not be required to pay any Massachusetts
income tax.

CALCULATION OF PERFORMANCE

For the 30-day period ended March 31, 1995, the annualized yields of
Quality Bond Fund for Class A and Class B shares were 7.31% and 6.92%, and the
yield for Adjustable Government Fund's Class A shares and Class B shares were
6.20% and 5.78%, respectively. At March 31, 1995, average annual returns for
Quality Bond Fund's Class A shares was 8.49% for the 10 year period beginning
March 31, 1985, 7.03% for the five year period beginning March 31, 1990, and
(3.31)% for the one year period beginning March 31, 1994. For Quality Bond
Fund's Class B shares, the average annual return was (2.83)% since inception
and (4.38)% for the one year period ended March 31, 1995. Average annual
return for Adjustable Government Fund's Class A and Class B shares for the
period from December 31, 1991 (inception of the Fund) through March 31, 1995
was 0.33% and 3.35%, respectively. For the one year period ended March 31,
1995 annual returns were 0.33% and 3.24%, respectively, for Class A and Class B
shares of Adjustable Government Fund.

Each Fund's yield is computed by dividing net investment income per
share determined for a 30-day period by the maximum offering price per share
(which includes the full sales charge) on the last day of the period, according
to the following standard formula:

Yield = 2 [ (a-b + 1 )6 -1]
---
cd

Where:

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<PAGE> 237

a = dividends and interest earned during the period.

b = net expenses accrued during the period.

c = the average daily number of fund shares outstanding during the
period that would be entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period (NAV where applicable).

Each Fund's total return is computed by finding the average annual
compounded rate of return over the 1-year, 5-year, and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
P(1+T)n = ERV

Where:

P = a hypothetical initial investment of $1,000.

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1,000
investment made at designated periods or fraction thereof.

In the case of Class A shares or Class B shares, this calculation
assumes the maximum sales charge is included in the initial investment or the
CDSC is applied at the end of the period. This calculation also assumes that
all dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The "distribution rate" is determined by
annualizing the result of dividing the declared dividends of a Fund during the
period stated by the maximum offering price or net asset value at the end of
the period.

In addition to average annual total returns, a Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Cumulative total returns may be quoted as
a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions, over any
time period. Total returns may be quoted with or without taking a Fund's
maximum sales charge on Class A shares or the CDSC on Class B shares into
account. Excluding a Fund's sales charge on Class A shares and the CDSC on
Class B shares from a total return calculation produces a higher total return
figure.

From time to time, in reports and promotional literature, a Fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper Analytical

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<PAGE> 238

Services, Inc.'s "Lipper -- Fixed Income Fund Performance Analysis," a monthly
publication which tracks net assets, total return, and yield on approximately
1,700 fixed income mutual funds in the United States. Ibbotson and Associates,
CDA Weisenberger and F.C. Towers are also used for comparison purposes, as well
a the Russell and Wilshire Indices.

Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S, etc. will
also be utilized. The Fund's promotional and sales literature may make
reference to the Fund's "beta." Beta is a reflection of the market-related
risk of the Fund by showing how responsive the Fund is to the market.

The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of a
Fund for any period in the future. The performance of a Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease a
Fund's performance.

ADDITIONAL PERFORMANCE INFORMATION. A Fund may use comparative
performance information from certain industry research materials and/or
published in various periodicals. The characteristics of the investments in
such comparisons may be different from those investments of a Fund's portfolio.
In addition, the formula used to calculate the performance statistics of such
investments may not be identical to the formula used by a Fund to calculate its
performance figures. From time to time, advertisements or information for a
Fund may include a discussion of certain attributes or benefits to be derived
by an investment in a Fund. Such advertisements or information may include
symbols, headlines or other material which highlight or summarize the
information discussed in more detail in the communication.

The following publications, indexes, averages and investments which
may be used in advertisements or information concerning a Fund for
dissemination to investors or shareholders, include, but are not limited, to:

a) Lipper - Mutual Fund Performance Analysis, Lipper - Fixed
Income Analysis, and Lipper Mutual Fund indices - measure total return
and average current yield for the mutual fund industry. Ranks
individual mutual fund performance over specified time periods
assuming reinvestment of all distributions, exclusive of any
applicable sales charges.

b) CDA Mutual Fund Report, published by CDA Investment
Technologies, Inc. - analyzes price, current yield, risk, total
return, and average rate of return (average annual compounded growth
rate) over specified time periods for the mutual fund industry.

c) Mutual Fund Source Book and other similar rating publications
by Morningstar, Inc. - independent performance monitor of equity and
fixed income mutual funds. Morningstar ratings (ranging from one star
for lowest and five stars for highest) are based

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<PAGE> 239

on analysis of a fund's ratio, i.e., price yield, risk (volatility)
and total return, including all loads and fees, compared with similar
funds for three-, five- and ten-year periods.

d) Financial publications: BARRONS, BUSINESS WEEK, PERSONAL
FINANCE, FINANCIAL WORLD, FORBES, FORTUNE, "The Wall Street Journal",
"New York Times", WEISENBERGER INVESTMENT COMPANIES SERVICE,
INSTITUTIONAL INVESTOR, and MONEY - rate fund performance over
specified time periods and provide other relative performance or
industry information.

e) Consumer Price Index (or Cost of Living Index), published by
the U. S. Bureau of Labor Statistics - a statistical measure of
change, over time, in the price of goods and services in major
expenditure groups.

f) Stocks, Bonds, Bills, and Inflation, published by Ibbotson
Associates - historical measure of yield, price, and total return for
common and small company stock, long-term government bonds, Treasure
bills, and inflation.

g) Savings and Loan Historical Interest Rates - as published in
the U. S. Savings & Loan League Fact Book.

h) Salomon Brothers Broad Bond Index or its component indices -
The Broad Index measures yield, price and total return for Treasury,
Agency, Corporate, and Mortgage bonds.

i) Salomon Brothers Composite High Yield Index or its component
indices - The High Yield Index measures yield, price and total return
for Long-Term High-Yield Index, Intermediate-Term High-Yield index and
Long-Term Utility High-Yield Index.

j) Shearson Lehman Brothers Aggregate Bond index or its component
indices (including Municipal Bond Index) - The Aggregate Bond Index
measures yield, price and total return for Treasury, Agency,
Corporate, Mortgage, and Yankee bonds.

k) Standard & Poor's Bond Indices - measure yield and price of
Corporate, Municipal, and government bonds.

l) Other taxable investments, including certificates of deposit
(CDs), money market deposit accounts (MMDAs), checking accounts,
savings accounts, money market mutual funds, and repurchase
agreements.

m) Historical data supplied by the research departments of
Shearson Lehman Hutton, First Boston Corporation, Morgan Stanley,
Salomon Brothers, Merrill Lynch, and Donaldson Lufkin and Jenrette.

n) Donoghue's Money Fund Report - industry averages for 7-day
annualized and compounded yields of taxable, tax-free and government
money funds.

47
<PAGE> 240

o) The Value Line Mutual Fund Survey, published by Value Line,
assigns rankings of 1 (best) to 5 (worst) in terms of risk adjusted
performance covering more than 2,000 equity and fixed income mutual
funds.

From time to time, in reports and promotional literature, a Fund's
performance will be compared to other mutual funds and investment vehicles such
as F.C. Towers.

In addition, advertisements and sales materials may from time to time,
contain hypothetical performance examples for purposes of illustrating
reinvestment (or "compounding") of dividends at fixed rates of return or tax
advantages to be derived from deferring payment of federal (and state) income
taxes (at maximum rates) as compared to taxable investments assuming fixed
rates of return. Illustrations may also include (1) hypothetical investments
in various retirement plans, such as IRAs, made by investors of various ages or
(2) comparisons to retirement plans funded by annuity or bank products.

In assessing such comparisons, an investor should consider the
following factors:

a) It is generally either not possible or not practicable to
invest in an average or index of certain investments.

b) Certificates of deposit issued by banks and other depository
institutions represent an alternative income producing product.
Certificates of deposit may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal of deposits
prior to maturity will normally be subject to a penalty. Rates
offered by banks and other depository institutions are subject to
change at any time specified by the issuing institution.

c) United States Treasury Bills, Notes or Bonds represent
alternative income producing products. Treasury obligations are
issued in selected denominations. Rates of Treasury obligations are
fixed at the time of issuance and payment of principal and interest is
backed by the full faith and credit of the United States Government.
The market value of such instruments will generally fluctuate
inversely with interest rates prior to maturity and will equal par
value at maturity.

Each Fund may from time to time advertise its comparative performance
as measured or refer to results published by various periodicals including, but
not limited to, Lipper Analytical Services, Inc. BARRON'S, "THE WALL STREET
JOURNAL", "NEW YORK TIMES", WEISENBERGER INVESTMENT COMPANIES SERVICE,
DONOGHUE'S MONEY FUND REPORT, STANGER'S INVESTMENT ADVISOR, FINANCIAL PLANNING,
MONEY, FORTUNE, PERSONAL FINANCE, MUNI WEEK, INSTITUTIONAL INVESTOR, BUSINESS
WEEK, FINANCIAL WORLD and FORBES. In addition, the Fund may from time to time
advertise its performance relative to certain indexes and benchmark
investments, including: (a) the Shearson Lehman Municipal Bond Index, (b) Bond
Buyer 25 Review Bond Index, (c) the Consumer Price Index, and (d) taxable
investments such as certificates of deposit, money market deposit accounts,
checking accounts, savings accounts, money market mutual funds.

48
<PAGE> 241

The composition of the investments in such indexes and the
characteristics of such benchmark investments are not identical to, and in some
cases are very different from, those of a Fund's portfolio. These indexes and
averages are generally unmanaged and the items included in the calculations of
such indexes and averages may not be identical to the formulas used by a Fund
to calculate its performance figures.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities for
Quality Bond Fund and the Portfolio (referred to collectively under this
caption as the "Funds") are made by the Adviser pursuant to recommendations
made by its investment committee, which consists of officers and directors of
the Adviser and affiliates and officers and Trustees who are interested persons
of the Funds. Orders for purchases and sales of securities are placed in a
manner which, in the opinion of the Adviser will offer the best price and
market for the execution of each such transaction. Purchases from underwriters
of portfolio securities may include a commission or commissions paid by the
issuer and transactions with dealers serving as market makers reflect a
"spread." Investments in debt securities are generally traded on a net basis
through dealers acting for their own account as principals and not as brokers;
no brokerage commissions are payable on such transactions.

The Funds' primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing
primary policy, the Rules of Fair Practice of the NASD and other policies that
the Trustees may determine, the Adviser may consider sales of shares of the
Funds as a factor in the selection of broker-dealers to execute portfolio
transactions.

To the extent consistent with the foregoing, the Funds will be
governed in the selection of brokers and dealers, and the negotiation of
brokerage commission rates and dealer spreads, by the reliability and quality
of the services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Adviser, and their value and expected contribution to the performance of the
Funds. It is not possible to place a dollar value on information and services
to be received from brokers and dealers, since it is only supplementary to the
research efforts of the Adviser. The receipt of research information is not
expected to reduce significantly the expenses of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Life Company or other advisory clients of the Adviser, and
conversely, brokerage commissions and spreads paid by other advisory clients of
the Adviser may result in research information and statistical assistance
beneficial to the Funds. The Funds will not make any commitments to allocate
portfolio transactions upon any prescribed basis. While the Funds' officers
will be primarily responsible for the allocation of the Funds' brokerage
business, their policies and practices in this regard must be consistent with
the foregoing and will at all times be subject to review by the Trustees. For
the

49
<PAGE> 242

fiscal years ended March 31, 1995, 1994 and 1993, brokerage commissions were
$69,802, $272,417, and $83,165, respectively, for Quality Bond Fund.

As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Funds may pay to a broker which provides brokerage and research services to
the Funds an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This
practice is subject to a good faith determination by the Trustees that the
price is reasonable in light of the services provided and to policies that the
Trustees may adopt from time to time. During the fiscal year ended March 31,
1995, the Funds did not pay commissions as compensation to any brokers for
research services such as industry, economic and company reviews and
evaluations of securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated ("Tucker Anthony")
John Hancock Distributors, Inc. ("John Hancock Distributors") and Sutro &
Company, Inc. ("Sutro"), are broker-dealers ("Affiliated Brokers"). Pursuant
to procedures determined by the Trustees and consistent with the above policy
of obtaining best net results, the Funds may execute portfolio transactions
with or through Tucker Anthony, Sutro or John Hancock Distributors. During the
year ended March 31, 1995, the Funds did not execute any portfolio transactions
with then affiliated brokers.

Any of the Affiliated Brokers may act as broker for the Funds on
exchange transactions, subject, however, to the general policy of the Funds set
forth above and the procedures adopted by the Trustees pursuant to the 1940
Act. Commissions paid to an Affiliated Broker must be at least as favorable as
those which the Trustees believe to be contemporaneously charged by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold. A transaction would not be placed with an Affiliated
Broker if the Funds would have to pay a commission rate less favorable than the
Affiliated Broker's contemporaneous charges for comparable transactions for its
other most favored, but unaffiliated, customers, except for accounts for which
the Affiliated Broker acts as a clearing broker for another brokerage firm, and
any customers of the Affiliated Broker not comparable to the Funds as
determined by a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Funds, the Adviser or the Affiliated Brokers.
Because the Adviser, which is affiliated with the Affiliated Brokers, has, as
an investment adviser to the Funds, the obligation to provide investment
management services, which includes elements of research and related investment
skills, such research and related skills will not be used by the Affiliated
Brokers as a basis for negotiating commissions at a rate higher than that
determined in accordance with the above criteria. The Funds will not effect
principal transactions with Affiliated Brokers. The Funds may, however,
purchase securities from other members of underwriting syndicates of which
Tucker Anthony, Sutro and John Hancock Distributors are members, but only in
accordance with the policy set forth above and procedures adopted and reviewed
periodically by the Trustees.

Quality Bond Fund's turnover rate for the fiscal years ended March 31,
1993 and 1994, and 1995 were 191%, 242% and 202%, respectively. The turnover
rate for Adjustable Government Fund for the fiscal years ended March 31, 1993,
1994 and 1995, were 186%, 244%

50
<PAGE> 243

and 341%, respectively. Such rates reflect the difference between the years'
varying market conditions.

TRANSFER AGENT SERVICES

John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Company, is the
transfer and dividend paying agent for each Fund. Quality Bond Fund pays
Investor Services monthly a transfer agent fee equal to $20.00 per account for
the Class A shares and $22.50 per account for the Class B shares on an annual
basis, plus out-of-pocket expenses. Adjustable Government Trust pays Investor
Services monthly a transfer agent fee equal to $20.00 per account for the Class
A shares and $22.50 per account for the Class B shares on an annual basis, plus
out-of-pocket expenses.

CUSTODY OF PORTFOLIO

Portfolio securities of the Funds are held pursuant to custodian
agreements between the Trust on behalf of each Fund and Investors Bank and
Trust ("IBT") 24 Federal Street, Boston, Massachusetts. Under the custodian
agreements, IBT performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116,
has been selected as the independent auditors of each Fund. The financial
statements of each Fund included in each Prospectus and this Statement of
Additional Information have been audited by Ernst & Young LLP for the periods
indicated in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.

51
<PAGE> 244

APPENDIX A

The ratings of Moody's Investors Service, Inc. and Standard & Poor's Corporation
represent their opinions as to the quality of various debt instruments. Their
ratings are a generally accepted barometer of credit risk. They are,
however, subject to certain limitations from an investor's standpoint. Such
limitations include the following: the rating of an issue is heavily weighted
by past developments and does not necessarily reflect probable future
conditions; there is frequently a lag between the time a rating is assigned and
the time it is updated; and there are varying degrees of difference in credit
risk of securities in each rating category. Therefore, it should be understood,
that ratings are not absolute standards of quality. Consequently, debt
instruments with the same maturity, coupon and rating may have different yields
while debt instruments of the same maturity and coupon with different ratings
may have the same yield.

Description of Bond Ratings Moody's Investors Service, Inc.
- -----------------------------------------------------------

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

A-1
<PAGE> 245

B: Bonds which are rated b generally lack the characteristics of desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principle or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Standard & Poor's Ratings Group
- -------------------------------

AAA: Bonds rated AAA have the higher rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.

A: Bonds rated A have a very strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than in higher rated categories.

BB, B, CCC, CC: Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

C: The rating C is reserved for income bonds on which no interest is being
paid.

A-2
<PAGE> 246

SEE NEXT COPY

F-1
<PAGE> 247

FINANCIAL STATEMENTS

John Hancock Funds - Investment Quality Bond 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.

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> 248

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> 249

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> 250

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> 251

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> 252

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> 253

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> 254

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:

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 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> 255

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.

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 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> 256

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.

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 $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.

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.

16
<PAGE> 257

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

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 0.6250% 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.

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 $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.

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 in connection with the sale of Class B shares. For the period ended
March 31, 1995, contingent deferred sales charges amounted to $29,464.

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.

17
<PAGE> 258

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.

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 $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> 259

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.

/s/ Ernst & Young LLP
Boston, Massachusetts
May 15, 1995

19
<PAGE> 260

FINANCIAL STATEMENTS

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

<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> 261
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> 262
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> 263

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> 264

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> 265
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> 266
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> 267
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> 268
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> 269
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.

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> 270
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> 271
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.

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> 272
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> 273

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.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
May 15, 1995

20
<PAGE> 274

JOHN HANCOCK GOVERNMENT
SECURITIES TRUST

CLASS A AND CLASS B SHARES

STATEMENT OF ADDITIONAL INFORMATION

JULY 17, 1995

This Statement of Additional Information ("SAI") provides information about
John Hancock Government Securities Trust (the "Fund"), a series of John
Hancock Bond Fund (the "Trust"), in addition to the information that is
contained in the Fund's Prospectus, dated July 17, 1995.

This SAI is not a prospectus. It should be read in conjunction with Fund's
Prospectus, a copy of which can be obtained, free of charge, by writing or
telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

<TABLE>
TABLE OF CONTENTS
<CAPTION>
Cross-
Referenced
SAI to Prospectus
Page Page
---- ----
<S> <C> <C>

Organization of the Trust . . . . . . . . . . . 2 6
Investment Objective and Policies . . . . . . . 2 4
Certain Investment Practices . . . . . . . . . 3 4
Investment Restrictions . . . . . . . . . . . . 13 6
Those Responsible for Management . . . . . . . 15 6
Investment Advisory and Other Services . . . . 25 6
Distribution Contract . . . . . . . . . . . . . 28 7
Net Asset Value . . . . . . . . . . . . . . . . 31 12
Initial Sales Charge on Class A Shares . . . . 31 7
Deferred Sales Charge on Class B Shares . . . . 33 7
Special Redemptions . . . . . . . . . . . . . . 33 18
Additional Services and Programs . . . . . . . 34 20
Description of the Trust's Shares . . . . . . . 35 6
Tax Status . . . . . . . . . . . . . . . . . . 37 9

</TABLE>
<PAGE> 275

Calculation of Performance . . . . . . . . . . 40 10
Brokerage Allocation . . . . . . . . . . . . . 44 N/A
Transfer Agent Services . . . . . . . . . . . . 46 Back Cover
Custody of Portfolio . . . . . . . . . . . . . 47 Back Cover
Independent Auditors . . . . . . . . . . . . . 47 Back Cover
Financial Statements . . . . . . . . . . . . . F-1 3

</TABLE>

ORGANIZATION OF THE TRUST

The Trust is an open-end management investment company organized as a
Massachusetts business trust under a Declaration of Trust dated December 12,
1984. The Trust currently has six series. Prior to December 24, 1994, the
Fund was called Transamerica Government Securities Trust and the Trust was
called Transamerica Bond Fund.

The Fund is managed by John Hancock Advisers, Inc. (the "Adviser"), a
wholly-owned indirect subsidiary of John Hancock Mutual Life Insurance Company
(the "Life Company"), chartered in 1862 with national headquarters at John
Hancock Place, Boston, Massachusetts. John Hancock Funds, Inc. ("John Hancock
Funds") acts as principal distributor of the shares of the Fund.

INVESTMENT OBJECTIVE AND POLICIES

As discussed under "Investment Objective and Policies" in the Prospectus,
the Fund's investment objective is to seek a high level of current income,
consistent with safety of principal. The Fund anticipates that it will invest
a substantial portion of its assets in GNMA Certificates. The Fund invests in
debt obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including certificates of the Government National Mortgage
Association and U.S. Treasury obligations and, although it presently does not
intend to do so, may write covered call options and secured put options
against such securities. In order to protect and anticipate against changes
in interest rates, the Fund may also purchase put and call options and engage
in transactions involving rate futures contracts and options on such
contracts. The average life of GNMA Certificates varies with the maturities
of the underlying mortgage instruments with maximum maturities of 30 years.
The average life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of prepayments
or refinancing of such mortgages or foreclosure. Such prepayments are passed
through to the registered holder with the regular monthly payments of
principal and interest, which has the effect of reducing future payments of
principal and interest. Due to the GNMA guarantee, foreclosures impose no
risk to principal investments.

The average life of pass-through pools varies with the maturities of the
underlying mortgage instruments. In addition, a pool's term may be shortened
by unscheduled or early payments of principal and interest on the underlying
mortgages. The occurrence of mortgage

<PAGE> 276

prepayments is affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage and other
social and demographic conditions. As prepayment rates vary widely, it is not
possible to predict accurately the average life of a particular pool.
However, statistics indicate that the average life of the type of mortgages
backing the majority of GNMA Certificates is approximately 12 years. For this
reason, it is standard practice to treat GNMA Certificates as 30-year
mortgage-backed securities which prepay fully in the twelfth year. Pools of
mortgages with other maturities or different characteristics will have varying
assumptions for average life. The assumed average life of pools of mortgages
having terms of less than 30 years is less than 12 years, but typically not
less than 5 years.

The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages underlying
the Certificates, but only by the amount of the fees paid to GNMA and the
issuer. Such fees in the aggregate usually amount to approximately .50 of 1%.

Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and
the associated average life assumption. In periods of falling interest rates
the rate of prepayments tends to increase, thereby shortening the actual
average life of a pool of mortgage-related securities. Conversely, in periods
of rising rates, the rate of prepayments tends to decrease, thereby
lengthening the actual average life of the pool. Reinvestment by the Fund of
prepayments may occur at higher or lower interest rates than the original
investment. Historically, actual average life has been consistent with the
12-year assumption referred to above. The actual yield of each GNMA
Certificate is influenced by the prepayment experience of the mortgage pool
underlying the Certificates. Interest on GNMA Certificates is paid monthly
rather than semi-annually as for traditional bonds.

CERTAIN INVESTMENT PRACTICES

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may, from time to time, lend securities from its portfolio to
brokers, dealers and financial institutions such as banks and trust companies.
Such loans will be secured by collateral consisting of cash or U.S. Government
securities which will be maintained in an amount equal to at least 100% of the
current market value of the loaned securities. During the period of the loan,
the Fund will receive the income on both the loaned securities and the
collateral and thereby increase its return. Cash collateral will be invested
in short-term high quality debt securities, which will increase the current
income of the Fund. The loans will be terminable by the Fund at any time and
by the borrower on one day's notice. The Fund will have the right to regain
record ownership of loaned securities to exercise beneficial rights, such as
rights to interest or other distributions or voting rights on important
issues. The Fund may pay reasonable fees to persons unaffiliated with the
Fund for services in arranging such loans. Lending of portfolio securities
involves a risk of failure by the borrower to return the loaned securities, in
which event the Fund may incur a loss.

<PAGE> 277

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase
securities on a when-issued or forward commitment basis. "When-issued" refers
to securities whose terms are available and for which a market exists, but
which have not been issued. The Fund will engage in when-issued transactions
with respect to securities purchased for its portfolio in order to obtain what
is considered to be an advantageous price and yield at the time of the
transaction. For when-issued transactions, no payment is made until delivery
is due, often a month or more after the purchase. In a forward commitment
transaction, the Fund contracts to purchase securities for a fixed price at a
future date beyond customary settlement time.

When the Fund engages in forward commitment and when-issued transactions,
it relies on the seller to consummate the transaction. The failure of the
issuer or seller to consummate the transaction may result in the Fund losing
the opportunity to obtain a price and yield considered to be advantageous.
The purchase of securities on a when-issued and forward commitment basis also
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date.

On the date the Fund enters into an agreement to purchase securities on a
when-issued or forward commitment basis, the Fund will segregate in a separate
account cash or liquid, high grade debt securities equal in value to the
Fund's commitment. These assets will be valued daily at market, and
additional cash or securities will be segregated in a separate account to the
extent that the total value of the assets in the account declines below the
amount of the when-issued commitments. Alternatively, the Fund may enter into
offsetting contracts for the forward sale of other securities that it owns.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. A
repurchase agreement is a contract under which the Fund would acquire a
security for a relatively short period (generally not more than 7 days)
subject to the obligation of the seller to repurchase and the Fund to resell
such security at a fixed time and price (representing the Fund's cost plus
interest). The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with securities dealers. The Adviser
will continuously monitor the creditworthiness of the parties with whom the
Fund enters into repurchase agreements. The Fund has established a procedure
providing that the securities serving as collateral for each repurchase
agreement must be delivered to the Fund's custodian either physically or in
book-entry form and that the collateral must be marked to market daily to
ensure that each repurchase agreement is fully collateralized at all times.
In the event of bankruptcy or other default by a seller of a repurchase
agreement, the Fund could experience delays in liquidating the underlying
securities and could experience losses, including the possible decline in the
value of the underlying securities during the period in which the Fund seeks
to enforce its rights thereto, possible subnormal levels of income and lack of
access to income during this period, and the expense of enforcing its rights.

<PAGE> 278

Government securities, issued or guaranteed by Federal agencies or government
sponsored enterprises, are not supported by the full faith and credit of the
United States, but may be supported by the right of the issuer to borrow from
the U.S. Treasury. These securities include obligations of the Federal Home
Loan Mortgage Corporation ("Freddie Macs"), and obligations supported by the
credit of the instrumentality, such as Federal National Mortgage Association
Bonds ("Fannie Maes"). No assurance can be given that the U.S. Government
will provide financial support to such Federal agencies, authorities,
instrumentalities and government sponsored enterprises in the future.

MORTGAGE-BACKED SECURITIES. The Fund may invest in mortgage pass-through
certificates and multiple-class pass-through securities, such as real estate
mortgage investment conduits ("REMIC") pass-through certificates,
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities ("SMBS"), and other types of "Mortgage-Backed Securities" that may
be available in the future.

GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage pass-
through securities represent participation interests in pools of residential
mortgage loans and are issued by U.S. Governmental or private lenders and
guaranteed by the U.S. Government or one of its agencies or instrumentalities,
including but not limited to the Government National Mortgage Association
("Ginnie Mae"), the Federal National Mortgage Association ("Fannie Mae") and
the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie Mae
certificates are guaranteed by the full faith and credit of the U.S.
Government for timely payment of principal and interest on the certificates.
Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered
and privately owned corporation, for full and timely payment of principal and
interest on the certificates. Freddie Mac certificates are guaranteed by
Freddie Mac, a corporate instrumentality of the U.S. Government, for timely
payment of interest and the ultimate collection of all principal of the
related mortgage loans.

MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE
OBLIGATIONS. CMOs and REMIC pass-through or participation certificates may be
issued by, among others, U.S. Government agencies and instrumentalities as
well as private lenders. CMOs and REMIC certificates are issued in multiple
classes and the principal of and interest on the mortgage assets may be
allocated among the several classes of CMOs or REMIC certificates in various
ways. Each class of CMOs or REMIC certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must
be fully retired no later than its final distribution date. Generally,
interest is paid or accrues on all classes of CMOs or REMIC certificates on a
monthly basis.

Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie
Mac certificates but also may be collateralized by other mortgage assets such
as whole loans or private mortgage pass-through securities. Debt service on
CMOs is provided from payments of principal and interest on the underlying
assets.

5
<PAGE> 279

A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages primarily secured by
interests in real property and other permitted investments. Investors may
purchase "regular" and "residual" interests in REMIC trusts although the Fund
does not intend to invest in residual interests.

STRIPPED MORTGAGE-BACKED SECURITIES. SMBS are derivative multiple-class
mortgage-backed securities. SMBS are usually structured with two classes that
receive different proportions of interest and principal distributions on a
pool of mortgage assets. A typical SMBS will have one class receiving some of
the interest and most of the principal, while the other class will receive
most of the interest and the remaining principal. In the most extreme case,
one class will receive all of the interest (the "interest only" class) while
the other class will receive all of the principal (the "principal only"
class). The yields and market risk of interest only and principal only SMBS,
respectively, may be more volatile than those of other fixed income
securities. The staff of the SEC considers privately issued SMBS to be
illiquid.

STRUCTURED OR HYBRID NOTES. The Fund may invest in "structured" or
"hybrid" notes. The distinguishing feature of a structured or hybrid note is
that the amount of interest and/or principal payable on the note is based on
the performance of a benchmark asset or market other than fixed-income
securities or interest rates. Examples of these benchmarks include stock
prices, currency exchange rates and physical commodity prices. Investing in a
structured note allows the Fund to gain exposure to the benchmark market while
fixing the maximum loss that the Fund may experience in the event that market
does not perform as expected. Depending on the terms of the note, the Fund
may forego all or part of the interest and principal that would be payable on
a comparable conventional note; the Fund's loss cannot exceed this foregone
interest and/or principal. An investment in structured or hybrid notes
involves risks similar to those associated with a direct investment in the
benchmark asset.

RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in
Mortgage-Backed Securities involves certain risks, including the failure of a
counter-party to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. In addition, investing in the
lowest tranche of CMOs and REMIC certificates involves risks similar to those
associated with investing in equity securities. Further, the yield
characteristics of Mortgage-Backed Securities differ from those of traditional
fixed income securities. The major differences typically include more
frequent interest and principal payments (usually monthly), the adjustability
of interest rates, and the possibility that prepayments of principal may be
made substantially earlier than their final distribution dates.

<PAGE> 280

Securities notwithstanding any direct or indirect governmental, agency or
other guarantee. When the Fund reinvests amounts representing payments and
unscheduled prepayments of principal, it may receive a rate of interest that
is lower than the rate on existing adjustable rate mortgage pass-through
securities. Thus, Mortgage-Backed Securities, and adjustable rate mortgage
pass-through securities in particular, may be less effective than other types
of U.S. Government securities as a means of "locking in" interest rates.

Conversely, in a rising interest rate environment, a declining prepayment
rate will extend the average life of many Mortgage-Backed Securities. This
possibility is often referred to as extension risk. Extending the average
life of a Mortgage-Backed Security increases the risk of depreciation due to
future increases in market interest rates.

RISK ASSOCIATED WITH SPECIFIC TYPES OF DERIVATIVE DEBT SECURITIES.
Different types of derivative debt securities are subject to different
combinations of prepayment, extension and/or interest rate risk. Conventional
mortgage pass-through securities and sequential pay CMOs are subject to all of
these risks, but are typically not leveraged. Thus, the magnitude of exposure
may be less than for more leveraged Mortgage-Backed Securities.

The risk of early prepayments is the primary risk associated with
interest only debt securities ("IOs"), super floaters, other leveraged
floating rate instruments and Mortgage-Backed Securities purchased at a
premium to their par value. In some instances, early prepayments may result
in a complete loss of investment in certain of these securities. The primary
risks associated with certain other derivative debt securities are the
potential extension of average life and/or depreciation due to rising interest
rates.

These securities include floating rate securities based on the Cost of
Funds Index ("COFI floaters"), other "lagging rate" floating rate securities,
floating rate securities that are subject to a maximum interest rate ("capped
floaters"), Mortgage-Backed Securities purchased at a discount, leveraged
inverse floating rate securities ("inverse floaters"), principal only debt
securities ("POs"), certain residual or support tranches of CMOs and index
amortizing notes. Index amortizing notes are not Mortgage-Backed Securities,
but are subject to extension risk resulting from the issuer's failure to
exercise its option to call or redeem the notes before their stated maturity
date. Leveraged inverse IOs combine several elements of the Mortgage-Backed
Securities described above and thus present an especially intense combination
of prepayment, extension and interest rate risks.

Planned amortization class ("PAC") and target amortization class ("TAC")
CMO bonds involve less exposure to prepayment, extension and interest rate
risk than other Mortgage-Backed Securities, provided that prepayment rates
remain within expected prepayment ranges or "collars." To the extent that
prepayment rates remain within these prepayment ranges, the residual or
support tranches of PAC and TAC CMOs assume the extra prepayment, extension
and interest rate risk associated with the underlying mortgage assets.

<PAGE> 281

Other types of floating rate derivative debt securities present more
complex types of interest rate risks. For example, range floaters are subject
to the risk that the coupon will be reduced to below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to depreciation in the
event of an unfavorable change in the spread between two designated interest
rates. X-reset floaters have a coupon that remains fixed for more than one
accrual period. Thus, the type of risk involved in these securities depends
on the terms of each individual X-reset floater.

The Fund is permitted to engage in certain hedging techniques involving
options and futures transactions in order to reduce the effect of interest
rate movements affecting the market values of the investments held, or
intended to be purchased, by the Fund.

WRITING COVERED CALL AND SECURED PUT OPTIONS. The Fund is authorized but
does not presently intend to sell (write) covered call options in order to
earn additional income on its portfolio securities or to protect partially
against declines in the value of such securities. A call option gives the
purchaser of such option, in return for a premium paid, the right to buy, and
the seller ("writer") the obligation to sell (if the option is exercised) the
underlying security at the exercise price during the option period. The
writer of the call option who receives the premium has the obligation to sell
the underlying security to the purchaser at the exercise price during the
option period if assigned an exercise notice. The Fund will write call
options only on a covered basis, which means that the Fund will own the
underlying security subject to a call option at all times during the option
period. The exercise price of a call option may be below, equal to or above
the current market value of the underlying security at the time the option is
written.

During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the
option period or at such earlier time at which the writer effects a closing
purchase transaction.

Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, in conjunction with the sale of the underlying security or to
enable the Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both.

In order to earn additional income or to facilitate its ability to
purchase a security at a price lower than the current market price of such
security, the Fund may write cash secured put options. A put option gives the
purchaser of the option the right to sell, and the writer the obligation to
buy (if the option is exercised) the underlying security at the exercise price
during the option period. During the option period, the writer of a put
option may be assigned an exercise notice by the broker/dealer through whom
the option was sold, requiring the writer to purchase the underlying security
at the exercise price. The Fund will write put options only on a secured
basis, which means that the Fund will maintain, in a segregated account with
the Fund's

<PAGE> 282

Custodian, cash or U.S. Government securities held in the segregated account
which will be adjusted on a daily basis to reflect changes in the market value
of the securities covered by the put option written by the Fund. Subject to
the limitation that all call and put option writing transactions be covered or
cash secured, the Fund may, to the extent determined appropriate by the
Adviser, engage without limitation in the writing of options on U.S.
Government Securities. The Fund's Adviser has advised the Board of Trustees
that it is not presently in the best interests of the Fund or its shareholders
to enter into transactions involving writing covered call and secured put
options for the purpose of generating additional income. Accordingly, the
Fund will not engage in such transactions at the present time nor will it
change such determination without first having given shareholders written
notice at least 60 (sixty) days in advance thereof.

OPTIONS AND FUTURES TRANSACTIONS. In order to achieve the Fund's
investment objective, the Adviser will actively manage the Fund's assets using
different investment strategies under different market conditions and interest
rate outlooks.

<TABLE>
The matrix set forth below relates to the use of the certain major
strategies involving options to different interest rate outlooks by the Fund.

<CAPTION>
INTEREST RATE OUTLOOK
-----------------------------------
DECLINING STABLE RISING
INTEREST INTEREST INTEREST
FUND STRATEGIES RATES RATES RATES
- --------------- --------- -------- --------
<S> <C> <C> <C>
Covered Call Writing
Out-of-the Money X
At-the-Money X
In-the-Money X
Purchase of Puts X
Secured Put Writing
Out-of-the-Money X
At-the-Money X
In-the-Money X
Purchase of Calls X
</TABLE>

COVERED CALL WRITING. An investor is engaged in covered call writing
when he sells the right to buy a security that he already owns for a fee or
premium. Because he already owns the security, the call is collateralized or
"covered". The exercise price of the call options may be below ("in-the-
money"), equal to ("at-the-money"), or above ("out-of-the-money") the current
market value of the underlying securities at the times the options are
written.

PURCHASE OF PUT. A right to sell a security at a specified price for a
specific period of time.

<PAGE> 283

SECURED PUT WRITING. An investor is engaged in secured put writing when
he accepts the obligation to purchase a security (if the option is exercised)
at the exercise price for a fee or premium and holds cash equivalents in
reserve to purchase the securities. Because the cash is reserved if the
option is exercised, the put is "secured". As in covered call writing, the
option can be "in," "at" or "out of the money."

PURCHASE OF CALL. A right to buy a security at a specified price for a
specific period of time.

SECURITIES OPTIONS. An option position may be closed out only on a
securities exchange which provides a secondary market for an option of the
same series. Although the Fund will write call and put options only when the
Adviser believes that a liquid secondary market will exist on a securities
exchange for options of the same series so that the Fund can effect a closing
purchase transaction if it desires to close out its positions, there can be no
assurance that a liquid secondary market will exist for a particular option at
any specific time. If a covered call option writer is unable to effect a
closing purchase transaction, it cannot sell the underlying security until the
option expires or the option is exercised. Accordingly, a covered call option
writer may not be able to sell an underlying security at a time when it might
otherwise be advantageous to do so. A secured put option writer who is unable
to effect a closing purchase transaction would continue to bear the risk of
decline in the market price of the underlying security until the option
expires or is exercised. In addition, a secured put writer would be unable to
utilize the amount held in cash or U.S. Government securities as security for
the put option for other investment purposes until the exercise or expiration
of the option. In connection with the qualification of the Fund as a
regulated investment company under the Internal Revenue Code, other
restrictions on the Fund's ability to enter into certain option transactions
may apply from time to time (see "Dividends, Distributions and Tax Status").

Possible reasons for the absence of a liquid secondary market on an
Exchange include the following: (a) insufficient trading interest in certain
options; (b) restrictions on transactions imposed by an exchange; (c) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities; (d) inadequacy of the
facilities of an exchange or a national clearing corporation to handle trading
volume; or (e) a decision by one or more Exchanges to discontinue the trading
of options or impose restrictions on types of orders. Although the Options
Clearing Corporation has stated that it believes, based on forecasts provided
by the exchanges, that its facilities are adequate to handle the volume of
reasonably anticipated options transactions, and although each exchange has
advised such clearing corporation that it believes that its facilities will
also be adequate to handle reasonably anticipated volume, there can be no
assurance that higher than anticipated trading activity or order flow or other
unforeseen events might not at times render certain of these facilities
inadequate and thereby result in the institution of special trading procedures
or restrictions which could interfere with the Fund's ability to effect
closing purchase transactions with respect to options written by it.

<PAGE> 284

The Fund will engage in over-the-counter ("OTC") option transactions only
with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York. In the event that any OTC option transaction is not
subject to a forward price at which the Fund has the absolute right to
repurchase the OTC option which it has sold, the value of the OTC option
purchased and of the Fund's assets used to "cover" the OTC option will be
considered "illiquid securities". The "formula" on which the forward price
will be based may vary among contracts with different primary dealers, but it
will be based on a multiple of the premium received by the Fund for writing
the option plus the amount, if any, of the option's intrinsic value, i.e.,
current market value of the underlying securities minus the option's stock
price.

The Fund's securities options transactions may be subject to limitations
established by each of the Exchanges governing the maximum number of options
in each class which may be held by a single investor or group of investors
acting in concert. Thus, the ability of the Fund to enter into transactions
involving options on debt securities may be limited by transactions engaged in
by the Adviser on behalf of its other investment advisory clients. An
Exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.

INTEREST RATE FUTURES CONTRACTS CHARACTERISTICS. Currently, futures
contracts can be purchased and sold with respect to U.S. Treasury bonds, U.S.
Treasury notes, and GNMAs on the Chicago Board of Trade and with respect to
U.S. Treasury bills on the International Monetary Market at the Chicago
Mercantile Exchange.

In contrast to the purchase or sale of a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Rather,
the Fund will initially be required to deposit with the Trust's broker an
amount of cash or U.S. Treasury bills equal to approximately 5% of the
contract amount. This is called "initial margin". Such initial margin is in
the nature of a performance bond or good faith deposit on the contract, which
is returned to the Trust upon termination of the futures contract, assuming
all contractual obligations have been satisfied. In addition, because under
current futures industry practice daily variations in gains and losses on open
contracts are required to be reflected in cash in the form of variation margin
payments, the Fund may be required to make additional payments during the term
of the contract to their broker. Such payments would be required in the event
that the price of an underlying debt security declined during the term of a
debt security futures contract purchased by the Fund or in the event that the
price of an underlying debt security has risen during the term of a debt
security futures contract sold by the Fund. In all instances involving the
purchase of futures contracts or call options on futures contracts by the
Fund, an amount of cash together with such other securities as may be
permitted by applicable regulatory authorities to be used for such purpose, at
least equal to the market value of the futures contracts, will be deposited in
a segregated account with the Fund's Custodian to collateralize the position.
At any time prior to the expiration of a futures contract, the Fund may elect
to close its position by taking an opposite position which will operate to
terminate the Fund's positions in the futures contract. See "Risks Relating
to Transactions in Futures Contracts" below.

<PAGE> 285

RISKS RELATING TO TRANSACTIONS IN FUTURES CONTRACTS. As discussed in the
Fund's Prospectus, there are several risks in connection with the use of
interest rate futures contracts by the Fund. One risk arises because, as a
result of the possible imperfect correlation between movements in the prices
of futures contracts and movements in the prices of the underlying U.S.
Government securities, the price of a futures contract may move more than or
less than the price of the securities being hedged. If the price of the
futures moves less than the price of the securities which are the subject of
the hedge, the hedge will not be fully effective. On the other hand, if the
price of the securities being hedged has moved in an unfavorable direction to
the Fund, the Fund would be in a better position than if it had not hedged at
all. If the price of the future moves more than the price of the security,
the Fund will experience either a gain or loss on the future which will not be
completely offset by movements in the price of the securities which are the
subject of the hedge. In addition, there may be an imperfect correlation
between movements in prices of futures contracts and portfolio securities
being hedged, the market prices of futures contracts may be affected by
certain factors. If participants in the futures market elect to close out
their contracts through offsetting transactions rather than meet margin
deposit requirements, distortions in the normal relationship between the debt
securities and futures markets could result. Price distortions could also
result if investors in futures contracts opt to make or take delivery of
underlying securities rather than engage in closing transactions due to the
resultant reduction in the liquidity of the futures market. In addition, due
to the fact that, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements
in the cash market, increased participation by speculators in the futures
market could cause temporary price distortions. Due to the possibility of
price distortions in the futures market and because of the imperfect
correlation between movements in the prices of the U.S. Government securities
and movements in the prices of futures contracts, a correct forecast of
interest rate trends by the Adviser may still not result in a successful
hedging transaction.

SECURITIES TRANSACTIONS SUBJECT TO DELAYED SETTLEMENT. As described in
the Prospectus, securities purchased for which the normal settlement date
occurs later than the settlement date which is normal for U.S. Treasury
obligations and the securities held in the Fund are subject to changes in
value (both experiencing appreciation when interest rates decline and
depreciation when interest rates rise) based upon the public's perception of
the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Purchasing securities subject to delayed settlement
can involve a risk that the yields available in the market when the delivery
takes place may actually be higher than those obtained in the transaction
itself. A separate account of the Fund consisting of cash or liquid debt
securities equal to the amount of the delayed settlement commitments will be
established at the Trust's custodian bank. For the purpose of determining the
adequacy of the securities in the account, the deposited securities will be
valued at market value using the valuation procedures for all other
investments. If the market or fair value of such securities declines,
additional cash or highly liquid securities will be placed in the account
daily so that the value of the account will equal the amount of such
commitments by the Fund. On the settlement date of these delayed settlement
securities, the Fund will meet its obligations from then available cash flow,
sale of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the delayed

<PAGE> 286

settlement securities themselves (which may have a value greater or lesser
than the Fund's payment obligations). Sale of securities to meet such
obligations will generally result in the realization of capital gains or
losses.

INVESTMENT RESTRICTIONS

The Fund has adopted certain fundamental investment restrictions. The
fundamental investment restrictions set forth below, as well as the investment
objective and fundamental policies and restrictions set forth in the
Prospectus, may not be changed without prior approval by the holders of a
"majority of the outstanding shares" of the Fund, as defined in the Investment
Company Act of 1940, as amended, (the "1940 Act"). A majority for this
purpose means the holders of: (a) more than 50% of the outstanding shares of
the Fund, or (b) 67% or more of the shares of the Fund represented at a
meeting where more than 50% of the outstanding shares of the Fund are
represented, whichever is less. Under these additional restrictions, the Fund
may not:

1. Invest more than 25% of total assets in the securities of issuers in any
one industry. For purposes of this restriction, gas, electric, water and
telephone utilities will each be treated as separate industries. This
restriction does not apply to obligations issued or guaranteed by the
United States government, its agencies or instrumentalities.

2. Make short sales of securities or purchase securities on margin, except
for such short-term loans as are necessary for the clearance of purchases
of portfolio securities.

3. Engage in the underwriting of securities except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933 in disposing of
a portfolio security.

5. Purchase oil, gas or other mineral leases, rights or royalty contracts or
exploration or development programs, except that the Fund may invest in
securities of companies which invest in or sponsor such programs.

6. Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.

7. Invest for the purpose of exercising control or management of another
company.

8. Invest in securities of any company if, to the knowledge of the Fund, any
officer or trustee of the Fund or its Adviser owns more than 1/2 of 1% of
the outstanding securities of

<PAGE> 287

such company, and all such officers and directors own in the aggregate more
than 5% of the outstanding securities of such company.

9. Issue senior securities, as defined in the Act, except that the Fund may
enter into repurchase and reverse repurchase agreements, lend portfolio
securities, and leverage and borrow as described under "Investment
Practices and Restrictions" in the Prospectus for the Fund.

10. Make loans of money or securities, except by (a) the purchase of fixed
income obligations; (b) investing in repurchase agreements; or (c) lending
its portfolio securities. See "Investment Practices and Restrictions" in
the Prospectus for the Fund.

11. Purchase or sell commodities or commodity futures contracts except
financial futures and options on such futures for hedging purposes under
policies developed by the Trust's Board of Trustees.

12. Invest in warrants or rights except where acquired in units or attached
to other securities.

13. Purchase the securities of any issuer if as a result more than 10% of the
value of the Fund's total assets would be invested in securities that are
subject to legal or contractual restrictions on resale ("restricted
securities") and in securities for which there are no readily available
market quotations; or enter into a repurchase agreement maturing in more
than seven days, if as a result such repurchase agreements together with
restricted securities and securities for which there are no readily
available market quotations would constitute more than 10% of the Fund's
total assets.

14. Invest more than 5% of the market or other fair value of its assets in
the securities of any one issuer and shall not purchase more than 10% of
the voting securities or more than 10% of any class of securities of any
one issuer. This restriction does not apply to U.S. Government securities
as defined in the prospectus.

15. Borrow in excess of 15% of the market or other fair value of its total
assets or pledge its assets to an extent greater than 10% of the market or
other fair value of its total assets. Any such borrowings shall be from
banks and shall be undertaken only as a temporary measure for extraordinary
or emergency purposes. Collateral arrangements maintained in connection
with the writing of covered call or secured put options, or margin deposits
in connection with the purchase or sale of futures contracts and related
options, are not deemed to be a pledge or other encumbrance. The borrowing
restriction set forth above does not prohibit the use of reverse repurchase
agreements, in an amount (including any borrowings) not to exceed 33-1/3%
of net assets.

As a matter of nonfundamental policy, the Fund will not purchase
securities when borrowings from banks exceed 5% of its total assets.

<PAGE> 288

Notwithstanding any investment restriction to the contrary, the Fund may,
in connection with the John Hancock Group of Funds Deferred Compensation Plan
for Independent Trustees/Directors, purchase securities of other investment
companies within the John Hancock Group of Funds provided that, as a result,
(i) no more than 10% of the Fund's assets would be invested in securities of
all other investment companies, (ii) such purchase would not result in more
than 3% of the total outstanding voting securities of any one such investment
company being held by the Fund and (iii) no more than 5% of the Fund's assets
would be invested in any one such investment company.

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Fund is managed by the Trust's Trustees who elect
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Trustees. Several of the officers and
Trustees of the Trust are also officers and directors of the Adviser or
officers and directors of John Hancock Funds.

Set forth below is information with respect to each of the Trust's
officers and Trustees. The officers and Trustees may be contacted at 101
Huntington Avenue, Boston, MA 02199-7603. Their affiliations represent their
principal occupations during the past five years.

<PAGE> 289
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Edward J. Boudreau, Jr,* Trustee, Chairman and Chief Executive
101 Huntington Avenue Chairman and Officer, the Investment Adviser and
Boston, MA 02199 Chief Executive The Berkeley Financial Group ("The
Officer(1)(2) Berkeley Group");
Chairman, NM Capital
Management, Inc.
("NM Capital"); John
Hancock Advisers
International Limited
("Advisers International");
John Hancock Funds, Inc.;
John Hancock Investor
Services Corporation
("Investor Services");
and Sovereign Asset
Management Corporation
("SAMCorp");
(hereinafter the Adviser,
the Berkeley Group, NM
Capital, Advisers
International, John Hancock
Funds, Inc., Investor
Services and SAMCorp
are collectively referred
to as the "Affiliated
Companies"); Chairman,
First Signature Bank & Trust;
Director, John Hancock
Freedom Securities
Corporation, John Hancock
Capital Corporation,
New England/Canada
Business Council; Member,
Investment Company Institute Board
of Governors: Trustee, Museum of
Science; President, the Adviser
(until July 1992); Trustee or
Director of other investment
companies

</TABLE>

16
<PAGE> 290
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
managed by the Adviser; and
Chairman, John Hancock
Distributors, Inc. (until April,
1994).

James F. Carlin Trustee Chairman and CEO, Carlin
233 West Central Street Consolidated, Inc. (insurance);
Natick, MA 01760 Director, Arbella Mutual
Insurance Company
insurance),Consolidated
Group Trust(group health
plan),Carlin Insurance
Agency, Inc. and
West Insurance Agency, Inc.;
Receiver, the City of Chelsea
(until August 1992); and
Trustee or Director of other
investment companies
managed by the Adviser.

17
<PAGE> 291
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Director, Jefferson-Pilot
Corporation (diversified
life insurance company);
Director, Freeport-
McMoran Inc. (oil and
gas company); Director,
Barton Creek Properties, Inc.
(1988-1990) (real estate
development) and LBJ
Foundation Board
(education foundation);
and Advisory Director,
Texas Commerce Bank
-Austin.

Charles L. Ladner Trustee(3) Director, Energy North, Inc.
UGI Corporation (public utility holding company);
460 North Gulph Road Senior Vice
King of Prussia, PA 19406 President, Finance UGI
Corp. (public utility
holding company)
(until 1992); and Trustee
or Director of other
investment companies
managed by the Adviser.

18
<PAGE> 292
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C> <C>
Panhandle Eastern Corporation
(a diversified energy
company);Director, Daniel Industries,
Inc. (manufacturer of gas measuring
products and energy related
equipment); director, GeoQuest
International, Inc. (a geophysical
consulting firm): and Director,
Greater Houston Partnership.

Patricia P. McCarter Trustee(3) Director and Secretary, the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer); and Trustee
Malvern, PA 19355 or Director of other investment
companies managed by
the Adviser.

Steven R. Pruchansky Trustee(1)(3) Director and Treasurer, Mast
360 Horse Creek Drive, #208 Holdings, Inc.; Director,
Naples, FL 33942 First Signature Bank & Trust
Company (until August 1991);
General Partner, Mast Realty
Trust; President, Maxwell
Building Corp. (until 1991);
and Trustee or Director
of other investment companies
managed by the Adviser.

Norman H. Smith Trustee(3) Lieutenant General, USMC,
Rt. 1, Box 249 E Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve
Affairs, Headquarters Marine Corps;
Commanding General III Marine
Expeditionary Force/3rd Marine
Division (retired 1991); and Trustee
or Director of other investment
companies managed by the Adviser.
</TABLE>

19
<PAGE> 293
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
John P. Toolan Trustee(3) Director, The Smith Barney
13 Chadwell Place Muni Bond Funds, The Smith
Morristown, NJ 07960 Barney Tax-Free Money Fund,
Inc., Vantage Money Market
Funds (mutual funds),
The Inefficient-Market
Fund, Inc. (closed-end
investment company)
and Smith Barney Trust
Company of Florida; Chairman,
Smith Barney Trust Company
(retired December, 1991);
Director, Smith Barney, Inc.,
Mutual Management Company and
Smith, Barney Advisers, Inc.
(investment advisers) (retired
1991); and Senior Executive Vice
President, Director and member of
the Executive Committee, Smith Barney,
Harris Upham & Co., Incorporated
(investment bankers) (until 1991);
and Trustee or Director of other
investment companies
managed by the Adviser.

Robert G. Freedman* Vice Chairman and Chief Investment President and Chief
101 Huntington Avenue Officer(2) Investment Officer, the
Boston, MA 02199 Adviser.

Anne C. Hodsdon President(2) Executive Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

James B. Little* Senior Vice Senior Vice President,
101 Huntington Avenue President and the Adviser.
Boston, MA 02199 Chief Financial
Officer
</TABLE>

20
<PAGE> 294
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Thomas H. Drohan* Senior Vice President and Senior Vice President and
101 Huntington Avenue Secretary Secretary, the Adviser.
Boston, MA 02199

Michael P. DiCarlo* Senior Vice President(2) Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

Edgar Larsen* Senior Vice President Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

B.J. Willingham* Senior Vice President Senior Vice President, the
101 Huntington Avenue Adviser. Formerly, Director
Boston, MA 02199 and Chief Investment
Officer of Transamerica
Fund Management Company.

James J. Stokowski* Vice President and Treasurer Vice President, the Investment
101 Huntington Avenue Adviser.
Boston, MA 02199

Susan S. Newton* Vice President and Compliance Vice President and Assistant
101 Huntington Avenue Officer Secretary, the Investment
Boston, MA 02199 Adviser.

John A. Morin* Vice President Vice President, the Investment
101 Huntington Avenue Adviser.
Boston, MA 02199
- -------------------
<FN>
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
</TABLE>

<PAGE> 295

<TABLE>
As of June 30, 1995, there were 62,634,037 Class A shares and 274,669
Class B shares of the Fund outstanding and officers and Trustees of the Trust
as a group beneficially owned less than 1% of these outstanding shares. At
such date, the following shareholders held, as record owner, 5% or more of the
shares of the Fund.

<CAPTION>
Percentage Ownership
--------------------
Government Securities Fund, Class B of Outstanding Shares
- ----------------------------------- ---------------------

<S> <C>
Daniel L. Brenner 22.26%
Charitable Remainder Annuity TR
DTD 9/3/93
c/o Roger Klein
5665 W. 95 Ste. 275
Overland Park, KS 66207-2966

Smith Barney, Inc. 9.21%
00139720004
388 Greenwich Street
New York, NY 10013-2375

A.G. Edwards & Sons Cust. 7.46%
FBO John J. Nestor IRA Rollover
11832 Gladstone Dr.
Santa Ana, CA 92705-2938

Anesthesia Associates, Ltd. 5.95%
Profit Sharing Pl & Tr
FBO Richard E. Pittman
2127 California St. N.W. #705
Washington, DC 20008-1814

Ellen A. Dukes TTEE 5.76%
FBO Ellen A. Dukes Trust
U/D/T DTD 5/23/89
19191 Harvard Ave. #263D
Irvine, CA 92715-4656

</TABLE>

Thomas J. Cooney 5.21%
4038 Diamond Leaf Ct.
Palm Harbor, FL 34684-3610

Donaldson Lufkin Jenrette Securities Corporation, Inc. 5.03%
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052

</TABLE>

As of December 22, 1994, the Trustees have established an Advisory Board
which acts to facilitate a smooth transition of management over a two-year
period (between Transamerica Fund Management Company ("TFMC"), the prior
investment adviser, and the Adviser). The members of the Advisory Board are
distinct from the Board of Trustees, do not serve the Fund in any other
capacity and are persons who have no power to determine what securities are
purchased or sold and behalf of the Fund. Each member of the Advisory Board
may be contacted at 101 Huntington Avenue, Boston, Massachusetts 02199.

Members of the Advisory Board and their respective principal occupations
during the past five years are as follows:

R. Trent Campbell, President, FMS, Inc. (financial and management services);
former Chairman of the Board, Mosher Steel Company.

Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman from Texas;
co-founder, Houston Parents' League; former board member of various civic
and cultural organizations in Houston, including the Houston Symphony,
Museum of Fine Arts and YWCA. Mrs. Bentsen is presently active in
various civic and cultural activities in the Washington, D.C. area,
including membership on the Area Board for The March of Dimes and is a
National Trustee for the Botanic Gardens of Washington, D. C.

COMPENSATION OF THE BOARD OF TRUSTEES AND ADVISORY BOARD

The following table provides information regarding the compensation paid by
the Fund and the other investment companies in the John Hancock Fund Complex
to the Independent Trustees and the Advisory Board members for their services.
Mr. Boudreau, a non-Independent Trustee, and each of the officers of the Funds
are interested persons of the Adviser, are compensated by the Adviser and
received no compensation from the Funds for their services.

Total Compensation
Pension or Retirement from all Funds in John
Aggregate Benefits Accrued as Hancock Fund
Compensation Part of the Fund's Complex to
Trustees from the Fund Expenses Trustees**
- -------- ------------- -------- ----------
<S> <C> <C> <C>
James F. Carlin $ 3,981 $ 0 $ 60,450
William H. Cunningham 4,334 8,007 0
Charles L. Ladner 4,337 0 60,450
Leo E. Linbeck, Jr. 13,540 0 0
Patricia P. McCarter 4,337 0 60,200
Steven R. Pruchansky 4,516 0 62,450
Norman H. Smith 4,516 4,337 62,450
John P. Toolan 0 0 60,450
------- ------- --------
$39,561 $12,344 $366,450
<FN>
** The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is $366,450 as of the calendar year ended December 31,
1994. All Trustee\Directors except Messrs. Cunningham and Linbeck are
Trustees\Directors of 39 funds in the John Hancock Fund Complex. Messrs.
Cunningham and Linbeck are Trustees\Directors of 21 funds. (The Fund was not
part of the John Hancock Fund Complex until December 22, 1994 and Messrs.
Cunningham and Linbeck were not trustees or directors of any funds in the John
Hancock Fund Complex prior to December 22, 1994.)
</TABLE>
<TABLE>
<CAPTION>
Total Compensation
Pension or Retirement from all Funds in John
Aggregate Benefits Accrued as Hancock Fund
Compensation Part of the Fund's Complex to
Advisory Board from the Fund Expenses Trustees
- -------------- ------------- -------- ----------
<S> <C> <C> <C>
R. Trent Campbell $ 9,769 $ 0 $ 54,000
Mrs. Lloyd Bentsen 9,769 0 54,000
Thomas R. Powers 9,769 0 54,000
Thomas B. McDade 9,769 0 54,000
------- --- --------
$39,076 $ 0 $216,000
</TABLE>

Thomas R. Powers, Formerly Chairman of the Board, President and Chief
Executive Officer, TFMC; Director, West Central Advisory Board, Texas
Commerce Bank; Trustee, Memorial Hospital System; Chairman of the Board
of Regents of Baylor University; Member, Board of Governors, National
Association of Securities Dealers, Inc.; Formerly, Chairman, Investment
Company Institute; formerly, President, Houston Chapter of Financial
Executive Institute.

<PAGE> 298

Thomas B. McDade, Chairman and Director, TransTexas Gas Company; Director,
Houston Industries and Houston Lighting and Power Company; Director,
TransAmerican Companies (natural gas producer and transportation); Member,
Board of Managers, Harris County Hospital District; Advisory Director,
Commercial State Bank, El Campo; Advisory Director, First National Bank of
Bryan; Advisory Director, Sterling Bancshares; Former Director and Vice
Chairman, Texas Commerce Bancshares; and Vice Chairman, Texas Commerce
Bank.

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Prospectus, the Fund receives its investment advice from the
Adviser. Investors should refer to the Prospectus for a description of certain
information concerning the investment management contract. Each of the Trustees
and principal officers affiliated with the Trust who is also an affiliated
person of the Adviser is named above, together with the capacity in which such
person is affiliated with the Fund and the Adviser.

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts 02199-7603,
was organized in 1968 and currently has over $13 billion in assets under
management in its capacity as investment adviser to the Fund and the other
mutual funds and publicly traded investment companies in the John Hancock Fund
Complex having a combined total of over 1,060,000 shareholders. The Adviser is
a wholly-owned subsidiary of The Berkeley Financial Group, which is in turn a
wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which is in turn a
wholly-owned subsidiary of the Life Company, one of the most recognized and
respected financial institutions in the nation. With total assets under
management of $80 billion, the Life Company is one of the ten largest life
insurance companies in the United States, and carries Standard & Poor's and A.M.
Best's highest ratings. Founded in 1862, the Life Company has been serving
clients for over 130 years.

As described in the Prospectus under the caption "Organization and Management of
the Fund," the Trust, on behalf of the Fund, has entered into an investment
management contract with the Adviser. Under the investment management contract,
the Adviser provides the Fund with (i) a continuous investment program,
consistent with the Fund's stated investment objective and policies, (ii)
supervision of all aspects of the Fund's operations except those that are
delegated to a custodian, transfer agent or other agent and (iii) such
executive, administrative and clerical personnel, officers and equipment as are
necessary for the conduct of its business. The Adviser is responsible for the
day-to-day management of the Fund's portfolio assets.

No person other than the Adviser and its directors and employees regularly
furnishes advice to the Fund with respect to the desirability of the Fund
investing in, purchasing or selling securities. The Adviser may from time to
time receive statistical or other similar factual information, and information
regarding general economic factors and trends, from the Life Company and its
affiliates.

<PAGE> 299

Under the terms of the investment management contract with the Fund, the Adviser
provides the Fund with office space, equipment and supplies and other facilities
and personnel required for the business of the Fund. The Adviser pays the
compensation of all officers and employees of the Trust and pays the expenses of
clerical services relating to the administration of the Fund. All expenses
which are not specifically paid by the Adviser and which are incurred in the
operation of the Fund including, but not limited to, (i) the fees of the
Trustees of the Trust who are not "interested persons," as such term is defined
in the 1940 Act (the "Independent Trustees"), (ii) the fees of the members of
the Trust's Advisory Board (described above) and (iii) the continuous public
offering of the shares of the Fund are borne by the Fund. Subject to the
conditions set forth in a private letter ruling that the Fund has received from
the Internal Revenue Service relating to its multiple-class structure, class
expenses properly allocable to any Class A or Class B shares will be borne
exclusively by such class of shares.

As provided by the investment management contract, the Fund pays the Adviser an
investment management fee, which is accrued daily and paid monthly in arrears,
at a stated percentage of the Fund's average daily net asset value as
described in the Prospectus. See "Organization and Management of the Fund" in
the Prospectus.

The Adviser may voluntarily and temporarily reduce its advisory fee or make
other arrangements to limit the Fund's expenses to a specified percentage of
average daily net assets. The Adviser retains the right to re-impose the
advisory fee and recover any other payments to the extent that, at the end of
any fiscal year, the Fund's annual expenses fall below this limit.

In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of any 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 any additional arrangements necessary to eliminate any remaining excess
expenses. Currently, the most restrictive limit applicable to the Fund is 2.5%
of the first $30,000,000 of the Fund's average daily net asset value, 2% of the
next $70,000,000 and 1.5% of the remaining average daily net asset value.

Pursuant to the investment management contract, the Adviser is not liable to the
Fund or its shareholders for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which such contracts
relate, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
its reckless disregard of the obligations and duties under the contract.

The initial term of the investment management contract expires on December 22,
1996 and will continue in effect from year to year thereafter if approved
annually by a vote of a majority of the Independent Trustees of the Trust,
cast in person at a meeting called for the purpose of voting on such approval,
and by either a majority of the Trustees or the holders of a majority of the
Fund's outstanding voting securities. The management contract may, on 60
days' written notice, be

<PAGE> 300

terminated at any time without the payment of any penalty by the Fund by vote
of a majority of the outstanding voting securities of the Fund, by the
Trustees or by the Adviser. The management contract terminates automatically
in the event of its assignment.

Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Adviser or its affiliates provide investment
advice. Because of different investment objectives or other factors, a
particular security may be bought for one or more funds or clients when one or
more are selling the same security. If opportunities for the purchase or sale
of securities by the Adviser or for other funds or clients for which the
Adviser renders investment advice arise for consideration at or about the same
time, transactions in such securities will be made, insofar as feasible, for
the respective funds or clients in a manner deemed equitable to all of them.
To the extent that transactions on behalf of more than one client of the
Adviser, or its affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse
effect on price.

Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
investment management contract or any extension, renewal or amendment thereof
remains in effect. If the Fund's investment management contract is no longer
in effect, the Fund (to the extent that it lawfully can) will cease to use
such name or any other name indicating that it is advised by or otherwise
connected with the Adviser. In addition, the Adviser or the Life Company may
grant the non-exclusive right to use the name "John Hancock" or any similar
name to any other corporation or entity, including but not limited to any
investment company of which the Life Company or any subsidiary or affiliate
thereof or any successor to the business of any subsidiary or affiliate
thereof shall be the investment adviser.

For the fiscal years ended March 31, 1993, 1994 and 1995 advisory fees payable
by the Fund to TFMC, the Fund's former investment adviser, amounted to
$4,592,951 $4,328,830 and $2,576,039 respectively.

ADMINISTRATIVE SERVICES AGREEMENT. The Trust, on behalf of the Fund was a party
to an administrative services agreement with TFMC (the "Services Agreement"),
pursuant to which TFMC performed bookkeeping and accounting services and
functions, including preparing and maintaining various accounting books, records
and other documents and keeping such general ledgers and portfolio accounts
as are reasonably necessary for the operation of the Fund. Other administrative
services included communications in response to shareholder inquiries and
certain printing expenses of various financial reports. In addition, such staff
and office space, facilities and equipment was provided as necessary to provide
administrative services to the Fund. The Services Agreement was amended in
connection with the appointment of the Adviser as adviser to the Fund to permit
services under the Agreement to be provided to the Fund by the Adviser and its
affiliates. The Services Agreement was terminated during the current fiscal
year.

For the fiscal years ended March 31, 1993, 1994 and 1995 the Fund paid to TFMC
(pursuant to the Services Agreement) $413,900, $329,407 and $209,911 of which
$351,165, $278,168 and

<PAGE> 301

$181,384 respectively, was paid to TFMC and $62,735, $51,239 and $28,527
respectively, was paid for certain data processing and pricing information
services.

DISTRIBUTION CONTRACT

DISTRIBUTION CONTRACT. As discussed in the Prospectus, the Fund's shares are
sold on a continuous basis at the public offering price. John Hancock Funds,
a wholly-owned subsidiary of the Adviser, has the exclusive right, pursuant to
the Distribution Contract dated December 22, 1994 (the "Distribution
Contract"), to purchase shares from the Fund at net asset value for resale to
the public or to broker-dealers at the public offering price. Upon notice to
all broker-dealers ("Selling Brokers") with whom it has sales agreements, John
Hancock Funds may allow such Selling Brokers up to the full applicable sales
charge during periods specified in such notice. During these periods, such
Selling Brokers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.

The Distribution Contract was initially adopted by the affirmative vote of the
Fund's Board of Trustees including the vote of a majority of the Independent
Trustees, cast in person at a meeting called for such purpose. The
Distribution Contract shall continue in effect until December 22, 1995 and
from year to year thereafter if approved by either the vote of the Fund's
shareholders or the Board of Trustees including the vote of a majority of the
Independent Trustees, cast in person at a meeting called for such purpose.
The Distribution Contract may be terminated at any time, without penalty, by
either party upon sixty (60) days' written notice or by a vote of a majority
of the outstanding voting securities of the Fund and terminates automatically
in the case of an assignment by John Hancock Funds.

Total underwriting commissions for sales of the Fund's Class A shares for the
fiscal years ended December 31, 1993, 1994 and 1995 respectively, were
$3,075,865, $1,521,866 and $422,993 respectively. Of such amounts $234,687,
$173,929 and $41,343, respectively, was retained by the Fund's former
distributor, Transamerica Fund Distributors, Inc. $6,228 was retained by John
Hancock Funds in 1995 and the remainder was reallowed to dealers.

DISTRIBUTION PLAN. The Board of Trustees, including the Independent Trustees of
the Trust, approved new distribution plans pursuant to Rule 12b-1 under the
1940 Act for Class A shares ("Class A Plan") and Class B shares ("Class B
Plan"). Such Plans were approved by a majority of the outstanding shares of
each respective class on December 16, 1994 and became effective on December 22,
1994.

Under the Class A Plan, the distribution or service fee will not exceed an
annual rate of 0.25% of the average daily net asset value of the Class A shares
of the Fund (determined in accordance with the Fund's Prospectus as from time
to time in effect). Any expenses under the Class A Plan not reimbursed within
12 months of being presented to the Fund for repayment are forfeited and are
not carried over to future years. Under the Class B Plan, the distribution or
service fee to be paid by the Fund will not exceed an annual rate of 1.00% of
the average daily net assets of the Class B

<PAGE> 302

shares of the Fund (determined in accordance with the Fund's Prospectus as
from time to time in effect); provided that the portion of such fee used to
cover Service Expenses (described below) shall not exceed an annual rate of
0.25% of the average daily net asset value of the Class B shares of the Fund.
Under the Class B Plan, the fee covers the Distribution and Service Expenses
(described below) and interest expenses on unreimbursed distribution expenses.
In accordance with generally accepted accounting principles, the Fund does not
treat unreimbursed distribution expenses attributable to Class B shares as a
liability of the Fund and does not reduce the current net assets of Class B by
such amount, although the amount may be payable under the Class B Plan in the
future.

Under the Plans, expenditures shall be calculated and accrued daily and paid
monthly or at such other intervals as the Trustees shall determine. The fee
may be spent by John Hancock Funds on Distribution Expenses or Service
Expenses. "Distribution Expenses" include any activities or expenses
primarily intended to result in the sale of shares of the relevant class of
the Fund, including, but not limited to: (i) initial and ongoing sales
compensation payable out of such fee as such compensation is received by John
Hancock Funds or by Selling Brokers, (ii) direct out-of-pocket expenses
incurred in connection with the distribution of shares, including expenses
related to printing of prospectuses and reports; (iii) preparation, printing
and distribution of sales literature and advertising material; (iv) an
allocation of overhead and other branch office expenses of John Hancock Funds
related to the distribution of Fund shares (v) distribution expenses that were
incurred by the Fund's former distributor and not recovered through payments
under the Class A or Class B former plans or through receipt of contingent
deferred sales charges; and (vi) in the event that any other investment
company (the "Acquired Fund") sells all or substantially all of its assets to,
merges with or otherwise engages in a combination with the Fund, distribution
expenses originally incurred in connection with the distribution of the
Acquired Fund's shares. Service Expenses under the Plans include payments
made to, or on account of, account executives of selected broker-dealers
(including affiliates of John Hancock Funds) and others who furnish personal
and shareholder account maintenance services to shareholders of the relevant
class of the Fund.

Pursuant to the Plans, at least quarterly, John Hancock Funds provides the Fund
with a written report of the amounts expended under the Plans and the purpose
for which such expenditures were made. The Directors review such reports on a
quarterly basis. During the fiscal year ended March 31, 1995 the Funds paid
Investor Services the following amounts of expenses with respect to the Class
A shares and Class B shares of each of the Funds:

Printing and Interest,
Mailing of Expenses of Carrying or
Prospectuses Compensation John Other
to New to Selling Hancock Finance
Advertising Shareholders Brokers Funds Charges
----------- ------------ ------- ----- -------
<S> <C> <C> <C> <C> <C>
Class A Shares $77,694 $1,718 $3,792 $219,353 $ 0

Class B Shares $ 135 $ 9 $1,723 $ 760 $28

</TABLE>

During the fiscal year ended March 31, 1995, total payments made by the Fund
under the former Class A and Class B Rule 12b-1 plan to the former distributor
amounted to $1,050,940 and $214, respectively, and of such amount represented
payments for (1) the cost of printing and distribution prospectuses and
financial reports to investors, (2) various sales literature, (3) advertising
expenses, (4) distribution and/or administrative services and (5) service
fees.

Each of the Plans provides that it will continue in effect only as long as its
continuance is approved at least annually by a majority of both the Trustees
and the Independent Trustees. Each of the Plans provides that it may be
terminated (a) at any time by vote of a majority of the Trustees, a majority
of the Independent Trustees, or a majority of the respective Class'
outstanding voting securities or (b) by John Hancock Funds on 60 days' notice
in writing to the Fund. Each of the Plans further provides that it may not
be amended to increase the maximum amount of the fees for the services
described therein without the approval of a majority of the outstanding shares
of the class of the Fund which has voting rights with respect to the Plan.
Each of the Plans provides that no material amendment to the Plan will, in any
event, be effective unless it is approved by a majority vote of the Trustees
and the Independent Trustees of the Trust. The holders of Class A shares and
Class B shares have exclusive voting rights with respect to the Plan
applicable to their respective class of shares. In adopting the Plans, the
Board of Trustees has determined that, in its judgment, there is a reasonable
likelihood that each Plan will benefit the holders of the applicable class of
shares of the Fund.

Information regardingthe services renderedunder the Plansand the Distribution
Contract and the amounts paid therefore by the respective Class of the
Fund are provided to, and reviewed by, the Board of Trustees on a quarterly
basis. In its quarterly review, the Board of Trustees considers the continued
appropriateness of the Plans and the Distribution Contract and the level of
compensation provided therein.

When the Fund seeks an Independent Trustee to fill a vacancy or as a nominee for
election by shareholders, the selection or nomination of the Independent
Trustee is, under resolutions adopted by the Trustees contemporaneously with
their adoption of the Plans, committed to the discretion of the Committee on
Administration of the Trustees. The members of the Committee on

<PAGE> 304

Administration are all Independent Trustees and identified in this Statement
of Additional Information under the heading "Those Responsible for
Management."

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of the Fund's shares,
the following procedures are utilized wherever applicable.

Debt investment securities are valued on the basis of valuations furnished by a
principal market maker or a pricing service, both of which generally utilize
electronic data processing techniques to determine valuations for normal
institutional size trading units of debt securities without exclusive reliance
upon quoted prices.

Short-term debt investments which have a remaining maturity of 60 days or less
are generally valued at amortized cost, which the Trustees have determined
approximates market value. If market quotations are not readily available or
if in the opinion of the Adviser any quotation or price is not representative
of true market value, the fair value of the security may be determined in good
faith in accordance with procedures approved by the Trustees.

The Fund will not price its securities on the following national holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day; and Christmas Day.

INITIAL SALES CHARGE ON CLASS A SHARES

The sales charges applicable to purchases of Class A shares of the Fund are
described in the Fund's Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Prospectus are described in
detail below. In calculating the sales charge applicable to current purchases
of Class A shares, the investor is entitled to cumulate current purchases with
the greater of the current value (at offering price) of the Class A shares of
the Fund, or if Investor Services is notified by the investor's dealer or the
investor at the time of the purchase, the cost of the Class A shares owned.

COMBINED PURCHASES. In calculating the sales charge applicable to purchases of
Class A shares made at one time, the purchases will be combined if made by (a)
an individual, his or her spouse and their children under the age of 21
purchasing securities for his or her own account, (b) a trustee or other
fiduciary purchasing for a single trust, estate or fiduciary account and (c)
certain groups of four or more individuals making use of salary deductions or
similar group methods of payment whose funds are combined for the purchase of
mutual fund shares. Further information about combined purchases, including
certain restrictions on combined group purchases, is available from Investor
Services or a Selling Broker's representative.

31
<PAGE> 305

WITHOUT SALES CHARGE. As described in the Prospectus, Class A shares of the
Fund may be sold without a sales charge to certain persons described in the
Prospectus.

ACCUMULATION PRIVILEGE. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of the reduced
sales charge by taking into account not only the amount then being invested but
also the purchase price or value of the Class A shares already held by such
person.

COMBINATION PRIVILEGE. Reduced sales charges (according to the schedule set
forth in the Class A and Class B Prospectus) also are available to an investor
based on the aggregate amount of his concurrent and prior investments in Class
A shares of the Fund and shares of all other John Hancock funds which carry a
sales charge.

LETTER OF INTENTION. The reduced sales loads are also applicable to investments
made over a specified period pursuant to a Letter of Intention (LOI), which
should be read carefully prior to its execution by an investor. The Fund offers
two options regarding the specified period for making investments under the
LOI. All investors have the option of making their investments over a period of
thirteen (13) months. Investors who are using the Fund as a funding medium for
a qualified retirement plan, however, may opt to make the necessary investments
called for by the LOI over a forty-eight (48) month period. These
qualified retirement plans include IRAs, SEP, SARSEP, TSA, 401(k) plans, TSA
plans and 457 plans. Such an investment (including accumulations and
combinations) must aggregate $50,000 or more invested during the specified
period from the date of the LOI or from a date within ninety (90) days prior
thereto, upon written request to Investor Services. The sales charge applicable
to all amounts invested under the LOI is computed as if the aggregate amount
intended to be invested had been invested immediately. If such aggregate amount
is not actually invested, the difference in the sales charge actually paid and
the sales charge payable had the LOI not been in effect is due from the
investor. However, for the purchases actually made with the specified period
(either 13 or 48 months), the sales charge applicable will not be higher than
that which would have been applied (including accumulations and combinations)
had the LOI been for the amount actually invested.

The LOI authorizes Investor Services to hold in escrow sufficient Class A shares
(approximately 5% of the aggregate) to make up any difference in sales charges
on the amount intended to be invested and the amount actually invested, until
such investment is completed within the specified period, at which time the
escrow shares will be released. If the total investment specified in the LOI is
not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing
the LOI, the investor authorizes Investor Services to act as his attorney-in-
fact to redeem any escrow shares and adjust the sales charge, if necessary. A
LOI does not constitute a binding commitment by an investor to purchase, or by
the Fund to sell, any additional shares and may be terminated at any time.

<PAGE> 306

DEFERRED SALES CHARGE ON CLASS B SHARES

Investments in Class B shares are purchased at net asset value per share without
the imposition of a sales charge so that the Fund will receive the full amount
of the purchase payment.

CONTINGENT DEFERRED SALES CHARGE. Class B shares which are redeemed within six
years of purchase will be subject to a contingent deferred sales charge
("CDSC") at the rates set forth in the Class A and Class B Prospectus as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the current market value or the
original purchase cost of the Class B shares being redeemed. Accordingly, no
CDSC will be imposed on increases in account value above the initial purchase
prices, including Class B shares derived from reinvestment of dividends or
capital gains distributions.

The amount of the CDSC, if any, will vary depending on the number of years from
the time of payment for the purchase of Class B shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.

Proceeds from the CDSC are paid to John Hancock Funds and are used in whole or
in part by John Hancock Funds to defray its expenses related to providing
distribution-related services to the Fund in connection with the sale of the
Class B shares, such as the payment of compensation to select Selling Brokers
for selling Class B shares. The combination of the CDSC and the distribution
and service fees facilitates the ability of the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the
Class A and Class B Prospectus for additional information regarding the CDSC.

SPECIAL REDEMPTIONS

Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed the Trustees. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any
such securities would be valued for the purposes of making such payment at the
same value as used in determining net asset value. The Fund has elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1%
of the net asset value of the Fund during any 90 day period for any one
account.

<PAGE> 307

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE. As described more fully in the Prospectus, the Fund
permits exchanges of shares of any class of the Fund for shares of the same
class in any other John Hancock fund offering that class.

SYSTEMATIC WITHDRAWAL PLAN. As described briefly in the Class A and Class B
Prospectus, the Fund permits the establishment of a Systematic Withdrawal
Plan. Payments under this plan represent proceeds arising from the redemption
of Fund shares. Since the redemption price of Fund shares may be more or less
than the shareholder's cost, depending upon the market value of the securities
owned by the Fund at the time of redemption, the distribution of cash pursuant
to this plan may result in realization of gain or loss for purposes of
Federal, state and local income taxes. The maintenance of a Systematic
Withdrawal Plan concurrently with purchases of additional Class A or Class B
shares of the Fund could be disadvantageous to a shareholder because of the
initial sales charge payable on such purchases of Class A shares and the CDSC
imposed on redemptions of Class B shares and because redemptions are taxable
events. Therefore, a shareholder should not purchase Fund shares at the same
time as a Systematic Withdrawal Plan is in effect. The Fund reserves the
right to modify or discontinue the Systematic Withdrawal Plan of any
shareholder on 30 days' prior written notice to such shareholder, or to
discontinue the availability of such plan in the future. The shareholder may
terminate the plan at any time by giving proper notice to Investor Services.

MONTHLY AUTOMATIC ACCUMULATION PROGRAM ("MAAP"). This program is explained
fully in the Fund's Class A and Class B Prospectus and the Account Privileges
Application. The program, as it relates to automatic investment checks, is
subject to the following conditions:

The investments will be drawn on or about the day of the month indicated.

The privilege of making investments through the Monthly Automatic Accumulation
Program may be revoked by Investor Services without prior notice if any
investment is not honored by the shareholder's bank. The bank shall be under
no obligation to notify the shareholder as to the non-payment of any check.

The program may be discontinued by the shareholder either by calling Investor
Services or upon written notice to Investor Services which is received at
least five (5) business days prior to the due date of any investment.

<PAGE> 308

shares of the Fund or in Class A shares of another John Hancock mutual fund.
If a CDSC was paid upon a redemption, a shareholder may reinvest the proceeds
from that redemption at net asset value in additional shares of the class from
which the redemption was made. The shareholder's account will be credited
with the amount of any CDSC charged upon the prior redemption and the new
shares will continue to be subject to the CDSC. The holding period of the
shares acquired through reinvestment will, for purposes of computing the CDSC
payable upon a subsequent redemption, include the holding period of the
redeemed shares. The Fund may modify or terminate the reinvestment privilege
at any time.

A redemption or exchange of Fund shares is a taxable transaction for Federal
income tax purposes even if the reinvestment privilege is exercised, and any
gain or loss realized by a shareholder on the redemption or other disposition
of Fund shares will be treated for tax purposes as described under the caption
"Tax Status."

DESCRIPTION OF THE TRUST'S SHARES

Ownership in the Fund is represented by transferable shares of beneficial
interest. The Declaration of Trust permits the Trustees to create an
unlimited number of series and classes of shares of the Trust and, with
respect to each series and class, to issue an unlimited number of full or
fractional shares and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial
interests of the series.

Pursuant to the Declaration of Trust, the Trustees have established six series
of shares, including the Fund, and may authorize the creation of additional
series of shares (the proceeds of which would be invested in separate,
independently managed portfolios) and additional classes within any series
(which would be used to distinguish among the rights of different categories of
shareholders, as might be required by future regulations or other unforeseen
circumstances). The five other series of Trust are John Hancock Intermediate
Government Trust, John Hancock

<PAGE> 309

Adjustable U.S. Government Trust, John Hancock Investment Quality Bond Fund,
John Hancock U.S. Government Trust and John Hancock Adjustable U.S. Government
Fund. As of the date of this Statement of Additional Information, the
Trustees have authorized the issuance of two classes of shares of the Fund,
designated as Class A and Class B. Class A and Class B shares of the Fund
represent an equal proportionate interest in the aggregate net asset values
attributable to that class of the Fund. Holders of Class A shares and Class B
shares each have certain exclusive voting rights on matters relating to the
Class A Plan and the Class B Plan, respectively. The different classes of the
Fund may bear different expenses relating to the cost of holding shareholder
meetings necessitated by the exclusive voting rights of any class of shares.

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 on the same day and will be
in the same amount, except for differences caused by the fact that (i) the
distribution and service fees relating to Class A and Class B shares will be
borne exclusively by that Class, (ii) Class B shares will pay higher
distribution and service fees than Class A shares and (iii) each of Class A
shares and Class B shares will bear any class expenses properly allocable to
such class of shares, subject to the conditions set forth in a private letter
ruling that the Fund has received from the Internal Revenue Service relating to
its multiple-class structure. Accordingly, the net asset value per share
may vary depending whether Class A shares or Class B shares are purchased.

VOTING RIGHTS. Shareholders are entitled to a full vote for each full share
held. The Trustees themselves have the power to alter the number and the
terms of office of Trustees, and they may at any time lengthen their own terms
or make their terms of unlimited duration (subject to certain removal
procedures) and appoint their own successors, provided that at all times at
least a majority of the Trustees have been elected by shareholders. The
voting rights of shareholders are not cumulative, so that holders of more than
50% of the shares voting can, if they choose, elect all Trustees being voted
upon, while the holders of the remaining shares would be unable to elect any
Trustees. Although the Trust need not hold annual meetings of shareholders,
the Trustees may call special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Also, a shareholders' meeting must be called if so requested in
writing by the holders of record of 10% or more of the outstanding shares of
the Trust. In addition, the Trustees may be removed by the action of the
holders of record of two-thirds or more of the outstanding shares.

SHAREHOLDER LIABILITY. The Declaration of Trust provides that no Trustee,
officer, employee or agent of the Trust is liable to the Trust or any series
or to a shareholder, nor is any Trustee, officer, employee or agent liable to
any third persons in connection with the affairs of the Trust, except as such
liability may arise from his or its own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties. It also provides that all
third persons shall look solely to the particular series' property for
satisfaction of claims arising in connection with the affairs of that series.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Trust.

<PAGE> 310

As a Massachusetts business trust, the Trust is not required to issue share
certificates. The Trust shall continue without limitation of time subject to
the provisions in the Declaration of Trust concerning termination by action of
the shareholders.

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for acts or obligations
of the trust. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts, obligations and affairs of the
Trust. The Declaration of Trust also provides for indemnification out of the
Trust's assets for all losses and expenses of any shareholder held personally
liable by reason of being or having been a shareholder. Liability is
therefore limited to circumstances in which the Trust itself would be unable
to meet its obligations, and the possibility of this occurrence is remote.

TAX STATUS

The Fund is treated as a separated entity for accounting and tax purposes. The
Fund has qualified and elected to be treated as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and intends to continue to so qualify in the future. As such
and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions, and the
diversification of its assets, the Fund will not be subject to Federal income
tax on its net income (including net short-term and long-term capital gains)
which is distributed to shareholders at least annually in accordance with the
timing requirements of the Code.

The Fund will be subject to a 4% non-deductible Federal excise tax on certain
amounts not distributed (and not treated as having been distributed) on a
timely basis in accordance with annual minimum distribution requirements. The
Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.

Distributions from the Fund's current or accumulated earnings and profits
("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital
gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in
each share so received equal to the amount of cash they would have received
had they elected to receive the distributions in cash, divided by the number
of shares received.

The amount of the Fund's net short-term and long-term capital gains, if any, in
any given year will vary depending upon the Adviser's current investment
strategy and whether the Adviser believes it to be in the best interest of the
Fund to dispose of portfolio securities or enter into options or futures
transactions that will generate capital gains. At the time of an investor's
purchase of Fund

<PAGE> 311

shares, a portion of the purchase price is often attributable to realized or
unrealized appreciation in the Fund's portfolio. Consequently, subsequent
distributions from such appreciation may be taxable to such investor even if
the net asset value of the investor's shares is, as a result of the
distributions, reduced below the investor's cost for such shares, and the
distributions in reality represent a return of a portion of the purchase
price.

Upon a redemption of shares of the Fund (including by exercise of the exchange
privilege) a shareholder may realize a taxable gain or loss depending upon his
basis in his shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, depending upon the shareholder's tax holding period
for the shares. A sales charge paid in purchasing Class A shares of the Fund
cannot be taken into account for purposes of determining gain or loss on the
redemption or exchange of such shares within 90 days after their purchase to
the extent shares of the Fund or another John Hancock Fund are subsequently
acquired without payment of a sales charge pursuant to the reinvestment or
exchange privilege. Such disregarded load will result in an increase in the
shareholder's tax basis in the shares subsequently acquired. Also, any loss
realized on a redemption or exchange may be disallowed to the extent the
shares disposed of are replaced with other shares of the Fund within a period
of 61 days beginning 30 days before and ending 30 days after the shares are
disposed of, such as pursuant to the Dividend Reinvestment Plan. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized upon the redemption of shares with a tax
holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term
capital gain with respect to such shares.

Although its present intention is to distribute all net short-term and long-term
capital gains, if any, the Fund reserves the right to retain and reinvest all or
any portion of its "net capital gain," which is the excess, as computed for
Federal income tax purposes, of net long-term capital gain over net short-term
capital loss in any year. The Fund will not in any event distribute net long-
term capital gain realized in any year to the extent that a capital loss is
carried forward from prior years against such gain. To the extent such excess
was retained and not exhausted by the carryforward of prior years' capital
losses, it would be subject to Federal income tax in the hands of the Fund. Each
shareholder would be treated for Federal income tax purposes as if the Fund had
distributed to him on the last day of its taxable year his pro rata share of
such excess, and he had paid his pro rata share of the taxes paid by the Fund
and reinvested the remainder in the Fund. Accordingly, each shareholder would
(a) include his pro rata share of such excess as long-term capital gain income
in his return for his taxable year in which the last day of the Fund's
taxable year falls, (b) be entitled either to a tax credit on his return for, or
to a refund of, his pro rata share of the taxes paid by the Fund, and (c) be
entitled to increase the adjusted tax basis for his shares in the Fund by the
difference between his pro rata share of such excess and his pro rata share of
such taxes.

For Federal income tax purposes, the Fund is generally permitted to carry
forward a net capital loss in any year to offset its net capital gains, if any,
during the eight years following the year of the loss. To the extent
subsequent net capital gains are offset by such losses, they would not

<PAGE> 312

result in Federal income tax liability to the Fund and, as noted above, would
not be distributed as such to shareholders. The Fund has approximately
$374,800,000 of capital loss carry forwards available to offset future net
capital gains, which carryforwards expire as follows: $231,900,000 in 1996,
$50,300,000 in 1997, $19,100,000 in 1998, $6,900,000 in 1999 and $66,000,000
in 2002.

Dividends, including capital gain distributions, paid by the Fund to its
corporate shareholders will not qualify for the corporate dividends received
deduction in their hands.

If the Fund invests in certain PIKs zero coupon securities or certain increasing
rate securities (and, in general any other securities with original issue
discount or with market discount if the Fund elects to include accrued market
discount in income currently), the Fund must accrue income on such investments
prior to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.

Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirements plans. Shareholders should consult their tax advisers for more
information. The Fund may be required to account for its transactions in dollar
rolls in a manner that, under certain circumstances, may limit the extent of its
participation in such transactions.

Limitations imposed by the Code on regulated investment companies like the Fund
may restrict the Fund's ability to enter into futures and options transactions.

Certain options and futures transactions undertaken by the Fund may cause the
Fund to recognize gains or losses from marking to market even though its
positions have not been sold or terminated and affect the character as long-
term or short-term and timing of some capital gains and losses realized by the
Fund. Also, certain of the Fund's losses on its transactions involving
options or futures contracts and/or offsetting portfolio positions may be
deferred rather than being taken into account currently in calculating the
Fund's taxable income or gains. These transactions may therefore affect the
amount, timing and character of the Fund's distributions to shareholders.
Certain of the applicable tax rules may be modified if the Fund is eligible
and chooses to make one or more of certain tax elections that may be
available. The Fund will take into account the special tax rules (including
consideration of available elections) applicable to options and futures
contracts in order to minimize any potential adverse tax consequences.

The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts or

<PAGE> 313

estates) subject to tax under such law. The discussion does not address
special tax rules applicable to certain classes of investors, such as tax-
exempt entities, insurance companies, and financial institutions. Dividends,
capital gain distributions, and ownership of or gains realized on the
redemption (including an exchange) of Fund shares may also be subject to state
and local taxes. Shareholders should consult their own tax advisers as to the
Federal, state or local tax consequences of ownership of shares of, and
receipt of distributions from, the Fund in their particular circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which their
investment in the Fund is effectively connected will be subject to U.S.
Federal income tax treatment that is different from that described above.
These investors may be subject to nonresident alien withholding tax at the
rate of 30% (or a lower rate under an applicable tax treaty) on amounts
treated as ordinary dividends from the Fund and, unless an effective IRS Form
W-8 or authorized substitute is on file, to 31% backup withholding on certain
other payments from the Fund. Non-U.S. investors should consult their tax
advisers regarding such treatment and the application of foreign taxes to an
investment in the Fund.

The Fund is not subject to Massachusetts corporate excise or franchise taxes.
Provided that the Fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.

CALCULATION OF PERFORMANCE

For the 30-day period ended March 31, 1995, the annualized yield of the Fund's
Class A and Class B shares were 5.92% and 5.55%, respectively. The average
annual total returns of the Class A shares of the Fund for the one, five and
life of the Fund (the Fund commenced operations on December 31, 1984) periods
ended March 31, 1995 were 1.39%, 7.31% and 7.25%, respectively. Total return
(not annualized) since inception on September 30, 1994 for Class B shares was
(0.79%).

The Fund's yield is computed by dividing net investment income per share
determined for a 30-day period by the maximum offering price per share (which
includes the full sales charge) on the last day of the period, according to
the following standard formula:

Yield = 2 [(a-b + 1 )6 -1]
---
cd
Where:

a = dividends and interest earned during the period.

b = net expenses accrued during the period.

<PAGE> 314

c = the average daily number of fund shares outstanding during the
period that would be entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period (NAV where applicable).

The Fund's total return is computed by finding the average annual
compounded rate of return over the 1-year, 5-year, and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:

ERV = P (1 + T)n

P = a hypothetical initial investment of $1,000.

T = average annual total return

n = number of years

ERV= ending redeemable value of a hypothetical $1,000 investment made
at the beginning of the designated period or fraction thereof.

In the case of Class A shares or Class B shares, this calculation assumes
the maximum sales charge is included in the initial investment or the CDSC is
applied at the end of the period. This calculation also assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The "distribution rate" is determined
by annualizing the result of dividing the declared dividends of the Fund
during the period stated by the maximum offering price or net asset value at
the end of the period.

In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value
of an investment over a stated period. Cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions, over any
time period. Total returns may be quoted with or without taking the Fund's
maximum sales charge on Class A shares or the CDSC on Class B shares into
account. Excluding the Fund's sales charge on Class A shares and the CDSC on
Class B shares from a total return calculation produces a higher total return
figure.

From time to time, in reports and promotional literature, the Fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper Analytical Services, Inc.'s "Lipper -- Fixed
Income Fund Performance Analysis," a monthly publication which tracks net
assets, total return, and yield on approximately 1,700 fixed income mutual
funds in the United States. Ibbotson and Associates, CDA Weisenberger and
F.C. Towers are also used for comparison purposes, as well a the Russell and
Wilshire Indices.

<PAGE> 315

The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of
the Fund for any period in the future. The performance of the Fund is a
function of many factors including its earnings, expenses and number of
outstanding shares. Fluctuating market conditions; purchases, sales and
maturities of portfolio securities; sales and redemptions of shares of
beneficial interest; and changes in operating expenses are all examples of
items that can increase or decrease the Fund's performance.

ADDITIONAL PERFORMANCE INFORMATION. The Fund may use comparative
performance information from certain industry research materials and/or
published in various periodicals. The characteristics of the investments in
such comparisons may be different from those investments of the Fund's
portfolio. In addition, the formula used to calculate the performance
statistics of such investments may not be identical to the formula used by the
Fund to calculate its performance figures. From time to time, advertisements
or information for the Fund may include a discussion of certain attributes or
benefits to be derived by an investment in the Fund. Such advertisements or
information may include symbols, headlines or other material which highlight
or summarize the information discussed in more detail in the communication.

The following publications, indices, averages and investments which may
be used in advertisements or information concerning the Fund for dissemination
to investors or shareholders, include but are not limited to:

a) Lipper - Mutual Fund Performance Analysis, Lipper - Fixed Income
Analysis, and Lipper Mutual Fund indexes - measure total return and
average current yield for the mutual fund industry. Ranks individual
mutual fund performance over specified time periods assuming reinvestment
of all distributions, exclusive of any applicable sales charges.

b) CDA Mutual Fund Report, published by CDA Investment Technologies, Inc. -
analyzes price, current yield, risk, total return, and average rate of
return (average annual compounded growth rate) over specified time periods
for the mutual fund industry.

c) Mutual Fund Source Book, and "Morningstar Mutual Funds" published by
Morningstar, Inc. - analyzes price, yield, risk, and total return for
selected mutual funds. Its ratings of 1 (low) and 5 (high) stars are
based on a fund's historical risk/reward ratio compared with similar funds
for 3-, 5- and 10-year periods, including all sales charges and

<PAGE> 316

fees. Morningstar, Inc., considered to be an expert in independent fund
performance monitoring, has consented to the use of its ratings in Fund
advertisements.

d) Financial publications: BARRONS, BUSINESS WEEK, PERSONAL FINANCE,
FINANCIAL WORLD, FORBES, FORTUNE, "The Wall Street Journal", MUNI WEEK,
WEISENBERGER INVESTMENT COMPANIES SERVICE, INSTITUTIONAL INVESTOR, and
MONEY - rate fund performance over specified time periods and provide
other relative performance or industry information.

e) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics - a statistical measure of change, over time,
in the price of goods and services in major expenditure groups.

f) Stocks, Bonds, Bills, and Inflation, published by Ibbotson Associates -
historical measure of yield, price, and total return for common and small
company stock, long-term government bonds, Treasury bills, and inflation.

g) Savings and Loan Historical Interest Rates - as published in the U.S.
Savings & Loan League Fact Book.

h) Salomon Brothers Broad Bond Index or its component indices - The Broad
Index measures yield, price and total return for Treasury, Agency,
Corporate, and Mortgage bonds.

i) Salomon Brothers Composite High Yield Index or its component indices -
The High Yield Index measures yield, price and total return for Long-Term
High-Yield Index, Intermediate-Term High-Yield index and Long-Term Utility
High-Yield Index.

j) Lehman Brothers Aggregate Bond index or its component indices (including
Municipal Bond Index) - The Aggregate Bond Index measures yield, price and
total return for Treasury, Agency, Corporate, Mortgage Government/
Corporate, Government, Treasury, Intermediate, High Yield and Yankee bonds.

k) Standard & Poor's Bond Indices - measure yield and price of Corporate,
Municipal, and government bonds.

l) Other taxable investments, including certificates of deposit (CDs), money
market deposit accounts (MMDAs), checking accounts, savings accounts,
money market mutual funds, and repurchase agreements.

m) Historical data supplied by the research departments of Lehman Hutton,
First Boston Corporation, Morgan Stanley, Salomon Brothers, Merrill Lynch,
and Donaldson Lufkin and Jenrette.

<PAGE> 317

n) Donoghue's Money Fund Reports - industry averages for 7-day annualized
and compounded yields of taxable, tax-free and government money funds.

In addition, advertisements and sales materials may contain hypothetical
performance examples for purposes of illustrating reinvestment (or
"compounding") of dividends at fixed rates of return or tax advantages to be
derived from deferring payment of federal (and state) income taxes (at maximum
rates) as compared to taxable investments assuming fixed rates of return.
Illustrations may also include (1) hypothetical investments in various
retirement plans, such as IRAs, made by investors of various ages or (2)
comparisons to retirement plans funded by annuity or bank products.

In assessing such comparisons, an investor should consider the following
factors:

a) It is generally either not possible or not practicable to invest in an
average or index of certain investments.

b) Certificates of deposit issued by banks and other depository institutions
represent an alternative income producing product. Certificates of
deposit may offer fixed or variable interest rates and principal is
guaranteed and may be insured. Withdrawal of deposits prior to maturity
will normally be subject to a penalty. Rates offered by banks and other
depository institutions are subject to change at any time specified by the
issuing institution.

c) United States Treasury Bills, Notes or Bonds represent alternative income
producing products. Treasury obligations are issued in selected
denominations. Rates of Treasury obligations are fixed at the time of
issuance and payment of principal and interest is backed by the full faith
and credit of the United States Government. The market value of such
instruments will generally fluctuate inversely with interest rates prior
to maturity and will equal par value at maturity.

Past performance is no guarantee of future results. In addition,
investors are advised to consult their brokers or financial advisers when
considering an investment in the Fund based upon performance comparisons.

The composition of the investments in such indexes and the
characteristics of such benchmark investments are not identical to, and in
some cases are very different from, those of the Fund's portfolio. These
indexes and averages are generally unmanaged and the items included in the
calculations of such indexes and averages may not be identical to the formulas
used by the Fund to calculate its performance figures.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by the Adviser and officers
of the Trust pursuant to

<PAGE> 318

recommendations made by an investment committee of the Adviser, which consists
of officers and directors of the Adviser and its affiliates and officers and
Trustees who are interested persons of the Trust. Orders for purchases and
sales of securities are placed in a manner which, in the opinion of the
officers of the Trust, will offer the best price and market for the execution
of each such transaction. Purchases from underwriters of portfolio securities
may include a commission or commissions paid by the issuer and transactions
with dealers serving as market makers reflect a "spread." Investments in debt
securities are generally traded on a net basis through dealers acting for
their own account as principals and not as brokers; no brokerage commissions
are payable on such transactions.

The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing
primary policy, the Rules of Fair Practice of the NASD and other policies that
the Trustees may determine, the Adviser may consider sales of shares of the
Fund as a factor in the selection of broker-dealers to execute the Fund's
portfolio transactions.

To the extent consistent with the foregoing, the Fund will be governed in
the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Adviser of the Fund, and their value and expected contribution to the
performance of the Fund. It is not possible to place a dollar value on
information and services to be received from brokers and dealers, since it is
only supplementary to the research efforts of the Adviser. The receipt of
research information is not expected to reduce significantly the expenses of
the Adviser. The research information and statistical assistance furnished by
brokers and dealers may benefit the Life Company or other advisory clients of
the Adviser, and conversely, brokerage commissions and spreads paid by other
advisory clients of the Adviser may result in research information and
statistical assistance beneficial to the Fund. The Fund will make no
commitments to allocate portfolio transactions upon any prescribed basis.
While the Trust's officers will be primarily responsible for the allocation of
the Fund's brokerage business, their policies and practices in this regard
must be consistent with the foregoing and will at all times be subject to
review by the Trustees. For the fiscal years ended March 31, 1995, 1994 and
1993, brokerage commissions paid by the Fund on portfolio transactions were
$223,500, $269,642, and $414,512 respectively.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Fund may pay to a broker which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This
practice is subject to a good faith determination by the Trustees that the
price is reasonable in light of the services provided and to policies that the
Trustees may adopt from time to time. During the fiscal year ended March 31,
1994, the Fund did not pay

<PAGE> 319

commissions as compensation to any brokers for research services such as
industry, economic and company reviews and evaluations of securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated ("Tucker Anthony")
John Hancock Distributors, Inc. ("John Hancock Distributors") and Sutro &
Company, Inc. ("Sutro"), are broker-dealers ("Affiliated Brokers"). Pursuant
to procedures determined by the Trustees and consistent with the above policy
of obtaining best net results, the Fund may execute portfolio transactions
with or through Tucker Anthony or Sutro. During the year ended March 31,
1994, the Fund did not execute any portfolio transactions with then affiliated
brokers.

Any of the Affiliated Brokers may act as broker for the Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Trustees pursuant to the 1940 Act.
Commissions paid to an Affiliated Broker must be at least as favorable as
those which the Trustees believe to be contemporaneously charged by other
brokers in connection with comparable transactions involving similar
securities being purchased or sold. A transaction would not be placed with an
Affiliated Broker if the Fund would have to pay a commission rate less
favorable than the Affiliated Broker's contemporaneous charges for comparable
transactions for its other most favored, but unaffiliated, customers, except
for accounts for which the Affiliated Broker acts as a clearing broker for
another brokerage firm, and any customers of the Affiliated Broker not
comparable to the Fund as determined by a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust, the Adviser or
the Affiliated Brokers. Because the Adviser, which is affiliated with the
Affiliated Brokers, has, as an investment adviser to the Fund, the obligation
to provide investment management services, which includes elements of research
and related investment skills, such research and related skills will not be
used by the Affiliated Brokers as a basis for negotiating commissions at a
rate higher than that determined in accordance with the above criteria. The
Fund will not effect principal transactions with Affiliated Brokers. The Fund
may, however, purchase securities from other members of underwriting
syndicates of which Tucker Anthony, Sutro and John Hancock Distributors are
members, but only in accordance with the policy set forth above and procedures
adopted and reviewed periodically by the Trustees.

The Fund's portfolio turnover rates for the fiscal years ended March 31,
1993, 1994 and 1995 were 322% and 453% and 337% respectively.

TRANSFER AGENT SERVICES

<PAGE> 320

CUSTODY OF PORTFOLIO

Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Trust, on behalf of the Fund, and Investors Bank and
Trust ("IBT") 24 Federal Street, Boston, Massachusetts. Under the custodian
agreement, IBT performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116, has
been selected as the independent auditors of the Fund. The financial
statements of the Fund included in the Prospectus and this Statement of
Additional Information have been audited by Ernst & Young LLP for the periods
indicated in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.

<PAGE> 321
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> 322
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> 323
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>

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.

9
<PAGE> 324
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> 325
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> 326
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> 327

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:

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.
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> 328
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.

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> 329
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.

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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.

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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

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JOHN HANCOCK U.S. GOVERNMENT TRUST
JOHN HANCOCK INTERMEDIATE GOVERNMENT TRUST

CLASS A AND CLASS B SHARES

STATEMENT OF ADDITIONAL INFORMATION

JULY 17, 1995

This Statement of Additional Information ("SAI") provides information about
John Hancock U.S. Government Trust ("U.S. Government Fund") and John Hancock
Intermediate Government Trust ("Intermediate Government Fund"; each of U.S.
Government Fund and Intermediate Government Fund, a "Fund" and collectively,
the "Funds"), each a series of John Hancock Bond Fund (the "Trust"), in
addition to the information that is contained in the Funds' Prospectuses, each
dated July 17, 1995.

This SAI is not a prospectus. It should be read in conjunction with each
Fund's Prospectus, copies of which can be obtained free of charge by writing or
telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

<TABLE>
TABLE OF CONTENTS

<CAPTION>
Cross- Cross-Referenced
Referenced to
Statement to U.S. Intermediate
of Government Government
Additional Fund Fund
Information Prospectus Prospectus
Page Page Page
<S> <C> <C> <C>

Organization of the Trust . . . . . . . . . . . . . . . . . . . . 2 8 7
Investment Objectives and Policies . . . . . . . . . . . . . . . 2 4 4
Certain Investment Practices . . . . . . . . . . . . . . . . . . 4 4 4
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . 13 4 4
Those Responsible for Management . . . . . . . . . . . . . . . . 15 8 7
Investment Advisory and Other Services . . . . . . . . . . . . . 27 8 7
Distribution Contracts . . . . . . . . . . . . . . . . . . . . . 30 9 8

</TABLE>
<PAGE> 333
<TABLE>
<S> <C> <C> <C>

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 33 15 14
Initial Sales Charge on Class A Shares . . . . . . . . . . . . . 34 9 8
Deferred Sales Charge on Class B Shares . . . . . . . . . . . . . 35 9 8
Special Redemptions . . . . . . . . . . . . . . . . . . . . . . . 36 9 8
Additional Services and Programs . . . . . . . . . . . . . . . . 36 22 22
Description of the Trust's Shares . . . . . . . . . . . . . . . . 38 8 7
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 11 11
Calculation of Performance . . . . . . . . . . . . . . . . . . . 43 12 12
Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . 47 N/A N/A
Transfer Agent Services . . . . . . . . . . . . . . . . . . . . . 50 Back Cover Back Cover
Custody of Portfolio . . . . . . . . . . . . . . . . . . . . . . 50 Back Cover Back Cover
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . 50 Back Cover Back Cover
Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-1 3 3

</TABLE>

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ORGANIZATION OF THE TRUST

The Trust is an open-end management investment company organized as a
Massachusetts business trust under a Declaration of Trust dated December 12,
1984. The Trust currently has six series, including the Funds. Prior to
December 22, 1994, the Trust was called Transamerica Bond Fund and the Funds
were called Transamerica U.S. Government Trust and Transamerica Intermediate
Government Trust.

INVESTMENT OBJECTIVE AND POLICIES

JOHN HANCOCK U.S. GOVERNMENT TRUST: The investment objective of U.S.
Government Fund is to earn a high level of current income consistent with
safety of principal by investing in debt obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, including certificates
of the Government National Mortgage Association and U.S. Treasury obligations.
In order to hedge against changes in interest rates, U.S. Government Fund may
purchase put and call options and sell interest rate futures contracts and call
options on such contracts. Investments of U.S. Government Fund are limited to
those which a federally chartered savings and loan association may, without
limitation as to percentage of assets, invest in, sell, redeem, hold or
otherwise deal with.

JOHN HANCOCK INTERMEDIATE GOVERNMENT TRUS: The investment objective
of Intermediate Government Fund is to earn a high level of current income,
consistent with the preservation of capital and maintenance of liquidity.
Intermediate Government Fund invests in debt obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities ("U.S. Government
Securities") having an average dollar weighted maturity of between one and ten
years.

Mortgages backing the securities purchased by the Funds include not
only conventional 30-year fixed rate mortgages but also graduated payment
mortgages and 15-year mortgages. All of these mortgages can be used to create
pass through securities.

GNMA CERTIFICATES. Certificates of the Government National Mortgage
Association ("GNMA") are mortgage-backed securities, which evidence an
undivided interest in a pool of mortgage loans. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrower over the term of
the loan rather than returned in a lump sum at maturity. GNMA Certificates
entitle the holder to receive a share of all interest and principal prepayments
paid and owed on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether or

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not the mortgagor actually makes the payment. The National Housing Act
authorizes GNMA to guarantee the timely payment of principal and interest on
securities backed by a pool of mortgages insured by the Federal Housing
Administration ("FHA") or the Farmer's Home Administration ("FHMA") or
guaranteed by the Veterans Administration ("VA"). The GNMA guarantee is backed
by the full faith and credit of the United States. The GNMA is also empowered
to borrow without limitation from the U.S. Treasury if necessary to make any
payments required under its guarantee.

FNMA SECURITIES. Established in 1938 to create a secondary market in
mortgages, the Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders that
purchases residential mortgages from a list of approved seller/servicers. FNMA
issues guaranteed mortgage pass-through certificates ("FNMA Certificates").
FNMA Certificates resemble GNMA Certificates in that each FNMA Certificate
represents a pro rata share of all interest and principal payments made and
owed on the underlying pool. FNMA guarantees timely payment of interest on
FNMA Certificates and the stated principal amount.

FHLMC SECURITIES. The Federal Home Loan Mortgage Corporation
("FHLMC") was created in 1970 through enactment of Title III of the Emergency
Home Finance Act of 1970. Its purpose is to promote development of a
nationwide secondary market in conventional residential mortgages. FHLMC
presently issues two types of mortgage pass-through securities, mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro rata
share of all interest and principal payments made and owed on the underlying
pool. The FHLMC guarantees timely monthly payment of interest on PCs and the
stated principal amount.

CERTAIN INVESTMENT PRACTICES

LENDING OF PORTFOLIO SECURITIES. In order to generate additional
income, a Fund may, from time to time, lend securities from its portfolios to
brokers, dealers and financial institutions such as banks and trust companies.
Such loans will be secured by collateral consisting of cash or U.S. Government
securities which will be maintained in an amount equal to at least 100% of the
current market value of the loaned securities. During the period of the loan,
the Fund will receive the income on both the loaned securities and the
collateral and thereby increase its return. Cash collateral will be invested
in short-term high quality debt securities, which will increase the current
income of the Fund. The loans will be terminable by the Funds at any time and
by the borrower on one day's notice. The Funds will have the right to regain
record ownership of loaned securities to exercise beneficial rights such as
rights to interest or other distributions or voting rights on important issues.
The Funds may pay reasonable fees to persons unaffiliated with the Funds for
services in arranging such loans. Lending of portfolio securities involves a
risk of failure by the borrower to return the loaned securities, in which event
the Funds may incur a loss.

SECURITIES TRANSACTIONS SUBJECT TO DELAYED SETTLEMENT. As described
under "Investments, Techniques and Risk Factors" in each Fund's Prospectus,
securities may be

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purchased for which the normal settlement date occurs later than the settlement
date which is normal for U.S. Government obligations. In no event, however,
will the settlement date in the case of Intermediate Government Fund occur
later than the 29th day after the trade date. Securities held in a Fund's
portfolio are subject to changes in value (both experiencing appreciation when
interest rates decline and depreciation when interest rates rise) based upon
the public's perception of the creditworthiness of the issuer and changes, real
or anticipated, in the level of interest rates. Purchasing securities subject
to delayed settlement can involve a risk that the yields available in the
market when the delivery takes place may actually be higher than those obtained
in the transaction itself. A separate account of the Fund consisting of cash
or liquid, high grade debt securities equal to the amount of the delayed
settlement commitments will be established at the Trust's custodian bank. For
the purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market value using the valuation
procedures for all other investments. If the market or fair value of such
securities declines, additional cash or liquid, high grade debt securities will
be placed in the account daily so that the value of the account will equal the
amount of such commitments by the Fund. On the settlement date of these
delayed settlement securities, the Fund will meet its obligations from the
available cash flow, sale of securities held in the separate account, sale of
other securities or, although it would not normally expect to do so, from sale
of the delayed settlement securities themselves (which may have a value greater
or lesser than the Fund's payment obligations). Sale of securities to meet
such obligations will generally result in the realization of capital gains or
losses.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Funds may purchase
securities on a when-issued basis. "When-issued" refers to securities whose
terms are available and for which a market exists, but which have not been
issued. A Fund will engage in when-issued transactions with respect to
securities purchased for its portfolio in order to obtain what is considered to
be an advantageous price and yield at the time of the transaction. For
when-issued transactions, no payment is made until delivery is due, often a
month or more after the purchase.

When a Fund engages in when-issued transactions, it relies on the
seller to consummate the transaction. The failure of the issuer or seller to
consummate the transaction may result in the Fund losing the opportunity to
obtain a price and yield considered to be advantageous. The purchase of
securities on a when-issued basis also involves a risk of loss if the value of
the security to be purchased declines prior to the settlement date.

On the date that a Fund enters into an agreement to purchase
securities on a when-issued basis, the Fund will segregate in a separate
account cash or short-term money market instruments equal in value to the
Fund's commitment. These assets will be valued daily at market, and additional
cash or securities will be segregated in a separate account to the extent that
the total value of the assets in the account declines below the amount of the
when-issued commitments.

REPURCHASE AGREEMENTS. The Funds may enter into repurchase
agreements. A repurchase agreement is a contract under which a Fund would
acquire a security for a relatively short period (generally not more than 7
days) subject to the obligation of the seller to repurchase

5
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and the Fund to resell such security at a fixed time and price (representing
the Fund's cost plus interest). A Fund will enter into repurchase agreements
only with member banks of the Federal Reserve System and with securities
dealers. The Adviser will continuously monitor the creditworthiness of the
parties with whom a Fund enters into repurchase agreements. The Funds have
established a procedure providing that the securities serving as collateral for
each repurchase agreement must be delivered to the Funds' custodian either
physically or in book-entry form and that the collateral must be marked to
market daily to ensure that each repurchase agreement is fully collateralized
at all times. In the event of bankruptcy or other default by a seller of a
repurchase agreement, a Fund could experience delays in liquidating the
underlying securities and could experience losses, including the possible
decline in the value of the underlying securities during the period in which
the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and the expense of
enforcing its rights.

GOVERNMENT SECURITIES. Certain U.S. Government securities, including
U.S. Treasury bills, notes and bonds, and Government National Mortgage
Association certificates ("Ginnie Maes"), are supported by the full faith and
credit of the United States. Certain other U.S. Government securities, issued
or guaranteed by Federal agencies or government sponsored enterprises, are not
supported by the full faith and credit of the United States, but may be
supported by the right of the issuer to borrow from the U.S. Treasury. These
securities include obligations of the Federal Home Loan Mortgage Corporation
("Freddie Macs"), and obligations supported by the credit of the
instrumentality, such as Federal National Mortgage Association Bonds ("Fannie
Maes"). No assurance can be given that the U.S. Government will provide
financial support to such Federal agencies, authorities, instrumentalities and
government sponsored enterprises in the future.

MORTGAGE-BACKED SECURITIES. The Funds may invest in mortgage
pass-through certificates and multiple-class pass-through securities, such as
real estate mortgage investment conduits ("REMIC") pass-through certificates,
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities ("SMBS"), and other types of "Mortgage-Backed Securities" that may
be available in the future.

GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage
pass-through securities represent participation interests in pools of
residential mortgage loans and are issued by U.S. Governmental or private
lenders and guaranteed by the U.S. Government or one of its agencies or
instrumentalities, including but not limited to the Government National
Mortgage Association ("Ginnie Mae"), the Federal National Mortgage Association
("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").
Ginnie Mae certificates are guaranteed by the full faith and credit of the U.S.
Government for timely payment of principal and interest on the certificates.
Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered and
privately owned corporation, for full and timely payment of principal and
interest on the certificates. Freddie Mac certificates are guaranteed by
Freddie Mac, a corporate instrumentality of the U.S. Government, for timely
payment of interest and the ultimate collection of all principal of the related
mortgage loans.

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MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE
OBLIGATIONS. CMOs and REMIC pass-through or participation certificates may be
issued by, among others, U.S. Government agencies and instrumentalities as well
as private lenders. CMOs and REMIC certificates are issued in multiple classes
and the principal of and interest on the mortgage assets may be allocated among
the several classes of CMOs or REMIC certificates in various ways. Each class
of CMOs or REMIC certificates, often referred to as a "tranche," is issued at a
specific adjustable or fixed interest rate and must be fully retired no later
than its final distribution date. Generally, interest is paid or accrues on
all classes of CMOs or REMIC certificates on a monthly basis.

Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or
Freddie Mac certificates but also may be collateralized by other mortgage
assets such as whole loans or private mortgage pass-through securities. Debt
service on CMOs is provided from payments of principal and interest on the
underlying mortgaged assets and any reinvestment income thereon.

A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages primarily secured by interests in real
property and other permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in a REMIC, although the
Funds do not intend to invest in residual interests.

STRIPPED MORTGAGE-BACKED SECURITIES. SMBS are derivative
multiple-class mortgage-backed securities. SMBS are usually structured with
two classes that receive different proportions of interest and principal
distributions on a pool of mortgage assets. A typical SMBS will have one class
receiving some of the interest and most of the principal, while the other class
will receive most of the interest and the remaining principal. In the most
extreme case, one class will receive all of the interest (the "interest only"
class) while the other class will receive all of the principal (the "principal
only" class). The yields and market risk of interest only and principal only
SMBS, respectively, may be more volatile than those of other fixed income
securities. The staff of the SEC considers privately issued SMBS to be
illiquid.

STRUCTURED OR HYBRID NOTES. The Funds may invest in "structured" or
"hybrid" notes. The distinguishing feature of a structured or hybrid note is
that the amount of interest and/or principal payable on the note is based on
the performance of a benchmark asset or market other than fixed-income
securities or interest rates. Examples of these benchmarks include stock
prices, currency exchange rates and physical commodity prices. Investing in a
structured note allows a Fund to gain exposure to the benchmark market while
fixing the maximum loss that the Fund may experience in the event that market
does not perform as expected. Depending on the terms of the note, a Fund may
forego all or part of the interest and principal that would be payable on a
comparable conventional note; the Fund's loss cannot exceed this foregone
interest and/or principal. An investment in structured or hybrid notes
involves risks similar to those associated with a direct investment in the
benchmark asset.

RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in
Mortgage-Backed Securities involves certain risks, including the failure of a
counter-party to meet its

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commitments, adverse interest rate changes and the effects of prepayments on
mortgage cash flows. In addition, investing in the lowest tranche of CMOs and
REMIC certificates involves risks similar to those associated with investing in
equity securities. Further, the yield characteristics of Mortgage-Backed
Securities differ from those of traditional fixed income securities. The major
differences typically include more frequent interest and principal payments
(usually monthly), the adjustability of interest rates, and the possibility
that prepayments of principal may be made substantially earlier than their
final distribution dates.

Prepayment rates are influenced by changes in current interest rates
and a variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, a Fund may fail to recoup fully its
investment in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental, agency or other guarantee. When the Fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may receive
a rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. Government securities as a means of
"locking in" interest rates.

Conversely, in a rising interest rate environment, a declining
prepayment rate will extend the average life of many Mortgage-Backed
Securities. This possibility is often referred to as extension risk.
Extending the average life of a Mortgage- Backed Security increases the risk of
depreciation due to future increases in market interest rates.

The risk of early prepayments is the primary risk associated with
interest only debt securities ("IOs"), super floaters, other leveraged floating
rate instruments and Mortgage-Backed Securities purchased at a premium to their
par value. In some instances, early prepayments may result in a complete loss
of investment in certain of these securities. The primary risks associated
with certain other derivative debt securities are the potential extension of
average life and/or depreciation due to rising interest rates.

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<PAGE> 340
amortizing notes are not Mortgage-Backed Securities, but are subject to
extension risk resulting from the issuer's failure to exercise its option to
call or redeem the notes before their stated maturity date. Leveraged inverse
IOs combine several elements of the Mortgage-Backed Securities described above
and thus present an especially intense combination of prepayment, extension and
interest rate risks.

Planned amortization class ("PAC") and target amortization class
("TAC") CMO bonds involve less exposure to prepayment, extension and interest
rate risk than other Mortgage-Backed Securities, provided that prepayment rates
remain within expected prepayment ranges or "collars." To the extent that
prepayment rates remain within these prepayment ranges, the residual or support
tranches of PAC and TAC CMOs assume the extra prepayment, extension and
interest rate risk associated with the underlying mortgage assets.

Other types of floating rate derivative debt securities present more
complex types of interest rate risks. For example, range floaters are subject
to the risk that the coupon will be reduced to below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to depreciation in the
event of an unfavorable change in the spread between two designated interest
rates. X-reset floaters have a coupon that remains fixed for more than one
accrual period. Thus, the type of risk involved in these securities depends on
the terms of each individual X-reset floater.

The Funds are permitted to engage in certain hedging techniques
involving options and futures transactions in order to reduce the effect of
interest rate movements affecting the market values of the investments held, or
intended to be purchased, by the Funds.

OPTIONS ON DEBT SECURITIES. The U.S. Government Fund may purchase put
and call options on debt securities which are traded on a national securities
exchange (an "Exchange") to protect its holdings in an underlying or related
security against a substantial decline in market value. Securities are
considered related if their price movements generally correlate to one another.
The purchase of put options on debt securities which are related to securities
held in its portfolio will enable the Fund to protect, at least partially,
unrealized gains in an appreciated security in its portfolio without actually
selling the security. In addition, the Fund may continue to receive interest
income on the security. The purchase of call options on debt securities may
help to protect against substantial increases in prices of securities the Fund
intends to purchase pending its ability to invest in such securities in an
orderly manner.
The U.S. Government Fund may sell put and call options it has
previously purchased, which could result in a net gain or loss depending on
whether the amount realized on the sale is more or less than the premium and
other transaction costs paid in connection with the option which is sold.

The purchase of put and call options involves certain risks. If a put
or call option purchased by the U.S. Government Fund is not sold when it has
remaining value, and if the market price of the underlying security remains
equal to or greater than the exercise price, in the case of a put, or equal to
or less than the exercise price, in the case of a call, the Fund will lose its

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entire investment in the option. Also, where a put or a call option on a
particular security is purchased to hedge against price movements in a related
security, the price of the put or call option may move more or less than the
price of the related security.

The U.S. Government Fund will not invest in a put or a call option if
as a result the amount of premiums paid for such options then outstanding would
exceed 10% of the Fund's total assets.

FUTURES CONTRACTS AND RELATED OPTION. The Funds may engage in the
purchase and sale of interest rate futures contracts ("financial futures") and
related options for the purposes and subject to the limitations described
below. Currently, the Funds may engage in such transactions with respect to
U.S. Treasury Bonds, U.S. Treasury Notes, and GNMA's on the Chicago Board of
Trade and with respect to U.S. Treasury bills on the International Money Market
at the Chicago Mercantile Exchange.

The Intermediate Government Fund may purchase financial futures
contracts only as a hedge against changes in the general level of interest
rates. The U.S. Government Fund may purchase financial futures contracts only
to close an existing short position in a futures contract. The purchase of a
financial futures contract obligates the buyer to accept and pay for the
specific type of debt security called for in the contract at a specified future
time and at a specified price. A Fund would purchase a financial futures
contract when it is not fully invested in long-term debt securities but wishes
to defer its purchases for a time until it can invest in such securities in an
orderly manner or because short-term yields are higher than long-term yields.
Such purchases would enable the Fund to earn the income on a short-term
security while at the same time minimizing the effect of all or part of an
increase in the market price of the long-term debt security which the Fund
intends to purchase in the future. A rise in the price of the long-term debt
security prior to its purchase either would generally be offset by an increase
in the value of the futures contract purchased by the Fund or avoided by taking
delivery of the debt securities under the futures contract.

The Funds may sell financial futures contracts only as a hedge against
changes in interest rates. The sale of a financial futures contract obligates
the seller to deliver the specific type of debt security called for in the
contract at a specified future time and at a specified price. A Fund would
sell a financial futures contract in order to continue to receive the income
from a long-term debt security, while endeavoring to avoid part or all of the
decline in market value of that security which would accompany an increase in
interest rates. If interest rates did rise, a decline in the value of the debt
security held by the Fund would be substantially offset by an increase in the
value of the futures contract sold by the Fund. While the Fund could sell a
long-term debt security and invest in a short-term security, ordinarily the
Fund would give up income on its investment, since long-term rates normally
exceed short-term rates.

In addition, the Funds may engage in certain transactions involving
put and call options on financial futures contracts to hedge against changes in
interest rates. The U.S. Government Fund may purchase put and call options and
sell call options on financial futures contracts for hedging

10
<PAGE> 342
purposes and may enter into closing transactions with respect to such options
to close an existing position. The Intermediate Government Fund may purchase
put and call options on financial futures contracts which are traded on a
securities exchange or board of trade for hedging purposes and may also enter
into closing transactions with respect to such options to close an existing
position. Options on financial futures contracts are similar to options on
securities except that a put option on a financial futures contract gives the
purchaser the right in return for the premium paid to assume a short position
in a financial futures contract and a call option on a financial futures
contract gives the purchaser the right in return for the premium paid to assume
a long position in a financial futures contract.

A Fund may hedge up to the full value of its portfolio through the use
of options and futures. At the time a Fund purchases a financial futures
contract or a call option on such a futures contract, an amount of cash or U.S.
Government Securities at least equal to the market value of the futures
contract will be deposited in a segregated account with the Funds' Custodian to
collateralize the position and thereby insure that such futures contract is
unleveraged. A Fund may not purchase or sell futures contracts or related put
or call options if immediately thereafter the sum of the amount of margin
deposits on the Fund's existing futures and related options positions and the
amount of premiums paid for related options (measured at the time of
investment) would exceed 5% of the Fund's total assets.

While a Fund's hedging transactions may protect the Fund against
adverse movements in the general level of interest rates, such transactions
could also preclude the opportunity to benefit from favorable movements in the
level of interest rates. Due to the imperfect correlation between movements in
the prices of futures contracts and movements in the prices of the related
securities being hedged, the price of a futures contract may move more than or
less than the price of the securities being hedged. Options on futures
contracts are generally subject to the same risks applicable to all option
transactions. In addition, a Fund's ability to use this technique will depend
in part on the development and maintenance of a liquid secondary market for
such options. For a discussion of the inherent risks involved with futures
contracts and options thereon, see "Risks Relating to Transactions in Futures
Contracts and Related Options" below.

The Funds' policies permitting the purchase and sale of futures
contracts and certain related put or call options only for hedging purposes may
not be changed without the approval of shareholders holding a majority of the
applicable Fund's outstanding voting securities. The Board of Trustees may
authorize procedures, including numerical limitations, with regard to such
transactions in furtherance of a Fund's investment objectives. Such procedures
are not deemed to be fundamental and may be changed by the Board of Trustees
without the vote of the Fund's shareholders.

The U.S. Government Fund is also authorized to, but presently does not
intend to, engage in certain investment techniques involving the sale of
covered call and secured put options for the purpose of generating additional
income. The Fund will not engage in such transactions without first having
given shareholders at least 60 days' written notice.

11
<PAGE> 343
RISKS RELATING TO TRANSACTIONS IN FUTURES CONTRACTS AND RELATED
OPTION. Positions in futures contracts may be closed out only on an exchange
or board of trade which provides a market for such futures. Although the Funds
intend to purchase or sell futures contracts only on exchanges or boards of
trade where there appears to be an active market, there is no assurance that a
liquid market on an exchange or board of trade will exist for any particular
contract or at any particular time. In the event a liquid market does not
exist, it may not be possible to close a futures position, and in the event of
adverse price movements, an affected Fund would continue to be required to make
daily cash payments of maintenance margin. In addition, limitations imposed by
an exchange or board of trade on which futures contracts are traded may compel
or prevent a Fund from closing out a contract which may result in reduced gain
or increased loss to the Fund. The absence of a liquid market in futures
contracts might cause a Fund to make or take delivery of the underlying
securities at a time when it may be disadvantageous to do so. The purchase of
put options on futures contracts involves less potential dollar risk to the
Fund than an investment of equal amount in futures contracts, since the premium
is the maximum amount of risk the purchaser of the option assumes. The entire
amount of the premium paid for an option can be lost by the purchaser, but no
more than that amount.

SPECIAL CONSIDERATIONS APPLICABLE TO OPTIONS ON U.S. GOVERNMENT SECURITIES

Treasury Bonds and Notes. Because trading interest in options written
on Treasury bonds and notes tends to center on the most recently auctioned
issues, the Exchanges will not continue indefinitely to introduce options with
new expirations to replace expiring options on particular issues. Instead, the
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run their course, with the possible addition of a
limited number of new expirations as the original ones expire. Options trading
on each issue of bonds or notes will thus be phased out as new options are
listed on more recent issues, and options representing a full range of
expirations will not ordinarily be available for every issue on which options
are traded.

Treasury Bills. Because the deliverable Treasury bill changes from
week to week, writers of Treasury bill calls cannot provide in advance for
their potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the U.S. Government Fund holds a long
position in Treasury bills with a principal amount corresponding to the
principal amount of the securities deliverable upon exercise of the option, it
may be hedged from a risk standpoint. In addition, the U.S. Government Fund
will maintain Treasury bills maturing no later than those which would be
deliverable in the event of an assignment of an exercise notice in a segregated
account with its Custodian so that it will be treated as being covered for
margin purposes.
GNMA Certificates. The following special considerations will be
applicable to the writing of call options on GNMA Certificates by U.S.
Government Fund when and if trading of options thereon commences. Since the
remaining principal balance of GNMA Certificates declines each month as a
result of mortgage payments, the U.S. Government Fund as a writer of a GNMA
call holding GNMA Certificates as "cover" to satisfy its delivery obligation in
the event of exercise may find that the GNMA Certificates it holds no longer
have a sufficient remaining principal balance for this purpose. Should this
occur, the Fund will purchase additional GNMA Certificates

12
<PAGE> 344
from the same pool (if obtainable) or replacement GNMA Certificates in the cash
market in order to maintain its cover. If for any reason, the Fund were no
longer covered, the Fund will either enter into a closing purchase transaction
or replace such Certificate with a Certificate which represents cover. When
the Fund closes its position or replaces such Certificate, it may realize an
unanticipated loss and incur transaction costs.

INVESTMENT RESTRICTIONS

Each Fund has adopted certain fundamental investment restrictions.
The fundamental restrictions set forth below as well as the Funds' investment
objectives and fundamental policies and restrictions set forth in the
Prospectuses may not be changed without approval of a majority of the
applicable Fund's outstanding voting securities. Under the Investment Company
Act of 1940, as amended (the "1940 Act"), and as used in the Prospectuses and
this SAI, a "majority of the outstanding voting securities" requires the
approval of the lesser of (1) the holders of 67% or more of the shares of a
Fund represented at a meeting if the holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) the
holders of more than 50% of the outstanding shares of the Fund.

Under these restrictions, a Fund may not:

1. Make short sales of securities or purchase securities on
margin, except for such short-term loans as are necessary for the
clearance of purchases of portfolio securities.

2. Engage in the underwriting of securities except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security or purchase securities which are not
readily marketable.

3. Purchase or sell real estate or interests therein, including
limited partnership interests although the Fund may purchase securities
of issuers which engage in real estate operations and securities which
are secured by real estate or interests therein.
4. Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the Trust
may invest in securities of companies which invest in or sponsor such
programs.

5. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition
of assets.

6. Invest for the purpose of exercising control or management of
another company.

7. Invest in securities of any company if, to the knowledge of
the Trust, any officer or director of the Trust or its Adviser owns more
than 1/2 of 1% of the outstanding securities of such company, and all
such officers and directors own in the aggregate more than 5% of the
outstanding securities of such company.

13
<PAGE> 345
8. Issue senior securities, as defined in the Act, except that
the Fund may enter into repurchase agreements, lend portfolio
securities, and borrow as described below.

9. Make loans of money or securities, except by (a) the purchase
of fixed income obligations; (b) investing in repurchase agreements; or
(c) lending its portfolio securities. See "Investments, Techniques and
Risk Factors" in the Prospectus.

10. Write or purchase put or call options or purchase or sell
commodities or commodity futures contracts except the Fund may purchase
such options on debt securities and purchase or sell financial futures
contracts and purchase options thereon.

11. Invest in warrants or rights except where acquired in units or
attached to other securities.

12. Enter into a repurchase agreement maturing in more than seven
days, if as a result such repurchase agreements together with restricted
securities and securities for which there are no readily available market
quotations would constitute more than 10% of the Fund's total assets, or
enter into reverse repurchase agreements exceeding in the aggregate
one-third of the market value of the Fund's total assets less liabilities
other than obligations created by reverse repurchase agreements.

13. Invest more than 5% of the market or other fair value of its
assets in the securities of any one issuer and shall not purchase more
than 10% of the voting securities or more than 10% of any class of
securities of any one issuer. This restriction does not apply to U.S.
Government securities as defined in the Prospectuses.

14. Borrow in excess of 15% of the market or fair value of its
total assets or pledge its assets to an extent greater than 10% of the
market or other fair value of its total assets. Borrowings must be from
banks and undertaken only as a temporary measure for extraordinary or
emergency purposes. Collateral arrangements maintained in connection with
the writing of covered call options or margin deposits in connection with
the sale of futures contracts and related options are not deemed to be a
pledge or other encumbrance. The restriction on borrowing does not
prohibit the use of reverse repurchase agreements in an amount (including
any borrowings) not to exceed 33 1/3% of the Fund's net assets.

In addition, U.S. Government Fund may invest only in those investments
which a federally chartered savings and loan association by law or regulation
may, without limitation as to percentage of assets, invest in, sell, redeem,
hold or otherwise deal with. The Intermediate Government Trust may not invest
more than 25% of its total assets in the securities of issuers in any single
industry, provided that there shall be no such limitation on the purchase of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

14
<PAGE> 346
Notwithstanding any investment restriction to the contrary, the Funds
may, in connection with the John Hancock Group of Funds Deferred Compensation
Plan for Independent Trustees/Directors, purchase securities of other
investment companies within the John Hancock Group of Funds provided that, as a
result, (i) no more than 10% of the Fund's assets would be invested in
securities of all other investment companies, (ii) such purchase would not
result in more than 3% of the total outstanding voting securities of any one
such investment company being held by the Fund and (iii) no more than 5% of the
Fund's assets would be invested in any one such investment company.

THOSE RESPONSIBLE FOR MANAGEMENT

The business of the Funds is managed by the Trust's Trustees who elect
officers who are responsible for the day-to-day operations of each Fund and who
execute policies formulated by the Trustees. Several of the officers and
Trustees of the Trust are also officers and directors of the Adviser or
officers and directors of John Hancock Funds.

Set forth below is the principal occupation or employment of the
Trustees and officers of the Trust during the past five years.

15
<PAGE> 347
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Edward J. Boudreau, Jr,* Trustee, Chairman and Chief Executive
101 Huntington Avenue Chairman and Officer, the Investment Adviser and
Boston, MA 02199 Chief Executive The Berkeley Financial Group("The
Officer(1)(2) Berkeley Group");
Chairman, NM Capital
Management, Inc.
("NM Capital"); John
Hancock Advisers
International Limited
("Advisers International");
John Hancock Funds, Inc.;
John Hancock Investor
Services Corporation
("Investor Services");
and Sovereign Asset
Management Corporation
("SAMCorp");
(hereinafter the Adviser,
the Berkeley Group, NM
Capital, Advisers
International, John Hancock
Funds, Inc., Investor
Services and SAMCorp
are collectively referred
to as the "Affiliated
Companies"); Chairman,
First Signature Bank & Trust;
Director, John Hancock
Freedom Securities
Corporation, John Hancock
Capital Corporation,
New England/Canada
Business Council; Member,
Investment Company Institute Board
of Governors: Trustee, Museum of
Science; President, the Adviser
(until July 1992); Trustee or
Director of other investment
companies

</TABLE>

16
<PAGE> 348
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
managed by the Adviser; and
Chairman, John Hancock
Distributors, Inc. (until April,
1994).

17
<PAGE> 349
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
life insurance company);
Director, Freeport-
McMoran Inc. (oil and
gas company); Director,
Barton Creek Properties, Inc.
(1988-1990) (real estate
development) and LBJ
Foundation Board
(education foundation);
and Advisory Director,
Texas Commerce Bank
-Austin.

18
<PAGE> 350
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C> <C>
Corporation (a diversified energy
company);Director, Daniel Industries,
Inc. (manufacturer of gas measuring
products and energy related
equipment); director, GeoQuest
International, Inc. (a geophysical
consulting firm): and Director,
Greater Houston Partnership.

Steven R. Pruchansky Trustee(1)(3) Director and Treasurer, Mast
360 Horse Creek Drive, #208 Holdings, Inc.; Director,
Naples, FL 33942 First Signature Bank & Trust
Company (until August 1991);
General Partner, Mast Realty
Trust; President, Maxwell
Building Corp. (until 1991);
and Trustee or Director
of other investment companies
managed by the Adviser.

Norman H. Smith Trustee(3) Lieutenant General, USMC,
Rt. 1, Box 249 E Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve
Affairs, Headquarters Marine Corps;
Commanding General III Marine
Expeditionary Force/3rd Marine
Division (retired 1991); and Trustee
or Director of other investment
companies managed by the Adviser.
</TABLE>

19
<PAGE> 351
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
John P. Toolan Trustee(3) Director, The Smith Barney
13 Chadwell Place Muni Bond Funds, The Smith
Morristown, NJ 07960 Barney Tax-Free Money Fund,
Inc., Vantage Money Market
Funds (mutual funds),
The Inefficient-Market
Fund, Inc. (closed-end
investment company)
and Smith Barney Trust
Company of Florida; Chairman,
Smith Barney Trust Company
(retired December, 1991);
Director, Smith Barney, Inc.,
Mutual Management Company and
Smith, Barney Advisers, Inc.
(investment advisers) (retired
1991); and Senior Executive Vice
President, Director and member of
the Executive Committee, Smith Barney,
Harris Upham & Co., Incorporated
(investment bankers) (until 1991);
and Trustee or Director of other
investment companies
managed by the Adviser.

Robert G. Freedman* Vice Chairman and Chief Investment President and Chief
101 Huntington Avenue Officer(2) Investment Officer, the
Boston, MA 02199 Adviser.

Anne C. Hodsdon President(2) Executive Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

James B. Little* Senior Vice Senior Vice President,
101 Huntington Avenue President and the Adviser.
Boston, MA 02199 Chief Financial
Officer
</TABLE>

20
<PAGE> 352
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Thomas H. Drohan* Senior Vice President and Senior Vice President and
101 Huntington Avenue Secretary Secretary, the Adviser.
Boston, MA 02199

Michael P. DiCarlo* Senior Vice President(2) Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

Edgar Larsen* Senior Vice President Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

James J. Stokowski* Vice President and Treasurer Vice President, the Investment
101 Huntington Avenue Adviser.
Boston, MA 02199

Susan S. Newton* Vice President and Compliance Vice President and Assistant
101 Huntington Avenue Officer Secretary, the Investment
Boston, MA 02199 Adviser.

John A. Morin* Vice President Vice President, the Investment
101 Huntington Avenue Adviser.
Boston, MA 02199
- ------------------
<FN>
*An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the
powers of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
</TABLE>

21
<PAGE> 353
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Trustees and officers may also be officers
and/or directors and/or trustees of one or more of the other funds for which
the Adviser serves as investment adviser.

<TABLE>
As of June 30, 1995, there were 787,138 Class A shares and 47,484
Class B shares of the Intermediate Government Fund and 2,096,935 Class A shares
and 37,195 Class B shares of U.S. Government Trust outstanding and officers and
Trustees of the Trust as a group beneficially owned less than 1% of the
outstanding shares of the Trust and of each of the Funds. At such date, the
following shareholders held, as record owner, 5% or more of the shares of the
respective Funds:

Percentage Ownership
Intermediate Government Trust, Class A: of Outstanding Shares
- -------------------------------------- ---------------------
<S> <C>
Merrill Lynch Pierce Fenner & Smith, Inc. 9.63%
Trade House Account - Book Entry
Team B - 3rd Floor
4800 DeerLake Drive East
Jacksonville, FL 32246-6484

Intermediate Government Trust, Class B
- --------------------------------------

Erma L. Phillips & Lloyd C. Phillips Jtten 14.43%
512 Oaks Fair Way
Bakersfield, CA 93309-2810

Merrill Lynch Pierce Fenner & Smith, Inc. 13.94%
Trade House Account
Attn: Book Entry - 3rd Floor
4800 DearLake Drive East
Jacksonville, FL 32246-6484

JHMLICo Custodian 11.15%
FBO Yoshiko Newton IRA
1650 Kanunu St. #715
Honolulu, HI 96814-2727

Donaldson Lufkin Jenrette Securities Corporation, Inc. 11.00%
P.O. Box 2052
Jersey City, NJ 07303-2052

Carol J. Valentine 6.21%
26151 N. Harbour Pointe Dr.
Harrison TWP, MI 48045-3209

</TABLE>

22
<PAGE> 354
<TABLE>
<S> <C>

Donaldson Lufkin Jenrette Securities Corporation, Inc. 5.06%
P.O. Box 2052
Jersey City, NJ 07303-2052

Louis White 5.02%
708 Saddlebrook
North Bedford, TX 76021

U.S. Government Trust, Class A:
- ------------------------------

Merchants & Marine Bank 14.51%
Attn: Mike Dickson
P. O. Box 279
Pascagoula, MS 39567-0729

Merrill Lynch Pierce Fenner & Smith, Inc. 11.03%
Trade House Account - Book Entry
Team B - 3rd Floor
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484

River Production Co. Inc. 9.61%
P. O. Box 909
Columbia, MS 39429-0909

Northern Trust Co. Ttee. 7.15%
FBO Adventist Health System/West
Attn: Tiffany Snyder
P. O. Box 92956
A/C 822-85446/4-866770
Chicago, IL 60675-29

First Diboll Company 6.17%
P. O. Box 152020
Lufkin, TX 75915-2020

Baptist General Convention of Texas 6.17%
333 N. Washington
Dallas, TX 75246-1798

</TABLE>

23
<PAGE> 355
<TABLE>
<S> <C>

Home Federal Savings Bank 5.99%
Attn: Helen Groves Coleman
9108 Woodward Avenue
Detroit, MI 48202-1699

U.S. Government Trust, Class B:
- ------------------------------

JHMLICo Custodian 42.74%
FBO Harold D. Sensing IRA
7167 Birch
Taylor, MI 48180-2313

Zuma M. Morris & George G. Bonicard Jtwros 26.69%
14237 Ridge Rd.
Prairieville, LA 70769-3151

Merrill Lynch Pierce Fenner & Smith, Inc. 7.57%
Trade House Account
Attn: Book Entry - 3rd Floor
4800 DearLake Drive East
Jacksonville, FL 32246-6484

Joyce Lee 6.75%
1510 Harold Drive
Ashdown, AR 71822-3104

Louis J. Barbich Ttee 6.44%
Gray Minors Trust
310 Mount Lowe Drive
Bakersfield, CA 93309-2468

Joanne McBrayer & Deborah L. Huffman Jtwros 6.34%
c/o J. Garofalo
524 Brook St.
Mamaroneck, NY 10543-2710

</TABLE>

As of December 22, 1994, the Trustees have established an Advisory
Board which acts to facilitate a smooth transition of management over a
two-year period (between Transamerica Fund Management Company ("TFMC"), the
prior investment adviser, and the Adviser). The members of the Advisory Board
are distinct from the Board of Trustees, do not serve the Fund in any other
capacity and are persons who have no power to determine what securities are
purchased or sold

24
<PAGE> 356
and behalf of the Fund. Each member of the Advisory Board may be contacted at
101 Huntington Avenue, Boston, Massachusetts 02199.

Members of the Advisory Board and their respective principal
occupations during the past five years are as follows:

R. Trent Campbell, President, FMS, Inc. (financial and management services);
former Chairman of the Board, Mosher Steel Company.

Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman from Texas;
co-founder, Houston Parents' League; former board member of various
civic and cultural organizations in Houston, including the Houston
Symphony, Museum of Fine Arts and YWCA. Mrs. Bentsen is presently
active in various civic and cultural activities in the Washington,
D.C. area, including membership on the Area Board for The March of
Dimes and is a National Trustee for the Botanic Gardens of Washington,
D. C.

Thomas R. Powers, Formerly Chairman of the Board, President and Chief Executive
Officer, TFMC; Director, West Central Advisory Board, Texas Commerce
Bank; Trustee, Memorial Hospital System; Chairman of the Board of
Regents of Baylor University; Member, Board of Governors, National
Association of Securities Dealers, Inc.; Formerly, Chairman,
Investment Company Institute; formerly, President, Houston Chapter of
Financial Executive Institute.

Thomas B. McDade, Chairman and Director, TransTexas Gas Company; Director,
Houston Industries and Houston Lighting and Power Company; Director,
TransAmerican Companies (natural gas producer and transportation);
Member, Board of Managers, Harris County Hospital District; Advisory
Director, Commercial State Bank, El Campo; Advisory Director, First
National Bank of Bryan; Advisory Director, Sterling Bancshares; Former
Director and Vice Chairman, Texas Commerce Bancshares; and Vice
Chairman, Texas Commerce Bank.

COMPENSATION OF THE BOARD OF TRUSTEES AND ADVISORY BOARD

The following table provides information regarding the compensation paid by the
Fund and the other investment companies in the John Hancock Fund Complex to the
Independent Trustees and the Advisory Board members for their services. Mr.
Boudreau, a non-Independent Trustee, and each of the officers of the Funds are
interested persons of the Adviser, are compensated by the Adviser and received
no compensation from the Funds for their services.

25
<PAGE> 357
<TABLE>
<CAPTION>

Total Compensation from
Aggregate Pension or Retirement all Funds in John Hancock
Compensation from the Benefits Accrued as Part Fund Complex to
U.S. Government Trust of the Fund's Expenses Trustees**
--------------------- ---------------------- -------------------------
Trustees
--------
<S> <C> <C> <C>
James F. Carlin $ 145 $ 0 $ 60,450
William H. Cunningham 771 292 0
Charles L. Ladner 159 0 60,450
Leo E. Linbeck, Jr. 1,313 0 0
Patricia P. McCarter 159 0 60,200
Steven R. Pruchansky 166 0 62,450
Norman H. Smith 166 0 62,450
John P. Toolan 0 159 60,450
------ ---- --------
$2,879 $451 Total $366,450
</TABLE>
<TABLE>
<CAPTION>
Compensation from all
Aggragate Pension or Retirement Funds in John Hancock
Compensation from the Benefits Accrued as Part Fund Complex to
Intermediate of the Fund's Expenses Trustees**
Trustees Government Trust ---------------------- ----------
-------- ----------------
<S> <C> <C> <C>
James F. Carlin $ 67 $ 0 $ 60,450
William H. Cunningham 0 134 0
Charles L. Ladner 73 0 60,450
Leo E. Linbeck, Jr. 143 0 0
Patricia P. McCarter 73 0 60,200
Steven R. Pruchansky 76 0 62,450
Norman H. Smith 76 0 62,450
John P. Toolan 0 73 60,450
---- ---- --------
$508 $207 Total $366,450
<FN>
** The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is $366,450 as of the calendar year ended December 31,
1994. All Trustee\Directors except Messrs. Cunningham and Linbeck are
Trustees\Directors of 39 funds in the John Hancock Fund Complex. Messrs.
Cunningham and Linbeck are Trustees\Directors of 21 funds. (The Fund was not
part of the John Hancock Fund Complex until December 22, 1994 and Messrs.
Cunningham and Linbeck were not trustees or directors of any funds in the John
Hancock Fund Complex prior to December 22, 1994.)

</TABLE>

26
<PAGE> 358
<TABLE>
<CAPTION>

Pension or Total Compensation
Aggregate Aggregate Retirement form all Funds in
Compensation form Compensation from Benefits Accrued John Hancock Fund
the Intermediate U.S. Government as Part of the Complex to Advisory
Advisory Board Government Trust Trust Fund's Expenses Board
-------------- ---------------- ----- --------------- -----
<S> <C> <C> <C> <C>
R. Trent Campbell $164 $ 356 $0 $ 54,000
Mrs. Lloyd Bentsen 164 356 0 54,000
Thomas R. Powers 164 356 0 54,000
Thomas B. McDade 164 356 0 54,000
-------- ------ ---- --------
$656 $1,424 Total $216,000

</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Prospectus, the Funds receive their investment
advice from the Adviser. Investors should refer to the Prospectuses for a
description of certain information concerning the investment management
contracts. Each of the Trustees and principal officers affiliated with the
Trust who is also an affiliated person of the Adviser is named above, together
with the capacity in which such person is affiliated with the Trust or the
Adviser.

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has over $13 billion in assets
under management in its capacity as investment adviser to the Funds and the
other mutual funds and publicly traded investment companies in the John Hancock
group of funds having a combined total of over 1,060,000 shareholders. The
Adviser is a wholly-owned subsidiary of The Berkeley Financial Group, which is
in turn a wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which is
in turn a wholly-owned subsidiary of the Life Company, one of the most
recognized and respected financial institutions in the nation. With total
assets under management of over $80 billion, the Life Company is one of the ten
largest life insurance companies in the United States, and carries Standard &
Poor's and A.M. Best's highest ratings. Founded in 1862, the Life Company has
been serving clients for over 130 years.

As described in the Prospectus under the caption "Organization and
Management of the Fund," the Trust, on behalf of each Fund, has entered into an
investment management contract with the Adviser. Under the investment
management contracts, the Adviser provides the Funds with (i) a continuous
investment program, consistent with each Fund's stated investment objective and
policies, (ii) supervision of all aspects of the Funds' operations except those
that are delegated to a custodian, transfer agent or other agent and (iii) such
executive, administrative and clerical

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<PAGE> 359
personnel, officers and equipment as are necessary for the conduct of their
business. The Adviser is responsible for the day-to-day management of each
Fund's portfolio assets.

No person other than the Adviser and its directors and employees
regularly furnishes advice to the Funds with respect to the desirability of the
Funds investing in, purchasing or selling securities. The Adviser may from
time to time receive statistical or other similar factual information, and
information regarding general economic factors and trends, from the Life
Company and its affiliates.

Under the terms of the investment management contracts with the Funds,
the Adviser provides the Trust with office space, equipment and supplies and
other facilities and personnel required for the business of the Trust. The
Adviser pays the compensation of all officers and employees of the Trust and
pays the expenses of clerical services relating to the administration of each
Fund. All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Trust including, but not limited to, (i)
the fees of the Independent Trustees, (ii) the fees of the members of the
Trust's Advisory Board (described above) and (iii) the continuous public
offering of the shares of the Funds are borne by the Funds and/or the other
series of the Trust. Subject to the conditions set forth in a private letter
ruling that the Funds have received from the Internal Revenue Service relating
to their multiple-class structure, class expenses properly allocable to any
Class A or Class B shares will be borne exclusively by such class of shares.

The investment management contract with the Trust, on behalf of
Intermediate Government Fund, provides that the Trust shall pay the Adviser for
its services, out of the assets of Intermediate Government Fund, a monthly fee,
computed at the annual rate of 0.50% of the average daily net assets of
Intermediate Government Fund. Prior to April 1, 1993, investment advisory fees
paid by the Intermediate Government Fund amounted to 0.45% of its average daily
net assets. On February 16, 1993, the Trust's Board of Trustees, including all
of the Independent Trustees, approved an amendment to the investment management
contract whereby the fee payable to the Fund's prior investment adviser under
the investment management contract be increased to 0.50% of the average daily
net assets of Intermediate Government Fund, and at a meeting on March 29, 1993,
shareholders of Intermediate Government Fund approved the amended investment
management contract.

The investment management contract with the Trust, on behalf of U.S.
Government Fund, provides that the Trust shall pay the Adviser for its
services, out of the assets of U.S. Government Fund, a monthly fee, computed at
the following rates:

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS OF FEE
JOHN HANCOCK U.S. GOVERNMENT TRUST (ANNUAL RATE)
---------------------------------- -------------
<S> <C>
On the first $200 million . . . . . . . . . . . . . . . . . 0.650%
On the next $300 million . . . . . . . . . . . . . . . . . . 0.625%
On the excess over $500 million . . . . . . . . . . . . . . 0.600%
</TABLE>

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<PAGE> 360
The Adviser may voluntarily and temporarily reduce its advisory fee or
make other arrangements to limiteach Fund's expenses to a specified percentage
of its average daily net assets. The Adviser retains the right to re-impose
the advisory fee and recover any other payments to the extent that, at the end
of any fiscal year, such Fund's annual expenses fall below this limit.

In the event normal operating expenses of a Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where that
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 any additional arrangements necessary to eliminate any remaining excess
expenses. Currently, the most restrictive limit applicable to each Fund is
2.5% of the first $30,000,000 of the Fund's average daily net asset value, 2%
of the next $70,000,000 and 1.5% of the remaining average daily net asset
value.

Pursuant to the investment management contracts, the Adviser is not
liable to the Funds or their shareholders for any error of judgment or mistake
of law or for any loss suffered by a Fund in connection with the matters to
which their respective contracts relate, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from its reckless disregard of the obligations and
duties under the applicable contract.

The term of each investment management contract expires on December
22, 1996 and each contract will continue in effect from year to year thereafter
if approved annually by a vote of a majority of the Independent Trustees of the
Trust, on behalf of the affected Fund, cast in person at a meeting called for
the purpose of voting on such approval, and by either a majority of the
Trustees or the holders of a majority of the affected Fund's outstanding voting
securities. A management contract may, on 60 days' written notice, be
terminated at any time without the payment of any penalty by the affected Fund
by vote of a majority of the outstanding voting securities of the affected
Fund, by the Trustees or by the Adviser. A management contract terminates
automatically in the event of its assignment.

Securities held by the Funds may also be held by other funds or
investment advisory clients for which the Adviser or its affiliates provide
investment advice. Because of different investment objectives or other
factors, a particular security may be bought for one or more funds or clients
when one or more are selling the same security. If opportunities for the
purchase or sale of securities by the Adviser or for other funds or clients for
which the Adviser renders investment advice arise for consideration at or about
the same time, transactions in such securities will be made, insofar as
feasible, for the respective funds or clients in a manner deemed equitable to
all of them. To the extent that transactions on behalf of more than one client
of the Adviser or its affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse
effect on price.

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<PAGE> 361
Under the investment management contracts, the Funds may use the name
"John Hancock" or any name derived from or similar to it only as long as the
applicable investment management contract or any extension, renewal or
amendment thereof remains in effect. If a Fund's investment management
contract is no longer in effect, that Fund (to the extent that it lawfully can)
will cease to use such name or any other name indicating that it is advised by
or otherwise connected with the Adviser. In addition, the Adviser or the Life
Company may grant the non-exclusive right to use the name "John Hancock" or any
similar name to any other corporation or entity, including but not limited to
any investment company of which the Life Company or any subsidiary or affiliate
thereof or any successor to the business of any subsidiary or affiliate thereof
shall be the investment adviser.

For the fiscal years ended March 31, 1993, 1994 and 1995, advisory
fees payable by Intermediate Government Fund to TFMC amounted to $6,588,
$24,447 and $35,445 respectively; and $10,219 to John Hancock Adviser's during
the fiscal year ended March 31, 1995 however, a portion of such fees was not
imposed pursuant to the voluntary fee and expense limitation arrangements then
in effect (see "Financial Highlights" in the Prospectus). For the fiscal years
ended March 31, 1993, 1994 and 1995, advisory fees payable by U.S. Government
Fund to TFMC amounted to $128,579, $143,566 and $105,080 respectively and
$30,022 to John Hancock Advisers during the fiscal year ended March 31, 1995.

ADMINISTRATIVE SERVICES AGREEMENT. The Trust, on behalf of the Funds,
was a party to administrative services agreements with TFMC (the "Services
Agreements"), pursuant to which TFMC performed bookkeeping and accounting
services and functions, including preparing and maintaining various accounting
books, records and other documents and keeping such general ledgers and
portfolio accounts as are reasonably necessary for the operation of the Funds.
Other administrative services included communications in response to
shareholder inquiries and certain printing expenses of various financial
reports. In addition, such staff and office space, facilities and equipment
was provided as necessary to provide administrative services to the Funds. The
Services Agreements were amended in connection with the appointment of the
Adviser as adviser to the Funds to permit services under the Agreements to be
provided to the Funds by the Adviser and its affiliates. The Services
Agreements were terminated during the current fiscal year.

DISTRIBUTION CONTRACTS

DISTRIBUTION CONTRACTS. As discussed in the Prospectuses, each
Fund's shares are sold on a continuous basis at the public offering price.
John Hancock Funds, a wholly-owned subsidiary of the Adviser, has the exclusive
right, pursuant to the Distribution Contracts dated December 22, 1994 (the
"Distribution Contracts"), to purchase shares from the Funds at net asset value
for resale to the public or to broker-dealers at the public offering price.
Upon notice to all broker-dealers ("Selling Brokers") with whom it has sales
agreements, John Hancock Funds may allow such Selling Brokers up to the full
applicable sales charge during periods specified in such notice. During these
periods, such Selling Brokers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933.

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<PAGE> 362
The Distribution Contracts were initially adopted by the affirmative
vote of the Trust's Board of Trustees including the vote a majority of the
Independent Trustees cast in person at a meeting called for such purpose. Each
Distribution Contract shall continue in effect until December 22, 1995 and from
year to year thereafter if approved by either the vote of the relevant Fund's
shareholders or the Board of Trustees, including the vote of a majority of the
Independent Trustees, cast in person at a meeting called for such purpose. A
Distribution Contract may be terminated at any time, without penalty, by either
party upon sixty (60) days' written notice or by a vote of a majority of the
outstanding voting securities of the relevant Fund and terminates automatically
in the case of an assignment by John Hancock Funds.

Total underwriting commissions for sales of the Class A shares of
Intermediate Government Fund and U.S. Government Fund for the fiscal years
ended March 31, 1993 were $5,066 and $2,267; for 1994 were $0 and $172 and for
1995 were $34,289 and $33,470 respectively. Of the amounts, for sales of Class
A shares of Intermediate Government Fund, $215, $0 and $3,185 was retained by
Transamerica Fund Distributors, Inc., the Funds' former distributor,(or the
Funds current distributor) for the fiscal years ended March 31, 1993, 1994 and
1995, respectively, and the remainders were reallowed to dealers. For sales of
Class A shares of U.S. Government Fund, $104, $0 and $2,778 was retained by
Transamerica Fund Distributors, Inc., the Fund's former distributor or the
Fund's current distributor, for the fiscal years ended March 31, 1993, 1994 and
1995, respectively, and the remainders were reallowed to dealers.

DISTRIBUTION PLAN. The Board of Trustees, including the Independent
Trustees of the Trust, approved new distribution plans for each Fund pursuant
to Rule 12b-1 under the 1940 Act for Class A shares ("Class A Plans") and
Class B shares ("Class B Plans"). Such Plans were approved by a majority of
the outstanding shares of each respective class on December 16, 1994 and became
effective on December 22, 1994.

Under the Class A Plans, the distribution or service fee will not
exceed an annual rate of 0.25% of the average daily net asset value of the
Class A shares of the Funds (determined in accordance with the appropriate
Fund's Prospectus as from time to time in effect). Any expenses under a Fund's
Class A Plan not reimbursed within 12 months of being presented to such Fund
for repayment are forfeited and not carried over to future years. Under the
Class B Plans, the distribution or service fee to be paid by the Funds will not
exceed an annual rate of 1.00% of the average daily net assets of the Class B
shares of the Funds (determined in accordance with the appropriate Fund's
prospectus as from time to time in effect); provided that the portion of such
fee used to cover Service Expenses (described below) shall not exceed an annual
rate of 0.25% of the average daily net asset value of the Class B shares of the
respective Fund. Under the Class B Plans, the fee covers the Distribution and
Service Expenses (described below) and interest expenses on unreimbursed
distribution expenses. In accordance with generally accepted accounting
principles, the Funds do not treat unreimbursed distribution expenses as a
liability of the Fund and do not reduce the current net assets of Class B
shares by such amount, although the amount may be payable in the future.

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<PAGE> 363
Under the Plans, expenditures shall be calculated and accrued daily
and paid monthly or at such other intervals as the Trustees shall determine.
The fee may be spent by John Hancock Funds on Distribution Expenses or Service
Expenses. "Distribution Expenses" include any activities or expenses primarily
intended to result in the sale of shares of the relevant class of the Funds,
including, but not limited to: (i) initial and ongoing sales compensation
payable out of such fee as such compensation is received by John Hancock Funds
or by Selling Brokers, (ii) direct out-of-pocket expenses incurred in
connection with the distribution of shares, including expenses related to
printing of prospectuses and reports; (iii) preparation, printing and
distribution of sales literature and advertising material; (iv) an allocation
of overhead and other branch office expenses of John Hancock Funds related to
the distribution of Fund Shares (v) distribution expenses that were incurred by
a Fund's former distributor and not recovered through payments under the Class
A or Class B former plans or through receipt of contingent deferred sales
charges; and (vi) in the event that any other investment company (the "Acquired
Fund") sells all or substantially all of its assets to merges with or otherwise
engages in a combination with a Fund, distribution expenses originally incurred
in connection with the distribution of the Acquired Fund's shares. Service
Expenses under the Plans include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of John Hancock
Funds) and others who furnish personal and shareholder account maintenance
services to shareholders of the relevant class of the Fund.

During the fiscal year ended March 31, 1995, total payments made under
the Class A Plan by U.S. Government Trust to TFMC amounted to $40,479. Total
payments made under the current Class A Rule 12b-1 plan to the current
distributor amounted t $11,332 and, of such amount, (1) $2,636 represented
payments for Advertising and promotion expenses, (2) $146 represented payment
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $223 represented payments for compensation to selling
brokers, (4) $8,327 represented expenses of Distributors (5) $0 represented
interest, carrying, or other finance charges.

During the fiscal year ended March 31, 1995, total payments made under the
Class B Plan by U.S. Government Trust to TFMC amounted to $82. Total payments
made under the current Class B Rule 12b-1 plan to the current distributor
amounted to $409 and, of such amount, (1) $26 represented payments for
Advertising and promotion expenses, (2) $1 represented payments for the cost of
Printing and mailing of prospectuses to other than current shareholders, (3)
$297 represented payments for compensation to selling brokers, (4) $83
represented expenses of Distributors (5) $2 represented interest, carrying, or
other finance charges.

During the fiscal year ended March 31, 1995, total payments made under the
Class A Plan by Intermediate Government Trust to TFMC amounted to $17,722.
Total payments made under the current Class A Rule 12b-1 plan to the current
distributor amounted to $4,929 and, of such amount, (1) $1,099 represented
payments for Advertising and promotion expenses, (2) $31 represented payments
for the cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $93 represented payments for compensation to selling brokers,
(4) $3,707

32
<PAGE> 364

represented expenses of Distributors (5) $0 represented interest, carrying, or
other finance charges.

During the fiscal year ended March 31, 1995, total payments made under the
Class B Plan by Intermediate Government Trust to TFMC amounted to $232. Total
payments made under the current Class A Rule 12b-1 plan to the current
distributor amounted to $491 and, of such amount, (1) $59 represented payment
for Advertising and promotion expenses, (2) $1 represented payments for the
cost of Printing and mailing of prospectuses to other than current
shareholders, (3) $257 represented payments for compensation to selling
brokers, (4) $170 represented expenses of Distributors (5) $2 represented
interest, carrying, or other finance charges.

Each of the Plans provides that it will continue in effect only as
long as its continuance is approved at least annually by a majority of both the
Trustees and the Independent Trustees. Each of the Plans provides that it may
be terminated (a) at any time by vote of a majority of the Trustees, a majority
of the Independent Trustees, or a majority of the respective Class' outstanding
voting securities or (b) by John Hancock Funds on 60 days' notice in writing to
the affected Fund. Each of the Plans further provides that it may not be
amended to increase the maximum amount of the fees for the services described
therein without the approval of a majority of the outstanding shares of the
class of the affected Fund which has voting rights with respect to the Plan.
Each of the Plans provides that no material amendment to the Plan will, in any
event, be effective unless it is approved by a majority vote of the Trustees
and the Independent Trustees of the Trust. The holders of Class A shares and
Class B shares have exclusive voting rights with respect to the Plan applicable
to their respective class of shares of the Fund in which they are shareholders.
In adopting the Plans, the Board of Trustees has determined that, in its
judgment, there is a reasonable likelihood that the Plans will benefit the
holders of the applicable class of shares of the Funds.

Information regarding the services rendered under the Plans and the
Distribution Contracts and the amounts paid therefor by the respective Class of
the Funds are provided to, and reviewed by, the Board of Trustees on a
quarterly basis. In its quarterly review, the Board of Trustees considers the
continued appropriateness of the Plans and the Distribution Contracts and the
level of compensation provided therein.

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.

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<PAGE> 365
Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine valuations
for normal institutional size trading units of debt securities without
exclusive reliance upon quoted prices.

Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost, which the Trustees have
determined approximates market value. If market quotations are not readily
available or if in the opinion of the Adviser any quotation or price is not
representative of true market value, the fair value of the security may be
determined in good faith in accordance with procedures approved by the
Trustees.

A Fund will not price its securities on the following national
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.

INITIAL SALES CHARGE ON CLASS A SHARES

The sales charges applicable to purchases of Class A shares of the
Funds are described in each Fund's Class A and Class B Prospectus. Methods of
obtaining reduced sales charges referred to generally in the Prospectuses are
described in detail below. In calculating the sales charge applicable to
current purchases of Class A shares, the investor is entitled to cumulate
current purchases with the greater of the current value (at offering price) of
the Class A shares of such Fund, or if Investor Services is notified by the
investor's dealer or the investor at the time of the purchase, the cost of the
Class A shares owned.

WITHOUT SALES CHARGE. As described in the Prospectuses, Class A
shares of the Funds may be sold without a sales charge to certain persons
described in the Prospectuses.

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<PAGE> 366
COMBINATION PRIVILEGE. Reduced sales charges (according to the
schedule set forth in each Fund's Class A and Class B Prospectus) also are
available to an investor based on the aggregate amount of his concurrent and
prior investments in Class A shares of such Fund and shares of all other John
Hancock funds which carry a sales charge.

LETTER OF INTENTION. The reduced sales loads are also applicable to
investments made over a specified period pursuant to a Letter of Intention
(LOI), which should be read carefully prior to its execution by an investor.
The Funds offer two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a period of thirteen (13) months. Investors who are using the
Funds as a funding medium for a qualified retirement plan, however, may opt to
make the necessary investments called for by the LOI over a forty-eight (48)
month period. These qualified retirement plans include IRAs, SEP, SARSEP, TSA,
401(k) plans, TSA plans and 457 plans. Such an investment (including
accumulations and combinations) must aggregate $50,000 or more invested during
the specified period from the date of the LOI or from a date within ninety (90)
days prior thereto, upon written request to Investor Services. The sales
charge applicable to all amounts invested under the LOI is computed as if the
aggregate amount intended to be invested had been invested immediately. If
such aggregate amount is not actually invested, the difference in the sales
charge actually paid and the sales charge payable had the LOI not been in
effect is due from the investor. However, for the purchases actually made
within the specified period (either 13 or 48 months), the sales charge
applicable will not be higher than that which would have been applied
(including accumulations and combinations) had the LOI been for the amount
actually invested.

The LOI authorizes Investor Services to hold in escrow sufficient
Class A shares (approximately 5% of the aggregate) to make up any difference in
sales charges on the amount intended to be invested and the amount actually
invested, until such investment is completed within the specified period, at
which time the escrow shares will be released. If the total investment
specified in the LOI is not completed, the Class A shares held in escrow may be
redeemed and the proceeds used as required to pay such sales charge as may be
due. By signing the LOI, the investor authorizes Investor Services to act as
his attorney-in-fact to redeem any escrow shares and adjust the sales charge,
if necessary. A LOI does not constitute a binding commitment by an investor to
purchase, or by the Funds to sell, any additional shares and may be terminated
at any time.

DEFERRED SALES CHARGE ON CLASS B SHARES

Investments in Class B shares are purchased at net asset value per
share without the imposition of a sales charge so that applicable Fund will
receive the full amount of the purchase payment.

35
<PAGE> 367
or the original purchase cost of the Class B shares being redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase prices, including Class B shares derived from reinvestment of
dividends or capital gains distributions.

Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by John Hancock Funds to defray its expenses related to
providing distribution-related services to the Funds in connection with the
sale of the Class B shares, such as the payment of compensation to select
Selling Brokers for selling Class B shares. The combination of the CDSC and
the distribution and service fees facilitates the ability of the Funds to sell
the Class B shares without a sales charge being deducted at the time of the
purchase. See each Fund's Class A and Class B Prospectus for additional
information regarding the CDSC.

SPECIAL REDEMPTIONS

Although it would not normally do so, each Fund has the right to pay
the redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed the Trustees. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any
such securities would be valued for the purposes of making such payment at the
same value as used in determining net asset value. The Funds have elected to
be governed by Rule 18f-1 under the 1940 Act, pursuant to which each Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the applicable Fund during any 90 day period for any one
account.

ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE. As described more fully in the Prospectuses, the
Funds permit exchanges of shares of any class of the Funds for shares of the
same class in any other John Hancock fund offering that class.

SYSTEMATIC WITHDRAWAL PLAN. As described briefly in the Class A and
Class B Prospectuses, the Funds permit the establishment of a Systematic
Withdrawal Plan. Payments under this plan represent proceeds arising from the
redemption of Fund shares. Since the redemption price of Fund shares may be
more or less than the shareholder's cost, depending upon the market value of
the securities owned by a Fund at the time of redemption, the distribution of
cash pursuant to this plan may result in realization of gain or loss for
purposes of Federal, state and local income taxes. The maintenance of a
Systematic Withdrawal Plan concurrently with purchases of additional Class A or
Class B shares of a Fund could be disadvantageous to a shareholder because of
the initial sales charge payable on such purchases of Class A shares and

36
<PAGE> 368
the CDSC imposed on redemptions of Class B shares and because redemptions are
taxable events. Therefore, a shareholder should not purchase Fund shares at
the same time as a Systematic Withdrawal Plan is in effect. The Funds reserve
the right to modify or discontinue the Systematic Withdrawal Plan of any
shareholder on 30 days' prior written notice to such shareholder, or to
discontinue the availability of such plan in the future. The shareholder may
terminate the plan at any time by giving proper notice to Investor Services.

The investments will be drawn on or about the day of the month
indicated.

REINVESTMENT PRIVILEGE. A shareholder who has redeemed Fund shares
may, within 120 days after the date of redemption, reinvest without payment of
a sales charge any part of the redemption proceeds in shares of the same class
of that Fund or another John Hancock mutual fund, subject to the minimum
investment limit in that fund. The proceeds from the redemption of Class A
shares may be reinvested at net asset value without paying a sales charge in
Class A shares of the Funds or in Class A shares of another John Hancock mutual
fund. If a CDSC was paid upon a redemption, a shareholder may reinvest the
proceeds from that redemption at net asset value in additional shares of the
class from which the redemption was made. The shareholder's account will be
credited with the amount of any CDSC charged upon the prior redemption and the
new shares will continue to be subject to the CDSC. The holding period of the
shares acquired through reinvestment will, for purposes of computing the CDSC
payable upon a subsequent redemption, include the holding period of the
redeemed shares. The Funds may modify or terminate the reinvestment privilege
at any time.

37
<PAGE> 369
DESCRIPTION OF THE TRUST'S SHARES

38
<PAGE> 370
distribution and service fees than Class A shares and (iii) each of Class A
shares and Class B shares will bear any class expenses properly allocable to
such class of shares, subject to the conditions set forth in a private letter
ruling that the Fund has received from the Internal Revenue Service relating to
its multiple-class structure. Accordingly, the net asset value per share may
vary depending whether Class A shares or Class B shares are purchased.

VOTING RIGHTS. Shareholders are entitled to a full vote for each full
share held. The Trustees themselves have the power to alter the number and the
terms of office of Trustees, and they may at any time lengthen their own terms
or make their terms of unlimited duration (subject to certain removal
procedures) and appoint their own successors, provided that at all times at
least a majority of the Trustees have been elected by shareholders. The voting
rights of shareholders are not cumulative, so that holders of more than 50% of
the shares voting can, if they choose, elect all Trustees being voted upon,
while the holders of the remaining shares would be unable to elect any
Trustees. Although the Trust need not hold annual meetings of shareholders,
the Trustees may call special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Also, a shareholder's meeting must be called if so requested in writing
by the holders of record of 10% or more of the outstanding shares of the Trust.
In addition, the Trustees may be removed by the action of the holders of record
of two-thirds or more of the outstanding shares.

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<PAGE> 371
TAX STATUS

Each Fund is treated as a separate entity for accounting and tax
purposes. Each Fund has qualified and elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and intends to continue to so qualify in the future. As
such and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions, and the diversification
of its assets, each Fund will not be subject to Federal income tax on its net
income (including net short-term and long-term capital gain) which is
distributed to shareholders at least annually in accordance with the timing
requirements of the Code.

For each Fund, the amount of net short-term and long-term capital
gains, if any, in any given year will vary depending upon the Adviser's current
investment strategy and whether the Adviser believes it to be in the best
interest of the Fund to dispose of portfolio securities or enter into options
or futures transactions that will generate capital gains. At the time of an
investor's purchase of Fund shares, a portion of the purchase price is often
attributable to realized or unrealized appreciation in the Fund's portfolio.
Consequently, subsequent distributions from such appreciation may be taxable to
such investor even if the net asset value of the investor's shares is, as a
result of the distributions, reduced below the investor's cost for such shares,
and the distributions in reality represent a return of a portion of the
purchase price.

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<PAGE> 372
subsequently acquired without payment of a sales charge pursuant to the
reinvestment or exchange privilege. Such disregarded load will result in an
increase in the shareholder's tax basis in the shares subsequently acquired.
Also, any loss realized on a redemption or exchange may be disallowed to the
extent the shares disposed of are replaced with other shares of the same Fund
within a period of 61 days beginning 30 days before and ending 30 days after
the shares are disposed of, such as pursuant to the Dividend Reinvestment Plan.
In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Any loss realized upon the redemption of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.

For Federal income tax purposes, each Fund is permitted to carry
forward a net capital loss in any year to offset its own net capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent net capital gains are offset by such losses, they would not result
in Federal income tax liability to the applicable Fund and, as noted above,
would not be distributed as such to shareholders. At December 31, 1994, the
Intermediate Government Fund had $735,389 of capital loss carryforwards
available to offset future net capital gains and such capital loss
carryforwards expire as follows: $28,597 in 1997 and $706,792 in 2002. At
December 31, 1994, the U.S. Government Fund had $53,533,889 of capital loss
carryforwards available to offset future net capital gains, and such capital
loss carryforwards expire as follows: $39,799,667 in 1996, $2,986,286 in 1997,
$5,412,804 in 1998, $653,763 in 1999, $2,152,064 in 2000 and $2,529,305 in
2002.

Dividends, including capital gain distributions, paid by the Funds to
their corporate shareholders will not qualify for the corporate dividends
received deduction in their hands.

41
<PAGE> 373
Each Fund that invests in certain PIKs, zero coupon securities or
certain increasing rate securities (and, in general, any other securities with
original issue discount or with market discount if the Fund elects to include
market discount in income currently) must accrue income on such investments
prior to the receipt of the corresponding cash payments. However, each Fund
must distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, a Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.

Each Fund may be required to account for its transactions in dollar
rolls in a manner that, under certain circumstances, may limit the extent of
its participation in such transactions.

Limitations imposed by the Code on regulated investment companies like
the Funds may restrict each Fund's ability to enter into futures and options
forward transactions.
Certain options and futures transactions undertaken by a Fund may
cause the Fund to recognize gains or losses from marking to market even though
its positions have not been sold or terminated and affect the character as
long-term or short-term and timing of some capital gains and losses realized by
the Fund. Also, certain of a Fund's losses on its transactions involving
options or futures contracts and/or offsetting portfolio positions may be
deferred rather than being taken into account currently in calculating the
Fund's taxable income or gains. Certain of the applicable tax rules may be
modified if a Fund is eligible and chooses to make one or more of certain tax
elections that may be available. These transactions may therefore affect the
amount, timing and character of a Fund's distributions to shareholders. The
Funds will take into account the special tax rules (including consideration of
available elections) applicable to options and futures contracts in order to
minimize any potential adverse tax consequences.

The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under
such law. The discussion does not address special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions. Dividends, capital gain distributions, and
ownership of or gains realized on the redemption (including an exchange) of
Fund shares may also be subject to state and local taxes. Shareholders should
consult their own tax advisers as to the Federal, state or local tax
consequences of ownership of shares of, and receipt of distributions from, the
Funds in their particular circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which
their investment in a Fund is effectively connected will be subject to U.S.
Federal income tax treatment that is

42
<PAGE> 374
different from that described above. These investors may be subject to
nonresident alien withholding tax at the rate of 30% (or a lower rate under an
applicable tax treaty) on amounts treated as ordinary dividends from a Fund
and, unless an effective IRS Form W- 8 or authorized substitute is on file, to
31% backup withholding on certain other payments from the Fund. Non-U.S.
investors should consult their tax advisers regarding such treatment and the
application of foreign taxes to an investment in either Fund.

CALCULATION OF PERFORMANCE

For the 30-day period ended March 31, 1995, the annualized yield of
Intermediate Government Fund's Class A shares was 4.65%, and for the 30-day
period ended March 31, 1995, the annualized yield of U.S. Government Fund's
Class A shares was 5.52%. The average annual total returns of the Class A
shares of the Intermediate Government Fund for the one, five and life of the
Fund (November 3, 1986 (initial public offering) periods ended March 31, 1995
were (2.34)%, 5.63% and 6.23%, respectively. The average annual total returns
of the Class A shares of the U.S. Government Fund for the one, five and life of
the Fund (inception) periods ended March 31, 1995 were (1.27)%, 6.63% and
6.38%, respectively. The performance of the Intermediate Government Fund would
be lower if the Fund's former investment adviser did not voluntarily limit the
Fund's operating expenses.

For the 30-day period ended March 31, 1995, the annualized yield of
Intermediate Government Fund's Class B shares was 5.08%, and for the 30-day
period ended March 31, 1995, the annualized yield of U.S. Government Fund's
Class B shares was 5.05%. The average returns of the Class B shares of the
Intermediate Government Fund for life of the fund (September 30,1994,
inception) period ended March 31, 1995 was (1.27%). The average annual total
return of the Class B shares of the U.S. Government Fund for the life of the
Fund (September 4, 1994, inception) was (0.72%).

Yield = 2 [ (a-b + 1 )6 -1]
---
cd
Where:

a= dividends and interest earned during the period.

b= net expenses accrued during the period.

43
<PAGE> 375
c= the average daily number of Fund shares outstanding during the
period that would be entitled to receive dividends.

d= the maximum offering price per share on the last day of the
period (NAV where applicable).

P (1 + T)n = ERV

P= a hypothetical initial investment of $1,000.

T= average annual total return

n= number of years

ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the designated periods or fraction
thereof.

From time to time, in reports and promotional literature, a Fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper Analytical Services, Inc.'s "Lipper -- Fixed
Income Fund Performance Analysis," a monthly publication which tracks net
assets, total return, and yield on approximately 1,700 fixed income mutual
funds in the United States. Ibbotson and Associates, CDA Weisenberger and F.C.
Towers are also used for comparison purposes, as well as the Russell and
Wilshire Indices.

44
<PAGE> 376
Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S, etc. will
also be utilized.

ADDITIONAL PERFORMANCE INFORMATION. The Funds may use comparative
performance information from certain industry research materials and/or
published in various periodicals. The characteristics of the investments in
such comparisons may be different from those investments of a Fund's portfolio.
In addition, the formula used to calculate the performance statistics of such
investments may not be identical to the formula used by a Fund to calculate its
performance figures. From time to time, advertisements or information for the
Funds may include a discussion of certain attributes or benefits to be derived
by an investment in a Fund. Such advertisements or information may include
symbols, headlines or other material which highlight or summarize the
information discussed in more detail in the communication.

The following publications, indices, averages and investments which
may be used in advertisements or information concerning the Funds for
dissemination to investors or shareholders, include but are not limited to:

a. Lipper-Mutual Fund Performance Analysis, Lipper-Fixed Income
Analysis, and Lipper Mutual Fund indices - measure total return and
average current yield for the mutual fund industry. Ranks individual
mutual fund performance over specified time periods assuming
reinvestment of all distributions, exclusive of any applicable sales
charges.
b. CDA Mutual Fund Report, published by CDA Investment
Technologies, Inc. - analyzes price, current yield, risk, total return,
and average rate of return (average annual compounded growth rate) over
specified time periods for the mutual fund industry.

c. Mutual Fund Source Book and "Morningstar Mutual Funds"
published by Morningstar, Inc. - analyzes price, yield, risk, and total
return for selected mutual funds. Its ratings of 1 (low) and 5 (high)
stars are based on a fund's historical risk/ reward ratio compared with
similar funds for 3-, 5- and 10-year periods, including all sales
charges and fees. Morningstar, Inc., considered to be an expert in
independent fund performance monitoring, has consented to the use of its
ratings in Fund advertisements.

d. Financial publications: BARRONS, BUSINESS WEEK, PERSONAL
FINANCE, FINANCIAL WORLD, FORBES, FORTUNE, "The Wall Street Journal",
MUNI WEEK, WEISENBERGER

45
<PAGE> 377

INVESTMENT COMPANIES SERVICE, INSTITUTIONAL INVESTOR, and MONEY - rate
fund performance over specified time periods and provide other relative
performance or industry information.

e. Consumer Price Index (or Cost of Living Index), published by
the U.S. Bureau of Labor Statistics - a statistical measure of change,
over time, in the price of goods and services in major expenditure
groups.

f. Stocks, Bonds, Bills, and Inflation, published by Ibbotson
Associates - historical measure of yield, price, and total return for
common and small company stock, long-term government bonds, Treasury
bills, and inflation.

g. Savings and Loan Historical Interest Rates - as published in
the U.S. Savings & Loan League Fact Book.

h. Salomon Brothers Broad Bond Index or its component indices -
The Broad Index measures yield, price and total return for Treasury,
Agency, Corporate, and Mortgage bonds.

i. Salomon Brothers Composite High Yield Index or its component
indices - The High Yield Index measures yield, price and total return
for Long-Term High-Yield Index, Intermediate-Term High-Yield Index and
Long-Term Utility High-Yield Index.

j. Lehman Brothers Aggregate Bond Index or its component indices
(including Municipal Bond Index) - The Aggregate Bond Index measures
yield, price and total return for Treasury, Agency, Corporate, Mortgage
Government/Corporate, Government, Treasury, Intermediate, High Yield and
Yankee bonds.

k. Standard & Poor's Bond Indices - measure yield and price of
Corporate, Municipal, and government bonds.

l. Other taxable investments, including certificates of deposit
(CDs), money market deposit accounts (MMDAs), checking accounts, savings
accounts, money market mutual funds, and repurchase agreements.
m. Historical data supplied by the research departments of Lehman
Hutton, First Boston Corporation, Morgan Stanley, Salomon Brothers,
Merrill Lynch, and Donaldson Lufkin and Jenrette.

n. Donoghue's Money Fund Reports - industry averages for 7-day
annualized and compounded yields of taxable, tax-free and government
money funds.

o. The Value Line Mutual Fund Survey, published by Value Line,
assigns rankings of 1 (best) to 5 (worst) in terms of risk adjusted
performance covering more than 2,000 equity and fixed income mutual
funds.

46
<PAGE> 378
In addition, advertisements and sales materials may contain
hypothetical performance examples for purposes of illustrating reinvestment (or
"compounding") of dividends at fixed rates of return or tax advantages to be
derived from deferring payment of federal (and state) income taxes (at maximum
rates) as compared to taxable investments assuming fixed rates of return.
Illustrations may also includes (1) hypothetical investments in various
retirement plans, such as IRAs, made by investors of various ages or (2)
comparisons to retirement plans funded by annuity or bank products.

In assessing such comparisons, an investor should consider the
following factors:

a. It is generally either not possible or not practicable to
invest in an average or index of certain investments.

b. Certificates of deposit issued by banks and other depository
institutions represent an alternative income producing product.
Certificates of deposit may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal of deposits
prior to maturity will normally be subject to a penalty. Rates offered
by banks and other depository institutions are subject to change at any
time specified by the issuing institution.

c. United States Treasury Bills, Notes or Bonds represent
alternative income producing products. Treasury obligations are issued
in selected denominations. Rates of Treasury obligations are fixed at
the time of issuance and payment of principal and interest is backed by
the full faith and credit of the United States government. The market
value of such instruments will generally fluctuate inversely with
interest rates prior to maturity and will equal par value at maturity.

Past performance is no guarantee of future results. In addition,
investors are advised to consult their brokers or financial advisers when
considering an investment in a Fund based upon performance comparisons.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by the Adviser and officers of
the Trust pursuant to recommendations made by an investment committee of the
Adviser, which consists of officers and directors of the Adviser and affiliates
and officers and Trustees who are interested persons of the Trust. Orders for
purchases and sales of securities are placed in a manner which, in the opinion
of

47
<PAGE> 379
the officers of the Trust, will offer the best price and market for the
execution of each such transaction. Purchases from underwriters of portfolio
securities may include a commission or commissions paid by the issuer, and
transactions with dealers serving as market makers reflect a "spread."
Investments in debt securities are generally traded on a net basis through
dealers acting for their own account as principals and not as brokers; no
brokerage commissions are payable on such transactions.

Each Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing
primary policy, the Rules of Fair Practice of the NASD and other policies that
the Trustees may determine, the Adviser may consider sales of shares of the
Funds as a factor in the selection of broker-dealers to execute the Funds'
portfolio transactions.

To the extent consistent with the foregoing, the Funds will be
governed in the selection of brokers and dealers, and the negotiation of
brokerage commission rates and dealer spreads, by the reliability and quality
of the services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Adviser of the Funds, and their value and expected contribution to the
performance of the Funds. It is not possible to place a dollar value on
information and services to be received from brokers and dealers, since it is
only supplementary to the research efforts of the Adviser. The receipt of
research information is not expected to reduce significantly the expenses of
the Adviser. The research information and statistical assistance furnished by
brokers and dealers may benefit the Life Company or other advisory clients of
the Adviser, and conversely, brokerage commissions and spreads paid by other
advisory clients of the Adviser may result in research information and
statistical assistance beneficial to the Funds. The Funds will make no
commitments to allocate portfolio transactions upon any prescribed basis.
While the Trust's officers will be primarily responsible for the allocation of
the Funds' brokerage business, their policies and practices in this regard must
be consistent with the foregoing and will at all times be subject to review by
the Trustees. For the fiscal years ended March 31, 1995, 1994 and 1993, no
negotiated brokerage commissions were paid on portfolio transactions.

As permitted by Section 28(e) of the Securities Exchange Act of 1934,
a Fund may pay to a broker which provides brokerage and research services to
the Fund an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This
practice is subject to a good faith determination by the Trustees that the
price is reasonable in light of the services provided and to policies that the
Trustees may adopt from time to time. During the fiscal year ended March 31,
1995, the Funds did not pay commissions as compensation to any brokers for
research services such as industry, economic and company reviews and
evaluations of securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony

48
<PAGE> 380

Incorporated ("Tucker Anthony") John Hancock Distributors, Inc. ("John Hancock
Distributors") and Sutro & Company, Inc. ("Sutro"), are broker-dealers
("Affiliated Brokers"). Pursuant to procedures determined by the Trustees and
consistent with the above policy of obtaining best net results, the Fund may
execute portfolio transactions with or through Tucker Anthony or Sutro. During
the year ended March 31, 1995, the Funds did not execute any portfolio
transactions with then affiliated brokers.

Any of the Affiliated Brokers may act as broker for a Fund on exchange
transactions, subject, however, to the general policy of the Funds set forth
above and the procedures adopted by the Trustees pursuant to the 1940 Act.
Commissions paid to an Affiliated Broker must be at least as favorable as those
which the Trustees believe to be contemporaneously charged by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold. A transaction would not be placed with an Affiliated Broker
if the Fund would have to pay a commission rate less favorable than the
Affiliated Broker's contemporaneous charges for comparable transactions for its
other most favored, but unaffiliated, customers, except for accounts for which
the Affiliated Broker acts as a clearing broker for another brokerage firm, and
any customers of the Affiliated Broker not comparable to the Fund as determined
by a majority of the Trustees who are not interested persons (as defined in the
1940 Act) of the Trust, the Adviser or the Affiliated Brokers. Because the
Adviser, which is affiliated with the Affiliated Brokers, has, as an investment
adviser to the Funds, the obligation to provide investment management services,
which includes elements of research and related investment skills, such
research and related skills will not be used by the Affiliated Brokers as a
basis for negotiating commissions at a rate higher than that determined in
accordance with the above criteria. The Funds will not effect principal
transactions with Affiliated Brokers. The Funds may, however, purchase
securities from other members of underwriting syndicates of which Tucker
Anthony, Sutro and John Hancock Distributors are members, but only in
accordance with the policy set forth above and procedures adopted and reviewed
periodically by the Trustees.

For the fiscal years ended March 31, 1993, 1994 and 1995, U.S.
Government Fund paid to present and the former investment adviser brokerage
commissions in the amounts of $6,395, $5,612 and $0 respectively. The former
investment adviser did not receive any brokerage commissions on portfolio
transactions effected on behalf of Intermediate Government Fund.

Brokerage or other transaction costs of a Fund are generally
commensurate with the rate of portfolio activity. The portfolio turnover rates
for the Funds for (a) the fiscal year ended March 31, 1995 and (b) the fiscal
year ended March 31, 1994 were:

Intermediate Government Fund - (a) 4% and (b) 89%.

U.S. Government Fund - (a) 438% and (b) 264%.

49
<PAGE> 381
TRANSFER AGENT SERVICES

U.S. Government Fund pays Investor Services monthly a transfer agent
fee equal to $20.00 per account for the Class A shares and $22.50 per account
for the Class B shares on an annual basis, plus out-of-pocket expenses.

CUSTODY OF PORTFOLIO

Portfolio securities of the Funds are held pursuant to a custodian
agreement between the Trust, on behalf of each Fund, and Investors Bank and
Trust ("IBT") 24 Federal Street, Boston, Massachusetts. Under the custodian
agreement, IBT performs custody, portfolio and fund accounting services.

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116,
has been selected as the independent auditors of each Fund. The financial
statements of each Fund included in its Prospectus and this Statement of
Additional Information have been audited by Ernst & Young LLP for the periods
indicated in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.

50
<PAGE> 382
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> 383
<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> 384

<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> 385
<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> 386

<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> 387
<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> 388

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> 389

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> 390
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> 391
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> 392

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> 393

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> 394

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> 395

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>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE> 396

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> 397

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> 398

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:

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.

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> 399

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.

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 0.50% 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, 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> 400

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.

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> 401

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.

/s/ Ernst & Young LLP
Boston, Massachusetts
May 15, 1995

<PAGE> 402

ADJUSTABLE U.S. GOVERNMENT FUND

STATEMENT OF ADDITIONAL INFORMATION

JULY 17, 1995

This Statement of Additional Information ("SAI") provides information about
Adjustable U.S. Government Fund (the "Portfolio"), a diversified series of
John Hancock Bond Fund (the "Trust"), in addition to the information that is
contained in the Portfolio's Prospectus, dated July 17, 1995.

This SAI is not a prospectus. It should be read in conjunction with the
Prospectus, a copy of which can be obtained free of charge by writing or
telephoning:

John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291

<TABLE>
TABLE OF CONTENTS

<CAPTION>
Statement of Cross
Additional Referenced
Information to Prospectus
Page Page
------------ -------------
<S> <C> <C>

Organization of the Trust . . . . . . . . . 2 7
Investment Objective and Policies . . . . . 2 5
Certain Investment Practices . . . . . . . 3 16
Investment Restrictions . . . . . . . . . . 5 5
Those Responsible for Management . . . . . 7 7
Investment Advisory and Other Services . . 15 7
Distribution Contract . . . . . . . . . . . 18 N/A
Net Asset Value . . . . . . . . . . . . . . 20 13
Purchase of Shares . . . . . . . . . . . . 20 10
Special Redemptions . . . . . . . . . . . . 20 13
Description of the Portfolio's Shares . . . 21 7
Tax Status . . . . . . . . . . . . . . . . 22 8
Calculation of Performance . . . . . . . . 25 10
Brokerage Allocation . . . . . . . . . . . 26 N/A
Transfer Agent Services . . . . . . . . . . 28 Back Cover
Custody of Portfolio . . . . . . . . . . . 28 Back Cover
Independent Auditors . . . . . . . . . . . 28 Back Cover
Financial Statements . . . . . . . . . . . 29 3

</TABLE>
<PAGE> 403

ORGANIZATION OF THE TRUST

The Trust is an open-end management investment company organized as a
Massachusetts business trust under a Declaration of Trust dated December
12, 1984. The Trust currently has six series.

The Portfolio is managed by John Hancock Advisers, Inc. (the
"Adviser"), a wholly-owned indirect subsidiary of John Hancock Mutual Life
Insurance Company (the "Life Company"), chartered in 1862 with national
headquarters at John Hancock Place, Boston, Massachusetts. John Hancock
Funds, Inc. ("John Hancock Funds") acts as principal distributor of the
shares of the Portfolio.

INVESTMENT OBJECTIVE AND POLICIES

The Portfolio seeks, as its primary investment objective, a high level
of current income consistent with low volatility of principal. Under
normal circumstances, at least 65% of the Portfolio's total assets will be
invested in adjustable rate mortgage securities ("ARMs") and pass-through
securities representing interests in loan pools and having periodic
interest rate resets, which in each case are U.S. Government Securities.

OBLIGATIONS OF THE UNITED STATES, ITS AGENCIES AND INSTRUMENTALITIES.
In addition to U.S. Government Securities which are adjustable rate
mortgage securities and other pass through securities representing
interests in loan pools and having periodic interest rate resets, the
Portfolio may invest in a variety of other securities issued or guaranteed
as to principal and interest by the U.S. Government, its agencies and
instrumentalities. U.S. Treasury Bills, notes and bonds are supported by
the full faith and credit of the United States. Other U.S. Government
Securities are supported either by the full faith and credit of the U.S.
Government (such as securities of the Small Business Administration), the
right of the issuer to borrow from the Treasury (such as securities of the
Federal Home Loan Banks), the discretionary authority of the U.S.
Government to purchase the agency's obligations (such as securities of the
Federal National Mortgage Association), or only the credit of the issuer.
No assurance can be given that the U.S. Government will provide financial
support of U.S. Government agencies, authorities or instrumentalities in
the future.

The Portfolio may also invest in separately U.S. traded principal and
interest components of securities guaranteed or issued by the U.S. Treasury
if such components are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS").

Other investments of the Portfolio are set forth below under "Certain
Investment Practices."

<PAGE> 404

CERTAIN INVESTMENT PRACTICES

LENDING OF PORTFOLIO SECURITIES. In order to generate additional
income, the Portfolio may, from time to time, lend securities from its
portfolio to brokers, dealers and financial institutions such as banks and
trust companies. Such loans will be secured by collateral consisting of cash
or U.S. Government Securities which will be maintained in an amount equal to
at least 100% of the current market value of the loaned securities. During
the period of each loan, the Portfolio will receive the income on both the
loaned securities and the collateral and thereby increase its return. Cash
collateral will be invested in short-term high quality debt securities, which
will increase the current income of the Portfolio. The loans will be
terminable by the Portfolio at any time and by the borrower on one day's
notice. The Portfolio will have the right to regain record ownership of
loaned securities to exercise beneficial rights such as rights to interest or
other distributions or voting rights on important issues. The Portfolio may
pay reasonable fees to persons unaffiliated with the Portfolio for services in
arranging such loans. Lending of portfolio securities involves a risk of
failure by the borrower to return the loaned securities, in which event the
Portfolio may incur a loss.

SECURITIES TRANSACTIONS SUBJECT TO DELAYED SETTLEMENT. As described
under "Investments, Techniques and Risk Factors" in the Prospectus,
securities purchased for which the normal settlement date occurs later than
the settlement date which is normal for U.S. Treasury obligations and the
securities held in the Portfolio are subject to changes in value (both
experiencing appreciation when interest rates decline and depreciation when
interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Purchasing securities subject to delayed
settlement can involve a risk that the yields available in the market when
the delivery takes place may actually be higher than those obtained in the
transaction itself. A separate account of the Portfolio consisting of cash
or liquid debt securities equal to the amount of the delayed settlement
commitments will be established at the Trust's custodian bank. For the
purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market value using the valuation
procedures for all other investments. If the market or fair value of such
securities declines, additional cash or highly liquid securities will be
placed in the account daily so that the value of the account will equal the
amount of such commitments by the Portfolio. On the settlement date of
these delayed settlement securities, the Portfolio will meet its
obligations from then available cash flow, sale of securities held in the
separate account, sale of other securities or, although it would not
normally expect to do so, from sale of the delayed settlement securities
themselves (which may have a value greater or lesser than the Portfolio's
payment obligations). Sale of securities to meet such obligations will
generally result in the realization of capital gains or losses.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Portfolio may
purchase securities on a when-issued or forward commitment basis. "When-
issued" refers to securities whose terms are available and for which a
market exists, but which have not been issued. The Portfolio will engage
in when-issued transactions with respect to securities purchased for its
portfolio in order to obtain what is considered to be an advantageous price
and yield at the time of the transaction. For when-issued transactions, no
payment is made until delivery is due, often a

<PAGE> 405

month or more after the purchase. In a forward commitment transaction, the
Portfolio contracts to purchase securities for a fixed price at a future
date beyond customary settlement time.

When the Portfolio engages in forward commitment and when-issued
transactions, it relies on the seller to consummate the transaction. The
failure of the issuer or seller to consummate the transaction may result in
the Portfolio losing the opportunity to obtain a price and yield considered
to be advantageous. The purchase of securities on a when-issued and
forward commitment basis also involves a risk of loss if the value of the
security to be purchased declines prior to the settlement date.

REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase
agreements. A repurchase agreement is a contract under which the Portfolio
would acquire a security for a relatively short period (generally not more
than 7 days) subject to the obligation of the seller to repurchase and the
Portfolio to resell such security at a fixed time and price (representing
the Portfolio's cost plus interest). The Portfolio will enter into
repurchase agreements only with member banks of the Federal Reserve System
and with securities dealers. The Adviser will continuously monitor the
creditworthiness of the parties with whom the Portfolio enters into
repurchase agreements. The Portfolio has established a procedure providing
that the securities serving as collateral for each repurchase agreement
must be delivered to the Portfolio's custodian either physically or in
book-entry form and that the collateral must be marked to market daily to
ensure that each repurchase agreement is fully collateralized at all times.
In the event of bankruptcy or other default by a seller of a repurchase
agreement, the Portfolio could experience delays in liquidating the
underlying securities and could experience losses, including the possible
decline in the value of the underlying securities during the period which
the Portfolio seeks to enforce its rights thereto, possible subnormal
levels of income and lack of access to income during this period, and the
expense of enforcing its rights.

<PAGE> 406

than the interest expense of the transaction. However there is a risk that
interest expense will nevertheless exceed the income earned. Reverse
repurchase agreements involve the risk that the market value of securities
purchased by the Portfolio with proceeds of the transaction may decline
below the repurchase price of the securities sold by the Portfolio which it
is obligated to repurchase. The Portfolio would also continue to be
subject to the risk of a decline in the market value of the securities sold
under the agreements because it will reacquire those securities upon
effecting their repurchase. To minimize various risks associated with
reverse repurchase agreements, the Portfolio would establish and maintain
with the Portfolio's custodian a separate account consisting of highly
liquid, marketable securities in an amount at least equal to the repurchase
prices of the securities (plus any accrued interest thereon) under such
agreements. In addition, the Portfolio would not enter into reverse
repurchase agreements exceeding in the aggregate 33 1/3% of the value of
its total net assets (including for this purpose other borrowings of the
Portfolio). The Portfolio will enter into reverse repurchase agreements
only with selected registered broker/dealers or with federally insured
banks or savings and loan associations which are approved in advance as
being creditworthy by the Trustees. Under procedures established by the
Trustees, the Adviser will monitor the creditworthiness of the firms
involved.

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following fundamental investment
restrictions. These restrictions may not be changed without approval by
holders of a majority of the outstanding shares of the Portfolio. A
majority for this purpose means the holders of: (a) more than 50% of the
outstanding shares, or (b) 67% or more of the shares represented at a
meeting where more that 50% of the outstanding shares are represented,
whichever is less.

The Portfolio may not:

(1) borrow money, except as a temporary measure for extraordinary or
emergency purposes the Portfolio may borrow from banks in aggregate
amounts at any one time outstanding not exceeding 33 1/3% of the total
assets (including the amount borrowed) of the Portfolio, valued at
market; and the Portfolio may not purchase any securities at any time
when borrowings exceed 5% of the total assets of the Portfolio (taken
at market value). This borrowing restriction does not prohibit the
use of reverse repurchase agreements (see "Reverse Repurchase
Agreements"). For purposes of this investment restriction, forward
commitment transactions shall not constitute borrowings. Interest
paid on any borrowings will reduce the Portfolio's net investment
income.

(2) make short sales of securities or purchase any security on margin,
except that the Portfolio may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of securities (this
restriction does not apply to securities purchased on a when-issued
basis);

(3) underwrite securities issued by other persons, except insofar as the
Portfolio may technically be deemed an underwriter under the
Securities Act of 1933 in selling a security;

<PAGE> 407

(4) make loans to other persons except (a) through the lending of
securities held by the Portfolio, (b) through the purchase of debt
securities in accordance with the investment policies of the Portfolio
(the entry into repurchase agreements is not considered a loan for
purposes of this restriction).

(5) with respect to 75% of its total assets, purchase the securities of
any one issuer (except securities issued or guaranteed by the U.S.
Government and its agencies or instrumentalities, as to which there
are no percentage limits or restrictions) if immediately after and as
a result of such purchase (a) more than 5% of the value of its assets
would be invested in that issuer, or (b) the Portfolio would hold more
than 10% of the outstanding voting securities of that issuer.

(6) purchase or sell real estate (including limited partnership interests)
other than securities secured by real estate or interests therein
including mortgage-related securities, interests in oil, gas or
mineral leases in the ordinary course of business (the Portfolio
reserves the freedom of action to hold and to sell real estate
acquired as a result of the ownership of securities).

(7) invest more than 25% of its total assets in the securities of issuers
whose principal business activities are in the same industry
(excluding obligations of the U.S. Government and repurchase
agreements).

(8) issue any senior security (as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), if such issuance is
specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder.

(9) invest in illiquid securities, including repurchase agreements
maturing in more than seven days but excluding securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933, if, as
a result thereof, more than 10% of the net assets (taken at market
value at the time of each investment of the Portfolio, as the case may
be) would be invested in such securities.

(10) Invest in securities of any company if, to the knowledge of the Trust,
any officer or director of the Trust or its Adviser owns more than 1/2
of 1% of the outstanding securities of such company, and all such
officers and directors own in the aggregate more than 5% of the
outstanding securities of such company.

The Portfolio has also adopted the following additional operating
restrictions that may be required by various laws and administrative
positions. These operating restrictions are not fundamental policies and
may be changed by the Portfolio without approval of its shareholders.

Under those operating restrictions, the Portfolio may not:

(a) invest in companies for the purpose of exercising control or
management;

<PAGE> 408

(b) make investments in the securities of other investment companies,
except as otherwise permitted by the 1940 Act or in connection with a
merger, consolidation, or reorganization;

(c) invest in securities of issuers (other than U.S. Government
Securities) having a record of less than three years of continuous
operation (for this purpose, the period of operation of any issuer
shall include the period of operation of any predecessor or
unconditional guarantor or such issuer) if, regarding all securities,
more than 5% of the total assets (taken at market value at the time of
each investment) of the Portfolio, as the case may be would be
invested in such securities;

(d) invest in commodities and commodity futures contracts, put or call
options or any combination thereof;

(e) mortgage, pledge, hypothecate or in any manner transfer, as security
for indebtedness, any securities owned by the Portfolio except as may
be necessary in connection with borrowings mentioned in (1) above; or

(f) purchase warrants of any issuer, except on a limited basis, if, as a
result, more than 2% of the value of its total assets would be
invested in warrants which are not listed on the New York Stock
Exchange and more than 5% of the value of its total assets would be
invested in warrants, whether or not so listed, such warrants in each
case to be valued at the lesser of cost or market, but assigning no
value to warrants acquired by the Portfolio in units or attached to
debt securities.

Pursuant to an undertaking with a certain state in connection with the
registration of shares of John Hancock Adjustable U.S. Government Trust
(the "Fund") (which invests its shares in the Portfolio), neither the Fund
nor the Portfolio will invest more than 15% of its respective net assets in
illiquid and restricted securities so long as such shares are registered
for sale in such state.

THOSE RESPONSIBLE FOR MANAGEMENT

The businesses of the Portfolio and the Fund are managed by the
Trustees who elect officers who are responsible for the day-to-day
operations of the Portfolio and the Fund and who execute policies
formulated by the Trustees. Several of the officers and Trustees of the
Portfolio and the Fund are also officers and directors of the Adviser or
officers and directors of John Hancock Funds.

Set forth below is the principal occupation or employment of the
Trustees and officers of the Trust during the past five years.

<PAGE> 409

<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Edward J. Boudreau, Jr,* Trustee, Chairman and Chief Executive
101 Huntington Avenue Chairman and Officer, the Investment Adviser and
Boston, MA 02199 Chief Executive The Berkeley Financial Group ("The
Officer(1)(2) Berkeley Group");
Chairman, NM Capital
Management, Inc.
("NM Capital"); John
Hancock Advisers
International Limited
("Advisers International");
John Hancock Funds, Inc.;
John Hancock Investor
Services Corporation
("Investor Services");
and Sovereign Asset
Management Corporation
("SAMCorp");
(hereinafter the Adviser,
the Berkeley Group, NM
Capital, Advisers
International, John Hancock
Funds, Inc., Investor
Services and SAMCorp
are collectively referred
to as the "Affiliated
Companies"); Chairman,
First Signature Bank & Trust;
Director, John Hancock
Freedom Securities
Corporation, John Hancock
Capital Corporation,
New England/Canada
Business Council; Member,
Investment Company Institute Board
of Governors: Trustee, Museum of
Science; President, the Adviser
(until July 1992); Trustee or
Director of other investment
companies managed by
the Adviser; and Chairman,
John Hancock Distributors, Inc.
(until April, 1994).
</TABLE>

8
<PAGE> 410
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
James F. Carlin Trustee Chairman and CEO, Carlin
233 West Central Street Consolidated, Inc. (insurance);
Natick, MA 01760 Director, Arbella Mutual
Insurance Company
insurance),Consolidated
Group Trust(group health
plan),Carlin Insurance
Agency, Inc. and
West Insurance Agency, Inc.;
Receiver, the City of Chelsea
(until August 1992); and
Trustee or Director of other
investment companies
managed by the Adviser.

William H. Cunningham Trustee Chancellor, University of
601 Colorado Street Texas System and former
O'Henry Hall President of the University of
Austin, TX 78701 Texas, Austin, Texas; Regents
Chair in Higher Education
Leadership; James L. Bayless
Chair for Free Enterprise;
Professor of Marketing
and Dean College of Business
Administration/Graduate
School of Business
(1983-1985); Centennial
Chair in Business Education
Leadership, 1983-1985;
Director, LaQuinta Motor
Inns, Inc. (hotel management
company); Director, Jefferson-
Pilot Corporation (diversified
life insurance company);
Director, Freeport-
McMoran Inc. (oil and
gas company); Director,
Barton Creek Properties, Inc.
(1988-1990) (real estate
development) and LBJ
Foundation Board
(education foundation);
and Advisory Director,
Texas Commerce Bank
-Austin.
</TABLE>

9
<PAGE> 411
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>
Charles L. Ladner Trustee(3) Director, Energy North, Inc.
UGI Corporation (public utility holding company);
460 North Gulph Road Senior Vice
King of Prussia, PA 19406 President, Finance UGI
Corp. (public utility
holding company)
(until 1992); and Trustee
or Director of other
investment companies
managed by the Adviser.

Leo E. Linbeck, Jr. Trustee Chairman, President, Chief
3810 W. Alabama Executive Officer and Director,
Houston, TX 77027 Linbeck Corporation
(a holding company engaged in
various phases of the construction
industry and warehousing
interests); Director and Chairman,
Federal Reserve Bank of Dallas;
Chairman of the Board and Chief
Executive Officer, Linbeck
Construction Corporation;
Director, Panhandle Eastern
Corporation (a diversified energy
company);Director, Daniel Industries,
Inc. (manufacturer of gas measuring
products and energy related
equipment); director, GeoQuest
International, Inc. (a geophysical
consulting firm): and Director,
Greater Houston Partnership.

10
<PAGE> 412
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C> <C>
Steven R. Pruchansky Trustee(1)(3) Director and Treasurer, Mast
360 Horse Creek Drive, #208 Holdings, Inc.; Director,
Naples, FL 33942 First Signature Bank & Trust
Company (until August 1991);
General Partner, Mast Realty
Trust; President, Maxwell
Building Corp. (until 1991);
and Trustee or Director
of other investment companies
managed by the Adviser.

Norman H. Smith Trustee(3) Lieutenant General, USMC,
Rt. 1, Box 249 E Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve
Affairs, Headquarters Marine Corps;
Commanding General III Marine
Expeditionary Force/3rd Marine
Division (retired 1991); and Trustee
or Director of other investment
companies managed by the Adviser.

John P. Toolan Trustee(3) Director, The Smith Barney
13 Chadwell Place Muni Bond Funds, The Smith
Morristown, NJ 07960 Barney Tax-Free Money Fund,
Inc., Vantage Money Market
Funds (mutual funds),
The Inefficient-Market
Fund, Inc. (closed-end
investment company)
and Smith Barney Trust
Company of Florida; Chairman,
Smith Barney Trust Company
(retired December, 1991);
Director, Smith Barney, Inc.,
Mutual Management Company and
Smith, Barney Advisers, Inc.
(investment advisers) (retired
1991); and Senior Executive Vice
President, Director and member of
the Executive Committee, Smith Barney,
Harris Upham & Co., Incorporated
(investment bankers) (until 1991);
and Trustee or Director of other
investment companies
managed by the Adviser.

</TABLE>

11
<PAGE> 413
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
---------------- -------------- -----------------------
<S> <C> <C>

Robert G. Freedman* Vice Chairman and Chief President and Chief
101 Huntington Avenue Investment Officer(2) Investment Officer, the
Boston, MA 02199 Adviser.

Anne C. Hodsdon President(2) Executive Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

James B. Little* Senior Vice Senior Vice President,
101 Huntington Avenue President and the Adviser.
Boston, MA 02199 Chief Financial
Officer

Thomas H. Drohan* Senior Vice President and Senior Vice President and
101 Huntington Avenue Secretary Secretary, the Adviser.
Boston, MA 02199

Michael P. DiCarlo* Senior Vice President(2) Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

Edgar Larsen* Senior Vice President Senior Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199

James J. Stokowski* Vice President and Vice President, the
101 Huntington Avenue Treasurer Adviser.
Boston, MA 02199

Susan S. Newton* Vice President and Vice President and Assistant
101 Huntington Avenue Compliance Officer Secretary, the Adviser.
Boston, MA 02199

John A. Morin* Vice President Vice President, the
101 Huntington Avenue Adviser.
Boston, MA 02199
</TABLE>

12
<PAGE> 414
- -------------------------
* An "interested person" of the Portfolio, as such term is defined in
the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the
powers of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.

All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Trustees and officers may also be
officers and/or directors and/or trustees of one or more of the other funds
for which the Adviser serves as investment adviser.

As of June 30, 1995, there were 1,817,177 Class A and 938,578 Class B
shares of the Portfolio outstanding and officers and trustees of the
Portfolio as a group beneficially owned less than 1% of these outstanding
shares. At such date, the Fund held of record 100% of the shares
outstanding. Such ownership by the Fund, representing an interest of more
than 25% of the outstanding shares of the Portfolio, results in the
presumption of "control" as defined under the 1940 Act and has the result
that the Fund can materially affect a positive or negative vote on any
matters which require the vote of all shareholders of the Portfolio.

As of December 22, 1994, the Trustees have established an Advisory
Board which acts to facilitate a smooth transition of management over a
two-year period (between Transamerica Fund Management Company ("TFMC"), the
prior investment adviser, and the Adviser). The members of the Advisory
Board are distinct from the Board of Trustees, do not serve the Portfolio
in any other capacity and are persons who have no power to determine what
securities are purchased or sold on behalf of the Portfolio. Each member
of the Advisory Board may be contacted at 101 Huntington Avenue, Boston,
Massachusetts 02199.

Members of the Advisory Board and their respective principal
occupations during the past five years are as follows:

R. Trent Campbell, President, FMS, Inc. (financial and management
services); former Chairman of the Board, Mosher Steel Company.

<PAGE> 415

of Baylor University; Member, Board of Governors, National Association of
Securities Dealers, Inc.; Formerly, Chairman, Investment Company
Institute; formerly, President, Houston Chapter of Financial
Executive Institute.

COMPENSATION OF THE BOARD OF TRUSTEES AND ADVISORY BOARD. The
following table provides information regarding the compensation paid by the
Fund and the other investment companies in the John Hancock Fund Complex to
the Independent Trustees and the Advisory Board members for their services.
Mr. Boudreau, a non-Independent Trustee, and each of the officers of the
Funds are interested persons of the Adviser, are compensated by the Adviser
and received no compensation from the Funds for their services.

Total
Compensation
Pension or from all Funds in
Aggregate Retirement Benefits John Hancock
Compensation Accrued as Part of Fund Complex to
Trustees from the Fund the Fund's Expenses Trustees**
- -------- ------------- ------------------- ----------
<S> <C> <C> <C>
James F. Carlin $ 103 $ 0 $ 60,450
William H. Cunningham 14 206 0
Charles L. Ladner 112 0 60,450
Leo E. Linbeck, Jr. 2,120 0 0
Patricia P. McCarter 112 0 60,200
Steven R. Pruchansky 117 0 62,450
Norman H. Smith 117 0 62,450
John P. Toolan 00 112 60,450
------ ---- --------
$2,695 $318 $366,450
<FN>
**The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is $366,450 as of the calendar year ended December 31,
1994. All Trustees/Directors except Messrs. Cunningham and Linbeck are
Trustees/Directors of 30 funds in the John Hancock Fund Complex. Messrs.
Cunningham and Linbeck are Trustees/Directors of 21 funds. (The Fund was
not part of the John Hancock Fund Complex until December 22, 1994 and
Messrs. Cunningham and Linbeck were not trustees or directors of any funds
in the John Hancock Fund Complex prior to December 22, 1994.)
</TABLE>
<TABLE>
<CAPTION>
Total
Compensation
Pension or from all Funds in
Aggregate Retirement Benefits John Hancock
Compensation Accrued as Part of Fund Complex to
Advisory Board from the Fund the Fund's Expenses Trustees**
- -------------- ------------- ------------------- ----------
<S> <C> <C> <C>
R. Trent Campbell $244 $ 0 $ 54,000
Mrs. Lloyd Bentsen 244 0 54,000
Thomas R. Powers 244 0 54,000
Thomas M. McDade 244 0 54,000
---- --------
TOTAL $976 0 $216,000
</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Prospectus, the Portfolio receives its investment
advice from the Adviser. Investors should refer to the Prospectus for a
description of certain information concerning the investment management
contract. Each of the Trustees and principal officers

<PAGE> 417

affiliated with the Portfolio who is also an affiliated person of the
Adviser is named above, together with the capacity in which such person is
affiliated with the Portfolio, the Adviser or TFMC (the Portfolio's prior
investment adviser).

The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has more than $13 billion
in assets under management in its capacity as investment adviser to the
Portfolio and the other mutual funds and publicly traded investment
companies in the John Hancock group of funds having a combined total of
over 1,060,000 shareholders. The Adviser is a wholly-owned subsidiary of
The Berkeley Financial Group, which is in turn a wholly-owned subsidiary of
John Hancock Subsidiaries, Inc., which is in turn a wholly-owned subsidiary
of the Life Company, one of the most recognized and respected financial
institutions in the nation. With total assets under management of over
$80 billion, the Life Company is one of the ten largest life insurance
companies in the United States and carries Standard & Poor's and A.M.
Best's highest ratings. Founded in 1862, the Life Company has been serving
clients for over 130 years.

As described in the Prospectus under the caption "Organization and
Management of the Fund," the Portfolio has entered into an investment
management contract with the Adviser. Under the investment management
contract, the Adviser provides the Portfolio with (i) a continuous
investment program, consistent with the Portfolio's stated investment
objective and policies, (ii) supervision of all aspects of the Portfolio's
operations except those that are delegated to a custodian, transfer agent
or other agent and (iii) such executive, administrative and clerical
personnel, officers and equipment as are necessary for the conduct of its
business. The Adviser is responsible for the day-to-day management of the
Portfolio's assets.

No person other than the Adviser and its directors and employees
regularly furnishes advice to the Portfolio with respect to the
desirability of the Portfolio investing in, purchasing or selling
securities. The Adviser may from time to time receive statistical or other
similar factual information, and information regarding general economic
factors and trends, from the Life Company and its affiliates.

Under the terms of the investment management contract with the
Portfolio, the Adviser provides the Portfolio with office space, equipment
and supplies and other facilities and personnel required for the business
of the Portfolio. The Adviser pays the compensation of all officers and
employees of the Portfolio and pays the expenses of clerical services
relating to the administration of the Portfolio. All expenses which are
not specifically paid by the Adviser and which are incurred in the
operation of the Portfolio, including, but not limited to, (i) the fees of
the Trustees of the Portfolio who are not "interested persons," as such
term is defined in the 1940 Act (the "Independent Trustees"), (ii) the fees
of the members of the Portfolio's Advisory Board (described above) and
(iii) the continuous public offering of the shares of the Portfolio are
borne by the Portfolio.

<PAGE> 418

Payment due the Adviser at the end of the first month shall be 1/12 of
the annual fees, based on average daily net assets of the Portfolio for
that month. At the end of each successive month, the Adviser shall be
entitled to a proportionate part of the annual fees, based on average net
assets from the first day of the fiscal year of the Portfolio through the
last day of the month for which payments is made, less any previous
payments made to the Adviser during such fiscal year.

The Adviser may voluntarily and temporarily reduce its advisory fee or
make other arrangements to limit the Portfolio's expenses to a specified
percentage of average daily net assets. The Adviser retains the right to
re-impose the advisory fee and recover any other payments to the extent
that, at the end of any fiscal year, the Portfolio's annual expenses fall
below this limit.

In the event normal operating expenses of the Portfolio, exclusive of
certain expenses prescribed by state law, are in excess of any state limit
where the 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 any additional arrangements necessary to
eliminate any remaining excess expenses. Currently, the most restrictive
limit applicable to the Portfolio is 2.5% of the first $30,000,000 of the
Portfolio's average daily net asset value, 2% of the next $70,000,000 and
1.5% of the remaining average daily net asset value.

Pursuant to the investment management contract, the Adviser is not
liable to the Portfolio or its shareholders for any error of judgment or
mistake of law or for any loss suffered by the Portfolio in connection with
the matters to which the contract relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from its reckless disregard of
the obligations and duties under the applicable contract.

The initial term of the investment management contract expires on
December 22, 1996 and it will continue in effect from year to year
thereafter if approved annually by a vote of a majority of the Independent
Trustees of the Portfolio, cast in person at a meeting called for the
purpose of voting on such approval, and by either a majority of the
Trustees or the holders of a majority of the Portfolio's outstanding voting
securities. The management contract may, on 60 days' written notice, be
terminated at any time without the payment of any penalty to the Portfolio
by vote of a majority of the outstanding voting securities of the
Portfolio, by the Trustees or by the Adviser. The management contract
terminates automatically in the event of its assignment.

Securities held by the Portfolio may also be held by other funds or
investment advisory clients for which the Adviser or its affiliates provide
investment advice. Because of different investment objectives or other
factors, a particular security may be bought for one or more funds or
clients when one or more are selling the same security. If opportunities
for purchase or sale of securities by the Adviser or for other funds or
clients for which the Adviser renders investment advice arise for
consideration at or about the same time, transactions in such securities
will be made, insofar as feasible, for the respective funds or clients in a
manner deemed equitable to all of them. To the extent that transactions on
behalf of more than one client of the Adviser or its respective affiliates
may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.

<PAGE> 419

Under the investment management contract, the Portfolio may use the
name "John Hancock" or any name derived from or similar to it only for as
long as the investment management contract or any extension, renewal or
amendment thereof remains in effect. If the Portfolio's investment
management contract is no longer in effect, the Portfolio (to the extent
that it lawfully can) will cease to use such name or any other name
indicating that it is advised by or otherwise connected with the Adviser.
In addition, the Adviser or the Life Company may grant the non-exclusive
right to use the name "John Hancock" or any similar name to any other
corporation or entity, including but not limited to any investment company
of which the Life Company or any subsidiary or affiliate thereof or any
successor to the business of any subsidiary or affiliate thereof shall be
the investment adviser.

For the fiscal years ended March 31, 1993, 1994, and 1995, advisory
fees paid by the Portfolio to TFMC, the Portfolio's former investment
adviser, amounted $123,662, $184,072, and $86,085, respectively; and during
the fiscal year ended March 31, 1995, advisory fees paid to the Adviser
amounted to $28,694, however, a portion of such fees were not imposed
pursuant to the voluntary fee and expense limitation arrangements then in
effect (see "The Portfolio's and the Fund's Expenses" in the Prospectus).

ADMINISTRATIVE SERVICES AGREEMENT. The Portfolio was a party to an
administrative services agreement with TFMC (the "Services Agreement"),
pursuant to which TFMC performed bookkeeping and accounting services and
functions, including preparing and maintaining various accounting books,
records and other documents and keeping such general ledgers and portfolio
accounts as are reasonably necessary for the operation of the Portfolio.
Other administrative services included communications in response to
shareholder inquiries and certain printing expenses of various financial
reports. In addition, such staff and office space, facilities and
equipment was provided as necessary to provide administrative services to
the Portfolio. The Services Agreement was amended in connection with the
appointment of the Adviser as adviser to the Portfolio to permit services
under the Agreement to be provided to the Portfolio by the Adviser and its
affiliates. The Services Agreement was terminated during the current
fiscal year.

For the fiscal years ended March 31, 1993, 1994, and 1995, the
Portfolio paid TFMC (pursuant to the Services Agreement) $37,033, $38,012,
and $24,461, respectively, of which $26,189, $26,722, and $17,704,
respectively, was paid to TFMC and $10,844, $11,290, and $6,757,
respectively, were paid for certain data processing and pricing information
services.

DISTRIBUTION CONTRACT

As discussed in the Prospectus, the Portfolio's shares are sold on a
continuous basis at the public offering price. John Hancock Funds, a
wholly-owned subsidiary of the Adviser, has the exclusive right, pursuant
to the Distribution Contract dated December 22, 1994 (the "Distribution
Contract"), to purchase shares from the Portfolio at net asset value for
resale to the public or to broker-dealers at the public offering price.
Upon notice to all broker-dealers ("Selling Brokers") with whom it has
sales agreements, John Hancock Funds may allow such Selling Brokers up to
the full applicable sales charge during periods specified in such notice.
During these periods, such

<PAGE> 420

Selling Brokers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.

The Distribution Contract was initially adopted by the affirmative
vote of the Portfolio's Board of Trustees including the vote of a majority
of the Independent Trustees, cast in person at a meeting called for such
purpose. The Distribution Contract shall continue in effect until December
22, 1996 and from year to year thereafter if approved by either the vote of
the Portfolio's shareholders or the Board of Trustees, including the vote
of a majority of the Independent Trustees, cast in person at a meeting
called for such purpose. The Distribution Contract may be terminated at
any time, without penalty, by either party upon sixty (60) days' written
notice or by a vote of a majority of the outstanding voting securities of
the Portfolio and terminates automatically in the case of an assignment by
John Hancock Funds.

When the Portfolio seeks an Independent Trustee to fill a vacancy or
as a nominee for election by shareholders, the selection or nomination of
the Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the
discretion of the Committee on Administration of the Trustees. The members
of the Committee on Administration are all Independent Trustees and
identified in this Statement of Additional Information under the heading
"Those Responsible for Management."

<PAGE> 421

NET ASSET VALUE

For purposes of calculating the net asset value ("NAV") of the
Portfolio's shares, the following procedures are utilized wherever
applicable.

Debt investment securities are valued on the basis of valuations
furnished by a principal market maker or a pricing service, both of which
generally utilize electronic data processing techniques to determine
valuations for normal institutional size trading units of debt securities
without exclusive reliance upon quoted prices.

Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost, which approximates market
value. If market quotations are not readily available or if in the opinion
of the Adviser any quotation or price is not representative of true market
value, the fair value of the security may be determined in good faith in
accordance with procedures approved by the Trustees.

The Portfolio will not price its securities on the following national
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.

PURCHASE OF SHARES

Shares of the Portfolio are offered at a price equal to their net
asset value. Share certificates will not be issued unless requested by the
shareholder in writing, and then only will be issued for full shares. The
Board of Trustees reserves the right to change or waive the minimum
investment requirements and to reject any order to purchase shares when in
the judgment of the Adviser such rejection is in the Portfolio's best
interest.

SPECIAL REDEMPTIONS

Although it would not normally do so, the Portfolio has the right to
pay the redemption price of shares of the Portfolio in whole or in part in
portfolio securities as prescribed the Trustees. When the shareholder
sells portfolio securities received in this fashion, he would incur a
brokerage charge. Any such securities would be valued for the purposes of
making such payment at the same value as used in determining net asset
value. The Portfolio has elected to be governed by Rule 18f-1 under the
1940 Act, pursuant to which the Portfolio is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
the Portfolio during any 90 day period for any one account.

<PAGE> 422

DESCRIPTION OF THE PORTFOLIO'S SHARES

Ownership in the Portfolio is represented by transferable shares of
beneficial interest. The Declaration of Trust permits the Trustees to
create an unlimited number of series and classes of shares of the Trust
and, with respect to each series and class, to issue an unlimited number of
full or fractional shares and to divide or combine the shares into a
greater or lesser number of shares without thereby changing the
proportionate beneficial interests of the series.

Each share of each series or class of the Trust represents an equal
proportionate interest with each other in that series or class, none having
priority or preference over other shares of the same series or class. The
interest of investors in the various series or classes of the Trust is
separate and distinct. All consideration received for the sales of shares
of a particular series or class of the Trust, all assets in which such
consideration is invested and all income, earnings and profits derived from
such investments will be allocated to and belong to that series or class.
As such, each such share is entitled to dividends and distributions out of
the net income belonging to that series or class as declared by the Board
of Trustees. Shares of the Trust have a par value of $0.01 per share. The
assets of each series are segregated on the Trust's books and are charged
with the liabilities of that series and with a share of the Trust's general
liabilities. The Board of Trustees determines those assets and liabilities
deemed to be general assets or liabilities of the Trust, and these items
are allocated among each series in proportion to the relative total net
assets of each series. In the unlikely event that the liabilities
allocable to a series exceed the assets of that series, all or a portion of
such liabilities may have to be borne by the other series.

Pursuant to the Declaration of Trust, the Trustees have established
six series of shares, including the Portfolio, and may authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional
classes within any series (which would be used to distinguish among the
rights of different categories of shareholders, as might be required by
future regulations or other unforeseen circumstances). The five other
series of Trust are John Hancock Intermediate Government Trust, John
Hancock Adjustable U.S. Government Trust, John Hancock Investment Quality
Bond Fund, John Hancock U.S. Government Trust and John Hancock Government
Securities Trust.

VOTING RIGHTS. Shareholders are entitled to a full vote for each full
share held. The Trustees themselves have the power to alter the number and
the terms of office of Trustees, and they may at any time lengthen their
own terms or make their terms of unlimited duration (subject to certain
removal procedures) and appoint their own successors, provided that at all
times at least a majority of the Trustees have been elected by
shareholders. The voting rights of shareholders are not cumulative, so
that holders of more than 50% of the shares voting can, if they choose,
elect all Trustees being voted upon, while the holders of the remaining
shares would be unable to elect any Trustees. Although the Trust need not
hold annual meetings of shareholders, the Trustees may call special
meetings of shareholders for action by shareholder vote as may be required
by the 1940 Act or the Declaration of Trust. Also, a shareholders' meeting
must be called if so requested in writing by the holders of record of 10%
or more of the outstanding shares of the Trust. In addition, the Trustees
may be removed by the action of the holders of record of two-thirds or more
of the outstanding shares.

<PAGE> 423

SHAREHOLDER LIABILITY. The Declaration of Trust provides that no
Trustee, officer, employee or agent of the Trust is liable to the Trust or
any series or to a shareholder, nor is any Trustee, officer, employee or
agent liable to any third persons in connection with the affairs of the
Trust, except as such liability may arise from his or its own bad faith,
willful misfeasance, gross negligence or reckless disregard of his duties.
It also provides that all third persons shall look solely to the particular
series' property for satisfaction of claims arising in connection with the
affairs of that series. With the exceptions stated, the Declaration of
Trust provides that a Trustee, officer, employee or agent is entitled to be
indemnified against all liability in connection with the affairs of the
Trust.

Under Massachusetts law, shareholders of a Massachusetts business
trust could, under certain circumstances, be held personally liable for
acts or obligations of the trust. However, the Trust's Declaration of
Trust contains an express disclaimer of shareholder liability for acts,
obligations and affairs of the Trust. The Declaration of Trust also
provides for indemnification out of the Trust's assets for all losses and
expenses of any shareholder held personally liable by reason of being or
having been a shareholder. Liability is therefore limited to circumstances
in which the Trust itself would be unable to meet its obligations, and the
possibility of this occurrence is remote.

TAX STATUS

The Portfolio is treated as a separate entity for accounting and tax
purposes. The Portfolio has qualified and elected to be treated as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code") and intends to continue to so qualify
in the future. As such and by complying with the applicable provisions of
the Code regarding the sources of its income, the timing of its
distributions, and the diversification of its assets, the Portfolio will
not be subject to Federal income tax on its net income (including net
short-term and long-term capital gains) which is distributed to
shareholders at least annually in accordance with the timing requirements
of the Code.

The Portfolio will be subject to a 4% non-deductible Federal excise
tax on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum
distribution requirements. The Portfolio intends under normal
circumstances to avoid liability for such tax by satisfying such
distribution requirements.

Distributions from the Portfolio's current or accumulated earnings and
profits ("E&P"), as computed for Federal income tax purposes, will be
taxable as described in the Portfolio's Prospectus whether taken in shares
or in cash. Distributions, if any, in excess of E&P will constitute a
return of capital, which will first reduce an investor's tax basis in
Portfolio shares and thereafter (after such basis is reduced to zero) will
generally give rise to capital gains.

<PAGE> 424

Shareholders electing to receive distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in each share
so received equal to the amount of cash they would have received had they
elected to receive the distributions in cash, divided by the number of
shares received.

The Portfolio's dividends and capital gain distributions will not
qualify for the corporate dividends received deduction.

The amount of net short-term and long-term capital gains, if any, in
any given year will vary depending upon the Adviser's current investment
strategy and whether the Adviser believes it to be in the best interest of
the Portfolio to dispose of portfolio securities that will generate capital
gains. At the time of an investor's purchase of Portfolio shares, a
portion of the purchase price is often attributable to realized or
unrealized appreciation in the Portfolio's portfolio. Consequently,
subsequent distributions from such appreciation may be taxable to such
investor even if the net asset value of the investor's shares is, as a
result of the distributions, reduced below the investor's cost for such
shares, and the distributions in reality represent a return of a portion of
the purchase price.

Upon a redemption of shares of the Portfolio (including by exercise of
the exchange privilege) a shareholder may realize a taxable gain or loss
depending upon his basis in his shares. Such gain or loss will be treated
as capital gain or loss if the shares are capital assets in the
shareholder's hands and will be long-term or short-term, depending upon the
shareholder's tax holding period for the shares. Any loss realized on a
redemption or exchange may be disallowed to the extent the shares disposed
of are replaced with other shares of the Portfolio within a period of 61
days beginning 30 days before and ending 30 days after the shares are
disposed of, such as pursuant to the Dividend Reinvestment Plan. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized upon the redemption of shares with a
tax holding period of six months or less will be treated as a long-term
capital loss to the extent of any amounts treated as distributions of long-
term capital gain with respect to such shares.

Although its present intention is to distribute all net short-term and
long-term capital gains, if any, the Portfolio reserves the right to retain
and reinvest all or any portion of its "net capital gain," which is the
excess, as computed for Federal income tax purposes, of net long-term
capital gain over net short-term capital loss in any year. The Portfolio
will not in any event distribute net long-term capital gains realized in
any year to the extent that a capital loss is carried forward from prior
years against such gain. To the extent such excess was retained and not
exhausted by the carryforward of prior years' capital losses, it would be
subject to Federal income tax in the hands of the Portfolio. Each
shareholder would be treated for Federal income tax purposes as if the
Portfolio had distributed to him on the last day of its taxable year his
pro rata share of such excess, and he had paid his pro rata share of the
taxes paid by the Portfolio and reinvested the remainder in the Portfolio.
Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain income in his return for his taxable year
in which the last day of the Portfolio's taxable year falls, (b) be
entitled either to a tax credit on his return for, or to a refund of, his
pro rata share of the taxes paid by the Portfolio, and (c) be entitled to
increase the adjusted tax basis for his shares in the Portfolio by the
difference between his pro rata share of such excess and his pro rata share
of such taxes.

<PAGE> 425

For Federal income tax purposes, the Portfolio is permitted to carry
forward a net capital loss in any year to offset its own net capital gains,
if any, during the eight years following the year of the loss. To the
extent subsequent net capital gains are offset by such losses, they would
not result in Federal income tax liability to the Portfolio and, as noted
above, would not be distributed as such to shareholders. The Portfolio has
$905,314 of capital loss carryforwards as of the tax year ended
December 31, 1994, of which $55,496 expires in 2000, $23,234 in 2001 and
$826,584 in 2002, available to offset future net capital gains.

The Portfolio must accrue income on investments in certain PIKs, zero
coupon securities or certain increasing rate securities (and, in general,
any other securities with original issue discount or with market discount
if the Portfolio elects to include market discount in income currently)
prior to the receipt of the corresponding cash payments. However, the
Portfolio must distribute, at least annually, all or substantially all of
its net income, including such accrued income, to shareholders to qualify
as a regulated investment company under the Code and avoid Federal income
and excise taxes. Therefore, the Portfolio may have to dispose of its
portfolio securities under disadvantageous circumstances to generate cash,
or may have to leverage itself by borrowing the cash, to satisfy
distribution requirements.

The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax
under such law. The discussion does not address special tax rules
applicable to certain classes of investors, such as tax-exempt entities,
insurance companies, and financial institutions. Dividends, capital gain
distributions, and ownership of or gains realized on the redemption
(including an exchange) of Portfolio shares may also be subject to state
and local taxes. Shareholders should consult their own tax advisers as to
the Federal, state or local tax consequences of ownership of shares of, and
receipt of distributions from, the Portfolio in their particular
circumstances.

Non-U.S. investors not engaged in a U.S. trade or business with which
their investment in the Portfolio is effectively connected will be subject
to U.S. Federal income tax treatment that is different from that described
above. These investors may be subject to nonresident alien withholding tax
at the rate of 30% (or a lower rate under an applicable tax treaty) on
amounts treated as ordinary dividends from the Portfolio and, unless an
effective IRS Form W-8 or authorized substitute is on file, to 31% backup
withholding on certain other payments from the Portfolio. Non-U.S.
investors should consult their tax advisers regarding such treatment and
the application of foreign taxes to an investment in any fund.

The Portfolio is not subject to Massachusetts corporate excise or
franchise taxes. Provided that the Portfolio qualifies as a regulated
investment company under the Code, it will also not be required to pay any
Massachusetts income tax.

<PAGE> 426

CALCULATION OF PERFORMANCE

For the 30-day period ended March 31, 1995, the annualized yield of
the Portfolio was 6.20%. At March 31, 1995, the average annual return for
the Portfolio was 3.34% for the one-year period ended March 31, 1995.

The Portfolio's yield is computed by dividing net investment income
per share determined for a 30-day period by the maximum offering price per
share on the last day of the period, according to the following standard
formula:

Yield = 2 [ (a-b + 1 )6 -1]
---
cd

Where:

a = dividends and interest earned during the period.

b = net expenses accrued during the period.

c = the average daily number of fund shares outstanding during
the period that would be entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period (NAV where applicable).

The Portfolio's total return is computed by finding the average annual
compounded rate of return over the 1-year, 5-year, and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:

P (1 + T)n = ERV

Where:

P = a hypothetical initial investment of $1,000.

T = average annual total return

n = number of years

ERV= ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the designated periods or fraction thereof.

This calculation also assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period.
The "distribution rate" is determined by

<PAGE> 427

annualizing the result of dividing the declared dividends of the Portfolio
during the period stated by the maximum offering price or net asset value
at the end of the period.

In addition to average annual total returns, the Portfolio may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Cumulative total returns may
be quoted as a percentage or as a dollar amount, and may be calculated for
a single investment, a series of investments, and/or a series of
redemptions, over any time period.

From time to time, in reports and promotional literature, the
Portfolio's yield and total return will be compared to indices of mutual
funds and bank deposit vehicles such as Lipper Analytical Services, Inc.'s
"Lipper -- Fixed Income Fund Performance Analysis," a monthly publication
which tracks net assets, total return, and yield on approximately 1,700
fixed income mutual funds in the United States. Ibbotson and Associates,
CDA Weisenberger and F.C. Towers are also used for comparison purposes, as
well a the Russell and Wilshire Indices.

Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE
WALL STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S,
etc. will also be utilized. The Portfolio's promotional and sales
literature may make reference to the Portfolio's "beta." Beta is a
reflection of the market-related risk of the Portfolio by showing how
responsive the Portfolio is to the market.

The performance of the Portfolio is not fixed or guaranteed.
Performance quotations should not be considered to be representations of
performance of the Portfolio for any period in the future. The performance
of the Portfolio is a function of many factors including its earnings,
expenses and number of outstanding shares. Fluctuating market conditions;
purchases, sales and maturities of portfolio securities; sales and
redemptions of shares of beneficial interest; and changes in operating
expenses are all examples of items that can increase or decrease the
Portfolio's performance.

BROKERAGE ALLOCATION

Decisions concerning the purchase and sale of portfolio securities are
made by the Adviser pursuant to recommendations made by its investment
committee, which consists of officers and directors of the Adviser and
affiliates and officers and Trustees who are interested persons of the
Portfolio. Orders for purchases and sales of securities are placed in a
manner which, in the opinion of the Adviser will offer the best price and
market for the execution of each such transaction. Purchases from
underwriters of portfolio securities may include a commission or
commissions paid by the issuer and transactions with dealers serving as
market makers reflect a "spread." Investments in debt securities are
generally traded on a net basis through dealers acting for their own
account as principals and not as brokers; no brokerage commissions are
payable on such transactions.

<PAGE> 428

The Portfolio's primary policy is to execute all purchases and sales
of portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including
brokerage commissions. This policy governs the selection of brokers and
dealers and the market in which a transaction is executed. Consistent with
the foregoing primary policy, the Rules of Fair Practice of the NASD and
other policies that the Trustees may determine, the Adviser may consider
sales of shares of the Portfolio as a factor in the selection of broker-
dealers to execute the Portfolio's portfolio transactions.

To the extent consistent with the foregoing, the Portfolio will be
governed in the selection of brokers and dealers, and the negotiation of
brokerage commission rates and dealer spreads, by the reliability and
quality of the services, including primarily the availability and value of
research information and to a lesser extent statistical assistance
furnished to the Adviser of the Portfolio, and their value and expected
contribution to the performance of the Portfolio. It is not possible to
place a dollar value on information and services to be received from
brokers and dealers, since it is only supplementary to the research efforts
of the Adviser. The receipt of research information is not expected to
reduce significantly the expenses of the Adviser. The research information
and statistical assistance furnished by brokers and dealers may benefit the
Life Company or other advisory clients of the Adviser, and conversely,
brokerage commissions and spreads paid by other advisory clients of the
Adviser may result in research information and statistical assistance
beneficial to the Portfolio. The Portfolio will make no commitments to
allocate portfolio transactions upon any prescribed basis. While the
Portfolio's officers will be primarily responsible for the allocation of
the Portfolio's brokerage business, their policies and practices in this
regard must be consistent with the foregoing and will at all times be
subject to review by the Trustees. For the fiscal years ended March 31,
1995, 1994, and 1993, no negotiated brokerage commissions were paid on
portfolio transactions.

As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Portfolio may pay to a broker which provides brokerage and research
services to the Portfolio an amount of disclosed commission in excess of
the commission which another broker would have charged for effecting that
transaction. This practice is subject to a good faith determination by the
Trustees that the price is reasonable in light of the services provided and
to policies that the Trustees may adopt from time to time. During the
fiscal year ended March 31, 1995, the Portfolio did not pay commissions as
compensation to any brokers for research services such as industry,
economic and company reviews and evaluations of securities.

The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated ("Tucker
Anthony") John Hancock Distributors, Inc. ("John Hancock Distributors") and
Sutro & Company, Inc. ("Sutro"), are broker-dealers ("Affiliated Brokers").
Pursuant to procedures determined by the Trustees and consistent with the
above policy of obtaining best net results, the Portfolio may execute
portfolio transactions with or through Tucker Anthony, Sutro or John
Hancock Distributors. During the year ended March 31, 1995, the Portfolio
did not execute any portfolio transactions with then affiliated brokers.

Any of the Affiliated Brokers may act as broker for the Portfolio on
exchange transactions, subject, however, to the general policy of the
Portfolio set forth above and the

<PAGE> 429

procedures adopted by the Trustees pursuant to the 1940 Act. Commissions
paid to an Affiliated Broker must be at least as favorable as those which
the Trustees believe to be contemporaneously charged by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold. A transaction would not be placed with an Affiliated
Broker if the Portfolio would have to pay a commission rate less favorable
than the Affiliated Broker's contemporaneous charges for comparable
transactions for its other most favored, but unaffiliated, customers,
except for accounts for which the Affiliated Broker acts as a clearing
broker for another brokerage firm, and any customers of the Affiliated
Broker not comparable to the Portfolio as determined by a majority of the
Trustees who are not interested persons (as defined in the 1940 Act) of the
Portfolio, the Adviser or the Affiliated Brokers. Because the Adviser,
which is affiliated with the Affiliated Brokers, has, as an investment
adviser to the Portfolio, the obligation to provide investment management
services, which includes elements of research and related investment
skills, such research and related skills will not be used by the Affiliated
Brokers as a basis for negotiating commissions at a rate higher than that
determined in accordance with the above criteria. The Portfolio will not
effect principal transactions with Affiliated Brokers. The Portfolio may,
however, purchase securities from other members of underwriting syndicates
of which Tucker Anthony, Sutro and John Hancock Distributors are members,
but only in accordance with the policy set forth above and procedures
adopted and reviewed periodically by the Trustees.

TRANSFER AGENT SERVICES

John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Company, is the
transfer and dividend paying agent for the Portfolio.

CUSTODY OF PORTFOLIO

Portfolio securities of the Portfolio are held pursuant to a custodian
agreement between the Trust, on behalf of the Portfolio, and Investors Bank
and Trust ("IBT") 24 Federal Street, Boston, Massachusetts. Under the
custodian agreement, IBT performs custody, portfolio and fund accounting
services.

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116,
has been selected as the independent auditors of the Portfolio. The
financial statements of the Portfolio included in the Prospectus and this
Statement of Additional Information have been audited by Ernst & Young LLP
for the periods indicated in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

<PAGE> 430

SEE NEXT COPY

<PAGE> 431

FINANCIAL STATEMENTS

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

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.

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

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE> 432
FINANCIAL STATEMENTS

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

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE> 433
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>

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE> 434

FINANCIAL STATEMENTS

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

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE> 435

FINANCIAL STATEMENTS

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

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.

SEE NOTES TO FINANCIAL STATEMENTS.

11
<PAGE> 436
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)
------------ ------------

SEE NOTES TO FINANCIAL STATEMENTS.

12
<PAGE> 437
FINANCIAL STATEMENTS

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

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

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> 438
FINANCIAL STATEMENTS

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

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

SEE NOTES TO FINANCIAL STATEMENTS.

14
<PAGE> 439
FINANCIAL STATEMENTS

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

</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> 440
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.

16
<PAGE> 441
NOTES TO FINANCIAL STATEMENTS

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

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

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

17
<PAGE> 442
NOTES TO FINANCIAL STATEMENTS

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

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.

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.

18
<PAGE> 443
NOTES TO FINANCIAL STATEMENTS

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

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.

19
<PAGE> 444

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 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.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
May 15, 1995

20
<PAGE> 445

JOHN HANCOCK BOND FUND

PART C.

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements included in the Registration Statement:

John Hancock Adjustable US Government Trust and Fund
John Hancock Investment Quality Bond Fund
John Hancock Government Securities Trust
John Hancock Intermediate Government Trust
John Hancock U.S. Government Trust

Statement of Assets and Liabilities as of March 31, 1995.
Statement of Operations of the year ended March 31, 1995.
Statement of changes in Net Asset for each of the two years
ended March 31.
Notes to Financial Statements.
Financial Highlights for each of the years ended March 31, 1995.
Auditors' Report Schedule of Investments as of March 31, 1995.

(b) Exhibits:

The exhibits to this Registration Statement are listed in the
Exhibit Index hereto and are incorporated herein by reference.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

No person is directly or indirectly controlled by or under common
control with Registrant.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

As of June 30, 1995, the number of record holders of shares of the
Registrant was as follows:

<TABLE>

TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
<S> <C>
Government Securities Trust
Class A Shares - 26,115
Class B Shares - 61

Investment Quality Bond Fund
Class A Shares 4,279
Class B Shares 368

</TABLE>

C-1

<PAGE> 446

U.S. Government Trust
Class A Shares 232
Class B Shares 10

Intermediate Government Trust
Class A Shares 286
Class B Shares 25

Adjustable US Government Trust
Class A Shares 315
Class B Shares 445

ITEM 27. INDEMNIFICATION

(a) Indemnification provisions relating to the Registrant's Trustees,
officers, employees and agents is set forth in Article VII of the Registrant's
By Laws included as Exhibit 2 herein.

(b) Under Section 12 of the Distribution Agreement, John Hancock Funds,
Inc. ("John Hancock Funds" ) has agreed to indemnify the Registrant and its
Trustees, officers and controlling persons against claims arising out of
certain acts and statements of John Hancock Funds.

Section 9(a) of the By-Laws of John Hancock Mutual Life Insurance
Company ("the Insurance Company") provides, in effect, that the Insurance
Company will, subject to limitations of law, indemnify each present and former
director, officer and employee of the of the Insurance Company who serves as a
Trustee or officer of the Registrant at the direction or request of the
Insurance Company against litigation expenses and liabilities incurred while
acting as such, except that such indemnification does not cover any expense or
liability incurred or imposed in connection with any matter as to which such
person shall be finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of the Insurance
Company. In addition, no such person will be indemnified by the Insurance
Company in respect of any liability or expense incurred in connection with any
matter settled without final adjudication unless such settlement shall have
been approved as in the best interests of the Insurance Company either by vote
of the Board of Directors at a meeting composed of directors who have no
interest in the outcome of such vote, or by vote of the policyholders. The
Insurance Company may pay expenses incurred in defending an action or claim in
advance of its final disposition, but only upon receipt of an undertaking by
the person indemnified to repay such payment if he should be determined not to
be entitled to indemnification.

Article IX of the respective By-Laws of John Hancock Funds and John
Hancock Advisers, Inc.("the Adviser") provide as follows:

"Section 9.01. Indemnity: Any person made or threatened to be made a party
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a director, officer, employee or agent of the
Corporation or is or was at any time since the inception of the Corporation
serving at the
C-2

<PAGE> 447

request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified by the Corporation against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and the liability was not incurred by reason of
gross negligence or reckless disregard of the duties involved in the conduct
of his office, and expenses in connection therewith may be advanced by the
Corporation, all to the full extent authorized by the law."

"Section 9.02. Not Exclusive; Survival of Rights: The indemnification
provided by Section 9.01 shall not be deemed exclusive of any other right to
which those indemnified may be entitled, and shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person."

Insofar as indemnification for liabilities under the Securities Act of 1933
(the "Act") may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the Registrant's Declaration of Trust and By-Laws
of John Hancock Funds, the Adviser, or the Insurance Company or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS

For information as to the business, profession, vocation or employment of
a substantial nature of each of the officers and Directors of the Adviser,
reference is made to Form ADV (801-8124) filed under the Investment Advisers
Act of 1940, which is incorporated herein by reference.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) John Hancock Funds acts as principal underwriter for the Registrant
and also serves as principal underwriter or distributor of shares for John
Hancock Cash Reserve, Inc., John Hancock Bond Fund, John Hancock Capital
Growth Fund, John Hancock Current Interest, John Hancock Series, Inc., John
Hancock Tax-Free Bond Fund, John Hancock California Tax-Free Income Fund,
John Hancock Capital Series, John Hancock Limited Term Government Fund,
John Hancock Tax-Exempt Income Fund, John Hancock Sovereign Investors Fund,
Inc., John Hancock Cash Management Fund, John Hancock Special Equities Fund,
John Hancock Sovereign Bond Fund, John Hancock Tax-Exempt Series, John Hancock
Strategic Series, John Hancock Technology Series, Inc., John Hancock World
Fund, John Hancock

C-3

<PAGE> 448

Investment Trust, John Hancock Institutional Series Trust, Freedom Investment
Trust, Freedom Investment Trust II and Freedom Investment Trust III.

(b) The following table lists, for each director and officer of
John Hancock Funds, the information indicated.

C-4

<PAGE> 449

<TABLE>

NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------- --------------------- ---------------------
<S> <C> <C>

Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts

Robert H. Watts Director and Senior None
John Hancock Place Vice President
P.O. Box 111
Boston, Massachusetts

C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer and
Boston, Massachusetts Director

Robert G. Freedman Director Vice President, Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts

Stephen M. Blair Executive Vice President- None
101 Huntington Avenue Sales
Boston, Massachusetts

Thomas H. Drohan Senior Vice President Senior Vice President and
101 Huntington Avenue Secretary
Boston, Massachusetts

James W. McLaughlin Senior Vice President None
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer

David A. King Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts

James B. Little Senior Vice President Senior Vice President and
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts

</TABLE>
C-5

<PAGE> 450

<TABLE>

NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ --------------------- ----------------------

William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts

John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts

Susan S. Newton Vice President and Vice President,
101 Huntington Avenue Secretary Assistant Secretary
Boston, Massachusetts and Compliance Officer

Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts

Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts

John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

</TABLE>
C-6
<PAGE> 451

<TABLE>

NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ --------------------- ---------------------
<S> <C> <C>

Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts

Hugh A. Dunlap Jr. Director None
101 Huntington Avenue
Boston, Massachusetts

William C. Fletcher Director None
53 State Street
Boston, Massachusetts

James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts

Michael T. Carpenter Senior Vice President None
1000 Louisiana Street
Houston, Texas

</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------

The Registrant maintains the records required to be maintained by it
under Rules 31a-1(a), 31a-1(b), and 31a-2(a) under the Investment Company Act
of 1940 at its principal executive offices at 101 Huntington Avenue, Boston
Massachusetts 02199-7603. Certain records, including records relating to
Registrant's shareholders and the physical possession of its securities, may be
maintained pursuant to Rule 31a-3 at the main offices of Registrant's Transfer
Agent and Custodian.

ITEM 31. MANAGEMENT SERVICES
-------------------

Not applicable.

C-7

<PAGE> 452
ITEM 32. UNDERTAKINGS
------------

(a) Not applicable

(b) Not applicable

(c) Registrant hereby undertakes to furnish each person
to whom a prospectus with respect to a series of the
Registrant is delivered with a copy of the latest annual
report to shareholders with respect to that series upon
request and without charge.

(d) Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended which relates to the
assistance to be rendered to shareholders by the Trustees of
the Registrant in calling a meeting of shareholders for the
purpose of voting upon the question of the removal of a
trustee.

C-8

<PAGE> 453

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston and The Commonwealth of Massachusetts
on the 17th day of July, 1995.

JOHN HANCOCK BOND FUND

By: *
-----------------------------
Edward J. Boudreau, Jr.
Chairman and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>

SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>

*
- ----------------------- Chairman and Chief Executive
Edward J. Boudreau, Jr. Executive Officer
(Principal Executive Officer)

/s/James B. Little
- -----------------------
James B. Little Senior Vice President and July 17, 1995
Chief Financial Officer
(Principal Financial and
Accounting Officer)

* Trustee
- -----------------------
James F. Carlin

* Trustee
- -----------------------
William H. Cunningham

* Trustee
- -----------------------
Charles L. Ladner

</TABLE>

C-9
<PAGE> 454
<TABLE>

SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>

* Trustee
- -----------------------
Leo E. Linbeck, Jr.

* Trustee
- -----------------------
Patricia P. McCarter

* Trustee
- -----------------------
Steven R. Pruchansky

* Trustee
- -----------------------
Norman H. Smith

* Trustee
- -----------------------
John P. Toolan

*By: /s/Thomas H. Drohan July 17, 1995
-------------------
Thomas H. Drohan,
Attorney-in-Fact

</TABLE>

C-10
<PAGE> 455

JOHN HANCOCK BOND FUND

(File No. 2-66906)

INDEX TO EXHIBITS

(1) (a) Amended and Restated Declaration of Trust.*
(b) Amendment to Declaration of Trust.*
(c) Amendment to Declaration of Trust dated December 16,
1994.+

(2) Amended Bylaws.*

(3) Not Applicable.

(4) Specimen Share Certificates for Class A Shares and Class B
Shares.*

(5) (a) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of
Investment Quality Bond Fund.*
(b) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of U.S.
Government Trust.*
(c) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of
Government Securities Trust.*
(d) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of
Intermediate Government Trust.*
(e) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of
Adjustable U.S. Government Fund.*
(f) Form of substantially identical Amended and Restated
Administrative Services Agreements among Transamerica
Fund Management Company, Transamerica Fund Distributors,
Inc., and the Registrant on behalf of each of Investment
Quality Bond Fund, U.S. Government Trust, Government
Securities Trust, Intermediate Government Trust,
Adjustable U.S. Government Fund and Adjustable U.S.
Government Trust.*

(6) (a) Distribution Agreement between John Hancock Broker
Distribution Services, Inc. and the Registrant.*
(b) Form of Soliciting Dealer Agreement between John Hancock
Funds, Inc. and the John Hancock funds.*
(g) Form of Financial Institution Sales and Service
Agreement between John Hancock Funds, Inc. and the John
Hancock funds.*

(7) Not Applicable.
<PAGE> 456

(8) Master Custodian Agreement between the John Hancock funds and
Investors Bank & Trust Company.*

(9) (a) Transfer Agency Agreement between John Hancock Investor
Services Corporation and the John Hancock funds.*

(b) Administration Agreement between John Hancock Advisers,
Inc. and the Registrant on behalf of Adjustable U.S.
Government Trust.*

(10) Rule 24(e) opinion.+

(11) Consent of Independent Auditors.+

(12) Not Applicable.

(13) Not Applicable.

(14) Not Applicable.

(15) (a) Rule 12b-1 Plans for Class A Shares.*
(i) Investment Quality Bond Fund
(ii) Adjustable U.S. Government Trust
(iii) Government Securities Trust
(iv) Intermediate Government Trust
(v) U.S. Government Trust

(b) Rule 12b-1 Plans for Class B Shares.*
(i) Investment Quality Bond Fund
(ii) Adjustable U.S. Government Trust
(iii) Government Securities Trust
(iv) Intermediate Government Trust
(v) U.S. Government Trust

(16) Schedule for computation of each performance quotation
provided in the Registration Statement in response to
Item 22.*

(27) Financial Data Schedule+

_______________________

* Previously filed with Registration Statement and/or post-
effective amendments and incorporated by reference herein.

** To be filed by post-effective amendment.

*** Filed with the Securities and Exchange Commission on
February 23, 1995, pursuant to Rule 24f-2 and incorporated
herein by reference.

+ Filed herewith.

-2-

<PAGE> 1
Exhibit 10
----------

July 13, 1995

John Hancock Bond Fund
101 Huntington Avenue
Boston, MA 02199

Re: Post-Effective Amendment No. 31 to Registration
Statement on Form N-1A (File Nos. 2-66906 and
811-03006) (the "Registration Statement")______
-----------------------------------------------

Ladies and Gentlemen:

John Hancock Bond Fund (the "Trust") is a Massachusetts business trust
organized under a written Declaration of Trust dated, executed and delivered in
Houston, Texas on November 27, 1984 as amended on February 13, 1985, February
14, 1985, September 23, 1985, August 19, 1986, June 14, 1989, September 23,
1991, March 29, 1993, April 15, 1993, March 28, 1994, April 15, 1994, July 8,
1994 and December 16, 1994 (as so amended the "Declaration of Trust"). The
beneficial interests thereunder are represented by transferable shares of
beneficial interest, par value $0.01 per share.

The Trustees of the Trust have the powers set forth in the Declaration
of Trust, subject to the terms, provisions and conditions therein provided.
Pursuant to Article VI, Section 6.1 of the Declaration of Trust, the number of
shares of beneficial interest authorized to be issued under the Declaration of
Trust is unlimited. Pursuant to Article VI, Section 6.9 of the Declaration of
Trust, the Trustees are authorized to divide the shares into one or more series
of shares and one or more classes thereof. Under Article VI, Section 6.4 of the
Declaration of Trust, the Trustees may issue shares for such amount and type of
consideration, including cash and property, at such time or times, and on such
terms as they may deem best without action or approval of the shareholders.

Pursuant to Article VI, Section 6.9 of the Declaration of Trust, the
Trustees established six series of shares designated "John Hancock Investment
Quality Bond Fund," "John Hancock Government Securities Trust," "John Hancock
U.S. Government Trust," "John Hancock Intermediate Government Trust,"
"Adjustable U.S. Government Fund" and "John Hancock Adjustable U.S. Government
Trust", each of which has been divided into two classes of shares designated
"Class A Shares" and "Class B Shares."

<PAGE> 2
John Hancock Bond Fund
July 13, 1995
Page 2

We understand that you are about to register under the Securities Act
of 1933, as amended, 18,662,390 shares of beneficial interest by Post-Effective
Amendment No. 31 to the Trust's Registration Statement.

We have examined the Declaration of Trust, the By-Laws, resolutions of
the Board of Trustees and such other documents as we have deemed necessary or
appropriate for the purpose of this opinion, including, but not limited to,
originals, or copies certified or otherwise identified to our satisfaction, of
such documents, Trust records and other instruments. In our examination of the
above documents, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all submitted to us as certified or photostatic copies,
the authenticity of the originals of such latter documents and the legal
competence of each individual executing any documents.

For purposes of this opinion letter, we have not made an independent
review of the laws of any state or jurisdiction other than The Commonwealth of
Massachusetts and express no opinion with respect to the laws of any
jurisdiction other than the laws of The Commonwealth of Massachusetts.
Further, we express no opinion as to compliance with any state or federal
securities laws, including the securities laws of The Commonwealth of
Massachusetts.

Our opinion below, as it relates to the nonassessability of the shares
of the Trust, is qualified to the extent that under Massachusetts law,
shareholders of a Massachusetts business trust, such as the Trust, may be held
personally liable for the obligations of such trust. In this regard, however,
please be advised that the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and provides that notice of such
disclaimer may be given in each note, bond, contract, certificate or
undertaking made or issued by or on behalf of the Trust. Also, the Declaration
of Trust provides for indemnification out of Trust property for all loss and
expense of any shareholder held personally liable solely by reason of his being
or having been a shareholder of the Trust; provided, however, that no Trust
property may be used to indemnify any shareholder of any series of the Trust
other than Trust property allocated or belonging to that series.

We are of the opinion that all necessary Trust action precedent to the
issue of the shares of beneficial interest of the Trust comprising the shares
covered by Post-Effective Amendment No. 31 to the Registration Statement has
been duly taken, and that

<PAGE> 3
John Hancock Bond Fund
July 13, 1995
Page 3

all such shares may legally and validly be issued for cash, and when sold will
be fully paid and non-assessable by the Trust upon receipt by the Trust or
its agent of consideration therefor in accordance with terms described in the
Trust's Declaration of Trust and the Registration Statement, subject to
compliance with the Securities Act of 1933, as amended, the Investment Company
Act of 1940, as amended and the applicable state laws regulating the sale of
securities.

We consent to your filing this opinion with the Securities and Exchange
Commission as an Exhibit to Post-Effective Amendment No. 31. Except as provided
in this paragraph, this opinion may not be relied upon by, or filed with, any
other parties or used for any other purpose.

Very truly yours,

/s/Hale and Dorr

Hale and Dorr

<PAGE> 1
Exhibit 11
----------

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "The Fund's
Financial Highlights" in the Prospectuses and "Independent Auditors" in the
Statements of AdditioNal Information and to the use, in this Post-Effective
Amendment Number 31 to Registration Statement No. 2-66906 of our reports dated
May 15, 1995, on the Adjustable U.S. Government Fund, Adjustable U.S.
Government Trust, U.S. Government Trust, Investment Quality Bond Fund,
Intermediate Government Trust and Government Securities Trust, constituting
the portfolios of the John Hancock Bond Fund.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Boston, Massachusetts
July 14, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 1
<NAME> JOHN HANCOCK INVESTMENT QUALITY BOND FUND - CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 92,245,630
<INVESTMENTS-AT-VALUE> 88,797,284
<RECEIVABLES> 7,796,249
<ASSETS-OTHER> 13,156
<OTHER-ITEMS-ASSETS> (3,428,659)
<TOTAL-ASSETS> 96,626,376
<PAYABLE-FOR-SECURITIES> 6,288,481
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 540,356
<TOTAL-LIABILITIES> 6,828,837
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,637,723
<SHARES-COMMON-STOCK> 10,080,512
<SHARES-COMMON-PRIOR> 10,969,185
<ACCUMULATED-NII-CURRENT> 150,084
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19,561,609)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,428,659)
<NET-ASSETS> 89,797,539
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,996,310
<OTHER-INCOME> 0
<EXPENSES-NET> 1,404,742
<NET-INVESTMENT-INCOME> 7,591,568
<REALIZED-GAINS-CURRENT> (7,781,316)
<APPREC-INCREASE-CURRENT> 1,248,406
<NET-CHANGE-FROM-OPS> 1,058,658
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,944,803
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 877,320
<NUMBER-OF-SHARES-REDEEMED> (2,244,995)
<SHARES-REINVESTED> 479,004
<NET-CHANGE-IN-ASSETS> (11,726,549)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11,780,293)
<OVERDISTRIB-NII-PRIOR> (10,058)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,758
<INTEREST-EXPENSE> 115,720
<GROSS-EXPENSE> 1,404,742
<AVERAGE-NET-ASSETS> 86,918,330
<PER-SHARE-NAV-BEGIN> 8.72
<PER-SHARE-NII> 0.66
<PER-SHARE-GAIN-APPREC> (0.55)
<PER-SHARE-DIVIDEND> (0.66)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.17
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 1
<NAME> JOHN HANCOCK INVESTMENT QUALITY BOND FUND - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 92,245,630
<INVESTMENTS-AT-VALUE> 88,797,284
<RECEIVABLES> 7,796,249
<ASSETS-OTHER> 13,156
<OTHER-ITEMS-ASSETS> (3,428,659)
<TOTAL-ASSETS> 96,626,376
<PAYABLE-FOR-SECURITIES> 6,288,481
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 540,356
<TOTAL-LIABILITIES> 6,828,837
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,637,723
<SHARES-COMMON-STOCK> 911,525
<SHARES-COMMON-PRIOR> 679,524
<ACCUMULATED-NII-CURRENT> 150,084
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19,561,609)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,428,659)
<NET-ASSETS> 89,797,539
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,996,310
<OTHER-INCOME> 0
<EXPENSES-NET> 1,404,742
<NET-INVESTMENT-INCOME> 7,591,568
<REALIZED-GAINS-CURRENT> (7,781,316)
<APPREC-INCREASE-CURRENT> 1,248,406
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<DISTRIBUTIONS-OF-INCOME> 486,623
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<NUMBER-OF-SHARES-SOLD> 463,584
<NUMBER-OF-SHARES-REDEEMED> (261,054)
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<NET-CHANGE-IN-ASSETS> (11,726,549)
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<PER-SHARE-NAV-END> 8.17
<EXPENSE-RATIO> 2.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 2
<NAME> JOHN HANCOCK GOVERNMENT SECURITIES TRUST - CLASS A

<S> <C>
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<NUMBER-OF-SHARES-SOLD> 3,304,464
<NUMBER-OF-SHARES-REDEEMED> 18,668,887
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</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 2
<NAME> JOHN HANCOCK GOVERNMENT SECURITIES TRUST - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> SEP-30-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 483,972,782
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<ACCUMULATED-NET-GAINS> (383,830,716)
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<ACCUM-APPREC-OR-DEPREC> (6,631,823)
<NET-ASSETS> 490,509,419
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<NET-INVESTMENT-INCOME> 43,494,506
<REALIZED-GAINS-CURRENT> (50,922,906)
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<NUMBER-OF-SHARES-SOLD> 201,709
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<SHARES-REINVESTED> 618
<NET-CHANGE-IN-ASSETS> (121,355,372)
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<EXPENSE-RATIO> 1.95
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 3
<NAME> JOHN HANCOCK U.S. GOVERNMENT TRUST - CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
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<PER-SHARE-NAV-END> 7.68
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 3
<NAME> JOHN HANCOCK U.S. GOVERNMENT TRUST - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> APR-01-1994
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<EXPENSE-RATIO> 2.34
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 4
<NAME> JOHN HANCOCK INTERMEDIATE GOVERNMENT TRUST - CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 4
<NAME> JOHN HANCOCK INTERMEDIATE GOVERNMENT TRUST - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
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<PER-SHARE-NAV-END> 9.28
<EXPENSE-RATIO> 2.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 5
<NAME> JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT TRUST - CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 5
<NAME> JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT TRUST - CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

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<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
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<NUMBER> 7
<NAME> JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT FUND - CLASS A

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</TABLE>

<ARTICLE> 6
<CIK> 0000315554
<NAME> JOHN HANCOCK BOND FUND
<SERIES>
<NUMBER> 7
<NAME> JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT FUND - CLASS B

<S> <C>
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</TABLE>