HANCOCK JOHN BOND FUND, 497, 1995-07-25

HANCOCK JOHN BOND FUND
497, 1995-07-25

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<PAGE> 1

JOHN HANCOCK U.S. GOVERNMENT TRUST
101 Huntington Avenue
Boston, Massachusetts 02199

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 8, 1995

Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of John Hancock U.S. Government Trust ("U.S. Government Trust"), a
series of John Hancock Bond Fund, a Massachusetts business trust (the "Trust"),
will be held at 101 Huntington Avenue, Boston, Massachusetts 02116 on Friday,
September 8, 1995 at 9:00 a.m., Boston time, and at any adjournment thereof, for
the following purposes:

1. To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization between the Trust, on behalf of U.S. Government Trust, and
the Trust, on behalf of John Hancock Intermediate Maturity Government Fund
("Intermediate Maturity Fund") (formerly, John Hancock Adjustable U.S.
Government Trust), providing for the acquisition by Intermediate Maturity
Fund of all of the assets of U.S. Government Trust in exchange solely for
the assumption of U.S. Government Trust's liabilities by Intermediate
Maturity Fund and the issuance of Class A and Class B shares of
Intermediate Maturity Fund to U.S. Government Trust for distribution to its
Class A and Class B shareholders; and

2. To consider and act upon such other matters as may properly come before the
Meeting or any adjournment thereof.

The Board of Trustees has fixed the close of business on July 14, 1995 as
the record date for determination of shareholders who are entitled to notice of
and to vote at the Meeting and any adjournment thereof.

If you cannot attend the Meeting in person, please complete, date and sign
the enclosed proxy and return it to John Hancock Investor Services Corporation,
101 Huntington Avenue, Boston, Massachusetts 02199 in the enclosed envelope. It
is important that you exercise your right to vote. THE ENCLOSED PROXY IS BEING
SOLICITED BY THE BOARD OF TRUSTEES OF JOHN HANCOCK U.S. GOVERNMENT TRUST.

By order of the Board of Trustees,

THOMAS H. DROHAN, Secretary

Boston, Massachusetts
July 21, 1995

<PAGE> 2

JOHN HANCOCK U.S. GOVERNMENT TRUST

a series of
John Hancock Bond Fund

PROXY STATEMENT

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

JOHN HANCOCK INTERMEDIATE MATURITY GOVERNMENT FUND

a series of
John Hancock Bond Fund

PROSPECTUS

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

This Proxy Statement and Prospectus sets forth the information you should
know before voting on the proposed reorganization of John Hancock U.S.
Government Trust ("U.S. Government Trust") into John Hancock Intermediate
Maturity Government Fund ("Intermediate Maturity Fund") (formerly, John Hancock
Adjustable U.S. Government Trust ("Adjustable Government Trust")). Please read
it carefully and retain it for future reference. U.S. Government Trust and
Intermediate Maturity Fund are each series of John Hancock Bond Fund, a
Massachusetts business trust (the "Trust").

This Proxy Statement and Prospectus is accompanied by the Preliminary
Prospectus of John Hancock Intermediate Maturity Government Fund (formerly,
Adjustable Government Trust) for Class A and Class B shares, dated July 19, 1995
and subject to completion. Information about U.S. Government Trust's Class A
and Class B shares is incorporated herein by reference to the U.S. Government
Trust Prospectus which is available at no charge upon request to Intermediate
Maturity Fund at 1-800-225-5291.

A Statement of Additional Information dated July 14, 1995 relating to this
Proxy Statement and Prospectus, and containing additional information about each
of Intermediate Maturity Fund and U.S. Government Trust, including historical
financial statements, is on file with the Securities and Exchange Commission
("SEC"). It is available, upon telephone request at no charge at the toll-free
number stated above, from Intermediate Maturity Fund. The Statement of
Additional Information is incorporated by reference into this Prospectus.

This Proxy Statement and Prospectus relates to Class A and Class B shares of
beneficial interest, par value of $0.01 per share (collectively, the
"Intermediate Maturity Fund Shares"), of

<PAGE> 3

Intermediate Maturity Fund which will be issued in exchange for all of U.S.
Government Trust's assets. In exchange for these assets, Intermediate Maturity
Fund will also assume all of the liabilities of U.S. Government Trust.

The Intermediate Maturity Fund Class A Shares issued to U.S. Government
Trust for distribution to U.S. Government Trust's Class A shareholders will have
an aggregate net asset value equal to that of U.S. Government Trust's Class A
shares. The Intermediate Maturity Fund Class B Shares issued to U.S. Government
Trust for distribution to U.S. Government Trust's Class B shareholders will have
an aggregate net asset value equal to that of U.S. Government Trust's Class B
shares. The asset values of U.S. Government Trust and Intermediate Maturity
Fund will be determined at the close of business (4:00 p.m. Eastern Time) on the
Closing Date (as defined below) for purposes of the proposed reorganization.

Following the receipt of Intermediate Maturity Fund Shares (1) U.S.
Government Trust will be liquidated, (2) the Intermediate Maturity Fund Shares
will be distributed to U.S. Government Trust's shareholders pro rata in exchange
for their shares of U.S. Government Trust and (3) U.S. Government Trust will be
terminated. Consequently, Class A U.S. Government Trust shareholders will become
Class A shareholders of Intermediate Maturity Fund, and Class B U.S. Government
Trust shareholders will become Class B shareholders of Intermediate Maturity
Fund. These transactions are collectively referred to in this Proxy Statement
and Prospectus as the "Reorganization." The Reorganization is being structured
as a tax-free reorganization so that, in the opinion of tax counsel, no gain or
loss will be recognized by Intermediate Maturity Fund, U.S. Government Trust or
the shareholders of U.S. Government Trust. The terms and conditions of this
transaction are more fully described in this Proxy Statement and Prospectus, and
in the Agreement and Plan of Reorganization that is attached as EXHIBIT A.

Intermediate Maturity Fund is a diversified series of the Trust, an
open-end management investment company organized as a Massachusetts business
trust in 1984. In connection with the Reorganization, the Trustees have
proposed several matters for consideration by the shareholders of Intermediate
Maturity Fund including proposals to abolish the Fund's master/feeder structure
and to change the Fund's investment objective and an investment restriction to
permit the Fund to be managed as an intermediate maturity government fund rather
than as an adjustable rate government fund. The Trustees have also approved the
change of the Fund's name to: John Hancock Intermediate Maturity Government
Fund. If the shareholders of Intermediate Maturity Fund do not approve the
proposed changes, the transactions contemplated by the Reorganization will not
proceed as described.

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<PAGE> 4

Intermediate Maturity Fund seeks to achieve a high level of current income,
consistent with the preservation of capital and maintenance of liquidity.
Intermediate Maturity Fund seeks to obtain this objective by investing primarily
(at least 65% of its total assets) in U.S. Government securities, including
mortgage-backed securities issued or guaranteed by U.S. Government agencies and
medium-term debt obligations of governmental issuers. Under normal market
conditions, the Fund maintains a weighted average remaining maturity or average
remaining life of three to ten years.

The principal place of business of both Intermediate Maturity Fund and U.S.
Government Trust is at 101 Huntington Avenue, Boston, Massachusetts 02199. Their
toll-free telephone number is 1-800-225-5291.

SHARES OF INTERMEDIATE MATURITY FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND THE
SHARES OF INTERMEDIATE MATURITY FUND 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.

The date of this Proxy Statement and Prospectus is July 14, 1995.

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<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
INTRODUCTION............................................................. 1
SUMMARY.................................................................. 2
RISK FACTORS AND SPECIAL CONSIDERATIONS.................................. 15
INFORMATION CONCERNING THE MEETING....................................... 16
PROPOSAL TO APPROVE AGREEMENT AND PLAN OF REORGANIZATION................. 18
CAPITALIZATION........................................................... 25
COMPARATIVE PERFORMANCE INFORMATION ..................................... 27
BUSINESS OF U.S. GOVERNMENT TRUST........................................ 30
General............................................................... 30
Investment Objective and Policies..................................... 30
Portfolio Management.................................................. 30
Trustees.............................................................. 30
Investment Adviser and Distributor.................................... 30
Expenses.............................................................. 30
Custodian and Transfer Agent.......................................... 30
U.S. Government Trust Shares.......................................... 31
Purchase of U.S. Government Trust Shares.............................. 31
Redemption of U.S. Government Trust Shares............................ 31
Dividends, Distributions and Taxes.................................... 31
BUSINESS OF INTERMEDIATE MATURITY FUND................................... 31
General............................................................... 31
Investment Objective and Policies..................................... 31
Portfolio Management.................................................. 32
Trustees.............................................................. 32
Investment Adviser and Distributor.................................... 32
Expenses.............................................................. 32
Custodian and Transfer Agent.......................................... 32
Purchase of Intermediate Maturity Fund Shares......................... 32
Redemption of Intermediate Maturity Fund Shares....................... 33
Dividends, Distributions and Taxes.................................... 33
EXPERTS.................................................................. 33
AVAILABLE INFORMATION.................................................... 33
EXHIBIT A................................................................ A-1
</TABLE>

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<PAGE> 6

EXHIBITS

A - Agreement and Plan of Reorganization by and between John Hancock Bond
Fund, on behalf of John Hancock U.S. Government Trust, and John
Hancock Bond Fund, on behalf of John Hancock Adjustable U.S.
Government Trust (as proposed to be renamed, John Hancock Intermediate
Maturity Government Fund) (attached to this document).

B - Preliminary Prospectus of John Hancock Intermediate Maturity
Government Fund (formerly, Adjustable Government Trust) for Class A
and Class B shares, dated July 19, 1995 and subject to completion
(included with this document).

C - Annual Report to Shareholders of Adjustable Government Trust, dated
March 31, 1995 (included with this document).

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<PAGE> 7

PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK U.S. GOVERNMENT TRUST
TO BE HELD ON SEPTEMBER 8, 1995

INTRODUCTION

This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of U.S. Government Trust (the
"Board of Trustees"). The proxies will be voted at the Special Meeting of
Shareholders (the "Meeting") of U.S. Government Trust to be held at 101
Huntington Avenue, Boston, Massachusetts 02199 on Friday, September 8, 1995 at
9:00 a.m., Boston time, and at any adjournment or adjournments of the Meeting.
The purposes of the Meeting are set forth in the accompanying Notice of Special
Meeting of Shareholders.

This Proxy Statement and Prospectus includes and incorporates by reference
the Preliminary Prospectus of John Hancock Intermediate Maturity Government Fund
("Intermediate Maturity Fund") (formerly, Adjustable Government Trust) for Class
A and Class B shares, dated July 19, 1995 and subject to completion (the
"Intermediate Maturity Fund Preliminary Prospectus"). The Annual Report to
Shareholders of Adjustable Government Trust, dated March 31, 1995, is included
with this Proxy Statement and Prospectus. These materials are being mailed to
shareholders of U.S. Government Trust on or after July 21, 1995. Information
about U.S. Government Trust is incorporated by reference to the U.S. Government
Trust Prospectus which is available upon request. U.S. Government Trust's Annual
Report to Shareholders was previously sent to shareholders on or about May 31,
1995.

As of June 30, 1995, 2,096,935 Class A and 37,195 Class B shares of
beneficial interest of U.S. Government Trust were outstanding. Shareholders of
record on July 14, 1995 (the "Record Date") are entitled to notice of and to
vote at the Meeting.

All properly executed proxies received by management prior to the Meeting,
unless revoked, will be voted at the Meeting according to the instructions on
the proxies. If no instructions are given, shares of U.S. Government Trust
represented by proxies will be voted FOR the proposal (the "Proposal") to
approve the Agreement and Plan of Reorganization (the "Agreement") between the
Trust, on behalf of U.S. Government Trust, and the Trust, on behalf of
Intermediate Maturity Fund.

The Board of Trustees knows of no business to be presented for
consideration at the Meeting other than that mentioned in the immediately
preceding paragraph. If other business is properly

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<PAGE> 8

brought before the Meeting, proxies will be voted according to the best judgment
of the persons named as proxies.

In addition to the mailing of these proxy materials, proxies may be
solicited in person or by telephone by Trustees, officers and employees of U.S.
Government Trust; by personnel of U.S. Government Trust's investment adviser,
John Hancock Advisers, Inc., and its transfer agent, John Hancock Investor
Services Corporation ("Investor Services"); or by broker-dealer firms. U.S.
Government Trust and Intermediate Maturity Fund (each, a "Fund" and
collectively, the "Funds") will each bear its own fees and expenses in
connection with the Reorganization discussed in this Proxy Statement and
Prospectus.

The information concerning U.S. Government Trust and Intermediate Maturity
Fund in this Proxy Statement and Prospectus has been supplied by the Trust.

SUMMARY

The following is a summary of certain information contained elsewhere in
this Proxy Statement and Prospectus. The summary is qualified by reference to
the more complete information contained in this Proxy Statement and Prospectus,
and in the EXHIBITS attached to or included with this document. Please read
this entire Proxy Statement and Prospectus carefully.

REASONS FOR THE PROPOSED REORGANIZATION

The Trust's Board of Trustees has determined that the proposed
Reorganization is in the best interests of U.S. Government Trust and its
shareholders. In making this determination, the Trustees considered several
relevant factors, including (1) the fact that the investment objectives and
policies of U.S. Government Trust and Intermediate Maturity Fund are
substantially similar, (2) the likelihood that the Reorganization will result in
improved economies of scale and a corresponding decrease in the expenses
currently borne by U.S. Government Trust's shareholders and (3) the fact that
combining the Funds' assets into a single portfolio will enable Intermediate
Maturity Fund to achieve greater diversification than U.S. Government Trust is
now able to achieve. The Board of Trustees believes that the Intermediate
Maturity Fund Shares received in the Reorganization will provide existing U.S.
Government Trust shareholders with substantially the same investment advantages
that they currently enjoy at a comparable level of risk. Shareholders of both
Funds may benefit from a fund offering greater diversification in its investment
portfolio as a result of the larger asset base. Greater diversification may
reduce the negative effect which the adverse performance of any one security may
have on the performance of the entire portfolio. For a more detailed

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<PAGE> 9

discussion of the reasons for the proposed Reorganization, see "Proposal to
Approve the Agreement and Plan of Reorganization--Reasons For The Proposed
Reorganization."

THE FUNDS' EXPENSES

Both Funds and their shareholders are subject to various fees and expenses.
The two tables set forth below show the shareholder transaction and operating
expenses of Class A and Class B shares of the Funds and the effect of applicable
expense limitations. These expenses are based on fees and expenses incurred
during the Funds' most recently completed fiscal years.

U.S. GOVERNMENT TRUST

<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

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%
</TABLE>

* 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.

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<PAGE> 10

INTERMEDIATE MATURITY FUND

<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)..................... 3.00% None
Maximum sales charge imposed on reinvested
dividends............................................... None None
Maximum deferred sales charge............................. None* 3.00%
Redemption 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(a)
(after expense limitation).............................. 0.75% 1.40%
</TABLE>

(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,
administration fee, other expenses and total fund operating expenses of
the Class A and Class B shares, respectively, would have been estimated as
0.40% and 0.40%, 0.10% and 0.10%, 0.75% and 0.75%, and 1.50% and 2.15%.

** 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.

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<PAGE> 11

Intermediate Maturity Fund incurred expenses which are included in the
expense ratios indirectly through the Fund's investment in the master fund.

INTERMEDIATE MATURITY FUND (PRO FORMA)

The table set forth below shows the pro forma operating expenses of Class A
and Class B shares of Intermediate Maturity Fund which assumes that the
Reorganization took place on March 31, 1995. These expenses are based on fees
and expenses incurred during the Funds' most recently completed fiscal years.

Pro Forma Intermediate Maturity Fund

<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------- -------

<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management fee (after expense limitation)................. 0.00% 0.00%
12b-1 fee*................................................ 0.25% 0.90%
Other expenses** (after expense limitation)............... 0.50% 0.50%
Total Fund operating expenses(a)
(after expense limitation).............................. 0.75% 1.40%
</TABLE>

(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,
other expenses and total fund operating expenses of the Class A and Class
B shares, respectively, would have been estimated as 0.40% and 0.40%,
0.65% and 0.65%, and 1.30% and 1.95%.

* 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 2.05%
of such assets.

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

If the Reorganization is consummated, the actual total operating expenses
of Class A and Class B shares of Intermediate Maturity Fund may vary from the
pro forma operating expenses indicated above due to changes in the net asset
value of Intermediate Government Trust and/or Intermediate Maturity Fund between
March 31, 1995 and the Closing Date (defined below).

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<PAGE> 12

THE FUNDS' INVESTMENT ADVISER

John Hancock Advisers, Inc. (the "Adviser") acts as investment adviser to
both Funds.

BUSINESS OF U.S. GOVERNMENT TRUST

U.S. Government Trust is a diversified series of the Trust, an open-end
management investment company organized as a Massachusetts business trust in
1984. As of March 31, 1995, U.S. Government Trust's net assets were
$17,780,907. All investment decisions for U.S. Government Trust are made by a
government fixed-income committee comprised of investment professionals employed
by the Adviser, and no single person is primarily responsible for making
recommendations to the committee.

BUSINESS OF INTERMEDIATE MATURITY FUND

Intermediate Maturity Fund is also a diversified series of the Trust. As
of March 31, 1995, Intermediate Maturity Fund's net assets were $22,455,416. All
investment decisions for Intermediate Maturity Fund are made by a government
fixed-income committee comprised of investment professionals employed by the
Adviser, and no single person is primarily responsible for making
recommendations to the committee.

COMPARISON OF THE INVESTMENT OBJECTIVES AND POLICIES OF U.S. GOVERNMENT TRUST
AND INTERMEDIATE MATURITY FUND

U.S. Government Trust: The investment objective of U.S. Government Trust
is to achieve a high level of current income, consistent with safety of
principal. The Fund invests primarily in U.S. Government securities, with an
emphasis on mortgage-backed securities issued by U.S. Government agencies. The
Fund may invest in mortgage-related derivatives, including ("collateralized
mortgage obligations ("CMOs") and stripped mortgage-backed securities ("SMBS").
The Fund may also invest in asset-backed securities, enter into mortgage dollar
rolls and reverse repurchase agreements and purchase options on debt securities,
interest rate futures contracts and options on these futures.

Intermediate Maturity Fund: The investment objective of Intermediate
Maturity Fund also is to achieve a high level of current income, consistent with
preservation of capital and maintenance of liquidity. The Fund invests
primarily (at least 65% of its total assets) in U.S. Government securities,
including mortgage-backed securities issued or guaranteed by U.S. Government
agencies, and medium-term debt obligations of governmental issuers. Under
normal market conditions, the Fund maintains a weighted average remaining
maturity or remaining average life of three to ten years. The Fund invests in
mortgage-related

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<PAGE> 13

derivatives, including CMOs and SMBS. The remainder of the Fund's assets may be
invested in U.S. government securities and in asset- backed securities and debt
obligations of corporate issuers each of which is rated in the highest rating
category by a nationally recognized statistical rating organization or, if
unrated, determined by the Adviser to be of comparable quality. The Fund may
enter into mortgage dollar rolls and engage in hedging transactions in futures
contracts and options on these futures.

U.S. Government Trust's investment objective is fundamental and may not be
changed without shareholder approval. Intermediate Maturity Fund's investment
objective is non-fundamental and may be changed by a vote of the Fund's Board of
Trustees. Prior to the implementation of a change to the Fund's investment
objective, the Fund's prospectus and statement of additional information will be
revised or supplemented.

In considering whether to approve the Reorganization, you should consider
the differences between the two Funds' investment objectives and policies and
whether an investment in Intermediate Maturity Fund is a suitable investment for
you. For a discussion of the risks associated with an investment in the Funds,
see "Risk Factors and Special Considerations."

<TABLE>
<CAPTION>
U.S. GOVERNMENT INTERMEDIATE MATURITY
TRUST FUND

<S> <C> <C>
Investment
Objective: Objective is to achieve Objective is to achieve
a high level of current a high level of current
income, consistent with income, consistent with
safety of principal. the preservation of
capital and maintenance
of liquidity.

Primary
Investments: At least 80% of the At least 65% of the
Fund's total assets Fund's assets are
are invested in invested in U.S.
U.S. Government Government securities,
securities, with including mortgage-
emphasis on mortgage backed securities issued
backed securities or guaranteed by U.S.
issued by U.S. Government agencies and
Government agencies. medium-term debt
obligations of
At least 65% of the governmental issuers.
Fund's assets are The Fund may invest the
invested in obliga- remainder of its assets
tions issued by the in other U.S. Government
Government National Securities and in asset-
</TABLE>

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<PAGE> 14

<TABLE>
<S> <C> <C>
Mortgage Association backed securities and
("GNMA"). debt obligations of corporate
issuers rated in the highest
rating category. Under normal
market conditions, the Fund
maintains a weighted average
remaining maturity or average
remaining life of three to ten
years.

Other
Investments: The Fund may invest up The Fund may invest
to 10% of its total in illiquid, restricted
assets in illiquid and Rule 144A securities,
securities, enter into subject to a 15% limit on
repurchase agreements, illiquid investments. The
purchase securities on a Fund may enter into
forward commitment or repurchase agreements,
when-issued basis, lend purchase securities on a
portfolio securities and forward commitment or when
enter into a reverse issued basis, lend portfolio
repurchase agreements. securities and enter into
reverse repurchase
agreements.

Permitted
Transactions in
Derivative
Instruments: The Fund may invest in The Fund may invest in
mortgage-related mortgage-related
derivatives, including derivatives, including
up to 10% of the CMOs and SMBS. The
Fund's total assets in Fund may invest in
CMOs and SMBS. The asset-backed securities
Fund may also invest and enter into mortgage
in asset-backed dollar rolls and
securities, enter into hedging transactions
mortgage dollar rolls in futures contracts
and exchange-traded and options on these
option on debt secur- futures.
ities, interest rate
futures contracts
and options on these
futures.
</TABLE>

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<PAGE> 15

<TABLE>
<S> <C> <C>
Diversification
and Industry
Concentration
(no change): The Fund is diversified The Fund is diversified
and does not concentrate and does not concentrate
more than 25% of its more than 25% of its
assets in any one assets in any one
industry. industry.
</TABLE>

FORM OF ORGANIZATION

U.S. Government Trust and Intermediate Maturity Fund are two separate
series of the Trust, a Massachusetts business trust organized in 1984. Both
Funds have authorized and outstanding two classes of shares: Class A and Class
B.

Each share of a series of the Trust represents an equal proportionate
interest in the assets belonging to that series. The liabilities attributable to
each series are not charged against the assets of the other series of the Trust.
Shares of each series and the other series of the Trust are voted separately
with respect to matters pertaining to that series, but all shares vote together
for the election of Trustees and the ratification of independent accountants.

The shares of each class of U.S. Government Trust and Intermediate Maturity
Fund represent an interest in the same portfolio of investments of that Fund.
Except as stated below, each class of each Fund has equal rights as to voting,
redemption, dividends and liquidation. Each class bears different distribution
and transfer agent fees and may bear other expenses properly attributable to
that class. Class A and Class B shareholders of each Fund have exclusive voting
rights with regard to the Rule 12b-1 distribution plan covering their class of
shares.

SALES CHARGES AND DISTRIBUTION AND SERVICE FEES

Class A Shares. U.S. Government Trust and Intermediate Maturity Fund
impose an initial sales charge on Class A shares as described above under the
caption, "The Funds' Expenses." An initial sales charge does not apply to Class
A shares acquired through the reinvestment of dividends from net investment
income or capital gain distributions.

Class A shares of U.S. Government Trust acquired by Intermediate Maturity
Fund's Class A shareholders pursuant to the Reorganization will not be subject
to any initial sales charge or CDSC. However, the CDSC imposed upon certain
redemptions within one year of purchase will continue to apply to the Class A
shares

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<PAGE> 16

of Intermediate Maturity Fund issued in the Reorganization. The holding period
for determining the application of this CDSC will be calculated from the date
the U.S. Government Trust Class A shares were originally issued.

Class B Shares. U.S. Government Trust and Intermediate Maturity Fund do
not impose an initial sales charge on Class B shares. However, Class B shares
redeemed within a specified number of years of purchase will be subject to a
CDSC at the rates set forth below. This CDSC 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, Class B shareholders will not
be assessed a CDSC on increases in account value above the initial purchase
price, including shares derived from reinvested dividends. The amount of the
CDSC, if any, will vary depending on the number of years from the time the Class
B shares were purchased until the time they are redeemed, as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT TRUST INTERMEDIATE MATURITY FUND

CONTINGENT CONTINGENT
DEFERRED SALES DEFERRED SALES
YEAR IN CHARGE AS A YEAR IN CHARGE AS A
WHICH CLASS B PERCENTAGE OF WHICH CLASS B PERCENTAGE OF
SHARES REDEEMED SOLLAR AMOUNT SHARES REDEEMED DOLLAR AMOUNT
FOLLOWING PURCHASE SUBJECT TO CDSC FOLLOWING PURCHASE SUBJECT TO CDSC

<S> <C> <C> <C>
First 5.0% First 3.0%
Second 4.0% Second 2.0%
Third 3.0% Third 2.0%
Fourth 3.0% Fourth 1.0%
Fifth 2.0% Fifth and
Sixth 1.0% thereafter None
Seventh and
thereafter None
</TABLE>

Class B shares of Intermediate Maturity Fund acquired by U.S. Government
Trust's Class B shareholders pursuant to the Reorganization will not be subject
to any CDSC at the time of the Reorganization. However, these shares will
remain subject to the original CDSC applicable when you redeem those shares. The
CDSC schedule described above with respect to shares of Intermediate Maturity
Fund will not apply to the Class B shares of Intermediate Maturity Fund that you
acquire in the Reorganization. For purposes of computing the CDSC payable upon
redemption of Class B shares of Intermediate Maturity Fund acquired by U.S.
Government Trust's Class B shareholders pursuant to the Reorganization and the
automatic conversion of Class B shares into Class A shares, the holding period
of the U.S. Government Trust

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<PAGE> 17

Class B shares will be added to that of the Intermediate Maturity Fund Class B
shares acquired in the Reorganization.

Distribution and Service Fees. Both Funds have adopted distribution plans
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Under these plans, each Fund may pay fees to John
Hancock Funds, Inc. ("John Hancock Funds"), the distributor of the Funds'
shares, to reimburse distribution and service expenses in connection with Class
A shares. These fees are payable at an annual rate of up to 0.25% of the
average daily net assets attributable to the Class A shares of U.S. Government
Trust and Intermediate Maturity Fund, respectively.

In addition, under the plans, each Fund may pay fees to John Hancock Funds
to reimburse it for distribution and service expenses in connection with Class B
shares. These fees are payable at an annual rate of up to 1.00% of each Fund's
average daily net assets attributable to its Class B shares. As of the date of
this Proxy Statement and Prospectus, Intermediate Maturity Fund has determined
to temporarily limit the fee paid by Class B shares of that Fund to 0.90% of
such assets. Of these fees, up to 0.25% may be for service expenses and up to
0.75% will be for distribution expenses. With respect to Class B shares only,
if John Hancock Funds is not fully reimbursed for payments made or expenses
incurred in any fiscal year, it is entitled to carry forward these expenses to
subsequent fiscal years for submission to the applicable Fund for payment,
subject always to the maximum annual Class B distribution fee described above.

The Board of Trustees of the Trust, on behalf of Intermediate Maturity
Fund, has determined that, if the Reorganization is consummated, unreimbursed
distribution and shareholder service expenses originally incurred in connection
with U.S. Government Trust's shares will be reimbursable under Intermediate
Maturity Fund's Rule 12b-1 plans. As of March 31, 1995, the unreimbursed
distribution and shareholder service expenses for Class A shares of Intermediate
Maturity Fund and U.S. Government Trust were $3,695 and $17,845, respectively.
The unreimbursed distribution and shareholder service expenses for Class B
shares of Intermediate Maturity Fund and U.S. Government Trust were $253,107 and
$6,629, respectively. See "Unreimbursed Distribution and Shareholder Expenses"
below.

PURCHASES AND EXCHANGES

Shares of Intermediate Maturity Fund may be purchased through certain
broker-dealers and through John Hancock Funds at the public offering price,
which is based on the next determined net asset value per share, plus any
applicable sales charge. The minimum initial investment in Intermediate
Maturity Fund is $1,000

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<PAGE> 18

($250 for group investments and retirement plans). In anticipation of the
Reorganization, after the Record Date, no new accounts may be opened in U.S.
Government Trust. Existing shareholders of U.S. Government Trust may continue
to purchase shares of the Fund after the Record Date.

Shareholders of both Funds may exchange their shares at net asset value for
shares of the same class, if applicable, of certain other funds managed by the
Adviser. Shares of any fund acquired in this manner that are subject to a CDSC
will incur the CDSC, if still applicable, upon redemption. The exchange
privilege is available only in those states where exchanges can be made legally.

DISTRIBUTION PROCEDURES

It is the policy of both Funds to declare dividends daily and to pay
dividends monthly from net investment income. Each Fund also distributes
annually all of its other taxable income, including net short-term and long-term
capital gains it has realized. U.S. Government Trust will make, immediately
prior to the Closing Date (as defined below), a distribution of any net income
and net realized capital gains it has not yet distributed.

REINVESTMENT OPTIONS

Unless an election is made to receive cash, the shareholders of both Funds
automatically reinvest all of their respective dividends and capital gain
distributions in additional shares of the same class of the same Fund. These
reinvestments are made at the net asset value per share and are not subject to
any sales charge.

REDEMPTION PROCEDURES

Shares of both Funds may be redeemed on any day that the Fund is open for
business at a price equal to the net asset value of the shares next determined
after receipt of a redemption request in good order, less any applicable CDSC.
Alternatively, shareholders of both Funds may sell their shares through
securities dealers, who may charge a fee. Redemptions and repurchases of Class
B shares and certain Class A shares of U.S. Government Trust and Intermediate
Maturity Fund are subject to the applicable CDSC, if any. Class A and Class B
shares of U.S. Government Trust may be redeemed up to and including the Closing
Date (as defined below).

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<PAGE> 19

REORGANIZATION

Effect of the Reorganization. Pursuant to the terms of the Agreement, the
proposed Reorganization will consist of the acquisition by Intermediate Maturity
Fund of all the assets of U.S. Government Trust in exchange solely for (i) the
assumption by Intermediate Maturity Fund of all the liabilities of U.S.
Government Trust and (ii) the issuance of Intermediate Maturity Fund shares
equal to the value of these assets, less the amount of these liabilities (the
"Intermediate Maturity Fund Shares"), to U.S. Government Trust. As part of the
liquidation process, U.S. Government Trust will immediately distribute to its
shareholders these Intermediate Maturity Fund Shares in exchange for their
shares of U.S. Government Trust. Consequently, Class A shareholders of U.S.
Government Trust will become Class A shareholders of Intermediate Maturity Fund
and Class B shareholders of U.S. Government Trust will become Class B
shareholders of Intermediate Maturity Fund. After completion of the
Reorganization, the existence of U.S. Government Trust will be terminated.

The Reorganization will become effective as of 5:00 p.m. on the closing
date, scheduled for September 22, 1995, or another date on or before December
31, 1995 as authorized representatives of the Funds may agree (the "Closing
Date"). The Intermediate Maturity Fund Class A Shares issued to U.S. Government
Trust for distribution to U.S. Government Trust's Class A shareholders will have
an aggregate net asset value equal to that of U.S. Government Trust's Class A
shares. The Intermediate Maturity Fund Class B shares issued to U.S. Government
Trust for distribution to U.S. Government Trust's Class B shareholders will have
an aggregate net asset value equal to that of U.S. Government Trust's Class B
shares. For purposes of the Reorganization, the Funds' respective asset values
will be determined as of the close of business (4:00 p.m. Eastern Time) on the
Closing Date.

The Board of Trustees, including the Trustees not affiliated with the
Adviser, unanimously approved the Reorganization, and determined that it was in
the best interests of both U.S. Government Trust and Intermediate Maturity Fund
and that the interests of U.S. Government Trust's and Intermediate Maturity
Fund's shareholders would not be materially diluted as a result of the
Reorganization. For a discussion of the factors considered by the Board of
Trustees, see "Proposal to Approve the Agreement and Plan of
Reorganization--Reasons for the Proposed Reorganization."

Tax Considerations. The consummation of the Reorganization is subject to
the receipt of an opinion of Hale and Dorr, counsel to the Funds, satisfactory
to the Trust, on behalf of each Fund, and substantially to the effect that:

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<PAGE> 20

(a) The acquisition by Intermediate Maturity Fund of all of the assets of
U.S. Government Trust solely in exchange for the issuance of Intermediate
Maturity Fund Shares to U.S. Government Trust and the assumption of all of U.S.
Government Trust's liabilities by Intermediate Maturity Fund, followed by the
distribution by U.S. Government Trust, in liquidation of U.S. Government Trust,
of Intermediate Maturity Fund Shares to the shareholders of U.S. Government
Trust in exchange for their shares of beneficial interest of U.S. Government
Trust and the termination of U.S. Government Trust, will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code, and
U.S. Government Trust and Intermediate Maturity Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;

(b) no gain or loss will be recognized by U.S. Government Trust upon (a)
the transfer of all of its assets to Intermediate Maturity Fund solely in
exchange for the issuance of Intermediate Maturity Fund Shares to U.S.
Government Trust, and the assumption of all of U.S. Government Trust's
liabilities by Intermediate Maturity Fund; and (b) the distribution by U.S.
Government Trust of these Intermediate Maturity Fund Shares to the shareholders
of U.S. Government Trust;

(c) no gain or loss will be recognized by Intermediate Maturity Fund upon
the receipt of U.S. Government Trust's assets solely in exchange for the
issuance of Intermediate Maturity Fund Shares to U.S. Government Trust and the
assumption of all of U.S. Government Trust's liabilities by Intermediate
Maturity Fund;

(d) the basis of the assets of U.S. Government Trust acquired by
Intermediate Maturity Fund will be, in each instance, the same as the basis of
those assets in the hands of U.S. Government Trust immediately prior to the
transfer;

(e) the tax holding period of the assets of U.S. Government Trust in the
hands of Intermediate Maturity Fund will, in each instance, include U.S.
Government Trust's tax holding period for those assets;

(f) the shareholders of U.S. Government Trust will not recognize gain or
loss upon the exchange of all of their shares of beneficial interest of U.S.
Government Trust solely for Intermediate Maturity Fund Shares as part of the
Reorganization;

(g) the basis of the Intermediate Maturity Fund Shares received by U.S.
Government Trust shareholders in the Reorganization will be the same as the
basis of the U.S. Government Trust Shares surrendered in exchange therefor; and

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<PAGE> 21

(h) the tax holding period of the Intermediate Maturity Fund Shares
received by U.S. Government Trust shareholders will include, for each
shareholder, the tax holding period for the U.S. Government Trust shares
surrendered in exchange therefor, provided the U.S. Government Trust shares were
held as capital assets on the date of the exchange.

THE MEETING

Time, Place and Date. The Meeting will be held on Friday, September 8,
1995, at 101 Huntington Avenue, Boston, Massachusetts 02199, at 9:00 a.m. Boston
time.

RECORD DATE

The Record Date for determining shareholders entitled to notice of and to
vote at the Meeting is July 14, 1995.

VOTE REQUIRED FOR APPROVAL

Approval of the Agreement by the shareholders of U.S. Government Trust
requires the affirmative vote of a majority of the shares of U.S. Government
Trust represented in person or by proxy and entitled to vote at a meeting of
shareholders at which a quorum is present. The Reorganization does not require
the approval of Intermediate Maturity Fund's shareholders. See "Proposal to
Approve the Agreement and Plan of Reorganization--Voting Rights and Required
Vote."

RISK FACTORS AND SPECIAL CONSIDERATIONS

The investment objectives and policies of the Funds are substantially
similar. For this reason, the risks associated with an investment in the Funds
are substantially similar. These include the risk that the value of U.S.
Government securities will decline in response to increases in interest rate
levels. The Funds' investments in mortgage-backed securities are subject to the
reinvestment risk associated with early payments of principal and interest on
the underlying mortgages. In addition, mortgage foreclosures and prepayments of
principal may result in some loss to the Funds' principal investment in
mortgage-backed securities purchased as a premium. The Funds' investments in
options, futures and other derivative instruments may include the risk that the
applicable market will move against a Fund's derivative position and that a Fund
will incur a loss. Derivative instruments may increase or leverage the Funds'
exposure to a particular market risk, which may increase the volatility of a
Fund's net asset value. Intermediate Maturity Fund's success in using options
and futures to hedge portfolio assets depends on the degree of price correlation
between the instrument and the hedged

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<PAGE> 22

asset. Some investments in which a Fund may invest are not readily marketable
or may become illiquid under adverse market conditions. Intermediate Maturity
Fund is permitted to invest up to 15% of its assets in illiquid securities,
while U.S. Government Trust may invest only 10% of its assets in these
securities. Intermediate Maturity Fund is authorized to invest up to one-third
of its assets in reverse repurchase agreements and covered mortgage dollar
rolls, while U.S. Government Trust may invest only 20% of its total assets in
such instruments. The use of reverse repurchase agreements involves leverage.
Leverage allows any investment gains made with the additional monies received to
increase the net asset value of the Funds' shares. However, if the additional
monies received are invested in ways that do not fully recover the costs to a
Fund of these transactions, the net asset value of that Fund may fall faster
than otherwise would have been the case. Covered mortgage dollar rolls are not
treated as a borrowing.

INFORMATION CONCERNING THE MEETING

SOLICITATION, REVOCATION AND USE OF PROXIES

A majority of U.S. Government Trust's outstanding shares that are
represented and entitled to vote at the Meeting will be a quorum for the
transaction of business. A U.S. Government Trust shareholder executing and
returning a proxy has the power to revoke it at any time before it is exercised,
by filing a written notice of revocation with U.S. Government Trust's transfer
agent, Investor Services, P.O. Box 9116, Boston, Massachusetts 02205- 9116, or
by returning a duly executed proxy with a later date before the time of the
Meeting. Any shareholder who has executed a proxy but is present at the Meeting
and wishes to vote in person may revoke his or her proxy by notifying the
Secretary of U.S. Government Trust (without complying with any formalities) at
any time before it is voted. Presence at the Meeting alone will not serve to
revoke a previously executed and returned proxy.

If a quorum is not present in person or by proxy at the time any session of
the Meeting is called to order, the persons named as proxies may vote those
proxies that have been received to adjourn the Meeting to a later date. If a
quorum is present but there are not sufficient votes in favor of the Proposal,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies with respect to the Proposal. Any
adjournment will require the affirmative vote of a majority of the shares of
U.S. Government Trust, represented in person or by proxy, at the session of the
Meeting to be adjourned. If an adjournment of the Meeting is proposed because
there are not sufficient votes in favor of the Reorganization, the persons named
as proxies will vote those proxies in favor of the Reorganization in favor of
adjournment,

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<PAGE> 23

and will vote those proxies against the Reorganization against adjournment.

In addition to the solicitation of proxies by mail or in person, U.S.
Government Trust may also arrange to have votes recorded by telephone by
officers and employees of the Fund or by personnel of the Adviser or Investor
Services. The telephone voting procedure is designed to authenticate a
shareholder's identity, to allow a shareholder to authorize the voting of shares
in accordance with the shareholder's instructions and to confirm that the voting
instructions have been properly recorded. If these procedures were subject to a
successful legal challenge, such votes would not be counted at the Meeting. The
Fund has not sought to obtain an opinion of counsel on this matter and is
unaware of any such challenge at this time. A shareholder would be called on a
recorded line at the telephone number the Fund has in its records for the
account and would be asked the shareholder's Social Security number of other
identifying information. The shareholder would then be given an opportunity to
authorize proxies to vote his shares at the Meeting in accordance with the
shareholder's instructions. To ensure that the shareholder's instructions have
been recorded correctly, the shareholder will also receive a confirmation of the
voting instructions in the mail. A special toll-free number will be available
in case the voting information contained in the confirmation is incorrect. If
the shareholder decides after voting by telephone to attend the Meeting, the
shareholder can revoke the proxy at that time and vote the shares at the
Meeting.

OUTSTANDING SHARES AND RECORD DATE

At the close of business on June 30, 1995, 2,096,935 Class A and 37,195
Class B shares of beneficial interest of U.S. Government Trust were outstanding
and entitled to vote. Only U.S. Government Trust shareholders of record at the
close of business on July 14, 1995 (the "Record Date") are entitled to notice of
and to vote at the Meeting and any adjournment of the Meeting. As of June 30,
1995, 1,817,177 Class A and 938,578 Class B shares of beneficial interest of
Intermediate Maturity Fund were outstanding.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF
U.S. GOVERNMENT TRUST AND INTERMEDIATE MATURITY FUND

To the knowledge of the Trust, as of June 30, 1995, the following persons
owned of record or beneficially 5% or more of the outstanding Class A shares of
U.S. Government Trust: Merchants & Marine Bank, Attn: Mike Dickson, P.O. Box
729, Pascagoula, MS (14.51%); Merrill Lynch Pierce Fenner & Smith Inc., 4800
Deer Lake Drive East, Jacksonville, FL (11.03%); River Production Co. Inc., P.O.
Box 909, Columbia, MS (9.61%); Northern

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<PAGE> 24

Trust Co. TTSE, FBO Adventist Health System/West, Attn: Tiffany Snyder, P.O. Box
92956, Chicago, IL (7.15%); First Diboll Company, P.O. Box 152020, Lufkin, TX
(6.17%); Baptist General Convention of Texas, 333 N. Washington, Dallas, TX
(6.17%); and Home Federal Savings Bank, Attn: Helen Groves Coleman, 9108
Woodward Avenue, Detroit, MI (5.99%); and the following persons owned of record
or beneficially 5% or more of the outstanding Class B shares of U.S. Government
Trust: JHMLICO Custodian, FBO Harold D. Sensing IRA, 7107 Birch, Taylor, MI
(42.74%); Zuma M. Morris & George G. Bonicard JTWROS, 14237 Ridge Road,
Prairieville, LA (26.69%); Merrill Lynch Pierce Fenner & Smith Inc., 4800 Deer
Lake Drive East, Jacksonville, FL (7.57%); Joyce Lee, 1510 Harold Drive,
Ashdown, AR (6.75%); Louis J. Barbich TTEE, Gray Minors Trust, 310 Mount Lowe
Drive, Bakersfield, CA (6.44%); and Joanne McBrayer & Deborah L. Huffman JTWROS,
c/o J. Garofalo, 524 Brook Street, Mamaroneck, NY (6.34%).

To the knowledge of the Trust, as of June 30, 1995, the following persons
owned of record or beneficially, 5% or more of the outstanding Class A shares of
Intermediate Maturity Fund: First Trust Company TTEE, Perspective Advisory Co.,
P.O. Box 173736, Denver, CO (12.42%); First Trust Corp & Co., P.O. Box 173736,
Denver, CO (10.00%); Merrill Lynch Pierce Fenner & Smith Inc., Trade House
Account, P.O. Box 45286, Jacksonville, FL (9.04%); First Trust Corp, P.O. Box
173736, Denver CO (7.04%); First Trust Corp & Co., P.O. Box 173736, Denver, CO
(5.85%); San Diego County Credit Union, 9956 Pacific Heights Blvd., San Diego,
CA (5.56%); and Standard Savings Bank, Attn: Danny Lau, 228 W. Garvey Avenue,
Monterey Park, CA (5.47%); and the following person owned of record or
beneficially 5% or more of the outstanding Class B shares of Intermediate
Maturity Fund: Merrill Lynch Pierce Fenner & Smith Inc., P.O. Box 45286,
Jacksonville, FL (6.72%).

As of June 30, 1995, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A and Class B
shares of beneficial interest of U.S. Government Trust and Intermediate Maturity
Fund, respectively.

PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION

GENERAL

The shareholders of U.S. Government Trust are being asked to approve the
Agreement, a copy which is attached as EXHIBIT A. The Reorganization will
consist of: (a) the transfer of all of U.S. Government Trust's assets to
Intermediate Maturity Fund, in exchange solely for the issuance of Intermediate
Maturity Fund Shares to U.S. Government Trust and the assumption of U.S.
Government Trust's liabilities by Intermediate Maturity Fund, (b)

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<PAGE> 25

the subsequent distribution by U.S. Government Trust, as part of its
liquidation, of the Intermediate Maturity Fund Shares to U.S. Government Trust's
shareholders and (c) the termination of U.S. Government Trust's existence. The
Intermediate Maturity Fund Class A Shares issued upon the consummation of the
Reorganization will have an aggregate net asset value equal to that of U.S.
Government Trust's Class A shares. The Intermediate Maturity Fund Class B
Shares issued upon consummation of the Reorganization will have an aggregate net
asset value equal to that of U.S. Government Trust's Class B shares. As noted
above, the asset values of U.S. Government Trust and Intermediate Maturity Fund
will be determined at the close of business (4:00 p.m. Eastern Time) on the
Closing Date for purposes of the Reorganization. See "Description of Agreement"
below.

Pursuant to the Agreement, U.S. Government Trust will liquidate and
distribute the Intermediate Maturity Fund Shares received, as described above,
pro rata to the shareholders of record of each class determined as of the close
of regular trading on the New York Stock Exchange on the Closing Date. The
result of the transfer of assets will be that Intermediate Maturity Fund will
add to its portfolio the net assets of U.S. Government Trust. Class A
shareholders of U.S. Government Trust will become Class A shareholders of
Intermediate Maturity Fund, and Class B shareholders of U.S. Government Trust
will become Class B shareholders of Intermediate Maturity Fund.

The Agreement and the Reorganization were unanimously approved by the Board
of Trustees of the Trust on behalf of each of U.S. Government Trust and
Intermediate Maturity Fund at a meeting held on May 16, 1995.

The Trust's Board of Trustees has also approved the reorganization of
another series of the Trust, John Hancock Intermediate Government Trust, into
Intermediate Maturity Fund (the "Intermediate Government Reorganization"). On
March 31, 1995, Intermediate Government Trust had net assets of $8,305,602. The
Reorganization of U.S. Government Trust described in this Proxy Statement and
Prospectus is not contingent in any way upon the consummation of the
Intermediate Government Reorganization. The Intermediate Government
Reorganization will not affect the net asset value of the Intermediate Maturity
Fund Shares or the number of such Shares to be received by the shareholders of
U.S. Government Trust.

REASONS FOR THE PROPOSED REORGANIZATION

The Board of Trustees believes that the proposed Reorganization will be
advantageous to the shareholders of U.S. Government Trust in several respects.
The Board of Trustees

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<PAGE> 26

considered the following matters, among others, in approving the Proposal.

First, the Board of Trustees believes that it is not advantageous to
operate and market U.S. Government Trust separately from Intermediate Maturity
Fund, because the investment objectives and policies of the two Funds are
substantially similar.

Second, the Board of Trustees considered the fact that U.S. Government
Trust and Intermediate Maturity Fund are of comparable size. The Board of
Trustees determined that the existence of two comparable funds within the same
fund complex and with substantially similar investment characteristics is likely
to impede the marketing and asset growth of U.S. Government Trust.

Third, the Board of Trustees considered that shareholders of both Funds may
be better served by a fund offering greater diversification. To the extent that
the Funds' assets are combined into a single portfolio and a larger asset base
is created as a result of the Reorganization, greater diversification of
Intermediate Maturity Fund's investment portfolio can be achieved than is
currently possible in either Fund. Greater diversification is expected to be
beneficial to shareholders of both Funds, because it may reduce the negative
effect which the adverse performance of any one security may have on the
performance of the entire portfolio.

Fourth, the Board of Trustees believes that the Intermediate Maturity Fund
Shares received in the Reorganization will provide existing U.S. Government
Trust shareholders with substantially the same investment advantages that they
currently enjoy at a comparable level of risk. The Board of Trustees also
considered the performance history of each Fund.

Fifth, a combined fund offers economies of scale that should have a
positive effect on the expenses currently borne by the shareholders of U.S.
Government Trust and directly and indirectly by Intermediate Maturity Fund. Both
Funds incur substantial overhead costs for accounting, legal, transfer agency
services, insurance, and custodial and administrative services. The Board of
Trustees expects that the Reorganization will result in a decrease in the
expenses currently borne by U.S. Government Trust's shareholders. See
"Summary--The Funds' Expenses."

In determining that the Reorganization is in the best interests of U.S.
Government Trust and the interests of its shareholders, the Board of Trustees
considered the fact that the Adviser will receive certain benefits from the
Reorganization. The Reorganization will result in a consolidated portfolio
management effort, and may result in time savings to the Adviser by reducing

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<PAGE> 27

the number of reports and regulatory filings that its personnel must prepare.

CAPITAL LOSS CARRYOVERS

As of March 31, 1995, U.S. Government Trust had capital loss carryovers, as
determined for federal income tax purposes, in the aggregate amount of
approximately $53,533,889, of which $39,799,667 expires on December 31, 1996,
$2,986,286 expires on December 31, 1997, $5,412,804 expires on December 31,
1998, $653,763 expires on December 31, 1999, $2,152,064 expires on December 31,
2000, and $2,529,305 expires on December 31, 2002. If the Reorganization does
not occur, U.S. Government Trust may use these capital loss carryovers to offset
its net capital gain, which would reduce the amount of net capital gain U.S.
Government Trust would be required to distribute to its shareholders in order to
avoid fund-level income and/or excise taxes on undistributed capital gain.

If the Reorganization is consummated, Intermediate Maturity Fund will
succeed to and take into account U.S. Government Trust's capital loss carryovers
and will be able to use such carryovers, along with any carryovers it may have,
to offset its net capital gain, subject to certain limitations under the Code
that may be applicable because of the Reorganization and certain other changes
in the past or future share ownership of Intermediate Maturity Fund, including
the issuance of shares of Intermediate Maturity Fund in other reorganization
transactions. These limitations could result in the expiration of all or
portions of such carryovers before they are fully used. However, U.S.
Government Trust did not, as of March 31, 1995, have net unrealized gains that,
when realized, its capital loss carryovers could be used to offset, and
accordingly all or substantial portions of U.S. Government Trust's capital loss
carryovers may also expire unused if the Reorganization is not consummated.

UNREIMBURSED DISTRIBUTION AND SHAREHOLDER SERVICE EXPENSES

The Board of Trustees has determined that, if the Reorganization is
consummated, distribution and shareholder service expenses incurred in
connection with shares of U.S. Government Trust, and not reimbursed under U.S.
Government Trust's Rule 12b-1 Plans or through CDSCs, will be reimbursable
expenses under Intermediate Maturity Fund's Rule 12b-1 Plans (the "assumption").
However, the maximum aggregate amounts payable during any fiscal year under
Intermediate Maturity Fund's Rule 12b-1 Plan (0.25% of average daily net assets
attributable to Class A shares and 1.00% of average daily net assets
attributable to Class B shares) will not be affected by the assumption.

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<PAGE> 28

With respect to both Class A and Class B shares of Intermediate Maturity
Fund, the percentage of net assets on a pro forma combined basis that the
unreimbursed expenses represent will increase slightly as a result of the
Reorganization and the assumption. As of March 31, 1995, the unreimbursed
distribution and shareholder service expenses of Intermediate Maturity Fund
attributable to Class A and Class B shares were $3,695 (0.029% of Intermediate
Maturity Fund's net assets attributable to Class A shares) and $253,107 (2.664%
of Intermediate Maturity Fund's net assets attributable to Class B shares),
respectively. As of the same date, the unreimbursed distribution and
shareholder service expenses of U.S. Government Trust attributable to Class A
and Class B shares were $17,845 (0.101% of U.S. Government Trust's net assets
attributable to Class A shares) and $6,629 (3.335% of U.S. Government Trust's
net assets attributable to Class B shares), respectively.

After the Reorganization, on a pro forma combined basis, the unreimbursed
distribution and shareholder service expenses of Intermediate Maturity Fund
attributable to Class A and Class B shares will be $21,540 (0.071% of
Intermediate Maturity Fund's pro forma net assets attributable to Class A
shares) and $259,736 (2.678% of Intermediate Maturity Fund's pro forma net
assets attributable to Class B shares), respectively.

The assumption will have no immediate effect upon the payments made under
Intermediate Maturity Fund's Rule 12b-1 Plans. While John Hancock Funds hopes to
recover unreimbursed distribution and shareholder service expenses over an
extended period of time, Intermediate Maturity Fund is not obligated to assure
that these amounts are recouped by John Hancock Funds. Unreimbursed distribution
and shareholder service expenses do not currently appear as an expense or
liability in the financial statements of either Fund, nor will they appear in
the financial statements of Intermediate Maturity Fund after the Reorganization
until paid or accrued. Unreimbursed expenses do not enter into the calculation
of the Fund's net asset value or the formula for calculating Rule 12b-1
payments. Even in the event of termination or noncontinuance of Intermediate
Maturity Fund's 12b-1 Plans, Intermediate Maturity Fund is not legally
committed, and is not required to commit, to the payment of any unreimbursed
distribution and shareholder service expenses. The staff of the Securities and
Exchange Commission has not approved or disapproved the treatment of the
unreimbursed distribution and shareholder service expenses described in this
Proxy Statement.

BOARDS' EVALUATION AND RECOMMENDATION

On the basis of the factors described above and other factors, the Board of
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the

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<PAGE> 29

Investment Company Act) of the Funds, determined that the Reorganization is in
the best interests of U.S. Government Trust and that the interests of U.S.
Government Trust's shareholders will not be materially diluted as a result of
the Reorganization. On the same basis, the Board of Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Funds, determined that the
Reorganization is in the best interests of Intermediate Maturity Fund and the
interests of Intermediate Maturity Fund's shareholders will not be materially
diluted as a result of the Reorganization.

THE TRUSTEES OF JOHN HANCOCK U.S. GOVERNMENT TRUST
RECOMMEND THAT THE SHAREHOLDERS OF JOHN HANCOCK
U.S. GOVERNMENT TRUST VOTE FOR THE PROPOSAL
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION

DESCRIPTION OF AGREEMENT

The following description of the Agreement is a summary, does not purport
to be complete, and is subject in all respects to the provisions of the
Agreement, and is qualified in its entirety by reference to the Agreement. A
copy of the Agreement is attached to this Proxy Statement and Prospectus as
EXHIBIT A and should be read in its entirety. Paragraph references are to
appropriate provisions of the Agreement.

Method of Carrying Out Reorganization. If U.S. Government Trust
shareholders approve the Agreement, the Reorganization will be consummated
promptly after the various conditions to the obligations of each of the parties
are satisfied (see Agreement, paragraphs 6 through 8). The Reorganization will
be completed on the Closing Date (as defined above).

On the Closing Date, U.S. Government Trust will transfer all of its assets
to Intermediate Maturity Fund in exchange for Intermediate Maturity Fund Shares
with an aggregate net asset value equal to the value of the assets delivered,
less the liabilities of U.S. Government Trust assumed, as of the close of
business on the Closing Date (see Agreement, paragraphs 1 and 2).

The value of U.S. Government Trust's assets and Intermediate Maturity
Fund's net asset values per Class A share and per Class B share will be
determined according to the valuation procedures set forth in the Trust's
Declaration of Trust and By-laws and the Intermediate Maturity Fund Prospectus,
respectively (see "Share Price" in the Intermediate Maturity Fund Prospectus).
No initial sales charge or CDSC will be imposed upon delivery of the
Intermediate Maturity Fund Shares in exchange for the assets of U.S. Government
Trust.

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<PAGE> 30

Surrender of Share Certificates. U.S. Government Trust shareholders whose
Class A or Class B shares are represented by one or more share certificates
should, prior to the Closing Date, either surrender their certificates to U.S.
Government Trust or deliver to U.S. Government Trust an affidavit with respect
to lost certificates, in the form and accompanied by the surety bonds that U.S.
Government Trust may require (collectively, an "Affidavit"). On the Closing
Date, all certificates which have not been surrendered will be deemed to be
cancelled, will no longer evidence ownership of U.S. Government Trust's shares
and will evidence ownership of Intermediate Maturity Fund Shares. Shareholders
may not redeem or transfer Intermediate Maturity Fund Shares received in the
Reorganization until they have surrendered their U.S. Government Trust share
certificates or delivered an Affidavit relating to them. Intermediate Maturity
Fund will not issue share certificates in the Reorganization.

Conditions Precedent to Closing. The obligation of U.S. Government Trust
to consummate the Reorganization is subject to the satisfaction of certain
conditions precedent, including the Trust's performance of all acts and
undertakings required under the Agreement and the receipt of all consents,
orders and permits necessary to consummate the Reorganization (see Agreement,
paragraphs 6 through 8).

The obligation of Intermediate Maturity Fund to consummate the
Reorganization is subject to the satisfaction of certain conditions precedent,
including the Trust's performance of all acts and undertakings to be performed
under the Agreement, the receipt of certain documents and financial statements
from the Trust, on behalf of U.S. Government Trust, and the receipt of all
consents, orders and permits necessary to consummate the Reorganization (see
Agreement, paragraphs 6 through 8).

The obligations of both parties are subject to the receipt of approval and
authorization of the Agreement by the vote of not less than a majority of the
outstanding shares of beneficial interest of U.S. Government Trust entitled to
vote (as described in the section captioned "Voting Rights and Required Vote"),
the receipt of a favorable opinion of Hale and Dorr as to the federal income tax
consequences of the Reorganization and the approval of shareholders of
Adjustable Government Trust of the proposals to change the structure of the
Fund, its investment objective and an investment restriction (see Agreement,
paragraph 8).

Termination of Agreement. The Agreement may be terminated, whether or not
approval of U.S. Government Trust's shareholders has been obtained, by mutual
agreement of the parties. In addition, either party may terminate its
obligations under the Agreement at or prior to the Closing Date, because of a
material breach by the other party of any representations, warranties or

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<PAGE> 31

agreements contained in the Agreement, or if a condition precedent in the
Agreement has not been met.

Expenses of the Reorganization. Intermediate Maturity Fund and U.S.
Government Trust will each be responsible for its own expenses incurred in
connection with entering into and carrying out the provisions of the Agreement,
whether or not the Reorganization is consummated.

Tax Considerations. The consummation of the Reorganization is subject to
the receipt of a favorable opinion of Hale and Dorr, counsel to the Funds,
satisfactory to the Trust on behalf of each of U.S. Government Trust and
Intermediate Maturity Fund and described above under the caption,
"Summary--Reorganization--Tax Considerations."

VOTING RIGHTS AND REQUIRED VOTE

Each U.S. Government Trust share is entitled to one vote. Class A and Class
B shareholders of U.S. Government Trust vote together with respect to the
Proposal. Approval of the Proposal requires the affirmative vote of a majority
of the shares of U.S. Government Trust represented in person or by proxy and
entitled to vote at a meeting of shareholders at which a quorum is present.

Shares of beneficial interest of U.S. Government Trust represented in
person or by proxy, including shares which abstain or do not vote with respect
to the Proposal, will be counted for purposes of determining whether a quorum is
present at the Meeting. Accordingly, an abstention from voting has the same
effect as a vote against the Proposal. However, if a broker or nominee holding
shares in "street name" indicates on the proxy card that it does not have
discretionary authority to vote on the Proposal, those shares will not be
considered as present and entitled to vote with respect to the Proposal.
Accordingly, a "broker non-vote" has no effect on the voting in determining
whether the Proposal has been adopted, provided that the holders of more than
50% of the outstanding shares (excluding the "broker non-votes") are present or
represented.

If the requisite approval of shareholders is not obtained, U.S. Government
Trust will continue to engage in business as a registered open-end, management
investment company and the Board of Trustees will consider what further action
may be appropriate.

CAPITALIZATION

The following table sets forth the capitalization of each Fund as of March
31, 1995, and the pro forma combined capitalization of both Funds as if the
Reorganization had occurred on that date. The table reflects pro forma exchange
ratios of

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<PAGE> 32

approximately 0.78479 Class A Intermediate Maturity Fund Shares being issued for
each Class A share of U.S. Government Trust, and approximately 0.78522 Class B
Intermediate Maturity Fund Shares being issued for each Class B share of U.S.
Government Trust. If the Reorganization is consummated, the actual exchange
ratios on the Closing Date may vary from those indicated due to (i) changes in
the market value of the portfolio securities of both Intermediate Maturity Fund
and U.S. Government Trust between March 31, 1995 and the Closing Date; (ii)
changes in the amount of undistributed net investment income and net realized
capital gains of Intermediate Maturity Fund and U.S. Government Trust during
that period resulting from income and distributions; and (iii) changes in the
accrued liabilities of Intermediate Maturity Fund and U.S. Government Trust
during the same period.

<TABLE>
<CAPTION>
MARCH 31, 1995

U.S. INTERMEDIATE PRO FORMA
GOVERNMENT TRUST MATURITY FUND COMBINED
---------------- ------------- ---------
<S> <C> <C> <C>
Net Assets................ $17,780,907 $22,444,093(1) $40,225,000(3)

Net Asset Value Per Share:

Class A................. $7.68 $9.78(1) $9.78
Class B................. $7.68 $9.78(1) $9.78

Shares Outstanding

Class A................. 2,290,672(2) 1,323,395 3,121,102(3)
Class B................. 25,882(2) 971,446 991,769(3)
</TABLE>

___________________

(1) Adjusted to reflect the proposed abolition of the master/feeder structure;
without such adjustment, the net assets would be $22,455,416 and the net
asset value of each Class A and Class B share would be $9.79, respectively.

(2) If the Reorganization had taken place on March 31, 1995, U.S. Government
Trust would have received 1,797,707 Class A shares and 20,323 Class B
shares of Intermediate Maturity Fund, which would have been available for
distribution to shareholders of the applicable class of U.S. Government
Trust. No assurance can be given as to the number of Class A Shares or
Class B shares of Intermediate Maturity Fund that will be received by U.S.
Government Trust on the Closing Date. The foregoing is merely an example
of what U.S. Government Trust would have received and distributed had the
Reorganization been consummated on March 31, 1995, and should

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<PAGE> 33

not be relied upon to reflect the amount that will actually be received on
the Closing Date.

(3) If both the Reorganization and the Intermediate Government Reorganization
had taken place on March 31, 1995, Intermediate Maturity Fund's pro forma
combined net assets would be $48,530,602 and the number of Class A and
Class B Intermediate Maturity Fund Shares outstanding would have been
3,940,150 and 1,021,937, respectively. The Intermediate Government
Reorganization will not affect the net asset value of the Class A or Class
B Intermediate Maturity Fund Shares to be issued in the Reorganization.

COMPARATIVE PERFORMANCE INFORMATION

TOTAL RETURN

The average annual total return at the public offering price on U.S.
Government Trust's Class A shares for the one-year and five-year periods ended
March 31, 1995 was (1.27)% and 6.63%, respectively. The average annual total
return at the public offering price on U.S. Government Trust's Class A shares
for the period from December 31, 1985 (commencement of operations) through March
31, 1995 was 6.38%. The average annual total return on U.S. Government Trust's
Class B shares for the period from September 30, 1994 (commencement of
operations) through March 31, 1995 was (0.72)%. Total return on Class B shares
reflects the applicable CDSC.

The average annual total return at the public offering price on
Intermediate Maturity Fund's Class A shares for the one-year period ended March
31, 1995 was 0.33%, giving effect to the expense limitations then in effect; and
(0.22)% without giving effect to such expense limitations. The average annual
total return at the public offering price on Intermediate Maturity Fund's Class
A shares for the period from December 31, 1991 (commencement of operations)
through March 31, 1995 was 3.35%, giving effect to the expense limitations then
in effect; and 2.85% without giving effect to these expense limitations. The
average annual total return on Intermediate Maturity Fund's Class B shares for
the one-year period ended March 31, 1995 was 0.33%, giving effect to the expense
limitations then in effect; and (0.22)% without giving effect to such expense
limitations. The average annual total return on Intermediate Maturity Fund's
Class B shares for the period from December 31, 1991 (commencement of
operations) through March 31, 1995 was 3.24%, giving effect to the expense
limitations then in effect; and 2.74% without giving effect to these expense
limitations. Total return on Class B shares reflects the applicable CDSC.

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<PAGE> 34

The average annual total return of each class of the Funds is determined by
multiplying a hypothetical initial investment of $1,000 in a class by the
average annual compound rate of return (including capital
appreciation/depreciation, and dividends and distributions paid and reinvested)
attributable to that class for the stated period and annualizing the result.

The table below indicates the total return (capital changes plus
reinvestment of all dividends and distributions) on a hypothetical investment of
$1,000 in each class of each Fund covering the indicated periods ending March
31, 1995. The data below represent historical performance which should not be
considered indicative of future performance of either Fund. Each Fund's
performance and net asset value will fluctuate so that their shares, when
redeemed, may be worth more or less than their original cost.

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<PAGE> 35

VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK U.S. GOVERNMENT TRUST
(Unaudited)
<TABLE>
<CAPTION>
Value of
Investment on
March 31, 1995 Total Return Total Return
Investment Amount of Including Including Sales Charge Excluding Sales Charge
Investment Period Date Investment Sales Charge Cumulative Annualized Cumulative Annualized
- ----------------- --------- ---------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
From inception
(December 31,1985)
to March 31, 1995 12/31/85 $1,000 $1,772 77.20% 6.38% 86.10% 6.94%

5 years ended
March 31, 1995 3/31/90 $1,000 $1,379 37.9% 6.63% 38.40% 7.68%

1 year ended
March 31, 1995 3/31/94 $1,000 $987 (1.27)% (1.27)% 3.68% 3.68%

CLASS B SHARES:
From inception
(September 4, 1994)
to March 31, 1995 9/4/94 $1,000 $993 (0.72)% (0.72)% 4.28% 4.28%
</TABLE>

VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT TRUST
(As Proposed To Be Renamed, John Hancock Intermediate Maturity Government Fund)
(Unaudited)
<TABLE>
<CAPTION>
Value of
Investment on
March 31, 1995 Total Return Total Return
Investment Amount of Including Including Sales Charge Excluding Sales Charge
Investment Period Date Investment Sales Charge Cumulative Annualized Cumulative Annualized
- ----------------- --------- ---------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
From inception
(December 31,1991)
to March 31, 1995 12/31/91 $1,000 $1,113 11.30% 3.35% 15.60% 4.48%

1 year ended
March 31, 1995 3/31/94 $1,000 $1,003 0.33% 0.33% 3.98% 3.98%

Class B Shares:
From inception
(December 31, 1991)
to March 31, 1995 12/31/91 $1,000 $1,109 10.90% 3.24% 12.90% 3.81%

1 year ended
March 31, 1995 3/31/94 $1,000 $1,003 0.33% 0.33% 3.30% 3.33%
</TABLE>

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<PAGE> 36

BUSINESS OF U.S. GOVERNMENT TRUST

GENERAL

For a discussion of the organization and operation of U.S. Government
Trust, see "Investment Objective and Policies" and "Organization and Management
of the Fund" in the U.S. Government Trust Prospectus.

INVESTMENT OBJECTIVE AND POLICIES

For a discussion of U.S. Government Trust's investment objective and
policies, see "Investment Objective and Policies" in the U.S. Government Trust
Prospectus.

PORTFOLIO MANAGEMENT

All investment decisions for U.S. Government Trust are made by a government
fixed-income committee consisting of investment professionals employed by the
Adviser, and no single person is primarily responsible for making
recommendations to the committee.

TRUSTEES

For a discussion of the responsibilities of the Board of Trustees, see
"Organization and Management of the Fund" in the U.S. Government Trust
Prospectus.

INVESTMENT ADVISER AND DISTRIBUTOR

For a discussion regarding U.S. Government Trust's investment adviser and
distributor, see "Organization and Management of the Fund," "How to Buy Shares"
and "Share Price" in the U.S. Government Trust Prospectus.

EXPENSES

For a discussion of U.S. Government Trust's expenses, see "Expense
Information" and "The Fund's Expenses" in the U.S. Government Trust Prospectus.

CUSTODIAN AND TRANSFER AGENT

U.S. Government Trust's custodian is Investors Bank & Trust Company. U.S.
Government Trust's transfer agent is John Hancock Investor Services Corporation.

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<PAGE> 37

U.S. GOVERNMENT TRUST SHARES

For a discussion of U.S. Government Trust's shares of beneficial interest,
see "Organization and Management of the Fund" in the U.S. Government Trust
Prospectus.

PURCHASE OF U.S. GOVERNMENT TRUST SHARES

For a discussion of how shares of U.S. Government Trust may be purchased or
exchanged, see "How to Buy Shares," "Alternative Purchase Arrangements" and
"Additional Services and Programs" in the U.S. Government Trust Prospectus. In
anticipation of the Reorganization, U.S. Government Trust has stopped offering
its shares to the public other than shares purchased through a monthly automatic
accumulation plan, the reinvestment of dividends and distributions.

REDEMPTION OF U.S. GOVERNMENT TRUST SHARES

For a discussion of how Class A and Class B shares of U.S. Government Trust
may be redeemed (other than in the Reorganization), see "How to Redeem Shares"
in the U.S. Government Trust Prospectus. U.S. Government Trust shareholders
whose shares are represented by share certificates will be required to surrender
their certificates for cancellation or deliver an affidavit of loss accompanied
by an adequate surety bond to Investor Services in order to redeem Intermediate
Maturity Fund Shares received in the Reorganization.

DIVIDENDS, DISTRIBUTIONS AND TAXES

For a discussion of U.S. Government Trust's policy with respect to
dividends, distributions and taxes, see "Distributions and Taxes" in the U.S.
Government Trust Prospectus.

BUSINESS OF INTERMEDIATE MATURITY FUND

GENERAL

For a discussion of the organization and current operation of Intermediate
Maturity Fund, see "Investment Objective and Policies" and "Organization and
Management of the Fund" in the Intermediate Maturity Fund Preliminary
Prospectus.

INVESTMENT OBJECTIVE AND POLICIES

For discussion of Intermediate Maturity Fund's investment objective and
policies, see "Investment Objective and Policies" in the Intermediate Maturity
Fund Preliminary Prospectus.

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<PAGE> 38

PORTFOLIO MANAGEMENT

All investment decisions for Intermediate Maturity Fund are made by a
government fixed-income committee consisting of investment professionals
employed by the Adviser, and no single person is primarily responsible for
making recommendations to the committee.

TRUSTEES

For a discussion of the responsibilities of Intermediate Maturity Fund's
Board of Trustees, see "Organization and Management of the Fund" in the
Intermediate Maturity Fund Preliminary Prospectus.

INVESTMENT ADVISER AND DISTRIBUTOR

For a discussion regarding Intermediate Maturity Fund's investment adviser
and distributor, see "Organization and Management of the Fund," "How to Buy
Shares" and "Share Price" in the Intermediate Maturity Fund Preliminary
Prospectus.

EXPENSES

For a discussion of Intermediate Maturity Fund's expenses, see "Expense
Information" and "The Fund's Expenses" in the Intermediate Maturity Fund
Preliminary Prospectus.

CUSTODIAN AND TRANSFER AGENT

Intermediate Maturity Fund's custodian is Investors Bank & Trust Company.
Intermediate Maturity Fund's transfer agent is John Hancock Investor Services
Corporation.

INTERMEDIATE MATURITY FUND SHARES

For a discussion of the Intermediate Maturity Fund Shares, see
"Organization and Management of the Fund" in the Intermediate Maturity Fund
Preliminary Prospectus.

PURCHASE OF INTERMEDIATE MATURITY FUND SHARES

For a discussion of how Class A and Class B shares of Intermediate Maturity
Fund may be purchased or exchanged, see "How to Buy Shares," "Alternative
Purchase Arrangements" and "Additional Services and Programs" in the
Intermediate Maturity Fund Preliminary Prospectus.

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<PAGE> 39

REDEMPTION OF INTERMEDIATE MATURITY FUND SHARES

For a discussion of how Class A and Class B shares of Intermediate Maturity
Fund may be redeemed, see "How to Redeem Shares" in the Intermediate Maturity
Fund Preliminary Prospectus. Former shareholders of U.S. Government Trust whose
shares are represented by share certificates will be required to surrender their
certificates for cancellation or deliver an affidavit of loss accompanied by an
adequate surety bond to Investor Services in order to redeem Intermediate
Maturity Fund Shares received in the Reorganization.

DIVIDENDS, DISTRIBUTIONS AND TAXES

For a discussion of Intermediate Maturity Fund's policy with respect to
dividends, distributions and taxes, see "Dividends and Taxes" in the
Intermediate Maturity Fund Preliminary Prospectus.

EXPERTS

The respective financial statements and the financial highlights of
Intermediate Maturity Fund and U.S. Government Trust as of March 31, 1995 and
for the year then ended, incorporated by reference into this Proxy Statement and
Prospectus, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing in the Statement of Additional
Information, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act, and in accordance therewith
files reports, proxy statements and other information with the SEC. These
reports, proxy statements and other information filed by the Trust, on behalf of
each Fund, can be inspected and copied (at prescribed rates) at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C., and
at the following regional offices: Chicago (500 West Madison Street, Suite 1400,
Chicago, Illinois); and New York (7 World Trade Center, Suite 1300, New York,
New York). Copies of such material can also be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.

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<PAGE> 40
EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
14th day of July, 1995, by and between John Hancock Adjustable U.S. Government
Trust (as proposed to be renamed, John Hancock Intermediate Maturity Government
Fund) (the "Acquiring Fund") and John Hancock U.S. Government Trust (the
"Acquired Fund"), each a series of John Hancock Bond Fund (the "Trust"), a
Massachusetts business trust with its principal place of business at 101
Huntington Avenue, Boston, Massachusetts 02199. The Acquiring Fund and the
Acquired Fund are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."

This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for the issuance of Class A and Class B shares of beneficial
interest of the Acquiring Fund (the "Acquiring Fund Shares") to the Acquired
Fund and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund, followed by the distribution by the Acquired Fund, on or promptly
after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to
the shareholders of the Acquired Fund in liquidation and termination of the
Acquired Fund as provided herein, all upon the terms and conditions set forth in
this Agreement.

In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:

1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES; LIQUIDATION OF THE
ACQUIRED FUND

1.1 The Acquired Fund will transfer all of its assets (consisting, without
limitation, of portfolio securities and instruments, dividends and interest
receivables, cash and other assets), as set forth in the statement of assets and
liabilities referred to in Paragraph 7.2 hereof (the "Statement of Assets and
Liabilities"), to the Acquiring Fund free and clear of all liens and
encumbrances, except as otherwise provided herein, in exchange for (i) the
assumption by the Acquiring Fund of the known and unknown liabilities of the
Acquired Fund, including the liabilities set forth in the Statement of Assets
and Liabilities (the "Acquired Fund Liabilities"), which shall be assigned and
transferred to the Acquiring Fund by the Acquired Fund and assumed by the
Acquiring Fund, and (ii) delivery by the Acquiring Fund to

A-1
<PAGE> 41

the Acquired Fund, for distribution pro rata by the Acquired Fund to its Class A
and Class B shareholders in proportion to their respective ownership of Class A
and/or Class B shares of beneficial interest of the Acquired Fund, as of the
close of business on the closing date (the "Closing Date"), of a number of the
Acquiring Fund Shares having an aggregate net asset value, in the case of each
class of Acquiring Fund Shares, equal to the value of the assets, less such
liabilities (herein referred to as the "net value of the assets"), attributable
to the corresponding class of the Acquired Fund so transferred, assumed,
assigned and delivered, all determined as provided in Paragraph 2.1 hereof and
as of a date and time as specified therein. Such transactions shall take place
at the closing provided for in Paragraph 3.1 hereof (the "Closing"). All
computations shall be provided by Investors Bank & Trust Company (the
"Custodian"), as custodian and pricing agent for the Acquiring Fund and the
Acquired Fund, and shall be recomputed by Ernst & Young LLP, the independent
accountants of the Acquiring Fund. The determination of the Custodian, as
recomputed by said accountants, shall, absent manifest error, be conclusive and
binding on all parties in interest.

1.2 The Acquired Fund has provided the Acquiring Fund with a list of the
current securities holdings of the Acquired Fund as of the date of execution of
this Agreement. The Acquired Fund reserves the right to sell any of these
securities (except to the extent sales may be limited by representations made in
connection with issuance of the tax opinion provided for in paragraph 8.6
hereof) but will not, without the prior approval of the Acquiring Fund, acquire
any additional securities other than securities of the type in which the
Acquiring Fund is permitted to invest.

1.3 The Acquiring Fund and the Acquired Fund shall each bear its own
expenses in connection with the transactions contemplated by this Agreement.

1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund will liquidate and distribute pro
rata to shareholders of record of the applicable class (the "Acquired Fund
shareholders"), determined as of the close of regular trading on the New York
Stock Exchange on the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of the Acquiring
Fund, to open accounts on the share records of the Acquiring Fund in the names
of the Acquired Fund shareholders and representing the respective pro rata
number and class of Acquiring Fund Shares due such shareholders. Acquired Fund
shareholders who own Class A shares of the Acquired

A-2

<PAGE> 42

Fund will receive Class A Acquiring Fund Shares, and Acquired Fund shareholders
who own Class B shares of the Acquired Fund will receive Class B Acquiring Fund
Shares. The Acquiring Fund shall not issue certificates representing Acquiring
Fund Shares in connection with such exchange.

1.5 The Acquired Fund shareholders holding certificates representing their
ownership of shares of beneficial interest of the Acquired Fund shall surrender
such certificates or deliver an affidavit with respect to lost certificates in
such form and accompanied by such surety bonds as the Acquired Fund may require
(collectively, an "Affidavit"), to John Hancock Investor Services Corporation
prior to the Closing Date. Any Acquired Fund share certificate which remains
outstanding on the Closing Date shall be deemed to be cancelled, shall no longer
evidence ownership of shares of beneficial interest of the Acquired Fund and
shall evidence ownership of Acquiring Fund Shares. Unless and until any such
certificate shall be so surrendered or an Affidavit relating thereto shall be
delivered, dividends and other distributions payable by the Acquiring Fund
subsequent to the Liquidation Date with respect to Acquiring Fund Shares shall
be paid to the holder of such certificate(s), but such shareholders may not
redeem or transfer Acquiring Fund Shares received in the Reorganization. The
Acquiring Fund will not issue share certificates in the Reorganization.

1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.

1.7 The existence of the Acquired Fund shall be terminated as promptly as
practicable following the Liquidation Date.

1.8 Any reporting responsibility of the Trust with respect to the Acquired
Fund, including, but not limited to, the responsibility for filing of regulatory
reports, tax returns, or other documents with the Securities and Exchange
Commission (the "Commission"), any state securities commissions, and any
federal, state or local tax authorities or any other relevant regulatory
authority, is and shall remain the responsibility of the Trust.

2. VALUATION

2.1 The net asset values of the Class A and Class B Acquiring Fund Shares
and the net values of the assets and liabilities of the Acquired Fund
attributable to its Class A and Class B shares to be transferred or assumed
shall, in each case, be determined as of the close of business (4:00 p.m. Boston
time)

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on the Closing Date. The net asset values of the Class A and Class B Acquiring
Fund Shares shall be computed by the Custodian in the manner set forth in the
Trust's Declaration of Trust, as amended, or By-laws and the Acquiring Fund's
then-current prospectus and statement of additional information and shall be
computed in each case to not fewer than four decimal places. The net values of
the assets of the Acquired Fund attributable to its Class A and Class B shares
to be transferred shall be computed by the Custodian by calculating the value of
the assets of each class transferred by the Acquired Fund and by subtracting
therefrom the amount of the liabilities of each respective class assigned and
transferred to and assumed by the Acquiring Fund on the Closing Date, said
assets and liabilities to be valued in the manner set forth in the Acquired
Fund's then-current prospectus and statement of additional information and shall
be computed in each case to not fewer than four decimal places.

2.2 The number of shares of each class of Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the Acquired Fund's
assets shall be determined by dividing the value of the Acquired Fund's assets
attributable to a class, less the liabilities attributable to that class assumed
by the Acquiring Fund, by the Acquiring Fund's net asset value per share of the
same class, all as determined in accordance with Paragraph 2.1 hereof.

2.3 All computations of value shall be made by the Custodian in accordance
with its regular practice as pricing agent for the Funds.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be September 22, 1995 or such other date on or
before December 31, 1995, as the parties may agree. The Closing shall be held
as of 5:00 p.m. at the offices of the Trust, 101 Huntington Avenue, Boston,
Massachusetts 02199, or at such other time and/or place as the parties may
agree.

3.2 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Acquired Fund shall be presented by
the Acquired Fund to the Custodian for examination no later than five business
days preceding the Closing Date. Portfolio securities which are not held in
book-entry form shall be delivered by the Acquired Fund to the Custodian for the
account of the Acquiring Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary

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federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Acquired Fund shall be delivered to the
Acquiring Fund by the Custodian by recording the transfer of beneficial
ownership thereof on its records. The cash delivered shall be in the form of
currency or by the Custodian crediting the Acquiring Fund's account maintained
with the Custodian with immediately available funds.

3.3 In the event that on the Closing Date (a) the New York Stock Exchange
shall be closed to trading or trading thereon shall be restricted or (b) trading
or the reporting of trading on said Exchange or elsewhere shall be disrupted so
that accurate appraisal of the value of the net assets of the Acquiring Fund or
the Acquired Fund is impracticable, the Closing Date shall be postponed until
the first business day after the day when trading shall have been fully resumed
and reporting shall have been restored; provided that if trading shall not be
fully resumed and reporting restored on or before December 31, 1995, this
Agreement may be terminated by the Acquiring Fund or by the Acquired Fund upon
the giving of written notice to the other party.

3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status of the Acquired Fund shareholders and the
number of outstanding shares of each class of the Acquired Fund owned by each
such shareholder, all as of the close of business on the Closing Date, certified
by its Treasurer, Secretary or other authorized officer (the "Shareholder
List"). The Acquiring Fund shall issue and deliver to the Acquired Fund a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date, or provide evidence satisfactory to the Acquired Fund that such Acquiring
Fund Shares have been credited to the Acquired Fund's account on the books of
the Acquiring Fund. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.

4. REPRESENTATIONS AND WARRANTIES

4.1 The Trust on behalf of the Acquired Fund represents, warrants and
covenants to the Acquiring Fund as follows:

(a) The Trust is a voluntary association with transferable shares
of the type commonly referred to as a business trust, duly organized and
validly existing under the laws of The Commonwealth of Massachusetts and
has the power

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to own all of its properties and assets and, subject to approval by the
shareholders of the Acquired Fund, to carry out the transactions
contemplated by this Agreement. Neither the Trust nor the Acquired Fund is
required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would not subject it to any
material liability or disability. The Trust has all necessary federal,
state and local authorizations to own all of its properties and assets and
to carry on its business as now being conducted;

(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), is in full force and effect. The Acquired Fund is a
diversified series of the Trust;

(c) The Trust and the Acquired Fund are not, and the execution,
delivery and performance of their obligations under this Agreement will not
result, in violation of any provision of the Trust's Declaration of Trust,
as amended, or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Trust or the Acquired
Fund is a party or by which it is bound;

(d) Except as otherwise disclosed in writing and accepted by the
Acquiring Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Trust or the Acquired Fund or any of the
Acquired Fund's properties or assets. The Trust knows of no facts which
might form the basis for the institution of such proceedings, and neither
the Trust nor the Acquired Fund is a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects the Acquired Fund's business or its
ability to consummate the transactions herein contemplated;

(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement or agreements for the purchase of securities
entered into in the ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated without
liability to the Acquired Fund at or prior to the Closing Date;

(f) The statement of assets and liabilities, including the schedule
of investments, of the Acquired Fund as of March 31, 1995 and the related
statement of operations for the year then ended, and the statement of
changes in net

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assets for the years ended March 31, 1995 and 1994 (audited by Ernst &
Young LLP) (copies of which have been furnished to the Acquiring Fund)
present fairly in all material respects the financial condition of the
Acquired Fund as of March 31, 1995 and the results of its operations and
changes in net assets for the respective stated periods in accordance with
generally accepted accounting principles consistently applied, and there
were no actual or contingent liabilities of the Acquired Fund as of the
respective dates thereof not disclosed therein;

(g) Since March 31, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund;

(h) At the date hereof and by the Closing Date, all federal, state
and other tax returns and reports, including information returns and payee
statements, of the Acquired Fund required by law to have been filed or
furnished by such dates shall have been filed or furnished, and all
federal, state and other taxes, interest and penalties shall have been paid
so far as due, or provision shall have been made for the payment thereof,
and to the best of the Acquired Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to
such returns or reports;

(i) The Acquired Fund has elected to be treated as a regulated
investment company for federal income tax purposes, has qualified as such
for each taxable year of its operation and will qualify as such as of the
Closing Date with respect to its final taxable year ending on the Closing
Date;

(j) The authorized capital of the Trust consists of unlimited number
of shares of beneficial interest, par value $.01 per share, divided into
six series, including the Acquiring Fund and the Acquired Fund. The shares
of the Acquired Fund are divided into two classes, Class A and Class B. All
issued and outstanding shares of beneficial interest of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Trust. All of the issued
and outstanding shares of beneficial interest of the Acquired Fund will, at
the time of Closing, be held by the persons and in the amounts and classes
set forth in the Shareholder List

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submitted to the Acquiring Fund pursuant to Paragraph 3.4 hereof. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of beneficial
interest, nor is there outstanding any security convertible into any of its
shares of beneficial interest;

(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the assets to be transferred to the Acquiring Fund
pursuant to Paragraph 1.1 hereof, and full right, power and authority to
sell, assign, transfer and deliver such assets hereunder, and upon delivery
and payment for such assets, the Trust on behalf of the Acquiring Fund will
acquire good and marketable title thereto subject to no restrictions on the
full transfer thereof, including such restrictions as might arise under the
Securities Act of 1933, as amended (the "1933 Act");

(l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Trust on
behalf of the Acquired Fund, and this Agreement constitutes a valid and
binding obligation of the Trust and the Acquired Fund enforceable in
accordance with its terms, subject to the approval of the Acquired Fund's
shareholders;

(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby shall be accurate and complete
and shall comply in all material respects with federal securities and other
laws and regulations thereunder applicable thereto;

(n) The proxy statement of the Acquired Fund (the "Proxy Statement")
to be included in the Registration Statement referred to in Paragraph 5.7
hereof (other than written information furnished by the Acquiring Fund for
inclusion therein, as covered by the Acquiring Fund's warranty in Paragraph
4.2(m) hereof), on the effective date of the Registration Statement, on the
date of the meeting of the Acquired Fund shareholders and on the Closing
Date, shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which such
statements were made, not misleading;

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<PAGE> 48

(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transactions contemplated by this Agreement;

(p) All of the issued and outstanding shares of beneficial interest
of the Acquired Fund have been offered for sale and sold in conformity with
all applicable federal and state securities laws;

(q) The prospectus of the Acquired Fund, dated July 17, 1995 (the
"Acquired Fund Prospectus"), previously furnished to the Acquiring Fund,
does not contain any untrue statements of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading.

4.2 The Trust on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:

(a) The Trust is a voluntary association with transferable shares of
the type commonly referred to as a business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and to carry out the
Agreement. Neither the Trust nor the Acquiring Fund is required to qualify
to do business in any jurisdiction in which it is not so qualified or where
failure to qualify would not subject it to any material liability or
disability. The Trust has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;

(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect. The
Acquiring Fund is a diversified series of the Trust;

(c) The preliminary prospectus (the "Acquiring Fund Prospectus") and
preliminary statement of additional information for Class A and Class B
shares of the Acquiring Fund, each dated July 19, 1995 and subject to
completion, and any amendments or supplements thereto on or prior to the
Closing Date, and the Registration Statement on Form N-14 to be filed in
connection with this Agreement (the "Registration Statement") (other than
written information furnished by the Acquired Fund for inclusion therein,
as covered by the Acquired Fund's warranty in Paragraph 4.1(m) hereof) will

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<PAGE> 49

conform in all material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Commission
thereunder, the Acquiring Fund Prospectus does not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and the
Registration Statement will not include any untrue statement of material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;

(d) At the Closing Date, the Trust on behalf of the Acquiring Fund
will have good and marketable title to the assets of the Acquiring Fund;

(e) The Trust and the Acquiring Fund are not, and the execution,
delivery and performance of their obligations under this Agreement will not
result, in violation of any provisions of the Trust's Declaration of Trust,
as amended, or By-laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Trust or the Acquiring
Fund is a party or by which the Trust or the Acquiring Fund is bound;

(f) Except as otherwise disclosed in writing and accepted by the
Acquired Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Trust or the Acquiring Fund or any of the
Acquiring Fund's properties or assets. The Trust knows of no facts which
might form the basis for the institution of such proceedings, and neither
the Trust nor the Acquiring Fund is a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated;

(g) The statement of assets and liabilities of the Acquiring Fund as
of March 31, 1995 and the related statement of operations and the schedule
of investments (copies of which have been furnished to the Acquired Fund),
present fairly in all material respects the financial position of the
Acquiring Fund as of March 31, 1995 and the results of its operations for
the period then ended in accordance with generally accepted accounting
principles consistently applied and there are no known actual or contingent
liabilities of the Acquiring Fund as of the respective dates thereof not
disclosed herein;

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<PAGE> 50

(h) Since March 31, 1995, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Trust on behalf of the Acquiring Fund of
indebtedness maturing more than one year from the date such indebtedness
was incurred;

(i) The Acquiring Fund has elected to be treated as a regulated
investment company for federal income tax purposes, has qualified as such
for each taxable year of its operation and will qualify as such as of the
Closing Date;

(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest, par value $.01 per share, divided
into six series, including the Acquiring Fund and the Acquired Fund. The
shares of the Acquiring Fund are divided into two classes, Class A and
Class B. All issued and outstanding shares of beneficial interest of the
Acquiring Fund are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and nonassessable by the Trust. The
Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of beneficial
interest, nor is there outstanding any security convertible into any of its
shares of beneficial interest;

(k) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Trust on
behalf of the Acquiring Fund, and this Agreement constitutes a valid and
binding obligation of the Acquiring Fund enforceable in accordance with its
terms;

(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so issued and
delivered, will be duly and validly issued shares of beneficial interest of
the Acquiring Fund and will be fully paid and nonassessable by the Trust;

(m) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
applicable thereto; and

(n) No consent, approval, authorization or order of any court or
governmental authority is required for the

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consummation by the Acquiring Fund of the transactions contemplated by the
Agreement, except for the registration of the Acquiring Fund Shares under
the 1933 Act, the 1940 Act and under state securities laws.

5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

5.1 Except as expressly contemplated herein to the contrary, the Trust, on
behalf of both the Acquiring Fund and the Acquired Fund, will operate its
respective businesses in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include customary dividends and distributions and any other distributions
necessary or desirable to avoid federal income or excise taxes.

5.2 The Trust will call a meeting of the Acquired Fund shareholders to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.

5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.

5.4 The Trust on behalf of the Acquired Fund will provide such information
within its possession or reasonably obtainable as the Trust on behalf of the
Acquiring Fund requests concerning the beneficial ownership of the Acquired
Fund's shares of beneficial interest.

5.5 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund each shall take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.

5.6 The Trust on behalf of the Acquired Fund shall furnish to the Trust on
behalf of the Acquiring Fund on the Closing Date the Statement of Assets and
Liabilities of the Acquired Fund as of the Closing Date, which statement shall
be prepared in accordance with generally accepted accounting principles
consistently applied and shall be certified by the Trust's Treasurer or
Assistant Treasurer. As promptly as practicable but in any case within 60 days
after the Closing Date, the Acquired Fund shall furnish to the Acquiring Fund,
in such form as is reasonably satisfactory to the Trust, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes and of
any capital loss carryovers and other items that will be carried over to the
Acquiring Fund as a result of Section 381 of the Code, and which statement will
be certified by the President of the Acquired Fund.

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5.7 The Trust on behalf of the Acquiring Fund will prepare and file with
the Commission the Registration Statement in compliance with the 1933 Act and
the 1940 Act in connection with the issuance of the Acquiring Fund Shares as
contemplated herein.

5.8 The Trust on behalf of the Acquired Fund will prepare a Proxy
Statement, to be included in the Registration Statement in compliance with the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the 1940 Act and the rules and regulations thereunder (collectively, the "Acts")
in connection with the special meeting of shareholders of the Acquired Fund to
consider approval of this Agreement.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE ACQUIRED
FUND

The obligations of the Trust on behalf of the Acquired Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Trust on behalf of the Acquiring Fund of all the obligations
to be performed by it hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:

6.1 All representations and warranties of the Trust on behalf of the
Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date;
and

6.2 The Trust on behalf of the Acquiring Fund shall have delivered to
the Acquired Fund a certificate executed in its name by the Trust's
President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the Acquired Fund and dated as of the
Closing Date, to the effect that the representations and warranties of the
Trust on behalf of the Acquiring Fund made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by
the transactions contemplated by this Agreement, and as to such other
matters as the Trust on behalf of the Acquired Fund shall reasonably
request.

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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE ACQUIRING
FUND

The obligations of the Trust on behalf of the Acquiring Fund to complete
the transactions provided for herein shall be, at its election, subject to the
performance by the Trust on behalf of the Acquired Fund of all the obligations
to be performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions:

7.1 All representations and warranties of the Trust on behalf of the
Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date;

7.2 The Trust on behalf of the Acquired Fund shall have delivered to
the Trust on behalf of the Acquiring Fund the Statement of Assets and
Liabilities of the Acquired Fund, together with a list of its portfolio
securities showing the federal income tax bases and holding periods of such
securities, as of the Closing Date, certified by the Treasurer or Assistant
Treasurer of the Trust;

7.3 The Trust on behalf of the Acquired Fund shall have delivered to
the Trust on behalf of the Acquiring Fund on the Closing Date a certificate
executed in the name of the Acquired Fund by a President or Vice President
and a Treasurer or Assistant Treasurer of the Trust, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Trust on behalf of
the Acquired Fund in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Trust
on behalf of the Acquiring Fund shall reasonably request; and

7.4 At or prior to the Closing Date, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have made all payments, or applied
all credits, to the Acquired Fund required by any applicable contractual or
state-imposed expense limitation.

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<PAGE> 54

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST, THE ACQUIRING
FUND AND THE ACQUIRED FUND

The obligations of the Trust, the Acquiring Fund and the Acquired Fund
hereunder are each subject to the further conditions that on or before the
Closing Date:

8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
beneficial interest of the Acquired Fund in accordance with the provisions of
the Trust's Declaration of Trust, as amended, and By-Laws, and certified copies
of the resolutions evidencing such approval by the Acquired Fund's shareholders
shall have been delivered by the Acquired Fund to the Trust on behalf of the
Acquiring Fund;

8.2 The proposals to (i) abolish the master/feeder structure of the
Acquiring Fund, (ii) approve an investment management contract between the
Trust, on behalf of the Acquiring Fund, and John Hancock Advisers, Inc., (iii)
approve an amendment to the Acquiring Fund's fundamental investment objective,
and (iv) approve an amendment to the Acquiring Fund's fundamental investment
restriction with respect to certain investments shall have been approved by the
requisite vote of the holders of the outstanding shares of beneficial interest
of the Acquiring Fund in accordance with the provisions of the Trust's
Declaration of Trust, as amended, and By-Laws, and certified copies of the
resolutions evidencing such approval by the Acquiring Fund's shareholders shall
have been delivered by the Acquiring Fund to the Trust on behalf of the Acquired
Fund;

8.3 The abolition of the master/feeder structure of the Acquiring Fund
shall have been accomplished and the liquidation of Adjustable U.S. Government
Fund (the master fund) shall have been completed in accordance with the
Agreement and Plan of Liquidation and Termination between Bond Fund, on behalf
of Adjustable U.S. Government Fund (the master fund), and John Hancock Bond
Fund, on behalf of the Acquiring Fund (the feeder fund).

8.4 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain changes or other relief in connection with, this
Agreement or the transactions contemplated herein;

8.5 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including
"no-action" positions of such federal or state authorities) deemed necessary by
the Trust

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to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for itself;

8.6 The Registration Statement shall have become effective under the 1933
Act and the 1940 Act and no stop orders suspending the effectiveness thereof
shall have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act or the 1940 Act;

8.7 The Acquired Fund shall have distributed to its shareholders all of
its investment company taxable income (as defined in Section 852(b)(2) of the
Code) for its taxable year ending on the Closing Date and all of its net capital
gain (as such term is used in Section 852(b)(3)(C) of the Code), after reduction
by any available capital loss carryforward, for its taxable year ending on the
Closing Date; and

8.8 The parties shall have received an opinion of Messrs. Hale and Dorr,
satisfactory to the Trust on behalf of the Acquired Fund and the Trust on behalf
of the Acquiring Fund, substantially to the effect that for federal income tax
purposes:

(a) The acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Shares
to the Acquired Fund and the assumption of all of the Acquired Fund
Liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in liquidation of the Acquired Fund, of Acquiring Fund
Shares to the shareholders of the Acquired Fund in exchange for their
shares of beneficial interest of the Acquired Fund and the termination of
the Acquired Fund, will constitute a "reorganization" within the meaning of
Section 368(a)(1)(c) of the Code, and the Acquired Fund and the Acquiring
Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;

(b) No gain or loss will be recognized by the Acquired Fund upon (i)
the transfer of all of its assets to the Acquiring Fund solely in exchange
for the issuance of Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring Fund;
and (ii) the distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund;

A-16

<PAGE> 56

(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
issuance of the Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring Fund;

(d) The basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be, in each instance, the same as the basis of those
assets in the hands of the Acquired Fund immediately prior to the transfer;

(e) The tax holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will, in each instance, include the Acquired
Fund's tax holding period for those assets;

(f) The shareholders of the Acquired Fund will not recognize gain or
loss upon the exchange of all of their shares of the Acquired Fund solely
for Acquiring Fund Shares as part of the transaction;

(g) The basis of the Acquiring Fund Shares received by the Acquired
Fund shareholders in the transaction will be the same as the basis of the
shares of beneficial interest of the Acquired Fund surrendered in exchange
therefor; and

(h) The tax holding period of the Acquiring Fund Shares received by
the Acquired Fund shareholders will include, for each shareholder, the tax
holding period for the shares of the Acquired Fund surrendered in exchange
therefor, provided that the Acquired Fund shares were held as capital
assets on the date of the exchange.

The Trust, on behalf of each of the Acquiring Fund and the Acquired Fund,
agrees to make and provide representations with respect to the Acquiring Fund
and the Acquired Fund, respectively, which are reasonably necessary to enable
Hale and Dorr to deliver an opinion substantially as set forth in this Paragraph
8.8. Notwithstanding anything herein to the contrary, the Trust may not waive
the conditions set forth in this Paragraph 8.8.

9. BROKERAGE FEES AND EXPENSES

9.1 The Trust, on behalf of the Acquiring Fund and the Acquired Fund,
represents and warrants to the Acquired Fund and the Acquiring Fund,
respectively, that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein.

A-17

<PAGE> 57

9.2 The Acquiring Fund and the Acquired Fund shall each be liable solely
for its own expenses incurred in connection with entering into and carrying out
the provisions of this Agreement whether or not the transactions contemplated
hereby are consummated.

10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Trust, on behalf of each of the Acquiring Fund and the Acquired
Fund, agrees that neither party has made any representation, warranty or
covenant not set forth herein or referred to in Paragraph 4 hereof and that this
Agreement constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.

11. TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the
Trust, on behalf of the Acquiring Fund, and the Trust, on behalf of the Acquired
Fund. In addition, either party may at its option terminate this Agreement at
or prior to the Closing Date:

(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date;

(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met; or

(c) by resolution of the Trust's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interest of either party's
shareholders.

11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Trust, the Acquiring Fund or the Acquired Fund, or
the Directors or officers of the Trust, but each party shall bear the expenses
incurred by it incidental to the preparation and carrying out of this Agreement.

A-18

<PAGE> 58

12. AMENDMENTS

This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the Trust.
However, following the meeting of shareholders of the Acquired Fund held
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund shareholders
under this Agreement to the detriment of such shareholders without their further
approval; provided that nothing contained in this Article 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.

13. NOTICES

Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquiring Fund or to the
Acquired Fund, each at 101 Huntington Avenue, Boston, Massachusetts 02199,
Attention: President, and, in either case, with copies to Hale and Dorr, 60
State Street, Boston, Massachusetts 02109, Attention: Pamela J. Wilson, Esq.

14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.

14.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.

14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.

A-19

<PAGE> 59

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first set forth above by its President or Vice
President and has caused its corporate seal to be affixed hereto.

JOHN HANCOCK BOND FUND on behalf of
JOHN HANCOCK ADJUSTABLE U.S.
GOVERNMENT TRUST

By: /s/ Anne C. Hodsdon
-------------------------

Name: Anne C. Hodsdon

Title: President

JOHN HANCOCK BOND FUND on behalf of
JOHN HANCOCK U.S. GOVERNMENT TRUST

By: /s/ Thomas H. Drohan
-------------------------

Name: Thomas H. Drohan

Title: Senior Vice President

A-20

<PAGE> 60
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS NOR THE
STATEMENT OF ADDITIONAL INFORMATION SHALL CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE OR JURISDICTION.

SUBJECT TO COMPLETION
DATED JULY 19, 1995

JOHN HANCOCK
INTERMEDIATE MATURITY
GOVERNMENT FUND

CLASS A AND CLASS B SHARES
PROSPECTUS
SEPTEMBER , 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..................................................... 6
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 Intermediate
Maturity 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 September , 1995, and
subject to completion 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> 61
<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 and
Adjustable U.S. Government Fund (the "Portfolio"), the mutual fund in which the
Fund previously invested all of its assets, for the fiscal year ended March 31,
1995 adjusted to reflect current fees and expenses. 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)............................................................. 0.00 % 0.00 %
12b-1 fee**........................................................................................... 0.25 % 0.90 %
Other expenses (after expense limitation)***.......................................................... 0.50 % 0.50 %
------- -------
Total Fund operating expenses (after expense limitation)(a)........................................... 0.75 % 1.40 %
<FN>
(a) Expenses reflect a temporary agreement by the Fund's investment 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, other expenses and total fund operating expenses of the Class A and
Class B shares, respectively, would have been estimated as 0.40% and 0.40%;
0.72% and 0.72%; and 1.37% and 2.02%.
* 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 these fees may be increased to as much as
1.00% of such assets and total Fund operating expenses would be 2.12% 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 lesser than those shown.)

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 "Investment Advisory and Other
Services" and "Distribution Contracts."
2
<PAGE> 62
<TABLE>

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.

<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> 63
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective 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 primarily in U.S.
Government securities, including mortgage-backed securities issued or guaranteed
by U.S. Government agencies. The Fund may also invest in medium-term debt
obligations of governmental issuers. Under normal market conditions, the Fund
intends to maintain a weighted average remaining maturity or remaining average
life of three to ten years. There is no assurance that the Fund will achieve its
investment objective.

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

Under normal market conditions, the Fund intends to invest primarily (at least
65% of its total assets) in U.S. Government securities. U.S. Government
securities consist of the following:

1. U.S. Treasury obligations, which differ only in their interest rates,
maturities and time 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

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 ("Ginnie Maes")); (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 ("Freddie Macs") or the Federal National Mortgage Association
("Fannie Maes")).

Ginnie Maes, Freddie Macs and Fannie Maes are mortgage-backed securities which
provide monthly payments that are, in effect, a "pass-through" of the monthly
interest and principal payments (including prepayments) made by the individual
borrowers on the pooled mortgage loans. The Fund's investments in mortgage-
backed securities may also include certain classes of multiple class
collateralized mortgage obligations and "stripped" mortgage-backed securities
("SMBS"). During periods of declining interest rates, principal and interest on
mortgage-backed securities may be prepaid at faster-than-expected rates. The
proceeds of these prepayments typically can only be invested in lower-yielding
securities. Therefore, mortgage-backed securities may be less effective at
maintaining yields during periods of declining interest rates than traditional
debt obligations of similar maturity. Different types of mortgage-backed
securities are subject to different combinations of prepayment, extension,
interest rate and/or other market risks. See "Investments, Techniques and Risk
Factors" for a further discussion of U.S. Government securities and these risks.

Under normal conditions, the Fund may invest the remainder of its assets in
other U.S. Government securities and asset-backed securities and debt
obligations of corporate issuers each of which is rated in the highest rating
category by a

4
<PAGE> 64
nationally recognized statistical rating organization or, if unrated, determined
by the investment adviser to be of comparable quality.

The Fund may also buy and sell options contracts, financial futures contracts
and options on these futures contracts for hedging and non-hedging purposes.
These contracts may be based on securities and securities indices. All of the
Fund's futures contracts and options on futures contracts will be traded on a
U.S. commodity exchange or board of trade.

Options, futures contracts and mortgage-backed securities are generally
considered to be "derivative" instruments because they derive their value from
the performance of an underlying asset, index or other economic benchmark. See
"Investments, Techniques and Risk Factors" for additional discussion of
derivative instruments.

The Fund may also lend its portfolio securities; enter into repurchase
agreements, mortgage dollar rolls and reverse repurchase agreements; purchase
securities on a forward commitment or when-issued basis; and purchase restricted
and illiquid securities.

See "Investments, Techniques and Risk Factors" for more information about the
Fund's investments.

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. Those restrictions designated as fundamental may
not be changed without shareholder approval. The Fund's investment objective and
its policies, including its policy of investing at least 65% of its assets in
U.S. Government securities, are nonfundamental and may be changed by a vote of
the Trustees without shareholder approval.

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

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. 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.

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

5
<PAGE> 65

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 in 1984. The Trust reserves
the right to create and issue a number of series of shares, or funds or classes
of these series, which are separately managed and have different investment
objectives. 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. 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 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 Fund, under certain circumstances, will
assist in shareholder communications with other Fund shareholders.

- -------------------------------------------------------------------------------
THE TRUSTEES ELECT OFFICERS AND RETAIN THE
INVESTMENT ADVISER WHO IS RESPONSIBLE FOR
THE DAY-TO-DAY OPERATIONS OF THE FUND,
SUBJECT TO THE 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 funds
through brokers which have agreements with John Hancock Funds ("Selling
Brokers"). Certain Fund 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.
- -------------------------------------------------------------------------------

The Fund is managed by the Adviser's government team, and no single person is
primarily responsible for making recommendations to the team.

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.

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.

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

6
<PAGE> 66
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 A SHARES ARE SUBJECT
TO AN INITIAL 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. John Hancock Funds and the Fund have agreed
until further notice to limit the Fund's 12b-1 fee for Class B shares to 0.90%
of the Fund's Class B average daily net assets. 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.

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

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. 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."

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

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

7
<PAGE> 67

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."

THE FUND'S EXPENSES

For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser equal to 0.40%.

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 Adviser and the former investment adviser to reduce operating
expenses and not to impose a portion of the management fee during that year. The
Adviser has temporarily agreed to continue to limit the Fund's aggregate
operating expenses until December 31, 1996 and not to impose its management fee
or to make other arrangements to the extent necessary to limit the total of the
management fees and the aggregate operating expenses of the Fund (not including
transfer agent fees, 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.
- -------------------------------------------------------------------------------

8
<PAGE> 68
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 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 total expenses is in the Financial Highlights section
of this Prospectus.

DIVIDENDS AND TAXES
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.

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

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 dividend on these shares will be lower than those on the Class A
shares. See "Share Price."

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

9
<PAGE> 69

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 correct 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 and
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. In
some states, a portion of the Fund's dividends that represents interest received
by the Fund on direct U.S. Government obligations may be exempt from tax.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
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. 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 of 3% (except as shown in "The
Fund's Financial Highlights"). Investments at lower sales charges would result
in higher performance figures. Total return and yield 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 may differ
with respect to that 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

10
<PAGE> 70
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 "Alternative Purchase Arrangements -- Factors to Consider in
Choosing an Alternative."

HOW TO BUY SHARES
- --------------------------------------------------------------------------------
<TABLE>
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 Intermediate Maturity Government 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.
- ---------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES
- -------------------------------------------------------------------------------
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> 71
- --------------------------------------------------------------------------------
<TABLE>
<S> <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 Maturity Government 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.
- -------------------------------------------------------------------------------

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 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. The NAV is 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.

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 Exchange and
transmit it

12
<PAGE> 72

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:

<CAPTION>
COMBINED
SALES CHARGE AS REALLOWANCE REALLOWANCE TO
AMOUNT INVESTED SALES CHARGE AS A PERCENTAGE OF AND SERVICE FEE AS SELLING BROKERS AS
(INCLUDING SALES A PERCENTAGE OF THE AMOUNT A PERCENTAGE OF A PERCENTAGE OF
CHARGE) OFFERING PRICE INVESTED OFFERING PRICE(+) THE OFFERING PRICE(*)
---------------- --------------- --------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.50% 2.26%
$100,000 to $499,999 2.50% 2.56% 2.25% 2.01%
$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.

(***) 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, 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.

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> 73
<TABLE>
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>

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
Class A 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.

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 John Hancock Money Market Fund), 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:

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

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> 74

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.

- -------------------------------------------------------------------------------
CLASS A SHARES MAY BE AVAILABLE WITHOUT A
SALES CHARGE TO CERTAIN INDIVIDUALS AND
ORGANIZATIONS.
- -------------------------------------------------------------------------------
- - 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 their 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.

- ------------------
*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.

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

15
<PAGE> 75

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:
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>

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.

<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.

16
<PAGE> 76
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:

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

- - 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.

17
<PAGE> 77
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 four 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
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).
- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------

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 as permitted by Federal
securities laws, which could be up to seven days.

- --------------------------------------------------------------------------------
<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.

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.
- ---------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 78
- --------------------------------------------------------------------------------
<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 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.
- ---------------------------------------------------------------------------------
<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.
</TABLE>
- --------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------

19
<PAGE> 79
ADDITIONAL SERVICES AND PROGRAMS

EXCHANGE PRIVILEGE
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 the Fund, John Hancock Short-Term Strategic
Income Fund and John Hancock Limited-Term Government 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 Class B shares of John Hancock
Money Market Fund at net asset value. However, you will continue to be subject
to a 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.

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

20
<PAGE> 80
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

21
<PAGE> 81
REINVESTMENT PRIVILEGE
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.
- -------------------------------------------------------------------------------
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
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.
- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH IRS REGULATIONS.
- -------------------------------------------------------------------------------

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)

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.

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

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, Keogh Plans (H.R.
10), Pension and Profit Sharing Plans (including 401(k) plans), Tax Sheltered
Annuity Retirement Plans (403(b) Plan) and Section 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 Section 457 Plans will be accepted without an initial minimum
investment.

INVESTMENTS, TECHNIQUES AND RISK FACTORS
MORTGAGE-BACKED SECURITIES. The Fund may invest in mortgage-backed securities.
A mortgage-backed security is an obligation of an issuer which is backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations ("CMOs"), make payments of both principal and interest at a variety
of intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Mortgage-backed securities may
have less potential for capital appreciation than comparable fixed-income
securities, due to the likelihood of increased prepayments of mortgages as
interest rates decline. If the

23
<PAGE> 83

Fund buys mortgage-backed securities at a premium, mortgage foreclosures and
prepayments of principal by mortgagors (which may be made at any time without
penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid. The value of mortgage-backed securities may also
change due to shifts in the market's perception of issuers. In addition,
regulatory or tax changes may adversely affect the mortgage securities market as
a whole.

The Fund may also invest in "stripped" mortgage-backed securities ("SMBS"). SMBS
are created when a U.S. Government agency or a financial institution separates
the interest and principal components of a mortgage-backed security and sells
them as individual securities. The holder of the "principal-only" security
("PO") receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security ("IO") receives
interest payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by changes in interest
rates. As interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can have
the opposite effect. Although the markets for such securities is increasingly
liquid, the Adviser may, in accordance with guidelines adopted by the Board of
Trustees, determine that certain stripped mortgage-backed securities issued by
the U.S. Government, its agencies or instrumentalities are not readily
marketable. If so, these securities, together with privately-issued stripped
mortgage-backed securities, will be considered illiquid for purposes of the
Fund's limitation of investments of illiquid securities.

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.

RESTRICTED SECURITIES. The Fund may purchase restricted securities, including
those eligible for resale to "qualified institutional buyers" pursuant to Rule
144A under the Securities Act of 1933 (the "Securities Act"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain factors,
including valuation, liquidity and availability of information. Purchases of
restricted securities are subject to an investment restriction limiting all the
Fund's illiquid securities to not more than 15% of its net assets.

LENDING OF SECURITIES. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the loaned securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, the Fund may be delayed in or prevented from
liquidating the collateral. It is a fundamental policy of the Fund not to lend
portfolio securities having a total value in excess of 33 1/3% of its total
assets.

REPURCHASE AGREEMENTS, FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund
may enter into repurchase agreements and may purchase

24
<PAGE> 84

securities on a forward commitment or when-issued basis. In a repurchase
agreement, the Fund buys a security subject to the right and obligation to sell
it back to the seller at a higher price. These transactions must be fully
collateralized at all times, but involve some credit risk to the Fund if the
other party defaults on its obligation and the Fund is delayed in or prevented
from liquidating the collateral. 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.

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 highly liquid, marketable securities to cover its obligations under reverse
repurchase agreements with selected firms approved in advance by the Board of
Trustees. The Fund will use the proceeds to purchase other investments. Reverse
repurchase agreements are considered to be borrowings by the Fund. As an
investment practice reverse repurchase agreements may have the effect of
leveraging the Fund's assets and may be considered speculative. Leveraging may
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 will limit its investments in reverse repurchase agreements and
other borrowings to no more than 33 1/3% of its total net 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 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."

25
<PAGE> 85

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. Covered rolls are not treated as
a borrowing or other senior security and will be excluded from the calculation
of the Fund's borrowings and other senior securities. For financial reporting
and tax purposes, the Fund treats mortgage dollar rolls as two separate
transactions; one involving the purchase of a security and a separate
transaction involving a sale. The Fund does not currently intend to enter into
mortgage dollar roll transactions that are accounted for as a financing.

OPTIONS AND FUTURES TRANSACTIONS. The Fund may buy and sell options contracts,
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, buying puts, and writing calls, tend to hedge the
Fund's investments against price fluctuations. Other strategies, including
buying futures, writing puts, and buying calls, tend to increase market
exposure. Options and futures may be combined with each other or with forward
contracts to adjust the risk and return characteristics of the overall strategy.
The Fund may invest in options and futures based on securities or indices,
including options and futures traded on foreign exchanges 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.

The Fund will not engage in a transaction in futures or options on futures for
non-hedging purposes if, immediately thereafter, the sum of initial margin
deposits and premiums required to establish speculative 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 in writing options
on futures is potentially unlimited and may exceed the amount of any premium
received. The Fund's transactions in options and futures contracts may be
limited by the requirements of the Code or qualification as a regulated
investment company.

RISKS ASSOCIATED WITH OPTIONS, FUTURES AND OTHER DERIVATIVE INSTRUMENTS. The
risks associated with the Fund's transactions in options, futures and other
derivative instruments, including mortgage-backed securities, 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

26
<PAGE> 86

mortgage-backed 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 15%
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.

27
<PAGE> 87

JOHN HANCOCK INTERMEDIATE JOHN HANCOCK
MATURITY GOVERNMENT FUND INTERMEDIATE
MATURITY
INVESTMENT ADVISER GOVERNMENT
John Hancock Advisers, Inc. FUND
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
SEPTEMBER , 1995
CUSTODIAN
Investors Bank & Trust Company FOR INVESTORS SEEKING TO
24 Federal Street ACHIEVE A HIGH LEVEL OF CURRENT
Boston, Massachusetts 02110 INCOME, CONSISTENT
WITH PRESERVATION OF
CAPITAL AND MAINTE-
NANCE 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
[LOGO] Printed on Recycled Paper BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
<PAGE> 88

JOHN HANCOCK

U.S. GOVERNMENT
TRUST
CLASS A AND CLASS B SHARES
PROSPECTUS
JULY 17, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<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.
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> 89

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.

<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...................................................................................... 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%
</TABLE>

* 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>
<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
</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 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 "Investment Advisory and Other
Services" and "Distribution Contract."

2
<PAGE> 90

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:
<TABLE>
<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
------- ------- ------- ------- -------- -------- -------- -------- --------

</TABLE>

<TABLE>

<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.............................. (0.57) (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%

</TABLE>

<TABLE>

<CAPTION>
Less Distributions
<S> <<C> <C>
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%
</TABLE>

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

(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.

3
<PAGE> 91

INVESTMENT OBJECTIVE AND POLICIES
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 consist of the following:

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

(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> 92

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> 93

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. 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.

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> 94

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 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 interest rates through its
transactions in options and futures contracts. However, these techniques will
not eliminate these risks and will result in transaction costs to the Fund.

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> 95

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.

- -------------------------------------------------------------------------------
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.

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

8
<PAGE> 96

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.

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."

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

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> 97

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.

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.

10
<PAGE> 98

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 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."

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> 99

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 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.

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

12
<PAGE> 100

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

<TABLE>
<S> <C> <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.
</TABLE>

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

<TABLE>
<S> <C> <C> <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.
</TABLE>

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

<TABLE>
<S> <C> <C> <C> <C>
PROGRAM
(MAAP) 2. The amount you elect to invest will be automatically withdrawn
from your bank or credit union account.
- ---------------------------------------------------------------------------------
</TABLE>

13
<PAGE> 101

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

<TABLE>
<S> <C> <C> <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).
</TABLE>

- -------------------------------------------------------------------------------
BUYING ADDITIONAL CLASS A AND CLASS B
SHARES (CONTINUED)
- -------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C> <C>
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>

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.

14
<PAGE> 102

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 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. 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.

- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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.

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:

<TABLE>
<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%(***)
</TABLE>

(**) 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.

15
<PAGE> 103

(+) 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."

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:

<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>

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.

16
<PAGE> 104

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.

17
<PAGE> 105

- - 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 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.
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:

<TABLE>
<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

18
<PAGE> 106

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>

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.

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 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 due to death or disability.

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

19
<PAGE> 107

- - 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 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.
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
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).

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

20
<PAGE> 108

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

<TABLE>
<S> <C> <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>

<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
--------------------------------- --------------------------------------------
<S> <C> <C> <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.
</TABLE>

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

21
<PAGE> 109

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

<TABLE>
<S> <C> <C> <C>
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
</TABLE>

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

<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------------
</TABLE>

ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
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.

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

22
<PAGE> 110

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.

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.

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> 111

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

REINVESTMENT PRIVILEGE
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.

- -------------------------------------------------------------------------------
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.

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.

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

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> 112

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)
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.

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

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

25
<PAGE> 113

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. 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 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. Repurchase agreements maturing
in more than seven (7) days will be subject to the Fund's restriction regarding
illiquid securities.

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."

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 not
readily marketable.

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 only
enter into

26
<PAGE> 114

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.

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.

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. 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> 115

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> 116

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.

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

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.

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."

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.

29
<PAGE> 117

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.

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, 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

30
<PAGE> 118

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> 119

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

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
OB
TAIN AS HIGH A LEVEL
OF INTEREST
CUSTODIAN
INCOME CONSISTENT WITH
SAFETY
Investors Bank & Trust Company
OF PRINCIPAL.
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 (LOGO) Printed
on Recycled Paper
<PAGE> 120

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> 121
<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>

2
<PAGE> 122
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.

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

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

3
<PAGE> 123
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

4
<PAGE> 124
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
<PAGE> 125
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.

6
<PAGE> 126
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

7
<PAGE> 127
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.

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

8
<PAGE> 128
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

9
<PAGE> 129
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> 130
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.

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<PAGE> 131
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

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<PAGE> 132
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.

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<PAGE> 133
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.

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<PAGE> 134
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.

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<PAGE> 135
<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> 136
<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.

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
</TABLE>

17
<PAGE> 137
<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.

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
</TABLE>

18
<PAGE> 138
<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.

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> 139
<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> 140
<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>

21
<PAGE> 141
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:
<CAPTION>
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> 142
<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> 143
<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> 144
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> 145
<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> 146
<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

27
<PAGE> 147
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>

28
<PAGE> 148
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.

29
<PAGE> 149
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.

30
<PAGE> 150
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.

31
<PAGE> 151
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

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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.

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.

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<PAGE> 153
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.

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 the Prospectuses, Class A
shares of the Funds may be sold without a sales charge to certain persons
described in the Prospectuses.

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.

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<PAGE> 154
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.

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 each Fund's 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

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<PAGE> 155
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 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

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<PAGE> 156
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.

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 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.

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."

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<PAGE> 157
DESCRIPTION OF THE TRUST'S 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.

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 relating to Class A and
Class B shares will be borne exclusively by that Class, (ii) Class B shares
will pay higher

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<PAGE> 158
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.

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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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.

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.

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.

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> 160
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 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.

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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.

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 retirement plans. Shareholders should consult their
tax advisers for more information.

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> 162
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.

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 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%).

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:

a= dividends and interest earned during the period.

b= net expenses accrued during the period.

43
<PAGE> 163
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

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.

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 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> 164
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 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. 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> 165

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> 166
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.

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 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> 167
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> 168
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> 169
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 Funds. Intermediate Government Fund
pays Investor Services monthly a transfer agent fee equal to $16.00 per account
for the Class A shares and $18.50 per account for the Class B shares on an
annual basis, plus out-of-pocket expenses.

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> 170
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> 171
<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> 172

<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>

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> 173
<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> 174

<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> 175
<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> 176

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> 177

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> 178
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> 179
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> 180

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