<PAGE> 1
As filed with the Securities and Exchange Commission on August 1, 1995.
SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the registrant / X /
Check the appropriate box:
/ X / Preliminary information statement
/__ / Definitive information statement
JOHN HANCOCK BOND FUND
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
JOHN HANCOCK BOND FUND
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / $125 per Rule 14c-5(g) and Item 22(a)(2) under the Securities
Exchange Act of 1934 (Previously transmitted by wire transfer)
<PAGE> 2
PRELIMINARY INFORMATION STATEMENT
ADJUSTABLE U.S. GOVERNMENT FUND
A Series of
JOHN HANCOCK BOND FUND
101 Huntington Avenue
Boston, Massachusetts 02199
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To Be Held September 8, 1995
A Special Meeting of Shareholders (the "Meeting") of Adjustable U.S.
Government Fund (the "Master Fund"), a series of John Hancock Bond Fund (the
"Trust") (telephone 1-800-225-5291), will be held at the office of the Trust
located at 101 Huntington Avenue, Boston, Massachusetts 02199, at 9:00 a.m.,
Boston time, on Friday, September 8, 1995. The purpose of the Meeting is to
consider and act upon the following proposal:
(1) To approve the Agreement and Plan of Liquidation and Termination of
Adjustable U.S. Government Fund. Approval of this Proposal will allow
John Hancock Adjustable U.S. Government Trust, the sole feeder fund in
the master/feeder fund structure, to operate in the traditional, one-tier
structure common to most mutual funds.
(2) To transact other business that may properly come before the Meeting or
any adjournment of the Meeting.
Proposal 1 is discussed in greater detail in the attached proxy statement
of John Hancock Adjustable U.S. Government Trust, which also serves as the
Information Statement accompanying this Notice of Special Meeting of
Shareholders. Approval of Proposal 1 by the Master Fund requires the
affirmative vote of a majority of the outstanding shares of the Master Fund
represented in person and entitled to vote at the Meeting if a quorum is
present. The Feeder Fund, as the sole shareholder of the Master Fund, will
vote to approve Proposal 1 in the same proportion as the votes case at the
Meeting by the Feeder Fund's shareholders on Proposal 1.
THE MASTER FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF
PROPOSAL 1.
There is one shareholder of record of the Master Fund as of the close of
business on July 14, 1995 entitled to notice of and to vote at the Meeting or
any adjournment of the Meeting. The Information Statement is being mailed to
the shareholder on or about August 11, 1995.
THOMAS H. DROHAN
Senior Vice President
and Secretary
Boston, Massachusetts
August 11, 1995
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
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PRELIMINARY INFORMATION STATEMENT
JOHN HANCOCK ADJUSTABLE U.S. GOVERNMENT TRUST
(as proposed to be renamed, John Hancock
Intermediate Maturity Government Fund)
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199
_______________
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of John Hancock Bond Fund (the "Trust"), on
behalf of John Hancock Adjustable U.S. Government Trust (the "Fund"). The
proxies will be used at the special meeting (the "Meeting") of the Fund's
shareholders to beheld at the offices of the Trust located on the 2nd floor at
101 Huntington Avenue, Boston, Massachusetts on Friday, Septem- ber 8, 1995 at
9:00 a.m., Boston time. Proxies will be solicited by mail and may also be
solicited in person or by telephone by officers, Trustees, directors and/or
registered representatives of the Trust's principal distributor, John Hancock
Funds, Inc. ("John Hancock Funds"); or by employees, officers and/or directors
of John Hancock Advisers, Inc. (the "Adviser"), and the transfer agent, John
Hancock Investor Services Corporation ("Investor Services").
The cost of preparing and mailing this Proxy Statement and the
accompanying Notice and proxy card will be borne indirectly by the Fund. The
mailing address of the Trust, the Adviser, John Hancock Funds and Investor
Services is 101 Huntington Avenue, Boston, Massachusetts 02199. This Proxy
Statement and proxy card are being mailed to shareholders on or about July 21,
1995. The Fund's annual report for the March 31, 1995 fiscal year was mailed
to the shareholders on or about May 31, 1995. A copy may be obtained free of
charge by writing to the Trust at the address stated above or by calling
1-800-225-5291.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees has fixed the close of business on July 14, 1995
as the record date (the "Record Date") for determination of shareholders of the
Fund entitled to notice of and to vote at the Special Meeting. Shareholders of
record of the Fund on the Record Date are entitled to one vote per share at the
Special Meeting or any adjournment of the meeting. On June 30, 1995, 2,755,756
shares of beneficial interest of the Fund were outstanding.
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SUMMARY
At a meeting of the Trust's Board of Trustees on May 16, 1995, the
Trustees evaluated a recommendation of the Adviser and determined that it would
be in the best interests of the Fund and its shareholders if the Fund
participated in two tax-free reorganizations (the "Reorganizations"), whereby
the Fund would acquire in two simultaneous transactions the assets of John
Hancock Intermediate Government Trust and John Hancock U.S. Government Trust
(the "Acquired Funds"). Each of the Acquired Funds is also a series of the
Trust. The Trustees have determined that the name of the Fund will be changed
to John Hancock Intermediate Maturity Government Fund. In connection with the
Trustees' approval of the Reorganizations, the Trustees have voted to approve,
and voted to recommend that the Fund's shareholders approve, the proposals
relating to the Fund's structure, its investment objective and an investment
restriction discussed in greater detail below.
Shareholder approval of the proposals will enable the Fund to
participate in the Reorganizations. One of the immediate benefits of the
Reorganizations to the Fund and its shareholders will be an increase in the
Fund's asset size. Increased asset size may enhance the diversification of the
Fund's portfolio, thereby reducing the risk of loss associated with holding any
one security in the portfolio. Increased asset size may also produce economies
of scale resulting in a decrease in expenses (as a percentage of net assets)
borne by the Fund and its shareholders.
This Proxy Statement does not relate directly to the Reorganizations
and shareholders are not being asked to vote on the Reorganizations.
PROPOSAL 1
CONSIDERATION OF THE PROPOSAL TO APPROVE THE AGREEMENT AND
PLAN OF LIQUIDATION AND TERMINATION OF
ADJUSTABLE U.S. GOVERNMENT FUND
General
In 1991, the Fund was organized as a series of the Trust with the
investment objective of earning a high level of current income, consistent with
low volatility of principal. The Fund seeks to achieve its investment
objective by investing all of its assets in the Master Fund, which has an
investment objective identical to that of the Fund. This structure, whereby a
mutual fund invests all of its assets in another mutual fund, is called a
"Master/Feeder" structure. This structure allows several funds (each, a
"feeder fund") with different distribution features, but with the same
investment objective, restrictions and policies, to combine their investments
in a single master fund instead of managing them separately. The Master/Feeder
structure may produce measurable benefits to shareholders of a feeder fund if
other
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feeder funds invest in the master fund, thereby increasing the master
fund's assets and producing economies of scale that result in reduced fund
expenses indirectly borne by the shareholders of each feeder fund.
Because the Fund is the only investor in the Master Fund, it has not
derived any advantages from the Master/Feeder structure. The Master/Feeder
structure has not resulted in investment in the Master Fund by other feeder
funds, either affiliated with the Adviser or not so affiliated. Because no
other feeder funds are investing in the Master Fund, the Master/Feeder
structure has resulted in additional and unnecessary regulatory compliance that
imposes added burdens on the Fund without an equal benefit.
As a feeder fund in a Master/Feeder structure, the Fund indirectly pays
its share of the expenses of the Master Fund. Because the Fund is the only
feeder fund investing in the Master Fund, the Fund has borne both its own
expenses and, indirectly, the entire amount of the Master Fund's advisory,
custody and other expenses. The abolition of the Master/Feeder structure will
not result in any increase in the fees borne directly and indirectly by the
Fund for advisory, transfer agency, custody or distribution services.
Furthermore, the administration agreement (the "Admin- istration Agreement")
between the Trust, on behalf of the Fund, and the Adviser will terminate upon
the abolition of the Master/ Feeder structure and the Fund will no longer pay
an administration fee of 0.10% of the Fund's average net assets. See Proposal
2 for additional discussion of the Administration Agreement.
At a meeting of the Trust's Board of Trustees on May 16, 1995, the
Trustees considered alternatives available to the Fund and the Master Fund,
including liquidating and terminating the Master Fund. The Trustees also
considered appointing the Adviser to serve as the Fund's investment adviser to
manage the Fund's assets in accordance with the Fund's investment objective,
policies and restrictions. The Trustees determined that the Master/Feeder
structure provided no measurable benefit to the Fund, the Master Fund or their
respective shareholders. The Trustees' decision was based principally upon the
Adviser's offer to manage the assets of the Fund pursuant to a new investment
management contract on substantially identical terms as the current investment
management contract between the Trust, on behalf of the Master Fund, and the
Adviser (see Proposal 2 below).
After consideration of the relevant factors, the Trustees, including
the Trustees who are not "interested persons" of the Trust, as that term is
defined (the "Independent Trustees") in the Investment Company Act of 1940, as
amended (the "1940 Act"), voted to approve, and voted to recommend that the
shareholders of the Fund and the Master Fund approve, the abolition of the
Master/ Feeder structure of the Fund in accordance with the provisions of the
Liquidation Plan, which is attached to this document as EXHIBIT A. The
following discussion of the Liquidation Plan is qualified in its entirety by
reference to EXHIBIT A.
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Liquidation and Termination
The Board of Trustees has determined that the abolition of the
Master/Feeder structure will be accomplished by means of a tax-free liquidation
of the Master Fund in accordance with the requirements of Section 332 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the termination of
the Master Fund in accordance with the Trust's Declaration of Trust and
applicable Massachusetts law. The conversion to a traditional, one-tier
investment company structure would be accomplished by having the Master Fund
distribute its portfolio securities and other assets, if any, together with all
of its liabilities, to the Fund in a liquidating distribution, in complete
redemption and cancellation of all of the Master Fund's shares of beneficial
interest. The Fund may elect either to retain or sell all or any portion of
these securities. Approval of the proposal to approve the Liquidation Plan
will constitute approval of the steps necessary to effect the abolition of the
Master/Feeder structure, including the approval by the Fund, as the sole
shareholder of the Master Fund, of the liquidation and termination of the
Master Fund.
Consummation of the Liquidation Plan is subject to the receipt of an
opinion of Hale and Dorr, counsel to the Fund and the Master Fund,
substantially to the effect that the liquidation of the Master Fund will
qualify as a complete liquidation of the Master Fund under Section 332 of the
Code with respect to which neither the Master Fund nor the Fund will recognize
any gain or loss under the Code, that the Fund's basis in each security
distributed to it in liquidation will be the same as the Master Fund's basis
for that security, and that the Fund's holding period for each security will
include the Master Fund's holding period for that security. Consummation of
the Liquidation Plan is also contingent upon approval by the Fund's
shareholders of an investment management contract between the Trust, on behalf
of the Fund, and the Adviser, as described in Proposal 2.
Trustees' Recommendation
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS APPROVE THE
PROPOSAL TO APPROVE THE LIQUIDATION PLAN.
If the shareholders of the Fund and the Master Fund do not approve this
Proposal and Proposal 2, the Fund will continue to operate as a feeder fund in
a Master/Feeder structure and the Trustees will consider what future action to
take, including resubmission of the Proposal to shareholders at a future date.
Furthermore, if Proposal 1 and Proposal 2 are not approved, the Meeting will be
adjourned and no further action will be considered at that time with respect to
Proposals 3 and 4.
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Vote Required
Approval of Proposal 1 requires the affirmative vote of a majority of
the outstanding shares of the Fund represented in person or by proxy and
entitled to vote at the Meeting if a quorum is present. With respect to the
Master Fund, the Fund, as the sole holder of shares of beneficial interest of
the Master Fund, will vote to approve or not to approve Proposal 1 in the same
proportion as the vote cast by the Fund's shareholders on Proposal 1 at the
Meeting. Because there are no other feeder funds investing in the Master Fund,
the Fund's vote will determine whether the shareholders of the Master Fund have
approved Proposal 1.
PROPOSAL 2
APPROVAL OF TERMS OF AN INVESTMENT MANAGEMENT CONTRACT
BETWEEN THE TRUST, ON BEHALF OF THE FUND,
AND JOHN HANCOCK ADVISERS, INC.
General
Under the Master/Feeder structure, the Trust, on behalf of the Master
Fund, entered into an investment management contract (the "Master Management
Contract") with the Adviser, whereby the Adviser provides the Master Fund with
investment research and portfolio management services. In connection with the
appointment of the Adviser as the Master Fund's investment adviser on Decem-
ber 22, 1994, the investment management contract between the Master Fund and
the previous investment adviser was terminated and the Master Management
Contract was approved by the Fund's shareholders (reflecting the Fund's status
as sole shareholder of the Master Fund) at a shareholder meeting held on
December 16, 1994.
Under the Master/Feeder structure, the Fund is not required to engage
the services of an investment adviser because the Fund holds only a redeemable
interest in the Master Fund. The Fund's shareholders, however, indirectly bear
the payment of the Master Fund's expenses, including the payment of the Master
Fund's advisory fee. If the Fund's shareholders approve the Liquidation Plan
described in Proposal 1 and the Fund's Master/Feeder structure is abolished,
the Fund will acquire all the assets and liabilities of the Master Fund and the
Master Management Contract will terminate. Accordingly, the Fund will be
required to engage an investment adviser to manage the Fund's portfolio of
investments.
At a meeting of the Board of Trustees on May 16, 1995, the Trustees,
including the Independent Trustees, voted to approve and recommended that the
Fund's shareholders approve, an investment management contract between the
Trust, on behalf of the Fund, and the Adviser (the "Fund Management Contract").
The rate of the advisory fee in the Fund Management Contract, as approved by
the
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Trustees and recommended for approval by the Fund's shareholders, is
identical to the rate of the advisory fee in the Master Management Contract.
If the Fund's shareholders do not approve Proposal 1, the Master Fund will not
be liquidated and terminated and the Master Management Contract and the
Administration Agreement will continue in effect.
Comparison of the Terms of the Fund Management Contract and the Master
Management Contract
Similarities between the Contracts. The material terms of the Fund
Management Contract discussed below are substantially similar to the terms of
the Master Management Contract approved on December 16, 1994 by the Fund's
shareholders. The Fund Management Contract is attached hereto as EXHIBIT B,
and the discussion of the terms of the Contract is qualified in its entirety by
reference to EXHIBIT B.
Pursuant to the Fund Management Contract and subject to the supervision and
approval of the Board of Trustees, the Adviser is responsible for using its
best efforts to provide the Fund with continuing and suitable investment
programs, consistent with the Fund's investment objective, policies and
restrictions. Specifically, the Adviser is required to: (a) furnish the Fund
with advice and recommendations with respect to the purchase, holding and
disposition of portfolio securities; (b) advise the Fund in connection with
policy decisions to be made by the Trustees and furnish the Fund with research,
economic and statistical data; (c) provide administration of the day-to-day
investment operations of the Fund; (d) submit reports to the Trustees as to the
valuation of the Fund's assets and other subjects; (e) assist the Fund in
negotiations relating to the Fund's investments; (f) place orders for the
purchase and sale of portfolio securities; (g) provide office space, equipment
and supplies and executive, clerical and secretarial personnel; (h) maintain
and preserve the Fund's records; (i) obtain and evaluate information relating
to economies, industries, businesses, security markets and securities; and (j)
oversee and evaluate the performance of agents and service providers to the
Fund. In addition, the Adviser has agreed, from time to time or at any time
requested by the Trustees, to furnish the Trustees with reports as to the
Adviser's performance under the Fund Management Contract. Under the Fund
Management Contract, the Adviser may appoint and employ one or more subadvisers
that are satisfactory to the Fund.
The Fund Management Contract provides that the Adviser is not liable
for any error of judgment or mistake of law, or for any loss suffered by the
Trust or the Fund in connection with the matters to which the Fund Management
Contract relates. However, the Adviser will be liable for a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations and
duties under the Contract.
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By its terms, the Fund Management Contract will continue in effect for
an initial term of two years from the date of execution and for successive
annual periods thereafter, provided that the continuance is specifically
approved at least annually by (i) the Trustees or by (ii) a vote of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities, and provided further that, in the first event, the continuance is
also approved by a majority of the Trust's Independent Trustees by vote cast in
person at a meeting called for the purpose of voting on approval. The Fund
Management Contract is terminable without penalty, on not less than 60 days'
notice by the Trustees, by the vote of a majority of the Fund's outstanding
voting securities or by the Adviser. The Fund Management Contract terminates
automatically in the event of its "assignment" (as defined in the 1940 Act).
Differences between the Contracts. The Fund Management Contract
clarifies that the Fund may bear the allocable cost of the Adviser's employees
rendering legal, accounting and auditing services to the Fund. In describing
the calculation of the Adviser's compensation, the Fund Management Contract
makes clear that the Adviser will receive only a pro rata portion of its
monthly fee for any periods in which the Adviser serves for less than a full
month. Both Contracts require the Adviser to reduce its fee if the Fund's
normal operating expenses are in excess of any limitation imposed by state law
in states where the Fund's shares are qualified for sale. The Fund Management
Contract contains an additional provision permitting the Adviser to refrain
from imposing all or a portion of its fee (in advance of the time its fee would
otherwise accrue) and/or undertake to make any other payments or arrangements
necessary to limit the Fund's expenses to any level the Adviser may specify.
Any fee reduction or undertaking shall constitute a binding modification of the
Fund Management Contract while it is in effect but may be discontinued or
modified prospectively by the Adviser at any time.
The Fund Management Contract provides specifically that the Adviser may
provide investment advisory services to other clients, including other
investment companies, and that the Adviser is under no obligation to acquire
any particular investment on behalf of the Fund if, in the Adviser's sole
discretion, it is not feasible or desirable to acquire a position in that
investment on behalf of the Fund.
The Fund Management Contract states that it will governed in accordance
with the laws of The Commonwealth of Massachusetts and that each provision of
the Contract is independent of all other provisions.
The Advisory Fee and the Fund's Other Expenses
Under the Fund Management Contract, the Fund will directly pay the
Adviser a monthly fee that is equal on an annual basis to 0.40% of the Fund's
average daily net assets. This is the same rate of compensation as is paid
indirectly by the fund to the
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adviser under the master management contract. Although the Fund
participates in a Master/Feeder structure, and bears the Master Fund's fees and
expenses indirectly, the Fund is not a party to the Master Management Contract.
However, because no other feeder funds invest in the Master Fund, the Fund also
bears the expense of the advisory fee paid by the Master Fund to the Adviser
pursuant to the Master Management Contract. Accordingly, the amount of the
advisory fee paid directly under the Fund Management Contract will be no higher
than the amount borne indirectly under the Master Management Contract.
Approval of the Fund Management Contract will not result in an increase, either
directly or indirectly, to any other fees borne by the Fund.
During the Fund's fiscal year ended March 31, 1995, the Fund indirectly
paid advisory fees to the Adviser and the previous adviser of $14,293 and
$42,877, respectively. These payments reflect agreements by the Adviser and
previous adviser to reduce the Fund's and the Master Fund's total operating
expenses to 0.75% and 1.40% of the average daily net assets of the Class A
shares and Class B shares, respectively. Had these expense reductions not been
in effect, the Fund would have indirectly borne advisory fees to the Adviser
and the previous adviser of $28,694 and $86,085, respectively.
If the Fund Management Contract is approved by the Fund's shareholders,
the Adviser will continue to reduce the Fund's management fees and other annual
operating expenses (not including transfer agency fees, Rule 12b-1 fees and
other class-specific expenses) to 0.35% of the average daily net assets of the
Class A shares and Class B shares, respectively, until December 31, 1996. As a
result of this expense reduction, the Fund's total annual operating expenses
for the current fiscal year are expected to be 0.75% and 1.40% of the average
daily net assets of Class A and Class B shares, respectively. Without this
expense reduction, the Fund's total annual operating expenses for the current
fiscal year are estimated to be 1.37% and 2.02% of the average daily net assets
of the Class A shares and Class B shares, respectively (assuming shareholders
approve Proposal 1).
As a feeder fund in the Master/Feeder structure, the Fund requires
certain administrative and accounting services that are provided to it by the
Adviser in its capacity as administrator (the "Administrator") pursuant to the
Administration Agreement. For these services, the Fund pays a monthly
administration fee to the Administrator equal on an annual basis to 0.10% of
the Fund's average daily net assets. If the Fund's shareholders approve the
Fund Management Contract, the Trust, on behalf of the Fund, will terminate the
Administration Agreement with the Administrator and the Fund will no longer pay
an administration fee.
During the fiscal year ended March 31, 1995, as a result of the expense
reduction described above, the Fund paid no adminis- tration fees to the
Administrator or the previous administrator. Had this limitation not been in
effect, the Fund would have paid
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administration fees to the Administrator and the previous administrator
of $7,171 and $21,511, respectively.
Trustees' Evaluation and Recommendation
At the meeting of the Board of Trustees on May 16, 1995, the Trustees,
including the Independent Trustees, approved the Fund Management Contract and
the amount of the advisory fee to be paid by the Fund. In making this
determination, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Fund and the investment
record of the Adviser in managing the Master Fund and the other John Hancock
mutual funds. The Trustees also considered that the Adviser's relationship
with the Fund will provide continuity of portfolio management services to the
Fund. The Trustees believe the Fund Management Contract and the proposed
advisory fee to be reasonable, fair and in the best interests of the Fund's
shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS APPROVE THE
FUND MANAGEMENT CONTRACT.
If the Fund Management Contract is not approved, the Trustees will not
authorize the implementation of the Liquidation Plan as described in Proposal
1, regardless of the fact that Proposal 1 may have been approved by the
shareholders of the Fund.
Vote Required
Approval of Proposal 2 requires the affirmative vote of a majority of
the outstanding voting securities of the Fund, as defined in the 1940 Act,
which means the lesser of (1) 67 percent or more of the shares of the Fund
represented at the Meeting if at least 50 percent of all outstanding shares of
the Fund are repre- sented at the Meeting or (2) 50 percent or more of the
outstanding shares of the Fund entitled to vote at the meeting (the "Majority
Shareholder Vote").
The Investment Adviser
The Adviser is a wholly-owned subsidiary of The Berkeley Financial
Group (the "Berkeley Group"), which is a wholly-owned subsidiary of John
Hancock Asset Management, which is a wholly- owned subsidiary of John Hancock
Subsidiaries, Inc., which is a wholly-owned subsidiary of John Hancock Mutual
Life Insurance Company (the "Life Company"). The address of the Adviser is 101
Huntington Avenue, Boston, Massachusetts 02199. The address of the other
entities is John Hancock Place, Boston, Massachusetts 02117. The directors of
the Adviser and their principal occupa- tions or employment are set forth under
the caption, "The Directors of the Adviser." The Adviser provides investment
advisory services to other mutual funds with investment objectives
substantially identical to that of the Fund. See EXHIBIT C for a
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list of those funds and the rates of the advisory fees paid by those
funds.
Brokerage Commissions on Portfolio Transactions
During the Fund's fiscal year ended March 31, 1995, the Fund paid no
brokerage commissions to affiliated brokers.
Other Material Payments by the Fund to the Adviser and Affiliates of
the Adviser
For the period from December 22, 1994 (when the Adviser was approved as
investment adviser to the Master Fund) to March 31, 1995, the Fund paid $9,013
and $21,694 to John Hancock Funds for distribution related services on behalf
of Class A and Class B shares, respectively. It is expected that John Hancock
Funds will continue to provide these services to the Fund.
<TABLE>
Directors of the Adviser
Edward J. Boudreau, Jr., Chairman and Chief Executive Officer of the
Trust, is the principal executive officer of the Adviser. Mr. Boudreau's
principal occupations and address, as well as those of the other Directors of
the Adviser, are set forth below.
<S> <C>
Edward J. Boudreau, Jr. Chairman and Chief Executive Officer, the
101 Huntington Avenue Adviser and The Berkeley Financial Group
Boston, MA 02199 (the "Berkeley Group"); Chairman, John
Hancock Advisers International Ltd., John
Hancock Funds and Investor Services
(collectively, the "Affiliated
Companies"); Chairman, NM Capital
Management, Inc. and Sovereign Asset
Management Corporation; and Chairman,
First Signature Bank & Trust.
Stephen L. Brown Chairman and Chief Executive Officer, the
John Hancock Place Insurance Company; Director, the Adviser
Boston, MA 02117 and the Affiliated Companies; Trustee, The
Berkeley Group and John Hancock Asset
Management.
Foster L. Aborn Vice Chairman, Director and President,
John Hancock Place Investment and Pension Sector, the
Boston, MA 02117 Life Company; Director, the Adviser,
Independence Investment Associates, Inc.,
John Hancock Funds, Investor Services, and
John Hancock Subsidiaries, Inc.; Trustee,
The Berkeley Group and John Hancock Asset
Management; Director, Hancock Venture
Partners, Inc.; Director, John Hancock
Capital Growth Management, Inc.; and
Director, John Hancock Capital Corp. and
John Hancock Freedom Securities Corp.
</TABLE>
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<TABLE>
<S> <C>
Richard S. Scipione Director, the Adviser, NM Capital
John Hancock Place Management, Inc., Sovereign Asset
Boston, MA 02117 Management Corporation and the Affiliated
Companies; General Counsel, the Life
Company; and Trustee, The Berkeley Group.
Thomas E. Moloney Chief Financial Officer, the Life
John Hancock Place Company; Director, the Adviser and the
Boston, MA 02117 Affiliated Companies; and Trustee, The
Berkeley Group.
John M. DeCiccio Senior Vice President, Investment
John Hancock Place Technology and Financial Management, the
Boston, MA 02117 Life Company; Director, the Adviser and
the Affiliated Companies; and Trustee, The
Berkeley Group.
Jeanne M. Livermore Senior Vice President, Group Pension
John Hancock Place Guaranteed and Stable Value Products, the
Boston, MA 02117 Life Company; Director, the Adviser, the
Affiliated Companies and John Hancock
Advisers International Ltd.; and Trustee,
The Berkeley Group.
John Goldsmith Chairman and Chief Executive Officer,
One Beacon Street John Hancock Freedom Securities Corp.;
Boston, MA 02108 Director, the Adviser and the Affiliated
Companies; and Trustee, The Berkeley
Group.
Richard O. Hansen Vice President, Managerial Department,
John Hancock Place the Life Company; Director, the Adviser
Boston, MA 02117 and the Affiliated Companies; and Trustee,
The Berkeley Group.
William C. Fletcher Director, the Adviser, John Hancock Funds,
53 State Street Investor Services; President and Director,
Boston, MA 02109 Independence Investment Associates, Inc.;
Trustee, The Berkeley Group; Trustee,
President and Chief Executive Office, John
Hancock Asset Management; and Director,
Hancock Natural Resource Group, Inc. and
John Hancock Energy Resources Management,
Inc.
Robert G. Freedman Vice Chairman and Chief Investment
101 Huntington Avenue Director, the Adviser; Director, the
Boston, MA 02199 Adviser, NM Capital Management, Inc.,
Sovereign Asset Management Corporation and
the Affiliated Companies; Senior Vice
President, The Berkeley Group; and
Director, John Hancock Advisers
International Ltd.
</TABLE>
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<TABLE>
<S> <C>
Robert H. Watts President, Chief Executive Officer and
John Hancock Place Director, John Hancock Distributors,
Boston, MA 02117 Inc.; and Director, the Adviser and the
Affiliated Companies.
C. Troy Shaver, Jr. President, Chief Executive Officer and
101 Huntington Avenue Director, John Hancock Funds; Director,
Boston, MA 02199 the Adviser, NM Management, Inc.,
Sovereign Asset Management Corporation and
the Affiliated Companies.
David A. King President, Chief Executive Officer and
101 Huntington Avenue Director, Investor Services; Director,
Boston, MA 02199 the Adviser and the Affiliated Companies.
</TABLE>
In addition to Messrs. Boudreau, Scipione and Freedman, the following
persons are officers and/or directors of both the Trust and the Adviser: Anne
C. Hodsdon, President of the Trust and President and Chief Operations Officer
of the Adviser; Thomas H. Drohan, Senior Vice President and Secretary of both
the Trust and the Adviser; James B. Little, Senior Vice President and Chief
Financial Officer of the Trust and Senior Vice President of the Adviser; James
K. Ho, Senior Vice President of both the Trust and the Adviser; Barry H. Evans,
Vice President of both the Trust and the Adviser; Anne McDonley, Vice President
of both the Trust and the Adviser; B.J. Willingham, Senior Vice President of
both the Trust and the Adviser; John A. Morin, Vice President of both the Trust
and the Adviser; Susan S. Newton, Vice President and Compliance Officer of the
Trust and Vice President and Assistant Secretary of the Adviser; and James J.
Stokowski, Vice President and Treasurer of the Trust and Vice President of the
Adviser.
Share Ownership
On December 16, 1994, shareholders approved the appointment of the
Adviser and also elected the Trustees to the Board of Trustees. As of July 14,
1995, Mr. Boudreau, Mr. Carlin, Mr. Linbeck and Mr. Smith owned beneficially or
of record 101 (0.00%), 100 (0.00%), 101 (0.00%) and 100 (0.00%) Class A shares
of the Fund, respectively.
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 the 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, 9985 Pacific Heights Blvd., San Diego,
CA (5.56%); 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 the Fund:
Merrill
-12-
<PAGE> 15
Lynch Pierce Fenner & Smith Inc., P.O. Box 45286, Jacksonville, FL
(6.72%).
On June 30, 1995, the Fund owned 2,755,756 shares of Adjustable U.S.
Government Fund (the "Master Fund"), which are all the outstanding shares of
the Master Fund.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT OBJECTIVE AND REDESIGNATION OF THE
FUND'S INVESTMENT OBJECTIVE AS NON-FUNDAMENTAL
General
At a meeting of the Board of Trustees on May 16, 1995, the Trustees,
including the Independent Trustees, voted to approve, and voted to recommend to
the Fund's shareholders that they approve, a proposal to amend the Fund's
investment objective and to redesignate the investment objective as
non-fundamental.
Proposed Amended Investment Objective
The Fund's current investment objective (as set forth in the Fund's
Prospectus) is to "earn a high level of current income consistent with low
volatility of principal" (the "Current Objective"). The Fund's proposed
investment objective would be to "achieve a high level of current income
consistent with preserva- tion of capital and maintenance of liquidity" (the
"Proposed Objective"). As currently managed, the Fund seeks to reduce
volatility of principal by investing at least 90% of the Fund's total assets in
adjustable rate securities and in fixed rate debt securities that have, at the
time of purchase, a final maturity or average life of less than five years.
This policy limits the flexibility of the Fund to respond to changing interest
rate environments and diminishes the Fund's opportunities to achieve high
current income.
As described above in the Summary, the Fund will be acquiring the
assets of the Acquired Funds in connection with the Reorganiza- tions. The
Reorganizations are expected to increase the Fund's asset size. The Proposed
Objective will give the Adviser more flexibility to seek high current income
for shareholders and to attract additional investors to the Fund. The Proposed
Objective is the same as that of John Hancock Intermediate Government Trust,
one of the Acquired Funds.
The Proposed Objective of the Fund will be non-fundamental, which means
that the investment objective may be changed at the discretion of the Trustees
without a shareholder vote. The Trustees believe that the ability to change
the Fund's investment objective will enable the Fund to better respond to
changing economic and market conditions without incurring the expense and delay
associated with holding a shareholders' meeting. If the
-13-
<PAGE> 16
Trustees were to decide at some future date to amend the Fund's
investment objective, no change would become effective until the Fund's
Prospectus and Statement of Additional Information had been amended or
supplemented to disclose the change.
In conjunction with their approval of the proposed Amendment to the
Fund's investment objective, the Trustees have also approved several changes to
the Fund's non-fundamental investment policies and one of the Fund's
non-fundamental investment restrictions. These changes to non-fundamental
investment policies and restrictions do not require approval by the Fund's
shareholders. Therefore, you are not being asked to vote on these changes.
The Trustees have determined that the Fund should be managed to conform
substantially to the investment policies of John Hancock Intermediate
Government Trust, one of the Acquired Funds. The Fund has not been able to
attract significant investor assets over the past several years. However, the
Adviser believes that reposition- ing the Fund as an "intermediate-term"
government fund will provide the Fund and its shareholders with better
opportunities to achieve the investment objective of high current income. The
Current Objective and the investment policies of the Fund do not give the
Adviser enough investment flexibility to manage the Fund through any but the
most favorable interest rate climates. The Adviser believes that the
restructured Fund would benefit from John Hancock's broad distribution network,
and would be in a better position to capture a greater share of the market for
intermediate- term government funds and to increase its asset size.
<TABLE>
The chart below summarizes the Fund's non-fundamental
investment policies and a non-fundamental investment restriction as
they are currently disclosed in the Fund's prospectus and as
proposed to be changed:
<CAPTION>
Adjustable Government John Hancock Intermediate
Trust (BEFORE PROPOSED Maturity Government Fund
CHANGES) (AFTER PROPOSED CHANGES)
<S> <C> <C>
INVESTMENT Current objective is to Proposed objective is to
OBJECTIVE earn a high level of achieve a high level of
current income, current income, consistent
consistent with low with the preservation of
volatility of principal. capital and maintenance of
liquidity.
PRIMARY Under normal At least 65% of the Fund's
INVESTMENTS circumstances, at least assets will be invested in
65% of the Fund's assets U.S. Government securities,
are invested in including mortgage-backed
adjustable rate mortgage securities issued or
securities issued or guaranteed by U.S.
guaranteed by the U.S. Government agencies and
Government or its medium-term debt
agencies or obligations of
</TABLE>
-14-
<PAGE> 17
<TABLE>
<S> <C> <C>
instrumentalities. governmental issuers.
At least 80% of the Fund's
total assets are invested Under normal market
in U.S. Government conditions, the Fund will
securities. maintain a weighted average
remaining maturity or
remaining average life of
three to ten years.
OTHER Up to 20% of the Fund's The Fund may invest in
INVESTMENTS assets are invested in illiquid, restricted and
privately issued Rule 144A securities,
collateralized mortgage subject to a 15% limit on
obligations ("CMOs"), illiquid investments.
mortgage-backed The Fund may enter into
securities and U.S. repurchase agreements,
Government zero coupon purchase securities
securities. For on a forward commitment
defensive purposes, the or when-issued
Fund may temporarily basis, lend portfolio
invest without limit securities and enter into
in short-term securities, reverse repurchase
e.g., U.S. Government agreements. The Fund will
money market instruments. not be subject to
The Fund may invest in additional bank regulatory
illiquid, restricted limitations.
and Rule 144A securities,
subject to a 10% limit
on illiquid investments.
The Fund may also enter
into repurchase
agreements, purchase
securities on a forward
commitment or when-issued
basis and lend portfolio
securities. Investments
are subject to additional
bank regulatory
limitations.
PERMITTED The Fund may invest The Fund may invest in
TRANSACTIONS in mortgage-related mortgage-related
IN DERIVATIVE derivatives, including derivatives, including CMOs
INSTRUMENTS CMOs and stripped and SMBS as well as
mortgage-backed mortgage dollar rolls.
securities ("SMBS"), as The Fund may buy and sell
well as mortgage dollar options contracts,
rolls. financial futures contracts
for hedging and non-hedging
purposes.
</TABLE>
-15-
<PAGE> 18
<TABLE>
<S> <C> <C>
DIVERSIFICA- The Fund is diversified The Fund is diversified and
TION AND and does not concentrate does not concentrate more
CONCENTRATION more than 25% of its than 25% of its total
(no change) total assets in any one assets in any one industry.
industry.
NON-FUNDAMENTAL The Fund may not invest The Fund may not invest in
INVESTMENT in commodities and commodities, except that
RESTRICTION commodity futures the Fund may purchase and
contracts, put or call sell: options on securities
options or any and securities indices,
combination thereof. futures contracts on
securities and securities
indices and options on these
futures, forward
commitments, when-issued
securities, securities index
put or call warrants and
repurchase agreements
entered into in accordance
with the Fund's investment
policies.
</TABLE>
The proposed change to the Current Objective and the changes to the
Fund's investment policies approved by the Trustees will not significantly
increase the risks associated with an investment in the Fund. The Fund
currently maintains a short to intermediate duration. As proposed to be
managed, the Fund will maintain a longer duration. Duration is a measure of
the exposure of the Fund to changes in interest rates. A longer duration may
increase the volatility of the Fund's net asset value to changing interest
rates. The Fund currently does not engage in options transactions. As proposed
to be managed, the Fund will engage in options transac- tions, futures
contracts and options on futures for hedging and non-hedging purposes. Options
and futures contracts are bought and sold to manage the Fund's exposure to
changing interest rates and security prices. The Fund may 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.
Trustees' Recommendation
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE FUND'S SHAREHOLDERS VOTE
FOR THE PROPOSAL TO AMEND THE INVESTMENT OBJECTIVE OF THE FUND.
Vote Required
Approval of Proposal 3 to amend the Fund's fundamental investment
objective requires a Majority Shareholder Vote as set forth in Proposal 2
above.
-16-
<PAGE> 19
PROPOSAL 4
PROPOSED AMENDMENT TO THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING INVESTMENTS
IN ILLIQUID SECURITIES, AND REDESIGNATION OF THIS
INVESTMENT RESTRICTION FROM FUNDAMENTAL TO NON-FUNDAMENTAL
On May 16, 1995, the Trustees of the Fund, including the Independent
Trustees, voted to approve, and voted to recommend to the Fund's shareholders
that they approve, a proposal to amend the Fund's investment restriction with
respect to illiquid securities. The proposal would permit the Fund to invest up
to 15% of its net assets in these securities and to redesignate the restriction
from fundamental to non-fundamental.
The Fund's existing restriction limits its investments in illiquid
securities to 10% of its net assets. Under policies of the SEC, a security is
considered illiquid if it cannot be sold within seven days at the price at
which an open-end fund valued the security on its books. In 1992, the SEC
concluded that the 10% limit was overly restrictive for open-end mutual funds
that are not money market funds. Accordingly, it increased the limit for these
funds to 15% of the funds' net assets. All but a few states' securities
commissions also permit a 15% limit on illiquid investments. Accordingly, the
Trustees believe that the Fund's current restriction should be amended to
permit the Fund to invest up to 15% of its net assets in illiquid securities.
At present, the Fund's investment restriction with respect to illiquid
securities is fundamental, which means that it can be changed only by a vote of
the Fund's shareholders. Neither the 1940 Act nor state securities laws
require such a policy to be fundamental (i.e., changeable only with shareholder
approval). Accordingly, the Trustees believe that the current fundamental
policy of the Fund concerning illiquid securities should be deleted and
replaced with an appropriate non-fundamental policy. Consistent with the SEC's
current position on liquidity, the Trustees have adopted a non-fundamental
restriction (to be effective upon shareholder approval) that would permit the
Fund to invest up to 15% of its net assets in illiquid securities.
In addition, the Trustees have adopted procedures under which the
Adviser may determine that certain securities, which were not issued in a pubic
offering registered under the Securities Act of 1933, are nevertheless liquid
by virtue of the existence of a trading market as permitted by Rule 144A under
such Act.
Accordingly, it is proposed that the existing investment restriction be
modified as discussed below and be adopted as a non- fundamental investment
restriction. For purposes of this investment restriction, the staff of the SEC
considers, and the Fund will treat, over-the-counter options to be illiquid and
subject to the 15% limitation. The Board of Trustees considered that, as an
open-end mutual fund, the Fund must have sufficient
-17-
<PAGE> 20
liquidity to redeem its shares daily in accordance with the 1940 Act
and, in addition, must be able to value each portfolio security accurately in
order to compute its net asset value each day and effect purchase and
redemption orders at the correct price. Therefore, a higher percentage of
illiquid securities in the Fund's portfolio may increase the risk that the Fund
may have difficulty in accurately valuing its portfolio or in raising
sufficient cash to satisfy redemption requests. The Trustees nevertheless
believe that the flexibility that accompanies the proposed change will benefit
the Fund by keeping it competitive with other funds, including those within the
John Hancock fund complex that currently have the flexibility to invest up to
15% of their net assets in illiquid securities.
The Fund's current fundamental investment restriction regarding
illiquid securities states that:
"The Fund may not: . . .
(9) invest in illiquid securities, including repurchase agreements
maturing in more than seven days but excluding securi- ties which may be resold
pursuant to Rule 144A under the Securities Act of 1933, if, as a result
thereof, more than 10% of the net assets (taken at market value at the time of
each investment of the Fund . . .) would be invested in such securities, except
that the Fund may invest all or substantially all of its assets in another
registered investment company having substantially the same investment
restrictions as the Fund . . .."
The Trustees recommend that the shareholders vote to replace this
restriction with the following new non-fundamental restriction regarding
illiquid securities:
"The Fund may not: . . .
(g) Purchase any security, including any repurchase agreement maturing
in more than seven days, which is not readily marketable, if more than 15% of
the net assets of the Fund, taken at market value, would be invested in these
securities."
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT THE FUND'S SHAREHOLDERS ADOPT THE PROPOSED
CHANGE TO THE FUND'S INVESTMENT RESTRICTION WITH RESPECT TO ILLIQUID
SECURITIES.
Required Vote
Approval of the proposed change to the Fund's investment restriction
requires a Majority Shareholder Vote as defined above in Proposal 2.
-18-
<PAGE> 21
OTHER MATTERS
The Trust's management knows of no business to be brought before the
Meeting except as described above. However, if any other matters properly come
before the Meeting, the persons named in the enclosed form of proxy intend to
vote on these matters in accordance with their best judgment. If shareholders
would like additional information about the matters proposed for action, the
Trust's management will be glad to hear from them and to provide further
information.
PROXIES AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a Fund shareholder present
at the Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Meeting will be voted
in accordance with the instructions contained in the proxies. If no
instruction is given, the persons named as proxies will vote the shares of the
Fund represented thereby in favor of the matters set forth in Proposals 1, 2, 3
and 4, and will use their best judgment in connection with the transaction of
other business that may properly come before the Special Meeting or any
adjournment thereof.
In the event that, at the time any session of the Special Meeting is
called to order, a quorum is not present in person or by proxy, the persons
named as proxies may vote those proxies that have been received to adjourn the
Meeting to a later date. In the event that a quorum is present but sufficient
votes by Fund share- holders in favor of Proposals 1, 2, 3 and 4 have not been
received, the persons named as proxies will vote those proxies which they are
entitled to vote in favor of the relevant Proposal for such an adjournment, and
will vote those proxies required to be voted against the Proposal against any
adjournment. A shareholder vote may be taken on one or more of the Proposals
in the Proxy Statement prior to the adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate.
Shares of beneficial interest of the Fund represented in person or by
proxy (including shares which abstain or do not vote with respect to one or
more of the Proposals presented for shareholder approval) will be counted for
purposes of determining whether a quorum is present at the Meeting.
Abstentions will be treated as shares that are present and entitled to vote
with respect to each Proposal, but will not be counted as a vote in favor of
the Proposal. Accordingly, an abstention from voting on a Proposal has the
same effect as a vote against the Proposal. As noted above, the adoption by
the Fund's shareholders of Proposals 2, 3 and 4 requires the affirmative vote
of the lesser of (i) 67 percent or more of the Fund's outstanding voting
securities present
-19-
<PAGE> 22
at the Special Meeting, if the holders of more than 50 percent of the
Fund's shares of beneficial interest are present or represented by proxy; or
(ii) 50 percent or more of the Fund's outstanding shares of beneficial
interest. If a broker or nominee holding shares in "street name" indicates on
the proxy that it does not have discretionary authority to vote as to a
particular 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 a Proposal has
been adopted pursuant to item (i) above. However, in determining whether a
Proposal has been adopted pursuant to item (ii) above, because shares
represented by a "broker non-vote" are considered outstanding shares, a "broker
non-vote" will have the same effect as a vote against the Proposal.
In addition to the solicitation of proxies by mail or in person, the
Fund 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 chal- lenge 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.
The Fund is the sole shareholder of the Master Fund as of the Record
Date and the Fund will vote its interest in the Master Fund to approve or not
approve Proposal 1 on September 8, 1995 in the same proportion as the votes
cast by the Fund's shareholders at the Fund Meeting.
SHAREHOLDERS' PROPOSALS
The Trust is not required, and does not intend, to hold meetings of
shareholders each year. Instead, meetings will beheld only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting for shareholders of
-20-
<PAGE> 23
the Trust must submit the proposal in writing, so that it is re- ceived
by the Trust at 101 Huntington Avenue, Boston, Massachusetts 02199 within a
reasonable time before any meeting.
July 21, 1995 JOHN HANCOCK ADJUSTABLE
U.S. GOVERNMENT TRUST
-21-
<PAGE> 24
EXHIBIT A
AGREEMENT AND PLAN OF LIQUIDATION AND TERMINATION OF
ADJUSTABLE U.S. GOVERNMENT FUND
This Agreement and Plan of Liquidation and Termination (the
"Liquidation Plan") between Adjustable U.S. Government Fund (the "Master Fund")
and John Hancock Adjustable U.S. Government Trust (the "Feeder Fund"), each of
which is a series of John Hancock Bond Fund (the "Trust"), is for the purpose
of effecting the liquidation and termination of the Master Fund in accordance
with the requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), and applicable Massachusetts law.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. The Liquidation Plan shall become effective upon formal adoption
by the affirmative vote of the Trustees of the Trust, the shareholder of the
Master Fund and the shareholders of the Feeder Fund. Consummation of the
Liquidation Plan is subject to (i) the receipt of an opinion of Hale and Dorr,
counsel to the Master Fund and the Feeder Fund, substantially to the effect
that the liquidation of the Master Fund will qualify as a complete liquidation
of the Master Fund under Section 332 of the Code with respect to which neither
the Master Fund nor the Feeder Fund will recognize any gain or loss under the
Code, and that the Feeder Fund's basis in each security distributed to it in
liquidation will be the same as the Master Fund's basis for that security, and
that the Feeder Fund's holding period for each such security will include the
Master Fund's holding period for that security; and (ii) approval by the
shareholders of the Feeder Fund of an investment management contract between
the Trust, on behalf of the Feeder Fund, and John Hancock Advisers, Inc.
2. After September 22, 1995 or such date as shall be mutually agreed
upon (the "Liquidation Date"), the Master Fund shall not perform business
activities other than those required for the winding up of its affairs,
preserving the value of its assets, and distributing its assets in accordance
with the Liquidation Plan. The transfer of all of the Master Fund's assets and
liabilities to the Feeder Fund as the sole shareholder of the Master Fund in
liquidation and the termination of the Master Fund are to be effected on or as
promptly as possible after the Liquidation Date and are intended to be
completed not later than the close of the taxable year of the Master Fund in
which the liquidating distribution is made. If more than one liquidating
distribution is made, all such distributions must in any event be completed
within three (3) years from the close of the Master Fund's taxable year during
which the first liquidating distribution under the Liquidation Plan is made.
A-1
<PAGE> 25
3. After settlement of any claims, liabilities and expenses required
to be paid prior to the distribution described in this sentence, the Master
Fund shall distribute, transfer and assign all of its remaining assets, subject
to all of its liabilities, whether known or unknown, to the Feeder Fund by
appropriate instruments of transfer, in complete redemption or cancellation of
all the Master Fund's shares of beneficial interest.
4. The Trustees and officers of the Trust shall cause to be executed
and filed any and all documents necessary or appropriate to completely
liquidate the Master Fund in accordance with the foregoing in a manner that
qualifies as a "complete liquidation" within the meaning of Section 332 of the
Code and to terminate the Master Fund as a series of the Trust under the laws
of The Commonwealth of Massachusetts. The Trustees and officers shall execute
and file, or provide for the execution and filing of, any final income tax
returns of the Master Fund required to be filed, Treasury Department Form 966
and all other tax returns, information statements, certificates, documents, and
other information required to be filed by reason of the complete liquidation
and termination of the Master Fund.
5. The officers and trustees of the Master Fund shall execute and
consummate the Liquidation Plan, and shall have power to adopt all resolutions,
execute all documents, file all papers, and take all necessary action they deem
necessary or desirable for the complete liquidation and termination of the
Master Fund.
IN WITNESS WHEREOF, the parties hereto have caused the Liquidation Plan
to be executed by their respective duly authorized officers, this 13th day of
June, 1995.
JOHN HANCOCK BOND FUND, on behalf of
ADJUSTABLE U.S. GOVERNMENT FUND
By:
----------------------------------------
Title:
-------------------------------------
JOHN HANCOCK BOND FUND, on behalf of
JOHN HANCOCK ADJUSTABLE U.S.
GOVERNMENT TRUST
By:
----------------------------------------
Title:
-------------------------------------
A-2
<PAGE> 26
EXHIBIT B
JOHN HANCOCK INTERMEDIATE MATURITY GOVERNMENT FUND
(a series of John Hancock Bond Fund)
101 Huntington Avenue
Boston, Massachusetts 02199
September 22, 1995
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
------------------------------
Ladies and Gentlemen:
John Hancock Bond Fund (the "Trust"), of which John Hancock
Intermediate Maturity Government Fund (the "Fund") is a series, has been
organized as a business trust under the laws of The Commonwealth of
Massachusetts to engage in the business of an investment company. The Trust's
shares of beneficial interest, par value $.01 per share, may be divided into
series, each series representing the entire undivided interest in a separate
portfolio of assets. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with
copies, properly certified or otherwise authenticated, of each of the
following:
(a) Declaration of Trust of the Trust, dated November 27, 1984, as
amended from time to time (the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
B-1
<PAGE> 27
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of this Agreement;
(d) Commitments, limitations and undertakings made by the Fund to
state securities or "blue sky" authorities for the purpose of qualifying shares
of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
The Trust will furnish to the Adviser from time to time copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. INVESTMENT AND MANAGEMENT SERVICES. The Adviser will use its best
efforts to provide to the Fund continuing and suitable investment programs with
respect to investments, consistent with the investment objectives, policies and
restrictions of the Fund. In the performance of the Adviser's duties hereunder,
subject always (x) to the provisions contained in the documents delivered to
the Adviser pursuant to Section 1, as each of the same may from time to time be
amended or supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information included in the
registration statement of the Trust as in effect from time to time under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations,
consistent with the investment objectives, policies and
restrictions of the Fund, with respect to the purchase,
holding and disposition of portfolio securities, alone or
in consultation with any subadviser or subadvisers
appointed pursuant to this Agreement and subject to the
provisions of any sub-investment management contract
respecting the responsibilities of such sub-adviser or
subadvisers;
(b) advise the Fund in connection with policy decisions to
be made by the Trustees or any committee thereof with
respect to the Fund's investments and, as requested,
furnish the Fund with research, economic and statistical
data in connection with the Fund's investments and
investment policies;
(c) provide administration of the day-to-day investment
operations of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
B-2
<PAGE> 28
(e) assist the Fund in any negotiations relating to the
Fund's investments with issuers, investment banking
firms, securities brokers or dealers and other
institutions or investors;
(f) consistent with the provisions of Section 8 of this
Agreement, place orders for the purchase, sale or
exchange of portfolio securities with brokers or
dealers selected by the Adviser, PROVIDED that in
connection with the placing of such orders and the
selection of such brokers or dealers the Adviser
shall seek to obtain execution and pricing within
the policy guidelines determined by the Trustees
and set forth in the Prospectus and Statement of
Additional Information of the Fund as in effect
from time to time;
(g) provide office space and office equipment and
supplies, the use of accounting equipment when
required, and necessary executive, clerical and
secretarial personnel for the administration of the
affairs of the Fund;
(h) from time to time or at any time requested by the
Trustees, make reports to the Fund of the Adviser's
performance of the foregoing services and furnish
advice and recommendations with respect to other
aspects of the business and affairs of the Fund;
(i) maintain all books and records with respect to the
Fund's securities transactions required by the 1940
Act, including subparagraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 thereunder
(other than those records being maintained by the
Fund's custodian or transfer agent) and preserve
such records for the periods prescribed therefor by
Rule 31a-2 of the 1940 Act (the Adviser agrees that
such records are the property of the Fund and will
be surrendered to the Fund promptly upon request
therefor);
(j) obtain and evaluate such information relating to
economies, industries, businesses, securities
markets and securities as the Adviser may deem
necessary or useful in the discharge of the
Adviser's duties hereunder;
(k) oversee, and use the Adviser's best efforts to
assure the performance of the activities and
services of the custodian, transfer agent or other
similar agents retained by the Fund; and
B-3
<PAGE> 29
(l) give instructions to the Fund's custodian as to
deliveries of securities to and from such custodian
and transfer of payment of cash for the account of
the Fund.
3. SUBADVISERS. The Adviser may engage one or more
investment advisers which are either registered as such or
specifically exempt from registration under the Investment Advisers
Act of 1940, as amended, to act as subadvisers to provide, with
respect to the Fund, certain services set forth in Section 2 of
this Agreement, all as shall be set forth in a written contract to
which the Trust and the Adviser shall be parties, which contract
shall be subject to approval by the vote of a majority of the
Trustees of the Trust who are not interested persons of the
Adviser, the subadviser or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval and by
the vote of a majority of the outstanding voting securities of the
Fund and otherwise consistent with the terms of the 1940 Act. Any
fee, compensation or expense to be paid to any subadviser shall be
paid by the Adviser, and no obligation to the subadviser shall be
incurred on the Fund's or Trust's behalf, except as agreed upon by
the Trustees of the Trust and otherwise consistent with the terms
of the 1940 Act.
4. EXPENSES PAID BY THE ADVISER. The Adviser will pay:
(a) the compensation and expenses of all officers and
employees of the Fund;
(b) the expenses of office rent, telephone and other
utilities, office furniture, equipment, supplies
and other expenses of the Fund;
(c) any other expenses incurred by the Adviser in
connection with the performance of its duties
hereunder; and
(d) premiums for such insurance as may be agreed upon
by the Adviser and the Trustees.
5. EXPENSES OF THE FUND NOT PAID BY THE ADVISER. The
Adviser will not be required to pay any expenses which this
Agreement does not expressly make payable by it. In particular,
and without limiting the generality of the foregoing but subject to
the provisions of Section 4, the Adviser will not be required to
pay under this Agreement:
(a) any and all expenses, taxes and governmental fees
incurred by the Trust or the Fund prior to the
effective date of this Agreement;
B-4
<PAGE> 30
(b) without limiting the generality of the foregoing
clause (a), the expenses of organizing the Trust
and the Fund (including without limitation, legal,
accounting and auditing fees and expenses incurred
in connection with the matters referred to in this
clause (b)), of initially registering shares of the
Trust under the Securities Act of 1933, as amended,
and of qualifying the shares for sale under state
securities laws for the initial offering and sale
of shares;
(c) the compensation and expenses of Trustees who are
not interested persons (as used in this Agreement,
such term shall have the meaning specified in the
1940 Act) of the Adviser and of independent
advisers, independent contractors, consultants,
managers and other unaffiliated agents employed by
the Fund other than through the Adviser;
(d) legal (including an allocable portion of the cost
of its employees rendering legal services to the
Fund), accounting and auditing fees and expenses of
the Fund;
(e) the fees and disbursements of custodians and
depositories of the Fund's assets, transfer agents,
disbursing agents, plan agents and registrars;
(f) taxes and governmental fees assessed against the
Fund's assets and payable by the Fund;
(g) the cost of preparing and mailing dividends,
distributions, reports, notices and proxy materials
to shareholders of the Fund;
(h) brokers' commissions and underwriting fees; and
(i) the expense of periodic calculations of the net
asset value of the shares of the Fund.
6. COMPENSATION OF THE ADVISER. For all services to be
rendered, facilities furnished and expenses paid or assumed by the
Adviser as herein provided, the Adviser shall be entitled to a fee,
paid monthly in arrears, at the annual rate of 0.40% of the average
daily net assets of the Fund for the preceding month.
The "average daily net assets" of the Fund shall be
determined on the basis set forth in the Fund's Prospectus or
otherwise consistent with the 1940 Act and the regulations
promulgated thereunder. The Adviser will receive a pro rata
portion of such monthly fee for any periods in which the Adviser
serves as investment adviser to the Fund for less than a full
B-5
<PAGE> 31
month. On any day that the net asset value calculation is
suspended as specified in the Fund's Prospectus, the net asset
value for purposes of calculating the advisory fee shall be
calculated as of the date last determined.
In the event that normal operating expenses of the Fund,
exclusive of certain expenses prescribed by state law, are in
excess of any limitation imposed by the law of a state where the
Fund has registered its shares of beneficial interest, the fee
payable to the Adviser will be reduced to the extent required by
law, and the Adviser will make any additional arrangements that the
Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a
portion of its fee (in advance of the time its fee would otherwise
accrue) and/or undertake to make any other payments or arrangements
necessary to limit the Fund's expenses to any level the Adviser may
specify. Any fee reduction or undertaking shall constitute a
binding modification of this Agreement while it is in effect but
may be discontinued or modified prospectively by the Adviser at any
time.
7. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES.
Nothing herein contained shall prevent the Adviser or any affiliate
or associate of the Adviser from engaging in any other business or
from acting as investment adviser or investment manager for any
other person or entity, whether or not having investment policies
or portfolios similar to the Fund's; and it is specifically
understood that officers, directors and employees of the Adviser
and those of its parent company, John Hancock Mutual Life Insurance
Company, or other affiliates may continue to engage in providing
portfolio management services and advice to other investment
companies, whether or not registered, to other investment advisory
clients of the Adviser or of its affiliates and to said affiliates
themselves.
The Adviser shall have no obligation to acquire with respect
to the Fund a position in any investment which the Adviser, its
officers, affiliates or employees may acquire for its or their own
accounts or for the account of another client, if, in the sole
discretion of the Adviser, it is not feasible or desirable to
acquire a position in such investment on behalf of the Fund.
Nothing herein contained shall prevent the Adviser from purchasing
or recommending the purchase of a particular security for one or
more funds or clients while other funds or clients may be selling
the same security.
8. AVOIDANCE OF INCONSISTENT POSITION. In connection with
purchases or sales of portfolio securities for the account of the
Fund, neither the Adviser nor any of its investment management
subsidiaries, nor any of the Adviser's or such investment
management subsidiaries' directors, officers or employees will act
B-6
<PAGE> 32
as principal or agent or receive any commission, except as may be
permitted by the 1940 Act and rules and regulations promulgated
thereunder. If any occasions shall arise in which the Adviser
advises persons concerning the shares of the Fund, the Adviser will
act solely on its own behalf and not in any way on behalf of the
Fund. Nothing herein contained shall limit or restrict the Adviser
or any of its officers, affiliates or employees from buying,
selling or trading in any securities for its or their own account
or accounts.
9. NO PARTNERSHIP OR JOINT VENTURE. Neither the Trust, the
Fund nor the Adviser are partners of or joint venturers with each
other and nothing herein shall be construed so as to make them such
partners or joint venturers or impose any liability as such on any
of them.
10. NAME OF THE TRUST AND THE FUND. The Trust and the Fund
may use the name "John Hancock" or any name or names derived from
or similar to the names "John Hancock Advisers, Inc." or "John
Hancock Mutual Life Insurance Company" only for so long as this
Agreement remains in effect. At such time as this Agreement shall
no longer be in effect, the Trust and the Fund will (to the extent
that they lawfully can) cease to use such a name or any other name
indicating that the Fund is advised by or otherwise connected with
the Adviser. The Fund acknowledges that it has adopted the name
"John Hancock Intermediate Maturity Government Fund" through
permission of John Hancock Mutual Life Insurance Company, a
Massachusetts insurance company, and agrees that John Hancock
Mutual Life Insurance Company reserves to itself and any successor
to its business the right to grant the nonexclusive right to use
the name "John Hancock" or any similar name or names to any other
corporation or entity, including but not limited to any investment
company of which John Hancock Mutual Life Insurance Company or any
subsidiary or affiliate thereof shall be the investment adviser.
11. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser
shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. Any
person, even though also employed by the Adviser, who may be or
become an employee of and paid by the Fund shall be deemed, when
acting within the scope of his employment by the Fund, to be acting
in such employment solely for the Fund and not as the Adviser's
employee or agent.
12. DURATION AND TERMINATION OF THIS AGREEMENT. This
Agreement shall remain in force until June 30, 1997, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
B-7
<PAGE> 33
Trustees who are not interested persons of the Adviser or (other
than as Board members) of the Fund, cast in person at a meeting
called for the purpose of voting on such approval, and (b) either
(i) the Trustees or (ii) a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days' written
notice, be terminated at any time without the payment of any
penalty by the vote of a majority of the outstanding voting
securities of the Fund, by the Trustees or by the Adviser.
Termination of this Agreement shall not be deemed to terminate or
otherwise invalidate any provisions of any contract between the
Adviser and any other series of the Trust. This Agreement shall
automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 12, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "assignment," "interested person" and "voting
security") shall be applied.
13. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination
is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until
approved by (a) the Trustees, including a majority of the Trustees
who are not interested persons of the Adviser or (other than as
Trustees) of the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and (b) a majority of the
outstanding voting securities of the Fund, as defined in the 1940
Act.
14. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
15. SEVERABILITY. The provisions of this Agreement are
independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be
deemed invalid or unenforceable in whole or in part.
16. MISCELLANEOUS. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. The name John Hancock Intermediate
Maturity Government Fund is a series designation of the Trustees
under the Trust's Declaration of Trust. The Declaration of Trust
has been filed with the Secretary of State of The Commonwealth of
Massachusetts. The obligations of the Fund are not personally
binding upon, nor shall resort be had to the private property of,
B-8
<PAGE> 34
any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only upon the Fund and its property. The Fund shall
not be liable for the obligations of any other series of the Trust
and no other series shall be liable for the Fund's obligations
hereunder.
Yours very truly,
JOHN HANCOCK BOND FUND
on behalf of John Hancock Intermediate
Maturity Government Fund
By:
----------------------------------------
Title:
-------------------------------------
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By:
----------------------------------------
Title:
-------------------------------------
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<PAGE> 35
<TABLE>
EXHIBIT C
The Adviser provides investment advisory services to the
following John Hancock funds with investment objectives
substantially identical to that of the Fund:
<CAPTION>
NAME OF FUND ASSET SIZE ADVISORY FEE
(as of 3/31/95)
<S> <C> <C>
John Hancock Intermediate $8,305,602 0.50% of the fund's
Government Trust average daily net
assets.(1)
John Hancock U.S. $17,780,907 0.65% of the first
Government Trust $200,000,000 of the
fund's average
daily net assets;
0.625% of the next
$300,000,000; and
0.60% in excess of
$500,000,000.
John Hancock Limited $214,660,384 0.60% of the first
Term Government Fund $250,000,000 of the
fund's average
daily net assets;
0.55% of the next
$250,000,000; and
0.50% in excess of
$500,000,000.
<FN>
__________
(1) The Adviser has temporarily agreed to limit this fund's
aggregate operating expenses and to reduce its advisory fee to the
extent necessary to limit the total of the advisory fee and
aggregate operating expenses of the Fund (not including transfer
agency fees, Rule 12b-1 fees and other class-specific expenses) to
0.91% of average daily net assets attributable to Class A and
Class B shares, respectively.
</TABLE>
C-1
