John Hancock Sovereign Bond Fund, May 1, 1994
John Hancock Growth Fund, May 1, 1994
John Hancock Special Value Fund, April 1, 1994
John Hancock Sovereign Investors Fund, May 1, 1994
John Hancock Sovereign Balanced Fund, May 1, 1994
John Hancock Limited Term Government Fund, May 1, 1994
John Hancock Global Technology Fund, May 1, 1994
John Hancock National Aviation & Technology Fund, May 1, 1994
John Hancock Tax-Exempt Income Fund, May 1, 1994
Supplement to Class A and Class B Prospectus
The "Qualifying for a Reduced Sales Charge" section under SHARE PRICE is
supplemented as follows:
Effective March 15, 1995, participant directed defined contribution plans
with at least 100 eligible employees at the inception of the Fund account
may purchase Class A shares of the Fund without an initial sales charge but
if the shares are redeemed within 12 months after the end of the calendar
year in which the purchase was made, a contingent deferred sales charge
will be imposed at the rate for Class A shares described in the prospectus.
March 15, 1995
<PAGE>
JOHN HANCOCK
SOVEREIGN
BOND FUND
Class A and Class B Shares
Prospectus
May 1, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Expense Information 2
The Fund's Financial Highlights 3
Investment Objective and Policies 5
Organization and Management of the Fund 8
Alternative Purchase Arrangements 8
The Fund's Expenses 10
Dividends and Taxes 10
Performance 11
How to Buy Shares 12
Share Price 14
How to Redeem Shares 18
Additional Services and Programs 20
Institutional Investors 23
Appendix 24
</TABLE>
This Prospectus sets forth information about John Hancock Sovereign Bond Fund
(the "Fund") that you should know before investing. Please read and retain it
for future reference.
Additional information about the Fund 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 May 1, 1994, and incorporated by
reference in this Prospectus, free of charge by writing or telephoning: John
Hancock Fund Services, Inc., 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 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>
EXPENSE INFORMATION
The purpose of the following information is to help you understand the
various fees and expenses that you will bear, directly or indirectly when you
purchase shares of the Fund. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Class A
shares and Class B shares of the Fund for the fiscal year ended December 31,
1993, adjusted to reflect current fees and expenses. Actual fees and expenses
of Class A shares 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 0.50% 0.50%
12b-1 fee*** 0.30% 1.00%
Other expenses 0.45% 0.27%
Total Fund operating expenses 1.25% 1.77%
</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 under the caption "Share Price," in the event of
certain redemption transactions within one year of purchase.
**The information set forth in the foregoing table relates only to the Class
A shares and Class B shares. The Board of Trustees has authorized the
issuance of three classes of the Fund, designated Class A, Class B and Class
C. See "Organization and Management of the Fund." Class C shares are only
offered to certain institutional investors and are described in a separate
prospectus. Some individual investors who are currently eligible to purchase
Class A and Class B shares may also be participants in plans that are
eligible to purchase Class C shares. See "Institutional Investors." Class C
shares are not subject to a sales charge on purchases, redemptions, or
reinvested dividends, nor are they subject to deferred sales charges or an
exchange fee. Class C expenses are identical to those of Class A shares
except that the transfer agent fee may differ and there is no 12b-1 Fee on
Class C shares.
***The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average daily net assets, and the remaining portion will
be used to cover distribution expenses. See "The Fund's 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>
You would pay the following expenses for the indicated period of years on a hypothetical $1,000
investment, assuming 5% annual return:
Class A Shares $57 $83 $111
$189
Class B Shares
-- Assuming complete redemption at end of period $68 $86 $116
$208
-- Assuming no redemption $18 $56 $ 96
$208
</TABLE>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment in Class C shares, assuming a 5% annual
return: 1 year, $7; 3 years, $21; 5 years, $36; and 10 years, $81.
(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 National Association of
Securities Dealers Rules of Fair Practice.
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."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been audited by Ernst &
Young, the Fund's independent auditors for the fiscal year ended December 31,
1993, whose unqualified report is included in the Fund's 1993 Annual Report
and is included in the Statement of Additional Information.
Selected data for each class of shares outstanding throughout each period
indicated are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating
Performance
Net Asset Value,
Beginning of Period $15.29 $15.31 $14.33 $14.77 $14.51 $14.53 $15.89 $15.85 $14.36 $13.99
Net Investment Income 1.14 1.20 1.29 1.32 1.43 1.44 1.40 1.55 1.62 1.62
Net Realized &
Unrealized Gain
(Loss) on Investments
and Financial Futures
Contracts 0.62 (0.01) 0.98 (0.40) 0.27 (0.06) (1.17) 0.52 1.40 0.35
Total from Investment
Operations 1.76 1.19 2.27 0.92 1.70 1.38 0.23 2.07 3.02 1.97
Dividends from Net
Investment Income (1.14) (1.21) (1.29) (1.35) (1.44) (1.40) (1.53) (1.53) (1.53) (1.60)
Distributions to
Shareholders from
Capital Paid-In -- -- -- (0.01) -- -- -- -- -- --
Distributions from Net
Realized Gain on
Investments Sold and
Financial Futures
Contracts (0.38) -- -- -- -- -- (0.06) (0.50) -- --
Total Distributions (1.52) (1.21) (1.29) (1.36) (1.44) (1.40) (1.59) (2.03) (1.53) (1.60)
Net Asset Value, End of
Period $15.53 $15.29 $15.31 $14.33 $14.77 $14.51 $14.53 $15.89 $15.85 $14.36
Total Investment Return
at Net Asset Value
(Value Unaudited) 11.80% 8.08% 16.59% 6.71% 12.13% 9.82% 1.58% 13.67% 22.35% 15.34%
Ratios and Supplemental
Data
Net Assets, End of
period (000,000's
omitted) $1,506 $1,386 $1,250 $1,103 $1,110 $1,104 $1,095 $1,152 $1,016 $ 829
Ratio of Expenses to
Average Net Assets 1.41% 1.44% 1.27% 1.31% 0.80% 0.82% 0.82% 0.72% 0.79% 0.79%
Ratio of Net Investment
Income to Average Net
Assets 7.18% 7.89% 8.81% 9.18% 9.68% 9.77% 9.32% 9.65% 10.95% 11.85%
Portfolio Turnover Rate 107% 87% 90% 92% 64% 66% 159% 163% 100% 47%
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
1993
<S> <C>
CLASS B(a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.90(e)
Net Investment Income 0.11
Net Realized & Unrealized Gain (Loss) on Investments and Financial
Futures Contracts --
Total from Investment Operations 0.11
Dividends from Net Investment Income (0.11)
Distributions to Shareholders from Capital Paid-In --
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.38)
Total Distributions (0.49)
Net Asset Value, End of Period $15.52
Total Investment Return at Net Asset (Value Unaudited) 0.90%(c)
Ratios and Supplemental Data
Net Assets, End of period (000,000's omitted) $4,125
Ratio of Expenses to Average Net Assets 1.63%(d)
Ratio of Net Investment Income to Average Net Assets 0.57%(d)
Portfolio Turnover Rate 107%
1993
CLASS C(b)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.86(e)
Net Investment Income 0.81
Net Realized & Unrealized Gain (Loss) on Investments and Financial
Futures Contracts 0.04
Total from Investment Operations 0.85
Dividends from Net Investment Income (0.81)
Distributions to Shareholders from Capital Paid-In --
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.38)
Total Distributions (1.19)
Net Asset Value, End of Period $15.52
Total Investment Return at Net Asset (Value Unaudited) 5.45%(c)
Ratios and Supplemental Data
Net Assets, End of period (000,000's omitted) $ 867
Ratio of Expenses to Average Net Assets 0.90%(d)
Ratio of Net Investment Income to Average Net Assets 4.90%(d)
Portfolio Turnover Rate 107%
</TABLE>
(A) CLASS B SHARES COMMENCED OPERATIONS ON NOVEMBER 23, 1993.
(B) CLASS C SHARES COMMENCED OPERATIONS ON MAY 7, 1993.
(C) TOTAL RETURN FOR THE PERIOD IS ON A CUMULATIVE BASIS.
(D) ON AN ANNUALIZED BASIS.
(E) INITIAL PRICE TO COMMENCE OPERATIONS.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to generate a high level of current
income consistent with prudent investment risk.
The Fund's investment objective is to generate a high level of current
income, consistent with prudent investment risk, through investment in a
diversified portfolio of freely marketable debt securities. The Fund's
Adviser seeks high current income consistent with the moderate level of risk
associated with a portfolio consisting primarily of investment grade debt
securities.
Under normal market conditions, at least 65% of the value of the Fund's
assets will be in bonds and/or debentures. In addition, the Fund contemplates
that at least 75% of the value of its total investments in debt securities
(other than commercial paper) will be represented by those securities which
have, at the time of purchase, a rating within the four highest grades as
determined by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa)
or Standard & Poor's Corporation ("S&P") (AAA, AA, A, or BBB) and debt
securities of banks, the U.S. Government and its agencies or
instrumentalities and other issuers which, although not rated as a matter of
policy by either Moody's or S&P, are considered by the Fund to have
investment quality comparable to securities receiving ratings within the four
highest grades. Debt securities rated Baa or BBB are considered medium grade
obligations with speculative characteristics and adverse economic conditions
or changing circumstances may weaken their issuers' capacity to pay interest
and repay principal. The Fund will diversify its investments among a number
of industry groups without concentration in any particular industry. The
Fund's investments, and consequently, its net asset value, will be subject to
the market fluctuations and risks inherent in all securities and there is no
assurance that the Fund's investment objective will always be achieved.
The Fund may employ certain investment strategies to help achieve its
investment objective.
Securities of domestic and foreign issuers. The Fund may invest in U.S.
dollar- denominated securities of foreign and United States issuers which are
issued in or outside of the U.S. Foreign companies may not be subject to
accounting standards and government supervision comparable to U.S. companies
and there is often less publicly available information about their
operations. Foreign markets generally provide less liquidity than U.S.
markets (and thus potentially greater price volatility) and typically provide
fewer regulatory protections for investors. Foreign securities can also be
affected by political or financial instability abroad. It is anticipated that
under normal conditions, the Fund will not invest more than 25% of its total
assets in foreign securities (excluding U.S. dollar-denominated Canadian
securities).
Futures and Option Contracts. The Fund may buy and sell financial futures
contracts and options on futures contracts. The Fund's ability to hedge
successfully will depend on the ability of John Hancock Advisers, Inc. (the
"Adviser") to predict accurately the future direction of interest rate
changes and other market factors. There is no assurance that a liquid market
for futures and options will always exist. In addition, the Fund could be
prevented from opening, or realizing the benefits of closing out, a futures
or options position because of position limits or limits on daily price
fluctuations imposed by an exchange.
The Fund may engage in transactions in futures contracts and options on
futures contracts for hedging and speculative purposes. All of the Fund's
futures contracts and options on futures contracts will be traded on a U.S.
commodity exchange or board
<PAGE>
of trade. The Fund will not engage in a transaction in futures or options on
futures for speculative 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 total assets.
Lower Rated Securities. The Fund may invest up to 25% of the value of its
total assets in fixed income securities rated below Baa by Moody's or below
BBB by S&P or in securities which are unrated. The Fund may invest in
securities rated as low as Ca by Moody's or CC by S&P, which may indicate
that the obligations are speculative to a high degree and often in default.
Lower rated securities are generally referred to as junk bonds. See the
Appendix attached to this Prospectus and the Statement of Additional
Information, respectively, for the distribution of securities in the various
ratings categories and a description of the characteristics of the
categories. The Fund is not obligated to dispose of securities whose issuers
subsequently are in default or which are downgraded below the above-stated
ratings. The Fund may invest in unrated securities which, in the opinion of
the Adviser, offer comparable yields and risks to those securities which are
rated.
Debt obligations rated in the lower ratings categories, or which are unrated,
involve greater volatility of price and risk of loss of principal and income.
In addition, lower ratings reflect a greater possibility of an adverse change
in financial condition affecting the ability of the issuer to make payments
of interest and principal.
The market price and liquidity of lower rated fixed income securities
generally respond to short-term economic, corporate and market developments
to a greater extent than do higher rated securities, because these
developments are perceived to have a more direct relationship to the ability
of an issuer of lower rated securities to meet its ongoing debt obligations.
Reduced volume and liquidity in the high yield bond market or the reduced
availability of market quotations will make it more difficult to dispose of
the bonds and to value accurately the Fund's assets. The reduced availability
of reliable, objective data may increase the Fund's reliance on management's
judgment in valuing the high yield bonds. To the extent that the Fund invests
in these securities, the achievement of the Fund's objective will depend more
on the Adviser's judgment and analysis than would otherwise be the case. In
addition, the Fund's investments in high yield securities may be susceptible
to adverse publicity and investor perceptions, whether or not justified by
fundamental factors. In the past, economic downturns and increases in
interest rates have caused a higher incidence of default by the issuers of
such securities and may do so in the future, particularly with respect to
highly leveraged issuers. The market prices of zero coupon and
payment-in-kind bonds are affected to a greater extent by interest rate
changes, and thereby tend to be more volatile than securities which pay
interest periodically and in cash. Increasing rate note securities are
typically refinanced by the issuers within a short period of time. The Fund
accrues income on these securities for tax and accounting purposes, which
income is required to be distributed to shareholders. Because no cash is
received, and income accrues on these securities, the Fund may be forced to
liquidate other investments to make these distributions.
The Fund may acquire individual securities of any maturity and is not subject
to any limits as to the average maturity of its overall portfolio. The longer
the Fund's average
<PAGE>
portfolio maturity, the more the value of the portfolio and the net asset
value of the Fund's shares will fluctuate in response to changes in interest
rates. An increase in interest rates will generally decrease the value of the
Fund's portfolio securities and the Fund's shares, while a decline in
interest rates will generally increase their value.
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"), subject to
a nonfundamental restriction limiting all illiquid securities held by the
Fund to not more than 15% of the Fund's net assets. The Trustees will
carefully monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted
securities.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The
Fund may enter into repurchase agreements and may purchase securities on a
forward or when-issued basis. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back 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 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.
Short-term Trading. Short-term trading means the purchase and subsequent sale
of a security after it has been held for a relatively brief period of time.
The Fund engages 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 fixed-income securities in order to realize
capital gains or improve income. Portfolio turnover rates of the Fund for
recent periods are shown in the section "The Fund's Financial Highlights."
The Fund follows certain policies, which may help reduce investment risk.
The Fund has adopted certain fundamental investment restrictions which are
detailed in the Statement of Additional Information, where they are
classified as fundamental or nonfundamental. The Fund's investment objective
and those investment restrictions designated as fundamental may not be
changed without shareholder approval. All other investment policies and
restrictions, however, are nonfundamental and can be changed by a vote of the
Trustees without shareholder approval.
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the
primary consideration is execution at the most favorable prices, taking into
account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares.
Pursuant to procedures determined by the Trustees, the Adviser may place
securities transactions with brokers affiliated with the Adviser. These
brokers include Tucker Anthony Incorporated and Sutro & Company, Inc. They
are indirectly owned by John Hancock Mutual Life Insurance Company, which in
turn indirectly owns the Adviser.
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUND
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 Fund is a diversified open-end management investment company organized as
a Maryland corporation in 1973 and reorganized as a Massachusetts business
trust in 1984. The Fund has an unlimited number of authorized shares of
beneficial interest. The Fund's Declaration of Trust permits the Trustees,
without shareholder approval, to create and classify shares of beneficial
interest into separate series of the Fund. As of the date of this Prospectus,
the Trustees have not authorized the creation of any new series of the Fund.
Additional series may be added in the future. The Trust's Declaration of
Trust also permits the Trustees to classify and reclassify any series or
portfolio of shares into one or more classes. Accordingly, the Trustees have
authorized the issuance of three classes of the Fund, designated Class A,
Class B and Class C. The shares of each class represent an interest in the
same portfolio of investments of the Fund and have equal rights as to voting,
redemption, dividends and liquidation. However, each class bears different
distribution and transfer agent fees, and Class A and Class B shareholders
have exclusive voting rights with respect to their distribution plans.
Shareholders have certain rights to remove Trustees. The Fund is not required
and does not intend to hold annual shareholder meetings, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental investment restrictions or approving a management
contract. The Fund, under certain circumstances, will assist in shareholder
communications with other shareholders.
John Hancock Advisers, Inc. advises investment companies having total assets
of approximately $10 billion.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary
of the John Hancock Mutual Life Insurance 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 Broker Distribution Services, Inc. ("Broker
Services") distributes shares for all of the John Hancock mutual funds
through selected broker-dealers ("Selling Brokers"). Certain Fund officers
are also officers of the Adviser and Broker Services.
James Ho is a Senior Vice President and the portfolio manager of the Fund.
Mr. Ho is assisted in the day-to-day management of the Fund's investment
portfolio by a co-manager and a team of credit analysts. Mr. Ho also directs
all taxable fixed-income investment management for the Adviser and has been
associated with the Adviser since 1985.
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 (see
"Contingent Deferred Sales Charge Alternative--Class B Shares"). If you do
not specify on your account application which class of shares you are
purchasing, it will be assumed that you are investing in Class A shares.
Investments in Class A shares are subject to an initial sales charge.
Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount of your purchase is $1 million or
more. If you purchase $1 million or more of Class A shares you will not be
subject to an initial sales charge,
<PAGE>
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 0.30% of the Fund's average daily net
assets attributable to the Class A shares. Certain purchases of Class A
shares qualify for reduced initial sales charges. See "Share
Price--Qualifying for a Reduced Sales Charge."
Investments in Class B shares are subject to a contingent deferred sales
charge.
Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them
within six years of purchase (the "contingent deferred sales charge" or the
"CDSC"). Class B shares are subject to ongoing distribution and service fees
at a combined annual rate of up to 1.00% of the Fund's average daily net
assets attributable to the Class B shares. Investing in Class B shares
permits all of your dollars to work from the time you make your investment,
but the higher ongoing distribution fee will cause these shares to have a
higher expense ratio than that of Class A shares. To the extent that any
dividends are paid by the Fund, these higher expenses will also result in
lower dividends than those paid on Class A shares.
Factors to Consider in Choosing an Alternative
You should consider which class of shares will be a more beneficial
investment for you.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider
whether, during the anticipated life of your Fund investment, the 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 page 2 of this Prospectus gives examples of the
charges applicable to each class of shares. Class A shares will normally be
more beneficial if you qualify for a reduced sales charge. See "Share
Price--Qualifying for a Reduced Sales Charge".
Class A shares are subject to lower distribution and service 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 because the accumulated distribution and service charges on
Class B shares may exceed the initial sales charge and accumulated
distribution and service charges on Class A shares during the life of your
investment.
Alternatively, you might determine that it would be more advantageous to
purchase Class B shares in order to have all your funds invested initially,
although remaining subject to higher distribution fees and, for a six-year
period, a CDSC.
In the case of Class A shares, distribution expenses that Broker Services
incurs in connection with the sale of shares will be paid from the proceeds
of the initial sales charge and the ongoing distribution and service fees. In
the case of Class B shares, expenses will be paid from the proceeds of the
ongoing distribution and service fees, as well as 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
<PAGE>
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 and will be in the same
amount. However, each class will bear only its own distribution and service
fees, shareholder meeting expenses and incremental transfer agency costs. See
"Dividends and Taxes."
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a fee to the
Adviser which for the 1993 fiscal year, was 0.44% of the Fund's average daily
net asset value.
The fund pays distribution and service fees for marketing and sales-related
shareholder servicing.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Under these Plans, the Fund will pay distribution and service fees at an
aggregate annual rate of 0.30% 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% is for service expenses and the
remaining amount is for distribution expenses. The distribution fees will be
used to reimburse Broker Services for its distribution expenses including but
not limited to: (i) initial and ongoing sales compensation to Selling Brokers
and others (including affiliates of Broker Services) engaged in the sale of
Fund shares; (ii) marketing, promotional and overhead expenses incurred in
connection with the distribution of Fund shares; and (iii) 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
Broker Services is not fully reimbursed for payments made or expenses
incurred by it under the Class A Plan, these expenses will not be carried
beyond twelve months from the date they were incurred. These unreimbursed
expenses under the Class B Plan will be carried forward together with
interest on the balance of these unreimbursed expenses.
The total expenses of the Fund's Class A shares for the year ended December
31, 1993, were 1.41% of average daily net asset value. The total expenses for
Class B shares for the period from November 23, 1993 (commencement date of
Class B shares) to December 31, 1993 were 1.63% of average daily net asset
value on an annualized basis.
DIVIDENDS AND TAXES
Dividends. Dividends from the Fund's net investment income are generally
declared daily and distributed monthly. Capital gains, if any, are generally
distributed annually. Dividends are reinvested in additional shares of your
class unless you elect the option to receive them in cash. If you elect the
cash option and the U.S. Postal Service cannot deliver your checks, your
election will be converted to the reinvestment option. Because of the higher
expenses associated with Class B shares, any dividend on these shares will be
lower than 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. 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
<PAGE>
be paid in January of a given year, but they may be taxable as if you
received them the previous December. The Fund will send you a statement by
January 31 showing the tax status of the dividends you received for the prior
year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). As a regulated investment company, the Fund will not
be subject to Federal income taxes on any net investment income and net
realized capital gains that are distributed to its shareholders at least
annually. When you redeem (sell) or exchange shares, you may realize a gain
or loss.
On the account application, you must certify that your social security or
other taxpayer identification number is correct and that you are not subject
to backup Federal tax withholding. If you do not provide this information, or
are otherwise subject to withholding, the Fund may be required to withhold
31% of your dividends, redemptions and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes, depending on your residence. 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. You should consult your tax
adviser for specific advice.
PERFORMANCE
The Fund may advertise its yield and total return.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30 day period by the
maximum offering price per share on the last day of that period. Yield is
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 Fund shares or the income reported in the Fund's financial
statements.
Total return is based on the overall change in value of a hypothetical
investment in the Fund.
The Fund's total return shows the overall dollar or percentage change in
value, 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 performance, you should recognize that it is not the same as
actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at lower sales charges would result in
higher performance figures. Yield and total return for the Class B shares
reflect 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. Yield and total return of Class A, Class B and Class C shares will
be calculated separately and, because each class is subject to different
expenses, the yield or total return with respect to that class for the same
period may differ. The relative performance of the Class A and Class B shares
will be affected by a variety
<PAGE>
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,
Class B and Class C shares in any advertisement or promotional materials
including the Fund's 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 indications of future
performance. See "Factors to Consider in Choosing an Alternative." Further
information about the performance of the Fund is contained in the Fund's
Annual Report to Shareholders which may be obtained free of charge by writing
or telephoning John Hancock Fund Services, Inc. at the address or telephone
number listed on the front page of this Prospectus.
HOW TO BUY SHARES
Opening an account
The minimum initial investment in Class A and Class B shares is $1,000 ($250
for group investments or $500 for 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, Fund Services will assume you are investing in Class A
shares.
By Check
1. Make your check payable to John Hancock Fund Services, Inc. ("Fund
Services").
2. Deliver the completed application and check to your registered
representative or Selling Broker, or mail it directly to Fund 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 Sovereign Bond Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered representative or
Selling Broker, or mail it directly to Fund Services.
Monthly Automatic
Accumulation
Program (MAAP)
Buying additional Class A and Class B shares
1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which funds
may be drawn.
2. The amount you elect to invest will be automatically withdrawn from your
bank or credit union account.
<PAGE>
By Telephone
1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which 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 and Class B shares by calling Fund Services toll-free at
1-800-225-5291.
3. Give the Fund Services representative the name(s) in which your account is
registered, the Fund name, the class of shares you own, your account number
and the amount you wish to invest.
4. Your investment normally will be credited to your account the business day
following your phone request.
By Check
1. Either complete the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund, the class
of shares you own, your account number and the name(s) in which the account
is registered.
2. Make your check payable to John Hancock Fund Services, Inc.
3. Mail the account information and check to:
John Hancock Fund Services, Inc.
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 Sovereign Bond Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
Other Requirements: All purchases must be made in U.S. dollars. Checks
written on foreign banks will delay purchases until U.S. funds are received,
and a collection charge may be imposed. Shares of the Fund are priced at the
offering price based on the net asset value computed after Broker 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 Fund Services.
Institutional Investors: Certain institutional investors may purchase Class C
shares of the Fund, which have no sales charge or 12b-1 fee. See
"Institutional Investors" for further information.
You will receive statements regarding your account which you should keep to
help with your personal recordkeeping.
You will receive a statement of your account after any transaction that
affects your share balance or registration (statements related to
reinvestment of dividends and automatic investment/withdrawal plans will be
sent to you quarterly). A tax information statement will be mailed to you by
January 31 of each year.
<PAGE>
SHARE PRICE
The offering price of shares is their net asset value plus a sales charge, if
applicable, which will vary with the purchase alternative you choose.
The net asset value ("NAV") is the value of one share. The NAV per share is
calculated by dividing the net assets of each class by the number of
outstanding shares of that class. The NAV will be different for each class to
the extent that different amounts of undistributed income are accrued on
shares of each class between dividend declarations. Securities in the Fund's
portfolio are generally valued by a pricing service which utilizes electronic
pricing techniques based on general institutional trading. Some securities
are valued at fair value based on procedures approved by the Trustees, and
for certain other securities, the amortized cost method is used if the
Trustees determine in good faith that this cost approximates fair value, as
described more fully in the Statement of Additional Information. The NAV is
calculated once daily as of the close of regular trading on the New York
Stock Exchange (generally at 4:00 P.M., New York time) on each day that the
Exchange is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by Broker Services.
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 Broker Services before its close of
business to receive that day's offering price.
The Fund offers two classes of shares in this Prospectus: Class A shares,
which are subject to an initial sales charge, and Class B shares, which are
subject to a contingent deferred sales charge. If you do not specify a
particular class of shares, it will be assumed that you are purchasing Class
A shares and an initial sales charge will be assessed.
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 Sales Reallowance Reallowance
Charge Charge and Service to Selling
as a as a Fee as a Broker as a
Percentage Percentage Percentage of Percentage of
Amount invested of Offering of the Amount Offering Offering
(Including Sales Charge) Price Invested Price(+) 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>
(*) Upon notice to Selling Brokers with whom it has sales agreements, Broker
Services 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.
(**) No sales charge is payable at the time of purchase of Class A shares of
$1 million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions within one year of purchase.
(***) Broker Services may pay a commission and 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 $10 million and over.
<PAGE>
(+) At the time of sale, Broker Services 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. 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 which are reinvested in
additional shares of the Fund.
In addition to the reallowance allowed to all Selling Brokers, Broker
Services will pay the following: Round trip airfare to a luxury resort will
be given to each registered representative of a Selling Broker who sells
certain amounts of shares of John Hancock funds. Broker Services will make
these incentive payments out of its own resources. Other than distribution
fees, the Fund does not bear distribution expenses.
Broker Services will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of the accounts attributable to such
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 in 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 contingent deferred sales charge period), a contingent deferred
sales charge ("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>
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the Class A shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends 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 redemption is first made from any
shares in your account not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion "Waiver of Contingent
Deferred Sales Charges" below.
Qualifying for a Reduced Sales Charge.
You may qualify for a
reduced sales charge on
your investments in
Class A shares.
If you invest more than $100,000 in Class A shares of the Fund or a
combination of funds in 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 or through the COMBINATION
PRIVILEGE. You may also be able to use the ACCUMULATION PRIVILEGE to take
advantage of the value of your previous investments in Class A shares of John
Hancock funds when meeting the breakpoints for a reduced sales charge.
<PAGE>
Class A shares of the Fund may be purchased without paying an initial sales
charge by the following:
Fund employees and affiliates
* A Trustee/Director or officer of the Trust/Company; 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.
Special transactions
* Any state, county, city or any instrumentality, department, authority or
agency of these entities (an "eligible governmental authority") which 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 (an
"eligible depository institution") 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 Broker Services 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 Mutual
Funds, when s/he withdraws from his/her plan and transfers any or all of
his/her plan distributions directly to the Fund.
* Class A shares of the Fund may also be purchased without an initial sales
charge in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares
are offered at net asset value per share without a sales charge, so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a
CDSC at the rates set forth below. This charge will be assessed on an amount
equal to the lesser of the current market value or the original purchase cost
of the shares being redeemed. Accordingly, you will not be assessed a CDSC on
increases in account value above the initial purchase price, including shares
derived from dividend reinvestments. 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 dividend reinvestment, and
next from the shares you have held the longest during the six-year period.
<PAGE>
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:
*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
Proceeds from the CDSC are paid to Broker Services. Broker Services uses them
in whole or in part to defray its expenses related to providing the Fund with
distribution services in connection with 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 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>
Contingent Deferred Sales
Year In Which Class B Shares Charge As a Percentage of
Redeemed Following 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.
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 no later than the month following eight years after the shares
were purchased, resulting 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 the shares in the original fund were purchased.
Waiver of Contingent Deferred Sales Charge. The CDSC is waived on redemptions
of Class B shares (and Class A shares subject to the CDSC) in the following
circum-
<PAGE>
stances: (1) redemptions in connection with a tax-exempt retirement plan
distribution which is mandatory under the Code (i.e., after age 70-1/2); (2)
redemptions involving certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies; (3)
redemptions that are due to death or disability; or (4) redemptions made
pursuant to the Reinvestment Privilege, as described below. The CDSC is
waived on redemptions of shares following distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the Code or from
custodial accounts under Code Section 403(b)(7), deferred compensation plans
under Code Section 457 and other employee benefit plans, and certain returns
of excess contributions made to these plans. In addition, all of these
distributions must be permitted to be made without penalty under the Code. In
addition, certain IRA and retirement plans purchasing shares before October
1, 1992 will not be subject to a CDSC. If you are entitled to a waiver of the
CDSC, you must notify Fund Services either directly or through your Selling
Broker at the time you make your redemption. The waiver will be granted
subject to confirmation of your entitlement to the waiver.
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 Fund Services, less any applicable CDSC.
The Fund may hold payment until reasonably satisfied that investments which
were recently made by check or Invest-by-Phone have been collected (which may
take up to 10 calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the
next business day. When you redeem your shares, you will generally realize a
gain or loss depending 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.
<PAGE>
By Telephone
To assure acceptance of your redemption request, please follow these
procedures.
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 New York Stock Exchange is
closed. Fund 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 30 days. A check will be mailed to the
exact name(s) 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
instructions. In all other cases, neither the Fund nor Fund 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 certificate 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
using EASI- Line. EASI-Line is a telephone number which is listed on account
statements.
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 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 this Prospectus.
In Writing
Send a stock power or "letter of instruction" specifying the name of the
Fund, the dollar amount or the number of shares to be redeemed, your name,
class of shares, your account number and the additional requirements listed
below that apply to your particular account.
<TABLE>
<CAPTION>
Type of Registration Requirements
<S> <C>
Individual, Joint Tenants, Sole
Proprietorship, Custodial (Uniform A letter of instruction signed (with titles where applicable)
Gifts or Transfer to Minors Act), by all persons authorized to sign for the account, exactly as
General Partners. it is registered with the signature(s) guaranteed.
Corporation, Association A letter of instruction and a corporate resolution, signed by
person(s) authorized to act on the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s) with the
signature(s) guaranteed. (If the Trustee's name is not
registered on your account, also provide a copy of the trust
document, certified within the last 60 days.)
</TABLE>
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
<PAGE>
Who may guarantee your signature
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less,
Broker Services may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Fund Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net
capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and
loan association, a cooperative bank, a federal savings bank or association;
or (v) a national securities exchange, a registered securities exchange or a
clearing agency.
Through Your Broker
Your broker may be able to initiate the redemption. Contact your broker for
instructions.
Additional information about redemptions
If you have certificates for your shares, you must submit them with your
stock power or a letter of instruction. 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 smaller accounts, the
Fund reserves the right to redeem at net asset value all shares in an account
which holds fewer than 50 shares (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. 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 up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
You may exchange shares of the Fund only for shares of the same class in
another John Hancock mutual fund.
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 which 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 which are subject to a CDSC may be
exchanged for 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 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.
You may exchange Class B shares of any John Hancock fund into shares of John
Hancock Cash Management Fund at net asset value. Shares so acquired will
continue
<PAGE>
to be subject to a CDSC upon redemption. The rate of the CDSC will be the
rate in effect on the original fund at the time of the exchange.
If you exchange Class B shares purchased prior to January 1, 1994 (except
John Hancock Short-Term Strategic Income Fund) for Class B shares of any
other John Hancock fund, you will continue to be subject to the CDSC schedule
that was in effect when they were purchased. See "Contingent Deferred Sales
Charge Alternative-- Class B shares."
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 a new exchange.
Under exchange agreements with Broker Services, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and Broker Services' 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.
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 Broker Services' 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.
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 gain or loss.
When you make an exchange, your account registration must be identical in
both the existing and new account. The exchange privilege is available only
in states where the exchange can be made legally.
By Telephone
1. When you fill out the application for your purchase of Fund shares, you
automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to have the telephone exchange privilege.
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.
<PAGE>
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 the dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Fund Services, Inc.
P.O. Box 9116
Boston, Massachusetts 02205-9116
Reinvestment Privilege
If you redeem shares of the Fund, you may be able to reinvest the proceeds in
this Fund or another John Hancock fund without paying an additional sales
charge.
1. No sales charge will apply to Class A shares that are reinvested in any of
the other John Hancock funds which are otherwise subject to a sales charge as
long as you reinvest within 120 days of the redemption date. If you paid a
CDSC upon a redemption, you may reinvest at net asset value in the same class
of shares from which you redeemed within 120 days. Your account will be
credited with the amount of the CDSC previously charged, and the reinvested
shares will continue to be subject to a CDSC. For purposes of computing the
CDSC payable upon a subsequent redemption, the holding period of the shares
acquired through reinvestment will include the holding period of the redeemed
shares.
2. Any portion of your redemption may be reinvested in Fund shares or in
shares of any of the other John Hancock mutual funds, subject to the minimum
investment limit of that fund.
3. To reinvest, you must notify Fund Services in writing. Include the Fund
name, account number and class from which your shares were originally
redeemed.
Systematic Withdrawal Plan
You can pay routine bills from your account or make periodic disbursements
from your retirement account to comply with IRS regulations.
1. You may elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the application from your registered representative or by calling
1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually
or annually or on a selected monthly basis, to yourself or any other
designated payee.
4. There is no limit on the number of payees you may authorize, but all
payments must be made at the same time or intervals.
5. It is not advantageous to maintain a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares because
you may be subject
<PAGE>
to an initial sales charge 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. If the U.S. Postal Service cannot deliver your checks, or if deposits to a
bank account are returned for any reason, your redemptions will be
discontinued.
Monthly Automatic Accumulation Program (MAAP)
You can make automatic investments and simplify your investing.
1. You may authorize an investment to be drawn automatically each month from
your bank for investment in Fund shares, under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
2. You may also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You may terminate your Monthly Automatic Accumulation Program at any time.
4. There is no charge to you for this program, and there is no cost to the
Fund.
5. If you have payments being withdrawn from a bank account and we are
notified that the account has been closed, your withdrawals will be
discontinued.
Group Investment Program
Organized groups of at least four persons may establish accounts.
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
2. The initial aggregate investment of all participants in the group must be
at least $250.
3. No additional charge is made in connection with 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) or TSA Plans), and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of the above
plans is $500. However, accounts being established as group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.
INSTITUTIONAL INVESTORS
Class C shares of the Fund are available only to the following types of
institutional investors: (i) Benefits plans not affiliated with the Adviser
which have at least $25,000,000 in plan assets, and either have a separate
trustee vested with investment discretion and certain limitations on the
ability of the plan beneficiaries to access their plan investments without
incurring adverse tax consequences or allow their partici
<PAGE>
pants to select among one or more investment options, including the Fund
("participant-directed plans"); (ii) Banks and insurance companies which are
not affiliated with the Adviser purchasing shares for their own account;
(iii) Investment companies not affiliated with the Adviser; (iv) Tax-exempt
retirement plans of the Adviser and its affiliates, including affiliated
brokers; and (v) Unit investment trusts sponsored by Broker Services and
certain other sponsors. Participant-directed plans include, but are not
limited to, 401(k), TSA and 457 plans.
Class C shares are available to eligible institutional investors at net asset
value without the imposition of a sales charge and are not subject to ongoing
distribution fees imposed under a plan adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The minimum initial investment in Class C
shares is $1,000,000, but this requirement may be waived at the discretion of
the Fund's officers. Some individuals who are currently eligible to purchase
Class A or Class B shares may also be participants in plans that are eligible
to purchase Class C shares of the Fund. Plans that qualify to purchase Class
C shares will not be permitted to purchase shares of any other class of the
Fund.
Broker Services may pay a one-time payment of up to 0.15% of the amount
invested in Class C shares to a Selling Broker for its sales of Class C
shares. A person entitled to receive compensation for selling shares of the
Fund may receive different compensation with respect to sales of Class A,
Class B and Class C shares or any additional future class of shares.
The Reinvestment Privilege, Systematic Withdrawal Plan, Monthly Automatic
Accumulation Program, Group Investment Program and Retirement Plans are not
available for Class C shares.
If you are considering a purchase of Class C shares of the Fund, please call
John Hancock Fund Services, Inc. at 1-800-437-9312 to obtain information
about eligibility, instructions for purchase by check or wire and an
Institutional Account Application.
APPENDIX
Moody's describes its lower ratings for corporate bonds as follows.
Bonds which are rated Baa are considered as medium grade obligations, i.e.
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby are well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
<PAGE>
Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
S&P describes its lower ratings for corporate bonds as follows:
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Debt rated BB, B, CCC, or C is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Quality Distribution
The average weighted quality distribution of the portfolio for the fiscal
year ended December 31, 1993:
<TABLE>
<CAPTION>
Rating Rating
Average % of Assigned % of Assigned % of
Security Ratings Value Portfolio by Adviser Portfolio by Service Portfolio
<S> <C> <C> <C> <C> <C> <C>
AAA $ 480,566,382 32.8% 0 0.0% $ 480,566,382 32.8%
AA 171,122,996 11.7% 0 0.0% 171,122,996 11.7%
A 281,972,616 19.2% 0 0.0% 281,972,616 19.2%
BAA 205,390,698 14.0% 0 0.0% 205,390,698 14.0%
BA 169,263,279 11.5% 0 0.0% 169,263,279 11.5%
B 140,096,731 9.5% 0 0.0% 140,096,731 9.5%
CAA 2,617,563 0.2% 0 0.0% 2,617,563 0.2%
CA 0 0.0% 0 0.0% 0 0.0%
C 0 0.0% 0 0.0% 0 0.0%
D 0 0.0% 0 0.0% 0 0.0%
Debt Securities 1,451,030,265 98.9% 0 0.0% $1,451,030,265 98.9%
Equity Securities 0 0.0%
Short-Term Securities 16,016,171 1.1%
Total Portfolio 1,467,046,436 100.0%
Other Assets--Net 18,172,209
Net Assets $1,485,218,645
</TABLE>
<PAGE>
(Notes)
<PAGE>
(Notes)
The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.
Fund employees and affiliates
<PAGE>
John Hancock Sovereign Bond Fund
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Broker Distribution Services, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
Transfer Agent
John Hancock Fund Services, Inc.
P.O. Box 9116
Boston, Massachusetts 02205-9116
Independent Auditors
Ernst & Young
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
TDD call 1-800-554-6713
JHD-2100P 5-94
JOHN HANCOCK
SOVEREIGN
BOND FUND
Class A and B Shares
Prospectus
May 1, 1994
A mutual fund seeking to generate a high level of current income consistent
with prudent investment risk through investment in a diversified portfolio of
freely marketable debt securities.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
E Printed on recycled paper using soybean ink
