As filed with the Securities and Exchange Commission on April 25, 1995.
Registration No. 2-48925
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
-------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 39 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [X]
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John Hancock Sovereign Bond Fund
(Exact Name of Registrant as Specified in Charter)
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, (617) 375-1700
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Name and Address of
Agent for Service:
THOMAS H. DROHAN
Vice President and Secretary
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
-------
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b), of Rule 485
(x) on May 1, 1995 pursuant to paragraph (b), of Rule 485
( ) 60 days after filing pursuant to paragraph (a), of Rule 485
( ) on (date) pursuant to paragraph (a), of Rule 485
<TABLE>
Calculation of Registration Fees Under the Securities Act of 1933
<CAPTION>
Proposed Maximum Proposed Aggregate
Title of Securities Amount of Shares Offering Price Maximum Amount of
Being Registered Being Registered Per Share Offering Price Registration Fee
<S> <C> <C> <C> <C>
Shares of Beneficial Interest Indefinite* N/A N/A N/A
Shares of Beneficial Interest 7,374,625 $15.15 $289,998 $100.00
<FN>
*Registrant continues its election to register an indefinite number of shares of beneficial
interest pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
**Registrant elects to calculate the maximum aggregate offering price pursuant to Rule 24e-2.
15,378,671 shares were redeemed during the fiscal year ended December 31, 1994. 10,122,055 shares
were used for reductions pursuant to Paragraph (c) of Rule 24f-2 during the current fiscal year.
7,374,625 shares is the amount of redeemed shares used for reduction in this Amendment. Pursuant to
Rule 457(c) under the Securities Act of 1933, the maximum public offering price of $15.15 per share
on April 18, 1995 is the price used as the basis for calculating the registration fee. While no fee is
required for the 7,355,483 shares, the Registrant has elected to register, for $100, an additional
$289,998 of shares (approximately 19,142 shares at $15.15 per share).
</FN>
</TABLE>
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
The Registrant filed the notice required by Rule 24f-2 for its most recent
fiscal year on or about February 23, 1995.
================================================================================
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND
Cross Reference Sheet
Pursuant to Rule 495(a) under the Securities Act of 1933
Item Number Form N-1A, Prospectus Caption Statement of Additional
Part A Information Caption
- --------------------------------------------------------------------------------
1 Front Cover Page *
2 Expense Information; The *
Fund's Expenses; Share Price
3 The Fund's Financial *
Highlights; Performance
4 Investment Objectives and *
Policies; Organization and
Management of the Fund
5 Organization and Management *
of the Fund; The Fund's
Expenses; Back Cover Page
6 Organization and Management *
of the Fund; Dividends and
Taxes; How to Buy Shares;
How to Redeem Shares;
Additional Services and
Programs
7 How to Buy Shares; Shares *
Price; Additional Services
and Programs; Alternative
Purchase Arrangements; The
Fund's Expenses; Back Cover
Page
8 How to Redeem Shares *
9 Not Applicable *
10 * Front Cover Page
11 * Table of Contents
12 * Organization of the Fund
13 * Investment Objectives
and Policies; Certain
Investment Practices;
Investment Restrictions
14 * Those Responsible for
Management
15 * Those Responsible for
Management
16 * Investment Advisory and
Other Services;
Distribution Contract;
Transfer Agent Services;
Custody of Portfolio;
Independent Auditors
17 * Brokerage Allocation
18 * Description of Fund's
Shares
19 * Net Asset Value;
Additional Services and
Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of
Performance
23 * Financial Statements
<PAGE>
John Hancock
Sovereign
Bond Fund
Class A and Class B Shares
Prospectus
May 1, 1995
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 9
Alternative Purchase Arrangements 10
The Fund's Expenses 11
Dividends and Taxes 12
Performance 13
How to Buy Shares 14
Share Price 15
How to Redeem Shares 20
Additional Services and Programs 22
Institutional Investors 25
Appendix 26
</TABLE>
This Prospectus sets forth information about John Hancock Sovereign Bond Fund
(the "Fund") a diversified 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, 1995, and incorporated by reference in
this Prospectus, free of charge by writing or telephoning: John Hancock
Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291, (1-800-554-6713 TDD).
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
THE FUND MAY INVEST UP TO 35% OF ITS ASSETS IN LOWER RATED BONDS, COMMONLY
KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER RISKS, INCLUDING DEFAULT RISKS, THAN
THOSE FOUND IN HIGHER RATED SECURITIES. INVESTORS SHOULD CAREFULLY CONSIDER
THESE RISKS BEFORE INVESTING. SEE "INVESTMENT OBJECTIVE AND POLICIES, P. 5."
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
Fund shares. The operating expenses included in the table and hypothetical
example below are based on fees and expenses of the Fund's Class A and Class B
shares for the fiscal year ended December 31, 1994, adjusted to reflect current
fees and expenses. Actual fees and expenses in the future may be greater or
less than those indicated.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
<S> <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 0.38% 0.25%
Total Fund operating
expenses 1.18% 1.75%
</TABLE>
*No sales charge is payable at the time of purchase on investments of $1
million or more, but a contingent deferred sales charge may be imposed on
these investments, as described under the caption "Share Price," in the event
of certain redemption transactions within one year of purchase.
**The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average 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> <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 $67 $85 $115 $191
-- Assuming no redemption $17 $55 $ 95 $191
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)
The Fund's payment of a distribution fee may result in a long-term shareholder
indirectly paying more than the economic equivalent of the maximum front-end
sales charge permitted under the 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."
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been audited by Ernst & Young
LLP, the Fund's independent auditors, whose unqualified report is included in
the Fund's 1994 Annual Report and is included in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, that may be obtained free of
charge by writing or telephoning John Hancock Investor Services Corporation
("Investor Services") at the address or telephone number listed on the front
page of this Prospectus.
Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 15.53 $ 15.29 $ 15.31 $ 14.33 $ 14.77
Net Investment Income 1.12 1.14 1.20 1.29 1.32
Net Realized & Unrealized Gain (Loss) on Investments
and Financial Futures Contracts (1.55) 0.62 (0.01) 0.98 (0.40)
Total from Investment Operations (0.43) 1.76 1.19 2.27 0.92
Less Distributions:
Dividends from Net Investment Income (1.12) (1.14) (1.21) (1.29) (1.35)
Distributions to Shareholders from Capital Paid-In -- -- -- -- (0.01)
Distributions from Net Realized Gain on Investments
Sold and Financial Futures Contracts (0.08) (0.38) -- -- --
Total Distributions (1.20) (1.52) (1.21) (1.29) (1.36)
Net Asset Value, End of Period $ 13.90 $ 15.53 $ 15.29 $ 15.31 $ 14.33
Total Investment Return at Net Asset Value (2.75%) 11.80% 8.08% 16.59% 6.71%
Ratios and Supplemental Data
Net Assets, End of period (000,000's omitted) $ 1,326 $ 1,506 $ 1,386 $ 1,250 $ 1,103
Ratio of Expenses to Average Net Assets 1.26% 1.41% 1.44% 1.27% 1.31%
Ratio of Net Investment Income to Average Net Assets 7.74% 7.18% 7.89% 8.81% 9.18%
Portfolio Turnover Rate 85 % 107 % 87 % 90 % 92 %
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 14.51 $ 14.53 $ 15.89 $ 15.85 $ 14.36
Net Investment Income 1.43 1.44 1.40 1.55 1.62
Net Realized & Unrealized Gain (Loss) on Investments
and Financial Futures Contracts 0.27 (0.06) (1.17) 0.52 1.40
Total from Investment Operations 1.70 1.38 0.23 2.07 3.02
Less Distributions:
Dividends from Net Investment Income (1.44) (1.40) (1.53) (1.53) (1.53)
Distributions to Shareholders from Capital Paid-In -- -- -- -- --
Distributions from Net Realized Gain on Investments
Sold and Financial Futures Contracts -- -- (0.06) (0.50) --
Total Distributions (1.44) (1.40) (1.59) (2.03) (1.53)
Net Asset Value, End of Period $ 14.77 $ 14.51 $ 14.53 $ 15.89 $ 15.85
Total Investment Return at Net Asset Value 12.13% 9.82% 1.58% 13.67% 22.35%
Ratios and Supplemental Data
Net Assets, End of period (000,000's omitted) $ 1,110 $ 1,104 $ 1,095 $ 1,152 $ 1,016
Ratio of Expenses to Average Net Assets 0.80% 0.82% 0.82% 0.72% 0.79%
Ratio of Net Investment Income to Average Net Assets 9.68% 9.77% 9.32% 9.65% 10.95%
Portfolio Turnover Rate 64 % 66 % 159 % 163 % 100 %
</TABLE>
3
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CLASS B(a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 15.52 $ 15.90(b)
Net Investment Income 1.04 0.11
Net Realized & Unrealized Loss on Investments and Financial Futures
Contracts (1.54) --
Total from Investment Operations (0.50) 0.11
Less Distributions:
Dividends from Net Investment Income (1.04) (0.11)
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.08) (0.38)
Total Distributions (1.12) (0.49)
Net Asset Value, End of Period $ 13.90 $ 15.52
Total Investment Return at Net Asset Value (3.13%) 0.90%
Ratios and Supplemental Data
Net Assets, End of period (000's omitted) $40,299 $4,125
Ratio of Expenses to Average Net Assets 1.78% 1.63%*
Ratio of Net Investment Income to Average Net Assets 7.30% 0.57%*
Portfolio Turnover Rate 85% 107%
</TABLE>
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CLASS C(c)
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 15.52 $ 15.86(b)
Net Investment Income 1.19 0.81
Net Realized & Unrealized Gain (Loss) on Investments and Financial
Futures Contracts (1.54) 0.04
Total from Investment Operations (0.35) 0.85
Less Distributions:
Dividends from Net Investment Income (1.19) (0.81)
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.08) (0.38)
Total Distributions (1.27) (1.19)
Net Asset Value, End of Period $ 13.90 $ 15.52
Total Investment Return at Net Asset Value (2.19%) 5.45%
Ratios and Supplemental Data
Net Assets, End of period (000's omitted) $1,670 $867
Ratio of Expenses to Average Net Assets 0.73% 0.90%*
Ratio of Net Investment Income to Average Net Assets 8.28% 4.90%*
Portfolio Turnover Rate 85% 107%
</TABLE>
* On an annualized basis.
(a) Class B shares commenced operations on November 23, 1993.
(b) Initial price to commence operations.
(c) Class C shares commenced operations on May 7, 1993.
(d) Class C shares were no longer offered for sale after March 31, 1995.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective 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 that 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 Ratings Group ("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. There is no assurance that the Fund will 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 that 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).
Mortgage-Backed and Derivative Securities
Mortgage-backed securities represent participation interests in pools of
adjustable and fixed mortgage loans which are guaranteed by agencies or
instrumentalities of the U.S. Government. Unlike conventional debt obligations,
mortgage-backed securities provide monthly payments derived from the monthly
interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans. The mortgage loans
underlying mortgage-backed securities are generally subject to a greater rate
of principal prepayments in a declining interest rate environment and to a
lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest and prepayment rate scenarios, the Fund may
fail to recover the full amount of its investment in mortgage-backed securities
5
<PAGE>
notwithstanding any direct or indirect governmental or agency guarantee. Since
faster than expected prepayments must usually be invested in lower yielding
securities, mortgage-backed securities are less effective than conventional
bonds in "locking in" a specified interest rate. In a rising interest rate
environment, a declining prepayment rate may extend the average life of many
mortgage-backed securities. Extending the average life of a mortgage-backed
security increases the risk of depreciation due to future increases in market
interest rates.
The Fund's investments in mortgage-backed securities may include conventional
mortgage passthrough securities and certain classes of multiple class
collateralized mortgage obligations ("CMOs"). In order to reduce the risk of
prepayment for investors, CMOs are issued in multiple classes, each having
different maturities, interest rates, payment schedules and allocations of
principal and interest on the underlying mortgages. Senior CMO classes will
typically have priority over residual CMO classes as to the receipt of
principal and/or interest payments on the underlying mortgages. The CMO classes
in which the Fund may invest include but are not limited to sequential and
parallel pay CMOs, including planned amortization class ("PAC") and target
amortization class ("TAC") securities.
Risks of Mortgage-Backed Securities. Different types of mortgage-backed
securities are subject to different combinations of prepayment, extension,
interest rate and/or other market risks. Conventional mortgage passthrough
securities and sequential pay CMOs are subject to all of these risks, but are
typically not leveraged. PACs, TACs and other senior classes of sequential and
parallel pay CMOs involve less exposure to prepayment, extension and interest
rate risk than other mortgage-backed securities, provided that prepayment rates
remain within expected prepayment ranges or "collars."
The Fund may invest in structured debt obligations indexed to various financial
assets or rates.
Structured Securities. The Fund may invest in structured notes, bonds or
debentures, the value of the principal of and/or interest on which is to be
determined by reference to changes in the value of specific currencies,
interest rates, commodities, indices or other financial indicators (the
"Reference") or the relative change in two or more References. The interest
rate or the principal amount payable upon maturity or redemption may be
increased or decreased depending upon changes in the applicable Reference. The
terms of the structured securities may provide that in certain circumstances no
principal is due at maturity and, therefore, may result in the loss of the
Fund's investment. Structured securities may be positively or negatively
indexed, so that appreciation of the Reference may produce an increase or
decrease in the interest rate or value of the security at maturity. In
addition, the change in interest rate or the value of the security at maturity
may be a multiple of the change in the value of the Reference. Consequently,
structured securities entail a greater degree of market risk than other types
of debt obligations. Structured securities may also be more volatile, less
liquid and more difficult to accurately price than less complex fixed income
investments.
Futures and Option Contracts. The Fund may engage in transactions in futures
contracts and options on futures contracts for hedging and speculative
purposes. 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, the degree of correlation between the
futures and securities markets and other market factors. There is no assurance
that a liquid market for futures and options will always exist.
6
<PAGE>
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.
All of the Fund's futures contracts and options on futures contracts will be
traded on a U.S. or foreign commodity exchange or board 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 exceeds 5% of the Fund's net 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 highly speculative and 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. In the case of lower-rated securities,
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 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 the perceptions are
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
lower-rated 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 that pay interest
periodically and in cash. Increasing
7
<PAGE>
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 is required to be distributed to shareholders.
Because no cash is received while income accrues on these securities, the Fund
may be forced to liquidate other investments to make the 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 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 reduce 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"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain
factors, including valuation, liquidity and availability of information.
Purchases of other restricted securities are subject to an investment
restriction limiting all the Fund's illiquid securities to not more than 15% of
its net assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to
return the securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value exceeding 33-1/3% of its total assets.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase 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 in or prevented from liquidating the collateral. The Fund will
segregate in a separate account cash or liquid, high grade debt securities
equal in value to its forward commitments and when- issued securities.
Purchasing 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 realize capital gain or improve
income by taking advantage of yield disparities between various fixed-income
securities.
8
<PAGE>
The Fund follows certain policies, which may help to reduce investment risk.
Investment Restrictions. The Fund has adopted certain fundamental investment
restrictions that 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. The Fund's
portfolio turnover rates for recent years are shown in the section "The Fund's
Financial Highlights."
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sale of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company, which in turn indirectly owns the Adviser.
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 a total asset
value of more than $13 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.
It provides the Fund, and other investment companies in the John Hancock group
of funds, with investment research and portfolio management services. John
Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of the
John Hancock funds through selected broker-dealers ("Selling Brokers"). Certain
Fund officers are also officers of the Adviser and John Hancock Funds. Pursuant
to an order granted by the
9
<PAGE>
Securities and Exchange Commission, the Fund has adopted a deferred
compensation plan for its independent Trustees which allows Trustees' fees to
be invested by the Fund in other John Hancock funds.
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.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
ALTERNATIVE PURCHASE ARRANGEMENTS
An alternative purchase plan allows you to choose the method of purchase that
is best for you.
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge
Alternative--Class A shares") or on a contingent deferred basis (see
"Contingent Deferred Sales Charge Alternative--Class B shares"). If you do not
specify on your account application the class of shares you are purchasing, it
will be assumed that you are investing in Class A shares.
Investments in Class A shares are subject to an initial sales charge.
Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount of your purchase is $1 million or more.
If you purchase $1 million or more of Class A shares you will not be subject to
an initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.30% 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 higher expenses 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.
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance Company
that had more than 100 eligible employees at the inception of the Fund account.
10
<PAGE>
Factors to Consider in Choosing an Alternative
You should consider which class of shares would be more beneficial 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 CDSC and 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. This is because
the accumulated distribution and service charges on Class B shares may exceed
the initial sales charge and accumulated distribution and service charges on
Class A shares during the life of your investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all your funds invested initially. However you will be
subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
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 from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the Class
B shares' CDSC and ongoing distribution and service fees are the same as those
of the Class A shares' initial sales charge and ongoing distribution and
service fees. Sales personnel distributing the Fund's shares may receive
different compensation for selling each class of shares.
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount, except for differences resulting in each class bearing 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 1994 fiscal year, was 0.50% of the Fund's average daily
net asset value.
11
<PAGE>
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 are used to reimburse John
Hancock Funds for its distribution expenses, including but not limited to: (i)
initial and ongoing sales compensation to Selling Brokers and others (including
affiliates of John Hancock Funds) engaged in the sale of Fund shares; (ii)
marketing, promotional and overhead expenses incurred in connection with the
distribution of Fund shares; 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 John Hancock Funds is not
fully reimbursed for payments it makes or expenses it incurs under the Class A
Plan, these expenses will not be carried beyond one year from the date they
were incurred. These unreimbursed expenses under the Class B Plan will be
carried forward together with interest on the balance of these unreimbursed
expenses. For the fiscal year ended December 31, 1994 an aggregate of
$1,752,030 of distribution expenses, or 7.14% of the average net assets of the
Class B shares of the Fund, was not reimbursed or recovered by the John Hancock
Funds through the receipt of deferred sales charges or 12b-1 fees in prior
periods.
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this Prospectus.
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 gain. These
dividends are taxable whether received in cash or reinvested in additional
shares. Certain dividends 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 tax 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 taxable gain or loss.
12
<PAGE>
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 withholding of Federal income tax. If you do not provide this
information, or are otherwise subject to backup withholding, the Fund may be
required to withhold 31% of your dividends and the proceeds of redemptions and
exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends that represents interest
received by the Fund on direct U.S. government obligations may be exempt from
tax. Non-U.S. shareholders and tax-exempt shareholders are subject to different
tax treatment not described above. You should consult your tax adviser for
specific advice.
PERFORMANCE
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.
The Fund's total return shows the overall change in value of a hypothetical
investment in the Fund, assuming the reinvestment of all dividends. Cumulative
total return shows the Fund's performance over a period of time. Average annual
total return shows the cumulative return of the Fund shares divided over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that it is not the same as actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at a lower sales charge would result in
higher performance figures. 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 and Class B 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 of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of Class
A and Class B shares in any advertisement or promotional materials including
the Fund's performance data. The value of the Fund's shares, when redeemed, may
be more or less than their original cost. Both yield and total return are
historical calculations and are not an indication of future performance. See
"Factors to Consider in Choosing an Alternative."
13
<PAGE>
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 and retirement plans).
Complete the Account Application attached to this Prospectus. Indicate whether
you are purchasing Class A or Class B shares. If you do not specify which class
of shares you are purchasing, Investor Services will assume you are investing
in Class A shares.
By Check
1. Make your check payable to John Hancock Investor Services Corporation.
("Investor Services").
2. Deliver the completed application and check to your registered
representative or Selling Broker, or mail it directly to Investor Services.
By Wire
1. Obtain an account number by contacting your registered representative or
Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock 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 Investor Services.
Buying additional Class A and Class B shares
Monthly Automatic
Accumulation
Program (MAAP)
1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which funds
may be drawn.
2. The amount you elect to invest will be automatically withdrawn from your
bank or credit union account.
By Telephone
1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn. Note that in order to invest by phone, your account must
be in a bank or credit union that is a member of the Automated Clearing
House system (ACH).
2. After your authorization form has been processed, you may purchase
additional Class A and Class B shares by calling Investor Services toll-free
at 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which your account
is registered, the Fund name, the class of shares you own, your account
number and the amount you wish to invest.
4. Your investment normally will be credited to your account the business day
following your phone request.
14
<PAGE>
By Check
1. Either fill out the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund, the class
of shares you own, your account number and the name(s) in which the account
is registered.
2. Make your check payable to John Hancock Investor Services Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation.
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
By Wire
Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock 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 John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 p.m., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Certificates are not issued unless a request is made in writing to Investor
Services.
You will receive account statements, 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.
SHARE PRICE
The offering price of your shares is their net asset value plus a sales charge,
if applicable, which will vary with the purchase alternative you choose.
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of
outstanding shares of that class. The NAV of each class can differ. Securities
in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services, or fair value as
determined in good faith according to procedures approved by the Trustees.
Short-term debt investments maturing within 60 days are valued at amortized
cost, which approximates market value. Foreign securities are valued on the
basis of quotations from the primary market in which they are traded. If
quotations are not readily available, or the value has been materially affected
by events occurring after the closing of a foreign market, assets are valued by
a method that the Trustees believe accurately reflects fair value. The NAV is
calculated once daily as of the close of regular trading on the New York Stock
Exchange (generally at 4:00 P.M., New York time) on each day that the Exchange
is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your
15
<PAGE>
investment before the close of regular trading on the New York Stock Exchange,
and transmit it to John Hancock Funds before its close of business, to receive
that day's offering price.
Initial Sales Charge Alternative--Class A Shares. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge as follows:
<TABLE>
<CAPTION>
Combined
Sales Sales Reallowance Reallowance
Charge Charge and Service to Selling
as a as a Fee as a Brokers 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, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. In addition to the reallowance allowed to all Selling Brokers,
John Hancock Funds will pay the following: round trip airfare to a resort
will be given to each registered representative of a Selling Broker (if
the Selling Broker has agreed to participate) who sells certain amounts of
shares of John Hancock funds. John Hancock Funds will make these incentive
payments out of its own resources. Other than distribution fees, the Fund
does not bear distribution expenses. 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.
(***) John Hancock Funds 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.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.
Sales charges ARE NOT APPLIED to any dividends that are reinvested in
additional Class A shares of the Fund.
John Hancock Funds 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
these brokers.
Under certain circumstances described below, investors in Class A shares may be
entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge."
Contingent Deferred Sales Charge--Investments of $1 Million or More in Class A
Shares. Purchases of $1 million or more 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
16
<PAGE>
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>
Existing full service clients of John Hancock Mutual Life Insurance Company who
were group annuity contract holders as of September 1, 1994, and participant
directed defined contribution plans with at least 100 eligible employees at the
inception of the Fund account may purchase Class A shares with no initial sales
charge. However, if the shares are redeemed within 12 months after the end of
the calendar year in which the purchase was made, a contingent deferred sales
charge will be imposed at the above rate.
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any 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 the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charges."
You may qualify for a reduced sales charge on your investments in Class A
shares.
Qualifying for a Reduced Sales Charge. If you invest more than $100,000 in
Class A shares of the Fund or a combination of funds in the John Hancock funds
(except money market funds), you may qualify for a reduced sales charge on your
investments in Class A shares through a LETTER OF INTENTION. You may also be
able to use the ACCUMULATION PRIVILEGE and COMBINATION 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. For the
ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales charge
will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
Example:
If you hold Class A shares of a John Hancock fund with a net asset value of
$80,000 and, subsequently, invest $20,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 3.75% and not 4.50%. This
rate is the rate that would otherwise be applicable to investments of less than
$100,000. See "Initial Sales Charge Alternative--Class A Shares."
17
<PAGE>
Class A shares may be available without a sales charge to certain individuals
and organizations.
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
(bullet) A Trustee or officer of the Trust; 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.
(bullet) Any state, county, city or any instrumentality, department, authority
or agency of these entities that is prohibited by applicable investment laws
from paying a sales charge or commission when it purchases shares of any
registered investment management company.*
(bullet) A bank, trust company, credit union, savings institution or other type
of depository institution, its trust departments or common trust funds if it is
purchasing $1 million or more for non-discretionary customers or accounts.*
(bullet) A broker, dealer or registered investment adviser that has entered
into an agreement with John Hancock Funds providing specifically for the use of
Fund shares in fee- based investment products made available to their clients.
(bullet) A former participant in an employee benefit plan with John Hancock
funds, when he/she withdraws from his/her plan and transfers any or all of
his/her plan distributions directly to the Fund.
* For investments made under these provisions, John Hancock funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may 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. The CDSC is waived on redemptions in certain
circumstances. See the discussion "Waiver of Contingent Deferred Sales Charges"
below.
Example:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and
18
<PAGE>
you have gained 10 additional shares through dividend reinvestment. If you
redeem 50 shares at this time, your CDSC will be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(bullet) Proceeds of 50 shares redeemed at $12 per
share $ 600
(bullet) Minus proceeds of 10 shares not subject to
CDSC because they were acquired through
dividend reinvestment (10 X $12) -120
(bullet) Minus appreciation on remaining shares,
also not subject to CDSC (40 X $2) - 80
(bullet) Amount subject to CDSC $ 400
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
all or part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of Class B shares, such as
compensating selected 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.
Under certain circumstances, the CDSC on Class B and certain Class A share
redemptions will be waived.
Waiver of Contingent Deferred Sales Charge. The CDSC will be waived on
redemptions of Class B shares and Class A shares that are subject to the CDSC
unless indicated otherwise, in the following circumstances:
(bullet) Redemptions of Class B shares made under a Systematic Withdrawal Plan
(see "How to Redeem Shares"), as long as your annual redemptions do not exceed
10% of your account value at the time you established your Systematic
Withdrawal Plan and 10% of the value of your subsequent investments (less
redemptions) in that account at the time you notify Investor Services. This
waiver does not apply to Systematic Withdrawal Plan redemptions of Class A
shares that are subject to a CDSC.
(bullet) Redemptions made to effect distributions from an Individual Retirement
Account either before or after age 59-1/2, as long as the distributions are
based on your life expectancy or the joint-and-last survivor life expectancy of
you and your beneficiary. These distributions must be free from penalty under
the Code.
19
<PAGE>
(bullet) Redemptions made to effect mandatory distributions under the Code
after age 70-1/2 from a tax-deferred retirement plan.
(bullet) Redemptions made to effect distributions to participants or
beneficiaries from certain employer-sponsored retirement plans including those
qualified under Section 401(a) of the Code, custodial accounts under Section
403(b)(7) of the Code and deferred compensation plans under Section 457 of the
Code. The waiver also applies to certain returns of excess contributions made
to these plans. In all cases, the distributions must be free from penalty under
the Code.
(bullet) Redemptions due to death or disability.
(bullet) Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.
(bullet) Redemptions made pursuant to the Fund's right to liquidate your
account if you own fewer than 50 shares.
(bullet) Redemptions made in connection with certain liquidation, merger or
acquisition transactions involving other investment companies or personal
holding companies.
(bullet) Redemptions from certain IRA and retirement plans that purchased
shares prior to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time
you make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
Conversion of Class B Shares. Your Class B shares, and an appropriate portion
of reinvested dividends on those shares will be converted into Class A shares
automatically. This will occur at the end of eight years after the shares were
purchased, and will result in lower annual distribution fees. If you exchanged
Class B shares into this Fund from another John Hancock fund, the calculation
will be based on the time you purchased the shares in the original fund. The
Fund has been advised that the conversion of Class B shares to Class A shares
should not be taxable for Federal income tax purposes, nor should it change
your tax basis or tax holding period for the converted shares.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services, less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently
made by check or Invest-by-Phone have been collected (which may take up to 10
calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and
what you receive for them, subject to certain tax rules. Under unusual
circumstances, the Fund may suspend redemptions or postpone payment for up to
seven days or longer, as permitted by Federal securities laws.
20
<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. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and other relevant
information may be requested. In addition, telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the address on the account must
not have changed for the last 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 Investor Services will be liable for
any loss or expense for acting upon telephone instructions made in accordance
with the telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other tax-qualified
retirement plans or shares of the Fund that are in certificated form.
During periods of extreme economic conditions or market changes, telephone
requests may be difficult to implement due to a large volume of calls. During
these times you should consider placing redemption requests in writing or using
EASI-Line. EASI-Line's telephone number which is 1-800-338-8080.
By Wire
If you have a telephone redemption form on file with the Fund, redemption
proceeds of $1,000 or more can be wired on the next business day to your
designated bank account, and a fee (currently $4.00) will be deducted. You may
also use electronic funds transfer to your assigned bank account, and the funds
are usually collectable after two business days. Your bank may or may not
charge 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 that is included with this Prospectus.
In Writing
Send a stock power or "letter of instruction" specifying the name of the Fund,
the dollar amount or the number of shares to be redeemed, your name, class of
shares, your account number and the additional requirements listed below that
apply to your particular account.
<TABLE>
<CAPTION>
Type of Registration Requirements
<S> <C>
Individual, Joint Tenants, Sole A letter of instruction signed (with titles where applicable) by
Proprietorship, Custodial (Uniform all persons authorized to sign for the account, exactly as it is
Gifts or Transfer to Minors Act), registered with the signature(s) guaranteed.
General Partners.
Corporation, Association A letter of instruction and a corporate resolution, signed by
person(s) authorized to act on the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s) with the
signature(s) guaranteed. (If the Trustee's name is not
registered on your account, also provide a copy of the trust
document, certified within the last 60 days.)
If you do not fall into any of these registration categories, please call 1-800-225-5291 for further instructions.
</TABLE>
21
<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, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or meets certain
net capital requirements; (iii) a credit union having authority to issue
signature guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v)
a national securities exchange, a registered securities exchange or a clearing
agency.
Through Your Broker
Your broker may be able to initiate the redemption. Contact your broker for
instructions.
Additional information about redemptions
If you have certificates for your shares, you must submit them with your stock
power or a letter of 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 balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange shares of the Fund only for shares of the same class of
another John Hancock fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of
investment goals. Contact your registered representative or Selling Broker and
request a prospectus for the John Hancock fund that interests 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 that are not subject to a CDSC are based on the
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 for exchanges into John Hancock Short-Term Strategic Income Fund, John
Hancock Adjustable U.S. Government Trust and John Hancock Limited-Term
Government Fund will be subject to the initial fund's CDSC). For purposes of
computing the CDSC payable upon redemption of shares acquired in an exchange,
the holding period of the original shares is added to the holding period of the
shares acquired in an exchange. However if you exchange Class B shares
purchased prior to January 1, 1994 for Class B shares of any other John Hancock
fund, you will continue to be subject to the CDSC schedule that was in effect
at your initial purchase date.
22
<PAGE>
You may exchange Class B shares of the fund into shares of a John Hancock money
market fund at net asset value. However, you will continue to be subject to a
CDSC upon redemption.
The Fund reserves the right to require that you keep previously exchanged
shares (and reinvested dividends) in the Fund for 90 days before you are
permitted a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.
When you make an exchange, your account registration 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.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely.
The Fund may also temporarily or permanently terminate the exchange privilege
for any person who makes seven or more exchanges out of the Fund per calendar
year. Accounts under common control or ownership will be aggregated for this
purpose. Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
By Telephone
1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to 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.
3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.
23
<PAGE>
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 Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Reinvestment Privilege
If you redeem shares of the Fund, you may be able to reinvest all or part of
the proceeds in shares of the Fund or another John Hancock fund without paying
an additional sales charge.
1. You will not be subject to a sales charge on Class A shares that you
reinvest in any John Hancock fund that is otherwise subject to a sales
charge, as long as you reinvest within 120 days from the redemption date. If
you paid a CDSC upon a redemption, you may reinvest at net asset value in
the same class of shares from which you redeemed within 120 days. Your
account will be credited with the amount of the CDSC previously charged, and
the reinvested shares will continue to be subject to a CDSC. For purposes of
computing the CDSC payable upon a subsequent redemption, the holding period
of the shares acquired through reinvestment will include the holding period
of the redeemed shares.
2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment
limit of that fund.
3. To reinvest, you must notify Investor Services in writing. Include the
Fund(s) name, 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 can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain 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 to an
24
<PAGE>
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. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.
Monthly Automatic Accumulation Program (MAAP)
You can make automatic investments and simplify your investing.
1. You can authorize an investment to be 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 can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can 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. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at
any time.
Retirement Plans
1. You may use the Fund to fund various types of 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 $250. 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) Benefit 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 participants to select among
one or more investment options, including the Fund ("participant-directed
plans"); (ii) Banks and insurance companies which are not
25
<PAGE>
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; (v) Unit investment trusts sponsored by John Hancock Funds and certain
other sponsors; and (vi) Existing full- service clients of John Hancock Mutual
Life Insurance Company who were group annuity contract holders as of September
1, 1994. 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 Company'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.
John Hancock Funds 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 or
Class C shares or any additional future class of shares.
Class C shares are also available to existing full-service clients of John
Hancock Mutual Life Insurance Company who were group annuity contract holders
as of September 1, 1994. John Hancock Funds, out of its own resources, may pay
to a Selling Broker an annual service fee of up to 0.20% of the amount invested
in Class C shares by these clients.
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 Investor Services Corporation 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.
26
<PAGE>
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.
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, 1994:
<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 $ 506,896,240 36.2% 0 0.0% $ 506,896,240 36.2%
AA 149,154,024 10.6% 0 0.0% 149,154,024 10.6%
A 240,396,674 17.2% 0 0.0% 240,396,674 17.2%
BAA 200,808,990 14.3% 0 0.0% 200,808,990 14.3%
BA 165,446,356 11.8% 0 0.0% 165,446,356 11.8%
B 114,182,848 8.2% 0 0.0% 114,182,848 8.2%
CAA 6,292,420 0.4% 0 0.0% 6,292,420 0.4%
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 1,383,177,552 98.7% 0 0.0% $1,383,177,552 98.7%
Equity Securities 0 0.0%
Short-Term Securities 18,727,923 1.3%
Total Portfolio 1,401,905,475 100.0%
Other Assets--Net 25,728,800
Net Assets $1,427,634,275
</TABLE>
27
<PAGE>
John Hancock Sovereign Bond Fund
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
TDD call 1-800-554-6713
JHD-2100P 5-95
JOHN HANCOCK
SOVEREIGN
BOND FUND
Class A and B Shares
Prospectus
May 1, 1995
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
[RECYCLE LOGO] Printed on recycled paper using soybean ink
28
<PAGE>
John Hancock
Sovereign
Bond Fund
Class C Shares
Prospectus
May 1, 1995
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 9
The Fund's Expenses 10
Dividends and Taxes 10
Performance 11
Who Can Buy Class C Shares 11
How to Buy Class C Shares 12
Class C Share Price 13
How to Redeem Class C Shares 14
Additional Services and Programs 16
Appendix 17
</TABLE>
This Prospectus sets forth the information about John Hancock Sovereign Bond
Fund (the "Fund") a diversified 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, 1995, and incorporated by reference in
this Prospectus, free of charge by writing or telephoning: John Hancock
Investor Services Corporation, P.O. Box 9277, Boston, Massachusetts 02205-9277,
1-800-437-9312.
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.
THE FUND MAY INVEST UP TO 35% OF ITS ASSETS IN LOWER RATED BONDS, COMMONLY
KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER RISKS, INCLUDING DEFAULT RISKS, THAN
THOSE FOUND IN HIGHER RATED SECURITIES. INVESTORS SHOULD CAREFULLY CONSIDER
THESE RISKS BEFORE INVESTING. SEE "INVESTMENT OBJECTIVE AND POLICIES, P. 5."
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
Fund shares. The operating expenses included in the table and hypothetical
example below are based on fees and expenses of Class C shares of the Fund for
the fiscal year ended December 31, 1994. Actual fees and expenses of Class C
shares in the future may be greater or less than those indicated.
<TABLE>
<CAPTION>
Shareholder Transaction Class C
Expenses Shares*
<S> <C>
Maximum sales charge imposed
on purchases (as a
percentage of offering
price) None
Maximum sales charge imposed
on reinvested dividends None
Maximum deferred sales
charge None
Redemption fee+ None
Exchange fee None
Annual Fund Operating
Expenses
(as a percentage of average
net assets)
Management fee 0.50%
Other expenses 0.23%
Total Fund operating
expenses 0.73%
</TABLE>
*The information set forth in the foregoing table relates only to Class C
shares. In addition, the Fund offers Class A and Class B shares. The Fund has
been operating since its organization with only one class of shares. On
December 15, 1992 such class of shares was designated by the Board of Trustees
as Class A shares.
+Redemption by wire fee (currently $4.00) not included.
<TABLE>
<CAPTION>
Example: Class C Shares 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 $7 $23 $41 $104
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses of Class C shares may be greater or less than those
shown.)
The management fee referred to above is more fully explained in this Prospectus
under the caption "The Fund's Expenses" and in the Statement of Additional
Information under the caption "Investment Advisory and Other Services."
In addition to Class C shares, the Fund also offers Class A and Class B shares.
Class A and Class B shares are available to individual investors at net asset
value plus a maximum initial sales charge of 4.5% for A shares and a maximum
contingent deferred sales charge of 5.00% for B shares. Class A and Class B
shares are subject to ongoing distribution and service fees of 0.30% and 1.00%
respectively, of the Fund's average daily net assets in accordance with plans
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
minimum initial investment in Class A or B shares is $1,000 ($250 for group
investments or $500 for retirement plans). Generally, investors who are
eligible to purchase Class C shares are not able to purchase A or B shares. If
you are considering a purchase of Class A or B shares, please call John Hancock
Investor Services Corporation ("Investor Services") at 1-800-437-9312 for more
information about eligibility, instructions for purchase by check or wire and
an Account Application.
Class A and B shares generally have operating expenses similar to Class C
shares, except for the sales charge and distribution and transfer agent fees.
Class A and B shareholders are eligible for a reinvestment privilege,
systematic withdrawal plan, monthly automatic accumulation program, group
investment program and use of the Fund as a funding vehicle for a retirement
plan. Investors wishing information about any of these services and expenses
should contact Investor Services at 1-800-437-9312.
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been audited by Ernst & Young
LLP, the Fund's independent auditors, whose unqualified report is included in
the Fund's 1994 Annual Report and is included in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, that may be obtained free of
charge by writing or telephoning John Hancock Investor Services Corporation
("Investor Services") at the address or telephone number listed on the front
page of this Prospectus.
Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating
Performance
Net Asset Value, Beginning
of Period $15.53 $15.29 $15.31 $14.33 $14.77 $14.51 $14.53 $15.89 $15.85 $14.36
Net Investment Income 1.12 1.14 1.20 1.29 1.32 1.43 1.44 1.40 1.55 1.62
Net Realized & Unrealized
Gain (Loss) on Investments
and Financial Futures
Contracts (1.55) 0.62 (0.01) 0.98 (0.40) 0.27 (0.06) (1.17) 0.52 1.40
Total from Investment
Operations (0.43) 1.76 1.19 2.27 0.92 1.70 1.38 0.23 2.07 3.02
Less Distributions:
Dividends from Net
Investment Income (1.12) (1.14) (1.21) (1.29) (1.35) (1.44) (1.40) (1.53) (1.53) (1.53)
Distributions to
Shareholders from Capital
Paid-In -- -- -- -- (0.01) -- -- -- -- --
Distributions from Net
Realized Gain on
Investments Sold and
Financial Futures
Contracts (0.08) (0.38) -- -- -- -- -- (0.06) (0.50) --
Total Distributions (1.20) (1.52) (1.21) (1.29) (1.36) (1.44) (1.40) (1.59) (2.03) (1.53)
Net Asset Value, End of
Period $13.90 $15.53 $15.29 $15.31 $14.33 $14.77 $14.51 $14.53 $15.89 $15.85
Total Investment Return at
Net Asset Value (2.75%) 11.80% 8.08% 16.59% 6.71% 12.13% 9.82% 1.58% 13.67% 22.35%
Ratios and Supplemental
Data
Net Assets, End of period
(000,000's omitted) $1,326 $1,506 $1,386 $1,250 $1,103 $1,110 $1,104 $1,095 $1,152 $1,016
Ratio of Expenses to
Average Net Assets 1.26% 1.41% 1.44% 1.27% 1.31% 0.80% 0.82% 0.82% 0.72% 0.79%
Ratio of Net Investment
Income to Average Net
Assets 7.74% 7.18% 7.89% 8.81% 9.18% 9.68% 9.77% 9.32% 9.65% 10.95%
Portfolio Turnover Rate 85% 107% 87% 90% 92% 64% 66% 159% 163% 100%
</TABLE>
3
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CLASS B(a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.52 $15.90(b)
Net Investment Income 1.04 0.11
Net Realized & Unrealized Loss on Investments and Financial Futures
Contracts (1.54) --
Total from Investment Operations (0.50) 0.11
Less Distributions:
Dividends from Net Investment Income (1.04) (0.11)
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.08) (0.38)
Total Distributions (1.12) (0.49)
Net Asset Value, End of Period $13.90 $15.52
Total Investment Return at Net Asset Value (3.13%) 0.90%
Ratios and Supplemental Data
Net Assets, End of period (000's omitted) $40,299 $4,125
Ratio of Expenses to Average Net Assets 1.78% 1.63%*
Ratio of Net Investment Income to Average Net Assets 7.30% 0.57%*
Portfolio Turnover Rate 85% 107%
</TABLE>
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CLASS C(c)
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 15.52 $ 15.86(b)
Net Investment Income 1.19 0.81
Net Realized & Unrealized Gain (Loss) on Investments and Financial
Futures Contracts (1.54) 0.04
Total from Investment Operations (0.35) 0.85
Less Distributions:
Dividends from Net Investment Income (1.19) (0.81)
Distributions from Net Realized Gain on Investments Sold and Financial
Futures Contracts (0.08) (0.38)
Total Distributions (1.27) (1.19)
Net Asset Value, End of Period $ 13.90 $ 15.52
Total Investment Return at Net Asset Value (2.19%) 5.45%
Ratios and Supplemental Data
Net Assets, End of period (000's omitted) $1,670 $867
Ratio of Expenses to Average Net Assets 0.73% 0.90%*
Ratio of Net Investment Income to Average Net Assets 8.28% 4.90%*
Portfolio Turnover Rate 85 % 107 %
</TABLE>
* On an annualized basis.
(a) Class B shares commenced operations on November 23, 1993.
(b) Initial price to commence operations.
(c) Class C shares commenced operations on May 7, 1993.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective 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 that 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 Ratings Group ("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. There is no assurance that the Fund will achieve its investment
objective.
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 that 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).
Mortgage-Backed and Derivative Securities
Mortgage-backed securities represent participation interests in pools of
adjustable and fixed mortgage loans which are guaranteed by agencies or
instrumentalities of the U.S. Government. Unlike conventional debt obligations,
mortgage-backed securities provide monthly payments derived from the monthly
interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans. The mortgage loans
underlying mortgage-backed securities are generally subject to a greater rate
of principal prepayments in a declining interest rate environment and to a
lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest and prepayment rate scenarios, the Fund may
fail to recover the full amount of its investment in mortgage-backed securities
notwithstanding any direct or indirect governmental or agency guarantee. Since
faster
5
<PAGE>
than expected prepayments must usually be invested in lower yielding
securities, mortgage-backed securities are less effective than conventional
bonds in "locking in" a specified interest rate. In a rising interest rate
environment, a declining prepayment rate may extend the average life of many
mortgage-backed securities. Extending the average life of a mortgage-backed
security increases the risk of depreciation due to future increases in market
interest rates.
The Fund's investments in mortgage-backed securities may include conventional
mortgage passthrough securities and certain classes of multiple class
collateralized mortgage obligations ("CMOs"). In order to reduce the risk of
prepayment for investors, CMOs are issued in multiple classes, each having
different maturities, interest rates, payment schedules and allocations of
principal and interest on the underlying mortgages. Senior CMO classes will
typically have priority over residual CMO classes as to the receipt of
principal and/or interest payments on the underlying mortgages. The CMO classes
in which the Fund may invest include but are not limited to sequential and
parallel pay CMOs, including planned amortization class ("PAC") and target
amortization class ("TAC") securities.
Risks of Mortgage-Backed Securities. Different types of mortgage-backed
securities are subject to different combinations of prepayment, extension,
interest rate and/or other market risks. Conventional mortgage passthrough
securities and sequential pay CMOs are subject to all of these risks, but are
typically not leveraged. PACs, TACs and other senior classes of sequential and
parallel pay CMOs involve less exposure to prepayment, extension and interest
rate risk than other mortgage-backed securities, provided that prepayment rates
remain within expected prepayment ranges or "collars."
The Fund may invest in structured debt obligations indexed to various financial
assets or rates.
Structured Securities. The Fund may invest in structured notes, bonds or
debentures, the value of the principal of and/or interest on which is to be
determined by reference to changes in the value of specific currencies,
interest rates, commodities, indices or other financial indicators (the
"Reference") or the relative change in two or more References. The interest
rate or the principal amount payable upon maturity or redemption may be
increased or decreased depending upon changes in the applicable Reference. The
terms of the structured securities may provide that in certain circumstances no
principal is due at maturity and, therefore, may result in the loss of the
Fund's investment. Structured securities may be positively or negatively
indexed, so that appreciation of the Reference may produce an increase or
decrease in the interest rate or value of the security at maturity. In
addition, the change in interest rate or the value of the security at maturity
may be a multiple of the change in the value of the Reference. Consequently,
structured securities entail a greater degree of market risk than other types
of debt obligations. Structured securities may also be more volatile, less
liquid and more difficult to accurately price than less complex fixed income
investments.
Futures and Option Contracts. The Fund may engage in transactions in futures
contracts and options on futures contracts for hedging and speculative
purposes. 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, the degree of correlation between the
futures and securities markets and other market factors. There is no assurance
that a liquid market for futures and options will always exist.
6
<PAGE>
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.
All of the Fund's futures contracts and options on futures contracts will be
traded on a U.S. or foreign commodity exchange or board 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 exceeds 5% of the Fund's net 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 highly speculative and 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. In the case of lower-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 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 the perceptions are
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
lower-rated 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 that pay interest
periodically and in cash. Increasing rate note securities are typically
refinanced by the issuers within a short period of
7
<PAGE>
time. The Fund accrues income on these securities for tax and accounting
purposes, which is required to be distributed to shareholders. Because no cash
is received, while income accrues on these securities, the Fund may be forced
to liquidate other investments to make the 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 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 reduce 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"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain
factors, valuation, liquidity and availability of information. Purchases of
restricted securities are subject to investment restriction limiting all its
illiquid securities to not more than 15% of the Fund's net assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to
return the securities. As a result, the Fund may incur a loss or, in the event
of the borrower's bankruptcy, may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value exceeding 33-1/3% of its total assets.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase 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 in or prevented from liquidating the collateral. The Fund will
segregate in a separate account cash or liquid, high grade debt securities
equal in value to its forward commitments and when- issued securities.
Purchasing 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 realize capital gain or improve
income by taking advantage of yield disparities between various fixed-income
securities.
The Fund follows certain policies, which may help to reduce investment risk.
Investment Restrictions. The Fund has adopted certain fundamental investment
restrictions that 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
8
<PAGE>
without shareholder approval. All other investment policies and restrictions
are nonfundamental and can be changed by a vote of the Trustees without
shareholder approval. The Fund's portfolio turnover rates for recent years are
shown in the section "The Fund's Financial Highlights."
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sale of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company, which in turn indirectly owns the Adviser.
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 Trustee's
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. On May 1, 1992, the Fund changed its name from John Hancock Bond Fund.
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 Fund'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 a total asset
value of more than $13 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 Funds, Inc. ("John Hancock Funds") 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
John Hancock Funds. Pursuant to an order granted by the Securities and Exchange
Commission, the Fund has adopted a deferred compensation plan for its
independent Trustees which allows Trustees' fees to be invested by the Fund in
other John Hancock funds.
9
<PAGE>
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.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a fee to the
Adviser which for the 1994 fiscal year, was 0.50% of the Fund's average daily
net asset value.
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this prospectus.
DIVIDENDS AND TAXES
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 Class C shares unless you
elect the option to receive them in cash. If you elect the cash option and the
U.S. Postal Service cannot deliver your checks, your election will be converted
to the reinvestment option.
Taxation. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income. Dividends from the Fund's
net long- term capital gains are taxable as long-term capital gain. These
dividends are taxable whether you received in cash or reinvested in additional
Class C shares. Certain dividends 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 tax 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 taxable 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 withholding of Federal income tax. If you do not provide this
information, or are otherwise subject to backup withholding, the Fund may be
required to withhold 31% of your taxable dividends and the proceeds of
redemptions and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes, with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends that represents interest
received by the Fund on direct
10
<PAGE>
U.S. Government obligations may be exempt from tax. Non-U.S. shareholders and
tax-exempt shareholders are subject to different tax treatment not described
above. You should consult your tax adviser for specific advice.
PERFORMANCE
The Fund may advertise its yield and total return of Class C shares.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of the Fund's Class C share price. Yield is computed by annualizing
the result of dividing the net investment income per share over a 30 day period
by the net asset value per Class C 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 Class C 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 Class C shares of the Fund.
The Fund's total return on Class C shares shows the overall change in value of
a hypothetical investment in the Fund, assuming the reinvestment of all
dividends. Cumulative total return shows the Class C shares performance of over
a period of time. Average annual total return shows the cumulative return of
the Class C of the Fund shares divided over the number of years included in the
period. Because average annual total return tends to smooth out variations in
the performance of the Class C Fund shares, you should recognize that it is not
the same as actual year-to-year results.
Neither total return nor yield calculations with respect to Class C shares
reflect the imposition of a sales charge. The value of Class C Fund shares when
redeemed, may be more or less than their original cost. Both yield and total
return are historical calculations and are not an indication of future
performance.
WHO CAN BUY CLASS C SHARES
Class C shares are available to certain institutional investors.
In order to buy Class C Fund shares, you must qualify as one of 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 participants 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 John Hancock Funds and certain other sponsors.
Participant-directed plans include but are not limited to 401(k), TSA and 457
Plans and certain other sponsors and (vi) existing full-service clients of John
Hancock Mutual Life Insurance Company who were group annuity contract holders
as of September 1, 1994. Participant- directed plans include but are not
limited to 401(k), TSA and 457 plans.
11
<PAGE>
HOW TO BUY CLASS C SHARES
Opening an account.
The minimum initial investment is $1,000,000, except that this requirement may
be waived at the discretion of the Fund's officers. You may qualify for the
minimum investment if you invest more than $1,000,000 in Class C shares of the
Fund and Class C shares of other funds in the John Hancock family of funds.
This is discussed in greater detail in the Statement of Additional Information.
Complete the Account Application attached to this Prospectus.
By Check
1. Make your check payable to John Hancock Investor Services Corporation
("Investor Services").
2. Deliver the completed application and check to your registered
representative or Selling Broker, or mail it directly to Investor Services.
By Wire
1. Obtain an account number by contacting your registered representative or
Selling Broker, or by calling 1-800-437-9312.
2. Instruct your bank to wire funds to:
First Signature Bank and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Sovereign Bond Fund
(Class C shares)
Your account number
Name(s) under which account is registered
3. Deliver the completed application to your registered representative or
Selling Broker, or mail it directly to Investor Services.
Buying additional Class C shares.
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 C shares by calling Investor Services toll free at
1-800-437-9312.
3. Give the Investor Services representative the name in which your account is
registered, the Fund name and your account number, and the amount you wish to
invest in Class C shares.
4. Your investment normally will be credited to your account the business day
following your phone request.
By Check
1. Either fill out the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund and class of
shares, 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 Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
12
<PAGE>
By Wire
Instruct your bank to wire funds to:
First Signature Bank and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Sovereign Bond Fund
(Class C 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 John Hancock Funds 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.
Class C share certificates are not issued unless a request is made in writing
to Investor Services.
You will receive account statements 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 will be sent to you quarterly). A tax information statement will be
mailed to you by January 31 of each year.
CLASS C SHARE PRICE
The offering price of your Class C shares is their net asset value.
The net asset value per share ("NAV") of a Class C share is the value of one
Class C share. The NAV is calculated by dividing the net assets of each class
by the number of outstanding shares of that class. The NAV of each class can
differ in value. Securities in the Fund's portfolio are valued on the basis of
market quotations, valuations provided by independent pricing services or, at
fair value as determined in good faith in accordance with procedures approved
by the Trustees. Short-term debt investments maturing within 60 days are valued
at amortized cost which approximates market value. Foreign securities are
valued on the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars using
current exchange rates. If quotations are not readily available or, the value
has been materially affected by events occurring after the closing of a foreign
market, assets are valued by a method that the Trustees believe accurately
reflects fair value. The NAV of Class C shares 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.
Class C shares of the Fund are sold at the offering price based on the NAV
computed after your investment request is received in good order by John
Hancock Funds. If you buy shares of the Fund through a Selling Broker, the
Selling Broker must receive your investment before the close of regular trading
on the New York Stock Exchange and transmit it to John Hancock Funds before its
close of business to receive that day's offering price. No sales charge is
imposed on the purchase of Class C shares.
13
<PAGE>
A one-time payment of up to 0.15% of the amount invested in Class C shares may
be made by John Hancock Funds to a Selling Broker for sales of Class C shares
made by that Selling Broker. A person entitled to receive compensation for
selling shares of the Fund may receive different compensation with respect to
sales of Class A shares, Class B shares and Class C shares of the Fund. John
Hancock Funds, out of its own resources, may pay to a selling Broker an annual
service fee up to 0.20% of the amount invested in Class C shares by these
clients.
HOW TO REDEEM CLASS C SHARES
You may redeem all or a portion of your Class C shares on any business day.
Your Class C shares will be redeemed at the next NAV for Class C shares
calculated after your redemption request is received in good order by Investor
Services. 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 Class C shares are redeemed, the Fund generally sends you payment on
the next business day. When you redeem your Class C shares, you may realize a
taxable gain or loss depending usually on the difference between what you paid
for them and what you receive for them, subject to certain tax rules. Under
unusual circumstances, the Fund may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by Federal securities laws.
To assure acceptance of your redemption request, please follow these
procedures.
By Telephone
All Fund shareholders are automatically eligible for the telephone redemption
privilege. Call 1-800-437-9312, 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. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and other relevant
information may be requested. In addition, telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the address on the account must
not have changed for the last 30 days. A check will be mailed to the exact
name(s) and address 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 Investor Services will be liable for
any loss or expense for acting upon telephone instructions made in accordance
with the telephone transaction procedures mentioned above.
Telephone redemption is not available for tax-qualified retirement plans or
Class C 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
such times you should consider placing redemption requests in writing or using
EASI-line. EASI-line's telephone number is 1-800-338-8080.
14
<PAGE>
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 charge a fee for
this service. Redemptions of less than $1,000 will be sent by check or
electronic funds transfer.
This feature may be elected by completing the "Telephone Redemption" section on
the Institutional Account Application that is included with this Prospectus.
In Writing
Send a stock power or "letter of instruction" specifying the name of the Fund,
the dollar amount or the number of Class C 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>
Corporation, Association A letter of instruction and a corporate resolution, signed by
person(s) authorized to act on the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s) with the
signature(s) guaranteed. (If the Trustee's name is not
registered on your account, also provide a copy of the trust
document, certified within the last 60 days.)
If you do not fall into any of these registration categories, please call 1-800-437-9312 for further
instructions.
</TABLE>
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 Class C shares redeemed is $100,000 or
less, John Hancock Funds may guarantee the signature. The following
institutions may provide you with a signature guarantee, provided that the
institution meets credit standards established by Investor Services: (i) a
bank; (ii) a securities broker or dealer, including a government or municipal
securities broker or dealer, that is a member of a clearing corporation or
meets certain net capital requirements; (iii) a credit union having authority
to issue signature guarantees; (iv) a savings and loan association, a building
and loan association, a cooperative bank, a federal savings bank or
association; or (v) a national securities exchange, a registered securities
exchange or a clearing agency.
Through Your Broker
Your broker may be able to initiate the redemption. Contact your broker for
instructions.
Additional information about redemptions.
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. 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 all Class C 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.
Shareholders will be notified before these redemptions are to be made or this
charge is imposed and will have 30 days to purchase additional Class C shares
to bring their account balance up to the required minimum. Unless the number of
Class C shares acquired by further purchases and dividend reinvestments, if
any, exceeds the number of Class C shares redeemed, repeated redemptions from a
smaller account may eventually trigger this policy.
15
<PAGE>
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange Class C shares of the Fund only for Class C shares of another
John Hancock mutual fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of
investment goals. Not all John Hancock funds offer Class C. 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 Class C shares. Exchanges may be made only into Class C shares
of other John Hancock funds.
Exchanges between funds are based on their respective net asset values. No
sales charge or transaction charge is imposed.
The Fund reserves the right to require you to keep previously exchanged Class C
shares (and reinvested dividends) in the Fund for 90 days before you are
permitted to execute a new exchange. The Fund may also terminate or alter the
terms of the exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a taxable 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.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely.
The Fund may also temporarily or permanently terminate the exchange privilege
for any person who makes seven or more exchanges out of the Fund per calendar
year. Accounts under common control or ownership will be aggregated for this
purpose.
By Telephone
1. When you fill out the application for your purchase of Class C shares of the
Fund, you automatically authorize exchanges by telephone unless you check the
box indicating that you do not wish to authorize the telephone exchange
privilege.
2. Call 1-800-437-9312. Have the account number of your current fund and the
exact name in which it is registered available to give to the customer service
representative.
3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.
16
<PAGE>
In Writing
1. In a letter request an exchange and list the following:
--the name of the fund whose Class C 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 Class C shares, all Class C 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 Investor Services Corporation
Attn: Institutional Services
P.O. Box 9277
Boston, Massachusetts 02205-9277
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 not 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.
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.
17
<PAGE>
Debt rated BB, B, CCC, or CC 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, 1994:
<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 $ 506,896,240 36.2% 0 0.0% $ 506,896,240 36.2%
AA 149,154,024 10.6% 0 0.0% 149,154,024 10.6%
A 240,396,674 17.2% 0 0.0% 240,396,674 17.2%
BAA 200,808,990 14.3% 0 0.0% 200,808,990 14.3%
BA 165,446,356 11.8% 0 0.0% 165,446,356 11.8%
B 114,182,848 8.2% 0 0.0% 114,182,848 8.2%
CAA 6,292,420 0.4% 0 0.0% 6,292,420 0.4%
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 1,383,177,552 98.7% 0 0.0% $1,383,177,552 98.7%
Equity Securities 0 0.0%
Short-Term
Securities 18,727,923 1.3%
Total Portfolio 1,401,905,475 100.0%
Other Assets--Net 25,728,800
Net Assets $1,427,634,275
</TABLE>
18
<PAGE>
John Hancock Sovereign Bond Fund
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds Services, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9277
Boston, Massachusetts 02205-9277
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-437-9312
Investment-by-Phone
Telephone Redemption
JHD-210CP 5-95
JOHN HANCOCK
SOVEREIGN
BOND FUND
Class C Shares
Prospectus
May 1, 1995
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
[RECYCLE LOGO] Printed on recycled paper using soybean ink
<PAGE>
JOHN HANCOCK
SOVEREIGN BOND FUND
Class A, Class B and Class C Shares
Statement of Additional Information
May 1, 1995
This Statement of Additional Information provides information about John Hancock
Sovereign Bond Fund (the "Fund") in addition to the information that is
contained in the Fund's Class A, Class B, and Class C Prospectuses (the
"Prospectuses") dated May 1, 1995.
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Fund's Prospectuses, a copy of which can be obtained
free of charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291
TABLE OF CONTENTS
Statement of
Additional
Information
Page
ORGANIZATION OF THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES 2
CERTAIN INVESTMENT PRACTICES 3
INVESTMENT RESTRICTIONS 8
THOSE RESPONSIBLE FOR MANAGEMENT 11
INVESTMENT ADVISORY AND OTHER SERVICES 16
DISTRIBUTION CONTRACT 18
NET ASSET VALUE 20
INITIAL SALES CHARGE ON CLASS A SHARES 20
DEFERRED SALES CHARGE ON CLASS B SHARES 22
SPECIAL REDEMPTIONS 23
ADDITIONAL SERVICES AND PROGRAMS 23
DESCRIPTION OF THE FUND'S SHARES 25
TAX STATUS 27
CALCULATION OF PERFORMANCE 30
<PAGE>
BROKERAGE ALLOCATION 32
TRANSFER AGENT SERVICES 33
CUSTODY OF PORTFOLIO 34
INDEPENDENT AUDITORS 34
FINANCIAL STATEMENTS 35
ORGANIZATION OF THE FUND
John Hancock Sovereign Bond Fund (the "Fund") is a diversified open-end
management investment company organized as a Massachusetts business trust under
the laws of The Commonwealth of Massachusetts. The Fund was organized in 1984 by
John Hancock Advisers, Inc. (the "Adviser") as the successor to John Hancock
Bond Fund, Inc., a Maryland corporation organized in 1973 by the Adviser. The
Adviser is an indirect wholly-owned subsidiary of John Hancock Mutual Life
Insurance Company (the "Life Insurance Company"), a Massachusetts life insurance
company chartered in 1862, with national headquarters at John Hancock Place,
Boston, Massachusetts.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to generate a high level of current
income, consistent with prudent investment risk, for distribution to its
shareholders through investment in a diversified portfolio of freely marketable
debt securities. The Fund's investments will be subject to the market
fluctuations and risks inherent in all securities. There is no assurance that
the Fund will achieve its investment objective. See "Investment Objective and
Policies" in the Fund's Prospectuses.
The Fund will invest primarily in debt securities within the four highest
investment ratings and unrated securities considered by the Adviser to be of
comparable investment quality. The Fund will, when feasible, purchase debt
securities which are non-callable.
The Fund may purchase corporate debt securities bearing fixed or fixed and
contingent interest as well as those which carry certain equity features, such
as conversion or exchange rights or warrants for the acquisition of stock of the
same or a different issuer, or participations based on revenues, sales or
profits. The Fund will not exercise any such conversion, exchange or purchase
rights if, at the time, the value of all equity interests so owned would exceed
10% of the Fund's total assets taken at market value.
The market value of debt securities which carry no equity participation
usually reflects yields generally available on securities of similar quality and
type. When such yields decline, the market value of a portfolio already invested
at higher yields can be expected to rise if such securities are protected
against early call. Similarly, when such yields increase, the market value of a
portfolio already invested can be expected to decline. The Fund's portfolio may
include debt securities which sell at substantial discounts from par. These
securities are low coupon bonds which, during periods of high interest rates,
because of their lower acquisition cost tend to sell on a yield basis
approximating current interest rates.
<PAGE>
The Fund intends to use short-term trading of securities as a means of
managing its portfolio to achieve its investment objective. The Fund, in
reaching a decision to sell one security and purchase another security at
approximately the same time, will take into account a number of factors,
including the quality ratings, interest rates, yields, maturity dates, call
prices, and refunding and sinking fund provisions of the securities under
consideration, as well as historical yield spreads and current economic
information. The success of short-term trading will depend upon the ability of
the Fund to evaluate particular securities, to anticipate relevant market
factors, including trends of interest rates and earnings and variations from
such trends, to obtain relevant information, to evaluate it promptly, and to
take advantage of its evaluations by completing transactions on a favorable
basis. It is expected that the expenses involved in short-term trading, which
would not be incurred by an investment company which does not use this portfolio
technique, will be significantly less than the profits and other benefits which
will accrue to shareholders.
The portfolio turnover rate will depend on a number of factors, including
the fact that the Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code. Accordingly, the Fund intends to limit
its short-term trading so that less than 30% of the Fund's gross annual income
(including all dividend and interest income and gross realized capital gains,
both short and long-term, without being offset for realized capital losses) will
be derived from gross realized gains on the sale or other disposition of
securities held for less than three months. This limitation, which must be met
by all mutual funds in order to obtain such Federal tax treatment, at certain
times may prevent the Fund from realizing capital gains on some securities held
for less than three months.
CERTAIN INVESTMENT PRACTICES
When-Issued Securities. "When-issued" refers to securities whose terms are
available and for which a market exists, but which have not yet been issued. No
payment is made with respect to a when-issued transaction, until delivery is
due, often a month or more after the purchase.
The Fund may engage in when-issued transactions with respect to securities
purchased for its portfolio in order to obtain an advantageous price and yield
at the time of the transactions. When the Fund engages in a when-issued
transaction, it relies on the seller to consummate the transaction. The failure
of the issuer or seller to consummate the transaction may result in the Fund
losing the opportunity to obtain a price and yield considered to be
advantageous. On the date the Fund enters into an agreement to purchase
securities on a when-issued basis, the Fund will segregate in a separate account
cash or liquid, high grade debt securities (i.e., securities rated in one of the
top three ratings categories by Moody's Investors Service, Inc.("Moody's") or
Standard & Poor's Ratings Group ("S&P) equal in value to the when-issued
commitment. These assets will be valued daily at market, and additional cash or
liquid, high grade debt securities will be segregated in a separate account to
the extent that the total value of the assets in the account declines below the
amount of the when-issued commitment.
Repurchase Agreements. A repurchase agreement is a contract under which
the Fund would acquire a security for a relatively short period (usually not
more than 7 days) subject to the
<PAGE>
obligation of the seller to repurchase and the Fund to resell such security at a
fixed time and price (representing the Fund's cost plus interest). The Fund will
enter into repurchase agreements only with member banks of the Federal Reserve
System and with "primary dealers" in U.S. Government securities. The Adviser
will continuously monitor the creditworthiness of the parties with whom the Fund
enters into repurchase agreements. The Fund has established a procedure
providing that the securities serving as collateral for each repurchase
agreement must be delivered to the Fund's custodian either physically or in
book-entry form and that the collateral must be marked to market daily to ensure
that each repurchase agreement is fully collateralized at all times. In the
event of bankruptcy or other default by a seller of a repurchase agreement, the
Fund could experience delays in liquidating the underlying securities and could
experience losses, including the possible decline in the value of the underlying
securities during the period which the Fund seeks to enforce its rights thereto,
possible subnormal levels of income and lack of access to income during this
period, and the expense of enforcing its rights.
Restricted Securities. The Fund may invest in restricted securities,
including those eligible for resale to certain institutional investors pursuant
to Rule 144A under the Securities Act of 1933 and foreign securities acquired in
accordance with Regulation S under the Securities Act of 1933. The Fund will not
invest more than 15% of its net assets in illiquid investments, which includes
repurchase agreements maturing in more than seven days, OTC options, securities
that are not readily marketable and restricted securities. However, if the Board
of Trustees determines based upon a continuing review of the trading markets for
specific Rule 144A securities, that they are liquid then such securities may be
purchased without regard to the 15% limit. The Board of Trustees may adopt
guidelines and delegate to the Adviser the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, will
retain sufficient oversight and be ultimately responsible for the
determinations. The Board will carefully monitor the Fund's investments in these
securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in the Fund if qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.
Financial Futures Contracts. The Fund may hedge its portfolio by selling
or purchasing financial futures contracts as an offset against the effects of
changes in interest rates or in security or foreign currency values. Although
other techniques could be used to reduce the Fund's exposure to interest rate
fluctuations, the Fund may be able to hedge its exposure more effectively and
perhaps at a lower cost by using financial futures contracts. The Fund may enter
into financial futures contracts for hedging and speculative purposes to the
extent permitted by regulations of the Commodity Futures Trading Commission
("CFTC").
Financial futures contracts have been designed by boards of trade which
have been designated "contract markets" by the CFTC. Futures contracts are
traded on these markets in a manner that is similar to the way a stock is traded
on a stock exchange. The boards of trade, through their clearing corporations,
guarantee that the contracts will be performed. Currently, financial futures
contracts are based on interest rate instruments such as long-term U.S. Treasury
bonds, U.S. Treasury notes, Government National Mortgage Association ("GNMA")
modified pass-through mortgage-backed securities, three-month U.S. Treasury
bills, 90-day commercial
<PAGE>
paper, bank certificates of deposit and Eurodollar certificates of deposit. It
is expected that if other financial futures contracts are developed and traded
the Fund may engage in transactions in such contracts.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts are
closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts (same exchange, underlying security and delivery
month). Other financial futures contracts, such as futures contracts on
securities indices, by their terms call for cash settlements. If the offsetting
purchase price is less than the Fund's original sale price, the Fund realizes a
gain, or if it is more, the Fund realizes a loss. Conversely, if the offsetting
sale price is more than the Fund's original purchase price, the Fund realizes a
gain, or if it is less, the Fund realizes a loss. The transaction costs must
also be included in these calculations. The Fund will pay a commission in
connection with each purchase or sale of financial futures contracts, including
a closing transaction. For a discussion of the Federal income tax considerations
of trading in financial futures contracts, see the information under the caption
"Tax Status" below.
At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
Government securities, known as "initial margin," ranging upward from 1.1% of
the value of the financial futures contract being traded. The margin required
for a financial futures contract is set by the board of trade or exchange on
which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the financial futures contract which is returned to the Fund
upon termination of the contract, assuming all contractual obligations have been
satisfied. The Fund expects to earn interest income on its initial margin
deposits. Each day, the futures contract is valued at the official settlement
price of the board of trade or exchange on which it is traded. Subsequent
payments, known as "variation margin," to and from the broker are made on a
daily basis as the market price of the financial futures contract fluctuates.
This process is known as "mark to market." Variation margin does not represent a
borrowing or lending by the Fund but is instead settlement between the Fund and
the broker of the amount one would owe the other if the financial futures
contract expired. In computing net asset value, the Fund will mark to market its
open financial futures positions.
Successful hedging depends on a strong correlation between the market for
the underlying securities and the futures contract market for those securities.
There are several factors that will probably prevent this correlation from being
a perfect one, and even a correct forecast of general interest rate trends may
not result in a successful hedging transaction. There are significant
differences between the securities and futures markets which could create an
imperfect correlation between the markets and which could affect the success of
a given hedge. The degree of imperfection of correlation depends on
circumstances such as: variations in speculative market demand for financial
futures and debt securities, including technical influences in futures trading
and differences between the financial instruments being hedged and the
instruments underlying the standard financial futures contracts available for
trading in such respects as interest rate levels, maturities and
creditworthiness of issuers. The degree of imperfection may be increased where
<PAGE>
the underlying debt securities are lower-rated and, thus, subject to greater
fluctuation in price than higher-rated securities.
A decision as to whether, when and how to hedge involves the exercise of
skill and judgment, and even a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected interest rate trends. The Fund
will bear the risk that the price of the securities being hedged will not move
in complete correlation with the price of the futures contracts used as a
hedging instrument. Although the Adviser believes that the use of financial
futures contracts will benefit the Fund, an incorrect prediction could result in
a loss on both the hedged securities in the Fund's portfolio and the hedging
vehicle so that the Fund's return might have been better had hedging not been
attempted. However, in the absence of the ability to hedge, the Adviser might
have taken portfolio actions in anticipation of the same market movements with
similar investment results but, presumably, at greater transaction costs. The
low margin deposits required for futures transactions permit an extremely high
degree of leverage. A relatively small movement in a futures contract may result
in losses or gains in excess of the amount invested.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit establishes
the maximum amount the price of a futures contract may vary either up or down
from the previous day's settlement price, at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day
and, therefore, does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example, futures prices
have occasionally moved to the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of positions
and subjecting some holders of futures contracts to substantial losses.
Finally, although the Fund engages in financial futures transactions only
on boards of trade or exchanges where there appears to be an adequate secondary
market, there is no assurance that a liquid market will exist for a particular
futures contract at any given time. The liquidity of the market depends on
participants closing out contracts rather than making or taking delivery. In the
event participants decide to make or take delivery, liquidity in the market
could be reduced. In addition, the Fund could be prevented from executing a buy
or sell order at a specified price or closing out a position due to limits on
open positions or daily price fluctuation limits imposed by the exchanges or
boards of trade. If the Fund cannot close out a position, it will be required to
continue to meet margin requirements until the position is closed.
Options on Financial Futures Contracts. The Fund may purchase and write
call and put options on financial futures contracts. An option on a futures
contract gives the purchaser the right, in return for the premium paid, to
assume a position in a futures contract at a specified exercise price at any
time during the period of the option. Upon exercise, the writer of the option
delivers the futures contract to the holder at the exercise price. The Fund
would be required to deposit with its custodian initial and variation margin
with respect to put and call options on futures contracts written by it. Options
on futures contracts involve risks similar to the risks relating to transactions
in financial futures contracts. Also, an option purchased by the Fund may expire
worthless, in which case the Fund would lose the premium it paid for the option.
<PAGE>
Other Considerations. The Fund will engage in futures transactions for
bona fide hedging or speculative purposes to the extent permitted by CFTC
regulations. The Fund will determine that the price fluctuations in the futures
contracts and options on futures used for hedging purposes are substantially
related to price fluctuations in securities held by the Fund or which it expects
to purchase. Except as stated below, the Fund's futures transactions will be
entered into for traditional hedging purposes -- i.e., futures contracts will be
sold to protect against decline in the price of securities that the Fund owns,
or futures contracts will be purchased to protect the Fund against an increase
in the price of securities or the currency in which they are denominated it
intends to purchase. As evidence of this hedging intent, the Fund expects that
on 75% or more of the occasions on which it takes a long futures or option
position (involving the purchase of futures contracts), the Fund will have
purchased, or will be in the process of purchasing equivalent amounts of related
securities or assets denominated in the related currency in the cash market at
the time when the futures or option position is closed out. However, in
particular cases, when it is economically advantageous for the Fund to do so, a
long futures position may be terminated or an option may expire without the
corresponding purchase of securities or other assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the aggregate initial margin and premiums required
to establish speculative positions in futures contracts and options on futures
will not exceed 5% of the net asset value of the Fund's portfolio, after taking
into account unrealized profits and losses on any such positions and excluding
the amount by which such options were in-the-money at the time of purchase. The
Fund will engage in transactions in futures contracts only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
for maintaining its qualification as a regulated investment company for Federal
income tax purposes.
When the Fund purchases a financial futures contract, or writes a put
option or purchases a call option thereon, cash and high grade liquid debt
securities will be deposited in a segregated account with the Fund's custodian
in an amount that, together with the amount of initial and variation margin held
in the account of its broker, equals the market value of the futures contract.
Lower Rated High Yield Debt Obligations. The Fund may invest in high
yielding, fixed income securities rated Baa or lower by Moody's or BBB or lower
by S&P. The Fund will not invest in securities rated below Ca by Moody's or CC
by S&P. Ratings are based largely on the historical financial condition of the
issuer. Consequently, the rating assigned to any particular security is not
necessarily a reflection of the issuer's current financial condition, which may
be better or worse than the rating would indicate.
The values of lower-rated securities generally fluctuate more than those
of high-rated securities. In addition, the lower rating reflects a greater
possibility of an adverse change in financial condition affecting the ability of
the issuer to make payments of interest and principal. The Adviser seeks to
minimize these risks through diversification, investment analysis and attention
to current developments in interest rates and economic conditions. To the extent
the
<PAGE>
Fund invests in securities in the lower rating categories, the achievement
of the Fund's goals is more dependent on the Adviser's ability than would be the
case if the Fund were investing in securities in the higher rated categories.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The following investment restrictions (as well as the Fund's investment
objective) will not be changed without approval of a majority of outstanding
voting securities which, as used in the Prospectuses and this Statement of
Additional Information, means approval of the lesser of (1) the holders of 67%
or more of the shares represented at a meeting if the holders of more than 50%
of the outstanding shares are present in person or by proxy or (2) the holders
of more than 50% of the outstanding shares.
The Fund observes the following fundamental restrictions:
The Fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2), (6)
and (7) below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on future contracts, forward commitments,
forward foreign exchange contracts and repurchase agreements entered into in
accordance with the Fund's investment policy, and the pledge, mortgage or
hypothecation of the Fund's assets within the meaning of paragraph (3) below are
not deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes in amounts not to exceed 33 1/3% of the Fund's
total assets (including the amount borrowed) taken at market value. The Fund
will not use leverage to attempt to increase income. The Fund will not purchase
securities while outstanding borrowings exceed 5% of the Fund's total assets.
(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's total assets
taken at market value.
(4) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
(5) Purchase or sell real estate or any interest therein, except that the
Fund may invest in securities of corporate or governmental entities secured by
real estate or marketable interest therein or issued by companies that invest in
real estate or interests therein.
<PAGE>
(6) Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets taken at market value, (2) enter into repurchase agreements, and (3)
purchase all or a portion of an issue of publicly distributed debt securities,
bank loan participation interests, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities.
(7) Invest in commodities or commodity contracts or in puts, calls, or
combinations of both, except interest rate futures contracts, options on
securities, securities indices, currency and other financial instruments and
options on such futures contracts, forward foreign currency exchange contracts,
forward commitments, securities index put or call warrants and repurchase
agreements entered into in accordance with the Fund's investment policies.
(8) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of each investment. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies or
instrumentalities.
(9) Purchase securities of an issuer, (other than the U.S.
Government, its agencies or instrumentalities) if
(a) Such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities of such issuer, or
(b) Such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
In connection with the lending of portfolio securities under item (6)
above, such loans must at all times be fully collateralized by cash or
securities of the U.S. Government or its agencies or instrumentalities and the
Fund's custodian must take possession of the collateral either physically or in
book entry form. Any cash collateral will consist of short-term high quality
debt instruments. Securities used as collateral must be marked to market daily.
Nonfundamental Investment Restrictions
The following restrictions are designated as nonfundamental and may be
changed by the Board of Trustees without shareholder approval:
The Fund may not:
(a) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the Adviser to
save commissions or to average prices among them is not deemed to result in a
securities trading account.
<PAGE>
(b) Purchase securities on margin or make short sales, except margin
deposits in connection with transactions in options, futures contracts, options
on futures contracts and other arbitrage transactions or unless by virtue of its
ownership of other securities, the Fund has the right to obtain securities
equivalent in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions, except that the Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities and in connection with transactions involving
forward foreign currency exchange transactions.
(c) Purchase a security if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of closed-end investment companies,
(ii) such purchase would result in more than 3% of the total outstanding voting
securities of any one such closed-end investment company being held by the Fund,
or (iii) more than 5% of the Fund's total assets would be invested in any one
such closed-end investment company. The Fund will not invest in the securities
of any open-end investment company.
(d) Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous operations prior
to the purchase if such purchase would cause investments of the Fund in all such
issuers to exceed 5% of the value of the total assets of the Fund.
(e) Invest for the purpose of exercising control over or management
of any company.
(f) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's total assets would be invested in
warrants which are not listed on the New York Stock Exchange or the American
Stock Exchange or more than 5% of the value of the total assets of the Fund
would be invested in warrants generally, whether or not so listed. For these
purposes, warrants are to be valued at the lesser of cost or market value, but
warrants acquired by the Fund in units with or attached to debt securities shall
be deemed to be without value.
(g) Knowingly purchase or retain securities of an issuer if one or more of
the Trustees or officers of the Fund or directors or officers of the Adviser or
any investment management subsidiary of the Adviser individually owns
beneficially more than 0.5%, and together own beneficially more than 5%, of the
securities of such issuer.
(h) Purchase interests in oil, gas or other mineral leases or exploration
programs; however, this policy will not prohibit the acquisition of securities
of companies engaged in the production or transmission of oil, gas or other
minerals.
(i) Invest more than (i) 10% of its total assets in securities which are
restricted under the Securities Act of 1933 (the "1933 Act") (excluding
restricted securities that are eligible for resale pursuant to Rule 144A under
the 1933 Act) or (ii) 15% of the Fund's total assets in such restricted
securities (including restricted securities eligible for resale pursuant to Rule
144A).
(j) Purchase interests in real estate limited partnerships.
<PAGE>
(k) 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
such securities. (The staff of the Securities and Exchange Commission considers
over-the-counter options to be illiquid securities subject to the 15% limit.)
(l) Notwithstanding any investment restriction to the contrary, the Fund
may, in connection with the John Hancock Group of Funds Deferred Compensation
Plan for Independent Trustees/Directors, purchase securities of other investment
companies within the John Hancock Group of Funds provided that, as a result, (i)
no more than 10% of the Fund's assets would be invested in securities of all
other investment companies, (ii) such purchase would not result in more than 3%
of the total outstanding voting securities of any one such investment company
being held by the Fund and (iii) no more that 5% of the Fund's assets would be
invested in any one such investment company.
In order to permit the sale of shares of the Fund in certain states, the
Trustees may, in their sole discretion, adopt restrictions on investment policy
more restrictive than those described above. Should the Trustees determine that
any such more restrictive policy is no longer in the best interest of the Fund
and its shareholders, the Fund may cease offering shares in the state involved
and the Trustees may revoke such restrictive policy. Moreover, if the states
involved shall no longer require any such restrictive policy, the Trustees may,
at their sole discretion, revoke such policy.
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the value of the Fund's assets will not be
considered a violation of restriction.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by its Trustees, who elect officers
who are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Trustees. Several of the officers and Trustees of the
Fund are also officers and directors of the Adviser or officers and directors of
the Fund's principal distributor, John Hancock Funds, Inc.
("John Hancock Funds").
The following table sets forth the principal occupation or employment of
the Trustees and principal officers of the Fund during the past five years:
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
*Edward J. Boudreau, Jr. Chairman (1,2) Chairman and Chief Executive
101 Huntington Avenue Officer, the Adviser and The
Boston, Massachusetts Berkeley Financial Group ("The
Berkeley Group"); Chairman, NM
Capital Management, Inc. ("NM
Capital"); John Hancock Advisers
International Limited; ("Advisers
International"); John Hancock
Funds, Inc., ("John Hancock
Funds"); John Hancock Investor
Services Corporation ("Investor
Services") and Sovereign Asset
Management Corporation
("SAMCorp"); (herein after the
Adviser, the Berkeley Group, NM
Capital, Advisers International,
John Hancock Funds, Investor
Services and SAMCorp are
collectively referred to as the
"Affiliated Companies");
Chairman, First Signature Bank &
Trust; Director, John Hancock
Freedom Securities Corp., John
Hancock Capital Corp., New
England/Canada Business Council;
Member, Investment Company
Institute Board of Governors;
Director, Asia Strategic Growth
Fund, Inc.; Trustee, Museum of
Science; President, the Adviser
(until July 1992). Chairman, John
Hancock Distributors, Inc. (until
April, 1994).
- --------------
*An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act:).
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
Dennis S. Aronowitz Trustee (4) Professor of Law, Boston
Boston University University School of Law;
Boston, Massachusetts Trustee, Brookline Savings
Bank; Director, Boston
University Center for Banking
Law Studies (until 1990).
Richard P. Chapman, Jr. Trustee (4) President, Brookline Savings
160 Washington Street Bank.
Brookline, Massachusetts
William J. Cosgrove Trustee (4) Vice President, Senior Banker
20 Buttonwood Place and Senior Credit Officer,
Saddle River, New Jersey Citibank, N.A. (retired
September 1991); Executive Vice
President, Citadel Group
Representative, Inc.
Gail D. Fosler Trustee (4) Vice President and Chief
4104 Woodbine Street Economist, The Conference Board
Chevy Chase, MD (non-profit economic and
business research).
Bayard Henry Trustee (4) Corporate Advisor; Director,
121 High Street Fiduciary Trust Company (a
Boston, Massachusetts trust company); Director,
Groundwater Technology, Inc.
(remediation); Samuel Cabot,
Inc.; Advisor, Corning Capital
Corp.
- -------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
*Richard S. Scipione Trustee (3) General Counsel, the Life
John Hancock Place Insurance Company; Director,
P.O. Box 111 the Adviser, the Affiliated
Boston, Massachusetts Companies, John Hancock
Distributors, Inc., JH Networking
Insurance Agency, Inc., John
Hancock Subsidiaries, Inc.,
SAMCorp, NM Capital and John
Hancock Property and Casualty
Insurance and its affiliates
(until November, 1993); Trustee;
The Berkeley Group; Director,
John Hancock Home Mortgages Corp.
and John Hancock Financial
Access, Inc. (until July 1990).
Edward J. Spellman Trustee (4) Partner, KPMG Peat Marwick
259C Commercial Bld. (retired June 1990).
Suite 200
Lauderdale by the Sea, FL
*Robert G. Freedman Vice Chairman and Vice Chairman and Chief
101 Huntington Avenue Chief Investment Investment Officer, the
Boston, Massachusetts Officer (2) Adviser; President, the
Adviser (until December 1994).
*Anne C. Hodsdon President (2) President and Chief Operations
101 Huntington Avenue Officer, the Adviser;
Boston, Massachusetts Executive Vice President, the
Adviser (until December 1994).
*Thomas H. Drohan Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary, the Adviser.
Boston, Massachusetts Secretary
*James K. Ho Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, Massachusetts
- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
*James B. Little Senior Vice Senior Vice President the
101 Huntington Avenue President and Chief Adviser.
Boston, Massachusetts Financial Officer (2)
*Michael P. DiCarlo Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, Massachusetts
*John A. Morin Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
*Susan S. Newton Vice President, Vice President and Assistant
101 Huntington Avenue Assistant Secretary Secretary, the Adviser.
Boston, Massachusetts and Compliance
Officer
*James J. Stokowski Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, Massachusetts
*Barry H. Evans Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) A Member of the Audit and Administration Committees.
<PAGE>
As of the date of this Statement of Additional Information, the officers
and Trustees of the Fund as a group owned less than 1% of the outstanding shares
of the Fund and the knowledge of the registrant, no persons owned of record or
beneficially 5% or more of any class of registrant's outstanding securities.
All of the officers listed are officers or employees of the Adviser or the
Affiliated Companies. Some of the Trustees and officers may also be officers
and/or directors and/or trustees of one or more of the other funds for which the
Adviser serves as investment adviser.
The following table provides information regarding the compensation paid
by the Fund and the other investment companies in the John Hancock Fund Complex
to the Independent Trustees for their services for each Fund's 1994 fiscal year.
The two non-Independent Trustees, Messrs. Boudreau and Scipione, and each of the
officers of the Funds are interested persons of the Adviser, are compensated by
the Adviser and receive no compensation from the Fund for their services.
Pension or Total
Retirement Compensation
Benefits Estimated From the Fund
Aggregate Accrued as Annual and John
Compensation Part of the Benefits Hancock Fund
Independent From the Fund Fund's Upon Complex to
Trustees Expenses Retirement Trustees (1)
-- -- (Total of
18 Funds)
-- --
Dennis S. Aronowitz $ 22,276 -- -- $ 60,950
Richard P. Chapman 23,019 -- -- 62,950
William J. Cosgrove 22,276 -- -- 60,950
Gail D. Fosler 22,276 -- -- 60,950
Bayard Henry 23,019 -- -- 62,950
Edward J. Spellman 22,276 -- -- 60,950
$135,142 $369,700
(1) The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is as of the calendar year ended December 31, 1994.
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectuses, the Fund receives its investment advice
from the Adviser. Investors should refer to the Prospectuses for a description
of certain information concerning the investment management contract.
<PAGE>
Each of the Trustees and principal officers of the Fund who is also an
affiliated person of the Adviser is named above, together with the capacity in
which such person is affiliated with the Fund and the Adviser.
As described in the Prospectuses under the caption "Organization and
Management of the Fund," the Fund has entered into an investment management
contract with the Adviser. Under the investment management contract, the Adviser
provides the Fund (i) with a continuous investment program, consistent with the
Fund's stated investment objective and policies, (ii) supervision of all aspects
of the Fund's operations except those delegated to a custodian, transfer agent
or other agent and (iii) such executive, administrative and clerical personnel,
officers and equipment as are necessary for the conduct of its business. The
Adviser is responsible for the management of the Fund's portfolio assets.
Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Adviser or its affiliates provides investment
advice. Because of different investment objectives or other factors, a
particular security may be bought for one or more funds or clients when one or
more other funds or clients are selling the same security. If opportunities for
the purchase or sale of securities by the Adviser or for other funds or clients,
for which the Adviser renders investment advice, arise for consideration at or
about the same time, transactions in such securities will be made, insofar as
feasible, for the respective funds or clients in a manner deemed equitable to
all of them. To the extent that transactions on behalf of more than one client
of the Adviser or its affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.
No person other than the Adviser and its directors and employees regularly
furnishes advice to the Fund with respect to the desirability of the Fund's
investing in, purchasing or selling securities. The Adviser may from time to
time receive statistical or other similar factual information, and information
regarding general economic factors and trends, from the Life Insurance Company
and its affiliates.
Under the terms of the investment management contract with the Fund, the
Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. The Adviser pays the compensation of all
other officers and employees of the Fund, and pays the expenses of clerical
services relating to the administration of the Fund.
All expenses which are not specifically paid by the Adviser and which are
incurred in the operation of the Fund (including fees of Trustees of the Fund
who are not "interested persons," as such term is defined in the Investment
Company Act, but excluding certain distribution related activities required to
be paid by the Adviser or John Hancock Funds) and the continuous public offering
of the shares of the Fund are borne by the Fund. Subject to conditions set forth
in a private letter ruling that the Fund has received from the Internal Revenue
Service relating to its multiple-class structure, class expenses properly
allocable to any of Class A, Class B and Class C shares will be borne
exclusively by such class of shares.
<PAGE>
As discussed in the Prospectuses and as provided by the investment
management contract, the Fund pays the Adviser monthly an investment management
fee, which is accrued daily, based on a stated percentage of the average of the
daily net assets of the Fund as follows:
Net Asset Value Annual Rate
First $1,500,000,000 0.50%
Next $500,000,000 0.45%
Next $500,000,000 0.40%
Amount over $2,500,000,000 0.35%
From time to time, the Adviser may reduce its fee or make other
arrangements to limit the Fund's expenses to a specified percentage of average
daily net assets. The Adviser retains the right to re-impose a fee and recover
any other payments to the extent that, at the end of any fiscal year, the Fund's
annual expenses fall below this limit.
On December 31, 1994, the net assets of the Fund were $1,368,027,206. For
the years ended December 31, 1992, 1993 and 1994 the Adviser received fees of
$5,863,500, $6,488,835 and $7,116,092 respectively. The 1992 and 1993 advisory
fee figures reflect the different advisory fee schedule that was in effect
before January 1, 1994.
If the total of all ordinary business expenses of the Fund for any fiscal
year exceeds limitations prescribed in any state in which shares of the Fund are
qualified for sale, the fee payable to the Adviser will be reduced to the extent
required by these limitations. At this time, the most restrictive limit on
expenses imposed by a state requires that expenses charged to the Fund in any
fiscal year not exceed 2-1/2% of the first $30,000,000 of the Fund's average net
assets, 2% of the next $70,000,000 of such net assets, and 1-1/2% of the
remaining average net assets. When calculating the above limit, the Fund may
exclude interest, brokerage commissions and extraordinary expenses.
Pursuant to its investment management contract, the Adviser is not liable
to the Fund or its shareholders for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which the
investment management contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
obligations and duties under the investment management contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and presently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
the other mutual funds and publicly traded investment companies in the John
Hancock group of funds having a combined total of over 1,060,000 shareholders.
The Adviser is an affiliate of the Life Insurance Company, one of the most
recognized and respected financial institutions in the nation. With total assets
under management of $80 billion, the Life Insurance Company is one of the ten
largest life insurance
<PAGE>
companies in the United States, and carries S&P's and A. M. Best's highest
ratings. Founded in 1862, John Hancock has been serving clients for over 130
years.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Insurance Company may grant the nonexclusive right to use the name
"John Hancock" or any similar name to any other corporation or entity, including
but not limited to any investment company of which the Life Insurance Company or
any subsidiary or affiliate thereof or any successor to the business of any
subsidiary or affiliate thereof shall be the investment adviser.
The investment management contract, and the distribution contract
discussed below, continue in effect from year to year if approved annually by
vote of a majority of the Fund's Trustees who are not interested persons of one
of the parties to the contract, cast in person at a meeting called for the
purpose of voting on such approval, and by either the Fund's Trustees or the
holders of a majority of the Fund's outstanding voting securities. The contract
automatically terminates upon assignment and may be terminated without penalty
on 60 days' notice at the option of either party to the contract or by vote of a
majority of the outstanding voting securities of the Fund.
DISTRIBUTION CONTRACT
The Fund has a distribution contract with John Hancock Funds. Under the
contract, John Hancock Funds is obligated to use its best efforts to sell shares
of the Fund. Shares of the Fund are also sold by selected broker-dealers (the
"Selling Brokers") which have entered into selling agency agreements with John
Hancock Funds. John Hancock Funds accepts orders for the purchase of the shares
of the Fund which are continually offered at net asset value next determined
plus any applicable sales charge. In connection with the sale of Class A and
Class B shares, John Hancock Funds and Selling Brokers receive compensation in
the form of a sales charge imposed, in the case of Class A shares, at the time
of sale or, in the case of Class B shares, on a deferred basis. The sales
charges are discussed further in the Fund's Class A and Class B Prospectus.
The Fund's Trustees adopted Distribution Plans with respect to the Class A
and Class B shares pursuant to Rule 12b-1 under the Investment Company Act.
Under the Class A Plan and the Class B Plan, the Fund will pay distribution and
service fees at an aggregate annual rate of up to 0.30% and 1.00%, respectively,
of the Fund's average daily net assets. However, the amount of the service fee
will not exceed 0.25% of the Fund's average daily net assets attributable to
each class of shares. The distribution fees reimburse John Hancock Funds for its
distribution costs incurred in the promotion of sales of shares of the Fund, and
the service fees compensate Selling Brokers for providing personal and account
maintenance services to shareholders. The Plans were approved by a majority of
the voting securities of the applicable class of the Fund. The Plans and all
amendments were approved by a majority of the Trustees, including a majority of
the
<PAGE>
Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plans (the "Independent
Trustees"), by votes cast in person at meetings called for the purpose of voting
on these Plans.
Pursuant to the Plans, at least quarterly, John Hancock Funds provides the
Fund with a written report of the amounts expended under the Plans and the
purpose for which such expenditures were made. The Trustees review these reports
on a quarterly basis.
During the fiscal year ended December 31, 1994 the Fund paid Investor
Services the following amounts of expenses with respect to the Class A shares
and Class B shares of the Fund:
Expense Items
Advertising Printing Compensation Expenses Interest
and to Selling of John Carrying or
Mailing of Brokers Hancock Other
Prospectus Funds Finance
to New Charges
Shareholders Other
Sovereign Bond
Class A shares $206,254 $12,680 $3,230,727 $743,987 $ 0
Class B shares 5,763 378 213,285 21,061 3,873
Each of the Plans provides that it will continue in effect only so long as
its continuance is approved at least annually by a majority of both the Trustees
and the Independent Trustees. Each of the Plans provides that it may be
terminated without penalty (a) by vote of a majority of the Independent
Trustees, (b) by a majority of the Fund's outstanding shares of the applicable
class in each case upon 60 days' written notice to John Hancock Funds, and (c)
automatically in the event of assignment. Each of the Plans further provides
that it may not be amended to increase the maximum amount of the fees for the
services described therein without the approval of a majority of the outstanding
shares of the class of the Fund which has voting rights with respect to the
Plan. And finally, each of the Plans provides that no material amendment to the
Plan will, in any event, be effective unless it is approved by a vote of a
majority of both the Trustees and the Independent Trustees of the Fund. The
holders of Class A shares and Class B shares have exclusive voting rights with
respect to the Plan applicable to their respective class of shares. In adopting
the Plans the Trustees concluded that, in their judgment, there is a reasonable
likelihood that each Plan will benefit the holders of the applicable class of
shares of the Fund.
Class C shares of the Fund are not subject to any distribution plan.
Expenses associated with the obligation of John Hancock Funds to use its best
efforts to sell Class C shares will be paid by the Adviser or John Hancock Funds
and will not be paid from the fees paid under Class A or Class B plans.
When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the
<PAGE>
discretion of the Committee on Administration of the Trustees. The members of
the Committee on Administration are all Independent Trustees and are identified
in this Statement of Additional Information under the heading "Those Responsible
for Management."
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.
Debt investment securities are valued on the basis of valuations furnished
by a principal market maker or a pricing service, both of which generally
utilize electronic data processing techniques to determine valuations for normal
institutional size trading units of debt securities without exclusive reliance
upon quoted prices.
Short-term debt investments which have a remaining maturity of 60 days or
less are generally valued at amortized cost which approximates market value. If
market quotations are not readily available or if in the opinion of the Adviser
any quotation or price is not representative of true market value, the fair
value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of any determination of a Fund's NAV
A Fund will not price its securities on the following national holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day; and Christmas Day. On any day an international
market is closed and the New York Stock Exchange is open, any foreign securities
will be valued at the prior day's close with the current day's exchange rate.
Trading of foreign securities may take place on Saturdays and U.S. business
holidays on which a Fund's NAV is not calculated. Consequently, a Fund's
portfolio securities may trade and the NAV of the Fund's redeemable securities
may be significantly affected on days when a shareholder has no access to the
Fund.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the Fund's Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Class A and Class B
Prospectus are described in detail below. In calculating the sales charge
applicable to current purchases of Class A shares, the investor is entitled to
accumulate current purchases with the greater of the current value (at offering
price) of the Class A shares of the Fund, or if Investor Services is notified by
the investor's dealer or the investor at the time of the purchase, the cost of
the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to
purchases of Class A shares made at one time, the purchases will be combined if
made by (a) an individual, his spouse
<PAGE>
and their children under the age of 21, purchasing securities for his or their
own account, (b) a trustee or other fiduciary purchasing for a single trust,
estate or fiduciary account and (c) certain groups of four or more individuals
making use of salary deductions or similar group methods of payment whose funds
are combined for the purchase of mutual fund shares. Further information about
combined purchases, including certain restrictions on combined group purchases,
is available from Fund Services or a Selling Broker's representative.
Without Sales Charges. As described in the Class A and Class B Prospectus,
Class A shares of the Fund may be sold without a sales charge to certain persons
described in the Prospectus.
Accumulation Privilege. Investors (including investors combining
purchases) who are already Class A shareholders may also obtain the benefit of
the reduced sales charge by taking into account not only the amount then being
invested but also the purchase price or current value of the Class A shares
already held by such person.
Combination Privilege. Reduced sales charges (according to the schedule
set forth in the Class A and Class B Prospectus) also are available to an
investor based on the aggregate amount of his concurrent and prior investments
in Class A shares of the Fund and shares of all other John Hancock funds which
carry a sales charge.
Letter of Intention. The reduced sales charges are also applicable to
investments made over a specified period pursuant to a Letter of Intention (the
"LOI"), which should be read carefully prior to its execution by an investor.
The Fund offers two options regarding the specified period for making
investments under the LOI. All investors have the option of making their
investments over a specified period of thirteen (13) months. Investors who are
using the Fund as a funding medium for a qualified retirement plan, however, may
opt to make the necessary investments called for by the LOI over a forty-eight
(48) month period. These qualified retirement plans include group IRA, SEP,
SARSEP, TSA, 401(k), 403(b) and 457 plans. Such an investment (including
accumulations and combinations) must aggregate $100,000 or more invested during
the specified period from the date of the LOI or from a date within ninety (90)
days prior thereto, upon written request to Investor Services. The sales charge
applicable to all amounts invested under the LOI is computed as if the aggregate
amount intended to be invested had been invested immediately. If such aggregate
amount is not actually invested, the difference in the sales charge actually
paid and the sales charge payable had the LOI not been in effect is due from the
investor. However, for the purchases actually made within the specified period
the sales charge applicable will not be higher than that which would have
applied (including accumulations and combinations) had the LOI been for the
amount actually invested.
The LOI authorizes Investor Services to hold in escrow sufficient Class A
shares (approximately 5% of the aggregate) to make up any difference in sales
charges on the amount intended to be invested and the amount actually invested,
until such investment is completed within the specified period, at which time
the escrow shares will be released. If the total investment specified in the LOI
is not completed, the Class A shares held in escrow may be redeemed and the
proceeds used as required to pay such sales charge as may be due. By signing the
LOI, the investor authorizes Investor Services to act as his attorney-in-fact to
redeem any
<PAGE>
escrowed shares and adjust the sales charge, if necessary. A LOI does not
constitute a binding commitment by an investor to purchase, or by the Fund to
sell, any additional Class A shares and may be terminated at any time.
Because Class C shares are sold at net asset value without the imposition
of any sales charge, none of the privileges described under these captions are
available to Class C investors, with the following exception:
Combination Privilege. As explained in the Prospectus for Class C Shares,
a Class C investor may qualify for the minimum $1,000,000 investment (or such
other amount as may be determined by the Fund's officers) if the aggregate
amount of his current and prior investments in Class C shares of the Fund and
Class C shares of any other John Hancock Fund exceeds $1,000,000.
DEFERRED SALES CHARGE ON CLASS B SHARES
Investments in Class B shares are purchased at net asset value per share
without the imposition of an initial sales charge so that the Fund will receive
the full amount of the purchase payment.
Contingent Deferred Sales Charge. Class B shares which are redeemed within
six years of purchase will be subject to a contingent deferred sales charge
("CDSC") at the rates set forth in the Class A and Class B Prospectus as a
percentage of the dollar amount subject to the CDSC. The charge will be assessed
on an amount equal to the lesser of the current market value or the original
purchase cost of the Class B shares being redeemed. Accordingly, no CDSC will be
imposed on increases in account value above the initial purchase prices,
including Class B shares derived from reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by Investor Services to defray its expenses related to
providing distribution-related services to the Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees facilitates the ability of the Fund to sell the
Class B shares without a sales charge being deducted at the time of the
purchase. See the Class A and Class B Prospectus for additional information
regarding the CDSC.
<PAGE>
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. If the shareholder were to sell
portfolio securities received in this fashion, he would incur a brokerage
charge. Any such securities would be valued for the purposes of making such
payment at the same value as used in determining net asset value. The Fund has,
however, elected to be governed by Rule 18f-1 under the Investment Company Act.
Under that rule, the Fund must redeem its shares for cash except to the extent
that the redemption payments to any shareholder during any 90-day period would
exceed the lesser of $250,000 or 1% of the Fund's net asset value at the
beginning of such period.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege. As described more fully in the Prospectuses, the Fund
permits exchanges of shares of any class of the Fund for shares of the same
class in any other John Hancock fund offering that class.
Systematic Withdrawal Plan. As described briefly in the Class A and Class
B Prospectus, the Fund permits the establishment of a Systematic Withdrawal
Plan. Payments under this plan represent proceeds from the redemption of Fund
shares. Since the redemption price of the Fund shares may be more or less than
the shareholder's cost, depending upon the market value of the securities owned
by the Fund at the time of redemption, the distribution of cash pursuant to this
plan may result in realization of gain or loss for purposes of Federal, state
and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares of the Fund
could be disadvantageous to a shareholder because of the initial sales charge
payable on such purchases of Class A shares and the CDSC imposed on redemptions
of Class B shares and because redemptions are taxable events. Therefore, a
shareholder should not purchase Class A and Class B shares of the Fund at the
same time a Systematic Withdrawal Plan is in effect. The Fund reserves the right
to modify or discontinue the Systematic Withdrawal Plan of any shareholder on 30
days' prior written notice to such shareholder, or to discontinue the
availability of such plan in the future. The shareholder may terminate the plan
at any time by giving proper notice to Investor Services.
Monthly Automatic Accumulation Program ("MAAP"). This program is explained
more fully in the Fund's Class A and Class B Prospectus and the Account
Privileges Application. The program, as it relates to automatic investment
checks, is subject to the following conditions:
The investment drafts will be drawn on or about the day of the month
indicated.
The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice if
any investment is not honored by the shareholder's bank. The bank shall be under
no obligation to notify the shareholder as to the non-payment of any check.
<PAGE>
The program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is received
at least five (5) business days prior to the processing date of any investment.
Reinvestment Privilege. A shareholder who has redeemed Fund shares may,
within 120 days after the date of redemption, reinvest without payment of a
sales charge any part of the redemption proceeds in shares of the same class of
the Fund or in any other John Hancock mutual fund, subject to the minimum
investment limit of that fund. The proceeds from the redemption of Class A
shares may be reinvested at net asset value without paying a sales charge in
Class A shares of the Fund or in Class A shares of another John Hancock mutual
fund. If a CDSC was paid upon a redemption, a shareholder may reinvest the
proceeds from this redemption at net asset value in additional shares of the
class from which the redemption was made. The shareholder's account will be
credited with the amount of any CDSC charged upon the prior redemption and the
new shares will continue to be subject to the CDSC. The holding period of the
shares acquired through reinvestment will, for purposes of computing the CDSC
payable upon a subsequent redemption, include the holding period of the redeemed
shares. The Fund may modify or terminate the reinvestment privilege at any time.
A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes even if the reinvestment privilege is exercised, and
any gain or loss realized by a shareholder on the redemption or other
disposition of Fund shares will be treated for tax purposes as described under
the caption "Tax Status."
DESCRIPTION OF THE FUND'S SHARES
The Trustees of the Fund are responsible for the management and
supervision of the Fund. The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest of the
Fund without par value. Under the Declaration of Trust, the Trustees have the
authority to create and classify shares of beneficial interest in separate
series, without further action by shareholders. As of the date of this Statement
of Additional Information, the Trustees have not authorized any additional
series of the Fund, other than the Fund, although they may do so in the future.
The Declaration of Trust also authorizes the Trustees to classify and reclassify
the shares of the Fund, or any other series of the Fund, into one or more
classes. As of the date of this Statement of Additional Information, the
Trustees have authorized the issuance of three classes of shares of the Fund,
designated as Class A, Class B and Class C shares.
The shares of each class of the Fund represent an equal proportionate
interest in the aggregate net assets attributable to that class of the Fund.
Class A shares and Class B shares of the Fund will be sold exclusively to
members of the public (other than the institutional investors described in the
Class A and Class B Prospectus) at net asset value. A sales charge will be
imposed either at the time of the purchase, for Class A shares, or on a
contingent deferred basis, for Class B shares. For Class A shares, no sales
charge is payable at the time of purchase on
<PAGE>
investments of $1 million or more, but for such investments a contingent
deferred sales charge may be imposed in the event of certain redemption
transactions within one year of purchase.
Holders of Class A shares and Class B shares have certain exclusive voting
rights on matters relating to their respective Rule 12b-1 distribution plans.
Holders of Class C shares have no voting rights with respect to Class A or Class
B distribution plans. Transfer agency costs will be allocated among the classes
of the Fund in accordance with the relative net assets of each class. The
different classes of the Fund may bear different expenses relating to the cost
of holding shareholder meetings necessitated by the exclusive voting rights of
any class of shares.
Dividends paid by the Fund, if any, with respect to each class of shares
will be calculated in the same manner, at the same time and will be in the same
amount, except that (i) the distribution and service fees relating to Class A
and Class B shares will be borne exclusively by that class, (ii) Class B shares
will pay higher distribution and service fees than Class A shares and (iii) each
of Class A, Class B and Class C shares will bear any other class expenses
properly allocable to such class of shares, subject to the conditions set forth
in a private letter ruling that the Fund has received from the Internal Revenue
Service relating to its multiple-class structure. Accordingly, the net asset
value per share may vary depending on the class of shares purchased.
In the event of liquidation, shareholders are entitled to share pro rata
in the net assets of the Fund available for distribution to such shareholders.
Shares entitle their holders to one vote per share, are freely transferable and
have no preemptive subscription or conversion rights. When issued, shares are
fully paid and non-assessable except as set forth below.
Unless otherwise required by the Investment Company Act or the Declaration
of Trust, the Fund has no intention of holding annual meetings of shareholders.
Fund shareholders may remove a Trustee by the affirmative vote of at least
two-thirds of the Fund's outstanding shares and the Trustees shall promptly call
a meeting for such purpose when requested to do so in writing by the record
holders of not less than 10% of the outstanding shares of the Fund. Shareholders
may, under certain circumstances, communicate with other shareholders in
connection with requesting a special meeting of shareholders. However, at any
time that less than a majority of the Trustees holding office were elected by
the shareholders, the Trustees will call a special meeting of shareholders for
the purpose of electing Trustees.
Under Massachusetts law, shareholders of a Massachusetts business trust
could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts, obligations or affairs of
the Fund. The Declaration of Trust also provides for indemnification out of the
Fund's assets for all losses and expenses of any shareholder held personally
liable by reason of being or having been a shareholder. Liability is therefore
limited to circumstances in which the Fund itself would be unable to meet its
obligations, and the possibility of this occurrence is remote.
<PAGE>
TAX STATUS
The Fund has qualified and has elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and intends to continue to so qualify in the future. As
such and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions and the diversification
of its assets, the Fund will not be subject to Federal income tax on taxable
income (including net realized capital gains, if any) which is distributed to
shareholders at least annually in accordance with the timing requirements of the
Code.
The Fund will be subject to a four percent non-deductible Federal excise
tax on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability for
such tax by satisfying such distribution requirements.
Distributions from the Fund's current or accumulated earnings and profits
("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital gains.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash they would have received had they elected to receive
the distribution in cash, divided by the number of shares received.
The amount of net realized capital gains, if any, in any given year will
vary depending upon the Adviser's current investment strategy and whether the
Adviser believes it to be in the best interest of the Fund to dispose of
portfolio securities that will generate capital gains or to enter into options
or futures transactions. At the time of an investor's purchase of shares, a
portion of the purchase price is often attributable to realized or unrealized
appreciation in the Fund's portfolio. Consequently, subsequent distributions may
be taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares, and the distributions in reality represent a return of a portion of the
purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. Such gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's hands
and will be long-term or short-term, depending upon the shareholder's tax
holding period for the shares. A sales charge paid in purchasing Class A shares
of the Fund cannot be taken into account for purposes of determining gain or
loss on the redemption or exchange of such shares within ninety (90) days after
their purchase to the extent Class A shares of the Fund or another John Hancock
fund are subsequently acquired without payment of a sales charge pursuant to the
reinvestment or exchange privilege. Such disregarded charge will result in an
increase in the shareholder's tax basis in the shares subsequently acquired.
Also, any loss
<PAGE>
realized on a redemption or exchange of shares may be disallowed to the extent
the shares disposed of are replaced with other shares of the Fund within a
period of sixty-one (61) days beginning thirty (30) days before and ending
thirty (30) days after the shares are disposed of, such as pursuant to the
Dividend Reinvestment Plan. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss. Any loss realized upon the
redemption of shares with a tax holding period of six months or less will be
treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain with respect to such shares.
Although its present intention is to distribute all net capital gains, if
any, the Fund reserves the right to retain and reinvest all or any portion of
the excess, as computed for Federal income tax purposes, of net long-term
capital gain over net short-term capital loss in any year. The Fund will not in
any event distribute net long-term capital gains realized in any year to the
extent that a capital loss is carried forward from prior years against such
gain. To the extent such excess was retained and not exhausted by the
carryforward of prior years' capital losses, it would be subject to Federal
income tax in the hands of the Fund. Each shareholder would be treated for
Federal income tax purposes as if the Fund had distributed to him on the last
day of its taxable year his pro rata share of such excess, and he had paid his
pro rata share of the taxes paid by the Fund and reinvested the remainder in the
Fund. Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain in his return for his taxable year in which the
last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares in the Fund by the difference between his pro rata share of this excess
and the pro rata share of these taxes.
For Federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset net capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent net capital
gains are offset by such losses, they would not result in Federal income tax
liability to the Fund and, as noted above, would not be distributed to
shareholders. The Fund has $11,341,446 of a capital loss carryforward available
to the extent provided by regulations, to offset future net realized capital
gains. The carryforward expires December 31, 2002.
Distributions from the Fund will not qualify for the dividends received
deduction for corporations.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to the Fund's investments in certain foreign securities.
Tax conventions between certain countries and the U.S. may reduce or eliminate
such taxes. Because more than 50% of the Fund's assets at the close of any
taxable year is not expected to consist of stocks or securities of
<PAGE>
foreign corporations, the Fund will not be able to pass through such taxes to
its shareholders (as additional income) along with a corresponding entitlement
to a tax credit or deduction. The Fund will deduct such taxes in computing its
investment company taxable income.
The Fund accrues income on zero coupon securities or certain PIK or
increasing rate securities (and, in general, any other securities with original
issue discount or with market discount if the Fund elects to include market
discount in income currently) prior to the receipt of cash payments. The Fund
must distribute, at least annually, all or substantially all of its net income
to shareholders to qualify as a regulated investment company under the Code and
avoid Federal income and excise taxes. Therefore, the Fund may have to dispose
of its portfolio securities under disadvantageous circumstances to generate
cash, or may have to leverage itself by borrowing the cash, to satisfy
distribution requirements.
The Fund may invest in debt obligations that are in the lower rating
categories or are unrated, including debt obligations of issuers not currently
paying interest as well as issuers who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Fund. Tax rules are not entirely clear about issues such as when the Fund may
cease to accrue interest, original issue discount, or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities,
how payments received on obligations in default should be allocated between
principal and income, and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by the Fund, in
the event it invests in such securities, in order to reduce the risk of
distributing insufficient income to preserve its status as a regulated
investment company and seek to avoid becoming subject to Federal income or
excise tax.
Limitations imposed by the Code on regulated investment companies like the
Fund may restrict the Fund's ability to enter into futures and options
transactions. The options and futures transactions undertaken by the Fund may
cause the Fund to recognize gains or losses from marking to market even though
its positions have not been sold or terminated and affect the character as
long-term or short-term and timing of some capital gains and losses realized by
the Fund. Also, some of the Fund's losses on its transactions involving options
and futures contracts and/or offsetting portfolio positions may be deferred
rather than being taken into account currently in calculating the Fund's taxable
income. Some of the applicable tax rules may be modified if the Fund is eligible
and chooses to make one or more of certain tax elections that may be available.
These transactions may thereafter affect the amount, timing and character of the
Fund's distributions to shareholders. The Fund will take into account the
special tax rules (including consideration of available elections) applicable to
options and futures transactions in order to minimize any potential adverse tax
consequences.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts or estates) subject to tax under such law.
The discussion does not address special tax rules applicable to certain classes
of investors, such as tax-exempt entities, insurance companies and financial
institutions. Dividends, capital gain distributions and ownership of or gains
realized on the redemption (including an exchange) of shares of the Fund may
also be subject to state and
<PAGE>
local taxes. A state income (and possibly local income and/or intangible
property) tax exemption is generally available to the extent the Fund's
distributions are derived from interest on (or, in the case of intangibles
taxes, the value of its assets is attributable to) certain U.S. Government
obligations, provided in some states that certain thresholds for holdings of
such obligations and/or reporting requirements are satisfied. The foregoing
discussion related to U.S. investors that are not exempt from U.S. Federal
income tax. Different tax consequences will apply to plan participants,
tax-exempt investors and investors that are subject to tax deferral. You should
consult your tax adviser for specific advice. Under the Code, a tax-exempt
investor in the Fund will not generally recognize unrelated business taxable
income from its investment in the Fund unless the tax-exempt investor incurred
indebtedness to acquire or continue to hold Fund shares and such indebtedness
remains unpaid. Shareholders should consult their own tax advisers as to the
Federal, state or local tax consequences of ownership of shares of, and receipt
of distributions from, the Fund in their particular circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above. These
investors may be subject to nonresident alien withholding tax at the rate of 30%
(or a lower rate under an applicable tax treaty), on amounts treated as ordinary
dividends from the Fund and, unless an effective IRS Form W-8 or authorized
substitute is on file, to 31% backup withholding on certain other payments from
the Fund. Non-U.S. investors should consult their tax advisors regarding such
treatment and the application of foreign taxes to an investment in the Fund.
The Fund is not subject to Massachusetts corporate excise or franchise
taxes. Provided that the Fund qualifies as a regulated investment company under
the Code, it will also not be required to pay any Massachusetts income tax.
CALCULATION OF PERFORMANCE
For the 30-day period ended December 31, 1994, the annualized yield on
Class A, Class B and Class C shares of the Fund was 7.43%, 7.26% and 8.40%,
respectively. The average annual total return of the Class A shares of the Fund
for the 1 year, 5 year and 10 year periods ended December 31, 1994 was (7.12)%,
9.28% and 6.90%, respectively and reflect payment of the maximum sales charge of
4.50%. The average annual total return of Class B shares of the Fund for the 1
year period ended December 31, 1994 and since inception on November 19, 1993 was
(7.97)% and (8.12)%, respectively. The average annual total return of Class C
shares of the Fund for the 1 year period ended December 31, 1994 and since
inception on May 7, 1993 was 2.19% and 1.89% as of December 31, 1994.
The Fund's yield is computed by dividing net investment income per share
determined for a 30-day period by the maximum offering price per share (which
includes the full sales charge) on the last day of the period, according to the
following standard formula:
_ _
| 6 |
| a - b |
Yield = 2 | (----- + 1) -1 |
| cd |
|_ _|
Where:
a = dividends and interest earned during the period.
b = net expenses accrued during the period.
c = the average daily number of fund shares outstanding during the period
that would be entitled to receive dividends.
d = the maximum offering price per share on the last day of the period
(NAV where applicable).
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
_______
/\n /
T = \/ ERV / P - 1
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of hypothetical $1,000 investment made at the
beginning of the 1 year, 5 year and life-of-fund periods.
In the case of Class A shares or Class B shares, this calculation assumes
the maximum sales charge of 4.5% and 5.0%, respectively, is included in the
initial investment or the CDSC applied at the end of the period. This
calculation also assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period. Performance
calculations for Class C shares do not include any sales charge or distribution
plan fees.
<PAGE>
In addition to average annual total returns, the Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single investment,
a series of investments, and/or a series of redemptions, over any time period.
Total returns may be quoted with or without taking the Fund's 4.5% sales charge
on Class A shares or the 5% CDSC on Class B shares into account. The
"distribution rate" is determined by annualizing the result of dividing the
declared dividends of the Fund during the period stated by the maximum offering
price or net asset value at the end of the period. Excluding the Fund's sales
charge on Class A shares and the CDSC on Class B shares from a total return
calculation produces a higher total return figure.
From time to time, in reports and promotional literature, the Fund's total
return will be ranked or compared to indices of mutual funds such as Lipper
Analytical Services, Inc.'s "Lipper -Mutual Performance Analysis," a monthly
publication which tracks net assets, total return, and yield on more than 1,000
equity mutual funds in the United States. Ibottson and Associates, CDA
Weisenberger and F.C. Towers are also used for comparison purposes, as well as
the Russell and Wilshire indices.
Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MORNINGSTAR, and BARRON'S may also be utilized.
The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities and the
allocation of brokerage commissions are made by the Adviser pursuant to
recommendations made by its investment committee, which consists of officers and
directors of the Adviser and affiliates, and officers and Trustees who are
interested persons of the Fund. Orders for purchases and sales of securities are
placed in a manner which, in the opinion of the Adviser, will offer the best
price and market for the execution of each such transaction. Purchases from
underwriters of portfolio securities may include a commission or commissions
paid by the issuer and transactions with dealers serving as market makers
reflect a "spread." Investments in debt securities are generally traded on a net
basis through dealers acting for their own account as principals and not as
brokers; no brokerage commissions are payable on such transactions.
The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the
<PAGE>
transaction including brokerage commissions. This policy governs the selection
of brokers and dealers and the market in which a transaction is executed.
Consistent with the foregoing primary policy, the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and such other policies as the
Trustees may determine, the Adviser may consider sales of shares of the Fund as
a factor in the selection of broker-dealers to execute the Fund's portfolio
transactions.
To the extent consistent with the foregoing, the Fund will be governed in
the selection of brokers and dealers, and in the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research information
and to a lesser extent statistical assistance furnished to the Adviser of the
Fund, and their value and expected contribution to the performance of the Fund.
It is not possible to place a dollar value on information and services to be
received from brokers and dealers, since it is only supplementary to the
research efforts of the Adviser. The receipt of research information is not
expected to reduce significantly the expenses of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Life Insurance Company or other advisory clients of the Adviser,
and, conversely, brokerage commissions and spreads paid by other advisory
clients of the Adviser may result in research information and statistical
assistance beneficial to the Fund. The Fund will make no commitment to allocate
portfolio transactions upon any prescribed basis. While the Fund's officers will
be primarily responsible for the allocation of the Fund's brokerage business,
their policies and practices in this regard must be consistent with the
foregoing and will at all times be subject to review by the Trustees. For the
years ended on December 31, 1994, 1993 and 1992, no negotiated brokerage
commissions were paid on portfolio transactions.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Fund may pay to a broker which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which another
broker would have charged for effecting that transaction. This practice is
subject to a good faith determination by the Trustees that such price is
reasonable in light of the services provided and to such policies as the
Trustees may adopt from time to time. During the fiscal year ended December 31,
1994, the Fund directed commissions in the amount of $61,055 to compensate
brokers for research services such as industry, economic and company reviews and
evaluations of securities.
The Adviser's indirect parent, the Life Insurance Company, is the indirect
sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated, John Hancock
Distributors, Inc. and Sutro & Company, Inc., are Affiliated Brokers. Pursuant
to procedures determined by the Trustees and consistent with the above policy of
obtaining best net results, the Fund may execute portfolio transactions with or
through Affiliated Brokers. During the year ending December 31, 1994, the Fund
did not execute any portfolio transactions with Affiliated Brokers.
Any of the Affiliated Brokers may act as broker for the Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Trustees pursuant to the Investment
Company Act. Commissions paid to an Affiliated Broker must be at least as
favorable as those which the connection with comparable transactions
<PAGE>
involving similar securities being purchased or sold. A transaction would not be
placed with an Affiliated Broker if the Fund would have to pay a commission rate
less favorable than the Affiliated Broker's contemporaneous charges for
comparable transactions for its other most favored, but unaffiliated, customers
except for accounts for which the Affiliated Broker acts as of the Trustees who
are not interested persons (as defined in the Investment Company Act) of the
Fund, the Adviser or the Affiliated Broker. Because the Adviser, which is
affiliated with the Affiliated Brokers, has, as an investment adviser to the
Fund, the obligation to provide investment management services, which includes
elements of research and related investment skills, such research and related
skills will not be used by the Affiliated Brokers as a basis for negotiating
commissions at a rate higher than that determined in accordance with the above
criteria. The Fund will not effect principal transactions with Affiliated
Brokers.
TRANSFER AGENT SERVICES
John Hancock Fund Services, P.O. Box 9116, Boston, MA 02205-9116, a
wholly-owned indirect subsidiary of the Life Insurance Company, is the transfer
and dividend paying agent of the Fund. The Fund pays Investor Services an annual
fee for Class A of $20.00 per shareholder account and for Class B shares of
$22.50 per shareholder account and 0.10% of the average daily net assets
attributable to the Class C shares, plus certain out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and Investors Bank & Trust Company, 24 Federal
Street, Boston, Massachusetts 02110. Under the custodian agreement, Investors
Bank & Trust Company performs custody, portfolio and fund accounting services.
INDEPENDENT AUDITORS
The independent auditors of the Fund are Ernst & Young LLP, 200 Clarendon
Street, Boston, Massachusetts 02116. Ernst & Young audits and renders an opinion
of the Fund's annual financial statements and prepares the Fund's annual Federal
income tax return.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Publicly traded bonds (cost - $1,416,676,785) ........... $1,319,515,091
Joint repurchase agreement (cost - $20,558,000) ......... 20,558,000
Corporate savings account ............................... 2,836
--------------
1,340,075,927
Receivable for shares sold ................................ 236,997
Interest receivable ....................................... 29,705,652
Receivable for variation margin - Note A .................. 85,000
--------------
Total Assets .......................... 1,370,103,576
----------------------------------------------------------
LIABILITIES:
Dividend payable .......................................... 369,802
Payable for shares repurchased ............................ 552,027
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................. 1,006,626
Accounts payable and accrued expenses ..................... 147,915
--------------
Total Liabilities ..................... 2,076,370
----------------------------------------------------------
NET ASSETS:
Capital paid-in ........................................... 1,484,381,233
Accumulated net realized loss on investments and
financial futures contracts ............................. ( 18,362,958)
Net unrealized depreciation of investments and
financial futures contracts ............................. ( 97,991,069)
--------------
Net Assets ............................ $1,368,027,206
==========================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value, respectively)
Class A - $1,326,058,253/95,399,448 ....................... $ 13.90
==============================================================================
Class B - $40,298,738/2,898,886 ........................... $ 13.90
==============================================================================
Class C - $1,670,215/120,133 .............................. $ 13.90
==============================================================================
MAXIMUM OFFERING PRICE PER SHARE *
Class A - ($13.90 x 104.71%) .............................. $ 14.55
==============================================================================
</TABLE>
* On single retail sales of less than $100,000. On sales of $100,000 or more and
on group sales the offering price is reduced.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest ................................................... $128,113,058
------------
Expenses:
Investment management fee - Note B ....................... 7,116,092
Transfer agent fee - Note B
Class A ................................................ 5,591,531
Class B ................................................ 53,759
Class C ................................................ 1,571
Distribution/service fee - Note B
Class A ................................................ 4,193,648
Class B ................................................ 244,360
Custodian fee ............................................ 254,019
Trustees' fees ........................................... 139,401
Printing ................................................ 118,780
Miscellaneous ............................................ 96,184
Registration and filing fees ............................. 96,149
Legal fees ............................................... 72,705
Auditing fee ............................................. 40,669
------------
Total Expenses ........................... 18,018,868
----------------------------------------------------------
Net Investment Income .................... 110,094,190
----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FINANCIAL FUTURES CONTRACTS
Net realized loss on investments sold ...................... ( 26,488,476)
Net realized gain on financial futures contracts ........... 8,308,883
Change in net unrealized appreciation/depreciation
of investments ........................................... ( 132,647,726)
Change in net unrealized appreciation/depreciation
of financial futures contracts ........................... (830,156)
------------
Net Realized and Unrealized
Loss on Investments and
Financial Futures Contracts .............. ( 151,657,475)
----------------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ................ ($ 41,563,285)
==========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............................................................. $ 110,094,190 $ 106,405,932
Net realized gain (loss) on investments sold and financial futures contracts ...... ( 18,179,593) 55,911,784
Change in net unrealized appreciation/depreciation of investments and financial
futures contracts ............................................................... ( 133,477,882) 189,124
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............... ( 41,563,285) 162,506,840
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($1.1202 and $1.1446 per share, respectively) ......................... ( 108,234,785) ( 106,352,974)
Class B** - ($1.0443 and $0.1107 per share, respectively) ....................... ( 1,784,944) ( 12,653)
Class C*** - ($1.1929 and $0.8108 per share, respectively) ...................... ( 74,461) ( 40,305)
Distributions from net realized gain on investments sold and financial futures
contracts
Class A - ($0.0801 and $0.3829 per share, respectively) ......................... ( 7,707,353) ( 36,302,105)
Class B** - ($0.0801 and $0.3829 per share, respectively) ....................... ( 84,479) ( 78,813)
Class C*** - ($0.0801 and $0.3829 per share, respectively) ...................... ( 4,864) ( 20,795)
-------------- --------------
Total Distributions to Shareholders ........................................... ( 117,890,886) ( 142,807,645)
-------------- --------------
FROM FUND SHARE TRANSACTIONS -- NET* ................................................ 16,735,156 104,786,805
-------------- --------------
NET ASSETS:
Beginning of period ............................................................... 1,510,746,221 1,386,260,221
-------------- --------------
End of period ..................................................................... $1,368,027,206 $1,510,746,221
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
STATEMENT OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................... 7,211,540 $105,031,130 11,249,959 $178,977,439
Shares issued to shareholders in reinvestment of distributions.. 6,285,614 90,586,929 7,140,277 112,978,666
---------- ------------ ---------- ------------
13,497,154 195,618,059 18,390,236 291,956,105
Less shares repurchased ........................................ (15,075,386) ( 218,252,651) (12,075,905) ( 192,270,492)
---------- ------------ ---------- ------------
Net increase (decrease) ...................................... ( 1,578,232) ($ 22,634,592) 6,314,331 $ 99,685,613
========== ============ ========== ============
CLASS B**
Shares sold .................................................... 2,846,673 $ 41,518,783 261,346 $ 4,144,516
Shares issued to shareholders in
reinvestment of distributions ................................ 84,680 1,203,433 4,463 69,594
---------- ------------ ---------- ------------
2,931,353 42,722,216 265,809 4,214,110
Less shares repurchased ........................................ ( 298,214) ( 4,254,708) ( 62) ( 959)
---------- ------------ ---------- ------------
Net increase ................................................. 2,633,139 $ 38,467,508 265,747 $ 4,213,151
========== ============ ========== ============
CLASS C***
Shares sold .................................................... 63,842 $ 895,248 52,653 $ 837,104
Shares issued to shareholders in
reinvestment of distributions ................................ 5,491 78,992 3,852 61,095
---------- ------------ ---------- ------------
69,333 974,240 56,505 898,199
Less shares repurchased ........................................ ( 5,071) ( 72,000) ( 634) ( 10,158)
---------- ------------ ---------- ------------
Net increase ................................................. 64,262 $ 902,240 55,871 $ 888,041
========== ============ ========== ============
</TABLE>
** Class B shares commenced operations on November 23, 1993.
*** Class C shares commenced operations on May 7, 1993.
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE
FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD, REINVESTED AND
REDEEMED DURING THE PERIOD, ALONG WITH THE CORRESPONDING DOLLAR VALUE FOR THE
LAST TWO PERIODS.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ....................... $ 15.53 $ 15.29 $ 15.31 $ 14.33 $ 14.77
---------- ---------- ---------- ---------- ----------
Net Investment Income ...................................... 1.12 1.14 1.20 1.29 1.32
Net Realized and Unrealized Gain (Loss) on Investments and
Financial Futures Contracts .............................. ( 1.55) 0.62 ( 0.01) 0.98 ( 0.40)
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ....................... ( 0.43) 1.76 1.19 2.27 0.92
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ....................... ( 1.12) ( 1.14) ( 1.21) ( 1.29) ( 1.35)
Distributions from Net Realized Gain on
Investments Sold and Financial Futures Contracts............ ( 0.08) ( 0.38) -- -- --
Distributions to Shareholders from Capital Paid-in.......... -- -- -- -- ( 0.01)
---------- ---------- ---------- ---------- ----------
Total Distributions .................................... ( 1.20) ( 1.52) ( 1.21) ( 1.29) ( 1.36)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ............................. $ 13.90 $ 15.53 $ 15.29 $ 15.31 $ 14.33
========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value ................. ( 2.75%) 11.80% 8.08% 16.59% 6.71%
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .................. $1,326,058 $1,505,754 $1,386,260 $1,249,980 $1,103,391
Ratio of Expenses to Average Net Assets..................... 1.26% 1.41% 1.44% 1.27% 1.31%
Ratio of Net Investment Income to Average Net Assets ....... 7.74% 7.18% 7.89% 8.81% 9.18%
Portfolio Turnover Rate..................................... 85% 107% 87% 90% 92%
CLASS B (a)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ....................... $ 15.52 $ 15.90(b)
---------- ----------
Net Investment Income ...................................... 1.04 0.11
Net Realized and Unrealized Loss on
Investments and Financial Futures Contracts .............. ( 1.54) --
---------- ----------
Total from Investment Operations ....................... ( 0.50) 0.11
---------- ----------
Less Distributions:
Dividends from Net Investment Income ....................... ( 1.04) ( 0.11)
Distributions from Net Realized Gain on
Investments Sold and Financial Futures Contracts.......... ( 0.08) ( 0.38)
---------- ----------
Total Distributions .................................... ( 1.12) ( 0.49)
--------- ----------
Net Asset Value, End of Period ............................. $ 13.90 $ 15.52
========= ==========
Total Investment Return at Net Asset Value.................. ( 3.13%) ( 0.90%)
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................... $ 40,299 $ 4,125
Ratio of Expenses to Average Net Assets .................... 1.78% 1.63%*
Ratio of Net Investment Income to Average Net Assets ....... 7.30% 0.57%*
Portfolio Turnover Rate .................................... 85% 107%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
CLASS C (c)
PER SHARE OPERATING PERFOMANCE
Net Asset Value, Beginning of Period......................................................... $ 15.52 $ 15.86(b)
-------- --------
Net Investment Income ....................................................................... 1.19 0.81
Net Realized and Unrealized Gain (Loss) on Investments
and Financial Futures Contracts ........................................................... ( 1.54) 0.04
-------- --------
Total from Investment Operations ........................................................ ( 0.35) 0.85
-------- --------
Less Distributions:
Dividends from Net Investment Income ........................................................ ( 1.19) ( 0.81)
Distributions from Net Realized Gain on Investments Sold
and Financial Futures Contracts ........................................................... ( 0.08) ( 0.38)
-------- --------
Total Distributions ..................................................................... ( 1.27) ( 1.19)
-------- --------
Net Asset Value, End of Period .............................................................. $ 13.90 $ 15.52
======== ========
Total Investment Return at Net Asset Value .................................................. ( 2.19%) 5.45%
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................................................... $ 1,670 $ 867
Ratio of Expenses to Average Net Assets ..................................................... 0.73% 0.90%*
Ratio of Net Investment Income to Average Net Assets ........................................ 8.28% 4.90%*
Portfolio Turnover Rate ..................................................................... 85% 107%
</TABLE>
* On an annualized basis.
(a) Class B shares commenced operations on November 23, 1993.
(b) Initial price to commence operations.
(c) Class C shares commenced operations on May 7, 1993.
THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS, AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE
FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
SOVEREIGN BOND FUND ON DECEMBER 31, 1994. IT'S DIVIDED INTO TWO MAIN CATEGORIES:
PUBLICLY TRADED BONDS AND SHORT-TERM INVESTMENTS. THE BONDS ARE FURTHER BROKEN
DOWN BY INDUSTRY GROUPS. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S
"CASH" POSITION, ARE LISTED LAST.
SCHEDULE OF INVESTMENTS
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
PUBLICLY TRADED BONDS
BANKS (11.08%)
Abbey National First Capital B.V.,
*Sub Note 10-15-04 ................................................. 8.200% AA- $ 7,000 $ 6,811,420
African Development Bank,
Sub Note 12-15-03 ................................................. 9.750 AA 8,000 8,681,680
Bank of Montreal - Chicago Branch,
Sub Note 11-01-00 ................................................. 9.800 A+ 8,500 8,619,850
Banque Paribas - New York Branch,
*Sub Note 03-01-09 ................................................. 6.875 A- 10,000 8,265,400
Barclays North American Capital Corp.,
Gtd Cap Note 05-15-21 ............................................. 9.750 AA- 7,500 7,976,100
First Interstate Bancorp.,
Sub Note 05-01-97 ................................................. 12.750 BBB+ 3,250 3,524,170
International Bank for Reconstruction and Development,
*30 Yr Bond 09-01-16 ............................................... 8.250 AAA 5,000 4,950,250
30 Yr Bond 07-15-17 ............................................... 9.250 AAA 15,550 16,945,923
Midland American Capital Corp.,
Gtd Note 11-15-03 ................................................. 12.750 A- 19,932 22,665,674
National Westminster Bank PLC - New York Branch,
Sub Note 05-01-01 ................................................. 9.450 AA- 10,000 10,519,100
RBSG Capital Corp.,
Gtd Cap Note 03-01-04 ............................................. 10.125 A+ 10,630 11,580,535
Scotland International Finance No. 2 B.V.,
*Sub Gtd Note 11-01-06 (R) ......................................... 8.850 A+ 10,250 10,218,020
Security Pacific Corp.,
Medium Term Sub Note 05-09-01 ..................................... 10.360 A- 6,000 6,578,280
Sub Note 11-15-00 ................................................. 11.500 A- 6,400 7,226,752
Toronto Dominion Bank - New York Branch,
*Sub Note 01-15-09 ................................................. 6.450 AA- 10,000 8,180,400
Westdeutsche Landesbank Girozentrale - New York Branch,
Sub Note 06-15-05 ................................................. 6.750 AA+ 10,000 8,854,700
------------
151,598,254
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- -------- ---------- --------- ------
<S> <C> <C> <C> <C>
BROADCASTING (3.88%)
Cablevision Systems Corp.,
Sr Sub Deb 04-01-04 ............................................. 10.750% B $ 8,000 $ 8,000,000
Century Communications Corp.,
Sr Sub Deb 10-15-03 ............................................. 11.875 B+ 10,125 10,555,313
Continental Cablevision, Inc.,
Sr Sub Deb 06-01-07 ............................................. 11.000 BB- 10,375 10,530,625
Jones Intercable, Inc.,
*Sr Sub Deb 07-15-04 ............................................. 11.500 B+ 5,000 5,175,000
Viacom International,
*Sub Deb 07-07-06 ................................................ 8.000 B+ 10,000 8,575,000
TKR Cable I, Inc.,
Sr Deb 10-30-07 ................................................. 10.500 BBB- 10,000 10,227,100
-----------
53,063,038
-----------
CHEMICALS (0.36%)
UCC Investors Holding, Inc.,
Sr Sub Note 05-01-03 ............................................ 11.000 B- 5,000 4,925,000
-----------
COMPUTERS (1.68%)
Unisys Corp.,
Credit Sensitive Note 07-01-97 .................................. 13.500 BB- 21,500 23,005,000
-----------
COSMETICS & TOILETRIES (0.41%)
Johnson & Johnson,
Deb 11-15-23 .................................................... 6.730 AAA 6,750 5,551,875
-----------
DIVERSIFIED OPERATIONS (0.51%)
Litton Industries, Inc.,
Sub Deb 07-01-05 ................................................ 12.625 BBB 6,500 6,946,875
-----------
FINANCE (3.58%)
American Express Co.,
Euronote 12-12-00 ............................................... 11.625 A+ 8,670 9,499,025
Banc One Credit Card Master Trust,
*Class A Asset Backed Cert, Ser 1994-B 12-15-99 .................. 7.550 AAA 10,000 9,853,125
Chrysler Financial Corp.,
Note 11-01-99 ................................................... 12.750 BBB+ 3,000 3,484,080
CIT Group Holdings, Inc. (The),
Medium Term Sr Sub Cap Note 03-15-01 ............................ 9.250 A 5,000 5,187,900
DR Structured Finance Corp.,
*Sec Pass thru Ctf Ser 1993K-1 08-15-18 .......................... 7.430 A 8,000 6,264,960
Great Western Financial Corp.,
Note 02-01-02 ................................................... 8.600 BBB+ 11,000 10,922,120
Merrill Lynch Mortgage Investors, Inc.,
Sr/Sub Pass thru Ctf Ser 1992 B, Class B Sub 04-15-12 ........... 8.500 AA 3,861 3,747,747
-----------
48,958,957
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C>
FOODS (0.52%)
Beatrice Foods, Inc.,
Sr Sub Note Ser B 12-01-01 ...................................... 12.000% B $ 900 $ 886,500
Flagstar Corp.,
Sr Sub Deb 11-01-04 ............................................. 11.250 CCC+ 7,500 6,187,500
------------
7,074,000
------------
GLASS PRODUCTS (0.76%)
Owens-Illinois, Inc.,
Sr Deb 12-01-03 ................................................. 11.000 BB 10,000 10,375,000
------------
GOLD MINING & PROCESSING (1.13%)
Magma Copper Co.,
*Sr Sub Note 12-15-01 ............................................ 12.000 BB+ 14,250 15,390,000
------------
GOVERNMENTAL - FOREIGN (3.71%)
Nova Scotia, Province of,
Deb 04-01-22 .................................................... 8.750 A- 7,500 7,347,300
SF Deb 05-15-13 ................................................. 11.500 A- 8,400 9,340,548
Ontario, Province of,
*Deb 08-31-12 .................................................... 15.250 AA- 6,595 7,971,640
Deb 04-25-13 .................................................... 11.750 AA- 6,000 6,762,060
Quebec, Province de,
Deb 10-01-13 .................................................... 13.000 A+ 11,000 12,950,850
Deb 09-15-14 .................................................... 13.250 A+ 1,000 1,213,180
Saskatchewan, Province of,
Deb 12-15-20 .................................................... 9.375 BBB+ 5,000 5,228,800
------------
50,814,378
------------
GOVERNMENTAL - U.S. (24.15%)
United States Treasury,
Bond 11-15-02 ................................................... 11.625 AAA 8,500 10,332,770
Bond 08-15-05 ................................................... 10.750 AAA 47,775 57,389,719
Bond 08-15-17 ................................................... 8.875 AAA 89,465 97,460,487
Bond 05-15-18 ................................................... 9.125 AAA 47,100 52,619,649
Bond 02-15-23 ................................................... 7.125 AAA 11,700 10,647,000
*Note 04-15-96 ................................................... 9.375 AAA 11,138 11,385,152
*Note 11-15-96 ................................................... 7.250 AAA 19,000 18,851,610
*Note 05-15-98 ................................................... 9.000 AAA 22,000 22,738,980
*Note 11-30-99 ................................................... 7.750 AAA 20,500 20,423,125
Note 05-15-01 ................................................... 8.000 AAA 28,250 28,470,633
------------
330,319,125
------------
GOVERNMENTAL - U.S. AGENCIES (12.26%)
Federal National Mortgage Association,
15 Yr SF Pass thru Ctf 02-01-08 ................................. 7.500 AAA 4,106 3,930,043
*15 Yr SF Pass thru Ctf 01-25-05 ................................. 8.000 AAA 10,000 9,603,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
GOVERNMENTAL - U.S. AGENCIES (continued)
Financing Corp.,
Bond Ser A 02-08-18........................................... 9.400% AAA $ 7,000 $ 7,718,900
Bond Ser B 04-06-18........................................... 9.800 AAA 1,700 1,943,950
Bond Ser D 09-26-19........................................... 8.600 AAA 9,250 9,453,500
Government National Mortgage Association,
30 Yr SF Pass thru Ctf 10-15-23............................... 7.000 AAA 17,989 16,144,740
*30 Yr SF Pass thru Ctf 02-15-24............................... 7.500 AAA 18,817 17,458,195
30 Yr SF Pass thru Ctf 09-15-22 to 05-15-23................... 8.000 AAA 20,505 19,600,959
*30 Yr SF Pass thru Ctf 12-15-22 to 10-15-24................... 8.500 AAA 44,712 43,929,958
*30 Yr SF Pass thru Ctf 11-15-16 to 07-15-21................... 9.000 AAA 25,108 25,352,873
30 Yr SF Pass thru Ctf 11-15-19 to 05-15-21................... 9.500 AAA 7,821 8,069,133
30 Yr SF Pass thru Ctf 06-15-20 to 11-15-20................... 10.000 AAA 3,592 3,774,514
30 Yr SF Pass thru Ctf 01-15-16............................... 10.500 AAA 252 268,906
30 Yr SF Pass thru Ctf 01-15-16............................... 11.000 AAA 390 423,378
------------
167,672,174
------------
INSURANCE (2.24%)
Massachusetts Mutual Life Insurance Co.,
*Surplus Note 11-15-23 (R)..................................... 7.625 AA- 14,500 12,342,545
Metropolitan Life Insurance Co.,
*Surplus Note 11-01-03 (R)..................................... 6.300 AA 9,000 7,548,750
New York Life Insurance Co.,
Surplus Note 12-15-23 (R)..................................... 7.500 AA 13,000 10,752,300
------------
30,643,595
------------
OIL & GAS (3.17%)
Ashland Oil, Inc.,
SF Deb 10-15-17............................................... 11.125 BBB 5,000 5,493,500
Coastal Corp. (The),
Sr Deb 06-15-06............................................... 11.750 BB+ 10,500 11,484,375
Maxus Energy Corp.,
Deb 05-01-13.................................................. 11.250 BB- 428 393,760
*SF Deb 11-15-15............................................... 11.500 BB 2,000 1,840,000
Oryx Energy Co.,
Note 05-01-96................................................. 9.300 BB 5,000 4,958,200
Note 09-15-98................................................. 9.750 BB 8,000 7,776,880
TransTexas Gas Corp.,
Sr Sec Note 09-01-00.......................................... 10.500 BB- 12,000 11,460,000
------------
43,406,715
------------
PAPER (1.26%)
Georgia Pacific Corp.,
Deb 01-15-18.................................................. 9.750 BBB- 7,500 7,576,650
Stone Container Corp.,
*Sr Note 02-01-01.............................................. 9.875 B 5,000 4,700,000
*Sr Note 10-01-04.............................................. 11.500 B 5,000 5,025,000
------------
17,301,650
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S
ISSUER, DESCRIPTION RATE RATING** OMITTED) MARKET VALUE
- ------------------- -------- -------- --------- -------------
<S> <C> <C> <C> <C>
PUBLISHING (2.21%)
News America Holdings Inc.,
Sr Note 10-15-99 .......................... 9.125% BBB- $ 7,500 $ 7,559,625
Sr Note 12-15-01 .......................... 12.000 BBB- 8,700 9,666,222
Time Warner Entertainment Co.,
Note 05-01-12 ............................. 10.150 BBB- 3,200 3,220,288
Time Warner Inc.,
Deb 01-15-13 .............................. 9.125 BBB- 10,850 9,775,199
------------
30,221,334
------------
RETAIL (1.97%)
K mart Corp.,
Lease Ctf 01-01-09 ........................ 13.500 BBB+ 2,000 2,228,060
Pathmark Stores, Inc.,
Sub Note 06-15-02 ......................... 11.625 B 9,100 8,736,000
Sub Note 06-15-02 ........................ 12.625 B 5,000 5,000,000
Safeway Stores, Inc.,
Lease Ctf 01-15-09 ........................ 13.500 BB+ 2,750 3,038,750
S.D. Warren Co.,
*Sr Sub Note 12-15-04 (R) .................. 12.000 B+ 2,500 2,537,500
Thrifty Payless Inc.,
*Sr Note 04-15-03 .......................... 11.750 B 5,500 5,390,000
------------
26,930,310
------------
STEEL (0.88%)
Weirton Steel Corp.,
Sr Note 10-15-99 .......................... 10.875 B 12,250 12,096,875
------------
TELECOMMUNICATIONS (0.69%)
British Telecom Finance Inc.,
*Gtd Deb 02-15-19 .......................... 9.625 AAA 9,000 9,485,730
------------
TOBACCO (0.69%)
RJR Nabisco Capital Corp.,
*Sr Note 04-15-99 .......................... 8.300 BBB- 5,000 4,818,750
RJR Nabisco, Inc.,
*Note 12-01-02 ............................. 8.625 BBB- 5,000 4,637,650
------------
9,456,400
------------
TRANSPORTATION (9.50%)
American Airlines, Inc.,
1991-A Pass thru Trust 01-02-07 ........... 9.710 BBB- 7,597 7,304,728
Sec Equip Ctf Ser B 01-06-05 .............. 14.375 BBB- 12,000 12,760,800
AMR Corp.,
*Deb 05-15-01 .............................. 9.500 BB+ 4,250 4,201,168
Delta Air Lines, Inc.,
*Deb 05-15-21 .............................. 9.750 BB 5,050 4,642,061
Equip Tr Ctf Ser A 06-01-10 ............... 10.000 BB+ 1,750 1,655,850
Equip Tr Ctf Ser B 06-01-10 ............... 10.000 BB+ 2,928 2,744,209
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- -------- -------- --------- ------
<S> <C> <C> <C> <C>
TRANSPORTATION (continued)
NWA Inc.,
Note 08-01-96........................................... 8.625% B- $14,165 $ 13,598,400
Railcar Trust No. 1992-1,
Trust Note Ser 92-1 06-01-04............................ 7.750 AAA 17,674 17,226,442
Scandinavian Airlines System,
Bond 07-20-99........................................... 9.125 A3 10,234 10,283,942
Sea-Land Service, Inc.,
Sec Bond Ser A 01-02-11................................. 10.600 BBB 5,000 5,245,550
Sec Bond Ser B 01-02-11................................. 10.600 BBB 7,000 7,343,770
Sec Bond Ser C 01-02-11................................. 10.600 BBB 6,000 6,294,660
Swire Pacific Ltd.,
*Note 09-29-04 (R)....................................... 8.500 A 5,000 4,811,000
United Air Lines, Inc.,
Deb 07-15-21............................................ 10.250 BB 5,000 4,712,000
*Deb Ser A 05-01-04...................................... 10.670 BB 4,275 4,310,953
*Deb Ser B 05-01-14...................................... 11.210 BB 10,460 10,715,433
USAir 1990-A Pass Through Trusts,
Pass thru Ctf Ser 1990-A1 03-19-05...................... 11.200 BB 14,024 12,060,406
------------
129,911,372
------------
UTILITIES (9.82%)
ALLTEL Corp.,
*Deb 04-01-09............................................ 10.375 A+ 5,000 5,329,200
British Columbia Hydro and Power Auth.
(Gtd by Prov of British Columbia),
Bond Ser FN 09-01-13.................................... 12.500 AA+ 6,175 7,158,492
CTC Mansfield Funding Corp.,
Sec Lease Oblig 09-30-16................................ 11.125 B+ 21,685 20,092,670
E.I.P. Refunding Corp.,
Sec Fac Bond 10-01-12................................... 10.250 B+ 9,795 8,717,550
First PV Funding Corp.,
*Lease Oblig Ser 1986 A 01-15-14......................... 10.300 B 7,150 6,792,500
GTE Corp.,
Deb 11-15-17............................................ 10.300 BBB+ 8,750 9,510,638
Hydro-Quebec (Gtd by Province of Quebec),
Deb 02-01-03............................................ 7.375 A+ 4,710 4,393,347
Deb Ser FV 02-01-12..................................... 11.750 A+ 5,000 6,322,050
Deb Ser HS 02-01-21..................................... 9.400 A+ 11,600 12,028,388
Iberdrola International B.V.,
Gtd Note 10-01-02 (R)................................... 7.500 AA- 8,000 7,491,840
Gtd Note 06-01-03 (R)................................... 7.125 AA- 8,654 7,898,592
Long Island Lighting Co.,
*Gen Ref Bond 05-01-21................................... 9.750 BBB- 2,000 1,833,040
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
<TABLE>
<CAPTION>
PAR VALUE
INTEREST S&P (000'S
ISSUER, DESCRIPTION RATE RATING** OMITTED) MARKET VALUE
- ------------------- -------- -------- --------- ------------
<S> <C> <C> <C> <C>
UTILITIES (CONTINUED)
Midland Funding Corp. I,
Sr Sec Lease Oblig Ser C 07-23-02 .............................. 10.330% BB- $ 7,033 $ 6,646,546
System Energy Resources, Inc.,
*1st Mtg 09-01-96 ............................................... 10.500 BBB- 10,870 11,229,471
*Sec Lease Oblig 01-15-14 ....................................... 8.200 BBB- 3,000 2,589,330
Tenaga Nasional Berhad,
*Note 06-15-04 (R) .............................................. 7.875 A 6,000 5,696,280
Transco Energy Co.,
*Note 07-01-99 .................................................. 11.250 B+ 10,000 10,637,500
--------------
134,367,434
--------------
TOTAL PUBLICLY TRADED BONDS
(Cost $1,416,676,785) (96.46%) 1,319,515,091
------ --------------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (1.50%)
Investment in a joint repurchase agreement transaction
with Lehman Bros., Inc. Dated 12-30-94, Due 01-03-95
(secured by U.S. Treasury Bonds, 9.25%, due 02-15-16 and
8.125%, due 08-15-21, and U.S. Treasury Notes, 5.500%,
due 02-15-95 and 4.625%, due 08-15-95) Note A .................. 5.850 -- 20,558 20,558,000
--------------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% ............................................. 2,836
--------------
TOTAL SHORT-TERM INVESTMENTS ( 1.50%) 20,560,836
------ --------------
TOTAL INVESTMENTS (97.96%) $1,340,075,927
====== ==============
NOTES TO THE SCHEDULE OF INVESTMENTS
(R) These securites are exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. Rule 144A
securities amounted to $69,296,827 as of December 31, 1994. See Note A
of the Notes to Financial Statements for valuation policy.
* Securities, other than short-term investments, newly added to the portfolio
during the year ended December 31, 1994.
** Credit ratings are unaudited and are rated by Moody's Investor Services or
John Hancock Advisers, Inc. where Standard and Poors ratings are not
available.
The percentage shown for each investment category is the total value as a
percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Sovereign Bond Fund (the "Fund") is a diversified open-end
investment management company, registered under the Investment Company Act of
1940.
The Trustees have authorized the issuance of multiple classes of the Fund,
designated as 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 to voting, redemption, dividends and liquidation, except that certain
expenses, subject to the approval of the Trustees, may be applied differently to
each class of shares in accordance with current regulations of the Securities
and Exchange Commission and the Internal Revenue Service. Shareholders of a
class which bears distribution/service expenses under the terms of a
distribution plan, have exclusive voting rights regarding such distribution
plan. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt instruments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $11,341,446 of a capital
loss carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. If such carryforward is used by the Fund, no
capital gain distributions will be made. The carryforward expires December 31,
2002. Additionally, net capital losses of $3,227,839 attributable to security
transactions occurring after October 31, 1994 are treated as arising on the
first day (January 1, 1995) of the Fund's next taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations. Dividends paid by the
Fund with respect to each class of shares will be calculated in the same
manner, at the same time and will be in the same amount, except for the effect
of expenses that may be applied differently to each class as explained
previously.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes. Transfer
agent expenses and distribution/service fees if any, are calculated daily at the
class level based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
from either the date of issue or the date of purchase over the life of the
security, as required by the Internal Revenue Code.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates. The
Fund will not engage in transactions in futures contracts for speculation, but
only for hedging or other permissible risk management purposes. The Fund's
ability to hedge successfully will depend on the Adviser's ability to predict
accurately the future direction of interest rate changes and other market
factors. At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
government securities, known as "initial margin". Each day, the futures contract
is valued at the official settlement price of the board of trade or U.S.
commodities exchange. Subsequent payments, known as "variation margin", to and
from the broker are made on a daily basis as the market price of the financial
futures contract fluctuates. Daily variation margin adjustments, arising from
this "mark to market", are recorded by the Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks of
entering into futures contracts include the possibility that there may be an
illiquid market and/or that a change in the value of the contract may not
correlate with changes in the value of the underlying securities. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures position because of position limits or limits on daily price
fluctuations imposed by an exchange.
For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures transactions.
At December 31, 1994, open positions in financial futures contracts are as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
- ---------- -------------- -------- ------------
<S> <C> <C> <C>
MARCH, 1995 200 U.S. TREASURY BOND SHORT ($587,500)
MARCH, 1995 180 U.S. TREASURY NOTE SHORT ( 241,875)
--------
($829,375)
========
</TABLE>
At December 31, 1994, the Fund has deposited in a segregated account,
$780,000 par value of U.S. Treasury Bond, 8.875%, 08-15-17 to cover margin
requirements on open financial futures contracts.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly fee to
the Adviser for a continuous investment program equivalent on an annual basis to
the sum of (a) 0.50% of the first $1,500,000,000 of the Fund's average daily net
asset value, (b) 0.45% of the next $500,000,000, (c) 0.40% of the next
$500,000,000 and (d) 0.35% of the Fund's average daily net asset value in excess
of $2,500,000,000.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1, 1995, JH
Funds was known as John Hancock Broker Distribution Services, Inc. For the
period ended December 31, 1994, JH Funds received net sales charges of
$3,002,073 with regard to sales of Class A shares. Out of this amount, $349,107
was retained and used for printing of prospectuses, advertising, sales
literature and other purposes, and $254,086 was paid as sales commissions and
first year service fees to unrelated broker-dealers and $2,398,880 was paid as
sales commissions and first year service fees to sales personnel of John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker
Anthony") and Sutro & Co., Inc. ("Sutro").
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Bond Fund
The Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is
the indirect sole shareholder of Distributors and John Hancock Freedom
Securities Corporation and its subsidiaries, which include Tucker Anthony and
Sutro, all of which are broker-dealers.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with sale of Class B shares. For the period ended December 31, 1994,
contingent deferred sales charges received by JH Funds amounted to $86,419.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH Funds, for
distribution and service expenses at an annual rate not to exceed 0.30% of the
Class A average daily net assets and 1.00% of the Class B average daily net
assets to reimburse JH Funds for its distribution and service costs. Up to a
maximum of 0.25% of such payments may be service fees as defined by the amended
Rules of Fair Practice of the National Association of Securities Dealers, which
became effective July 7, 1993. Under the amended Rules of Fair Practice
curtailment of a portion of the Fund's 12b-1 payments could occur under certain
circumstances.
The Fund has a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, Investor Services was known as John
Hancock Fund Services. For the period ended December 31, 1994, the Fund paid
Investor Services a monthly transfer agent fee equivalent, on an annual basis,
to 0.40%, 0.22%, and 0.10% (0.40% prior to April 1, 1994) of the average daily
net asset value, attributable to Class A, Class B and Class C shares of the
Fund, respectively, plus out of pocket expenses incurred by Investor Services on
behalf of the Fund for proxy mailings. Effective January 1, 1995, Class A and
Class B shares will pay transfer agent fees based on transaction volume and the
number of shareholder accounts.
Messrs. Edward J. Boudreau, Jr., Francis C. Cleary, Jr., (until December
14, 1994), and Richard S. Scipione are directors and/or officers of the Adviser,
and/or its affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of securities, other than
obligations of the U.S. government and its agencies and short-term securities,
during the period ended December 31, 1994, aggregated $605,559,932 and
$711,784,608, respectively. Purchases and proceeds from sales of obligations of
the U.S. government and its agencies, during the period ended December 31, 1994,
aggregated $649,530,400 and $540,820,353, respectively.
The cost of investments owned at December 31, 1994 (excluding the corporate
savings account) for Federal income tax purposes was $1,441,028,880. Gross
unrealized appreciation and depreciation of investments aggregated $4,974,658
and $105,930,447, respectively, resulting in net unrealized depreciation of
$100,955,789.
21
<PAGE>
John Hancock Funds - Sovereign Bond Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
John Hancock Sovereign Bond Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Sovereign Bond Fund (the "Fund"), including the schedule of investments,
as of December 31, 1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
John Hancock Sovereign Bond Fund at December 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
[SIGNATURE]
/s/ Ernst & Young LLP
Boston, Massachusetts
February 13, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund for its fiscal year ended
December 31, 1994.
Corporate Dividends Received Deduction: None of the 1994 dividends qualify
for the corporate dividends received deduction.
U.S. Government Obligations: Income from these investments may be exempt
from certain state and local taxes. The percentage of assets invested in U.S.
Treasury bonds, bills, and notes was 24.10% at year end. The percentage of
income derived from U.S. Treasury bonds, bills, and notes was 18.69%. The
percentage of assets invested in obligations of other U.S. government agencies
(excluding securities issued by Federal National Mortgage Association and
Government National Mortgage Association) was 1.39% at year end. The percentage
of income derived from these investments was 1.29% For specific information on
exemption provisions in your state, consult your local state tax office or your
tax adviser.
22
<PAGE>
PART C.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement:
John Hancock Sovereign Bond Fund-
Statement of Assets and Liabilities as of December 31, 1994.
Statement of Operations of the year ended December 31, 1994.
Statement of changes in Net Asset for each of the two years ended
December 31.
Notes to Financial Statements.
Financial Highlights for each of the 10 years ended December 31, 1994.
Schedule of Investments as of December 31, 1994.
(b) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibit
Index hereto and are incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
No person is directly or indirectly controlled by or under common
control with Registrant.
Item 26. Number of Holders of Securities
As of April 7, 1995, the number of record holders of shares of
Registrant was as follows:
Title of Class Number of Record Holders
Class A Shares - 145,247
Class B Shares - 3,235
Class C Shares 1
Item 27. Indemnification
Section 4.3 of Registrant's Declaration of Trust provides that (i)
every person who is, or has been, a Trustee, officer, employee or agent
of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise)
shall be indemnified by the Trust, or by one or more Series thereof if
the claim arises from his or her conduct with respect to only such
Series, to the fullest extent permitted by law against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof; and that (ii) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims, actions,
suits or proceedings (civil, criminal, or other, including appeals),
actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
However, no indemnification shall be provided to a Trustee or officer
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office; (ii) with respect to any matter as to which he shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust
or a Series thereof; (iii) in the event of a settlement or other
disposition not involving a final adjudication resulting in a payment
by a Trustee or officer, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office by (A) a court by (B) a majority of the Non-
interested trustees or independent legal counsel, or (C) a vote of the
majority of the Fund's outstanding shares.
The rights of indemnification may be insured against by policies
maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing
contained herein shall affect any rights to indemnification to which
personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding may be advanced by the Trust or a Series
thereof before final disposition, if the recipient undertakes to repay
the amount if it is ultimately determined that he is not entitled to
indemnification, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or
Series thereof shall be insured against losses arising out of any
such advances; or (ii) a majority of the Non-interested Trustees
acting on the matter (provided that a majority of the
Non-interested Trustees act on the matter) or an independent
legal counsel in a written opinion shall determine, based upon a
review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
For purposes of indemnification Non-interested Trustee" is one
who (i) is not an "Interested Person" of the Trust (including
anyone who has been exempted from being an "Interested Person" by
any rule, regulation or order of the Commission), and (ii) is not
involved in the claim, action, suit or proceeding.
(b) Under the Distribution Agreement. Under Section 12 of the Distribution
Agreement, John Hancock Funds, Inc. ("John Hancock Funds" ) has agreed to
indemnify the Registrant and its Trustees, officers and controlling persons
against claims arising out of certain acts and statements of John Hancock Funds.
Section 9(a) of the By-Laws of the Insurance Company provides, in effect,
that the Insurance Company will, subject to limitations of law, indemnify each
present and former director, officer and employee of the of the Insurance
Company who serves as a Trustee or officer of the Registrant at the direction or
request of the Insurance Company against litigation expenses and liabilities
incurred while acting as such, except that such indemnification does not cover
any expense or liability incurred or imposed in connection with any matter as to
which such person shall be finally adjudicated not to have acted in good faith
in the reasonable belief that his action was in the best interests of the
Insurance Company. In addition, no such person will be indemnified by the
Insurance Company in respect of any liability or expense incurred in connection
with any matter settled without final adjudication unless such settlement shall
have been approved as in the best interests of the Insurance Company either by
vote of the Board of Directors at a meeting composed of directors who have no
interest in the outcome of such vote, or by vote of the policyholders. The
Insurance Company may pay expenses incurred in defending an action or claim in
advance of its final disposition, but only upon receipt of an undertaking by the
person indemnified to repay such payment if he should be determined to be
entitled to indemnification.
Article IX of the respective By-Laws of John Hancock Funds and the Adviser
provide as follows:
"Section 9.01. Indemnity: Any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and the liability was not
incurred by reason of gross negligence or reckless disregard of the duties
involved in the conduct of his office, and expenses in connection therewith may
be advanced by the Corporation, all to the full extent authorized by the law."
"Section 9.02. Not Exclusive; Survival of Rights: The indemnification provided
by Section 9.01 shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such as person."
Insofar as indemnification for liabilities under the Securities Act of 1933 (the
"Act") may be permitted to Trustees, officers and controlling persons of
Registrant pursuant to the Registrant's Amended and Restated Articles of
Incorporation, Article 10.1 of the Registrant's By-Laws, The underwriting
Agreement, the By-Laws of John Hancock Funds, the Adviser, or the Insurance
Company or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and other Connections of Investment Adviser
For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and Directors of the
Investment Adviser, reference is made to Forms ADV (801-8124) filed under the
Investment Advisers Act of 1940, herein incorporated by reference.
Item 29. Principal Underwriters
(a) John Hancock Funds acts as principal underwriter for the Registrant and
also serves as principal underwriter or distributor of shares for John
Hancock Cash Reserve, Inc., John Hancock Bond Fund, John Hancock Capital
Growth Fund, John Hancock Current Interest, John Hancock Special Series,
Inc., John Hancock Tax-Free Bond Fund, John Hancock California Tax-Free
Income Fund, John Hancock Capital Series, John Hancock Limited-Term
Government Fund, John Hancock Tax-Exempt Income Fund, John Hancock Sovereign
Investors Fund, Inc., John Hancock Cash Management Fund, John Hancock Special
Equities Fund, John Hancock Sovereign Bond Fund, John Hancock Tax-Exempt
Series, John Hancock Strategic Series, John Hancock Technology Series, Inc.
and John Hancock World Fund, John Hancock Investment Trust, John Hancock
Institutional Series Trust, Freedom Investment Trust, Freedom Investment
Trust II and Freedom Investment Trust III.
(b) The following table lists, for each director and officer of John
Hancock Funds, the information indicated.
(b) Subadviser
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts
Robert H. Watts Director and Senior None
John Hancock Place Vice President
P.O. Box 111
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer and
Boston, Massachusetts Director
Robert G. Freedman Director Vice Chairman and Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts
Stephen M. Blair Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
Thomas H. Drohan Senior Vice President Senior Vice President
101 Huntington Avenue and
Boston, Massachusetts Secretary
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer
David A. King Senior Vice President- None
101 Huntington Avenue
Boston, Massachusetts
James B. Little Senior Vice President Senior Vice President
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
Susan S. Newton Vice President and Vice President,
101 Huntington Avenue Secretary Assistant Secretary
Boston, Massachusetts and Compliance Officer
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
Hugh A. Dunlap, Jr. Director None
101 Huntington Avenue
Boston, Massachusetts
James V. Bowhers Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
(c) None.
Item 30. Location of Accounts and Records
Registrant maintains the records required to be maintained by it under
Rules 31a-1 (a), 31a-a(b), and 31a-2(a) under the Investment Company
Act of 1940 as its principal executive offices at 101 Huntington
Avenue, Boston Massachusetts 02199-7603. Certain records, including
records relating to Registrant's shareholders and the physical
possession of its securities, may be maintained pursuant to Rule 31a-3
at the main office of Registrant's Transfer Agent and Custodian.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus with respect to a series of the Registrant is delivered with
a copy of the latest annual report to shareholders with respect to that
series upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston,
and the Commonwealth of Massachusetts on the 24th day of April, 1995.
JOHN HANCOCK SOVEREIGN BOND FUND
By:
Edward J. Boudreau, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Title Date
* Chairman April 24, 1995
Edward J. Boudreau, Jr. (Principal Executive Officer)
/s/James B. Little
James B. Little Senior Vice President and Chief April 24, 1995
Financial Officer (Principal
Financial and Accounting Officer)
* Trustee April 24, 1995
Dennis S. Aronowitz
* Trustee April 24, 1995
Richard P. Chapman
* Trustee April 24, 1995
William J. Cosgrove
* Trustee April 24, 1995
Bayard Henry
* Trustee April 24, 1995
Gail D. Fosler
<PAGE>
Signature Title Date
* Trustee April 24, 1995
Richard S. Scipione
* Trustee April 24, 1995
Edward J. Spellman
*By: /s/Thomas H. Drohan April 24, 1995
Thomas H. Drohan
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description Page Number
99.B1 Amended and Restated Declaration of Trust of Registrant
dated February 28, 1992
99.Bl.l Amendment to Declaration of Trust dated May 1, 1992.
99.B1.2 Amendment to Declaration of Trust dated September 14,
1993.
99.B2 Amended and Restated By-Laws of Registrant as adopted
on December 8, 1993.
99.B2.1 Amendment to By-Laws dated December 13, 1994.
99.B4 Specimen share certificate for the Registrant
99.B5 Investment Management Contract between Registrant and
John Hancock Advisers, Inc. dated January 1, 1994.
99.B6 Distribution Agreement with Registrant and John Hancock
Broker Distribution Services, Inc. dated August 1, 1991
99.B6.1 Form of Soliciting Dealer Agreement between John
Hancock Broker Distribution Services, Inc. and Selected
Dealers.
99.B6.2 Form of Financial Institution Sales and Service
Agreement.
99.B7 None
99.B8 Master Custodian Agreement between John Hancock Mutual
Funds and Investors Bank and Trust Company dated
December 15, 1992.
99.B9 Transfer Agency Agreement between Registrant and John
Hancock Fund Services, Inc. dated January 1, 1991.
99.B10 Rule 24(e) opinion.
99.Bll Auditor's Consent.
99.B12 Financial Statement of the Registrant for the fiscal
year ended December 31, 1994 included in Parts A and B.
99.B13 None
99.B14 None
99.B15 Class A Distribution Plan between Registrant and John
Hancock Broker Services, Inc.
99.B15.1 Class B Distribution Plan between Registrant and John
Hancock Broker Services, Inc.
99.B16 Schedule for Computation of Yield and Total Return.
99.B17 Powers of Attorney dated December 13, 1984, April 23,
1988, April 23, 1987, November 15, 1988, May 17, 1988,
October 23, 1990, October 15, 1991, January 1 1994.
99.27 Class A Financial Data Schedules -- Class A
99.27 Class B Financial Data Schedules -- Class B
99.27 Class C Financial Data Schedules -- Class C
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
John Hancock Bond Fund
101 Huntington Avenue
Boston, Massachusetts
02199-7603
Dated February 28, 1992
<PAGE>
Table of Contents
ARTICLE I - NAME AND DEFINITIONS ........................................... 1
Section 1.1. Name ........................................................ 1
Section 1.2. Definitions ................................................. 1
ARTICLE II - TRUSTEES ...................................................... 3
Section 2.1. General Powers .............................................. 3
Section 2.2. Investments ................................................. 3
Section 2.3. Legal Title ................................................. 4
Section 2.4. Issuance and Repurchase of Shares ........................... 4
Section 2.5. Delegation; Committees ...................................... 4
Section 2.6. Collection and Payment ...................................... 4
Section 2.7. Expenses .................................................... 5
Section 2.8. Manner of Acting; By-laws ................................... 5
Section 2.9. Miscellaneous Powers ........................................ 5
Section 2.10. Principal Transactions ...................................... 5
Section 2.11. Litigation .................................................. 5
Section 2.12. Number of Trustees .......................................... 6
Section 2.13. Election and Term ........................................... 6
Section 2.14. Resignation and Removal ..................................... 6
Section 2.15. Vacancies ................................................... 6
Section 2.16. Delegation of Power to Other Trustees ....................... 6
ARTICLE III - CONTRACTS .................................................... 7
Section 3.1. Distribution Contract ....................................... 7
Section 3.2. Advisory or Management Contract ............................. 7
Section 3.3. Administration Agreement .................................... 7
Section 3.4. Service Agreement ........................................... 7
Section 3.5. Transfer Agent .............................................. 7
Section 3.6. Custodian ................................................... 8
Section 3.7. Affiliations of Trustees or Officers, Etc. .................. 8
Section 3.8. Compliance with 1940 Act .................................... 8
ARTICLE IV - LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES
AND OTHERS ................................................................ 8
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc ....... 8
Section 4.2. Non-Liability of Trustees, Etc ............................. 9
Section 4.3. Mandatory Indemnification .................................. 9
<PAGE>
Section 4.4. No Bond Required of Trustees ............................... 10
Section 4.5. No Duty of Investigation;
Notice in Trust Instruments, Etc. .......................... 10
Section 4.6. Reliance on Experts, Etc. .................................. 10
ARTICLE V - SHARES OF BENEFICIAL INTEREST ................................. 11
Section 5.1. Beneficial Interest ........................................ 11
Section 5.2. Rights of Shareholders ..................................... 11
Section 5.3. Trust Only ................................................. 11
Section 5.4. Issuance of Shares ......................................... 11
Section 5.5. Register of Shares ......................................... 11
Section 5.6. Transfer of Shares ......................................... 12
Section 5.7. Notices .................................................... 12
Section 5.8. Treasury Shares ............................................ 12
Section 5.9. Voting Powers .............................................. 12
Section 5.10. Meetings of Shareholders ................................... 12
Section 5.11. Series or Class Designation ................................ 13
Section 5.12. Assent to Declaration of Trust ............................. 15
ARTICLE VI - REDEMPTION AND REPURCHASE OF SHARES .......................... 15
Section 6.1. Redemption of Shares ....................................... 15
Section 6.2. Price ...................................................... 15
Section 6.3. Payment .................................................... 16
Section 6.4. Effect of Suspension of Determination
of Net Asset Value ......................................... 16
Section 6.5. Repurchase by Agreement .................................... 16
Section 6.6. Redemption of Shareholder's Interest ....................... 16
Section 6.7. Redemption of Shares in Order to
Qualify as Regulated Investment
Company; Disclosure of Holding ............................. 16
Section 6.8. Reductions in Number of Outstanding
Shares Pursuant to Net Asset
Value Formula .............................................. 17
Section 6.9. Suspension of Right of Redemption .......................... 17
ARTICLE VII - DETERMINATION OF NET ASSET VALUE, NET INCOME AND
DISTRIBUTIONS ............................................................. 17
Section 7.1. Net Asset Value ............................................ 17
Section 7.3. Determination of Net Income;
Constant Net Asset Value; Reduction
of Outstanding Shares ...................................... 18
Section 7.4. Power to Modify Foregoing Procedures ....................... 18
ARTICLE VIII - DURATION; TERMINATION OF TRUST OR A SERIES OR
CLASS; AMENDMENT; MERGERS, ETC ............................................ 19
Section 8.1. Duration ................................................... 19
Section 8.2. Termination of the Trust or a Series or a Class ............ 19
Section 8.3. Amendment Procedure ........................................ 20
Section 8.4. Merger, Consolidation and Sale of Assets ................... 20
Section 8.5. Incorporation .............................................. 20
<PAGE>
ARTICLE IX - REPORTS TO SHAREHOLDERS ...................................... 21
ARTICLE X - MISCELLANEOUS ................................................. 21
Section 10.1. Execution and Filing ....................................... 21
Section 10.2. Governing Law .............................................. 21
Section 10.3. Counterparts ............................................... 21
Section 10.4. Reliance by Third Parties .................................. 21
Section 10.5. Provisions in Conflict with Law or Regulations ............. 21
<PAGE>
DECLARATION OF TRUST made this 28th day of February, 1992 by
Board of Trustees (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with the provisions
of Article II hereof, the "Trustees");
WHEREAS, pursuant to a Declaration of Trust dated October 5, 1984 the Trustees
established a trust for the investment and reinvestment of fund's
contributed thereto;
WHEREAS, said Declaration of Trust provides that the beneficial interest in the
trust assets be divided into transferable shares of beneficial interest;
WHEREAS, said Declaration of Trust provides that all money and property
contributed to the trust established thereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the shares of
beneficial interest issued thereunder and subject to the provisions thereof;
and
WHEREAS, the Trustees desire to amend and restate said Declaration of Trust in
its entirety, as hereinafter provided;
NOW, THEREFORE, the undersigned, being a majority of the Trustees of the Trust,
hereby amend and restate the Declaration of Trust in its entirety, as
follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "John Hancock Bond
Fund" (the "Trust").
Section 1.2. Definitions. Wherever they are used herein, the following terms
have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to the
contract described in Section 3.3 hereof.
(b) "By-laws" means the By-laws referred to in Section 2.8 hereof, as
from time to time amended.
(c) "Class" means any division of shares within a Series, which Class
is or has been established within such Series in accordance with
the provisions of Article V.
<PAGE>
The three initial Classes of Shares established and designated in
Section 5.11 hereof are: "Class A"; "Class B"; and "Class C."
(d) The terms "Commission" and "Interested Person" have the meanings
given them in the 1940 Act. Except as such term may be otherwise
defined by the Trustees in conjunction with the establishment of
any Series of Shares, the term "vote of a majority of the Shares
outstanding and entitled to vote" shall have the same meaning as is
assigned to the term "vote of a majority of the outstanding voting
securities" in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has custody
of any Trust Property as required by Section 17(f) of the 1940 Act,
but does not include a system for the central handling of
securities described in said Section 17(f).
(f) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein," and "hereunder" shall be deemed to refer to
this Declaration rather than exclusively to the article or section
in which such words appear.
(g) "Distributor" means the party, other than the Trust, to the
contract described in Section 3.1 hereof.
(h) "Fund" or "Funds," individually or collectively, means the separate
Series of Shares of the Trust, together with the assets and
liabilities assigned thereto.
(i) "Fundamental Restrictions" means the investment restrictions set
forth in the Prospectus and Statement of Additional Information and
designated as fundamental restrictions therein.
(j) "His" shall include the feminine and neuter, as well as the
masculine, genders
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(m) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
(n) "Prospectus" means the Prospectus and Statement of Additional
Information included in the Registration Statement of the Trust
under the Securities Act of 1933 as such Prospectus and Statement
of Additional Information may be amended or supplemented and filed
with the Commission from time to time.
<PAGE>
(o) "Series" individually or collectively means the separately managed
component(s) of the Trust (or, if the Trust shall have only one
such component, then that one) as may be established and designated
from time to time by the Trustees pursuant to Section 5.11 hereof.
(p) "Shareholder" means a record owner of Outstanding Shares.
(q) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to
time, including the Shares of any and all Series or of any Class
within any Series (as the context may require) which may be
established by the Trustees, and includes fractions of Shares as
well as whole Shares. "Outstanding" Shares means those Shares shown
from time to time on the books of the Trust or its Transfer Agent
as then issued and outstanding, but shall not include Shares which
have been redeemed or repurchased by the Trust and which are at the
time held in the treasury of the Trust.
(r) "Transfer Agent" means any Person other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and
the like.
(s) "Trust" means John Hancock Bond Fund.
(t) The "Trustees" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the
terms hereof, and all other persons who now serve or may from time
to time be duly elected, qualified and serving as Trustees in
accordance with the provisions of Article II hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or
persons in this capacity or their capacities as trustees hereunder.
(u) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees, including any and all assets
of or allocated to any Series or Class, as the context may require.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust
Property and business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees shall
have
<PAGE>
power to conduct the business of the Trust and carry on its operations
in any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of the
United States of America, in the District of Columbia, and in any and
all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of
foreign governments, and to do all such other things and execute all
such instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests
of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration, the presumption shall be
in favor of a grant of power to the Trustees. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid
powers. Such powers of the Trustees may be exercised without order of or
resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the
conduct of such operations.
(b) To invest in, hold for investment, or reinvest in, cash;
securities, including common, preferred and preference stocks;
warrants; subscription rights; profit-sharing interests or
participations and all other contracts for or evidence of equity
interests; bonds, debentures, bills, time notes and all other
evidences of indebtedness; negotiable or non-negotiable
instruments; government securities, including securities of any
state, municipality or other political subdivision thereof, or any
governmental or quasi-governmental agency or instrumentality; and
money market instruments including bank certificates of deposit,
finance paper, commercial paper, bankers' acceptances and all kinds
of repurchase agreements, of any corporation, company, trust,
association, firm or other business organization however
established, and of any country, state, municipality or other
political s subdivision, or any governmental or quasi-governmental
agency or instrumentality; and the Trustees shall be deemed to have
the foregoing powers with respect to any additional securities in
which the Trust may invest should the Fundamental Restrictions be
amended.
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase
or sell, to sell or otherwise dispose of, to lend and to pledge any
such securities, to enter into repurchase agreements, reverse
repurchase agreements, firm commitment agreements, and forward
foreign currency exchange contracts, to purchase and sell options
on securities, indices, currency or other financial assets, futures
contracts and options on futures contracts of all descriptions and
to engage in all types of hedging and risk management transactions.
<PAGE>
(d) To exercise all rights, powers and privileges of ownership or
interest in all securities and repurchase agreements included in
the Trust Property, including the right to vote thereon and
otherwise act with respect thereto and to do all acts for the
preservation, protection, improvement and enhancement in value of
all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any
property, real or personal, including cash or foreign currency, and
any interest therein.)
(f) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security the Trust Property;
and to endorse, guarantee, or undertake the performance of any
obligation or engagement of any other Person and to lend Trust
Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is
included in the Trust Property or in the affairs of which the
Trustees have any direct or indirect interest; to do all acts and
things designed to protect, preserve, improve or enhance the value
of such obligation or interest; and to guarantee or become surety
on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust,
association or firm.
(h) To enter into a plan of distribution and any related agreements
whereby the Trust may finance directly or indirectly any activity
which is primarily intended to result in sale of Shares.
(i) To adopt on behalf of the Trust or any Series thereof an
alternative purchase plan providing for the issuance of multiple
Classes of Shares (as authorized herein at Section 5.11), such
Shares being differentiated on the basis of purchase method and
allocation of distribution expenses.
(j) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything
necessary, suitable or proper for the accomplishment of any purpose
or the attainment of any object or the furtherance of any power
hereinbefore set forth, either alone or in association with others,
and to do every other act or thing incidental or appurtenant to or
arising out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit
or restrict in any manner the general powers of the Trustees.
<PAGE>
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by
fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust or any
Series of the Trust, or in the name of any other Person as nominee, on
such terms as the Trustees may determine, provided that the interest of
the Trust therein is deemed appropriately protected. The right, title
and interest of the Trustees in the Trust Property and the Property of
each Series of the Trust shall vest automatically in each Person who may
hereafter become a Trustee. Upon the termination of the term of office,
resignation, removal or death of a Trustee he shall automatically cease
to have any right, title or interest in any of the Trust Property, and
the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VI and VII and Section
5.11 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the
Trust, whether capital or surplus or otherwise, to the full extent now
or hereafter permitted by the laws of the Commonwealth of Massachusetts
governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing
of such things and the execution of such instruments either in the name
of the Trust or any Series of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. Subject to Section 5.11 hereof, the
Trustees shall have power to collect all property due to the Trust; to
pay all claims, including taxes, against the Trust Property; to
prosecute, defend, compromise or abandon any claims relating to the
Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and
to enter into releases, agreements and other instruments.
Section 2.7. Expenses. Subject to Section 5.11 hereof, the Trustees shall have
the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of
this Declaration, and to pay reasonable compensation
<PAGE>
from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided herein or
in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees (a quorum
being present), including any meeting held by means of a conference
telephone circuit or similar communications equipment by means of which
all persons participating in the meeting can hear each other, or by
written consents of the entire number of Trustees then in office. The
Trustees may adopt By-laws not inconsistent with this Declaration to
provide for the conduct of the business of the Trust and may amend or
repeal such By-laws to the extent such power is not reserved to the
Shareholders. Notwithstanding the foregoing provisions of this Section
2.8 and in addition to such provisions or any other provision of this
Declaration or of the By-laws, the Trustees may by resolution appoint a
committee consisting of less than the whole number of Trustees then in
office, which committee may be empowered to act for and bind the
Trustees and the Trust, as if the acts of such committee were the acts
of all the Trustees then in office, with respect to the institution,
prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be
brought before any court, administrative agency or other adjudicatory
body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11 hereof, the Trustees
shall have the power to: (a) employ or contract with such Persons as the
Trustees may deem desirable for the transaction of the business of the
Trust or any Series thereof; (b) enter into joint ventures, partnerships
and any other combinations or associations; (c) remove Trustees or fill
vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider
appropriate, and appoint from their own number, and terminate, any one
or more committees which may exercise some or all of the power and
authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property or the Property of the appropriate
Series of the Trust, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers,
administrators, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding
any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person
against such liability; (e) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any
Trustees, officers, employees and agents of the Trust; (f) to the extent
permitted by law, indemnify any person with whom the Trust or any Series
thereof has dealings, including the Investment Adviser, Administrator,
Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual
obligations of others; (h) determine and change the fiscal year of the
Trust or any Series thereof and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, but the absence of such
seal shall not impair the validity of any instrument executed on behalf
of the Trust.
<PAGE>
Section 2.10. Principal Transactions. Except in transactions not permitted by
the 1940 Act or rules and regulations adopted by the Commission, the
Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust or any Series thereof
to any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such
dealings with the Investment Adviser, Distributor or Transfer Agent or
with any Interested Person of such Person; and the Trust or a Series
thereof may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon customary
terms.
Section 2.11. Litigation. The Trustees shall have the power to engage in and to
prosecute, defend, compromise, abandon, or adjust by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and
demands relating to the Trust, and out of the assets of the Trust or any
Series thereof to pay or to satisfy any debts, claims or expenses
incurred in connection therewith, including those of litigation, and
such power shall include without limitation the power of the Trustees or
any appropriate committee thereof, in the exercise of their or its good
faith business judgment, to dismiss any action, suit, proceeding,
dispute, claim, or demand, derivative or otherwise, brought by any
person, including a Shareholder in its own name or the name of the
Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business
for or on behalf of the Trust.
Section 2.12. Number of Trustees. The number of Trustees shall be such number as
shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees
shall in no event be less than two (2) nor more than fifteen (15).
Section 2.13. Election and Term. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.15 hereof, the
Trustees may succeed themselves and shall be elected by the Shareholders
owning of record a plurality of the Shares voting at a meeting of
Shareholders on a date fixed by the Trustees. Except in the event of
resignations or removals pursuant to Section 2.14 hereof, each Trustee
shall hold office until such time as less than a majority of the
Trustees holding office have been elected by Shareholders. In such event
the Trustees then in office will call a Shareholders' meeting for the
election of Trustees. Except for the foregoing circumstances, the
Trustees shall continue to hold office and may appoint successor
Trustees.
Section 2.14. Resignation and Removal. Any Trustee may resign his trust (without
the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such
resignation shall be effective upon such delivery, or at a later date
according to the terms of the instrument. Any of the Trustees may be
removed (provided the aggregate number of Trustees after such removal
shall not be less than two) with cause, by the action of two-thirds of
the remaining Trustees or by action of two-thirds of the outstanding
Shares of the Trust (for purposes of determining the
<PAGE>
circumstances and procedures under which any such removal by the
Shareholders may take place, the provisions of Section 16(c) of the 1940
Act shall be applicable to the same extent as if the Trust were subject
to the provisions of that Section). Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust
Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall
execute and deliver on his behalf such documents as the remaining
Trustees shall require as provided in the preceding sentence.
Section 2.15. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of his death, retirement, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to
perform the duties of the office of a Trustee. No such vacancy shall
operate to annul the Declaration or to revoke any existing agency
created pursuant to the terms of the Declaration. In the case of an
existing vacancy, including a vacancy existing by reason of an increase
in the number of Trustees, subject to the provisions of Section 16(a) of
the 1940 Act, the remaining Trustees shall fill such vacancy by the
appointment of such other person as they in their discretion shall see
fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment
shall have accepted in writing such appointment and agreed in writing to
be bound by the terms of the Declaration. An appointment of a Trustee
may be made in anticipation of a vacancy to occur at a later date by
reason of retirement, resignation or increase in the number of Trustees,
provided that such appointment shall not become effective prior to such
retirement, resignation or increase in the number of Trustees. Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is
filled as provided in this Section 2.15, the Trustees in office,
regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by
the Declaration. A written instrument certifying the existence of such
vacancy signed by a majority of the Trustees in office shall be
conclusive evidence of the existence of such vacancy.
Section 2.16. Delegation of Power to Other Trustees. Any Trustee may, by power
of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that
in no case shall fewer than two (2) Trustees personally exercise the
powers granted to the Trustees under this Declaration except as herein
otherwise expressly provided.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their discretion from
time to time enter into an exclusive or non exclusive distribution
contract or contracts providing for the sale
<PAGE>
of the Shares to net the Trust or the applicable Series of the Trust not
less than the amount provided for in Section 7.1 of Article VII hereof,
whereby the Trustees may either agree to sell the Shares to the other
party to the contract or appoint such other party as their sales agent
for the Shares, and in either case on such terms and conditions, if any,
as may be prescribed in the By-laws, and such further terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article III or of the By-laws;
and such contract may also provide for the repurchase of the Shares by
such other party as agent of the Trustees.
Section 3.2. Advisory or Management Contract. Subject to approval by a vote of a
majority of Shares outstanding and entitled to vote, the Trustees may in
their discretion from time to time enter into one or more investment
advisory or management contracts or, if the Trustees establish multiple
Series, separate investment advisory or management contracts with
respect to one or more Series whereby the other party or parties to any
such contracts shall undertake to furnish the Trust or such Series
management, investment advisory, administration, accounting, legal,
statistical and research facilities and services, promotional or
marketing activities, and such other facilities and services, if any, as
the Trustees shall from time to time consider desirable and all upon
such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the
Trustees may authorize the Investment Advisers, or any of them, under
any such contracts (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales,
loans or exchanges of portfolio securities and other investments of the
Trust on behalf of the Trustees or may authorize any officer, employee
or Trustee to effect such purchases, sales, loans or exchanges pursuant
to recommendations of such Investment Advisers, or any of them (and all
without further action by the Trustees). Any such purchases, sales,
loans and exchanges shall be deemed to have been authorized by all of
the Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such
meeting the approval or continuance of any such investment advisory or
management contract. If the Shareholders of any one or more of the
Series of the Trust should fail to approve any such investment advisory
or management contract, the Investment Adviser may nonetheless serve as
Investment Adviser with respect to any Series whose Shareholders approve
such contract.
Section 3.3. Administration Agreement. The Trustees may in their discretion from
time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes separate administration agreements
with respect to each Series or Class, whereby the other party to such
agreement shall undertake to manage the business affairs of the Trust or
of a Series or Class thereof of the Trust and furnish the Trust or a
Series or a Class thereof with office facilities, and shall be
responsible for the ordinary clerical, bookkeeping and recordkeeping
services at such office facilities, and other facilities and services,
if any, and all upon such terms and conditions as the Trustees may in
their discretion determine.
<PAGE>
Section 3.4. Service Agreement. The Trustees may in their discretion from time
to time enter into Service Agreements with respect to one or more Series
or Classes of Shares whereby the other parties to such Service
Agreements will provide administration and/or support services pursuant
to Administration Plans and Service Plans, and all upon such terms and
conditions as the Trustees in their discretion may determine.
Section 3.5. Transfer Agent. The Trustees may in their discretion from time to
time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish
transfer agency and shareholder services to the Trust. The contract
shall have such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the Declaration. Such
services may be provided by one or more Persons.
Section 3.6. Custodian. The Trustees may appoint or otherwise engage one or more
banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least
two million dollars ($2,000,000) to serve as Custodian with authority as
its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the Trust.
The Trustees may also authorize the Custodian to employ one or more
sub-custodians, including such foreign banks and securities depositories
as meet the requirements of applicable provisions of the 1940 Act, and
upon such terms and conditions as may be agreed upon between the
Custodian and such sub-custodian, to hold securities and other assets of
the Trust and to perform the acts and services of the Custodian, subject
to applicable provisions of law and resolutions adopted by the Trustees.
Section 3.7. Affiliations of Trustees or Officers, Etc. The fact that: (i) any
of the Shareholders, Trustees or officers of the Trust or any Series
thereof is a shareholder, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any partnership, corporation,
trust, association or other organization or of or for any parent or
affiliate of any organization, with which a contract of the character
described in Sections 3.1, 3.2, 3.3 or 3.4 above or for services as
Custodian, Transfer Agent or disbursing agent or for related services
may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder of or has an
interest in the Trust, or that (ii) any partnership, corporation, trust,
association or other organization with which a contract of the character
described in Sections 3.1, 3.2, 3.3 or 3.4 above or for services as
Custodian, Transfer Agent or disbursing agent or for related services
may have been or may hereafter be made also has any one or more of such
contracts with one or more other partnerships, corporations, trusts,
associations or other organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust or its Shareholders.
Section 3.8. Compliance with 1940 Act. Any contract entered into pursuant to
Sections 3.1 or 3.2 shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment
thereof or other applicable Act of Congress hereafter enacted),
<PAGE>
as modified by any applicable order or orders of the Commission, with
respect to its continuance in effect, its termination and the method of
authorization and approval of such contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or
affairs of the Trust or any Series thereof. No Trustee, officer,
employee or agent of the Trust or any Series thereof shall be subject to
any personal liability whatsoever to any Person, other than to the Trust
or its Shareholders, in connection with Trust Property or the affairs of
the Trust, save only that arising from bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties with respect to
such Person; and all such Persons shall look solely to the Trust
Property, or to the Property of one or more specific Series of the Trust
if the claim arises from the conduct of such Trustee, officer, employee
or agent with respect to only such Series, for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust
or any Series thereof, is made a party to any suit or proceeding to
enforce any such liability of the Trust or any Series thereof, he shall
not, on account thereof, be held to any personal liability. The Trust
shall indemnify and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall reimburse
such Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor)
out of the Trust Property for all legal and other expenses reasonably
incurred by him in connection with any such claim or liability. The
indemnification and reimbursement required by the preceding sentence
shall be made only out of assets of the one or more Series whose Shares
were held by said Shareholder at the time the act or event occurred
which gave rise to the claim against or liability of said Shareholder.
The rights accruing to a Shareholder under this Section 4.1 shall not
impair any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in
any appropriate situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee or
agent of the Trust or any Series thereof shall be liable to the Trust,
its Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting Trustee
to redress any breach of trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
<PAGE>
Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is, or has been, a Trustee, officer, employee
or agent of the Trust (including any individual who serves at
its request as director, officer, partner, trustee or the like
of another organization in which it has any interest as a
shareholder, creditor or otherwise) shall be indemnified by
the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such
Series, to the fullest extent permitted by law against all
liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened;
and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the Trust or a Series thereof;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph
(b)(ii) resulting in a payment by a Trustee or officer,
unless there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of his office:
(A) by the court or other body approving the settlement or
other disposition;
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a
majority of the Non-interested Trustees acting on the
matter (provided that a majority of the Non-interested
Trustees then in office act on the matter) or
(y) written opinion of independent legal counsel; or
<PAGE>
(C) a vote of a majority of the Shares outstanding and
entitled to vote (excluding Shares owned of record or
beneficially by such individual).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable,
shall not affect any other rights to which any Trustee or officer
may now or hereafter be entitled, shall continue as to a person who
has ceased to be such Trustee or officer and shall inure to the
benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust or any Series
thereof other than Trustees and officers may be entitled by
contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense To any claim,
action, suit or proceeding of the character described in paragraph
(a) of this Section 4.3 may be advanced by the Trust or a Series
thereof prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to
indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust
or Series thereof shall be insured against losses arising out
of any such advances; or
(ii) a majority of the Non-interested Trustees acting on the
matter (provided that a majority of the Non-interested
Trustees act on the matter) or an independent legal counsel
in a written opinion shall determine, based upon a review of
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Non-interested Trustee" is one who (i)
is not an "Interested Person" of the Trust (including anyone who has
been exempted from being an "Interested Person" by any rule, regulation
or order of the Commission), and (ii) is not involved in the claim,
action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be obligated to give
any bond or other security for the performance of any of his duties
hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust or a Series
thereof shall be bound to make any inquiry concerning the validity of
any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or
property paid, loaned, or delivered to or on the order of the Trustees
or of said officer, employee or agent. Every obligation,
<PAGE>
contract, instrument, certificate, Share, other security of the Trust or
a Series thereof or undertaking, and every other act or thing whatsoever
executed in connection with the Trust shall be conclusively presumed to
have been executed or done by the executors thereof only in their
capacity as Trustees under this Declaration or in their capacity as
officers, employees or agents of the Trust or a Series thereof. Every
written obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking made or issued
by the Trustees may recite that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the
obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually,
but bind only the Trust Property or the Trust Property of the applicable
Series, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to bind
the Trustees individually. The Trustees shall at all times maintain
insurance for the protection of the Trust Property or the Trust Property
of the applicable Series, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate
to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee, officer or employee of the
Trust or a Series thereof shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act or
any failure to act resulting from reliance in good faith upon the books
of account or other records of the Trust or a Series thereof, upon an
opinion of counsel, or upon reports made to the Trust or a Series
thereof by any of its officers or employees or by the Investment
Adviser, the Administrator, the Distributor, Transfer Agent, selected
dealers, accountants, appraisers or other experts or consultants
selected with reasonable care by the Trustees, officers or employees of
the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable Shares of beneficial interest without
par value. The number of such Shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the exclusive authority
without the requirement of Shareholder approval to establish and
designate one or more Series of shares and one or more Classes thereof
as the Trustees deem necessary or desirable. Each Share of any Series
shall represent an equal proportionate Share in the assets of that
Series with each other Share in that Series. Subject to the provisions
of Section 5.11 hereof, the Trustees may also authorize the creation of
additional Series of Shares (the proceeds of which may be invested in
separate, independently managed portfolios) and additional Classes of
Shares within any Series. All Shares issued hereunder including, without
limitation, Shares issued in
<PAGE>
connection with a dividend in Shares or a split in Shares, shall be
fully paid and nonassessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of
the Trust nor can they be called upon to share or assume any losses of
the Trust or suffer an assessment of any kind by virtue of their
ownership of Shares. The Shares shall be personal property giving only
the rights specifically set forth in this Declaration. The Shares shall
not entitle the holder to preference, preemptive, appraisal, conversion
or exchange rights, except as the Trustees may determine with respect to
any Series or Class of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create only the
relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship
other than a trust. Nothing in this Declaration of Trust shall be
construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may, from time
to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury,
to such party or parties and for such amount and type of consideration,
including cash or property, at such time or times and on such terms as
the Trustees may deem best, except that only Shares previously
contracted to be sold may be issued during any period when the right of
redemption is suspended pursuant to Section 6.9 hereof, and may in such
manner acquire other assets (including the acquisition of assets subject
to, and in connection with the assumption of, liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may
issue fractional Shares and Shares held in the treasury. The Trustees
may from time to time divide or combine the Shares of the Trust or, if
the Shares be divided into Series or Classes, of any Series or any Class
thereof of the Trust, into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Trust or in the
Trust Property allocated or belonging to such Series or Class.
Contributions to the Trust or Series thereof may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share
or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of
Shares held by them respectively and a record of all transfers thereof.
Such register shall be conclusive as to who are the holders of the
Shares and who shall be entitled to receive dividends or distributions
or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of
<PAGE>
any dividend or distribution, nor to have notice given to him as
provided herein or in the By-laws, until he has given his address to the
Transfer Agent or such other officer or agent of the Trustees as shall
keep the said register for entry thereon. It is not contemplated that
certificates will be issued for the Shares; however, the Trustees, in
their discretion, may authorize the issuance of share certificates and
promulgate appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Shares shall be transferable on the records of
the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of transfer, together with
such evidence of the genuineness of each such execution and
authorization and of other matters as may reasonably be required. Upon
such delivery the transfer shall be recorded on the register of the
Trust. Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer. Any person becoming entitled to any Shares in
consequence of the death, bankruptcy, or incompetence of any
Shareholder, or otherwise by operation of law, shall be recorded on the
register of Shares as the holder of such Shares upon production of the
proper evidence thereof to the Trustees or the Transfer Agent, but until
such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of
the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any Shareholder of record
at his last known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until resold
pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Section 2.13; (ii) with
respect to any investment advisory contract entered into pursuant to
Section 3.2; (iii) with respect to termination of the Trust or a Series
or Class thereof as provided in Section 8.2; (iv) with respect to any
amendment of this Declaration to the extent and as provided in Section
8.3; (v) with respect to any merger, consolidation or sale of assets as
provided in Section 8.4; (vi) with respect to incorporation of the Trust
to the extent and as provided in Section 8.5; (vii) to the same extent
as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not
be brought or maintained derivatively or as a class action on behalf of
the Trust or a Series thereof or the Shareholders of either; (viii) with
respect to any plan adopted pursuant to Rule 12b-1 (or
<PAGE>
any successor rule) under the 1940 Act, and related matters; and (ix)
with respect to such additional matters relating to the Trust as may be
required by this Declaration, the By-laws or any registration of the
Trust as an investment company under the 1940 Act with the Commission
(or any successor agency) or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote. On any matter submitted
to a vote of Shareholders, all Shares shall be voted by individual
Series except (1) when permitted by the 1940 Act, Shares shall be voted
in the aggregate and not by individual Series; and (2) when the Trustees
have determined that the matter affects only the interests of one or
more Series or Class thereof, then only the Shareholders of such Series
or Class thereof shall be entitled to vote thereon. The Trustees may, in
conjunction with the establishment of any further Series or any Classes
of Shares, establish conditions under which the several Series or
Classes of Shares shall have separate voting rights or no voting rights.
There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration or the By-laws
to be taken by Shareholders. The By-laws may include further provisions
for Shareholders' votes and meetings and related matters.
Section 5.10. Meetings of Shareholders. No annual or regular meetings of
Shareholders are required. Special meetings of the Shareholders,
including meetings involving only the holders of Shares of one or more
but less than all Series or Classes thereof, may be called at any time
by the Chairman of the Board, President, or any Vice-President of the
Trust, and shall be called by the President or the Secretary at the
request, in writing or by resolution, of a majority of the Trustees, or
at the written request of the holder or holders of ten percent (10%) or
more of the total number of Shares then issued and outstanding of the
Trust entitled to vote at such meeting. Meetings of the Shareholders of
any Series of the Trust shall be called by the President or the
Secretary at the written request of the holder or holders of ten percent
(10%) or more of the total number of Shares then issued and outstanding
of such Series of the Trust entitled to vote at such meeting. Any such
request shall state the purpose of the proposed meeting.
Section 5.11. Series or Class Designation.
(a) Without limiting the authority of the Trustees set forth in Section
5.1 to establish and designate any further Series, it is hereby
confirmed that the Trust consists of the presently Outstanding
Shares of a single Series: John Hancock Bond Fund (the "Existing
Series").
(b) Without limiting the authority of the Trustees set forth in Section
5.1 to establish and designate any further Classes, there are
hereby established and designated three distinct Classes of Shares
of the Existing Series: "Class A"--Shares of which are subject to a
sales charge at time of purchase and a Class A Rule 12b-1
distribution plan (the "Front-End Option"); "Class B"- Shares of
which are subject to a contingent deferred sales charge ("CDSC"), a
Class B Rule 12b-1 distribution plan,
<PAGE>
and automatic conversion to Class A Shares seven years after
purchase, provided that there is an ongoing opinion of counsel or
an Internal Revenue Service Ruling that such conversion is a
non-taxable event (the "CDSC Option"); and "Class C"-- Shares of
which are offered for purchase to certain institutional investors
with no sales charge and no Class C Rule 12b-1 distribution plan
(the "No-Load Option"). Each outstanding Share of any Series shall
be of Class A unless the Trustees, with the consent of the holder
of the Share (which consent shall be evidenced by the holder's
subscription of Shares of a specified Class or by any other action
prescribed by the Trustees), determines that such Share is or shall
be of some other Class.
(c) The Shares of the existing Series and such Classes thereof herein
established and designated and any Shares of any further Series and
Classes thereof that may from time to time be established and
designated by the Trustees shall be established and designated, and
the variations in the relative rights and preferences as between
the different Series shall be fixed and determined, by the Trustees
(unless the Trustees otherwise determine with respect to further
Series or Classes at the time of establishing and designating the
same); provided, that all Shares shall be identical except that
there may be variations so fixed and determined between different
Series or Classes thereof as to investment objective, policies and
restrictions, purchase price, payment obligations, distribution
expenses, right of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, exchange rights,
and conditions under which the several Series shall have separate
voting rights, all of which are subject to the limitations set
forth below. All references to Shares in this Declaration shall be
deemed to be Shares of any or all Series or Classes as the context
may require.
(d) As to any existing Series and Classes, both heretofore and herein
established and designated, and any further division of Shares of
the Trust into additional Series or Classes, the following
provisions shall be applicable:
(i) The number of authorized Shares and the number of Shares of
each Series or Class thereof that may be issued shall be
unlimited. The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and
reacquired of any Series or Class into one or more Series or
one or more Classes that may be established and designated
from time to time. The Trustees may hold as treasury shares
(of the same or some other Series or Class), reissue forsuch
consideration and on such terms as they may determine, or
cancel any Shares of any Series or Class reacquired by the
Trust at their discretion from time to time.
(ii) All consideration received by the Trust for the issue or sale
of Shares of a particular Series or Class, together with all
assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived
from any
<PAGE>
reinvestment of such proceeds in whatever form the same may
be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors of such Series and
except as may otherwise be required by applicable tax laws,
and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any
particular Series, the Trustees shall allocate them among any
one or more of the Series established and designated from
time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes. No
holder of Shares of any Series shall have any claim on or
right to any assets allocated or belonging to any other
Series.
(iii) The assets belonging to each particular Series shall be
charged with the liabilities of the Trust in respect of that
Series or the appropriate Class or Classes thereof and all
expenses, costs, charges and reserves attributable to that
Series or Class or Classes thereof, and any general
liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series
established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion
deem fair and equitable. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall
be conclusive and binding upon the Shareholders of all Series
and Classes for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act,
to determine which items are capital; and each such
determination and allocation shall be conclusive and binding
upon the Shareholders. The assets of a particular Series of
the Trust shall, under no circumstances, be charged with
liabilities attributable to any other Series or Class thereof
of the Trust. All persons extending credit to, or contracting
with or having any claim against a particular Series or Class
of the Trust shall look only to the assets of that particular
Series for payment of such credit, contract or claim.
(iv) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 7.2 of this
Declaration with respect to any Series or Classes which
represent the interests in the assets of the Trust
immediately prior to the establishment of two or more Series
or Classes. With respect to any other Series or Class,
dividends and distributions on Shares of a particular Series
or Class may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise, pursuant to a
standing resolution or resolutions adopted only once or with
such frequency as the Trustees may determine, to the holders
of Shares of that Series or Class, from such of the income
and capital gains, accrued or realized, from the
<PAGE>
assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities
belonging to that Series or Class. All dividends and
distributions on Shares of a particular Series or Class shall
be distributed pro rata to the Shareholders of that Series or
Class in proportion to the number of Shares of that Series or
Class held by such Shareholders at the time of record
established for the payment of such dividends or
distribution.
(v) Each Share of a Series of the Trust shall represent a
beneficial interest in the net assets of such Series. Each
holder of Shares of a Series or Class thereof shall be
entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such Series or
Class net of expenses. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his
being or having been a Shareholder of a Series or Class, such
Shareholder shall be paid solely out of the funds and
property of such Series of the Trust. Upon liquidation or
termination of a Series or Class thereof of the Trust,
Shareholders of such Series or Class thereof shall be
entitled to receive a pro rata share of the net assets of
such Series. A Shareholder of a particular Series of the
Trust shall not be entitled to participate in a derivative or
class action on behalf of any other Series or the
Shareholders of any other Series of the Trust.
(vi) On each matter submitted to a vote of Shareholders, all
Shares of all Series and Classes shall vote as a single
class; provided, however, that (1) as to any matter with
respect to which a separate vote of any Series or Class is
required by the 1940 Act or is required by attributes
applicable to any Class or is required by any Rule 12b-1
plan, such requirements as to a separate vote by that Series
or Class shall apply, (2) to the extent that a matter
referred to in (1) above, affects more than one Class or
Series and the interests of each such Class or Series in the
matter are identical, then, subject to (3) below, the Shares
of all such affected Classes or Series shall vote as a single
Class; (3) as to any matter which does not affect the
interests of a particular Series or Class, only the holders
of Shares of the one or more affected Series or Classes shall
be entitled to vote; and (4) the provisions of the following
sentence shall apply. On any matter that pertains to any
particular Class of a particular Series or to any class
expenses with respect to any Series which matter may be
submitted to a vote of Shareholders, only Shares of the
affected Class, as the case may be, or that Series shall be
entitled to vote except that: (i) to the extent said matter
affects Shares of another Class or Series, such other Shares
shall also be entitled to vote, and in such cases Shares of
the affected Class, as the case may be, of such Series shall
be voted in the aggregate together with such other Shares;
and (ii) to the extent that said matter does not affect
Shares of a particular Class of such Series, said Shares
shall not be entitled to vote (except where otherwise
required by law or permitted by the Trustees acting in their
sole discretion)
<PAGE>
even though the matter is submitted to a vote of the
Shareholders of any other Class or Series.
(vii) Except as otherwise provided in this Article V, the Trustees
shall have the power to determine the designations,
preferences, privileges, payment obligations, limitations
and rights, including voting and dividend rights, of each
Class and Series of Shares. Subject to compliance with the
requirement of the 1940 Act, the Trustees shall have the
authority to provide that the holders of Shares of any
Series or Class shall have the right to convert or exchange
said Shares into Shares of one or more Series or Classes of
Shares in accordance with such requirements, conditions and
procedures as may be established by the Trustees.
(viii) The establishment and designation of any Series or Classes
of Shares shall be effective upon the execution by a
majority of the then Trustees of an instrument setting forth
such establishment and designation and the relative rights
and preferences of such Series or Classes, or as otherwise
provided in such instrument. At any time that there are no
Shares outstanding of any particular Series or Class
previously established and designated, the Trustees may by
an instrument executed by a majority of their number abolish
that Series or Class and the establishment and designation
thereof. Each instrument referred to in this section shall
have the status of an amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by virtue of
having become a Shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares.
(a) All Shares of the Trust shall be redeemable, at the redemption
price determined in the manner set out in this Declaration.
Redeemed or repurchased Shares may be resold by the Trust. The
Trust may require any Shareholder to pay a sales charge to the
Trust, the underwriter, or any other person designated by the
Trustees upon redemption or repurchase of Shares in such amount and
upon such conditions as shall be determined from time to time by
the Trustees.
(b) The Trust shall redeem the Shares of the Trust or any Series or
Class thereof at the price determined as hereinafter set forth,
upon the appropriately verified written application of the record
holder thereof (or upon such other form of request as the
<PAGE>
Trustees may determine) at such office or agency as may be
designated from time to time for that purpose by the Trustees. The
Trustees may from time to time specify additional conditions, not
inconsistent with the 1940 Act, regarding the redemption of Shares
in the Trust's then effective Prospectus.
Section 6.2. Price. Shares shall be redeemed at a price based on their net asset
value determined as set forth in Section 7.1 hereof as of such time as
the Trustees shall have theretofore prescribed by resolution. In the
absence of such resolution, the redemption price of Shares deposited
shall be based on the net asset value of such Shares next determined as
set forth in Section 7.1 hereof after receipt of such application. The
amount of any contingent deferred sales charge or redemption fee payable
upon redemption of Shares may be deducted from the proceeds of such
redemption.
Section 6.3. Payment Payment of the redemption price of Shares of the Trust or
any Series or Class thereof shall be made in cash or in property to the
Shareholder at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time
in the Trust's then effective Prospectus, subject to the provisions of
Section 6.4 hereof. Notwithstanding the foregoing, the Trustees may
withhold from such redemption proceeds any amount arising (i) from a
liability of the redeeming Shareholder to the Trust or (ii) in
connection with any Federal or state tax withholding requirements.
Section 6.4. Effect of Suspension of Determination of Net Asset Value If,
pursuant to Section 6.9 hereof, the Trustees shall declare a suspension
of the determination of net asset value with respect to Shares of the
Trust or of any Series or Class thereof, the rights of Shareholders
(including those who shall have applied for redemption pursuant to
Section 6.1 hereof but who shall not yet have received payment) to have
Shares redeemed and paid for by the Trust or a Series or Class thereof
shall be suspended until the termination of such suspension is declared.
Any record holder who shall have his redemption right so suspended may,
during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke
any application for redemption not honored and withdraw any Share
certificates on deposit. The redemption price of Shares for which
redemption applications have not been revoked shall be based on the net
asset value of such Shares next determined as set forth in Section 7.1
after the termination of such suspension, and payment shall be made
within seven (7) days after the date upon which the application was made
plus the period after such application during which the determination of
net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares directly,
or through the Distributor or another agent designated for the purpose,
by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or
contract of purchase is made or the net asset value as of any time
<PAGE>
which may be later determined pursuant to Section 7.1 hereof, provided
payment is not made for the Shares prior to the time as of which such
net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trustees, in their sole
discretion, may cause the Trust to redeem all of the Shares of one or
more Series or Class thereof held by any Shareholder if the value of
such Shares held by such Shareholder is less than the minimum amount
established from time to time by the Trustees.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated Investment
Company; Disclosure of Holding.
(a) If the Trustees shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of Shares or other
securities of the Trust has or may become concentrated in any
Person to an extent which would disqualify the Trust or any Series
of the Trust as a regulated investment company under the Internal
Revenue Code of 1986, then the Trustees shall have the power by lot
or other means deemed equitable by them (i) to call for redemption
by any such Person a number, or principal amount, of Shares or
other securities of the Trust or any Series of the Trust sufficient
to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust or any Series of the Trust into
conformity with the requirements for such qualification and (ii) to
refuse to transfer or issue Shares or other securities of the Trust
or any Series of the Trust to any Person whose acquisition of the
Shares or other securities of the Trust or any Series of the Trust
in question would result in such disqualification. The redemption
shall be effected at the redemption price and in the manner
provided in Section 6.1.
(b) The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with
respect to direct and indirect ownership of Shares or other
securities of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code of 1986, or to
comply with the requirements of any other taxing authority. Section
6.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula.
Section 6.8. Reductions in Number of Outstanding Shares Pursuant to Net Asset
Value Formula. The Trust may also reduce the number of outstanding
Shares of the Trust or of any Series of the Trust pursuant to the
provisions of Section 7.3.
Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary weekend and
holiday closings, (ii) during which trading on the New York Stock
Exchange is restricted, (iii) during which an emergency exists as a
result of which disposal by the Trust or a Series thereof of securities
owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust or a Series thereof fairly to determine the
value of its net assets, or (iv) during any other period when the
Commission may for the protection of Shareholders of the
<PAGE>
Trust by order permit suspension of the right of redemption or
postponement of the date of payment or redemption; provided that
applicable rules and regulations of the Commission shall govern as to
whether the conditions prescribed in (ii), (iii), or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but
not later than the close of business on the business day next following
the declaration of suspension, and thereafter there shall be no right of
redemption or payment on redemption until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any
event on the first day on which said stock exchange shall have reopened
or the period specified in (ii) or (iii) shall have expired (as to which
in the absence of an official ruling by the Commission, the
determination of the Trust shall be conclusive). In the case of a
suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset
value existing after the termination of the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The net asset value of each outstanding Share of
the Trust or of each Series or Class thereof shall be determined on such
days and at such time or times as the Trustees may determine. The value
of the assets of the Trust or any Series thereof may be determined (i)
by a pricing service which utilizes electronic pricing techniques based
on general institutional trading, (ii) by appraisal of the securities
owned by the Trust or any Series of the Trust, (iii) in certain cases,
at amortized cost, or (iv) by such other method as shall be deemed to
reflect the fair value thereof, determined in good faith by or under the
direction of the Trustees. From the total value of said assets, there
shall be deducted all indebtedness, interest, taxes, payable or accrued,
including estimated taxes on unrealized book profits, expenses and
management charges accrued to the appraisal date, net income determined
and declared as a distribution and all other items in the nature of
liabilities which shall be deemed appropriate, as incurred by or
allocated to the Trust or any Series or Class of the Trust. The
resulting amount which shall represent the total net assets of the Trust
or Series or Class thereof shall be divided by the number of Shares of
the Trust or Series or Class thereof outstanding at the time and the
quotient so obtained shall be deemed to be the net asset value of the
Shares of the Trust or Series or Class thereof. The net asset value of
the Shares shall be determined at least once on each business day, as of
the close of regular trading on the New York Stock Exchange or as of
such other time or times as the Trustees shall determine. The power and
duty to make the daily calculations may be delegated by the Trustees to
the Investment Adviser, the Administrator, the Custodian, the Transfer
Agent or such other Person as the Trustees by resolution may determine.
The Trustees may suspend the daily determination of net asset value to
the extent permitted by the 1940 Act. It shall not be a violation of any
provision of this Declaration of Trust if Shares are sold, redeemed or
repurchased by the Trust at a price other than one based on net asset
value if the net asset value is affected by one or more errors
inadvertently made in the pricing of portfolio securities or in accruing
income, expenses or liabilities.
<PAGE>
Section 7.2. Distributions to Shareholders.
(a) The Trustees shall from time to time distribute ratably among the
Shareholders of the Trust or of a Series or Class thereof such
proportion of the net profits, surplus (including paid-in surplus),
capital, or assets of the Trust or such Series held by the Trustees
as they may deem proper. Such distributions may be made in cash or
property (including without limitation any type of obligations of
the Trust or Series or Class or any assets thereof), and the
Trustees may distribute ratably among the Shareholders of the Trust
or Series or Class thereof additional Shares of the Trust or Series
or Class thereof issuable hereunder in such manner, at such times,
and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of the Trust or Series
or Class thereof at the time of declaring a distribution or among
the Shareholders of the Trust or Series or Class thereof at such
other date or time or dates or times as the Trustees shall
determine. The Trustees may in their discretion determine that,
solely for the purposes of such distributions, Outstanding Shares
shall exclude Shares for which orders have been placed subsequent
to a specified time on the date the distribution is declared or on
the next preceding day if the distribution is declared as of a day
on which Boston banks are not open for business, all as described
in the then effective prospectus under the Securities Act of 1933.
The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust
or a Series or Class thereof or to meet obligations of the Trust or
a Series or Class thereof, or as they may deem desirable to use in
the conduct of its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate. The
Trustees may in their discretion determine that an account
administration fee or other similar charge may be deducted directly
from the income and other distributions paid on Shares to a
Shareholder's account in each Series or Class.
(b) Inasmuch as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the
books, the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, additional amounts sufficient to enable the Trust or
a Series or Class thereof to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value; Reduction of
Outstanding Shares. Subject to Section 5.11 hereof, the net income of
the Series and Classes thereof of the Trust shall be determined in such
manner as the Trustees shall provide by resolution. Expenses of the
Trust or of a Series or Class thereof, including the advisory or
management fee, shall be accrued each day. Each Class shall bear only
expenses relating to its Shares and an allocable share of Series
expenses in accordance with such policies as may be established by the
Trustees
<PAGE>
from time to time and as are not inconsistent with the provisions of
this Declaration of Trust or of any applicable document filed by the
Trust with the Commission or of the Internal Revenue Code of 1986, as
amended. Such net income may be determined by or under the direction of
the Trustees as of the close of trading on the New York Stock Exchange
on each day on which such market is open or as of such other time or
times as the Trustees shall determine, and, except as provided herein,
all the net income of any Series or Class of the Trust, as so
determined, may be declared as a dividend on the Outstanding Shares of
such Series or Class. If, for any reason, the net income of any Series
or Class of the Trust determined at any time is a negative amount, the
Trustees shall have the power with respect to such Series or Class (i)
to offset each Shareholder's pro rata share of such negative amount from
the accrued dividend account of such Shareholder, or (ii) to reduce the
number of Outstanding Shares of such Series or Class by reducing the
number of Shares in the account of such Shareholder by that number of
full and fractional Shares which represents the amount of such excess
negative net income, or (iii) to cause to be recorded on the books of
the Trust an asset account in the amount of such negative net income,
which account may be reduced by the amount, provided that the same shall
thereupon become the property of the Trust with respect to such Series
or Class and shall not be paid to any Shareholder, of dividends declared
thereafter upon the Outstanding Shares of such Series or Class on the
day such negative net income is experienced, until such asset account is
reduced to zero. The Trustees shall have full discretion to determine
whether any cash or property received shall be treated as income or as
principal and whether any item of expense shall be charged to the income
or the principal account, and their determination made in good faith
shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to
determine, in the light of the particular circumstances, how much if any
of the value thereof shall be treated as income, the balance, if any, to
be treated as principal.
Section 7.4. Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VII, but subject to Section 5.11
hereof, the Trustees may prescribe, in their absolute discretion, such
other bases and times for determining the per Share net asset value of
the Shares of the Trust or a Series or Class thereof or net income of
the Trust or a Series or Class thereof, or the declaration and payment
of dividends and distributions as they may deem necessary or desirable.
Without limiting the generality of the foregoing, the Trustees may
establish several Series or Classes of Shares in accordance with Section
5.11, and declare dividends thereon in accordance with Section
5.11(d)(iv).
ARTICLE VIII
DURATION; TERMINATION OF TRUST OR A SERIES OR CLASS; AMENDMENT;
MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation of time but
subject to the provisions of this Article VIII.
Section 8.2. Termination of the Trust or a Series or a Class.
<PAGE>
(a) The Trust or any Series or Class thereof may be terminated by (i)
the affirmative vote of the holders of not less than two thirds of
the Shares outstanding and entitled to vote at any meeting of
Shareholders of the Trust or the appropriate Series or Class
thereof, (ii) by an instrument or instruments in writing without a
meeting, consented to by the holders of two-thirds of the Shares of
the Trust or a Series or Class thereof; provided, however, that, if
such termination is recommended by the Trustees, the vote or
written consent of the holders of a majority of the Shares of the
Trust or a Series or Class thereof outstanding and entitled to vote
shall be sufficient authorization, or (iii) notice to Shareholders
by means of an instrument in writing signed by a majority of the
Trustees, stating that a majority of the Trustees has determined
that the continuation of the Trust or a Series or a Class thereof
is not in the best interest of such Series or a Class, the Trust or
their respective shareholders as a result of such factors or events
adversely affecting the ability of such Series or a Class or the
Trust to conduct its business and operations in an economically
viable manner. Such factors and events may include (but are not
limited to) the inability of a Series or Class or the Trust to
maintain its assets at an appropriate size, changes in laws or
regulations governing the Series or Class or the Trust or affecting
assets of the type in which such Series or Class or the Trust
invests or economic developments or trends having a significant
adverse impact on the business or operations of such Series or
Class or the Trust. Upon the termination of the Trust or the Series
or Class,
(i) The Trust, Series or Class shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust, Series or Class and all of the powers of the Trustees
under this Declaration shall continue until the affairs of
the Trust, Series or Class shall have been wound up,
including the power to fulfill or discharge the contracts of
the Trust, Series or Class, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any
part of the remaining Trust Property or Trust Property
allocated or belonging to such Series or Class to one or more
persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and
do all other acts appropriate to liquidate its business;
provided that any sale, conveyance, assignment, exchange,
transfer or other disposition of all or substantially all the
Trust Property or Trust Property allocated or belonging to
such Series or Class that requires Shareholder approval in
accordance with Section 8.4 hereof shall receive the approval
so required
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities
and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust
Property or the remaining property of the terminated Series
or Class, in
<PAGE>
cash or in kind or partly each, among the Shareholders of the
Trust or the Series or Class according to their respective
rights.
(b) After termination of the Trust, Series or Class and distribution to
the Shareholders as herein provided, a majority of the Trustees
shall execute and lodge among the records of the Trust and file
with the Office of the Secretary of the Commonwealth of
Massachusetts an instrument in writing setting forth the fact of
such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties with respect to the Trust
or the terminated Series or Class, and the rights and interests of
all Shareholders of the Trust or the terminated Series or Class
shall thereupon cease.
Section 8.3. Amendment Procedure.
(a) This Declaration may be amended by a vote of the holders of a
majority of the Shares outstanding and entitled to vote or by any
instrument in writing, without a meeting, signed by a majority of
the Trustees and consented to by the holders of a majority of the
Shares outstanding and entitled to vote. The Trustees may amend
this Declaration without the vote or consent of Shareholders if
they deem it necessary to conform this Declaration to the
requirements of applicable federal or state laws or regulations or
the requirements of the regulated investment company provisions of
the Internal Revenue Code, but the Trustees shall not be liable for
failing so to do. The Trustees may also amend this Declaration
without the vote or consent of Shareholders if they deem it
necessary or desirable to change the name of the Trust or to make
any other changes in the Declaration which do not adversely affect
the rights of Shareholders hereunder.
(b) No amendment may be made under this Section 8.3 which would change
any rights with respect to any Shares of the Trust or Series or
Class thereof by reducing the amount payable thereon upon
liquidation of the Trust or Series or Class thereof or by
diminishing or eliminating any voting rights pertaining thereto,
except with the vote or consent of the holders of two-thirds of the
Shares of the Trust or such Series or Class outstanding and
entitled to vote. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption
from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon
Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders
or by the Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records
of the Trust.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any Series
thereof may merge or consolidate with any other corporation,
association, trust or other organization
<PAGE>
or may sell, lease or exchange all or substantially all of the Trust
Property or Trust Property allocated or belonging to such Series,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders
called for the purpose by the affirmative vote of the holders of
two-thirds of the Shares of the Trust or such Series outstanding and
entitled to vote, or by an instrument or instruments in writing without
a meeting, consented to by the holders of two-thirds of the Shares of
the Trust or such Series; provided, however, that, if such merger,
consolidation, sale, lease or exchange is recommended by the Trustees,
the vote or written consent of the holders of a majority of the Shares
of the Trust or such Series outstanding and entitled to vote shall be
sufficient authorization; and any such merger, consolidation, sale,
lease or exchange shall be deemed for all purposes to have been
accomplished under and pursuant to Massachusetts law.
Section 8.5. Incorporation. With the approval of the holders of a majority of
the Shares of the Trust or a Series thereof outstanding and entitled to
vote, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any
other trust, partnership, association or other organization to take over
all of the Trust Property or the Trust Property allocated or belonging
to such Series or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and
transfer the Trust Property or the Trust Property allocated or belonging
to such Series to any such corporation, trust, association or
organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities
of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation,
partnership, trust, association or organization in which the Trust or
such Series holds or is about to acquire shares or any other interest.
The Trustees may also cause a merger or consolidation between the Trust
or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law,
as provided under the law then in effect. Nothing contained herein shall
be construed as requiring approval of Shareholders for the Trustees to
organize or assist in organizing one or more corporations, trusts,
partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organization or
entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of each
Series a written financial report of the transactions of the Trust, including
financial statements which shall at least annually be certified by independent
public accountants.
ARTICLE X
MISCELLANEOUS
<PAGE>
Section 10.1. Execution and Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws
of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Each amendment so filed shall be
accompanied by a certificate signed and acknowledged by a Trustee
stating that such action was duly taken in a manner provided herein, and
unless such amendment or such certificate sets forth some later time for
the effectiveness of such amendment, such amendment shall be effective
upon its execution. A restated Declaration, integrating into a single
instrument all of the provisions of the Declaration which are then in
effect and operative, may be executed from time to time by a majority of
the Trustees and filed with the Secretary of The Commonwealth of
Massachusetts. A restated Declaration shall, upon execution, be
conclusive evidence of all amendments contained therein and may
hereafter be referred to in lieu of the original Declaration and the
various amendments thereto.
Section 10.2. Governing Law. This Declaration is executed by the Trustees and
delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 10.3. Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original,
and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a
Trustee hereunder, certifying (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any
instrument or writing, (c) the form of any vote passed at a meeting of
Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any
By-laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner
relate to the affairs of the Trust, shall be conclusive evidence as to
the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code of 1986
or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Declaration; provided, however,
<PAGE>
that such determination shall not affect any of the remaining
provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in
any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 28th
day of February, 1992.
/s/Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr., Chairman
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Dennis S. Aronowitz
Dennis S. Aronowitz
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Richard P. Chapman
Richard P. Chapman
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Francis C. Cleary, Jr.
Francis C. Cleary, Jr.
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/William J. Cosgrove
William J. Cosgrove
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
<PAGE>
/s/James V. Fletchero
James V. Fetchero
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Bayard Henry
Bayard Henry
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Richard S. Scipione
Richard S. Scipione
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
/s/Edward J. Spellman
Edward J. Spellman
as Trustee and not individually
101 Huntington Avenue
Boston, Massachusetts 02199-7603
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY, MASSACHUSETTS
February 28, 1992
Then personally appeared the above-named persons, Edward J, Boudreau, Jr.,
Dennis S. Aronowitz, Richard P. Chapman, Francis C. Cleary, Jr., William J.
Cosgrove, James V. Fetchero, Bayard Henry, Richard S. Scipione, Edward J.
Spellman, who acknowledged the foregoing instrument to be their free act and
deed.
Before me,
/s/ Carmen Pelissier
Notary Public
My commission expires:
July 30, 1993
JOHN HANCOCK BOND FUND
Instrument Changing Name of the Trust
The Trustees of John Hancock Bond Fund (the "Trust"), hereby amend the
Trust's Amended and Restated Declaration of Trust, dated February 28, 1992 (the
"Declaration of Trust"), to the extent necessary to reflect the change of name
of the John Hancock Bond Fund to John Hancock Sovereign Bond Fund, effective May
1, 1992.
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
Instrument on the 9th day of April, 1992.
/s/ Dennis S. Aronowitz
Dennis S. Aronowitz
Trustee
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Trustee
/s/ Richard P. Chapman, Jr.
Richard P. Chapman, Jr.
Trustee
/s/ Francis C. Cleary, Jr.
Francis C. Cleary, Jr.
Trustee
/s/ William J. Cosgrove
William J. Cosgrove
Trustee
/s/ James V. Fetchero
James V. Fetchero
Trustee
/s/ Bayard Henry
Bayard Henry
Trustee
<PAGE>
John Hancock Bond Fund
Instrument Changing Name of the Trust
/s/Richard S. Scipione
Richard S. Scipione
Trustee
/s/ Edward J. Spellman
Edward J. Spellman
Trustee
The name John Hancock Bond Fund is the designation of the Trustees under
the Amended and Restated Declaration of Trust, dated February 28, 1992 The
Declaration of Trust has been filed with the Secretary of State of the
Commonwealth of Massachusetts. The obligations of the Registrant are not
personally binding upon, nor shall resort be had to the private property of ,
any of the Trustees, shareholders, officer, employees or agents of Registrant ,
but Registrant's property only shall be bound.
JOHN HANCOCK SOVEREIGN BOND FUND
Establishment and Designation
of
Class A Shares, Class B Shares and Class C Shares
of Beneficial Interest of
John Hancock Sovereign Bond Fund
The undersigned, being a majority of the Trustees of John Hancock
Sovereign Bond Fund, a Massachusetts business trust (the "Fund"), acting
pursuant to Sections 5.1 and 5.11 of the Amended and Restated Declaration of
Trust dated February 28, 1992 of the Fund, as amended from time to time (the
"Declaration"), do hereby divide the shares of beneficial interest of John
Hancock Sovereign Bond Fund (the "Shares"), to create three classes of Shares of
the Fund as follows:
1. The three classes of Shares of the Fund established and designated
hereby are Class A Shares," "Class B Shares," and "Class C Shares,"
respectively.
2. Class A Shares, Class B Shares and Class C Shares shall each be
entitled to all of the rights and preferences accorded to Shares
under the Declaration.
3. The purchase price of Class A Shares, of Class B Shares and of Class
C Shares, the method of determining the net asset value of Class A
Shares, of Class B Shares and of Class C Shares, and the relative
dividend rights of holders of Class A Shares, of holders of Class B
Shares and of holders of Class C Shares shall be established by the
Trustees of the Fund in accordance with the provisions of the
Declaration and shall be set forth in the Fund's Registrtion
Statement on Form N-1A under the Securities Act of 1933 an/or the
Investment Company Act of 1940, as amended and as in effect at the
time of issuing such shares.
4. All Shares of the Fund issued prior to the filing of this instrument
with the Secretary of State of The Commonwealth of Massachusetts
shall be deemed Class A Shares or Class C Shares, as the case may
be, and the Trustees, acting in their sole discretion, may determine
that any Shares of the Fund issued after such time are Class A
Shares, Class B Shares, Class C Shares, or Shares of any other class
of the Fund hereafter established and designated by the Trustees.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
14th day of September, 1993.
<PAGE>
/s/Edward J. Boudreau, Jr. /s/William S. Cosgrove
Edward J. Boudreau. Jr. William S. Cosgrove
as Trustee and not individually as Trustee and not individually
34 Swan Road 20 Buttonwood Place
Winchester, MA 01890 Saddle River, NJ 07458
/s/Dennis S. Aronowitz /s/Bayard Henry
Dennis S. Aronowitz Bayard Henry
as Trustee and not individually as Trustee and not individually
29 Lee Road 65 Goddard Avenue
Chestnut Hill, MA 02167 Brookline, MA 02146
/s/Richard P. Chapman, Jr. /s/Richard S. Scipione
Richard P. Chapman, Jr. Richard S. Scipione
as Trustee and not individually as Trustee and not individually
107 Upland Road 4 Sentinel Road
Brookline, MA 02146 Hingham, MA 02043
/s/Francis C. Cleary, Jr. /s/Edward J. Spellman
Francis C. Cleary Edward J. Spellman
as Trustee and not individually as Trustee and not individually
58 Avalon Road 259 C Commercial Blvd.
Needham, MA 02192 Lauderdale By the Sea, FL 33308
The Declaration, a copy of which, together with all amendments thereto,
is on file in the office of the Secretary of State of the Commonwealth of
Massachusetts provides that no Trustee, officer, employee or agent of the Fund
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its shareholders, in connection with
Trust Property or the affairs of the Fund, save only that arising from bad
faith, willful misfeasance, gross negligence, or reckless disregard of his
duties with respect to such Person; and all such Persons shall look solely to
the Trust Property, or to the Trust Property of one or more specific Series of
the Fund if the claim arises from the conduct of such Trustee, officer, employee
or agent with respect to only such Series, for satisfaction of claims of any
nature arising in connection with the affairs of the Fund.
BY-LAWS
OF
JOHN HANCOCK SOVEREIGN BOND FUND
As Adopted on December 8, 1993
<PAGE>
Table of Contents
Page
ARTICLE I -- Definitions .................................................. 1
ARTICLE II -- Offices and Seal ............................................. 1
Section 2.1 Principal Office ..................................... 1
Section 2.2 Other Offices......................................... 1
Section 2.3 Seal ................................................. 1
ARTICLE III -- Shareholders ................................................ 2
Section 3.1 Meetings ............................................. 2
Section 3.2 Place of Meeting ..................................... 2
Section 3.3 Notice of Meetings ................................... 2
Section 3.4 Shareholders Entitled to Vote......................... 2
Section 3.5 Quorum .............................................. 3
Section 3.6 Treatment of Abstentions ............................. 3
Section 3.7 Voting of Shares Held in Street Name ................. 3
Section 3.8 Adjournment .......................................... 3
Section 3.9 Proxies .............................................. 3
Section 3.10 Inspection of Records ................................ 4
Section 3.11 Record Dates ......................................... 4
ARTICLE IV -- Meetings of Trustees ......................................... 4
Section 4.1 Regular Meetings ..................................... 4
Section 4.2 Special Meetings ..................................... 4
Section 4.3 Notice ............................................... 4
Section 4.4 Waiver of Notice ..................................... 5
Section 4.5 Quorum, Adjournment and Voting ....................... 5
Section 4.6 Compensation ......................................... 5
ARTICLE V -- Executive Committee and Other Committees ...................... 5
Section 5.1 How Constituted ...................................... 5
Section 5.2 Powers of the Executive Committee .................... 6
Section 5.3 Other Committees of Trustees ......................... 6
Section 5.4 Proceedings, Quorum and Manner of
<PAGE>
Acting .......................................... 6
Section 5.5 Other Committees ..................................... 6
ARTICLE VI -- Officers ..................................................... 6
Section 6.1 General .............................................. 6
Section 6.2 Election, Term of Office and
Qualifications ................................... 7
Section 6.3 Resignations and Removals ............................ 7
Section 6.4 Vacancies and Newly Created
Offices .......................................... 7
Section 6.5 Chairman of the Board ................................ 7
Section 6.6 President ............................................ 8
Section 6.7 Vice President ....................................... 8
Section 6.8 Chief Financial Officer, Treasurer
and Assistant Treasurers ......................... 8
Section 6.9 Secretary and Assistant
Secretaries ...................................... 9
Section 6.10 Subordinate Officers ................................. 9
Section 6.11 Remuneration ......................................... 9
Section 6.12 Surety Bonds ......................................... 9
ARTICLE VII -- Execution of Instruments; Voting of Securities............... 10
Section 7.1 Execution of Instruments ............................. 10
Section 7.2 Voting of Securities ................................. 10
ARTICLE VIII -- Fiscal Year, Accountants ................................... 10
Section 8.1 Fiscal Year .......................................... 10
Section 8.2 Accountants .......................................... 10
ARTICLE IX -- Amendments ................................................... 11
Section 9.1 General .............................................. 11
<PAGE>
BY-LAWS
OF
JOHN HANCOCK SOVEREIGN BOND FUND
ARTICLE I
Definitions
The terms "Class," "Commission," "Declaration," "Interested Person,"
"1940 Act," "Series," "Shareholder," "Shares," "Trust," "Trust Property" and
"Trustees" have the meanings given them in the Amended and Restated Declaration
of Trust of John Hancock Sovereign Bond Fund dated February 28, 1992, as amended
from time to time.
ARTICLE II
Offices and Seal
Section 2.1. Principal Office. The principal office of the Trust shall
be located in the City of Boston, The Commonwealth of Massachusetts.
Section 2.2. Other Offices. The Trust may establish and maintain such
other offices and places of business within or without The Commonwealth of
Massachusetts as the Trustees may from time to time determine.
Section 2.3. Seal. The seal of the Trust shall be circular in form and
shall bear the name of the Trust, the year of its organization, and the words
"Common Seal" and "A Massachusetts Voluntary Association." The form of the seal
shall be subject to alteration by the Trustees and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or otherwise
reproduced. Any officer or Trustee of the Trust shall have authority to affix
the seal of the Trust to any document requiring the same but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
<PAGE>
ARTICLE III
Shareholders
Section 3.1. Meetings. A Shareholders' meeting for the election of
Trustees and the transaction of other proper business shall be held when
authorized or required by the Declaration.
Section 3.2. Place of Meeting. All Shareholders' meetings shall be held
at such place within or without The Commonwealth of Massachusetts as the
Trustees shall designate.
Section 3.3. Notice of Meetings. Notice of all Shareholders' meetings,
stating the time, place and purpose of the meeting, shall be given by the
Secretary or an Assistant Secretary of the Trust by mail to each Shareholder
entitled to notice of and to vote at such meeting at his address as recorded on
the register of the Trust. Such notice shall be mailed at least 10 days and not
more than 60 days before the meeting. Such notice shall be deemed to be given
when deposited in the United States mail, with postage thereon prepaid. Any
adjourned meeting may be held as adjourned without further notice. No notice
need be given (A) to any Shareholder if a written waiver of notice, executed
before or after the meeting by such Shareholder or his attorney thereunto duly
authorized, is filed with the records of the meeting, or (B) to any Shareholder
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A waiver of notice need not specify the purposes of
the meeting.
Section 3.4. Shareholders Entitled to Vote. If, pursuant to Section 3.11
hereof, a record date has been fixed for the determination of Shareholders
entitled to notice of and to vote at any Shareholders' meeting, each Shareholder
of the Trust shall be entitled to vote, in accordance with the applicable
provisions of the Declaration, in person or by proxy, each Share or fraction
thereof standing in his name on the register of the Trust at the time of
determining net asset value on such record date. If the Declaration or the 1940
Act requires that Shares be voted by Series or Class, each Shareholder shall
only be entitled to vote, in person or by proxy, each Share or fraction thereof
of such Series or Class standing in his name on the register of the Trust at the
time of determining net asset value on such record date. If no record date has
been fixed for the determination of Shareholders so entitled, the record date
for the determination of Shareholders entitled to notice of and to vote at a
Shareholders' meeting shall be at the close of business on the day on which
notice of the meeting is mailed or, if notice is waived by all Shareholders, at
the close of business on the tenth day next preceding the day on which the
meeting is held.
Section 3.5. Quorum. The presence at any Shareholders' meeting in person
or by proxy, of Shareholders entitled to cast a majority of the votes thereat
shall be a quorum for the transaction of business.
<PAGE>
Section 3.6. Treatment of Abstentions. Shares represented in person or
by proxy, including Shares which abstain or do not vote with respect to one or
more proposals presented for shareholder approval, will be counted for purposes
of determining whether a quorum is present. Abstentions will be treated as
Shares that are present and entitled to vote with respect to any particular
proposal, but will not be counted as a vote in favor of such proposal. An
abstention from voting on a proposal will have the same effect as a vote against
such proposal.
Section 3.7. Voting of Shares Held in Street Name. If a broker or
nominee holding Shares in "street name" indicates on a proxy that it does not
have discretionary authority to vote those Shares as to a particular proposal
presented for shareholder approval, those Shares will be considered to be
outstanding, but will not be considered as present and entitled to vote with
respect to such proposal.
Section 3.8. Adjournment. The holders of a majority of the Shares
entitled to vote at the meeting and present thereat, in person or by proxy,
whether or not constituting a quorum, or, if no Shareholder entitled to vote is
present thereat, in person or by proxy, any Trustee or officer present thereat
entitled to preside or act as Secretary of such meeting, may adjourn the meeting
sine die or from time to time. Any business that might have been transacted at
the meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present.
Section 3.9. Proxies. Shares may be voted in person or by proxy. When
any Share is held jointly by several persons, any one of them may vote at any
meeting, in person or by proxy in respect of such Share unless at or prior to
exercise of the vote the Trustees receive a specific written notice to the
contrary from any one of them. If more than one such joint owner shall be
present at such meeting, in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote cast, such vote shall not be received
in respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Section 3.10. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 3.11. Record Dates. The Trustees may fix in advance a date as a
record date for the purpose of determining the Shareholders who are entitled to
notice of and to vote at any meeting or any adjournment thereof, or to express
consent in writing without a meeting to any action of the Trustees, or who shall
receive payment of any dividend or of any other distribution, or for the purpose
of any other lawful action, provided that such record date shall be not more
than 60 days before the date on which the particular action requiring such
determination of Shareholders is to be taken. In such case, subject to the
provisions of Section 3.4, each eligible Shareholder of record on such record
date shall be entitled to notice of, and to vote at, such meeting or
adjournment, or to express such consent, or to receive payment of
<PAGE>
such dividend or distribution or to take such other action, as the case may be,
notwithstanding any transfer of Shares on the register of the Trust after the
record date.
ARTICLE IV
Meetings of Trustees
Section 4.1. Regular Meetings. The Trustees from time to time shall
provide by resolution for the holding of regular meetings for the election of
officers and the transaction of other proper business and shall fix the place
and time for such meetings to be held within or without The Commonwealth of
Massachusetts.
Section 4.2. Special Meetings. Special meetings of the Trustees shall be
held whenever called by the Chairman of the Board, the President (or, in the
absence or disability of the President, by any Vice President), the Treasurer,
the Secretary or two or more Trustees, at the time and place within or without
The Commonwealth of Massachusetts specified in the respective notices or waivers
of notice of such meetings.
Section 4.3. Notice. Notice of regular and special meetings, stating the
time and place, shall be (a) mailed to each Trustee at his residence or regular
place of business at least five days before the day on which the meeting is to
be held or (b) caused to be delivered to him personally or to be transmitted to
him by telegraph, cable or wireless at least two days before the day on which
the meeting is to be held. Unless otherwise required by law, such notice need
not include a statement of the business to be transacted at, or the purpose of,
the meeting. No notice of adjournment of a meeting of the Trustees to another
time or place need be given if such time and place are announced at such
meeting.
Section 4.4. Waiver of Notice. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him. A waiver of notice need not specify the purposes of the meeting.
Section 4.5. Quorum, Adjournment and Voting. At all meetings of the
Trustees, the presence of a majority of the total number of Trustees authorized,
but not less than two, shall constitute a quorum for the transaction of
business. A majority of the Trustees present, whether or not constituting a
quorum, may adjourn the meeting, from time to time. The action of a majority of
the Trustees present at a meeting at which a quorum is present shall be the
action of the Trustees unless the concurrence of a greater proportion is
required for such action by law, by the Declaration or by these By-Laws.
Section 4.6. Compensation. Each Trustee may receive such remuneration
for his services as such as shall be fixed from time to time by resolution of
the Trustees.
<PAGE>
ARTICLE V
Executive Committee and Other Committees
Section 5.1. How Constituted. The Trustees may, by resolution, designate
one or more committees, including an Executive Committee, an Audit Committee and
a Committee on Administration, each consisting of at least two Trustees. The
Trustees may, by resolution, designate one or more alternate members of any
committee to serve in the absence of any member or other alternate member of
such committee. Each member and alternate member of a committee shall be a
Trustee and shall hold office at the pleasure of the Trustees. The Chairman of
the Board and the President shall be members of the Executive Committee.
Section 5.2. Powers of the Executive Committee. Unless otherwise
provided by resolution of the Trustees, the Executive Committee shall have and
may exercise all of the power and authority of the Trustees, provided that the
power and authority of the Executive Committee shall be subject to the
limitations contained in the Declaration.
Section 5.3. Other Committees of Trustees. To the extent provided by
resolution of the Trustees, other committees shall have and may exercise any of
the power and authority that may lawfully be granted to the Executive Committee.
Section 5.4. Proceedings, Quorum and Manner of Acting. In the absence of
appropriate resolution of the Trustees, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable, provided that the quorum shall not be less than two
Trustees. In the absence of any member or alternate member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a Trustee to act in the place of such absent
member or alternate member. Members and alternate members of a committee may
participate in a meeting of such committee by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5.5. Other Committees. The Trustees may appoint other
committees, each consisting of one or more persons who need not be Trustees.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Trustees, but shall not exercise any
power which may lawfully be exercised only by the Trustees or a committee
thereof.
<PAGE>
ARTICLE VI
Officers
Section 6.1. General. The officers of the Trust shall be a Chairman of
the Board, a President, a Secretary, and a Treasurer, and may include one or
more Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 6.10 of this Article VI.
Section 6.2. Election, Term of Office and Qualifications. The officers
of the Trust and any Series thereof (except those appointed pursuant to Section
6.10) shall be elected by the Trustees at their first meeting. If any officer or
officers are not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the Trustees. Except as
provided in Sections 6.3 and 6.4 of this Article VI, each officer elected by the
Trustees shall hold office until his successor shall have been chosen and
qualified. No person shall hold more than one office of the Trust or any Series
thereof, except that the President may hold the office of Chairman of the Board
and any Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the
Trust may also hold the office of Vice President. The Chairman of the Board and
the President shall be selected from among the Trustees and may hold such
offices only so long as they continue to be Trustees. Any Trustee or officer may
be but need not be a Shareholder of the Trust.
Section 6.3. Resignations and Removals. Any officer may resign his
office at any time by delivering a written resignation to the Trustees, the
President, the Secretary or any Assistant Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery. Any officer may be
removed from office with or without cause by the vote of a majority of the
Trustees at any regular meeting or any special meeting. Except to the extent
expressly provided in a written agreement with the Trust, no officer resigning
and no officer removed shall have any right to any compensation for any period
following his resignation or removal or any right to damages on account of such
removal.
Section 6.4. Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Trustees at any regular or special meeting
or, in the case of any office created pursuant to Section 6.10 of this Article
VI, by any officer upon whom such power shall have been conferred by the
Trustees.
Section 6.5. Chairman of the Board. The Chairman of the Board shall be
the chief executive officer of the Trust and each Series thereof, shall preside
at all Shareholders' meetings and at all meetings of the Trustees and shall be
ex officio a member of all committees of the Trustees and each Series thereof,
except the Audit Committee. Subject to the supervision of the Trustees, he shall
have general charge of the business of the Trust and each Series thereof, the
Trust Property and the officers, employees and agents of the Trust and each
<PAGE>
Series thereof. He shall have such other powers and perform such other duties as
may be assigned to him from time to time by the Trustees.
Section 6.6. President. The President shall be the chief operating
officer of the Trust and each Series thereof and, at the request of or in the
absence or disability of the Chairman of the Board, he shall preside at all
Shareholders' meetings and at all meetings of the Trustees and shall in general
exercise the powers and perform the duties of the Chairman of the Board. Subject
to the supervision of the Trustees and such direction and control as the
Chairman of the Board may exercise, he shall have general charge of the
operations of the Trust and each Series and Class thereof and its officers,
employees and agents. He shall exercise such other powers and perform such other
duties as from time to time may be assigned to him by the Trustees.
Section 6.7. Vice President. The Trustees may, from time to time,
designate and elect one or more Vice Presidents who shall have such powers and
perform such duties as from time to time may be assigned to them by the Trustees
or the President. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice Presidents,
then the senior in length of time in office of the Vice Presidents present and
able to act) may perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President.
Section 6.8 Chief Financial Officer, Treasurer and Assistant Treasurers.
The Chief Financial Officer shall be the principal financial and accounting
officer of the Trust and each Series thereof and shall have general charge of
the finances and books of account of the Trust and each Series and Class
thereof. Except as otherwise provided by the Trustees, he shall have general
supervision of the funds and property of the Trust and each Series thereof and
of the performance by the Custodian, appointed pursuant to Section 3.6 of the
Declaration of its duties with respect thereto. The Chief Financial Officer
shall render a statement of condition of the finances of the Trust and each
Series and Class thereof to the Trustees as often as they shall require the same
and he shall in general perform all the duties incident to the office of the
Chief Financial Officer and such other duties as from time to time may be
assigned to him by the Trustees.
The Treasurer or any Assistant Treasurer may perform such duties of the
Chief Financial Officer as the Chief Financial Officer or the Trustees may
assign. In the absence of the Chief Financial Officer, the Treasurer may perform
all duties of the Chief Financial Officer. In the absence of the Chief Financial
Officer and the Treasurer, any Assistant Treasurer may perform all duties of the
Chief Financial Officer.
Section 6.9. Secretary and Assistant Secretaries. The Secretary shall
attend to the giving and serving of all notices of the Trust and each Series and
Class thereof and shall record all proceedings of the meetings of the
Shareholders and Trustees in one or more books to be kept for that purpose. He
shall keep in safe custody the seal of the Trust, and shall have charge of the
records of the Trust and each Series and Class thereof, including the register
of shares and such other books and papers as the Trustees may direct and such
books, reports, certificates and other documents required by law to be kept, all
of which shall at all reasonable
<PAGE>
times be open to inspection by any Trustee. He shall perform such other duties
as appertain to his office or as may be required by the Trustees.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Trustees may assign, and, in the absence of the Secretary, he
may perform all the duties of the Secretary.
Section 6.10. Subordinate Officers. The Trustees from time to time may
appoint such other subordinate officers or agents as they may deem advisable,
each of whom shall have such title, hold office for such period, have such
authority and perform such duties as the Trustees may determine. The Trustees
from time to time may delegate to one or more officers or agents the power to
appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 6.11. Remuneration. The salaries or other compensation of the
officers of the Trust and any Series thereof shall be fixed from time to time by
resolution of the Trustees, except that the Trustees may by resolution delegate
to any person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in accordance with
the provisions of Section 6.10 hereof.
Section 6.12. Surety Bonds. The Trustees may require any officer or
agent of the Trust or any Series thereof to execute a bond (including, without
limitation, any bond required by the 1940 Act and the rules and regulations of
the Commission) to the Trustees in such sum and with such surety or sureties as
the Trustees may determine, conditioned upon the faithful performance of his
duties to the Trust, including responsibility for negligence and for the
accounting of any of the Trust Property that may come into his hands. In any
such case, a new bond of like character shall be given at least every six years,
so that the date of the new bond shall not be more than six years subsequent to
the date of the bond immediately preceding.
ARTICLE VII
Execution of Instruments, Voting of Securities
Section 7.1. Execution of Instruments. All deeds, documents, transfers,
contracts, agreements, requisitions or orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Trust or any
Series thereof, and other instruments requiring execution either in the name of
the Trust or the names of the Trustees or otherwise may be signed by the
Chairman, the President, a Vice President or the Secretary and by the Chief
Financial Officer, Treasurer or an Assistant Treasurer, or as the Trustees may
otherwise, from time to time, authorize, provided that instructions in
connection with the execution of portfolio securities actions may be signed by
one such officer. Any such authorization may be general or confined to specific
instances.
<PAGE>
Section 7.2. Voting of Securities. Unless otherwise ordered by the
Trustees, the Chairman, the President or any Vice President shall have full
power and authority on behalf of the Trustees to attend and to act and to vote,
or in the name of the Trustees to execute proxies to vote, at any meeting of
stockholders of any company in which the Trust or any Series thereof may hold
stock. At any such meeting such officer shall possess and may exercise (in
person or by proxy) any and all rights, powers, and privileges incident to the
ownership of such stock. The Trustees may by resolution from time to time confer
like powers upon any other person or persons.
ARTICLE VIII
Fiscal Year; Accountants
Section 8.1. Fiscal Year. The fiscal year of the Trust and any Series
thereof shall be established by resolution of the Trustees.
Section 8.2. Accountants.
(a) The Trustees shall employ a public accountant or firm of independent
public accountants as their accountant to examine the accounts of the Trust and
to sign and certify at least annually financial statements filed by the Trust.
The accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders.
(b) A majority of the Trustees who are not Interested Persons of the
Trust shall select the accountant at any meeting held before the initial
registration statement of the Trust becomes effective, and thereafter shall
select the accountant annually by votes, cast in person, at a meeting held
within 30 days before or after the beginning of the fiscal year of the Trust.
(c) Any vacancy occurring due to the death or resignation of the
accountant, may be filled at a meeting called for the purpose by the vote, cast
in person, of a majority of those Trustees who are not Interested Persons of the
Trust.
ARTICLE IX
Amendments
Section 9.1. General. These By-Laws may be amended or repealed, in whole
or in part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
John Hancock Capital Series
John Hancock Cash Management Fund
John Hancock Income Securities Trust
John Hancock Investors Trust
John Hancock Limited Term Government Fund
John Hancock Sovereign Bond Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Exempt Series Fund
John Hancock World Fund
AMENDMENT TO BY-LAWS
RESOLVED, that the By-Laws of the Trust be and hereby are amended to
create the office of Vice Chairman of the Trust by adding the following as
Article VI, Sub-Section 6.5A of the By-Laws:
Section 6.5A. Powers and Duties of the Vice Chairman. The Trustees may, but need
not, appoint one or more Vice Chairmen of the Trust. A Vice Chairman shall be an
executive officer of the Trust and shall have the powers and duties of a Vice
President of the Trust, as provided in Section 6.7 of this Article VI. The Vice
Chairman shall perform such duties as may be assigned to him or her from time to
time by the Trustees of the Chairman.
JOHN HANCOCK
SOVEREIGN BOND FUND
A MASSACHUSETTS VOLUNTARY ASSOCIATION
CLASS A
fully paid and non-assessable shares of beneficial interest, without par value,
in John Hancock Sovereign Bond Fund (the "Fund"), a Massachusetts voluntary
association established by the amended and restated Declaration of Trust dated
February 28, 1992, as amended from time to time, a copy of which, together with
any amendments thereto (the "Declaration"), is on file with the Secretary of the
Commonwealth of Massachusetts. The provisions of the Declaration are hereby
incorporated in and made a part of this certificate as fully as if set forth
herein in their entirety, to all of which provisions the holder and every
transferee or assignee hereof by accepting or holding the same agrees to be
bound. This certificate, and the shares represented hereby are negotiable and
transferable on the books of the Fund by the registered holder hereof in person
or by attorney upon surrender of this certificate properly endorsed. This
certificate is issued by the Trustees of John Hancock Sovereign Bond Fund,
acting not individually but as such Trustees, and is not valid until
countersigned by the Transfer Agent.
The name John Hancock Sovereign Bond Fund is the designation of the Trustees
under the amended and restated Declaration of Trust dated February 28, 1992, as
amended from time to time. The obligations hereunder are not personally binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but the Fund property
or a specific portion thereof only shall be bound.
Change date 9/10/93...fpb
Mass Fund
Signed by Boudreau, Chairman
<PAGE>
JOHN HANCOCK
SOVEREIGN BOND FUND
A MASSACHUSETTS VOLUNTARY ASSOCIATION
CLASS B
Date Changed 11/1/93...jjm
Mass Fund
signed by Boudreau, Chairman
fund 121
<PAGE>
JOHN HANCOCK
SOVEREIGN BOND FUND
A MASSACHUSETTS VOLUNTARY ASSOCIATION
CLASS C
Date Changed 11/1/93...jjm
Mass Fund
signed by Boudreau, Chairman
fund 221
JOHN HANCOCK SOVEREIGN BOND FUND
Investment Management Contract
Dated January 1, 1994
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND
Boston, Massachusetts
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Ladies and Gentlemen:
John Hancock Sovereign Bond Fund (the "Fund") 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 Fund's shares of beneficial interest
may be classified into series, each series representing the entire undivided
interest in a separate portfolio of assets. Series may be established or
terminated from time to time by action of the Board of Trustees of the Fund. As
of the date hereof, other than the Fund, there are no additional series of the
Fund.
The Board of Trustees of the Fund (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 Fund and the Adviser agree as follows:
1. Delivery of Documents. The Fund has furnished the Adviser with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Amended and Restated Declaration of Trust of the Fund, dated
February 28, 1992 (the "Declaration of Trust");
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser for the
<PAGE>
Fund and approving the form of this Agreement; and
(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.
The Fund 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 policies, objectives 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
registration statement of the Fund 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 policies, objectives and restrictions of the Fund, with respect
to the purchase, holding and disposition of portfolio securities including the
purchase and sale of options, alone or in consultation with any sub-adviser or
sub-advisers appointed pursuant to this Agreement and subject to the provisions
of any sub-investment management contract respecting the responsibilities of
such sub-adviser or sub-advisers;
(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;
<PAGE>
(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 7 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 sub-paragraphs (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
<PAGE>
activities and services of the custodian, transfer agent or other similar agents
retained by the Fund;
(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; and
(m) appoint and employ one or more sub-advisers satisfactory to the Fund
under sub-investment management agreements.
3. 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.
4. 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 3, the Adviser will not be
required to pay under this Agreement:
(a) the expenses of organizing the Fund (including without limitation,
legal, accounting and auditing fees and expenses incurred in connection with the
matters referred to in this clause (a)), of initially registering shares of the
Fund 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;
(b) the compensation and expenses of Trustees who are not interested
persons (as
<PAGE>
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;
(c) legal, accounting and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of the
Fund's assets, transfer agents, disbursing agents, plan agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets and
payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of the
shares of the Fund.
5. Compensation of the Adviser. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as herein provided, the
Fund will pay to the Adviser monthly in arrears a fee based on a stated
percentage of the average daily net assets of the Fund for the preceding month
as set forth below:
Net Asset Value Annual Rate
First $1,500,000,000 0.50%
Next $ 500,000,000 0.45%
Next $ 500,000,000 0.40%
Amount Over $2,500,000,000 0.35%
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
<PAGE>
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 month.
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 is registered to sell 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 to the foregoing, the Adviser may from time to time agree
not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Fund for all or a portion of its expenses not
otherwise required to be borne or reimbursed by the Adviser. Any such fee
reduction or undertaking may be discontinued or modified by the Adviser at any
time.
6. 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.
7. 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 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
<PAGE>
or employees from buying, selling or trading in any securities for its or their
own account or accounts. The Fund acknowledges that the Adviser and its
officers, affiliates, and employees, and its other clients may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of hereunder. 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. No Partnership or Joint Venture. The Fund and the Adviser are not 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.
9. Name of the Fund. The Fund may use the name "John Hancock" or any name
derived from or similar to the name "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 Fund will (to the extent that it 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 Sovereign Bond 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 non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the investment
adviser.
10. 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
<PAGE>
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.
11. Duration and Termination of this Agreement. This Agreement shall remain in
force until the second anniversary of the date upon which this Agreement was
executed by the parties hereto, 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 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 Fund by vote of a majority of the outstanding voting securities
of the Fund, by the Trustees or by the Adviser. Termination of this Agreement
with respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between the Adviser and any other
series of the Fund. This Agreement shall automatically terminate in the event of
its assignment. In interpreting the provisions of this Section 11, the
definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "assignment," "interested person" or "voting security") shall be
applied.
12. 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 Board members) 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.
13. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
14. 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
<PAGE>
the fact that for any reason any other or others of them may be deemed invalid
or unenforceable in whole or in part.
15. 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 Sovereign Bond Fund is the designation of the
Trustees under the Amended and Restated Declaration of Trust of the Fund dated
February 28, 1992. The Amended and Restated Declaration of Trust has been filed
with the Secretary 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, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. The Fund shall not be
liable for the obligations of any other series of the Fund.
Yours very truly,
JOHN HANCOCK SOVEREIGN BOND FUND
By: /s/ Robert G. Freedman
Title: President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/ Robert G. Freedman
Title: President
August 1, 1991
John Hancock Broker Distribution Services, Inc.
Boston, Massachusetts
Distribution Agreement
Dear Sir:
John Hancock Bond Fund (the "Fund") 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 Fund's Board of Directors has selected you to act as
principal underwriter (as such term is defined in Section 2(a)(29) of the
Investment Company Act of 1940, as amended) of the shares of beneficial interest
("shares") of the Fund and you are willing, as agent for the Fund, to sell the
shares to the public, to broker-dealers or to both, in the manner and on the
conditions hereinafter set forth. Accordingly, the Fund hereby agrees with you
as follows:
1. Delivery of Documents. The Fund will furnish you promptly with copies,
properly certified or otherwise authenticated, of any registration statements
filed by it with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, or the Investment Company Act of 1940, as amended, together
with any financial statements and exhibits included therein, and all amendments
or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to time
use its best efforts to register under the Securities Act of 1933, as amended,
such shares not already so registered as you may reasonably be expected to sell
as agent on behalf of the Fund. This Agreement relates to the issue and sale of
shares that are duly authorized and registered and available for sale by the
Fund if, but only if, the Fund sees fit to sell them. You and the Fund will
cooperate in taking such action as may be necessary from time to time to qualify
shares for sale in Massachusetts and in any other states mutually agreeable to
you and the Fund, and to maintain such qualification if and so long as such
shares are duly registered under the Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in states in
which you may lawfully do so) to obtain from investors unconditional orders for
shares authorized for issue by the Fund and registered under the Securities Act
of 1933, as amended, provided that you may in your discretion refuse to accept
orders for such shares from any particular applicant.
<PAGE>
4. Sale of Shares. Subject to the provisions of Sections 5 and 6 hereof and to
such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus, you are authorized to sell as agent on
behalf of the Fund authorized and issued shares registered under the Securities
Act of 1933, as amended. Such sales may be made by you on behalf of the Fund by
accepting unconditional orders to purchase such shares placed with your
investors. The sales price to the public of such shares shall be the public
offering price as defined in Section 6 hereof.
5. Sale of Shares to Investors by the Fund. Any right granted to you to accept
orders for shares or make sales on behalf of the Fund will not apply to shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all the assets of any investment company or substantially all the
outstanding shares of any such company, and such right shall not apply to shares
that may be offered or otherwise issued by the Fund to shareholders by virtue of
their being shareholders of the Fund.
6. Public Offering Price. All shares sold by you as agent for the Fund will be
sold at the public offering price, which will be determined in the manner
provided in the Fund's prospectus or statement of additional information, as now
in effect or as it may be amended.
7. No Sales Discount. The Fund shall receive the applicable net asset value on
all sales of shares by you as agent of the Fund.
8. Delivery of Payments. You will deliver to the Transfer Agent all payments
made pursuant to orders accepted by you, and accompanied by proper applications
for the purchase of shares, no later than the first business day following the
receipt by you in your home office of such payments and applications.
9. Suspension of Sales. If and whenever a suspension of the right of redemption
or a postponement of the date of payment or redemption has been declared
pursuant to the Fund's Articles of Incorporation and has become effective, then,
until such suspension or postponement is terminated, no further orders for
shares shall be accepted by you except such unconditional orders placed with you
before you have knowledge of the suspension. The Fund reserves the right to
suspend the sale of shares and your authority to accept orders for shares on
behalf of the Fund if, in the judgment of a majority of the Fund's Board of
Directors, it is in the best interests of the Fund to do so, such suspension to
continue for such period as may be determined by such majority; and in that
event, no shares will be sold by the Fund or by you on behalf of the Fund while
such suspension remains in effect except for shares necessary to cover
unconditional orders accepted by you before you had knowledge of the suspension.
10. Expenses. The Fund will pay (or will enter into arrangements providing that
persons other than you will pay) all fees and expenses in connection with the
preparation and filing of any registration statement and prospectus or
amendments thereto under the
<PAGE>
Securities Act of 1933, as amended, covering the issue and sale of shares and in
connection with the qualification of shares for sale in the various states in
which the fund shall determine it advisable to qualify such shares for sale. It
will also pay the issue taxes or (in the case of shares redeemed) any initial
transfer taxes thereon. You will pay all expenses of printing prospectuses and
other sales literature, all fees and expenses in connection with your
qualification as a dealer in various states, and all other expenses in
connection with the sale and offering for sale of the shares of the Fund which
have not been herein specifically allocated to the Fund.
11. Conformity with Law. You agree that in selling the shares you will duly
conform in all respects with the laws of the United States and any state in
which such shares may be offered for sale by you pursuant to this Agreement.
12. Indemnification. You agree to indemnify and hold harmless the Fund and each
of its Board members and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the Securities Act of 1933, as amended,
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which the Fund or such Board members,
officers or controlling person may become subject under such Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
shares by any person which (a) may be based upon any wrongful act by you or any
of your employees or representatives or (b) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus or statement of additional information
covering shares of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon information furnished or
confirmed in writing to the Fund by you, or (c) may be incurred or arise by
reason of your acting as the Fund's agent instead of purchasing and reselling
shares as principal in distributing shares to the public, provided that in no
case is your indemnity in favor of a Board member or officer of the Fund or any
other person deemed to protect such Board member or officer of the Fund or other
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of shares
other than the information and representations contained in a registration
statement, prospectus, or statement of additional information covering shares,
as such registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time. No person other
than you is authorized to act as principal underwriter for the Fund.
13. Duration and Termination of this Agreement. This Agreement shall remain in
force until the conclusion of the first meeting of shareholders of the Fund
following the first public offering of shares and, if approved at that meeting,
from year to year thereafter, but only
<PAGE>
so long as such continuance is specifically approved at least annually by (a) a
majority of the Board of Directors who are not interested persons of you (other
than as Board members) or of the Fund, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Board of
Directors of the Fund, 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 Board of Directors of the
Fund, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement will automatically terminate in the event of its
assignment by you. In interpreting the provisions of this Section 13, the
definitions contained in Section 2(a) of the Investment Company Act of 1940
(particularly the definitions of "interested person", "assignment" and "voting
security") shall be applied.
14. 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. If the Fund should at any time deem it necessary or
advisable in the best interests of the Fund that any amendment of this agreement
be made in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or other governmental authority or to obtain
any advantage under state or federal tax laws and should notify you of the form
of such amendment, and the reasons therefor, and if you should decline to assent
to such amendment, the Fund may terminate this agreement forthwith. If you
should at any time request that a change be made in the Fund's Certificate of
Incorporation or By-Laws, or in its methods of doing business, in order to
comply with any requirements of federal law or regulations of the Securities and
Exchange Commission or of a national securities association of which you are or
may be a member, relating to the sale of shares, and the Fund should not make
such necessary change within a reasonable time, you may terminate this Agreement
forthwith.
<PAGE>
15. 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.
Very truly yours,
JOHN HANCOCK BOND FUND
By: /s/ Edward J. Boudreau. Jr.
Edward J. Boudreau. Jr.
Chairman
The foregoing Agreement is hereby accepted as of the date hereof.
JOHN HANCOCK BROKER
DISTRIBUTION SERVICES, INC.
By: /s/ C. Troy Shaver, Jr.
C. Troy Shaver, Jr.
President
SOLICITING DEALER AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
BOSTON -- MASSACHUSETTS -- 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
SOLICITING DEALER AGREEMENT
Date
------------------------------
John Hancock Funds, Inc. ("the Distributor" or "Distributor") is the
principal distributor of the shares of beneficial interest (the "securities")
of each of the John Hancock Funds, ("We" or "us"), (the "Funds"). Such Funds
are those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You represent that you are a member
of the National Association of Securities Dealers, Inc., (the "NASD") and,
accordingly, we invite you to become a non-exclusive soliciting dealer to
distribute the securities of the Funds and you agree to solicit orders for the
purchase of the securities on the following terms. Securities are offered
pursuant to each Fund's prospectus and statement of additional information, as
such prospectus and statement of additional information may be amended from
time to time. To the extent that the prospectus or statement of additional
information contains provisions that are inconsistent with the terms of this
Agreement, the terms of the prospectus or statement of additional information
shall be controlling.
OFFERINGS
1. You agree to abide by the Rules of Fair Practice of the NASD and to all
other rules and regulations that are now or may become applicable to
transactions hereunder.
2. As principal distributor of the Funds, we shall have full authority to
take such action as we deem advisable in respect of all matters pertaining to
the distribution. This offer of shares of the Funds to you is made only in
such jurisdictions in which we may lawfully sell such shares of the Funds.
3. You shall not make any representation concerning the Funds or their
securities except those contained in the then- current prospectus or
statement of additional information for each Fund.
4. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by the Distributor or the
Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
5. You are not authorized to act as our agent. Nothing shall constitute you
as a syndicate, association, joint venture, partnership, unincorporated
business, or other separate entity or otherwise partners with us, but you shall
be liable for your proportionate share of any tax, liability or expense based
on any claim arising from the sale of shares of the Funds under this Agreement.
We shall not be under any liability to you, except for obligations expressly
assumed by us in this Agreement and liabilities under Section 11(f) of the
Securities Act of 1933, and no obligations on our part shall be implied or
inferred herefrom.
-2-
<PAGE>
6. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All dealers offering shares of
the Funds and their associated persons agree to comply with these general
suitability and compliance standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your registered representatives in light of all the facts and circumstances, to
ascertain that the class of shares to be purchased by each investor is
appropriate and suitable. These recommendations should be based on several
factors, including but not limited to:
(A) the amount of money to be invested initially and over a period of
time;
(B) the current level of front-end sales load or back-end sales load
imposed by the Fund;
(C) the period of time over which the client expects to retain the
investment;
(D) the anticipated level of yield from fixed income funds' Class A and
Class B shares;
(E) any other relevant circumstances such as the availability of
reduced sales charges under letters of intent and/or rights of
accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Soliciting Dealer Agreement for compliance with the foregoing standards.
In certain instances, it may be appropriate to discuss the purchase with the
registered representatives involved or to review the advantages and
disadvantages of selecting one class of shares over another with the client.
The Distributor will not accept orders for Class B Shares in any Fund from you
for accounts maintained in street name. Trades for Class B Shares will only be
accepted in the name of the shareholder.
7. CLASS C SHARES - Certain mutual funds distributed by the Distributor may be
offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
8. Orders for securities received by you from investors will be for the sale
of the securities at the public offering price, which will be the net asset
value per share as determined in the manner provided in the relevant Fund's
prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then- current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
-3-
<PAGE>
In addition to the foregoing, you acknowledge and agree to the initial
and subsequent investment minimums, which may vary from year to year, as
described in the then-current prospectus for each Fund.
9. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
10. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then-current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
11. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by a registered representative in your employ and remitted to us
promptly by you, (b) where a subsequent investment is made to an account
established by a registered representative in your employ or (c) where a
subsequent investment is made to an account established by a broker/dealer
other than you and is accompanied by a signed request from the account
shareholder that your registered representative receive the Reallowance for
that investment and/or for subsequent investments made in such account. If for
any reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
12. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the the prospectus). To the
extent you provide distribution and marketing services in the promotion of the
sale of shares of these Funds, including furnishing services and assistance to
your customers who invest in and own shares of such Funds and including, but
not limited to, answering routine inquiries regarding such Funds and assisting
in changing distribution options, account designations and addresses, you may
be entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
13. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
14. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
15. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
-4-
<PAGE>
INDEMNIFICATION
16. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
17. NSCC INDEMNITY - SHAREHOLDER AND HOUSE ACCOUNTS - In consideration of the
Distributor and John Hancock Investor Services Corporation ("Investor
Services") liquidating, exchanging, and/or transferring unissued shares of the
Funds for your customers without the use of original or underlying
documentation supporting such instructions (e.g., a signed stock power or
signature guarantee), you hereby agree to indemnify the Distributor, Investor
Services and each respective Fund against any losses, including reasonable
attorney's fees, that may arise from such liquidation exchange, and/or
transfer of unissued shares upon your direction. This indemnification shall
apply only to the liquidation, exchange and/or transfer of unissued shares in
shareholder and house accounts executed as wire orders transmitted via NSCC's
Fund/SERVsystem. You represent and warrant to the Funds, the Distributor and
Investor Services that all such transactions shall be properly authorized by
your customers.
The indemnification in this Section 16 shall not apply to any losses
(including attorney's fees) caused by a failure of the Distributor, Investor
Services or a Fund to comply with any of your instructions governing any of the
above transactions, or any negligent act or omission of the Distributor,
Investor Services or a Fund, or any of their directors, officers, employees or
agents. All transactions shall be settled upon your confirmation through NSCC
transmission to Investor Services.
The Distributor, Investor Services or you may revoke the indemnity
contained in this Section 16 upon prior written notice to each of the other
parties hereto, and in the case of such revocation, this indemnity agreement
shall remain effective as to trades made prior to such revocation.
MISCELLANEOUS
18. We will supply to you at our expense additional copies of the prospectus
and statement of additional information for each of the Funds and any printed
information supplemental to such material in reasonable quantities upon
request.
19. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
20. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
21. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
-5-
<PAGE>
SOLICITING DEALER
-------------------------------------------------
Name of Organization
By:-------------------------------------------------
Authorized Signature of Soliciting Dealer
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the following
information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
-------------------------------- ------------------------------
TO BE COMPLETED BY: TO BE COMPLETED BY:
JOHN HANCOCK FUNDS, INC. JOHN HANCOCK INVESTOR
SERVICES CORPORATION
BY: BY:
----------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
TITLE TITLE
DEALER NUMBER:
------------------------------------
-6-
<PAGE>
JOHNHANCOCK
MUTUAL FUNDS
John Hancock Broker Distrubution Services, Inc.
101 Huntington Avenue Boston, MA 02199-7608 1-800-225-5291
/s/ John Hancock
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Resources Fund
John Hancock Limited-Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government Securities Fund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Government Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, Inc., as principal distributor of the
John Hancock funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
*Closed to new investors as of 9/30/94
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to the selling Brokers for sales of John Hancock
Funds is set forth in each Fund's then- current prospectus. No Commission will
be paid on sales of John Hancock Cash Management Fund or any John Hancock Fund
that is without a sales charge. Purchases of Class A shares of $1 million or
more, or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no initial
sales charge. On purchases of this type, John Hancock Funds, Inc. will pay a
commission as set forth in each Fund's then-current prospectus. John Hancock
Funds, Inc. will pay Brokers for sales of Class B shares of the Funds a
marketing fee as set forth in each Fund's then-current prospectus.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEES
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, John Hancock Funds, Inc. will advance to you a First Year
Service Fee related to the purchase of Class A shares (only if subject to sales
charge) or Class B shares of any of the Funds, as the case may be, sold by your
firm. This Service Fee will be compensation for your personal service and/or
the maintenance of shareholder accounts ("Customer Servicing") during the
twelve-month period immediately following the purchase of such shares, in the
amount not to exceed .25 of 1% of net assets invested in Class A shares or
Class B shares of the Fund, as the case may be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your firm has under management
with the Funds combined average daily net assets for the preceding quarter of
no less than $1 million, or an individual representative of your firm has under
management with the Funds combined average daily net assets for the preceding
quarter of no less than $250,000 (an "Eligible Firm").
<PAGE>
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
SCHEDULE D
DATED JULY 1, 1992 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK MUTUAL FUNDS
No broker/dealer shall represent the FUnds or Distribution Services in any
written communications without prior receipt of written approval from John
Hancock Broker Distribution Services, Inc. This includes but is not limited to
all advertising, public relations, marketing and sales literature, and media
contacts.
Further, subsequent to the creation of such materialsbefore written
approval from JHBDS will be given, a copy of the NASD review document
applicable to such materials must be furnished to John Hancock Broker
Distribution Services, Inc. for its review and files.
FOR PURPOSES OF THIS SCHEDULE D, THE FOLLOWING TERMS ARE DEFINED:
Advertising:
materials designed for the mass market, e.g. print ads, radio and tv
commercials, billboards, etc.
Sales literature:
materials designed for a directed market, e.g. prospecting letters,
brochures, mailers, stuffers, etc.
Coop Advertising:
advertising materials (as defined above) used by selling group members
for which John Hancock pays some or all of the costs of publication
whether the materials were developed by JHBDS Marketing or not.
John Hancock Broker Distribution Services, Inc. Approval of Advertising:
Approval has four meanings:approval of the material itself from a
marketing perspective (JHBDS product managers), proactive compliance
officer), parent company corporate advertising approval (John Hancock
Mutual Life Insurance Company Advertising Dept. personnel) and
approval for use and related cost-sharing arrangements (national sales
coordinators).
NASD Filing:
Materials created by JHBDS will be filed with the NASD by the JHBDS
Compliance Department. Materials not created by JHBDS but to be
included in the coop program will be filed with the NASD by the
broker-dealer creating the materials. However, prior to use of the
materials in our coop program, we will need a copy of the final
version of the material as well as the NASDcomment letter. When this
is received, the above approvals can be obtained.
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
Boston - Massachusetts - 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
Date
--------------------------------
John Hancock Funds, Inc. ("The Distributor", or "Distributor"), ("We" or
"us"), is the principal distributor of the shares of beneficial interest (the
"securities") of each of the John Hancock Funds (the "Funds"). Such Funds are
those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You hereby represent that you are a
"bank" as defined in Section 3(a)(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction in shares of
the Funds, are not required to register as a broker/dealer under the Exchange
Act or regulations thereunder. We invite you to become a non-exclusive
soliciting financial institution ("Financial Institution") to distribute the
securities of the Funds and you agree to solicit orders for the purchase of the
securities on the following terms. Securities are offered pursuant to each
Fund's prospectus and statement of additional information, as such prospectus
and statement of additional information may be amended from time to time. To
the extent that the prospectus or statement of additional information contains
provisions that are inconsistent with the terms of this Agreement, the terms of
the prospectus or statement of additional information shall be controlling.
OFFERINGS
1. You represent and warrant that you will use your best efforts to ensure
that any purchase of shares of the Funds by your customers constitutes a
suitable investment for such customers. You acknowledge that you will base
such a decision of suitability on all the facts you have gathered about your
customer's financial situation, investment objectives, risk tolerance and
sophistication.
2. You represent and warrant that a copy of the then-current prospectus of a
Fund will be delivered to your customer before any purchase of shares of that
Fund are effected for that customer. You shall not effect any transaction in,
or induce any purchase or sale of, any shares of the Funds by means of any
manipulative, deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with respect to
transactions in shares of a Fund.
3. You represent and warrant that you will not make shares of any Fund
available to your customers, including your fiduciary customers, except in
compliance with all Federal and state laws and rules and regulations of
regulatory agencies or authorities applicable to you, or any of your affiliates
engaging in such activity, which may affect your business practices. You
confirm that you are not in violation of any banking law or regulations as to
which you are subject. You agree that you will comply with the requirements of
Banking Circular 274 issued by the Office of the Comptroller of the Currency in
offering shares of the Funds to your customers. We agree that we will comply
with all Federal and state laws and rules and regulations of regulatory
agencies or authorities applicable to us. We and you acknowledge and agree
that the offering of shares of the Funds pursuant to this agreement is subject
to the oversight of your management and the regulatory authorities by which you
are subject to review, and that appropriate records and materials relating to
any activity by you or us undertaken pursuant to this agreement may be accessed
by bank examiners in the due course of any regulatory review to which you may
be subject.
4. As principal distributor of the Funds, we shall have full authority to take
such action as we deem advisable in respect of all matters pertaining to the
distribution. This offer of shares of the Funds to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Funds.
-2-
<PAGE>
5. You shall not make any representation concerning the Funds or their
securities except those contained in the then-current prospectus or statement
of additional information for each Fund.
6. We will supply to you at our expense additional copies of the then-current
prospectus and statement of additional information for each of the Funds and
any printed information supplemental to such material in reasonable quantities
upon request. It shall be your obligation to ensure that all such information
and materials are distributed to your customers who own or seek to own shares
of the Funds in accordance with securities and/or banking law and regulations
and any other applicable regulations.
7. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by us the Distributor or
the Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
8. You are not authorized to act as our agent. In making available shares of
the Funds under this Financial Institution Sales and Service Agreement, nothing
herein shall be construed to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or employee of the
Funds, and you shall not make any representations to the contrary. Nothing
shall constitute you as a syndicate, association, unincorporated business, or
other separate entity or partners with us, but you shall be liable for your
proportionate share of any tax, liability or expense based on any claim arising
from the sale of shares of the Funds under this Agreement. We shall not be
under any liability to you, except for obligations expressly assumed by us in
this Agreement and liabilities under Section 11(f) of the Securities Act of
1933, and no obligations on our part shall be implied or inferred herefrom.
9. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All soliciting financial
institutions offering shares of the Funds and their agents, employees and
representatives agree to comply with these general suitability and compliance
standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your agents, employees and representatives in light of all the facts and
circumstances, to ascertain that the class of shares to be purchased by each
investor is appropriate and suitable. These recommendations should be based on
several factors, including but not limited to:
(A) the amount of money to be invested initially and over
a period of time;
(B) the current level of front-end sales load or back-end
sales load imposed by the Fund;
(C) the period of time over which the customer expects to
retain the investment;
(D) the anticipated level of yield from fixed income
funds' Class A and Class B shares;
(E) any other relevant circumstances such as the
availability of reduced sales charges under letters
of intent and/or rights of accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
-3-
<PAGE>
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Financial Institution Sales and Service Agreement for compliance with the
foregoing standards. In certain instances, it may be appropriate to discuss
the purchase with the agents, employees and representatives involved or to
review the advantages and disadvantages of selecting one class of shares over
another with the client. The Distributor will not accept orders for Class B
Shares in any Fund from you for accounts maintained in your name or in the name
of your nominee for the benefit of certain of your customers. Trades for Class
B Shares will only be accepted in the name of the shareholder.
10. CLASS C SHARES - Certain mutual funds distributed by the Distributor may
be offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
11. With respect to any and all transactions in the shares of any Fund
pursuant to this Financial Institution Sales and Service Agreement it is
understood and agreed in each case that: (a) you shall be acting solely as
agent for the account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute transactions only
upon receiving instructions from you acting as agent for your customer or upon
receiving instructions directly from your customer; (d) as between you and your
customer, your customer will have full beneficial ownership of all shares; (c)
each transaction shall be for the account of your customer and not for your
account; and (f) unless otherwise agreed in writing we will serve as a clearing
broker for you on a fully disclosed basis, and you shall serve as the
introducing agent for your customers' accounts. Subject to the foregoing,
however, and except for Class B shares, as described in Section 8 above, you
may maintain record ownership of such customers' shares in an account
registered in your name or the name of your nominee, for the benefit of such
customers. Each transaction shall be without recourse to you provided that you
act in accordance with the terms of this Financial Institution Sales and
Service Agreement. You represent and warrant to us that you will have full
right, power and authority to effect transactions (including, without
limitation, any purchases and redemptions) in shares of the Funds on behalf of
all customer accounts provided by you.
12. Orders for securities received by you from your customers will be for the
sale of the securities at the public offering price, which will be the net
asset value per share as determined in the manner provided in the relevant
Fund's prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then-current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for each Fund.
13. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
14. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then- current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
15. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by you and remitted to us promptly by you, (b) where a subsequent
investment is made to an account established by you or (c) where a subsequent
investment is made to an account established by a financial institution or
-4-
<PAGE>
registered broker/dealer other than you and is accompanied by a signed request
from the account shareholder that you receive the Reallowance for that
investment and/or for subsequent investments made in such account. If for any
reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
16. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the prospectus). To the extent
you provide distribution and marketing services in the promotion of the sale of
shares of these Funds, including furnishing services and assistance to your
customers who invest in and own shares of such Funds and including, but not
limited to, answering routine inquiries regarding such Funds and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
17. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
18. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
19. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
INDEMNIFICATION
20. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
MISCELLANEOUS
21. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as most recently furnished to us by you.
22. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
23. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
-5-
<PAGE>
FINANCIAL INSTITUTION
-------------------------------------------------
Financial Institution
By:
-------------------------------------------------
Authorized Signature of Financial Institution
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the
following information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
--------------------- ----------------------------
TO BE COMPLETED BY: JOHN HANCOCK INVESTOR
JOHN HANCOCK FUNDS, INC. SERVICES CORPORATION
By: By:
--------------------------------- ------------------------------------
- ------------------------------------ ------------------------------------
Title Title
TO BE COMPLETED BY:
FINANCIAL INSTITUTION NUMBER:
----------------------------------------------
-6-
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Rescources Fund
John Hancock Limited Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government SecurritiesFund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Governtment Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, as principal distributor of the
John Hancock Funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
* Closed to new invstors as of 9/30/94.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to Financial Institutions for sales of John Hancock
Funds is the same as that paid to Selling Brokers described and set forth
in each Fund's then-current prospectus. No Commission will be paid on
sales of John Hancock Cash Management Fund or any John Hancock Fund that is
without a sales charge. Purchases of Class A shares of $1 million or more,
or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no
initial sales charge. On purchases of this type, the Distributor will pay a
commission as set forth in each Fund's then-current prospectus. John
Hancock Funds, Inc. will pay Financial Institutions for sales of Class B
shares of the Funds a marketing fee as set forth in each Fund's then-
current prospectus for Selling Brokers.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DISTRIBUTION PLAN SCHEDULE OF COMPENSATION
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEE
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will advance to you a First Year Service
Fee related to the purchase of Class A shares (only if subject to sales charge)
or Class B shares of any of the Funds, as the case maybe, sold by your firm on
or after July 1, 1993. This Service Fee will be compensation for your personal
service and/or the maintenance of shareholder accounts ("Customer Servicing")
during the twelve-month period immediately following the purchase of such
shares, in an amount not to exceed .25 of 1% of the average daily net assets
attributable to Class A shares or Class B shares of the Fund, as the case may
be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve-month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your Financial Institution has
under management with the Funds combined average daily net assets for the
preceding quarter of no less than $1 million, or an individual representative
of your Financial Institution has under management with the Funds combined
average daily net assets for the preceding quarter of no less than $250,000 (an
"Eligible Financial Institution").
MASTER CUSTODIAN AGREEMENT
between
JOHN HANCOCK MUTUAL FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
2. Employment of Custodian and Property to be held by it . . . . . . . . . . . . . . . 3-4
3. Duties of the Custodian with Respect toProperty of the Fund . . . . . . . . . . . . 4
A. Safekeeping and Holding of Property . . . . . . . . . . . . . . . . . . . . . 4
B. Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
C. Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
E. Payments for Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . 9
F. Investment and Availability of Federal Funds . . . . . . . . . . . . . . . . . 9
G. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10
H. Payment of Fund Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12
I. Liability for Payment in Advance of Receipt of Securities Purchased . . . . . 12-13
J. Payments for Repurchases of Redemptions of Shares of the Fund . . . . . . . . 13
K. Appointment of Agents by the Custodian . . . . . . . . . . . . . . . . . . . . 13
L. Deposit of Fund Portfolio Securities in Securities Systems . . . . . . . . . . 13-16
M. Deposit of Fund Commercial Paper in an Approved
Book-Entry System for Commercial Paper . . . . . . . . . . . . . . . . . . 16-18
N. Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-19
O. Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . 19
P. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Q. Communications Relating to Fund Portfolio Securities . . . . . . . . . . . . . 19-20
R. Exercise of Rights; Tender Offers . . . . . . . . . . . . . . . . . . . . . . 20
S. Depository Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21
T. Interest Bearing Call or Time Deposits . . . . . . . . . . . . . . . . . . . . 21
U. Options, Futures Contracts and Foreign Currency Transactions . . . . . . . . . 21-23
V. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . . 23-24
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Records and Miscellaneous Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 24-25
6. Opinion of Fund`s Independent Public Accountants . . . . . . . . . . . . . . . . . . 25
7. Compensation and Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . . 25-26
8. Responsibility of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-27
9. Persons Having Access to Assets of the Fund . . . . . . . . . . . . . . . . . . . . 27
10. Effective Period, Termination and Amendment; Successor Custodian . . . . . . . . . . 27-28
11. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . 28-29
12. Certification as to Authorized Officers . . . . . . . . . . . . . . . . . . . . . . 29
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15. Adoption of the Agreement by the Fund . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE>
MASTER CUSTODIAN AGREEMENT
This Agreement is made as of December 15, 1992 between each investment
company advised by John Hancock Advisers, Inc. which has adopted this Agreement
in the manner provided herein and Investors Bank & Trust Company (hereinafter
called "Bank", "Custodian" and "Agent"), a trust company established under the
laws of Massachusetts with a principal place of business in Boston,
Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean the investment company which has adopted this
Agreement and is listed on Appendix A hereto. If the Fund is a Massachusetts
business trust or Maryland corporation, it may in the future establish and
designate other separate and distinct series of shares, each of which may be
called a "portfolio"; in such case, the term "Fund" shall also refer to each
such separate series or portfolio.
(b) "Board" shall mean the board of directors/trustees/managing general
partners/director general partners of the Fund, as the case may be.
(c) "The Depository Trust Company", a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Authorized Officer", shall mean any of the following officers of
the Trust: The Chairman of the Board of Trustees, the President, a Vice
President, the Secretary, the Treasurer or Assistant Secretary or Assistant
Treasurer, or any other officer of the Trust duly authorized to sign by
appropriate resolution of the Board of Trustees of the Trust.
(e) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
<PAGE>
(f) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository
but only if the Custodian has received a certified copy of a vote of the Board
approving such clearing agency as a securities depository for the Fund.
(g) "Federal Book-Entry System" shall mean the book-entry system
referred to in Rule 17f-4(b) under the Investment Company Act of 1940 for
United States and federal agency securities (i.e., as provided in Subpart O of
Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the
book-entry regulations of federal agencies substantially in the form of Subpart
O).
(h) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(i) "Approved Book-Entry System for Commercial Paper" shall mean a
system maintained by the Custodian or by a subcustodian employed pursuant to
Section 2 hereof for the holding of commercial paper in book-entry form but
only if the Custodian has received a certified copy of a vote of the Board
approving the participation by the Fund in such system.
(j) The Custodian shall be deemed to have received "proper
instructions" in respect of any of the matters referred to in this Agreement
upon receipt of written or facsimile instructions signed by such one or more
person or persons as the Board shall have from time to time authorized to give
the particular class of instructions in question. Electronic instructions for
the purchase and sale of securities which are transmitted by John Hancock
Advisers, Inc. to the Custodian through the John Hancock equity trading system
and the John Hancock fixed income trading system shall be deemed to be proper
instructions; the Fund shall cause all such instructions to be confirmed in
writing. Different persons may be authorized to give instructions for
different purposes. A certified copy of a vote of the Board may be received
and accepted by the Custodian as conclusive evidence of the authority of any
such person to act and may be considered as in full force and effect until
receipt of written notice to the contrary. Such instructions may be general or
specific in terms and, where appropriate, may be standing instructions. Unless
the vote delegating authority to any person or persons to give a particular
class of instructions specifically requires that the approval of any person,
persons or committee shall first have been obtained before the Custodian may
act on instructions of that class, the Custodian shall be under no obligation
to question the right of the person or persons giving such instructions in so
doing. Oral instructions will be considered proper instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund
shall cause all oral
<PAGE>
instructions to be confirmed in writing. The Fund authorizes the Custodian to
tape record any and all telephonic or other oral instructions given to the
Custodian. Upon receipt of a certificate signed by two officers of the Fund as
to the authorization by the President and the Treasurer of the Fund accompanied
by a detailed description of the communication procedures approved by the
President and the Treasurer of the Fund, "proper instructions" may also include
communications effected directly between electromechanical or electronic
devices provided that the President and Treasurer of the Fund and the Custodian
are satisfied that such procedures afford adequate safeguards for the Fund's
assets. In performing its duties generally, and more particularly in
connection with the purchase, sale and exchange of securities made by or for
the Fund, the Custodian may take cognizance of the provisions of the governing
documents and registration statement of the Fund as the same may from time to
time be in effect (and votes, resolutions or proceedings of the shareholders or
the Board), but, nevertheless, except as otherwise expressly provided herein,
the Custodian may assume unless and until notified in writing to the
contrary that so-called proper instructions received by it are not in conflict
with or in any way contrary to any provisions of such governing documents and
registration statement, or votes, resolutions or proceedings of the
shareholders or the Board.
2. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby appoints and employs the Bank as its Custodian and Agent
in accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Fund agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), by-laws, prospectus, statement of
additional information and distribution agreement with its principal
underwriter, together with such resolutions, votes and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of
its duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Fund held by such subcustodian.
Any foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the
Board and shall be in accordance with and subject to the provisions of said
Rule. For
<PAGE>
the purposes of this Agreement, any property of the Fund held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
------------------------------------------------------------
A. SAFEKEEPING AND HOLDING OF PROPERTY The Custodian shall keep
safely all property of the Fund and on behalf of the Fund shall
from time to time receive delivery of Fund property for
safekeeping. The Custodian shall hold, earmark and segregate on
its books and records for the account of the Fund all property of
the Fund, including all securities, participation interests and
other assets of the Fund (1) physically held by the Custodian, (2)
held by any subcustodian referred to in Section 2 hereof or by any
agent referred to in Paragraph K hereof, (3) held by or maintained
in The Depository Trust Company or in Participants Trust Company
or in an Approved Clearing Agency or in the Federal Book- Entry
System or in an Approved Foreign Securities Depository, each of
which from time to time is referred to herein as a "Securities
System", and (4) held by the Custodian or by any subcustodian
referred to in Section 2 hereof and maintained in any Approved
Book-Entry System for Commercial Paper.
B. DELIVERY OF SECURITIES The Custodian shall release and deliver
securities or participation interests owned by the Fund held (or
deemed to be held) by the Custodian or maintained in a Securities
System account or in an Approved Book-Entry System for Commercial
Paper account only upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities or participation interests
for the account of the Fund, BUT ONLY against receipt of
payment therefor; if delivery is made in Boston or New
York City, payment therefor shall be made in accordance
with generally accepted clearing house procedures or by
use of Federal Reserve Wire System procedures; if delivery
is made elsewhere payment therefor shall be in accordance
with the then current "street delivery" custom or in
accordance with such procedures agreed to in writing from
time to time by the parties hereto; if the sale is
effected through a Securities System, delivery and payment
therefor shall be made in accordance with the provisions
of Paragraph L hereof; if the sale of commercial paper is
to be effected through an Approved Book-Entry System for
Commercial Paper, delivery and payment therefor shall be
made in accordance with the provisions of Paragraph M
hereof; if the securities are to be sold outside the
United States, delivery may be made in accordance with
procedures agreed to in writing from time to time by the
parties hereto; for the purposes of this subparagraph, the
term "sale" shall include the disposition of a portfolio
<PAGE>
security (i) upon the exercise of an option written by the
Fund and (ii) upon the failure by the Fund to make a
successful bid with respect to a portfolio security, the
continued holding of which is contingent upon the making
of such a bid;
2) Upon the receipt of payment in connection with any
repurchase agreement or reverse repurchase agreement
relating to such securities and entered into by the Fund;
3) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
5) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Paragraph K hereof or into the name
or nominee name of any subcustodian employed pursuant to
Section 2 hereof; or for exchange for a different number
of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided
that, in any such case, the new securities or
participation interests are to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
6) To the broker selling the same for examination in
accordance with the "street delivery" custom; provided
that the Custodian shall adopt such procedures as the Fund
from time to time shall approve to ensure their prompt
return to the Custodian by the broker in the event the
broker elects not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion of
such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
<PAGE>
8) In the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities, or the surrender
of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
9) For delivery in connection with any loans of securities
made by the Fund (such loans to be made pursuant to the
terms of the Fund's current registration statement), but
only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may
be in the form of cash or obligations issued by the United
States government, its agencies or instrumentalities.
10) For delivery as security in connection with any borrowings
by the Fund requiring a pledge or hypothecation of assets
by the Fund (if then permitted under circumstances
described in the current registration statement of the
Fund), provided, that the securities shall be released
only upon payment to the Custodian of the monies borrowed,
except that in cases where additional collateral is
required to secure a borrowing already made, further
securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
11) When required for delivery in connection with any
redemption or repurchase of Shares of the Fund in
accordance with the provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any
agreement between the Custodian (or a subcustodian
employed pursuant to Section 2 hereof) and a broker-dealer
registered under the Securities Exchange Act of 1934 and,
if necessary, the Fund, relating to compliance with the
rules of The Options Clearing Corporation or of any
registered national securities exchange, or of any similar
organization or organizations, regarding deposit or escrow
or other arrangements in connection with options
transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian (or a subcustodian
employed pursuant to Section 2 hereof),
and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission
and/or of any
<PAGE>
contract market or commodities exchange or similar
organization, regarding futures margin account deposits or
payments in connection with futures transactions by
the Fund;
14) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a
certified copy of a vote of the Board specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose
to be proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
C. REGISTRATION OF SECURITIES Securities held by the Custodian
(other than bearer securities) for the account of the Fund shall
be registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian, or in the
name or nominee name of any agent appointed pursuant to Paragraph
K hereof, or in the name or nominee name of any subcustodian
employed pursuant to Section 2 hereof, or in the name or nominee
name of The Depository Trust Company or Participants Trust Company
or Approved Clearing Agency or Federal Book-Entry System or
Approved Book-Entry System for Commercial Paper; provided, that
securities are held in an account of the Custodian or of such
agent or of such subcustodian containing only assets of the Fund
or only assets held by the Custodian or such agent or such
subcustodian as a custodian or subcustodian or in a fiduciary
capacity for customers. All certificates for securities accepted
by the Custodian or any such agent or subcustodian on behalf of
the Fund shall be in "street" or other good delivery form or shall
be returned to the selling broker or dealer who shall be advised
of the reason thereof.
D. BANK ACCOUNTS The Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund, subject only to
draft or order by the Custodian acting in pursuant to the terms of
this Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or
for the account of the Fund other than cash maintained by the Fund
in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each
such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved in writing by two
officers of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be subject to
withdrawal only by the Custodian in that capacity.
<PAGE>
E. PAYMENT FOR SHARES OF THE FUND The Custodian shall make
appropriate arrangements with the Transfer Agent and the principal
underwriter of the Fund to enable the Custodian to make certain it
promptly receives the cash or other consideration due to the Fund
for such new or treasury Shares as may be issued or sold from time
to time by the Fund, in accordance with the governing documents
and offering prospectus and statement of additional information of
the Fund. The Custodian will provide prompt notification to the
Fund of any receipt by it of payments for Shares of the Fund.
F. INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS Upon agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of proper instructions, which may be continuing
instructions when deemed appropriate by the parties, invest in
such securities and instruments as may be set forth in such
instructions on the same day as received all federal funds
received after a time agreed upon between the Custodian and the
Fund.
G. COLLECTIONS The Custodian shall promptly collect all income and
other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall promptly
collect all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and shall
credit such income, as collected, to the Fund's custodian account.
The Custodian shall do all things necessary and proper in connection with such
prompt collections and, without limiting the generality of the foregoing, the
Custodian shall
1) Present for payment all coupons and other income items
requiring presentations;
2) Present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the
Fund, checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities
System or in an Approved Book-Entry System for Commercial
Paper at the time funds become available to the Custodian;
in the case of securities maintained in The Depository
Trust Company funds shall be deemed available to the Fund
not later than the opening of business on the first
business day after receipt of such funds by the Custodian.
<PAGE>
The Custodian shall notify the Fund as soon as reasonably practicable whenever
income due on any security is not promptly collected. In any case in which the
Custodian does not receive any due and unpaid income after it has made demand
for the same, it shall immediately so notify the Fund in writing, enclosing
copies of any demand letter, any written response thereto, and memoranda of all
oral responses thereto and to telephonic demands, and await instructions from
the Fund; the Custodian shall in no case have any liability for any nonpayment
of such income provided the Custodian meets the standard of care set forth in
Section 8 hereof. The Custodian shall not be obligated to take legal action
for collection unless and until reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights and
other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. PAYMENT OF FUND MONEYS Upon receipt of proper instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of the Fund in the
following cases only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options
on futures contracts purchased for the account of the Fund
but only (a) against the receipt of
(i) such securities registered as provided in
Paragraph C hereof or in proper form for
transfer or
(ii) detailed instructions signed by an officer of the
Fund regarding the participation interests to be
purchased or
(iii) written confirmation of the purchase by the Fund
of the options, futures contracts, forward
contracts or options on futures contracts
by the Custodian (or by a subcustodian employed pursuant
to Section 2 hereof or by a clearing corporation of a
national securities exchange of which the Custodian is a
member or by any bank, banking institution or trust
company doing business in the United States or abroad
which is qualified under the Investment Company Act of
1940 to act as a custodian and which has been designated
by the Custodian as its agent for this purpose or by the
agent specifically designated in such instructions as
representing the purchasers of a new issue of privately
placed securities); (b) in the case of a purchase effected
through a Securities System, upon receipt of the
securities by the Securities System in accordance with the
conditions set forth in Paragraph L hereof; (c) in the
case of a purchase of commercial paper effected through an
Approved Book-Entry System for Commercial Paper, upon
<PAGE>
receipt of the paper by the Custodian or subcustodian in
accordance with the conditions set forth in Paragraph M
hereof; (d) in the case of repurchase agreements entered
into between the Fund and another bank or a broker-
dealer, against receipt by the Custodian of the securities
underlying the repurchase agreement either in certificate
form or through an entry crediting the Custodian's
segregated, non-proprietary account at the Federal Reserve
Bank of Boston with such securities along with written
evidence of the agreement by the bank or broker-dealer to
repurchase such securities from the Fund; or (e) with
respect to securities purchased outside of the United
States, in accordance with written procedures agreed to
from time to time in writing by the parties hereto;
2) When required in connection with the conversion, exchange
or surrender of securities owned by the Fund as set forth
in Paragraph B hereof;
3) When required for the redemption or repurchase of Shares
of the Fund in accordance with the provisions of Paragraph
J hereof;
4) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: advisory fees,
distribution plan payments, interest, taxes, management
compensation and expenses, accounting, transfer agent and
legal fees, and other operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other distributions to
holders of Shares declared or authorized by the Board; and
6) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a
certified copy of a vote of the Board, specifying the
amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
I. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED In any and every case where payment for purchase of
securities for the account of the Fund is made by the Custodian in
advance of receipt of the securities purchased in the absence of
specific written instructions signed by two officers of the Fund
to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the
securities had been received by the Custodian; EXCEPT that in the
case of a repurchase agreement
<PAGE>
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the
account of such bank prior to the receipt of (i) the securities in
certificate form subject to such repurchase agreement or (ii)
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the
Federal Reserve Bank of Boston or (iii) the safekeeping receipt,
PROVIDED that such securities have in fact been so transferred by
book-entry and the written repurchase agreement is received by the
Custodian in due course; AND EXCEPT that if the securities are to
be
purchased outside the United States, payment may be made in
accordance with procedures agreed to from time to time by the
parties hereto.
J. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
From such funds as may be available for the purpose, but subject
to any applicable votes of the Board and the current redemption
and repurchase procedures of the Fund, the Custodian shall, upon
receipt of written instructions from the Fund or from the Fund's
transfer agent or from the principal underwriter, make funds
and/or portfolio securities available for payment to holders of
Shares who have caused their Shares to be redeemed or repurchased
by the Fund or for the Fund's account by its transfer agent or
principal underwriter.
The Custodian may maintain a special checking account upon which
special checks may be drawn by shareholders of the Fund holding
Shares for which certificates have not been issued. Such checking
account and such special checks shall be subject to such rules and
regulations as the Custodian and the Fund may from time to time
adopt. The Custodian or the Fund may suspend or terminate use of
such checking account or such special checks (either generally or
for one or more shareholders) at any time. The Custodian and the
Fund shall notify the other immediately of any such suspension or
termination.
K. APPOINTMENT OF AGENTS BY THE CUSTODIAN The Custodian may at any
time or times in its discretion appoint (and may at any time
remove) any other bank or trust company (provided such bank or
trust company is itself qualified under the Investment Company Act
of 1940 to act as a custodian or is itself an eligible foreign
custodian within the meaning of Rule 17f-5 under said Act) as the
agent of the Custodian to carry out such of the duties and
functions of the Custodian described in this Section 3 as the
Custodian may from time to time direct; provided, however, that
the appointment of any such agent shall not relieve the Custodian
of any of its responsibilities or liabilities hereunder, and as
between the Fund and the Custodian the Custodian shall be fully
responsible for the acts and omissions of any such agent. For the
purposes of this Agreement, any property of the Fund held by any
such agent shall be deemed to be held by the Custodian hereunder.
<PAGE>
L. DEPOSIT OF FUND PORTFOLIO SECURITIES IN SECURITIES SYSTEMS The
Custodian may deposit and/or maintain securities owned by the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, and at all times subject to the following
provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep securities of
the Fund in a Securities System provided that such securities are
maintained in a non-proprietary account ("Account") of the
Custodian or such subcustodian in the Securities System which
shall not include any assets of the Custodian or such subcustodian
or any other person other than assets held by the Custodian or
such subcustodian as a fiduciary, custodian, or otherwise for its
customers.
(b) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund, and the
Custodian shall be fully and completely responsible for
maintaining a recordkeeping system capable of accurately and
currently stating the Fund's holdings maintained in each such
Securities System.
(c) The Custodian shall pay for securities purchased in book-entry
form for the account of the Fund only upon (i) receipt of notice
or advice from the Securities System that such securities have
been transferred to the Account, and (ii) the making of any entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund only upon (i)
receipt of notice or advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all notices or advises from the Securities System of
transfers of securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Custodian and be
promptly provided to the Fund at its request.
<PAGE>
The Custodian shall promptly send to the Fund confirmation
of each transfer to or from the
account of the Fund in the form of a written advice or notice of
each such transaction, and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's transactions in the
Securities System for the account of the Fund on the next business
day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to
the Securities System's accounting system, system of internal
accounting controls or procedures for safeguarding securities
deposited in the Securities System; the Custodian shall promptly
send to the Fund any report or other communication relating to the
Custodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System; and
the Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to
Section 2 hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to such
agent's or subcustodian's internal accounting controls and
procedures for safeguarding securities deposited in any Securities
System. The Custodian's books and records relating to the Fund's
participation in each Securities System will at all times during
regular business hours be open to the inspection of the Fund's
authorized officers, employees or agents.
(e) The Custodian shall not act under this Paragraph L in the absence
of receipt of a certificate of an officer of the Fund that the
Board has approved the use of a particular Securities System; the
Custodian shall also obtain appropriate assurance from the
officers of the Fund that the Board has annually reviewed and
approved the continued use by the Fund of each Securities System,
so long as such review and approval is required by Rule 17f-4
under the Investment Company Act of 1940, and the Fund shall
promptly notify the Custodian if the use of a Securities System is
to be discontinued; at the request of the Fund, the Custodian will
terminate the use of any such Securities System as promptly as
practicable.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or subcustodians or of any of its or their employees
or from any failure of the Custodian or any such agent or
subcustodian to enforce effectively such rights as it may have
against the Securities System or any other person; at the election
of the Fund, it shall be entitled to be
<PAGE>
subrogated to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage
if and to the extent that the Fund has not been made whole for any
such loss or damage.
M. DEPOSIT OF FUND COMMERCIAL PAPER IN AN APPROVED BOOK-ENTRY SYSTEM FOR
COMMERCIAL PAPER Upon receipt of proper instructions with respect to
each issue of direct issue commercial paper purchased by the Fund, the
Custodian may deposit and/or maintain direct issue commercial paper
owned by the Fund in any Approved Book-Entry System for Commercial
Paper, in each case only in accordance with applicable Securities and
Exchange Commission rules, regulations, and no-action correspondence,
and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep
commercial paper of the Fund in an Approved Book-Entry
System for Commercial Paper, provided that such paper is
issued in book entry form by the Custodian or subcustodian
on behalf of an issuer with which the Custodian or
subcustodian has entered into a book-entry agreement and
provided further that such paper is maintained in a
non-proprietary account ("Account") of the Custodian or
such subcustodian in an Approved Book-Entry System for
Commercial Paper which shall not include any assets of the
Custodian or such subcustodian or any other person other
than assets held by the Custodian or such subcustodian as
a fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial
paper of the Fund which is maintained in an Approved
Book-Entry System for Commercial Paper shall identify by
book-entry each specific issue of commercial paper
purchased by the Fund which is included in the System and
shall at all times during regular business hours be open
for inspection by authorized officers, employees or agents
of the Fund. The Custodian shall be fully and completely
responsible for maintaining a recordkeeping system capable
of accurately and currently stating the Fund's holdings of
commercial paper maintained in each such System.
(c) The Custodian shall pay for commercial paper purchased in
book-entry form for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice
from the issuer that such paper has been issued, sold and
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
purchase, payment and transfer for the account of the
Fund. The Custodian shall transfer such commercial
<PAGE>
paper which is sold or cancel such commercial paper which
is redeemed for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice that
payment for such paper has been transferred to the Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such transfer or redemption and
payment for the account of the Fund. Copies of all notices,
advises and confirmations of transfers of commercial paper
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be
promptly provided to the Fund at its request. The
Custodian shall promptly send to the Fund confirmation of
each transfer to or from the account of the Fund in the
form of a written advice or notice of each such
transaction, and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in
the System for the account of the Fund on the next business
day.
(d) The Custodian shall promptly send to the Fund any report
or other communication received or obtained by the
Custodian relating to each System's accounting system,
system of internal accounting controls or procedures for
safeguarding commercial paper deposited in the System; the
Custodian shall promptly send to the Fund any report or
other communication relating to the Custodian's internal
accounting controls and procedures for safeguarding
commercial paper deposited in any Approved Book-Entry
System for Commercial Paper; and the Custodian shall
ensure that any agent appointed pursuant to Paragraph K
hereof or any subcustodian employed pursuant to Section 2
hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to
such agent's or subcustodian's internal accounting
controls and procedures for safeguarding securities
deposited in any Approved Book-Entry System for Commercial
Paper.
(e) The Custodian shall not act under this Paragraph M in the
absence of receipt of a certificate of an officer of the
Fund that the Board has approved the use of a particular
Approved Book-Entry System for Commercial Paper; the
Custodian shall also obtain appropriate assurance from the
officers of the Fund that the Board
has annually reviewed and approved the continued use by
the Fund of each Approved Book-Entry System for Commercial
Paper, so long as such review and approval is required by
Rule 17f-4 under the Investment Company Act of 1940, and
the Fund shall promptly notify the Custodian if the use of
an Approved Book-Entry System for Commercial Paper is to
be discontinued; at the request of the Fund, the Custodian
will terminate the use of any such System as promptly as
practicable.
<PAGE>
(f) The Custodian (or subcustodian, if the Approved Book-Entry
System for Commercial Paper is maintained by the
subcustodian) shall issue physical commercial paper or
promissory notes whenever requested to do so by the Fund
or in the event of an electronic system failure which
impedes issuance, transfer or custody of direct issue
commercial paper by book-entry.
(g) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the Fund
for any loss or damage to the Fund resulting from use of
any Approved Book-Entry System for Commercial Paper by
reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or subcustodians or of any
of its or their employees or from any failure of the
Custodian or any such agent or subcustodian to enforce
effectively such rights as it may have against the System,
the issuer of the commercial paper or any other person; at
the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to
any claim against the System, the issuer of the commercial
paper or any other person which the Custodian may have as
a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such
loss or damage.
N. SEGREGATED ACCOUNT The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Paragraph L hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and any registered
broker-dealer (or any futures commission merchant), relating to
compliance with the rules of the Options Clearing Corporation and
of any registered national securities exchange (or of the
Commodity Futures Trading Commission or of any contract market or
commodities exchange), or of any similar
organization or organizations, regarding escrow or deposit or
other arrangements in connection with transactions by the Fund,
(ii) for purposes of segregating cash or U.S. Government
securities in connection with options purchased, sold or written
by the Fund or futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for other
proper purposes, but only, in the case of clause (iv), upon
receipt of, in addition to proper instructions, a certificate
signed by two officers of the Fund, setting forth the purpose such
segregated account and declaring such purpose to be a proper
purpose.
<PAGE>
O. OWNERSHIP CERTIFICATES FOR TAX PURPOSES The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund
held by it and in connection with transfers of securities.
P. PROXIES The Custodian shall, with respect to the securities held
by it hereunder, cause to be promptly delivered to the Fund all
forms of proxies and all notices of meetings and any other notices
or announcements or other written information affecting or
relating to the securities, and upon receipt of proper
instructions shall execute and deliver or cause its nominee to
execute and deliver such proxies or other authorizations as may be
required. Neither the Custodian nor its nominee shall vote upon
any of the securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except
as otherwise herein provided) unless ordered to do so by proper
instructions.
Q. COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES The
Custodian shall deliver promptly to the Fund all written
information (including, without limitation, pendency of call and
maturities of securities and participation interests and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers and other persons relating
to the securities and participation interests being held for the
Fund. With respect to tender or exchange offers, the Custodian
shall deliver promptly to the Fund all written information
received by the Custodian from issuers and other persons relating
to the securities and participation interests whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer.
R. EXERCISE OF RIGHTS; TENDER OFFERS In the case of tender offers,
similar offers to purchase or exercise rights (including, without
limitation, pendency of calls and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options and the
maturity of futures contracts) affecting or relating to securities
and participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for promptly
notifying the Fund of all such offers in accordance with the
standard of reasonable care set forth in Section 8 hereof. For
all such offers for which the Custodian is responsible as provided
in this Paragraph R, the Fund shall have responsibility for
providing the Custodian with all necessary instructions in timely
fashion. Upon receipt of proper instructions, the Custodian shall
timely deliver to the issuer or trustee thereof, or to the agent
of either, warrants, puts, calls, rights or similar
<PAGE>
securities for the purpose of being exercised or sold upon proper
receipt therefor and upon receipt of assurances satisfactory to
the Custodian that the new securities and cash, if any,
acquired by such action are to be delivered to the Custodian or
any subcustodian employed pursuant to Section 2 hereof. Upon
receipt of proper instructions, the Custodian shall timely deposit
securities upon invitations for tenders of securities upon proper
receipt therefor and upon receipt of assurances satisfactory to
the Custodian that the consideration to be paid or delivered or
the tendered securities are to be returned to the Custodian or
subcustodian employed pursuant to Section 2 hereof.
Notwithstanding any provision of this Agreement to the contrary,
the Custodian shall take all necessary action, unless otherwise
directed to the contrary by proper instructions, to comply with
the terms of all mandatory or compulsory exchanges, calls,
tenders, redemptions, or similar rights of security ownership, and
shall thereafter promptly notify the Fund in writing of such
action.
S. DEPOSITORY RECEIPTS The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign
securities to the depository used by an issuer of American
Depository Receipts, European Depository Receipts or International
Depository Receipts (hereinafter collectively referred to as
"ADRs") for such securities,
against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that
the depository has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of a nominee of
the Custodian or in the name or nominee name of any subcustodian
employed pursuant to Section 2 hereof, for delivery to the
Custodian or such subcustodian at such place as the Custodian or
such subcustodian may from time to time designate. The Custodian
shall, upon receipt of proper instructions, surrender ADRs to the
issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory
to the Custodian that the issuer of the ADRs has acknowledged
receipt of instructions to cause its depository to deliver the
securities underlying such ADRs to the Custodian or to a
subcustodian employed pursuant to Section 2 hereof.
T. INTEREST BEARING CALL OR TIME DEPOSITS The Custodian shall, upon
receipt of proper instructions, place interest bearing fixed term
and call deposits with the banking department of such banking
institution (other than the Custodian) and in such amounts as the
Fund may designate. Deposits may be denominated in U.S. Dollars
or other currencies. The Custodian shall include in its records
with respect to the assets of the Fund appropriate notation as to
the amount and currency of each such deposit, the accepting
banking institution and other appropriate details and shall retain
such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Custodian by the banking
<PAGE>
institution. Such deposits shall be deemed portfolio securities
of the applicable Fund for the purposes of this Agreement, and the
Custodian shall be responsible for the collection of income from
such accounts and the transmission of cash to and from such
accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
------------------------------------------------------------
1. OPTIONS. The Custodians shall, upon receipt of proper
instructions and in accordance with the provisions of any
agreement between the Custodian, any registered
broker-dealer and, if necessary, the Fund, relating to
compliance with the rules of the Options Clearing
Corporation or of any registered national securities
exchange or similar organization or organizations, receive
and retain confirmations or other documents, if any,
evidencing the purchase or writing of an option on a
security, securities index, currency or other financial
instrument or index by the Fund;
deposit and maintain in a segregated account for each Fund
separately, either physically or by book-entry in a
Securities System, securities subject to a covered call
option written by the Fund; and release and/or transfer
such securities or other assets only in accordance with a
notice or other communication evidencing the expiration,
termination or exercise of such covered option furnished
by the Options Clearing Corporation, the securities or
options exchange on which such covered option is traded or
such other organization as may be responsible for handling
such options transactions. The Custodian and the
broker-dealer shall be responsible for the sufficiency of
assets held in each Fund's segregated account in
compliance with applicable margin maintenance
requirements.
2. FUTURES CONTRACTS The Custodian shall, upon receipt of
proper instructions, receive and retain confirmations and
other documents, if any, evidencing the purchase or sale
of a futures contract or an option on a futures contract
by the Fund; deposit and maintain in a segregated account,
for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or
variation "margin" deposits (including mark- to-market
payments) intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold
or any options on futures contracts written by Fund, in
accordance with the provisions of any agreement or
agreements among the Fund, the Custodian and such futures
commission merchant, designed to comply with the rules of
the Commodity Futures Trading Commission and/or of any
contract market or commodities exchange or similar
organization regarding such margin deposits or payments;
and release and/or transfer assets in such margin accounts
only in
<PAGE>
accordance with any such agreements or rules. The
Custodian and the futures commission merchant shall be
responsible for the sufficiency of assets held in the
segregated account in compliance with the applicable
margin maintenance and mark-to-market payment requirements.
3. FOREIGN EXCHANGE TRANSACTIONS The Custodian shall,
pursuant to proper instructions, enter into or cause a
subcustodian to enter into foreign exchange contracts,
currency swaps or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for
the account of the Fund. Such transactions may be
undertaken by the Custodian or subcustodian with such
banking or financial institutions or other currency
brokers, as set forth in proper instructions. Foreign
exchange contracts, swaps and options shall be deemed to
be portfolio securities of the Fund; and accordingly, the
responsibility of the Custodian therefor shall be the same
as and no greater than the Custodian's responsibility in
respect of other portfolio securities of the Fund. The
Custodian shall be responsible for the transmittal to and
receipt of cash from the currency broker or banking or
financial institution with which the contract or option is
made, the maintenance of proper records with respect to
the transaction and the maintenance of any segregated
account required in connection with the transaction. The
Custodian shall have no duty with respect to the selection
of the currency brokers or banking or financial
institutions with which the Fund deals or for their
failure to comply with the terms of any contract or
option. Without limiting the foregoing, it is agreed that
upon receipt of proper instructions and insofar as funds
are made available to the Custodian for the purpose, the
Custodian may (if determined necessary by the Custodian to
consummate a particular transaction on behalf and for the
account of the Fund) make free outgoing payments of cash
in the form of U.S. dollars or foreign currency before
receiving confirmation of a foreign exchange contract or
swap or confirmation that the countervalue currency
completing the foreign exchange contract or swap has been
delivered or received. The Custodian shall not be
responsible for any costs and interest charges which may
be incurred by the Fund or the Custodian as a result of
the failure or delay of third parties to deliver foreign
exchange; provided that the Custodian shall nevertheless
be held to the standard of care set forth in, and shall be
liable to the Fund in accordance with, the provisions of
Section 8.
V. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY The Custodian may in its
discretion, without express authority from the Fund:
<PAGE>
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, PROVIDED, that all such
payments shall be accounted for by the Custodian to the
Treasurer of the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all nondiscretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities
and property of the Fund except as otherwise directed by
the Fund.
4. Duties of Bank with Respect to Books of Account and Calculations of Net
Asset Value
-----------------------------------------------------------------------
The Bank shall as Agent (or as Custodian, as the case may be) keep such books
of account and render as at the close of business on each day a detailed
statement of the amounts received or paid out and of securities received or
delivered for the account of the Fund during said day and such other
statements, including a daily trial balance and inventory of the Fund's
portfolio securities; and shall furnish such other financial information and
data as from time to time requested by the Treasurer or any authorized officer
of the Fund; and shall compute and determine, as of the close of regular
trading on the New York Stock Exchange, or at such other time or times as the
Board may determine, the net asset value of a Share in the Fund, such
computation and determination to be made in accordance with the governing
documents of the Fund and the votes and instructions of the Board at the time
in force and applicable, and promptly notify the Fund and its investment
adviser and such other persons as the Fund may request of the result of such
computation and determination. In computing the net asset value the Custodian
may rely upon security quotations received by telephone or otherwise from
sources or pricing services designated by the Fund by proper instructions, and
may further rely upon information furnished to it by any authorized officer of
the Fund relative (a) to liabilities of the Fund not appearing on its books of
account, (b) to the existence, status and proper treatment of any reserve or
reserves, (c) to any procedures established by the Board regarding the
valuation of portfolio securities, and (d) to the value to be assigned to any
bond, note, debenture, Treasury bill, repurchase agreement, subscription right,
security, participation interest or other asset or property for which market
quotations are not readily available.
5. Records and Miscellaneous Duties
--------------------------------
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund
<PAGE>
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and state
tax laws and any other law or administrative rules or procedures which may be
applicable to the Fund. All books of account and records maintained by the Bank
in connection with the performance of its duties under this Agreement shall be
the property of the Fund, shall at all times during the regular business hours
of the Bank be open for inspection by authorized officers, employees or agents
of the Fund, and in the event of termination of this Agreement shall be
delivered to the Fund or to such other person or persons as shall be designated
by the Fund. Disposition of any account or record after any required period of
preservation shall be only in accordance with specific instructions received
from the Fund. The Bank shall assist generally in the preparation of
reports to shareholders, audits of accounts, and other ministerial matters of
like nature; and, upon request, shall furnish the Fund's auditors with an
attested inventory of securities held with appropriate information as to
securities in transit or in the process of purchase or sale and with such other
information as said auditors may from time to time request. The Custodian shall
also maintain records of all receipts, deliveries and locations of such
securities, together with a current inventory thereof, and shall conduct
periodic verifications (including sampling counts at the Custodian) of
certificates representing bonds and other securities for which it is responsible
under this Agreement in such manner as the Custodian shall determine from time
to time to be advisable in order to verify the accuracy of such inventory. The
Bank shall not disclose or use any books or records it has prepared or
maintained by reason of this Agreement in any manner except as expressly
authorized herein or directed by the Fund, and the Bank shall keep confidential
any information obtained by reason of this Agreement.
6. Opinion of Fund's Independent Public Accountants
------------------------------------------------
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to enable the Fund to obtain from year to year favorable opinions
from the Fund's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement and Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
7. Compensation and Expenses of Bank
---------------------------------
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Fund and the
Bank. The Bank shall entitled to receive from the Fund on demand reimbursement
for its cash disbursements, expenses and charges, including counsel fees, in
connection with its duties as Custodian and Agent hereunder, but excluding
salaries and usual overhead expenses.
8. Responsibility of Bank
----------------------
<PAGE>
So long as and to the extent that it is in the exercise of reasonable care, the
Bank as Custodian and Agent shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to
such advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement but shall be liable only
for its own negligent or bad faith acts or failures to act. Notwithstanding
the foregoing, nothing contained in this paragraph is intended to nor shall it
be construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to subcustodians
generally in Section 2 hereof, provided that, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank, the Custodian shall not be
liable for any loss, damage, cost, expense, liability or claim resulting from,
or caused by, the direction of or authorization by the Fund to maintain custody
of any securities or cash of the Fund in a foreign county including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, revolution,
military or usurped powers, nuclear fission, fusion or radiation, earthquake,
storm or other disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Bank, result in the Bank or its nominee assigned to the
Fund being liable for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
9. Persons Having Access to Assets of the Fund
-------------------------------------------
(i) No trustee, director, general partner, officer, employee
or agent of the Fund shall have physical access to the
assets of the Fund held by the Custodian or be authorized
or permitted to withdraw any investments of the Fund, nor
shall the Custodian deliver any assets of the Fund to any
such person. No officer or director, employee or agent of
the Custodian who holds any similar position with the Fund
or the
<PAGE>
investment adviser of the Fund shall have access to the
assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only be
available to duly authorized officers, employees,
representatives or agents of the Custodian or other
persons or entities for whose actions the Custodian shall
be responsible to the extent permitted hereunder, or to
the Fund's independent public accountants in connection
with their auditing duties performed on behalf of the
Fund.
(iii) Nothing in this Section 9 shall prohibit any officer,
employee or agent of the Fund or of the investment adviser
of the Fund from giving instructions to the Custodian or
executing a certificate so long as it does not result in
delivery of or access to assets of the Fund prohibited by
paragraph (i) of this Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
----------------------------------------------------------------
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid
to the other party, such termination to take effect not sooner than sixty (60)
days after the date of such delivery or mailing; provided, that the Fund may at
any time by action of its Board, (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or by the Banking Commissioner of The Commonwealth of Massachusetts
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Upon termination of the
Agreement, the Fund shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
Unless the holders of a majority of the outstanding Shares of the Fund vote to
have the securities, funds and other properties held hereunder delivered and
paid over to some other bank or trust company, specified in the vote, having
not less than $2,000,000 of aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other qualifications
for custodians set forth in the Investment Company Act of 1940, the Board
shall, forthwith, upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian, a bank or trust company having such
qualifications. The Bank, as Custodian, Agent or otherwise, shall, upon
termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no such vote has been
<PAGE>
adopted by the shareholders and that no written order designating a successor
custodian shall have been delivered to the Bank on or before the date when such
termination shall become effective, then the Bank shall not deliver the
securities, funds and other properties of the Fund to the Fund but shall have
the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all funds, securities and properties of the Fund held by or
deposited with the Bank, and all books of account and records kept by the Bank
pursuant to this Agreement, and all documents held by the Bank relative
thereto. Thereafter such bank or trust company shall be the successor of the
Custodian under this Agreement.
11. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition
to the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
governing instruments of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Agreement.
12. Certification as to Authorized Officers
---------------------------------------
The Secretary of the Fund shall at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the authorized officers of each fund, it being
understood that upon the occurence of any change in the information set forth
in the most recent certification on file (including without limitation any
person named in the most recent certification who has ceased to hold the office
designated therein), the Secretary of the Fund shall sign a new or amended
certification setting forth the change and the new, additional or ommitted
names or signatures. The Bank shall be entitled to rely and act upon any
officers named in the most recent certification.
13. Notices
-------
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to Thomas H. Drohan, John Hancock Advisers, Inc., 101 Huntington
Avenue, Boston, Massachusetts 02199, or to such other address as the Fund may
have designated to the Bank, in writing, or to Investors Bank & Trust Company,
24 Federal Street, Boston, Massachusetts 02110, shall be deemed to have been
properly delivered or given hereunder to the respective addressees.
<PAGE>
14. Massachusetts Law to Apply; Limitations on Liability
----------------------------------------------------
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts.
If the Fund is a Massachusetts business trust, the Custodian expressly
acknowledges the provision in the Fund's declaration of trust limiting the
personal liability of the trustees and shareholders of the Fund; and the
Custodian agrees that it shall have recourse only to the assets of the Fund for
the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund.
Each Fund, and each series or portfolio of a Fund, shall be liable only for its
own obligations to the Custodian under this Agreement and shall not be jointly
or severally liable for the obligations of any other Fund, series or portfolio
hereunder.
<PAGE>
15. Adoption of the Agreement by the Fund
-------------------------------------
The Fund represents that its Board has approved this Agreement and has duly
authorized the Fund to adopt this Agreement. This Agreement shall be deemed to
supersede and terminate, as of the date first written above, all prior
agreements between the Fund and the Bank relating to the custody of the Fund's
assets.
* * * *
<PAGE>
In Witness Whereof, the parties hereto have caused this agreement to be
executed in duplicate as of the date first written above by their respective
officers thereunto duly authorized.
John Hancock Mutual Funds
by: /s/ Robert G. Freedman
----------------------
Attest:
/s/Avery P. Maher
- -----------------
Investors Bank & Trust Company
by: /s/ Henry M. Joyce
------------------
Attest:
/s/ JM Keenan
- -------------
<PAGE>
Page 1 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Limited Term Government Fund
John Hancock Capital Series
John Hancock Special Value Fund
John Hancock Growth Fund
John Hancock Income Securities Trust
John Hancock Investors Trust
John Hancock Sovereign Bond Fund
John Hancock Sovereign Investors Fund, Inc.
John Hancock Sovereign Investors Fund
John Hancock Sovereign Balanced Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Independence Diversified Core Equity Fund
John Hancock Strategic Income Fund
John Hancock Utilities Fund
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Exempt Series Fund
California Portfolio
Massachusetts Portfolio
New York Portfolio
John Hancock Technology Series, Inc.
John Hancock National Aviation & Technology Fund
John Hancock Global Technology Fund
Freedom Investment Trust
John Hancock Gold & Government Fund
John Hancock Regional Bank Fund
John Hancock Sovereign U.S. Government Income Fund
John Hancock Managed Tax-Exempt Fund
John Hancock Sovereign Achievers Fund
Freedom Investment Trust II
John Hancock Special Opportunities Fund
Freedom Investment Trust III
John Hancock Discovery Fund
<PAGE>
Page 2 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Series, Inc.
John Hancock Emerging Growth Fund
John Hancock Global Resources Fund
John Hancock Government Income Fund
John Hancock High Yield Bond Fund
John Hancock High Yield Tax-Free Fund
John Hancock Money Market Fund B
John Hancock Cash Reserve, Inc.
John Hancock Current Interest
John Hancock U.S. Government Cash Reserve
John Hancock Capital Growth Fund
John Hancock Investment Trust
John Hancock Growth and Income Fund
John Hancock California Tax-Free Income Fund
John Hancock Tax-Free Bond Fund
John Hancock Bond Fund
John Hancock Investment Quality Bond Fund
John Hancock Government Securities Trust
John Hancock U.S. Government Trust
John Hancock Adjustable U.S. Government Trust
John Hancock Adjustable U.S. Government Fund
John Hancock Intermediate Government Trust
John Hancock Institutional Series Trust
John Hancock Berkeley Dividend Performers Fund
John Hancock Berkeley Bond Fund
John Hancock Berkeley Fundamental Value Fund
John Hancock Berkeley Sector Opportunity Fund
John Hancock Independence Diversified Core Equity Fund II
John Hancock Independence Value Fund
John Hancock Independence Growth Fund
John Hancock Independence Medium Capitalization Fund
John Hancock Independence Balanced Fund
JOHN HANCOCK BOND TRUST
TRANSFER AGENCY AND SERVICE AGREEMENT
Dated January 1, 1991
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of January, 1991 by and between John
Hancock Bond Trust, a Massachusetts business trust, having its principal office
and place of business at 101 Huntington Avenue, Boston, Massachusetts (the
"Fund"), and John Hancock Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 101 Huntington Avenue, Boston,
Massachusetts 02117 ("JHFSI").
WITNESSETH:
WHEREAS, the Fund desires to appoint JHFSI as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and JHFSI desires to accept such appointment;
WHEREAS, the Fund is authorized to issue shares in one series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer Shares in one series, the
Pacific Basin Equities Portfolio; (such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 8, being herein referred to as the "Fund(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1 Terms of Appointment: Duties of JHFSI
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby,
<PAGE>
employs and appoints JHFSI to act as, and JHFSI agrees to act as transfer agent
for the Fund's authorized and issued shares of capital stock ("Shares"), with
any accumulation, open-account or similar plans provided to the shareholders of
the Fund ("Shareholders") and set out in the currently effective prospectus of
the Fund, including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 JHFSI agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and JHFSI, JHFSI shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation
therefor to the Custodian of the Fund authorized pursuant to
the Declaration of Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor
to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund; and
(vii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) Record the issuance of Shares of the Fund and maintain
pursuant to SEC
<PAGE>
Rule 17Ad-10(e) a record of the total number of Shares of the
Fund which are authorized, based upon data provided to it by
the Fund, and issued and outstanding. JHFSI shall also provide
the Fund on a regular basis with the total number of Shares
which are authorized and issued and outstanding and shall have
no obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), JHFSI shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program); including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmations forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and (ii) provide
a system which will enable the Fund to monitor the total number of Shares sold
in each State.
(c) In addition, the Fund shall (i) identify to JHFSI in writing those
transactions and assets to be treated as exempt from the blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of JHFSI for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue
<PAGE>
sky compliance by the Fund and the reporting of such transactions to the Fund as
provided above.
(d) Additionally, JHFSI shall:
(i) Utilize a system to identify all share transactions which
involve purchase and redemption orders that are processed at a
time other than the time of the computation of net asset value
per share next computed after receipt of such orders, and
shall compute the net effect upon the Fund of such
transactions so identified on a daily and cumulative basis.
(ii) If upon any day the cumulative net effect of such transactions
upon the Fund is negative and exceed a dollar amount
equivalent to 1/2 of 1 cent per share, JHFSI shall promptly
make a payment to the Fund in cash or through the use of a
credit, in the manner described in paragraph (iv) below, in
such amount as may be necessary to reduce the negative
cumulative net effect to less than 1/2 of 1 cent per share.
(iii) If on the last business day of any month the cumulative net
effect upon the Fund (adjusted by the amount of all prior
payments and credits by JHFSI and the Fund) is negative, the
Fund shall be entitled to a reduction in the fee next payable
under the Agreement by an equivalent amount, except as
provided in paragraph (iv) below. If on the last business day
in any month the cumulative net effect upon the Fund (adjusted
by the amount of all prior payments and credits by JHFSI and
the Fund) is positive, JHFSI shall be entitled to recover
certain past payments and reduction in fees, and to credit
against all future payments and fee reductions that may be
required under the Agreement as herein described in paragraph
(iv) below.
(iv) At the end of each month, any positive cumulative net effect
upon the Fund shall be deemed to be a credit to JHFSI which
shall first be applied to permit JHFSI to recover any prior
cash payments and fee reductions made by it to the Fund under
paragraphs (ii) and (iii) above during the calendar year, by
increasing the amount of the monthly fee under the Agreement
next payable in an amount equal to prior payments and fee
<PAGE>
reductions made by JHFSI during such calendar year, but not
exceeding the sum of that month's credit and credits arising
in prior months during such calendar year to the extent such
prior credits have not previously been utilized as
contemplated by this paragraph. Any portion of a credit to
JHFSI not so used by it shall remain as a credit to be used as
payment against the amount of any future negative cumulative
net effects that would otherwise require a cash payment or fee
reduction to be made to the Fund pursuant to paragraphs (ii)
or (iii) above (regardless of whether or not the credit or any
portion thereof arose in the same calendar year as that in
which the negative cumulative net effects or any portion
thereof arose).
(v) JHFSI shall supply to the Fund from time to time, as mutually
agreed upon, reports summarizing the transactions identified
pursuant to paragraph (i) above, and the daily and cumulative
net effects of such transactions, and shall advise the Fund at
the end of each month of the net cumulative effect at such
time. JHFSI shall promptly advise the Fund if at any time the
cumulative net effect exceeds a dollar amount equivalent to
1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever
cause, or this provision 1.02 (d) is terminated pursuant to
paragraph (vii) below, the Fund shall promptly pay to JHFSI an
amount in cash equal to the amount by which the cumulative net
effect upon the Fund is positive or, if the cumulative net
effect upon the Fund is negative, JHFSI shall promptly pay to
the Fund an amount in cash equal to the amount of such
cumulative net effect.
(vii) This provision 1.02 (d) of the Agreement may be terminated by
JHFSI at any time without cause, effective as of the close of
business on the date written notice (which may be by telex) is
received by the Fund.
Procedures applicable to certain of these services may be establishes
from time to time by agreement between the Fund and JHFSI.
<PAGE>
Article 2 Fees and Expenses
2.01 For performance by JHFSI pursuant to this Agreement, the Fund
agrees to pay JHFSI an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and JHFSI.
2.02 In addition to the fee paid under Section 2.01 above. the Fund
agrees to reimburse JHFSI for out-of-pocket expenses or advances incurred by
JHFSI for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by JHFSI at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses promptly
following the mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to JHFSI by the Fund at least seven (7) days prior to the
mailing date of such materials.
Article 3 Representations and Warranties of JHFSI
JHFSI represents and warrants to the Fund that:
3.01 It is a Delaware corporation duly organized and existing and in
good standing under the laws of the State of Delaware, and as a Foreign
Corporation under the Laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
<PAGE>
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to JHFSI that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All Trust proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified investment company registered
under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
Article 5 Indemnification
5.01 JHFSI shall not be responsible for, and the Fund shall indemnify
and hold JHFSI harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(a) All actions of JHFSI or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by JHFSI or its agents or subcontractors of
information,
<PAGE>
records and documents which (i) are received by JHFSI or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund.
(d) The reliance on, or the carrying out by JHFSI or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 JHFSI shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liabilities arising out of or attributed to any action or failure or
omission to act by JHFSI as a result of JHFSI's lack of good faith, negligence
or willful misconduct.
5.03 At any time JHFSI may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by JHFSI under this
Agreement, and JHFSI and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. JHFSI, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided JHFSI or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. JHFSI, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of
<PAGE>
the Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and JHFSI
6.01 The Fund shall promptly furnish to JHFSI the following:
(a) A certified copy of the resolution of the Trustee of the Fund
authorizing the appointment of JHFSI and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
6.02 JHFSI hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such
<PAGE>
certificates, forms and devices.
6.03 JHFSI shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, JHFSI agrees that all such records prepared or maintained
by JHFSI relating to the services to be performed by JHFSI hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered to the Fund on
and in accordance with its request.
6.04 JHFSI and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, JHFSI will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
instruction. JHFSI reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, JHFSI reserves the right to charge for any other
reasonable expenses associated with such termination.
Article 8 Additional Funds
<PAGE>
8.01 In the event that the Fund establishes one or more of series of
Shares in addition to the Federal Securities Portfolio, and the Fixed Income
Portfolio with respect to which it desires to have JHFSI render services as a
transfer agent under the terms hereof, it shall so notify JHFSI in writing, and
if JHFSI agrees in writing to provide such services, such series of Shares shall
become a Fund hereunder.
Article 9 Assignment
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 JHFSI may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A (c)(1) of the Securities Exchange Act of
1934 ("Section 17A (c)(1)"), (ii) 440 Financial Group, (iii) or any other entity
JHFSI deems appropriate in order to comply with the terms and conditions of this
Agreement, provided, however, that JHFSI shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions.
Article 10 Amendment
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Trustees of the Fund.
Article 11 Massachusetts Law to Apply
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and In accordance with the laws of The Commonwealth of
Massachusetts.
<PAGE>
Article 12 Merger of Agreement
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
Article 13 Limitation on Liability
13.01 The name John Hancock Bond Trust is the designation of the
Trustees under the Declaration of Trust dated October 5, 1984, as amended from
time to time. The obligations of such Trust as not personally binding upon, nor
shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the Trust's property only shall
be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: JOHN HANCOCK BOND TRUST
/s/ Thomas H. Drohan BY: /s/ Edward J. Boudreau, Jr.
ATTEST: JOHN HANCOCK FUND SERVICES, INC.
/s/ Thomas H. Drohan BY: /s/ Robert H. Watts
April 24, 1995
John Hancock Sovereign Bond Fund
101 Huntington Avenue
Boston, MA 02199
RE: John Hancock Sovereign Bond Fund
(File Nos. 2-48925; 811-2402) (0000045288)
Ladies and Gentlemen:
In connection with the filing of Post-Effective Amendment No. 22
pursuant to Rule 24e-2 under the Investment Company Act of 1940, as
amended, registering by Post-Effective Amendment No. 39 under the
Securities Act of 1933, as amended, 19,142 shares of the John Hancock
Sovereign Bond Fund (the "Fund") sold in reliance upon Rule 24e-2
during the fiscal year ending December 31, 1994, it is the opinion of
the undersigned that such shares will be legally issued, fully paid and
nonassessable.
In connection with this opinion it should be noted that the Fund is an entity
of the type generally known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of a Massachusetts business trust may be held
personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for obligations of the
Fund and indemnifies any shareholder of the Fund, with this indemnification
to be paid solely out of the assets of the Fund. Therefore, the
shareholder's risk is limited to circumstances in which the assets of the
Fund are insufficient to meet the obligations asserted against Fund assets.
Sincerely,
Avery P. Maher
Assistant Secretary
Member of Massachusetts Bar
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "The Fund's
Financial Highlights" in the Class A and Class B Shares Prospectus and in the
Class C Shares Prospectus and "Independent Auditors" in the Class A, Class B and
Class C Shares Statement of Additional Information and to the use, in this
Post-Effective Amendment Number 39 to Registration Statement (Form N-1A No.
2-48925) dated May 1, 1995, of our report on the financial statements and
financial highlights of John Hancock Sovereign Bond Fund dated February 13,
1995.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 1995
JOHN HANCOCK SOVEREIGN BOND FUND
Amended and Restated Distribution Plan
Class A Shares
January 3, 1994
Article I. This Plan
This amended and restated Distribution Plan (the "Plan") sets forth the
terms and conditions on which John Hancock Sovereign Bond Fund (the "Fund"), on
behalf of its Class A shares, will, after the effective date hereof, pay certain
amounts to John Hancock Broker Distribution Services, Inc. ("Broker Services")
in connection with the provision by Broker Services of certain services to the
Fund and its Class A shareholders, as set forth herein. Certain of such payments
by the Fund may, under Rule 12b-1 of the Securities and Exchange Commission, as
from time to time amended (the "Rule"), under the Investment Company Act of
1940, as amended (the "Act"), be deemed to constitute the financing of
distribution by the Fund of its shares. This Plan describes all material aspects
of such financing as contemplated by the Rule and shall be administered and
interpreted, and implemented and continued, in a manner consistent with the
Rule. The Fund and Broker Services heretofore entered into a Distribution
Agreement, dated August 1, 1991 (the "Agreement"), the terms of which, as
heretofore and from time to time continued, are incorporated herein by
reference.
Article II. Distribution and Service Expenses
The Fund shall pay to Broker Services a fee in the amount specified in
Article III hereof. Such fee may be spent by Broker Services on any activities
or expenses primarily intended to result in the sale of Class A shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (a) initial and ongoing sales compensation out
of such fee as it is received by Broker Services of the Fund or other
broker-dealers ("Selling Brokers") that have entered into an agreement with
Broker Services for the sale of Class A shares of the Fund, (b) direct
out-of-pocket expenses incurred in connection with the distribution of Class A
shares of the Fund, including expenses related to printing of prospectuses and
reports to other than existing Class A shareholders of the Fund, and
preparation, printing and distribution of sales literature and advertising
materials, and (c) an allocation of overhead and other branch office expenses of
Broker Services related to the distribution of Class A shares of the Fund.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish
<PAGE>
personal and shareholder account maintenance services to Class A shareholders of
the Fund.
Article III. Maximum Expenditures
The expenditures to be made by the Fund pursuant to this Plan, and the
basis upon which such expenditures will be made, shall be determined by the
Fund, and in no event shall such expenditures exceed 0.30% of the average daily
net asset value of the Class A shares of the Fund (determined in accordance with
the Fund's prospectus as from time to time in effect) on an annual basis to
cover Distribution Expenses and Service Expenses, provided that the portion of
such fee used to cover service expenses shall not exceed an annual rate of up to
0.25% of the average daily net asset value of the Class A shares of the Fund.
Such expenditures shall be calculated and accrued daily and paid monthly or at
such other intervals as the Trustees shall determine. In the event Broker
Services is not fully reimbursed for payments made or other expenses incurred by
it under this Plan, such expenses will not be carried beyond one year from the
date such expenses were incurred. Any fees paid to Broker Services under this
Plan during any fiscal year of the Fund and not expended or allocated by Broker
Services for actual or budgeted Distribution Expenses and Service Expenses
during such fiscal year will be promptly returned to the Fund.
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund and its
investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall bear the
respective expenses to be borne by them under the Investment Management
Contract, as amended, dated January 1, 1994, as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Fund shall not, directly or indirectly, engage in financing any
activity which is primarily intended to or should reasonably result in the sale
of shares of the Fund.
Article V. Approval by Trustees, etc.
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Trustees
of the Fund and (b) those Trustees of the Fund who are not "interested persons"
of the Fund, as such term may be from time to time defined under the Act, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Independent Trustees").
<PAGE>
Article VI. Continuance
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article V.
Article VII. Information
Broker Services shall furnish the Fund and its Trustees quarterly, or at
such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of the
Trustees, a majority of the Independent Trustees, or a majority of the Fund's
outstanding voting Class A shares, or (b) by Broker Services on 60 days' notice
in writing to the Fund.
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at
any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the Fund's then outstanding
voting Class A shares.
(b) That such agreement shall terminate automatically in the event of
its assignment.
Article X. Amendments
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class A shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article V.
Article XI. Limitation of Liability
The name "John Hancock Sovereign Bond Fund" is the designation of the
Trustees under the Declaration of Trust, dated February 28, 1992, as amended
from time to time. The Declaration of Trust has been filed with the Secretary of
State of the
<PAGE>
Commonwealth of Massachusetts. The obligations of the Fund are not personally
binding upon, nor shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the Fund, but only the
Fund's property shall be bound. No series of the Fund shall be responsible for
the obligations of any other series of the Fund.
IN WITNESS WHEREOF, the Fund has executed this amended and restated
Distribution Plan effective as of the 3rd day of January, 1994 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN BOND FUND
By: /s/Robert G. Freedman
President
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By: /s/ C. Troy Shaver, Jr.
President
JOHN HANCOCK SOVEREIGN BOND FUND
Amended and Restated Distribution Plan
Class B Shares
November 19, 1993
Article I. This Plan
This amended and restated Distribution Plan (the "Plan") sets forth the
terms and conditions under which John Hancock Sovereign Bond Fund (the "Fund"),
will, after the effective date hereof, pay certain amounts to John Hancock
Broker Distribution Services, Inc. ("Broker Services") in connection with the
provision by Broker Services of certain services to the Fund and its Class B
shareholders, as set forth herein. Certain of such payments by the Fund may,
under Rule 12b-1 of the Securities and Exchange Commission, as from time to time
amended (the "Rule"), under the Investment Company Act of 1940, as amended (the
"Act"), be deemed to constitute the financing of distribution by the Fund of its
shares. This Plan describes all material aspects of such financing as
contemplated by the Rule and shall be administered and interpreted, and
implemented and continued, in a manner consistent with the Rule. The Fund and
Broker Services heretofore entered into a Distribution Agreement, dated August
1, 1991 (the "Agreement"), the terms of which, as heretofore and from time to
time continued, are incorporated herein by reference.
Article II. Distribution and Service Expenses
The Fund shall pay to Broker Services a fee in the amount specified in
Article III hereof. Such fee may be spent by Broker Services on any activities
or expenses primarily intended to result in the sale of Class B shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (a) initial and ongoing sales compensation out
of such fee as it is received by Broker Services or other broker-dealers
("Selling Brokers") that have entered into an agreement with Broker Services for
the sale of Class B shares of the Fund, (b) direct out-of pocket expenses
incurred in connection with the distribution of Class B shares of the Fund,
including expenses related to printing of prospectuses and reports to other than
existing Class B shareholders of the Fund, and preparation, printing and
distribution of sales literature and advertising materials, (c) an allocation of
overhead and other branch office expenses of Broker Services related to the
distribution of Class B shares of the Fund, and (d) interest expenses on
unreimbursed distribution expenses related to Class B shares, as described in
Article IV.
Service Expenses include payments made to, or on account of account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class B shareholders of the Fund.
Article III. Maximum Expenditures
The expenditures to be made by the Fund pursuant to this Plan, and the
basis upon which such expenditures will be made, shall be determined by the
Fund, and in no event shall such expenditures exceed 1.00% of the average daily
net asset value of the Class B shares of the Fund (determined in accordance with
the Fund's prospectus as from time to time in effect) on an annual basis to
cover Distribution Expenses and Service Expenses, provided that the portion of
such fee used to cover Service Expenses, shall not exceed an annual rate of up
to 0.25% of the average daily net asset value of the Class B shares of the Fund.
Such expenditures shall be
<PAGE>
calculated and accrued daily and paid monthly or at such other intervals as the
Trustees shall determine.
Article IV. Unreimbursed Distribution Expenses
In the event that Broker Services is not fully reimbursed for payments
made or expenses incurred by it as contemplated hereunder, in any fiscal year,
Broker Services shall be entitled to carry forward such expenses to subsequent
fiscal years for submission to the Class B shares of the Fund for payment,
subject always to the annual maximum expenditures set forth in Article III
hereof; provided, however, that nothing herein shall prohibit or limit the
Trustees from terminating this Plan and all payments hereunder at any time
pursuant to Article IX hereof.
Article V. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Trust, the Fund
and its investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall
bear the respective expenses to be borne by them under the Investment Management
Contract between them, dated March 24, 1987 as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Trust and the Fund shall not, directly or indirectly, engage in
financing any activity which is primarily intended to or should reasonably
result in the sale of shares of the Fund.
Article VI. Approval by Trustees, etc.
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Trustees
of the Fund and (b) those Trustees of the Fund who are not "interested persons"
of the Fund, as such term may be from time to time defined under the Act, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Independent Trustees").
Article VII. Continuance
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article VI.
Article VIII. Information
Broker Services shall furnish the Fund and its Trustees quarterly, or at
such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Services Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
Article IX. Termination
This Plan may be terminated (a) at any time by vote of a majority of the
Trustees, a majority of the Independent Trustees, or a majority of the Fund's
outstanding voting Class B shares, or (b) by Broker Services on 60 days' notice
in writing to the Fund.
<PAGE>
Article X. Agreements
Each Agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at
any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the Fund's then
outstanding Class B shares.
(b) That such agreement shall terminate automatically in the event of
its assignment.
Article XI. Amendments
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class B shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article VII.
Article XII. Limitation of Liability
The name "John Hancock Sovereign Bond Fund" is the designation of the
Trustees under the Declaration of Trust, dated February 28, 1992, as restated
and amended from time to time. 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, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. No series of the Trust
shall be responsible for the obligations of any other series of the Trust.
IN WITNESS WHEREOF, the Fund has executed this amended and restated
Distribution Plan effective as of the 19 day of November, 1993 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN BOND FUND
By: /s/ Robert G. Freedman
Robert G. Freedman
President
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By: /s/ C. Troy Shaver, Jr.
C. Troy Shaver, Jr.
President
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 95,404,828 96,098,565 (693,737) 0.0544%
POP $14.56 $14.51 $0.05 -0.0260%
Net Assets $1,389,094,296 $1,394,390,178 ($5,295,882) 0.0284%
Income $9,868,734 $9,776,634 $92,100 0.0820%
Adj. to Income $0 * $0 ** $0 0.0000%
-------------- -------------- ------------ -------
Adj. Income $9,868,734 $9,776,634 $92,100 0.0820%
Expenses $1,395,855 $1,384,899 $10,956 -0.0098%
-------------- -------------- ------------ -------
Net Income $8,472,879 $8,391,735 $81,144 0.0722%
Net Income $8,472,879 $8,391,735 $81,144
Net Assets $1,389,094,296 $1,394,390,178 ($5,295,882)
NI/NA 0.0060995708 0.0060182115 0.0000813593
SEC Yield 7.43% 7.33% 0.10% 0.1006%
* Current Month's Adjustments: $0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS B Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 2,819,113 2,674,564 144,549 -0.3700%
POP $13.90 $13.86 $0.04 -0.0212%
Net Assets $39,185,671 $37,069,457 $2,116,214 -0.3912%
Income $291,268 $272,125 $19,143 0.6032%
Adj. to Income $0 * $0 ** $0 0.0000%
------------ ------------ ------------ ---------
Adj. Income $291,268 $272,125 $19,143 0.6032%
Expenses $58,071 $54,549 $3,522 -0.1111%
------------ ------------ ------------ ---------
Net Income $233,197 $217,576 $15,621 0.4921%
Net Income $233,197 $217,576 $15,621
Net Assets $39,185,671 $37,069,457 $2,116,214
NI/NA 0.0059510784 0.0058694143 0.0000816642
SEC Yield 7.25% 7.15% 0.10% 0.1009%
* Current Month's Adjustments: $0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS C Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 67,490 64,469 3,021 -0.3755%
POP $13.90 $13.86 $0.04 -0.0247%
Net Assets $938,111 $893,540 $44,571 -0.4002%
Income $6,980 $6,559 $421 0.5567%
Adj. to Income $0 * $0 ** $0 0.0000%
------------ ------------ ------------ ---------
Adj. Income $6,980 $6,559 $421 0.5567%
Expenses $523 $488 $35 -0.0464%
------------ ------------ ----------- ---------
Net Income $6,457 $6,071 $386 0.5103%
Net Income $6,457 $6,071 $386
Net Assets $938,111 $893,540 $44,571
NI/NA 0.0068829808 0.0067943211 0.0000886597
SEC Yield 8.40% 8.29% 0.11% 0.1101%
* Current Month's Adjustments: $0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS A SOVEREIGN BOND
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C>
1 12/1/94 331,001.9381 46,018.23 95,805,853.005
2 12/2/94 331,964.6898 45,933.24 95,771,162.984
3 12/3/94 331,964.6896 46,083.59 95,771,162.984
4 12/4/94 331,964.6898 46,083.59 95,771,162.984
5 12/5/94 332,399.0115 46,083.59 95,728,465.817
6 12/6/94 331,078.7685 46,007.57 95,688,222.815
7 12/7/94 329,988.1082 46,191.04 95,642,055.419
8 12/8/94 328,021.9195 46,049.46 95,608,451.565
9 12/9/94 328,345.7166 46,041.98 95,100,137.048
10 12/10/94 328,345.7166 45,841.80 95,100,137.048
11 12/11/94 328,345.7166 45,841.80 95,100,137.048
12 12/12/94 328,678.5645 45,841.80 95,544,413.456
13 12/13/94 329,182.6724 45,896.42 95,499,276.477
14 12/14/94 327,796.8849 45,937.12 95,484,104.646
15 12/15/94 326,678.4439 47,080.36 95,440,361.165
16 12/16/94 328,461.7296 47,053.81 95,421,213.823
17 12/17/94 328,461.7296 47,040.64 95,421,213.823
18 12/18/94 328,461.7296 47,040.64 95,421,213.823
19 12/19/94 328,341.6857 47,040.64 95,399,861.839
20 12/20/94 332,996.0968 47,036.91 95,372,237.696
21 12/21/94 329,600.0436 47,040.72 95,335,905.247
22 12/22/94 329,984.9157 47,051.41 95,262,093.297
23 12/23/94 328,351.9242 46,957.45 95,243,941.776
24 12/24/94 328,351.9242 46,943.25 95,243,941.776
25 12/25/94 328,351.9242 46,943.25 95,243,941.776
26 12/26/94 328,351.9242 46,943.25 95,243,941.776
27 12/27/94 326,803.0280 46,943.25 95,136,276.550
28 12/28/94 325,555.2780 47,055.50 95,142,299.800
29 12/29/94 325,322.2210 46,962.96 95,093,191.657
30 12/30/94 325,580.3271 46,869.28 95,108,454.271 14.560000 7.432
TOTAL 9,868,734.0120 1,395,854.55 2,862,144,833.391
AVERAGED SHARES: 95,404,827.780
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B SOVEREIGN BOND
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C>
1 12/1/94 9,504.9013 1,866.41 2,750,849.414
2 12/2/94 9,561.1542 1,865.35 2,758,105.240
3 12/3/94 9,561.1542 1,877.84 2,758,105.240
4 12/4/94 9,561.1542 1,877.84 2,758,105.240
5 12/5/94 9,611.2569 1,877.84 2,767,702.313
6 12/6/94 9,624.6438 1,883.57 2,781,439.258
7 12/7/94 9,614.2904 1,898.18 2,786,430.517
8 12/8/94 9,551.0833 1,896.43 2,783,585.209
9 12/9/94 9,639.0731 1,898.48 2,791,539.930
10 12/10/94 9,639.0731 1,901.56 2,791,539.930
11 12/11/94 9,639.0731 1,901.56 2,791,539.930
12 12/12/94 9,667.4830 1,901.56 2,809,998.891
13 12/13/94 9,683.4767 1,906.27 2,809,010.845
14 12/14/94 9,662.2353 1,909.85 2,814,253.519
15 12/15/94 9,657.6166 1,949.97 2,821,236.112
16 12/16/94 9,742.4555 1,954.08 2,830,000.203
17 12/17/94 9,742.4555 1,958.56 2,830,000.203
18 12/18/94 9,742.4555 1,958.56 2,830,000.203
19 12/19/94 9,754.7645 1,958.56 2,833,977.406
20 12/20/94 9,926.3662 1,963.34 2,842,703.906
21 12/21/94 9,871.2031 1,972.99 2,854,947.765
22 12/22/94 9,903.7674 1,981.02 2,858,808.201
23 12/23/94 9,862.0256 1,981.35 2,860,375.346
24 12/24/94 9,862.0256 1,986.86 2,860,375.346
25 12/25/94 9,862.0256 1,986.86 2,860,375.346
26 12/26/94 9,862.0256 1,986.86 2,860,375.346
27 12/27/94 9,837.7263 1,986.86 2,863,614.413
28 12/28/94 9,809.2564 1,995.54 2,866,455.269
29 12/29/94 9,817.9427 1,993.36 2,869,568.579
30 12/30/94 9,854.2864 1,993.46 2,878,369.311 13.900000 7.2597
TOTAL 291,628.4511 58,070.97 84,573,388.431
AVERAGED SHARES: 2,819,112.948
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS C SOVEREIGN BOND
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C>
1 12/1/94 225.4854 16.44 65,264.011
2 12/2/94 226.2228 16.45 65,264.011
3 12/3/94 226.2228 16.50 65,264.011
4 12/4/94 226.2228 16.50 65,264.011
5 12/5/94 226.6200 16.50 65,264.011
6 12/6/94 225.8148 16.49 65,264.011
7 12/7/94 225.1796 16.55 65,264.011
8 12/8/94 223.9168 16.52 65,264.011
9 12/9/94 225.3352 16.58 65,264.011
10 12/10/94 225.3352 16.56 65,264.011
11 12/11/94 225.3352 16.56 65,264.011
12 12/12/94 226.0497 16.56 65,710.091
13 12/13/94 226.5037 16.59 65,710.091
14 12/14/94 225.5859 16.61 65,710.091
15 12/15/94 224.9190 17.38 65,710.091
16 12/16/94 226.1920 17.37 65,710.091
17 12/17/94 226.1920 17.36 65,710.091
18 12/18/94 226.1920 17.36 65,710.091
19 12/19/94 226.1602 17.36 65,710.091
20 12/20/94 229.4324 17.38 65,710.091
21 12/21/94 227.1794 17.38 65,710.091
22 12/22/94 227.6208 17.40 65,710.091
23 12/23/94 228.5983 17.50 66,307.958
24 12/24/94 228.5983 17.53 66,307.958
25 12/25/94 228.5983 17.53 66,307.958
26 12/26/94 228.5983 17.53 66,307.958
27 12/27/94 227.7770 17.53 66,307.958
28 12/28/94 226.8932 17.58 66,307.958
29 12/29/94 226.8478 17.56 66,307.958
30 12/30/94 410.2031 29.61 119,827.249 13.900000 8.4031
TOTAL 6,979.8320 522.77 2,024,698.077
AVERAGED SHARES: 67,489.936
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.28% 10 Year Value: $2,428.51
5 Year Return: 6.90% 5 Year Value: $1,395.85
3 Year Return: 3.92% 3 Year Value: $1,122.35
1 Year Return: -7.12% 1 Year Value: $928.83
YTD Return: -7.12% YTD Value: $928.83
- -------------------------------------------------------------------------------
Constant Sales Charge: 4.50% Accrued dividend: $0.00300
</TABLE>
<TABLE>
<CAPTION>
10-Year
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 / 88 $14.86 $15.56 4.50% 10/03/88 $0.11750 $14.72 $11.6092 0.789 99.591
11 / 88 $14.67 $15.36 4.50% 11/04/88 $0.11750 $14.68 $11.7019 0.797 100.388
12 / 88 $14.51 $15.19 4.50% 12/02/88 $0.11750 $14.59 $11.7956 0.808 101.196
12/29/88 $0.11750 $14.50 $11.8905 0.820 102.016
1 / 89 $14.68 $15.37 4.50% $0.0000 0.000 102.016
2 / 89 $14.50 $15.18 4.50% 02/03/89 $0.11750 $14.48 $11.9869 0.828 102.844
3 / 89 $14.45 $15.13 4.50% 03/03/89 $0.11750 $14.43 $12.0842 0.837 103.681
4 / 89 $14.56 $15.25 4.50% 04/03/89 $0.11750 $14.38 $12.1825 0.847 104.528
5 / 89 $14.77 $15.47 4.50% 05/05/89 $0.11750 $14.40 $12.2820 0.853 105.381
6 / 89 $15.02 $15.73 4.50% 06/02/89 $0.11750 $14.91 $12.3823 0.830 106.211
7 / 89 $15.15 $15.86 4.50% 07/05/89 $0.11750 $14.99 $12.4798 0.833 107.044
8 / 89 $14.93 $15.63 4.50% 08/04/89 $0.11750 $14.96 $12.5777 0.841 107.885
9 / 89 $14.87 $15.57 4.50% 09/01/89 $0.11750 $14.88 $12.6765 0.852 108.737
10 / 89 $15.01 $15.72 4.50% 10/05/89 $0.11750 $14.93 $12.7766 0.856 109.593
11 / 89 $14.99 $15.70 4.50% 11/06/89 $0.11750 $14.92 $12.8772 0.863 110.456
12 / 89 $14.76 $15.46 4.50% 12/06/89 $0.11750 $14.91 $12.9786 0.870 111.326
12/29/89 $0.14900 $14.77 $16.5876 1.123 112.449
1 / 90 $14.59 $15.28 4.50% $0.0000 0.000 112.449
2 / 90 $14.52 $15.20 4.50% 02/02/90 $0.11750 $14.51 $13.2128 0.911 113.360
3 / 90 $14.42 $15.10 4.50% 03/02/90 $0.11750 $14.34 $13.3198 0.929 114.289
4 / 90 $14.16 $14.83 4.50% 04/02/90 $0.11750 $14.35 $13.4290 0.936 115.225
5 / 90 $14.43 $15.11 4.50% 05/04/90 $0.11750 $14.20 $13.5389 0.953 116.178
6 / 90 $14.53 $15.21 4.50% 06/01/90 $0.11750 $14.43 $13.6509 0.946 117.124
7 / 90 $14.60 $15.29 4.50% 07/06/90 $0.11750 $14.37 $13.7621 0.958 118.082
8 / 90 $14.27 $14.94 4.50% 08/03/90 $0.10875 $14.33 $12.8414 0.896 118.978
9 / 90 $14.21 $14.88 4.50% 09/04/90 $0.10875 $14.23 $12.9389 0.909 119.887
10 / 90 $14.19 $14.86 4.50% 10/05/90 $0.10875 $14.12 $13.0377 0.923 120.810
11 / 90 $14.32 $14.99 4.50% 11/02/90 $0.10875 $14.14 $13.1381 0.929 121.739
12 / 90 $14.33 $15.01 4.50% 12/03/90 $0.10875 $14.42 $13.2391 0.918 122.657
12/31/90 $0.10875 $14.30 $0.00875 Return of $13.3389 0.933 123.590
1 / 91 $14.49 $15.17 4.50% Capital $0.0000 0.000 123.590
2 / 91 $14.54 $15.23 4.50% 02/01/91 $0.10875 $14.57 $13.4404 0.922 124.512
3 / 91 $14.58 $15.27 4.50% 03/08/91 $0.10875 $14.42 $13.5407 0.939 125.451
4 / 91 $14.65 $15.34 4.50% 04/03/91 $0.10875 $14.50 $13.6428 0.941 126.392
5 / 91 $14.66 $15.35 4.50% 05/03/91 $0.10875 $14.53 $13.7451 0.946 127.338
6 / 91 $14.58 $15.27 4.50% 06/03/91 $0.10820 $14.45 $13.7780 0.953 128.291
7 / 91 $14.66 $15.35 4.50% 07/03/91 $0.10775 $14.47 $13.8234 0.955 129.246
8 / 91 $14.83 $15.53 4.50% 08/02/91 $0.10770 $14.69 $13.9198 0.948 130.194
9 / 91 $14.99 $15.70 4.50% 09/03/91 $0.10750 $14.81 $13.9959 0.945 131.139
10 / 91 $15.03 $15.74 4.50% 10/03/91 $0.10700 $14.85 $14.0319 0.945 132.084
11 / 91 $15.05 $15.76 4.50% 11/01/91 $0.10650 $14.98 $14.0669 0.939 133.023
12 / 91 $15.31 $16.03 4.50% 12/03/91 $0.10525 $15.10 $14.0007 0.927 133.950
12/31/91 $0.10525 $15.29 $14.0982 0.922 134.872
1 / 92 $15.16 $15.87 4.50% $0.0000 0.000 134.872
2 / 92 $15.18 $15.90 4.50% 02/03/92 $0.10250 $15.12 $13.8244 0.914 135.786
3 / 92 $15.04 $15.75 4.50% 03/03/92 $0.10250 $15.06 $13.9181 0.924 136.710
4 / 92 $15.01 $15.72 4.50% 04/03/92 $0.10225 $15.03 $13.9786 0.930 137.640
5 / 92 $15.17 $15.88 4.50% 05/01/92 $0.10225 $14.94 $14.0737 0.942 138.582
6 / 92 $15.27 $15.99 4.50% 06/03/92 $0.10200 $15.06 $14.1354 0.939 139.521
7 / 92 $15.55 $16.28 4.50% 07/02/92 $0.10100 $15.30 $14.0916 0.921 140.442
8 / 92 $15.58 $16.31 4.50% 08/03/92 $0.10100 $15.45 $14.1846 0.918 141.360
9 / 92 $15.64 $16.38 4.50% 09/03/92 $0.10000 $15.53 $14.1360 0.910 142.270
10 / 92 $15.30 $16.02 4.50% 10/02/92 $0.10000 $15.60 $14.2270 0.912 143.182
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89
1 / 90
2 / 90 65.789
3 / 90 $7.7302 0.539 66.328
4 / 90 $7.7935 0.543 66.871
5 / 90 $7.8573 0.553 67.424
6 / 90 $7.9223 0.549 67.973
7 / 90 $7.9868 0.556 68.529
8 / 90 $7.4525 0.520 69.049
9 / 90 $7.5091 0.528 69.577
10 / 90 $7.5665 0.536 70.113
11 / 90 $7.6248 0.539 70.652
12 / 90 $7.6834 0.533 71.185
$7.7414 0.541 71.726
1 / 91 $0.0000 0.000 71.726
2 / 91 $7.8002 0.535 72.261
3 / 91 $7.8584 0.545 72.806
4 / 91 $7.9177 0.546 73.352
5 / 91 $7.9770 0.549 73.901
6 / 91 $7.9961 0.553 74.454
7 / 91 $8.0224 0.554 75.008
8 / 91 $8.0784 0.550 75.558
9 / 91 $8.1225 0.548 76.106
10 / 91 $8.1433 0.548 76.654
11 / 91 $8.1637 0.545 77.199
12 / 91 $8.1252 0.538 77.737
$8.1818 0.535 78.272
1 / 92 $0.0000 0.000 78.272
2 / 92 $8.0229 0.531 78.803 62.893
3 / 92 $8.0773 0.536 79.339 $6.4465 0.428 63.321
4 / 92 $8.1124 0.540 79.879 $6.4746 0.431 63.752
5 / 92 $8.1676 0.547 80.426 $6.5186 0.436 64.188
6 / 92 $8.2035 0.545 80.971 $6.5472 0.435 64.623
7 / 92 $8.1781 0.535 81.506 $6.5269 0.427 65.050
8 / 92 $8.2321 0.533 82.039 $6.5701 0.425 65.475
9 / 92 $8.2039 0.528 82.567 $6.5475 0.422 65.897
10 / 92 $8.2567 0.529 83.096 $6.5897 0.422 66.319
</TABLE>
<TABLE>
<CAPTION>
YTD
Month Dividend # of Shares Shares Dividend
Ended Received Reinv. Outstanding Received
- -------------------------------------------------------------
<S> <C>
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89
1 / 90
2 / 90
3 / 90
4 / 90
5 / 90
6 / 90
7 / 90
8 / 90
9 / 90
10 / 90
11 / 90
12 / 90
1 / 91
2 / 91
3 / 91
4 / 91
5 / 91
6 / 91
7 / 91
8 / 91
9 / 91
10 / 91
11 / 91
12 / 91
1 / 92
2 / 92
3 / 92
4 / 92
5 / 92
6 / 92
7 / 92
8 / 92
9 / 92
10 / 92
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.28% 10 Year Value: $2,428.51
5 Year Return: 6.90% 5 Year Value: $1,395.85
3 Year Return: 3.92% 3 Year Value: $1,122.35
1 Year Return: -7.12% 1 Year Value: $928.83
YTD Return: -7.12% YTD Value: $928.83
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: 4.50% Accrued dividend: $0.00300
<TABLE>
<CAPTION>
10-Year
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $15.26 $15.98 4.50% 11/03/92 $0.09900 $15.18 $14.1750 0.934 144.116
12 / 92 $15.29 $16.01 4.50% 12/03/92 $0.09800 $15.19 $14.1234 0.930 145.046
12/23/92 $0.09650 $15.29 $13.9969 0.915 145.961
1 / 93 $15.60 $16.34 4.50% $0.0000 0.000 145.961
2 / 93 $15.82 $16.57 4.50% 02/03/93 $0.09650 $15.49 $14.0852 0.909 146.870
3 / 93 $15.83 $16.58 4.50% 03/03/93 $0.09650 $15.86 $14.1730 0.894 147.764
4 / 93 $15.84 $16.59 4.50% 04/01/93 $0.09700 $15.71 $14.3331 0.912 148.676
5 / 93 $15.80 $16.54 4.50% 05/03/93 $0.09680 $15.81 $14.3918 0.910 149.586
6 / 93 $16.04 $16.80 4.50% 06/03/93 $0.09700 $15.81 $14.5098 0.918 150.504
7 / 93 $16.08 $16.84 4.50% 07/02/93 $0.09650 $15.97 $14.5236 0.909 151.413
8 / 93 $16.34 $17.11 4.50% 08/03/93 $0.09600 $16.00 $14.5356 0.908 152.321
9 / 93 $16.26 $17.03 4.50% 09/03/93 $0.09500 $16.34 $14.4705 0.886 153.207
10 / 93 $16.27 $17.04 4.50% 10/01/93 $0.09450 $16.20 $14.4781 0.894 154.101
11 / 93 $15.90 $16.65 4.50% 11/03/93 $0.10036 $16.03 $15.4656 0.965 155.066
12 / 93 $15.53 $16.26 4.50% 12/10/93 $0.11791 $15.98 $18.2838 1.144 156.210
12/23/93 $0.38290 $15.60 $59.8128 3.834 160.044
12/30/93 $0.06053 $15.53 $9.6875 0.624 160.668
1 / 94 $15.68 $16.42 4.50% $0.0000 0.000 160.668
2 / 94 $15.32 $16.04 4.50% 02/10/94 $0.12343 $15.52 $19.8317 1.278 161.946
3 / 94 $14.84 $15.54 4.50% 03/10/94 $0.09070 $15.10 $14.6885 0.973 162.919
4 / 94 $14.51 $15.19 4.50% 04/04/94 $0.08005 $14.63 $13.0417 0.891 163.810
04/08/94 $0.08820 $14.63 $14.4480 0.988 164.798
5 / 94 $14.40 $15.08 4.50% 05/10/94 $0.10003 $14.35 $16.4847 1.149 165.947
6 / 94 $14.28 $14.95 4.50% 06/10/94 $0.09579 $14.50 $15.8961 1.096 167.043
7 / 94 $14.41 $15.09 4.50% 07/08/94 $0.08723 $14.21 $14.5712 1.025 168.068
8 / 94 $14.34 $15.02 4.50% 08/10/94 $0.10058 $14.27 $16.9043 1.185 169.253
9 / 94 $14.09 $14.75 4.50% 09/9/94 $0.09237 $14.20 $15.6339 1.101 170.354
10 / 94 $13.97 $14.63 4.50% 10/10/94 $0.09507 $14.01 $16.1956 1.156 171.510
11 / 94 $13.86 $14.51 4.50% 11/10/94 $0.09459 $13.86 $16.2231 1.170 172.680
12 94 $13.90 $14.55 4.50% 12/09/94 $0.08918 $13.92 $15.3996 1.106 173.786
12/29/94 $0.05999 $13.92 $10.4254 0.749 174.535
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $8.2265 0.542 83.638 $6.5656 0.433 66.752
12 / 92 $8.1965 0.540 84.178 $6.5417 0.431 67.183
$8.1232 0.531 84.709 $6.4832 0.424 67.607
1 / 93 $0.0000 0.000 84.709 $0.0000 0.000 67.607
2 / 93 $8.1744 0.528 85.237 $6.5241 0.421 68.028
3 / 93 $8.2254 0.519 85.756 $6.5647 0.414 68.442
4 / 93 $8.3183 0.529 86.285 $6.6389 0.423 68.865
5 / 93 $8.3524 0.528 86.813 $6.6661 0.422 69.287
6 / 93 $8.4209 0.533 87.346 $6.7208 0.425 69.712
7 / 93 $8.4289 0.528 87.874 $6.7272 0.421 70.133
8 / 93 $8.4359 0.527 88.401 $6.7328 0.421 70.554
9 / 93 $8.3981 0.514 88.915 $6.7026 0.410 70.964
10 / 93 $8.4025 0.519 89.434 $6.7061 0.414 71.378
11 / 93 $8.9756 0.560 89.994 $7.1635 0.447 71.825
12 / 93 $10.6112 0.664 90.658 $8.4689 0.530 72.355
$34.7129 2.225 92.883 $27.7047 1.776 74.131
$5.6222 0.362 93.245 $4.4871 0.289 74.420
1 / 94 $0.0000 0.000 93.245 $0.0000 0.000 74.420
2 / 94 $11.5095 0.742 93.987 $9.1859 0.592 75.012 62.344
3 / 94 $8.5246 0.565 94.552 $6.8036 0.451 75.463 $5.6546 0.374 62.718
4 / 94 $7.5689 0.517 95.069 $6.0408 0.413 75.876 $5.0206 0.343 63.061
$8.3851 0.573 95.642 $6.6923 0.457 76.333 $5.5620 0.380 63.441
5 / 94 $9.5671 0.667 96.309 $7.6356 0.532 76.865 $6.3460 0.442 63.883
6 / 94 $9.2254 0.636 96.945 $7.3629 0.508 77.373 $6.1194 0.422 64.305
7 / 94 $8.4565 0.595 97.540 $6.7492 0.475 77.848 $5.6093 0.395 64.700
8 / 94 $9.8106 0.687 98.227 $7.8300 0.549 78.397 $6.5075 0.456 65.156
9 / 94 $9.0732 0.639 98.866 $7.2415 0.510 78.907 $6.0185 0.424 65.580
10 / 94 $9.3992 0.671 99.537 $7.5017 0.535 79.442 $6.2347 0.445 66.025
11 / 94 $9.4152 0.679 100.216 $7.5144 0.542 79.984 $6.2453 0.451 66.476
12 94 $8.9373 0.642 100.858 $7.1330 0.512 80.496 $5.9283 0.426 66.902
$6.0505 0.435 101.293 $4.8290 0.347 80.843 $4.0135 0.288 67.190
</TABLE>
<TABLE>
<CAPTION>
YTD
Month Dividend # of Shares Shares Dividend
Ended Received Reinv. Outstanding Received
- ----------------------------------------------------------------
<S> <C>
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
9 / 94
10 / 94
11 / 94
12 94
68.729
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.28% 10 Year Value: $2,428.51
5 Year Return: 6.90% 5 Year Value: $1,395.85
3 Year Return: 3.92% 3 Year Value: $1,122.35
1 Year Return: -7.12% 1 Year Value: $928.83
YTD Return: -7.12% YTD Value: $928.83
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: 4.50% Accrued dividend: $0.00300
<TABLE>
<CAPTION>
Monthly
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 88 $14.86 $15.56 4.50% 10/03/88 $0.11750 $14.72
11 / 88 $14.67 $15.36 4.50% 11/04/88 $0.11750 $14.68
12 / 88 $14.51 $15.19 4.50% 12/02/88 $0.11750 $14.59
12/29/88 $0.11750 $14.50
1 / 89 $14.68 $15.37 4.50%
2 / 89 $14.50 $15.18 4.50% 02/03/89 $0.11750 $14.48
3 / 89 $14.45 $15.13 4.50% 03/03/89 $0.11750 $14.43
4 / 89 $14.56 $15.25 4.50% 04/03/89 $0.11750 $14.38
5 / 89 $14.77 $15.47 4.50% 05/05/89 $0.11750 $14.40
6 / 89 $15.02 $15.73 4.50% 06/02/89 $0.11750 $14.91
7 / 89 $15.15 $15.86 4.50% 07/05/89 $0.11750 $14.99
8 / 89 $14.93 $15.63 4.50% 08/04/89 $0.11750 $14.96
9 / 89 $14.87 $15.57 4.50% 09/01/89 $0.11750 $14.88
10 / 89 $15.01 $15.72 4.50% 10/05/89 $0.11750 $14.93
11 / 89 $14.99 $15.70 4.50% 11/06/89 $0.11750 $14.92
12 / 89 $14.76 $15.46 4.50% 12/06/89 $0.11750 $14.91
12/29/89 $0.14900 $14.77
1 / 90 $14.59 $15.28 4.50%
2 / 90 $14.52 $15.20 4.50% 02/02/90 $0.11750 $14.51
3 / 90 $14.42 $15.10 4.50% 03/02/90 $0.11750 $14.34
4 / 90 $14.16 $14.83 4.50% 04/02/90 $0.11750 $14.35
5 / 90 $14.43 $15.11 4.50% 05/04/90 $0.11750 $14.20
6 / 90 $14.53 $15.21 4.50% 06/01/90 $0.11750 $14.43
7 / 90 $14.60 $15.29 4.50% 07/06/90 $0.11750 $14.37
8 / 90 $14.27 $14.94 4.50% 08/03/90 $0.10875 $14.33
9 / 90 $14.21 $14.88 4.50% 09/04/90 $0.10875 $14.23
10 / 90 $14.19 $14.86 4.50% 10/05/90 $0.10875 $14.12
11 / 90 $14.32 $14.99 4.50% 11/02/90 $0.10875 $14.14
12 / 90 $14.33 $15.01 4.50% 12/03/90 $0.10875 $14.42
12/31/90 $0.10875 $14.30 $0.00875 Return of
1 / 91 $14.49 $15.17 4.50% Capital
2 / 91 $14.54 $15.23 4.50% 02/01/91 $0.10875 $14.57
3 / 91 $14.58 $15.27 4.50% 03/08/91 $0.10875 $14.42
4 / 91 $14.65 $15.34 4.50% 04/03/91 $0.10875 $14.50
5 / 91 $14.66 $15.35 4.50% 05/03/91 $0.10875 $14.53
6 / 91 $14.58 $15.27 4.50% 06/03/91 $0.10820 $14.45
7 / 91 $14.66 $15.35 4.50% 07/03/91 $0.10775 $14.47
8 / 91 $14.83 $15.53 4.50% 08/02/91 $0.10770 $14.69
9 / 91 $14.99 $15.70 4.50% 09/03/91 $0.10750 $14.81
10 / 91 $15.03 $15.74 4.50% 10/03/91 $0.10700 $14.85
11 / 91 $15.05 $15.76 4.50% 11/01/91 $0.10650 $14.98
12 / 91 $15.31 $16.03 4.50% 12/03/91 $0.10525 $15.10
12/31/91 $0.10525 $15.29
1 / 92 $15.16 $15.87 4.50%
2 / 92 $15.18 $15.90 4.50% 02/03/92 $0.10250 $15.12
3 / 92 $15.04 $15.75 4.50% 03/03/92 $0.10250 $15.06
4 / 92 $15.01 $15.72 4.50% 04/03/92 $0.10225 $15.03
5 / 92 $15.17 $15.88 4.50% 05/01/92 $0.10225 $14.94
6 / 92 $15.27 $15.99 4.50% 06/03/92 $0.10200 $15.06
7 / 92 $15.55 $16.28 4.50% 07/02/92 $0.10100 $15.30
8 / 92 $15.58 $16.31 4.50% 08/03/92 $0.10100 $15.45
9 / 92 $15.64 $16.38 4.50% 09/03/92 $0.10000 $15.53
10 / 92 $15.30 $16.02 4.50% 10/02/92 $0.10000 $15.60
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.28% 10 Year Value: $2,428.51
5 Year Return: 6.90% 5 Year Value: $1,395.85
3 Year Return: 3.92% 3 Year Value: $1,122.35
1 Year Return: -7.12% 1 Year Value: $928.83
YTD Return: -7.12% YTD Value: $928.83
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: 4.50% Accrued dividend: $0.00300
<TABLE>
<CAPTION>
Monthly
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $15.26 $15.98 4.50% 11/03/92 $0.09900 $15.18
12 / 92 $15.29 $16.01 4.50% 12/03/92 $0.09800 $15.19
12/23/92 $0.09650 $15.29
1 / 93 $15.60 $16.34 4.50%
2 / 93 $15.82 $16.57 4.50% 02/03/93 $0.09650 $15.49
3 / 93 $15.83 $16.58 4.50% 03/03/93 $0.09650 $15.86
4 / 93 $15.84 $16.59 4.50% 04/01/93 $0.09700 $15.71
5 / 93 $15.80 $16.54 4.50% 05/03/93 $0.09680 $15.81
6 / 93 $16.04 $16.80 4.50% 06/03/93 $0.09700 $15.81
7 / 93 $16.08 $16.84 4.50% 07/02/93 $0.09650 $15.97
8 / 93 $16.34 $17.11 4.50% 08/03/93 $0.09600 $16.00
9 / 93 $16.26 $17.03 4.50% 09/03/93 $0.09500 $16.34
10 / 93 $16.27 $17.04 4.50% 10/01/93 $0.09450 $16.20
11 / 93 $15.90 $16.65 4.50% 11/03/93 $0.10036 $16.03
12 / 93 $15.53 $16.26 4.50% 12/10/93 $0.11791 $15.98
12/23/93 $0.38290 $15.60
12/30/93 $0.06053 $15.53
1 / 94 $15.68 $16.42 4.50%
2 / 94 $15.32 $16.04 4.50% 02/10/94 $0.12343 $15.52
3 / 94 $14.84 $15.54 4.50% 03/10/94 $0.09070 $15.10
4 / 94 $14.51 $15.19 4.50% 04/04/94 $0.08005 $14.63
04/08/94 $0.08820 $14.63
5 / 94 $14.40 $15.08 4.50% 05/10/94 $0.10003 $14.35
6 / 94 $14.28 $14.95 4.50% 06/10/94 $0.09579 $14.50
7 / 94 $14.41 $15.09 4.50% 07/08/94 $0.08723 $14.21
8 / 94 $14.34 $15.02 4.50% 08/10/94 $0.10058 $14.27
9 / 94 $14.09 $14.75 4.50% 09/9/94 $0.09237 $14.20
10 / 94 $13.97 $14.63 4.50% 10/10/94 $0.09507 $14.01
11 / 94 $13.86 $14.51 4.50% 11/10/94 $0.09459 $13.86
12 94 $13.90 $14.55 4.50% 12/09/94 $0.08918 $13.92
12/29/94 $0.05999 $13.92
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.79% 10 Year Value: $2,543.46
5 Year Return: 7.89% 5 Year Value: $1,462.05
3 Year Return: 5.53% 3 Year Value: $1,175.18
1 Year Return: -2.75% 1 Year Value: $972.49
YTD Return: -2.75% YTD Value: $972.49
- -------------------------------------------------------------------------------
Constant Sales Charge: 0.00% Accrued dividend: $0.00300
</TABLE>
<TABLE>
<CAPTION>
-------------------------
10-Year
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 / 88 $14.86 $14.86 0.00% 10/03/88 $0.11750 $14.72 $12.1602 0.826 104.317
11 / 88 $14.67 $14.67 0.00% 11/04/88 $0.11750 $14.68 $12.2572 0.835 105.152
12 / 88 $14.51 $14.51 0.00% 12/02/88 $0.11750 $14.59 $12.3554 0.847 105.999
12/29/88 $0.11750 $14.50 $12.4549 0.859 106.858
1 / 89 $14.68 $14.68 0.00% $0.0000 0.000 106.858
2 / 89 $14.50 $14.50 0.00% 02/03/89 $0.11750 $14.48 $12.5558 0.867 107.725
3 / 89 $14.45 $14.45 0.00% 03/03/89 $0.11750 $14.43 $12.6577 0.877 108.602
4 / 89 $14.56 $14.56 0.00% 04/03/89 $0.11750 $14.38 $12.7607 0.887 109.489
5 / 89 $14.77 $14.77 0.00% 05/05/89 $0.11750 $14.40 $12.8650 0.893 110.382
6 / 89 $15.02 $15.02 0.00% 06/02/89 $0.11750 $14.91 $12.9699 0.870 111.252
7 / 89 $15.15 $15.15 0.00% 07/05/89 $0.11750 $14.99 $13.0721 0.872 112.124
8 / 89 $14.93 $14.93 0.00% 08/04/89 $0.11750 $14.96 $13.1746 0.881 113.005
9 / 89 $14.87 $14.87 0.00% 09/01/89 $0.11750 $14.88 $13.2781 0.892 113.897
10 / 89 $15.01 $15.01 0.00% 10/05/89 $0.11750 $14.93 $13.3829 0.896 114.793
11 / 89 $14.99 $14.99 0.00% 11/06/89 $0.11750 $14.92 $13.4882 0.904 115.697
12 / 89 $14.76 $14.76 0.00% 12/06/89 $0.11750 $14.91 $13.5944 0.912 116.609
12/29/89 $0.14900 $14.77 $17.3747 1.176 117.785
1 / 90 $14.59 $14.59 0.00% $0.0000 0.000 117.785
2 / 90 $14.52 $14.52 0.00% 02/02/90 $0.11750 $14.51 $13.8397 0.954 118.739
3 / 90 $14.42 $14.42 0.00% 03/02/90 $0.11750 $14.34 $13.9518 0.973 119.712
4 / 90 $14.16 $14.16 0.00% 04/02/90 $0.11750 $14.35 $14.0662 0.980 120.692
5 / 90 $14.43 $14.43 0.00% 05/04/90 $0.11750 $14.20 $14.1813 0.999 121.691
6 / 90 $14.53 $14.53 0.00% 06/01/90 $0.11750 $14.43 $14.2987 0.991 122.682
7 / 90 $14.60 $14.60 0.00% 07/06/90 $0.11750 $14.37 $14.4151 1.003 123.685
8 / 90 $14.27 $14.27 0.00% 08/03/90 $0.10875 $14.33 $13.4507 0.939 124.624
9 / 90 $14.21 $14.21 0.00% 09/04/90 $0.10875 $14.23 $13.5529 0.952 125.576
10 / 90 $14.19 $14.19 0.00% 10/05/90 $0.10875 $14.12 $13.6564 0.967 126.543
11 / 90 $14.32 $14.32 0.00% 11/02/90 $0.10875 $14.14 $13.7616 0.973 127.516
12 / 90 $14.33 $14.33 0.00% 12/03/90 $0.10875 $14.42 $13.8674 0.962 128.478
12/31/90 $0.10875 $14.30 $0.00875 Return of $13.9720 0.977 129.455
1 / 91 $14.49 $14.49 0.00% Capital $0.0000 0.000 129.455
2 / 91 $14.54 $14.54 0.00% 02/01/91 $0.10875 $14.57 $14.0782 0.966 130.421
3 / 91 $14.58 $14.58 0.00% 03/08/91 $0.10875 $14.42 $14.1833 0.984 131.405
4 / 91 $14.65 $14.65 0.00% 04/03/91 $0.10875 $14.50 $14.2903 0.986 132.391
5 / 91 $14.66 $14.66 0.00% 05/03/91 $0.10875 $14.53 $14.3975 0.991 133.382
6 / 91 $14.58 $14.58 0.00% 06/03/91 $0.10820 $14.45 $14.4319 0.999 134.381
7 / 91 $14.66 $14.66 0.00% 07/03/91 $0.10775 $14.47 $14.4796 1.001 135.382
8 / 91 $14.83 $14.83 0.00% 08/02/91 $0.10770 $14.69 $14.5806 0.993 136.375
9 / 91 $14.99 $14.99 0.00% 09/03/91 $0.10750 $14.81 $14.6603 0.990 137.365
10 / 91 $15.03 $15.03 0.00% 10/03/91 $0.10700 $14.85 $14.6981 0.990 138.355
11 / 91 $15.05 $15.05 0.00% 11/01/91 $0.10650 $14.98 $14.7348 0.984 139.339
12 / 91 $15.31 $15.31 0.00% 12/03/91 $0.10525 $15.10 $14.6654 0.971 140.310
12/31/91 $0.10525 $15.29 $14.7676 0.966 141.276
1 / 92 $15.16 $15.16 0.00% $0.0000 0.000 141.276
2 / 92 $15.18 $15.18 0.00% 02/03/92 $0.10250 $15.12 $14.4808 0.958 142.234
3 / 92 $15.04 $15.04 0.00% 03/03/92 $0.10250 $15.06 $14.5790 0.968 143.202
4 / 92 $15.01 $15.01 0.00% 04/03/92 $0.10225 $15.03 $14.6424 0.974 144.176
5 / 92 $15.17 $15.17 0.00% 05/01/92 $0.10225 $14.94 $14.7420 0.987 145.163
6 / 92 $15.27 $15.27 0.00% 06/03/92 $0.10200 $15.06 $14.8066 0.983 146.146
7 / 92 $15.55 $15.55 0.00% 07/02/92 $0.10100 $15.30 $14.7607 0.965 147.111
8 / 92 $15.58 $15.58 0.00% 08/03/92 $0.10100 $15.45 $14.8582 0.962 148.073
9 / 92 $15.64 $15.64 0.00% 09/03/92 $0.10000 $15.53 $14.8073 0.953 149.026
10 / 92 $15.30 $15.30 0.00% 10/02/92 $0.10000 $15.60 $14.9026 0.955 149.981
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
5-Year 3-Year 1-Year
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89
1 / 90
2 / 90 68.871
3 / 90 $8.0923 0.564 69.435
4 / 90 $8.1586 0.569 70.004
5 / 90 $8.2255 0.579 70.583
6 / 90 $8.2935 0.575 71.158
7 / 90 $8.3611 0.582 71.740
8 / 90 $7.8017 0.544 72.284
9 / 90 $7.8609 0.552 72.836
10 / 90 $7.9209 0.561 73.397
11 / 90 $7.9819 0.564 73.961
12 / 90 $8.0433 0.558 74.519
$8.1039 0.567 75.086
1 / 91 $0.0000 0.000 75.086
2 / 91 $8.1656 0.560 75.646
3 / 91 $8.2265 0.570 76.216
4 / 91 $8.2885 0.572 76.788
5 / 91 $8.3507 0.575 77.363
6 / 91 $8.3707 0.579 77.942
7 / 91 $8.3983 0.580 78.522
8 / 91 $8.4568 0.576 79.098
9 / 91 $8.5030 0.574 79.672
10 / 91 $8.5249 0.574 80.246
11 / 91 $8.5462 0.571 80.817
12 / 91 $8.5060 0.563 81.380
$8.5652 0.560 81.940
1 / 92 $0.0000 0.000 81.940
2 / 92 $8.3989 0.555 82.495 65.876
3 / 92 $8.4557 0.561 83.056 $6.7523 0.448 66.324
4 / 92 $8.4925 0.565 83.621 $6.7816 0.451 66.775
5 / 92 $8.5502 0.572 84.193 $6.8277 0.457 67.232
6 / 92 $8.5877 0.570 84.763 $6.8577 0.455 67.687
7 / 92 $8.5611 0.560 85.323 $6.8364 0.447 68.134
8 / 92 $8.6176 0.558 85.881 $6.8815 0.445 68.579
9 / 92 $8.5881 0.553 86.434 $6.8579 0.442 69.021
10 / 92 $8.6434 0.554 86.988 $6.9021 0.442 69.463
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
YTD
Month Dividend # of Shares Shares Dividend
Ended Received Reinv. Outstanding Received
- -------------------------------------------------------------
<S> <C>
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89
1 / 90
2 / 90
3 / 90
4 / 90
5 / 90
6 / 90
7 / 90
8 / 90
9 / 90
10 / 90
11 / 90
12 / 90
1 / 91
2 / 91
3 / 91
4 / 91
5 / 91
6 / 91
7 / 91
8 / 91
9 / 91
10 / 91
11 / 91
12 / 91
1 / 92
2 / 92
3 / 92
4 / 92
5 / 92
6 / 92
7 / 92
8 / 92
9 / 92
10 / 92
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.79% 10 Year Value: $2,543.46
5 Year Return: 7.89% 5 Year Value: $1,462.05
3 Year Return: 5.53% 3 Year Value: $1,175.18
1 Year Return: -2.75% 1 Year Value: $972.49
YTD Return: -2.75% YTD Value: $972.49
- -------------------------------------------------------------------------------
Constant Sales Charge: 0.00% Accrued dividend: $0.00300
</TABLE>
<TABLE>
<CAPTION>
------------------------------------
10-Year
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $15.26 $15.26 0.00% 11/03/92 $0.09900 $15.18 $14.8481 0.978 150.959
12 / 92 $15.29 $15.29 0.00% 12/03/92 $0.09800 $15.19 $14.7940 0.974 151.933
12/23/92 $0.09650 $15.29 $14.6615 0.959 152.892
1 / 93 $15.60 $15.60 0.00% $0.0000 0.000 152.892
2 / 93 $15.82 $15.82 0.00% 02/03/93 $0.09650 $15.49 $14.7541 0.952 153.844
3 / 93 $15.83 $15.83 0.00% 03/03/93 $0.09650 $15.86 $14.8459 0.936 154.780
4 / 93 $15.84 $15.84 0.00% 04/01/93 $0.09700 $15.71 $15.0137 0.956 155.736
5 / 93 $15.80 $15.80 0.00% 05/03/93 $0.09680 $15.81 $15.0752 0.954 156.690
6 / 93 $16.04 $16.04 0.00% 06/03/93 $0.09700 $15.81 $15.1989 0.961 157.651
7 / 93 $16.08 $16.08 0.00% 07/02/93 $0.09650 $15.97 $15.2133 0.953 158.604
8 / 93 $16.34 $16.34 0.00% 08/03/93 $0.09600 $16.00 $15.2260 0.952 159.556
9 / 93 $16.26 $16.26 0.00% 09/03/93 $0.09500 $16.34 $15.1578 0.928 160.484
10 / 93 $16.27 $16.27 0.00% 10/01/93 $0.09450 $16.20 $15.1657 0.936 161.420
11 / 93 $15.90 $15.90 0.00% 11/03/93 $0.10036 $16.03 $16.2001 1.011 162.431
12 / 93 $15.53 $15.53 0.00% 12/10/93 $0.11791 $15.98 $19.1522 1.199 163.630
12/23/93 $0.38290 $15.60 $62.6539 4.016 167.646
12/30/93 $0.06053 $15.53 $10.1476 0.653 168.299
1 / 94 $15.68 $15.68 0.00% $0.0000 0.000 168.299
2 / 94 $15.32 $15.32 0.00% 02/10/94 $0.12343 $15.52 $20.7737 1.338 169.637
3 / 94 $14.84 $14.84 0.00% 03/10/94 $0.09070 $15.10 $15.3861 1.019 170.656
4 / 94 $14.51 $14.51 0.00% 04/04/94 $0.08005 $14.63 $13.6610 0.934 171.590
04/08/94 $0.08820 $14.63 $15.1342 1.034 172.624
5 / 94 $14.40 $14.40 0.00% 05/10/94 $0.10003 $14.35 $17.2676 1.203 173.827
6 / 94 $14.28 $14.28 0.00% 06/10/94 $0.09579 $14.50 $16.6509 1.148 174.975
7 / 94 $14.41 $14.41 0.00% 07/08/94 $0.08723 $14.21 $15.2631 1.074 176.049
8 / 94 $14.34 $14.34 0.00% 08/10/94 $0.10058 $14.27 $17.7070 1.241 177.290
9 / 94 $14.09 $14.09 0.00% 09/9/94 $0.09237 $14.20 $16.3763 1.153 178.443
10 / 94 $13.97 $13.97 0.00% 10/10/94 $0.09507 $14.01 $16.9646 1.211 179.654
11 / 94 $13.86 $13.86 0.00% 11/10/94 $0.09459 $13.86 $16.9935 1.226 180.880
12 94 $13.90 $13.90 0.00% 12/09/94 $0.08918 $13.92 $16.1309 1.159 182.039
12/29/94 $0.05999 $13.92 $10.9205 0.785 182.824
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
5-Year 3-Year 1-Year
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $8.6118 0.567 87.555 $6.8768 0.453 69.916
12 / 92 $8.5804 0.565 88.120 $6.8518 0.451 70.367
$8.5036 0.556 88.676 $6.7904 0.444 70.811
1 / 93 $0.0000 0.000 88.676 $0.0000 0.000 70.811
2 / 93 $8.5572 0.552 89.228 $6.8333 0.441 71.252
3 / 93 $8.6105 0.543 89.771 $6.8758 0.434 71.686
4 / 93 $8.7078 0.554 90.325 $6.9535 0.443 72.129
5 / 93 $8.7435 0.553 90.878 $6.9821 0.442 72.571
6 / 93 $8.8152 0.558 91.436 $7.0394 0.445 73.016
7 / 93 $8.8236 0.553 91.989 $7.0460 0.441 73.457
8 / 93 $8.8309 0.552 92.541 $7.0519 0.441 73.898
9 / 93 $8.7914 0.538 93.079 $7.0203 0.430 74.328
10 / 93 $8.7960 0.543 93.622 $7.0240 0.434 74.762
11 / 93 $9.3959 0.586 94.208 $7.5031 0.468 75.230
12 / 93 $11.1081 0.695 94.903 $8.8704 0.555 75.785
$36.3384 2.329 97.232 $29.0181 1.860 77.645
$5.8855 0.379 97.611 $4.6999 0.303 77.948
1 / 94 $0.0000 0.000 97.611 $0.0000 0.000 77.948
2 / 94 $12.0484 0.776 98.387 $9.6214 0.620 78.568 65.274
3 / 94 $8.9237 0.591 98.978 $7.1261 0.472 79.040 $5.9204 0.392 65.666
4 / 94 $7.9232 0.542 99.520 $6.3272 0.432 79.472 $5.2566 0.359 66.025
$8.7777 0.600 100.120 $7.0094 0.479 79.951 $5.8234 0.398 66.423
5 / 94 $10.0150 0.698 100.818 $7.9975 0.557 80.508 $6.6443 0.463 66.886
6 / 94 $9.6574 0.666 101.484 $7.7119 0.532 81.040 $6.4070 0.442 67.328
7 / 94 $8.8524 0.623 102.107 $7.0691 0.497 81.537 $5.8730 0.413 67.741
8 / 94 $10.2699 0.720 102.827 $8.2010 0.575 82.112 $6.8134 0.477 68.218
9 / 94 $9.4981 0.669 103.496 $7.5847 0.534 82.646 $6.3013 0.444 68.662
10 / 94 $9.8394 0.702 104.198 $7.8572 0.561 83.207 $6.5277 0.466 69.128
11 / 94 $9.8561 0.711 104.909 $7.8706 0.568 83.775 $6.5388 0.472 69.600
12 94 $9.3558 0.672 105.581 $7.4711 0.537 84.312 $6.2069 0.446 70.046
$6.3338 0.455 106.036 $5.0579 0.363 84.675 $4.2021 0.302 70.348
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
YTD
Month Dividend # of Shares Shares Dividend
Ended Received Reinv. Outstanding Received
- -------------------------------------------------------------
<S> <C>
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
9 / 94
10 / 94
11 / 94
12 94
71.942
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.79% 10 Year Value: $2,543.46
5 Year Return: 7.89% 5 Year Value: $1,462.05
3 Year Return: 5.53% 3 Year Value: $1,175.18
1 Year Return: -2.75% 1 Year Value: $972.49
YTD Return: -2.75% YTD Value: $972.49
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: 0.00% Accrued dividend: $0.00300
<TABLE>
<CAPTION>
--------------------------
Monthly
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Reinv. Outstanding
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 88 $14.86 $14.86 0.00% 10/03/88 $0.11750 $14.72
11 / 88 $14.67 $14.67 0.00% 11/04/88 $0.11750 $14.68
12 / 88 $14.51 $14.51 0.00% 12/02/88 $0.11750 $14.59
12/29/88 $0.11750 $14.50
1 / 89 $14.68 $14.68 0.00%
2 / 89 $14.50 $14.50 0.00% 02/03/89 $0.11750 $14.48
3 / 89 $14.45 $14.45 0.00% 03/03/89 $0.11750 $14.43
4 / 89 $14.56 $14.56 0.00% 04/03/89 $0.11750 $14.38
5 / 89 $14.77 $14.77 0.00% 05/05/89 $0.11750 $14.40
6 / 89 $15.02 $15.02 0.00% 06/02/89 $0.11750 $14.91
7 / 89 $15.15 $15.15 0.00% 07/05/89 $0.11750 $14.99
8 / 89 $14.93 $14.93 0.00% 08/04/89 $0.11750 $14.96
9 / 89 $14.87 $14.87 0.00% 09/01/89 $0.11750 $14.88
10 / 89 $15.01 $15.01 0.00% 10/05/89 $0.11750 $14.93
11 / 89 $14.99 $14.99 0.00% 11/06/89 $0.11750 $14.92
12 / 89 $14.76 $14.76 0.00% 12/06/89 $0.11750 $14.91
12/29/89 $0.14900 $14.77
1 / 90 $14.59 $14.59 0.00%
2 / 90 $14.52 $14.52 0.00% 02/02/90 $0.11750 $14.51
3 / 90 $14.42 $14.42 0.00% 03/02/90 $0.11750 $14.34
4 / 90 $14.16 $14.16 0.00% 04/02/90 $0.11750 $14.35
5 / 90 $14.43 $14.43 0.00% 05/04/90 $0.11750 $14.20
6 / 90 $14.53 $14.53 0.00% 06/01/90 $0.11750 $14.43
7 / 90 $14.60 $14.60 0.00% 07/06/90 $0.11750 $14.37
8 / 90 $14.27 $14.27 0.00% 08/03/90 $0.10875 $14.33
9 / 90 $14.21 $14.21 0.00% 09/04/90 $0.10875 $14.23
10 / 90 $14.19 $14.19 0.00% 10/05/90 $0.10875 $14.12
11 / 90 $14.32 $14.32 0.00% 11/02/90 $0.10875 $14.14
12 / 90 $14.33 $14.33 0.00% 12/03/90 $0.10875 $14.42
12/31/90 $0.10875 $14.30 $0.00875 Return of
1 / 91 $14.49 $14.49 0.00% Capital
2 / 91 $14.54 $14.54 0.00% 02/01/91 $0.10875 $14.57
3 / 91 $14.58 $14.58 0.00% 03/08/91 $0.10875 $14.42
4 / 91 $14.65 $14.65 0.00% 04/03/91 $0.10875 $14.50
5 / 91 $14.66 $14.66 0.00% 05/03/91 $0.10875 $14.53
6 / 91 $14.58 $14.58 0.00% 06/03/91 $0.10820 $14.45
7 / 91 $14.66 $14.66 0.00% 07/03/91 $0.10775 $14.47
8 / 91 $14.83 $14.83 0.00% 08/02/91 $0.10770 $14.69
9 / 91 $14.99 $14.99 0.00% 09/03/91 $0.10750 $14.81
10 / 91 $15.03 $15.03 0.00% 10/03/91 $0.10700 $14.85
11 / 91 $15.05 $15.05 0.00% 11/01/91 $0.10650 $14.98
12 / 91 $15.31 $15.31 0.00% 12/03/91 $0.10525 $15.10
12/31/91 $0.10525 $15.29
1 / 92 $15.16 $15.16 0.00%
2 / 92 $15.18 $15.18 0.00% 02/03/92 $0.10250 $15.12
3 / 92 $15.04 $15.04 0.00% 03/03/92 $0.10250 $15.06
4 / 92 $15.01 $15.01 0.00% 04/03/92 $0.10225 $15.03
5 / 92 $15.17 $15.17 0.00% 05/01/92 $0.10225 $14.94
6 / 92 $15.27 $15.27 0.00% 06/03/92 $0.10200 $15.06
7 / 92 $15.55 $15.55 0.00% 07/02/92 $0.10100 $15.30
8 / 92 $15.58 $15.58 0.00% 08/03/92 $0.10100 $15.45
9 / 92 $15.64 $15.64 0.00% 09/03/92 $0.10000 $15.53
10 / 92 $15.30 $15.30 0.00% 10/02/92 $0.10000 $15.60
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS A
Initial Investment: $1,000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.79% 10 Year Value: $2,543.46
5 Year Return: 7.89% 5 Year Value: $1,462.05
3 Year Return: 5.53% 3 Year Value: $1,175.18
1 Year Return: -2.75% 1 Year Value: $972.49
YTD Return: -2.75% YTD Value: $972.49
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: 0.00% Accrued dividend: $0.00300
<TABLE>
<CAPTION>
--------------------------
Monthly
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Reinv. Outstanding
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11 / 92 $15.26 $15.26 0.00% 11/03/92 $0.09900 $15.18
12 / 92 $15.29 $15.29 0.00% 12/03/92 $0.09800 $15.19
12/23/92 $0.09650 $15.29
1 / 93 $15.60 $15.60 0.00%
2 / 93 $15.82 $15.82 0.00% 02/03/93 $0.09650 $15.49
3 / 93 $15.83 $15.83 0.00% 03/03/93 $0.09650 $15.86
4 / 93 $15.84 $15.84 0.00% 04/01/93 $0.09700 $15.71
5 / 93 $15.80 $15.80 0.00% 05/03/93 $0.09680 $15.81
6 / 93 $16.04 $16.04 0.00% 06/03/93 $0.09700 $15.81
7 / 93 $16.08 $16.08 0.00% 07/02/93 $0.09650 $15.97
8 / 93 $16.34 $16.34 0.00% 08/03/93 $0.09600 $16.00
9 / 93 $16.26 $16.26 0.00% 09/03/93 $0.09500 $16.34
10 / 93 $16.27 $16.27 0.00% 10/01/93 $0.09450 $16.20
11 / 93 $15.90 $15.90 0.00% 11/03/93 $0.10036 $16.03
12 / 93 $15.53 $15.53 0.00% 12/10/93 $0.11791 $15.98
12/23/93 $0.38290 $15.60
12/30/93 $0.06053 $15.53
1 / 94 $15.68 $15.68 0.00%
2 / 94 $15.32 $15.32 0.00% 02/10/94 $0.12343 $15.52
3 / 94 $14.84 $14.84 0.00% 03/10/94 $0.09070 $15.10
4 / 94 $14.51 $14.51 0.00% 04/04/94 $0.08005 $14.63
04/08/94 $0.08820 $14.63
5 / 94 $14.40 $14.40 0.00% 05/10/94 $0.10003 $14.35
6 / 94 $14.28 $14.28 0.00% 06/10/94 $0.09579 $14.50
7 / 94 $14.41 $14.41 0.00% 07/08/94 $0.08723 $14.21
8 / 94 $14.34 $14.34 0.00% 08/10/94 $0.10058 $14.27
9 / 94 $14.09 $14.09 0.00% 09/9/94 $0.09237 $14.20
10 / 94 $13.97 $13.97 0.00% 10/10/94 $0.09507 $14.01
11 / 94 $13.86 $13.86 0.00% 11/10/94 $0.09459 $13.86
12 94 $13.90 $13.90 0.00% 12/09/94 $0.08918 $13.92
12/29/94 $0.05999 $13.92
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS C
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: N/A 10 Year Value: $0.00
5 Year Return: N/A 5 Year Value: $0.00
1.65 Year Return: 1.89% 3 Year Value: $1,031.42
1 Year Return: -2.20% 1 Year Value: $978.05
YTD Return: -2.20% YTD Value: $978.05
- -------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: N/A Accrued Dividend $0.00329
<TABLE>
<CAPTION>
3-Year
-------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 /7/ 93 $15.86 $15.86 N/A 63.052
5 / 93 $15.81 $15.81 N/A 63.052
6 / 93 $16.05 $16.05 N/A 06/03/93 $0.10362 $15.81 $6.5334 0.413 63.465
7 / 93 $16.09 $16.09 N/A 07/02/93 $0.10309 $15.97 $6.5426 0.410 63.875
8 / 93 $16.34 $16.34 N/A 08/03/93 $0.10268 $16.00 $6.5587 0.410 64.285
9 / 93 $16.27 $16.27 N/A 09/03/93 $0.10181 $16.34 $6.5449 0.401 64.686
10 / 93 $16.27 $16.27 N/A 10/01/93 $0.10130 $16.20 $6.5527 0.404 65.090
11 / 93 $15.90 $15.90 N/A 11/03/93 $0.10715 $16.03 $6.9744 0.435 65.525
12 / 93 $15.52 $15.52 N/A 12/10/93 $0.12625 $15.98 $8.2725 0.518 66.043
12/23/93 $0.38290 $15.60 $0.3829 Cap Gain $25.2879 1.621 67.664
12/30/93 $0.06489 $15.53 $4.3907 0.283 67.947
1 / 94 $15.67 $15.67 N/A $0.0000 0.000 67.947
2 / 94 $15.32 $15.32 N/A 02/10/94 $0.12705 $15.52 $8.6327 0.556 68.503
3 / 94 $14.85 $14.85 N/A 03/10/94 $0.09320 $15.10 $6.3845 0.423 68.926
4 / 94 $14.51 $14.51 N/A 04/04/94 $0.08005 $14.63 $5.5175 0.377 69.303
04/08/94 $0.09270 $14.63 $6.4244 0.439 69.742
5 / 94 $14.40 $14.40 N/A 05/10/94 $0.10767 $14.35 $7.5093 0.523 70.265
6 / 94 $14.28 $14.28 N/A 06/10/94 $0.10311 $14.50 $7.2451 0.500 70.765
7 / 94 $14.41 $14.41 N/A 07/08/94 $0.09382 $14.21 $6.6392 0.467 71.232
8 / 94 $14.34 $14.34 N/A 08/10/94 $0.10834 $14.27 $7.7173 0.541 71.773
9 / 94 $14.09 $14.09 N/A 09/09/94 $0.09940 $14.20 $7.1342 0.502 72.275
10 / 94 $13.97 $13.97 N/A 10/10/94 $0.10227 $14.01 $7.3916 0.528 72.803
11 / 94 $13.86 $13.86 N/A 11/10/94 $0.10167 $13.86 $7.4019 0.534 73.337
12 / 94 $13.90 $13.90 N/A 12/09/94 $0.09580 $13.92 $7.0257 0.505 73.842
12/29/94 $0.06459 $13.92 $4.7695 0.343 74.185
</TABLE>
<TABLE>
<CAPTION>
1-Year YTD Monthly
-------------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 /7/ 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94 65.274
3 / 94 $6.0835 0.403 65.677
4 / 94 $5.2574 0.359 66.036
$6.1215 0.418 66.454
5 / 94 $7.1552 0.499 66.953
6 / 94 $6.9036 0.476 67.429
7 / 94 $6.3262 0.445 67.874
8 / 94 $7.3535 0.515 68.389
9 / 94 $6.7979 0.479 68.868
10 / 94 $7.0431 0.503 69.371
11 / 94 $7.0529 0.509 69.880
12 / 94 $6.6945 0.481 70.361
$4.5446 0.326 70.687
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BOND FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
1.10 Year Return: -4.65% -8.12% $948.98 4.00% $37.96 $911.02
1 Year Return: -3.13% -7.97% $968.73 5.00% $48.44 $920.29
YTD Return: -3.13% -7.97% $968.73 5.00% $48.44 $920.29
- --------------------------------------------------------------------------------------
Constant Sales Charge: N/A Accrued Dividend $0.00281
</TABLE>
<TABLE>
<CAPTION>
3-Year
------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 /23/ 93 $15.87 $15.87 N/A 63.012
11 / 93 $15.90 $15.90 N/A $0.0000 0.000 63.012
12 / 93 $15.52 $15.52 N/A 12/10/93 $0.05254 $15.97 $3.3107 0.207 63.219
12/23/93 $0.38290 $15.59 $0.3829 Cap Gain $24.2066 1.553 64.772
12/30/93 $0.05815 $15.52 $3.7665 0.243 65.015
1 / 94 $15.67 $15.67 N/A $0.0000 0.000 65.015
2 / 94 $15.32 $15.32 N/A 02/10/94 $0.11383 $15.52 $7.4007 0.477 65.492
3 / 94 $14.85 $14.85 N/A 03/10/94 $0.08510 $15.10 $5.5734 0.369 65.861
4 / 94 $14.52 $14.52 N/A 04/04/94 $0.08005 $14.63 $5.2722 0.360 66.221
04/08/94 $0.08180 $14.63 $5.4169 0.370 66.591
5 / 94 $14.40 $14.40 N/A 05/10/94 $0.09354 $14.35 $6.2287 0.434 67.025
6 / 94 $14.28 $14.28 N/A 06/10/94 $0.08920 $14.50 $5.9784 0.412 67.437
7 / 94 $14.41 $14.28 N/A 07/08/94 $0.08151 $14.21 $5.4968 0.387 67.824
8 / 94 $14.34 $14.34 N/A 08/10/94 $0.09369 $14.27 $6.3544 0.445 68.269
9 / 94 $14.09 $14.09 N/A 09/09/94 $0.08611 $14.20 $5.8786 0.414 68.683
10 / 94 $13.97 $13.97 N/A 10/10/94 $0.08882 $14.01 $6.1004 0.435 69.118
11 / 94 $13.86 $13.86 N/A 11/10/94 $0.08832 $13.86 $6.1045 0.440 69.558
12 / 94 $13.90 $13.90 N/A 12/09/94 $0.08918 $13.92 $6.2032 0.446 70.004
N/A 12/29/94 $0.05999 $13.92 $4.1995 0.302 70.306
- ----------------------------------------------------------------------------------------------------------------------------------
13.90 70.306
</TABLE>
<TABLE>
<CAPTION>
1-Year YTD Monthly
-------------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11 /23/ 93
11 / 93
12 / 93
64.433
$0.0000 0.000 64.433
1 / 94 $0.0000 0.000 63.816
2 / 94 $7.2642 0.468 65.274
3 / 94 $5.5548 0.368 65.642
4 / 94 $5.2546 0.359 66.001
$5.3989 0.369 66.370
5 / 94 $6.2081 0.433 66.803
6 / 94 $5.9586 0.411 67.214
7 / 94 $5.4786 0.386 67.600
8 / 94 $6.3334 0.444 68.044
9 / 94 $5.8593 0.413 68.457
10 / 94 $6.0804 0.434 68.891
11 / 94 $6.0845 0.439 69.330
12 / 94 $6.1828 0.444 69.774
$4.1857 0.301 70.075
- ---------------------------------------------------------------------------------------------------------------------------------
70.075
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned Trustee of John Hancock
Sovereign Bond Fund does hereby constitute and appoint EDWARD J. BOUDREAU, JR.,
THOMAS H. DROHAN, AND JAMES B. LITTLE and each of them individually his true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable
(i) to enable the Trust to comply with the Securities Act of 1933, as
amended, and any rules regulations, orders or other requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under such Securities Act of 1933 of shares of beneficial
interest of the Trust to be offered by the Trust, and
(ii) in connection with the registration of the Trust under the
Investment Company Act of 1940, as amended,
including specifically, but without limitation of the foregoing, power and
authority to sign his name in his behalf as Director as indicated below,
opposite his signature hereto, to any amendment or supplement (including
post-effective amendments) to the registration statement or statements filed
with the Securities and Exchange Commission under such Securities Act of 1933
and such Investment Company Act of 1940, and to execute any instruments or
documents filed or to be filed as a part of or in connection with such
registration statement or statements; and does hereby ratify and confirm all
that said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, we have hereunto set our hands on the date indicated
below.
SIGNATURE TITLE DATE AS OF:
/s/ Edward J. Boudreau, Jr. Chairman, Trustee November 15, 1988
Edward J. Boudreau, Jr. and Principal
Executive Officer
/s/ Thomas H. Drohan Senior Vice President December 13, 1984
Thomas H. Drohan and Secretary
/s/ Dennis S. Aronowitz Trustee May 17, 1988
Dennis S. Aronowitz
/s/ Richard P. Chapman, Jr. Trustee December 13, 1984
Richard P. Chapman, Jr.
<PAGE>
/s/ William J. Cosgrove Trustee October 15, 1991
William J. Cosgrove
/s/ Gail D. Fosler Trustee January 1, 1994
Gail D. Fosler
/s/ Bayard Henry Trustee December 13, 1984
Bayard Henry
/s/ Richard S. Scipione Trustee April 23, 1987
Richard S. Scipione
/s/ Edward J. Spellman Trustee October 23, 1990
Edward J. Spellman
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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