REGISTRATION NOS. 2-29503
811-1678
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. 45 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24 [X]
JOHN HANCOCK LIMITED TERM GOVERNMENT FUND
(Exact Name of Registrant as Specified in Charter)
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617) 375-1700
Thomas H. Drohan, Esq.
John Hancock Advisers, Inc.
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
Calculation of Registration Fees Under the Securities Act of 1933
<TABLE>
<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 Beneficail Interest 8,392,358 879 290,000 $100
</TABLE>
* 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. 14,222,202 shares were redeemed during the fiscal
year ended December 31, 1995. 11,034,452 shares were used for reductions
pursuant to Paragraph (c) of Rule 24f-2 during the current fiscal year.
8,392,358 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 $8.79 per share on April 19, 1996 is
the price used as the basis for calculating the registration fee. While no
fee is required for the 8,359,366 shares the Registrant has elected to
register, for $100, an additional $290,000 of shares (approximately 32,992
shares at $8.79 per share).
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the 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 26, 1996.
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK LIMITED TERM GOVERNMENT FUND
CROSS REFERENCE SHEET
Item Number Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
- ---------------------- ------------------ -----------------------
<S> <C> <C>
1 Front Cover Page *
2 Expense Information; The Fund's Expenses; *
Share Price
3 The Fund's Financial Highlights; *
Performance
4 Investment Objectives and Policies; *
Organization and Management of the Fund
5 Organization and Management of the Fund; *
The Fund's Expenses; Back Cover Page
6 Organization and Management of the Fund; *
Dividends and Taxes; How to Buy Shares;
How to Redeem Shares; Additional Services
and Programs
7 How to Buy Shares; Share 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
<PAGE>
Item Number Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
- ---------------------- ------------------ -----------------------
16 * Investment Advisory and Other
Services; Distribution Contract;
Transfer Agent Services; Custody of
Portfolio; Independent Auditors
17 * Brokerage Allocation
18 * Description of Fund's Shares
19 * Net Asset Value; Additional
Services and Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of Performance
23 * Financial Statements
</TABLE>
<PAGE>
John Hancock
Limited-Term
Government Fund
Class A and Class B Shares
Prospectus
May 1, 1996
TABLE OF CONTENTS
Page
-------
Expense Information 2
The Fund's Financial Highlights 3
Investment Objective and Policies 5
Organization and Management of the Fund 7
Alternative Purchase Arrangements 8
The Fund's Expenses 9
Dividends and Taxes 10
Performance 11
How to Buy Shares 12
Share Price 13
How to Redeem Shares 18
Additional Services and Programs 20
This Prospectus sets forth information about John Hancock Limited-Term
Government 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, 1996, 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.
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, 1995, adjusted to
reflect current fees and expenses. Actual fees and expenses in the future may
be greater or less than those indicated.
Class A Class B
Shareholder Transaction Expenses Shares Shares
------- ---------
Maximum sales charge imposed on
purchases (as a percentage of
offering price) 3.00% None
Maximum sales charge imposed on
reinvested dividends None None
Maximum deferred sales charge None* 3.00%
Redemption fee+ None None
Exchange fee None None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management fee 0.60% 0.60%
12b-1 fee** 0.30% 1.00%
Other expenses 0.47% 0.47%
Total Fund operating expenses 1.37% 2.07%
* No sales charge is payable at the time of purchase on investments in Class
A shares of $1 million or more, but a contingent deferred sales charge may
be imposed on these investments, as described below under the caption
"Share Price," in the event of certain redemption transactions made within
one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be
used to cover distribution expenses. 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 a 5% annual
return:
Class A Shares $44 $72 $103 $190
Class B Shares
--Assuming complete redemption at end of period $51 $85 $111 $198
--Assuming no redemption $21 $65 $111 $198
</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 1995 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,
------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 8.31 $ 8.80 $ 8.77 $ 8.97 $ 8.61 $ 8.73
------- ------- ------- ------- ------- -------
Net Investment Income 0.50(a) 0.38(a) 0.48 0.54 0.67 0.74
Net Realized & Unrealized Gain (Loss)
on Investments 0.42 (0.49) 0.14 (0.18) 0.36 (0.11)
------- ------- ------- ------- ------- -------
Total from Investment Operations 0.92 (0.11) 0.62 0.36 1.03 0.63
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income (0.50) (0.38) (0.48) (0.54) (0.67) (0.75)
Distributions from Net Realized Gain
on Investments Sold -- -- (0.11) (0.02) -- --
------- ------- ------- ------- ------- -------
Total Distributions (0.50) (0.38) (0.59) (0.56) (0.67) (0.75)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 8.73 $ 8.31 $ 8.80 $ 8.77 $ 8.97 $ 8.61
======= ======= ======= ======= ======= =======
Total Investment Return at Net Asset
Value (e) 11.23% (1.31%) 7.13% 4.19% 12.54% 7.75%
Ratios and Supplemental Data
Net Assets, End of period (000's
omitted) $198,681 $218,846 $262,903 $259,170 $211,322 $176,329
Ratio of Expenses to Average Net
Assets 1.36% 1.41% 1.51% 1.55% 1.44% 1.53%
Ratio of Net Investment Income to
Average Net Assets 5.76% 4.39% 5.34% 6.13% 7.72% 8.56%
Portfolio Turnover Rate 105% 155% 175% 185% 134% 75%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1989 1988 1987 1986
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 8.56 $ 8.83 $ 9.71 $ 9.24
------- ------- ------- -------
Net Investment Income 0.79 0.77 0.78 0.83
Net Realized & Unrealized Gain (Loss)
on Investments 0.18 (0.28) (0.83) 0.47
------- ------- ------- -------
Total from Investment Operations 0.97 0.49 (0.05) 1.30
------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income (0.80) (0.76) (0.83) (0.83)
Distributions from Net Realized Gain
on Investments Sold -- -- -- --
------- ------- ------- -------
Total Distributions (0.80) (0.76) (0.83) (0.83)
------- ------- ------- -------
Net Asset Value, End of Period $ 8.73 $ 8.56 $ 8.83 $ 9.71
======= ======= ======= =======
Total Investment Return at Net Asset
Value (e) 11.59% 5.67% (0.49%) 14.59%
Ratios and Supplemental Data
Net Assets, End of period (000's
omitted) $179,065 $192,315 $202,924 $201,293
Ratio of Expenses to Average Net
Assets 1.01% 1.02% 0.97% 0.90%
Ratio of Net Investment Income to
Average Net Assets 8.98% 8.71% 8.52% 8.82%
Portfolio Turnover Rate 26% 12% 7% 6%
</TABLE>
3
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS (continued)
CLASS B (c)
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 8.31 $ 8.77(b)
-------- ---------
Net Investment Income 0.45(a) 0.30(a)
Net Realized and Unrealized Gain (Loss)
on Investments 0.42 (0.46)
-------- ---------
Total from Investment Operations 0.87 (0.16)
-------- ---------
Less Distributions:
Dividends from Net Investment Income (0.45) (0.30)
-------- ---------
Net Asset Value, End of Period $ 8.73 $ 8.31
======== =========
Total Investment Return at Net Asset
Value (e) 10.60% (1.84%)(d)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $10,765 $7,111
Ratio of Expenses to Average Net Assets 1.93% 2.12%*
Ratio of Net Investment Income to Average
Net Assets 5.21% 3.70%*
Portfolio Turnover Rate 105% 155%
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Initial price to commence operations.
(c) Class B shares commenced investment operations on January 3, 1994.
(d) Not annualized.
(e) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charge.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
[sidebar]
The Fund's investment objec-
tive is to seek current income
and security of principal by
investing primarily in securi-
ties of the United States gov-
ernment and its agencies.
The Fund's investment objective is to provide current income and security of
principal through investment primarily in securities of the United States
government and its agencies. These are direct obligations of, or are
guaranteed as to payment of principal and interest by, the United States
government or its agencies ("Government Obligations"). There is no assurance
that the Fund will achieve its investment objective.
The Fund intends to invest at least 80% of its total assets in Government
Obligations, including repurchase agreements secured by those obligations.
Investments will be made in an attempt to minimize excessive fluctuations in
net asset value per share, so at times the highest yielding Government
Obligations may not be selected for investment if, in management's view,
future interest rate movements could result in a depreciation in value. While
the Fund makes no commitment concerning the portfolio maturities of
particular securities, it expects that under normal conditions a substantial
portion of the portfolio will be invested in Government Obligations with
maturities of up to ten years. In the past year, the average dollar-weighted
maturity was two years.
The Government Obligations in which the Fund will invest include but are not
limited to:
Treasury Notes and Bonds--These are direct obligations of the United States
government backed by the full faith and credit of the United States. New
issues of notes mature in one to seven years, while bonds generally have a
maturity of five years or more.
Treasury Bills--These are direct obligations of the United States
government backed by the full faith and credit of the United States and
mature in one year or less.
Agency Securities--These securities may be guaranteed by the United States
Treasury or supported by the issuer's right to borrow from the Treasury,
and may be backed by the credit of the Federal agency itself.
Mortgage-Backed and Derivative Securities
[sidebar]
The Fund may invest in
mortgage-backed securities
and other Government obliga-
tions issued by the Govern-
ment National Mortgage
Association, Federal National
Mortgage Association and the
Federal Home Loan Mortgage
Corporation.
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 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.
5
<PAGE>
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 sequential and parallel pay
CMOs, including planned amortization class ("PAC") and target amortization
class ("TAC") securities. The Fund does not invest in residual classes of
CMOs.
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."
In addition to Government Obligations, the Fund may invest up to 20% of its
total assets in certificates of deposit maturing in one year or less. These
will be issued by United States banks or thrift institutions that are insured
by the Federal Deposit Insurance Corporation and which have assets of $1
billion or more.
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.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The
Fund may enter into repurchase agreements and 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 to the issuer 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 Government Obligations for future delivery
or on a forward or 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. The Fund may attempt to maximize current income through
short- term portfolio trading. This will involve selling portfolio
instruments and purchasing different instruments to take advantage of yield
disparities in different segments of the market for Government Obligations.
Portfolio turnover rates of the Fund for recent years are shown in the
section "The Fund's Financial Highlights." A high rate of portfolio turnover
6
<PAGE>
(100% or more) involves correspondingly greater brokerage expenses that must
be borne by the Fund and the shareholders and may, under certain
circumstances, make it more difficult for the Fund to qualify as a regulated
investment company under the Internal Revenue Code of 1986. See "Tax Status"
and "Brokerage Allocation" in the Statement of Additional Information.
[sidebar]
The Fund follows certain
policies, which may help
reduce investment risk.
Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
designated as fundamental or nonfundamental. The investment objective and
fundamental restrictions may not be changed without shareholder approval. All
other investment policies and restrictions are nonfundamental and can be
changed by a vote of the Trustees without shareholder approval. Portfolio
turnover rates of the Fund for recent years are shown in the section "The
Fund's Financial Highlights."
[sidebar]
Brokers are chosen based on
best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, John
Hancock Advisers, Inc. (the "Adviser") gives primary consideration to
execution at the most favorable prices, taking into account the broker's
professional ability and quality of service. Consideration may also be given
to the broker's sales of Fund shares. Pursuant to procedures 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. They
are indirectly owned by John Hancock Mutual Life Insurance Company (the "Life
Company"), which in turn indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
[sidebar]
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 Delaware corporation in 1968 and reorganized as a Massachusetts business
trust in 1984. The Fund has an unlimited number of 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.
Although additional series may be added in the future, the Trustees have no
current intention of creating additional series of the Fund. The Fund's
Declaration of Trust 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 two classes of the Fund, designated
Class A and Class B. The shares of each class represent an interest in the
same portfolio of investments of the Fund and have equal rights as to voting,
redemption, dividends and liquidation. However, each class bears different
distribution 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
to hold annual shareholder meetings, although special meetings may be held
for such purposes as electing or removing Trustees, changing fundamental
investment restrictions and policies or approving a management contract. The
Fund, under certain circumstances, will assist in shareholder communications
with other shareholders.
7
<PAGE>
[sidebar]
John Hancock Advisers, Inc.
advises investment companies
having a total asset value of
more than $16 billion.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary
of the Life Company, a financial services company. The Adviser provides the
Fund, and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds,
Inc. ("John Hancock Funds") distributes shares for all of the John Hancock
funds through 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.
Barry Evans is primarily responsible for the management of the Fund and is
assisted by a team of portfolio managers and analysts. Mr. Evans has managed
bond funds since he joined the Adviser in 1986.
In order to avoid conflicts 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
[sidebar]
An alternative purchase plan
allows you to choose the
method of payment that is
best for you.
You can purchase shares of the Fund at a price equal to their net asset value
per share plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (See "Initial Sales Charge
Alternative--Class A Shares") or on a contingent deferred basis (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.
[sidebar]
Investments in Class A
shares are subject to an
initial sales charge.
Class A Shares. If you elect Class A shares, you will incur an initial sales
charge unless the amount you 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."
[sidebar]
Investments in Class B
shares are subject to a con-
tingent 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 four years of purchase (the "contingent deferred sales charge" or the
"CDSC"). Class B shares are subject to ongoing distribution and service fees
at a combined annual rate of up to 1.00% of the Fund's average daily net
assets attributable to the Class B shares. 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 Class A shares. To the extent that any dividends are
paid by the Fund, these higher expenses will result in lower dividends than
those paid on Class A shares.
8
<PAGE>
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or the Life Company that had more than 100
eligible employees at the inception of the Fund account.
[sidebar]
You should consider which
class of shares will be more
beneficial for you.
Factors to Consider in Choosing an Alternative. The alternative purchase
arrangement allows you to choose the most beneficial way to buy shares, given
the amount of the purchase, the length of time you expect to hold your shares
and other circumstances. You should consider whether, during the anticipated
life of your Fund investment, the CDSC and accumulated fees on Class B shares
would be less than the initial sales charge and accumulated fees on Class A
shares purchased at the same time, and to what extent this differential would
be offset by the Class A shares' lower expenses. To help you make this
determination, the table under the caption "Expense Information" on the
inside cover page of this Prospectus shows examples of the charges applicable
to each class of shares. Class A shares will normally be more beneficial if
you qualify for 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 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 four-year period, a CDSC.
In the case of Class A shares, the distribution expenses that John Hancock
Funds incurs in connection with the sale of the shares will be paid from the
proceeds of the initial sales charge and the ongoing distribution and service
fees. In the case of Class B shares, the expenses will be paid from the
proceeds of the ongoing distribution and service fees, as well as from the
CDSC incurred upon redemption within four years of purchase. The purpose and
function of 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 from each class bearing only
its own distribution and service fees and shareholder meeting expenses. 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 1995 fiscal year was 0.60% of the Fund's average daily
net asset value.
9
<PAGE>
[sidebar]
The Fund pays distribution
and service fees for market-
ing and sales-related share-
holder servicing.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service
fees at an aggregate annual rate of up to 0.30% of the Class A shares'
average daily net assets and an aggregate annual rate of up to 1.00% of the
Class B shares' average daily net assets. In each case, up to 0.25% is for
service expenses and the remaining amount is for distribution expenses. The
distribution fees will be used to reimburse 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 are
paid to compensate Selling Brokers and others 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 twelve months from the date they were incurred. These
unreimbursed expenses under the Class B Plan will be carried forward together
with interest on the balance of these unreimbursed expenses.
For the fiscal year ended December 31, 1995 an aggregate of $195,672 of
distribution expenses or 2.31%, of the average net assets of the Class B
shares of the Fund, was not reimbursed or recovered by John Hancock Funds
through the receipt of deferred sales charges or 12b-1 fees in prior periods.
The Fund compensates the Adviser for performing necessary tax and financial
management services. The compensation for 1996 is estimated to be at an
annual rate of 0.01875% of the average net assets of the Fund.
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
declared and distributed annually.
Dividends are reinvested in additional shares of your class unless you elect
the option to receive cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividends on these shares will be lower than those on the Class A
shares. See "Share Price."
Taxation. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you as ordinary income. Dividends from the
Fund's net long- term capital gains are taxable as long-term capital gains.
These dividends are taxable whether received in cash or reinvested in
additional shares. Certain dividends may be paid in January of a given year
but may be taxable as if you received them the previous December. The Fund
will send you a statement by January 31 showing the tax status of the
dividends you received for the prior year.
10
<PAGE>
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). As a regulated investment company, the Fund will not
be subject to Federal income taxes on any net investment income and net
realized capital gains that are distributed to its shareholders within the
time period prescribed by the Code. When you redeem (sell) or exchange
shares, you may realize a taxable gain or loss.
On the account application, you must certify that your social security or
other taxpayer identification number you provide is correct and that you are
not subject to backup withholding of Federal income tax. If you do not
provide this information or are otherwise subject to this withholding, the
Fund may be required to withhold 31% of your dividends and the proceeds of
redemptions and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investments in and distributions from the Fund.
Non-U.S. shareholders and tax- exempt shareholders are subject to a different
tax treatment not described above. In many states, a portion of the Fund's
dividends that represent interest received by the Fund on direct U.S.
Government obligations may be exempt from tax. You should consult your tax
adviser for specific advice.
PERFORMANCE
[sidebar]
The Fund may advertise its
yield and total return.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of the Fund's 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.
Yields are 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 your shares or the income reported in the Fund's
financial statements.
Total return shows the overall dollar or percentage change in value of a
hypothetical investment in the Fund, assuming the reinvestment of all
dividends. Cumulative total return shows the Fund's performance over a period
of time. Average annual total return shows the cumulative return divided by
the number of years included in the period. Because average annual total
return tends to smooth out variations in the performance, you should
recognize that it is not the same as actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge of 3% (except as shown in "The
Fund's Financial Highlights"). Investments at a lower sales charge would
result in higher performance figures. Yield and total return for the Class B
shares reflect the deduction of the applicable CDSC imposed on a redemption
of shares held for the applicable period. All calculations assume that all
dividends are reinvested at net asset value on the reinvestment dates during
the periods. Total return and yield of Class A and Class B shares will be
calculated separately, and, because each class is subject to different
expenses, the yield or total return with respect to each 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 both classes in any advertisement or promotional
materials including Fund performance data. The value of the Fund's shares,
11
<PAGE>
when redeemed, may be more or less than their original cost. Both total
return and yield are historical calculations and are not an indication of
future performance. See "Factors to Consider in Choosing an Alternative."
HOW TO BUY SHARES
[sidebar]
Opening an account
The minimum initial investment 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
P.O. Box 9115
Boston, MA 02205-9115
2. Deliver the completed application and check to your registered
representative or Selling Broker, or mail it directly to Investor
Services.
By Wire
1. Obtain an account number by contacting your registered representative or
Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA No. 211475000
For credit to: John Hancock Limited-Term Government Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered representative
or Selling Broker, or mail it directly to Investor Services.
[sidebar]
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 your
funds may be drawn.
2. The amount you elect to invest will be withdrawn automatically from your
bank or credit union account.
By Telephone
1. Complete the "Invest-By-Phone" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your
funds may be drawn. Note that in order to invest by phone, your account
must be in a bank or credit union that is a member of the Automated
Clearing House system (ACH).
2. After your authorization form has been processed, you may purchase
additional Class A or Class B shares by calling Investor Services
toll-free 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.
By Check
1. Either complete the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund, the
class of shares you own, your account number and the name(s) in which the
account is registered.
2. Make your check payable to John Hancock Investor Services Corporation
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
12
<PAGE>
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 Limited-Term Government Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
Other Requirements: All purchases must be made in U.S. dollars. Checks
written on foreign banks will delay purchases until U.S. funds are received,
and a collection charge may be imposed. Shares of the Fund are priced at the
offering price based on the net asset value computed after 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 to
Investor Services.
[sidebar]
You will receive account state-
ments that you should keep to
help with your personal
recordkeeping.
You will receive a statement of your account after any transaction that
affects your share balance or registration (statements related to
reinvestment of dividends and automatic investment/withdrawal plans will be
sent to you quarterly). A tax information statement will be mailed to you by
January 31 of each year.
SHARE PRICE
[sidebar]
The offering price of your
shares is their net asset value
plus a sales charge, if appli-
cable, 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 the Board of Trustees has determined to approximate
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 have been materially affected by
events occurring after the closing of a foreign market, assets are valued by
a method that the Trustees believes accurately reflects fair value. The NAV
is calculated once daily as of the close of regular trading on the New York
Stock Exchange (generally at 4:00 p.m., New York time) on each day that the
Exchange is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock
Funds. If you buy shares of the Fund through a Selling Broker, the Selling
Broker must receive your investment before the close of regular trading on
the New York Stock Exchange, and transmit it to John Hancock Funds before its
close of business, to receive that day's offering price.
13
<PAGE>
Initial Sales Charge Alternative--Class A Shares.
The offering price you pay for Class A shares of the Fund equals the NAV plus
a sales charge, as follows:
<TABLE>
<CAPTION>
Combined
Sales Charge Sales Charge Reallowance Reallowance to
as as and Service Selling Brokers
a Percentage a Percentage Fee as a as a Percentage
Amount Invested of the of the Percentage of of the
(Including Sales Offering Amount Offering Offering Price
Charge) Price Invested Price(+) (*)
- ----------------------- ------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.50% 2.26%
$100,000 to $499,999 2.50% 2.56% 2.25% 2.01%
$500,000 to $999,999 2.00% 2.04% 1.75% 1.51%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
</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. A Selling Broker to whom substantially the entire sales charge
is reallowed 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 CDSC may be imposed in the event of certain
redemption transactions made 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 the aggregate, as
follows: 1% on sales to $4,999,999, plus 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" below.
Contingent Deferred Sales Charge--Investments of $1 million or more in Class
A Shares. Purchases of $1 million or more of the Fund's Class A shares will
be made at net asset value with no initial sales charge, but if the shares
are redeemed within 12 months after the end of the calendar month in which
the purchase was made (the CDSC period), a CDSC will be imposed. The rate of
the CDSC will depend on the amount invested as follows:
Amount Invested CDSC Rate
- -------------------------------- ----------
$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%
14
<PAGE>
Existing full service clients of the Life Company who were group annuity
contract holders as of September 1, 1994, and participant directed defined
contribution plans with at least 100 eligible employees at the inception of
the Fund account, may purchase Class A shares with no initial sales charge.
However, if the shares are redeemed within 12 months after the end of the
calendar year in which the purchase was made, a CDSC will be imposed at the
above rate.
The CDSC will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends which have been reinvested in
additional Class A shares.
In determining whether a CDSC applies to a redemption, the calculation will
be determined in a manner that results in the lowest possible rate being
charged. Therefore, it will be assumed that redemption is first made from any
shares in your account 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."
[sidebar]
You may qualify for a reduced
sales charge on your
investment in Class A shares.
Qualifying for a Reduced Sales Charge. If you invest more than $100,000 in
Class A shares of the Fund or a combination of 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 shares of the John
Hancock funds in meeting the breakpoints for a reduced sales charge. For the
ACCUMULATION 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 2.50% and not 3.00%. This
is the rate that would otherwise be applicable to investments of less than
$100,000. See "Initial Sales Charge Alternative--Class A Shares."
If you are in one of the following categories, you may purchase Class A
shares of the Fund without paying a sales charge:
[sidebar]
Class A shares may be avail-
able without a sales charge
to certain individuals and
organizations.
(bullet) Shares of the Fund may be sold without a sales charge to investors
reinvesting redemption proceeds which were subject to a sales charge from
non-John Hancock funds. Investors reinvesting redemption proceeds from
non-John Hancock funds must submit proof of the redemption at the time of
purchase of the Fund. This may be a copy of the redemption check or the
confirmation statement. These reinvestments
15
<PAGE>
must remain in the Fund for 15 days before redemption or exchange. John
Hancock Funds may make a payment for these reinvestments, out of its own
resources, to a Selling Broker in an amount not to exceed 0.25% of the amount
invested.
(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
(an "eligible depository institution") if it is purchasing $1 million or more
for non-discretionary customers or accounts.*
(bullet) A broker, dealer, financial planner, consultant 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 or services made available to their clients.
(bullet) A former participant in an employee benefit plan with John Hancock
funds, when he or she withdraws from his or her plan and transfers any or all
of his or her plan distributions directly to the Fund.
(bullet) A member of an approved affinity group financial services plan.*
*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 an initial sales charge, so
that your entire investment will go to work at the time of purchase. However,
Class B shares redeemed within four years of purchase will be subject to a
CDSC at the rates set forth below. The 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 four-year CDSC redemption period or those you acquired
through dividend reinvestment and next from the shares you have held the
longest during the four-year period. The CDSC is waived on redemptions in
certain circumstances. See the discussion "Waiver of Contingent Deferred
Sales Charges" below.
16
<PAGE>
Example:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment.
If you redeem 50 shares at this time, your CDSC will be calculated as
follows:
(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
---
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds
uses them to defray its expenses related to providing the Fund with
distribution services in connection with the sale of the 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 an initial sales charge.
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 determining this holding period, any payment you make during
the month will be aggregated and deemed to have been made on the last day of
the month.
Year in Which Contingent Deferred Sales
Class B Redeemed Charge As a Percentage of
Following Purchase Dollar Amount Subject to CDSC
- ----------------------- --------------------------------
First 3.0%
Second 2.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter None
A commission equal to 2.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision
of personal and account maintenance services to shareholders during the
twelve months following the sale, and thereafter the service fee is paid in
arrears.
[sidebar]
Under certain circumstances,
the CDSC on Class B and
Class A share redemptions
will be waived.
Waiver of Contingent Deferred Sales Charges. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a
CDSC, unless indicated otherwise, in the circumstances defined below:
(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
17
<PAGE>
expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty
under the Code.
(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 no later than the month following five 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 into Class A shares of the Fund should not be taxable for
Federal income tax purpose and should not 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 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 three business days or longer, as permitted by Federal securities
laws.
18
<PAGE>
[sidebar]
To assure acceptance of your
redemptions request, please
follow these procedures.
By Telephone
All Fund shareholders are eligible automatically 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) and address shown on the account.
If reasonable procedures, such as those described above, are not followed,
the Fund may be liable for any loss due to unauthorized or fraudulent
telephone instructions. In all other cases, neither the Fund nor Investor
Services will be liable for any loss or expense for acting upon telephone
instructions made according to the telephone transaction procedures mentioned
above.
Telephone redemption is not available for IRAs or other tax-qualified
retirement plans or shares of the Fund that are in certificate form.
During periods of extreme economic conditions or market changes, telephone
requests may be difficult to implement due to a large volume of calls. During
these times, you should consider placing redemption requests in writing or
using EASI-Line. EASI-Line's telephone number is 1-800-338-8080.
By Wire
If you have a telephone redemption form on file with the Fund, redemption
proceeds of $1,000 or more can be wired on the next business day to your
designated bank account, and a fee (currently $4.00) will be deducted. You
may also use electronic funds transfer to your assigned bank account, and the
funds are usually collectible after two business days. Your bank may or may
not charge 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.
By Check
(Class A
shares only)
You may elect the checkwriting option on the account application, which
allows you to write checks in amounts from a minimum of $100. Checks may not
be written against shares in your account which have been purchased within
the last 15 days, except for shares purchased by wire transfer (which are
immediately available), or for Fund shares that are in certificate form.
You should make sure that there are sufficient shares in the account to cover
the amount of any check drawn, since the net asset value of shares will
fluctuate. If insufficient shares are in the account, the check will be
returned marked "insufficient funds" and no shares will be redeemed.
It is not possible to determine in advance the total value of your account so
as to write a check for the value of the entire account because dividends
declared on shares held in the account or prior redemptions and possible
changes in net asset value may cause the account to change in amount.
Accordingly, you should not close your account by writing a check.
Shareholders may not maintain a Systematic Withdrawal Plan and utilize the
checkwriting service at the same time.
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.
19
<PAGE>
<TABLE>
<CAPTION>
Type of Registration Requirements
- ---------------------------------- ---------------------------------------------------------------
<S> <C>
Individual, Joint Tenants, Sole
Proprietorship, Custodial A letter of instruction signed (with titles where applicable)
(Uniform Gifts or Transfer to by all persons authorized to sign for the account, exactly as
Minors Act), General Partners. it is registered with the signature(s) guaranteed.
Corporation, Association A letter of instruction and a corporate resolution, signed by
person(s) authorized to act on the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s) with the
signature(s) guaranteed. (If the Trustee's name is not
registered on your account, also provide a copy of the trust
document, certified within the last 60 days.)
</TABLE>
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
[sidebar]
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.
[sidebar]
Additional information
about redemptions.
Through Your Broker
Your broker may be able to initiate the redemption. Contact your broker for
instructions.
If you have certificates for your shares, you must submit them with your
stock power or a letter of 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 to the required minimum. Unless the number of shares
acquired by additional purchases and any dividend reinvestments, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
[sidebar]
You may exchange shares of
the Fund for shares of the
same class of another John
Hancock fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of
investment goals. Contact your registered representative or Selling Broker
and request a prospectus for the John Hancock funds that interest you. Read
the prospectus carefully before exchanging
20
<PAGE>
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 their
respective net asset values. No sales charge or transaction charge is
imposed. Class B shares of the Fund that are subject to a CDSC may be
exchanged into Class B shares of another John Hancock fund without incurring
the CDSC; however these shares will be subject to the CDSC schedule of the
shares acquired (except that exchanges into John Hancock Short-Term Strategic
Income Fund, John Hancock Intermediate Maturity Government Fund and this 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 in effect on your
initial purchase date.
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 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 in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers
and investment advisers may exchange their clients' Fund shares, subject to
the terms of those agreements and John Hancock Funds' right to reject or
suspend those exchanges at any time. Because of the restrictions and
procedures under those agreements, the exchanges may be subject to timing
limitations and other restrictions that do not apply to exchanges requested
by shareholders directly, as described above.
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 prior notice whenever it is reasonably able to do so, it may impose
these restrictions at any time.
21
<PAGE>
By Telephone
1. When you complete the application for your initial purchase of Fund
shares, you authorize exchanges automatically by telephone unless you
check the box indicating that you do not wish to authorize telephone
exchanges.
2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.
3. Your name, the account number, taxpayer identification number applicable
to the account and other relevant information may be requested. In
addition, telephone instructions are recorded.
In Writing
1. In a letter request an exchange and list the following:
-- the name and class of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or 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
[sidebar]
If you redeem shares of the
Fund, you may be able to
reinvest all or part of the
proceeds in shares of this
Fund or another John
Hancock fund without pay-
ing an additional sales
charge.
1. You will not be subject to a sales charge on Class A shares that you
reinvest in a John Hancock fund that is otherwise subject to a sales
charge, as long as you reinvest within 120 days of the redemption date. If
you paid a CDSC upon a redemption, you may reinvest at net asset value in
the same class of shares from which you redeemed within 120 days. Your
account will be credited with the amount of the CDSC previously charged,
and the reinvested shares will continue to be subject to a CDSC. The
holding period of the shares acquired through reinvestment, for purposes
of computing the CDSC payable upon a subsequent redemption, 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 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
[sidebar]
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 this 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.
22
<PAGE>
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 initial sales charge, on your purchases
of Class A shares or a CDSC on your redemptions of Class B shares. In
addition, 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)
[sidebar]
You can make automatic
investments and simplify your
investing.
1. You can authorize an investment to be withdrawn automatically each month
on 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 withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.
Group Investment Program
[sidebar]
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 for various types of qualified retirement plans, such
as 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 Section 457 plans.
2. The initial investment minimum or aggregate minimum for any of these plans
is $250. However, accounts being established as group IRA, SEP, SARSEP,
TSA, 401(k) and Section 457 plans will be accepted without an initial
minimum investment.
23
<PAGE>
JOHN HANCOCK LIMITED-TERM
GOVERNMENT 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
For: TDD call 1-800-554-6713
JHD 2200P 5/96
JOHN HANCOCK
LIMITED-TERM
GOVERNMENT
FUND
Class A and Class B Shares
Prospectus
May 1, 1996
A mutual fund seeking current income and
security of principal through investment pri-
marily in securities of the United States gov-
ernment and its agencies.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
[recycle symbol] Printed on Recycled Paper
<PAGE>
JOHN HANCOCK
LIMITED-TERM GOVERNMENT FUND
Class A and Class B Shares
Statement of Additional Information
May 1, 1996
This Statement of Additional Information provides information about John
Hancock Limited-Term Government Fund (the "Fund") in addition to the information
that is contained in the Fund's Class A and Class B Prospectus, (the
"Prospectus") dated May 1, 1996.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus, a copy of which can be obtained free of
charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291
TABLE OF CONTENTS
Statement of
Additional
Information
Page
ORGANIZATION OF THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES 2
CERTAIN INVESTMENT PRACTICES 2
INVESTMENT RESTRICTIONS 4
THOSE RESPONSIBLE FOR MANAGEMENT 7
INVESTMENT ADVISORY AND OTHER SERVICES 12
DISTRIBUTION CONTRACT 14
NET ASSET VALUE 16
INITIAL SALES CHARGE ON CLASS A SHARES 16
DEFERRED SALES CHARGE ON CLASS B SHARES 17
SPECIAL REDEMPTIONS 18
ADDITIONAL SERVICES AND PROGRAMS 18
DESCRIPTION OF THE FUND'S SHARES 19
TAX STATUS 20
CALCULATION OF PERFORMANCE 23
BROKERAGE ALLOCATION 25
TRANSFER AGENT SERVICES 26
CUSTODY OF PORTFOLIO 27
INDEPENDENT AUDITORS 27
FINANCIAL STATEMENTS -
<PAGE>
ORGANIZATION OF THE FUND
John Hancock Limited-Term Government 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 U.S. Government Securities Fund, Inc., a Delaware
corporation organized in 1968 by the John Hancock Life Insurance Company (the
"Life Company"), a Massachusetts life insurance company chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts. On July 1,
1993 the Fund changed its name from "John Hancock U.S. Government Securities
Fund."
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide current income and
security of principal of portfolio investments through investment primarily in
securities of the United States government and its agencies. These securities
(which are herein referred to as "Government Obligations") are direct
obligations of, or are guaranteed as to payment of principal and interest by,
the United States government or its agencies.
The types of securities the Fund invests in are described in the
Prospectus. Federal agencies referred to in the Prospectus include, but are not
limited to: Federal Intermediate Credit Banks, Federal Land Banks, Banks for
Cooperatives, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Tennessee Valley Authority, Federal
Home Loan Mortgage Corporation and Farmers Home Administration.
CERTAIN INVESTMENT PRACTICES
When-Issued Securities. Newly-issued Government Obligations may be purchased by
the Fund on a "when-issued" basis, which means that the Government Obligations
are not delivered until a future date, which may be as long as 120 days after
the Fund has agreed to purchase the Government Obligations. Until delivery, the
Fund does not pay for Government Obligations purchased on a when-issued basis
and does not start earning interest on them, but the Fund is committed to pay
for the Government Obligations on a fixed date at a fixed price. During the
period before the delivery of the Government Obligations, the Fund could have
unrealized gains or losses if the Government Obligations' market value increases
or decreases relative to the agreed-upon purchase price. The Fund does not
intend to make when-issued commitments for speculative purposes, but only to
accomplish the investment objective of the Fund, and does not intend to make
when-issued commitments aggregating more than 20% of the Fund's total assets
taken at market value. On the date the Fund enters into an agreement to purchase
Government Obligations on a when-issued basis, the Fund will segregate in a
separate account cash or liquid high grade debt securities equal in value to the
when-issued commitment. These assets will be valued at market daily and
additional cash or liquid securities will be segregated in the separate account
to the extent that the total value of the assets in the account declines below
the amount of the when-issued commitment. All when-issued and other
delayed-delivery transactions will be settled within 120 days.
2
<PAGE>
Portfolio Trading. The Fund, consistent with its investment objective, will
attempt to maximize current income through portfolio trading. This may involve
selling portfolio instruments and purchasing different instruments to take
advantage of disparities of yield in different segments of the market for
Government Obligations. For the years ended December 31, 1993, 1994 and 1995,
the Fund's portfolio turnover rate was 175%, 155% and 105%, respectively.
Certificates of Deposit. The Fund may invest in certificates of deposit maturing
in one year or less after the date of acquisition issued by U.S. banks which are
insured by the Federal Deposit Insurance Corporation and which have assets of $1
billion or more. Certificates of deposit are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified rate of
return and are normally negotiable.
Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to Government Obligations and any of the other instruments in which it
may invest. A repurchase agreement is a contract under which the Fund would
acquire a security for a relatively short period (usually not more than seven
days) subject to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the Fund's cost
plus interest). Although the Fund may enter into repurchase agreements with
respect to any portfolio securities which it may acquire consistent with its
investment policies and restrictions, it is the Fund's present intention to
enter into repurchase agreements only with respect to Government Obligations.
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. The Fund will enter into repurchase agreements only
with member banks of the Federal Reserve System and with "primary dealers" in
United States government securities. In the event of a 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 value of the underlying securities, during the period in
which the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and the expense of
enforcing its rights.
REMIC Securities. The Fund may purchase collateralized mortgage obligations
issued by a real estate mortgage investment conduit ("REMIC"). REMIC securities
represent interests in a fixed pool of mortgages secured by an interest in real
property and are typically issued in multiple classes to investors such as the
Fund. The Fund may invest in REMIC securities that are issued or guaranteed by
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or other U.S. government agencies or instrumentalities and for which
the mortgage collateral is insured, guaranteed or otherwise backed by the U.S.
government or one or more of its agencies or instrumentalities. The Fund will
not invest in "residual" interests in REMICs because of certain tax
disadvantages for regulated investment companies that own such interests.
3
<PAGE>
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 the Fund's
outstanding voting securities which, as used in the Prospectus and this
Statement of Additional Information means approval of the lesser of (1) 67% or
more of the Fund's outstanding shares represented at a meeting if at least 50%
of the Fund's outstanding shares are present in person or by proxy or (2) 50% of
the Fund's outstanding shares.
The Fund may not:
(1) 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 securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, 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.
(2) Purchase securities of an issuer (other than the U.S. government, its
agencies or instrumentalities), if:
(i) 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
(ii) such purchase would at the time result in more than 10% of the outstanding
voting securities of such issuer being held by the Fund.
(3) 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.
(4) 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.
(5) Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph (4) 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.
(6) 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 interests therein or securities issued by
companies that invest in real estate or interests therein.
4
<PAGE>
(7) Issue senior securities, except as permitted by paragraphs (1) and (4)
above. 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 futures contracts, forward
commitments, forward foreign currency 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 (5) above are not deemed to be senior securities.
(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.
In connection with the lending of portfolio securities under item (1)
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) Purchase securities on margin or make short sales, except in connection
with 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.
(b) 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.
(c) Invest for the purpose of exercising control over or management of any
company.
(d) Purchase a security if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of other investment companies,
(ii) such purchase would result in more the 3% of the total outstanding
voting securities of any one such 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 investment company.
5
<PAGE>
(e) 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.
(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, but warrants acquired by the Fund in units with or attached to debt
securities shall be deemed to be without value.
(g) Invest in interests in oil, gas or other mineral leases or exploration
programs; provided, however, this restriction 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 10% of its total assets in securities which are
restricted under the Securities Act of 1933 (the "1933 Act"), excluding
securities that are eligible for resale pursuant to Rule 144A under the
1933 Act.
(j) Purchase interests in real estate limited partnerships.
(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 than 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 or investment
policies more restrictive than those described above. Should the Trustees
determine that any such more restrictive policy is no longer in the best
interests 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 values of the Fund's assets will not be
considered a violation of the restriction.
6
<PAGE>
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,
Inc.").
The following table sets forth the principal occupation or employment of
the Trustees and principal officers of the Fund during the past five years:
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
Edward J. Boudreau, Jr.* Chairman and Chief Chairman and Chief Executive
101 Huntington Avenue Executive Officer (1,2) 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).
</TABLE>
- --------------
* 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.
7
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
Dennis S. Aronowitz Trustee (4) Professor of Law, Boston University
Boston University School of Law; Trustee, Brookline
Boston, Massachusetts Savings Bank.
Richard P. Chapman, Jr. Trustee (4) President, Brookline Savings Bank;
160 Washington Street Director, Federal Home Loan Bank of
Brookline, Massachusetts Boston, (lending); Director, Lumber
Insurance Companies, (fire and
casualty insurance); Trustee,
Northeastern University
(education); Director, Depositors
Insurance Fund, Inc. (insurance).
William J. Cosgrove Trustee (4) Vice President, Senior Banker and
20 Buttonwood Place Senior Credit Officer, Citibank,
Saddle River, New Jersey N.A. (retired September 1991);
Executive Vice President, Citadel
Group Representatives, Inc.;
Trustee, the Hudson City Savings
Bank.
Gail D. Fosler Trustee (4) Vice President and Chief Economist,
4104 Woodbine Street The Conference Board (non-profit
Chevy Chase, MD economic and business research).
Bayard Henry Trustee (4) Corporate Advisor; Director,
31 Milk Street Fiduciary Trust Company (a trust
Boston, Massachusetts company); Director, Groundwater
Technology, Inc. (remediation);
Samuel Cabot, Inc.; Advisor,
Kestrel Venture Management.
Anne C. Hodsdon* Trustee and President (2) President and Chief Operating
101 Huntington Avenue Officer, the Adviser; Executive
Boston, Massachusetts Vice President, the Adviser (until
December 1994); Senior Vice
President; the Adviser (until
December 1993); Vice President, the
Adviser, until 1991.
</TABLE>
- --------------
* 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.
8
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
Richard S. Scipione* Trustee (3) General Counsel, the Life Company;
John Hancock Place Director, the Adviser, the
P.O. Box 111 Affiliated Companies, John Hancock
Boston, Massachusetts 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.
Edward J. Spellman, CPA Trustee (4) Partner, KPMG Peat Marwick LLP
259C Commercial Bld. (retired June 1990).
Lauderdale, FL
Robert G. Freedman* Vice Chairman and Chief Vice Chairman and Chief Investment
101 Huntington Avenue Investment Officer (2) Officer, the Adviser; President,
Boston, Massachusetts the Adviser (until December 1994).
Thomas H. Drohan* Senior Vice President and Senior Vice President and
101 Huntington Avenue Secretary Secretary, the Adviser.
Boston, Massachusetts
</TABLE>
- --------------
* 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.
9
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name and Address With The Fund During the Past Five Years
- ---------------- ------------- --------------------------
<S> <C> <C>
James B. Little* Senior Vice President and Senior Vice President the Adviser.
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
John A. Morin* Vice President Vice President, the Adviser;
101 Huntington Avenue Counsel, the Life Company (until
Boston, Massachusetts 1995).
Susan S. Newton* Vice President, Assistant Vice President and Assistant
101 Huntington Avenue Secretary and Compliance Secretary, the Adviser.
Boston, Massachusetts Officer
James J. Stokowski* Vice President and Treasurer Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
</TABLE>
- --------------
* 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.
10
<PAGE>
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. The three non-Independent Trustees,
Messrs. Boudreau, Scipione and Ms. Hodsdon, each of the officers of the Fund are
interested persons of the Adviser, are compensated by the Adviser and/or its
affiliates and receive no compensation from the Fund for their services.
<TABLE>
<CAPTION>
Total Compensation
Pension or From the Fund and John
Aggregate Retirement Benefits Estimated Annual Hancock Fund Complex
Compensation From Accrued as Part of Benefits Upon to Trustees(1)
Independent Trustees the Fund * the Fund's Expenses* Retirement (Total of 19 Funds)
- -------------------- ---------- -------------------- ---------- -------------------
<S> <C> <C> <C> <C>
Dennis S. Aronowitz $ 3,256 $ - $ - $ 61,050
Richard P. Chapman, Jr. 809 2,559 - 62,800
William J. Cosgrove 809 2,447 - 61,050
Gail D. Fosler 3,259 - - 60,800
Bayard Henry 3,155 - - 58,850
Edward J. Spellman 3,256 - - 61,050
------- ------ ------ --------
$14,544 $5,006 $ - $365,600
</TABLE>
* Compensation for the fiscal year ended December 31, 1995.
(1) The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is as of the calendar year ended December 31, 1995.
The nominees of the Funds may at times be the record holders of in excess
of 5% of shares of any one or more Funds by virtue of holding shares in "street
name". As of March 13, 1996, the officers and trustees of the Trusts as a group
owned less than 1% of the outstanding shares of each class of each of the Funds.
As of March 13, 1996, the following shareholders beneficially owned 5% of or
more of the outstanding shares of the Funds listed below:
<TABLE>
<CAPTION>
Number of shares Percentage of total
Fund and Class of beneficial outstanding shares of
Name and Address of Shareholder of Shares interest owned the class of the Fund
- ------------------------------- --------- -------------- ---------------------
<S> <C> <C> <C>
Merrill Lynch Pierce Fenner & Class B shares 177,358 14.49%
Smith, Inc.
Attn Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
</TABLE>
11
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, the Fund receives its investment advice
from the Adviser. Investors should refer to the Prospectus for a description of
certain information concerning the investment management contract.
Each of the Trustees and principal officers 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 Prospectus 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 with (i) a continuous investment program, consistent with the
Fund's stated investment objective and policies, (ii) supervision of all aspects
of the Fund's operations except those that are delegated to a custodian,
transfer agent or other agent and (iii) such executive, administrative and
clerical personnel, officers and equipment as are necessary for the conduct of
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 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.
12
<PAGE>
As provided by the investment management contract, the Fund pays the
Adviser monthly an investment management fee which is based on a stated
percentage of the Fund's average of the daily net assets as follows:
Net Asset Value Annual Rate
First $250,000,000 0.60%
Next $250,000,000 0.55%
Amount over $500,000,000 0.50%
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, 1995 the net assets of the Fund were $209,446,375 . For the
years ended December 31, 1993, 1994 and 1995, the Adviser received fees of
$1,251,037, $1,506,527 and $1,278.357, 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 may 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 limit above, the Fund may
exclude interest, brokerage commissions and extraordinary expenses.
Pursuant to the investment management contract, the Adviser is not liable
to the Fund or its shareholders for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which 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 $16 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 1,080,000 shareholders.
The Adviser is an indirect wholly owned subsidiary of the Life Company, one of
the most recognized and respected financial institutions in the nation. With
total assets under management of $80 billion, the Life Company is one of the ten
largest life insurance companies in the United States, and carries high ratings
from Standard & Poor's and A.M. Best. Founded in 1862, the Life Company has been
serving clients for over 130 years.
13
<PAGE>
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 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 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 continues in effect from year to year if
approved annually by vote of a majority of the 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 Trustees or
the holders of a majority of the Fund's outstanding voting securities. This
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
on behalf 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 Prospectus.
The Fund's Trustees adopted Distribution Plans with respect to Class A and
Class B shares (the "Plans"), pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, 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 daily net assets attributable to the shares of that class. However, the
service fee will not exceed 0.25% of the Fund's 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 Fund shares, and the
service fees compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event that John Hancock Funds is
not fully reimbursed for expenses incurred by it under the Class B Plan in any
fiscal year, John Hancock Funds may carry these expenses forward, provided,
however that the Trustees may terminate the Class B Plan and, thus, the Fund's
obligation to make further payments at any time. Accordingly, the Fund does not
treat unreimbursed expenses relating to the Class B shares as a liability of the
Fund. The Plans were approved by a majority of the voting securities of the
Fund. The Plans and all amendments were approved by a majority of the Trustees,
including a majority of the 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.
14
<PAGE>
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 these expenditures were made. The Trustees review these
reports on a quarterly basis.
During the fiscal year ended December 31, 1995 the Fund paid John Hancock
Funds the following amounts of expenses with respect to the Class A shares and
Class B shares of the Fund:
<TABLE>
<CAPTION>
Expense Items
Printing and
Mailing of Interest Carrying
Prospectus to Compensation to Expenses of John or Other Finance
Advertising New Shareholders Selling Brokers Hancock Funds Charges Other
----------- ---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Limited Term
Government
- ----------
Class A Shares $69,807 $ 8,026 $385,830 $150,439 $ -
Class B Shares 1,741 232 5,485 3,760 73,183
</TABLE>
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 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 of the Plans will benefit the holders of the applicable class of
shares of the Fund.
When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Trustees. The members of the Committee
on Administration are all Independent Trustees and are identified in this
Statement of Additional Information under the heading "Those Responsible for
Management."
15
<PAGE>
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.
A Fund will not price its securities on the following national holidays: New
Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor
Day; Thanksgiving Day; and Christmas Day.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund are
described in the Prospectus. Methods of obtaining reduced sales charges referred
to generally in the Prospectus are described in detail below. In calculating the
sales charge applicable to current purchases of Class A shares of the Fund, the
investor is entitled to cumulate current purchases with the greater of the
current value (at offering price) of the Class A shares of the Fund owned by the
investor, or, if John Hancock Investors, Inc. ("Investor Services") is notified
by the investor's dealer or the investor at the time of the purchase, the cost
of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to purchases of
Class A shares made at one time, the purchases will be combined if made by (a)
an individual, his or her spouse and their children under the age of 21,
purchasing securities for his or 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 Investor
Services or a Selling Broker's representative.
Without Sales Charge. As described in the Prospectus, Class A shares of the Fund
may be sold without a sales charge to certain persons described in the
Prospectus.
Accumulation Privilege. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of the reduced
sales charge by taking into account not only the amount then being invested but
also the purchase price or current account value of the Class A shares already
held by such person.
16
<PAGE>
Combination Privilege. Reduced sales charges (according to the schedule set
forth in the 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. 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), TSA and Section 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
(either 13 or 48 months) 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 escrowed Class A 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 or her
attorney-in-fact to redeem any escrowed Class A 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.
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 four
years of purchase will be subject to a contingent deferred sales charge ("CDSC")
at the rates set forth in the 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.
17
<PAGE>
The amount of the CDSC, if any, 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 this number, all
payments during a month will be aggregated and deemed to have been made on the
last day of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in whole
or in part by John Hancock Funds to defray its expenses related to providing
distribution-related services to the Fund in connection with the sale of the
Class B shares, such as the payment of compensation to select Selling Brokers
for selling Class B shares. The combination of the CDSC and the distribution and
service fees facilitates the ability of the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the
Prospectus for additional information regarding the CDSC.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any such
securities would be valued for the purposes of making such payment at the same
value as used in determining net asset value. The Fund has, 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 Prospectus, the Fund permits
exchanges of shares of any class of the Fund for shares of the same class in any
other John Hancock fund offering that class.
Systematic Withdrawal Plan. As described briefly in the Prospectus, the Fund
permits the establishment of a Systematic Withdrawal Plan. Payments under this
plan represent proceeds arising from the redemption of shares of the Fund. Since
the redemption price of the shares of the Fund 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 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.
18
<PAGE>
Monthly Automatic Accumulation Program ("MAAP"). This program is explained fully
in the Prospectus. The program, as it relates to automatic investment checks, is
subject to the following conditions:
The investments will be drawn on or about the day of the month indicated.
The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice if
any investment is not honored by the shareholder's bank. The bank shall be under
no obligation to notify the shareholder as to the non-payment of any checks.
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 any of the other John Hancock mutual funds, 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 any other John Hancock funds.
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 shares of the Fund 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 shares of the Fund 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,
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 new
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 two
classes of shares of the Fund, designated as Class A and Class B.
Class A and Class B shares of the Fund represent an equal proportionate
interest in the aggregate net assets attributable to that class of the Fund.
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The holders of Class A and Class B shares each have certain exclusive
voting rights on matters relating to their respective Rule 12b-1 distribution
plans. 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.
Dividend paid by the Fund, if any, with respect to each class of shares
will be calculated in the same manner at the same time and on the same day and
will be in the same amount, except 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 class of shares will bear any other class expenses
properly attributable to that class of shares, subject to conditions imposed by
the Internal Revenue Service in issuing rulings to funds with multiple-class
structure. Similarly, 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 of 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, by the Trust, 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 Fund 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.
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 for each taxable
year. 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.
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The Fund will be subject to a four percent nondeductible 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 earning 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 that 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 interests of the Fund to dispose of
portfolio securities that will generate capital gains. At the time of an
investor's purchase of Fund shares, a portion of the purchase price is often
attributable to realized or unrealized appreciation in the Fund's portfolio or
undistributable taxable income of the Fund. Consequently, subsequent
distributions on these shares from such appreciation or income 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 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. This disregarded charge will result in an
increase in the shareholder's tax basis in the Class A shares subsequently
acquired. Also, any loss realized on a redemption or exchange will be disallowed
to the extent the shares disposed of are replaced with other shares of the Fund
within a period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of, such as pursuant to the Automatic 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 the Fund's 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 carry forward 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
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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 the taxable year in which the
last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares in the Fund by the difference between his pro rata share of such excess
and his pro rata share of such taxes.
For Federal income tax purposes, the Fund is 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 as such
shareholders. The Fund has $7,286,040 of capital loss carry forward available to
the extent provided by regulations, to offset future net realized capital gains.
The carry forward expires December 31, 2002.
If the Fund invests in certain securities with original issue discount (or
with market discount if the Fund elects to include market discount in income
currently), the Fund will be required to accrue income on such investments prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Distributions from the Fund will not qualify for the dividends received
deduction for corporations.
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 local taxes. Shareholders should consult their own
tax advisers as to the Federal, state or local tax consequences of ownership of
shares of, and receipt of distributions from, the Fund in their particular
circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which their
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 non-resident 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
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substitute is on file, to 31% backup withholding on certain other payments from
the Fund. Non-U.S. investors should consult their tax advisers regarding such
treatment and the application of foreign taxes to an investment in the Fund.
The Fund is not subject to Massachusetts corporate excise or franchise
taxes. Provided that the Fund qualifies as a regulated investment company under
the Code, it will also not be required to pay any Massachusetts income tax.
CALCULATION OF PERFORMANCE
For the 30-day period ended December 31, 1995, the annualized yield on
Class A and Class B shares at the Fund was 4.91% and 4.37%, respectively. The
average annual total return of the Fund's Class A shares for the 1 year, 5 year
and 10 year periods ended December 31, 1995 was 7.89%, 6.00% and 6.83%,
respectively, and reflect payment of the maximum sales charge of 3.00%. The
total return for the one year period ending December 31, 1995 and since
inception on January 3, 1994 for Class B shares was 7.63% and 3.26% reflects the
applicable CDSC.
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, where applicable) on the last day of the period,
according to the following standard formula:
Yield = 2 ([(a-b) + 1] 6-1)
---
cd
Where:
a = dividends and interest earned during the period.
b = net expenses accrued during the period.
c = the average daily number of shares of the Fund 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.
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The Fund's total return in 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 a hypothetical $1,000 investment made
at the beginning of the 1 year, 5 year and 10 year periods.
In the case of Class A shares or Class B shares, this calculation assumes
the maximum sales charge of 3.00% is included in the initial investment or the
CDSC applied at the end of the period, respectively. This calculation also
assumes that all dividends and distributions are reinvested at net asset value
on the reinvestment dates during the period.
In addition to average annual total returns, the Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single investment,
a series of investments, and/or a series of redemptions, over any time period.
Total returns may be quoted with or without taking the Fund's 3.00% sales charge
on Class A shares or the 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 yield
and total return will be compared to indices of mutual funds and bank deposit
vehicles such as Lipper Analytical Services, Inc. "Lipper Fixed Income Fund
Performance Analysis," a monthly publication which tracks net assets, total
return, and yield on fixed income mutual funds in the United States. Comparisons
may also be made to bank certificates of deposit ("CDs"), which differ from
mutual funds, such as the Fund, in several ways. The interest rate established
by the sponsoring bank is fixed for the term of a CD, there are penalties for
early withdrawal from CDs, and the principal on a CD is insured.
Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, the WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S may also be
utilized.
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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 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 maker to
reflect a "spread." Investments in debt securities are generally traded on a net
basis through dealers acting for their own account as principals and not as
brokers; no brokerage commissions are payable on such transactions.
The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing primary
policy, the Rules of Fair Practice of the 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 the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research information
and, to a lesser extent, statistical assistance furnished to the Adviser of the
Fund and their value and expected contribution to the performance of the Fund.
It is not possible to place a dollar value on information and services to be
received from brokers and dealers, since it is only supplementary to the
research efforts of the Adviser. The receipt of research information is not
expected to reduce significantly the expenses of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Life Company or other advisory clients of the Adviser, and,
conversely, brokerage commissions and spreads paid by other advisory clients of
the Adviser may result in research information and statistical assistance
beneficial to the Fund. The Fund will make no commitment to allocate portfolio
transactions upon any prescribed basis. While the Adviser will be primarily
responsible for the allocation of the Fund's brokerage business, their policies
and practices of the Adviser 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 December 31, 1995, 1994, and 1993 no negotiated brokerage
commissions were paid on portfolio transactions.
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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 commission is
reasonable in light of the services provided and to such policies as the
Trustees may adopt from time to time. During the period ended December 31, 1995,
the Fund did not pay commissions to compensate any brokers for research services
such as industry, economic and company reviews and evaluations of securities.
The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Distributors, Inc. ("Distributors"), a broker-dealer
and John Hancock Freedom Securities Corporation and its three broker-dealer
subsidiaries, Tucker Anthony Incorporated ("Tucker Anthony") and Sutro &
Company, Inc. ("Sutro"), each, ("Affiliated Brokers"). Pursuant to procedures
established 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. For the years ended December 31, 1995, 1994 and 1993, 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 Trustees believe to be contemporaneously charged by
other brokers in connection with comparable transactions involving similar
securities being purchased or sold. A transaction would not be placed with an
Affiliated Broker if the Fund would have to pay a commission rate less favorable
than the Affiliated Broker's contemporaneous charges for comparable transactions
for its other most favored, but unaffiliated, customers except for accounts for
which the Affiliated Broker acts as clearing broker for another brokerage firm,
and any customers of the Affiliated Broker not comparable to the Fund as
determined by a majority of the Trustees who are not interested persons (as
defined in the 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 Broker 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 Investor Services Corporation ("Investor Services"), P.O. Box
9116, Boston, MA 02205-9116, a wholly-owned indirect subsidiary of the Life
Company, is the transfer and dividend paying agent for the Fund. The Fund pays
an annual fee of $20.00 for each Class A shareholder and $22.50 for each Class
B, plus certain out-of-pocket expenses. These expenses are aggregated and
charged to the Fund and allocated to each class on the basis of the relative net
asset values.
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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
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 LLP audits and
renders an opinion of the Fund's annual financial statements and prepares the
Fund's annual Federal income tax return.
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PART C.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements listed below are included in and incorporated
by reference into Part B of the Registration Statement from the 1995 Annual
Report to Shareholders for the year ended December 31, 1995 (filed
electronically on February 26, 1996; file nos. 811-1678, and 2-29503; accession
number 0000950135-96-001152):
John Hancock Limited-Term Government Fund
Statement of Assets and Liabilities as of December 31, 1995.
Statement of Operations of the year ended December 31, 1995.
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, 1995.
Schedule of Investments as of December 31, 1995.
(b) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibit Index
hereto and are incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
No person is directly or indirectly controlled by or under common control
with Registrant.
Item 26. Number of Holders of Securities
As of March 29, 1996, the number of record holders of shares of Registrant
was as follows:
Title of Class Number of Record Holders
Class A Shares - 24,710
Class B Shares - 676
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
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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.
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(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 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
C-3
<PAGE>
(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 Current Interest, John
Hancock Series, Inc., John Hancock Tax-Free Bond Fund, John Hancock California
Tax-Free Income Fund, John Hancock Capital Series, John Hancock Limited-Term
Government Fund, John Hancock Tax-Exempt Income Fund, John Hancock Sovereign
Investors Fund, Inc., John Hancock 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.
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Edward J. Boudreau, Jr. Director, Chairman, President and Chairman
101 Huntington Avenue Chief Executive Officer
Boston, Massachusetts
Robert H. Watts Director, Executive Vice None
John Hancock Place President and Chief Compliance
P.O. Box 111 Officer
Boston, Massachusetts
Robert G. Freedman Director Vice Chairman and Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts
Stephen M. Blair Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
Thomas H. Drohan Senior Vice President Senior Vice President and
101 Huntington Avenue Secretary
Boston, Massachusetts
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer
David A. King Director None
101 Huntington Avenue
Boston, Massachusetts
James B. Little Senior Vice President Senior Vice President and
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
John A. Morin Vice President and Secretary Vice President
101 Huntington Avenue
Boston, Massachusetts
C-5
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
Susan S. Newton Vice President Vice President and
101 Huntington Avenue Assistant Secretary
Boston, Massachusetts
Christopher M. Meyer Second Vice President and None
101 Huntington Avenue Treasurer
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
C-6
<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
David F. D'Alessandro 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
James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Masschusetts
Charles H. Womack Senior Vice President None
6501 Americas Parkway
Suite 950
Albuquerque, New Mexico
Michael T. Carpenter Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
Anthony P. Petrucci Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
C-7
<PAGE>
Keith Harstein Vice President None
101 Huntington Avenue
Boston, Massachusetts
Griselda Lyman Vice President None
101 Huntington Avenue
Boston, Massachusetts
</TABLE>
(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.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, and the Commonwealth of Massachusetts on the
26th day of April 1996.
JOHN HANCOCK LIMITED TERM GOVERNMENT 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman
Edward J. Boudreau, Jr. (Principal Executive Officer)
/s/James B. Little
James B. Little Senior Vice President and Chief April 26, 1996
Financial Officer (Principal
Financial and Accounting Officer)
* Trustee
Dennis S. Aronowitz
* Trustee
Richard P. Chapman
* Trustee
William J. Cosgrove
* Trustee
Gail D. Fosler
* Trustee
Bayard Henry
________________________ Trustee
Anne C. Hodsdon
C-9
<PAGE>
* Trustee
Richard S. Scipione
* Trustee
Edward J. Spellman
By: /s/Thomas H. Drohan April 26, 1996
-------------------
Thomas H. Drohan,
Attorney-in-Fact
</TABLE>
C-10
<PAGE>
John Hancock Limited-Term Government Fund
EXHIBIT INDEX
Exhibit No. Exhibit Description
99.B1 Declaration of Trust of Registrant dated February 28, 1992.*
99.B1.1 Amendment to Declaration of Trust dated July 1, 1993.*
99.B1.2 Amendment to Declaration of Trust dated December 7, 1993.*
99.B1.3 Amendment to Declaration of Trust Agreement Abolition of Class
C Shares of Beneficial Interest of John Hancock Limited Term
Government Fund dated May 1, 1995.+
99B1.4 Amedment to Declaration of Trust amending Number of Trustees and
Appointing Individual to Fill A Vacancy dated March 5, 1996.+
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.B2.2 Amendment to By-Laws dated March 6, 1996.+
99.B4 Specimen share certificate for the Registrant.*
99.B5 Investment Management Contract between the Regisrant 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.B9.1 Accounting and Legal Services Agreement between John Hancock
Advisers, Inc. and Registrant as of January 1, 1996.+
<PAGE>
99.B10 Rule 24(e) opinion.+
99.B11 Auditor's Consent.+
99.B12 Not Applicable
99.B13 None
99.B14 None
99B15 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 of 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
99.27 Class B
* Previously filed electronically with post-effective amendment number 44
(file nos. 811-1678 and 2-29503) on April 26, 1995, accession number
0000950146-95-000179.
+ Filed herewith.
JOHN HANCOCK LIMITED TERM GOVERNMENT FUND
Abolition of Class C Shares
of Beneficial Interest of
John Hancock Limited Term Government Fund (the "Fund")
The undersigned, being a majority of the Trustees of John Hancock Limited
Term Government Fund, a Massachusetts business Trust (the "Trust"), acting
pursuant to the Amended and Restated Declaration of Trust dated February 28,
1992 of the Trust, as amended from time to time (the "Declaration of Trust"), do
hereby abolish the class of shares of beneficial interest of the Fund previously
established and designated as "Class C Shares" and in connection therewith do
hereby extinguish any and all rights and preferences of such Class C Shares as
set forth in the Declaration of Trust and the Trust's Registration Statement on
Form N-1A. The abolition of the Class C shares of the Fund is effective as of
May 1, 1995.
The Declaration of Trust is hereby amended to the extent necessary to
reflect the abolition of Class C Shares.
Capitalized terms not otherwise defined herein shall have the meaning set
forth in the Declaration of Trust.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 1st day of May, 1995.
/s/Edward J. Boudreau, Jr. /s/Dennis S. Aronowitz
Edward J. Boudreau, Jr. Dennis S. Aronowitz
as Trustee, not individually as Trustee, not individually
34 Swan Road Boston University
Winchester, MA 01890 Boston, Massachusetts
/s/Richard P. Chapman, Jr. /s/Edward J. Spellman
Richard P. Chapman, Jr. Edward J. Spellman
as Trustee, not individually as Trustee, not individually
160 Washington Street 295C Commercial Bld.
Brookline, Massachusetts Lauderdale by the Sea, FL
/s/William J. Cosgrove /s/Gail D. Fosler
William J. Cosgrove Gail D. Fosler
as Trustee, not individually as Trustee, not individually
20 Buttonwood Place 4104 Woodbine Street
Saddle River, New Jersey Chevy Chase, MD
- ----------------- ----------------
Bayard Henry Richard S. Scipione
as Trustees, not individually as Trustees, not individually
121 High Street John Hancock Place
Boston, Massachusetts Boston, Massachusetts
<PAGE>
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 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 Trust 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.
JOHN HANCOCK LIMITED TERM GOVERNMENT FUND
Instrument Amending Number of Trustees
and Appointing Individual to Fill a Vacancy
The undersigned, constituting a majority of the Trustees of John Hancock
Limited Term Government Fund, a Massachusetts business trust (the "Trust"),
acting pursuant to the Amended and Restated Declaration of Trust dated February
28, 1992 of the Trust, as amended from time to time, do hereby:
a) amend Section 2.12, effective March 5, 1996, to read as follows:
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).
b) appoint Anne C. Hodsdon to fill a vacancy, such appointment to become
effective upon such individual accepting in writing such appointment and
agreeing to be bound by the terms of the Declaration of Trust and such
individual to hold office until his successor is elected and qualified or
until the earlier occurrence of any of the events specified in the first
sentence of Section 2.15 of the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned being at least a majority of the
Trustees of the Trust, have executed this amendment as of the 5th day of March,
1996.
/s/Dennis S. Arnonowitz _________________________
Dennis S. Aronowitz Gail D. Fosler
/s/Edward J. Boudreau, Jr. _________________________
Edward J. Boudreau, Jr. Bayard Henry
/s/Richard P. Chapman, Jr. /s/Richard S. Scipione
Richard P. Chapman, Jr. Richard S. Scipione
/s/William J. Cosgrove /s/Edward J. Spellman
William J. Cosgrove Edward J. Spellman
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 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/her
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 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.
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
)ss
COUNTY OF SUFFOLK )
Then personally appeared the above-named Edward J. Boudreau, Jr., Dennis S.
Aronowitz, Richard P. Chapman, Jr., William J. Cosgrove, Richard S. Scipione,
and Edward J. Spellman, who each acknowledged the foregoing instrument to be his
or her fee act and deed, before me, this 5th day of March 1996.
/s/Ann Marie Kalapinski
Notary Public
My Commission Expires: 10/20/00
<PAGE>
John Hancock Capital Series
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 World Fund
CONSIDERATION OF PROPOSAL TO AMEND THE BY-LAWS,
EFFECTIVE MARCH 6, 1996
RESOLVED, that the By-Laws of the Trust be and hereby are amended to delete
Article IV, Sub-Section 5.1 of the By-Laws and replace it with the following:
Executive Committees 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
an Administration Committee, 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 shall be a member of the Executive Committee.
As of January 1, 1996
ACCOUNTING & LEGAL SERVICES AGREEMENT
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Dear Sir:
The John Hancock Funds listed on Schedule A (the "Funds") have selected John
Hancock Advisers, Inc. (the "Administrator") to provide certain accounting and
legal services for the Funds, as more fully set forth below, and you are willing
to provide such services under the terms and conditions hereinafter set forth.
Accordingly, the Funds agree with you as follows:
1. Services. Subject to the general supervision of the Board of
Trustees/Directors of the Funds, you will provide certain tax, accounting
and legal services (the "Services") to the Funds. You will, to the extent
such services are not required to be performed by you pursuant to an
investment advisory agreement, provide:
(A) such tax, accounting, recordkeeping and financial management services
and functions as are reasonably necessary for the operation of each
Fund. Such services shall include, but shall not be limited to,
supervision, review and/or preparation and maintenance of the
following books, records and other documents: (1) journals containing
daily itemized records of all purchases and sales, and receipts and
deliveries of securities and all receipts and disbursements of cash
and all other debits and credits, in the form required by Rule
31a-1(b) (1) under the Act; (2) general and auxiliary ledgers
reflecting all asset, liability, reserve, capital, income and expense
accounts, in the form required by Rules 31a-1(b) (2) (i)-(iii) under
the Act; (3) a securities record or ledger reflecting separately for
each portfolio security as of trade date all "long" and "short"
positions carried by each Fund for the account of the Funds, if any,
and showing the location of all securities long and the off-setting
position to all securities short, in the form required by Rule
31a-1(b) (3) under the Act; (4) a record of all portfolio purchases or
sales, in the form required by Rule 31a-1(b) (6) under the Act; (5) a
record of all puts, calls, spreads, straddles and all other options,
if any, in which any Fund has any direct or indirect interest or which
the Funds have granted or guaranteed, in the form required by Rule
31a-1(b) (7) under the Act; (6) a record of the proof of money
balances in all ledger accounts maintained pursuant to this Agreement,
in the form required by Rule 31a-1(b) (8) under the Act; (7) price
make-up sheets and such records as are necessary to reflect the
determination of each Funds' net asset value; and (8) arrange for, or
participate in (a) the preparation for the Fund of all required tax
returns, (b) the preparation and submission of reports to existing
shareholders and (c) the preparation of financial data or reports
required by the Securities and Exchange Commission and other
regulatory authorities;
<PAGE>
(B) certain legal services as are reasonably necessary for the operation
of each Funds. Such services shall include, but shall not be limited
to; (1) maintenance of each Fund's registration statement and federal
and state registrations; (2) preparation of certain notices and proxy
materials furnished to shareholders of the Funds; (3) preparation of
periodic reports of each Fund to regulatory authorities, including
Form N-SAR and Rule 24f-2 legal opinions; (4) preparation of materials
in connection with meetings of the Board of Trustees/Directors of the
Funds; (5) preparation of written contracts, distribution plans,
compliance procedures, corporate and trust documents and other legal
documents; (6) research advice and consultation about certain legal,
regulatory and compliance issues, (7) supervision, coordination and
evaluation of certain services provided by outside counsel.
(C) provide the Funds with staff and personnel to perform such accounting,
bookkeeping and legal services as are reasonably necessary to
effectively service the Fund. Without limiting the generality of the
foregoing, such staff and personnel shall be deemed to include
officers of the Administrator, and persons employed or otherwise
retained by the Administrator to provide or assist in providing of the
services to the Fund.
(D) maintain all books and records relating to the foregoing services; and
(E) provide the Funds with all office facilities to perform tax,
accounting and legal services under this Agreement.
2. Compensation of the Administrator The Funds shall reimburse the
Administrator for: (1) a portion of the compensation, including all
benefits, of officers and employees of the Administrator based upon the
amount of time that such persons actually spend in providing or assisting
in providing the Services to the Funds (including necessary supervision and
review); and (2) such other direct and indirect expenses, including, but
not limited to, those listed in paragraph (1) above, incurred on behalf of
the Fund that are associated with the providing of the Services and (3) 10%
of the reimbursement amount. In no event, however, shall such reimbursement
exceed levels that are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and
quality. Compensation under this Agreement shall be calculated and paid
monthly in a arrears.
3. No Partnership or Joint Venture. The Funds and you are not partners of or
joint ventures with each other and nothing herein shall be construed so as
to make you such partners or joint venturers or impose any liability as
such on any of you.
4. Limitation of Liability of the Administrator. You shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from reckless
disregard by you of your obligations and duties under this Agreement. Any
person, even though also employed by you, who may be or become an employee
of and paid by the Funds shall be deemed, when acting within the scope of
his or her employment by the Funds, to be acting in such employment solely
for the Funds and not as your employee or agent.
<PAGE>
5. 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 majority of the Trustees/Directors. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any
penalty by the Funds by vote of a majority of the Trustees/Directors, or by
you. This Agreement shall automatically terminate in the event of its
assignment.
6. 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
or termination is sought.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts without
regard to the choice of law provisions thereof.
8. 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. A copy of the Declaration of Trust of each Fund
organized as Massachusetts business trusts is on file with the Secretary of
State of the Commonwealth of Massachusetts. The obligations of each such
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.
Yours very truly,
JOHN HANCOCK FUNDS (See Schedule A)
By: /s/ James B. Little
James B. Little
Senior Vice President
The foregoing contract is
hereby agreed to as of the
date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/ Anne C. Hodsdon
Anne C. Hodsdon
President
<PAGE>
January 1, 1996
SCHEDULE A
John Hancock Capital Series
- John Hancock Growth Fund
- John Hancock Special Value Fund
John Hancock Limited Term Government Fund
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 World Fund
- John Hancock Pacific Basin Equities Fund
- John Hancock Global Rx Fund
- John Hancock Global Marketplace Fund
John Hancock Cash Reserve, Inc.
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
John Hancock Institutional Series Trust
- John Hancock Active Bond Fund
- John Hancock Dividend Performers Fund
- John Hancock Fundamental Value Fund
- John Hancock Global Bond Fund
- John Hancock International Equity Fund
- John Hancock Multi-Sector Growth Fund
- John Hancock Small Capitalization Equity Fund
- John Hancock Independence Diversified Core Equity Fund II
- John Hancock Independence Value Fund
- John Hancock Independence Balanced Fund
- John Hancock Independence Medium Capitalization Fund
- John Hancock Independence Growth Fund
John Hancock Declartion Trust
- John Hancock V.A. 500 Index Fund
- John Hancock V.A. Discovery Fund
- John Hancock V.A. Diversified Core Equity Fund
- John Hancock V.A. Emerging Equities Fund
- John Hancock V.A. Global Income Fund
- John Hancock V.A. International Fund
- John Hancock V.A. Money Market Fund
- John Hancock V.A. Sovereign Bond Fund
- John Hancock V.A. Strategic Income Fund
- John Hancokc V.A. Sovereign Investors Fund
April 26, 1996
John Hancock Limited Term Government Fund
101 Huntington Avenue
Boston, MA 02199
RE: John Hancock Limited Term Government Fund (the "Fund")
(File Nos. 2-9503; 811-1677) (000045298)
Ladies and Gentlemen:
In connection with the filing of Post-Effective Amendment No.24 pursuant to Rule
24e-2 under the Investment Company Act of 1940, as amended, registering by
Post-Effective Amendment No.45 under the Securities Act of 1933, as amended,
32,992 shares of the Fund sold in reliance upon Rule 24e-2 during the fiscal
year ending December 31, 1995, 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,
/s/ Avery P. Maher
Avery P. Maher
Assistant Secretary
Member of Massachusetts Bar
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "The Fund's Financial
Highlights" in the Class A and Class B Shares prospectus and "Independent
Auditors" in the Class A and Class B Shares Statement of Additional Information
and to the use of our report dated February 9, 1996 on the financial highlights
of the John Hancock Limited Term Government Fund in this Post-Effective
Amendment Number 45 Registration Statement (Form N-1A No.
2-29503 ) dated May 1, 1996.
/s/ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 25, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> JOHN HANCOCK LIMITED TERM GOVERNMENT FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 203,867,453
<INVESTMENTS-AT-VALUE> 206,994,974
<RECEIVABLES> 2,743,726
<ASSETS-OTHER> 17,080
<OTHER-ITEMS-ASSETS> 3,127,521
<TOTAL-ASSETS> 209,755,780
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 309,405
<TOTAL-LIABILITIES> 309,405
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 213,604,894
<SHARES-COMMON-STOCK> 22,763,676
<SHARES-COMMON-PRIOR> 218,845,980
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,286,040)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,127,521
<NET-ASSETS> 209,446,375
<DIVIDEND-INCOME> 0
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