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JOHN HANCOCK FUNDS
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
JOHN HANCOCK CAPITAL GROWTH FUND
JOHN HANCOCK CASH RESERVE, INC.
JOHN HANCOCK TAX-FREE BOND FUND
SUPPLEMENT DATED MAY 1, 1995
TO PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1995
THE INFORMATION IN THIS SUPPLEMENT IS ONLY APPLICABLE TO PURCHASE OR REDEMPTION
ORDERS RECEIVED BY THE FUND ON OR BEFORE THE CLOSE OF BUSINESS (GENERALLY 5 P.M.
EASTERN TIME) ON MAY 12, 1995. THE SALES CHARGES AND PURCHASE AND REDEMPTION
PROCEDURES DISCUSSED IN THE ACCOMPANYING PROSPECTUS OR STATEMENT OF ADDITIONAL
INFORMATION APPLY TO ORDERS RECEIVED COMMENCING AT 9 A.M. EASTERN TIME ON MAY
15, 1995. THE SHAREHOLDER SERVICES THAT WILL BE AVAILABLE ON AND AFTER 9 A.M.
EASTERN TIME ON MAY 15, 1995 ARE ALSO DESCRIBED IN THE ACCOMPANYING PROSPECTUS
OR STATEMENT OF ADDITIONAL INFORMATION AND TO THE EXTENT THAT THEY ARE
INCONSISTENT THEREWITH, THE SERVICES DESCRIBED IN THIS SUPPLEMENT WILL BE
DISCONTINUED.
TRANSFER AGENT. Until the close of business on May 12, 1995, transfer and
dividend disbursing agent functions are performed by The Shareholder Services
Group ("Transfer Agent"), One American Express Plaza, Providence, Rhode Island
02903-1135.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. Until the close of business
on May 12, 1995, the offering price you pay for Class A shares of the Funds
(other than Cash Reserve which shares are sold without a sales charge) equals
the net asset value per share next computed after your investment is received in
good order by John Hancock Funds, Inc. ("John Hancock Funds") plus a sales
charge as follows:
CALIFORNIA TAX-FREE INCOME FUND AND TAX-FREE BOND FUND
<TABLE>
<CAPTION>
SALES CHARGE AS COMBINED REALLOWANCE REALLOWANCE TO
SALES CHARGE AS A PERCENTAGE OF AND SERVICE FEE SELLING BROKERS
AMOUNT INVESTED A PERCENTAGE OF THE AMOUNT AS A PERCENTAGE AS A PERCENTAGE OF
(INCLUDING SALES CHARGE) OFFERING PRICE INVESTED OF OFFERING PRICE(+) OFFERING PRICE(*)
- ----------------------------- --------------- --------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Less than $100,000........... 4.75% 4.99% 4.25% 4.01%
$100,000 to $249,999......... 3.75% 3.90% 3.25% 3.01%
$250,000 to $499,999......... 2.75% 2.83% 2.35% 2.11%
$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>
CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
SALES CHARGE AS COMBINED REALLOWANCE REALLOWANCE TO
SALES CHARGE AS A PERCENTAGE OF AND SERVICE FEE SELLING BROKERS
AMOUNT INVESTED A PERCENTAGE OF THE AMOUNT AS A PERCENTAGE AS A PERCENTAGE OF
(INCLUDING SALES CHARGE) OFFERING PRICE INVESTED OF OFFERING PRICE(+) OFFERING PRICE(*)
- ----------------------------- --------------- --------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Less than $50,000............ 5.75% 6.10% 5.25% 5.01%
$50,000 to $99,999........... 4.75% 4.99% 4.25% 4.01%
$100,000 to $249,999......... 3.75% 3.90% 3.25% 3.01%
$250,000 to $499,999......... 2.75% 2.83% 2.35% 2.11%
$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 broker-dealers with whom it has sales agreements ("Selling
Brokers"), John Hancock Funds may reallow an amount up to the full
applicable sales charge. A Selling Broker to whom
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substantially the entire sales charge is reallowed or who receives these
incentives may be deemed to be an underwriter under the Securities Act of
1933.
(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions within one year of purchase
in an amount equal to 1% of the lesser of (a) the net asset value of the
shares at the time of purchase or (b) the net asset value of the shares at
the time of redemption.
(***) 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 $3 million, 0.50% on the next $2 million and 0.25%
on amounts over $5 million.
(+) At time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance and thereafter pays the service fee
periodically in arrears. Selling Brokers receive the fee as compensation
for providing personal and account maintenance services to shareholders.
EXPENSE INFORMATION. Because the sales charges set forth above are higher than
the sales charges that will be effective on or after May 15, 1995, shareholders
purchasing shares of the Funds before May 15, 1995 will bear higher expenses
than those set forth in the example under "Expense Information" in the
accompanying Prospectus.
ON OR BEFORE THE CLOSE OF BUSINESS ON MAY 12, 1995, THE FUNDS EMPLOY THE
PURCHASE AND REDEMPTION PROCEDURES AND OFFER THE SERVICES DESCRIBED BELOW. IF
PURCHASE OR REDEMPTION IS BEING MADE BY MAIL, AN INVESTOR SHOULD USE THE
PROCEDURES IN THE ACCOMPANYING PROSPECTUS IF THE FUND WILL RECEIVE THE
INVESTOR'S ORDER ON OR AFTER MAY 15, 1995.
HOW TO BUY SHARES. Shares may be purchased by mailing a check, made payable to
the appropriate Fund (noting shareholder account number), and if opening a new
account, a completed Account Application (a copy of which is attached to the
accompanying Prospectus), to The Shareholder Services Group, P.O. Box 9656,
Providence, Rhode Island, 02940-9656 or, if delivered by express mail, to One
American Express Plaza, Providence, Rhode Island 02903.
The initial purchase must be at least $1,000 ($2,500 for Cash Reserve) with
subsequent investments of no less than $50 ($100 for Cash Reserve). Certificates
for shares will not be issued unless requested by the shareholder in writing and
then only for full shares.
Purchases of Fund shares through an eligible securities dealer (not available
for Tax-Free Bond Fund) must be at least $100. The minimum initial and
subsequent investment for tax deferred retirement programs are $250 and $25,
respectively. However, programs that are investing through plans providing for
regular periodic investments, including a payroll deduction plan or investment
by bank draft, are subject to a $25 minimum purchase.
Purchase of $1 Million or More (Not applicable to Cash Reserve). On purchases
by a single purchaser aggregating $1 million or more of Class A shares (other
than Cash Reserve) a contingent deferred sales charge ("CDSC") will be imposed
on the proceeds of the redemption if they are redeemed within 12 months of the
end of the calendar month of their purchase, in an amount equal to 1% of the
lessor of (a) the net asset value of the shares at the time of purchase or (b)
the net asset value of the shares at the time of redemption.
Fedwire Purchases. Investors may make payment for initial and subsequent
investments by federal funds wire. Investors should first notify Account
Services (1-800-343-6840) of the new account request (if applicable) and the
intended wire purchase. To assure proper credit, banks wiring federal funds
should be instructed to include: (1) name of the Fund; (2) name of the
shareholder (as registered exactly in the account), and shareholder's account
number; or (3) if opening an account, the name and address in which the
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account is being registered and the taxpayer identification number of the
investor (a completed Account Application must be mailed to the Transfer Agent
after completing the wire arrangements). Federal funds may be wired to: Boston
Safe Deposit and Trust Co. ("BSDT"), ABA Routing Number: 011001234, Account
Number: 159565, except during such times or holidays when BSDT is not open for
business.
HOW TO REDEEM SHARES. If a shareholder holds both Class A and Class B Shares of
a Fund, any request for redemption must specify whether Class A or Class B
Shares are to be redeemed. Failure to specify which class or to have sufficient
shares of the class specified will result in the redemption request being denied
until the Transfer Agent receives further written instructions from the
shareholder.
Payment proceeds will be mailed within seven (7) days following receipt of all
required documents. However, in the case of redemptions of shares which were
recently purchased by check, the payment of proceeds of that redemption may be
delayed for a period of up to 15 days or more until the check used to purchase
the shares has been cleared for payment by the shareholder's bank. A Fund will
not forward proceeds by FedWire Redemption (described below), and the redemption
will not be effective for a period of 15 days after receipt of the purchase
check. This delay in payment of redemption proceeds can be avoided if shares are
purchased by means of a certified check or federal funds wire. Under unusual
circumstances, a Fund may suspend redemptions or postpone payment for up to
seven days or more, as permitted by securities laws.
Redemption by Written Request. To redeem shares, send a written request or
"letter of instruction" specifying the name of the Fund, the dollar amount or
number of shares to be redeemed, and shareholder's name and account number to:
The Shareholder Services Group, P.O. Box 9656, Providence, Rhode Island
02940-9656.
A request for redemption will be processed after receipt by the Transfer Agent
of all required documents in proper order including any issued share
certificates and the letter of instruction (or a stock power) signed by each
account owner exactly as the account is registered. If a redemption of $50,000
or more is to be made (or if the shareholder's address or bank account to which
proceeds are to be mailed has changed in the prior 30 days), signatures must be
guaranteed. If shares are held in the name of a corporation, trust, estate,
custodianship, guardianship, partnership or pension and profit sharing plan,
additional documentation may be necessary.
Telephone Redemption. Shares of a Fund for which no share certificates have
been issued may be redeemed in amounts of $50,000 or less by telephone request,
provided that selection has been made in the Account Application or a telephone
authorization form is on file with the Transfer Agent. Proceeds from these
telephone redemptions will be mailed to the shareholder's address of record. The
Fund and/or the Transfer Agent reserve the right to refuse telephone redemption
requests at any time. Telephone authorization forms are available from the Fund
upon request. Information concerning redemptions can be obtained by contacting
the Fund at 1-800-343-6840.
Fedwire Redemption. Shareholders may redeem shares for which no certificates
have been issued and have redemption proceeds of at least $50,000 ($1,000 for
Cash Reserve) wired by federal funds transfer. Requests for expedited redemption
may be made by wire communication, telephone or letter provided that the
shareholder has selected this option in the Account Application. Proceeds of
shares redeemed at the net asset value next determined after receipt of a
redemption request are transmitted the following business day (same day for Cash
Reserve) by wire to the shareholder's bank account designated in the Account
Application form (bank must be a member of the Federal Reserve System). Delivery
of the proceeds of a wire redemption request for $250,000 or more may be delayed
by a Fund for up to seven days if the Fund's investment adviser deems it
appropriate under the then current market conditions. A Fund cannot be
responsible for the
3
<PAGE> 4
efficiency of the federal wire system or the shareholder's dealer or bank. Cash
Reserve reserves the right to charge a $5.00 fee for wire redemptions less than
$5,000.
Reinstatement Privilege (Not applicable to Cash Reserve). A shareholder who has
redeemed shares of a Fund, or has had shares repurchased by a Fund, may, within
60 days after the date these shares were redeemed or repurchased, reinvest
(reinstate) all or a portion of the proceeds of the redemption or repurchase in
shares of the Fund or in shares of other John Hancock funds previously managed
by Transamerica Fund Management Company ("eligible John Hancock funds") at the
next determined net asset value of the shares being acquired so long as the
Transfer Agent is in receipt of a written request for reinstatement and
appropriate payment. Shares being acquired pursuant to the reinstatement
privilege must be of the identical class as those which were redeemed within the
prior 60 days. The contingent deferred sales charge will not be applicable to
Class B Shares acquired in a reinvestment, although it will be assessed in
connection with the initial redemption or repurchase. This privilege may be
exercised only once as to any particular shares of a Fund or other eligible John
Hancock fund. Consult your tax adviser concerning the tax consequences, if any,
related to the reinstatement privilege.
ADDITIONAL SERVICES AND PROGRAMS. The Funds offer shareholders the following
services and privileges: (1) Reinvestment of dividends and distributions at net
asset value; (2) Tax-Sheltered Retirement Plans (Capital Growth Fund and Cash
Reserve only); (3) Automatic Investment Plan; (4) Exchange Privilege; (5)
Systematic Withdrawal Plan and (6) Automated Dollar Cost Averaging Program.
Further information regarding these services and privileges is set forth in the
Terms and Conditions contained in this Supplement. Certain of these Terms and
Conditions will change after May 14, 1995 regardless of when shares were
purchased. For further information call or write the Fund at The Shareholder
Services Group, P.O. Box 9656, Providence, Rhode Island 02940-9656,
1-800-343-6840.
Systematic Withdrawal Plans ("SWPs") are available to any shareholder who owns
shares of a Fund having a total value, at the then current offering price, of at
least $5,000 and has all shares on deposit with the Transfer Agent. (The $5,000
minimum account balance will be waived for retirement plan accounts.) No CDSC
will be imposed on the redemption of Class B Shares that have been sold to
shareholders having a SWP with payments of an annual amount less than or equal
to 12% of the value of the account determined at the time of the SWP
authorization.
Exchange Privilege permits Class A and Class B shareholders of a Fund to
exchange their shares only for certain shares of other eligible John Hancock
funds. For more information call 1-800-343-6840.
Automated Dollar Cost Averaging Program (the "Program") permits shareholders
(limited to Class A shareholders of Capital Growth Fund) to "transfer" (through
the Exchange Privilege) each month $100 or more from their money market account
in John Hancock Cash Reserve, Inc. and/or John Hancock U.S. Government Cash
Reserve (for Class A Shares) or John Hancock Money Market Fund B (for Class B
Shares) to their account(s) in a Fund and other eligible John Hancock funds and
whose shares are not subject to a 2-year 1% contingent deferred sales charge. To
be eligible for participation, at least $5,000 must be initially present in the
shareholder's money market account. Further information is available, along with
the application form for the Program, from the Fund by calling Account Services
at 1-800-343-6840. Note that automated dollar cost averaging methods do not
assure a profit and do not protect against loss in declining markets. You should
consult your broker or financial adviser to determine whether this Program is
suitable for your investment needs. There is no service fee for participating in
the Program. However, the Funds and the eligible John Hancock funds reserve the
right to impose such a fee.
4
<PAGE> 5
TERMS AND CONDITIONS OF
NEW ACCOUNT APPLICATION AND AUTHORIZATION FORM
INVESTMENTS IN THE FUND
To open a Shareholder Account for either Class A or Class B shares, a minimum
initial investment of $1,000 is required, with subsequent minimum investments
of $50 on any fund except John Hancock US Government Cash Reserve which has an
initial minimum of $20,000 with subsequent purchases of $500 and John Hancock
Cash Reserve which has a minimum of $2,500 with subsequent purchases of $100.
Minimum initial and subsequent purchase amounts are $25 for investors
establishing an Automatic Investment Plan. These investments will be applied to
the purchase of full and fractional shares of the Fund at the public offering
price. The application form should accompany initial purchases into an account.
Purchases of Class B shares of $1,000,000 or more will not be accepted. An
investment transmittal stub (detachable portion of any previously received
Shareholder Statement) should accompany additional purchases into an account.
Additional purchases, as well as confirmed purchases made through eligible
securities dealers, should not use the application but should follow the
settlement process applicable to each.
RIGHT OF ACCUMULATION (CLASS A SHARES ONLY)
Shares may be purchased at the public offering price applicable to the total of
(a) the dollar amount being purchased plus (b) an amount equal to the
then-current net asset value of the combined holdings of the purchaser, his or
her spouse, and their children under age 21, of Class A shares of any mutual
fund, or shares of any front load mutual fund, advised by John Hancock
Advisers, Inc. and formerly Transamerica Fund Management Company ("John Hancock
Funds"). In order for this cumulative quantity discount to be made available,
your securities dealer must give notification of your total holdings in all
John Hancock Funds each time he places an order for you. Similarly, you must
provide The Shareholder Services Group (the "Transfer Agent" or "TSSG") with
the account numbers of all John Hancock Fund Shareholder Accounts in which you
hold shares so that you may receive the cumulative quantity discount whenever
you send an investment by mail directly to the Transfer Agent. Please attach a
schedule showing any additional account number(s) and full registration of
each account other than the three accounts you have listed in block 9.
STATEMENT OF INTENTION (CLASS A SHARES ONLY)
A reduction of sales charges is also available to an investor who, pursuant to
a written Statement of Intention ("S.O.I.") which is set forth in the
application form in the Prospectus, establishes a total investment goal of
$100,000 or more, to be achieved through any number of investments over a
thirteen (13) month period. A $50,000 investment goal is available to
individuals purchasing in: John Hancock Growth and Income Fund, John Hancock
Capital Growth Fund, John Hancock Emerging Growth Fund, John Hancock Adjustable
U.S. Government Trust and John Hancock Global Resources Fund. Each investment
made during the period will be subject to the reduced sales charge applicable
to the goal amount, provided the Transfer Agent is notified of the existing
S.O.I. at the time of purchase. The current net asset value of all Class A
shares, or shares of any front load mutual fund, of all John Hancock mutual
funds owned by the purchaser and/or his immediate family prior to the
Distributor's date of receipt of the S.O.I. may also be applied towards
fulfillment of the stated goal amount, provided the dealer or shareholder
notifies the Distributor of such existing share ownership.
The initial purchase must be at least 5% of the stated investment goal; shares
equal to 5% of the dollar amount specified in the S.O.I. will be retained in
escrow by the Transfer Agent by placing a restriction against transfer or
redemption of such shares, until the total purchases equal the aggregate amount
specified in the S.O.I. At that time, the escrow shares will be released. At
any time while a Statement of Intention is in effect, a shareholder may, by
written notice to the Distributor, increase the amount of the stated goal. In
such case, the revised goal will be treated as a new S.O.I.; however, the
initial thirteen (13) month investment period will remain unchanged. Shares
purchased during the previous 90-day period and still owned by the shareholder
will be eligible for a sales charge reduction in accordance with the reduced
sales charge applicable to the new Statement of Intention. The price reduction
is conditional upon receipt by the Distributor of any sales commission
differential and will be effected upon notification to the Transfer Agent by
the broker/dealer.
The Statement of Intention does not obligate the investor to purchase, nor the
Fund to sell the indicated amount of the investment goal. In the event the
investment goal is not achieved within the thirteen (13) month period, the
investor is required to pay the difference between the sales charge otherwise
applicable to the purchases made during this period and sales charges actually
paid. Such payment may be made directly to the Distributor or if not paid
within twenty (20) days of written request by the Fund, the Distributor is
authorized by the S.O.I. to liquidate a sufficient number of escrowed shares to
obtain such difference. John Hancock Funds, Inc. is hereby and irrevocably
appointed attorney to give instructions to redeem any or all of such escrow
shares, with full power of substitution in the premises.
Purchases of shares by persons within the immediate family of the person
signing the statement can also qualify for reduced offering prices. The
Statement of Intention must be referred to by the purchaser or dealer when
making a purchase or placing an order. In addition, a request to close the
account will also be considered a request to close the S.O.I. and thus
liquidate the appropriate number of escrow shares. The escrow share liquidation
proceeds will be paid to the Distributor and the Dealer of Record at the time
of termination of the S.O.I. prior to its completion.
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FEDWIRE REDEMPTION
Shareowners may have redemptions of $50,000 or more ($1,000 or more for John
Hancock US Government Cash Reserve and John Hancock Cash Reserve Inc.) wire
transferred to their previously designated bank account in a financial
institution which is a member of the Federal Reserve System. Any changes to
banking information provided within this authorization form must be submitted
in writing to John Hancock Funds Shareholder Services with the shareowner(s)
signature(s) guaranteed. Shares held in certificated form may not be sold using
the FedWire Redemption privilege unless they are first presented to the Fund
for deposit. Redemptions will be made at the net asset value at the close of
the business day in which they are received, provided the request is received
by 3:00 p.m. Central Standard Time ("CST") at 1-800-343-6840. If requested,
proceeds from John Hancock US Government Cash Reserve and John Hancock Cash
Reserve Inc. will be wired the same day provided the redemption request is
received by 11:00 a.m. CST. Proceeds will be wired the following business
day if the request is received between 11:00 a.m. and 3:00 p.m. CST or if the
redemption is from any other fund. FedWire redemptions in amounts of less than
$5,000 may incur a $5 fee which would be deducted from proceeds wired. Wire
transfers will be made only to the bank of record. Institutions wishing to
utilize this privilege must also complete the applicable resolution or
agreement contained within this Application form.
TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
1. In absence of a negative election, telephone privileges will automatically
be accorded to all new accounts established.
2. Telephone instructions must be received before 3:00 PM Central Time at
1-800-343-6840.
3. Newly purchased shares must be held a minimum of 15 days before being
eligible for redemption.
4. Shares held in certificated form must first be presented to the Fund for
deposit before an exchange or redemption can be effected.
5. The following rules apply only to exchanges:
A. Exchanges between the Group I and Group II funds listed below are not
permitted.
<TABLE>
<CAPTION>
Group I Group II
------- --------
<S> <C>
John Hancock Capital Growth Fund (Class A) John Hancock Money Market Fund B
John Hancock Investment Quality Bond Fund (Class A) John Hancock High Yield Tax-Free Fund (Class B)
John Hancock Government Securities Trust (Class A) John Hancock High Yield Bond Fund (Class B)
John Hancock Growth and Income Fund (Class A) John Hancock Emerging Growth Fund (Class B)
John Hancock U.S. Government Cash Reserve John Hancock Global Resources Fund (Class B)
John Hancock Cash Reserve, Inc. John Hancock Government Income Fund (Class B)
John Hancock California Tax-Free Income Fund (Class A) John Hancock Growth and Income Fund (Class B)
John Hancock Tax-Free Bond Fund (Class A) John Hancock California Tax-Free Income Fund (Class B)
John Hancock Emerging Growth Fund (Class A) John Hancock Tax-Free Bond Fund (Class B)
John Hancock Adjustable U.S. Government Trust (Class A) John Hancock Adjustable U.S. Government Trust (Class B)*
John Hancock High Yield Bond Fund (Class A) John Hancock Capital Growth Fund (Class B)
John Hancock High Yield Tax-Free Fund (Class A) John Hancock Investment Quality Bond Fund (Class B)
John Hancock Global Resources Fund (Class A) John Hancock Government Securities Trust (Class B)
John Hancock Intermediate Government Trust (Class A) John Hancock Intermediate Government Trust (Class B)
John Hancock U.S. Government Trust (Class A) John Hancock U.S. Government Trust (Class B)
John Hancock Government Income Fund (Class A)
</TABLE>
B. Any new account established through the exchange privilege will have the
same registration, dividend option and telephone exchange and telephone
redemption privilege as in effect for the present account.
C. If the exchange involves the establishment of a new account, the dollar
amount being exchanged must at least equal the minimum investment
requirement of the fund being acquired as indicated in the prospectus of
such fund.
D. All exchanges will be processed at the respective net asset values of the
funds involved, however, shares originally purchased into any of the
Group I funds that do not impose sales charges will be exchanged to other
Group I funds only upon payment of the full sales charge imposed by that
fund. Exchanges to a fund imposing a higher sales load will be processed
upon payment of the sales charge differential.
E. For purposes of calculating the amount of any contingent deferred sales
charge ("CDSC") applicable to exchanged shares of funds in Group II, a
proportionate amount of each "category" of shares held by the investor in
the account from which the exchange is effected will be deemed to be the
amount of shares of each category exchanged to the other CDSC Fund. See
the Statement of Additional Information for further details.
F. For federal income tax purposes, an exchange constitutes a redemption
and a purchase of the designated share amount from which a gain or loss
may result.
G. The exchange privilege is available only in states where the shares of
the Fund may legally be sold.
* Exchanges between this Fund and other Group II funds are permitted;
however, the shares exchanged will remain subject to the aging and
commission structure applicable to the Fund in which they were
originally purchased.
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<PAGE> 7
6. Provisions for redemptions are as follows:
A. A maximum amount of $50,000 may be redeemed by telephone.
B. Redemptions will be made at the net asset value at the close of the
business day.
C. Redemption checks will be made payable to the shareowner(s) named in the
registration and mailed to the address of record. If an address change
has been processed in the past 30 days, the redemption request will not
be honored.
D. Tax withholding information must be provided on fiduciary accounts which
have Boston Safe Deposit and Trust Co., Inc. as custodian.
E. If a redemption is requested from a Fund in Group II, a CDSC may be
applied.
7. As stated in the Prospectus, reasonable procedures will be employed by the
Fund or its agents to confirm that instructions received by telephone are
genuine and in the absence thereof, the Fund or its agents may be liable for
any losses due to unauthorized or fraudulent instructions. Such procedures
may include, but not necessarily be limited to, recording telephone
instructions, written confirmations of transactions and/or obtaining
verification of some private information of the account owner.
REDEMPTION BY DRAFT PRIVILEGE
When a draft is drawn on this account and presented to Boston Safe Deposit and
Trust Co., Inc. (the "Bank") for payment, a sufficient number of full and
fractional shares of the Fund will be redeemed by TSSG to cover the amount of
the draft subject to the following conditions:
1. Redemption by draft is available only on John Hancock Cash Reserve Inc.,
John Hancock US Government Cash Reserve Inc. and John Hancock Government
Securities Trust (Class A).
2. Drafts must be on forms provided by the Fund and for a minimum of $500 ($250
on John Hancock Cash Reserve Inc.) or they will not be honored.
3. Shares held in the account for fifteen (15) calendar days or less which have
not been purchased with a Federal Reserve Wire will not be redeemed; drafts
written for amounts which include such shares will not be honored.
4. The Redemption by Draft Privilege is subject to the Fund's and the Bank's
rules and regulations (including those adopted by governmental or
quasi-governmental bodies) as amended from time to time.
5. Any amendment or modification of the information contained in this
Authorization requires that a new Authorization Form be completed and
submitted to the Transfer Agent.
6. Shareholders will be subject to the Bank's rules and regulations governing
such drafts, including the right of the bank not to honor drafts in amounts
exceeding the value of the Shareholder's acount with the Fund at the time the
draft is presented for payment.
7. Certificates for fund account shares, if issued, must be returned to the
Fund before a redemption draft for such shares is honored.
SYSTEMATIC WITHDRAWAL PLAN
The systematic withdrawal plan may be established on shareholder accounts
following completion of the appropriate section within the application form.
This account privilege is subject to the following conditions:
1. Establishing a withdrawal plan on a fund account requires a minimum
investment of $5,000.
2. Withdrawals must be in amounts of $25 or more and
may be taken on a monthly, quarterly, semiannual or annual basis.
3. Dividend and capital gain distributions must be reinvested in the account as
full and fractional shares.
4. Redemptions are made at net asset value as of the close of business on the
New York Stock Exchange on the fifth (5th) business day prior to the end of
the application time period.
5. The systematic withdrawal plan may be terminated by either the Fund or the
shareholder at any time, without penalty, by written notification to the
other party.
6. Shares in Group II funds may be subject to a contingent deferred sales
charge upon redemption.
7. Newly purchased shares must be held a minimum of 15 calendar days before
being eligible for redemption through the Systematic Withdrawal Plan option.
8. Certain redemptions processed through the Systematic Withdrawal Plan may be
eligible for waiver of the CDSC. In order for the waiver to apply, the
annual aggregate redemption amount cannot exceed 12% of the account value.
Systematic withdrawals established for a fixed dollar or share amount will
be reviewed and adjusted periodically to ensure that the 12% limit is not
surpassed. Shareholders requesting an annual aggregate amount greater than
the 12% limit will receive two checks each time a redemption is effected.
One check will represent the amount withdrawn in accordance with the waiver
policy. The second check will represent the difference amount and may be
subject to a CDSC. Please contact Account Services at 800-343-6840 for more
information.
9. Proceeds sent via Electronic Funds Transfer may not be credited to the
shareholder's bank for a period of up to 3 days.
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<PAGE> 8
SYSTEMATIC EXCHANGE
1. To establish Systematic Exchange, the originating fund must have a
minimum balance of $5,000.
2. The exchanges will continue until the balance in the originating account
is insufficient to complete the exchanges or until the program is terminated
by written notification.
3. Exchanges from the originating fund to the fund(s) designated will be
processed on the second Tuesday of each month (or following business day, if
applicable).
4. The originating fund and the fund(s) selected for Systematic Exchange
must have identical registrations.
5. All exchanges will be processed at the respective net asset values (plus
a sales charge, if applicable) of the funds involved.
6. A monthly account service fee of $3 will be imposed at the end of any
given month on John Hancock U.S. Government Cash Reserve accounts with
balances less than $20,000. A monthly account service fee of $3 will be
imposed at the end of any given month on John Hancock Cash Reserve, Inc.
accounts with balances less than $2,500.
7. Additional shares of the originating fund may be purchased at any time to
prolong the program.
8. Systematic Exchange may be modified or terminated at any time.
9. Systematic Exchange is subject to the terms and conditions of the
Telephone Exchange and Telephone Redemption section discussed above.
AUTOMATIC INVESTMENT PLAN
The John Hancock Automatic Investment Plan gives shareowners the convenience of
automatically investing in their fund account on a monthly basis by authorizing
John Hancock to draft their bank account by electronic funds transfer (EFT).
This privilege is subject to the following conditions:
1. The monthly amount to be drafted must be $25 or more for each John Hancock
account.
2. The bank being drafted must be a member of an Automated Clearing House
(ACH).
3. This service is subject to the rules for the bank account, ACH and the Fund.
4. Ten days written notice is required if you are changing bank information
other than the dollar amount.
5. If a draft is returned by the bank as unpaid for any reason, including
insufficient funds, closed account or invalid account, John Hancock is
authorized to deduct sufficient shares held in the account to offset the
purchase made and discontinue the Automatic Investment Plan.
6. The Automatic Investment Plan may be discontinued at any time by the
shareowners written or verbal instructions which must be received at least
ten calendar days in advance of the next draft.
7. Automatic investment plan purchases in retirement accounts which have Boston
Safe Deposit and Trust as custodian will be credited as a contribution for
the calendar year in which they are received.
NOTES
Each time there is a transaction in a Shareholder Account, the shareholder will
receive a confirmation statement from the Transfer Agent reflecting the
transaction.
Certificates can be issued for full shares only. These certificates will be
sent to the shareholder only upon specific written request.
The method of delivery of share certificates to the Transfer Agent is at the
option and risk of the shareholder. If sent by mail, registered and insured
mail is suggested.
All correspondence regarding Shareholder Accounts should be addressed to John
Hancock Funds Shareholder Services, P.O. Box 9656, Providence, RI 02940-9656.
8
