As filed with the Securities and Exchange Commission on April 25, 1995
File Nos. 2-7954
811-115
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. 90 [x]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 90
(Check appropriate box or boxes.)
John Hancock Sovereign Investors Fund, Inc.
(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
Senior Vice President and Secretary
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, 1995 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] On (date) pursuant to paragraph (a) of Rule 485
An indefinite number of shares of Common Stock of the Registrant has been
registered under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant's Rule 24-f Notice for its fiscal
year ended December 31, 1994 was filed with the Commission on February 23, 1995.
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS FUNDS, INC.
Cross Reference Sheet
Item Number Form N-1A, Prospectus Caption Statement of Additional
Part A Information Caption
- -------------------------------------------------------------------------------
1 Front Cover Page *
2 Expense Information; The *
Fund's Expenses; Share Price
3 The Fund's Financial *
Highlights; Performance
4 Investment Objectives and *
Policies; Organization and
Management of the Fund
5 Organization and Management *
of the Fund; The Fund's
Expenses; Back Cover
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
16 * Investment Advisory and
Other Services;
Distribution Contract;
Transfer Agent Services;
Custody of Portfolio;
Independent Auditors
17 * Brokerage Allocation
18 * Description of Fund's
Shares
19 * Net Asset Value;
Additional Services and
Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of
Performance
23 * Financial Statements
<PAGE>
John Hancock
Sovereign
Investors
Fund
Class A and Class B Shares
Prospectus
May 1, 1995
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 10
Dividends and Taxes 11
Performance 11
How to Buy Shares 13
Share Price 14
How to Redeem Shares 19
Additional Services and Programs 21
Institutional Investors 24
This Prospectus sets forth information about John Hancock Sovereign Investors
Fund (the "Fund"), a diversified series of John Hancock Sovereign Investors
Fund, Inc. (the "Company"), that you should know before investing. Please read
and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated May 1, 1995 and incorporated by reference in
this Prospectus, free of charge by writing to or by telephoning: John Hancock
Investor Services Corporation, Post Office 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, 1994, adjusted to reflect current
fees and expenses. Actual fees and expenses in the future may be greater or less
than those indicated.
<TABLE>
<CAPTION>
Class A Class B
Shareholder Transaction Expenses Shares** Shares**
<S> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price) 5.00% None
Maximum sales charge imposed on
reinvested dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Exchange fee None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee 0.58% 0.58%
12b-1 fee*** 0.30% 1.00%
Other expenses 0.34% 0.33%
Total Fund operating expenses 1.22% 1.91%
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more, but a contingent deferred sales charge may be imposed on these
investments, as described under the caption "Share Price," in the event of
certain redemption transactions within one year of purchase.
** The information on these set forth in the foregoing table relates only to the
Class A and Class B shares. As of the date of this Prospectus, the Board of
Directors has authorized the issuance of three classes of the Fund, designated
Class A, Class B and Class C. See "Organization and Management of the Fund."
Class C shares are only offered to certain institutional investors and are
described in a separate prospectus. Some individual investors who are currently
eligible to purchase Class A and Class B shares may also be participants in
plans that are eligible to purchase Class C shares. See "How to Buy
Shares--Institutional Investors." Class C shares are not subject to a sales
charge on purchases, redemptions, or reinvested dividends, nor are they subject
to deferred sales charges or an exchange fee. Class C expenses are identical to
those of Class A shares except that the transfer agent fee may differ and there
is no 12b-1 Fee on Class C shares.
*** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be used
to cover distribution expenses, but the remaining portion for Class B shares
will never exceed 0.75% of average daily net assets.
+Redemption by wire fee (currently $4.00) not included.
<TABLE>
<CAPTION>
Example: 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
Class A Shares $62 $86 $113 $188
Class B Shares
--Assuming complete redemption at end of period $69 $90 $123 $205
--Assuming no redemption $19 $60 $103 $205
</TABLE>
You would pay the following expenses for the indicated period of years on a
$1,000 investment in Class C shares, assuming a 5% annual return: 1 year, $8, 3
years, $25, 5 years, $43, and 10 years, $97.
(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 Financial Highlights, for each of the two years in the period
ended December 31, 1994 has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose unqualified report is included in the Fund's 1994
Annual Report and is included in the Statement of Additional Information. The
Financial Highlights for the years 1985 through 1992 were audited by other
independent auditors. Further information about the performance of the Fund is
contained in the Fund's Annual Report to Shareholders, that may be obtained free
of charge by writing or telephoning John Hancock Investor Services Corporation
("Investor Services") at the address or telephone number listed on the front
page of this Prospectus.
Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992(g) 1991(g) 1990(g) 1989(g) 1988(g) 1987(f)(g) 1986(f)(g) 1985(f)(g)
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
Net Asset Value,
Beginning of Period $15.10 $14.78 $14.31 $11.94 $12.60 $11.19 $10.96 $12.36 $11.31 $9.45
Net Investment Income 0.46 0.44 0.47 0.54 0.58 0.59 0.57 0.53 0.58 0.55
Net Realized and
Unrealized Gain
(Loss) on
Investments (0.75) 0.39 0.54 3.03 (0.05) 2.01 0.65 (0.45) 1.89 2.27
Total from
Investment
Operations (0.29) 0.83 1.01 3.57 0.53 2.60 1.22 0.08 2.47 2.82
Less Distributions:
Dividends from Net
Investment Income (0.46) (0.42) (0.45) (0.53) (0.59) (0.61) (0.61) (0.58) (0.55) (0.53)
Distributions from Net
Realized Gain on
Investments Sold (0.11) (0.09) (0.09) (0.67) (0.60) (0.58) (0.38) (0.90) (0.87) (0.43)
Total Distributions (0.57) (0.51) (0.54) (1.20) (1.19) (1.19) (0.99) (1.48) (1.42) (0.96)
Net Asset Value, End
of Period $14.24 $15.10 $14.78 $14.31 $11.94 $12.60 $11.19 $10.96 $12.36 $11.31
Total Investment
Return at Net Asset
Value (1.85%) 5.71% 7.23% 30.48% 4.38% 23.76% 11.23% 0.28% 21.70% 30.60%
Ratios and
Supplemental Data
Net Assets, End of
Period (000's
omitted) $1,090,231 $1,258,575 $872,932 $194,055 $83,470 $66,466 $45,861 $40,564 $34,708 $23,806
Ratio of Expenses to
Average Net Assets 1.16% 1.10% 1.13% 1.18% 1.14% 1.07% 0.86% 0.85% 0.70% 0.86%
Ratio of Net
Investment Income to
Average Net Assets 3.13% 2.94% 3.32% 4.01% 4.77% 4.80% 4.97% 3.96% 4.28% 5.23%
Portfolio Turnover
Rate 45% 46% 30% 67% 55% 40% 35% 59% 34% 31%
</TABLE>
<TABLE>
<CAPTION>
1994
<S> <C>
Class B (a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.02(d)
Net Investment Income 0.38(e)
Net Realized and Unrealized Gain on Investments (0.69)
Total from Investment Operations (0.31)
Less Distributions:
Dividends from Net Investment Income (0.36)
Distributions from Net Realized Gain on Investments Sold (0.11)
Total Distributions (0.47)
Net Asset Value, End of Period $14.24
Total Investment Return at Net Asset Value (2.04%)(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $128,069
Ratio of Expenses to Average Net Assets 1.86%*
Ratio of Net Investment Income to Average Net Assets 2.57%*
Portfolio Turnover Rate 45%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
For the Period
Year Ended May 7, 1993
December 31, 1994 To December 31, 1993 (b)
<S> <C> <C>
Class C (b)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.11 $14.79(d)
Net Investment Income 0.52 0.27(e)
Net Realized and Unrealized Gain on Investments (0.77) 0.48
Total from Investment Operations (0.25) 0.75
Less Distributions:
Dividends from Net Investment Income (0.51) (0.34)
Distributions from Net Realized Gain on Investments Sold (0.11) (0.09)
Total Distributions (0.62) (0.43)
Net Asset Value, End of Period $14.24 $15.11
Total Investment Return at Net Asset Value (1.57%) 5.13%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $15,128 $10,189
Ratio of Expenses to Average Net Assets 0.81% 0.88%*
Ratio of Net Investment Income to Average Net Assets 3.53% 3.17%*
Portfolio Turnover Rate 45% 46%
</TABLE>
Note: During the period covered by this table Sovereign Advisers, Inc. was the
investment adviser until October 23, 1991 when John Hancock Advisers, Inc.
became the Fund's investment adviser.
* On an annualized basis.
(a) Class B shares commenced operations on January 3, 1994.
(b) Class C shares commenced operations on May 7, 1993.
(c) Not annualized.
(d) Initial price to commence operations.
(e) On average month end shares outstanding.
(f) Restated for 2 for 1 stock split effective April 29, 1987.
(g) Not covered by report of independent auditors included in the Statement of
Additional Information.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek long-term growth of capital and
income without undue market risks.
The Fund's investment objective is to provide long term growth of capital and of
income without assuming undue market risks. The Fund believes that its shares
are suitable for investment by persons who are in search of above-average long
term reward. At times, however, the Fund may find it advantageous to invest
primarily for current income because of market conditions. The Fund will
diversify its investments among a number of industry groups without
concentrating more than 25% of its assets in any particular industry. The Fund's
investments will be subject to market fluctuation and risks inherent in all
securities. There is no assurance that the Fund will achieve its investment
objective.
The Fund will invest primarily in common stocks, although it may respond to
market conditions by investing in other types of securities.
Common stocks will generally represent the major part of the Fund's holdings,
although, for defensive purposes, the Fund may temporarily hold a larger
percentage of high grade liquid preferred stocks or debt securities. The Fund's
portfolio securities are selected mainly for their investment character based
upon generally accepted elements of intrinsic value, including industry
position, management, financial strength, earning power, marketability and
prospects for future growth. The distribution or mix of various types of
investments is based on general market conditions, the level of interest rates,
business and economic conditions and the availability of investments in the
equity or fixed income markets. The amount of the Fund's assets that may be
invested in either equity or fixed income securities is not restricted and is
based upon management's judgment of what might best achieve the Fund's
investment objective.
The Fund generally invests in seasoned companies in sound financial condition
with a long record of paying dividends.
While there is considerable flexibility in the investment grade and type of
security in which the Fund may invest, the Fund may only invest in companies who
have (or whose predecessors have) been in continuous business for at least five
years and have total assets of at least $10 million. The Fund currently uses a
strategy of investing only in those common stocks which have a record of having
increased their dividend payout in each of the preceding ten or more years. This
dividend performers strategy can be changed at any time.
Investments in corporate fixed income securities may be in bonds, convertible
debentures and preferred convertible or non-convertible stock. Convertible
issues, while influenced by the level of interest rates, are also subject to the
changing value of the underlying common stock into which they are convertible.
Fixed income securities eligible for purchase by the Fund may have stated
maturities of one to thirty years. The value of fixed income securities varies
inversely with interest rates. Although fixed income securities in the Fund's
portfolio may include securities rated as low as C by Standard & Poor's Ratings
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") and unrated
securities deemed of equivalent quality by John Hancock Advisers, Inc. (the
"Adviser"), no more than 5% of the Fund's net assets will be invested in debt
securities rated lower than BBB by S&P or Baa by Moody's or unrated securities
of equivalent quality. Bonds rated BBB or Baa normally exhibit adequate
protection parameters. However, bonds rated BBB or Baa or lower have speculative
characteristics, and adverse changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make principal and
interest payments than with higher grade bonds. Bonds rated lower than BBB or
Baa are high risk securities commonly known as "junk bonds." If any security in
the
5
<PAGE>
Fund's portfolio falls below the Fund's minimum credit quality standards, as a
result of a rating downgrade or the Adviser's determination, the Fund will
dispose of the security as promptly as possible while attempting to minimize any
loss.
Restricted Securities. The Fund may purchase restricted securities, including
those that can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"). The Board of
Directors will monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of information.
Purchases of restricted securities are subject to an investment restriction
limiting all the Fund's illiquid securities to not more than 15% of its net
assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the securities. As a result, the Fund may incur a loss or, in the event of the
borrower's bankruptcy, may be delayed in or prevented from liquidating the
collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value exceeding 33-1/3% of its total assets.
Government Securities. The Fund may also invest in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Certain
U.S. Government securities, including U.S. Treasury bills, notes and bonds and
Government National Mortgage Association certificates ("Ginnie Maes"), are
supported by the full faith and credit of the United States. Certain other U.S.
Government securities, issued or guaranteed by federal agencies or government
sponsored enterprises, are not supported by the full faith and credit of the
United States, but may be supported by the right of the issuer to borrow from
the U.S. Treasury. These securities include obligations of the Federal Home Loan
Mortgage Corporation ("Freddie Macs") and Federal National Mortgage Association
("Fannie Maes"), and obligations supported by the credit of the instrumentality,
such as Student Loan Marketing Association Bonds ("Sallie Maes").
The Fund may invest in mortgage-backed securities that have stated maturities of
up to thirty years when they are issued, depending upon the length of the
mortgages underlying the securities. In practice, however, unscheduled or early
payments of principal and interest on the underlying mortgages may make the
securities' effective maturity shorter than this, and the prevailing interest
rates may be higher or lower than the current yield of the Fund's portfolio at
the time the Fund receives the payments for reinvestment. Mortgage- backed
securities may have less potential for capital appreciation than comparable
fixed- income securities, due to the likelihood of increased prepayments of
mortgages as interest rates decline. If the Fund buys mortgage-backed securities
at a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of the
Fund's principal investment to the extent of the premium paid.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment 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 seller at a
higher
6
<PAGE>
price. These transactions must be fully collateralized at all times, but involve
some credit risk to the Fund if the other party defaults on its obligation and
the Fund is delayed in or prevented from liquidating the collateral. The Fund
will segregate in a separate account cash or liquid, high grade debt securities
equal in value to its forward commitments and when-issued securities. Purchasing
securities for future delivery or on a when-issued basis may increase the Fund's
overall investment exposure, and involves a risk of loss if the value of the
securities declines before the settlement date.
The Fund follows certain policies which may help to reduce investment risk.
Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
classified as fundamental or non-fundamental. The Fund's investment objective
and those investment restrictions designated as fundamental may not be changed
without shareholder approval. The Fund's non-fundamental investment policies and
restrictions, however, may be changed by a vote of the Directors without
shareholder approval. The Fund's portfolio turnover rates for recent years are
shown in "The Fund's Financial Highlights."
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Directors, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Interstate/Johnson Lane, Tucker Anthony Incorporated, John Hancock Distributors,
Inc., and Sutro & Company, Inc. Tucker Anthony Incorporated, John Hancock
Distributors, Inc., and Sutro & Company are indirectly owned by John Hancock
Mutual Life Insurance Company, which in turn indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Directors elect officers and retain the investment adviser, who is
responsible for the day-to-day operations of the Fund, subject to the
Directors' policies and supervision.
The Fund is a separate, diversified portfolio of the Company, an open-end
management investment company. The Company was organized as a corporation in the
State of Delaware in January 1936 and reincorporated in Maryland in 1990. The
Company currently has 345,000,000 authorized shares of capital stock. The
Company's Articles of Incorporation permit the Directors to create and classify
the capital stock into separate series, without shareholder approval. As of the
date of this Prospectus, the Directors have authorized shares of the Fund and
one other series. Additional series may be added in the future. The Company's
Articles of Incorporation also permit the Directors to classify and reclassify
any series or portfolio of shares into one or more classes. Accordingly, the
Directors have authorized the issuance of three classes of the Fund, designated
Class A, Class B and Class C. The shares of each class represent an interest in
the same portfolio of investments of the Fund. Each class has equal rights as to
voting, redemption, dividends and liquidation. However, each bears different
distribution and transfer agent fees. Also, Class A and Class B shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plan,
which has been adopted by holders of those shares in connection with the shares'
distribution.
Shareholders have certain rights to remove Directors. The Company is not
required and does not intend to hold annual meetings of shareholders, although
special meetings may be held for such purposes as electing or removing
Directors, changing fundamental investment restrictions, and policies or
approving a management contract.
7
<PAGE>
John Hancock Advisers, Inc. advises investment companies having a total asset
value of more than $13 billion.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. John Hancock
Funds, Inc. ("John Hancock Funds") distributes shares for all of the John
Hancock funds through selected broker-dealers ("Selling Brokers"). Certain
officers of the Company 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 Directors which
allows Directors' fees to be invested by the Fund in other John Hancock funds.
Pursuant to a service agreement between the Adviser and its affiliate, Sovereign
Asset Management Corporation ("SAMCorp"), SAMCorp furnishes to the Adviser
certain portfolio management services with respect to the securities held in the
portfolio of the Fund. The Adviser supervises SAMCorp's performance of such
services and is responsible for all services required to be provided under the
Adviser's investment management contract with the Fund. The Adviser pays to
SAMCorp 40% of the fee received from the Fund by the Adviser.
John F. Snyder III is primarily responsible for management of the Fund. He is
assisted by a team of co-portfolio managers and analysts in the day-to-day
management of the Fund. Mr. Snyder is Executive Vice President of SAMCorp and
Senior Vice President of the Company. He has been a co-portfolio manager of the
Fund since 1984. He has been associated with the Adviser since 1991 when the
Adviser assumed management of the Fund. He is also co-portfolio manager of John
Hancock Sovereign Achievers Fund and John Hancock Sovereign Balanced Fund.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser,
the Sub- Adviser and the Fund have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of these
restrictions are: pre-clearance for all personal trades and a ban on the
purchase of initial public offerings, as well as contributions to specified
charities of profits on securities held for less than 91 days. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders come first.
ALTERNATIVE PURCHASE ARRANGEMENTS
An alternative purchase plan allows you to choose the method of 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.
Investments in Class A shares are subject to an initial sales charge.
Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount 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."
8
<PAGE>
Investments in Class B shares are subject to a contingent deferred sales charge.
Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all your
dollars to work from the time you make your investment, but the higher ongoing
distribution fee will cause these shares to have higher expenses than that of
Class A shares. To the extent that any dividends are paid by the Fund, these
higher expenses will also result in lower dividends than those paid on Class A
shares.
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance Company
that had more than 100 eligible employees at the inception of the Fund account.
Factors to Consider in Choosing an Alternative
You should consider which class of shares would be more beneficial for you.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time that 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 page 2 of this Prospectus gives examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for a reduced sales charge. See "Share Price--
Qualifying for a Reduced Sales Charge."
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent that
any dividends are paid. However, because initial sales charges are deducted at
the time of purchase, you would not have all of your funds invested initially
and, therefore, would initially own fewer shares. If you do not qualify for
reduced initial sales charges and expect to maintain your investment for an
extended period of time, you might consider purchasing Class A shares. This is
because the accumulated distribution and service charges on Class B shares may
exceed the initial sales charge and accumulated distribution and service charges
on Class A shares during the life of your investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you will
be subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of shares will be paid from the proceeds of
the initial sales charge and the ongoing distribution and service fees. In the
case of Class B shares, expenses will be paid from the proceeds of the ongoing
distribution and service fees, as well as from the CDSC incurred upon redemption
within six years of purchase. The purpose and function of 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.
9
<PAGE>
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time, 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, shareholder meeting expenses and any incremental
transfer agency costs. See "Dividends and Taxes."
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a fee to the
Adviser which is based on a stated percentage of the Fund's average daily net
asset value as follows:
$0 to $750 million 0.60%
750 million to 1.5 billion 0.55%
1.5 billion to 2.5 billion 0.50%
2.5 billion and over 0.45%
The investment management fee for the 1994 fiscal year was 0.60% of the Fund's
average daily net asset value.
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 net assets. The
Adviser retains the right to reimpose a fee and recover any other payments to
the extent that, at the end of any fiscal year, the Fund's actual expenses fall
below the limit.
The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.
The Class A and Class B shareholders have adopted distribution plans (the
"Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
these Plans, the Fund will pay distribution and service fees at an aggregate
annual rate of 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. Distribution fees are used to reimburse
John Hancock Funds for its distribution expenses, including but not limited to:
(i) initial and ongoing sales compensation to Selling Brokers and others
(including affiliates of John Hancock Funds) engaged in the sale of Fund shares,
(ii) marketing, promotional and overhead expenses incurred in connection with
the distribution of Fund shares and (iii) with respect to Class B shares only,
interest expenses on unreimbursed distribution expenses. The service fees will
be used to compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event John Hancock Funds is not
fully reimbursed for payments it makes or expenses it incurs under the Class A
Plan, these expenses will not be carried beyond one year from the date they were
incurred. These unreimbursed expenses under the Class B Plan will be carried
forward together with interest on the balance of these unreimbursed expenses.
For the fiscal year ended December 31, 1994 an aggregate of $5,896,150 of
distribution expenses, or 0.47% of the average net assets of the Class B shares
of the Fund, was not reimbursed or recovered by the John Hancock Funds through
the receipt of deferred sales charges or 12b-1 fees in prior periods.
Information on the Fund's expenses is in the Fund's Financial Highlights section
of this Prospectus.
10
<PAGE>
DIVIDENDS AND TAXES
The Fund has paid quarterly dividends continuously since 1937.
Dividends. Dividends from the Fund's net investment income are declared and paid
quarterly. Capital gains, if any, are generally declared and distributed
annually. From time to time the Fund may declare a special dividend at year's
end. Dividends are reinvested in additional shares of your class unless you
elect to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividend on these shares will be lower than that of 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 paid in January of a given year, may be taxable as if
you received them the previous December. Corporate shareholders may be entitled
to take the corporate dividends- received deduction for dividends received by
the Fund from U.S. domestic corporations, subject to certain restrictions under
the Internal Revenue Code of 1986, as amended (the "Code"). The Fund will send
you a statement by January 31 showing the tax status of the dividends you
received for the prior year.
The Fund has qualified and intends to continue to qualify each year as a
regulated investment company under Subchapter M of 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 is correct, and that you are not subject to
backup withholding of Federal income tax. If you do not provide this information
or are otherwise subject to backup withholding, the Fund may be required to
withhold 31% of your dividends and the proceeds of redemptions and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends that represents interest received
by the Fund on direct U.S. government obligations may be exempt from tax.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
advice.
PERFORMANCE
The Fund may advertise its yield and total return.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30-day period by the maximum
offering price per share on the last day of that period. Yield is also
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
shares or the income reported in the Fund's financial statements.
The Fund's total return shows the overall change in value of a hypothetical
investment in the Fund, assuming the reinvestment of all dividends. Cumulative
total return
11
<PAGE>
shows the Fund's performance over a period of time. Average annual total return
shows the cumulative return of the Fund shares divided over the number of years
included in the period. Because average annual total return tends to smooth out
variations in the Fund's performance, you should recognize that it is not the
same as actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at lower sales charges would result in
higher performance figures. Yield and total return for the Class B shares
reflect deduction of the applicable CDSC imposed on a redemption of shares held
for the applicable period. All calculations assume that all dividends are
reinvested at net asset value on the reinvestment dates during the periods.
Yield and total return of Class A, Class B and Class C shares will be calculated
separately and, because each class is subject to different expenses, the yield
or total return with respect to that class for the same period may differ. The
relative performance of the Class A and Class B shares will be affected by a
variety of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of Class
A, Class B and Class C shares in any advertisement or promotional materials
including the Fund performance data. The value of Fund shares, when redeemed,
may be more or less than their original cost. Both yield and total return are
historical calculations and are not an indication of future performance. See
"Factors to Consider in Choosing an Alternative."
12
<PAGE>
HOW TO BUY SHARES
Opening an account.
- --------------------------------------------------------------------------------
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans).
Complete the Account Application attached to this Prospectus and indicate
whether you are buying Class A or Class B shares. If you do not specify which
class of shares you are purchasing, Investor Services will assume you are
investing in Class A shares.
- --------------------------------------------------------------------------------
By Check
1. Make your check payable to John Hancock Investor Services Corporation
("Investor Services").
2. Deliver the completed application and check to your registered representative
or Selling Broker or mail it directly to Investor Services.
- --------------------------------------------------------------------------------
By Wire
1. Obtain an account number by contacting your registered representative or
Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Sovereign Investors Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered.
3. Deliver the completed application to your registered representative or
Selling Broker or mail it directly to Investor Services.
- --------------------------------------------------------------------------------
Buying additional Class A and Class B shares.
Monthly Automatic Accumulation Program (MAAP)
1. Complete the "Automatic Investing" and "Bank Information" sections on the
Account Privileges Application, designating a bank account from which your funds
may be drawn.
2. The amount you elect to invest will be automatically withdrawn from your bank
or credit union account.
- --------------------------------------------------------------------------------
By Telephone
1. Complete the "Invest-by-Phone" and "Bank Information" sections on the Account
Privileges Application, designating a bank account from which your funds may be
drawn. Note that in order to invest by phone, your account must be in a bank or
credit union that is a member of the Automated Clearing House System (ACH).
2. After your authorization form has been processed, you may purchase additional
Class A and Class B shares by calling Investor Services toll-free at
1-800-225-5291.
3. Give the Investor Services representative the name(s) in which your account
is registered, the Fund name, the class of shares you own, your account number
and the amount you wish to invest.
4. Your investment normally will be credited to your account the business day
following your phone request.
- --------------------------------------------------------------------------------
By Check
1. Either fill out the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund and 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.
- --------------------------------------------------------------------------------
13
<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 Sovereign Investors Fund (Class A and Class B shares) Your Account
Number Name(s) under which account is registered.
- --------------------------------------------------------------------------------
Other Requirements. All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 p.m., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Certificates are not issued unless a request is made in writing to Investor
Services.
- --------------------------------------------------------------------------------
Institutional Investors. Certain institutional investors may purchase Class C
shares of the Fund, which have no sales charge or 12b-1 fee. See "Institutional
Investors" for further information.
- --------------------------------------------------------------------------------
You will receive account statements, which you should keep to help with your
personal recordkeeping.
You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.
SHARE PRICE
The offering price of your shares is their net asset value plus a sales charge,
if applicable, which will vary with the purchase alternative you choose.
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued on the basis of market quotations, valuations provided by
independent pricing services, or fair value as determined in good faith
according to procedures approved by the Directors. Short-term debt investments
maturing within 60 days are valued at amortized cost, which approximates market
value. Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates. If quotations are not readily
available or the value has been materially affected by events occurring after
the closing of a foreign market, assets are valued by a method that the
Directors believe accurately reflects fair value. The NAV is calculated once
daily as of the close of regular trading on the New York Stock Exchange
(generally at 4:00 P.M., New York time) on each day that the Exchange is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your investment before the close of regular trading on the New York
Stock Exchange, and transmit it to John Hancock Funds before its close of
business, to receive that day's offering price.
Initial Sales Charge Alternative--Class A Shares.
The offering price you pay for Class A shares of the Fund equals the NAV next
computed after your investment is received in good order by John Hancock Funds
plus a sales charge, as follows:
14
<PAGE>
<TABLE>
<CAPTION>
Combined
Sales Charge as Reallowance Reallowance to
Sales Charge as a Percentage of and Service Fee Selling Broker as
Amount Invested a Percentage of the Amount as a Percentage of a Percentage of
(Including Sales Charge) Offering Price Invested Offering Price(+) Offering Price(*)
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
</TABLE>
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales charge. In
addition to the reallowance allowed to all Selling Brokers, John Hancock Funds
will pay the following: round trip airfare to a resort will be offered to each
registered representative of a Selling Broker (if the Selling Broker has agreed
to participate) who sells certain amounts of shares of John Hancock funds. John
Hancock Funds will make these incentive payments out of its own resources. Other
than distribution fees, the Fund does not bear distribution expenses. A Selling
Broker to whom substantially the entire sales charge is reallowed or who
receives these incentives may be deemed to be an underwriter under the
Securities Act of 1933.
(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a contingent deferred sales charge may be imposed in the
event of certain redemption transactions 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, 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 Fund's net
assets invested in the Fund, and 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 accounts attributable to these
brokers.
Under certain circumstances as 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 Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the contingent deferred sales charge period), a contingent deferred sales
charge ("CDSC") will be imposed. The rate of the CDSC will depend on the amount
invested as follows:
15
<PAGE>
Amount Invested CDSC Rate
$1 million to $4,999,999 1.00%
$5 Million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%
Existing full service clients of John Hancock Mutual Life Insurance Company who
were group annuity contract holders as of September 1, 1994, and participant
directed defined contribution plans with at least 100 eligible employees at the
inception of the Fund account, may purchase Class A shares with no initial sales
charge. However, if the shares are redeemed within 12 months after the end of
the calendar year in which the purchase was made, a contingent deferred sales
charge will be imposed at the above rate.
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends which have been reinvested in
additional Class A shares.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charge."
You may qualify for a reduced sales charge on your investments in Class A
shares.
Qualifying for a Reduced Sales Charge. If you invest more than $50,000 in Class
A shares of the Fund or a combination of funds in the John Hancock funds (except
money market funds), you may qualify for a reduced sales charge on your
investments in Class A shares through a LETTER OF INTENTION. You may also be
able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to take
advantage of the value of your previous investments in Class A shares of the
John Hancock funds when meeting the breakpoints for a reduced sales charge. For
the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales
charge will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any other
John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
Example
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $30,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 4.50% and not 5.00%. This
rate is the rate that would otherwise be applicable to investments of less than
$50,000. See "Initial Sales Charge Alternative-Class A Shares."
Class A shares may be available without a sales charge to certain individuals
and organizations.
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
16
<PAGE>
(bullet) A Director or officer of the Company; a Director or officer of the
Adviser and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees or
Directors of any of the foregoing; a member of the immediate family of any of
the foregoing; or any fund, pension, profit sharing or other benefit plan for
the individuals described above.
(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 or registered investment adviser that has entered into
an agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
(bullet) A former participant in an employee benefit plan with John Hancock
Funds, when he/she withdraws from his/her plan and transfers any or all of
his/her plan distributions directly to the Fund.
*For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares are
offered at net asset value per share without a sales charge, so that your
initial investment will go to work at the time of purchase. However, Class B
shares redeemed within six years of purchase will be subject to a CDSC at the
rates set forth below. This charge will be assessed on an amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. Accordingly, you will not be assessed a CDSC on increases in
account value above the initial purchase price, including shares derived from
dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
dividend reinvestment and next from the shares you have held the longest during
the six-year period. The CDSC is waived on redemptions in certain circumstances.
See the discussion "Waiver of Contingent Deferred Sales Charges" below.
Example:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:
17
<PAGE>
<TABLE>
<S> <C>
(bullet) Proceeds of 50 shares redeemed at $12 per share $600
(bullet) Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 X $12) -120
(bullet) Minus appreciation on remaining shares, also not subject to CDSC (40
X $2) -80
(bullet) Amount subject to CDSC $400
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
all or part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of 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 deducting a sales charge at the time of the
purchase.
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.
Year In Which Class B Contingent Deferred Sales
Shares Redeemed Charge As a Percentage of
Following Purchase Dollar Amount Subject to CDSC
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
A commission equal to 3.75% of the amount invested, and a first year's service
fee equal to 0.25% of the amount invested, are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for personal and
account maintenance services provided to shareholders during the twelve months
following the sale, and thereafter the service fee is paid in arrears.
Under certain circumstances, the CDSC on Class B and 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 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
18
<PAGE>
401(a) of the Code, custodial accounts under Section 403(b)(7) of the Code and
deferred compensation plans under Section 457 of the Code. The waiver also
applies to certain returns of excess contributions made to these plans. In all
cases, the distributions must be free from penalty under the Code.
(bullet) Redemptions due to death or disability.
(bullet) Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.
(bullet) Redemptions made pursuant to the Fund's right to liquidate your account
if you own fewer than 50 shares.
(bullet) Redemptions made in connection with certain liquidation, merger or
acquisition transactions involving other investment companies or personal
holding companies.
(bullet) Redemptions from certain IRA and retirement plans that purchased shares
prior to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
Conversion of Class B Shares. Your Class B shares, and an appropriate portion of
reinvested dividends on those shares, will be converted into Class A shares
automatically. This will occur at the end of the month eight years after the
shares were purchased, and will result in lower annual distribution fees. If you
exchanged Class B shares into this Fund from another John Hancock fund, the
calculation will be based on the time you purchased the shares in the original
fund. The Fund has been advised that the conversion of Class B shares to Class A
shares should not be taxable for Federal income tax purposes, nor should it
change your tax basis or tax holding period for the converted shares.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently made
by check or Invest- by-Phone have been collected (which may take up to 10
calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and what
you receive for them, subject to certain tax rules. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for up to seven days or
longer, as permitted by Federal securities laws.
19
<PAGE>
To assure acceptance of your redemption request, please follow these procedures.
By Telephone
All Fund shareholders are automatically eligible for the telephone redemption
privilege. Call 1-800-225-5291, 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 thirty days. A check will be mailed to the exact
name(s) and address on the account.
If reasonable procedures, such as those described above, are not followed, the
Fund may be liable for any loss due to unauthorized or fraudulent 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 in
accordance with the telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other tax-qualified retirement
plans or Fund shares 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
EASILINE. EASILINE'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.
In Writing
Send a stock power or letter of instruction specifying the name of the Fund, the
dollar amount or the number of shares to be redeemed, your name, class of
shares, your account number and the additional requirements listed below that
apply to your particular account.
<TABLE>
<CAPTION>
Type of Registration Requirements
<S> <C>
Individual, Joint Tenants, Sole
Proprietorship, Custodial (Uniform A letter of instruction signed (with titles where applicable) by
Gifts or Transfer to Minors Act), all persons authorized to sign for the account, exactly as it is
General Partners. 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 a
signature guarantee. (If the Trustee's name is not registered on
your account, also provide a copy of the trust document,
certified within the last 60 days.)
If you do not fall into any of these registration categories please call
1-800-225-5291 for further instructions.
</TABLE>
20
<PAGE>
Who may guarantee your signature.
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that any such 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.
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
charge is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange shares of the Fund only for shares of the same class of another
John Hancock fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for shares of the same class of another John Hancock fund. For
this purpose, John Hancock funds with only one class of shares will be treated
as Class A, whether or not they have been so designated.
Exchanges between funds 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 are subject to a CDSC may be exchanged for Class B
shares of another John Hancock fund without incurring the CDSC; however these
shares will be subject to the CDSC schedule of the shares acquired (except that
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Adjustable U.S. Government Trust and John Hancock Limited-Term Government Fund
will be subject to the initial fund's CDSC). For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added
21
<PAGE>
to the holding period of the shares acquired in an exchange. However if you
exchange Class B shares purchased prior to January 1, 1994 for Class B shares of
any other John Hancock fund, you will continue to be subject to the CDSC
schedule that was in effect at your initial purchase date.
You may exchange Class B shares of any John Hancock fund into shares of a John
Hancock money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption.
The Fund reserves the right to require that you keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.
When you make an exchange, your account registration 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 terminate the exchange privilege for any person who
makes seven or more exchanges out of the Fund per calendar year. Accounts under
common control or ownership will be aggregated for this purpose. Although the
Fund will attempt to give you prior notice whenever it is reasonably able to do
so, it may impose these restrictions at any time.
By Telephone
1. When you fill out the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to have the telephone 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.
22
<PAGE>
In Writing
1. In a letter request an exchange and list the following:
- --the name and class of the fund whose shares you currently own
- --your account number
- --the name(s) in which the account is registered
- --the name of the fund in which you wish your exchange to be invested
- --the number of shares, all shares or the dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Reinvestment Privilege
If you redeem shares of the Fund, you may be able to reinvest the proceeds in
the Fund or another John Hancock fund without paying an additional sales charge.
1. You will not be subject to a sales charge on Class A shares that you reinvest
in any John Hancock fund that is otherwise subject to a sales charge, as long as
you reinvest within 120 days from the redemption date. If you paid a CDSC upon a
redemption, you may reinvest at net asset value in the same class of shares from
which you redeemed within 120 days. Your account will be credited with the
amount of the CDSC previously charged, and the reinvested shares will continue
to be subject to a CDSC. For purposes of computing the CDSC payable upon a
subsequent redemption, the holding period of the shares acquired through
reinvestment will include the holding period of the redeemed shares.
2. Any portion of your redemption may be reinvested in Fund shares or in shares
of any of the other John Hancock funds, subject to the minimum investment limit
of that fund.
3. To reinvest, you must notify Investor Services in writing. Include the
account number and class from which your shares were originally redeemed.
Systematic Withdrawal Plan
You can pay routine bills from your account, or make periodic disbursements from
your retirement account to comply with IRS regulations.
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the Application from your registered representative or by calling
1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.
4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.
5. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares because you may be
subject to an initial sales charge on your purchases of Class A shares and to a
CDSC on your redemption of Class B shares. In addition, your redemptions are
taxable events.
23
<PAGE>
6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.
Monthly Automatic Accumulation Program (MAAP)
You can make automatic investments and simplify your investing.
1. You can authorize an investment to be automatically drawn each month from
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program at any time.
4. There is no charge to you for this program, and there is no cost to the Fund.
5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.
Group Investment Program
Organized groups of at least four persons may establish accounts.
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
2. The initial aggregate payment of all participants in the group must be at
least $250.
3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum and you may terminate the program at any
time.
Retirement Plans
1. You may use the Fund to fund various types of retirement plans, including
Individual Retirement Accounts, Keogh Plans (H.R. 10), Pension and Profit
Sharing Plans, (including 401(k) plans), Tax Sheltered Annuity Retirement Plans
(403(b) or TSA Plans) and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of the above
plans is $250. However, accounts being established as Group IRA, SEP, SARSEP,
TSA, 401(k) and 457 Plans will be accepted without an initial minimum
investment.
INSTITUTIONAL INVESTORS
Class C shares of the Fund are available only to the following types of
institutional investors: (i) Benefit plans not affiliated with the Adviser which
have at least $25,000,000 in plan assets, and either have a separate trustee
vested with investment discretion and certain limitations on the ability of the
plan beneficiaries to access their plan investments without incurring adverse
tax consequences or allow their participants to select among one or more
investment options, including the Fund ("participant-directed plans"); (ii)
Banks and insurance companies which are not affiliated with the Adviser
purchasing shares for their own account; (iii) Investment companies not
affiliated with the Adviser; (iv) Tax-exempt retirement plans of the Adviser and
its affiliates, including affiliated brokers; (v) Unit investment trusts
sponsored by John Hancock Funds and certain other sponsors; and (vi) Existing
full- service clients of John Hancock Mutual Life Insurance Company who were
group annuity contract holders as of September 1, 1994. Participant-directed
plans include, but are not limited to, 401(k), TSA and 457 plans.
24
<PAGE>
Class C shares are available to eligible institutional investors at net asset
value without the imposition of a sales charge and are not subject to ongoing
distribution fees imposed under a plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The minimum initial investment in Class C shares
is $1,000,000, but this requirement may be waived at the discretion of the
Company's officers. Some individuals who are currently eligible to purchase
Class A or Class B shares may also be participants in plans that are eligible to
purchase Class C shares of the Fund.
John Hancock Funds may pay a one-time payment of up to 0.15% of the amount
invested in Class C shares to a selling broker for its sales of Class C shares.
A person entitled to receive compensation for selling shares of the Fund may
receive different compensation with respect to sales of Class A, Class B or
Class C shares or any additional future class of shares.
Class C shares are also available to existing full-service clients of John
Hancock Mutual Life Insurance Company who were group annuity contract holders as
of September 1, 1994. John Hancock Funds, out of its own resources, may pay to a
Selling Broker an annual service fee of up to 0.20% of the amount invested in
Class C shares by these clients.
The Reinvestment Privilege, Systematic Withdrawal Plan, Monthly Automatic
Accumulation Program, Group Investment Program and Retirement Plans are not
available for Class C shares.
If you are considering a purchase of Class C shares of the Fund, please call
John Hancock Investor Services Corporation at 1-800-437-9312 to obtain
information about eligibility, instructions for purchase by check or wire and an
Institutional Account Application.
25
<PAGE>
(NOTES)
26
<PAGE>
(NOTES)
27
<PAGE>
JOHN HANCOCK SOVEREIGN
INVESTORS 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
For Telephone Exchange Call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
TDD Call 1-800-554-6713
JHD-2900P 5/95
JOHN HANCOCK
SOVEREIGN
INVESTORS
FUND
Class A and Class B Shares
Prospectus
May 1, 1995
A mutual fund seeking long-term growth of capital and income without undue
market risks.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
(Recycle Logo) Printed on recycled paper using soybean ink
<PAGE>
John Hancock
Sovereign
Investors
Fund
CLASS C Shares
Prospectus
May 1, 1995
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
The Fund's Expenses 8
Dividends and Taxes 9
Performance 10
Who Can Buy Class C Shares 10
How to Buy Class C Shares 10
Class C Share Price 12
How to Redeem Class C Shares 12
Additional Services and Programs 14
This Prospectus sets forth information about John Hancock Sovereign Investors
Fund (the "Fund"), a diversified series of John Hancock Sovereign Investors
Fund, Inc. (the "Company"), that you should know before investing. Please read
and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated May 1, 1995, and incorporated by reference in
this Prospectus, free of charge by writing to or by telephoning: John Hancock
Investor Services Corporation, Post Office Box 9277, Boston, Massachusetts
02205-9277, 1-800-437-9312.
Shares of the Fund are not deposits or obligations of or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
The purpose of the following information is to help you understand the various
fees and expenses that you will bear, directly or indirectly, when you purchase
Fund shares. The operating expenses included in the table and hypothetical
example below are based on fees and expenses of Class C shares of the Fund for
the fiscal year ended December 31, 1994, adjusted to reflect current fees and
expenses. Actual fees and expenses of Class C shares in the future may be
greater or less than those shown.
Class C
Shareholder Transaction Expenses Shares*
Maximum sales charge imposed on purchases (as a
percentage of offering price) None
Maximum sales charge imposed on reinvested dividends None
Maximum deferred sales charge None
Redemption fee+ None
Exchange fee None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management fee 0.58%
Other Expenses 0.18%
Total Fund operating expenses 0.76%
*The information set forth in the foregoing table relates only to Class C
shares. In addition, the Fund offers Class A and Class B shares.
+Redemption by wire fee (currently $4.00) not included.
<TABLE>
<CAPTION>
Example: Class C Shares 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming a 5% annual return $8 $24 $42 $94
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses of Class C shares may be greater or less than those
shown.)
The management fee referred to above is more fully explained in this Prospectus
under the caption "The Fund's Expenses" and in the Statement of Additional
Information under the caption "Investment Advisory and Other Services." In
addition to Class C shares, the Fund also offers Class A and Class B shares.
Class A shares are available to individual investors at net asset value plus a
maximum initial sales charge of 5.00% for A shares. Class A and Class B shares
are subject to ongoing Rule 12b-1 fee of 0.30% and 1.00%, respectively, of the
Fund's average daily net assets in accordance with a plan adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The minimum initial
investment in Class A or B shares is $1,000 ($250 for group investments or $500
for retirement plans). Generally, investors who are eligible to purchase Class C
shares are not able to purchase Class A shares. If you are considering a
purchase of Class A or Class B shares, please call John Hancock Investor
Services Corporation ("Investor Services") at 1-800-437-9312 for more
information about eligibility, instructions for purchase by check or wire and an
Account Application.
Class A and Class B shares generally have operating expenses similar to Class C
shares, except for the sales charge and Rule 12b-1 fee. Class A and Class B
shareholders are eligible for a reinvestment privilege, systematic withdrawal
plan, monthly automatic accumulation program, group investment program and use
of the Fund as a funding vehicle for a retirement plan. Investors wishing
information about any of these services and expenses should contact Investor
Services at 1-800-437-9312.
Total return of Class A, Class B and Class C shares will be calculated
separately, and for Class A shares may reflect the imposition of a sales charge.
Because each class is subject to certain different expenses, the total return
with respect to that class may differ for the same period.
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following Financial Highlights, for each of the two years in the period
ended December 31, 1994, has been audited by Ernst & Young LLP, the Fund's
independent auditors whose unqualified report is included in the Fund's 1994
Annual Report and is included in the Statement of Additional Information. The
Financial Highlights for the years 1985 through 1992 were audited by other
independent auditors. 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,(f)
1994 1993 1992(g) 1991(g) 1990(g) 1989(g) 1988(g) 1987(g) 1986(f)(g) 1985(f)(g)
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
Net Asset Value,
Beginning of
Period $15.10 $14.78 $14.31 $11.94 $12.60 $11.19 $10.96 $12.36 $11.31 $9.45
Net Investment Income 0.46 0.44 0.47 0.54 0.58 0.59 0.57 0.53 0.58 0.55
Net Realized and
Unrealized Gain
(Loss) on
Investments (0.75) 0.39 0.54 3.03 (0.05) 2.01 0.65 (0.45) 1.89 2.27
Total from Investment
Operations (0.29) 0.83 1.01 3.57 0.53 2.60 1.22 0.08 2.47 2.82
Less Distributions:
Dividends from Net
Investment Income (0.46) (0.42) (0.45) (0.53) (0.59) (0.61) (0.61) (0.58) (0.55) (0.53)
Distributions from Net
Realized Gain on
Investments Sold (0.11) (0.09) (0.09) (0.67) (0.60) (0.58) (0.38) (0.90) (0.87) (0.43)
Total Distributions (0.57) (0.51) (0.54) (1.20) (1.19) (1.19) (0.99) (1.48) (1.42) (0.96)
Net Asset Value,
End of Period $14.24 $15.10 $14.78 $14.31 $11.94 $12.60 $11.19 $10.96 $12.36 $11.31
Total Investment
Return at
Net Asset Value (1.85%) 5.71% 7.23% 30.48% 4.38% 23.76% 11.23% 0.28% 21.70% 30.60%
Ratios and
Supplemental
Data
Net Assets,
End of Period
(000's omitted $1,090,231 $1,258,575 $872,932 $194,055 $83,470 $66,466 $45,861 $40,564 $34,708 $23,806
Ratio of Expenses
to Average
Net Assets 1.16% 1.10% 1.13% 1.18% 1.14% 1.07% 0.86% 0.85% 0.70% 0.86%
Ratio of Net
Investment Income
to Average Net
Assets 3.13% 2.94% 3.32% 4.01% 4.77% 4.80% 4.97% 3.96% 4.28% 5.23%
Portfolio Turnover Rate 45% 46% 30% 67% 55% 40% 35% 59% 34% 31%
</TABLE>
<TABLE>
<S> <C>
Class B (a)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.02(d)
Net Investment Income 0.38(e)
Net Realized and Unrealized Gain on Investments (0.69)
Total from Investment Operations (0.31)
Less Distributions:
Dividends from Net Investment Income (0.36)
Distributions from Net Realized Gain on Investments Sold (0.11)
Total Distributions (0.47)
Net Asset Value, End of Period $14.24
Total Investment Return at Net Asset Value (2.04%)(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $128,069
Ratio of Expenses to Average Net Assets 1.86%*
Ratio of Net Investment Income to Average Net Assets 2.57%*
Portfolio Turnover Rate 45%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Year Ended For the Period
December 31, May 7, 1993
1994 To December 31, 1993 (b)
<S> <C> <C>
Class C (b)
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.11 $14.79(d)
Net Investment Income 0.52 0.27(e)
Net Realized and Unrealized Gain on Investments (0.77) 0.48
Total from Investment Operations (0.25) 0.75
Less Distributions:
Dividends from Net Investment Income (0.51) (0.34)
Distributions from Net Realized Gain on Investments Sold (0.11) (0.09)
Total Distributions (0.62) (0.43)
Net Asset Value, End of Period $14.24 $15.11
Total Investment Return at Net Asset Value (1.57%) 5.13%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $15,128 $10,189
Ratio of Expenses to Average Net Assets 0.81 0.88%*
Ratio of Net Investment Income to Average Net Assets 3.53% 3.17%*
Portfolio Turnover Rate 45% 46%
</TABLE>
Note: During the period covered by this table Sovereign Advisers, Inc. was the
investment adviser until October 23, 1991 when John Hancock Advisers, Inc.
became the Fund's investment adviser.
*On an annualized basis.
(a) Class B shares commenced operations on January 3, 1994.
(b) Class C shares commenced operations on May 7, 1993.
(c) Not annualized.
(d) Initial price to commence operations.
(e) On average month end shares outstanding.
(f) Restated for 2 for 1 stock split effective April 29, 1987.
(g) Not covered by report of independent auditors presented in the Statement of
Additional Information.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek long-term growth of capital and
income without undue market risk.
The Fund's investment objective is to provide long term growth of capital and of
income without assuming undue market risks. The Fund believes that its shares
are suitable for investment by persons who are in search of above-average long
term reward. At times, however, because of market conditions the Fund may find
it advantageous to invest primarily for current income. The Fund will diversify
its investments among a number of industry groups without concentrating more
than 25% of its assets in any particular industry. The Fund's investments will
be subject to market fluctuation and risks inherent in all securities. There is
no assurance that the Fund will achieve its investment objective.
The Fund will invest primarily in common stocks, although it may respond to
market conditions by investing in other types of securities.
Common stocks will generally represent the major part of the Fund's holdings,
although, for defensive purposes, the Fund may temporarily hold a larger
percentage of high grade liquid preferred stocks or debt securities. The Fund's
portfolio securities are selected mainly for their investment character based
upon generally accepted elements of intrinsic value, including industry
position, management, financial strength, earning power, marketability and
prospects for future growth. The distribution or mix of various types of
investments is based on general market conditions, the level of interest rates,
business and economic conditions and the availability of investments in the
equity or fixed income markets. The amount of the Fund's assets that may be
invested in either equity or fixed income securities is not restricted and is
based upon management's judgment of what might best achieve the Fund's
investment objective.
The Fund generally invests in seasoned companies in sound financial condition
with a long record of paying dividends.
While there is considerable flexibility in the investment grade and type of
security in which the Fund may invest, the Fund may only invest in companies who
have (or whose predecessors have) been in continuous business for at least five
years and have total assets of at least $10 million. The Fund currently uses a
strategy of investing only in those common stocks which have a record of having
increased their dividend payout in each of the preceding ten or more years. This
dividend performers strategy can be changed at any time.
Investments in corporate fixed income securities may be in bonds, convertible
debentures and preferred convertible or non-convertible stock. Convertible
issues, while influenced by the level of interest rates, are also subject to the
changing value of the underlying common stock into which they are convertible.
Fixed income securities eligible for purchase by the Fund may have stated
maturities of one to thirty years. The value of fixed income securities varies
inversely with interest rates. Although fixed income securities in the Fund's
portfolio may include securities rated as low as C by Standard & Poor's Ratings
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") and unrated
securities deemed of equivalent quality by John Hancock Advisers, Inc. (the
"Adviser"), no more than 5% of the Fund's net assets will be invested in debt
securities rated lower than BBB by S&P or Baa by Moody's or unrated securities
of equivalent quality. Bonds rated BBB or Baa normally exhibit adequate
protection parameters. However, speculative characteristics, and adverse changes
in economic conditions or other circumstances are more likely to lead to
weakened capacity to make principal and interest payments than higher grade
bonds. Bonds rated lower than BBB or Baa are high risk securities commonly known
as "junk bonds." If any security in the Fund's portfolio falls below the Fund's
minimum credit quality standards, as a result of a rating downgrade or the
Adviser's determination, the Fund will dispose of the security as promptly as
possible while attempting to minimize any loss.
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<PAGE>
Restricted Securities. In addition, temporary investments in short term
securities, including money market instruments, may be made in order to receive
a return on excess cash. The Fund may purchase restricted securities, including
those which can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"). The Board of
Directors will monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of information.
Purchases of restricted securities are subject to an investment restriction
limiting all the Fund's illiquid securities to not more than 15% of its net
assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the securities. As a result, the Fund may incur a loss or, in the event of the
borrower's bankruptcy, the Fund may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value exceeding 33-1/3% of its total assets.
Government Securities. The Fund may also invest in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Certain
U.S. Government securities, including U.S. Treasury bills, notes and bonds and
Government National Mortgage Association certificates ("Ginnie Maes"), are
supported by the full faith and credit of the United States. Certain other U.S.
Government securities, issued or guaranteed by federal agencies or government
sponsored enterprises, are not supported by the full faith and credit of the
United States, but may be supported by the right of the issuer to borrow from
the U.S. Treasury. These securities include obligations of the Federal Home Loan
Mortgage Corporation ("Freddie Macs") and Federal National Mortgage Association
("Fannie Maes"), and obligations supported by the credit of the instrumentality,
such as Student Loan Marketing Association Bonds ("Sallie Maes").
The Fund may invest in mortgage-backed securities which have stated maturities
of up to thirty years when they are issued, depending upon the length of the
mortgages underlying the securities. In practice, however, unscheduled or early
payments of principal and interest on the underlying mortgages may make the
securities' effective maturity shorter than this, and the prevailing interest
rates may be higher or lower than the current yield of the Fund's portfolio at
the time the Fund receives the payments for reinvestment. Mortgage-backed
securities may have less potential for capital appreciation than comparable
fixed-income securities, due to the likelihood of increased prepayments of
mortgages as interest rates decline. If the Fund buys mortgage-backed securities
at a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of the
Fund's principal investment to the extent of the premium paid.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment 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 seller at a
higher price. These transactions must be fully collateralized at all times, but
involve some credit risk to the Fund
6
<PAGE>
if the other party defaults on its obligations and the Fund is delayed in or
prevented from liquidating the collateral. The Fund will segregate in a separate
account cash or liquid, high grade debt securities equal in value to its forward
commitments and when-issued securities. Purchasing securities for future
delivery or on a when-issued basis may increase the Fund's overall investment
exposure and involves a risk of loss if the value of the securities declines
before the settlement date.
The Fund follows certain policies which may help to reduce investment risk.
Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
classified as fundamental or non-fundamental. The Fund's investment objective
and those investment restrictions designated as fundamental may not be changed
without shareholder approval. The Fund's non-fundamental investment policies and
restrictions, however, may be changed by a vote of the Directors without
shareholder approval. The Fund's portfolio turnover rates for recent years are
shown in "The Fund's Financial Highlights."
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable prices, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sale of Fund shares. Pursuant to
procedures established by the Directors, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Interstate/Johnson Lane, Tucker Anthony Incorporated, John Hancock Distributors,
Inc. and Sutro & Company, Inc. which are indirectly owned by John Hancock Mutual
Life Insurance Company, which in turn indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Directors elect officers and retain the investment adviser, who is
responsible for the day-to-day operations of the Fund, subject to the Directors'
policies and supervision.
The Fund is a separate, diversified portfolio of the Company, an open-end
management investment company. The Company was organized as a corporation in the
State of Delaware in January 1936 and reincorporated in Maryland in 1990. The
Company currently has 345,000,000 authorized shares of capital stock. The
Company's Articles of Incorporation permit the Directors to create and classify
the capital stock into separate series, without shareholder approval. As of the
date of this Prospectus, the Directors have authorized shares of the Fund and
one other series. Additional series may be added in the future. The Company's
Articles of Incorporation also permit the Directors to classify and reclassify
any series or portfolio of shares into one or more classes. As of the date of
this Prospectus, the Fund has authorized Class A shares, Class B shares and
Class C shares, all of which shares have equal rights as to voting, redemption,
dividends and liquidation except that Class A shares and Class B shares have
exclusive voting rights with respect to the Rule 12b-1 distribution plans which
have been adopted by holders of Class A and Class B shares in connection with
the distribution of Class A and Class B shares.
Shareholders have certain rights to remove Directors. The Company is not
required and does not intend to hold annual meetings of shareholders, although
special meetings may be held for such purposes as electing or removing
Directors, changing fundamental investment restrictions and policies or
approving a management contract.
John Hancock Advisers, Inc. advises investment companies having a total asset
value of more than $13 billion.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. John Hancock
Funds, Inc. ("John Hancock Funds") distributes shares for all of the John
Hancock funds
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<PAGE>
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 Directors which allows Directors'
fees to be invested by the Fund in other John Hancock funds.
Pursuant to a service agreement without the Adviser and its affiliate, Sovereign
Asset Management Corporation ("SAMCorp"), SAMCorp furnishes to the Adviser
certain portfolio management services with respect to the securities held in the
portfolio of the Fund. The Adviser supervises SAMCorp's performance of such
services and is responsible for all services required to be provided under the
Adviser's investment management contract with the Fund. The Adviser pays to
SAMCorp 40% of the fee received from the Fund by the Adviser.
John F. Snyder III is primarily responsible for management of the Fund. He is
assisted by a team of co-portfolio managers and analysts in the day-to-day
management of the Fund. Mr. Snyder is Executive Vice President of SAMCorp and
Senior Vice President of the Fund. He has been a co-portfolio manager of the
Fund since 1984. He has been associated with the Adviser since 1991 when the
Adviser assumed management of the Fund. He is also co-portfolio manager of John
Hancock Sovereign Achievers Fund and John Hancock Sovereign Balanced Fund.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser,
the Sub-Adviser and the Fund have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of these
restrictions are: pre- clearance for all personal trades and a ban on the
purchase of initial public offerings, as well as contributions to specified
charities of profits on securities held for less than 91 days. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders come first.
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net asset value as follows:
$0 to 750 million 0.60%
750 million to 1.5 billion 0.55%
1.5 billion to 2.5 billion 0.50%
2.5 billion and over 0.45%
The investment management fee for the 1994 fiscal year was 0.60% of the Fund's
average daily net asset value. The Adviser may, from time to time, reduce its
fee or make other arrangements to limit the Fund's expenses to a specified
percentage of average net assets. The Adviser retains the right to impose such
fee and recover any other payments to the extent at the end of any fiscal year,
the Fund's actual expenses at year end fall below any limit.
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this Prospectus.
8
<PAGE>
DIVIDENDS AND TAXES
The Fund has paid quarterly distributions continuously since 1937.
Dividends. Income dividends are paid quarterly from net investment income.
Capital gains if any, are generally distributed annually. From time to time, the
Fund may declare a special dividend at year's end. Dividends are reinvested on
the record date in additional Class C shares unless you elect the option to
receive them either entirely in cash or a combination of cash and additional
Class C shares. Under the cash option, you receive both dividends and capital
gains in cash. Under the cash and reinvest option, you will receive dividends in
cash and capital gains distributions in additional Class C shares of the Fund.
Dividends which are reinvested will be reinvested at net asset value on the
payment date. If you elect the cash option and the U.S. Postal Service cannot
deliver your checks, your election will be converted to the reinvestment option.
Taxation. For investors who are not exempt from Federal income taxes, dividends
from the Fund's net investment income, certain net foreign currency gains, and
net short-term capital gains are taxable to you as ordinary income. Dividends
from the Fund's net long-term capital gains are taxable as long-term capital
gain. These dividends are taxable whether you receive cash or reinvest in
additional Class C shares. Certain dividends paid in January of a given year may
be taxable as if you received them the previous December. Corporate shareholders
may be entitled to take the corporate dividends received deduction for dividends
received by the Fund from U.S. domestic corporations, subject to certain
restrictions under the Internal Revenue Code of 1986, as amended (the "Code").
The Fund will send you a statement by January 31 showing the tax status of the
dividends you received for the prior year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the 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 Class C shares, you may realize a taxable
gain or loss.
On the account application, you must certify that your social security or other
taxpayer identification number is correct and that you are not subject to backup
withholding of Federal income tax. If you do not provide this information or are
otherwise subject to backup withholding, the Fund may be required to withhold
31% of your taxable dividends, and the proceeds of redemptions and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes, with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends that represents interest received
by the Fund on direct U.S. government obligations may be exempt from tax.
Non-U.S. shareholders and tax-exempt shareholders are subject to different tax
treatment not described above. You should consult your tax adviser for specific
advice.
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<PAGE>
PERFORMANCE
The Fund may advertise its yield and total return on Class C shares.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of the Class C share price. Yield is computed by annualizing the
result of dividing the net investment income per share over a 30 day period by
the net asset value per Class C share on the last day of that period. Yield is
also calculated according to accounting methods that are standardized for all
stock and bond funds. Because yield accounting methods differ from the methods
used for other accounting purposes, the Fund's yield may not equal the income
paid on Class C shares or the income reported in the Fund's financial
statements.
The Fund's total return on Class C shares shows the overall change in value of a
hypothetical investment in the Fund, assuming the reinvestment of all dividends.
Cumulative total return shows the Class C shares' performance over a period of
time. Average annual total return shows the cumulative return of the Class C
Fund shares divided by the number of years included in the period. Because
average annual total return tends to smooth out variations in the performance of
Class C Fund shares, you should recognize that it is not the same as actual
year-to-year results.
Neither total return nor yield calculations with respect to Class C shares
reflect the imposition of a sales charge. The value of Class C Fund shares, when
redeemed, may be more or less than their original cost. Both yield and total
return are historical calculations and are not an indication of future
performance.
WHO CAN BUY CLASS C SHARES
Class C shares are available to certain institutional investors.
In order to buy Class C Fund shares, you must qualify as one of the following
types of institutional investors: (i) Benefits plans (other than self-directed
plans) not affiliated with the Adviser which have at least $25,000,000 in plan
assets and either have a separate trustee vested with investment discretion and
certain limitations on the ability of the plan beneficiaries to access their
plan investments without incurring adverse tax consequences or allow their
participants to select among one or more investment options, including the Fund
("participant-direct plans"); (ii) Banks and insurance companies which are not
affiliated with the Adviser purchasing shares for their own account; (iii)
Investment companies not affiliated with the Adviser; (iv) Tax exempt retirement
plans of the Adviser and its affiliates, including affiliated brokers; and (v)
Unit investment trusts sponsored by John Hancock Funds and certain other
sponsors and (vi) existing full-service clients of John Hancock Mutual Life
Insurance Company who were group annuity contract holders as of September 1,
1994. Participant-directed plans include but are not limited to 401(k), TSA and
457 plans.
HOW TO BUY CLASS C SHARES
Opening an account.
The minimum initial investment is $1,000,000, except that this requirement may
be waived at the discretion of the Fund's officers. You may qualify for the
minimum investment if you invest more than $1,000,000 in Class C shares of the
Fund and Class C shares of other funds in the John Hancock family of funds. This
is discussed in greater detail in the Statement of Additional Information.
Complete the Account Application attached to this Prospectus.
By Check
1. Make your check payable to John Hancock Investor Services Corporation
("Investor Services").
2. Deliver the completed application and check to your registered representative
or Selling Broker, or mail it directly to Investor Services.
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<PAGE>
By Wire
1. Obtain an account number by contacting your registered representative or
Selling Broker or by calling 1-800-437-9312.
2. Instruct your bank to wire funds to:
First Signature Bank and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Sovereign Investors Fund
(Class C shares)
Your account number
Name(s) under which account is registered.
3. Deliver the completed application to your registered representative or
Selling Broker, or mail it directly to Investor Services.
Buying additional Class C shares.
By Telephone
1. Complete the "Invest-By-Phone" and "Bank Information" sections on the Account
Privileges Application designating a bank account from which funds may be drawn.
Note that in order to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House System (ACH).
2. After your authorization form has been processed, you may purchase additional
Class C shares by calling Investor Services toll-free at 1-800-437-9312.
3. Give the Investor Services representative the name(s) in which your account
is registered, the Fund name and your account number, and the amount you wish to
invest in Class C shares.
4. Your investment normally will be credited to your account the business day
following your phone request.
By Check
1. Either fill out the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund and the class
of shares you own, your account number and the name(s) in which the account is
registered.
2. Make your check payable to John Hancock Investor Services Corporation
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
By Wire
Instruct your bank to wire funds to:
First Signature Bank and Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Sovereign Investors Fund
(Class C Shares)
Your Account Number
Name(s) under which account is registered.
Other Requirements All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 p.m., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Class C share certificates are not issued unless a request is made in writing to
Investor Services.
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<PAGE>
You will receive account statements which you should keep to help with your
personal recordkeeping.
You will receive a statement of your account after any transactions that affects
your share balance or registration (statements related to reinvestment of
dividends will be sent to you quarterly). A tax information statement will be
mailed to you by January 31 of each year.
CLASS C SHARE PRICE
The offering price of your Class C shares is their net asset value.
The net asset value per share ("NAV") of a Class C share is the value of one
Class C share. The NAV is calculated by dividing the net assets of each class by
the number of outstanding shares of that class. The NAV of each class can differ
in value. Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or at fair value
as determined in good faith in accordance with procedures approved by the
Directors. Short-term debt investments maturing within 60 days are valued at
amortized cost which approximates market value. Foreign securities are valued on
the basis of quotations from the primary market in which they are traded, and
are translated from the local currency into U.S. dollars using current exchange
rates. If quotations are not readily available or, the value has been materially
affected by events occurring after the closing of a foreign market, assets are
valued by a method that the Directors believe accurately reflects fair value.
The NAV of Class C shares is calculated once daily as of the close of regular
trading on the New York Stock Exchange (generally at 4:00 p.m., New York time)
on each day that the Exchange is open.
Class C shares of the Fund are sold at the offering price based on the NAV
computed after your investment request is received in good order by John Hancock
Funds. If you buy shares of the Fund through a Selling Broker, the Selling
Broker must receive your investment before the close of regular trading on the
New York Stock Exchange and transmit it to John Hancock Funds prior to its close
of business to receive that day's offering price. No sales charge is imposed on
the purchase of Class C shares.
A one-time payment of up to 0.15% of the amount invested in Class C shares may
be made by John Hancock Funds to a Selling Broker for sales of Class C shares
made by that Selling Broker. A person entitled to receive compensation for
selling shares of the Fund may receive different compensation with respect to
sales of Class A shares, Class B shares and Class C shares of the Fund. John
Hancock Funds, out of its own resources, may pay to a selling Broker an annual
service fee up to 0.20% of the amount invested in Class C shares by these
clients.
HOW TO REDEEM CLASS C SHARES
You may redeem all or a portion of your Class C shares on any business day. Your
Class C shares will be redeemed at the next NAV for Class C shares calculated
after your redemption request is received in good order by Investor Services.
The Fund may hold payment until reasonably satisfied that investments which were
recently made by check or Invest-by-Phone have been collected (which may take up
to 10 calendar days).
Once your Class C shares are redeemed, the Fund generally sends you payment on
the next business day. When you redeem your Class C shares, you may realize a
taxable gain or loss depending usually on the difference between what you paid
for them and what you receive for them, subject to certain tax rules. Under
unusual circumstances, the Fund may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by Federal securities laws.
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<PAGE>
To assure acceptance of your redemption request, please follow the procedures.
By Telephone
All Fund shareholders are automatically eligible for the telephone redemption
privilege. Call 1-800-437-9312, from 8:00 A.M. to 4:00 P.M. (New York Time),
Monday through Friday, excluding days on which the New York Stock Exchange is
closed. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account number,
taxpayer identification number applicable to the account and other relevant
information may be requested. In addition, telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the address on the account must
not have changed for the last 30 days. A check will be mailed to the exact
name(s) and address on the account.
If reasonable procedures, such as those described above, are not followed, the
Fund may be liable for any loss due to unauthorized or fraudulent instructions.
In all other cases, neither the Fund nor Investor Services will be liable for
any loss or expense for acting upon telephone instructions made in accordance
with the telephone transaction procedures mentioned above.
Telephone redemption is not available for tax-qualified retirement plans or for
Class C shares of the Fund that are in certificate form.
During periods of extreme economic conditions or market changes, telephone
requests may be difficult to implement due to a large volume of calls. During
such times you should consider placing redemption requests in writing or using
EASI-line. EASI-line's telephone number is 1-800-338-8080.
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 Institutional Account Application that is included with this Prospectus.
in Writing
Send a stock power or "letter of instruction" specifying the name of the Fund,
the dollar amount or the number of Class C shares to be redeemed, your name,
class of shares, your account number and the additional requirements listed
below that apply to your particular account.
<TABLE>
<S> <C>
Type of Registration Requirements
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
signatures guaranteed. (If the Trustee's name is not registered
on your account, also provide a copy of the trust document,
certified within the last 60 days.)
If you do not fall into any of these registration categories, please call
1-800-437-9312 for further instructions.
</TABLE>
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<PAGE>
Who may guarantee your signature.
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the Class C shares redeemed is $100,000 or
less, John Hancock Funds may guarantee the signature. The following institutions
may provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
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. You may not redeem certificated shares by
telephone.
Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the right to redeem all Class C shares in an account which holds fewer
than 50 shares (except accounts under retirement plans) and to mail the proceeds
to the shareholder, or the transfer agent may impose an annual fee of $10.00. No
account will be involuntarily redeemed or additional fee imposed, if the value
of the account is in excess of the Fund's minimum initial investment.
Shareholders will be notified before these redemptions are to be made or this
charge is imposed and will have 30 days to purchase additional Class C shares to
bring their account balance up to the required minimum. Unless the number of
Class C shares acquired by further purchases and dividend reinvestments, if any,
exceeds the number of Class C shares redeemed, repeated redemptions from a
smaller account may eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange Class C shares of the Fund only for Class C shares 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. Not all John Hancock funds offer Class C. Contact your registered
representative or Selling Broker and request a prospectus for the John Hancock
funds that interest you. Read the prospectus carefully before exchanging your
Class C shares. Exchanges may be made only into Class C shares of other John
Hancock funds.
Exchanges between funds are based on their respective net asset values. No sales
charge or transaction charge is imposed.
The Fund reserves the right to require you to keep previously exchanged Class C
shares (and reinvested dividends) in the Fund for 90 days before you are
permitted to execute a new exchange. The Fund may also terminate or alter the
terms of the exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.
When you make an exchange, your account registration must be identical in both
the existing and new account. The exchange privilege is available only in states
where the exchange can be made legally.
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<PAGE>
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 your prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
By Telephone
1. When you fill out the application for your initial purchase of Class C shares
of the Fund, you automatically authorize exchanges by telephone unless you check
the box indicating that you do not wish to authorize the telephone exchange
privilege.
2. Call 1-800-437-9312. Have the account number of your current fund and the
exact name in which it is registered available to give to the customer service
representative.
3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.
In Writing
1. In a letter request an exchange and list the following:
- --name of the fund whose Class C shares you currently own
- --your account number
- --the name(s) in which the account is registered
- --the name of the fund in which you wish your exchange to be invested
- --the number of Class C shares, all Class C shares or the dollar amount
you wish to exchange.
Sign your request exactly as the account is registered.
2. Mail the request and information to:
Attn: Institutional Services
John Hancock Investor Services Corporation
P.O. Box 9277
Boston, Massachusetts 02205-9277
<PAGE>
JOHN HANCOCK SOVEREIGN
INVESTORS 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 St.
Boston, MA 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For Service Information
For Telephone Exchange Call 1-800-437-9312
For Investment-by-Phone
For Telephone Redemption
JH290CP 5/95
<PAGE>
JOHN HANCOCK
SOVEREIGN
INVESTORS
FUND
CLASS C SHARES
Prospectus
May 1, 1995
A mutual fund seeking long-term growth of capital and income without undue
market risks.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-437-9312
(Recycle Logo) Printed on Recycled Paper
<PAGE>
JOHN HANCOCK
SOVEREIGN INVESTORS FUND
CLASS A, CLASS B and CLASS C SHARES
Statement of
Additional Information
May 1, 1995
This Statement of Additional Information provides information about John
Hancock Sovereign Investors Fund (the "Fund") in addition to the information
that is contained in the Fund's Class A and Class B and the Class C
Prospectuses, dated May 1, 1995 (the "Prospectuses").
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Fund's Prospectuses, a copy of which can be
obtained free of charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-(800)-225-5291
TABLE OF CONTENTS
Statement
of
Additional
Information
Page
Organization of the Fund 2
Investment Objective and Policies 2
Investment Restrictions 5
Those Responsible for Management 8
Investment Advisory and Other Services 15
Distribution Contracts 18
Net Asset Value 19
Initial Sales Charge on Class A Shares 20
Deferred Sales Charge on Class B Shares 21
Special Redemptions 22
Additional Services and Programs 22
Description of Fund Shares 23
Tax Status 25
<PAGE>
Calculation of Performance 28
Brokerage Allocation 30
Transfer Agent Services 32
Custody of Portfolio 32
Independent Auditors 32
Appendix A-1 A-1
Appendix A-2 A-2
Financial Statements
ORGANIZATION OF THE FUND
John Hancock Sovereign Investors Fund (the "Fund") is a separate
diversified portfolio of John Hancock Sovereign Investors Fund, Inc. (the
"Company"), an open-end investment management company.
The Company was organized as a corporation in the State of Delaware in
1936 and reincorporated in Maryland in 1990. The Board of Directors of the
Company has authority under the Company's charter to create and classify shares
into separate series and reclassify any series or portfolio of shares into one
or more classes without further action by shareholders. Pursuant thereto, the
Board of Directors has created the Fund and one additional series of the Company
known as John Hancock Sovereign Balanced Fund ("Balanced Fund") and authorized
the issuance of three classes of shares of the Fund: Class A, Class B and Class
C. See "Description of Fund Shares." Additional series may be added in the
future from time to time.
The Fund is managed by John Hancock Advisers, Inc. (the "Adviser"). The
Adviser is an indirect wholly-owned subsidiary of the John Hancock Mutual Life
Insurance Company (the "Life Insurance Company"), chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts. Prior to
October 23, 1991, the Company was known as "Sovereign Investors, Inc."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide long-term growth of capital
and of income without assuming what the Adviser believes to be undue market
risks. At times, however, because of market conditions, the Fund may invest
primarily for current income. There is no assurance that the Fund's objective
will be attained. The Fund will make investments in different types and classes
of securities in accordance with the Board of Directors' and the Adviser's
appraisal of economic and market conditions. The securities held by the Fund are
under continuous study by the Adviser. They are selected because they are
considered by the management to contribute to the possible achievement of the
Fund's objective. They are held or disposed of in accordance with the results of
a continuing examination of their merit. Shareholder approval is not required to
effect changes in investment objective.
<PAGE>
The Fund may hold all common stocks or for more defensive purposes it may
hold high grade liquid preferred stocks and debt securities or cash. In
addition, temporary investments in short term debt securities may be made so as
to receive a return on excess cash.
The investment policy of the Fund is to purchase and hold securities for
capital appreciation and investment income, although there may be a limited
number of short-term transactions incidental to the pursuit of its investment
objective. The Fund may make portfolio purchases and sales to the extent that in
its Board's opinion, relying on the Adviser or independently, such transactions
are in the interest of shareholders.
Portfolio turnover rates for the past three fiscal years were: 1992, 30%,
1993, 46% and 1994, 45%.
The Fund endeavors to achieve its objectives by utilizing experienced
management and generally investing in securities of seasoned companies in sound
financial condition. A company or its predecessors must have been in continuous
business for at least five years and must have total assets of at least
$10,000,000 before its securities can be purchased by the Fund. The Fund has not
purchased securities of real estate investment trusts and has no present
intention of doing so in the future.
Restricted Securities. Although the Fund has authority to purchase to a limited
extent "restricted securities" (i.e., securities that would be required to be
registered prior to distribution to the public), the Fund did not do so in its
past fiscal year and has no current intention of doing so, except that the Fund
may in the future invest in restricted securities eligible for resale to certain
institutional investors pursuant to Rule 144A under the Securities Act of 1933.
The Fund will not invest more than 15% of its net assets in illiquid
investments, which includes repurchase agreements maturing in more than seven
days, securities that are not readily marketable and restricted securities.
However, if the Board of Directors determines, based upon a continuing review of
the trading markets for specific Rule 144A securities that they are liquid then
such securities may be purchased without regard to the 15% limit. The Board of
Directors may adopt guidelines and delegate to the Adviser the daily function of
determining and monitoring the liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for the
determinations. Since it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
develop, the Board will carefully monitor the Fund's investments in these
securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in the Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities. The Fund does not intend to invest more that 5% of
its net assets in Rule 144A securities in the coming year.
Diversification. The Fund's investments are diversified in a broad list of
issues, representing many different industries. Although diversification does
not eliminate market risk, it may tend to reduce it. At the same time, holdings
of a large number of shares in any one company are avoided. Thus, during periods
when general economic and political conditions are subject to rapid changes, it
<PAGE>
may be appropriate to effect rapid changes in the Fund's investments. This
can be more readily accomplished by limiting the amount of any one investment.
As is common to all securities investments, the stock of this managed
diversified Fund is subject to fluctuation in value; its portfolio will not
necessarily prove a defense in periods of declining prices or lead the advance
in rising markets. The Fund's management will endeavor to reduce the risks
encountered in the use of any single investment by investing the assets of the
Fund in a widely diversified group of securities. Diversification, however, will
not necessarily reduce inherent market risks. Securities are selected mainly for
their investment character, based upon generally accepted elements of intrinsic
value including industry position, management, financial strength, earning
power, ready marketability and prospects for future growth.
Concentration. The Fund's policy is not to concentrate its investments in any
one industry, but investments of up to 25% of its total assets at market value
may be made in a single industry. This limitation may not be changed without the
affirmative vote of a majority of the Fund's outstanding voting securities, as
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
Lower Rated Bonds. The Fund may invest in debt securities rated as low as C by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group
("S&P") and unrated securities deemed of equivalent quality by the Adviser.
These securities are speculative to a high degree and often have very poor
prospects of attaining real investment standing. Lower rated securities are
generally referred to as junk bonds. No more than 5% of the Fund's net assets,
however, will be invested in securities rated lower than BBB by S&P or Baa by
Moody's. In addition, no more than 5% of the Fund's net assets may be invested
in securities rated BBB or Baa and unrated securities deemed of equivalent
quality. See the Appendix attached to this Statement of Additional Information
which describes the characteristics of the securities in the various ratings
categories. The Fund may invest in comparable quality unrated securities which,
in the opinion of the Adviser, offer comparable yields and risks to those
securities which are rated.
Debt obligations rated in the lower ratings categories, or which are
unrated, involve greater volatility of price and risk of loss of principal and
income. In addition, lower ratings reflect a greater possibility of an adverse
change in financial condition affecting the ability of the issuer to make
payments of interest and principal. The high yield fixed income market is
relatively new and its growth occurred during a period of economic expansion.
The market has not yet been fully tested by an economic recession.
The market price and liquidity of lower rated fixed income securities
generally respond to short term corporate and market developments to a greater
extent than do the price and liquidity of higher rated securities because such
developments are perceived to have a more direct relationship to the ability of
an issuer of such lower rated securities to meet its ongoing debt obligations.
The market prices of zero coupon bonds are affected to a greater extent by
interest rate changes, and thereby tend to be more volatile than securities
which pay interest periodically. Increasing rate note securities are typically
refinanced by the issuers within a short period of time.
Reduced volume and liquidity in the high yield bond market or the reduced
availability of market quotations will make it more difficult to dispose of the
bonds and to value accurately
<PAGE>
the Fund's assets. The reduced availability of reliable, objective data may
increase the Fund's reliance on management's judgment in valuing high yield
bonds. In addition, the Fund's investments in high yield securities may be
susceptible to adverse publicity and investor perceptions, whether or not
justified by fundamental factors. The Fund's investments, and consequently its
net asset value, will be subject to the market fluctuations and risks inherent
in all securities.
Options and Futures. The Fund may not invest in futures contracts or sell call
or put options. The Fund has authority to purchase put and call options,
although the Fund has no present intention of doing so in the coming fiscal
year.
Government Securities. Certain U.S. Government securities, including U.S.
Treasury bills, notes and bonds, and Government National Mortgage Association
certificates ("Ginnie Maes"), are supported by the full faith and credit of the
United States. Certain other U.S. Government securities, issued or guaranteed by
federal agencies or government sponsored enterprises, are not supported by the
full faith and credit of the United States, but may be supported by the right of
the issuer to borrow from the U.S. Treasury. These securities include
obligations of the Federal Home Loan Mortgage Corporation ("Freddie Macs"), and
obligations supported by the credit of the instrumentality, such as Federal
National Mortgage Association Bonds ("Fannie Maes"). Ginnie Maes, Freddie Macs
and Fannie Maes are mortgage-backed securities which provide monthly payments
which are, in effect, a "pass-through" of the monthly interest and principal
payments (including any prepayments) made by the individual borrowers on the
pooled mortgage loans. Collateralized Mortgage Obligations ("CMOs") in which the
Fund may invest are securities issued by a U.S. Government instrumentality that
are collateralized by a portfolio of mortgages or mortgage-backed securities.
Mortgage-backed securities may be less effective than traditional debt
obligations of similar maturity at maintaining yields during periods of
declining interest rates.
Mortgage-backed securities have stated maturities of up to thirty years
when they are issued depending upon the length of the mortgages underlying the
securities. In practice, however, unscheduled or early payments of principal and
interest on the underlying mortgages may make the securities' effective maturity
shorter than this and the prevailing interest rates may be higher or lower than
the current yield of the Fund's portfolio at the time such payments are received
by the Fund for reinvestment. Mortgage-backed securities may have less potential
for capital appreciation than comparable fixed-income securities due to the
likelihood of increased prepayments of mortgages as interest rates decline. If
the Fund buys mortgage-backed securities at a premium, mortgage foreclosures and
prepayments of principal by mortgagors (which may be made at any time without
penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The following investment restrictions will not be changed without the
affirmative vote of a majority of the Fund's outstanding voting securities, as
defined in the Investment Company Act.
<PAGE>
(1) The Fund may not, with respect to 75% of its total assets, purchase
any security (other than securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements collateralized by
such securities) if, as a result: (a) more than 5% of its total assets would be
invested in the securities of any one issuer, or (b) the Fund would own more
than 10% of the voting securities of any one issuer.
(2) The Fund may not issue senior securities, except as permitted by
paragraphs (3) and (7) below. For purposes of this restriction, the issuance of
shares of common stock in multiple classes, the purchase or sale of options,
futures contracts and options on futures contracts, forward commitments, and
repurchase agreements entered into in accordance with the Fund's investment
policies, and the pledge, mortgage or hypothecation of the Fund's assets are not
deemed to be senior securities.
(3) The Fund may not borrow money except in connection with the sale or
resale of its capital stock.
(4) The Fund may not act as an underwriter, except to the extent that, in
connection with the disposition of portfolio investments, the Fund may be deemed
to be an underwriter for purposes of the Securities Act of 1933.
(5) The Fund may not purchase or sell real estate, or any interest
therein, including real estate mortgage loans, except that the Fund may: (i)
hold and sell real estate acquired as the result of its ownership of securities,
or (ii) invest in securities of corporate or governmental entities secured by
real estate or marketable interests therein or securities issued by companies
(other that real estate limited partnerships) that invest in real estate or
interests therein.
(6) The Fund may not make loans, except that the Fund (1) may lend
portfolio securities in accordance with the Fund's investment policies in an
amount up to 33-1/3% of the Fund's total assets taken at market value, (2) enter
into repurchase agreements, and (3) purchase all or a portion of an issue of
debt securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities.
(7) The Fund may not purchase or sell commodities or commodity contracts;
except that the Fund may purchase and sell options on securities, securities
indices, currency and other financial instruments, futures contracts on
securities, securities indices, currency and other financial instruments and
options on such futures contracts, forward commitments, interest rate swaps,
caps and floors, securities index put or call warrants and repurchase agreements
entered into in accordance with the Fund's investment policies.
(8) The Fund may not purchase securities of an issuer conducting its
principal activity in any particular industry if immediately after such purchase
the value of the Fund's investments in all issuers in this industry would exceed
25% of its total assets taken at market value.
NON FUNDAMENTAL INVESTMENT RESTRICTIONS
The following restrictions may be changed by the Funds Board of Directors
and will not require shareholder approval.
<PAGE>
The Fund may not:
(a) Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of any investment
adviser to the Fund in order to save commissions or to average prices among the
accounts, and the participation of the Fund as a part of a group bidding for the
purchase of tax exempt bonds shall not be deemed to result in participation in a
securities trading account.
(b) Purchase securities on margin or make short sales 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 short 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.
(c) Purchase a security if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of closed-end investment companies,
(ii) such purchase would result in more than 3% of the outstanding voting
securities of any one closed-end investment company being held by the Fund, or
(iii) more than 5% of the Fund's total assets would be invested in any one
closed-end investment company. The Fund will not purchase the securities of any
open-end investment company, except in a merger, consolidation or other
reorganization.
(d) Purchase a security of a company unless it or its predecessors have
been in continuous business for at least five years, and unless its most recent
balance sheet shows at least $10,000,000 total assets.
(e) Invest for the purpose of exercising control over or management of
any company.
(f) Purchase warrants of any issuer, if as a result, 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 Fund's total assets would be invested in warrants,
whether or not so listed, such warrants in each case to be valued at the lesser
of cost or market, but assigning no value to warrants acquired by the Fund in
units with or attached to debt securities.
(g) Knowingly purchase or retain securities of an issuer if one or more of
the Directors 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 1/2 of 1% and together own beneficially more than 5% of
the securities of such issuer.
(h) Purchase interests in oil, gas or other mineral lease exploration
programs; however, this policy will not prohibit the acquisition of securities
of companies engaged in the production or transmission of oil, gas or other
minerals.
<PAGE>
(i) Purchase any security, including any repurchase agreement maturing in
more than seven days, which is illiquid, 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 currently considers
over-the-counter options to be illiquid securities subject to the 15% limit.)
(j) Write put or call options.
(k) Purchase put and call options (other than protective put options) if,
as a result, the value of the Fund's aggregate investment in such options would
exceed 5% of its total assets.
(l) Purchase interests in real estate limited partnerships.
(m) No officer or director of the Fund may take a short position in the
shares of the Fund, withhold orders or buy shares in anticipation of orders.
(n) No security of a bank or trust company may be purchased unless it is a
domestic corporation, and has combined capital, surplus and undivided profits of
at least $20,000,000.
(o) 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
Directors may, in their sole discretion, adopt restrictions on investment policy
more restrictive than those described above. Should the Directors determine that
any such more restrictive policy is no longer in the best interest of the Fund
and its shareholders, the Fund may cease offering shares in the state involved
and the Directors may revoke such restrictive policy. Moreover, if the states
involved shall no longer require any such restrictive policy, the Directors may,
at their sole discretion, revoke such policy.
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the value of the Fund's assets will not be
considered a violation of restriction.
Because investments in securities of other investment companies may result
in duplication of certain fees and expenses, the Fund will invest in such
securities only when, in the Adviser's opinion, the anticipated return on such
securities justifies any such additional expense.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by its Board of Directors who elect
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Directors. Several of the officers and
<PAGE>
Directors of the Fund are also officers or directors of the Adviser or officers
or directors of the Fund's principal distributor, John Hancock Funds, Inc.
("John Hancock Funds,").
The following table sets forth the principal occupation or employment of
the Trustees and principal officers of the Fund during the past five years:
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
Edward J. Boudreau, Chairman (1,2) Chairman and Chief Executive
Jr.* Officer, the Adviser and The
101 Huntington Avenue Berkeley Financial Group ("Berkeley
Boston, MA 02199 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 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. ("Distributors")
(until April 1994).
Thomas W.L. Cameron Director Chairman and Director, Sovereign
Interstate/Johnson Lane Advisers, Inc.; Senior Vice
1892 Andell Bluff Blvd. President, Interstate/Johnson Lane
Johns Island, SC 29455 Corp. (securities dealer).
Charles F. Fretz Director (3) Consultant, self employed; Vice
RD #5, Box 300B President and Director, Towers,
Clothier Springs Road Perrin, Forster & Crosby, Inc.
Malvern, PA 19355 (international management
consultants) (until 1985).
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the AuditCommittee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address with the Company During the Past Five Years
Charles L. Ladner Director (3) Director, Energy North, Inc.
UGI Corporation (public utility holding company)
P.O. Box 858 (until 1992); Senior Vice
Valley Forge, PA 19482 President, Finance of UGI Corp.
(gas distribution utility).
Patricia P. McCarter Director (3) Director and Secretary of the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer).
Malvern, PA 19355
Steven R. Pruchansky Director (1,3) Director and Treasurer, Mast
6920 Daniel Road Holdings, Inc.; Director, First
Naples, FL 33942 Signature Bank & Trust Company
(until August 1991); General
Partner, Mast Realty Trust;
President, Maxwell Building Corp.
(until 1991).
Norman H. Smith Director (3) Retired. Lieutenant General,
Rt. 1, Box 249 E United States Marine Corps;
Linden, VA 22642 Deputy Chief of Staff for
Manpower and Reserve Affairs,
Headquarters Marine Corps;
Commanding General, III Marine
Expeditionary Force/3rd Marine
Division (retired 1991).
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the AuditCommittee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address with the Company During the Past Five Years
John P. Toolan Director (3) Director, The Muni Bond Funds,
13 Chadwell Place National Liquid Reserves, Inc.,
Morristown, NJ 07960 The Tax Free Money Fund, Inc.
and Vantage Money Market Funds
(mutual funds), and The
Inefficient-Market Fund, Inc.
(closed-end investment company;
Chairman, Smith Barney Trust
Company (retired December,
1991); Director, Smith Barney,
Inc., Mutual Management Company
and Smith Barney Advisers, Inc.
(investment advisers) (until
December 1991).
James F. Carlin Director Chairman and Chief Executive
233 West Central Street Officer, Carlin Consolidated,
Natick, MA 01760 Inc. (insurance); Director,
Arabella Mutual Insurance
Company; Receiver, City of
Chelsea, Massachusetts (until
August 1992).
Harold R. Hiser, Jr. Director Executive Vice President,
Schering-Plough Schering-Plough Corporation
Corporation (pharmaceuticals); Director,
One Giralda Farms ReCapital Corporation
Madison, NJ 07940-1000 (reinsurance).
Robert G. Freedman* Vice Chairman and Vice Chairman and Chief
101 Huntington Avenue Chief Investment Investment Officer, the Adviser;
Boston, MA 02199 Officer (2) President, the Adviser (until
December 1994).
Anne C. Hodsdon* President (2) President and Chief Operations
101 Huntington Avenue Officer, the Adviser; Executive
Boston, MA 02199 Vice President, the Adviser
(until December 1994).
Thomas H. Drohan* Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary of the Adviser.
Boston, MA 02199 Secretary
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the AuditCommittee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
James K. Ho* Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
James B. Little* Senior Vice Senior Vice President, the
101 Huntington Avenue President and Adviser.
Boston, MA 02199 Chief Financial
Officer
John F. Snyder, III Senior Vice Executive Vice President, SAM
1 Westlakes President Corp.
1235 Westlakes Drive
Berwyn, PA 19312
Michael P. DiCarlo* Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
- ----------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the AuditCommittee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
Susan S. Newton* Vice President, Vice President and Assistant
101 Huntington Avenue Assistant Secretary, the Adviser.
Boston, MA 02199 Secretary and
Compliance Officer
John A. Morin* Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
James J. Stokowski* Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, MA 02199
Barry Evans Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
- ----------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the AuditCommittee and the Committee on Administration.
(4) A Member of the Audit, Administration and Compensation Committees.
<PAGE>
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Directors and officers may also be officers
and/or Directors and/or Trustees of one or more other funds for which the
Adviser serves as investment adviser.
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated From the Fund
Compensation Accrued as Annual and John
From the Part of the Benefits Upon Hancock Fund
Independent Directors Fund Fund's Retirement Complex to
Expenses Directors(1)(2)
<S> <C> <C> <C> <C>
James F. Carlin $ 29,101 - - $ 60,450
Charles F. Fretz 29,011 - - 60,350
Harold R. Hiser, Jr. 27,174 - - 56,000
Alonzo R. Horsey 27,378 - - 56,200
(deceased)
Charles L. Ladner 29,101 - - 60,450
Patricia P. McCarter 29,101 - - 60,200
Steven R. Pruchansky 30,078 - - 62,450
Norman H. Smith 30,078 - - 62,450
John P. Toolan 29,101 - - 60,450
--------- -------------- -------------- ----------
$260,125 $548,600
</TABLE>
(1) The total compensation paid by the John Hancock Fund Complex to the
Independent Directors is as of the calendar year ended December 31, 1994.
(2) All Directors except Messers. Fretz and Hiser are Directors of 39 funds in
the John Hancock Complex. Messers. Fretz and Hiser are Directors of 21 funds.
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 April 10, 1995 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 April 10, 1995 the following shareholders beneficially owned 5% of or
more of the outstanding shares of the Funds listed below:
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Number of shares of total
Name and Address of Class of Shares beneficial interest outstanding
Shareholder owned shares of the
class of the Fund
<S> <C> <C> <C>
Mellon Bank Trustee
California Savings Plus
Program Class C shares 772,121.352 69.33
457 Plan A/C CSPF0135002
Attn: Bob Stein
1 Cabot Rd.
Medford, MA 02155-5158
Mellon Bank Trustee Class C shares 173,982.6380 15.62
California Savings Plus
Program
401(K) Thrift Plan A/C
CSPF0035002
Attn: Bob Stein
1 Cabot Rd.
Medford, MA 02155-5158
Investment-Incentive Plan Class C shares 150,546.689 13.52
FBO
John Hancock Mutual Fund
Co's
Attn: Jeff Bogard AD Q
One University Park
P.O. Box 8992
Waltham, MA 02254-8992
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectuses, 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 Directors and principal officers affiliated with 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 or the Adviser.
As described in the Prospectuses under the caption "Organization and
Management of the Fund," the Fund has entered into an investment management
contract with the Adviser. Under the investment management contract, the Adviser
provides the Fund (i) with a continuous investment program, consistent with the
Fund's stated investment objective and policies; (ii) supervision of all aspects
of the Fund's operations except those delegated to a custodian, transfer agent
or other agent and (iii) such executive, administrative and clerical personnel,
officers and equipment as are necessary for the conduct of its business. The
Adviser is responsible for the day to day 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 affiliates provide investment advice.
Because of different investment
<PAGE>
objectives or other factors, a particular security may be bought for one or more
funds or clients when one or more are selling the same security. If
opportunities for purchase or sale of securities by the Adviser for the Fund 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 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 and
SAMCORP Advisers, Inc. regularly furnish 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 Insurance Company and its affiliates.
Under the terms of the investment management contract with the Fund, the
Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. The Adviser pays the compensation of all
other officers and employees of the Fund, and pays the expenses of clerical
services relating to the administration of the Fund.
All expenses which are not specifically paid by the Adviser and which are
incurred in the operation of the Fund (including fees of Directors of the Fund
who are not "interested persons," as such term is defined in the Investment
Company Act but excluding certain distribution-related activities required to be
paid by the Adviser or John Hancock Funds) and the continuous public offering of
the shares of the Fund are borne by the Fund. Subject to conditions set forth in
a private letter ruling that the Fund has received from the Internal Revenue
Service relating to its multiple-class structure, class expenses properly
allocable to any of Class A, Class B or Class C shares, will be borne
exclusively by such class of shares.
As discussed in the Class A and Class B Prospectus and as provided by the
investment management contract, the Fund pays the Adviser quarterly an
investment management fee, which is accrued daily, based on a stated percentage
of the average of the daily net assets of the Fund.
Investment advisory fees paid to the Adviser in 1994, 1993 and 1992
amounted to $7,452,980, 6,750,790 and $3,016,183, respectively. The Adviser paid
SAMCORP the sum of $464,466 in 1992, $2,672,150 in 1993 and $2,997,156 in 1994.
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.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where the
Fund is registered to sell shares of common stock, the fee payable to the
Adviser will be reduced to the extent of such excess and the Adviser will make
any additional arrangements necessary to eliminate any remaining excess
expenses. Currently, the most restrictive limit applicable to the Fund is 2.5%
of the first
<PAGE>
$30,000,000 of the Fund's average daily net assets, 2% of the next
$70,000,000 of such assets and 1.5% of the remaining average daily net assets.
Pursuant to the investment management contract, the Adviser is not liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which 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 of the obligations and duties under the investment management
contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
other mutual funds and publicly traded investment companies in the John Hancock
group of funds having a combined total of over 1,060,000 shareholders. The
Adviser is an affiliate of the Life Insurance Company, one of the most
recognized and respected financial institutions in the nation. With total assets
under management of $80 billion, the Life Insurance Company is one of the ten
largest life insurance companies in the United States, and carries Standard &
Poor's and A.M. Best's highest ratings. Founded in 1862, John Hancock has been
serving clients for over 130 years.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Insurance Company may grant the non-exclusive right to use the name
"John Hancock" or any similar name to any other corporation or entity, including
but not limited to any investment company of which the Life Insurance Company or
any subsidiary or affiliate thereof or any successor to the business of any
subsidiary or affiliate thereof shall be the investment adviser.
The Adviser has entered into a service agreement with SAMCORP Advisers,
Inc. ("SAMCORP"), which is an indirect wholly-owned subsidiary of the Life
Insurance Company. The service agreement provides that SAMCORP will provide to
the Adviser certain portfolio management services with respect to the securities
held in the portfolio of the Fund. The service agreement further provides that
the Adviser will remain ultimately responsible for all of its obligations under
the investment management contract between the Adviser and the Fund. Subject to
the supervision of the Adviser, SAMCORP furnishes the Fund with recommendations
with respect to the purchase, holding and disposition of equity securities in
the Fund's portfolio; furnishes the Fund with research, economic and statistical
data in connection with the Fund's equity investments; and places orders for
transactions in equity securities.
The Adviser pays to SAMCORP 40% of the monthly investment management fee
received by the Adviser with respect to the Fund during such month. The fees
paid by the Fund to the Adviser under the investment management contract are not
affected by this arrangement.
The investment management contract and the distribution contract continue
in effect from year to year thereafter if approved annually by vote of a
majority of the Independent Directors,
<PAGE>
cast in person at a meeting called for the purpose of voting on such approval,
and by either the Directors or the holders of a majority of the Fund's
outstanding voting securities. The contract automatically terminates upon
assignment. The contract may be terminated without penalty on 60 days' notice at
the option of either party to the respective contract or by vote of a majority
of the outstanding voting securities of the Fund.
DISTRIBUTION CONTRACTS
The Fund's Directors have adopted Distribution Plans with respect to Class
A and Class B shares (together, the "Plans") pursuant to Rule 12b-1 under the
Investment Company Act. Under the Class A and Class B 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 average daily net assets. However, the service
fee will not exceed 0.25% of the Fund's average daily net assets attributable to
each class of shares. The distribution fees reimburse John Hancock Funds for its
distribution costs incurred in the promotion of sales of shares of the Fund, and
the service fees compensate selected broker-dealers (the "Selling Brokers") for
providing personal and shareholder account maintenance services. The Plans were
approved by the Class A shareholders of the Fund and both Plans and the
amendments to the Class A Plans, by a majority of the Directors, including a
majority of the Directors 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 Directors"), by votes cast in person at meetings called for the
purpose of voting on such Plans. Pursuant to each Plan, at least quarterly, John
Hancock Funds provides the Fund with a written report of the amounts expended
under the Plan and the purpose for which these expenditures were made. The
Directors review these reports on a quarterly basis.
During the fiscal year ended December 31, 1994 the Funds paid Investor
Services the following amounts of expenses with respect to the Class A and Class
B shares of the Fund:
Expense Items
Printing
and Mailing Expenses of Interest
of Compensation John Carrying or
Prospectus to Selling Hancock Other
Advertising to New Brokers Funds Finance
Shareholders Charges Other
Sovereign
Investors
Fund
Class A Shares $549,163 $14,790 $1,705,056 $1,202,999 $ 0
Class B Shares 33,002 604 601,139 72,439 11,000
Each of the Plans provides that it will continue in effect only so long as
its continuance is approved at least annually by the Directors and by the
Independent Directors. The Plans provide that they may be terminated without
penalty (a) by vote of a majority of the Independent Directors (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
<PAGE>
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 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 Directors and the Independent Directors
of the Fund. The holders of Class A and Class B shares have exclusive voting
rights with respect to the Plan applicable to their class of shares. In adopting
the Plans, the Directors concluded that, in their judgment, there is a
reasonable likelihood that each Plan will benefit holders of the applicable
class of shares of the Fund.
Class C shares of the Fund are not subject to any distribution plan.
Expenses associated with the obligation of John Hancock Funds to use its best
efforts to sell Class C shares will be paid by the Adviser or John Hancock Funds
and will not be paid from the fees paid under Class A or Class B Plans.
When the Fund seeks an Independent Director to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Director is, under resolutions adopted by the Directors
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Directors. The members of the
Committee on Administration are all Independent Directors and are identified in
this Statement of Additional Information under the caption "Those Responsible
for Management."
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.
Debt investment securities are valued on the basis of valuations furnished
by a principal market maker or a pricing service, both of which generally
utilize electronic data processing techniques to determine valuations for normal
institutional size trading units of debt securities without exclusive reliance
upon quoted prices.
Equity securities traded on a principal exchange or NASDAQ National Market
Issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.
Short-term debt investments which have a remaining maturity of 60 days or
less are generally valued at amortized cost which approximates market value. If
market quotations are not readily available or if in the opinion of the Adviser
any quotation or price is not representative of true market value, the fair
value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of any determination of a Fund's NAV.
<PAGE>
A Fund will not price its securities on the following national holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day; and Christmas Day. On any day an international
market is closed and the New York Stock Exchange is open, any foreign securities
will be valued at the prior day's close with the current day's exchange rate.
Trading of foreign securities may take place on Saturdays and U.S. business
holidays on which a Fund's NAV is not calculated. Consequently, a Fund's
portfolio securities may trade and the NAV of the Fund's redeemable securities
may be significantly affected on days when a shareholder has no access to the
Fund.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the Fund's Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Prospectus are described in
detail below. In calculating the sales charge applicable to current purchases of
Class A shares, 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, or if Investor Services is notified by the investor's dealer or the
investor at the time of the purchase, the cost of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to purchases of
Class A shares made at one time, the purchases will be combined if made by (a)
an individual, his spouse and their children under the age of 21, purchasing
securities for his or their own account, (b) a Director or other fiduciary
purchasing for a single Fund, 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 Class A and Class B Prospectus, Class
A shares of the Fund may be sold without a sales charge to certain persons
described in the Prospectus.
Accumulation Privilege. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of a reduced sales
charge by taking into account not only the amount then being invested but also
the purchase price or current value of the Class A shares already held by such
person.
Combination Privilege. Reduced sales charges (according to the schedule set
forth in the Class A and Class B Prospectus) also are available to an investor
based on the aggregate amount of his concurrent and prior investments in Class A
shares of the Fund and shares of all other John Hancock funds which carry a
sales charge.
Letter of Intention. The reduced sales loads are also applicable to investments
made over a specified period pursuant to a Letter of Intention (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 period of
thirteen (13) months. Investors who are using the Fund as a funding medium for a
<PAGE>
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 IRA'S, SEP, SARSEP, TSA, 401 (k) plans, TSA plans and
457 plans. Such an investment (including accumulations and combinations) must
aggregate $50,000 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 with the specified period (either 13 or 48 months),
the sales charge applicable will not be higher than that which would have been
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
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.
Because Class C shares are sold at net asset value without the imposition
of any sales charge, none of the privileges described under these captions are
available to Class C investors, with the following exception:
Combination Privilege. As explained in the Prospectus for Class C Shares, a
Class C investor may qualify for the minimum $1,000,000 investment (or such
other amount as may be determined by the Fund's officers) if the aggregate
amount of his current and prior investments in Class C shares of the Fund and
Class C shares of any other John Hancock Fund exceeds $1,000,000.
DEFERRED SALES CHARGE ON CLASS B SHARES
Investments in Class B shares are purchased at net asset value per share
without the imposition of an initial sales charge so that the Fund will receive
the full amount of the purchase payment.
Contingent Deferred Sales Charge. Class B shares which are redeemed within six
years of purchase will be subject to a contingent deferred sales charge ("CDSC")
at the rates set forth in the Class A and Class B Prospectus as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the current market value or the original purchase cost of
the Class B shares being redeemed. Accordingly, no CDSC will be imposed on
increases in account value above the initial purchase prices, including Class B
shares derived from reinvestment of dividends or capital gains distributions.
<PAGE>
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by Investor Services to defray its expenses related to
providing distribution related services to the Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees enables the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the Class
A and Class B Prospectus for additional information regarding the CDSC.
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 FOR CLASS A AND CLASS B SHARES
Exchange Privilege. As described more fully in the Prospectuses, the Fund
permits exchanges of shares of any class of the Fund for shares of the same
class in any other John Hancock fund offering that class.
Systematic Withdrawal Plan. As described briefly in the Fund's Class A and Class
B Prospectus, the Fund permits the establishment of a Systematic Withdrawal
Plan. Payments under this plan represent proceeds arising from the redemption of
shares. 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 as a
Systematic Withdrawal Plan is in effect. The Fund reserves the right to modify
or discontinue the
<PAGE>
Systematic Withdrawal Plan of any shareholder on 30 days' prior written
notice to such shareholder, or to discontinue the availability of such plan in
the future. The shareholder may terminate the plan at any time by giving proper
notice to Investor Services.
Monthly Automatic Accumulation Program (MAAP). This program is explained fully
in the Class A and Class B Prospectus. The program, as it relates to automatic
investment drafts, is subject to the following conditions:
The investment drafts will be drawn on or about the day of the month indicated.
The privilege of making investments through the Monthly Automatic Accumulation
Program may be revoked by Investor Services without prior notice if any
investment is not honored by the Shareholder's bank. The bank shall be under no
obligation to notify the shareholder as to the non-payment of any check.
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 shares of the Fund 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 another John Hancock fund, subject to the minimum investment limit
in any 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 fund. If a CDSC was paid
upon a redemption, a shareholder may reinvest the proceeds from such 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 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 will be treated for tax purposes as described below.
DESCRIPTION OF FUND SHARES
As of December, 1993, the Company's authorized capitalization is
345,000,000 fully paid and non-assessable shares of capital stock, $.01 par
value with 285,000,000 shares allocated to this Fund and 60,000,000 shares
allocated to the John Hancock Sovereign Balanced Fund Series. When issued, each
share is fully transferable, has one vote and has equal rights with respect to
earnings, dividends and liquidation. Shareholders have no preemptive or
conversion rights. On April 20, 1987, shareholders voted to increase the
authorized shares and to split the capital stock
<PAGE>
2-for-1 thereby restating the par value from $1 to $.50 per share. On May 1,
1990 the Company reincorporated in Maryland with authority to issue 100,000,000
shares of $.01 par value. Presently outstanding stock certificates of $1 and
$.50 par should be retained and will have the same value as the new $.01 par
stock.
The Directors of the Company are responsible for the management and
supervision of the Company. Under the Articles of Incorporation, the Directors
have the authority to classify unissued capital stock in separate series,
without further action by shareholders. As of the date of this Statement of
Additional Information, the Directors have authorized two series of the Company.
Additional series may be added in the future. The Articles of Incorporation also
authorize the Directors to classify and reclassify the shares of the Fund, or
any new series of the Company, into one or more classes. As of the date of this
Statement of Additional Information, the Directors have authorized the issuance
of three classes of shares: Class A, Class B and Class C shares.
The shares of each class of the Fund represent an equal proportionate
interest in the assets belonging to the Fund. Class A shares and Class B shares
of the Fund will be sold exclusively to members of the public (other than the
institutional investors described in the Class A and Class B Prospectus) at net
asset value and a sales charge that will vary inversely with the dollar amount
of shares purchased. For Class A shares, no sales charge is payable at the time
of purchase on investments of $1 million or more, but for such investments a
contingent deferred sales charge may be imposed in the event of certain
redemption transactions within one year of purchase.
Holders of Class A and Class B shares have certain exclusive voting rights
on matters relating to their respective Rule 12b-1 distribution plans. Holders
of Class C shares have no voting rights with respect to the Class A or Class B
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. Transfer agency costs will
be allocated among the classes of Fund shares in accordance with the relative
net assets of each class.
Dividends paid by the Fund, if any, with respect to each class of shares
will be calculated in the same manner at the same time 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
and (ii) Class B shares will pay higher distribution fees than Class A shares
and (iii) each of Class A, Class B and Class C shares will bear any other class
expenses properly allocable to such class of shares,, subject to conditions set
forth in a private letter ruling that the Fund has received from the Internal
Revenue Service relating to its multiple-class structure. Accordingly, the net
asset value per share may vary depending on the class of shares purchased.
In the event of liquidation, shareholders are entitled to share pro rata
in the net assets of the Fund available for distribution to the 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.
Unless otherwise required by the Investment Company Act or the Articles of
Incorporation, the Fund has no intention of holding annual meetings of
shareholders. Fund shareholders may remove a Director by the affirmative vote of
at least a majority of the Fund's
<PAGE>
outstanding shares and the Directors 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 Directors holding office were elected by the shareholders, the
Directors will call a special meeting of shareholders for the purpose of
electing Directors.
TAX STATUS
Each series of the Company, including the Fund, is treated as a separate
entity for accounting and tax purposes. The Fund has qualified and has elected
to be treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to continue
to so qualify in the future. As such and by complying with the applicable
provisions of the Code regarding the sources of its income, the timing of its
distributions and the diversification of its assets, the Fund will not be
subject to Federal income tax on taxable income (including net realized capital
gains) distributed to shareholders at least annually in accordance with the
timing requirements of the Code.
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 earnings and profits
("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital gains.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash they would have received had they elected to receive
the distributions in cash, divided by the number of shares received.
The amount of net realized capital gains, if any, in any given year will
result from sales of securities made with a view to the maintenance of a
portfolio believed by the Fund's management to be most likely to attain the
Fund's objective. Such sales, and any resulting gains or losses, may therefore
vary considerably from year to year. At the time of an investor's purchase of
shares of the Fund, a portion of the purchase price is often attributable to
realized or unrealized appreciation in the Fund's portfolio or undistributed
taxable income of the Fund. Consequently, subsequent distributions may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions (or portions thereof) 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
<PAGE>
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. Such disregarded charge will result in an
increase in the shareholder's tax basis in the shares subsequently acquired.
Also, any loss realized on a redemption or exchange may 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 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 carryforward of prior years' capital losses, it would be subject to Federal
income tax in the hands of the Fund. Each shareholder would be treated for
Federal income tax purposes as if the Fund had distributed to him on the last
day of its taxable year his pro rata share of such excess, and he had paid his
pro rata share of the taxes paid by the Fund and reinvested the remainder in the
Fund. Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain in his return for his taxable year in which the
last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares in the Fund by the difference between his pro rata share of such excess
and his pro rata share of these taxes.
For Federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset net capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent net capital
gains are offset by such losses, they would not result in Federal income tax
liability to the Fund and as noted above would not be distributed as such to
shareholders. Presently, there are no realized capital loss carryforwards to
offset against future net realized capital gains.
For purposes of the dividends received deduction available to
corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of the stock of such corporations held by the Fund, for
U.S. Federal income tax purposes, for at least 46 days (91 days in the case of
certain preferred stock) and distributed and designated by the Fund may be
treated a qualifying dividends. Corporate shareholders must meet the minimum
holding period requirement stated above (46 or 91 days) with respect to their
shares of the Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative minimum
<PAGE>
tax liability. Additionally, any corporate shareholder should consult its tax
adviser regarding the possibility that its basis in its shares may be reduced,
for Federal income tax purposes, by reason of "extraordinary dividends" received
with respect to the shares, for the purpose of computing its gain or loss on
redemption or other disposition of the shares.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
The Fund accrues income on zero coupon securities or certain PIK or
increasing rate securities (and, in general, any other securities with original
issue discount or with market discount if the Fund elects to include market
discount in income currently) prior to the receipt of cash payments. The Fund
must distribute, at least annually, all or substantially all of its net income
to shareholders to qualify as a regulated investment company under the Code and
avoid federal income and excise taxes. Therefore, the Fund may have to dispose
of its portfolio securities under disadvantageous circumstances to generate
cash, or may have to leverage itself by borrowing the cash, to satisfy
distribution requirements.
Investments in debt obligations that are at risk of or in default may
present special tax issues for the Fund. Tax rules are not entirely clear about
issues such as when the Fund may cease to accrue interest, original issue
discount, or market discount; when and to what extent deductions may be taken
for bad debts or worthless securities; how payments received on obligations in
default should be allocated between principal and income; and whether exchanges
of debt obligations in a workout context are taxable. These and other issues
will be addressed by the Fund, in the event it invests in such securities, in
order to reduce the risk of distributing insufficient income to preserve its
status as a regulated investment company and seek to avoid becoming subject to
Federal income or excise tax.
The foregoing discussion relates solely to U.S. Federal income tax laws
applicable to the 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. A state income (and possibly
local income and/or intangible property) tax exemption is generally available to
the extent the Fund's distributions are derived from interest on (or, in the
case of intangibles taxes, the value of its assets is attributable to) certain
U.S. Government obligations, provided in some states that certain thresholds for
holdings of such obligations and/or reporting requirements are satisfied. The
foregoing discussion related to U.S. investors that are not exempt from U.S.
Federal income tax. Different tax consequences will apply to plan participants,
tax-exempt investors and investors that are subject to tax deferral. You should
consult your tax adviser for specific advice. Under the Code, a tax-exempt
investor in the Fund will not generally recognize unrelated business taxable
income from its investment in the Fund unless the tax-exempt investor incurred
indebtedness to acquire or continue to hold Fund shares and such indebtedness
remains unpaid. Shareholders should consult their own tax advisers as to the
Federal, state or local tax consequences of ownership of shares of, and receipt
of distributions
<PAGE>
from, the Fund in their particular circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above. These
investors may be subject to nonresident alien withholding tax at the rate of 30%
(or a lower rate under an applicable tax treaty) on amounts treated as ordinary
dividends from the Fund and, unless an effective IRS Form W-8 or authorized
substitute is on file, to 31% backup withholding on certain other payments from
the Fund. Non-U.S. investors should consult their tax advisers regarding such
treatment and the application of foreign taxes to an investment in the Fund.
Provided that the Fund qualifies as a regulated investment company under the
Code, it will not be required to pay Massachusetts corporate excise , franchise
or income taxes.
CALCULATION OF PERFORMANCE
For the 30-day period ended December 31, 1994, the annualized yield on
Class A, Class B and Class C shares of the Fund was 3.20%, 2.57%, and 3.75%,
respectively. The average annual total return of the Class A shares of the
Fund for the 1 year period ended December 31, 1994 was (6.73)%, 7.56% and
12.18%, respectively. The average annual total return of the Class B shares of
the Fund for the period from the commencement of operations, January 3, 1994 to
December 31, 1994 was (6.94)%.
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula: Where:
P = a hypothetical initial investment of $1,000.
[GRAPHIC EQUATION]
n
_____
T = V 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, 5 and 10 year periods.
<PAGE>
This calculation assumes the maximum sales charge of 5.0% is included in
the initial investment or the CDSC is applied at the end of the period, and also
assumes that all dividends and distributions are reinvested at net asset value
on the reinvestment dates during the period. Performance calculations for Class
C shares do not include any sales charge or distribution plan fees.
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 5.0% 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.
The Fund's yield is computed by dividing net investment income per share
determined for a 30-day period by the maximum offering price per share (which
includes the full sales charge) on the last day of the period, according to the
following standard formula:
[GRAPHIC EQUATION]
-- --
| a-b 6 |
Yield=2 | (--- +1 ) -1 |
| cd |
-- --
Where:
a = dividends and interest earned during the period.
b = expenses accrued during the period (net of fee reductions and
expense limitation payments, if any).
c = the average daily number of shares outstanding during the
period that would be entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
The Class A shares yield at December 31, 1993 was 2.32%.
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 Clipper Analytical Services, Inc.'s "Lipper--Growth and Income
Fund Performance Analysis," a publication which tracks mutual fund net assets,
total return, and yield. Comparisons may also be made to bank certificates of
deposit ("CDs"), which differ from mutual funds, such as the Fund, in several
ways.
<PAGE>
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, BARRON'S and IBBOTSON ASSOCIATES
will also be utilized as well as the Russell and Wilshire indices. The Fund may
also cite Morningstar Mutual Values, an independent mutual fund information
service which ranks mutual funds. The Fund's promotional and sales literature
may make reference to the Fund's "beta." Beta is a reflection of the
market-related risk of the Fund by showing how responsive the Fund is to the
market.
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; 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 broker commissions are made by the Advisers pursuant to
recommendations made by its investment committee, which consists of officers and
directors of the Adviser and officers and Directors who are interested persons
of the Fund, and by SAMCORP. Orders for purchases and sales of securities are
placed in a manner, which, in the opinion of the Adviser, will offer the best
price and market for the execution of each such transaction. Purchases from
underwriters of portfolio securities may include a commission or commissions
paid by the issuer and transactions with dealers serving as market maker reflect
a "spread." 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 Directors 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 broker 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 and SAMCORP, 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 and SAMCORP.
<PAGE>
The receipt of research information is not expected to reduce significantly the
expenses of the Adviser. The research information and statistical assistance
furnished by brokers and dealers may benefit the Life Insurance Company or other
advisory clients of the Adviser and SAMCORP, and, conversely, brokerage
commissions and spreads paid by other advisory clients of the Adviser or SAMCORP
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 and SAMCORP will be primarily
responsible for the allocation of the Fund's brokerage business, their policies
and practices in this regard must be consistent with the foregoing and will at
all times be subject to review by the Directors. For the years ended on December
31, 1994, 1993 and 1992, the Fund paid negotiated brokerage commissions in the
amount of $1,197,837, $1,517,163 and $1,088,511, respectively.
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 Directors that such price is
reasonable in light of the services provided and to such policies as the
Directors may adopt from time to time. During the period year ended December 31,
1994, the Fund directed commissions in the amount of $144,950 to compensate
brokers for research services such as industry, economic and company reviews and
evaluation of securities.
The Adviser's indirect parent, the Life Insurance Company, is the indirect
sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated, John Hancock
Distributors, and Sutro & Company, Inc., are broker-dealers ("Affiliated
Brokers"). Pursuant to procedures determined by the Directors and consistent
with the above policy of obtaining best net results, the Fund may execute
portfolio transactions with or through Affiliated Brokers. During the year ended
December 31, 1994 the Fund did not execute any portfolio transactions with
Affiliated Brokers.
Any of the Affiliated Brokers may act as broker for the Fund on securities
or commodities exchange transactions, subject, however, to the general policy of
the Fund set forth above and the procedures adopted by the Directors pursuant to
the Investment Company Act. Commissions paid to an Affiliated Broker must be at
least as favorable as those which the Directors 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 Directors who are not interested persons
(as defined in the Investment Company Act) of the Fund, the Adviser, SAMCORP or
the Affiliated Broker. Any such transactions would be subject to a good faith
determination by the Directors that the compensation paid to Affiliated Brokers
is fair and reasonable. Because the Adviser and SAMCORP, which are affiliated
with the Affiliated Brokers, have, as investment advisers 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
<PAGE>
determined in accordance with the above criteria. The Fund will not engage in
principal transactions with Affiliated Brokers. The Fund may, however, purchase
securities from other members of underwriting syndicates of which Tucker Anthony
and Sutro are members but only in accordance with the policy set forth above and
procedures adopted and reviewed periodically by the Directors.
TRANSFER AGENT SERVICES
John Hancock Fund Services, Inc., P.O. Box 9116, 101 Huntington Avenue,
Boston, MA 02205-9116, a wholly-owned indirect subsidiary of the Life Insurance
Co., is the transfer and dividend paying agent for the Fund. The Fund pays
Investor Services an annual fee for Class A shares of $16.00 per shareholder
account and for Class B shares of $18.50 per shareholder account and 0.10% of
the average daily net assets attributable to the Class C shares, plus certain
out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and Investors Bank & Trust Company, 24 Federal
Street, Boston, Massachusetts 02110. Under the custodian agreement, Investors
Bank & Trust Company performs custody, portfolio and fund accounting services.
INDEPENDENT AUDITORS
The independent auditors of the Fund are Ernst & Young LLP, Boston,
Massachusetts 02116. The independent auditors audit and render an opinion on the
Fund's annual financial statements and prepare the Fund's annual income tax
returns.
<PAGE>
APPENDIX
Moody's describes its lower ratings for corporate bonds as follows:
Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterized
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represented obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Standard & Poor's describes its lower ratings for corporate bonds as follows:
Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Debt rated 'BB,' 'B,' 'CCC,' or 'CC' is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. 'BB' indicates the
lowest degree of speculation and 'CC' the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Moody's describes its three highest ratings for commercial paper as follows:
Issuers rated P-1 (or related supporting institutions) have a superior capacity
for repayment of short-term promissory obligations. P-1 repayment capacity will
normally be evidenced by the following characteristics: (1) leading market
positions in well-established industries; (2) high rates of return on funds
employed; (3) conservative capitalization structures with moderate reliance on
debt and ample asset protections; (4) broad margins in earnings coverage of
fixed financial charges and high internal cash generation; and (5) well
established access to a range of financial markets and assured sources of
alternate liquidity.
<PAGE>
Issuers rated P-2 (or related supporting institutions) have a strong capacity
for repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated P-3 (or supporting institutions) have an acceptable ability for
repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
<PAGE>
Standard & Poor's describes its lower ratings for corporate bonds as follows:
BBB Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C Debt rated 'BB', 'B', 'CCC', 'CC" and 'C' is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. 'BB'
indicates the lowest degree of speculation and 'C' the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.
CCC Debt rated 'CCC' has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The 'CCC' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'B' or 'B-' rating.
CC The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating.
C The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued. Standard & Poor's describes its three highest
ratings for commercial paper as follows:
A-1. This designation indicated that the degree of safety regarding timely
payment is very strong.
A-2. Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated A-1.
A-3. Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
Issuers rated P-2 (or related supporting institutions) have a strong capacity
for repayment of
<PAGE>
short-term promissory obligations. This will normally be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Issuers rated P-3 (or supporting institutions) have an acceptable ability for
repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common and preferred stocks
(cost - $928,787,740)......................................... $ 948,142,537
Bonds (cost - $166,844,619)..................................... 158,120,535
United States government and agencies obligations
(cost - $85,588,225).......................................... 80,845,200
Short-term notes (cost - $44,023,340)........................... 44,023,340
Corporate savings account....................................... 46,459
--------------
1,231,178,071
Receivable for shares sold........................................ 1,765,799
Receivable for investments sold................................... 1,436,802
Interest receivable............................................... 5,197,805
Dividends receivable.............................................. 3,453,254
--------------
Total Assets.................... 1,243,031,731
----------------------------------------------------
LIABILITIES:
Payable for shares repurchased.................................. 1,538,553
Payable for investments purchased............................... 5,916,264
Payable to John Hancock Advisers, Inc.
and affiliates - Note B....................................... 2,052,940
Accounts payable and accrued expenses........................... 95,460
--------------
Total Liabilities............... 9,603,217
----------------------------------------------------
NET ASSETS:
Capital paid-in................................................. 1,228,767,231
Accumulated net realized loss on investments.................... ( 1,298,030)
Net unrealized appreciation of investments...................... 5,887,688
Undistributed net investment income............................. 71,625
--------------
Net Assets...................... 1,233,428,514
====================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding with $0.01 per share par value)
Class A - $1,090,231,331/76,585,860
(160,000,000 shares authorized)............................... $ 14.24
======================================================================================
Class B - $128,069,240/8,996,738
(100,000,000 shares authorized)............................... $ 14.24
======================================================================================
Class C - $15,127,943/1,062,699
(25,000,000 shares authorized)................................ $ 14.24
======================================================================================
MAXIMUM OFFERING PRICE *
Class A - ($14.24 x 105.26%).................................. $ 14.99
======================================================================================
</TABLE>
** On a single retail sale of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
** Class B shares commenced operations on January 3, 1994.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES)
FOR THE PERIOD STATED.
<TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $150,097)........ $ 29,197,554
Interest........................................................ 24,255,558
------------
53,453,112
------------
Expenses:
Investment management fee - Note B.............................. 7,452,980
Distribution/service fee - Note B
Class A....................................................... 3,472,008
Class B **.................................................... 718,184
Transfer agent fee - Note B
Class A....................................................... 2,073,942
Class B **.................................................... 143,780
Class C....................................................... 16,154
Trustees' fees.................................................. 270,740
Custodian fee................................................... 205,942
State taxes..................................................... 133,233
Registration and filing fees.................................... 117,319
Printing........................................................ 114,019
Miscellaneous................................................... 83,411
Legal fees...................................................... 68,243
Auditing fee.................................................... 37,750
------------
Total Expenses 14,907,705
----------------------------------------------------
Net Investment Income 38,545,407
----------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments sold........................... 4,097,671
Change in net unrealized appreciation/depreciation
of investments................................................ ( 66,910,292)
------------
Net Realized and Unrealized
Loss on Investments............. ( 62,812,621)
----------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations....... ($24,267,214)
====================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................................................... $ 38,545,407 $ 33,139,262
Net realized gain on investments sold...................................... 4,097,671 11,356,627
Change in net unrealized appreciation/depreciation of investments.......... ( 66,910,292) 21,365,000
-------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations........ ( 24,267,214) 65,860,889
-------------- -------------
INCOME EQUALIZATION - NOTE A:
Amount transferred to capital paid-in...................................... ----- (2,430,618)
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.4593 and $0.4226 per share, respectively).................. ( 35,871,209) ( 32,927,611)
Class B ** - ($0.3553 and none per share, respectively).................. ( 2,196,993) -----
Class C - ($0.5100 and $0.3405 per share, respectively).................. ( 479,108) ( 138,123)
Distributions from net realized gain on investments sold
Class A - ($0.1105 and $0.0894 per share, respectively).................. ( 8,643,183) ( 7,369,319)
Class B ** - ($0.1105 and none per share, respectively).................. ( 601,125) -----
Class C - ($0.1105 and $0.0894 per share, respectively).................. ( 99,934) ( 59,264)
-------------- -------------
Total Distributions to Shareholders.................................... ( 47,891,552) ( 40,494,317)
-------------- -------------
FROM FUND SHARE TRANSACTIONS -- NET*
Net increase from Fund share transactions.................................. 36,823,322 370,465,643
Amount transferred from undistributed net investment to capital paid-in - Note A ----- 2,430,618
-------------- -------------
Total from Fund Share Transactions - Net............................... 36,823,322 372,896,261
NET ASSETS:
Beginning of period.................................................... 1,268,763,958 872,931,743
-------------- -------------
End of period (including undistributed net investment income
of $71,625 and $73,528, respectively)................................ $1,233,428,514 $1,268,763,958
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993
---------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
<C> <C> <C> <C>
Shares sold..................................................... 10,349,215 $151,120,247 36,041,533 $535,178,205
Shares issued to shareholders in reinvestment of distributions . 2,834,406 40,225,646 2,363,969 35,296,030
----------- ------------ ---------- ------------
13,183,621 191,345,893 38,405,502 570,474,235
Less shares repurchased......................................... ( 19,930,271) ( 291,424,469) (14,126,521) ( 210,126,158)
----------- ------------ ---------- ------------
Net increase (decrease)......................................... ( 6,746,650) ($100,078,576) 24,278,981 $360,348,077
=========== ============ ========== ============
CLASS B **
Shares sold..................................................... 9,346,868 $136,349,532
Shares issued to shareholders in reinvestment of distributions . 181,850 2,588,170
----------- ------------
9,528,718 138,937,702
Less shares repurchased......................................... ( 531,980) ( 7,682,774)
----------- ------------
Net increase.................................................... 8,996,738 $131,254,928
=========== ============
CLASS C
Shares sold..................................................... 527,530 $ 7,700,516 677,564 $ 10,165,181
Shares issued to shareholders in reinvestment of distributions . 33,614 478,279 13,146 197,387
----------- ------------ ---------- ------------
561,144 8,178,795 690,710 10,362,568
Less shares repurchased......................................... ( 172,765) ( 2,531,825) ( 16,390) ( 245,002)
----------- ------------ ---------- ------------
Net increase.................................................... 388,379 $ 5,646,970 674,320 $ 10,117,566
=========== ============ ========== ============
</TABLE>
** Class B shares commenced operations on January 3, 1994.
The STATEMENT OF CHANGES IN NET ASSETS shows how the value of the Fund's net
assets has changed since the end of the previous fiscal year. The difference
reflects earnings less expenses, any investment gains and losses,
distributions paid to shareholders, and any increase or decrease in money
shareholders invested in the Fund. The footnote illustrates the number of
Fund shares sold, reinvested and redeemed, during the last two periods, along
with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------
1994 1993 1992(f) 1991(f) 1990(f)
---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period...................... $ 15.10 $ 14.78 $ 14.31 $ 11.94 $ 12.60
---------- ---------- -------- -------- -------
Net Investment Income..................................... 0.46 0.44 0.47 0.54 0.58
Net Realized and Unrealized Gain (Loss) on Investments.... ( 0.75) 0.39 0.54 3.03 ( 0.05)
---------- ---------- -------- -------- -------
Total from Investment Operations........................ ( 0.29) 0.83 1.01 3.57 0.53
---------- ---------- -------- -------- -------
Less Distributions:
Dividends from Net Investment Income...................... ( 0.46) ( 0.42) ( 0.45) ( 0.53) ( 0.59)
Distributions from Net Realized Gain on Investments Sold . ( 0.11) ( 0.09) ( 0.09) ( 0.67) ( 0.60)
---------- ---------- -------- -------- -------
Total Distributions..................................... ( 0.57) ( 0.51) ( 0.54) ( 1.20) ( 1.19)
---------- ---------- -------- -------- -------
Net Asset Value, End of Period............................ $ 14.24 $ 15.10 $ 14.78 $ 14.31 $ 11.94
========== ========== ======== ======== =======
Total Investment Return at Net Asset Value................ ( 1.85%) 5.71% 7.23% 30.48% 4.38%
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................. $1,090,231 $1,258,575 $872,932 $194,055 $83,470
Ratio of Expenses to Average Net Assets................... 1.16% 1.10% 1.13% 1.18% 1.14%
Ratio of Net Investment Income to Average Net Assets...... 3.13% 2.94% 3.32% 4.01% 4.77%
Portfolio Turnover Rate................................... 45% 46% 30% 67% 55%
CLASS B (a)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period...................... $ 15.02(d)
---------
Net Investment Income..................................... 0.38(e)
Net Realized and Unrealized Loss on Investments........... ( 0.69)
---------
Total from Investment Operations...................... ( 0.31)
---------
Less Distributions:
Dividends from Net Investment Income...................... ( 0.36)
Distributions from Net Realized Gain on Investments Sold . ( 0.11)
---------
Total Distributions................................... ( 0.47)
---------
Net Asset Value, End of Period............................ $ 14.24
=========
Total Investment Return at Net Asset Value................ ( 2.04%)(c)
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................. $ 128,069
Ratio of Expenses to Average Net Assets................... 1.86%*
Ratio of Net Investment Income to Average Net Assets...... 2.57%*
Portfolio Turnover Rate................................... 45%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 7, 1993
YEAR ENDED (COMMENCEMNET OF
DECEMBER 31, OPERATIONS) TO
1994 DECEMBER 31, 1993
------------ -----------------
<S> <C> <C>
CLASS C (b)
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period....................... $ 15.11 $ 14.79(d)
--------- ---------
Net Investment Income...................................... 0.52 0.27(e)
Net Realized and Unrealized Gain (Loss) on Investments..... ( 0.77) 0.48
--------- ---------
Total from Investment Operations....................... ( 0.25) 0.75
--------- ---------
Less Distributions:
Dividends from Net Investment Income....................... ( 0.51) ( 0.34)
Distributions from Net Realized Gain on Investments Sold... ( 0.11) ( 0.09)
--------- ---------
Total Distributions.................................... ( 0.62) ( 0.43)
--------- ---------
Net Asset Value, End of Period............................. $ 14.24 $ 15.11
========= =========
Total Investment Return at Net Asset Value................. ( 1.57%) 5.13%(c)
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).................. $ 15,128 $ 10,189
Ratio of Expenses to Average Net Assets.................... 0.81% 0.88%*
Ratio of Net Investment Income to Average Net Assets....... 3.53% 3.17%*
Portfolio Turnover Rate.................................... 45% 46%
<FN>
* On an annualized basis.
</FN>
</TABLE>
(a) Class Bshares commenced operations on January 3, 1994.
(b) Class C shares commenced operations on May 7, 1993.
(c) Not annualized.
(d) Initial price to commence operations.
(e) On average month end shares outstanding.
(f) These periods are covered by the report of other independent auditors
(not included herein).
The FINANCIAL HIGHLIGHTS summarize the impact of the following factors on a
single share for the period indicated: the net investment income, gains
(losses), distributions and total investment return of the Fund. It shows how
the Fund's net asset value for a share has changed since the end of the
previous period. Additionally, important relationships between some items
presented in the financial statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
SCHEDULE OF INVESTMENTS
December 31, 1994
Per share earnings and dividends and their compound growth rates are shown
for the years 1985 to 1994. This data and price/earnings ratios are
unaudited.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPOUND
Number Growth Market
OF SHARES COMMON STOCKS (74.73%) RATE VALUE
- --------- ---- -----
<S> <C> <C> <C>
BANKS (4.54%)
324,000 First Union Corp. @ 41 3\8....................... $ 13,405,500
North Carolina-based bank holding company
EARNINGS P/S.....$2.16, 2.57, 2.55, 2.76,
2.40, 2.52, 2.55, 2.24, 4.73, 5.29 10.5%
DIVIDENDS P/S......$.58, .65, .77, .86,
1.00, 1.08, 1.12, 1.28, 1.50, 1.72 12.8%
Price/Earnings Ratio............................8
640,000* KeyCorp. @ 25.................................... 16,000,000
Multi-regional bank holding company
EARNINGS P/S....$1.41, 1.72, 1.88, 2.10,
2.32, 2.32, 2.45, 2.51, 2.89, 3.50 10.6%
DIVIDENDS P/S....$.46, .48, .60, .68, .80,
.88, .92, .98, 1.12, 1.28 12.0%
Price/Earnings Ratio............................7
590,000 NationsBank Corp. @ 45 1\8....................... 26,623,750
Largest superregional bank in the Southeast
EARNINGS P/S......$2.28, 2.51, 2.01, 2.87,
4.44, 2.61, .76, 4.60, 5.00, 6.21 11.8%
DIVIDENDS P/S......$.66, .78, .86, .94,
1.10, 1.42, 1.48, 1.51, 1.64, 1.88 12.3%
Price/Earnings Ratio............................7
------------
56,029,250
------------
BASIC INDUSTRY (.94%)
540,000 Sonoco Products Corp. @ 21 1\2................... 11,610,000
------------
Containers, paper products and packaging
EARNINGS P/S....$.57, .63, .77, 1.10, 1.18,
1.21, 1.10, .94, 1.35, 1.37 10.2%
DIVIDENDS P/S......$.18, .21, .25, .32,
.41, .45, .46, .49, .53, .56 13.4%
Price/Earnings Ratio...........................16
CHEMICALS (8.52%)
655,000 Air Products & Chemicals, Inc. @ 44 5\8.......... 29,229,375
Producer of industrial and specialty
chemicals and gases
EARNINGS P/S....$1.17, 1.17, 1.42, 1.95, 1.93,
2.08, 2.23, 2.45, 1.76, 2.05 6.4%
DIVIDENDS P/S....$ .32, .39, .45, .55, .63, .69,
.75, .83, .89, .95 12.9%
Price/Earnings Ratio...........................22
491,200* Cromp & Knowles Corp. @ 16 1\2................... 8,104,800
Produces and markets specialty chemicals
EARNINGS P/S....$.14, .17, .24, .36, .50,
.61, .73, .83, 1.00, 1.01 26.6%
DIVIDENDs P/S....$ .075, .079, .084, .11,
.15, .20, .25, .31, .38, .46 22.3%
Price/Earnings Ratio...........................16
415,000 Minnesota Mining & Manufacturing Co. @ 53 3\8.... 22,150,625
Diversified manufacturer of industrial,
commercial, health care and consumer products
EARNINGS P/S.....$1.51, 1.70, 2.01, 2.55, 2.80,
2.96, 2.63, 2.83, 2.91, 3.16 8.6%
DIVIDENDS P/S....$.88, .90, .93, 1.06, 1.30, 1.46,
1.56, 1.60, 1.66, 1.768.0%
Price/Earnings Ratio...........................17
</TABLE>
<PAGE>
The SCHEDULE OF INVESTMENTS is a complete list of all securities owned by
Sovereign Investors Fund on December 31, 1994. It's divided into five main
categories: common stocks, preferred stocks, corporate bonds, U.S. government
and agencies obligations and short-term investments. The common stocks are
further broken down by industry groups. Short-term investments, which
represent the Fund's "cash" position, are listed last.
<TABLE>
<CAPTION>
COMPOUND
Number Growth Market
OF SHARES COMMON STOCKS RATE VALUE
- --------- ---- -----
<S> <C> <C> <C>
CHEMICALS (continued)
640,000 PPG Inds., Inc. @ 37 1\8......................... $ 23,760,000
Manufacturer of specialty chemicals, coatings and
resins
EARNINGS P/S......$ 1.14, 1.33, 1.60, 2.13, 2.09,
2.22, .95, 1.61, 1.78, 2.60 9.6%
DIVIDENDS P/S.....$.41, .47, .56, .64, .74, .82,
.86, .94, 1.04, 1.12 11.8%
Price/Earnings Ratio...........................14
28,100 Rohm & Haas Co. @ 57 1\8......................... 1,605,212
Manufacturer of specialty chemicals and plastics
EARNINGS P/S.....$1.94, 2.50, 2.85, 3.46, 2.65,
3.10, 2.45, 2.56, 1.74, 3.69 7.4%
DIVIDENDS P/S....$.70, .78, .86, 1.02, 1.16, 1.22,
1.24, 1.28, 1.36, 1.448. 3%
Price/Earnings Ratio...........................16
145,000* RPM, Inc. @ 18 1\2............................... 2,682,500
Manufacturer of specialty chemicals and coatings
to waterproof and rustproof structures
EARNINGS P/S.....$ .33, .39, .43, .48, .56, .65,
.72, .73, .61, .93 12.2%
DIVIDENDS P/S.....$.21, .23, .27, .31, .34, .37,
.42, .46, .49, .53 10.8%
Price/Earnings Ratio...........................20
711,600 Witco Corp. @ 24 5\8............................. 17,523,150
Producer of special petroleum chemicals
Earnings P/S.......$1.28, 1.47, 1.46, 1.53, .80,
1.38, 1.61, 1.19, .64, 1.98 5.0%
Dividends P/S.....$.49, .54, .60, .72, .83, .86,
.91, .92, .96, 1.06 9.0%
Price/Earnings Ratio...........................12
------------
105,055,662
------------
COMPUTER & OFFICE EQUIPMENT (1.54%)
260,000 Alco Standard Corp @ 62 3\4...................... 16,315,000
Distributor of office and paper products
EARNINGS P/S......$1.52, 1.47, 1.50, 2.12, 2.68,
2.19, 1.95, 2.22, 2.34, 2.87 7.3%
DIVIDENDS P/S.....$.61, .63, .65, .70, .78, .85,
.89, .93, .97, 1.01 5.8%
Price/Earnings Ratio...........................22
86,300 Pitney Bowes, Inc. @ 31 3\4...................... 2,740,025
World's largest manufacturer of postage meters
and related mailing equipment
EARNINGS P/S......$.91, 1.05, 1.26, 1.50, 1.14,
1.30, 1.80, 1.56, 2.16, 2.41 11.4%
DIVIDENDS P/S.....$.30, .33, .38, .46, .52, .60,
.68, .78, .90, 1.04 14.8%
Price/Earnings Ratio...........................13
------------
19,055,025
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
<TABLE>
<CAPTION>
COMPOUND
Number Growth Market
OF SHARES COMMON STOCKS RATE VALUE
- --------- ---- -----
CONSUMER CYCLICALS & SERVICES (5.77%)
<S> <C> <C> <C>
1,181,000 Hanson PLC ADR @ 18....................................... $ 21,258,000
U.K. based multi-subsidiary holding company
EARNINGS P/S......$.57, .72, 1.10, 1.71, 1.67, 1.83,
1.74, 1.66, .87, 1.20 8.6%
DIVIDENDS P/S*......$.15, .20, .27, .36, .56, .68,
.79, .80**, .86, .88 21.7%
** Gross ordinary dividends per ADR
**1992 Dividend excludes extra transition
dividend of $.23.
Price/Earnings Ratio....................................15
400,000 McDonald's Corp @ 29 1\4 ................................. 11,700,000
Dominant force in the fast food industry
EARNINGS P/S.......$1.09, 1.23, 1.42, 1.70, 1.91, 1.10,
1.18, 1.30, 1.46, 1.67 4.9%
DIVIDENDS P/S.......$.10, .11, .12, .14, .15, .17, .18,
.20, .21, .23 9.7%
Price/Earnings Ratio....................................18
725,000 Sysco Corp. @ 25 3\4...................................... 18,668,750
Largest distributer of food service products
EARNINGS P/S......$.29, .34, .35, .45, .60, .73, .84, .93,
1.08, 1.18 16.9%
DIVIDENDS P/S......$.05, .06, .07, .08, .09, .10, .14,
.22, .28, .36 24.5%
Price/Earnings Ratio....................................22
400,000 V.F. Corp. @ 48 5\8....................................... 19,450,000
International apparel manufacturer
EARNINGS P/S......$2.25, 2.05, 2.62, 2.54, 2.70, 1.35,
2.75, 3.97, 3.80, 4.19 7.2%
DIVIDENDS P/S......$.58, .66, .75, .85, .91, 1.00, 1.02,
1.11, 1.22, 1.30 9.4%
Price/Earnings Ratio....................................12
-------------
71,076,750
-------------
CONSUMER DURABLES (3.81%)
700,000 Leggett & Platt, Inc. @ 35................................ 24,500,000
Produces intermediate products for the home furnishings
industry
EARNINGS P/S......$.88, .95, 1.11, 1.09, 1.29, .84, 1.11,
1.64, 2.09, 2.68 13.2%
DIVIDENDS P/S.....$.17, .20, .28, .32, .37, .42, .43, .46,
.54, .62 15.5%
Price/Earnings Ratio....................................13
534,000 Masco Corp. @ 22 5\8...................................... 12,081,750
Leading manufacturer of brand-name building and home
improvement products
EARNINGS P/S......$1.26, 1.54, 1.61, 2.06, 1.41, .91, .30,
1.21, 1.45, 1.75 3.7%
DIVIDENDS P/S.....$.29, .34, .38, .44, .50, .54, .57,
.61, .65, .69 10.1%
Price/Earnings Ratio....................................13
700,000* Shaw Industries, Inc. @ 14 7\8........................... 10,412,500
Leading manufacturer of brand-name carpeting
EARNINGS P/S......$.19, .18, .21, .27, .39, .53, .29, .47,
.72, .91 19.0%
DIVIDENDS P/S......$.04, .05, .07, .08, .09, .11, .13,
.15, .18, .22 20.9%
Price/Earnings Ratio....................................16
-------------
46,994,250
-------------
CONSUMER NON-DURABLES (8.92%)
360,000 Campbell Soup Co. @ 44 1\8................................ 15,885,000
Leading food manufacturer and distributor
EARNINGS P/S....$.77, .86, .95, .94, .05, .02, 1.58, 1.95,
1.02, 2.51 14.0%
DIVIDENDS P/S.....$.31, .33, .36, .42, .46, .50, .58, .76,
.97, 1.12 15.3%
Price/Earnings Ratio....................................18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOUND
Number Growth Market
OF SHARES COMMON STOCKS RATE VALUE
- --------- ---- -----
CONSUMER NON-DURABLES(CONTINUED)
<S> <C> <C> <C>
126,700* Colgate-Palmolive Co. @ 63 3\8............................ $ 8,029,613
Global consumer products Co. which consists of oral
care, body care , household surface care etc,
EARNINGS P/S.....$1.06, 1.25, .01, 1.11, 1.90, 2.12, .76,
2.93, 3.38, 3.80 15.2%
DIVIDENDS P/S....$.65, .68, .70, .74, .78, .90, 1.07,
1.15, 1.34, 1.54 10.1%
Price/Earnings Ratio....................................17
935,000 PepsiCo, Inc. @ 36 1\4.................................... 33,893,750
Second largest soft drink company
EARNINGS P/S....$.50, .58, .77, .96, 1.13, 1.37, 1.35,
1.61, 1.96, 2.21 18.0%
DIVIDENDS P/S......$.19, .21, .22, .27, .32, .38, .46,
.51, .61, .70 15.6%
Price/Earnings Ratio....................................16
550,000 Procter & Gamble Co. (The) @ 62.......................... 34,100,000
Leading producer of household consumer products
EARNINGS P/S....$ .95, 1.04, .46, 1.48, 1.74, 2.25, 2.43,
2.62, .25, 1.90 8.0%
DIVIDENDS P/S......$.65, .67, .68, .70, .83, .93, 1.00,
1.08, 1.17, 1.32 8.2%
Price/Earnings Ratio....................................33
715,000 Sara Lee Corp. @ 25 1\4................................... 18,053,750
Manufacturer of brand name packaged food and consumer
products
EARNINGS P/S......$.45, .51, .59, .71, .85, .96, 1.08,
1.24, 1.40, 1.47 14.1%
DIVIDENDS P/S.....$.18, .20, .25, .30, .36, .42, .47,
.50, .58, .64 15.1%
Price/Earnings Ratio....................................17
------------
109,962,113
------------
DIVERSIFIED INDUSTRIAL (1.07%)
200,000* TRW Inc. @ 66............................................. 13,200,000
------------
Producer of space and defense products/services and
automotive components
EARNINGS P/S......$1.90, 3.56, 3.95, 4.23, 4.25, 3.36,
(2.30), 3.10, 3.40, 4.89 11.1%
DIVIDENDS P/S......$1.50, 1.53, 1.60, 1.63, 1.72, 1.74,
1.80, 1.82, 1.88, 1.94 7.1%
Price/Earnings Ratio....................................14
ELECTRICAL EQUIPMENT (6.16%)
400,000 Emerson Electric Co. @ 62 1\2............................. 25,000,000
Produces and sells electrical/electronic products and
systems
EARNINGS P/S.....$1.81, 1.87, 2.00, 2.31, 2.63, 2.75,
2.83, 2.96, 3.15, 4.04 9.3%
DIVIDENDS P/S.....$.88, .93, .98, 1.03, 1.16, 1.28, 1.34,
1.40, 1.47, 1.60 6.9%
Price/Earnings Ratio....................................16
1,000,000 General Electric Co. @ 51................................. 51,000,000
Dominant force in home appliances, electrical power,
and financial services
EARNINGS P/S......$1.28, 1.37, 1.60, 1.88, 2.18, 2.43,
2.55, 2.51, 3.03, 3.40 11.5%
DIVIDENDS P/S.....$.55, .58, .65, .70, .82, .94, 1.02,
1.12, 1.26, 1.44 11.3%
Price/Earnings Ratio....................................15
------------
76,000,000
------------
ENERGY (1.48%)
300,000 Exxon Corp. @ 60 3\4...................................... 18,225,000
------------
Major factor in the crude oil, natural gas and chemical
industry
EARNINGS P/S......$3.23, 3.71, 3.43, 3.95, 2.32, 3.96,
4.45, 3.82, 4.21, 3.63 1.3%
DIVIDENDS P/S......$1.73, 1.80, 1.90, 2.15, 2.30, 2.47,
2.68, 2.83, 2.88, 2.91 5.9%
Price/Earnings Ratio....................................17
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
<TABLE>
<CAPTION>
COMPOUND
Number GROWTH
MARKET
OF SHARES COMMON STOCKS RATE VALUE
---------- ---- -----
<S> <C> <C> <C>
HEALTHCARE (5.92%)
893,000 Abbott Laboratories @ 32 5\8.............................. $ 29,134,125
Major pharmaceutical and healthcare firm
EARNINGS P/S....$.49, .58, .70, .83, .96, 1.11, 1.27, 1.47,
1.69, 1.86 16.0%
DIVIDENDS P/S.... $.17, .20, .24, .29, .34, .40, .48,
.58, .66, .74 17.8%
Price/Earnings Ratio....................................18
513,000 Johnson & Johnson @ 54 3\4................................ 28,086,750
Major producer of prescription and non-prescription
drugs, toiletries, medical instruments and supplies
EARNINGS P/S.....$.82, .45, 1.18, 1.41, 1.60, 1.72, 2.19,
2.46, 2.74, 3.13 16.0%
DIVIDENDS P/S.....$.32, .34, .40, .48, .56, .66, .77,
.89, 1.01, 1.13 15.0%
Price/Earnings Ratio....................................18
414,000 Merck & Co., Inc. @ 38 1\8................................ 15,783,750
World's largest drug manufacturer
EARNINGS P/S......$.42, .54, .73, 1.01, 1.25, 1.52, 1.83,
2.12, 1.87, 2.40 21.4%
DIVIDENDS P/S.....$.18, .21, .27, .43, .55, .64, .77,
.92, 1.03, 1.14 22.8%
Price/Earnings Ratio...................................16
-------------
73,004,625
-------------
INSURANCE (5.65%)
400,000 AFLAC Corp. @ 32......................................... 12,800,000
Global specialty insurer
EARNINGS P/S......$.54, .78, .93, 1.08, .80, 1.15, 1.46,
1.79, 2.32, 2.79 20.0%
DIVIDENDS P/S......$.14, .16, .18, .20, .23, .26, .30,
.34, .39, .45 13.9%
Price/Earnings Ratio...................................12
350,000 American General Corp. @ 28 1\4.......................... 9,887,500
Financial services company engaged in life/health
insurance and consumer finance
EARNINGS P/S.....$1.60, 2.17, 1.86, 1.72, 1.88, 2.35,
2.13, 2.45, 1.15, 2.99 7.2%
DIVIDENDS P/S......$.50, .56, .63, .70, .75, .79, 1.00,
1.04, 1.11, 1.16 9.8%
Price/Earnings Ratio....................................9
226,000 Chubb Corp. @ 77 3\8..................................... 17,486,750
Broadly based property-casualty insurance organization
EARNINGS P/S....$.95, 2.82, 3.81, 4.19, 4.70, 5.79, 6.32,
6.96, 3.91, 5.80 22.3%
DIVIDENDS P/S....$.76, .80, .89, 1.08, 1.16, 1.32, 1.48,
1.60, 1.72, 1.84 10.3%
Price/Earnings Ratio...................................13
500,000* NWNL Company, Inc. @ 29.................................. 14,500,000
Diversified holding company specializing in insurance
and financial services
EARNINGS P/S....$1.01, 1.67, 1.85, 1.76, 2.07, 2.09,
1.71, 2.06, 2.62, 3.24 13.8%
DIVIDENDS P/S...$.40, .43, .48, .54, .59, .65, .69,
.73, .79, .88 9.2%
Price/Earnings Ratio....................................9
150,000* Providian Corp. @ 30 7\8................................. 4,631,250
Financial service company providing
insurance, loan,annuity and pension products
EARNINGS P/S.....$1.29, 1.46, 1.67, 2.00, 2.93, 1.70,
2.67, 3.14, 3.13, 3.38 11.3%
DIVIDENDS P/S....$.38, .41, .44, .47, .50, .54,
.60, .66, .73, .80 8.6%
Price/Earnings Ratio....................................9
300,000 Torchmark Corp. @ 34 7\8................................. 10,462,500
Diversified financial services and insurance company
EARNINGS P/S....$1.45, 1.76, 1.87, 2.13, 2.59, 2.85,
3.13, 3.58, 3.76, 3.85 11.5%
DIVIDENDS P/S.....$.35, .53, .67, .73, .83, .93, 1.00,
1.07, 1.08, 1.12 13.8%
Price/Earnings Ratio....................................9
-------------
69,768,000
-------------
<PAGE>
MEDIA AND INFORMATION SERVICES (3.40%)
470,000 Gannett Co., Inc @ 53 1\4............................... $ 25,027,500
Publishes 81 daily/50 nondaily newspapers, operates 10
TV , 8 FM and 7 AM stations
EARNINGS P/S....$1.58, 1.71, 1.98, 2.26, 2.47, 2.36,
2.00, 2.40, 2.73, 3.19 8.1%
DIVIDENDS P/S....$.77, .86, .94, 1.02, 1.11, 1.21,
1.24, 1.26, 1.30, 1.34 6.3%
Price/Earnings Ratio...................................17
215,800* Interpublic Group Inc. @ 32 1\8.......................... 6,932,575
One of the largest advertising agencies in the world
EARNINGS P/S.....$.56, .62, .75, .91, 1.05, 1.19, 1.30,
1.37, 1.67, 1.86 14.3%
DIVIDENDS P/S....$.18, .20, .22, .26, .32, .37, .41,
.45, .49, .55 13.2%
Price/Earnings Ratio...................................17
150,000 McGraw-Hill, Inc @ 66 7\8............................... 10,031,250
Supplier of information products and services for
business and education industry
EARNINGS P/S....$2.92, 3.04, 3.27, 3.83, .82, 3.53,
3.03, 3.13, 3.23, 4.10 3.8%
DIVIDENDS P/S....$1.40, 1.52, 1.68, 1.84, 2.00, 2.16,
2.20, 2.24, 2.28, 2.32 5.8%
Price/Earnings Ratio...................................16
-------------
41,991,325
-------------
POLLUTION CONTROL (1.86%)
873,000 WMX Technologies Inc. @ 26 1\4........................... 22,916,250
-------------
Nation's largest provider of waste management services
EARNINGS P/S.....$.43, .88, .73, 1.03, 1.22, 1.49, 1.23,
1.86, .94, 1.65 16.1%
DIVIDENDS P/S....$.11, .13, .17, .21, .27, .34, .40,
.48, .56, .60 20.7%
Price/Earnings Ratio....................................16
RETAIL (3.33%)
585,900 May Dept. Stores @ 33 3\4................................. 19,774,125
Operates 318 department stores and 3,295 shoe stores
EARNINGS P/S....$1.35, 1.22, 1.45, 1.71, 1.82, 1.87,
2.01, 2.01, 2.36, 2.77 8.3%
DIVIDENDS P/S....$.46, .51, .56, .62, .69, .77, .81, .83,
.90, 1.01 9.1%
Price/Earnings Ratio....................................12
1,000,000* Wal-Mart Stores, Inc. @ 21 1\4............................ 21,250,000
Operates chain of discount department stores
EARNINGS P/S......$.12, .15, .20, .28, .37, .48, .57,
.70, .87, 1.03 27.0%
DIVIDENDS P/S.....$.018, .021, .03, .04, .06, .07, .09,
.11, .13, .17 28.3%
Price/Earnings Ratio....................................21
-------------
41,024,125
-------------
TECHNOLOGY (1.66%)
200,000* General Motors Corp. Class E @ 38 1\2..................... 7,700,000
Leading provider of information processing services
EARNINGS P/S......$.39, .53, .66, .79, .91, 1.04, 1.17,
1.33, 1.51, 1.68 17.6%
DIVIDENDS P/S.....$.05, .10, .13, .17, .24, .28, .32,
.36, .40, .48 28.6%
Price/Earnings Ratio.....................................23
200,000 Raytheon Co. @ 63 7\8...................................... 12,775,000
Manufacturer of electronic equipment, has operations in
aircraft products and is active in air defense missiles
EARNINGS P/S.....$ 2.29, 2.53, 3.03, 3.66, 3.98, 4.26,
4.48, 4.72, 5.11, 4.51 7.8%
DIVIDENDS P/S....$.80, .85, .90, 1.00, 1.08, 1.18, 1.20,
1.30, 1.40, 1.45 6.8%
Price/Earnings Ratio.....................................14
-------------
20,475,000
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
<TABLE>
<CAPTION>
COMPOUND
NUMBER GROWTH MARKET
OF SHARES COMMON STOCKS RATE VALUE
- --------- ---- -----
<S> <C> <C> <C>
TELECOMMUNICATIONS (5.18%)
840,000 ALLTEL Corp. @ 30 1\8......................................................... $ 25,305,000
One of the country's largest telephone systems
Earnings P/S..........$.71, .77, .90, 1.04, 1.13, 1.18, 1.09, 1.22, 1.39, 1.63 9.7%
Dividends P/S................$.41, .44, .45, .51, .57, .64, .70, .74, .80, .88 8.9%
Price/Earnings Ratio....................................................... 19
250,000 Bell Atlantic Corp. @ 49 3\4.................................................. 12,437,500
Provides telephone services in Mid-Atlantic
states
Earnings P/S.......$2.74, 2.93, 3.12, 3.33, 2.72, 3.38, 2.90, 3.22, 3.39, 3.33 2.2%
Dividends P/S......$1.70, 1.80, 1.92, 2.04, 2.20, 2.36, 2.52, 2.60, 2.68, 2.76 5.5%
Price/Earnings Ratio....................................................... 15
592,700* Frontier Corp.- (Formerly Rochester
Telephone Corp.) @ 21 1\8..................................................... 12,520,787
Provides telephone service to the city of
Rochester N.Y. and outlying areas
Earnings P/S............$.97, .89, .93, 1.06, .99, .86, 1.18, 1.04, 1.21, 1.52 5.1%
Dividends P/S................$.61, .64, .66, .68, .71, .73, .75, .77, .79, .81 3.2%
Price/Earnings Ratio....................................................... 14
450,000 GTE Corp. @ 30 3\8............................................................ 13,668,750
Largest independent local telephone holding
company
Earnings P/S.......$1.72, 1.69, 1.62, 1.77, 2.08, 1.82, 1.69, 1.95, 1.03, 2.46 4.1%
Dividends P/S......$1.04, 1.10, 1.24, 1.30, 1.40, 1.52, 1.64, 1.76, 1.85, 1.88 6.8%
Price/Earnings Ratio....................................................... 12 -----------
63,932,037
-----------
TOBACCO (2.66%)
389,000 Philip Morris Cos., Inc. @ 57 1\2............................................. 22,367,500
Global tobacco, brewing and food company
Earnings P/S.......$1.31, 1.55, 1.94, 2.22, 3.18, 3.83, 4.24, 5.45, 4.05, 5.46 17.2%
Dividends P/S.........$.50, .62, .79, 1.01, 1.25, 1.55, 1.91, 2.35, 2.60, 3.03 22.2%
Price/Earnings Ratio....................................................... 11
375,000 UST Inc. @ 27 3\4............................................................. 10,406,250
Leading producer of smokeless tobacco
Earnings P/S.............$.40, .46, .56, .71, .82, .98, 1.18, 1.40, 1.70, 1.85 18.5%
Dividends P/S...............$.22, .25, .30, .37, .46, .55, .66, .80, .96, 1.12 19.8%
Price/Earnings Ratio....................................................... 15
-----------
32,773,750
-----------
UTILITIES (2.32%)
140,000* Dominion Resources, Inc. @ 35 3\4............................................. 5,005,000
Virginia based utility holding company
Earnings P/S.......$2.40, 2.65, 3.03, 3.01, 2.76, 2.92, 3.02, 4.65, 3.12, 3.13 3.0%
Dividends P/S......$1.83, 1.91, 1.99, 2.07, 2.15, 2.23, 2.31, 2.40, 2.48, 2.55 3.8%
Price/Earnings Ratio....................................................... 11
200,000* Florida Progress Corp. @ 30................................................... 6,000,000
Holding Co for Florida Power electric utility services
Earnings P/S.......$2.35, 2.47, 2.49, 2.35, 2.39, 2.14, 2.15, 2.05, 2.22, 2.30 NMF
Dividends P/S......$1.44, 1.54, 1.61, 1.67, 1.72, 1.78, 1.84, 1.90, 1.95, 1.99 3.7%
Price/Earnings Ratio....................................................... 13
UTILITIES (CONTINUED)
400,000 National Fuel Gas Co. @ 25 1\2................................................ $ 10,200,000
Integrated natural gas system serving New
York, Pennsylvania and Ohio
Earnings P/S.......$1.90, 1.75, 1.49, 1.65, 1.93, 1.83, 1.63, 1.94, 2.21, 2.23 1.8%
Dividends P/S......$1.02, 1.12, 1.19, 1.25, 1.32, 1.40, 1.45, 1.49, 1.53, 1.57 4.9%
Price/Earnings Ratio........................................................11
210,000* Union Electric Co. @ 35 3\8................................................... 7,428,750
Largest electric utility in Missouri
Earnings P/S.......$2.86, 2.89, 2.91, 2.56, 2.91, 2.74, 3.01, 2.83, 2.77, 3.02 0.6%
Dividends P/S......$1.78, 1.86, 1.92, 1.94, 2.02, 2.10, 2.18, 2.26, 2.34, 2.40 3.4%
Price/Earnings Ratio....................................................... 12
-----------
28,633,750
-----------
TOTAL COMMON STOCKS
(Cost $902,738,090) 921,726,912
-----------
PREFERRED STOCKS (2.14%)
150,000 AMR Corp., 6% Conv @ 39 1\8.................................................. 5,868,750
415,000 American Express Co. DECS, 6 1\4%
Conv @ 42 5\8................................................................ 17,689,375
60,000 Sonoco Products Co. 4 1\2% Conv
Ser AA @ 475\8................................................................ 2,857,500
TOTAL PREFERRED STOCKS -----------
(Cost $26,049,650) 26,415,625
PAR VALUE ----------
(000's)
OMITTED
- --------
CORPORATE BONDS (12.82%)
5,000 BankAmerica Corp., Sub Note 8.125%,
02-01-02 @ 97.083............................................................. 4,854,150
5,000* Black & Decker Corp. , Note 7.00%,
02-01-06 @ 85.078............................................................. 4,253,900
4,000* Bowater Inc. , Deb 9.50%,
10-15-12 @ 101.102............................................................ 4,044,080
10,000 Coastal Corp.(The), Sr Deb 11.75%,
06-15-06 @ 109.375............................................................ 10,937,500
5,000 Comcast Corp., Sr Sub Deb 10.25%,
10-15-01 @ 98.000............................................................. 4,900,000
5,000* Digital Equipment Corp. , Deb 8.625%,
11-01-12 @ 83.485............................................................. 4,174,250
10,000 Federal Express Corp., Note 9.65%,
06-15-12 @ 105.487............................................................ 10,548,700
5,000* GTE North Inc. ,Telephone Facility Lease
Bonds, 9.60%, 01-01-21 @ 105.242.............................................. 5,262,100
8,500 Georgia-Pacific Corp., Deb 9.50%,
02-15-18 @ 100.091............................................................ 8,507,735
5,000* Hechinger Co., Deb 9.45%,
11-15-12 @ 98.054............................................................. 4,902,700
</TABLE>
15
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
<TABLE>
<CAPTION>
PAR VALUE
(000's MARKET
OMITTED) CORPORATE BONDS VALUE
- -------- --------------- -----
<S> <C> <C>
10,000* IBM Corp., Deb 7.50%,
06-15-13 @ 88.998........................ $ 8,899,800
5,000* Morgan Stanley Corp., Deb 7.00%,
10-01-13 @ 81.325........................ 4,067,600
5,000 NCNB Corp., Sub Note 9.125%,
10-15-01 @ 101.892....................... 5,094,600
5,000* NationsBank Corp., Sub Note 6.875%,
02-15-05 @ 86.831........................ 4,341,550
5,000* NationsBank Corp., Sub Note 9.375%,
09-15-09 @ 102.798....................... 5,139,900
5,000* Owen-Illinois, Inc., Sr Deb 11.00%,
12-01-03 @ 103.750....................... 5,187,500
4,000 Owen-Illinois, Inc., Sr Sub Note 10.00%,
08-01-02 @ 97.750........................ 3,910,000
2,000* Protective Life Corp., Sr. Note 7.95%,
7-1-04 @ 94.932.......................... 1,898,640
10,000 RBSG Capital Corp., Gtd Cap Note
10.125%, 03-01-04 @ 108.942.............. 10,894,200
10,000* RJR Nabisco, Inc., Note 8.625%,
12-01-02 @ 92.753....................... 9,275,300
4,000* Ralston Purina Co. , Deb 9.25%,
10-15-09 @ 101.387....................... 4,055,480
5,000* Sears Reobuck & Co., Note 9.375%,
11-01-11 @ 104.502....................... 5,225,100
5,000* Standard Credit Card Master Trust 1,
7.25%, 04-07-08 @ 91.125................. 4,556,250
4,500 Titan Wheel International Inc. Conv
Deb 4.75%, 12-01-00 @ 106.00............. 4,770,000
5,000* USF&G Corp. , Sr Notes 8.375%,
06-15-01 @ 95.392........................ 4,769,600
10,000 United Air Lines Inc., Deb 9.125%,
01-15-12 @ 86.605........................ 8,660,500
5,000 Wells Fargo & Co., Deb 8.20%,
11-01-96 @ 99.788........................ 4,989,400
_____________
TOTAL CORPORATE BONDS
(Cost $166,844,619) 158,120,535
_____________
UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS (6.56%)
5,000 Federal Home Loan Mort. Corp. Sr
Sub 6.55%, 04-02-03 @ 88.969............. 4,448,450
5,000* Federal Home Loan Mort. Corp. Sr
Sub 7.50%, 07-23-07 @ 91.580............. 4,579,000
10,000* Federal Home Loan Mort. Corp. Sr
Sub 6.63%, 01-12-09 @ 83.750............. 8,375,000
10,000 Federal National Mort. Assn. Sr
Sub 7.30%, 07-10-02 @ 94.687............. 9,468,700
5,000* Tennessee Valley Auth., Pwr Bond
Ser C 7.875%, 09-15-01 @ 97.187.......... $ 4,859,350
5,000 United States Treasury, Note 7.875%,
11-15-99 @ 100.250....................... 5,012,500
10,000 United States Treasury, Note 8.00%,
05-15-01 @ 100.781....................... 10,078,100
25,000* United States Treasury, Note 7.25%,
08-15-04 @ 95.984........................ 23,996,000
10,000* United States Treasury, Note 7.875%,
11-15-04 @ 100.281....................... 10,028,100
_____________
TOTAL UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS
(Cost $85,588,225) 80,845,200
_____________
SHORT-TERM INVESTMENTS (3.57%)
SHORT TERM NOTES (3.57%)
3,300 Countrywide Funding Corp., 4.95%
01-05-95................................. 3,327,248
1,536 Ford Motor Credit Corp., 6.05%
01-03-95................................. 1,535,225
1,234 Ford Motor Credit Corp., 6.05%
01-06-95................................. 1,232,756
2,438 Ford Motor Credit Corp., 5.82%
01-10-95................................. 2,434,058
4,000 Ford Motor Credit Corp., 5.82%
01-12-95................................. 3,992,240
3,946 Ford Motor Credit Corp., 5.82%
01-13-95................................. 3,937,707
5,432 Goldman Sachs Co., 6.20% 01-03-95........ 5,429,194
4,005 ITT Financial Corp., 6.00% 01-04-95...... 4,002,331
3,500 ITT Financial Corp., 6.00% 01-05-95...... 3,497,083
1,607 ITT Financial Corp., 6.10% 01-05-95...... 1,605,366
3,000 ITT Financial Corp., 6.09% 01-06-95...... 2,996,955
2,050 ITT Financial Corp., 6.02% 01-10-95...... 2,046,572
4,000 ITT Financial Corp., 6.05% 01-11-95...... 3,992,605
4,000 Merrill Lynch & Co., 6.00% 01-09-95...... 3,994,000
_____________
TOTAL SHORT-TERM NOTES 44,023,340
_____________
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
<TABLE>
<CAPTION>
PAR VALUE
(000's MARKET
OMITTED) SHORT-TERM INVESTMENTS VALUE
- -------- -----
<S> <C> <C>
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%........ $ 46,459
______________
TOTAL SHORT-TERM INVESTMENTS 44,069,799
______________
TOTAL INVESTMENTS (99.82%) $1,231,178,071
====== ==============
* Securities, other than short-term investments, newly added to the
portfolio for period ended December 31, 1994.
NMF No meaningful figure.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Sovereign Investors Fund, Inc. (the "Corporation"), is an
open-end investment management company, registered under the Investment
Company Act of 1940. The Corporation consists of two series portfolios: John
Hancock Sovereign Investors Fund (the "Fund") and John Hancock Sovereign
Balanced Fund.
The Directors have authorized the issuance of multiple classes of the
Fund, designated as Class A, Class B and Class C. The shares of each class
represent an interest in the same portfolio of investments of the Fund and
have equal rights to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Directors, may be
applied differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the Internal
Revenue Service. Shareholders of a class, which bears distribution/service
expenses under terms of a distribution plan, have exclusive voting rights
regarding such distribution plan. Significant accounting policies of the Fund
are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing
services or, at fair value as determined in good faith in accordance with
procedures approved by the Trustees. Short-term debt investments maturing
within 60 days are valued at amortized cost which approximates market value.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date
of purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investment, to its shareholders. Therfore, no Federal income
tax provision is required. Additionally, net capital losses of $1,217,935
attributable to security transactions incurred after October 31, 1994 are
treated as arising on the first day (January 1, 1995) of the Fund's current
taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date. Interest income on investment
securities is recorded on the accrual basis.
The Fund records all distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such
distributions are determined in conformity with income tax regulations, which
may differ from generally accepted accounting principles. Dividends paid by
the Fund, with respect to each class of shares will be calculated in the same
manner and at the same time and will be in the same amount, except for the
effect of expenses that may be applied differently to each class as explained
previously.
EXPENSES The majority of the expenses of the Corporation are directly
identifiable to an individual Fund. Expenses which are not readily
identifiable to a specific Fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and type
of expense and the relative size of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class
of shares based on the appropriate net assets of the respective classes.
Transfer agent expenses and distribution/service fees, if any, are calculated
daily at the class level based on the appropriate net assets of each class
and the specific expense rate(s) applicable to each class.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities purchased from either the date of issue or the date of purchase
over the life of the security, as required by the Internal Revenue Code.
INCOME EQUALIZATION Prior to January 1, 1993, the Fund followed the
accounting practice known as income equalization by which a portion of the
proceeds from sales and costs of repurchases of Fund shares, equivalent on a
per share basis to the amount of undistributed net investment income on the
date of the transaction, was credited or charged to undistributed net
investment income. As a result, undistributed net income per share was not
affected by sales or redemptions of Fund shares. The Fund discontinued
equalization accounting
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
as of January 1, 1993, and reclassified net equalization credits in the amount
of $2,430,618 from undistributed net investment income to capital paid-in. In
management's opinion, discontinuation of equalization accounting will result in
less distortion of undistributed net investment income as compared to income
available to shareholders for distribution for Federal tax purposes. This change
in accounting policy, shown on the Statement of Changes in Net Assets for the
year ended December 31, 1993, has no effect on the net assets, the results of
operations, or the net asset value per share of the Fund and did not have a
material effect on the per share amounts shown in the Financial Highlights.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a quarterly
management fee to John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned
subsidiary of The Berkeley Financial Group, for a continuous investment
program equivalent on an annual basis, to the sum of 0.60% of the Fund's
average daily net asset value. Effective March 31, 1995, the Fund will pay a
quarterly management fee to the Adviser, equivalent on an annual basis, to
the sum of (a) 0.60% of the first $750,000,000 of the Fund's average daily
net asset value, (b) 0.55% of the next $750,000,000, (c) 0.50% of the next
$1,000,000,000 and (d) 0.45% of the Fund's average daily net asset value in
excess of $2,500,000,000. The Adviser has entered into a service agreement
with Sovereign Asset Management Corporation ("SAMCORP") an affiliate of the
Adviser, to provide certain investment research and portfolio management
services to the Fund, for which the Adviser pays SAMCORP 40% of its
management fee.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares, the fee
payable to the Adviser will be reduced to the extent of such excess, and the
Adviser will make additional arrangements necessary to eliminate any
remaining excess expenses. The current limits are 2.5% of the first
$30,000,000 of the Fund's average daily net asset value, 2.0% of the next
$70,000,000, and 1.5% of the remaining average daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1,
1995, JH Funds was known as John Hancock Broker Distribution Services, Inc.
For the period ended December 31, 1994, JH Funds received net sales charges
of $5,068,113 with regard to sales of Class A shares. Out of this amount,
$798,216 was retained and used for printing prospectuses, advertising, sales
literature and other purposes, $2,458,300 was paid as sales commissions to
unrelated broker-dealers, and $1,811,597 was paid as sales commissions to
sales personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker
Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"). The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is the
indirect sole shareholder of Distributors and John Hancock Freedom Securities
Corporation and its subsidiaries, which include Tucker Anthony and Sutro, all
of which are broker-dealers.
Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in part
to defray its expenses related to providing distribution related services to
the Fund in connection with the sale of Class B shares. For the period ended
December 31, 1994 contingent deferred sales charges received by JH Funds
amounted to $133,135.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans
with respect to Class A and Class B pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to
JH Funds for distribution and service expenses at an annual rate not to
exceed 0.30% of Class A average daily net assets
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Investors Fund
and 1.00% of Class B average daily net assets to reimburse JH Funds for its
distribution/service costs. Up to a maximum of 0.25% of these payments may be
service fees as defined by the amended Rules of Fair Practice of the National
Association of Securities Dealers, which became effective July 7, 1993. Under
the amended Rules of Fair Practice, curtailment of a portion of the Fund's
12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, Investor Services was known
as John Hancock Fund Services, Inc. The Fund pays Investor Services a monthly
transfer agent fee equivalent, on an annual basis, to 0.17%, 0.19% and 0.10%
(0.17% prior to April 1, 1994) of the average daily net asset value,
attributable to Class A, Class B and Class C shares of the Fund, respectively,
plus out of pocket expenses incurred by Investor Services on behalf of the Fund
for proxy mailings. Effective January 1, 1995, Class A and Class B shares will
pay transfer agent fees based on transaction volume and the number of
shareholder accounts.
Mr. Edward J. Boudreau, Jr. is director and officer of the Adviser as
well as Director of the Fund. The compensation of unaffiliated Directors is
borne by the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
period ended December 31, 1994, aggregated $464,823,355 and $392,300,033,
respectively. Purchases and proceeds from sales of obligations of the U.S.
government and its agencies aggregated $111,742,650 and $136,373,759,
respectively, during the period ended December 31, 1994.
The cost of investments owned at December 31, 1994 (including the
joint repurchase agreement), for Federal income tax purposes was
$1,225,522,373. Gross unrealized appreciation and depreciation of investments
aggregated $61,338,140 and $55,728,901, respectively, resulting in net
unrealized appreciation of $5,609,239.
20
<PAGE>
JOHN HANCOCK FUNDS - SOVEREIGN INVESTORS FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
John Hancock Sovereign Investors Fund,Inc. --
John Hancock Sovereign Investors Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Sovereign Investors Fund (the "Fund"), one of the portfolios
constituting John Hancock Sovereign Investors Fund, Inc., including the
schedule of investments, as of December 31, 1994, and the related statement
of operations for the year then ended and the statement of changes in net
assets and the financial highlights for each of the two years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of John Hancock Sovereign Investors Fund for
each of the three years in the period ended December 31, 1992 were audited by
other auditors whose report dated February 3, 1993 expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Sovereign Investors Fund portfolio of John Hancock
Sovereign Investors Fund, Inc. at December 31, 1994, the results of its
operations for the year then ended, and the changes in its net assets and
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
Boston, Massachusetts
February 13, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December
31, 1994.
The Fund designated distributions to shareholders of $4,311,900 as
long-term capital gain dividends. Shareholders were mailed a 1994 U.S.
Treasury Department Form 1099-DIV in January 1995 representing their
proportionate share.
United States Government Obligations: Income from these investments
may be exempt from certain state and local taxes. The percentage of assets
invested in U.S. Treasury bonds, bills and notes was 3.95% at year end. The
percentage of income derived from U.S. Treasury bonds, bills and notes was
8.81%. The percentage of assets invested in obligations of other U.S.
government agencies (excluding securities issued by Federal National Mortgage
Association and Government National Mortgage Association) was 1.79% at year
end. The percentage of income derived from these investments was 3.88%.
With respect to the Fund's ordinary taxable income for the fiscal
year ended December 31, 1994, 70.54% qualifies for the corporate dividends
received deduction.
For specific information on exemption provisions in your state,
consult your local state tax office or your tax adviser.
21
<PAGE>
John Hancock
Sovereign
Balanced Fund
Class A and Class B Shares
Prospectus
May 1, 1995
TABLE OF CONTENTS
Page
Expense Information 2
The Fund's Financial Highlights 3
Investment Objectives, Policies and Risk Considerations 4
Organization and Management of the Fund 9
Alternative Purchase Arrangements 10
The Fund's Expenses 12
Dividends and Taxes 13
Performance 13
How to Buy Shares 15
Share Price 16
How to Redeem Shares 22
Additional Services and Programs 23
This Prospectus sets forth information about John Hancock Sovereign Balanced
Fund (the "Fund"), a diversified series of John Hancock Sovereign Investors
Fund, Inc. (the "Company"), that you should know before investing. Please
read and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's
Statement of Additional Information, dated May 1, 1995, and incorporated by
reference in this Prospectus, free of charge, by writing to or by
telephoning: John Hancock Investor Services Corporation, Post Office 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 you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses of the Fund's Class
A and Class B shares for the fiscal year ended December 31, 1994, adjusted to
reflect current fees and expenses. Actual fees and expenses in the future may
be greater or less than those indicated.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
<S> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases (As a percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Exchange fee None None
Annual Operating Expenses (As a percentage of average net assets)
Management fee 0.60% 0.60%
12b-1 fee** 0.30% 1.00%
Other Expenses 0.39% 0.38%
Total operating expenses 1.29% 1.98%
<FN>
*No sales charge is payable at the time of purchase of Class A shares on investments of $1 million or
more, but a contingent deferred sales charge may be imposed on these investments, as described below,
in the event of certain redemption transactions within one year of purchase.
**The amount of the 12b-1 fee used to cover service expenses will be up to 0.25% of average net
assets, and the remaining portion will be used to cover distribution expenses.
+Redemption by wire fee of $4.00 not included.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Example 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expense for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return.
Class A Shares $62 $89 $117 $198
Class B Shares--Assuming complete redemption at end of period $70 $92 $127 $213
Class B Shares--Assuming no redemption $20 $62 $107 $213
</TABLE>
(This example should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown.)
Long-term shareholders should be advised that, as a result of the payment of
distribution fees they may pay more than the economic equivalent of the
maximum front-end sales charge permitted under applicable law.
The management fee and Rule 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 Contracts."
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following Financial Highlights for each of the two years in the period
ended December 31, 1994 has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose unqualified report is included in the Fund's 1994
Annual Report and is included in the Statement of Additional Information. The
Financial Highlights for the period ended December 31, 1992 was audited by
other independent auditors. 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 FOR THE PERIOD
DECEMBER 31, OCTOBER 5, 1992
TO
1994 1993 DECEMBER 31, 1992
(a)(d)
CLASS A
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period $10.74 $10.19 $10.00
Net Investment Income 0.50 0.46 0.04(b)
Net Realized and Unrealized Gain (Loss) on Investments (0.88) 0.68 0.20
Total from Investment Operations (0.38) 1.14 0.24
Less Distributions:
Dividends from Net Investment Income (0.50) (0.45) (0.05)
Distributions from Net Realized Gain on Investments Sold (0.02) (0.14) ......
Total Distributions (0.52) (0.59) (0.05)
Net Asset Value, End of Period $9.84 $10.74 $10.19
Total Investment Return at Net Asset Value (3.51%) 11.38% 2.37%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $61,952 $62,218 $5,796
Ratio of Expenses to Average Net Assets 1.23% 1.45% 2.79%*(b)
Ratio of Net Investment Income to Average Net Assets 4.89% 4.44% 3.93%*(b)
Portfolio Turnover Rate 78% 85% 0%
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $10.75 $10.20 $10.00
Net Investment Income 0.43 0.37 0.03(b)
Net Realized and Unrealized Gain (Loss) on Investments (0.89) 0.70 0.20
Total from Investment Operations (0.46) 1.07 0.23
Less Distributions:
Dividends from Net Investment Income (0.43) (0.38) (0.03)
Distributions from Net Realized Gain on Investments Sold (0.02) (0.14) ......
Total Distributions (0.45) (0.52) (0.03)
Net Asset Value, End of Period $9.84 $10.75 $10.20
Total Investment Return at Net Asset Value (4.22%) 10.63% 2.29%(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $79,176 $78,775 $14,311
Ratio of Expenses to Average Net Assets 1.87% 2.10% 3.51%*(b)
Ratio of Net Investment Income to Average Net Assets 4.25% 4.01% 3.21%*(b)
Portfolio Turnover Rate 78% 85% 0%
</TABLE>
* On an annualized basis.
(a) Fund commenced operations on October 5, 1992.
(b) Reflects expense limitation in effect during the period indicated (see
note B). As a result of such limitation, expenses for the period from October
5, 1992 to December 31, 1992 for Class A and Class B reflect a reduction of
$0.0016 and $0.0012 per share, respectively. Absent of such limitation the
ratio of expenses to average net assets would have been 2.94% and 3.66%,
respectively, and the ratio of net investment income to average net assets
would have been 3.78% and 3.06%, respectively.
(c) Not annualized.
(d) Not covered by report of independent auditors included in the Statement
of Additional Information.
3
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The Fund's investment objective is to seek current income, growth of capital
and capital preservation.
The Fund's investment objectives are to provide current income, long-term
growth of capital and income, and preservation of capital. The Fund attempts
to achieve these objectives by allocating portfolio assets among various
categories of fixed income securities and equity securities. The Fund
diversifies its investments among a number of industry groups without
concentrating more than 25% of its assets in any particular industry. The
Fund's investments are subject to market fluctuation and the risks inherent
in all securities. There is no assurance that the Fund will achieve its
investment objectives.
The Fund intends to invest in both equity and fixed-income securities.
The Fund may invest in any type or class of security. Under normal
circumstances, it is expected that between 40% and 60% of the value of the
Fund's total assets will consist of fixed income securities, and at least 25%
of the value of the Fund's total assets will consist of fixed income senior
securities. Fixed income securities may include both convertible and
non-convertible debt securities and preferred stock, and only that portion of
their value attributed to their fixed income characteristics, as determined
by John Hancock Advisers, Inc. (the "Adviser"), can be used in applying the
25% test. The balance of the Fund's total assets may consist of cash or (i)
equity securities of established companies, (ii) equity and fixed income
securities of foreign corporations, governments or other issuers meeting
applicable quality standards as determined by the Fund's investment adviser,
(iii) foreign currencies, (iv) securities that are issued or guaranteed as to
interest and principal by the U.S. Government, its agencies, authorities or
instrumentalities, (v) obligations and equity securities of banks or savings
and loan associations (including certificates of deposit and bankers'
acceptances); and (vi) to the extent available and permissible, options and
futures contracts on securities, currencies and indices. Each of these
investments is more fully described below. The Fund's portfolio securities
are selected mainly for their investment character based upon generally
accepted elements of intrinsic value, including industry position,
management, financial strength, earning power, marketability and prospects
for future growth. The distribution or mix of various types of investments is
based on general market conditions, the level of interest rates, business and
economic conditions and the availability of investments in the equity or
fixed income markets.
The Fund will use a strategy of investing only in those common stocks that
have a record of increasing their dividend payout in each of the preceding
ten or more years.
While there is considerable flexibility in the investment quality and type of
securities in which the Fund may invest, the Fund's investments in equity
securities are limited to securities of companies who have (or whose
predecessors have) been in business continuously for at least five years and
have total assets of at least $10 million. Equity securities, for purposes of
the Fund's investment policy, are limited to common stocks, preferred stocks,
investment grade convertible securities and warrants. In addition, the Fund
utilizes a strategy of investing only in those common stocks which have a
record of having increased their shareholder dividend in each of the
preceding ten or more years. This dividend performers strategy may be changed
at any time.
The Fund's investments in fixed-income securities will primarily be
investment grade.
At least 75% of the Fund's total investments in fixed income securities
(other than commercial paper) will be rated within the four highest grades as
determined by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa)
or Standard & Poor's Ratings Group ("S&P") (AAA, AA, A or BBB). Fixed income
securities rated Baa or BBB are considered medium grade obligations with
speculative characteristics; and
4
<PAGE>
adverse economic conditions or changing circumstances may weaken their
issuers' capacity to pay interest and repay principal.
The Fund may invest in fixed income securities that are in the lower ratings
categories or are unrated.
Up to 25% of the Fund's total investments in fixed income securities, which
under normal market conditions would constitute no more than 15% of the
Fund's total assets, may be rated as low as C by S&P or Moody's. The Fund may
invest in unrated securities which, in the opinion of the Adviser, offer
yields and risks comparable to those of securities which are rated.
Risk Factors Associated with Lower Rated Securities. Fixed income securities
rated lower than Baa or BBB are high risk securities commonly known as "junk
bonds." See the Appendix attached to this Prospectus which describes the
characteristics of the securities in the various ratings categories. The Fund
is not obligated to dispose of securities whose issuers subsequently are in
default or which are downgraded below the above-stated ratings. The credit
ratings of the rating agencies, such as those ratings described here, may not
be changed by the rating agencies in a timely fashion to reflect subsequent
economic events. The credit ratings of securities do not reflect an
evaluation of market risk. Debt obligations rated in the lower ratings
categories, or which are unrated, involve greater price volatility and risk
of principal and income loss. In addition, lower ratings reflect a greater
possibility of an adverse change in financial condition affecting the
issuer's ability to make payments of interest and principal. The market price
and liquidity of lower rated fixed income securities generally respond more
to short-term corporate and market developments than do those of higher rated
securities, because these developments are perceived to have a more direct
relationship to the ability of an issuer of lower rated securities to meet
its ongoing debt obligations. The market prices of zero coupon and
payment-in-kind bonds are affected to a greater extent by interest rate
changes, and thereby tend to be more volatile than securities that pay
interest periodically and in cash. Increasing rate note securities are
typically refinanced by the issuers within a short period of time.
Reduced volume and liquidity in the high yield market or the reduced
availability of market quotations will make it more difficult to dispose of
the securities and to value accurately the Fund's assets. The reduced
availability of reliable, objective data may increase the Fund's reliance on
management's judgment in valuing high yield securities. In addition, the
Fund's investments in lower-rated securities may be susceptible to adverse
publicity and investor perceptions, whether or not justified by fundamental
factors. The Fund's investments, and consequently its net asset value, will
be subject to the market fluctuations and risk inherent in all securities.
Investments in corporate fixed income securities may be in bonds, convertible
debentures and convertible or non-convertible preferred stock. The value of
convertible securities, while influenced by the level of interest rates, is
also affected by the changing value of the underlying common stock into which
the securities are convertible. The value of fixed income securities varies
inversely with interest rates.
5
<PAGE>
The Fund may also invest in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Certain U.S. Government securities, including U.S. Treasury bills, notes and
bonds and Government National Mortgage Association certificates ("Ginnie
Maes"), are supported by the full faith and credit of the United States.
Certain other U.S. Government securities, issued or guaranteed by Federal
agencies or government sponsored enterprises, are not supported by the full
faith and credit of the United States, but may be supported by the right of
the issuer to borrow from the U.S. Treasury. These securities include
obligations of the Federal Home Loan Mortgage Corporation ("Freddie Macs")
and the Federal National Mortgage Association ("Fannie Maes") and obligations
supported by the credit of the instrumentality, such as Student Loan
Marketing Association Bonds ("Sallie Maes"). No assurance can be given that
the U.S. Government will provide financial support to these federal agencies,
authorities, instrumentalities and government sponsored enterprises in the
future.
Securities of Foreign Issuers. The Fund may purchase securities of foreign
issuers which may involve risks not present in domestic investments. It is
anticipated that under normal conditions, the Fund will not invest more than
35% of its total assets in foreign securities. See "Global Risks" below.
Foreign Currency Transactions. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future
date at a price set at the time of the contract. Although certain strategies
could minimize the risk of loss due to a decline in the value of the hedged
foreign currency, they could also limit any potential gain which might result
from an increase in the value of the currency.
Futures and Option Contracts. The Fund may buy and sell financial futures
contracts and options on futures contracts. The Fund's ability to hedge
successfully will depend on the ability of the Adviser to predict accurately
the future direction of interest rate changes and other market factors. There
is no assurance that a liquid market for futures and options will always
exist. In addition, the Fund could be prevented from opening, or realizing
the benefits of closing out, a futures or options position because of
position limits or limits on daily price fluctuations imposed by an exchange.
The Fund may engage in transactions in futures contracts and options on
futures contracts for hedging and speculative purposes. All of the Fund's
futures contracts and options on futures contracts will be traded on a U.S.
or foreign commodity exchange or board of trade. The Fund will not engage in
a transaction in futures or options on futures for speculative purposes if,
immediately thereafter, the sum of initial margin deposits and premiums
required to establish speculative positions in futures contracts and options
on futures would exceed 5% of the Fund's total assets.
Options Transactions. To earn income from the premiums received, the Fund may
write (sell) listed and over-the-counter covered call options and covered put
options on debt and equity securities and foreign currency. The Fund may
write listed and over-the-counter covered call and put options on up to 100%
of its net assets. In addition, the Fund may purchase listed and
over-the-counter call and put options on securities and currency with an
aggregate value not exceeding 5% of the Fund's total assets. The Securities
and Exchange Commission considers over-the-counter options to be illiquid
except under prescribed conditions, which are discussed in detail in the
Statement of Additional Information.
6
<PAGE>
While transactions in options and futures contracts may reduce certain risks,
they may entail other risks. Certain risks arise due to the imperfect
correlations between movements in the price of options and futures contracts
and movements in the prices of the securities or currency underlying the
contracts.
The Fund's ability to use futures contracts and options to hedge or earn
income successfully will depend on the Adviser's ability to predict
accurately the future direction of interest rate changes, currency rate
fluctuations and other market factors. The success of hedging transactions
will also depend on the degree of correlation between the futures or options
markets and the securities markets. The risk of loss on futures and written
options transactions is potentially unlimited and may exceed the amount
invested or of the premium received. There is no assurance that a liquid
market for futures and options will always exist. In addition, the Fund could
be prevented from opening, or realizing the benefits of closing out, a
futures or options position because of position limits or limits on daily
price fluctuations imposed by an exchange.
Restricted Securities. The Fund may purchase restricted securities, including
those that can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"). The Board
of Directors will monitor the Fund's investments in these securities,
focusing on certain factors, including valuation, liquidity and availability
of information. Purchases of restricted securities are subject to an
investment restriction limiting all the Fund's illiquid securities to not
more than 15% of its net assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements.
The Fund may reinvest any cash collateral in short-term securities. When the
Fund lends portfolio securities, there is a risk that the borrower may fail
to return the loaned securities. As a result, the Fund may incur a loss or,
in the event of the borrower's bankruptcy, may be delayed in or prevented
from liquidating the collateral. It is a fundamental policy of the Fund not
to lend portfolio securities having a total value in excess of 33-1/3% of its
total assets.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The
Fund may enter into repurchase agreements and may purchase securities on a
forward commitment 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
seller at a higher price. These transactions must be fully collateralized at
all times, but involve some credit risk to the Fund if the other party
defaults on its obligation and the Fund is delayed in or prevented from
liquidating the collateral. The Fund will segregate, in a separate account,
cash or liquid high grade debt securities equal in value to its forward
commitments and when-issued securities. Purchasing securities for future
delivery or on a when-issued basis may increase the Fund's overall investment
exposure and involves a risk of loss if the value of the securities declines
before the settlement date.
Defensive Investments. When the Adviser believes unfavorable investment
conditions exist requiring the Fund to assume a temporary defensive
investment posture, the Fund may hold cash or invest all or a portion of its
assets in short-term instru-
7
<PAGE>
ments, including: short-term U.S. Government securities and repurchase
agreements in respect thereof; bank certificates of deposit, bankers'
acceptances, time deposits and letters of credit; and commercial paper
(including so called Section 4(2) paper) rated at least A-2 by S&P or P-2 by
Moody's or if unrated, considered by the Adviser to be of comparable quality.
The Fund's temporary defensive investments may also include: debt obligations
of U.S. companies rated at least A by S&P or Moody's or, if unrated, of
comparable quality in the opinion of the Adviser; commercial paper and
corporate debt obligations not satisfying the above credit standards if they
are (a) subject to demand features or puts or (b) guaranteed as to principal
and interest by a domestic or foreign bank having total assets in excess of
$1 billion, by a company whose commercial paper may be purchased by the Fund,
or by a foreign government having an existing debt security rated at least A
by S&P or Moody's; and other short- term investments which the Adviser
determines present minimal credit risks and which are of "high quality" as
determined by any major rating service or, in the case of an instrument that
is not rated, of comparable quality as determined by the Adviser.
Investments in foreign securities may involve risks and considerations that
are not present in domestic investments.
Global Risks. Investments in foreign securities may involve risks not present
in domestic investments due to exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of expropriation, confiscatory taxation or political, economic or
social instability. There may be difficulty in enforcing legal rights outside
the United States. Some foreign companies are not subject to the same uniform
financial reporting requirements, accounting standards and government
supervision as domestic companies, and foreign exchange markets are regulated
differently from the U.S. stock market. Security trading practices abroad may
offer less protection to investors such as the Fund. In addition, foreign
securities may be denominated in the currency of the country in which the
issuer is located. Consequently, changes in the foreign exchange rate will
affect the value of the Fund's shares and dividends.
These risks may be intensified in the case of investments in emerging markets
or countries with limited or developing capital markets. These countries are
located in the Asia- Pacific region, Eastern Europe, Latin and South America
and Africa. Security prices in these markets can be significantly more
volatile than in more developed countries, reflecting the greater
uncertainties of investing in less established markets and economies.
Political, legal and economic structures in many of these emerging market
countries may be undergoing significant evolution and rapid development, and
they may lack the social, political, legal and economic stability
characteristic of more developed countries. Emerging market countries may
have failed in the past to recognize private property rights. They may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions on
repatriation of assets, and may have less protection of property rights than
more developed countries. Their economies may be predominantly based on only
a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates. Local securities markets may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. The Funds may be required to establish
special custodial or other arrangements before
8
<PAGE>
making certain investments in those countries. Securities of issuers located
in these countries may have limited marketability and may be subject to more
abrupt or erratic price movements.
The Fund follows certain policies which may help to reduce investment risk.
Investment Restrictions. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
classified as fundamental or non-fundamental. The Fund's investment
restrictions designated as fundamental may not be changed without shareholder
approval. The Fund's non-fundamental investment objective, policies and
restrictions, however, may be changed by a vote of the Directors without
shareholder approval. These changes may result in the Fund having an
investment objective different from the objective which you considered
appropriate at the tiime of your investment. The Fund's portfolio turnover
rates for recent periods are shown in the section "The Fund's Financial
Highlights."
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the
Adviser gives primary consideration to execution at the most favorable price,
taking into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares.
Pursuant to procedures established by the Board of Directors, the Adviser may
place securities transactions with brokers affiliated with the Adviser. These
brokers include Interstate/Johnson Lane, Tucker Anthony Incorporated, John
Hancock Distributors, Inc. and Sutro & Company, Inc. Tucker Anthony
Incorporated, John Hancock Distributors, Inc. and Sutro & Company, Inc. are
indirectly owned by John Hancock Mutual Life Insurance Company, which in turn
indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Directors elect officers and retain the investment adviser, who is
responsible for the day-to-day operations of the Fund, subject to the
Directors' policies and supervision.
The Fund is a separate, diversified portfolio of the Company, an open-end
management investment company. The Company was organized as a corporation in
the State of Delaware in January 1936 and reincorporated in Maryland in 1990.
The Company currently has 345,000,000 shares of capital stock. The Company's
Articles of Incorporation permit the Directors to create and reclassify the
capital stock into separate series, without shareholder approval. As of the
date of this Prospectus, the Directors have authorized shares of the Fund and
one other series. Additional series may be added in the future. The Company's
Articles of Organization also permit the Directors to classify and reclassify
any series or portfolio of shares into one or more classes. As of the date of
this Prospectus the Directors have authorized the issuance of two classes of
the Fund, designated as 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 except
that each class of shares bears different distribution and transfer agent
fees and has exclusive voting rights with respect to its Rule 12b-1
distribution plan. The Company is not required and does not intend to hold
annual shareholder meetings, although special meetings may be held for such
purposes as electing or removing Directors, changing fundamental investment
restrictions and policies or approving a management contract. Shareholders
have certain rights to remove Directors.
9
<PAGE>
John Hancock Advisers, Inc. advises investment companies having a total asset
value of more than $13 billion.
The Adviser was organized in 1968 and is a wholly owned indirect subsidiary
of John Hancock Mutual Life Insurance Company, a financial services company.
It provides the Fund and other investment companies in the John Hancock group
of funds with investment research and portfolio management services. John
Hancock Funds, Inc. ("John Hancock Funds") distributes shares for all of the
John Hancock funds through selected broker-dealers ("Selling Brokers").
Certain officers of the Company 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 Directors which allows Directors' fees to be invested by the Fund
in other John Hancock funds.
Pursuant to a service agreement between the Adviser and its affiliate,
Sovereign Asset Management Corporation ("SAMCorp"), SAMCorp furnishes to the
Adviser certain portfolio management services with respect to the equity
securities held in the portfolio of the Fund. The Adviser supervises
SAMCorp's performance of such services and is responsible for all services
required to be provided under the Adviser's investment management contract
with the Fund. The Adviser pays to SAMCorp 40% of the fee received from the
Fund by the Adviser with respect to equity securities in the Fund's
portfolio.
John F. Snyder III is primarily responsible for management of the Fund. He is
assisted by a team of co-portfolio managers and analysts in the day-to-day
management of the Fund. Mr. Snyder is Executive Vice President of SAMCorp and
Senior Vice President of the Company. He has been a co-portfolio manager of
the Fund since its inception in 1992. He has been associated with the Adviser
since 1991. He is also co-portfolio manager of John Hancock Sovereign
Achievers Fund and John Hancock Sovereign Investors Fund.
In order to avoid any conflict with portfolio trades for the Fund, the
Adviser and the Fund have adopted extensive restrictions on personal
securities trading by personnel of the Adviser and its affiliates. Some of
these restrictions are: pre-clearance for all personal trades and a ban on
the purchase of initial public offerings, as well as contributions to
specified charities of profits on securities held for less than 91 days.
These restrictions are a continuation of the basic principle that the
interests of the Fund and its shareholders come first.
ALTERNATIVE PURCHASE ARRANGEMENTS
An alternative purchase plan allows you to choose the method of purchase that
is best for you.
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (See "Initial Sales Charge
Alternative--Class A shares") or on a contingent deferred basis (See
"Contingent Deferred Sales Charge Alternative--Class B shares"). If you do
not specify on your account application the class of shares you are
purchasing, it will be assumed that you are investing in Class A shares.
Investments in Class A shares are subject to an initial sales charge.
Class A Shares. If you elect to purchase Class A Shares, you will incur an
initial sales charge unless the amount 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 pur-
10
<PAGE>
chase. Class A shares are subject to ongoing distribution and service fees at
a combined annual rate of up to 0.30% of the Fund's average daily net assets
attributable to the Class A shares. Certain purchases of Class A shares
qualify for reduced initial sales charges. See "Share Price --Qualifying for
a Reduced Sales Charge."
Investments in Class B shares are subject to a contingent deferred sales
charge.
Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them
within six years of purchase (the "contingent deferred sales charge" or the
"CDSC"). Class B shares are subject to ongoing distribution and service fees
at a combined annual rate of up to 1.00% of the Fund's average daily net
assets attributable to the Class B shares. Investing in Class B shares
permits all of your dollars to work from the time you make your investment,
but the higher ongoing distribution fee will cause these shares to have
higher expenses than that of Class A shares. To the extent that any dividends
are paid by the Fund, these higher expenses will also result in lower
dividends than those paid on Class A shares.
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance
Company that had more than 100 eligible employees at the inception of the
Fund account.
Factors to Consider in Choosing an Alternative
You should consider which class of the shares would be more beneficial for
you.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares given the amount of your purchase, the length of time that
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 page 2 of this Prospectus gives examples of the
charges applicable to each class of shares. Class A shares will normally be
more beneficial if you qualify for a reduced sales charge. See "Share Price--
Qualifying for a Reduced Sales Charge."
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent
any dividends are paid. However, because initial sales charges are deducted
at the time of purchase, you would not have all of your funds invested
initially and, therefore, would initially own fewer shares. If you do not
qualify for reduced initial sales charges and expect to maintain your
investment for an extended period of time, you might consider purchasing
Class A shares. This is because the accumulated distribution and service
charges on Class B shares may exceed the initial sales charge and accumulated
distribution and service charges on Class A shares during the life of your
investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all of your funds invested initially. However, you
will be subject to higher distribution fees and, for a six-year period, a
CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of the shares will be paid from the
proceeds of the initial
11
<PAGE>
sales charge and the ongoing distribution and service fees. In the case of
Class B shares, expenses will be paid from the proceeds of the ongoing
distribution and service fees, as well as from the CDSC incurred upon
redemption within six years of purchase. The purpose and function of the
Class B shares' CDSC and ongoing distribution and service fees are the same
as those of the Class A shares' initial sales charge and ongoing distribution
and service fees. Sales personnel distributing the Fund's shares may receive
different compensation for selling each class of shares.
Dividends, if any, on Class A and Class B shares will be calculated in the
same manner, at the same time and on the same day. They will also be in the
same amount, except for differences resulting from each class bearing only
its own distribution and service fees, and shareholder meeting expenses and
incremental transfer agency costs. See "Dividends and Taxes."
THE FUND'S EXPENSES
The Fund pays a monthly fee equal (on an annual basis) to .60% of its average
daily net asset value to the Adviser for managing the Fund's investment and
business affairs. The Adviser pays to SAMCorp 40% of the fee received by the
Adviser with respect to the equity securities held in the portfolio of the
Fund during such month. 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 net assets. The Adviser retains the right to reimpose a
fee and recover any other payments to the extent that, at the end of any
fiscal year, the Fund's actual expenses at year end fall below that limit.
The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.
The Class A and Class B shareholders have adopted distribution plans (the
"Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Under these Plans, the Fund will pay distribution and service fees at an
aggregate annual rate of 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. Distribution fees are
used to reimburse John Hancock Funds for its distribution expenses, including
but not limited to: (i) initial and ongoing sales compensation to Selling
Brokers and others (including affiliates of John Hancock Funds) engaged in
the sale of Fund shares, (ii) marketing, promotional and overhead expenses
incurred in connection with the distribution of Fund shares, and (iii) with
respect to Class B shares only, interest expenses on unreimbursed
distribution expenses. The service fees will be used to compensate Selling
Brokers for providing personal and account maintenance services to
shareholders. In the event John Hancock Funds is not fully reimbursed for
payments it makes or expenses it incurs under the Class A Plan, these
expenses will not be carried beyond one year from the date they were
incurred. These unreimbursed expenses under the Class B Plan will be carried
forward together with interest on the balance of these unreimbursed expenses.
For the year ended December 31, 1994 an aggregate of $3,311,377 of
distribution expenses or 2.30% of the average net assets of Class B shares
were not reimbursed or recovered by the John Hancock Funds through the
receipt of deferred sales charges or 12b-1 fees.
Information on the Fund's total expenses is in the Fund's Financial
Highlights section of this Prospectus.
12
<PAGE>
DIVIDENDS AND TAXES
Dividends. Income dividends are paid quarterly from net investment income.
Capital gains, if any, are generally distributed annually. Dividends are
reinvested in additional shares of your class unless you elect the option to
receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividend on these shares will be lower than on the Class A
shares. See "Share Price."
Taxation. Dividends from the Fund's net investment income, certain net
foreign currency gains, and net short-term capital gains are taxable to you
as ordinary income. Dividends from the Fund's net long-term capital gains are
taxable as long-term capital gain. These dividends are taxable whether you
received cash or reinvested in additional shares. Certain dividends paid in
January of a given year, may be taxable as if you received them the previous
December. Corporate shareholders may be entitled to take the corporate
dividends received deduction for dividends received by the Fund from U.S.
domestic corporations, subject to certain restrictions under the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund will send you a
statement by January 31 showing the tax status of the dividends you received
for the prior year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code. As a regulated investment
company, the Fund will not be subject to Federal income tax on any net
investment income or net realized capital gains that are distributed to its
shareholders at least annually. When you redeem (sell) or exchange shares,
you may realize a taxable gain or loss.
On the account application, you must certify that your social security or
other taxpayer identification number is correct and that you are not subject
to backup withholding of Federal income tax. If you do not provide this
information, or are otherwise subject to backup withholding, the Fund may be
required to withhold 31% of your dividends and the proceeds of redemptions
and exchanges.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes, with respect to your investment in and distributions from the Fund. In
some states, a portion of the Fund's dividends that represent investment
received by the Fund on direct U.S. Government Obligations may be exempt from
tax. Non-U.S. shareholders and tax-exempt shareholders are subject to
different tax treatment not described above. You should consult your tax
adviser for specific advice.
PERFORMANCE
The Fund may advertise its yield and total return.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30-day period by the
maximum offering price per share on the last day of that period. Yield is
also calculated according to accounting methods that are standardized for all
stock and bond funds. Because yield accounting methods differ from the
methods used for other accounting purposes, the Fund's yield may not equal
the income paid on Fund shares or the income reported in the Fund's financial
statements.
13
<PAGE>
The Fund's total return shows the overall change in value of a hypothetical
investment in the Fund, assuming the reinvestment of all dividends.
Cumulative total return shows the Fund's performance over a period of time.
Average annual total return shows the cumulative return of the Fund shares
divided over the number of years included in the period. Because average
annual total return tends to smooth out variations in the Fund's performance,
you should recognize that it is not the same as actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at lower sales charges would result in
higher performance figures. Yield and total return for the Class B shares
reflect deduction of the applicable CDSC imposed on a redemption of shares
held for the applicable period. All calculations assume that all dividends
are reinvested at net asset value on the reinvestment dates during the
periods. Yield and total return of Class A and Class B shares will be
calculated separately and, because each class is subject to different
expenses, the yield and total return may differ with respect to that class
for the same period. 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 and yield of Class A and Class B
shares in any advertisement or promotional materials including Fund
performance data. The value of Fund shares, when redeemed, may be more or
less than their original cost. Both yield and total return are historical
calculations and are not an indication of future performance. See "Factors to
Consider in Choosing an Alternative."
14
<PAGE>
HOW TO BUY SHARES
Opening an account.
The minimum initial investment in Class A and Class B shares is $1,000 ($250 for
group investments and retirement plans). Complete the Account Application
attached to this Prospectus. Indicate whether you are purchasing Class A or
Class B shares. If you do not specify which class of shares you are purchasing.
Investor Services will assume you are investing in Class A shares.
<TABLE>
<S> <C>
By Check 1. Make your check payable to John Hancock Investor Services Corporation ("Investor
Services").
2. Deliver the completed application and check to your registered representative or
Selling Broker, or mail it directly to Investor Services.
By Wire 1. Obtain an account number by contacting your registered representative or Selling
Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For Credit To: John Hancock Sovereign Balanced Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered.
3. Deliver the completed application to your registered representative or Selling
Broker or mail it directly to Investor Services.
Buying additional Class A and Class B shares.
Monthly Automatic 1. Complete the "Automatic Investing" and "Bank Information" sections on the Account
Accumulation Privileges Application, designating a bank account from which your funds may be
Program (MAAP) drawn.
2. The amount you elect to invest will be automatically withdrawn from your bank or
credit union account.
By Telephone 1. Complete the "Invest-By-Phone" and "Bank Information" sections on the Account
Privileges Application, designating a bank account from which your funds may be
drawn. Note that in order to invest by phone, your account must be in a bank or
credit union that is a member of the Automated Clearing House System (ACH).
2. After your authorization form has been processed, you may purchase additional
Class A and Class B shares by calling Investor Services toll-free at 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which the 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 fill out the detachable stub included on your account statement or include
a note with your investment listing the name of the Fund, the class of shares you
own, your account number and the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor Services Corporation
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
15
<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 Sovereign Balanced Fund
(Class A or Class B shares)
Your Account Number
Name(s) under which account is registered
</TABLE>
Other Requirements. All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 p.m., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Certificates are not issued unless a request is made in writing to Investor
Services.
You will receive account statements which you should keep to help with your
personal recordkeeping.
You will receive a statement of your account after every transaction that
affects your share balance or registration (statements related to
reinvestment of dividends and automatic investment/withdrawal plans will be
sent to you quarterly). A tax information statement will be mailed to you by
January 31 of each year.
SHARE PRICE
The offering price of your shares is their net asset value plus a sales
charge, if applicable, which will vary with the purchase alternative you
choose.
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of
outstanding shares of that class. The NAV of each class can differ.
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or fair value
as determined in good faith according to procedures approved by the
Directors. Short-term debt investments maturing within 60 days are valued at
amortized cost which approximates market value. Foreign securities are valued
on the basis of quotations from the primary market in which they are traded
and are translated from the local currency into U.S. dollars using current
exchange rates. If quotations are not readily available or the value has been
materially affected by events occurring after the closing of a foreign
market, assets are valued by a method that the Directors believe accurately
reflects their 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 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.
Initial Sales Charge Alternative--Class A Shares. The offering price you pay
for Class A shares of the Fund equals the NAV next computed after your
investment is received in good order by John Hancock Funds plus a sales
charge, as follows:
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<PAGE>
<TABLE>
<CAPTION>
Combined Reallowance
Sales Charge Reallowance to Selling
Sales Charge as a and Service Brokers
as a Percentage Fee as a as a
Percentage of the Percentage Percentage
Amount Invested of Offering Amount of Offering of Offering
(including Sales Charge) Price Invested Price(+) Price(*)
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(**) 0.00%(**) (***) 0.00%(***)
</TABLE>
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales charge.
In addition to the reallowance allowed to all Selling Brokers, John Hancock
Funds will pay the following: round trip airfare to a resort will be given to
each registered representative of a Selling Broker (if the Selling Broker has
agreed to participate) who sells certain amounts of shares of John Hancock
funds. John Hancock Funds will make these incentive payments out of its own
resources. Other than distribution fees, the Fund does not bear distribution
expenses. A Selling Broker to whom substantially the entire sales charge is
reallowed or who receives these incentives may be deemed to be an underwriter
under the Securities Act of 1933.
(**) No sales charge is payable at the time of purchase of Class A shares of
$1 million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions within one year of purchase.
(***) John Hancock Funds may pay a commission and first year's service fee
(as described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in aggregate as follows: 1%
on sales to $4,999,999, 0.50% on the next $5 million and 0.25% on $10 million
and over.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net assets
invested in the Fund and thereafter 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 accounts attributable to these
brokers.
Under certain circumstances as 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 Class A shares will be made at
net asset value with no initial sales charge, but if the shares are redeemed
within 12 months
17
<PAGE>
after the end of the calendar month in which the purchase was made (the
contingent deferred sales charge period), a contingent deferred sales charge
("CDSC") will be imposed. The rate of the CDSC will depend on the amount
invested as follows:
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%
Existing full service clients of John Hancock Mutual Life Insurance Company
who were group annuity contract holders as of September 1, 1994, and
participant directed defined contribution plans with at least 100 eligible
employees at the inception of the Fund account may purchase Class A shares
with no initial sales charge. However if the shares are redeemed within 12
months after the end of the calendar year in which the purchase was made, a
contingent deferred sales charge will be imposed at the above rate.
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends which have been reinvested in
additional Class A shares.
In determining whether a CDSC is applicable 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 Charge."
You may qualify for a reduced sales charge on your investments in Class A
shares.
Qualifying for a Reduced Sales Charge. If you invest more than $50,000 in
Class A shares of the Fund or a combination of funds in the John Hancock
funds (except money market funds), you may qualify for a reduced sales charge
on your investments in Class A shares through a LETTER OF INTENTION. You may
also be able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to
take advantage of the value of your previous investments in Class A shares of
the John Hancock funds when meeting the breakpoints for a reduced sales
charge. For the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the
applicable sales charge will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
Example:
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $30,000 in Class A shares of the Fund, the
sales charge
18
<PAGE>
on this subsequent investment would be 4.50% and not 5.00%. This rate is the
rate that would otherwise be applicable to investments of less than $50,000.
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:
Class A shares may be available without a sales charge to certain individuals
and organizations.
(bullet) A Director or officer of the Company; a Director or officer of the
Adviser and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees or
Directors of any of the foregoing; a member of the immediate family of any of
the foregoing; or any fund, pension, profit sharing or other benefit plan for
the individuals described above.
(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 or registered investment adviser that has entered into
an agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee- based investment products made available to their clients.
(bullet) A former participant in an employee benefit plan with John Hancock
funds, when he/she withdraws from his/her plan and transfers any or all of
his/her plan distributions directly to the Fund.
- -------------------
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales
charge in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares
are offered at net asset value per share without a sales charge, so that your
initial investment will go to work at the time of purchase. However, Class B
shares redeemed within six years of purchase will be subject to a CDSC at the
rates set forth below. This charge will be assessed on an amount equal to the
lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on
increases in account value above the initial purchase price, including shares
derived from dividend reinvestment.
In determining whether a CDSC applies to a redemption, the calculation will
be determined in a manner that results in the lowest possible rate being
charged. It will be assumed that your redemption comes first from shares you
have held beyond the six-year CDSC redemption period or those you acquired
through dividend reinvest-
19
<PAGE>
ment, and next from the shares you have held the longest during the six-year
period. The CDSC is waived on redemptions in certain circumstances. See the
discussion "Waiver of Contingent Deferred Sales Charges" below.
Example:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and 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 all or part of them to defray its expenses related to providing the Fund
with distribution services connected to 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 deducting a sales charge
at the time of the purchase.
The amount of the CDSC, if any, will vary depending on the number of years
from the time you purchase your Class B shares until the time you redeem
them. Solely for purposes of determining this holding period, any payments
you make during the month will be aggregated and deemed to have been made on
the last day of the month.
Year in Which Class B Contingent Deferred Sales
Shares Redeemed Charge As a Percentage of
Following Purchase Dollar Amount Subject to CDSC
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested, are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision
of personal and account maintenance services to shareholders during the
twelve months following the sale, and thereafter the service fee is paid in
arrears.
If you purchased Class B shares prior to January 1, 1994, the applicable CDSC
as a percentage of the amount redeemed will be: 4% for redemptions during the
first year after purchase, 3.5% for redemptions during the second year, 3%
for redemptions during the third year, 2.5% for redemptions during the fourth
year, 2% for redemptions during the fifth year, 1% for redemptions during the
sixth year, and no CDSC for the seventh year and thereafter.
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<PAGE>
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 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 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 at the end of the month eight years after the
shares were purchased, and will result in lower annual distribution fees. If
you exchanged Class B shares into this Fund from another John Hancock fund,
the calculation will be based on the time you purchased the shares in the
original fund. The Fund has been advised
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<PAGE>
that the conversion of Class B shares to Class A shares should not be taxable
for Federal income tax purposes, nor should it change your tax basis or tax
holding period for the converted shares.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after your redemption
request is received in good order by Investor Services, less any applicable
CDSC. The Fund may hold payment until it is reasonably satisfied that
investments that were recently made by check or Invest- by-Phone have been
collected (which may take up to 10 calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the
next business day. When you redeem your shares, you may realize a taxable
gain or loss depending usually on the difference between what you paid for
them and what you received for them, subject to certain tax rules. Under
unusual circumstances, the Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities laws.
To assure acceptance of your redemption request, please follow these
procedures.
By Telephone
All Fund shareholders are automatically eligible for the telephone redemption
privilege. Call 1-800-225-5291, from 8:00 A.M. to 4:00 P.M. (Eastern 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, but the address on the account must not have
changed for the last 30 days. A check will be mailed to the exact name(s) and
address on the account.
If reasonable procedures, such as those described above, are not followed, the
Fund may be liable for any loss due to unauthorized or fraudulent 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 in
accordance with the telephone transactions procedures mentioned above.
Telephone redemption is not available for IRAs or other tax-qualified retirement
plans or shares of the Fund that are in certificated form.
During periods of extreme economic conditions or market changes, telephone
requests may be difficult to implement due to a large volume of calls. During
these times you should consider placing redemption requests in writing or using
EASI-Line. EASI-Line's telephone number 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.
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.
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<PAGE>
<TABLE>
<S> <C>
Type of Registration Requirements
Individual, Joint Tenants, Sole
Proprietorship, Custodial Letter of instruction signed (with titles where applicable) by
(Uniform Gifts or Transfer to all persons authorized to sign for the account, exactly as it
Minors Act), General Partners. is registered accompanied by signature(s) guarantee(s).
Corporation, Association Letter of instruction and a corporate resolution, signed by
person(s) authorized to act on the account, accompanied by
signature(s) guarantee(s).
Trusts A letter of instruction by the Trustee(s) with a signature
guarantee. (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.
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.
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 nor additional fee imposed,
if the value of the account is in excess of the Fund's minimum initial
investment. No CDSC will be imposed on involuntary redemptions of shares.
Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a smaller account may
eventually trigger this policy.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange shares of the Fund only for shares of the same class of
another John Hancock fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of
investment goals. Contact your registered representative or Selling Broker
and request a prospectus for the John Hancock funds that interest you. Read
the Prospectus carefully before exchanging your shares. You can exchange
shares of each class of the Fund only for shares of the same class of another
John Hancock fund. For this purpose, John Hancock funds with only one class
of shares will be treated as Class A whether or not they have been so
designated.
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<PAGE>
Exchanges between funds 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
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Adjustable U.S. Government Trust and John Hancock Limited-Term Government Fund
will be subject to the initial Fund's CDSC). For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in an
exchange. However, if you exchange Class B shares purchased prior to January 1,
1994 for Class B shares of any other John Hancock fund, you will continue to be
subject to the CDSC schedule that was in effect at your initial purchase date.
You may exchange Class B shares of any John Hancock fund into a John Hancock
money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption.
The Fund reserves the right to require that you keep previously exchanged
shares (and reinvested dividends) in the Fund for 90 days before you are
permitted a new exchange. The Fund may also terminate or alter the terms of
the exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and
the purchase of shares of another for Federal income tax purposes. An
exchange may result in a taxable gain or loss.
When you may 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 terminate the exchange
privilege for any person who makes seven or more exchanges out of the Fund
per calendar year. Accounts under common control or ownership will be
aggregated for this purpose. Although the Fund will attempt to give you prior
notice whenever it is reasonably able to do so, it may impose these
restrictions at any time.
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<PAGE>
By Telephone
1. When you fill out the application for your initial purchase of Fund
shares, you automatically authorize exchanges by telephone unless you check
the box indicating that you do not wish to have the telephone exchange
privilege.
2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.
3. Your name, the account number, taxpayer identification number applicable
to the account and other relevant information may be requested. In addition,
telephone instructions are recorded.
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 dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Reinvestment Privilege
If you redeem shares of the Fund, you may be able to reinvest the proceeds in
the Fund or another John Hancock fund without paying an additional sales
charge.
1. You will not be subject to a sales charge on Class A shares that you
reinvest in any John Hancock fund that is otherwise subject to a sales
charge, as long as you reinvest within 120 days from the redemption date. If
you paid a CDSC upon a redemption, you may reinvest at net asset value in the
same class of shares from which you redeemed within 120 days. Your account
will be credited with the amount of the CDSC previously charged, and the
reinvested shares will continue to be subject to a CDSC. For purposes of
computing the CDSC payable upon a subsequent redemption, the holding period
of the shares acquired through reinvestment will include the holding period
of the redeemed shares.
2. Any portion of your redemption may be reinvested in Fund shares or in
shares of any of the other John Hancock funds, subject to the minimum
investment limit of that fund.
3. To reinvest, you must notify Investor Services in writing. Include the
Fund(s) name, account number and class from which your shares were originally
redeemed.
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<PAGE>
Systematic Withdrawal Plan
You can pay routine bills from your account or make periodic disbursements of
funds from your retirement account to comply with IRS regulations.
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the application by contacting your registered representative or
by calling 1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually
or annually or on a selected monthly basis to yourself or any other
designated payee.
4. There is no limit on the number of payees you may authorize, but all
payments must be made at the same time or intervals.
5. It is not advantageous to maintain a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares because
you may be subject to an initial sales charge on your purchases of Class A
shares or a CDSC on your redemptions of Class B shares. In addition, your
redemptions are taxable events.
6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.
Monthly Automatic Accumulation Program (MAAP)
You can make automatic investments and simplify your investing.
1. You can authorize an investment to be drawn automatically each month from
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program at any time.
4. There is no charge to you for this program, and there is no cost to the
Fund.
5. If you have payments being withdrawn from a bank account and we are
notified that the account has been closed, your withdrawals will be
discontinued.
Group Investment Program
Organized groups of at least four persons may establish accounts.
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
2. The initial aggregate payment 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.
26
<PAGE>
Retirement Plans
1. You may use the Fund to fund various types of retirement plans, including
Individual Retirement Accounts, Keogh Plans (H.R. 10), Pension and Profit
Sharing Plans (including 401(k) plans), Tax Sheltered Annuity Retirement
Plans (403(b) or TSA Plans) and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of these plans
is $250. However, accounts being established as Group IRA, SEP, SARSEP, TSA
and 401(k) and 457 Plans will be accepted without an initial minimum
investment.
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<PAGE>
APPENDIX
Moody's describes its ratings for fixed income securities as follows:
Fixed income securities which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Fixed income securities which are rated "Aa" are judged to be of high quality
by all standards. Together with the Aaa group they are generally referred to
as "high grade" obligations. They are rated lower than the best fixed income
securities because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities.
Fixed income securities which are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment some
time in the future.
Fixed income securities which are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such fixed income securities lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Fixed income securities which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes fixed income securities in this class.
Fixed income securities which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Fixed income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Fixed income securities which are rated "Ca" represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
Fixed income securities which are rated "C" are the lowest rated class of
fixed income securities and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
28
<PAGE>
S&P describes its ratings for fixed income securities as follows:
Fixed income securities rated "AAA" have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
Fixed income securities rated "AA" have a very strong capacity to pay
interest and repay principal and differs from the higher rated issues only in
small degree.
Fixed income securities rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than fixed income
securities in higher rated categories.
Fixed income securities rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas such securities
normally exhibit adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to
pay interest and repay principal for fixed income securities in this category
than in higher rated categories.
Fixed income securities rated "BB," "B," "CCC," "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligations. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such fixed income securities will likely
have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
Moody's describes its three highest ratings for commercial paper as follows:
Issuers rated "P-1" (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. "P-1" repayment
capacity will normally be evidenced by the following characteristics: (1)
leading market positions in well- established industries; (2) high rates of
return on funds employed; (3) conservative capitalization structures with
moderate reliance on debt and ample asset protections; (4) broad margins in
earnings coverage of fixed financial charges and high internal cash
generation; and (5) well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers rated "P-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.
Issuers rated "P-3" (or supporting institutions) have an acceptable ability
for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability
in earnings and profitability may result in changes in the level of debt
protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
29
<PAGE>
S&P describes its three highest ratings for commercial paper as follows:
"A-1." This designation indicate that the degree of safety regarding timely
payment is very strong.
"A-2." Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1."
"A-3." Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Quality Distribution
The average quality distribution of the portfolio for the fiscal year ended
December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Y-T-D Rating Rating
Average % of Assigned % of Assigned % of
Security Rating Value Portfolio by Adviser Portfolio by Service Portfolio
<S> <C> <C> <C> <C> <C> <C>
AAA $ 22,206,410 15.6% 0 0.0% $22,206,410 15.6%
AA 3,064,368 2.2% 0 0.0% 3,064,368 2.2%
A 12,395,742 8.7% 0 0.0% 12,395,742 8.7%
BAA 10,040,012 7.1% 0 0.0% 10,040,012 7.1%
BA 5,980,174 4.2% 0 0.0% 5,980,174 4.2%
B 10,382,853 7.3% 0 0.0% 10,382,853 7.3%
CAA 199,375 0.1% 0 0.0% 199,375 0.1%
CA 0 0.0% 0 0.0% 0 0.0%
C 0 0.0% 0 0.0% 0 0.0%
D 0 0.0% 0 0.0% 0 0.0%
Debt Securities 64,268,934 45.2% 0 0.0% $64,268,934 45.2%
Equity Securities 72,981,453 51.4%
Short-Term Securities 4,820,833 3.4%
Total Portfolio 142,071,221 100.0%
Other Assets--Net 1,862,257
Net Assets $143,933,477
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN BALANCED 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
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
TDD call 1-800-554-6713
JH3600P 5/95
JOHN HANCOCK
SOVEREIGN
BALANCED FUND
Class A and Class B Shares
Prospectus
May 1, 1995
A mutual fund seeking current income, long-term growth of capital and of
income and preservation of capital without assuming undue market risks.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
(Recycle Logo) Printed on recycled paper
<PAGE>
JOHN HANCOCK
SOVEREIGN BALANCED FUND
CLASS A AND CLASS B SHARES
Statement of
Additional Information
May 1, 1995
This Statement of Additional Information provides information about John
Hancock Sovereign Balanced Fund (the "Fund") in addition to the information that
is contained in the Fund's Class A and Class B Prospectus, dated May 1, 1995
(the "Prospectus").
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 Objectives, Policies and Risk 2
Considerations
Certain Investment Practices 3
Investment Restrictions 10
Ratings 14
Those Responsible for Management 14
Investment Advisory and Other Services 20
Net Asset Value 22
Distribution Contracts 23
Initial Sales Charge on Class A Shares 25
Deferred Sales Charge on Class B Shares 26
Additional Services and Programs for Class 27
A and
Class B Shares
Tax Status 28
Description of Fund Shares 32
Calculation of Performance 33
Brokerage Allocation 35
Transfer Agent Services 37
Custody of Portfolio 37
Independent Auditors 37
<PAGE>
ORGANIZATION OF THE FUND
John Hancock Sovereign Balanced Fund (the "Fund") is a separate
diversified portfolio of John Hancock Sovereign Investors Fund, Inc. (the
"Company"), an open-end investment management company.
The Company was organized as a corporation in the State of Delaware in
1936 and reincorporated in Maryland in 1990. The Board of Directors of the
Company has authority under the Company's charter to create and classify shares
into separate series and to classify and reclassify any series or portfolio of
shares into one or more classes without further action by shareholders. Pursuant
thereto, the Board of Directors has created the Fund and one additional series
of the Company known as John Hancock Sovereign Investors Fund ("Investors
Fund"). Additional series may be added in the future from time to time. As of
the date of this Statement of Additional Information, the Board of Directors
have authorized the issuance of three classes of shares of the Fund: Class A,
Class B and Class C, although to date, the Fund has issued only Class A shares
and Class B shares. The Fund has no present intention of issuing Class C shares.
See "Description of Fund Shares."
The Fund is managed by John Hancock Advisers, Inc. (the "Adviser"). The
Adviser is an indirect wholly-owned subsidiary of the John Hancock Mutual Life
Insurance Company (the "Life Insurance Company"), chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts. Prior to
October 23, 1991, the Company was known as "Sovereign Investors, Inc."
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The Fund's investment objective and policies are set forth in the
Prospectus, which is incorporated herein by reference. The following information
augments the Prospectus. The investment objectives of the Fund are to provide
current income, long-term growth of capital and income and preservation of
capital without assuming what the Adviser believes to be undue market risks. At
times, however, because of market conditions, the Fund may invest primarily for
current income. There is no assurance that the Fund's objectives will be
achieved. The Fund will allocate its investments among different types and
classes of securities in accordance with the Adviser's appraisal of economic and
market conditions. Shareholder approval is not required to effect changes in the
Fund's investment objectives.
As described in the Prospectus, the Fund may invest in all types of equity
and debt securities of both domestic and foreign issuers.
Assuming relatively stable economic conditions, it is anticipated that the
annual portfolio turnover rate will not usually exceed 100%. However, under
certain economic conditions, a higher turnover may be advisable to achieve the
Fund's objectives.
Foreign Securities. The Fund may invest up to 35% of its total assets in
securities of foreign companies. The actual percentage that will be allocated to
foreign securities will vary depending on the relative yields of foreign and
U.S. securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries and
<PAGE>
the relationship of such countries' currency to the U.S. dollar. These factors
are judged on the basis of fundamental economic criteria (e.g., relative
inflation levels and trends, growth rate forecasts, balance of payments status
and economic policies) as well as technical and political data.
CERTAIN INVESTMENT PRACTICES
When-Issued Securities. "When-issued" refers to securities whose terms are
available and for which a market exists, but which have not been issued. For
when-issued transactions, no payment is made until delivery is due, often a
month or more after the purchase.
The Fund will engage in when-issued transactions with respect to
securities purchased for its portfolio in order to obtain what is considered to
be an advantageous price and yield at the time of the transaction. When the Fund
engages in when-issued transactions, it relies on the seller to consummate the
transaction. The failure of the issuer or seller to consummate the transaction
may result in the Fund's losing the opportunity to obtain a price and yield
considered to be advantageous. On the date the Fund enters into an agreement to
purchase securities on a when-issued basis, the Fund will segregate in a
separate account cash or liquid high grade debt securities equal in value to the
when-issued commitment. These assets will be valued daily at market, and
additional cash or securities will be segregated in a separate account to the
extent that the total value of the assets in the account declines below the
amount of the when-issued commitments.
Repurchase Agreements. A repurchase agreement is a contract under which
the Fund would acquire a security for a relatively short period (usually not
more than 7 days) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). The Fund will enter into repurchase agreements only with
member banks of the Federal Reserve System and with "primary dealers" in U.S.
Government securities. The Adviser will continuously monitor the
creditworthiness of the parties with whom it enters into repurchase agreements.
The Fund has established a procedure providing that the securities serving
as collateral for each repurchase agreement must be delivered to the Fund's
custodian either physically or in book-entry form and that the collateral must
be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, the Fund could experience delays in
liquidating the underlying securities and could experience losses, including the
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and expense of enforcing
its rights.
Lending of Portfolio Securities. In order to generate additional income,
the Fund may from time to time lend securities from its portfolio to brokers,
dealers and financial institutions such as banks and trust companies. Such loans
will be secured by collateral consisting of cash or U.S. Government securities
which will be maintained in an amount equal to at least 100% of the current
market value of the loaned securities. During the period of the loan, the Fund
receives the income on both the loaned securities and the collateral and thereby
increases its return. Cash collateral will be invested in short-term high
quality debt securities, which will increase the current income of the Fund.
Such loans will not be for more than 60 days and will be terminable at any
<PAGE>
time. The Fund will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as rights to interest or other
distributions or voting rights on important issues. The Fund may pay reasonable
fees to persons unaffiliated with the Fund for services in arranging such loans.
Lending of portfolio securities involves a risk of failure by the borrower to
return the loaned securities, in which event the Fund may incur a loss.
Financial Futures Contracts. The Fund may hedge its portfolio by selling
financial futures contracts as an offset against the effect of expected
increases in interest rates or declines in security or foreign currency values
and by purchasing such futures contracts as an offset against the effect of
expected declines in interest rates or increases in security or foreign currency
values. Although other techniques could be used to reduce the Fund's exposure to
interest rate, securities market and currency fluctuations, the Fund may be able
to hedge its exposure more effectively and perhaps at a lower cost by using
financial futures contracts. The Fund will enter into financial futures
contracts for hedging and non-hedging purposes.
Financial futures contracts have been designed by boards of trade which
have been designated "contract markets" by the Commodity Futures Trading
Commission ("CFTC"). Futures contracts are traded on these markets in a manner
that is similar to the way a stock is traded on a stock exchange. The boards of
trade, through their clearing corporations, guarantee that the contracts will be
performed. It is expected that if new types of financial futures contracts are
developed and traded the Fund may engage in transactions in such contracts.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts are
closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts (same exchange, underlying security or currency and
delivery month). Other financial futures contracts, such as futures contracts on
securities indices, by their terms call for cash settlements. If the offsetting
purchase price is less than the Fund's original sale price, the Fund realizes a
gain, or if it is more, the Fund realizes a loss. Conversely, if the offsetting
sale price is more than the Fund's original purchase price, the Fund realizes a
gain, or if it is less, the Fund realizes a loss. The transaction costs must
also be included in these calculations. The Fund will pay a commission in
connection with each purchase or sale of financial futures contracts, including
a closing transaction. For a discussion of the Federal income tax considerations
of trading in financial futures contracts, see the information under the caption
"Tax Status" below.
At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
Government securities, known as "initial margin." The margin required for a
financial futures contract is set by the board of trade or exchange on which the
contract is traded and may be modified during the term of the contract. The
initial margin is in the nature of a performance bond or good faith deposit on
the financial futures contract which is returned to the Fund upon termination of
the contract, assuming all contractual obligations have been satisfied. The Fund
expects to earn interest income on its initial margin deposits. Each day, the
futures contract is valued at the official settlement price of the board of
trade or exchange on which it is traded. Subsequent payments, known as
"variation margin," to and from the broker are made on a daily basis as the
market price of the financial futures contract fluctuates. This process is known
as "mark to market." Variation margin does not represent a borrowing or lending
by the Fund but is instead a settlement between the Fund and the broker of the
amount one would owe the other if the financial futures contract expired. In
computing net asset value, the Fund will mark to the market its open financial
futures positions.
<PAGE>
Successful hedging depends on the extent of correlation between the market
for the underlying securities and the futures contract market for those
securities or currency. There are several factors that will probably prevent
this correlation from being perfect, and even a correct forecast of general
interest rate, securities market or currency trends may not result in a
successful hedging transaction. There are significant differences between the
securities or currency markets and the futures markets which could create an
imperfect correlation between the markets and which could affect the success of
a given hedge. The degree of imperfection of correlation depends on
circumstances such as: variations in speculative market demand for financial
futures and debt and equity securities, including technical influences in
futures trading and differences between the financial instruments being hedged
and the instruments underlying the standard financial futures contracts
available for trading in such respects as interest rate levels, maturities and
creditworthiness of issuers. The degree of imperfection may be increased where
the underlying debt securities are lower-rated, and, thus, subject to greater
fluctuation in price than higher-rated securities.
A decision as to whether, when and how to hedge involves the exercise of
skill and judgment, and even a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected interest rate, securities market
or currency trends. The Fund will bear the risk that the price of the securities
being hedged will not move in complete correlation with the price of the futures
contracts used as a hedging instrument. Although the Adviser believes that the
use of financial futures contracts will benefit the Fund, an incorrect
prediction could result in a loss on both the hedged securities or currency in
the Fund's portfolio and the futures position so that the Fund's return might
have been better had hedging not been attempted. However, in the absence of the
ability to hedge, the Adviser might have taken portfolio actions in anticipation
of the same market movements with similar investment results but, presumably, at
greater transaction costs. The low margin deposits required for futures
transactions permit an extremely high degree of leverage. A relatively small
movement in the price of instruments underlying a futures contract may result in
losses or gains in excess of the amount invested.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit establishes
the maximum amount the price of a futures contract may vary either up or down
from the previous day's settlement price, at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day
and, therefore, does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example, futures prices
have occasionally moved to the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of positions
and subjecting some holders of futures contracts to substantial losses.
Finally, although the Fund engages in financial futures transactions only
on boards of trade or exchanges where there appears to be an adequate secondary
market, there is no assurance that a liquid market will exist for a particular
futures contract at any given time. The liquidity of the market depends on
participants closing out contracts rather than making or taking delivery. In the
event participants decide to make or take delivery, liquidity in the market
could be reduced. In addition, the Fund could be prevented from executing a buy
or sell order at a specified price or closing out a position due to limits on
open positions or daily price fluctuation limits imposed by the exchanges or
boards of trade. If the Fund cannot close out a position, it will be required to
<PAGE>
continue to meet margin requirements until the position is closed.
Options on Financial Futures Contracts. The Fund may purchase and write
call and put options on financial futures contracts. An option on a futures
contract gives the purchaser the right, in return for the premium paid, to
assume a position in a futures contract at a specified exercise price at any
time during the period of the option. Upon exercise, the writer of the option
delivers the futures contract to the holder at the exercise price. The Fund
would be required to deposit with its custodian initial and variation margin
with respect to put and call options on futures contracts written by it.
Options on futures contracts involve risks similar to the risks relating
to transactions in financial futures contracts. Also, an option purchased by the
Fund may expire worthless, in which case the Fund would lose the premium paid
therefor.
Restrictions on Use of Futures Transactions and Options. The Fund
intends to comply with CFTC Regulation 4.5 and thereby avoid the status of
"commodity pool operator."
When futures contracts or options thereon are purchased to protect against
a price increase in securities intended to be purchased later, it is anticipated
that at least 75% of such intended purchases will be completed. As an
alternative to this test of bona fine hedging intent, a CFTC regulation permits
the Fund to elect to comply with a different test, under which the Fund will not
enter into a futures contract or purchase an option thereon for non-hedging
purposes if immediately thereafter the initial margin deposits and premiums
required to establish non-hedging positions in futures contracts and options on
futures would exceed 5% of the Fund's total assets.
When the Fund purchases a futures contract, writes a put option thereon or
purchases a call option thereon, an amount of cash or high grade liquid debt
securities (i.e., securities rated in one of the top three ratings categories by
Moody's Investor Services, Inc. ("Moody's), Standard & Poor's Ratings Group
("S&P") will be deposited in a segregated account with the Fund's custodian
which is equal to the underlying value of the futures contract reduced by the
amount of initial and variation margin held in the account of its broker.
Options Transactions. The Fund may write listed and over-the-counter
covered call options and covered put options on securities in order to earn
additional income from the premiums received. In addition, the Fund may purchase
listed and over-the-counter call and put options written by the Fund. The extent
to which covered options will be used by the Fund will depend upon market
conditions and the availability of alternative strategies. The Fund may write
listed covered and over-the-counter call and put options on up to 100% of its
net assets.
The Fund will write listed and over-the-counter call options only if they
are "covered," which means that the Fund owns or has the immediate right to
acquire the securities underlying the options without additional cash
consideration upon conversion or exchange of other securities held in its
portfolio. A call option written by the Fund will also be "covered" if the Fund
holds on a share-for-share basis a covering call on the same securities where
(i) the exercise price of the covering call held is equal to or less than the
exercise price of the call written if the difference is maintained by the Fund
in cash, U.S. Treasury bills or high grade liquid debt obligations in a
segregated account with the Fund's custodian, and (ii) the covering call expires
at the same time as the call written. If a covered call option is not exercised,
the Fund would keep both the option premium and the underlying security. If the
covered call option written by the Fund is exercised
<PAGE>
and the exercise price, less the transaction costs, exceeds the cost of the
underlying security, the Fund would realize a gain in addition to the amount of
the option premium it received. If the exercise price, less transaction costs,
is less than the cost of the underlying security, the Fund's loss would be
reduced by the amount of the option premium.
As writer of a covered put option, the Fund will write a put option only
with respect to securities it intends to acquire for the Fund's portfolio and
will maintain in a segregated account with its custodian bank cash, U.S.
Government securities, or high-grade liquid debt securities with a value equal
to the price at which the underlying security may be sold to the Fund in the
event the put option is exercised by the purchaser. The Fund can also write a
"covered" put option by purchasing on a share-for-share basis a put on the same
security as the put written by the Fund if the exercise price of the covering
put held is equal to or greater than the exercise price of the put written and
the covering put expires at the same time or later than the put written.
In writing listed and over-the-counter covered put options on securities,
the Fund would earn income from the premiums received. If a covered put option
is not exercised, the Fund would keep the option premium and the assets
maintained to cover the option. If the option is exercised and the exercise
price, including transaction costs, exceeds the market price of the underlying
security, the Fund would realize a loss, but the amount of the loss would be
reduced by the amount of the option premium.
If the writer of an exchange-traded option wishes to terminate his
obligation prior to its exercise, it may effect a "closing purchase
transaction." This is accomplished by buying an option of the same series as the
option previously written. The effect of the purchase is that the Fund's
position will be offset by the Options Clearing Corporation. The Fund may not
effect a closing purchase transaction after it has been notified of the exercise
of an option. There is no guarantee that a closing purchase transaction can be
effected. Although the Fund will generally write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular option or at any particular time, and for some options no secondary
market on an exchange may exist.
In the case of a written call option, effecting a closing transaction will
permit the Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. In the case of a
written put option, it will permit the Fund to write another put option to the
extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other investments. If the Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.
The Fund will realize a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option.
The Fund will realize a loss from a closing transaction if the cost of the
closing transaction is more than the premium received for writing the option.
However, because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by appreciation of the underlying security owned by the Fund.
<PAGE>
Over-the-Counter Options. The Fund may engage in options transactions on
exchanges and in the over-the-counter markets. In general, exchange-traded
options are third-party contracts (i.e., performance of the parties' obligations
is guaranteed by an exchange or clearing corporation) with standardized strike
prices and expiration dates. Over-the-counter ("OTC") transactions are two-party
contracts with price and terms negotiated by the buyer and seller. The Fund will
acquire only those OTC options for which management believes the Fund can
receive on each business day at least two separate bids or offers (one of which
will be from an entity other than a party to the option) or those OTC options
valued by an independent pricing service. The Fund will write and purchase OTC
options only with member banks of the Federal Reserve System and primary dealers
in U.S. Government securities or their affiliates which have capital of at least
$50 million or whose obligations are guaranteed by an entity having capital of
at least $50 million. The SEC has taken the position that OTC options are
illiquid securities subject to the restriction that illiquid securities are
limited to not more than 15% of the Fund's assets. The SEC, however, has a
partial exemption from the above restrictions on transactions in OTC options.
The SEC allows the Fund to exclude from 15% limitation on illiquid securities a
portion of the value of the OTC options written by the Fund, provided that
certain conditions are met. First, the other party to the OTC options has to be
a primary U.S. Government securities dealer designated as such by the Federal
Reserve Bank. Second, the Fund would have an absolute contractual right to
repurchase the OTC options at a formula price. If the above conditions are met,
a Fund must treat as illiquid only that portion of the OTC option's value (and
the value of its underlying securities) which is equal to the formula price for
repurchasing the OTC option, less the OTC option's intrinsic value.
Restricted Securities. Although the Fund has authority to purchase to a
limited extent "restricted securities" (i.e., securities that would be required
to be registered prior to distribution to the public), the Fund has no current
intention of doing so. However, the Fund may in the future invest in restricted
securities eligible for resale to certain institutional investors pursuant to
Rule 144A under the Securities Act of 1933 and foreign securities acquired in
accordance with Regulation S under the Securities Act of 1933. The Fund will not
invest more than 15% of its net assets in illiquid investments, which includes
repurchase agreements maturing in more than seven days, securities that are not
readily marketable and restricted securities. However, if the Board of Directors
determines, based upon a continuing review of the trading markets for specific
Rule 144A securities, that they are liquid then such securities may be purchased
without regard to the 15% limit. The Board of Directors may adopt guidelines and
delegate to the Adviser the daily function of determining and monitoring the
liquidity of restricted securities. The Board, however, will retain sufficient
oversight and be ultimately responsible for the determinations. Since it is not
possible to predict with assurance exactly how this market for restricted
securities sold and offered under Rule 144A will develop, the Board will
carefully monitor the Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
The Fund does not intend to invest more than 5% of its net assets in Rule 144A
securities in the coming year.
Government Securities. Certain U.S. Government securities, including U.S.
Treasury bills, notes and bonds, and Government National Mortgage Association
certificates ("Ginnie Maes"), are supported by the full faith and credit of the
United States. Certain other U.S. Government securities, issued or guaranteed by
Federal agencies or government sponsored
<PAGE>
enterprises, are not supported by the full faith and credit of the United
States, but may be supported by the right of the issuer to borrow from the U.S.
Treasury. These securities include obligations of the Federal Home Loan Mortgage
Corporation ("Freddie Macs"), and obligations supported by the credit of the
instrumentality, such as Federal National Mortgage Association Bonds ("Fannie
Maes"). No assurance can be given that the U.S. Government will provide
financial support to such Federal agencies, authorities, instrumentalities and
government sponsored enterprises in the future.
Ginnie Maes, Freddie Macs and Fannie Maes are mortgage-backed securities
which provide monthly payments which are, in effect, a "pass-through" of the
monthly interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans. Collateralized mortgage
obligations ("CMOs") in which the Fund may invest are securities issued by a
U.S. Government instrumentality that are collateralized by a portfolio of
mortgages or mortgage-backed securities. Mortgage-backed securities may be less
effective than traditional debt obligations of similar maturity at maintaining
yields during periods of declining interest rates. The Fund will not invest more
than 50% of its assets in mortgage-backed securities.
Forward Foreign Currency Transactions. The foreign currency exchange
transactions of the Fund may be conducted on a spot (i.e., cash) basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market. The Fund may also deal in forward foreign currency exchange contracts
involving currencies of the different countries in which it will invest as a
hedge against possible variations in the foreign exchange rate between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date and price set at the time
of the contract. The Fund's dealings in forward foreign currency exchange
contracts will be limited to hedging either specified transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward foreign
currency contracts with respect to specific receivables or payables of the Fund
accruing in connection with the purchase and sale of its portfolio securities
denominated in foreign currencies. Portfolio hedging is the use of forward
foreign currency contracts to offset portfolio security positions denominated or
quoted in such foreign currencies. The Fund will not attempt to hedge all of its
foreign portfolio positions and will enter into such transactions only to the
extent, if any, deemed appropriate by the Adviser. The Fund will not engage in
speculative forward foreign currency exchange transactions.
If the Fund purchases a forward contract, its custodian bank will
segregate cash or high grade liquid debt securities in a separate account of the
Fund in an amount equal to the value of the Fund's total assets committed to the
consummation of such forward contract. Those assets will be valued at market
daily and if the value of the securities in the separate account declines,
additional cash or securities will be placed in the account so that the value of
the account will be equal to the amount of the Fund's commitment with respect to
such contracts.
Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency rises. Moreover, it may
not be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
<PAGE>
The cost to the Fund of engaging in foreign currency exchange transactions
varies with such factors as the currency involved, the length of the contract
period and the market conditions then prevailing. Since transactions in foreign
currency are usually conducted on a principal basis, no fees or commissions are
involved.
Lower Rated High Yield Securities. As discussed in the Fund's Prospectus,
the Fund may invest in high yielding, fixed income securities rated as low as C
by Moody's or S&P. These lower rated securities are speculative to a high degree
and often have very poor prospects of attaining real investment standing. Lower
rated securities are generally referred to as junk bonds. Ratings are based
largely on the historical financial condition of the issuer. Consequently, the
rating assigned to any particular security is not necessarily a reflection of
the issuer's current financial condition, which may be better or worse than the
rating would indicate.
The values of lower-rated securities generally fluctuate more than those
of high-rated securities. In addition, the lower rating reflects a greater
possibility of an adverse change in financial condition affecting the ability of
the issuer to make payments of interest and principal. The Adviser seeks to
minimize these risks through diversification, investment analysis and attention
to current developments in interest rates and economic conditions. Because the
Fund invests in securities in the lower rated categories, the achievement of the
Fund's goals is more dependent on the Adviser's ability than would be the case
if the Fund were investing exclusively in securities in the higher rated
categories. See the Appendix attached to this Statement of Additional
Information which describes the characteristics of the securities in the various
ratings categories. The Fund may invest in unrated securities which, in the
opinion of the Adviser, are of comparable quality and offer yields and risks
which are comparable to those of rated securities.
The Fund may invest in pay-in-kind (PIK) securities, which pay interest in
either cash or additional securities, at the issuer's option, for a specified
period. The Fund also may invest in zero coupon bonds, which have a determined
interest rate, but payment of the interest is deferred until maturity of the
bonds. Both kinds of bonds may be more speculative and subject to greater
fluctuations in value than securities which pay interest periodically and in
cash, due to changes in interest rates.
The market value of high yield securities which carry no equity
participation usually reflects yields generally available on securities of
similar quality and type. When such yields decline, the market value of a
portfolio already invested at higher yields can be expected to rise if such
securities are protected against early call. In general, in selecting securities
for its portfolio, the Fund intends to seek protection against early call.
Similarly, when such yields increase, the market value of a portfolio already
invested at lower yields can be expected to decline. The Fund's portfolio may
include debt securities which sell at substantial discounts from par. These
securities are low coupon bonds which, during periods of high interest rates,
because of their lower acquisition cost tend to sell on a yield basis
approximating current interest rates.
INVESTMENT RESTRICTIONS
The following investment restrictions will not be changed without the
approval of a majority of the outstanding voting securities of the Fund, voting
as a single class, which, as used in the Prospectus and this Statement of
Additional Information, means approval of the lesser of (i) the holders of
<PAGE>
67% or more of the shares of the Fund represented at a meeting if the holders of
more than 50% of outstanding shares are present in person or by proxy or (ii)
the holders of more than 50% of the outstanding shares of the Fund.
The Fund observes the fundamental restrictions listed in items (1) through (9)
below.
(1) Issue senior securities, except as permitted by paragraph (2) below.
For purposes of this restriction, the issuance of shares in multiple classes or
series, the purchase or sale of options, futures contracts and options on
futures contracts, forward foreign currency exchange contracts, forward
commitments and repurchase agreements entered into in accordance with the Fund's
investment policies, and the pledge, mortgage or hypothecation of the Fund's
assets within the meaning of paragraph (3) below, are not deemed to be senior
securities.
(2) Borrow money in amounts exceeding 33% of the Fund's total assets
(including the amount borrowed) taken at market value. Interest paid on
borrowings will reduce income available to shareholders.
(3) Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecation does not exceed 33% of the Fund's total assets taken
at market value.
(4) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
(5) Purchase or sell real estate or any interest therein, including real
estate limited partnerships, 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.
(6) Make loans, except for collateralized loans of portfolio securities in
accordance with the Fund's investment policies. The Fund does not, for this
purpose, consider the purchase of all or a portion of an issue of bonds, bank
certificates of deposit, bankers' acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the
securities, to be the making of a loan.
(7) Buy or sell commodities, commodity contracts, puts, calls or
combinations thereof, except futures contracts and options on securities,
securities indices, currency and other financial instruments, options on such
futures contracts, forward foreign currency exchange contracts, forward
commitments, interest rate or currency swaps, securities index put or call
warrants and repurchase agreements entered into in accordance with the Fund's
investment policies.
(8) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of each investment. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies or
instrumentalities.
(9) Purchase securities of an issuer (other than the U.S. Government,
its agencies or instrumentalities), if, with respect to 75% of the Fund's
total assets,
<PAGE>
(i) more than 5% of the Fund's total assets taken at market value would
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.
In connection with the lending of portfolio securities under item (6)
above, such loans must at all times be fully collateralized and the Fund's
custodian must take possession of the collateral either physically or in book
entry form. Securities used as collateral must be marked to market daily.
Nonfundamental Investment Restrictions. The following investment
restrictions are designated as nonfundamental and may be changed by the Board
of Directors without shareholders' approval.
The Fund may not:
(a) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the Adviser to
save commissions or to average prices among them is not deemed to result in a
joint securities trading account.
(b) Purchase securities on margin (except that it may obtain such
short-term credits as may be necessary for the clearance of transactions in
securities and forward foreign currency exchange contracts and may make margin
payments in connection with transactions in futures contracts and options on
futures) or make short sales of securities unless by virtue of its ownership of
other securities, the Fund has the right to obtain, without the payment of any
additional consideration, securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is made upon the same
conditions.
(c) Purchase securities of an issuer if, to the Fund's knowledge, one or
more of the Directors or officers of the Company or the directors or officers of
the Adviser individually owns beneficially more than 0.5% and together own
beneficially more than 5% of the securities of such issuer.
(d) Purchase a security if, as a result, (a) more than 10% of the Fund's
assets would be invested in securities of other investment companies, (b) more
than 3% of the total outstanding voting securities of any one such investment
company would be held by the Fund, or (c) more than 5% of the Fund's assets
would be invested in any one investment company. The Fund may not purchase
securities of any open-end investment company except when such purchase is part
of a plan of merger, consolidation, reorganization or purchase of substantially
all of the assets of any other investment company. Because investments in
securities of other investment companies may result in duplication of certain
fees and expenses, the Fund will invest in such securities only when, in the
Adviser's opinion, the anticipated return on such securities justifies any such
additional expense.
<PAGE>
(e) Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous operations 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.
(f) Invest for the purpose of exercising control over or management
of any company.
(g) 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.
(h) Purchase any security, including any repurchase agreement maturing in
more than 7 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 may consider
over-the-counter options to be illiquid securities subject to the 15% limit.)
(i) Purchase interests in oil, gas or other mineral leases or exploration
programs or leases; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas or
other minerals.
(j) Purchase a security if, as a result, more than 15% of the Fund's
assets would be invested in securities which are restricted as to disposition;
however, this policy will not restrict the acquisition of restricted securities
offered and sold to "qualified institutional buyers" under Rule 144A under the
Securities Act of 1933 or to foreign securities purchased in accordance with
Regulation S under the Securities Act of 1933.
(k) 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
Board of Directors may, in its sole discretion, adopt restrictions or investment
policies more restrictive than those described above. Should the Board of
Directors determine that any such more restrictive policy is no longer in the
best interest of the Fund and its shareholders, the Fund may cease offering
shares in the state involved and the Board may revoke such restrictive policy.
Moreover, if the states involved shall no longer require any such restrictive
policy, the Board of Directors may, at its sole discretion, revoke such policy.
<PAGE>
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the value of the Fund's assets will not be
considered a violation of the restriction.
RATINGS
As described in the Fund's Prospectus, at least 75% of the Fund's
investments in fixed income securities will be comprised of securities in the
four highest applicable ratings of S&P and Moody's or their equivalent or
unrated securities deemed of comparable quality by the Adviser. See the Appendix
attached to the Prospectus, which describes the characteristics of the
securities in the various categories.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by its Board of Directors who elect
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Board of Directors. Several of the officers
and Directors of the Company are also officers or directors of the Adviser or
officers or directors of John Hancock Funds, Inc., ("John Hancock Funds") the
Fund's principal distributor.
The following table sets forth the principal occupation or employment of
the Directors of the Company and principal officers of the Company during the
past five years:
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
Edward J. Boudreau, Chairman (1,2) Chairman and Chief Executive
Jr.* Officer, the Adviser and The
101 Huntington Avenue Berkeley Financial Group ("Berkeley
Boston, MA 02199 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 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. ("Distributors")
(until April 1994).
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address with the Company During the Past Five Years
Thomas W.L. Cameron Director Chairman and Director,
Interstate/Johnson Lane Sovereign Advisers, Inc.;
1892 Andell Bluff Blvd. Senior Vice President,
Johns Island, SC 29455 Interstate/Johnson Lane Corp.
(securities dealer).
Charles F. Fretz Director (3) Consultant, self employed; Vice
RD #5, Box 300B President and Director, Towers,
Clothier Springs Road Perrin, Forster & Crosby, Inc.
Malvern, PA 19355 (international management
consultants) (until 1985).
Charles L. Ladner Director (3) Director, Energy North, Inc.
UGI Corporation (public utility holding company)
P.O. Box 858 (until 1992); Senior Vice
Valley Forge, PA 19482 President, Finance of UGI Corp.
(gas distribution utility).
Patricia P. McCarter Director (3) Director and Secretary of the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer).
Malvern, PA 19355
Steven R. Pruchansky Director (1,3) Director and Treasurer, Mast
6920 Daniel Road Holdings, Inc.; Director, First
Naples, FL 33942 Signature Bank & Trust Company
(until August 1991); General
Partner, Mast Realty Trust;
President, Maxwell Building
Corp. (until 1991).
Norman H. Smith Director (3) Retired. Lieutenant General,
Rt. 1, Box 249 E United States Marine Corps;
Linden, VA 22642 Deputy Chief of Staff for
Manpower and Reserve Affairs,
Headquarters Marine Corps;
Commanding General, III Marine
Expeditionary Force/3rd Marine
Division (retired 1991).
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address with the Company During the Past Five Years
John P. Toolan Director (3) Director, The Muni Bond Funds,
13 Chadwell Place National Liquid Reserves, Inc.,
Morristown, NJ 07960 The Tax Free Money Fund, Inc.
and Vantage Money Market Funds
(mutual funds), and The
Inefficient-Market Fund, Inc.
(closed-end investment company;
Chairman, Smith Barney Trust
Company (retired December,
1991); Director, Smith Barney,
Inc., Mutual Management Company
and Smith Barney Advisers, Inc.
(investment advisers) (until
December 1991).
James F. Carlin Director Chairman and Chief Executive
233 West Central Street Officer, Carlin Consolidated,
Natick, MA 01760 Inc. (insurance); Director,
Arabella Mutual Insurance
Company; Receiver, City of
Chelsea, Massachusetts (until
August 1992).
Harold R. Hiser, Jr. Director Executive Vice President,
Schering-Plough Schering-Plough Corporation
Corporation (pharmaceuticals); Director,
One Giralda Farms ReCapital Corporation
Madison, NJ 07940-1000 (reinsurance).
Robert G. Freedman* Vice Chairman and Vice Chairman and Chief
101 Huntington Avenue Chief Investment Investment Officer, the Adviser;
Boston, MA 02199 Officer (2) President, the Adviser (until
December 1994).
Anne C. Hodsdon* President (2) President and Chief Operations
101 Huntington Avenue Officer, the Adviser; Executive
Boston, MA 02199 Vice President, the Adviser
(until December 1994).
Thomas H. Drohan* Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary of the Adviser.
Boston, MA 02199 Secretary
- -------------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
James K. Ho* Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
James B. Little* Senior Vice Senior Vice President, the
101 Huntington Avenue President and Adviser.
Boston, MA 02199 Chief Financial
Officer
John F. Snyder, III Senior Vice Executive Vice President, SAM
1 Westlakes President Corp.
1235 Westlakes Drive
Berwyn, PA 19312
Michael P. DiCarlo* Senior Vice Senior Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
- ----------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
<PAGE>
Positions Held Principal Occupation(s)
Name and Address With the Company During the Past Five Years
Susan S. Newton* Vice President, Vice President and Assistant
101 Huntington Avenue Assistant Secretary, the Adviser.
Boston, MA 02199 Secretary and
Compliance Officer
John A. Morin* Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
James J. Stokowski* Vice President and Vice President, the Adviser.
101 Huntington Avenue Treasurer
Boston, MA 02199
Barry Evans Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, MA 02199
- ----------------
* An "interested person" of the Company as such term is defined in the
Investment Company Act of 1940, as amended ("The Investment Company Act").
(1) Member of the Executive Committee. Under the Company's charter, the
Executive Committee may generally exercise most of the powers of the Board
of Directors.
(2) A member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
<PAGE>
As of the date of this Statement of Additional Information, the officers
and Directors of the Company as a group owned less than 1% of the outstanding
shares of the Fund.
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Directors and officers may also be officers
and/or directors and/or Trustees of one or more other funds for which the
Adviser serves as investment adviser.
During the fiscal year ended December 31, 1994, fees paid to the
Independent Directors were $548,600.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From the Fund
Aggregate Benefits Estimated and John
Compensation Accrued as Annual Hancock Fund
From the Fund Part of the Benefits Upon Complex to
Independent Directors Fund's Retirement Directors(1)(2)
Expenses
<S> <C> <C> <C> <C>
James F. Carlin $ 3,262 - - $ 60,450
Charles F. Fretz 3,252 - - 60,350
Harold R. Hiser, Jr. 3,051 - - 56,000
Alonzo Horsey 3,062 - - 56,200
(deceased)
Charles L. Ladner 3,262 - - 60,450
Patricia P. McCarter 3,262 - - 60,200
Steven R. Pruchansky 3,371 - - 62,450
Norman H. Smith 3,371 - - 62,450
John P. Toolan 3,262 - - 60,450
--------- ----------- ----------- ----------
$29,155 $548,600
</TABLE>
(1)The total compensation paid by the John Hancock Fund Complex to the
Independent Directors is as of the calendar year ended December 31, 1994.
(2) All Directors except Messers. Fretz and Hiser are Directors of 39 funds
in the John Hancock Complex. Messers. Fretz and Hiser are Directors of 21
funds.
INVESTMENT ADVISORY AND OTHER SERVICES
Each of the Directors and principal officers affiliated with the Company
who is also an affiliated person of the Adviser is named above, together with
the capacity in which such person is affiliated with the Company or 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 which the Adviser provides the Fund with a
continuous investment program, consistent with the Fund's stated investment
objective and policies. The Adviser is responsible for the day to day management
of the Fund's portfolio assets.
<PAGE>
Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Adviser or any affiliate 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 are selling the same security. If opportunities for purchase or sale of
securities by the Adviser for the Fund 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 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
furnish 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 John Hancock Mutual Life
Insurance Company and its affiliates.
Under the terms of the investment management contract with the Fund, the
Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. All expenses which are not specifically
paid by the Adviser and which are incurred in the operation of the Fund,
including fees of Directors of the Company who are not "interested persons," as
such term is defined in the Investment Company Act (the "Independent
Directors"), and the continuous public offering of the shares of the Fund are
borne by the Fund but excluding certain distribution-related activities required
to be paid by the Adviser or John Hancock Funds.
As discussed in the Prospectus and as provided by the investment
management contract, the Fund pays the Adviser monthly an investment management
fee, which is accrued daily, based on an annual rate of 0.60% of the average of
the daily net assets of the Fund. 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 net assets. The Adviser retains the right to re-impose a
fee and recover other payments to the extent that, at the end of any fiscal
year, the Fund's actual expenses at year end fall below any such limit.
Investment Advisory fees to the Adviser during the fiscal year ended
December 31, 1994 amounted to $864,666.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where the
Fund is registered to sell shares of common stock, the fee payable to the
Adviser will be reduced to the extent of such excess. At this time, the most
restrictive limit applicable to the Fund is 2.5% of the first $30,000,000 of the
Fund's average daily net assets, 2% of the next $70,000,000 of such assets and
1.5% of the remaining average daily net assets. When calculating the Fund's
expense ratio for this purpose, the Fund may exclude interest, brokerage
commissions and extraordinary expenses.
Pursuant to the investment management contract, the Adviser is not liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which the investment management contract
relates, except a loss resulting from willful
<PAGE>
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard 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 currently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
other mutual funds and publicly traded investment companies in the John Hancock
group of funds having a combined total of over 1,060,000 shareholders. The
Adviser is an affiliate of the Life Insurance Company, one of the most
recognized and respected financial institutions in the nation. With total assets
under management of $80 billion, the Life Insurance Company is one of the ten
largest life insurance companies in the United States, and carries S&P and A.M.
Best's highest ratings. Founded in 1862, John Hancock has been serving clients
for over 130 years.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Insurance Company may grant the nonexclusive right to use the name
"John Hancock" or any similar name to any other corporation or entity, including
but not limited to any investment company of which the Life Insurance Company or
any subsidiary or affiliate thereof or any successor to the business of any
subsidiary or affiliate thereof shall be the investment adviser.
The Adviser has entered into a service agreement with Sovereign Asset
management Corporation (SAMCORP) which is an indirect wholly-owned subsidiary of
the Life Insurance Company. The service agreement provides that SAMCORP will
provide to the Adviser certain portfolio management services with respect to the
equity securities held in the portfolio of the Fund. The service agreement
further provides that the Adviser will remain ultimately responsible for all of
its obligations under the investment management contract between the Adviser and
the Fund. Subject to the supervision of the Adviser, SAMCORP furnishes the Fund
with recommendations with respect to the purchase, holding and disposition of
equity securities in the Fund's portfolio; furnishes the Fund with research,
economic and statistical data in connection with the Fund's equity investments;
and places orders for transactions in equity securities.
The Adviser pays to SAMCORP 40% of the monthly investment management fee
received by the Adviser with respect to the equity securities held in the
portfolio of the Fund during such month. The fees paid by the Fund to the
Adviser under the investment management contract are not affected by this
arrangement.
During the fiscal year ended December 31, 1994, the Adviser paid SAMCORP
$105,882 in connection with the service agreement with SAMCORP.
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable.
<PAGE>
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.
Equity securities traded on a principal exchange or NASDAQ National Market
Issues are generally valued at last sale price on the day of valuation.
Securities in the aforementioned category for which no sales are reported and
other securities traded over-the-counter are generally valued at the last
available bid price.
Short-term debt investments which have a remaining maturity of 60 days or less
are generally valued at amortized cost which approximates market value. If
market quotations are not readily available or if in the opinion of the Adviser
any quotation or price is not representative of true market value, the fair
value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
Any assets or liabilities expressed in terms of foreign currencies are
translated into U.S. dollars by the custodian bank based on London currency
exchange quotations as of 5:00 p.m., London time (12:00 noon, New York time) on
the date of any determination of a Fund's NAV.
A Fund will not price its securities on the following national holidays: New
Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor
Day; Thanksgiving Day; and Christmas Day. On any day an international market is
closed and the New York Stock Exchange is open, any foreign securities will be
valued at the prior day's close with the current day's exchange rate. Trading of
foreign securities may take place on Saturdays and U.S. business holidays on
which a Fund's NAV is not calculated. Consequently, a Fund's portfolio
securities may trade and the NAV of the Fund's redeemable securities may be
significantly affected on days when a shareholder has no access to the Fund.
DISTRIBUTION CONTRACTS
Effective July 1, 1993 the Fund has amended the distribution plans with
respect to Class A and Class B shares (the "Plans") initially adopted on October
1, 1992, pursuant to Rule 12b-1 under the Investment Company Act. Under the
Class A and Class B Plans, the Fund will pay distribution and service fees at an
aggregate annual rate of up to 0.30% and 1.00%, respectively. However, the
amount of the service fee will not exceed 0.25% of the Fund's average daily net
assets attributable to each Class of shares. The distribution fees reimburse
John Hancock Funds for its distribution costs incurred in the promotion of sales
of shares of the Fund, and the service fee compensates selected broker-dealers
(the "Selling Brokers") for providing personal and shareholder account
maintenance services.
The Plans were approved by the Adviser as the sole initial shareholder of
the Class A and B shares. The Plans, and all amendments to the Plans, have also
been approved by a majority of the Directors, including a majority of the
Independent Directors, by votes cast in person at a meeting called for the
purpose of voting on such Plans.
<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 the expenditures were made. The Directors review these reports
on a quarterly basis.
During the fiscal year ended December 31, 1994 the Funds paid Investor
Services the following amounts of expenses with respect to the Class A and Class
B shares and Class C shares of each of the Funds:
Expense Items
Printing
and Mailing Expenses of Interest
of Compensation John Carrying or
Prospectus to Selling Hancock Other
Advertising to New Brokers Funds Finance
Shareholders Charges Other
Sovereign
Balanced Fund
Class A Shares $ 30,749 $ 4,157 $ 99,430 $ 54,701 $ 0
Class B Shares 37,873 6,114 562,753 66,815 69,151
By their terms, the Plans will continue in effect only so long as their
continuance is approved at least annually by the Board of Directors and by the
Independent Directors. Each of the Plans provides that it may be terminated
without penalty (a) by vote of a majority of the Independent Directors (b) by a
majority of the Fund's outstanding shares of the applicable class having voting
rights with respect to the Plan upon 60 days' written notice to Broker Services,
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. Each of the Plans also provides that no material amendment to the
Plan will, in any event, be effective unless it is approved by a vote of the
Board of Directors and the Independent Directors of the Company. 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 Directors concluded that, in their judgment,
there is a reasonable likelihood that each Plan will benefit the holders of the
applicable class of shares of the Fund.
When the Company seeks an Independent Director to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Director is, under resolutions adopted by the Directors
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Directors. The members of the
Committee on Administration are all Independent Directors and are identified in
this Statement of Additional Information under the caption "Management of the
Fund."
Under each Plan the Fund has also entered into a distribution agreement
with John Hancock Funds under which John Hancock Funds is obligated to use its
best efforts to sell shares of each class on behalf of the Fund. Shares of
<PAGE>
the Fund are also sold by Selling Brokers. John Hancock Funds and Selling
Brokers receive compensation in connection with the sale of shares of the Fund
in the form of a sales charge imposed either at the time of sale or on a
deferred basis. The sales charges are discussed further in the Prospectus.
The investment management contract, discussed in this Statement of
Additional Information under the caption "Investment Advisory and Other
Services," and the service agreement and the distribution agreement, discussed
above, continue in effect until October 23, 1993 and from year to year
thereafter if approved annually by the vote of a majority of the Independent
Directors, cast in person at a meeting called for the purpose of voting on such
approval, and by either the Board of Directors or the holders of a majority of
the Fund's outstanding voting securities. In addition, the service agreement
automatically terminates upon termination or assignment of the investment
management contract. Each contract automatically terminates upon assignment.
Each contract may be terminated without penalty on 60 days' notice at the option
of either party to the respective contract or by vote of a majority of the
outstanding voting securities of the Fund.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the 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,
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, or if
Investor Services is notified by the investor's dealer or the investor at the
time of the purchase, the cost of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to
purchases of Class A shares made at one time, the purchases will be combined if
made by (a) an individual, his spouse 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 a
reduced sales charge by taking into account not only the amount then being
invested but also the purchase price or current value of the Class A shares
already held by such person.
<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. The reduced sales charges are also applicable to
investments made over a specified period pursuant to a Letter of Intention
(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
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's, SEP, SARSEP, TSA, 401(k) plans,
403(b) plans, and 457 plans. Such an investment (including accumulations and
combinations) must aggregate $50,000 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 been 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 13-month 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
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
six 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
shares being redeemed. Accordingly, no CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
reinvestment of dividends or capital gains distributions.
<PAGE>
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.
Proceeds from the CDSC are paid to Investor Services and are used in whole
or in part by Investor Services to defray its expenses related to providing
distribution-related services to the Fund in connection with the sale of the
Class B shares, such as the payment of compensation to select Selling Brokers
for selling Class B shares. The combination of the CDSC and the distribution and
service fees facilitates the ability of the Fund to sell the Class B shares
without a sales charge being deducted at the time of the purchase. See the
Prospectus for additional information regarding the CDSC.
ADDITIONAL SERVICES AND PROGRAMS FOR CLASS A AND CLASS B SHARES
Exchange Privilege. As described more fully in the Prospectus, the Fund
permits exchanges of shares of the Fund for shares of the same class in any
other John Hancock fund offering that class.
Systematic Withdrawal Plan. 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
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 or Class B shares at the same time as a Systematic
Withdrawal Plan is in effect. The Fund reserves the right to modify or
discontinue the Systematic Withdrawal Plan of any shareholder on 30 days' prior
written notice to such shareholder, or to discontinue the availability of such
plan in the future. The shareholder may terminate the plan at any time by giving
proper notice to Investor Services.
Monthly Automatic Accumulation Program (MAAP). This program applies solely
to Class A shares of the Fund and is explained more fully in the Prospectus and
the Account Privileges Application. The program, as it relates to automatic
investment drafts, 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 your bank. The bank shall be
under no obligation to notify the shareholder as to the non-payment of any
draft.
<PAGE>
The Program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is
received at least five (5) business days prior to the processing date of
any investment.
Reinvestment Privilege. A shareholder who has redeemed shares of the Fund
may, within 120 days after the date of redemption, reinvest any part of the
redemption proceeds in shares of the same class of the Fund or in any of the
other John Hancock funds, subject to the minimum investment limit in any 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
any of the other John Hancock funds. If a CDSC was paid upon a redemption, a
shareholder may reinvest the proceeds from such redemption at net asset value in
additional shares of the class from which the redemption was made. Such
shareholder's account will be credited with the amount of any CDSC charged upon
the prior redemption and such new shares will continue to be subject to the
CDSC. For purposes of determining the amount of any CDSC imposed upon a
subsequent redemption, the holding period of the shares acquired through
reinvestment will 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 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 will be treated for tax purposes as described below.
TAX STATUS
Each series of the Company, including the Fund, is treated as a separate
entity for accounting and tax purposes. 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"). 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) which is distributed to shareholders at least annually
in accordance with the timing requirements of the Code.
The Fund will be subject to a four percent 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 earnings and profits
("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus, whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in Fund shares and thereafter
(after such basis is reduced to zero) will generally give rise to capital gains.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash they would have received had they taken the
distribution in cash, divided by the number of shares received.
<PAGE>
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
forward foreign currency contracts, certain foreign currency futures and
options, foreign currencies, or payables or receivables denominated in a foreign
currency are subject to Section 988 of the Code, which generally causes such
gains and losses to be treated as ordinary income and losses and may affect the
amount, timing and character of distributions to shareholders. Any such
transactions that are not directly related to the Fund's investment in stock or
securities may increase the amount of gain it is deemed to recognize from the
sale of certain investments held for less than three months, which gain is
limited under the Code to less than 30% of its annual gross income, and may
under future Treasury regulations produce income not among the types of
"qualifying income" from which the Fund must derive at least 90% of its annual
gross income. If the net foreign exchange loss for a year treated as ordinary
loss under Section 988 were to exceed the Fund's investment company taxable
income computed without regard to such loss (i.e., all of the Fund's net income
other than any excess of net long-term capital gain over net short-term capital
loss) the resulting overall ordinary loss for such year would not be deductible
by the Fund or its shareholders in future years.
The Fund may be subject to foreign taxes on its income from certain
foreign securities. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. Because more than 50% of the Fund's assets at
the close of any taxable year will not consist of stocks or securities of
foreign corporations, the Fund will be unable to pass such taxes through to
shareholders (as additional income) along with a corresponding entitlement to a
foreign tax credit or deduction. If the Fund acquires stock in certain non-U.S.
corporations that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, rents, royalties or capital gain) or hold
at least 50% of their assets in investments producing such passive income
("passive foreign investment companies"), the Fund could be subject to Federal
income tax and additional interest charges on "excess distributions" received
from such companies or gain from the sale of stock in such companies, even if
all income or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders any
credit or deduction for such a tax. Certain elections may, if available,
ameliorate there adverse tax consequences, but any such election would require
the Fund to recognize taxable income or gain without the concurrent receipt of
cash. The Fund may limit and/or manage its holdings in passive foreign
investment companies to minimize its tax liability or maximize its return from
these investments.
The amount of net realized capital gains, if any, in any given year will
result from sales of securities or transactions in options or futures made with
a view to the maintenance of a portfolio believed by the Fund's management to be
most likely to attain the Fund's objective. Such sales, and any resulting gains
or losses, may therefore vary considerably from year to year. At the time of an
investor's purchase of shares of the Fund, a portion of the purchase price is
often attributable to realized or unrealized appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently, subsequent
distributions may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions in reality represent a
return of a portion of the purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. Such gain or loss will be treated as
capital gain or loss if the shares are capital assets in the
<PAGE>
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. Such 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 may
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
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 carryforward of prior years' capital losses, it would be subject to Federal
income tax in the hands of the Fund. Each shareholder would be treated for
Federal income tax purposes as if the Fund had distributed to him on the last
day of its taxable year his pro rata share of such excess, and he had paid his
pro rata share of the taxes paid by the Fund and reinvested the remainder in the
Fund. Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain in his return for his taxable year in which the
last day of the Fund's taxable year falls, (b) be entitled either to a tax
credit on his return for, or to a refund of, his pro rata share of the taxes
paid by the Fund, and (c) be entitled to increase the adjusted tax basis for his
shares 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 as such to
shareholders. The Fund has $340,120 of a capital loss carryforward available, to
the extent provided by regulations, to offset future net realized capital gains.
The carryforward expires December 31, 2002.
For purposes of the dividends received deduction available to
corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of the stock of such corporations held by the Fund, for
U.S. Federal income tax purposes, for at least 46 days (91 days in the case of
certain preferred stock) and distributed and designated by the Fund may be
treated as qualifying dividends. Corporate shareholders must meet the minimum
holding period requirement stated above (46 or 91 days) with respect to their
shares of the Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends received
deduction. the entire qualifying divided, including the otherwise deductible
amount, will be included in determining the excess if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative
<PAGE>
minimum tax liability. Additionally, any corporate shareholder should consult
its tax adviser regarding the possibility that its basis in its shares may be
reduced, for Federal income tax purposed, by reason of "extraordinary dividends"
received with respect to the shares, for the purpose of computing its gain or
loss on redemption or other disposition of the shares.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
The Fund accrues income on zero coupon securities or certain PIKs or
increasing rate securities (and, in general, any other securities with original
issue discount or with market discount if the Fund elects to include market
discount in income currently) prior to the receipt of the corresponding cash
payments. 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.
Investments in debt obligations that are at risk of or in default present
special tax issues for the Fund. Tax rules are not entirely clear about issues
such as when the Fund may cease to accrue interest, original issue discount, or
market discount; when and to what extent deductions may be taken for bad debts
or worthless securities; how payments received on obligations in default should
be allocated between principal and income; and whether exchanges of debt
obligations in a workout context are taxable. These and other issues will be
addressed by the Fund, in the event it invests in such securities, in order to
reduce the risk of distributing insufficient income to preserve its status as a
regulated investment company and seek to avoid becoming subject to Federal
income or excise tax.
Limitations imposed by the Code on regulated investment companies like the
Fund may restrict the Fund's ability to enter into futures, options and forward
transactions.
The options and futures transactions and certain forward foreign currency
transactions undertaken by the Fund may cause the Fund to recognize gains or
losses from marking to market even though its positions have not been sold or
terminated and affect their character as long-term or short-term (or, in the
case of currency forwards, options, or futures, as ordinary income or loss) and
timing of some gains and losses realized by the Fund. Also, some of the Fund's
losses on its transactions involving options, futures and forward contracts
and/or offsetting portfolio positions may be deferred rather than being taken
into account currently in calculating the Fund's taxable income. Some of the
applicable tax rules may be modified if the Fund is eligible and chooses to make
one or more of certain tax elections that may be available. These transactions
may therefore affect the amount, timing and character of the Fund's
distributions to shareholders. The Fund will take into account the special tax
rules applicable to options, futures and forward contracts (including
consideration of any available elections) in order to minimize any potential
adverse tax consequences.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts
<PAGE>
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. A state income (and possibly local income and/or intangible
property) tax exemption is generally available to the extent the Fund's
distributions are derived from interest on (or, in the case of intangibles
taxes, the value of its assets is attributable to) certain U.S. Government
obligations, provided in some states that certain thresholds for holdings of
such obligations and/or reporting requirements are satisfied. Shareholders
should consult their own tax advisers as to the Federal, state or local tax
consequences of ownership of shares of, and receipt of distributions from, the
Fund in their particular circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above. These
investors may be subject to nonresident alien withholding tax at the rate of 30%
(or a lower rate under an applicable tax treaty) on amounts treated as ordinary
dividends from the Fund and, unless an effective IRS Form W-8 or authorized
substitute is on file, to 31% backup withholding on certain other payments from
the Fund. Non-U.S. investors should consult their tax advisers regarding such
treatment and the application of foreign taxes to an investment in the Fund.
Provided that the Fund qualifies as a regulated investment company under the
Code, it will not be required to pay Massachusetts corporate excise, franchise
or income taxes.
DESCRIPTION OF FUND SHARES
The Directors of the Company are responsible for the management and
supervision of the Company. Under the Articles of Incorporation, the Directors
have the authority to classify unissued capital stock in separate series,
without further action by shareholders. The Company's authorized capitalization
is 345,000,000 fully paid and non-assessable shares of capital stock, $.01 par
value, of which 60,000,000 shares are allocated to the Fund. As of the date of
this Statement of Additional Information, the Directors have authorized two
series of the Company. Additional series may be added in the future. The
Articles of Incorporation also authorize the Directors to classify and
reclassify the shares of the Company, or any new series of the Company, into one
or more classes. As of the date of this Statement of Additional Information, the
Directors have authorized the issuance of two classes of shares of the Fund,
designated as Class A and Class B.
Each Class A share and Class B share of the Fund represents an equal
proportionate interest in the assets belonging to the Fund. 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. Shares of each class
may be exchanged only for shares of the same class in another fund sponsored by
the Adviser and for shares of John Hancock Cash Management Fund, a money market
fund. Shares of Class B shares may also be exchanged for shares of the Class B
shares of the Freedom Money Market Fund, an affiliate of the Fund. Dividends
paid by the Fund, if any, with respect to each class of shares will be
calculated in the same manner, at the same time and on the same day and will be
in the same amount, except that (i) Class B shares will pay higher distribution
and service fees than Class A shares and (ii) each of Class A shares and Class B
shares will bear any other class expenses properly attributable to such class of
shares. Similarly, the net asset value per share may vary depending on the class
of shares purchased.
<PAGE>
When issued, shares are fully paid and non-assessable except as provided
in the Prospectus under the caption "Organization and Management of the Fund."
In the event of liquidation, shareholders are entitled to share pro rata in the
net assets of the Fund available for distribution to such shareholders. Shares
entitle their holders to one vote per share, are freely transferable and have no
preemptive, subscription or conversion rights.
Unless otherwise required by the Investment Company Act or the Articles of
Incorporation, the Company has no intention of holding annual meetings of
shareholders. Shareholders of the Company may remove a Director by the
affirmative vote of at least a majority of the Company's outstanding shares and
the Directors shall promptly call a meeting for such purpose when requested to
do so in writing by the record holders of not less than 25% of the outstanding
shares of the Company. 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
Directors holding office were elected by the shareholders, the Directors will
call a special meeting of shareholders for the purpose of electing Directors.
Shareholders have no preemptive or conversion rights.
CALCULATION OF PERFORMANCE
The average annual total return is determined separately for each class of
shares at December 31, 1994, with all distributions reinvested in shares. The
average annualized total returns for Class A shares for the 1-year period and
cumulative total return since the Fund's inception on October 5, 1992, were
(8.37)% and 1.98%, respectively, and reflect payment of the maximum sales charge
of 5.00%. The average annualized total returns for Class B shares for the 1-year
period and cumulative since the Fund's inception on October 5, 1992, were
(9.01)% and 1.93%, respectively, and reflects applicable contingent deferred
sales charge (maximum contingent deferred sales charge of 5% declines to 0% over
six years).
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
[GRAPHIC EQUATION]
n
_____
T = V 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 and life-of-fund periods.
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
<PAGE>
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 5.0% sales charge on Class A shares or the CDSC on Class B
shares into account. Excluding the Fund's sales charge on Class A and the CDSC
on Class B shares from a total return calculation produces a higher total return
figure.
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 on the
last day of the period, according to the following standard formula:
[GRAPHIC EQUATION]
-- --
| a-b 6 |
Yield=2 | (--- +1 ) -1 |
| cd |
-- --
Where:
a = dividends and interest earned during the period.
b = expenses accrued during the period (net of fee reductions
and expense limitation payments, if any).
c = the average daily number of Class A shares outstanding
during the period that would be entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
The Class A and Class B shares' yield at December 31, 1994 was 4.53% and
4.19%, respectively. Both total return and yield calculations for Class A shares
include the effect of paying the maximum sales charge of 5.00%. Investments at
lower sales charges would result in higher performance figures. Both total
return and yield for the Class B shares reflect deduction of the applicable CDSC
imposed on a redemption of shares held for the applicable period. All
calculations assume that all dividends and distributions are reinvested at net
asset value on the reinvestment dates during the periods. The total return and
yield of Class A and Class B shares will differ; the Fund will include the total
return and yield of both classes in any advertisement or promotional material
including Fund performance data. The value of Fund shares, 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.
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.'s "Lipper -- Fund Performance
Analysis," a publication which tracks mutual fund net assets, total return, and
yield. 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, BARRON'S and IBBOTSON ASSOCIATES
will also be
<PAGE>
utilized as well as the RUSSELL and WILSHIRE indices. The Fund may also cite
Morningstar Mutual Values, an independent mutual fund information service which
ranks mutual funds. The Fund's promotional and sales literature may make
reference to the Fund's "beta." Beta is a reflection of the market-related risk
of the Fund by showing how responsive the Fund is to the market.
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; 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 of the
Fund are made by the Adviser pursuant to recommendations made by its investment
committee, which consists of directors of the Adviser and officers and Directors
who are interested persons of the Company. Orders for purchases and sales of
securities are placed in a manner, which, in the opinion of the Adviser, will
offer the best price and market for the execution of each such transaction.
Purchases from underwriters of portfolio securities may include a commission or
commissions paid by the issuer and transactions with dealers serving as market
maker reflect a "spread." 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 Board of Directors 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 Insurance Company or other advisory clients of the Adviser,
and, conversely, brokerage commissions and spreads paid by other advisory
clients of the Adviser may result in research information and statistical
assistance beneficial to the Fund. The Fund will make no commitment to allocate
portfolio transactions upon any prescribed basis. While the Adviser will be
primarily responsible for the allocation of the Fund's brokerage business, the
policies and practices of the Adviser in this regard must be
<PAGE>
consistent with the foregoing and will at all times be subject to review by the
Board of Directors. For the period ended December 31, 1994, the Fund paid
brokerage commissions in the amount of $189,448.
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 Board of Directors that such price
is reasonable in light of the services provided and to such policies as the
Board may adopt from time to time.
For the fiscal year ended December 31, 1994, the Fund paid commissions in
the amount of $44,812 to compensate brokers for research services evaluations of
securities.
The Adviser's indirect parent, the Life Insurance Company, is the indirect
sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated, John Hancock
Distributors, and Sutro & Company, Inc., are broker-dealers ("Affiliated
Brokers"). Pursuant to procedures determined by the Board of Directors and
consistent with the above policy of obtaining best net results, the Fund may
execute portfolio transactions with or through Affiliated Brokers. During the
period ending December 31, 1994, the Fund did not execute any portfolio
transactions with Affiliated Brokers.
Any of the Affiliated Brokers may act as broker for the Fund on securities
or commodities exchange transactions, subject, however, to the general policy of
the Fund set forth above and the procedures adopted by the Board of Directors
pursuant to the Investment Company Act. Commissions paid to an Affiliated Broker
must be at least as favorable as those which the Board believes 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
Directors who are not interested persons (as defined in the Investment Company
Act) of the Company, the Adviser or the Affiliated Broker. Any such transactions
would be subject to a good faith determination by the Board of Directors that
the compensation paid to Affiliated Brokers is fair and reasonable. 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 engage in principal transactions with
Affiliated Brokers. The Fund may, however, purchase securities from other
members of underwriting syndicates of which Tucker Anthony and Sutro are members
but only in accordance with the policy set forth above and procedures adopted
and reviewed periodically by the Board of Directors.
<PAGE>
TRANSFER AGENT SERVICES
John Hancock Fund Services, Inc., P.O. Box 9116, Boston, MA 02205-9116, a
wholly-owned indirect subsidiary of the Life Insurance Co., is the transfer and
dividend paying agent for the Fund. The Fund pays Investor Services an annual
fee for Class A shares of $16.00 per shareholder account and for Class B shares
of $18.50 per shareholder account, plus certain out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Company and Investors Bank & Trust Company, 24 Federal
Street, Boston, Massachusetts 02110. Under the custodian agreement, Investors
Bank & Trust Company performs custody, portfolio and fund accounting services.
INDEPENDENT AUDITORS
The independent auditors of the Fund are Ernst & Young LLP, Boston,
Massachusetts 02116. The independent auditors audit and render an opinion on the
Fund's annual financial statements and prepare the Fund's income tax returns.
y:corpsec\n1a\sai\sovbal\sov5_94.doc
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE PER SHARE FOR EACH CLASS AS OF THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- -------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common and preferred stocks (cost - $73,957,095)...... $ 73,453,050
Corporate Bonds (cost - $41,506,951).................. 38,162,271
United States government and agencies
obligations (cost - $21,409,819).................... 20,419,131
Canadian government obligations
(cost - $2,275,607)................................. 2,060,975
Joint repurchase agreement (cost - $5,477,000)........ 5,477,000
Corporate savings account............................. 1,449
------------
139,573,876
Receivable for shares sold.............................. 9,018
Interest receivable..................................... 1,440,907
Dividends receivable.................................... 248,803
Deferred organization expenses - Note A................. 65,857
------------
Total Assets...................... 141,338,461
----------------------------------------------------
LIABILITIES:
Payable for shares repurchased.......................... 61,256
Payable to John Hancock Advisers, Inc. and
affiliates - Note B................................... 96,723
Accounts payable and accrued expenses................... 52,537
------------
Total Liabilities................. 210,516
----------------------------------------------------
NET ASSETS:
Capital paid-in......................................... 147,472,740
Accumulated net realized loss on investments............ (1,304,246)
Net unrealized depreciation of investments.............. (5,054,045)
Undistributed net investment income..................... 13,496
------------
Net Assets........................ $141,127,945
====================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - 30,000,000 shares authorized
per class with $0.01 par value per share)
Class A - $61,951,754 / 6,295,898....................... $ 9.84
==========================================================================
Class B - $79,176,191 / 8,046,236....................... $ 9.84
==========================================================================
MAXIMUM OFFERING PRICE *
Class A - ($9.84 x 105.26%)............................. $ 10.36
==========================================================================
<FN>
* On a single retail sale of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
</FN>
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES)
FOR THE PERIOD STATED.
<TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- -----------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest................................................ $ 6,147,667
Dividends (net of foreign withholding tax of $13,980)... 2,642,264
------------
8,789,931
------------
Expenses:
Investment management fee - Note B.................... 864,666
Distribution/service fee - Note B
Class A............................................. 189,037
Class B............................................. 742,706
Transfer agent fee - Note B
Class A............................................. 115,099
Class B............................................. 162,030
Custodian fee......................................... 56,436
Registration and filing fees.......................... 34,562
Auditing fee.......................................... 32,355
Trustees' fees........................................ 30,833
Printing.............................................. 30,304
Organization expense.................................. 24,042
------------
Total Expenses.................... 2,282,070
----------------------------------------------------
Net Investment Income............. 6,507,861
----------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments sold................... (1,231,584)
Change in net unrealized appreciation/depreciation
of investments........................................ (11,093,661)
------------
Net Realized and Unrealized
Loss on Investments............... (12,325,245)
----------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations......... $ (5,817,384)
====================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------
- ------
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................................................... $ 6,507,861 $ 3,295,566
Net realized gain (loss) on investments sold.................................. (1,231,584) 2,051,455
Change in net unrealized appreciation/depreciation of investments............. (11,093,661) 2,123,828
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations......... (5,817,384) 7,470,849
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.4951 and $0.4539 per share, respectively)..................... (3,070,175) (1,220,690)
Class B - ($0.4296 and $0.3816 per share, respectively)..................... (3,424,190) (2,077,457)
Distributions from net realized gain on investments sold
Class A - ($0.0231 and $0.1390 per share, respectively)..................... (140,283) (802,165)
Class B - ($0.0231 and $0.1390 per share, respectively)..................... (179,739) (1,001,930)
------------ ------------
Total Distributions to Shareholders..................................... (6,814,387) (5,102,242)
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET*............................................ 12,766,526 118,517,317
------------ ------------
NET ASSETS:
Beginning of period........................................................... 140,993,190 20,107,266
------------ ------------
End of period (including undistributed net investment income of
$13,496 and none, respectively) ........................................... $141,127,945 $140,993,190
============ ============
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1994 1993
--------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.......................................................... 1,345,089 $ 13,926,996 2,417,337 $25,625,592
Shares issued in reorganization - Note D............................. -- -- 3,185,896 34,314,653
Shares issued to shareholders in reinvestment of distributions....... 305,566 3,035,107 179,420 1,919,915
---------- ------------ --------- -----------
1,650,655 16,962,103 5,782,653 61,860,160
Less shares repurchased.............................................. (1,146,920) (11,691,908) (559,332) (6,003,391)
---------- ------------ --------- -----------
Net increase......................................................... 503,735 $ 5,270,195 5,223,321 $55,856,769
========== ============ ========= ===========
CLASS B
Shares sold.......................................................... 1,851,509 $ 19,139,945 6,244,398 $66,088,653
Shares issued to shareholders in reinvestment of distributions....... 322,144 3,200,787 263,224 2,814,189
---------- ------------ --------- -----------
2,173,653 22,340,732 6,507,622 68,902,842
Less shares repurchased.............................................. (1,454,476) (14,844,401) (584,015) 6,242,294)
---------- ------------ --------- -----------
Net increase......................................................... 719,177 $ 7,496,331 5,923,607 $62,660,548
========== ============ ========= ===========
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAVE CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE
REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES,
DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY
SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND
SHARES SOLD, REINVESTED AND REDEEMED, DURING THE LAST TWO PERIODS, ALONG WITH
THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the period indicated, investment
returns, key ratios and supplemental data are as follows:
- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, FOR THE PERIOD
----------------------- OCTOBER 5, 1992 TO
1994 1993 DECEMBER 31, 1992(a)(d)
---------- ---------- ----------------------
<S> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......................... $ 10.74 $ 10.19 $10.00
------- ------- -------
Net Investment Income ......................................... 0.50 0.46 0.04(b)
Net Realized and Unrealized Gain (Loss) on Investments ........ (0.88) 0.68 0.20
------- ------- -------
Total from Investment Operations ......................... (0.38) 1.14 0.24
------- ------- -------
Less Distributions:
Dividends from Net Investment Income ........................ (0.50) (0.45) (0.05)
Distributions from Net Realized Gain on Investments Sold .... (0.02) (0.14) --
------- ------- -------
Total Distributions ....................................... (0.52) (0.59) (0.05)
------- ------- -------
Net Asset Value, End of Period ................................ $ 9.84 $ 10.74 $10.19
======= ======= =======
Total Investment Return at Net Asset Value .................... (3.51%) 11.38% 2.37%(c)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $61,952 $62,218 $5,796
Ratio of Expenses to Average Net Assets ....................... 1.23% 1.45% 2.79%*(b)
Ratio of Net Investment Income to Average Net Assets .......... 4.89% 4.44% 3.93%*(b)
Portfolio Turnover Rate ....................................... 78% 85% 0%
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......................... $ 10.75 $ 10.20 $10.00
------- ------- -------
Net Investment Income ......................................... 0.43 0.37 0.03(b)
Net Realized and Unrealized Gain (Loss) on Investments ........ (0.89) 0.70 0.20
------- ------- -------
Total from Investment Operations ............................ (0.46) 1.07 0.23
------- ------- -------
Less Distributions:
Dividends from Net Investment Income ........................ (0.43) (0.38) (0.03)
Distributions from Net Realized Gain on Investments Sold .... (0.02) (0.14) --
------- ------- -------
Total Distributions ....................................... (0.45) (0.52) (0.03)
------- ------- -------
Net Asset Value, End of Period ................................ $ 9.84 $ 10.75 $10.20
======= ======= =======
Total Investment Return at Net Asset Value .................... (4.22%) 10.63% 2.29%(c)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..................... $79,176 $78,775 $14,311
Ratio of Expenses to Average Net Assets ....................... 1.87% 2.10% 3.51%*(b)
Ratio of Net Investment Income to Average Net Assets .......... 4.25% 4.01% 3.21%*(b)
Portfolio Turnover Rate ....................................... 78% 85% 0%
<FN>
* On an annualized basis.
(a) Fund commenced operations on October 5, 1992.
(b) Reflects expense limitation in effect during the period indicated (see note B). As a result of such limitation, expenses
for the period from October 5, 1992 to December 31, 1992 for Class A and Class B reflect a reduction of $0.0016 and $0.0012
per share, respectively. Absent of such limitation the ratio of expenses to average net assets would have been 2.94% and
3.66%, respectively, and the ratio of net investment income to average net assets would have been 3.78% and 3.06%,
respectively. Without the reimbursement, total investment return would have been lower.
(c) Not annualized.
(d) This period is covered by the report of other independent auditors (not included herein).
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
SCHEDULE OF INVESTMENTS
December 31, 1994
Per share earnings and dividends and their compound growth rates
are shown for the years 1985 to 1994. This data and price/earnings
ratios are unaudited.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES
OWNED BY SOVEREIGN BALANCED FUND ON DECEMBER 31, 1994. IT'S
DIVIDED INTO SIX MAIN CATEGORIES: COMMON STOCKS, PREFERRED
STOCKS, CORPORATE BONDS, UNITED STATES GOVERNMENT AND AGENCIES
OBLIGATIONS, CANADIAN GOVERNMENT OBLIGATIONS AND SHORT-TERM
INVESTMENTS. THE INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY
GROUPS. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH"
POSITION, ARE LISTED LAST.
<TABLE>
<CAPTION>
COMPOUND
NUMBER GROWTH MARKET
OF SHARES COMMON STOCKS (50.69%) RATE VALUE
- ----------- ----- -----
<S> <C> <C>
BANKS (2.58%)
70,000 KeyCorp @ 25............................... $ 1,750,000
Multi-regional bank holding company
EARNINGS P/S...... $1.41, 1.72, 1.88, 2.10,
2.32, 2.32, 2.45, 2.51, 2.89, 3.50 10.6%
DIVIDENDS P/S........ $.46, .48, .60, .68,
.80, .88, .92, .98, 1.12, 1.20 12.0%
Price/Earnings Ratio................... 7.1
42,000 NationsBank Corp. @ 45 1\8.............. 1,895,250
Largest superregional bank in the Southeast
EARNINGS P/S.......$2.28, 2.51, 2.01, 2.87,
4.44, 2.61, .76, 4.60, 5.00, 6.21 11.8%
DIVIDENDS P/S.........$.66, .78, .86, .94,
1.10, 1.42, 1.48, 1.51, 1.64, 1.88 12.3%
Price/Earnings Ratio....................7.3
-----------
3,645,250
-----------
BASIC INDUSTRIES (0.91%)
60,000* Sonoco Products Co. @ 21 1\2............. 1,290,000
-----------
Containers, paper products and packaging
EARNINGS P/S.......$ .57, .63, .77, 1.10,
1.18, 1.21,1.10, .94, 1.35, 1.37 10.2%
DIVIDENDS P/S..........$ .18, .21, .25,
.32, .41, .45, .46, .49, .53, .56 13.4%
Price/Earnings Ratio.....................16
CHEMICALS (6.48%)
40,000* Air Products And Chemicals
Inc. @ 44 5\8.............................. 1,785,000
Producer of industrial and speciality
chemicals and gases
EARNINGS P/S.......$ 1.17, 1.17, 1.42, 1.95,
1.93, 2.08, 2.23, 2.45, 1.76, 2.05 6.4%
DIVIDENDS P/S $ .32, .39, .45, .55, .63,
.69, .75, .83, .89, .95 12.9%
Price/Earnings Ratio...................21.8
70,000* Crompton & Knowles
Corporation @ 16 1\2....................... 1,155,000
Produces and markets speciality chemicals
EARNINGS P/S........$.14, .17, .24, .36, .50,
.61, .73, .83, 1.00, 1.01 26.6%
DIVIDENDS P/S...$ .075. .079, .084, .11, .15,
.20, .25, .31, .38, .46 22.3%
Price/Earnings Ratio...................16.3
40,000 Minnesota Mining and
Manufacturing Co. @ 53 3\8................. 2,135,000
Diversified manufacturer of industrial,
commercial, health care and consumer products
EARNINGS P/S......$ 1.51, 1.70, 2.01, 2.55, 2.80,
2.96, 2.63, 2.83, 2.91, 3.16 8.6%
DIVIDENDS P/S $ .88, .90, .93, 1.06, 1.30,
1.46, 1.56, 1.60, 1.66, 1.76 8.0%
Price/Earnings Ratio...................16.9
58,000 PPG Industries, Inc. @ 37 1\8 ............ 2,153,250
Manufacturer of specialty chemicals,
coatings and resins
EARNINGS P/S.....$ 1.14, 1.33, 1.60, 2.13,
2.09, 2.22, .95, 1.61, 1.78, 2.60 9.6%
DIVIDENDS P/S $ .41, .47, .56, .64, .74,
.82, .86, .94, 1.04, 1.12 11.8%
Price/Earnings Ratio...................14.3
CHEMICALS (CONTINUED)
77,000 Witco Corporation @ 24 5\8 ............... $ 1,896,125
Producer of special petroleum chemicals
EARNINGS P/S......$ 1.28, 1.47, 1.46, 1.53,
.80, 1.38, 1.61, 1.19, .64, 1.98 5.0%
DIVIDENDS P/S......$ .49, .54, .60, .72,
.83, .86, .91, .92, .96, 1.06 9.0%
Price/Earnings Ratio..................12.4
-----------
9,124,375
-----------
CONSUMER CYCLICALS & SERVICES (2.61%)
110,000 Hanson PLC ADR @ 18....................... 1,980,000
U.K. based multi-subsidiary holding company
EARNINGS P/S........$ .57, .72, 1.10, 1.71,
1.67, 1.83, 1.74, 1.66, .87, 1.20 8.6%
Dividends P/S* .......$ .15, .20, .27, .36,
.56, .68, .79, .80**, .86, .88 21.7%
* Gross ordinary dividends per ADR.
** 1992 Dividend excludes extra transition
dividend of $.23.
Price/Earnings Ratio...................15
35,000 VF Corp. @ 48 5\8......................... 1,701,875
International apparel manufacturer
EARNINGS P/S......$ 2.25, 2.05, 2.62, 2.54,
2.70, 1.35, 2.75, 3.97, 3.80, 4.19 7.2%
DIVIDENDS P/S.......$ .58, .66, .75, .85,
.91, 1.00, 1.02, 1.11, 1.22, 1.30 9.4%
Price/Earnings Ratio..................11.6
-----------
3,681,875
-----------
Consumer Durables (3.85%)
66,800* Leggett & Platt, Inc. @ 35 ............... 2,338,000
Produces intermediate products for the home
furnishings industry
EARNINGS P/S........$ .88, .95, 1.11, 1.09,
1.29, .84, 1.11, 1.64, 2.09, 2.68 13.2%
DIVIDENDS P/S.......$ .17, .20, .28, .32,
.37, .42, .43, .46, .54, .62 15.5%
Price/Earnings Ratio..................13.1
67,000 Masco Corp. @ 22 5\8 .................... 1,515,875
Leading manufacturer of brand-name building
and home improvement products
EARNINGS P/S......$ 1.26, 1.54, 1.61, 2.06,
1.41, .91, .30, 1.21, 1.45, 1.75 3.7%
DIVIDENDS P/S......$ .29, .34, .38, .44,
.50, .54, .57, .61, .65, .69 10.1%
Price/Earnings Ratio....................13
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
<CAPTION>
COMPOUND
NUMBER GROWTH MARKET
OF SHARES COMMON STOCKS RATE VALUE
- --------- ------ -----------
<S> <C> <C> <C>
CONSUMER DURABLES (CONTINUED)
60,000* Superior Industries
International, Inc. @ 26 3/8 . . . . . . . . . . . . . . . . . . . . . . . $ 1,582,500
Manufacturer of automotive wheels
EARNINGS P/S . . . . $ .27, .26, .32, .46, .56, .54, .62, .95, 1.48, 1.83 23.7%
DIVIDENDS P/S . . . . $ 85, .04, .05, .053, .07, .08, .09, .10, .11, .15 25.1%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . 14.4 -----------
5,436,375
-----------
CONSUMER NON-DURABLES (4.41%)
15,000* Colgate - Palmolive Company @ 63 3/8 . . . . . . . . . . . . . . . . . . . 950,625
Global consumer products company which
consists of oral care, body care,
household surface care, etc.
EARNINGS P/S . . $ 1.06, 1.25, .01, 1.11, 1.90, 2.12, .76, 2.93, 3.38, 3.80 15.2%
DIVIDENDS P/S . . . $. 65, .68, .70, .74, .78, .90, 1.07, 1.15, 1.34, 1.54 10.1%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
65,000 PepsiCo, Inc. @ 36 1\4 . . . . . . . . . . . . . . . . . . . . . . . . . . 2,356,250
Second largest soft drink company
EARNINGS P/S . . . $ .50, .58, .77, .96, 1.13, 1.37, 1.35, 1.61, 1.96, 2.21 18.0%
DIVIDENDS P/S . . . . . $ .19, .21, .22, .27, .32, .38, .46, .51, .61, .70 15.6%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . .16.4
47,000 Procter & Gamble Co. (The) @ 62. . . . . . . . . . . . . . . . . . . . . . 2,914,000
Produces laundry and cleaning products,
personal care items, food, beverages, etc.
EARNINGS P/S . . $ .95, 1.04, .46, 1.48, 1.74, 2.25, 2.43, 2.62, .25, 1.90 8.0%
DIVIDENDS P/S . . . $ .65, .67, .68, .70, .83, .93, 1.00, 1.08, 1.17, 1.32 8.2%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . 32.6 -----------
6,220,875
-----------
DIVERSIFIED INDUSTRIALS (1.17%)
25,000 TRW Inc. @ 66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,000
-----------
Producer of space and defense
products/services and automotive
components
EARNINGS P/S $ 1.90, 3.56, 3.95, 4.23, 4.25, 3.36, (2.30), 3.10, 3.40, 4.89 11.1%
DIVIDENDS P/S $ 1.50, 1.53, 1.60, 1.63, 1.72, 1.74, 1.80, 1.82, 1.88, 1.94 7.1%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
DIVERSIFIED OPERATIONS (3.34%)
25,000* Alco Standard Corporation @ 62 3\4 . . . . . . . . . . . . . . . . . . . . 1,568,750
Distributor of office and paper products
EARNINGS P/S . $ 1.52, 1.47, 1.50, 2.12, 2.68, 2.19, 1.95, 2.22, 2.34, 2.87 7.3%
DIVIDENDS P/S . . . . $ .61, .63, .65, .70, .78, .85, .89, .93, .97, 1.01 5.8%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . 21.9
25,000 Johnson Controls, Inc. @ 49. . . . . . . . . . . . . . . . . . . . . . . . 1,225,000
Supplies building controls, manufacturer of
seats and batteries to the auto industry, and
a leader of soft drink containers
EARNINGS P/S . $ 2.40, 2.36, 2.20, 2.71, 2.42, 2.13, 2.19, 2.86, 3.16, 3.80 5.2%
DIVIDENDS P/S $ .95, 1.00, 1.07, 1.12, 1.17, 1.21, 1.25, 1.30, 1.38, 1.47 5.0%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . 12.9
DIVERSIFIED OPERATIONS (CONTINUED)
70,000 Questar Corporation @ 27 1\2 . . . . . . . . . . . . . . . . . . . . . . . $ 1,925,000
Diversified holding company operating in the
natural gas and property management businesses
EARNINGS P/S . $ 1.60, 1.47, .96, 1.16, 1.27, 1.46, 1.63, 1.85, 1.56, 1.99 2.5%
DIVIDENDS P/S . . . $ .82, .87, .91, .94, .95, .97, 1.01, 1.04, 1.09, 1.13 3.6%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 13.8
-----------
4,718,750
-----------
ELECTRICAL EQUIPMENT (4.78%)
34,000* Emerson Electric Co. @ 62 1\2 . . . . . . . . . . . . . . . . . . . . . . . 2,125,000
Produces and sells electrical/electronic
products and systems
EARNINGS P/S . $ 1.81, 1.87, 2.00, 2.31, 2.63, 2.75, 2.83, 2.96, 3.15, 4.04 9.3%
DIVIDENDS P/S. . $ .88, .93, .98, 1.03, 1.16, 1.28, 1.34, 1.40, 1.47, 1.60 6.9%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 15.5
54,000 General Electric Co. @ 51 . . . . . . . . . . . . . . . . . . . . . . . . . 2,754,000
Dominant force in home appliances,
electrical power and financial services
EARNINGS P/S . $ 1.28, 1.37, 1.60, 1.88, 2.18, 2.43, 2.55, 2.51, 3.03, 3.40 11.5%
DIVIDENDS P/S . . . $ .55, .58, .65, .70, .82, .94, 1.02, 1.12, 1.26, 1.44 11.3%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 15
35,000 Hubbell Incorporated
Class B @ 53 1\4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,863,750
Manufacturer of electrical and electronic
products
EARNINGS P/S . $ 1.49, 1.69, 1.94, 2.25, 2.52, 2.74, 2.66, 2.83, 2.00, 3.24 9.0%
DIVIDENDS P/S . . $ .58, .64, .75, .85, 1.07, 1.25, 1.40, 1.51, 1.55, 1.62 12.1%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 16.4
-----------
6,742,750
-----------
ENERGY (1.29%)
30,000 Exxon Corp. @ 60 3\4. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,822,500
-----------
Major factor in the crude oil, natural gas and
chemical industry
EARNINGS P/S . $ 3.23, 3.71, 3.43, 3.95, 2.32, 3.96, 4.45, 3.82, 4.21, 3.63 1.3%
DIVIDENDS P/S . $ 1.73, 1.80, 1.90, 2.15, 2.30, 2.47, 2.68, 2.83, 2.88, 2.91 5.9%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
FINANCIAL (1.22%)
120,000* United Dominion Realty Trust @ 14 3\8. . . . . . . . . . . . . . . . . . . . 1,725,000
-----------
Portfolio of income-producing real estate in
the southeastern U.S.
EARNINGS P/S . . . . . . $ .14, .10, .08, .13, .28, .21, .15, .19, .28, .52 15.7%
DIVIDENDS P/S . . . . . $ .47, .48, .51, .56, .61, .62, .63, .66, .70, .78 5.8%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 27.6
HEALTHCARE (3.49%)
84,000 Abbott Laboratories @ 32 5\8 . . . . . . . . . . . . . . . . . . . . . . . . 2,740,500
Major pharmaceutical and healthcare firm
EARNINGS P/S . . . . $ .49, .58, .70, .83, .96, 1.11, 1.27, 1.47, 1.69, 1.86 16.0%
DIVIDENDS P/S . . . . . . $ .17, .20, .24, .29, .34, .40, .48, .58, .66, .74 17.8%
Price/Earnings Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 17.5
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Balanced Fund
<CAPTION>
COMPOUND
NUMBER GROWTH MARKET
OF SHARES COMMON STOCKS RATE VALUE
- --------- ---- -----
HEALTHCARE (CONTINUED)
<S> <C> <C>
40,000 Johnson & Johnson @ 54 3\4.................. $ 2,190,000
Major producer of prescription/non-
prescription drugs, toiletries, and
medical instruments and supplies
EARNINGS P/S......$ .82, .45, 1.18, 1.41,
1.60, 1.72, 2.19, 2.46, 2.74, 3.13 16.0%
DIVIDENDS P/S.....$ .32, .34, .40, .48,
.56, .66, .77, .89, 1.01, 1.13 15.0%
Price/Earnings Ratio.....................17.5
-----------
4,930,500
-----------
INSURANCE (1.99%)
21,000* Chubb Corporation (The) @ 77 3\8 ........... 1,624,875
Broadly based property/casualty insurer
EARNINGS P/S....$ .95, 2.82, 3.81, 4.19,
4.70, 5.79, 6.32, 6.96, 3.91, 5.80 22.3%
DIVIDENDS P/S......$ .76, .80, .89, 1.08,
1.16, 1.32, 1.48, 1.60, 1.72, 1.84 10.3%
Price/Earnings Ratio.....................13.3
41,000* NWNL Companies, Inc. (The) @ 29 ............ 1,189,000
Specialities in life and health insurance
and annuity businesses
EARNINGS P/S.......$ 1.01, 1.67, 1.85, 1.76,
2.07, 2.09, 1.71, 2.06, 2.62, 3.24 13.8%
DIVIDENDS P/S......$ .40, .43, .48, .54,
.59, .65, .69, .73, .79, .88 9.2%
Price/Earnings Ratio......................9
-----------
2,813,875
-----------
POLLUTION CONTROL (1.40%)
75,000* WMX Technologies, Inc. @ 26 1\4 .............. 1,968,750
Nation's largest provider of waste ---------
management services
EARNINGS P/S.......$ .43, .88, .73, 1.03,
1.22, 1.49, 1.23, 1.86, .94, 1.65 16.1%
DIVIDENDS P/S.....$ .11, .13, .17, .21,
.27, .34, .40, .48, .56, .60 20.7%
Price/Earnings Ratio.....................15.9
PUBLISHING (1.62%)
43,000 Gannett Co., Inc. @ 53 1\4 .................. 2,289,750
Publishes 81 daily /50 non-daily ---------
newspapers, operates 10 TV, 8 FM and
7 AM Stations
EARNINGS P/S.....$ 1.58, 1.71, 1.98, 2.26,
2.47, 2.36, 2.00, 2.40, 2.73, 3.19 8.1%
DIVIDENDS P/S......$ .77, .86, .94, 1.02,
1.11, 1.21, 1.24, 1.26, 1.30, 1.34 6.3%
Price/Earnings Ratio.....................16.7
RETAIL (3.32%)
32,800* Hannaford Brothers Co. @ 25 3\8 ............. 832,300
Operates chains of retail food and drug
stores
EARNINGS P/S......$ .44, .51, .65, .77,
.96, 1.07, 1.08, 1.21, 1.33, 1.51 14.7%
DIVIDENDS P/S.......$ .12, .13, .14, .16,
.18, .22, .26, .30, .34, .38 13.7%
Price/Earnings Ratio.....................16.8
51,000 May Dept. Stores Company @ 33 3\4 ...... 1,721,250
Operates 318 department stores and 3,295
shoe stores
EARNINGS P/S.....$ 1.35, 1.22, 1.45, 1.71,
1.82, 1.87, 2.01, 2.01, 2.36, 2.77 8.3%
DIVIDENDS P/S......$ .46, .51, .56, .62,
.69, .77, .81, .83, .90, 1.01 9.1%
Price/Earnings Ratio.....................12.2
RETAIL (CONTINUED)
100,000* Wal-Mart Stores, Inc. @ 21 1\4.............. $ 2,125,000
Operates chain of discount department
stores
EARNINGS P/S......$ .12, .15, .20, .28,
.37, .48, .57, .70, .87, 1.03 27.0%
DIVIDENDS P/S.....$ .018, .021, .03, .04,
.06, .07, .09, .11, .13, .17 28.3%
Price/Earnings Ratio.....................20.6
-----------
4,678,550
-----------
TELECOMMUNICATIONS (2.57%)
75,000 ALLTEL Corporation @ 30 1\8 ............... 2,259,375
One of the country's largest telephone
systems
EARNINGS P/S......$ .71, .77, .90, 1.04,
1.13, 1.18, 1.09, 1.22, 1.39, 1.63 9.7%
DIVIDENDS P/S......$ .41, .44, .45, .51,
.57, .64, .70, .74, .80, .88 8.9%
Price/Earnings Ratio.....................18.5
65,000* Frontier Corp. - formerly Rochester
Telephone Corporation @ 21 1\8............. 1,373,125
Provides telephone service to city of
Rochester NY and outlying areas
EARNINGS P/S....$ .97, .89, .93, 1.06,
.99, .86, 1.18, 1.04, 1.21, 1.52 5.1%
DIVIDENDS P/S.....$ .61, .64, .66, .68,
.71, .73, .75, .77, .79, .81 3.2%
Price/Earnings Ratio.....................13.9
-----------
3,632,500
-----------
TOBACCO (2.61%)
35,000* Philip Morris Companies Inc. @ 57 1\2 .... 2,012,500
Global tobacco, brewing and food company
EARNINGS P/S....$ 1.31, 1.55, 1.94, 2.22,
3.18, 3.83, 4.24, 5.45, 4.05, 5.46 17.2%
DIVIDENDS P/S......$ .50, .62, .79, 1.01,
1.25, 1.55, 1.91, 2.35, 2.60, 3.03 22.2%
Price/Earnings Ratio.....................10.5
60,000 UST Inc. @ 27 3\4......................... 1,665,000
Leading producer of smokeless tobacco
EARNINGS P/S....$ .40, .46, .56, .71, .82,
.98, 1.18, 1.40, 1.70, 1.85 18.5%
DIVIDENDS P/S $ .22, .25, .30, .37, .46,
.55, .66, .80, .96, 1.12 19.8%
Price/Earnings Ratio.....................15
-----------
3,677,500
-----------
UTILITIES (1.05%)
42,000* Union Electric Company @ 35 3\8........... 1,485,750
Largest electric utility in Missouri ----------
EARNINGS P/S......$ 2.86, 2.89, 2.91, 2.56,
2.91, 2.74, 3.01, 2.83, 2.77, 3.02 0.6%
DIVIDENDS P/S $ 1.78, 1.86, 1.92, 1.94,
2.02, 2.10, 2.18, 2.26, 2.34, 2.40 3.4%
Price/Earnings Ratio.....................11.7
TOTAL COMMON STOCKS
(Cost $72,227,720) 71,534,925
-----------
PREFERRED STOCKS (1.36%)
45,000 American Express Co. "DECS" @ 42 5\8 1,918,125
-----------
TOTAL PREFERRED STOCKS
(Cost $1,729,375) 1,918,125
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Balanced Fund
<CAPTION>
PAR VALUE
(000'S MARKET
OMITTED) CORPORATE BONDS (27.04%) VALUE
- --------- -------
<S> <C> <C>
$ 250* Abbey National First Capital, Sr Sub
Note 8.20%, 10-15-04 @ 97.306............. $ 243,265
1,000* Banc One Credit Card Corp., Sr Sub
Note 7.55%, 12-15-99 @ 98.531............. 985,313
1,000* Bank of Scotland, Sub Note 8.85%,
11-01-06 @ 99.688......................... 996,880
1,000* Banque Paribas New York Corp., Sub
Note 6.875%, 03-01-09 @ 82.654............ 826,540
1,000* Barclays North American Capital, Deb.
9.75%, 05-15-21 @ 106.348................. 1,063,480
1,015 BFI Acquisition Corp., Sr Sub Note 12.00%,
12-01-01 @ 98.5........................... 999,775
1,100 CTC Mansfield Funding Corp., Secured Lease
Obligation Bonds 11.125%,
09-30-16 @ 92.657......................... 1,019,227
1,653 Coastal Corp.(The), Sr Deb 11.75%,
06-15-06 @ 109.375........................ 1,807,969
1,300 GTE Corp., Deb 10.250%,
11-01-20 @ 105.181........................ 1,367,353
1,500 Georgia-Pacific Corp., Deb 9.75%,
01-15-18 @ 101.022........................ 1,515,330
300 Great Western Bank, Sub Note 10.25%,
06-15-00 @ 105.671........................ 317,013
1,500 Hydro-Quebec Corp. Deb Ser HS 9.40%,
02-01-21 @ 103.693........................ 1,555,395
1,800* Landeskreditbank Baden-Wurttemberg,
Sub Note 7.625% 2-01-23 @ 91.004.......... 1,638,072
1,000* Magna Copper Company, Sub
Note 12.00% 12-15-01 @ 108.000............ 1,080,000
600* Mass Mutual Life, Sub Note 7.625%,
11-15-23 @ 85.121(R)...................... 510,726
2,000 Medusa Corp. Convertible Sub Note 6.00%,
11-15-03 @ 87.000......................... 1,740,000
1,000 Midland American Capital Corp., Gtd Note
12.75%, 11-15-03 @ 113.715................ 1,137,150
820 Midland Funding Corp. Sr Sec Lease
Oblig 10.33%, 07-23-02 @ 94.500........... 775,153
670 National Westminster Bancorp,
Deb 12.125%, 11-15-02 @ 109.162........... 731,385
500 News America Holdings Corp.,
Sr Note 9.125%, 10-15-99 @ 100.795........ 503,975
500 News America Holdings Corp., Sr Note
8.50%, 02-15-05 @ 95.794.................. 478,970
750 New York Life 7.50%,
12-15-23 @ 82.710(R)...................... 620,325
1,950 NWA Inc., Sub Note 8.625%,
8-01-96 @ 96.000.......................... 1,872,000
CORPORATE BONDS
$ 400 Occidental Petroleum Corp., Sr Deb
11.75%, 03-15-11 @ 108.246............. $ 432,984
500* Pathmark Stores Inc., Sub Note A 11.625%,
06-15-02 @ 96.000......................... 480,000
750 RBSG Capital Corp., Gtd Cap Note 10.125%,
03-01-04 @ 109.036........................ 817,065
400 RJR Nabisco Capital Corp., Sr Sub Deb 8.75%,
04-15-04 @ 92.114......................... 368,456
500 Scandinavian Airlines System, Deb 9.125%,
7-20-99 @ 100.488......................... 502,440
1,100 Security Pacific Corp., Sub Note 11.50%,
11-15-00 @ 112.918........................ 1,242,098
1,000* Standard Credit Card Master Trust,
Credit Card Participation Certificates, 7.25%,
4-07-08 @ 91.125.......................... 911,250
500 Stone Container, Sub Note 9.875%,
02-01-01 @ 94.000......................... 470,000
1,000* Thrifty Payless, Inc., Sr. Sub Note, 12.25%,
4-15-01 @ 94.500.......................... 945,000
1,900 TKR Cable 1, Inc. Deb 10.50%,
10-30-07 @ 102.271........................ 1,943,149
700* Trans Texas Gas Corp., Sr. Secured Note,
10.50%, 9-01-00 @ 95.5.................... 668,500
1,450 Unisys Corp., Credit Sensitive Notes
14.0765%, 07-01-97 @ 107.000.............. 1,551,500
260 United Air Lines Inc., Deb 10.25%,
07-15-21 @ 94.240......................... 245,024
1,594 USAir Inc., Deb 10.55%,
01-15-05 @ 78.750......................... 1,255,275
500* Viacom International, Sub Deb. 8.00%,
07-07-06 @ 85.75.......................... 428,750
1,000* Weirton Steel Corporation, Sr. Notes
10.875%, 10-15-99 @ 98.750................ 987,500
1,100 Westpac Banking Corp., Sub Deb 9.125%,
08-15-01 @ 102.544........................ 1,127,984
-----------
TOTAL CORPORATE BONDS
(Cost $41,506,951) 38,162,271
-----------
UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS (14.47%)
2,831* Federal National Mort. Assn. 7.5%,
08-01-08 @ 95.718......................... 2,710,607
396 Federal National Mort. Assn. REMIC 9.8%,
05-25-19 @ 100.500........................ 397,986
1,790 Financing Corp., Bond 9.65%,
11-02-18 @ 112.930........................ 2,021,447
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
John Hancock Funds - Sovereign Balanced Fund
<TABLE>
<CAPTION>
PAR VALUE
(000'S UNITED STATES GOVERNMENT MARKET
OMITTED) AND AGENCIES OBLIGATIONS VALUE
- --------- -------
<S> <C> <C>
$ 236* Government National Mort. Assn. 9.00%,
04-15-21 @ 100.875..................... $ 238,555
2,768 United States Treasury, Bond 8.875%,
08-15-17 @ 108.937....................... 3,015,376
500 United States Treasury, Bond 7.125%,
02-15-23 @ 91.000........................ 455,000
1,000 United States Treasury, Note 9.375%,
04-15-96 @ 102.219....................... 1,022,190
4,000* United States Treasury, Note 7.25%,
11-15-96 @ 99.219........................ 3,968,760
2,000* United States Treasury, Note 9.00%,
05-15-98 @ 103.359....................... 2,067,180
2,500 United States Treasury, Note 8.75%,
08-15-00 @ 104.094....................... 2,602,350
2,000* United States Treasury, Note 7.25%,
08-15-04 @ 95.984........................ 1,919,680
-----------
TOTAL UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS
(Cost $21,409,819) 20,419,131
-----------
CANADIAN GOVERNMENT
OBLIGATIONS (1.46%)
$ 750 Nova Scotia, Province of, Deb 9.50%,
02-01-19 @ 104.690..................... $ 785,175
1,250 Saskatchewan, Province of, Deb 9.125%,
02-15-21 @ 102.064....................... 1,275,800
-----------
TOTAL CANADIAN GOVERNMENT
OBLIGATIONS
(Cost $2,275,607) 2,060,975
-----------
</TABLE>
<TABLE>
<CAPTION>
INTEREST
RATE
----
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (3.88%)
JOINT REPURCHASE AGREEMENT (3.88%)
5,477 Investment in a joint repurchase
agreement transaction with
Lehman Brothers Corp., Dated
12-30-94, Due 01-03-95 (secured
by U.S. Treasury Bonds, 9.250%
Due 02-15-16, and 8.125%
Due 08-15-21, and by U.S.Treasury
Notes, 5.500% Due 02-15-95,
and 4.625% Due 08-15-95)
Note A .......................... 5.85% 5,477,000
------------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% ............... 1,449
------------
TOTAL SHORT-TERM INVESTMENTS 5,478,449
------------
TOTAL INVESTMENTS ( 98.90%) $139,573,876
====== ============
<FN>
* Securities, other than short-term investments, newly added to the
portfolio for year ended December 31, 1994.
(R) These securities are exempt from registration under Rule 144A of the
securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from registration.
See Note A of the Notes to Financial Statements for valuation policy rule.
Rule 144A securities amounted to $1,131,051 as of December 31, 1994.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Balanced Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Sovereign Investors Fund, Inc. (the "Corporation"),is an open-end
investment management company, registered under the Investment Company Act of
1940. The Corporation consists of two series portfolios: John Hancock Sovereign
Balanced Fund (the "Fund") and John Hancock Sovereign Investors Fund.
The Directors have authorized the issuance of multiple classes of the
Fund, designated as Class A, Class B and Class C. The shares of each class
represent an interest in the same portfolio of investments of the Fund and have
equal rights to voting, redemptions, dividends, and liquidation, except that
certain expenses, subject to the approval of the Directors, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class, which bears distribution/service expenses under terms
of a distribution plan, have exclusive voting rights regarding such
distribution plan. No Class C shares of the Fund were issued and outstanding
during the period ended December 31, 1994. Significant accounting policies of
the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial
Group, may participate in a joint repurchase agreement. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account, on the Fund's behalf. The Adviser is responsible for ensuring
that the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $340,120 of a capital
loss carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. To the extent that such carryforward is
used by the Fund, no capital gain distributions will be made. The carryforward
expires December 31, 2002. Additionally, net capital losses of $938,657
attributable to security transactions occurring after October 31, 1994 are
treated as arising on the first day (January 1, 1995) of the Fund's next
taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities
is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations. Dividends paid by the
Fund with respect to each class of shares will be calculated in the same
manner, at the same time and will be in the same amount, except for the
effect of expenses that may be applied differently to each class as explained
previously.
EXPENSES The majority of the expenses of the Corporation are directly
identifiable to an individual Fund. Expenses which are not readily identifiable
to a specific Fund are allocated in such a manner as deemed equitable, taking
into consideration, among other things, the nature and type of expense and the
relative size of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Balanced Fund
to each class of shares based on the appropriate net assets of the respective
classes. Transfer agent expenses and distribution/service fees if any, are
calculated daily at the class level based on the appropriate net assets of
each class and the specific expense rate(s) applicable to each class.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
investment securities from either the date of issue or date of purchase over
the life of the security, as required by the Internal Revenue Code.
ORGANIZATION EXPENSE Expenses incurred in connection with the organization
of the Fund have been capitalized and are being charged to the Fund's
operations ratably over a five-year period that began with the commencement
of investment operations of the Fund.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays amonthly
management fee to the Adviser for a continuous investment program equivalent
on an annual basis, to the sum of 0.60% of the Fund's average daily
net asset value. The Adviser has entered into a service agreement with
Sovereign Asset Management Corporation ("SAMCORP") an affiliate of the
Adviser, to provide certain investment research and portfolio management
services to the Fund, for which the Adviser pays SAMCORP 40% of its
management fee with respect to equity securities in the Funds' portfolio.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares, the fee
payable to the Adviser will be reduced to the extent of such excess, and the
Adviser will make additional arrangements necessary to eliminate any
remaining excess expenses. The current limits are 2.5% of the first
$30,000,000 of the Fund's average daily net asset value, 2.0% of the next
$70,000,000, and 1.5% of the remaining average daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. Prior to January
1, 1995, JH Funds was known as John Hancock Broker Distribution Services,
Inc. For the period ended December 31, 1994, JH Funds received net sales
charges of $416,947 with regard to sales of Class A shares. Out of this
amount, $64,941 was retained and used for printing prospectuses, advertising,
sales literature and other purposes, $78,926 was paid as sales commissions
to unrelated broker-dealers and $273,080 was paid as sales commissions to
sales personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker
Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"). The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is the
indirect sole shareholder of Distributors and John Hancock Freedom Securities
Corporation and its subsidiaries, which include Tucker Anthony and Sutro, all
of which are broker- dealers.
Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time
of redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in part
to defray its expenses related to providing distribution related services to
the Fund in connection with the sale of Class B shares. For the period ended
December 31, 1994 contingent deferred sales charges paid to JH Funds amounted
to $248,315.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
with respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds, for distribution and service expenses, at an annual rate not to
exceed 0.30% of Class A average daily net assets and 1.00% of Class B
average daily net assets to reimburse JH Funds for its distribution/service
costs. Up to a maximum of 0.25% of such payments may be service fees as
defined by the amended Rules of Fair Practice of the National Association of
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Sovereign Balanced Fund
Securities Dealers. Under the amended Rules of Fair Practice, curtailment
of a portion of the Fund's 12b-1 payments could occur under certain
circumstances. Accordingly, the 12b-1 fees for Class B shares were reduced
during a portion of 1994.
The Fund has a transfer agent agreement with John Hancock Investor
Services, Corp. ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, Investor Services was known
as John Hancock Fund Services, Inc. For the period ended December 31, 1994, the
Fund paid Investor Services a monthly transfer agent fee equivalent, on an
annual basis, to 0.18% and 0.20% of the average daily net asset value of Class
A and Class B shares of the Fund, respectively, plus out of pocket expenses
incurred by Investor Services on behalf of the Fund for proxy mailings.
Effective January 1, 1995, the Fund will pay transfer agent fees based on
transaction volume and the number of shareholder accounts.
Mr. Edward J. Boudreau, Jr. is director and officer of the Adviser as
well as Director of the Fund. The compensation of unaffiliated Directors is
borne by the Fund. The Adviser owns 11,291 Class A shares of beneficial
interest of the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short- term securities, during the
period ended December 31, 1994, aggregated $93,996,810 and $84,249,995,
respectively. Purchases and proceeds from sales of obligations of the U.S.
government and its agencies aggregated $57,620,132 and $60,200,915,
respectively.
The cost of investments owned at December 31, 1994 (including the joint
repurchase agreement), for Federal income tax purposes was $144,651,878. Gross
unrealized appreciation and depreciation of investments aggregated $3,435,807
and $8,515,258, respectively, resulting in net unrealized depreciation of
$5,079,451.
NOTE D --
REORGANIZATION
On September 21, 1993, the shareholders of John Hancock Asset Allocation Fund
(JHAA) approved a plan of reorganization between JHAA and the Fund providing
for the transfer of substantially all of the assets and liabilities of JHAA to
the Fund in exchange solely for Class A shares of the Fund. The acquisition was
accounted for as a tax free exchange of 3,185,896 Class A shares for the net
assets of JHAA which amounted to $34,314,653, including $3,788,008 of
unrealized appreciation, after the close of business at September 24, 1993.
17
<PAGE>
John Hancock Funds - Sovereign Balanced Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
John Hancock Sovereign Investors Fund, Inc. --
John Hancock Sovereign Balanced Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Sovereign Balanced Fund (the "Fund"), one of the portfolios
constituting John Hancock Sovereign Investors Fund, Inc., including the
schedule of investments, as of December 31, 1994, and the related statements of
operations for the year ended, and the statement of changes in net assets and
financial highlights for each of the two years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The financial
highlights of John Hancock Sovereign Balanced Fund for the year ended
December 31, 1992 were audited by other auditors whose report dated
February 3, 1993 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1994, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the John Hancock Sovereign Balanced Fund portfolio of John Hancock
Sovereign Investors Fund, Inc. at December 31, 1994, the results of its
operations for the year ended, and the changes in its net assets and financial
highlights for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
Boston, Massachusetts
February 13, 1995
/S/ Ernst & Young LLP
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund for its fiscal year ended
December 31, 1994.
The Fund designated a distribution to shareholders of $320,000 as
long-term capital gain dividends. Shareholders were mailed a 1994 U.S. Treasury
Department Form 1099-DIV in January 1995 representing their proportionate
share.
U.S. Government Obligations: Income from these investments may be
exempt from certain state and local taxes. The percentage of assets invested in
U.S. Treasury bonds, bills, and notes was 10.65% at year end. The percentage of
income derived from U.S. Treasury bonds, bills, and notes was 12.75%. The
percentage of assets invested in obligations of other U.S. government agencies
(excluding securities issued by Federal National Mortgage Association and
Government National Mortgage Association) was 1.43% at year end. The
percentage of income derived from these investments was 1.96% For specific
information on exemption provisions in your state, consult your local state tax
office or your tax adviser.
With respect to the Fund's ordinary taxable income for the fiscal year
ended December 31, 1994, 38.76% qualifies for the dividends received deduction
available to corporations.
18
<PAGE>
PART C.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement:
John Hancock Sovereign Investors Fund
Statement of Assets and Liabilities as of December 31, 1994.
Statement of Operations for the period ended December 31, 1994.
Statement of Changes in Net Assets for the period ended December 31,
1994.
Notes to Financial Statements.
Financial Highlights for each of the 10 years ended December 31, 1994.
Schedule of Investments as of December 31, 1994.
John Hancock Sovereign Balanced Fund
Statement of Assets and Liabilities as of December 31, 1994.
Statement of Operations for the period ended December 31, 1994.
Statement of Changes in Net Assets for the period ended December 31,
1994.
Notes to Financial Statements.
Financial Highlights for each full period ended December 31, 1994.
Schedule of Investments as of December 31, 1994.
(b) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibits
Index hereto and are incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
No person is directly or indirectly controlled by or under common
control with Registrant.
Item 26. Number of Holders of Securities
As of April 7, 1995, the number of record holders of shares of Registrant was
as follows:
Title of Class Shares Number of Record
Holders
John Hancock Sovereign Investors Fund
Class A Shares 99,011
Class B Shares 14,948
Class C Shares 2
John Hancock Sovereign Balanced Fund
Class A Shares 6,175
Class B Shares 6,541
<PAGE>
Item 27. Indemnification
(a) Under Registrant's Articles of Incorporation and By-laws. Article XII
of the Articles of Incorporation of Registrant and Article XIII of the
By-Laws of Registrant contain provisions indemnifying each director and each
officer of Registrant from liability to the full extent permitted by the
Maryland General Corporation law, subject to the provisions of the Investment
Company Act of 1940.
(b) Under the Underwriting Agreement. Under Section 12 of the Distribution
Agreement, the principal underwriter has agreed to indemnify the Registrant
and its Trustees, officers and controlling persons against claims arising out
of certain acts and statements of the underwriter.
(c) Under the By-Laws of the John Hancock Mutual Life Insurance Company
("the Insurance Company"), John Hancock Funds, Inc. ("John Hancock Funds")
and John Hancock Advisers, Inc. (the "Adviser"). Section 9a 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 Insurance Company who serves as a
director or employee 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 by 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 mater settled without final adjudication unless such
settlement shall have been approved as in the best interests of the
Insurance Commune 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
provides as follows:
"Section 9.01. Indemnity: Any person made or threatened to be made a party
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the
Corporation against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
the liability was not incurred by reason of gross negligence or reckless
disregard of the duties involved in the conduct of his office, and expenses
in connection therewith may be advanced by the Corporation, all to the full
extent authorized by the law."
"Section 9.02. Not Exclusive; Survival of Rights: The indemnification
provided by Section 9.01 shall not be deemed exclusive of any other right to
which those indemnified may be entitled, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such as person."
(d) Under the Investment Management Contract of Registrant. Section 8 of the
Registrant's Investment Management Contract provides that the Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with matters to which the contract
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by the Adviser of its obligations and duties under the contract.
Any person, even though also employed by the Adviser, who may be or become an
employee of the paid by the Fund shall be deemed, when acting within the
scope of his employment by the Fund, to be acting in such employment solely
for the fund and not as the Adviser's employee or agent.
(e) 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 Section 0.1 of the Registrant's By-Laws,
Section 13 of the Underwriting Agreement filed as Exhibit 6 to the original
Registration Statement, the By-Laws of the Registrant, the By-laws of the
John Hancock Funds, the Adviser, or the Insurance Company or otherwise.
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with
the securities being registered, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisers
For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and Directors of the
Investment Adviser, reference is made to Forms ADV (801-8124) filed under the
Investment Advisers Act of 1940, herein incorporated by reference.
Item 29. Principal Underwriters
(a) John Hancock Funds acts as principal underwriter for the Registrant and
also serves as principal underwriter or distributor of shares for John
Hancock Cash Reserve, Inc., John Hancock Bond Fund, John Hancock Capital
Growth Fund, John Hancock Current Interest, John Hancock Special Series,
Inc., John Hancock Tax-Free Bond Fund, John Hancock California Tax-Free
Income Fund, John Hancock Capital Series, John Hancock Limited-Term
Government Fund, John Hancock Tax-Exempt Income Fund, John Hancock Sovereign
Investors Fund, Inc., John Hancock Cash Management Fund, John Hancock Special
Equities Fund, John Hancock Sovereign Bond Fund, John Hancock Tax-Exempt
Series, John Hancock Strategic Series, John Hancock Technology Series, Inc.
and John Hancock World Fund, John Hancock Investment Trust, John Hancock
Institutional Series Trust, Freedom Investment Trust, Freedom Investment
Trust II and Freedom Investment Trust III.
(b) The following table lists, for each director and officer of John
Hancock Funds, the information indicated.
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts
Robert H. Watts Director and Senior None
John Hancock Place Vice President
P.O. Box 111
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer and
Boston, Massachusetts Director
Robert G. Freedman Director Vice President, Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts
Stephen M. Blair Executive Vice None
101 Huntington Avenue President-
Boston, Massachusetts Sales
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 Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President and Vice President,
101 Huntington Avenue Secretary Assistant Secretary
Boston, Massachusetts and Compliance Officer
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Hugh A. Dunlap, Jr. Director None
101 Huntington Avenue
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
James V. Bowhers Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
(c) None.
Item 30. Location of Accounts and Records
Registrant maintains the records required to be maintained by it under
Rules 31a-1 (a), 31a-a(b), and 31a-2(a) under the Investment Company Act of
1940 as its principal executive offices at 101 Huntington Avenue, Boston
Massachusetts 02199-7603. Certain records, including records relating to
Registrant's shareholders and the physical possession of its securities, may
be maintained pursuant to Rule 31a-3 at the main office of Registrant's
Transfer Agent and Custodian.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus with respect to a series of the Registrant is
delivered with a copy of the latest annual report to shareholders
with respect to that series upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston,
and the Commonwealth of Massachusetts on the 24th day of April 1995.
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
By: *
_______________________________
Edward J. Boudreau, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Title Date
* Chairman April 24, 1995
______________________ (Principal Executive
Edward J. Boudreau, Jr. Officer)
Senior Vice President April 24, 1995
and Chief Financial
/s/James B. Little Officer (Principal
James B. Little Financial and Accounting
Officer)
*
______________________ Director April 24, 1995
Thomas W. L. Cameron
*
______________________ Director April 24, 1995
Charles F. Fretz
* Director April 24, 1995
______________________
Charles L. Ladner
*
______________________ Director April 24, 1995
Patricia P. McCarter
<PAGE>
Signature Title Date
*
______________________ Director April 24, 1995
Norman H. Smith
*
______________________ Director April 24, 1995
Steven R. Pruchansky
*
______________________ Director April 24, 1995
James F. Carlin
*
______________________ Director April 24, 1995
John P. Toolan
*
______________________ Director April 24, 1995
Harold R. Hiser, Jr.
*By:
/s/Thomas H. Drohan April 24, 1995
Thomas H. Drohan
(Attorney-in-Fact)
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description Page Number
99.B1 Articles of Incorporation of Registrant of Registrant
dated March 22, 1990.
99.B1.1 Articles of Amendment dated October 23, 1991.
99.B1.2 Articles of Amendment dated September 23, 1992.
99.B1.3 Articles of Amendment dated February 26, 1993.
99.B1.4 Articles of Amendment dated December 8, 1993.
99.B2 Amended and Restated By-Laws of Registrant as adopted
on June 15, 1990 and amended on December 20, 1991,
September 8, 1992, March 2, 1993 and November 30, 1993.
99.B4 Specimen share certificate for the Registrant
99.B5 Investment Management Contract between John Hancock
Sovereign Investors Fund and John Hancock Advisers,
Inc. dated October 23, 1991.
99.B5.1 Investment Management Contract between John Hancock
Sovereign Balanced Fund and John Hancock Advisers, Inc.
dated October 2, 1992.
99.B5.2 Service Agreement between John Hancock Advisers, Inc.,
TBFG Advisers, Inc.and John Hancock Sovereign Investors
Fund, Inc. dated October 2, 1992.
99.B6 Distribution Agreement with Registrant and John Hancock
Broker Distribution Services, Inc. dated October 23,
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 October 2, 1992.
99.B10 None
99.B11 Auditor's Consent.
99.B12 Financial Statement of the John Hancock Sovereing
Investors Fund for the fiscal year ended December 31,
1994 included in Parts A and B.
99.B12.1 Financial Statement of the John Hancock Sovereing
Balanced Fund for the fiscal year ended December 31,
1994 included in Parts A and B.
99.B13 None
99.B14 None
99.B15 Class A Distribution Plan between John Hancock
Sovereign Investors Fund and John Hancock Broker
Services, Inc.
99.B15.1 Class B Distribution Plan between John Hancock
Sovereign Investors Fund and John Hancock Broker
Services, Inc.
99.B15.2 Class A Distribution Plan between John Hancock
Sovereign Balanced Fund and John Hancock Broker
Services, Inc.
99.B15.3 Class B Distribution Plan between John Hancock
Sovereign Balanced Fund and John Hancock Broker
Services, Inc.
99.B16 Schedule for Computation of Yield and Total Return.
99.B17 Powers of Attorney dated December 20, 1991, December 8,
1992, January 1 1994.
99.27.1A Sovereign Investors
99.27.1B Sovereign Investors
99.27.1C Sovereign Investors
99.27.2A Sovereign Balanced
99.27.2B Sovereign Balanced
ARTICLES OF INCORPORATION
SOVEREIGN INVESTORS, INC.
ARTICLE I
THE UNDERSIGNED, GEORGE A. BAILEY, JR., whose address is Suite 515A, 985
Old Eagle School Road, Wayne, PA 19087, being at least eighteen years of age,
does hereby act as an incorporator, under and by virtue of the General Laws of
the State of Maryland authorizing the formation of corporations and with the
intention of forming a corporation.
ARTICLE II
The name of the Corporation is:
Sovereign Investors, Inc.
ARTICLE III
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
(1) To conduct and carry on business of an investment company of the
management type.
(2) To hold, invest and reinvest its assets in securities, and in
connection therewith to hold part or all of its assets in cash.
(3) To issue and sell shares of its own capital stock as its Board of
Directors may determine in such amounts and on such terms and conditions and for
such purposes and for such amount or kind of consideration now or hereafter
permitted by law.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by law and by the Charter of the Corporation.
<PAGE>
(5) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conductive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
Notwithstanding anything contained elsewhere in the Articles of
Incorporation or in the By-Laws of the Corporation, the Corporation shall not
purchase any security or securities on "margin."
Notwithstanding anything contained elsewhere in the Articles of
Incorporation or in the By-Laws of the Corporation, the Corporation shall not
make any "short sale" of any security or securities (that is to say, it shall
not contract to sell any security or securities except to the extent that the
same, or securities exchangeable therefor, shall be owned by the Corporation, or
deliverable to it under firm contract so as to be available for delivery in
satisfaction of such sale).
Notwithstanding anything contained elsewhere in the Articles of
Incorporation or the By-Laws of the Corporation, the Corporation shall not
borrow any money, or mortgage or pledge any of its property, except that, in
connection with the sale or resale of shares of the capital stock of the
Corporation, it may draw, discount or otherwise deal with, drafts in respect of
all or any part of the sale price of such shares for which orders have been
accepted by or on behalf of the Corporation.
The meaning of any term or phrase used in the Articles of Incorporation
shall be construed in accordance with such definitions as may from time to time
be set forth in the By-Laws of the Corporation subject always to the
requirement that no definition shall be adopted which will result in a violation
of the provisions of the law of the State of Maryland, or which is inconsistent
with a definition set forth in the Articles of Incorporation.
Subject to the foregoing limitations, the Corporation shall be authorized
to exercise and enjoy all of the powers, rights and privileges granted to, or
conferred upon, corporations by the General Laws of the State of Maryland now or
hereafter in force, and the enumeration of the foregoing shall not be deemed to
exclude any powers, rights or privileges so granted or conferred.
ARTICLE IV
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is The Corporation Trust Incorporated, a corporation of this State,
and the post office address of the resident agent is 32 South Street, Baltimore,
Maryland 21202.
<PAGE>
ARTICLE V
(1) The total number of shares of capital stock which the Corporation
shall have authority to issue is One Hundred Million (100,000,000) shares, of
the par value of One Cent ($0.01) per share and of the aggregate par value of
One Million Dollars ($1,000,000), of which One Hundred Million (100,000,000)
shares are designated Common Stock.
(2) Any fractional share shall carry proportionately all the rights of a
whole share, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of the Charter and the By-Laws of the
Corporation.
(4) The Board of Directors shall have authority to classify and reclassify
any unissued shares of capital stock from time to time by setting or changing in
any one or more respects the conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of the capital stock; provided that the Board of Directors shall
not classify or reclassify any of such shares into any class or series of stock
which is prior to any class or series of capital stock then outstanding with
respect to rights upon liquidation, dissolution or winding up of the affairs of,
or upon any distribution of the assets of, the Corporation. Subject to the
foregoing, the power of the Board of Directors to classify or reclassify any of
the shares of capital stock shall include, without limitation, authority to
classify or reclassify any authorized but unissued shares of such stock into a
class or classes of capital stock and to divide and classify shares of any class
into one or more series of such class, by determining, fixing or altering one or
more of the following:
(i) The distinctive designation of such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or series,
the number of shares of any class or series may be decreased by the Board of
Directors in connection with any classification or reclassification of unissued
shares and the number of shares of such class or series may be increased by the
Board of Directors in connection with any classification or reclassification,
and any shares of any class or series which have been redeemed, purchased or
otherwise acquired by the Corporation shall remain part of the authorized
capital stock and be subject to classification and reclassification as provided
herein.
(ii) Whether or not and, if so, the rates, amounts and times at which, and
the conditions under which, dividends shall be payable on shares of such class
or series.
(iii) Whether or not shares of such class or series shall have voting
rights, in addition to any voting rights provided by law and, if so, the terms
of such voting rights.
<PAGE>
(iv) The rights of the holders of such shares or series upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
(v) Any other rights, restrictions, including restrictions on
transferability, and qualification of shares of such class or series, not
inconsistent with law and the Charter of the Corporation.
ARTICLE VI
(1) The Corporation shall have ten (10) directors. The number of directors
may be changed as provided in the By-Laws, but may not exceed fifteen (15)
directors. The Board of Directors shall be divided into three classes: Class I,
Class II and Class III, with the number of directorships being apportioned among
the classes so as to maintain the membership of the Classes as nearly equal as
possible. The terms of office of the classes of directors elected at the initial
meeting shall expire at the time of subsequent annual elections as follows:
Class I in 1993, Class II in 1991, and Class III in 1992, or thereafter in each
case when their respective successors are elected and qualified. At each
subsequent annual election, the directors chosen to succeed those whose terms
are expiring shall be identified as being of the same class as the directors
whom they succeed, and shall be elected for a term expiring at the time of the
third succeeding annual election, or thereafter in each case when their
respective successors are elected and qualified.
Class I directors shall be William J. Erwin, Jr.,
Dr. Philip U. Koopman, and
Patricia P. McCarter
Class II directors shall be George A. Bailey, Jr.,
Charles F. Fretz,
Robert J. Kennedy, and
Charles S. Moore
Class III directors shall be Thomas W. L. Cameron,
Alonzo R. Horsey, and
Charles L. Ladner
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in the Charter
or the By-Laws of the Corporation or in the General Laws of the State of
Maryland.
(3) No holder of stock of the Corporation shall, as such holder, have any
right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares authorized by
<PAGE>
the Charter, or out of any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such right, if
any, as the Board of Directors, in its discretion, may determine.
ARTICLE VII
Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the redemption
price of such shares as in effect from time to time as may be determined by the
Board of Directors of the Corporation in accordance with the provisions hereof,
subject to the right of the Board of Directors of the Corporation to suspend the
right of redemption of shares of capital stock of the Corporation or postpone
the date of payment of such redemption price in accordance with provisions of
applicable law. Without limiting the generality of the foregoing, the
Corporation shall, to the extent permitted by applicable law, have the right at
any time to redeem the shares owned by any holder of capital stock of the
Corporation if (i) the aggregate net asset value of such shares is less than One
Thousand Dollars ($1,000), or (ii) such redemption is, in the opinion of the
Board of Directors of the Corporation, desirable in order to prevent the
Corporation from being deemed a "personal holding company" within the meaning of
the Internal Revenue Code of 1954, as amended, in each case subject to such
further terms and conditions as the Board of Directors of the Corporation may
from time to time adopt. The redemption price of shares of capital stock of the
Corporation shall be the net asset value thereof as determined by the Board of
Directors of the Corporation from time to time in accordance with the provisions
of applicable law, less such redemption fee or other charge, if any, as may be
fixed by resolution of the Board of Directors of the Corporation. Payment of the
redemption price shall be made in cash by the Corporation at such time and in
such manner as may be determined from time to time by the Board of Directors of
the Corporation.
ARTICLE VIII
Any determination made in good faith, by or pursuant to the direction of
the Board of Directors, as to the amount of assets, obligations or liabilities
of the Corporation, as to the amount of net income of the Corporation from
dividends and interest for any period or amounts at any time legally available
for the payment of dividends, as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for creating reserves or
as to the use, alteration or cancellation of any reserves or charges (whether or
not any obligation or liability for which such reserves or charges shall have
been created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the value or price of any security
owned by the Corporation or as to any other matters relating to the issuance,
sale, redemption or other acquisition or disposition of securities or shares of
capital stock of the Corporation, and any reasonable determination made in good
faith by the Board of Directors as to whether any transaction constitutes a
purchase of securities on "margin", a sales of securities
<PAGE>
"short", or an underwriting of the sale of, or a participation in any
underwriting or selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and future, and
shares of the capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of the Charter of the Corporation
shall be effective to (a) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (b) protect or purport to protect any director
or officer of the Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE IX
The duration of the Corporation shall be perpetual.
ARTICLE X
(1) The Corporation reserves the right from time to time to make any
amendments of its Articles of Incorporation which may be now or hereafter
authorized by law, including any amendments changing the terms or contract
rights, as expressly set forth in its Articles of Incorporation, of any of its
outstanding stock by classification, reclassification or otherwise, but no such
amendment which changes such terms or contract rights of any of its outstanding
stock shall be valid unless such amendment shall have been authorized by not
less than a majority of the aggregate number of the votes entitled to be cast
thereon by a vote at a meeting.
(2) Notwithstanding any provision of the General Laws of the State of
Maryland requiring any action to be taken or authorized by the affirmative vote
of the holders of a greater proportion of all classes or any class, such action
shall be effective and valid if taken or authorized by the affirmative vote of
the holders of a majority of the total number of votes entitled to be cast
thereon, except as otherwise provided in these Articles.
ARTICLE XI
All cash and securities owned by the Corporation from time to time shall
be deposited under an agreement with a responsible bank or trust company which
shall be a national banking association or a trust company or banking
corporation in good standing, organized under the laws of the United States of
America or under the laws of one of the States thereof, having (according to its
most recent published report) a capital, surplus and undivided profits
aggregating not less
<PAGE>
than $3,000,000, if there be such a one willing and able to act upon reasonable
and customary terms.
The By-Laws of the Corporation may contain further provisions with respect
to the custody of the cash and securities of the Corporation not inconsistent
with the foregoing requirement.
ARTICLE XII
(1) A director or an officer of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages as a director or an
officer, respectively, except to the extent such limitation is not permitted
under the Maryland General Corporation Law or the Investment Company Act of
1940, as currently in effect or as the same may hereafter be amended.
(2) Each director and each officer of the Corporation shall be indemnified
by the Corporation to the full extent permitted by the General Laws of the State
of Maryland now or hereafter in force, including advance of related expenses,
subject to the provisions of the Investment Company Act of 1940.
(3) No amendment, modification or repeal of this Article Twelfth shall
adversely affect any right or protection of a director or officer which exists
at the time of such amendment, modification or repeal.
IN WITNESS WHEREOF, the undersigned incorporator of SOVEREIGN INVESTORS,
INC. hereby executes the foregoing Articles of Incorporation and acknowledges
the same to be his act. Dated the 22nd day of March, 1990.
/s/ George A. Bailey, Jr.
George A. Bailey, Jr.
WITNESS:
/s/ Harry C. Schaub
SOVEREIGN INVESTORS , INC.
Articles of Amendment
Sovereign Investors, Inc., a Maryland corporation having its principal
office in Baltimore City, Maryland (which is hereinafter called the
"Corporation") hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended as follows:
(a) Article II of the Charter is amended in its entirety to
read as follows:
The name of the corporation is:
John Hancock Sovereign Investors, Inc.
(b) Article VI, Paragraph (1) of the Charter is amended in its
entirety to read as follows:
(1) The number of directors of the Corporation shall be
twelve,which number may be increased or decreased pursuant
to the By-Laws of the Corporation, but shall never be less
than the minimum permitted by the General Laws of the State
of Maryland now or hereafter in force. The names of the
directors who shall serve until the next annual meeting of
stockholders and until their successors are elected and
qualify are as follows: Edward J. Boudreau, Jr., Thomas
W.L. Cameron, George A. Bailey, Jr. William J. Erwin, Jr.,
Charles F. Fretz, Alonzo R. Horsey, Robert J. Kennedy,
Charles L Ladner, Patricia P. McCarter, Charles S. Moore,
Norman H. Smith and Steven R. Pruchansky; provided,
however, that the Corporation shall not be required to hold
an annual meeting in any year in which the election of
directors is not required to be acted upon under the
Investment company Act of 1940, as amended.
SECOND: The amendment does not increase the authorized stock of the
Corporation.
THIRD: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, Sovereign Investors , Inc. has caused these presents
to be signed in its name and on its behalf by its President and witnessed by its
Secretary on October 23, 1991.
WITNESS: SOVEREIGN INVESTORS, INC.
/s/ G. Alan Bailey By: /s/ George Bailey, Jr.
Secretary President
<PAGE>
THE UNDERSIGNED, _______________President of Sovereign Investors , Inc.
who executed on behalf of the Corporation of the foregoing Articles of Amendment
of which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ George A. Bailey, Jr.
President
JOHN HANCOCK SOVEREIGN INVESTORS, INC.
ARTICLES OF AMENDMENT
John Hancock Sovereign Investors, Inc., a Maryland corporation, having principal
office in Baltimore City, Maryland (which is hereinafter called the
"corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended as follows:
Article II of the Charter is amended in its entirety to read as
follows:
The name of the Corporation is:
John Hancock Sovereign Investors Fund, Inc.
SECOND: the amendment does not increase the authorized stock of the
Corporation.
THIRD: The foregoing amendment to the Charter of the Corporation has
been advised by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, John Hancock Sovereign Investors, Inc. has
caused these presents to be signed in its name and on its behalf by its Vice
President, and witnessed by its Secretary of September 23, 1992.
WITNESS: JOHN HANCOCK SOVEREIGN
INVESTORS, INC.
/s/ Thomas H. Drohan By /s/ John A. Morin
THE UNDERSIGNED, John A. Morin, Vice President, of John Hancock Sovereign
Investors, Inc., who executed on behalf of the Corporation the foregoing
Articles of Amendment of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles of Amendment to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the matters
and facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.
/s/ John A. Morin
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
Articles Supplementary
John Hancock Sovereign Investors Fund, Inc., a Maryland corporation having
its principal office in Boston, Massachusetts (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940.
SECOND: In accordance with Section 2-105(c) of the Maryland General
Corporation Law, the Board of Directors has increased the authorized capital
stock of the Corporation.
THIRD: (a) As of immediately before the increase, the total number
of shares of stock of all classes which the Corporation had authority to issue
was 100,000,000 shares, of which no shares were Preferred Stock and 100,000,000
shares were Common Stock (par value $.01 per share). The Common Stock has been
divided into 20,000,000 shares of the "John Hancock Sovereign Balanced Fund"
series and 80,000,000 shares of the "John Hancock Sovereign Investors Fund"
series.
(b) As increased, the total number of shares of stock of all
classes which the Corporation has authority to issue is 245,000,000 shares, of
which no shares are Preferred Stock and 245,000,000 shares are Common Stock
((par value $.01 per share). Such Common Stock is hereby divided into 60,000,000
shares of the "John Hancock Sovereign Balanced Fund" series and 185,000,000
shares of the "John Hancock Sovereign Investors Fund" series.
(c) The John Hancock Sovereign Balanced Fund Series has
three classes of shares, designated Class A, Class B and Class C, which shall
consist, until further changed, of the lesser of (x) 30,000,000 shares,
30,000,000 shares and zero shares of classes A, B and C, respectively, or (y)
all of the unissued shares of all classes of Common Stock of the John Hancock
Sovereign Balanced Fund Series. The terms of the Class A, Class B and Class C
shares are set forth in the Charter of the Corporation.
(d) The aggregate per value of all shares having a par value
is $1,000,000 before the increase and $2,450,000 as increased.
FOURTH: Pursuant to authority expressly vesting in the Board of
Directors of the Corporation by Article V, Paragraph (4) of the Charter of the
Corporation, the Board of Directors has duly divided and classified 25,000,000
unissued shares of the John Hancock Sovereign Investors Fund as Class C shares.
The remaining 160,000,000 shares of the John Hancock Sovereign Investors Fund,
including shares currently issued and outstanding, shall be referred to as Class
A shares, except that the
<PAGE>
Corporation reserves the right to reclassify any unissued shares of the John
Hancock Sovereign Investors Fund as Class B shares.
FIFTH: The Class A, Class B (to the extent any shares are hereafter
reclassified) and Class C shares of the John Hancock Sovereign Investors Fund
(the "Sovereign Investors Fund") shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other rights;
provided, however, that notwithstanding anything in the Charter to the contrary:
(1) The Class A shares shall be subject to such front-end
sales loads as may be established by the Board of Directors
from time to time in accordance with the Investment Company
Act of 1940 and applicable rules and regulations of the
National Association of Securities Dealers, Inc.
(2) The Class B shares shall be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the
National Association of Securities Dealers, Inc.
(3) The Class C shares shall be subject to no sales loads.
(4) Expenses related solely to a particular Class (including,
without limitation, distribution expenses under a Rule 12b-1
plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however,
designated ) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board
of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(5) As to any matter with respect to which a separate vote of
any Class is required by the Investment Company Act of 1940 or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
arrangement referred to in subsection (4) above), such
requirement as to a separate vote by that Class shall apply in
lieu of Single Class Voting, and if permitted by the
Investment Company Act of 1940 or the Maryland General
Corporation Law, the Classes of more than one Series shall
vote together as a single class on any such matter which shall
have the same effect on each such Class. As to any matter
which does not affect the interest of a particular Class, only
the holders of shares of the affected Classes shall be
entitled to vote.
<PAGE>
SIXTH: The shares aforesaid have been duly classified by the Board
of Directors pursuant to authority and power contained in the Charter of the
Corporation.
IN WITNESS WHEREOF, John Hancock Sovereign Investors Fund, Inc. has
caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Secretary of February 26, 1993.
WITNESS: JOHN HANCOCK SOVEREIGN
INVESTORS FUND, INC.
/s/ Thomas H. Drohan By: /s/ John A Morin
Senior Vice President and John A. Morin
Secretary Vice President
<PAGE>
THE UNDERSIGNED, John A. Morin, Vice President of John Hancock Sovereign
Investors Fund, Inc., who executed on behalf of the Corporation the foregoing
Articles Supplementary of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the matters
and facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.
/s/ John A. Morin
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
Articles Supplementary
John Hancock Sovereign Investors Fund, Inc., a Maryland corporation having
its principal office in Baltimore City, Maryland (which is hereinafter called
the "Corporation") hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
SECOND: In accordance with Section 2-105(c) of the Maryland General
Corporation Law, the Board of Directors has increased the authorized capital
stock of the Corporation.
THIRD: (a) As of immediately before the increase, the total number of
shares of stock of all classes which the Corporation had authority to issue was
245,000,000 shares, of which no shares were Preferred Stock and 245,000,000
shares were Common Stock, par value $.01 per share. The Common Stock has been
divided into 185,000,000 shares of the "John Hancock Sovereign Investors Fund"
series and 60,000,000 shares of the "John Hancock Sovereign Balanced Fund"
series.
(b) As increased, the total number of shares of stock of all classes
which the Corporation has authority to issue is 345,000,000 shares, of which no
shares are Preferred Stock and 345,000,000 shares are Common Stock, par value
$.01 per share. Such Common Stock is hereby divided into 285,000,000 shares of
the "John Hancock Sovereign Investors Fund" and 60,000,000 shares of the "John
Hancock Sovereign Balanced Fund" series.
(c) The aggregate par value of all shares having a par value is
$2,450,000 before the increase and $3,450,000 as increased.
FOURTH: Pursuant to authority expressly vesting in the Board of Directors
of the Corporation by Article V, Paragraph (4) of the Charter of the
Corporation, the Board of Directors has duly divided and classified 100,000.000
of the newly authorized shares with the John Hancock Sovereign Investors Fund as
Class B shares with the result that 160,000,000 shares of the John Hancock
Sovereign Investors Fund series are now classified as Class A shares,
100,000,000 of such shares are now classified as Class B shares and 25,000,000
of such shares are now classified as Class C shares.
FIFTH: The voting, dividend, liquidation and other rights and terms and
conditions of the classes of the John Hancock Sovereign Investors Fund are set
forth in the Charter of the Corporation.
<PAGE>
SIXTH: The shares aforesaid have been duly classified by the Board of
Directors pursuant to authority and power contained in the Charter of the
Corporation.
IN WITNESS WHEREOF, John Hancock Sovereign Investors Fund, Inc. has caused
these presents to be signed in its name and on its behalf by a duly authorized
officer and witnessed by its Secretary on December 8th 1993.
WITNESS: JOHN HANCOCK SOVEREIGN
INVESTORS FUND, INC.
/s/ Thomas H. Droha By: /s/ John A. Morin
Thomas H. Drohan John A. Morin
Senior Vice Presid Vice President
and Secretary
THE UNDERSIGNED, John A. Morin, Vice President of John Hancock Sovereign
Investors Fund, Inc., who executed on behalf of the Corporation of the foregoing
Articles Supplementary of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the matters
and facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.
/s/ John A. Morin
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
(a Maryland corporation)
BYLAWS
AMENDED AND RESTATED
DATE ADOPTED: June 15, 1990
AMENDED: December 20, 1991
AMENDED: September 8, 1992
AMENDED: March 2, 1993 (Article II, Section 4)
AMENDED: November 30, 1993
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
(a Maryland corporation)
Amended and Restated
* * * * *
B Y L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The corporation shall maintain an office in the City of
Baltimore, State of Maryland, or elsewhere in the State of Maryland.
Section 2. The corporation may also have offices at such other
places both within and without the State of Maryland as the board of
directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of the stockholders of the corporation or any
series or class thereof shall be held at the corporation's office located
at Suite 515A, 985 Old Eagle
School Road, Wayne, PA 19087, or at any other place within the United
States as shall be designated from time to time by the board of directors
and stated in the notice of meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders are not required in any
year in which the election of directors is not required to be acted upon
under the Investment Company Act of 1940, as amended (the "1940 Act"); in
years in which the election of directors is required to be acted upon
under the 1940 Act, the annual meeting of stockholders, commencing with
the year of 1991, shall be held on the third Monday of April of each year,
if not a legal holiday, and if a legal holiday, then on the next following
Monday, at eleven o'clock in the forenoon, at which the stockholders shall
elect members of the board, as provided herein. Any business of the
corporation may be transacted at the annual meeting without being
specially designated in the notice, except such business as is
specifically required by statute to be stated in the notice. Any reference
to an annual
<PAGE>
meeting herein shall be deemed to apply only to those annual meetings that
are required under the 1940 Act.
No change of the time or place of a meeting for the election of
directors, as fixed by the bylaws, shall be made within sixty (60) days
next before the day on which such election is to be held. In case of any
change in such time or place for such election of directors, notice
thereof shall be given to each stockholder entitled to vote, in person, or
by letter mailed to his last known post office address, twenty (20) days
before the election is held.
Section 3. At any time in the interval between annual meetings,
special meetings of the stockholders of the corporation or any series or
class thereof may be called by the board of directors, chairman of the
board or president.
Section 4. Special meetings of stockholders shall be called by the
secretary upon the written request of stockholders entitled to cast at
least twenty-five percent, and in the case of a question of removal of any
such director, not less than ten percent of all the votes entitled to be
cast at the meeting at such time and at such place within or without the
State of Maryland as may be fixed by the board of directors, and as may be
stated in the notice setting forth such call. Such request shall state the
purpose or purposes of such meeting and the matters proposed to be acted
on thereat. The secretary shall inform the stockholders who make the
request of the reasonably estimated cost of preparing and mailing a notice
of the meeting, and after payment of these costs by such stockholders to
the corporation, the secretary shall give notice stating the purpose or
purposes of the meeting to all stockholders entitled to notice at such
meeting. No special meeting need be called upon the request of the holders
of shares entitled to cast less than a majority of all votes entitled to
be cast at such meeting, to consider any matter which is substantially the
same as a matter voted upon at any special meeting of the stockholders
held during the preceding twelve (12) months.
Section 5. Not less than ten (10) nor more than ninety days (90)
before the date of an annual or special stockholders' meeting, the
secretary shall give to each stockholder entitled to vote at such meeting,
written or printed notice stating the time and place of the meeting and,
in the case of a special meeting, the purpose or purposes for which the
meeting is called, either by mail or by presenting it to him personally or
by leaving it at his residence or usual place of business. If mailed, such
notice shall be deemed to be given when deposited in the United States
mail addressed to the stockholder at his post-office address as it appears
on the records of the corporation, with postage thereon prepaid.
<PAGE>
Section 6. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 7. At any meeting of stockholders of the corporation or any
series or class thereof, the presence in person or by proxy of
stockholders entitled to cast a majority of the votes thereat shall
constitute a quorum, except that where the holders of shares of any series
or class thereof are entitled to a separate vote as a series or class
(such series or class being referred to as a "Separate Class") or where
the holders of shares of two or more (but not all) series or classes
thereof are required to vote as a single series or class (such series or
classes being referred to as a "Combined Class"), the presence in person
or by proxy of the holders of a majority of the shares of that Separate
Class or Combined Class, as the case may be, issued and outstanding and
entitled to vote thereat shall constitute a quorum for such vote; but this
Section shall not affect any requirement under the statute or under the
charter for the vote necessary for the adoption of any measure. Whether or
not a quorum is present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or
represented by proxy, may, by a majority vote, adjourn the meeting from
time to time, without notice other than announcement at the meeting. If a
quorum with respect to a Separate Class or a Combined Class, as the case
may be, shall not be present or represented at any meeting of
stockholders, the holders of a majority of the shares of such Separate
Class or such Combined Class, as the case may be, present in person or by
proxy and entitled to vote shall have power to adjourn the meeting from
time to time as to such Separate Class or such Combined Class, as the case
may be, without notice other than announcement at the meeting, until the
requisite number of shares entitled to vote at such meeting shall be
present. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 8. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly
come before the meeting, unless more than a majority of the votes cast is
required by the statute or by the charter, except that a plurality of all
votes cast at a meeting at which a quorum is present is sufficient to
elect a director.
Section 9. Stock of the corporation represented in person or by
proxy at a meeting of the corporation's stockholders, including shares of
stock that abstain or do not vote with respect to one or more proposals
presented for stockholder approval, will be counted for purposes of
determining whether a quorum is present. Abstentions will be treated as
shares of stock that are present and entitled to vote with respect to any
particular
<PAGE>
proposal, but will not be counted as votes in favor of such proposal. An
abstention from voting on a proposal will have the same effect as a vote
against such proposal.
Section 10. If a broker or nominee holding shares of stock in
"street name" indicates on a proxy that it does not have discretionary
authority to vote those shares as to a particular proposal presented for
stockholder approval, those shares will be considered to be outstanding,
but will not be considered as present and entitled to vote with respect to
such proposal.
Section 11. On each matter submitted to a vote of the stockholders,
each holder of a share shall be entitled to one vote for each share
standing in his name on the books of the corporation, irrespective of the
class or series thereof, and all shares of all classes or series shall
vote as a single class or series ("Single Class Voting"); provided,
however, (a) as to any matter with respect to which a separate vote of any
class or series is required by the 1940 Act or by the Maryland General
Corporation Law, such requirement as to a separate vote by that class or
series shall apply in lieu of Single Class Voting as described above; (b)
in the event that the separate vote requirements referred to in (a) above
apply with respect to one or more classes of series, then, subject to (c)
below, the shares of all other classes or series shall vote as a single
class or series; and (c) as to any matter which does not affect the
interest of a particular class or series, including liquidation of a
particular class or series, only the holders of shares of the one or more
affected classes shall be entitled to vote. A stockholder may vote the
shares owned of record by him either in person or by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from its date, unless otherwise
provided in the proxy. At all meetings of stockholders, unless the voting
is conducted by inspectors, all questions relating to the qualification of
voters and the validity of proxies and the acceptance or rejection of
votes shall be decided by the chairman of the meeting.
In case the transfer books of the corporation shall not have been
closed and no date shall have been fixed as a record date for the
determination of the stockholders entitled to vote, no share of stock
shall be voted on at any election of directors after the first election of
directors, which has been transferred on the books of the corporation
within twenty days next preceding such election. The vote for directors
shall be by ballot. The vote upon any other matter before the meeting
shall be taken in such manner as the chairman of the meeting shall direct.
Section 12. Any action required or permitted to be taken at any
meeting of stockholders may be taken without a meeting, if a consent in
writing, setting forth such action, is signed by all the stockholders
entitled to vote on the subject matter thereof and
<PAGE>
any other stockholders entitled to notice of a meeting of stockholders but
not to vote thereat have waived in writing any rights which they may have
to dissent from such action, and such consent and waiver are filed with
the records of stockholders meetings.
Section 13. The chairman of each meeting at which directors are to
be elected shall appoint two inspectors of election, unless such
appointment shall be unanimously waived by those stockholders present or
represented by proxy at the meeting and entitled to vote at the election
of directors. No director or candidate for the office of director shall be
appointed as such inspector. The inspectors shall first take and subscribe
an oath or affirmation faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of their
ability, and shall take charge of the polls and after the balloting shall
make a certificate of the result of the vote taken.
ARTICLE III
DIRECTORS
Section 1. The property and business of this corporation shall be
managed by its board of directors. The board of directors shall consist of
not less than three nor more than fifteen persons.
The number of directors provided for in the Articles of
Incorporation may be changed by the majority vote of the entire board of
directors so long as the number remains within the specified limits in the
Articles of Incorporation or bylaws, and such action does not affect the
tenure of office of any director.
Directors shall hold office for the period for which they are
elected and until their respective successors are elected and shall
qualify, unless sooner displaced pursuant to law. The manner of electing
the directors shall be specified in the Articles of Incorporation. Until
an annual meeting of stockholders that is required by the 1940 Act or
until successors are duly elected and qualify, the board shall consist of
the persons named as such in the Articles of Incorporation. Directors need
not be stockholders in the corporation.
Each share of stock may be voted for as many individuals as there
are directors to be elected and for whose election the share is entitled
to be voted.
Section 2. In the event of a vacancy or vacancies in the board of
directors caused by reason of the death, disqualification or resignation
of any director or directors, or in the event of an increase in the number
of directors, the vacancy or vacancies may be filled and the additional
directors may be elected by the votes of a majority of the directors in
<PAGE>
the office at the time, provided that immediately after the filling of
such vacancy or vacancies or the election of any additional director or
directors at least two-thirds of the directors then holding office shall
be the directors named in the original Articles of Incorporation or shall
have been elected to such office by the holders of the outstanding voting
securities of the corporation at an annual or special meeting duly called
for that purpose. Directors chosen by the board of directors pursuant to
the authority contained in this Section shall hold office until the next
election of directors and until their successors shall be duly elected and
qualify, unless sooner displaced pursuant to law.
Section 3. (a) In the event of a vacancy or vacancies in the board
of directors caused by reason of the death, disqualification or
resignation of any director or directors, or in the event of an increase
in the number of directors, the vacancy or vacancies may be filled and the
additional directors may be elected by the outstanding voting security
holders of the corporation at an annual meeting, if required by the 1940
Act, or a special meeting duly called for that purpose. Directors chosen
pursuant to the authority contained in this Section shall hold office
until the next election of directors and until their successors shall be
duly elected and qualify, unless sooner displaced pursuant to law.
(b) In the event of a vacancy or vacancies in the board of
directors caused by reason of the death, disqualification or resignation
of any director or directors, or in the event of an increase in the number
of directors, and the board of directors is not authorized pursuant to the
provisions of the foregoing Section 2 of this Article to fill all such
vacancies, or to elect all of such additional directors, then a majority
of the directors then in office, though less than a quorum, shall
forthwith cause to be held as promptly as possible, and in any event
within sixty days, (unless the Securities and Exchange Commission shall by
order extend such period) a meeting of the holders of the outstanding
voting securities of the corporation, for the purpose of electing
directors to fill any vacancies in the board of directors, which vacancies
the board of directors are not authorized by Section 2 to fill, and for
the purpose of electing any additional directors, which additional
directors the board of directors are not authorized to elect pursuant to
Section 2, as the case may be. Directors so chosen by the holders of the
outstanding voting securities of the corporation at a meeting called
pursuant to the provisions of this Section shall hold office until the
next election of the directors and until their successors shall be duly
elected and qualify, unless sooner displaced pursuant to law.
Subject to Article II, a director may be removed from office by the
holders of record of not less than two-thirds of the outstanding shares of
the corporation by declaring that he or she be removed from that office
either by declaration in writing filed with the
<PAGE>
Custodian of the securities of the corporation or by votes cast in person
or by proxy at a meeting called for the purpose.
Section 4. In addition to the powers and authorities by these bylaws
expressly conferred upon them, the board of directors may exercise all
such powers of the corporation and do all such lawful acts and things as
are not by statute or by the Articles of Incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. Meetings of the board of directors, regular or special,
may be held at any place in or out of the State of Maryland as the board
may from time to time determine.
Section 6. Written notice of each regular and of each special
meeting of the board of directors stating the time and place thereof,
shall be served on, sent or mailed postage prepaid to, each director at
his address as the same appears on the books of the corporation, at least
one (1) day before the meeting. The notice of any meeting need not specify
the purpose or purposes thereof, unless required by any applicable law.
Section 7. Special meetings of the board of directors may be called
at any time by the president or secretary on the written request of any
two directors or one-third of the Board, whichever number is greater.
Special meetings may be held at such place or places within or without
Maryland as may be designated from time to time by the board of directors;
in the absence of such designation such meetings shall be held at such
places as may be designated in the call.
Section 8. Whenever under any provision of the charter or of these
bylaws or of the laws of the State of Maryland, the board of directors is
authorized to take any action at a meeting of the board after notice, such
action may be taken at the meeting without notice if the required notice
be waived in writing by each director of the corporation or if all the
directors be present.
Section 9. At all meetings of the board, a majority of the entire
board of directors shall constitute a quorum for the transaction of
business and the action of a majority of the directors present at any
meeting at which a quorum is present, but not less than three, shall be
the action of the board of directors unless the concurrence of a greater
proportion is required for such action by statute, the charter or these
bylaws. If a quorum shall not be present at any meeting of directors, the
directors present thereat may by a majority vote
<PAGE>
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. One or more
directors may participate in a meeting of the board or of a committee of
the board by means of conference telephone or similar communication
equipment by means of which all persons participating in the meeting can
hear each other. Participation in a meeting by these means constitutes
presence in person at the meeting.
Section 10. Any action required or permitted to be taken at any
meeting of the board of directors or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all
members of the board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the board or
committee.
Section 11. After the Department of Taxation and Assessments accepts
the Articles of Incorporation for record, the directors shall hold an
organization meeting of the board of directors, to adopt bylaws, elect
officers, and transact any other business which may come before the
meeting. Notice shall be given to each director in writing of the time and
place of the meeting at least three days before it is held unless a
unanimous written consent setting forth the aforementioned is (1) signed
by each member of the board, and (2) filed with the minutes of proceedings
of the board.
COMMITTEES OF DIRECTORS
Section 12. The board of directors may appoint from among its
members an executive committee and other committees composed of two or
more directors, and may delegate to such committees, any of the powers of
the board of directors except the powers that are prohibited from
delegation by applicable law which include, but are not limited to, the
power to declare dividends or distributions on stock, recommend to the
stockholders any action which requires stockholder approval, amend the
bylaws, approve any merger or share exchange which does not require
stockholder approval, or issue stock. Nevertheless, if the board of
directors has given general authorization for the issuance of stock, a
committee of the board, in accordance with a general formula or method
specified by the board of directors by resolution or by adoption of a
stock option plan or other plan, may fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued. In the absence of any member of any such committee, the members
thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the board of directors to act in the place of such
absent members.
<PAGE>
Section 13. When exercising any of the powers of the board of
directors, the committees shall keep minutes of their proceedings and
shall report the same to the board of directors at the meeting next
succeeding, and any action by the committees shall be subject to revision
and alteration by the board of directors.
COMPENSATION OF DIRECTORS
Section 14. Directors, as such, shall not receive any stated salary
for their services but, by resolution of the board, a fixed sum, and
expenses of attendance if any, may be allowed to directors for attendance
at each regular or special meeting of the board of directors, or of any
committee thereof, but nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notice by mail
shall be deemed to be given at the time when the same shall be mailed. In
the case of stockholders' meetings the notice may be left at the
stockholder's residence or usual place of business. Notice to directors
may also be given by telegram.
Section 2. Whenever any notice of the time, place or purpose of any
meeting of stockholders, directors or committee is required to be given
under the provisions of the statute or under the provisions of the charter
or these bylaws, a waiver thereof in writing, signed by the person or
persons entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance at the
meeting of stockholders in person or by proxy, or at the meeting of
directors or committee in person, shall be deemed equivalent to the giving
of such notice to such persons.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, vice-president, a secretary
and a treasurer. The president shall be selected from among the directors.
The board of directors may also choose additional officers, including a
chairman, one or more vice-presidents, and one or more assistant
secretaries and assistant treasurers. Two or more offices, except those of
president and
<PAGE>
vice-president, may be held by the same person but no officer shall
execute, acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law, the charter or these bylaws to be
executed, acknowledged or verified by two or more officers.
Section 2. The board of directors at its first meeting after every
required annual meeting of stockholders shall choose a president from
among the directors, and shall choose one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall serve for one year
and until their successors are chosen and qualify. Any officer or agent
may be removed by the board of directors whenever, in its judgment, the
best interests of the corporation will be served thereby, but such removal
shall be without prejudice to the contractual rights, if any, of the
person so removed. If the office of any officer becomes vacant for any
reason, the vacancy shall be filled by the board of directors if required
under applicable law, and may be filled if not required.
Section 6. Any officer, agent or employee of the corporation may be
required to give a bond for the faithful discharge of his duties, in such
sum and with such surety or sureties as the board of directors may from
time to time prescribe.
THE CHAIRMAN
Section 7. The chairman, or in his absence or disability, the vice
chairman, shall be the chief executive officer of the corporation. The
chairman shall preside at all meetings of the stockholders and directors,
shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board
are carried into effect, subject, however, to the right of the directors
to delegate any specific powers to any other officer or officers of the
corporation.
Section 8. The chairman shall execute in the corporate name all
authorized deeds, mortgages, bonds, contracts or other instruments
requiring a seal, under the seal of the
<PAGE>
corporation, except in cases where the signing or execution thereof shall
be expressly delegated by the board of directors to some other officer or
agent of the corporation.
The chairman shall be ex officio a member of all committees and
shall have the general powers and duties of supervision and management
usually vested in the office of president of a corporation.
THE PRESIDENT
Section 8. The president shall, at the request of or in the absence
or disability of the chairman or the vice chairman, preside at all
meetings of the stockholders and directors, and shall in general, exercise
the powers and perform the duties of the chairman. Subject to the
supervision of the directors and such direction and control as the
chairman may exercise, the president shall exercise such other powers and
perform such other duties as from time to time may be assigned by the
directors.
VICE-PRESIDENTS
Section 9. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties
and exercise the powers of the president, and shall perform such other
duties and have such other powers as the board of directors may from time
to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of
directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause
to be given, notice of all meetings of the stockholders and all meetings
of the board of directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose supervision
he shall be. He shall keep in safe custody the seal of the corporation
and, when authorized by the board of directors, affix the same to any
instrument requiring it and, when so affixed, it shall be attested by his
signature or by the signature of an assistant secretary.
Section 11. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of
directors, shall, in the absence or
<PAGE>
disability of the secretary, perform the duties and exercise the powers of
the secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. Except as provided in Article Eleventh of the Articles
of Incorporation, the treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 13. Except as provided in Article Eleventh of the Articles
of Incorporation, the treasurer shall, unless otherwise provided by the
board of directors, disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the board of directors so
requires an account of all his transactions as treasurer and of the
financial condition of the corporation.
Section 14. If required by the board of directors, the treasurer
shall give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 15. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE VI
SALE AND REPURCHASE OF CAPITAL STOCK
Section 1. The price to be received by the corporation, exclusive of
any marketing concession or premium (which shall not exceed 9% of the
public offering price thereof), for each share of any class or series of
capital stock of the corporation for purposes of the issuance, sale,
redemption or repurchase of such capital stock (otherwise than as stock
<PAGE>
dividends or upon the exercise of warrants or other instruments
representing rights to purchase or subscribe to shares of such stock),
shall be determined and take effect as hereinafter set forth. The price of
a share of any class or series of the capital stock of the corporation
(hereinafter called "Net Asset Value") for purposes of sale, redemption or
repurchase shall be determined as of the close of business of the New York
Stock Exchange on each business day on which such Exchange is open, such
Net Asset Value taking effect as of such close. In addition, in its
discretion, the board of directors, or any duly authorized officer, may
make, or cause to be made, more frequent determinations of the Net Asset
Value when it deems necessary, which determinations shall become effective
at the time established by the board of directors.
Section 2. So long as there are assets legally available to do so,
and such right is not suspended under the provisions of the 1940 Act, the
board of directors and each holder of shares of a particular class or
series shall have the right to redeem all or any part of the shares of
that class or series in the manner set forth in the Articles of
Incorporation.
Section 3. The Net Asset Value per share of any class or series
shall be the quotient obtained by dividing the value at such time of the
net assets of that class or series (i.e., the value of the assets
belonging to the corporation less the liabilities belonging to that class
or series determined as set forth in this Article of these bylaws) by the
total number of shares of that class or series of the corporation
(excluding shares of its capital stock owned by the corporation)
outstanding according to the records of the corporation at such time, all
determined by the board of directors in accordance with generally accepted
accounting principles and not inconsistent with the 1940 Act.
The board of directors may determine to maintain the Net Asset Value
per share of any class or series at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the
1940 Act for the continuing declarations of income attributable to that
class or series as dividends payable in additional shares of that class or
series at the designated constant dollar amount and for the handling of
any losses attributable to that class or series. Such procedures may
provide that in the event of any loss, each stockholder shall be deemed to
have contributed to the capital of the corporation attributable to that
class or series his pro rata portion of the total number of shares
required to be cancelled in order to permit the net asset value per share
of that class or series to be maintained, after reflecting such loss, at
the designated constant dollar amount. Each stockholder of the corporation
shall be deemed to have agreed, by his investment in any class or series
with respect to which the board of directors shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence
in the event of any such loss.
<PAGE>
Section 4. For the purpose of determination of the price at which
the capital stock of the corporation shall be issued, sold and resold by
the corporation, the assets of each class or series of the corporation
shall be determined in the manner set forth in the Articles of
Incorporation.
Section 5. For the purpose of determination of the price at which
the shares of any class or series of capital stock of the corporation
shall be issued, sold and resold by the corporation, the liabilities of
the corporation shall be determined in the manner set forth in the
Articles of Incorporation.
Section 6. The value at any given time of items of property owned by
the corporation shall be determined as follows:
(a) The value of any security which shall be listed or traded
on the New York Stock Exchange or the American Stock Exchange shall be
determined by taking the most recently reported sale quotation with
respect to a sale of such security (or, in the absence of any sale, the
average between the most recent asked price quotation therefor and the
most recent bid price quotation therefor) on the day, and at or prior to
the time, as of which such value is determined, as shown by any report in
common use of transactions or quotations made on such Exchange;
(b) The value of any security which shall not be listed or
dealt in on the New York Stock Exchange or the American Stock Exchange
shall be determined as nearly as practicable in the manner described in
the foregoing clause, except that the appropriate sale price quotation, or
appropriate bid and asked price quotations, may be ascertained by
reference to any source of quotations in common use which may be
available; or
(c) The value of any security in respect of which an
appropriate sale quotation, or appropriate bid and asked quotations, of
the character specified in the foregoing clauses (a) and (b) shall not be
available, and the values of any assets of the corporation other than
securities, shall be determined in such manner as the board of directors,
or any officer designated for the purpose by the board of directors, may
deem appropriate.
Section 7. The price at which capital stock of the corporation shall
be purchased or repurchased by the corporation, pursuant to the exercise
of stockholder's option, shall be determined in the manner set forth in
Sections 3, 4, 5, and 6 of this Article of these bylaws for the purpose of
issue and resale of such stock.
<PAGE>
Section 8. Shares of capital stock of the corporation which have
been subscribed for or agreed to be purchased from the corporation shall
be deemed to become outstanding as of the time of acceptance of the order
therefor by or on behalf of the corporation and the net price to be
received by the corporation therefor (that is to say, after deduction of
any commission or concession payable by the corporation upon the sale
thereof) shall be deemed to be an asset of the corporation.
Shares of such capital stock about to be purchased by the
corporation shall be deemed to be outstanding until the time as of which
the price thereof is agreed upon or determined, as the case may be, and
thereupon and until paid, the price payable therefor shall be deemed to be
a liability of the corporation.
Section 9. For all purposes of the Articles of Incorporation and
these bylaws a full business session of the New York Stock Exchange on any
day shall be defined as a session with respect to which the actual time of
closing is that time which shall have been scheduled for such closing in
advance of the opening of such session and shall not be deemed to include
a session closing irregularly due to market conditions or otherwise.
Section 10. Each determination of the value of a share of the
capital stock of the corporation made by the board of directors, or by any
officer of the corporation designated by the board of directors to make
such determination, shall be conclusive.
ARTICLE VII
RESTRICTIONS
Section 1. Securities issued by the corporation may be sold to any
officer or director of the corporation or to any proprietor, member,
director or officer of a manager or sponsor of, or advisor to, or
principal distributor for the corporation, at the Net Asset Value, as
defined in Article VI, in effect at the time of such sale, provided that
any such sale shall comply in all respects with governing securities laws
and regulations, and no security issued by the corporation shall be sold
to any such person except on representation to the corporation by such
person that such purchase is being made for investment purposes only.
Section 2. No officer or director of the corporation and no business
organization acting as manager or sponsor of, or adviser to, or principal
distributor for, the corporation, and no proprietor, member, officer or
director of any manager or sponsor of, or advisor to, or principal
distributor for, the corporation shall be permitted to make any "short
sale" of any security or securities issued by the corporation; "short
sale" shall not be deemed to
<PAGE>
include any sale of such securities to the extent that the same, or
securities exchangeable therefor, shall be owned by the seller or
deliverable to the seller under firm contract so as to be available for
delivery in satisfaction of such sale. In the administration of this
Section 2 and the following Section 3, the corporation and all persons,
firms or corporations interested therein shall be entitled, in the absence
of actual knowledge to the contrary on the part of the officer or agent of
the corporation or other person, firm or corporation acting, to assume due
compliance with agreements not to make such "short sales" or prohibited
purchases or both.
Section 3. No business organization acting as manager or sponsor of,
or advisor to, or principal distributor for, the corporation shall be
permitted to purchase any securities issued by the corporation, either
from the corporation or elsewhere, except when and to the extent that any
such manager, sponsor, advisor, or distributor has received orders for
securities of the corporation at least equivalent in quantity and kind to
the securities proposed to be purchased from the corporation.
Section 4. The provisions set forth in the foregoing Sections 1, 2
and 3 of this Article shall not be construed to prohibit the principal
distributor for the corporation from maintaining, in the capacity of agent
for the corporation, a market for the securities issued by the
corporation.
Section 5. All contracts hereafter entered into by the corporation
for management, sponsorship, advisory or stock distributing (by a
principal distributor) services shall contain express reference to the
provisions of the foregoing Sections 1, 2, 3 and 4 of this Article.
ARTICLE VIII
CERTIFICATES OF STOCK
Section 1. The board of directors may authorize the issue of some or
all of the shares of any or all of its classes or series without
certificates. This authority does not affect shares already represented by
certificates until those certificates are surrendered to the corporation.
At the time of issue or transfer of shares without certificates, the
corporation shall send the stockholder a written statement of the
information required on certificates pursuant to Maryland law. The shares
of the stock of the corporation shall be transferable on the books of the
corporation by the holder thereof in person or by his attorney, upon
surrender for cancellation of a certificate or certificates for the same
number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto duly executed, and with such proof of the
authenticity of the signature as the corporation or its agents may
reasonably require. Each certificate shall be signed by the
<PAGE>
president or a vice-president and countersigned by the secretary or an
assistant secretary or the treasurer or an assistant treasurer and may be
sealed with the corporate seal.
Section 2. The signatures may be either manual or facsimile
signatures and the seal may be either facsimile or any other form of seal.
In case any officer who has signed any certificate ceases to be an officer
of the corporation before the certificate is issued, the certificate may
nevertheless be issued by the corporation with the same effect as if the
officer had not ceased to be such officer as of the date of its issue.
Each stock certificate shall include on its face the name of the
corporation, the name of the stockholder and the series or class of stock
and number of shares represented by the certificate. If the corporation
has authority to issue stock of more than one class or series, the stock
certificate shall contain on its face or back a full statement or summary
of: (1) the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption of the stock of each class which
the corporation is authorized to issue and (2) if the corporation is
authorized to issue any preferred or special class in series, the
differences in the relative rights and preferences between the shares of
each series to the extent they have been set, and the authority of the
board of directors to set the relative rights and preferences of
subsequent series. A summary of such information included in a
registration statement permitted to become effective under the Securities
Act of 1933, as now or hereafter amended, shall be an acceptable summary
for the purposes of this Section. In lieu of such full statement or
summary, there may be set forth upon the face or back of the certificate a
statement that the corporation will furnish to any stockholder upon
request and without charge, a full statement of such information. Every
stock certificate representing shares of stock which are restricted as to
transferability by the corporation shall contain a full statement of the
restriction or state that the corporation will furnish information about
the restriction to the stockholder on request and without charge. A stock
certificate may not be issued until the stock represented by it is fully
paid.
LOST CERTIFICATES
Section 3. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of that fact and
advertise the same in such manner as the board of directors may require,
and shall give the corporation a bond of indemnity, in form and with one
or more sureties satisfactory to the board of directors, and in an amount
satisfactory to the board of directors, whereupon a new certificate may be
issued of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed, but always subject to the approval of the
board of directors.
<PAGE>
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The board of directors may fix, in advance, a date as the
record date for the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in
order to make a determination of stockholders for any other proper
purpose. Such date, in any case, shall be not more than sixty days, and in
case of a meeting of stockholders not less than ten days, prior to the
date on which the particular action requiring such determination of
stockholders is to be taken. In lieu of fixing a record date, the board of
directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, twenty days. If the stock
transfer books are closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least ten days immediately preceding such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE IX
DIVIDENDS
Section 1. Dividends and capital gain distributions on shares of a
particular class or series of the corporation may be declared and paid at
any time and from time to time in the discretion of the board of directors
in the manner set forth in the Articles of Incorporation.
<PAGE>
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think
conducive to the interests of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The officers shall prepare or cause to be prepared
annually a full and correct statement of the affairs of each class or
series of the corporation, including a statement of assets and liabilities
and a statement of operations for the preceding fiscal year, which shall
be mailed to the stockholders and submitted at the annual meeting, if
held, and shall be filed within twenty days thereafter at the
corporation's principal office.
If an annual meeting of stockholders is not held, pursuant to a
bylaw under Article II herein, the statement of affairs shall be placed on
file at the corporation's principal office within 120 days after the end
of the fiscal year.
CHECKS
Section 4. All checks, drafts, and orders for the payment of money,
notes and other evidences of indebtedness, issued in the name of the
corporation shall be signed by such officer or officers as the board of
directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall begin on the
first day of January in each year and shall end on the thirty-first day of
December following.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate
Seal, Maryland." The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
<PAGE>
STOCK LEDGER
Section 7. The original or a duplicate of the stock ledger shall be
kept at the office of the stock transfer agent and shall contain the names
and addresses of all stockholders and the number of shares of each class
held by each stockholder. Such stock ledger may be in written form or any
other form capable of being converted into written form within a
reasonable time for visual inspection.
ARTICLE X
AMENDMENTS
Section 1. Subject to the laws of Maryland, the board of directors
shall have the power, at any regular meeting or at any special meeting if
notice thereof be included in the notice of such special meeting, to
alter, amend or repeal any bylaws of the corporation and to make new
bylaws so long as such alteration, amendment, repeal or making of the
bylaws does not affect any statutory rights of stockholders under the laws
of Maryland or violate any provisions of the 1940 Act.
Section 2. The stockholders shall have the power, at any annual
meeting or at any special meeting if notice thereof be included in the
notice of such special meeting, to alter or repeal any bylaws of the
corporation and to make new bylaws.
ARTICLE XI
AGREEMENTS
Section 1. All agreements purporting to comply with the requirements
of Article Eleventh of the Articles of Incorporation shall contain a
provision requiring delivery of the deposited property of the corporation,
in the event of termination or ending of such agreement for any reason,
only directly to a successor custodian or trustee complying with the
requirements of the aforementioned Article Eleventh under the then current
agreement or under a succeeding agreement complying with the requirements
of the aforementioned Article Eleventh, unless otherwise directed by a
majority of the shares held by stockholders then entitled to vote for
directors, such direction, if necessary, to be obtained either by
affirmative vote or written direction.
Section 2. In the event that notice of termination of a custodian or
trustee agreement contemplated by Article Eleventh of the Articles of
Incorporation is given or, such an agreement has ended or is about to end
for any reason, the officers of the corporation shall use their best
efforts to either obtain a successor custodian or trustee under the then
current agreement, or negotiate a new agreement with another custodian or
trustee. Unless at least 30 days prior to the effective termination date,
if notice of termination is given, or within 60 days of the ending of the
agreement if no notice of
<PAGE>
termination be given either (1) a successor custodian or trustee complying
with the requirements of the aforementioned Article Eleventh has agreed to
be substituted under the then current agreement as soon as practicable, or
(2) an agreement complying with the requirements of the aforementioned
Article Eleventh shall have been executed, the board of directors of the
corporation shall forthwith call a meeting of the stockholders then
entitled to vote for directors to decide by a majority of the outstanding
shares entitled to vote at such meeting, whether the corporation should
(1) conduct its affairs in any manner approved by the stockholders, (2)
continue without a custodian or trustee agreement or (3) be dissolved.
Section 3. The corporation may not hereafter enter into any Contract
on behalf of any series for the supervision or "management" of the
business of such series without the affirmative vote or written consent of
the holders of a majority of the issued and outstanding shares of such
series then entitled to vote for directors; no such Contract shall be
entered into which permits amendment, transfer, assignment, sale,
hypothecation or pledge thereof without the aforementioned affirmative
vote or written consent. "Contract" as used in this Section shall be
deemed not to include a custodian or trustee agreement purporting to
comply with the requirements of Article Eleventh of the Articles of
Incorporation.
ARTICLE XII
EXERCISE OF OPTIONS
Section 1. In the event that a holder of shares of capital stock of
the corporation wishes to exercise the right given under Article VII of
the Articles of Incorporation to require the corporation to purchase all
or any part of such shares, he shall surrender his certificate or
certificates for such shares to the corporation accompanied by proper
transfer instruments, or endorsed as specified in Article VIII of these
bylaws, together with a written statement setting forth the number of
shares which he requires the corporation to purchase. The purchase price
of such shares which the corporation is so required to purchase shall be
payable within the period of five business days after the date as of which
proper surrender of the certificate therefor is made (exclusive of days on
which the New York Stock Exchange shall be closed).
Section 2. Nothing contained in these bylaws shall deny the board of
directors or any officer designated for the purpose the right to
repurchase capital stock of the corporation from stockholders not
exercising their option to require repurchase under Article VII of the
Articles of Incorporation for the account of the corporation out of
available surplus at a repurchase price per share not to exceed the next
effective price determined in accordance with the provisions of Article VI
of these bylaws.
<PAGE>
ARTICLE XIII
INDEMNITY AND INSURANCE
Section 1. A "Covered Person" shall include the following: (1) any
director or officer of the corporation, or (2) an individual who is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise.
Section 2. The corporation shall indemnify each person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative ("Proceeding"), by reason of the fact that
he is or was a Covered Person, against all expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such Proceeding to the
fullest extent permitted by law; unless it is established that:
(a) the act or omission of the Covered Person was material to the
matter giving rise to the Proceeding; and
(1) was committed in bad faith; or
(2) was the result of active and deliberate dishonesty;
or
(b) the Covered Person actually received an improper personal
benefit in money, property, or services; or
(c) in the case of any criminal Proceeding, the Covered Person had
reasonable cause to believe that the act or omission was unlawful.
Section 3. A Covered Person shall not be indemnified if the
Proceeding was one by or in the right of the corporation in which the
Covered Person was adjudged to be liable to the corporation.
Section 4. A Covered Person may not be indemnified under Section 2
of this Article in respect to any Proceeding charging improper personal
benefit to the Covered Person, whether or not involving action in the
Covered Person's official capacity, in which the Covered Person was
adjudged to be liable on the basis that personal benefit was improperly
received.
<PAGE>
Section 5. Indemnification under Section 2 of this Article may not
be made by the corporation unless authorized for a specific Proceeding
after a determination has been made that the Covered Person has met the
standard of conduct set forth in Section 2.
(a) Such determination shall be made:
(1) by the board of directors by a majority vote of a
quorum consisting of directors not, at the time, parties to the
Proceeding; or, if such a quorum cannot be obtained, then by a majority
vote of a committee of the board consisting solely of two or more
directors not, at the time, parties to such Proceeding, and who were duly
designated to act in the matter by a majority vote of the full board, in
which designated directors who are parties may participate; or
(2) by special legal counsel selected by the board of
directors; or
(3) if a committee cannot be established or if the
requisite quorum of the full board cannot be obtained pursuant to this
Section, then by a majority vote of the full board in which directors who
are parties may participate; or
(4) by the stockholders.
(b) The determination as to the reasonableness of expenses
shall be made in the same manner as the determination that indemnification
is authorized.
Section 6. Reasonable expenses incurred by a Covered Person who is a
party to a Proceeding may be paid or reimbursed by the corporation in
advance of the final disposition of the Proceeding upon receipt by the
corporation of:
(a) a written affirmation by the Covered Person of the
Covered Person's good faith belief that the standard of conduct necessary
for indemnification by the corporation as authorized by this Article has
been met; and
(b) a written undertaking by or on behalf of the Covered
Person to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
Section 7. The indemnification and advancement of expenses provided
or authorized by this Article may not be deemed exclusive of any other
rights, by indemnification or otherwise, to which a Covered Person may be
entitled under the
<PAGE>
Articles of Incorporation, these bylaws, a resolution of the stockholders
or directors, an agreement or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
Section 8. (a) The corporation may purchase and maintain insurance
on behalf of a Covered Person against any liability asserted against and
incurred by such person in any capacity or arising out of such person's
position, whether or not the corporation would have the power to indemnify
against liability under the provisions of this Article.
(b) The corporation may provide similar protection, including
a trust fund, letter of credit, or surety bond, not inconsistent with this
Section.
Section 9. Any indemnification of, or advance of expenses to, a
Covered Person in accordance with this Article, if arising out of a
Proceeding by or in the right of the corporation, shall be reported in
writing to the stockholders with the notice of the next stockholder's
meeting or prior to the meeting.
Section 10. A Covered Person, who has been successful, on the merits
or otherwise, in the defense of any Proceeding referred to in Section 2 of
this Article shall be indemnified against reasonable expenses incurred by
the Covered Person in connection with the Proceeding.
JOHN HANCOCK SOVEREIGN INVESTORS FUND
A SERIES PORTFOLIO OF
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CLASS A
fully paid and non-assessable shares in John Hancock Sovereign Investors Fund
(the "Fund"), a Series of Shares established and designated under the Charter of
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC. (hereinafter referred to as the
"Corporation"), transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed subject, however, to the provisions referred to
herein. This Certificate and the shares represented thereby are issued and shall
be held subject to all the provisions of the Certificate of Incorporation
forming the Corporation and all of the provisions in the By-laws of the
Corporation (copies of which are on file in the office of the Corporation) to
all of which the holder of this Certificate by acceptance hereof assents. This
Certificate is not valid until countersigned by the Transfer Agent.
- -----------------------------------------------------------
Update date 9/10/93
Maryland Fund
Signed by Freedman, President
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS FUND
A SERIES PORTFOLIO OF
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CLASS B
- -------------------------------------------------
Update date 1/3/94...jjm
Maryland Fund
Signed by Freedman, President
fund #129
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS FUND
A SERIES PORTFOLIO OF
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CLASS C
- -------------------------------------------------
Update date 9/10/93...fpb
Maryland Fund
Signed by Freedman, President
<PAGE>
JOHN HANCOCK SOVEREIGN BALANCED FUND
A SERIES PORTFOLIO OF
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CLASS A
fully paid and non-assessable shares of John Hancock Sovereign Balanced Fund
(the "Fund"), a Series of Shares established and designated under the Charter of
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC. (hereinafter referred to as the
"Corporation"), transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed subject, however, to the provisions referred to
herein. This Certificate and the shares represented thereby are issued and shall
be held subject to all the provisions of the Certificate of Incorporation
forming the Corporation and all of the provisions in the By-laws of the
Corporation (copies of which are on file in the office of the Corporation) to
all of which the holder of this Certificate by acceptance hereof assents. This
certificate is not valid until countersigned by the Transfer Agent.
- -------------------------------------------------------------
Update date 9/10/93
Maryland Funf
signed by Freedman, President
<PAGE>
JOHN HANCOCK SOVEREIGN BALANCED FUND
A SERIES PORTFOLIO OF
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CLASS B
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
985 Old Eagle School Road
Wayne, Pennsylvania
October 23,1991
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Dear Sirs:
John Hancock Sovereign Investors Fund, Inc. (the "Fund"), is
incorporated in Maryland with its principal place of business at 985 Old Eagle
School Road, Wayne, Pennsylvania to engage in the business of an investment
company. Subject to the approval of the Fund's shareholders, the Fund's
Directors have selected John Hancock Advisers, Inc. (the "Adviser") to provide
overall investment advice and management for the Fund and to provide certain
other services, as more fully set forth below, and you are willing to provide
such advice, management and services under the terms and conditions hereinafter
set forth. Accordingly, the Fund agrees with you as follows:
1. Delivery of Documents. The Trust has furnished you with copies,
properly certified or otherwise authenticated, of each of the
following:
(a) Articles of Incorporation, dated May 1, 1990 (the
"Articles");
(b) By-Laws of the Trust as in effect on the date hereof.
(c) Resolutions of the Board of Directors selecting the Adviser
as the investment adviser for the Fund and approving the form
of this Agreement and resolution adopted by the shareholders
of the Fund; and
(d) Commitments, limitations and undertakings made by the Fund to
state "blue sky" authorities for the purpose of qualifying
shares of the Fund for sale in such states.
The Fund will furnish you from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
<PAGE>
2. Investment and Management Services. You will use your best efforts
to provide to the Fund continuing and suitable investment programs
with respect to investments, consistent with the investment
policies, objectives and restrictions of the Fund. In the
performance of the Adviser's duties hereunder, subject always(x)
to the provisions contained in the documents delivered to the
Adviser pursuant to Section 1, as each of the same may from time
to time be amended or supplemented, and (y) to the limitations set
forth in the registration statement of the Fund as in effect from
time to time under the Securities Act of 1933, as amended, the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment policies, objectives and restrictions of
the Fund, with respect to the purchase, holding and
disposition of portfolio securities;
(b) advise the Fund in connection with policy decisions to be
made by the Board of Directors or any committee thereof with
respect to such Fund's investment and, as requested, furnish
the Fund with research, economic and statistical data in
connection with the Fund's investments and investment
policies;
(c) provided administration of the day-to-day investment
operations of the Fund;
(d) submit such reports relating to the valuation of the Fund's
securities as the Board of Directors may reasonably request;
(e) assist the Fund in any negotiations relating to its
investments with issuers, investment banking firms,
securities brokers or dealers and other institutions or
investors;
(f) consistent with provisions of Section 6 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by you, provided
that in connection with the placing of such orders and the
selection of such brokers or dealers you shall seek to obtain
execution and pricing within the policy guidelines determined
by the Board of Directors and set forth in the Prospectus and
Statement of Additional Information of the Fund as in effect
from time to time;
(g) provide office space and equipment and supplies, the use of
accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of
the affairs of the Fund;
(h) from time to time or at any time requested by the Board of
Directors, make reports to the Fund of your performance of
the foregoing services and furnish advice and recommendations
with respect to other aspects of the business and affairs of
the Fund;
(i) maintain and preserve the records required by the Investment
Company Act of 1940, as amended, to be maintained and
preserved by the Fund on behalf of the Fund (you agree that
such records are the property of the Fund and will be
surrendered to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as
you may deem necessary or useful in the discharge of your
duties hereunder;
<PAGE>
(k) oversee and use your best efforts to assure the performance
of, the activities and services of the custodian, transfer
agent and other similar agents retained by the Fund; and
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of
payments of cash for the account of the Fund.
3. Expenses of the Fund. You will pay:
(a) the compensation and expenses of all officers and employees
of the Fund;
(b) the expenses of office, rent, telephone and other utilities,
office furniture, equipment, supplies and other office
expenses of the Fund;
(c) any other expenses incurred by you in connection with the
performance of your duties hereunder; and
(d) premiums for such insurance as may be agreed upon be you and
the Fund.
4. Expenses of the Fund or the Fund Not Paid by You. You will not be
required to pay any expenses which this Agreement does not
expressly make payable to you. In particular, and without limiting
the generality of the foregoing but subject to the provisions of
Section 3, you will not be required to pay:
(a) any and all expenses, taxes and governmental fees incurred by
the Fund prior to the effective date of the Fund's Post
Effective Amendment No 79.
(b) the compensation and expenses of Board of Directors who are
not interested persons (as used in this Agreement such term
shall have the meaning specified in the Investment Company
Act of 1940, as amended) of you, and of independent advisers,
independent contractors, consultants, managers and other
unaffiliated agents employed by the Fund other that through
you;
(c) legal, accounting and auditing fees and expenses of the Fund;
(d) the fees or disbursements of custodians and depositories of
the Fund's assets, transfer agents, disbursing agents, plan
agents and registrars;
(e) taxes and governmental fees assessed against the Fund's
assets and payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value
of the shares of the Fund.
5. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by you as herein
provided, the Fund will pay you quarterly, a fee at the annual
rate of .60% of the average daily net asset value of the Fund
during such quarter.
<PAGE>
In the event normal operating expenses of the Fund, exclusive
of certain expenses prescribed by state law, are in excess of any
limitation imposed be a state where the Fund is registered to sell
shares of beneficial interest, the fee payable to the Adviser will
be reduced to the extent of such excess and the Adviser will make
any arrangements necessary to eliminate any remaining excess
expenses.
6. Avoidance of Inconsistent Position. In connection with purchases
or sales of portfolio securities for the account of the Fund,
neither your nor any investment management subsidiary of yours,
nor any of your or their directors, officers or employees will act
as principal or agent or receive any commission. If any occasion
shall arise in which you advise persons concerning the shares of
the Fund, you will act solely on your own behalf and not in any
way on behalf of the Fund.
7. No Partnership or Joint Venture. The Fund, and you are not
partners of or joint venturers with each other and nothing herein
shall be construed so as to make them such partners or joint
venturers or impose any liability as such on any of them.
8. Limitation of Liability of the Adviser. You shall not be liable
for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on 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 Fund shall be deemed, when acting within the scope
of his employment by the Fund, to be acting in such employment
solely for the Fund and not as your employee or agent.
9. Duration and Termination of this Agreement. This Agreement shall
remain in force until the second anniversary of the date upon
which this Agreement was executed by the parties hereto, and from
year to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the
Board of Directors who are not interested persons of you or (other
than as Board Members) of the Fund, cast in person at a meeting
called for the purpose on voting on such approval, and (b) either
(i) the Board of Directors or (ii) a majority of the outstanding
voting securities of the Fund. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of
any penalty by the Fund by vote of a majority of the outstanding
voting securities of the Fund, or by the Board of Directors of by
you. This Agreement shall automatically terminate in the event of
its assignment. In interpreting the provisions of this Section 9,
the definitions contained in Section 2(a) of the Investment
Company Act of 1940, as amended (particularly the definitions of
"assignment," "interested person" or "voting security"), shall be
applied.
10. Amendment of this Agreement. No provision of this agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement
<PAGE>
shall be effective until approved by (a) the Board of Directors,
including a majority of the Board of Directors who are not
interested persons of you or (other than as Board of Directors) of
the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) a majority of the outstanding
voting securities of the Fund, as defined in the Investment
Company Act of 1940, as amended.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit 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.
Yours very truly,
JOHN HANCOCK SOVEREIGN
INVESTORS FUND, INC
By /s/ Edward J. Boudreau, Jr.
President
The foregoing contract is hereby agreed to as of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By /s/ Edward J. Boudreau, Jr.
Chairman of the Board
President and Chief Executive Officer
John Hancock Sovereign Balanced Fund
October 2, 1992
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Dear Sir:
John Hancock Sovereign Investors Fund, Inc. (the "Company") is
incorporated in Maryland with its principal place of business at 101 Huntington
Avenue, Boston, Massachusetts to engage in the business of an investment
company. Subject to the approval of the shareholders of John Hancock Sovereign
Balanced Fund, a separate diversified portfolio of the Company (the "Fund"), the
Board of Directors has selected John Hancock Advisers, Inc. (the "Adviser") to
provide overall investment advice and management for the Fund and to provide
certain other services, as more fully set forth below, and you are willing to
provide such advice, management and services under the terms and conditions
hereinafter set forth. Accordingly, the Company, on behalf of the Fund, agrees
with you as follows:
1. Delivery of Documents. The Fund has furnished you with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Articles of Incorporation, dated as amended as of
September 24, 1992 (the "Articles");
(b) By-Laws of the Corporation as in effect on the date
hereof;
(c) Resolutions of the Board of Directors selecting the
Adviser as the investment adviser for the Fund and approving the form
of this Agreement, and resolution adopted by the shareholders of the
Fund; and
<PAGE>
(d) Commitments, limitations and undertakings made by the Fund
to state securities or "blue sky" authorities for the purpose of
qualifying shares of the Fund for sale in such states.
The Fund will furnish you from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment and Management Services. You will use your best efforts
to provide to the Fund continuing and suitable investment programs with respect
to investments, consistent with the investment policies, objectives and
restrictions of the Fund. In the performance of the Adviser's duties hereunder,
subject always (x) to the provisions contained in the documents delivered to the
Adviser pursuant to Section 1, as each of the same may from time to time be
amended or supplemented, and (y) to the limitations set forth in the
registration statement of the Fund as in effect from time to time under the
Securities Act of 1933, as amended and the Investment Company Act of 1940 as
amended, the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations,
consistent with the investment policies, objectives and restrictions of
the Fund, with respect to the purchase, holding and disposition of
portfolio securities;
(b) advise the Fund in connection with policy decisions to be
made by the Board of Directors or any committee thereof with respect to
such Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the Fund's
investments and investment policies;
(c) provide administration of the day-to-day investment
operations of the Fund;
(d) submit such reports relating to the valuation of the
Fund's securities as the Board of Directors may reasonably request;
(e) assist the Fund in any negotiations relating to its
investments with issuers, investment banking firms, securities brokers
or dealers and other institutions or investors;
(f) consistent with provisions of Section 6 of this Agreement,
place orders for the purchase, sale or exchange of portfolio securities
with brokers or dealers selected by you, provided that in connection
with the placing of such orders and the selection of such brokers or
dealers you shall seek to
<PAGE>
obtain execution and pricing within the policy guidelines
determined by the Board of Directors and set forth in the Prospectus
and Statement of Additional Information of the Fund as in effect from
time to time;
(g) provide office space and equipment and supplies, the use
of accounting equipment when required, and necessary executive,
clerical and secretarial personnel for the administration of the
affairs of the Fund;
(h) from time to time and at any time requested by the Board
of Directors, make reports to the Fund of your performance of the
foregoing services and furnish advice and recommendations with respect
to other aspects of the business and affairs of the Fund;
(i) maintain and preserve the records required by the
Investment Company Act of 1940, as amended, to be maintained and
preserved by the Fund on its behalf (you agree that such records are
the property of the Fund and will be surrendered to the Fund promptly
upon request therefor);
(j) obtain and evaluate such information relating to
economies, industries, businesses, securities markets and securities as
you may deem necessary or useful in the discharge of your duties
hereunder;
(k) oversee and use your best efforts to assure the
performance of, the activities and services of the custodian, transfer
agent and other similar agents retained by the Fund; and
(l) give instructions to the Fund's custodian as to deliveries
of securities to and form such custodian and transfer of payment of
cash for the account of the Fund.
3. Expenses of the Fund. You will pay:
(a) the compensation and expenses of all officers and
employees of the Fund;
(b) the expenses of office, rent, telephone and other
utilities, office furniture, equipment, supplies and other office
expenses of the Fund;
(c) any other expenses incurred by you in connection with the
performance of your duties hereunder; and
<PAGE>
(d) premiums for such insurance as may be agreed upon by you
and the Fund.
4. Expenses of the Fund Not Paid by You. You will not be required to
pay any expenses which this Agreement does not expressly make payable by you. In
particular, and without limiting the generality of the foregoing but subject to
the provisions of Section 3, you will not be required to pay under this
Investment Management Contract:
(a) the compensation and expenses of the Board of Directors
who are not interested persons (as used in this Agreement such term
shall have the meaning specified in the Investment Company Act of 1940,
as amended) of you, and of independent advisers, independent
contractors, consultants, managers and other unaffiliated agents
employed by the Fund other than through you;
(b) legal, accounting and auditing fees and expenses of the
Fund;
(c) the fees or disbursements of custodians and depositories
of the Fund's assets, transfer agents, disbursing agents, plan agents
and registrars;
(d) taxes and governmental fees assessed against the Fund's
assets and payable by the Fund;
(e) the cost of preparing and mailing dividends,
distributions, reports, notices and proxy materials to shareholders of
the Fund;
(f) brokers' commissions and underwriting fees; and
(g) the expense of periodic calculations of the net asset
value of the shares of the Fund.
5. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by you as herein provided, the
Fund will pay you monthly, a fee at the annual rate of .60% of the average daily
net asset value of the Fund.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any limitation
imposed by a state where the Fund is registered to sell shares of common stock,
the fee payable to the Adviser will be reduced to the extent of such excess and
the Adviser will make any additional arrangements necessary to eliminate any
remaining excess expenses.
<PAGE>
6. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither you nor any
investment management subsidiary of yours, nor any of your or their directors,
officers or employees will act as principal or agent or receive any commission.
If any occasion shall arise in which you advise persons concerning the shares of
the Fund, you will act solely on your own behalf and not in any way on behalf of
the Fund.
7. No Partnership or Joint Venture. The Fund and you are not partners
of or joint venturers with each other and nothing herein shall be construed so
as to make them such partners or joint venturers or impose any liability as such
on any of them.
8. Limitation of Liability of the Adviser. You shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on 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 Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as your employee or agent.
9. Duration and Termination of this Agreement. This Agreement shall
remain in force until October 23, 1993, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
(a) a majority of the Board of Directors who are not interested persons of you
or (other than as Board Members) of the Fund, case in person at a meeting called
for the purpose on voting on such approval, and (b) either (i) the Board of
Directors or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may, on 60 days' written notice, be terminated at any time
without the payment of any penalty by the Fund by vote of a majority of the
outstanding voting securities of the Fund, by the Board of Directors or by you.
This Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 9, the definitions contained in
Section 2(a) of the Investment Company Act of 1940, as amended (particularly the
definitions of "assignment," "interested person" or "voting security"), shall be
applied.
10. Amendment of this Agreement. No provision of this agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by (a) the Board of Directors, including a majority of the Board of
Directors who are not interested persons of you or (other than as Board Members)
of the Fund, case in person at a meeting called for the purpose of voting on
such approval, and (b) a majority
<PAGE>
of the outstanding voting securities of the Fund, as defined in the
Investment Company Act of 1940, as amended.
11. 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.
Yours very truly,
JOHN HANCOCK SOVEREIGN INVESTORS
FUND, INC.
on behalf of John Hancock Sovereign
Balanced Fund
By /s/ Edward J. Boudreau, Jr.
Chairman
The foregoing contract is
hereby agreed to as of the
date hereof
JOHN HANCOCK ADVISERS, INC.
By /s/ Edward J. Boudreau, Jr.
Chairman of the Board
and Chief Executive Officer
SERVICE AGREEMENT
between
John Hancock Advisers, Inc.
and
Berkeley Investment Partners, Inc.
(name changed to TBFG Advisers, Inc.)
October 2, 1992
<PAGE>
JOHN HANCOCK ADVISERS, INC.
101 Huntington Avenue
Boston, Massachusetts 02199
October 2, 1992
Berkeley Investment Partners, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Ladies and Gentlemen:
John Hancock Advisers, Inc. ("Advisers") is incorporated in Delaware
with its principal place of business at 101 Huntington Avenue, Boston,
Massachusetts to engage in the business of an investment adviser to
investment companies. Subject to the approval of the Board of Directors of
John Hancock Sovereign Investors Fund, Inc. (the "Company"), Advisers has
selected Berkeley Investment Partners, Inc., a Delaware corporation under
common control with Advisers ("Berkeley"), to provide portfolio management
services for John Hancock Sovereign Investors Fund ("Investors Fund") and
with respect to the equity investments of John Hancock Sovereign Balanced
Fund ("Balanced Fund") (collectively, the "Funds"). You agree that you are
willing to provide such services for the Funds and, accordingly, Advisers and
you agree as follows:
1. Delivery of Documents. The Company or Advisers has furnished you
with copies, properly certified or otherwise authenticated, of each of the
following Company documents:
(a) Articles of Incorporation dated May 1, 1990 (the
"Articles");
(b) By-laws of the Company as in effect on the date hereof;
(c) resolutions of the Board of Directors selecting Berkeley to
perform portfolio management services for the Funds and
approving the form of this Agreement; and
(d) commitments, limitations and undertakings made by the Funds
to state securities or "blue sky" authorities for the
purpose of qualifying shares of the Funds for sale in such
states.
The Company or Advisers will furnish you from time to time with copies,
properly certified or otherwise authenticated, of all amendments of, or
supplements to, the foregoing, if any.
2. Portfolio Management Services. You will use your best efforts to
provide to each Fund continuing and suitable portfolio management services,
consistent with the investment policies, objectives and restrictions of each
Fund. In the performance of your duties hereunder, subject always (x) to the
provisions contained in the documents delivered to you pursuant to Section 1
above, as each of the same may from time to time be amended or supplemented
and (y) to the limitations set forth in the registration statement of the
Company as in effect from time to time under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, you will, at
your expense:
(a) furnish each Fund with advice and recommendations,
consistent with the investment policies, objectives and restrictions of
the Fund, with respect to the purchase, holding and disposition of
portfolio securities;
(b) assist each fund in connection with policy decisions to be
made by the Board of Directors or any committee thereof
with respect to the Fund's investments and, as requested,
furnish each Fund with research, economic and statistical
data in connection with the Fund's investments and
investment policies;
(c) assist each Fund in any negotiations relating to its
investments with issuers, investment banking firms,
securities brokers or dealers and other institutions and
investors;
(d) consistent with the provisions of Section 5 of this
Agreement, place orders for the purchase, sale or exchange
of portfolio securities with brokers or dealers selected by
you; provided, that in connection with the placing of such
orders and the selections of such brokers or dealers you
shall seek to obtain execution and pricing within the
policy guidelines determined by the Board of Directors and
set forth in the Prospectus and Statement of Additional
Information of each Fund as in effect from time to time;
and provided, further, that Advisers shall have final
supervisory authority with respect to investment decisions
concerning the purchase, sale or exchange of portfolio
securities;
(e) from time to time and at any time requested by the Board of
Directors of the Company or Advisers, make reports to the
Company or Advisers, as the case may be, of your
performance of the foregoing services;
(f) maintain and preserve on the Funds' behalf the records that
come to rest with you in your performance hereunder and
that are required by the Investment Company Act of 1940, as
amended, to be maintained and preserved by the Funds (you
agree that such records are the property of the Funds and
shall be surrendered to the Company or Advisers promptly
upon request therefor); and
(g) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities
as you may deem necessary or useful in the discharge of
your duties hereunder.
3. Expenses. You will pay any expenses incurred by you in
connection with the performance of your duties hereunder.
4. Compensation. For all services to be rendered and expenses paid
or assumed by you as herein provided, Advisers will pay you monthly, out of
the advisory fee that Advisers receives from each fund, a fee equal on an
annual basis to 40% of the advisory fee received by Advisers from Investors
Fund and 40% of the advisory fee received by Advisers from the Balanced Fund
with respect to the equity securities held in the portfolio of Balanced Fund
during such month. For this purpose, equity securities shall be defined as
common and preferred stocks; direct equity interests in trusts, partnerships,
joint ventures and other unincorporated entities or enterprises; warrants;
and options and futures contracts based on equity securities or indices
composed of equity securities.
5. Avoidance of Inconsistent Position. In connection with purchases
or sales of portfolio securities for the account of a Fund, neither you nor
any of your directors, officers or employees shall act as principal or agent
or receive any commission. If any occasion shall arise in which you advise
persons concerning the shares of a Fund, you will act solely on your own
behalf and not in any way on behalf of the Fund or the Company.
6. No Partnership or Joint Venture. The Company, Advisers and you,
and any subset of such parties, are not partners or joint venturers with each
other and nothing herein shall be construed so as to make any of them such a
partner or joint venturer or impose any liability on any of them as such.
7. Limitation of Liability. You shall not be liable for any error
of judgment or mistake of law or for any loss suffered by Advisers or 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 under this Agreement 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 Company shall be deemed, when acting
within the scope of his employment by the Company, to be acting in such
employment solely for the Company and not as your employee or agent.
8. Responsibility of Advisers. Notwithstanding this Agreement,
Advisers shall remain ultimately responsible for all of its obligations under
each Investment Management Contract between the Company on behalf of the
Funds and Advisers.
9. Duration and Termination of this Agreement. This Agreement shall
become effective on the date hereof and shall remain in force as to each Fund
until October 23, 1993 and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by (a) a majority
of the Board of Directors of the Company who are not interested persons of
you, Advisers or (other than as Directors) the Company, cast in person at a
meeting called for the purpose of voting on such approval, and (b) either (i)
the Board of Directors of the Company or (ii) a majority of the outstanding
voting securities of the respective Fund. This Agreement may, on 60 days'
written notice, be terminated as to either Fund at any time without the
payment of any penalty by the Fund (by vote of a majority of the outstanding
voting securities of the Fund or by the Board of Directors), by Advisers or
by you. This Agreement shall terminate automatically in the event of its
assignment or in the event of the assignment or termination of the Investment
Management Contract between the Company on behalf of the applicable Fund and
Advisers.
10. Amendments. 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 whom enforcement of the change, waiver, discharge
or termination is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until approved
by the Board of Directors of the Company, including a majority of the
Directors who are not interested persons of you, Advisers or (other than as
Directors) the Company, cast in person at a meeting called for the purpose of
voting on such approval. In interpreting the provisions of Section 9 above
and this Section 10, the definitions contained in Section 2(a) of the
Investment Company Act of 1940, as amended, shall be applied (particularly
the definitions of "assignment," "interested person" and "voting security").
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
JOHN HANCOCK ADVISERS, INC.
By: /s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Chairman of the Board
and Chief Executive Officer
The foregoing contract is hereby
agreed to as of the date hereof.
BERKELEY INVESTMENT PARTNERS, INC.
By: /s/ Robert G. Freedman
President
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
Distribution Agreement
Dated October 23, 1991
<PAGE>
JOHN HANCOCK
SOVEREIGN INVESTORS FUND, INC.
985 Old Eagle School Road
Wayne, Pennsylvania
October 23, 1991
John Hancock Broker Distribution Services, Inc.
Boston, Massachusetts
Distribution Agreement
Dear Sir:
John Hancock Sovereign Investors Fund, Inc. (the "Fund") is incorporated in
Maryland to engage in the business of an investment company. The Fund's Board of
Directors has selected you to act as principal underwriter (as such term is
defined in Section 2(a)(29) of the Investment Company Act of 1940, as amended)
of the shares of common stock ("shares") of the Fund and you are willing, as
agent for the Fund, to sell the shares to the public, to broker-dealers or to
both, in the manner and on the conditions hereinafter set forth. Accordingly,
the Fund hereby agrees with you as follows:
1. Delivery of Documents. The Fund will furnish you promptly with copies,
properly certified or otherwise authenticated, of any registration statements
filed by it with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, or the Investment Company Act of 1940, as amended, together
with any financial statements and exhibits included therein, and all amendments
or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to time
use its best efforts to register under the Securities Act of 1933, as amended,
such shares not already so registered as you may reasonably be expected to sell
as agent on behalf of the Fund. This Agreement relates to the issue and sale of
shares that are duly authorized and registered and available for sale by the
Fund if, but only if, the Fund sees fit to sell them. You and the Fund will
cooperate in taking such action as may be necessary from time to time to qualify
shares for sale in Massachusetts and in any other states mutually agreeable to
you and the Fund, and to maintain such qualification if and so long as such
shares are duly registered under the Securities Act of 1933, as amended.
<PAGE>
3. Solicitation of Orders. You will use your best efforts (but only in states in
which you may lawfully do so) to obtain from investors unconditional orders for
shares authorized for issue by the Fund and registered under the Securities Act
of 1933, as amended, provided that you may in your discretion refuse to accept
orders for such shares from any particular applicant.
4. Sale of Shares. Subject to the provisions of Sections 5 and 6 hereof and to
such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus, you are authorized to sell as agent on
behalf of the Fund authorized and issued shares registered under the Securities
Act of 1933, as amended. Such sales may be made by you on behalf of the Fund by
accepting unconditional orders to purchase such shares placed with your
investors. The sales price to the public of such shares shall be the public
offering price as defined in Section 6 hereof.
5. Sale of Shares to Investors by the Fund. Any right granted to you to accept
orders for shares or make sales on behalf of the Fund will not apply to shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all the assets of any investment company or substantially all the
outstanding shares of any such company, and such right shall not apply to shares
that may be offered or otherwise issued by the Fund to shareholders by virtue of
their being shareholders of the Fund.
6. Public Offering Price. All shares sold by you as agent for the Fund will be
sold at the public offering price, which will be determined in the manner
provided in the Fund's prospectus or statement of additional information, as now
in effect or as it may be amended .
7. No Sales Discount. The Fund shall receive the applicable net asset value on
all sales of shares by you as agent of the Fund.
8. Delivery of Payments. You will deliver to the Transfer Agent all payments
made pursuant to orders accepted by you, and accompanied by proper applications
for the purchase of shares, no later than the first business day following the
receipt by you in your home office of such payments and applications.
9. Suspension of Sales. If and whenever a suspension of the right of redemption
or a postponement of the date of payment or redemption has been declared
pursuant to the Fund's Articles of Incorporation and has become effective, then,
until such suspension or postponement is terminated, no further orders for
shares shall be accepted by you except such unconditional orders placed with you
before you have knowledge of the suspension. The Fund reserves the
<PAGE>
right to suspend the sale of shares and your authority to accept orders for
shares on behalf of the Fund if, in the judgment of a majority of the Fund's
Board of Directors, it is in the best interests of the Fund to do so, such
suspension to continue for such period as may be determined by such majority;
and in that event, no shares will be sold by the Fund or by you on behalf of the
Fund while such suspension remains in effect except for shares necessary to
cover unconditional orders accepted by you before you had received notice of the
suspension.
10. Expenses. The Fund will pay (or will enter into arrangements providing that
persons other than you will pay) all fees and expenses in connection with the
preparation and filing of any registration statement and prospectus or
amendments thereto under the Securities Act of 1933, as amended, covering the
issue and sale of shares and in connection with the continued qualification of
shares for sale in the various states in which the Fund has determined it
advisable to qualify such shares for sale. It will also pay the issue taxes or
(in the case of shares redeemed) any initial transfer taxes thereon. You will
pay all expenses of printing prospectuses and other sales literature, all fees
and expenses in connection with your qualification as a dealer in various
states, and all other expenses in connection with the sale and offering for sale
of the shares of the Fund which have not been herein specifically allocated to
the Fund.
11. Conformity with Law. You agree that in selling the shares you will duly
conform in all respects with the laws of the United States and any state in
which such shares may be offered for sale by you pursuant to this Agreement.
12. Indemnification. You agree to indemnify and hold harmless the Fund and each
of its Board members and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the Securities Act of 1933, as amended,
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which the Fund or such Board members,
officers or controlling person may become subject under such Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
shares by any person which (a) may be based upon any wrongful act by you or any
of your employees or representatives or (b) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus or statement of additional information
covering shares of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon information furnished or
confirmed in writing to the Fund by you, or (c) may be incurred or arise by
reason of your acting as the Fund's agent instead of purchasing and reselling
shares as principal in distributing shares to the public, provided that in no
case is your indemnity in favor of a Board member or officer of the Fund or any
other person deemed to protect such Board member or officer of the Fund or other
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement.
<PAGE>
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of shares
other than the information and representations contained in a registration
statement, prospectus, or statement of additional information covering shares,
as such registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time. No person other
than you is authorized to act as principal underwriter for the Fund.
13. Duration and Termination of this Agreement. This Agreement shall remain in
force until the second anniversary of the date upon which this Agreement was
executed by the parties hereto and from year to year, but only so long as such
continuance is specifically approved at least annually by (a) a majority of the
Board of Directors who are not interested persons of you (other than as Board
members) or of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) either (i) the Board of Directors of the Fund,
or (ii) a majority of the outstanding voting securities of the Fund. This
Agreement may, on 60 days' written notice, be terminated at any time, without
the payment of any penalty, by the Board of Directors of the Fund, by a vote of
a majority of the outstanding voting securities of the Fund, or by you. This
Agreement will automatically terminate in the event of its assignment by you. In
interpreting the provisions of this Section 13, the definitions contained in
Section 2(a) of the Investment Company Act of 1940 (particularly the definitions
of "interested person", "assignment" and "voting security") shall be applied.
14. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If the Fund should at any time deem it necessary or
advisable in the best interests of the Fund that any amendment of this agreement
be made in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or other governmental authority or to obtain
any advantage under state or federal tax laws and should notify you of the form
of such amendment, and the reasons therefor, and if you should decline to assent
to such amendment, the Fund may terminate this agreement forthwith. If you
should at any time request that a change be made in the Fund's Certificate of
Incorporation or By-Laws, or in its methods of doing business, in order to
comply with any requirements of federal law or regulations of the Securities and
Exchange Commission or of a national securities association of which you are or
may be a member, relating to the sale of shares, and the Fund should not make
such necessary change within a reasonable time, you may terminate this Agreement
forthwith.
SOLICITING DEALER AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
BOSTON -- MASSACHUSETTS -- 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
SOLICITING DEALER AGREEMENT
Date
------------------------------
John Hancock Funds, Inc. ("the Distributor" or "Distributor") is the
principal distributor of the shares of beneficial interest (the "securities")
of each of the John Hancock Funds, ("We" or "us"), (the "Funds"). Such Funds
are those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You represent that you are a member
of the National Association of Securities Dealers, Inc., (the "NASD") and,
accordingly, we invite you to become a non-exclusive soliciting dealer to
distribute the securities of the Funds and you agree to solicit orders for the
purchase of the securities on the following terms. Securities are offered
pursuant to each Fund's prospectus and statement of additional information, as
such prospectus and statement of additional information may be amended from
time to time. To the extent that the prospectus or statement of additional
information contains provisions that are inconsistent with the terms of this
Agreement, the terms of the prospectus or statement of additional information
shall be controlling.
OFFERINGS
1. You agree to abide by the Rules of Fair Practice of the NASD and to all
other rules and regulations that are now or may become applicable to
transactions hereunder.
2. As principal distributor of the Funds, we shall have full authority to
take such action as we deem advisable in respect of all matters pertaining to
the distribution. This offer of shares of the Funds to you is made only in
such jurisdictions in which we may lawfully sell such shares of the Funds.
3. You shall not make any representation concerning the Funds or their
securities except those contained in the then- current prospectus or
statement of additional information for each Fund.
4. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by the Distributor or the
Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
5. You are not authorized to act as our agent. Nothing shall constitute you
as a syndicate, association, joint venture, partnership, unincorporated
business, or other separate entity or otherwise partners with us, but you shall
be liable for your proportionate share of any tax, liability or expense based
on any claim arising from the sale of shares of the Funds under this Agreement.
We shall not be under any liability to you, except for obligations expressly
assumed by us in this Agreement and liabilities under Section 11(f) of the
Securities Act of 1933, and no obligations on our part shall be implied or
inferred herefrom.
-2-
<PAGE>
6. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All dealers offering shares of
the Funds and their associated persons agree to comply with these general
suitability and compliance standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your registered representatives in light of all the facts and circumstances, to
ascertain that the class of shares to be purchased by each investor is
appropriate and suitable. These recommendations should be based on several
factors, including but not limited to:
(A) the amount of money to be invested initially and over a period of
time;
(B) the current level of front-end sales load or back-end sales load
imposed by the Fund;
(C) the period of time over which the client expects to retain the
investment;
(D) the anticipated level of yield from fixed income funds' Class A and
Class B shares;
(E) any other relevant circumstances such as the availability of
reduced sales charges under letters of intent and/or rights of
accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Soliciting Dealer Agreement for compliance with the foregoing standards.
In certain instances, it may be appropriate to discuss the purchase with the
registered representatives involved or to review the advantages and
disadvantages of selecting one class of shares over another with the client.
The Distributor will not accept orders for Class B Shares in any Fund from you
for accounts maintained in street name. Trades for Class B Shares will only be
accepted in the name of the shareholder.
7. CLASS C SHARES - Certain mutual funds distributed by the Distributor may be
offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
8. Orders for securities received by you from investors will be for the sale
of the securities at the public offering price, which will be the net asset
value per share as determined in the manner provided in the relevant Fund's
prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then- current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
-3-
<PAGE>
In addition to the foregoing, you acknowledge and agree to the initial
and subsequent investment minimums, which may vary from year to year, as
described in the then-current prospectus for each Fund.
9. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
10. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then-current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
11. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by a registered representative in your employ and remitted to us
promptly by you, (b) where a subsequent investment is made to an account
established by a registered representative in your employ or (c) where a
subsequent investment is made to an account established by a broker/dealer
other than you and is accompanied by a signed request from the account
shareholder that your registered representative receive the Reallowance for
that investment and/or for subsequent investments made in such account. If for
any reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
12. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the the prospectus). To the
extent you provide distribution and marketing services in the promotion of the
sale of shares of these Funds, including furnishing services and assistance to
your customers who invest in and own shares of such Funds and including, but
not limited to, answering routine inquiries regarding such Funds and assisting
in changing distribution options, account designations and addresses, you may
be entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
13. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
14. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
15. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
-4-
<PAGE>
INDEMNIFICATION
16. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
17. NSCC INDEMNITY - SHAREHOLDER AND HOUSE ACCOUNTS - In consideration of the
Distributor and John Hancock Investor Services Corporation ("Investor
Services") liquidating, exchanging, and/or transferring unissued shares of the
Funds for your customers without the use of original or underlying
documentation supporting such instructions (e.g., a signed stock power or
signature guarantee), you hereby agree to indemnify the Distributor, Investor
Services and each respective Fund against any losses, including reasonable
attorney's fees, that may arise from such liquidation exchange, and/or
transfer of unissued shares upon your direction. This indemnification shall
apply only to the liquidation, exchange and/or transfer of unissued shares in
shareholder and house accounts executed as wire orders transmitted via NSCC's
Fund/SERVsystem. You represent and warrant to the Funds, the Distributor and
Investor Services that all such transactions shall be properly authorized by
your customers.
The indemnification in this Section 16 shall not apply to any losses
(including attorney's fees) caused by a failure of the Distributor, Investor
Services or a Fund to comply with any of your instructions governing any of the
above transactions, or any negligent act or omission of the Distributor,
Investor Services or a Fund, or any of their directors, officers, employees or
agents. All transactions shall be settled upon your confirmation through NSCC
transmission to Investor Services.
The Distributor, Investor Services or you may revoke the indemnity
contained in this Section 16 upon prior written notice to each of the other
parties hereto, and in the case of such revocation, this indemnity agreement
shall remain effective as to trades made prior to such revocation.
MISCELLANEOUS
18. We will supply to you at our expense additional copies of the prospectus
and statement of additional information for each of the Funds and any printed
information supplemental to such material in reasonable quantities upon
request.
19. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
20. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
21. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
-5-
<PAGE>
SOLICITING DEALER
-------------------------------------------------
Name of Organization
By:-------------------------------------------------
Authorized Signature of Soliciting Dealer
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the following
information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
-------------------------------- ------------------------------
TO BE COMPLETED BY: TO BE COMPLETED BY:
JOHN HANCOCK FUNDS, INC. JOHN HANCOCK INVESTOR
SERVICES CORPORATION
BY: BY:
----------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
TITLE TITLE
DEALER NUMBER:
------------------------------------
-6-
<PAGE>
JOHNHANCOCK
MUTUAL FUNDS
John Hancock Broker Distrubution Services, Inc.
101 Huntington Avenue Boston, MA 02199-7608 1-800-225-5291
/s/ John Hancock
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Resources Fund
John Hancock Limited-Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government Securities Fund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Government Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, Inc., as principal distributor of the
John Hancock funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
*Closed to new investors as of 9/30/94
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to the selling Brokers for sales of John Hancock
Funds is set forth in each Fund's then- current prospectus. No Commission will
be paid on sales of John Hancock Cash Management Fund or any John Hancock Fund
that is without a sales charge. Purchases of Class A shares of $1 million or
more, or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no initial
sales charge. On purchases of this type, John Hancock Funds, Inc. will pay a
commission as set forth in each Fund's then-current prospectus. John Hancock
Funds, Inc. will pay Brokers for sales of Class B shares of the Funds a
marketing fee as set forth in each Fund's then-current prospectus.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEES
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, John Hancock Funds, Inc. will advance to you a First Year
Service Fee related to the purchase of Class A shares (only if subject to sales
charge) or Class B shares of any of the Funds, as the case may be, sold by your
firm. This Service Fee will be compensation for your personal service and/or
the maintenance of shareholder accounts ("Customer Servicing") during the
twelve-month period immediately following the purchase of such shares, in the
amount not to exceed .25 of 1% of net assets invested in Class A shares or
Class B shares of the Fund, as the case may be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your firm has under management
with the Funds combined average daily net assets for the preceding quarter of
no less than $1 million, or an individual representative of your firm has under
management with the Funds combined average daily net assets for the preceding
quarter of no less than $250,000 (an "Eligible Firm").
<PAGE>
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
SCHEDULE D
DATED JULY 1, 1992 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK MUTUAL FUNDS
No broker/dealer shall represent the FUnds or Distribution Services in any
written communications without prior receipt of written approval from John
Hancock Broker Distribution Services, Inc. This includes but is not limited to
all advertising, public relations, marketing and sales literature, and media
contacts.
Further, subsequent to the creation of such materialsbefore written
approval from JHBDS will be given, a copy of the NASD review document
applicable to such materials must be furnished to John Hancock Broker
Distribution Services, Inc. for its review and files.
FOR PURPOSES OF THIS SCHEDULE D, THE FOLLOWING TERMS ARE DEFINED:
Advertising:
materials designed for the mass market, e.g. print ads, radio and tv
commercials, billboards, etc.
Sales literature:
materials designed for a directed market, e.g. prospecting letters,
brochures, mailers, stuffers, etc.
Coop Advertising:
advertising materials (as defined above) used by selling group members
for which John Hancock pays some or all of the costs of publication
whether the materials were developed by JHBDS Marketing or not.
John Hancock Broker Distribution Services, Inc. Approval of Advertising:
Approval has four meanings:approval of the material itself from a
marketing perspective (JHBDS product managers), proactive compliance
officer), parent company corporate advertising approval (John Hancock
Mutual Life Insurance Company Advertising Dept. personnel) and
approval for use and related cost-sharing arrangements (national sales
coordinators).
NASD Filing:
Materials created by JHBDS will be filed with the NASD by the JHBDS
Compliance Department. Materials not created by JHBDS but to be
included in the coop program will be filed with the NASD by the
broker-dealer creating the materials. However, prior to use of the
materials in our coop program, we will need a copy of the final
version of the material as well as the NASDcomment letter. When this
is received, the above approvals can be obtained.
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
Boston - Massachusetts - 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
Date
--------------------------------
John Hancock Funds, Inc. ("The Distributor", or "Distributor"), ("We" or
"us"), is the principal distributor of the shares of beneficial interest (the
"securities") of each of the John Hancock Funds (the "Funds"). Such Funds are
those listed on Schedule A hereto which may be amended or supplemented from
time to time by the Distributor to include additional Funds for which the
Distributor is the principal distributor. You hereby represent that you are a
"bank" as defined in Section 3(a)(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction in shares of
the Funds, are not required to register as a broker/dealer under the Exchange
Act or regulations thereunder. We invite you to become a non-exclusive
soliciting financial institution ("Financial Institution") to distribute the
securities of the Funds and you agree to solicit orders for the purchase of the
securities on the following terms. Securities are offered pursuant to each
Fund's prospectus and statement of additional information, as such prospectus
and statement of additional information may be amended from time to time. To
the extent that the prospectus or statement of additional information contains
provisions that are inconsistent with the terms of this Agreement, the terms of
the prospectus or statement of additional information shall be controlling.
OFFERINGS
1. You represent and warrant that you will use your best efforts to ensure
that any purchase of shares of the Funds by your customers constitutes a
suitable investment for such customers. You acknowledge that you will base
such a decision of suitability on all the facts you have gathered about your
customer's financial situation, investment objectives, risk tolerance and
sophistication.
2. You represent and warrant that a copy of the then-current prospectus of a
Fund will be delivered to your customer before any purchase of shares of that
Fund are effected for that customer. You shall not effect any transaction in,
or induce any purchase or sale of, any shares of the Funds by means of any
manipulative, deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with respect to
transactions in shares of a Fund.
3. You represent and warrant that you will not make shares of any Fund
available to your customers, including your fiduciary customers, except in
compliance with all Federal and state laws and rules and regulations of
regulatory agencies or authorities applicable to you, or any of your affiliates
engaging in such activity, which may affect your business practices. You
confirm that you are not in violation of any banking law or regulations as to
which you are subject. You agree that you will comply with the requirements of
Banking Circular 274 issued by the Office of the Comptroller of the Currency in
offering shares of the Funds to your customers. We agree that we will comply
with all Federal and state laws and rules and regulations of regulatory
agencies or authorities applicable to us. We and you acknowledge and agree
that the offering of shares of the Funds pursuant to this agreement is subject
to the oversight of your management and the regulatory authorities by which you
are subject to review, and that appropriate records and materials relating to
any activity by you or us undertaken pursuant to this agreement may be accessed
by bank examiners in the due course of any regulatory review to which you may
be subject.
4. As principal distributor of the Funds, we shall have full authority to take
such action as we deem advisable in respect of all matters pertaining to the
distribution. This offer of shares of the Funds to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Funds.
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<PAGE>
5. You shall not make any representation concerning the Funds or their
securities except those contained in the then-current prospectus or statement
of additional information for each Fund.
6. We will supply to you at our expense additional copies of the then-current
prospectus and statement of additional information for each of the Funds and
any printed information supplemental to such material in reasonable quantities
upon request. It shall be your obligation to ensure that all such information
and materials are distributed to your customers who own or seek to own shares
of the Funds in accordance with securities and/or banking law and regulations
and any other applicable regulations.
7. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to any Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by us the Distributor or
the Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
8. You are not authorized to act as our agent. In making available shares of
the Funds under this Financial Institution Sales and Service Agreement, nothing
herein shall be construed to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or employee of the
Funds, and you shall not make any representations to the contrary. Nothing
shall constitute you as a syndicate, association, unincorporated business, or
other separate entity or partners with us, but you shall be liable for your
proportionate share of any tax, liability or expense based on any claim arising
from the sale of shares of the Funds under this Agreement. We shall not be
under any liability to you, except for obligations expressly assumed by us in
this Agreement and liabilities under Section 11(f) of the Securities Act of
1933, and no obligations on our part shall be implied or inferred herefrom.
9. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering
and selling shares of these Funds to investors. All soliciting financial
institutions offering shares of the Funds and their agents, employees and
representatives agree to comply with these general suitability and compliance
standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and
your agents, employees and representatives in light of all the facts and
circumstances, to ascertain that the class of shares to be purchased by each
investor is appropriate and suitable. These recommendations should be based on
several factors, including but not limited to:
(A) the amount of money to be invested initially and over
a period of time;
(B) the current level of front-end sales load or back-end
sales load imposed by the Fund;
(C) the period of time over which the customer expects to
retain the investment;
(D) the anticipated level of yield from fixed income
funds' Class A and Class B shares;
(E) any other relevant circumstances such as the
availability of reduced sales charges under letters
of intent and/or rights of accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity
discount on the front-end sales charge. In addition, shares subject to a
contingent deferred sales charge may be more appropriate for investors whose
orders would not qualify for quantity discounts and who, therefore, may prefer
to defer sales charges and also for investors who determine it to be
advantageous to have all of their funds invested without deduction of a
front-end sales commission. However, if it is anticipated that an investor may
redeem his or her shares within a short period of time, the investor may,
depending on the amount of his or her purchase, bear higher distribution
expenses by purchasing contingent deferred sales charge shares than if he or
she had purchased shares subject to a front-end sales charge.
-3-
<PAGE>
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Financial Institution Sales and Service Agreement for compliance with the
foregoing standards. In certain instances, it may be appropriate to discuss
the purchase with the agents, employees and representatives involved or to
review the advantages and disadvantages of selecting one class of shares over
another with the client. The Distributor will not accept orders for Class B
Shares in any Fund from you for accounts maintained in your name or in the name
of your nominee for the benefit of certain of your customers. Trades for Class
B Shares will only be accepted in the name of the shareholder.
10. CLASS C SHARES - Certain mutual funds distributed by the Distributor may
be offered with Class C shares. Refer to each Fund prospectus for availability
and details. Class C shares are designed for institutional investors and
qualified benefit plans, including pension funds, and are sold without a sales
charge or 12b-1 fee. If a commission is paid to you for transactions in Class
C shares, it will be paid by the Distributor out of its own resources.
SALES
11. With respect to any and all transactions in the shares of any Fund
pursuant to this Financial Institution Sales and Service Agreement it is
understood and agreed in each case that: (a) you shall be acting solely as
agent for the account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute transactions only
upon receiving instructions from you acting as agent for your customer or upon
receiving instructions directly from your customer; (d) as between you and your
customer, your customer will have full beneficial ownership of all shares; (c)
each transaction shall be for the account of your customer and not for your
account; and (f) unless otherwise agreed in writing we will serve as a clearing
broker for you on a fully disclosed basis, and you shall serve as the
introducing agent for your customers' accounts. Subject to the foregoing,
however, and except for Class B shares, as described in Section 8 above, you
may maintain record ownership of such customers' shares in an account
registered in your name or the name of your nominee, for the benefit of such
customers. Each transaction shall be without recourse to you provided that you
act in accordance with the terms of this Financial Institution Sales and
Service Agreement. You represent and warrant to us that you will have full
right, power and authority to effect transactions (including, without
limitation, any purchases and redemptions) in shares of the Funds on behalf of
all customer accounts provided by you.
12. Orders for securities received by you from your customers will be for the
sale of the securities at the public offering price, which will be the net
asset value per share as determined in the manner provided in the relevant
Fund's prospectus, as now in effect or as amended from time to time, next after
receipt by us (or the relevant Fund's transfer agent) of the purchase
application and payment for the securities, plus the relevant sales charges set
forth in the relevant Fund's then-current prospectus (the "Public Offering
Price"). The procedures relating to the handling of orders shall be subject to
our instructions which we will forward from time to time to you. All orders
are subject to acceptance by us, and we reserve the right in our sole
discretion to reject any order.
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for each Fund.
13. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
14. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then- current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
15. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by you and remitted to us promptly by you, (b) where a subsequent
investment is made to an account established by you or (c) where a subsequent
investment is made to an account established by a financial institution or
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<PAGE>
registered broker/dealer other than you and is accompanied by a signed request
from the account shareholder that you receive the Reallowance for that
investment and/or for subsequent investments made in such account. If for any
reason, a purchase transaction is reversed, you shall not be entitled to
receive or retain any part of the Reallowance on such purchase and shall pay to
us on demand in full the amount of the Reallowance received by you in
connection with any such purchase. We may withhold and retain from the amount
of the Reallowance due you a sum sufficient to discharge any amount due and
payable by you to us.
16. Certain of the Funds have adopted a plan under Investment Company Act
Rule 12b-1 ("Distribution Plan" as described in the prospectus). To the extent
you provide distribution and marketing services in the promotion of the sale of
shares of these Funds, including furnishing services and assistance to your
customers who invest in and own shares of such Funds and including, but not
limited to, answering routine inquiries regarding such Funds and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule C hereto.
All compensation, including 12b-1 fees, shall be payable to you only to the
extent that funds are received and in the possession of the Distributor.
17. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to
your right to sell the shares of the Funds in any state or jurisdiction.
18. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
19. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates,
when requested, will be delivered to you upon payment in full of the sum due
for the sale of the shares of the Funds. If payment is not so received or
made, we reserve the right forthwith to cancel the sale, or, at our option, to
liquidate the shares of the Fund subject to such sale at the then prevailing
net asset value, in which latter case you will agree to be responsible for any
loss resulting to the Funds or to us from your failure to make payments as
aforesaid.
INDEMNIFICATION
20. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any losses,
claims, damages, liabilities or expenses (including reasonable fees of
counsel), whether joint or several, to which any such person or entity may
become subject insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission or
alleged omission to state a material fact made or omitted by it herein, or, (b)
any willful misfeasance or gross misconduct by it in the performance of its
duties and obligations hereunder.
MISCELLANEOUS
21. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as most recently furnished to us by you.
22. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
23. This agreement, which shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, may be terminated by any party hereto at any
time upon written notice.
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<PAGE>
FINANCIAL INSTITUTION
-------------------------------------------------
Financial Institution
By:
-------------------------------------------------
Authorized Signature of Financial Institution
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the
following information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
--------------------- ----------------------------
TO BE COMPLETED BY: JOHN HANCOCK INVESTOR
JOHN HANCOCK FUNDS, INC. SERVICES CORPORATION
By: By:
--------------------------------- ------------------------------------
- ------------------------------------ ------------------------------------
Title Title
TO BE COMPLETED BY:
FINANCIAL INSTITUTION NUMBER:
----------------------------------------------
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<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology
Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Rescources Fund
John Hancock Limited Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government SecurritiesFund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Governtment Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government
Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B
Fund
</TABLE>
From time to time John Hancock Funds, as principal distributor of the
John Hancock Funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
* Closed to new invstors as of 9/30/94.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to Financial Institutions for sales of John Hancock
Funds is the same as that paid to Selling Brokers described and set forth
in each Fund's then-current prospectus. No Commission will be paid on
sales of John Hancock Cash Management Fund or any John Hancock Fund that is
without a sales charge. Purchases of Class A shares of $1 million or more,
or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no
initial sales charge. On purchases of this type, the Distributor will pay a
commission as set forth in each Fund's then-current prospectus. John
Hancock Funds, Inc. will pay Financial Institutions for sales of Class B
shares of the Funds a marketing fee as set forth in each Fund's then-
current prospectus for Selling Brokers.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DISTRIBUTION PLAN SCHEDULE OF COMPENSATION
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEE
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will advance to you a First Year Service
Fee related to the purchase of Class A shares (only if subject to sales charge)
or Class B shares of any of the Funds, as the case maybe, sold by your firm on
or after July 1, 1993. This Service Fee will be compensation for your personal
service and/or the maintenance of shareholder accounts ("Customer Servicing")
during the twelve-month period immediately following the purchase of such
shares, in an amount not to exceed .25 of 1% of the average daily net assets
attributable to Class A shares or Class B shares of the Fund, as the case may
be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve-month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your Financial Institution has
under management with the Funds combined average daily net assets for the
preceding quarter of no less than $1 million, or an individual representative
of your Financial Institution has under management with the Funds combined
average daily net assets for the preceding quarter of no less than $250,000 (an
"Eligible Financial Institution").
MASTER CUSTODIAN AGREEMENT
between
JOHN HANCOCK MUTUAL FUNDS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Definitions..................................................1-3
2. Employment of Custodian and Property to be held by it........3-4
3. Duties of the Custodian with Respect to
Property of the Fund.........................................4
A. Safekeeping and Holding of Property......................4
B. Delivery of Securities...................................4-7
C. Registration of Securities...............................7
D. Bank Accounts............................................7
E. Payments for Shares of the Fund..........................8
F. Investment and Availability of Federal Funds.............8
G. Collections..............................................8-9
H. Payment of Fund Moneys...................................9-10
I. Liability for Payment in Advance of
Receipt of Securities Purchased..........................10
J. Payments for Repurchases of Redemptions
of Shares of the Fund....................................11
K. Appointment of Agents by the Custodian...................11
L. Deposit of Fund Portfolio Securities in
Securities Systems.......................................12-13
M. Deposit of Fund Commercial Paper in an Approved
Book-Entry System for Commercial Paper...................14-16
N. Segregated Account.......................................16
O. Ownership Certificates for Tax Purposes..................16
P. Proxies .................................................17
Q. Communications Relating to Fund Portfolio
Securities.........................................17
R. Exercise of Rights; Tender Offers.......................17-18
S. Depository Receipts......................................18
T. Interest Bearing Call or Time Deposits...................18
U. Options, Futures Contracts and Foreign
Currency Transactions....................................18-20
V. Actions Permitted Without Express Authority..............20
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value...............................20-21
5. Records and Miscellaneous Duties.............................21
6. Opinion of Fund's Independent Public Accountants.............22
7. Compensation and Expenses of Bank............................22
8. Responsibility of Bank.......................................22-23
9. Persons Having Access to Assets of the Fund..................23
10. Effective Period, Termination and Amendment;
Successor Custodian..........................................24
11. Interpretive and Additional Provisions.......................25
12. Certification as to Authorized Officers......................25
13. Notices......................................................25
14. Massachusetts Law to Apply...................................25
15. Adoption of the Agreement by the Fund........................26
<PAGE>
MASTER CUSTODIAN AGREEMENT
This Agreement is made as of June 15, 1994 between each investment company
advised by John Hancock Advisers, Inc. which has adopted this Agreement in the
manner provided herein and State Street Bank and Trust Company (hereinafter
called "Bank", "Custodian" and "Agent"), a trust company established under the
laws of Massachusetts with a principal place of business in Boston,
Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean the investment company which has adopted this
Agreement and is listed on Appendix A hereto. If the Fund is a Massachusetts
business trust or Maryland corporation, it may in the future establish and
designate other separate and distinct series of shares, each of which may be
called a "portfolio"; in such case, the term "Fund" shall also refer to each
such separate series or portfolio.
(b) "Board" shall mean the board of directors/trustees/managing general
partners/director general partners of the Fund, as the case may be.
(c) "The Depository Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Authorized Officer", shall mean any of the following officers of the
Trust: The Chairman of the Board of Trustees, the President, a Vice President,
the Secretary, the Treasurer or Assistant Secretary or Assistant Treasurer, or
any other officer of the Trust duly authorized to sign by appropriate resolution
of the Board of Trustees of the Trust.
(e) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(f) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository but
only if the Custodian has received a certified copy of a vote of the Board
approving such clearing agency as a securities depository for the Fund.
(g) "Federal Book-Entry System" shall mean the book-entry system referred
to in Rule 17f-4(b) under the Investment Company Act of 1940 for United States
and federal agency securities (i.e., as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart O).
(h) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(i) "Approved Book-Entry System for Commercial Paper" shall mean a system
maintained by the Custodian or by a subcustodian employed pursuant to Section 2
hereof for the holding of commercial paper in book-entry form but only if the
Custodian has received a certified copy of a vote of the Board approving the
participation by the Fund in such system.
(j) The Custodian shall be deemed to have received "proper instructions" in
respect of any of the matters referred to in this Agreement upon receipt of
written or facsimile instructions signed by such one or more person or persons
as the Board shall have from time to time authorized to give the particular
class of instructions in question. Electronic instructions for the purchase and
sale of securities which are transmitted by John Hancock Advisers, Inc. to the
Custodian through the John Hancock equity trading system and the John Hancock
fixed income trading system shall be deemed to be proper instructions; the Fund
shall cause all such instructions to be confirmed in writing. Different persons
may be authorized to give instructions for different purposes. A certified copy
of a vote of the Board may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms and, where
appropriate, may be standing instructions. Unless the vote delegating authority
to any person or persons to give a particular class of instructions specifically
requires that the approval of any person, persons or committee shall first have
been obtained before the Custodian may act on instructions of that class, the
Custodian shall be under no obligation to question the right of the person or
persons giving such instructions in so doing. Oral instructions will be
considered proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be confirmed
in writing. The Fund authorizes the Custodian to tape record any and all
telephonic or other oral instructions given to the Custodian. Upon receipt of a
certificate signed by two officers of the Fund as to the authorization by the
President and the Treasurer of the Fund accompanied by a detailed description of
the communication procedures approved by the President and the Treasurer of the
Fund, "proper instructions" may also include communications effected directly
between electromechanical or electronic devices provided that the President and
Treasurer of the Fund and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets. In performing its duties
generally, and more particularly in connection with the purchase, sale and
exchange of securities made by or for the Fund, the Custodian may take
cognizance of the provisions of the governing documents and registration
statement of the Fund as the same may from time to time be in effect (and votes,
resolutions or proceedings of the shareholders or the Board), but, nevertheless,
except as otherwise expressly provided herein, the Custodian may assume unless
and until notified in writing to the contrary that so-called proper instructions
received by it are not in conflict with or in any way contrary to any provisions
of such governing documents and registration statement, or votes, resolutions or
proceedings of the shareholders or the Board.
2. Employment of Custodian and Property to be Held by It
The Fund hereby appoints and employs the Bank as its Custodian and Agent in
accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Fund agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), By-Laws, prospectus, statement of
additional information and distribution agreement with its principal
underwriter, together with such resolutions, votes and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of its
duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Fund held by such subcustodian. Any
foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the Board
and shall be in accordance with and subject to the provisions of said Rule. For
the purposes of this Agreement, any property of the Fund held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
A. Safekeeping and Holding of Property The Custodian shall keep
safely all property of the Fund and on behalf of the Fund
shall from time to time receive delivery of Fund property for
safekeeping. The Custodian shall hold, earmark and segregate
on its books and records for the account of the Fund all
property of the Fund, including all securities, participation
interests and other assets of the Fund (1) physically held by
the Custodian, (2) held by any subcustodian referred to in
Section 2 hereof or by any agent referred to in Paragraph K
hereof, (3) held by or maintained in The Depository Trust
Company or in Participants Trust Company or in an Approved
Clearing Agency or in the Federal Book-Entry System or in an
Approved Foreign Securities Depository, each of which from
time to time is referred to herein as a "Securities System",
and (4) held by the Custodian or by any subcustodian referred
to in Section 2 hereof and maintained in any Approved
Book-Entry System for Commercial Paper.
B. Delivery of Securities The Custodian shall release and deliver
securities or participation interests owned by the Fund held (or deemed
to be held) by the Custodian or maintained in a Securities System
account or in an Approved Book-Entry System for Commercial Paper
account only upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities or participation interests for the
account of the Fund, but only against receipt of payment
therefor; if delivery is made in Boston or New York City, payment
therefor shall be made in accordance with generally accepted
clearing house procedures or by use of Federal Reserve Wire
System procedures; if delivery is made elsewhere payment therefor
shall be in accordance with the then current "street delivery"
custom or in accordance with such procedures agreed to in writing
from time to time by the parties hereto; if the sale is effected
through a Securities System, delivery and payment therefor shall
be made in accordance with the provisions of Paragraph L hereof;
if the sale of commercial paper is to be effected through an
Approved Book-Entry System for Commercial Paper, delivery and
payment therefor shall be made in accordance with the provisions
of Paragraph M hereof; if the securities are to be sold outside
the United States, delivery may be made in accordance with
procedures agreed to in writing from time to time by the parties
hereto; for the purposes of this subparagraph, the term "sale"
shall include the disposition of a portfolio security (i) upon
the exercise of an option written by the Fund and (ii) upon the
failure by the Fund to make a successful bid with respect to a
portfolio security, the continued holding of which is contingent
upon the making of such a bid;
2) Upon the receipt of payment in connection with any
repurchase agreement or reverse repurchase agreement
relating to such securities and entered into by the Fund;
3) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Fund;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
5) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Paragraph K hereof or into the name or nominee name of any
subcustodian employed pursuant to Section 2 hereof; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities or
participation interests are to be delivered to the Custodian or
any subcustodian employed pursuant to Section 2 hereof;
6) To the broker selling the same for examination in accordance with
the "street delivery" custom; provided that the Custodian shall
adopt such procedures as the Fund from time to time shall approve
to ensure their prompt return to the Custodian by the broker in
the event the broker elects not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, re capitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion of such securities, or pursuant to
any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
8) In the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
9) For delivery in connection with any loans of securities made by
the Fund (such loans to be made pursuant to the terms of the
Fund's current registration statement), but only against receipt
of adequate collateral as agreed upon from time to time by the
Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities.
10) For delivery as security in connection with any borrowings by the
Fund requiring a pledge or hypothecation of assets by the Fund
(if then permitted under circumstances described in the current
registration statement of the Fund), provided, that the
securities shall be released only upon payment to the Custodian
of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such loan upon
redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the
loan;
11) When required for delivery in connection with any redemption or
repurchase of Shares of the Fund in accordance with the
provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any agreement
between the Custodian (or a subcustodian employed pursuant to
Section 2 hereof) and a broker-dealer registered under the
Securities Exchange Act of 1934 and, if necessary, the Fund,
relating to compliance with the rules of The Options Clearing
Corporation or of any registered national securities exchange, or
of any similar organization or organizations, regarding deposit
or escrow or other arrangements in connection with options
transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian (or a subcustodian employed
pursuant to Section 2 hereof), and a futures commission merchant,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or of any contract market or commodities
exchange or similar organization, regarding futures margin
account deposits or payments in connection with futures
transactions by the Fund;
14) For any other proper corporate purpose, but only upon receipt of,
in addition to proper instructions, a certified copy of a vote of
the Board specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purpose to be proper corporate purpose, and naming
the person or persons to whom delivery of such securities shall
be made.
C. Registration of Securities Securities held by the Custodian
(other than bearer securities) for the account of the Fund
shall be registered in the name of the Fund or in the name of
any nominee of the Fund or of any nominee of the Custodian, or
in the name or nominee name of any agent appointed pursuant to
Paragraph K hereof, or in the name or nominee name of any
subcustodian employed pursuant to Section 2 hereof, or in the
name or nominee name of The Depository Trust Company or
Participants Trust Company or Approved Clearing Agency or
Federal Book-Entry System or Approved Book-Entry System for
Commercial Paper; provided, that securities are held in an
account of the Custodian or of such agent or of such
subcustodian containing only assets of the Fund or only assets
held by the Custodian or such agent or such subcustodian as a
custodian or subcustodian or in a fiduciary capacity for
customers. All certificates for securities accepted by the
Custodian or any such agent or subcustodian on behalf of the
Fund shall be in "street" or other good delivery form or shall
be returned to the selling broker or dealer who shall be
advised of the reason thereof.
D. Bank Accounts The Custodian shall open and maintain a
separate bank account or accounts in the name of the Fund,
subject only to draft or order by the Custodian acting in
pursuant to the terms of this Agreement, and shall hold in
such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund
other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian
for the Fund may be deposited by it to its credit as Custodian
in the banking department of the Custodian or in such other
banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be
approved in writing by an Authorized Officer. Such funds
shall be deposited by the Custodian in its capacity as
Custodian and shall be subject to withdrawal only by the
Custodian in that capacity.
E. Payment for Shares of the Fund The Custodian shall make
appropriate arrangements with the Transfer Agent and the
principal underwriter of the Fund to enable the Custodian to
make certain it promptly receives the cash or other
consideration due to the Fund for such new or treasury Shares
as may be issued or sold from time to time by the Fund, in
accordance with the governing documents and offering
prospectus and statement of additional information of the
Fund. The Custodian will provide prompt notification to the
Fund of any receipt by it of payments for Shares of the Fund.
F. Investment and Availability of Federal Funds Upon agreement
between the Fund and the Custodian, the Custodian shall, upon
the receipt of proper instructions, which may be continuing
instructions when deemed appropriate by the parties, invest in
such securities and instruments as may be set forth in such
instructions on the same day as received all federal funds
received after a time agreed upon between the Custodian and
the Fund.
G. Collections The Custodian shall promptly collect all income
and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall
promptly collect all income and other payments with respect to
bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or agent thereof and
shall credit such income, as collected, to the Fund's
custodian account.
The Custodian shall do all things necessary and proper in connection with such
prompt collections and, without limiting the generality of the foregoing, the
Custodian shall
1) Present for payment all coupons and other income items
requiring presentations;
2) Present for payment all securities which may mature or
be called, redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the
Fund, checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities System
or in an Approved Book-Entry System for Commercial Paper at the
time funds become available to the Custodian; in the case of
securities maintained in The Depository Trust Company funds shall
be deemed available to the Fund not later than the opening of
business on the first business day after receipt of such funds by
the Custodian.
The Custodian shall notify the Fund as soon as reasonably practicable whenever
income due on any security is not promptly collected. In any case in which the
Custodian does not receive any due and unpaid income after it has made demand
for the same, it shall immediately so notify the Fund in writing, enclosing
copies of any demand letter, any written response thereto, and memoranda of all
oral responses thereto and to telephonic demands, and await instructions from
the Fund; the Custodian shall in no case have any liability for any nonpayment
of such income provided the Custodian meets the standard of care set forth in
Section 8 hereof. The Custodian shall not be obligated to take legal action for
collection unless and until reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights and
other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. Payment of Fund Moneys Upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options on
futures contracts purchased for the account of the Fund but only
(a) against the receipt of:
(i) such securities registered as provided in
Paragraph C hereof or in proper form for transfer
or
(ii) detailed instructions signed by an officer of the
Fund regarding the participation interests to be
purchased or
(iii) written confirmation of the purchase by the Fund
of the options, futures contracts, forward
contracts or options on futures contracts
by the Custodian (or by a subcustodian employed pursuant to
Section 2 hereof or by a clearing corporation of a national
securities exchange of which the Custodian is a member or by any
bank, banking institution or trust company doing business in the
United States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and which has been
designated by the Custodian as its agent for this purpose or by
the agent specifically designated in such instructions as
representing the purchasers of a new issue of privately placed
securities); (b) in the case of a purchase effected through a
Securities System, upon receipt of the securities by the
Securities System in accordance with the conditions set forth in
Paragraph L hereof; (c) in the case of a purchase of commercial
paper effected through an Approved Book-Entry System for
Commercial Paper, upon receipt of the paper by the Custodian or
subcustodian in accordance with the conditions set forth in
Paragraph M hereof; (d) in the case of repurchase agreements
entered into between the Fund and another bank or a
broker-dealer, against receipt by the Custodian of the securities
underlying the repurchase agreement either in certificate form or
through an entry crediting the Custodian's segregated,
non-proprietary account at the Federal Reserve Bank of Boston
with such securities along with written evidence of the agreement
by the bank or broker-dealer to repurchase such securities from
the Fund; or (e) with respect to securities purchased outside of
the United States, in accordance with written procedures agreed
to from time to time in writing by the parties hereto;
2) When required in connection with the conversion,
exchange or surrender of securities owned by the Fund as
set forth in Paragraph B hereof;
3) When required for the redemption or repurchase of Shares
of the Fund in accordance with the provisions of
Paragraph J hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: advisory fees, distribution plan payments,
interest, taxes, management compensation and expenses,
accounting, transfer agent and legal fees, and other operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends or other distributions
to holders of Shares declared or authorized by the
Board; and
6) For any other proper corporate purpose, but only upon receipt of,
in addition to proper instructions, a certified copy of a vote of
the Board, specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities
Purchased In any and every case where payment for purchase of
securities for the account of the Fund is made by the
Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions signed by two
officers of the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian; except that in the case of a repurchase agreement
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to
the account of such bank prior to the receipt of (i) the
securities in certificate form subject to such repurchase
agreement or (ii) written evidence that the securities subject
to such repurchase agreement have been transferred by
book-entry into a segregated non-proprietary account of the
Custodian maintained with the Federal Reserve Bank of Boston
or (iii) the safekeeping receipt, provided that such
securities have in fact been so transferred by book-entry and
the written repurchase agreement is received by the Custodian
in due course; and except that if the securities are to be
purchased outside the United States, payment may be made in
accordance with procedures agreed to from time to time by the
parties hereto.
J. Payments for Repurchases or Redemptions of Shares of the Fund
From such funds as may be available for the purpose, but
subject to any applicable votes of the Board and the current
redemption and repurchase procedures of the Fund, the
Custodian shall, upon receipt of written instructions from the
Fund or from the Fund's transfer agent or from the principal
underwriter, make funds and/or portfolio securities available
for payment to holders of Shares who have caused their Shares
to be redeemed or repurchased by the Fund or for the Fund's
account by its transfer agent or principal underwriter.
The Custodian may maintain a special checking account upon which
special checks may be drawn by shareholders of the Fund holding Shares
for which certificates have not been issued. Such checking account and
such special checks shall be subject to such rules and regulations as
the Custodian and the Fund may from time to time adopt. The Custodian
or the Fund may suspend or terminate use of such checking account or
such special checks (either generally or for one or more shareholders)
at any time. The Custodian and the Fund shall notify the other
immediately of any such suspension or termination.
K. Appointment of Agents by the Custodian The Custodian may at
any time or times in its discretion appoint (and may at any
time remove) any other bank or trust company (provided such
bank or trust company is itself qualified under the Investment
Company Act of 1940 to act as a custodian or is itself an
eligible foreign custodian within the meaning of Rule 17f-5
under said Act) as the agent of the Custodian to carry out
such of the duties and functions of the Custodian described in
this Section 3 as the Custodian may from time to time direct;
provided, however, that the appointment of any such agent
shall not relieve the Custodian of any of its responsibilities
or liabilities hereunder, and as between the Fund and the
Custodian the Custodian shall be fully responsible for the
acts and omissions of any such agent. For the purposes of
this Agreement, any property of the Fund held by any such
agent shall be deemed to be held by the Custodian hereunder.
L. Deposit of Fund Portfolio Securities in Securities Systems
The Custodian may deposit and/or maintain securities owned by
the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, and at
all times subject to the following
provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep securities
of the Fund in a Securities System provided that such
securities are maintained in a non-proprietary account
("Account") of the Custodian or such subcustodian in the
Securities System which shall not include any assets of the
Custodian or such subcustodian or any other person other than
assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund, and the Custodian
shall be fully and completely responsible for maintaining a record
keeping system capable of accurately and currently stating the Fund's
holdings maintained in each such Securities System.
(c) The Custodian shall pay for securities purchased in book-entry
form for the account of the Fund only upon (i) receipt of
notice or advice from the Securities System that such
securities have been transferred to the Account, and (ii) the
making of any entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account of
the Fund only upon (i) receipt of notice or advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all notices or
advises from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be promptly
provided to the Fund at its request. The Custodian shall
promptly send to the Fund confirmation of each transfer to or
from the account of the Fund in the form of a written advice
or notice of each such transaction, and shall furnish to the
Fund copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or
other communication received or obtained by the Custodian
relating to the Securities System's accounting system, system
of internal accounting controls or procedures for safeguarding
securities deposited in the Securities System; the Custodian
shall promptly send to the Fund any report or other
communication relating to the Custodian's internal accounting
controls and procedures for safeguarding securities deposited
in any Securities System; and the Custodian shall ensure that
any agent appointed pursuant to Paragraph K hereof or any
subcustodian employed pursuant to Section 2 hereof shall
promptly send to the Fund and to the Custodian any report or
other communication relating to such agent's or
subcustodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System.
The Custodian's books and records relating to the Fund's
participation in each Securities System will at all times
during regular business hours be open to the inspection of the
Fund's Authorized Officers, employees or agents.
(e) The Custodian shall not act under this Paragraph L in the
absence of receipt of a certificate of an Authorized Officer
that the Board has approved the use of a particular Securities
System; the Custodian shall also obtain appropriate assurance
from an Authorized Officer that the Board has annually
reviewed and approved the continued use by the Fund of each
Securities System, so long as such review and approval is
required by Rule 17f-4 under the Investment Company Act of
1940, and the Fund shall promptly notify the Custodian if the
use of a Securities System is to be discontinued; at the
request of the Fund, the Custodian will terminate the use of
any such Securities System as promptly as practicable.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or subcustodians or of any of
its or their employees or from any failure of the Custodian or
any such agent or subcustodian to enforce effectively such
rights as it may have against the Securities System or any
other person; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
M. Deposit of Fund Commercial Paper in an Approved Book-Entry System
for Commercial Paper Upon receipt of proper instructions with
respect to each issue of direct issue commercial paper purchased
by the Fund, the Custodian may deposit and/or maintain direct
issue commercial paper owned by the Fund in any Approved
Book-Entry System for Commercial Paper, in each case only in
accordance with applicable Securities and Exchange Commission
rules, regulations, and no-action correspondence, and at all
times subject to the following provisions:
(a) The Custodian may (either directly or through one or
more subcustodians employed pursuant to Section 2) keep
commercial paper of the Fund in an Approved Book-Entry
System for Commercial Paper, provided that such paper is
issued in book entry form by the Custodian or
subcustodian on behalf of an issuer with which the
Custodian or subcustodian has entered into a book-entry
agreement and provided further that such paper is
maintained in a non-proprietary account ("Account") of
the Custodian or such subcustodian in an Approved
Book-Entry System for Commercial Paper which shall not
include any assets of the Custodian or such subcustodian
or any other person other than assets held by the
Custodian or such subcustodian as a fiduciary,
custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial
paper of the Fund which is maintained in an Approved
Book-Entry System for Commercial Paper shall identify by
book-entry each specific issue of commercial paper
purchased by the Fund which is included in the System
and shall at all times during regular business hours be
open for inspection by authorized officers, employees or
agents of the Fund. The Custodian shall be fully and
completely responsible for maintaining a record keeping
system capable of accurately and currently stating the
Fund's holdings of commercial paper maintained in each
such System.
(c) The Custodian shall pay for commercial paper purchased
in book-entry form for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice from the
issuer that such paper has been issued, sold and
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
purchase, payment and transfer for the account of the
Fund. The Custodian shall transfer such commercial
paper which is sold or cancel such commercial paper
which is redeemed for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice that
payment for such paper has been transferred to the
Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer or redemption
and payment for the account of the Fund. Copies of all
notices, advises and confirmations of transfers of
commercial paper for the account of the Fund shall
identify the Fund, be maintained for the Fund by the
Custodian and be promptly provided to the Fund at its
request. The Custodian shall promptly send to the Fund
confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice of
each such transaction, and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transactions in the System for the account of the Fund
on the next business day.
(d) The Custodian shall promptly send to the Fund any report
or other communication received or obtained by the
Custodian relating to each System's accounting system,
system of internal accounting controls or procedures for
safeguarding commercial paper deposited in the System;
the Custodian shall promptly send to the Fund any report
or other communication relating to the Custodian's
internal accounting controls and procedures for
safeguarding commercial paper deposited in any Approved
Book-Entry System for Commercial Paper; and the
Custodian shall ensure that any agent appointed pursuant
to Paragraph K hereof or any subcustodian employed
pursuant to Section 2 hereof shall promptly send to the
Fund and to the Custodian any report or other
communication relating to such agent's or subcustodian's
internal accounting controls and procedures for
safeguarding securities deposited in any Approved
Book-Entry System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph M in
the absence of receipt of a certificate of an officer of
the Fund that the Board has approved the use of a
particular Approved Book-Entry System for Commercial
Paper; the Custodian shall also obtain appropriate
assurance from an Authorized Officer that the Board has
annually reviewed and approved the continued use by the
Fund of each Approved Book-Entry System for Commercial
Paper, so long as such review and approval is required
by Rule 17f-4 under the Investment Company Act of 1940,
and the Fund shall promptly notify the Custodian if the
use of an Approved Book-Entry System for Commercial
Paper is to be discontinued; at the request of the Fund,
the Custodian will terminate the use of any such System
as promptly as practicable.
(f) The Custodian (or subcustodian, if the Approved Book-Entry System
for Commercial Paper is maintained by the subcustodian) shall
issue physical commercial paper or promissory notes whenever
requested to do so by the Fund or in the event of an electronic
system failure which impedes issuance, transfer or custody of
direct issue commercial paper by book-entry.
(g) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the
Fund for any loss or damage to the Fund resulting from
use of any Approved Book-Entry System for Commercial
Paper by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or
subcustodians or of any of its or their employees or
from any failure of the Custodian or any such agent or
subcustodian to enforce effectively such rights as it
may have against this System, the issuer of the
commercial paper or any other person; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against this System, the issuer of the commercial paper
or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any
such loss or damage.
N. Segregated Account The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant
to Paragraph L hereof, (i) in accordance with the provisions
of any agreement among the Fund, the Custodian and any
registered broker-dealer (or any futures commission merchant),
relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange
(or of the Commodity Futures Trading Commission or of any
contract market or commodities exchange), or of any similar
organization or organizations, regarding escrow or deposit or
other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or U.S. Government
securities in connection with options purchased, sold or
written by the Fund or futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper
purposes, but only, in the case of clause (iv), upon receipt
of, in addition to proper instructions, a certificate signed
by two officers of the Fund, setting forth the purpose such
segregated account and declaring such purpose to be a proper
purpose.
O. Ownership Certificates for Tax Purposes The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
P. Proxies The Custodian shall, with respect to the securities
held by it hereunder, cause to be promptly delivered to the
Fund all forms of proxies and all notices of meetings and any
other notices or announcements or other written information
affecting or relating to the securities, and upon receipt of
proper instructions shall execute and deliver or cause its
nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor
its nominee shall vote upon any of the securities or execute
any proxy to vote thereon or give any consent or take any
other action with respect thereto (except as otherwise herein
provided) unless ordered to do so by proper instructions.
Q. Communications Relating to Fund Portfolio Securities The
Custodian shall deliver promptly to the Fund all written
information (including, without limitation, pendency of call
and maturities of securities and participation interests and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers and other persons
relating to the securities and participation interests being
held for the Fund. With respect to tender or exchange offers,
the Custodian shall deliver promptly to the Fund all written
information received by the Custodian from issuers and other
persons relating to the securities and participation interests
whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer.
R. Exercise of Rights; Tender Offers In the case of tender
offers, similar offers to purchase or exercise rights
(including, without limitation, pendency of calls and
maturities of securities and participation interests and
expirations of rights in connection therewith and notices of
exercise of call and put options and the maturity of futures
contracts) affecting or relating to securities and
participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for
promptly notifying the Fund of all such offers in accordance
with the standard of reasonable care set forth in Section 8
hereof. For all such offers for which the Custodian is
responsible as provided in this Paragraph R, the Fund shall
have responsibility for providing the Custodian with all
necessary instructions in timely fashion. Upon receipt of
proper instructions, the Custodian shall timely deliver to the
issuer or trustee thereof, or to the agent of either,
warrants, puts, calls, rights or similar securities for the
purpose of being exercised or sold upon proper receipt
therefor and upon receipt of assurances satisfactory to the
Custodian that the new securities and cash, if any, acquired
by such action are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof. Upon
receipt of proper instructions, the Custodian shall timely
deposit securities upon invitations for tenders of securities
upon proper receipt therefor and upon receipt of assurances
satisfactory to the Custodian that the consideration to be
paid or delivered or the tendered securities are to be
returned to the Custodian or subcustodian employed pursuant to
Section 2 hereof. Notwithstanding any provision of this
Agreement to the contrary, the Custodian shall take all
necessary action, unless otherwise directed to the contrary by
proper instructions, to comply with the terms of all mandatory
or compulsory exchanges, calls, tenders, redemptions, or
similar rights of security ownership, and shall thereafter
promptly notify the Fund in writing of such action.
S. Depository Receipts The Custodian shall, upon receipt of
proper instructions, surrender or cause to be surrendered
foreign securities to the depository used by an issuer of
American Depository Receipts, European Depository Receipts or
International Depository Receipts (hereinafter collectively
referred to as "ADRs") for such securities, against a written
receipt therefor adequately describing such securities and
written evidence satisfactory to the Custodian that the
depository has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of a nominee
of the Custodian or in the name or nominee name of any
subcustodian employed pursuant to Section 2 hereof, for
delivery to the Custodian or such subcustodian at such place
as the Custodian or such subcustodian may from time to time
designate. The Custodian shall, upon receipt of proper
instructions, surrender ADRs to the issuer thereof against a
written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian
that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities
underlying such ADRs to the Custodian or to a subcustodian
employed pursuant to Section 2 hereof.
T. Interest Bearing Call or Time Deposits The Custodian shall,
upon receipt of proper instructions, place interest bearing
fixed term and call deposits with the banking department of
such banking institution (other than the Custodian) and in
such amounts as the Fund may designate. Deposits may be
denominated in U.S. Dollars or other currencies. The
Custodian shall include in its records with respect to the
assets of the Fund appropriate notation as to the amount and
currency of each such deposit, the accepting banking
institution and other appropriate details and shall retain
such forms of advice or receipt evidencing the deposit, if
any, as may be forwarded to the Custodian by the banking
institution. Such deposits shall be deemed portfolio
securities of the applicable Fund for the purposes of this
Agreement, and the Custodian shall be responsible for the
collection of income from such accounts and the transmission
of cash to and from such accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
1. Options. The Custodians shall, upon receipt of proper
instructions and in accordance with the provisions of
any agreement between the Custodian, any registered
broker-dealer and, if necessary, the Fund, relating to
compliance with the rules of the Options Clearing
Corporation or of any registered national securities
exchange or similar organization or organizations,
receive and retain confirmations or other documents, if
any, evidencing the purchase or writing of an option on
a security, securities index, currency or other
financial instrument or index by the Fund; deposit and
maintain in a segregated account for each Fund
separately, either physically or by book-entry in a
Securities System, securities subject to a covered call
option written by the Fund; and release and/or transfer
such securities or other assets only in accordance with
a notice or other communication evidencing the
expiration, termination or exercise of such covered
option furnished by the Options Clearing Corporation,
the securities or options exchange on which such covered
option is traded or such other organization as may be
responsible for handling such options transactions.
2. Futures Contracts The Custodian shall, upon receipt of
proper instructions, receive and retain confirmations
and other documents, if any, evidencing the purchase or
sale of a futures contract or an option on a futures
contract by the Fund; deposit and maintain in a
segregated account, for the benefit of any futures
commission merchant, assets designated by the Fund as
initial, maintenance or variation "margin" deposits
(including mark-to-market payments) intended to secure
the Fund's performance of its obligations under any
futures contracts purchased or sold or any options on
futures contracts written by Fund, in accordance with
the provisions of any agreement or agreements among the
Fund, the Custodian and such futures commission
merchant, designed to comply with the rules of the
Commodity Futures Trading Commission and/or of any
contract market or commodities exchange or similar
organization regarding such margin deposits or payments;
and release and/or transfer assets in such margin
accounts only in accordance with any such agreements or
rules.
3. Foreign Exchange Transactions The Custodian shall,
pursuant to proper instructions, enter into or cause a
subcustodian to enter into foreign exchange contracts,
currency swaps or options to purchase and sell foreign
currencies for spot and future delivery on behalf and
for the account of the Fund. Such transactions may be
undertaken by the Custodian or subcustodian with such
banking or financial institutions or other currency
brokers, as set forth in proper instructions. Foreign
exchange contracts, swaps and options shall be deemed to
be portfolio securities of the Fund; and accordingly,
the responsibility of the Custodian therefor shall be
the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities
of the Fund. The Custodian shall be responsible for the
transmittal to and receipt of cash from the currency
broker or banking or financial institution with which
the contract or option is made, the maintenance of
proper records with respect to the transaction and the
maintenance of any segregated account required in
connection with the transaction. The Custodian shall
have no duty with respect to the selection of the
currency brokers or banking or financial institutions
with which the Fund deals or for their failure to comply
with the terms of any contract or option. Without
limiting the foregoing, it is agreed that upon receipt
of proper instructions and insofar as funds are made
available to the Custodian for the purpose, the
Custodian may (if determined necessary by the Custodian
to consummate a particular transaction on behalf and for
the account of the Fund) make free outgoing payments of
cash in the form of U.S. dollars or foreign currency
before receiving confirmation of a foreign exchange
contract or swap or confirmation that the countervalue
currency completing the foreign exchange contract or
swap has been delivered or received. The Custodian
shall not be responsible for any costs and interest
charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third
parties to deliver foreign exchange; provided that the
Custodian shall nevertheless be held to the standard of
care set forth in, and shall be liable to the Fund in
accordance with, the provisions of Section 8.
V. Actions Permitted Without Express Authority The Custodian may in
its discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Agreement, provided, that all such payments shall be
accounted for by the Custodian to the Treasurer of the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all nondiscretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Fund
except as otherwise directed by the Fund.
4. Duties of Bank with Respect to Books of Account and Calculations
of Net Asset Value
The Bank shall as Agent (or as Custodian, as the case may be) keep such books of
account and render as at the close of business on each day a detailed statement
of the amounts received or paid out and of securities received or delivered for
the account of the Fund during said day and such other statements, including a
daily trial balance and inventory of the Fund's portfolio securities; and shall
furnish such other financial information and data as from time to time requested
by the Treasurer or any Authorized Officer of the Fund; and shall compute and
determine, as of the close of regular trading on the New York Stock Exchange, or
at such other time or times as the Board may determine, the net asset value of a
share in the Fund, such computation and determination to be made in accordance
with the governing documents of the Fund and the votes and instructions of the
Board at the time in force and applicable, and promptly notify the Fund and its
investment adviser and such other persons as the Fund may request of the result
of such computation and determination. In computing the net asset value the
Custodian may rely upon security quotations received by telephone or otherwise
from sources or pricing services designated by the Fund by proper instructions,
and may further rely upon information furnished to it by any authorized officer
of the Fund relative (a) to liabilities of the Fund not appearing on its books
of account, (b) to the existence, status and proper treatment of any reserve or
reserves, (c) to any procedures established by the Board regarding the valuation
of portfolio securities, and (d) to the value to be assigned to any bond, note,
debenture, Treasury bill, repurchase agreement, subscription right, security,
participation interest or other asset or property for which market quotations
are not readily available.
5. Records and Miscellaneous Duties
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All books of account and
records maintained by the Bank in connection with the performance of its duties
under this Agreement shall be the property of the Fund, shall at all times
during the regular business hours of the Bank be open for inspection by
authorized officers, employees or agents of the Fund, and in the event of
termination of this Agreement shall be delivered to the Fund or to such other
person or persons as shall be designated by the Fund. Disposition of any account
or record after any required period of preservation shall be only in accordance
with specific instructions received from the Fund. The Bank shall assist
generally in the preparation of reports to shareholders, audits of accounts, and
other ministerial matters of like nature; and, upon request, shall furnish the
Fund's auditors with an attested inventory of securities held with appropriate
information as to securities in transit or in the process of purchase or sale
and with such other information as said auditors may from time to time request.
The Custodian shall also maintain records of all receipts, deliveries and
locations of such securities, together with a current inventory thereof, and
shall conduct periodic verifications (including sampling counts at the
Custodian) of certificates representing bonds and other securities for which it
is responsible under this Agreement in such manner as the Custodian shall
determine from time to time to be advisable in order to verify the accuracy of
such inventory. The Bank shall not disclose or use any books or records it has
prepared or maintained by reason of this Agreement in any manner except as
expressly authorized herein or directed by the Fund, and the Bank shall keep
confidential any information obtained by reason of this Agreement.
6. Opinion of Fund's Independent Public Accountants
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to enable the Fund to obtain from year to year favorable opinions
from the Fund's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement and Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
7. Compensation and Expenses of Bank
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Fund and the
Bank. The Bank shall be entitled to receive from the Fund on demand
reimbursement for its cash disbursements, expenses and charges, including
counsel fees, in connection with its duties as Custodian and Agent hereunder,
but excluding salaries and usual overhead expenses.
8. Responsibility of Bank
So long as and to the extent that it is in the exercise of reasonable care, the
Bank as Custodian and Agent shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement but shall be liable only for
its own negligent or bad faith acts or failures to act. Notwithstanding the
foregoing, nothing contained in this paragraph is intended to nor shall it be
construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to subcustodians
generally in Section 2 hereof, provided that, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign county including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
acts of war, civil war or terrorism, insurrection, revolution, military or
usurped powers, nuclear fission, fusion or radiation, earthquake, storm or other
disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Bank, result in the Bank or its nominee assigned to the Fund
being liable for the payment of money or incurring liability of some other form,
the Fund, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of the Fund assets to
the extent necessary to obtain reimbursement.
9. Persons Having Access to Assets of the Fund
(i) No trustee, director, general partner, officer, employee
or agent of the Fund shall have physical access to the
assets of the Fund held by the Custodian or be
authorized or permitted to withdraw any investments of
the Fund, nor shall the Custodian deliver any assets of
the Fund to any such person. No officer or director,
employee or agent of the Custodian who holds any similar
position with the Fund or the investment adviser of the
Fund shall have access to the assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only
be available to duly Authorized Officers, employees,
representatives or agents of the Custodian or other
persons or entities for whose actions the Custodian
shall be responsible to the extent permitted hereunder,
or to the Fund's independent public accountants in
connection with their auditing duties performed on
behalf of the Fund.
(iii) Nothing in this Section 9 shall prohibit any Authorized Officer,
employee or agent of the Fund or of the investment adviser of the
Fund from giving instructions to the Custodian or executing a
certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (i) of this
Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; provided, that the Fund may at any
time by action of its Board, (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or by the Banking Commissioner of The Commonwealth of Massachusetts
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Upon termination of the
Agreement, the Fund shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
Unless the holders of a majority of the outstanding shares of the Fund vote to
have the securities, funds and other properties held hereunder delivered and
paid over to some other bank or trust company, specified in the vote, having not
less than $2,000,000 of aggregate capital, surplus and undivided profits, as
shown by its last published report, and meeting such other qualifications for
custodians set forth in the Investment Company Act of 1940, the Board shall,
forthwith, upon giving or receiving notice of termination of this Agreement,
appoint as successor custodian, a bank or trust company having such
qualifications. The Bank, as Custodian, Agent or otherwise, shall, upon
termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no such vote has been adopted by
the shareholders and that no written order designating a successor custodian
shall have been delivered to the Bank on or before the date when such
termination shall become effective, then the Bank shall not deliver the
securities, funds and other properties of the Fund to the Fund but shall have
the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all funds, securities and properties of the Fund held by or
deposited with the Bank, and all books of account and records kept by the Bank
pursuant to this Agreement, and all documents held by the Bank relative thereto.
Thereafter such bank or trust company shall be the successor of the Custodian
under this Agreement.
11. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
governing instruments of the Fund. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
12. Certification as to Authorized Officers
The Secretary of the Fund shall at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of the
names and signatures of the Authorized Officers of each fund, it being
understood that upon the occurrence of any change in the information set forth
in the most recent certification on file (including without limitation any
person named in the most recent certification who has ceased to hold the office
designated therein), the Secretary of the Fund shall sign a new or amended
certification setting forth the change and the new, additional or omitted names
or signatures. The Bank shall be entitled to rely and act upon instructions from
any officers named in the most recent certification.
13. Notices
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to Thomas H. Drohan, John Hancock Advisers, Inc., 101 Huntington
Avenue, Boston, Massachusetts 02199, or to such other address as the Fund may
have designated to the Bank, in writing, or to State Street Bank and Trust
Company, shall be deemed to have been properly delivered or given hereunder to
the respective addressees.
14. Massachusetts Law to Apply; Limitations on Liability
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts.
If the Fund is a Massachusetts business trust, the Custodian expressly
acknowledges the provision in the Fund's declaration of trust limiting the
personal liability of the trustees and shareholders of the Fund; and the
Custodian agrees that it shall have recourse only to the assets of the Fund for
the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund. Each
Fund, and each series or portfolio of a Fund, shall be liable only for its own
obligations to the Custodian under this Agreement and shall not be jointly or
severally liable for the obligations of any other Fund, series or portfolio
hereunder.
15. Adoption of the Agreement by the Fund
The Fund represents that its Board has approved this Agreement and has duly
authorized the Fund to adopt this Agreement. This Agreement shall be deemed to
supersede and terminate, as of the date first written above, all prior
agreements between the Fund and the Bank relating to the custody of the Fund's
assets.
* * * * *
<PAGE>
In Witness Whereof, the parties hereto have caused this agreement to be executed
in duplicate as of the date first written above by their respective officers
thereunto duly authorized.
John Hancock Mutual Funds listed on Appendix A
by: /s/James B. Little
James B. Little
Senior Vice President and Chief Financial Officer
Attest:
/s/ Avery P. Maher
State Street Bank and Trust Company
by: /s/Ronald E. Logue
Attest:
/s/ Sharon Baker Morin
<PAGE>
State Street Bank and Trust Company
Appendix A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Cash Management Fund
John Hancock World Fund
John Hancock Pacific Basin Equities Fund
John Hancock Global Rx Fund
John Hancock Global Retail Fund
John Hancock Patriot Premium Dividend Fund I
John Hancock Patriot Premium Dividend Fund II
John Hancock Patriot Select Dividend Trust
John Hancock Patriot Global Dividend Fund
John Hancock Patriot Preferred Dividend Fund
John Hancock Bank and Thrift Opportunity Fund (Effective - August 15,
1994)
Freedom Investment Trust II
John Hancock Global Fund
John Hancock Global Income Fund
John Hancock Short-Term Strategic Income Fund
John Hancock International Fund
The Southeastern Thrift and Bank Fund, Inc.
John Hancock Institutional Series Trust
John Hancock Berkeley Global Bond Fund
John Hancock Berkeley Overseas Growth Fund
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
TRANSFER AGENCY AND SERVICE AGREEMENT
Dated October 2, 1992
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 2nd day of October, 1992 by and between John
Hancock Sovereign Investors Fund, Inc., a Maryland Corporation, having its
principal office and place of business at 1 Westlakes, 1235 Westlakes Drive,
Suite 220, Berwyn, Pennsylvania, 19312 (the "Fund"), and John Hancock Fund
Services, Inc., a Delaware corporation having its principal office and place of
business at 101 Huntington Avenue, Boston, Massachusetts 02117 ("JHFSI").
WITNESSETH:
WHEREAS, the Fund desires to appoint JHFSI as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and JHFSI desires to accept such appointment;
WHEREAS, the Fund intends to offer shares in one or more series, the
John Hancock Sovereign Investors Fund, Inc., as the initial series, and the John
Hancock Sovereign Balanced Fund as the second series, (such series, together
with all other series subsequently established by the Fund and made subject to
this agreement in accordance with Article 8, being herein referred to as the
"Fund(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1 Terms of Appointment: Duties of JHFSI
1.01 Subject to the terms and conditions set forth in this Agreement, the Fund
hereby, employs and appoints JHFSI to act as, and JHFSI agrees to act as
transfer agent for the Fund's authorized and issued shares of common stock
("Shares"), with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") and set out in the currently effective
prospectus of the Fund, including without limitation any periodic investment
plan or periodic withdrawal program.
1.02 JHFSI agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by agreement
between the Fund and JHFSI, JHFSI shall:
(i) Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefor to the Custodian of the
Fund authorized pursuant to the By-Laws of the Corporation as in effect on the
date thereof (the "Custodian");
<PAGE>
(ii) Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance, redemption requests and redemption directions and
deliver the appropriate documentation therefor to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions declared by
the Fund; and
(vii) Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
(viii) Record the issuance of Shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares of the Fund which are
authorized, based upon data provided to it by the Fund, and issued and
outstanding. JHFSI shall also provide the Fund on a regular basis with the total
number of Shares which are authorized and issued and outstanding and shall have
no obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), JHFSI shall:
(i) perform all of the customary services of a transfer agent, dividend
disbursing agent and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation any periodic
investment plan or periodic withdrawal program); including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, receiving and tabulating proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmations, forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and;
<PAGE>
(ii) provide a system which will enable the Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Fund shall (i) identify to JHFSI in writing those
transactions and assets to be treated as exempt from the blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of JHFSI for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Additionally, JHFSI shall:
(i) Utilize a system to identify all share transactions which involve purchase
and redemption orders that are processed at a time other than the time of the
computation of net asset value per share next computed after receipt of such
orders, and shall compute the net effect upon the Fund of such transactions so
identified on a daily and cumulative basis.
(ii) If upon any day the cumulative net effect of such transactions upon the
Fund is negative and exceed a dollar amount equivalent to 1/2 of 1 cent per
share, JHFSI shall promptly make a payment to the Fund in cash or through the
use of a credit, in the manner described in paragraph (iv) below, in such amount
as may be necessary to reduce the negative cumulative net effect to less than
1/2 of 1 cent per share.
(iii) If on the last business day of any month the cumulative net effect upon
the Fund (adjusted by the amount of all prior payments and credits by JHFSI and
the Fund) is negative, the Fund shall be entitled to a reduction in the fee next
payable under the Agreement by an equivalent amount, except as provided in
paragraph (iv) below. If on the last business day in any month the cumulative
net effect upon the Fund (adjusted by the amount of all prior payments and
credits by JHFSI and the Fund) is positive, JHFSI shall be entitled to recover
certain past payments and reductions in fees, and to credit against all future
payments and fee reductions that may be required under the Agreement as herein
described in paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net effect upon the Fund
shall be deemed to be a credit to JHFSI which shall first be applied to permit
JHFSI to recover any prior cash payments and fee reductions made by it to the
Fund under paragraphs (ii) and (iii) above during the calendar year, by
increasing the amount of the monthly fee under the Agreement next payable in an
amount equal to prior payments and fee reductions made by JHFSI during such
calendar year, but not exceeding the sum of that month's credit and credits
arising in prior months during such calendar year to the extent such prior
credits have not previously been utilized as contemplated by this paragraph. Any
portion of a credit to JHFSI not so used by it shall remain as a credit to be
used as payment against the amount of any future negative cumulative net effects
that would otherwise require a cash payment or fee reduction to be made to the
Fund pursuant to paragraphs (ii)
<PAGE>
or (iii) above (regardless of whether or not the credit or any portion thereof
arose in the same calendar year as that in which the negative cumulative net
effects or any portion thereof arose).
(v) JHFSI shall supply to the Fund from time to time, as mutually agreed upon,
reports summarizing the transactions identified pursuant to paragraph (i) above,
and the daily and cumulative net effects of such transactions, and shall advise
the Fund at the end of each month of the net cumulative effect at such time.
JHFSI shall promptly advise the Fund if at any time the cumulative net effect
exceeds a dollar amount equivalent to 1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever cause, or this
provision 1.02 (d) is terminated pursuant to paragraph (vii) below, the Fund
shall promptly pay to JHFSI an amount in cash equal to the amount by which the
cumulative net effect upon the Fund is positive or, if the cumulative net effect
upon the Fund is negative, JHFSI shall promptly pay to the Fund an amount in
cash equal to the amount of such cumulative net effect.
(vii) This provision 1.02 (d) of the Agreement may be terminated by JHFSI at any
time without cause, effective as of the close of business on the date written
notice (which may be by telex) is received by the Fund.
Procedures applicable to certain of these services may be established from time
to time by agreement between the Fund and JHFSI.
Article 2 Fees and Expenses
2.01 For performance by JHFSI pursuant to this Agreement, the Fund agrees to pay
JHFSI an annual maintenance fee for each Shareholder account as set out in the
initial fee schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.02 below may be changed from time to time
subject to mutual written agreement between the Fund and JHFSI.
2.02 In addition to the fee paid under Section 2.01 above. the Fund agrees to
reimburse JHFSI for out-of-pocket expenses or advances incurred by JHFSI for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by JHFSI at the request or with the consent of the Fund, will
be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses promptly
following the mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to JHFSI by the Fund at least seven (7) days prior to the
mailing date of such materials.
Article 3 Representations and Warranties of JHFSI
<PAGE>
JHFSI represents and warrants to the Fund that:
3.01 It is a Delaware corporation duly organized and existing and in good
standing under the laws of the State of Delaware, and as a Foreign Corporation
under the Laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its charter and By-Laws to
enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to JHFSI that:
4.01 It is a corporation duly organized and existing and in good standing under
the laws of the state of Maryland.
4.02 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
4.03 All corporate proceedings required by said Charter and By-Laws have been
taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end and diversified investment company registered under the
Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Fund being offered for sale.
Article 5 Indemnification
5.01 JHFSI shall not be responsible for, and the Fund shall indemnify and hold
JHFSI harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or attributable
to:
<PAGE>
(a) All actions of JHFSI or its agent or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this Agreement, or
which arise out of the Fund's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by JHFSI or its agents or subcontractors of
information, records and documents which (i) are received by JHFSI or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund.
(d) The reliance on, or the carrying out by JHFSI or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 JHFSI shall indemnify and hold the Fund harmless from and against any and
all losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising out of or attributed to any action or failure or omission to
act by JHFSI as a result of JHFSI's lack of good faith, negligence or willful
misconduct.
5.03 At any time JHFSI may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by JHFSI under this Agreement, and
JHFSI and its agents or subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel. JHFSI, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided JHFSI or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. JHFSI, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Fund, and the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
<PAGE>
5.04 In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article 5
shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and JHFSI
6.01 The Fund shall promptly furnish to JHFSI the following:
(a) A certified copy of the resolution of the Board of Directors of the Fund
authorizing both the appointment of JHFSI and the execution and delivery of this
Agreement.
(b) A copy of the Charter and By-Laws of the Fund and all amendments thereto.
6.02 JHFSI hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 JHFSI shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, JHFSI agrees that all such records prepared or maintained
by JHFSI relating to the services to be performed by JHFSI hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered to the Fund on
and in accordance with its request.
6.04 JHFSI and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the
<PAGE>
negotiation or the carrying out of this Agreement shall remain confidential, and
shall not be voluntarily disclosed to any other person, except as may be
required by law.
6.05 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, JHFSI will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such instruction.
JHFSI reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket expenses
associated with the movement of records and material will be borne by the Fund.
Additionally, JHFSI reserves the right to charge for any other reasonable
expenses associated with such termination.
Article 8 Additional Funds
8.01 In the event that the Fund establishes one or more of series of Shares in
addition to the John Hancock Sovereign Investors Fund, Inc, and the John Hancock
Sovereign Balanced Fund with respect to which it desires to have JHFSI render
services as a transfer agent under the terms hereof, it shall so notify JHFSI in
writing, and if JHFSI agrees in writing to provide such services, such series of
Shares shall become a Fund hereunder.
Article 9 Assignment
9.01 Except as provided in Section 9.03 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03 JHFSI may, without further consent on the part of the Fund, subcontract for
the performance hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly registered as a transfer agent
pursuant to Section 17A (c)(1) of the Securities Exchange Act of 1934 ("Section
17A (c)(1)"), (ii) 440 Financial Group, (iii) or any other entity JHFSI deems
appropriate in order to comply with the terms and conditions of this Agreement,
provided, however, that JHFSI shall be as fully responsible to the Fund for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
<PAGE>
Article 10 Amendment
10.01 This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Directors of the Fund.
Article 11 Massachusetts Law to Apply
11.01 This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
Article 12 Merger of Agreement
12.01 This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
BY: /s/ Edward J. Boudreau, Jr.
ATTEST: JOHN HANCOCK FUND SERVICES, INC.
BY: /s/ John A. Morin
Vice President
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "The Fund's
Financial Highlights" in the Class A and Class B Shares Prospectus and in the
Class C Shares Prospectus and "Independent Auditors" in the Class A, Class B and
Class C Shares Statement of Additional Information and to the use, in this
Post-Effective Amendment Number 90 to Registration Statement (Form N-1A No.
2-7954) dated May 1, 1995, of our report on the financial statements and
financial highlights of John Hancock Sovereign Investors Fund portfolio of John
Hancock Sovereign Investors Fund, Inc. dated February 13, 1995.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 1995
John Hancock Sovereign Investors Fund
Amended and Restated Distribution Plan
Class A Shares
January 1, 1994
Article I. This Plan
This Amended and Restated Distribution Plan (the "Plan") sets forth the
terms and conditions on which John Hancock Sovereign Investors Fund, Inc. (the
"Company"), on behalf of the Class A shares of John Hancock Sovereign Investors
Fund (the "Fund"), will, after the effective date hereof, pay certain amounts to
John Hancock Broker Distribution Services, Inc. ("Broker Services") in
connection with the provision by Broker Services of certain services to the Fund
and its Class A shareholders, as set forth herein. Certain of such payments by
the Company may, under Rule 12b-1 of the Securities and Exchange Commission, as
from time to time amended (the "Rule"), under the Investment Company Act of
1940, as amended (the "Act"), be deemed to constitute the financing of
distribution by the Fund of its shares. This Plan describes all material aspects
of such financing as contemplated by the Rule and shall be administered and
interpreted, and implemented and continued, in a manner consistent with the
Rule. The Company, on behalf of the Fund, and Broker Services heretofore entered
into a Distribution Agreement, dated October 23, 1991, as amended from time to
time, (the "Agreement"), the terms of which, as heretofore and from time to time
continued, are incorporated herein by reference.
Article II. Distribution and Service Expenses
The Company, on behalf of the Fund shall pay to Broker Services a fee
in the amount specified in Article III hereof. Such fee may be spent by Broker
Services on any activities or expenses primarily intended to result in the sale
of Class A shares of the Fund, including, but not limited to the payment of
Distribution Expenses (as defined below) and Service Expenses (as defined
below). Distribution Expenses include, but are not limited to, (a) initial and
ongoing sales compensation payable out of such fee as such compensation is
received by Broker Services or other broker-dealers ("Selling Brokers") that
have entered into an agreement with Broker Services for the sale of Class A
shares of the Fund, (b) direct out-of-pocket expenses incurred in connection
with the distribution of Class A shares of the Fund, including expenses related
to printing of prospectuses and reports to other than existing Class A
shareholders of the Fund, and preparation, printing and distribution of sales
literature and advertising materials, and (c) an allocation of overhead and
other branch office expenses of Broker Services related to the distribution of
Class A shares of the Fund.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class A shareholders of the Fund.
Article III. Maximum Expenditures
The expenditures to be made by the Company, on behalf of the Fund
pursuant to this Plan, and the basis upon which such expenditures will be made,
shall be determined
by the Fund, and in no event shall such expenditures exceed an annal rate of
0.30% of the average daily net asset value of the Class A shares of the Fund
(determined in accordance with the Fund's prospectus as from time to time in
effect) to cover Distribution Expenses and Service Expenses, provided that the
expenditures used to cover Service Expenses may only constitute up to an annual
rate of 0.25% of the average daily net asset value of the Class A shares of the
Fund payable annually pursuant to the Plan. Such expenditures shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Directors shall determine. In the event Broker Services is not fully reimbursed
for payments made or other expenses incurred by it under this Plan, such
expenses will not be carried beyond one year from the date such expenses were
incurred. Any fees paid to Broker Services under this Plan during any fiscal
year of the Fund and not expended or allocated by Broker Services for actual or
budgeted Distribution Expenses and Service Expenses during such fiscal year will
be promptly returned to the Fund.
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund and its
investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall bear the
respective expenses to be borne by them under the Investment Management
Contract, as amended, dated October 23, 1991, as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Fund shall not, directly or indirectly, engage in financing any
activity which is primarily intended to or should reasonably result in the sale
of shares of the Fund.
Article V. Approval by Directors
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Fund, as such term may be from time to time defined under the
Act, and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Independent Directors").
Article VI. Continuance
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article V.
Article VII. Information
Broker Services shall furnish the Fund and its Directors quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Directors may request.
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of
the Directors, a majority of the Independent Directors, or a majority of the
Fund's outstanding voting Class A shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the Fund's then outstanding voting Class A
shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article X. Amendments
This Plan may not be amended to increase materially the maximum amount
of the fees payable by the Fund hereunder without the approval of a majority of
the outstanding voting Class A shares of the Fund. No material amendment to the
Plan shall, in any event, be effective unless it is approved in the same manner
as is provided for approval of this Plan in Article V.
IN WITNESS WHEREOF, the Fund has executed this Amended and Restated
Distribution Plan effective as of the 1st day of January, 1994 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN INVESTORS
FUND, INC.
(on behalf of John Hancock
Sovereign Investors Fund)
By /s/ Thomas H. Drohan
JOHN HANCOCK BROKER DISTRIBUTION
SERVICES, INC.
By /s/ John A. Morin
Vice President
JOHN HANCOCK SOVEREIGN INVESTORS FUND
Amended and Restated Distribution Plan
Class B Shares
January 3, 1994
Article I. This Plan
This Distribution Plan (the "Plan") sets forth the terms and conditions
under which John Hancock Sovereign Investors Fund, Inc. (the "Company") on
behalf of the Class B shares of John Hancock Sovereign Investors Fund (the
"Fund"), will, after the effective date hereof, pay certain amounts to John
Hancock Broker Distribution Services, Inc. ("Broker Services") in connection
with the provision by Broker Services of certain services to the Fund and its
Class B shareholders, as set forth herein. Certain of such payments by the
Company may, under Rule 12b-1 of the Securities and Exchange Commission, as from
time to time amended (the "Rule"), under the Investment Company Act of 1940, as
amended (the "Act"), be deemed to constitute the financing of distribution by
the Fund of its shares. This Plan describes all material aspects of such
financing as contemplated by the Rule and shall be administered and interpreted,
and implemented and continued, in a manner consistent with the Rule. The
Company, on behalf of the Fund, and Broker Services heretofore entered into a
Distribution Agreement, dated January 3, 1994 (the "Agreement"), the terms of
which, as heretofore and from time to time continued, are incorporated herein by
reference.
Article II. Distribution and Service Expenses
The Company, on behalf of the Fund, shall pay to Broker Services a fee
in the amount specified in Article III hereof. Such fee may be spent by Broker
Services on any activities or expenses primarily intended to result in the sale
of Class B shares of the Fund, including, but not limited to the payment of
Distribution Expenses (as defined below) and Service Expenses (as defined
below). Distribution Expenses include, but are not limited to, (a) initial and
ongoing sales compensation payable out of such fee as such compensation is
received by Broker Services or other broker-dealers ("Selling Brokers") that
have entered into an agreement with Broker Services for the sale of Class B
shares of the Fund, (b) direct out-of-pocket expenses incurred in connection
with the distribution of Class B shares of the Fund, including expenses related
to printing of prospectuses and reports to other than existing Class B
shareholders of the Fund, and preparation, printing and distribution of sales
literature and advertising materials, (c) an allocation of overhead and other
branch office expenses of Broker Services related to the distribution of Class B
shares of the Fund, and (d) interest expenses on unreimbursed distribution
expenses related to Class B shares as described in Article IV.
<PAGE>
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class B shareholders of the Fund.
Article III. Maximum Expenditures
The expenditures to be made by the Company, on behalf of the Fund,
pursuant to this Plan, and the basis upon which such expenditures will be made,
shall be determined by the Fund, and in no event shall such expenditures exceed
1.00% of the average daily net asset value of the Class B shares of the Fund
(determined in accordance with the Fund's prospectus as from time to time in
effect) on an annual basis to cover Distribution Expenses and Service Expenses,
provided that the portion of such fee used to cover Service Expenses shall not
exceed 0.25% annually of the average daily net asset value of the Class B shares
of the Fund. Such expenditures shall be calculated and accrued daily and paid
monthly or at such other intervals as the Directors shall determine.
Article IV. Unreimbursed Distribution Expenses
In the event that Broker Services is not fully reimbursed for payments
made or expenses incurred by it as contemplated hereunder, in any fiscal year,
Broker Services shall be entitled to carry forward such expenses to subsequent
fiscal years for submission to the Class B shares of the Fund for payment,
subject always to the annual maximum expenditures set forth in Article III
hereof; provided, however, that nothing herein shall prohibit or limit the
Directors from terminating this Plan and all payments hereunder at any time
pursuant to Article IX hereof.
Article V. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund and its
investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall bear the
respective expenses to be borne by them under the Investment Management
Contract, as from time to time continued and amended (the "Management
Contract"), and under the Fund's current prospectus as it is from time to time
in effect. Except as otherwise contemplated by this Plan, the Fund shall not,
directly or indirectly, engage in financing any activity which is primarily
intended to or should reasonably result in the sale of shares of the Fund.
Article VI. Approval by Directors
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Fund, as such term may be from time to time defined under the
Act, and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Independent Directors").
<PAGE>
Article VII. Continuance
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article VI.
Article VIII. Information
Broker Services shall furnish the Fund and its Directors quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Directors may request.
Article IX. Termination
This Plan may be terminated (a) at any time by vote of a majority of
the Directors, a majority of the Independent Directors, or a majority of the
Fund's outstanding voting Class B shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
Article X. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the Fund's then outstanding voting Class B
shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article XI. Amendments
This Plan may not be amended to increase materially the maximum amount
of the fees payable by the Fund hereunder without the approval of a majority of
the outstanding voting Class B shares of the Fund. No material amendment to the
Plan shall, in any event, be effective unless it is approved in the same manner
as is provided for approval of this Plan in Article VI.
<PAGE>
IN WITNESS WHEREOF, the Fund has executed this Amended and Restated
Distribution Plan effective as of the 3rd day of January, 1994 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
(on behalf of John Hancock Sovereign Investors Fund)
By /s/ Edward J. Boudreau, Jr.
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By /s/ C. Troy Shaver, Jr.
JOHN HANCOCK SOVEREIGN BALANCED FUND
Amended and Restated Distribution Plan
Class A Shares
July 1, 1993
Article I. This Plan
This Amended and Restated Distribution Plan (the "Plan") sets forth the
terms and conditions under which John Hancock Sovereign Investors Fund, Inc.
(the "Company") on behalf of the Class A shares of John Hancock Sovereign
Balanced Fund (the "Fund"), will, after the effective date hereof, pay certain
amounts to John Hancock Broker Distribution Services, Inc. ("Broker Services")
in connection with the provision by Broker Services of certain services to the
Fund and its Class A shareholders, as set forth herein. Certain of such payments
by the Company may, under Rule 12b-1 of the Securities and Exchange Commission,
as from time to time amended (the "Rule"), under the Investment Company Act of
1940, as amended (the "Act"), be deemed to constitute the financing of
distribution by the Fund of its shares. This Plan describes all material aspects
of such financing as contemplated by the Rule and shall be administered and
interpreted, and implemented and continued, in a manner consistent with the
Rule. The Company, on behalf of the Fund, and Broker Services heretofore entered
into a Distribution Agreement, dated October 23, 1991 (the "Agreement"), the
terms of which, as heretofore and from time to time continued, are incorporated
herein by reference.
Article II. Distribution and Service Expenses
The Company, on behalf of the Fund, shall pay to Broker Services a fee
in the amount specified in Article III hereof. Such fee may be spent by Broker
Services on any activities or expenses primarily intended to result in the sale
of Class A shares of the Fund, including, but not limited to the payment of
Distribution Expenses (as defined below) and Service Expenses (as defined
below). Distribution Expenses include, but are not limited to, (a) initial and
ongoing sales compensation payable out of such fee as such compensation is
received by Broker Services or other broker-dealers ("Selling Brokers") that
have entered into an agreement with Broker Services for the sale of Class A
shares of the Fund, (b) direct out-of-pocket expenses incurred in connection
with the distribution of Class A shares of the Fund, including expenses related
to printing of prospectuses and reports to other than existing Class A
shareholders of the Fund, and preparation, printing and distribution of sales
literature and advertising materials, (c) an allocation of overhead and other
branch office expenses of Broker Services related to the distribution of Class A
shares of the Fund.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class A shareholders of the Fund.
<PAGE>
Article III. Maximum Expenditures
The expenditures to be made by the Company, on behalf of the Fund,
pursuant to this Plan, and the basis upon which such expenditures will be made,
shall be determined by the Fund, and in no event shall such expenditures exceed
0.30% of the average daily net asset value of the Class A shares of the Fund
(determined in accordance with the Fund's prospectus as from time to time in
effect) on an annual basis to cover Distribution Expenses and Service Expenses,
provided that the portion of such fee used to cover Service Expenses shall not
exceed 0.25% annually of the average daily net asset value of the Class A shares
of the Fund. Such expenditures shall be calculated and accrued daily and paid
monthly or at such other intervals as the Directors shall determine. In the
event Broker Services is not fully reimbursed for payments made or other
expenses incurred by it under this Plan, such expenses will not be carried
beyond one year from the date such expenses were incrred. Any fees paid to
Broker Services under this Plan during any fiscal year of the Fund and not
expended or allocated by Broker Services for actual or budgeted Distribution
Expenses and Service Expenses during such fiscal year will be promptly returned
to the Fund.
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund and its
investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall bear the
respective expenses to be borne by them under the Investment Management
Contract, as amended, dated October 23, 1991, as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Fund shall not, directly or indirectly, engage in financing any
activity which is primarily intended to or should reasonably result in the sale
of shares of the Fund.
Article V. Approval by Directors
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Fund, as such term may be from time to time defined under the
Act, and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Independent Directors").
Article VI. Continuance
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article V.
<PAGE>
Article VII. Information
Broker Services shall furnish the Fund and its Directors quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Directors may request.
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of
the Directors, a majority of the Independent Directors, or a majority of the
Fund's outstanding voting Class A shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the Fund's then
outstanding voting Class A shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article X. Amendments
This Plan may not be amended to increase materially the maximum amount
of the fees payable by the Fund hereunder without the approval of a majority of
the outstanding voting Class A shares of the Fund. No material amendment to the
Plan shall, in any event, be effective unless it is approved in the same manner
as is provided for approval of this Plan in Article V.
IN WITNESS WHEREOF, the Fund has executed this Amended and Restated
Distribution Plan effective as of the 1st day of July, 1993 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
(on behalf of John Hancock Sovereign Balanced Fund)
By /s/ Edward J. Boudreau, Jr.
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By /s/ C. Troy Shaver, Jr.
President
JOHN HANCOCK SOVEREIGN BALANCED FUND
Amended and Restated Distribution Plan
Class B Shares
July 1, 1993
Article I. This Plan
This Amended and Restated Distribution Plan (the "Plan") sets forth the
terms and conditions under which John Hancock Sovereign Investors Fund, Inc.
(the "Company") on behalf of the Class B shares of John Hancock Sovereign
Balanced Fund (the "Fund"), will, after the effective date hereof, pay certain
amounts to John Hancock Broker Distribution Services, Inc. ("Broker Services")
in connection with the provision by Broker Services of certain services to the
Fund and its Class B shareholders, as set forth herein. Certain of such payments
by the Company may, under Rule 12b-1 of the Securities and Exchange Commission,
as from time to time amended (the "Rule"), under the Investment Company Act of
1940, as amended (the "Act"), be deemed to constitute the financing of
distribution by the Fund of its shares. This Plan describes all material aspects
of such financing as contemplated by the Rule and shall be administered and
interpreted, and implemented and continued, in a manner consistent with the
Rule. The Company, on behalf of the Fund, and Broker Services heretofore entered
into a Distribution Agreement, dated October 23, 1991 (the "Agreement"), the
terms of which, as heretofore and from time to time continued, are incorporated
herein by reference.
Article II. Distribution and Service Expenses
The Company, on behalf of the Fund, shall pay to Broker Services a fee
in the amount specified in Article III hereof. Such fee may be spent by Broker
Services on any activities or expenses primarily intended to result in the sale
of Class B shares of the Fund, including, but not limited to the payment of
Distribution Expenses (as defined below) and Service Expenses (as defined
below). Distribution Expenses include, but are not limited to, (a) initial and
ongoing sales compensation payable out of such fee as such compensation is
received by Broker Services or other broker-dealers ("Selling Brokers") that
have entered into an agreement with Broker Services for the sale of Class B
shares of the Fund, (b) direct out-of-pocket expenses incurred in connection
with the distribution of Class B shares of the Fund, including expenses related
to printing of prospectuses and reports to other than existing Class B
shareholders of the Fund, and preparation, printing and distribution of sales
literature and advertising materials, (c) an allocation of overhead and other
branch office expenses of Broker Services related to the distribution of Class B
shares of the Fund, and (d) interest expenses on unreimbursed distribution
expenses related to Class B shares as described in Article IV.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class B shareholders of the Fund.
<PAGE>
Article III. Maximum Expenditures
The expenditures to be made by the Company, on behalf of the Fund,
pursuant to this Plan, and the basis upon which such expenditures will be made,
shall be determined by the Fund, and in no event shall such expenditures exceed
1.00% of the average daily net asset value of the Class B shares of the Fund
(determined in accordance with the Fund's prospectus as from time to time in
effect) on an annual basis to cover Distribution Expenses and Service Expenses,
provided that the portion of such fee used to cover Service Expenses shall not
exceed 0.25% annually of the average daily net asset value of the Class B shares
of the Fund. Such expenditures shall be calculated and accrued daily and paid
monthly or at such other intervals as the Directors shall determine.
Article IV. Unreimbursed Distribution Expenses
In the event that Broker Services is not fully reimbursed for payments
made or expenses incurred by it as contemplated hereunder, in any fiscal year,
Broker Services shall be entitled to carry forward such expenses to subsequent
fiscal years for submission to the Class B shares of the Fund for payment,
subject always to the annual maximum expenditures set forth in Article III
hereof; provided, however, that nothing herein shall prohibit or limit the
Directors from terminating this Plan and all payments hereunder at any time
pursuant to Article IX hereof.
Article V. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund and its
investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall bear the
respective expenses to be borne by them under the Investment Management
Contract, as amended, dated October 2, 1991, as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Fund shall not, directly or indirectly, engage in financing any
activity which is primarily intended to or should reasonably result in the sale
of shares of the Fund.
Article VI. Approval by Directors
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Fund, as such term may be from time to time defined under the
Act, and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Independent Directors").
Article VII. Continuance
<PAGE>
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article VI.
Article VIII. Information
Broker Services shall furnish the Fund and its Directors quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Directors may request.
Article IX. Termination
This Plan may be terminated (a) at any time by vote of a majority of
the Directors, a majority of the Independent Directors, or a majority of the
Fund's outstanding voting Class B shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
Article X. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the Fund's then outstanding voting Class B
shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article XI. Amendments
This Plan may not be amended to increase materially the maximum amount
of the fees payable by the Fund hereunder without the approval of a majority of
the outstanding voting Class B shares of the Fund. No material amendment to the
Plan shall, in any event, be effective unless it is approved in the same manner
as is provided for approval of this Plan in Article VI.
IN WITNESS WHEREOF, the Fund has executed this Amended and Restated
Distribution Plan effective as of the 1st day of July, 1993 in Boston,
Massachusetts.
JOHN HANCOCK SOVEREIGN INVESTORS FUND, INC.
(on behalf of John Hancock Sovereign Balanced Fund)
By /s/ Edward J. Boudreau, Jr.
<PAGE>
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By /s/ C. Troy Shaver, Jr.
President
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN BALANCED FUND - CLASS A Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 6,242,583 6,285,203 (42,620) 0.0309%
POP $10.36 $10.35 $0.01 -0.0045%
Net Assets $64,673,156 $65,051,848 ($378,691) 0.0264%
Income $305,348 $304,722 $626 0.0118%
Adj. to Income $0 * $0 ** $0 0.0000%
----------- ------------ ------------ --------
Adj. Income $305,348 $304,722 $626 0.0118%
Expenses $63,678 $64,745 ($1,066) 0.0201%
----------- ------------ ------------ --------
Net Income $241,670 $239,978 $1,692 0.0319%
Net Income $241,670 $239,978 $1,692
Net Assets $64,673,156 $65,051,848 ($378,691)
NI/NA 0.0037367862 0.0036890203 0.0000477659
SEC Yield 4.5262% 4.4679% 0.0583% 0.0583%
* Current Month's Adjustments: $0.00
** Prior Month's Adjustments: $0.00
</TABLE>
SUMMARY OF PUCHASE/SALE TRANSACTIONS:
<TABLE>
<CAPTION>
Monthly
Total Par (000) YTM Income
<S> <C> <C> <C>
Purchases - Bonds $500 11.87% $4,946
Sales - Bonds $500 10.79% $4,496
-------
$450
=======
<CAPTION>
Total Shares
<S> <C>
Purchase - Equity 46
Sales - Equity 91
------------
Net -45
============
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN BALANCED FUND - CLASS B Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 8,003,161 8,049,926 (46,765) 0.0244%
POP $9.84 $9.82 $0.02 -0.0086%
Net Assets $78,751,107 $79,050,274 ($299,167) 0.0158%
Income $391,091 $390,015 $1,077 0.0167%
Adj. to Income $0 * $0 ** $0 0.0000%
------------ ------------ ------------ -------
Adj. Income $391,091 $390,015 $1,077 0.0167%
Expenses $118,461 $120,297 ($1,836) 0.0284%
------------ ------------ ------------ -------
Net Income $272,630 $269,717 $2,912 0.0451%
Net Income $272,630 $269,717 $2,912
Net Assets $78,751,107 $79,050,274 ($299,167)
NI/NA 0.0034619192 0.0034119742 0.0000499450
SEC Yield 4.1904% 4.1295% 0.0609% 0.0609%
* Current Month's Adjustments: $0.00
** Prior Month's Adjustments: $0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS A SOVEREIGN BALANCED
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/1/94 10,199.2125 2118.86 6,245,446.360
2 12/2/94 10,207.5236 2107.98 6,243,104.917
3 12/3/94 10,207.5236 2117.75 6,243,104.917
4 12/4/94 10,207.5236 2117.75 6,243,104.917
5 12/5/94 10,222.3010 2117.75 6,239,579.840
6 12/6/94 10,190.9009 2112.86 6,240,708.807
7 12/7/94 10,205.9660 2117.18 6,240,770.343
8 12/8/94 10,209.1199 2115.27 6,235,845.315
9 12/9/94 10,204.8736 2102.57 6,235,736.977
10 12/10/94 10,204.8736 2105.89 6,235,736.977
11 12/11/94 10,204.8736 2105.89 6,235,736.977
12 12/12/94 10,038.7024 2105.89 6,236,553.995
13 12/13/94 10,039.1986 2108.38 6,231,517.438
14 12/14/94 10,016.0639 2108.08 6,228,956.268
15 12/15/94 10,005.0859 2120.22 6,227,429.211
16 12/16/94 10,076.9683 2124.75 6,231,706.317
17 12/17/94 10,076.9683 2148.01 6,231,706.317
18 12/18/94 10,076.9683 2148.01 6,231,706.317
19 12/19/94 10,230.0377 2148.01 6,232,055.397
20 12/20/94 10,217.7360 2132.35 6,233,229.490
21 12/21/94 10,222.1328 2132.77 6,231,359.801
22 12/22/94 10,253.1106 2138.07 6,229,899.285
23 12/23/94 10,230.4709 2137.46 6,227,635.538
24 12/24/94 10,230.4709 2116.45 6,227,635.538
25 12/25/94 10,230.4709 2116.45 6,227,635.538
26 12/26/94 10,230.4709 2116.45 6,227,635.538
27 12/27/94 10,220.8586 2116.45 6,295,711.660
28 12/28/94 10,222.3345 2144.08 6,295,554.383
29 12/29/94 10,211.2729 2140.34 6,294,777.391
30 12/30/94 10,254.1227 2136.41 6,295,898.223 14.990000 4.5262
TOTAL 305,348.1370 63,678.38 187,277,479.992
AVERAGED SHARES: 6,242,582.666
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
CLASS B SOVEREIGN BALANCED
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/1/94 13,065.8641 3944.96 8,008,381.701
2 12/2/94 13,080.5010 3922.28 8,007,945.747
3 12/3/94 13,080.5010 3940.62 8,007,945.747
4 12/4/94 13,080.5010 3940.62 8,007,945.747
5 12/5/94 13,091.3662 3940.62 7,998,614.150
6 12/6/94 13,060.3314 3931.36 8,006,076.071
7 12/7/94 13,075.8364 3940.55 8,003,942.997
8 12/8/94 13,089.5430 3937.85 8,003,664.647
9 12/9/94 13,079.7065 3913.66 8,000,968.609
10 12/10/94 13,079.7065 3918.17 8,000,968.609
11 12/11/94 13,079.7065 3918.17 8,000,968.609
12 12/12/94 12,858.5245 3918.17 7,997,042.746
13 12/13/94 12,865.4871 3922.87 7,994,885.853
14 12/14/94 12,831.8448 3922.56 7,989,248.468
15 12/15/94 12,817.3286 3945.72 7,986,958.798
16 12/16/94 12,897.9972 3952.53 7,985,490.522
17 12/17/94 12,897.9972 3985.79 7,985,490.522
18 12/18/94 12,897.9972 3985.79 7,985,490.522
19 12/19/94 13,092.7392 3985.79 7,985,344.033
20 12/20/94 13,078.6272 3965.58 7,988,217.189
21 12/21/94 13,100.6819 3969.45 7,995,971.122
22 12/22/94 13,127.3494 3980.03 7,986,296.864
23 12/23/94 13,107.6944 3978.49 7,989,205.751
24 12/24/94 13,107.6944 3941.21 7,989,205.751
25 12/25/94 13,107.6944 3941.21 7,989,205.751
26 12/26/94 13,107.6944 3941.21 7,989,205.751
27 12/27/94 13,094.1969 3941.21 8,064,454.349
28 12/28/94 13,075.1364 3988.85 8,051,844.985
29 12/29/94 13,055.5504 3977.65 8,047,620.922
30 12/30/94 13,105.5214 3968.38 8,046,236.001 9.840000 4.1904
TOTAL 391,091.3206 118,461.35 240,094,838.534
AVERAGED SHARES: 8,003,161.284
</TABLE>
Page 1
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 4.36% 3 Year Value: $1,100.25
1 Year Return: -3.51% 1 Year Value: $964.93
YTD Return: -3.51% YTD Value: $964.93
- --------------------------------------------------------------------------------
Constant Sales Charge: 0.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.00 0.00%
10 / 92 $10.05 $10.05 0.00%
11 / 92 $10.14 $10.14 0.00%
12 / 92 $10.19 $10.19 0.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.33 0.00%
2 / 93 $10.45 $10.45 0.00%
3 / 93 $10.57 $10.57 0.00%
4 / 93 $10.46 $10.46 0.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $10.52 0.00%
6 / 93 $10.68 $10.68 0.00%
7 / 93 $10.58 $10.58 0.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $10.97 0.00%
9 / 93 $10.79 $10.79 0.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $10.88 0.00%
11 / 93 $10.82 $10.82 0.00%
12 / 93 $10.74 $10.74 0.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $10.88 0.00%
2 / 94 $10.69 $10.69 0.00%
3 / 94 $10.30 $10.30 0.00%
4 / 94 $10.13 $10.13 0.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.16 0.00%
6 / 94 $10.04 $10.04 0.00%
7 / 94 $10.16 $10.16 0.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.35 0.00%
9 / 94 $10.14 $10.14 0.00%
10 / 94 $10.04 $10.04 0.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $9.83 0.00%
12 / 94 $9.84 $9.84 0.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
10-Year 5-Year
----------- ----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 / 04 /92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
9 / 94
10 / 94
11 / 94
12 / 94
</TABLE>
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 4.36% 3 Year Value: $1,100.25
1 Year Return: -3.51% 1 Year Value: $964.93
YTD Return: -3.51% YTD Value: $964.93
- --------------------------------------------------------------------------------
Constant Sales Charge: 0.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.00 0.00%
10 / 92 $10.05 $10.05 0.00%
11 / 92 $10.14 $10.14 0.00%
12 / 92 $10.19 $10.19 0.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.33 0.00%
2 / 93 $10.45 $10.45 0.00%
3 / 93 $10.57 $10.57 0.00%
4 / 93 $10.46 $10.46 0.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $10.52 0.00%
6 / 93 $10.68 $10.68 0.00%
7 / 93 $10.58 $10.58 0.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $10.97 0.00%
9 / 93 $10.79 $10.79 0.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $10.88 0.00%
11 / 93 $10.82 $10.82 0.00%
12 / 93 $10.74 $10.74 0.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $10.88 0.00%
2 / 94 $10.69 $10.69 0.00%
3 / 94 $10.30 $10.30 0.00%
4 / 94 $10.13 $10.13 0.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.16 0.00%
6 / 94 $10.04 $10.04 0.00%
7 / 94 $10.16 $10.16 0.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.35 0.00%
9 / 94 $10.14 $10.14 0.00%
10 / 94 $10.04 $10.04 0.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $9.83 0.00%
12 / 94 $9.84 $9.84 0.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
3-Year 1-Year
---------- ----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 / 04 /92 100.000
10 / 92 $0.0000 0.000 100.000
11 / 92 $0.0000 0.000 100.000
12 / 92 $4.7300 0.463 100.463
1 / 93 $0.0000 0.000 100.463
2 / 93 $0.0000 0.000 100.463
3 / 93 $0.0000 0.000 100.463
4 / 93 $10.4783 1.002 101.465
5 / 93 $0.0000 0.000 101.465
6 / 93 $0.0000 0.000 101.465
7 / 93 $11.8917 1.128 102.593
8 / 93 $0.0000 0.000 102.593
9 / 93 $12.4138 1.156 103.749
10 / 93 $0.0000 0.000 103.749
11 / 93 $0.0000 0.000 103.749
12 / 93 $25.9777 2.419 106.168 93.110
1 / 94 $0.0000 0.000 106.168 $0.0000 0.000 93.110
2 / 94 $0.0000 0.000 106.168 $0.0000 0.000 93.110
3 / 94 $0.0000 0.000 106.168 $0.0000 0.000 93.110
4 / 94 $16.4507 1.648 107.816 $14.4274 1.446 94.556
5 / 94 $0.0000 0.000 107.816 $0.0000 0.000 94.556
6 / 94 $0.0000 0.000 107.816 $0.0000 0.000 94.556
7 / 94 $13.3153 1.342 109.158 $11.6777 1.177 95.733
8 / 94 $0.0000 0.000 109.158 $0.0000 0.000 95.733
9 / 94 $0.0000 0.000 109.158 $0.0000 0.000 95.733
10 / 94 $13.2845 1.331 110.489 $11.6507 1.167 96.900
11 / 94 $0.0000 0.000 110.489 $0.0000 0.000 96.900
12 / 94 $13.0377 1.325 111.814 $11.4342 1.162 98.062
</TABLE>
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 4.36% 3 Year Value: $1,100.25
1 Year Return: -3.51% 1 Year Value: $964.93
YTD Return: -3.51% YTD Value: $964.93
- --------------------------------------------------------------------------------
Constant Sales Charge: 0.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.00 0.00%
10 / 92 $10.05 $10.05 0.00%
11 / 92 $10.14 $10.14 0.00%
12 / 92 $10.19 $10.19 0.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.33 0.00%
2 / 93 $10.45 $10.45 0.00%
3 / 93 $10.57 $10.57 0.00%
4 / 93 $10.46 $10.46 0.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $10.52 0.00%
6 / 93 $10.68 $10.68 0.00%
7 / 93 $10.58 $10.58 0.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $10.97 0.00%
9 / 93 $10.79 $10.79 0.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $10.88 0.00%
11 / 93 $10.82 $10.82 0.00%
12 / 93 $10.74 $10.74 0.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $10.88 0.00%
2 / 94 $10.69 $10.69 0.00%
3 / 94 $10.30 $10.30 0.00%
4 / 94 $10.13 $10.13 0.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.16 0.00%
6 / 94 $10.04 $10.04 0.00%
7 / 94 $10.16 $10.16 0.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.35 0.00%
9 / 94 $10.14 $10.14 0.00%
10 / 94 $10.04 $10.04 0.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $9.83 0.00%
12 / 94 $9.84 $9.84 0.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
YTD Monthly
---------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 / 04 /92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93 93.110
1 / 94 $0.0000 0.000 93.110
2 / 94 $0.0000 0.000 93.110
3 / 94 $0.0000 0.000 93.110
4 / 94 $14.4274 1.446 94.556
5 / 94 $0.0000 0.000 94.556
6 / 94 $0.0000 0.000 94.556
7 / 94 $11.6777 1.177 95.733
8 / 94 $0.0000 0.000 95.733
9 / 94 $0.0000 0.000 95.733
10 / 94 $11.6507 1.167 96.900
11 / 94 $0.0000 0.000 96.900
12 / 94 $11.4342 1.162 98.062
</TABLE>
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 1.98% 3 Year Value: $1,044.87
1 Year Return: -8.37% 1 Year Value: $916.30
YTD Return: -8.37% YTD Value: $916.30
- --------------------------------------------------------------------------------
Constant Sales Charge: 5.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.53 5.00%
10 / 92 $10.05 $10.58 5.00%
11 / 92 $10.14 $10.67 5.00%
12 / 92 $10.19 $10.73 5.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.87 5.00%
2 / 93 $10.45 $11.00 5.00%
3 / 93 $10.57 $11.13 5.00%
4 / 93 $10.46 $11.01 5.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $11.07 5.00%
6 / 93 $10.68 $11.24 5.00%
7 / 93 $10.58 $11.14 5.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $11.55 5.00%
9 / 93 $10.79 $11.36 5.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $11.45 5.00%
11 / 93 $10.82 $11.39 5.00%
12 / 93 $10.74 $11.31 5.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $11.45 5.00%
2 / 94 $10.69 $11.25 5.00%
3 / 94 $10.30 $10.84 5.00%
4 / 94 $10.13 $10.66 5.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.69 5.00%
6 / 94 $10.04 $10.57 5.00%
7 / 94 $10.16 $10.69 5.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.89 5.00%
9 / 94 $10.14 $10.67 5.00%
10 / 94 $10.04 $10.57 5.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $10.35 5.00%
12 / 94 $9.84 $10.36 5.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
10-Year 5-Year
----------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------
<S> <C>
10 / 04 /92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
9 / 94
10 / 94
11 / 94
12 / 94
</TABLE>
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 1.98% 3 Year Value: $1,044.87
1 Year Return: -8.37% 1 Year Value: $916.30
YTD Return: -8.37% YTD Value: $916.30
- --------------------------------------------------------------------------------
Constant Sales Charge: 5.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.53 5.00%
10 / 92 $10.05 $10.58 5.00%
11 / 92 $10.14 $10.67 5.00%
12 / 92 $10.19 $10.73 5.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.87 5.00%
2 / 93 $10.45 $11.00 5.00%
3 / 93 $10.57 $11.13 5.00%
4 / 93 $10.46 $11.01 5.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $11.07 5.00%
6 / 93 $10.68 $11.24 5.00%
7 / 93 $10.58 $11.14 5.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $11.55 5.00%
9 / 93 $10.79 $11.36 5.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $11.45 5.00%
11 / 93 $10.82 $11.39 5.00%
12 / 93 $10.74 $11.31 5.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $11.45 5.00%
2 / 94 $10.69 $11.25 5.00%
3 / 94 $10.30 $10.84 5.00%
4 / 94 $10.13 $10.66 5.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.69 5.00%
6 / 94 $10.04 $10.57 5.00%
7 / 94 $10.16 $10.69 5.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.89 5.00%
9 / 94 $10.14 $10.67 5.00%
10 / 94 $10.04 $10.57 5.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $10.35 5.00%
12 / 94 $9.84 $10.36 5.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
3-Year 1-Year
---------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 / 04 /92 94.967
10 / 92 $0.0000 0.000 94.967
11 / 92 $0.0000 0.000 94.967
12 / 92 $4.4919 0.440 95.407
1 / 93 $0.0000 0.000 95.407
2 / 93 $0.0000 0.000 95.407
3 / 93 $0.0000 0.000 95.407
4 / 93 $9.9510 0.951 96.358
5 / 93 $0.0000 0.000 96.358
6 / 93 $0.0000 0.000 96.358
7 / 93 $11.2932 1.071 97.429
8 / 93 $0.0000 0.000 97.429
9 / 93 $11.7889 1.098 98.527
10 / 93 $0.0000 0.000 98.527
11 / 93 $0.0000 0.000 98.527
12 / 93 $24.6702 2.297 100.824 88.417
1 / 94 $0.0000 0.000 100.824 $0.0000 0.000 88.417
2 / 94 $0.0000 0.000 100.824 $0.0000 0.000 88.417
3 / 94 $0.0000 0.000 100.824 $0.0000 0.000 88.417
4 / 94 $15.6227 1.565 102.389 $13.7002 1.373 89.790
5 / 94 $0.0000 0.000 102.389 $0.0000 0.000 89.790
6 / 94 $0.0000 0.000 102.389 $0.0000 0.000 89.790
7 / 94 $12.6450 1.275 103.664 $11.0891 1.118 90.908
8 / 94 $0.0000 0.000 103.664 $0.0000 0.000 90.908
9 / 94 $0.0000 0.000 103.664 $0.0000 0.000 90.908
10 / 94 $12.6159 1.264 104.928 $11.0635 1.109 92.017
11 / 94 $0.0000 0.000 104.928 $0.0000 0.000 92.017
12 / 94 $12.3815 1.258 106.186 $10.8580 1.103 93.120
</TABLE>
<PAGE>
Sovereign Balanced Fund - Class A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
2.24 Year Return: 1.98% 3 Year Value: $1,044.87
1 Year Return: -8.37% 1 Year Value: $916.30
YTD Return: -8.37% YTD Value: $916.30
- --------------------------------------------------------------------------------
Constant Sales Charge: 5.00%
</TABLE>
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 / 04 /92 $10.00 $10.53 5.00%
10 / 92 $10.05 $10.58 5.00%
11 / 92 $10.14 $10.67 5.00%
12 / 92 $10.19 $10.73 5.00% 12/23/92 $0.0473 $10.21
1 / 93 $10.33 $10.87 5.00%
2 / 93 $10.45 $11.00 5.00%
3 / 93 $10.57 $11.13 5.00%
4 / 93 $10.46 $11.01 5.00% 04/01/93 $0.1043 $10.46
5 / 93 $10.52 $11.07 5.00%
6 / 93 $10.68 $11.24 5.00%
7 / 93 $10.58 $11.14 5.00% 07/02/93 $0.1172 $10.54
8 / 93 $10.97 $11.55 5.00%
9 / 93 $10.79 $11.36 5.00% 09/21/93 $0.1210 $10.74
10 / 93 $10.88 $11.45 5.00%
11 / 93 $10.82 $11.39 5.00%
12 / 93 $10.74 $11.31 5.00% 12/23/93 $0.25039 $10.74 $0.13899
1 / 94 $10.88 $11.45 5.00%
2 / 94 $10.69 $11.25 5.00%
3 / 94 $10.30 $10.84 5.00%
4 / 94 $10.13 $10.66 5.00% 04/04/94 $0.15495 $9.98 $0.02305
5 / 94 $10.16 $10.69 5.00%
6 / 94 $10.04 $10.57 5.00%
7 / 94 $10.16 $10.69 5.00% 07/01/94 $0.12350 $9.92
8 / 94 $10.35 $10.89 5.00%
9 / 94 $10.14 $10.67 5.00%
10 / 94 $10.04 $10.57 5.00% 10/03/94 $0.12170 $9.98
11 / 94 $9.83 $10.35 5.00%
12 / 94 $9.84 $10.36 5.00% 12/23/94 $0.11800 $9.84
</TABLE>
<TABLE>
<CAPTION>
YTD Monthly
----------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 / 04 /92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93 88.417
1 / 94 $0.0000 0.000 88.417
2 / 94 $0.0000 0.000 88.417
3 / 94 $0.0000 0.000 88.417
4 / 94 $13.7002 1.373 89.790
5 / 94 $0.0000 0.000 89.790
6 / 94 $0.0000 0.000 89.790
7 / 94 $11.0891 1.118 90.908
8 / 94 $0.0000 0.000 90.908
9 / 94 $0.0000 0.000 90.908
10 / 94 $11.0635 1.109 92.017
11 / 94 $0.0000 0.000 92.017
12 / 94 $10.8580 1.103 93.120
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
Constant Sales Charge: N/A
</TABLE>
<TABLE>
<CAPTION>
10-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 /4/ 92 $10.00 $10.00 N/A
10 / 92 $10.05 $10.05 N/A
11 / 92 $10.13 $10.13 N/A
12 / 92 $10.20 $10.20 N/A 12/23/92 $0.0292 $10.22
1 / 93 $10.34 $10.34 N/A
2 / 93 $10.45 $10.45 N/A
3 / 93 $10.56 $10.56 N/A
4 / 93 $10.47 $10.47 N/A 04/01/93 $0.0856 $10.47
5 / 93 $10.52 $10.52 N/A
6 / 93 $10.67 $10.67 N/A
7 / 93 $10.59 $10.59 N/A 07/02/93 $0.0983 $10.55
8 / 93 $10.97 $10.97 N/A
9 / 93 $10.79 $10.79 N/A 09/21/93 $0.1016 $10.75
10 / 93 $10.88 $10.88 N/A
11 / 93 $10.81 $10.81 N/A
12 / 93 $10.75 $10.75 N/A 12/23/93 $0.23509 $10.75 $0.13899
1 / 94 $10.89 $10.89 N/A
2 / 94 $10.69 $10.69 N/A
3 / 94 $10.29 $10.29 N/A
4 / 94 $10.13 $10.13 N/A 04/04/94 $0.13575 $9.99 $0.02305
5 / 94 $10.15 $10.15 N/A
6 / 94 $10.03 $10.03 N/A
7 / 94 $10.16 $10.16 N/A 07/01/94 $0.10700 $9.92
8 / 94 $10.34 $10.34 N/A
</TABLE>
<TABLE>
<CAPTION>
5-Year
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C>
10 /4/ 92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
Constant Sales Charge: N/A
</TABLE>
<TABLE>
<CAPTION>
10-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9 / 94 $10.12 $10.12 N/A
10 / 94 $10.04 $10.04 N/A 10/03/94 $0.10600 $9.98
11 / 94 $9.82 $9.82 N/A
12 / 94 $9.84 $9.84 N/A 12/23/94 $0.10385 $9.84
</TABLE>
<TABLE>
<CAPTION>
5-Year
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C>
9 / 94
10 / 94
11 / 94
12 / 94
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
</TABLE>
Constant Sales Charge: N/A
<TABLE>
<CAPTION>
3-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 /4/ 92 $10.00 $10.00 N/A 100.000
10 / 92 $10.05 $10.05 N/A $0.0000 0.000 100.000
11 / 92 $10.13 $10.13 N/A $0.0000 0.000 100.000
12 / 92 $10.20 $10.20 N/A 12/23/92 $0.0292 $10.22 $2.9200 0.286 100.286
1 / 93 $10.34 $10.34 N/A $0.0000 0.000 100.286
2 / 93 $10.45 $10.45 N/A $0.0000 0.000 100.286
3 / 93 $10.56 $10.56 N/A $0.0000 0.000 100.286
4 / 93 $10.47 $10.47 N/A 04/01/93 $0.0856 $10.47 $8.5845 0.820 101.106
5 / 93 $10.52 $10.52 N/A $0.0000 0.000 101.106
6 / 93 $10.67 $10.67 N/A $0.0000 0.000 101.106
7 / 93 $10.59 $10.59 N/A 07/02/93 $0.0983 $10.55 $9.9387 0.942 102.048
8 / 93 $10.97 $10.97 N/A $0.0000 0.000 102.048
9 / 93 $10.79 $10.79 N/A 09/21/93 $0.1016 $10.75 $10.3681 0.964 103.012
10 / 93 $10.88 $10.88 N/A $0.0000 0.000 103.012
11 / 93 $10.81 $10.81 N/A $0.0000 0.000 103.012
12 / 93 $10.75 $10.75 N/A 12/23/93 $0.23509 $10.75 $0.13899 $24.2171 2.253 105.265
1 / 94 $10.89 $10.89 N/A $0.0000 0.000 105.265
2 / 94 $10.69 $10.69 N/A $0.0000 0.000 105.265
3 / 94 $10.29 $10.29 N/A $0.0000 0.000 105.265
4 / 94 $10.13 $10.13 N/A 04/04/94 $0.13575 $9.99 $0.02305 $14.2897 1.430 106.695
5 / 94 $10.15 $10.15 N/A $0.0000 0.000 106.695
6 / 94 $10.03 $10.03 N/A $0.0000 0.000 106.695
7 / 94 $10.16 $10.16 N/A 07/01/94 $0.10700 $9.92 $11.4164 1.151 107.846
8 / 94 $10.34 $10.34 N/A $0.0000 0.000 107.846
</TABLE>
<TABLE>
<CAPTION>
1-Year
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C> <C> <C>
10 /4/ 92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93 93.023
1 / 94 $ 0.0000 0.000 93.023
2 / 94 $ 0.0000 0.000 93.023
3 / 94 $ 0.0000 0.000 93.023
4 / 94 $12.6279 1.264 94.287
5 / 94 $ 0.0000 0.000 94.287
6 / 94 $ 0.0000 0.000 94.287
7 / 94 $10.0887 1.017 95.304
8 / 94 $ 0.0000 0.000 95.304
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
Constant Sales Charge: N/A
</TABLE>
<TABLE>
<CAPTION>
3-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9 / 94 $10.12 $10.12 N/A $0.0000 0.000 107.846
10 / 94 $10.04 $10.04 N/A 10/03/94 $0.10600 $9.98 $11.4317 1.145 108.991
11 / 94 $9.82 $9.82 N/A $0.0000 0.000 108.991
12 / 94 $9.84 $9.84 N/A 12/23/94 $0.10385 $9.84 $11.3187 1.150 110.141
</TABLE>
<TABLE>
<CAPTION>
1-Year
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C> <C> <C>
9 / 94 $0.0000 0.000 95.304
10 / 94 $10.1022 1.012 96.316
11 / 94 $0.0000 0.000 96.316
12 / 94 $10.0024 1.017 97.333
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
Constant Sales Charge: N/A
</TABLE>
<TABLE>
<CAPTION>
YTD
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 /4/ 92 $10.00 $10.00 N/A
10 / 92 $10.05 $10.05 N/A
11 / 92 $10.13 $10.13 N/A
12 / 92 $10.20 $10.20 N/A 12/23/92 $0.0292 $10.22
1 / 93 $10.34 $10.34 N/A
2 / 93 $10.45 $10.45 N/A
3 / 93 $10.56 $10.56 N/A
4 / 93 $10.47 $10.47 N/A 04/01/93 $0.0856 $10.47
5 / 93 $10.52 $10.52 N/A
6 / 93 $10.67 $10.67 N/A
7 / 93 $10.59 $10.59 N/A 07/02/93 $0.0983 $10.55
8 / 93 $10.97 $10.97 N/A
9 / 93 $10.79 $10.79 N/A 09/21/93 $0.1016 $10.75
10 / 93 $10.88 $10.88 N/A
11 / 93 $10.81 $10.81 N/A
12 / 93 $10.75 $10.75 N/A 12/23/93 $0.23509 $10.75 $0.13899 93.023
1 / 94 $10.89 $10.89 N/A $0.0000 0.000 93.023
2 / 94 $10.69 $10.69 N/A $0.0000 0.000 93.023
3 / 94 $10.29 $10.29 N/A $0.0000 0.000 93.023
4 / 94 $10.13 $10.13 N/A 04/04/94 $0.13575 $9.99 $0.02305 $12.6279 1.264 94.287
5 / 94 $10.15 $10.15 N/A $0.0000 0.000 94.287
6 / 94 $10.03 $10.03 N/A $0.0000 0.000 94.287
7 / 94 $10.16 $10.16 N/A 07/01/94 $0.10700 $9.92 $10.0887 1.017 95.304
8 / 94 $10.34 $10.34 N/A $0.0000 0.000 95.304
</TABLE>
<TABLE>
<CAPTION>
Monthly
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C>
10 /4/ 92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93
1 / 94
2 / 94
3 / 94
4 / 94
5 / 94
6 / 94
7 / 94
8 / 94
</TABLE>
<PAGE>
SOVEREIGN BALANCED FUND - CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
2.24 Year Return: 3.66% 1.93% $1,083.79 4.00% $40.00 $1,043.79
1 Year Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
YTD Return: -4.22% -9.01% $957.76 5.00% $47.89 $909.87
- -------------------------------------------------------------------------------------------------
Constant Sales Charge: N/A
</TABLE>
<TABLE>
<CAPTION>
YTD
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9 / 94 $10.12 $10.12 N/A $0.0000 0.000 95.304
10 / 94 $10.04 $10.04 N/A 10/03/94 $0.10600 $9.98 $10.1022 1.012 96.316
11 / 94 $9.82 $9.82 N/A $0.0000 0.000 96.316
12 / 94 $9.84 $9.84 N/A 12/23/94 $0.10385 $9.84 $10.0024 1.017 97.333
</TABLE>
<TABLE>
<CAPTION>
Monthly
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C>
9 / 94
10 / 94
11 / 94
12 / 94
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN INVESTORS FUND - CLASS A Impact
ADJUSTED YIELD CALCULATION 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 76,238,905.076 76,787,890.954 (548,986) 0.0232%
POP $14.99 $14.88 $0.11 -0.0238%
Net Assets $1,142,821,187.09 $1,142,603,817.40 $217,370 -0.0006%
Income $4,090,450.32 $4,075,796.23 $14,654 0.0156%
Adj. to Income $0.00 $0.00 $0 0.0000%
----------------- ----------------- ------------- -------
Adj. Income $4,090,450.32 $4,075,796.23 $14,654 0.0156%
Expenses $1,065,624.83 $1,050,153.45 $15,471 -0.0164%
----------------- ----------------- ------------- -------
Net Income $3,024,825.49 $3,025,642.78 ($817) -0.0008%
Net Income $3,024,825.49 $3,025,642.78 ($817)
Net Assets $1,142,821,187.09 $1,142,603,817.40 $217,370
NI/NA 0.0026468056 0.0026480244 -0.0000012188
SEC Yield 3.1973% 3.1987% -0.0014% -0.0014%
$0.00
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN INVESTORS FUND - CLASS B Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 8,685,677.295 8,254,575.963 431,101 -0.1309%
NAV $14.24 $14.12 $0.12 -0.0220%
Net Assets $123,684,044.68 $116,554,612.60 $7,129,432.08 -0.1529%
Income $465,424.16 $437,883.74 $27,540.42 0.2699%
Adj. to Income $0.00 $0.00 ** $0.00 0.0000%
--------------- --------------- ------------- -------
Adj. Income $465,424.16 $437,883.74 $27,540.42 0.2699%
Expenses $201,866.25 * $182,560.38 * $19,305.87 -0.1894%
--------------- --------------- ------------- -------
Net Income $263,557.91 $255,323.36 $8,234.55 0.0805%
Net Income $263,557.91 $255,323.36 $8,234.55
Net Assets $123,684,044.68 $116,554,612.60 $7,129,432.08
NI/NA 0.0021308966 0.0021905899 -0.0000596933
SEC Yield 2.57% 2.6431% -0.0724% -0.0724%
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK SOVEREIGN INVESTORS FUND - CLASS C Impact
ADJUSTED YIELD CALCULATION - 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 1,036,247.424 1,013,440.672 22,807 -0.0823%
NAV $14.24 $14.15 $0.09 -0.0240%
Net Assets $14,756,163.32 $14,340,185.51 $415,978 -0.1063%
Income $55,630.87 $53,813.06 $1,818 0.1501%
Adj. to Income $0.00 $0.00 ** $0 0.0000%
-------------- -------------- ------------ --------
Adj. Income $55,630.87 $53,813.06 $1,818 0.1501%
Expenses $9,874.23 * $9,429.72 $445 -0.0367%
-------------- -------------- ------------ --------
Net Income $45,756.64 $44,383.34 $1,373 0.1134%
Net Income $45,756.64 $44,383.34 $1,373
Net Assets $14,756,163.32 $14,340,185.51 $415,978
NI/NA 0.0031008494 0.0030950325 0.0000058169
SEC Yield 3.7500% 3.7429% 0.0071% 0.0071%
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
CLASS A SOVEREIGN INVESTORS
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/01/94 136,275.8718 34393.94 76,403,610.352
2 12/02/94 138,018.2401 34172.88 76,381,312.429
3 12/03/94 138,018.2401 34403.31 76,381,312.429
4 12/04/94 138,018.2401 34403.31 76,381,312.429
5 12/05/94 136,510.1642 34403.31 76,337,818.888
6 12/06/94 135,861.7205 34347.80 76,306,505.916
7 12/07/94 136,046.6385 34350.03 76,268,869.387
8 12/08/94 136,249.5051 34302.02 76,241,306.018
9 12/09/94 136,168.9767 34015.19 76,206,756.129
10 12/10/94 136,168.9767 34083.04 76,206,756.129
11 12/11/94 136,168.9767 34083.04 76,206,756.129
12 12/12/94 136,585.4156 34083.04 76,231,302.470
13 12/13/94 136,767.5902 34196.99 76,196,831.523
14 12/14/94 136,674.6768 34252.69 76,160,926.040
15 12/15/94 136,377.4900 34334.41 76,144,696.924
16 12/16/94 136,649.7220 34428.18 76,131,191.558
17 12/17/94 136,649.7220 34633.80 76,131,191.558
18 12/18/94 136,649.7220 34633.80 76,131,191.558
19 12/19/94 136,335.0449 34633.80 76,084,140.726
20 12/20/94 136,671.8542 34576.33 76,077,474.707
21 12/21/94 135,746.1924 34549.59 75,999,003.595
22 12/22/94 135,629.2995 34607.93 75,982,474.811
23 12/23/94 135,892.0039 34615.00 75,983,465.198
24 12/24/94 135,892.0039 35323.87 75,983,465.198
25 12/25/94 135,892.0039 35323.87 75,983,465.198
26 12/26/94 135,892.0039 35323.87 75,983,465.198
27 12/27/94 136,097.2543 35323.87 76,757,878.787
28 12/28/94 136,343.1905 34712.44 76,665,542.436
29 12/29/94 135,179.3292 34591.13 76,631,268.270
30 12/30/94 135,020.2485 34501.92 76,585,860.309 14.990000 3.1972
TOTAL 4,090,450.3182 1,035,604.40 2,287,167,152.299
AVERAGED SHARES: 76,238,905.077
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
CLASS B SOVEREIGN INVESTORS
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/01/94 15,124.6165 6171.12 8,489,354.519
2 12/02/94 15,335.8730 6144.95 8,496,949.901
3 12/03/94 15,335.8730 6196.49 8,496,949.901
4 12/04/94 15,335.8730 6196.49 8,496,949.901
5 12/05/94 15,195.3026 6196.49 8,507,392.715
6 12/06/94 15,169.3201 6200.18 8,530,386.536
7 12/07/94 15,212.7057 6215.95 8,539,113.558
8 12/08/94 15,249.5689 6214.92 8,544,140.291
9 12/09/94 15,290.7887 6172.74 8,568,585.236
10 12/10/94 15,290.7887 6199.54 8,568,585.236
11 12/11/94 15,290.7887 6199.54 8,568,585.236
12 12/12/94 15,346.6591 6199.54 8,576,968.022
13 12/13/94 15,425.4681 6232.17 8,606,141.317
14 12/14/94 15,441.9093 6261.55 8,617,290.257
15 12/15/94 15,467.8765 6309.90 8,649,110.779
16 12/16/94 15,561.9046 6352.78 8,682,949.813
17 12/17/94 15,561.9046 6416.38 8,682,949.813
18 12/18/94 15,561.9046 6416.38 8,682,949.813
19 12/19/94 15,579.5564 6416.38 8,707,658.711
20 12/20/94 15,686.8350 6429.78 8,745,746.910
21 12/21/94 15,655.6287 6454.26 8,778,977.849
22 12/22/94 15,712.2813 6495.94 8,816,601.527
23 12/23/94 15,769.8234 6519.53 8,832,073.550
24 12/24/94 15,769.8234 6602.76 8,832,073.550
25 12/25/94 15,769.8234 6602.76 8,832,073.550
26 12/26/94 15,769.8234 6602.76 8,832,073.550
27 12/27/94 15,903.7426 6602.76 8,968,376.048
28 12/28/94 15,925.0169 6589.63 8,954,090.957
29 12/29/94 15,821.2179 6569.47 8,968,481.691
30 12/30/94 15,861.4653 6569.80 8,996,738.131 14.240000 2.5707
TOTAL 465,424.1634 190,752.94 260,570,318.868
AVERAGED SHARES: 8,685,677.296
</TABLE>
Page 1
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS - SEC TOTAL RETURN FORMULA CLASS A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------
Average Annual Total Return Investment Value - End of Period
<S> <C> <C> <C>
10 Year Return: 12.76% 10 Year Value: $3,324.46
5 Year Return: 8.67% 5 Year Value: $1,515.26
3 Year Return: 3.62% 3 Year Value: $1,112.57
1 Year Return: -1.85% 1 Year Value: $981.46
YTD Return: -1.85% YTD Value: $981.46
- --------------------------------- --------------------------------
Constant Sales Charge: 0.00%
</TABLE>
<TABLE>
<CAPTION>
10-Year
Month Offering Ex-Div Dividend Reinv Cap Gain Dividend # of Shares Shares
Ended NAV Price Date Amount Price Info Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 84 $9.450 $9.450 12/14/84 $0.3750 $9.280 $0.2450 105.820
1 / 85 $9.890 $9.890 $0.0000 0.000 105.820
2 / 85 $10.140 $10.140 $0.0000 0.000 105.820
3 / 85 $10.145 $10.145 03/15/85 $0.1300 $9.895 $13.7566 1.390 107.210
4 / 85 $10.150 $10.150 $0.0000 0.000 107.210
5 / 85 $10.720 $10.720 $0.0000 0.000 107.210
6 / 85 $10.835 $10.835 06/14/85 $0.1300 $10.635 $13.9373 1.311 108.521
7 / 85 $10.580 $10.580 $0.0000 0.000 108.521
8 / 85 $10.630 $10.630 $0.0000 0.000 108.521
9 / 85 $10.190 $10.190 09/16/85 $0.1350 $10.280 $14.6503 1.425 109.946
10 / 85 $10.680 $10.680 $0.0000 0.000 109.946
11 / 85 $11.355 $11.355 $0.0000 0.000 109.946
12 / 85 $11.310 $11.310 12/16/85 $0.5700 $11.345 $0.4350 $62.6692 5.524 115.470
1 / 86 $11.515 $11.515 $0.0000 0.000 115.470
2 / 86 $12.470 $12.470 $0.0000 0.000 115.470
3 / 86 $13.140 $13.140 03/14/86 $0.1350 $12.980 $15.5885 1.201 116.671
4 / 86 $12.975 $12.975 $0.0000 0.000 116.671
5 / 86 $13.620 $13.620 $0.0000 0.000 116.671
6 / 86 $14.055 $14.055 06/13/86 $0.1350 $13.495 $15.7506 1.167 117.838
7 / 86 $13.800 $13.800 $0.0000 0.000 117.838
8 / 86 $14.415 $14.415 $0.0000 0.000 117.838
9 / 86 $12.945 $12.945 09/16/86 $0.1400 $12.910 $16.4973 1.278 119.116
10 / 86 $13.700 $13.700 $0.0000 0.000 119.116
11 / 86 $13.670 $13.670 $0.0000 0.000 119.116
12 / 86 $12.365 $12.365 12/15/86 $1.0050 $12.630 $0.8650 $119.7116 9.478 128.594
1 / 87 $13.600 $13.600 $0.0000 0.000 128.594
2 / 87 $14.015 $14.015 $0.0000 0.000 128.594
3 / 87 $13.850 $13.850 03/18/87 $0.1400 $13.970 $18.0032 1.289 129.883
4 / 87 $13.240 $13.240 $0.0000 0.000 129.883
5 / 87 $13.290 $13.290 $0.0000 0.000 129.883
6 / 87 $13.770 $13.770 06/17/87 $0.1400 $13.880 $18.1836 1.310 131.193
7 / 87 $14.190 $14.190 $0.0000 0.000 131.193
8 / 87 $14.640 $14.640 $0.0000 0.000 131.193
9 / 87 $14.030 $14.030 09/16/87 $0.1500 $13.830 $19.6790 1.423 132.616
10 / 87 $11.990 $11.990 $0.0000 0.000 132.616
11 / 87 $11.570 $11.570 $0.0000 0.000 132.616
12 / 87 $10.960 $10.960 12/16/87 $1.0500 $10.870 $0.9000 $139.2468 12.810 145.426
1 / 88 $11.600 $11.600 $0.0000 0.000 145.426
2 / 88 $11.830 $11.830 $0.0000 0.000 145.426
3 / 88 $11.450 $11.450 03/16/88 $0.1500 $11.770 $21.8139 1.853 147.279
4 / 88 $11.380 $11.380 $0.0000 0.000 147.279
5 / 88 $11.320 $11.320 $0.0000 0.000 147.279
6 / 88 $11.500 $11.500 06/16/88 $0.1500 $11.400 $22.0919 1.938 149.217
7 / 88 $11.430 $11.430 $0.0000 0.000 149.217
8 / 88 $11.340 $11.340 $0.0000 0.000 149.217
9 / 88 $11.560 $11.560 09/16/88 $0.1500 $11.480 $22.3826 1.950 151.167
10 / 88 $11.740 $11.740 $0.0000 0.000 151.167
11 / 88 $11.630 $11.630 $0.0000 0.000 151.167
12 / 88 $11.190 $11.190 12/22/88 $0.5360 $11.160 $0.3820 $81.0255 7.260 158.427
1 / 89 $11.600 $11.600 $0.0000 0.000 158.427
2 / 89 $11.470 $11.470 $0.0000 0.000 158.427
3 / 89 $11.500 $11.500 03/16/89 $0.1500 $11.530 $23.7641 2.061 160.488
4 / 89 $11.830 $11.830 $0.0000 0.000 160.488
5 / 89 $12.280 $12.280 $0.0000 0.000 160.488
6 / 89 $12.130 $12.130 06/16/89 $0.1500 $12.180 $24.0732 1.976 162.464
7 / 89 $12.970 $12.970 $0.0000 0.000 162.464
8 / 89 $13.000 $13.000 $0.0000 0.000 162.464
9 / 89 $12.880 $12.880 09/18/89 $0.1500 $12.790 $24.3696 1.905 164.369
10 / 89 $12.920 $12.920 $0.0000 0.000 164.369
11 / 89 $13.190 $13.190 $0.0000 0.000 164.369
12 / 89 $12.600 $12.600 12/21/89 $0.7370 $12.420 $0.5800 $121.1400 9.754 174.123
1 / 90 $12.220 $12.220 $0.0000 0.000 174.123
2 / 90 $12.270 $12.270 $0.0000 0.000 174.123
3 / 90 $12.330 $12.330 03/16/90 $0.1500 $12.270 $26.1185 2.129 176.252
4 / 90 $12.170 $12.170 $0.0000 0.000 176.252
5 / 90 $12.850 $12.850 $0.0000 0.000 176.252
6 / 90 $12.890 $12.890 06/18/90 $0.1500 $12.740 $26.4378 2.075 178.327
</TABLE>
<TABLE>
<CAPTION>
5-Year
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- -------------------------------------------------
<S> <C> <C> <C> <C>
12 / 84
1 / 85
2 / 85
3 / 85
4 / 85
5 / 85
6 / 85
7 / 85
8 / 85
9 / 85
10 / 85
11 / 85
12 / 85
1 / 86
2 / 86
3 / 86
4 / 86
5 / 86
6 / 86
7 / 86
8 / 86
9 / 86
10 / 86
11 / 86
12 / 86
1 / 87
2 / 87
3 / 87
4 / 87
5 / 87
6 / 87
7 / 87
8 / 87
9 / 87
10 / 87
11 / 87
12 / 87
1 / 88
2 / 88
3 / 88
4 / 88
5 / 88
6 / 88
7 / 88
8 / 88
9 / 88
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89 79.365
1 / 90 $0.0000 0.000 79.365
2 / 90 $0.0000 0.000 79.365
3 / 90 $11.9048 0.970 80.335
4 / 90 $0.0000 0.000 80.335
5 / 90 $0.0000 0.000 80.335
6 / 90 $12.0503 0.946 81.281
</TABLE>
<TABLE>
<CAPTION>
3-Year 1-Year YTD
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv.
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
12 / 84
1 / 85
2 / 85
3 / 85
4 / 85
5 / 85
6 / 85
7 / 85
8 / 85
9 / 85
10 / 85
11 / 85
12 / 85
1 / 86
2 / 86
3 / 86
4 / 86
5 / 86
6 / 86
7 / 86
8 / 86
9 / 86
10 / 86
11 / 86
12 / 86
1 / 87
2 / 87
3 / 87
4 / 87
5 / 87
6 / 87
7 / 87
8 / 87
9 / 87
10 / 87
11 / 87
12 / 87
1 / 88
2 / 88
3 / 88
4 / 88
5 / 88
6 / 88
7 / 88
8 / 88
9 / 88
10 / 88
11 / 88
12 / 88
1 / 89
2 / 89
3 / 89
4 / 89
5 / 89
6 / 89
7 / 89
8 / 89
9 / 89
10 / 89
11 / 89
12 / 89
1 / 90
2 / 90
3 / 90
4 / 90
5 / 90
6 / 90
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS - SEC TOTAL RETURN FORMULA CLASS A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------
Average Annual Total Return Investment Value - End of Period
<S> <C> <C> <C>
10 Year Return: 12.76% 10 Year Value: $3,324.46
5 Year Return: 8.67% 5 Year Value: $1,515.26
3 Year Return: 3.62% 3 Year Value: $1,112.57
1 Year Return: -1.85% 1 Year Value: $981.46
YTD Return: -1.85% YTD Value: $981.46
- --------------------------------- --------------------------------
Constant Sales Charge: 0.00%
</TABLE>
<TABLE>
<CAPTION>
10-Year
Month Offering Ex-Div Dividend Reinv Cap Gain Dividend # of Shares Shares
Ended NAV Price Date Amount Price Info Received Reinv. Outstanding
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 / 90 $12.960 $12.960 $0.0000 0.000 178.327
8 / 90 $12.100 $12.100 $0.0000 0.000 178.327
9 / 90 $11.580 $11.580 09/18/90 $0.1500 $11.850 $26.7491 2.257 180.584
10 / 90 $11.540 $11.540 $0.0000 0.000 180.584
11 / 90 $12.230 $12.230 $0.0000 0.000 180.584
12 / 90 $11.940 $11.940 12/20/90 $0.7400 $11.920 $0.6000 $133.6322 11.211 191.795
1 / 91 $12.290 $12.290 $0.0000 0.000 191.795
2 / 91 $13.000 $13.000 $0.0000 0.000 191.795
3 / 91 $13.150 $13.150 03/18/91 $0.1400 $12.970 $26.8513 2.070 193.865
4 / 91 $13.290 $13.290 $0.0000 0.000 193.865
5 / 91 $13.680 $13.680 $0.0000 0.000 193.865
6 / 91 $13.160 $13.160 06/17/91 $0.1300 $13.470 $25.2025 1.871 195.736
7 / 91 $13.670 $13.670 $0.0000 0.000 195.736
8 / 91 $14.210 $14.210 $0.0000 0.000 195.736
9 / 91 $14.030 $14.030 09/17/91 $0.1300 $13.910 $25.4457 1.829 197.565
10 / 91 $14.210 $14.210 $0.0000 0.000 197.565
11 / 91 $13.900 $13.900 $0.0000 0.000 197.565
12 / 91 $14.310 $14.310 12/20/91 $0.8000 $14.050 $0.6700 $158.0520 11.249 208.814
1 / 92 $14.160 $14.160 $0.0000 0.000 208.814
2 / 92 $14.200 $14.200 $0.0000 0.000 208.814
3 / 92 $14.020 $14.020 $0.0000 0.000 208.814
4 / 92 $14.220 $14.220 04/03/92 $0.1200 $13.870 $25.0577 1.807 210.621
5 / 92 $14.360 $14.360 $0.0000 0.000 210.621
6 / 92 $14.120 $14.120 $0.0000 0.000 210.621
7 / 92 $14.460 $14.460 07/02/92 $0.1100 $14.130 $23.1683 1.640 212.261
8 / 92 $14.410 $14.410 $0.0000 0.000 212.261
9 / 92 $14.490 $14.490 09/08/92 $0.1100 $14.400 $23.3487 1.621 213.882
10 / 92 $14.430 $14.430 $0.0000 0.000 213.882
11 / 92 $14.870 $14.870 $0.0000 0.000 213.882
12 / 92 $14.780 $14.780 12/23/92 $0.2014 $14.820 $0.0914 $43.0758 2.907 216.789
1 / 93 $14.800 $14.800 $0.0000 0.000 216.789
2 / 93 $14.820 $14.820 $0.0000 0.000 216.789
3 / 93 $15.080 $15.080 $0.0000 0.000 216.789
4 / 93 $14.690 $14.690 04/01/93 $0.1100 $14.940 $23.8468 1.596 218.385
5 / 93 $14.800 $14.800 $0.0000 0.000 218.385
6 / 93 $14.820 $14.820 $0.0000 0.000 218.385
7 / 93 $14.650 $14.650 07/02/93 $0.1000 $14.650 $21.8385 1.491 219.876
8 / 93 $15.150 $15.150 $0.0000 0.000 219.876
9 / 93 $14.980 $14.980 $0.0000 0.000 219.876
10 / 93 $14.950 $14.950 10/01/93 $0.1000 $14.930 $21.9876 1.473 221.349
11 / 93 $15.030 $15.030 $0.0000 0.000 221.349
12 / 93 $15.100 $15.100 12/23/93 $0.20204 $15.060 $0.08944 $44.7214 2.970 224.319
1 / 94 $15.390 $15.390 $0.0000 0.000 224.319
2 / 94 $15.060 $15.060 $0.0000 0.000 224.319
3 / 94 $14.480 $14.480 $0.0000 0.000 224.319
4 / 94 $14.430 $14.430 04/04/94 0.16915 $14.08 0.06025 $37.9436 2.695 227.014
5 / 94 $14.510 $14.510 $0.0000 0.000 227.014
6 / 94 $14.180 $14.180 $0.0000 0.000 227.014
7 / 94 $14.490 $14.490 07/01/94 0.11490 $14.10 $26.0839 1.850 228.864
8 / 94 $14.930 $14.930 $0.0000 0.000 228.864
9 / 94 $14.520 $14.520 $0.0000 0.000 228.864
10 / 94 $14.480 $14.480 10/03/94 0.11600 $14.37 $26.5482 1.847 230.711
11 / 94 $14.140 $14.140 $0.0000 0.000 230.711
12 / 94 $14.240 $14.240 12/23/94 0.16971 $14.25 0.05022 $39.1540 2.748 233.459
End of Period (update for formulas above):
$14.240 233.459
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 / 90 $0.0000 0.000 81.281
8 / 90 $0.0000 0.000 81.281
9 / 90 $12.1922 1.029 82.310
10 / 90 $0.0000 0.000 82.310
11 / 90 $0.0000 0.000 82.310
12 / 90 $60.9094 5.110 87.420
1 / 91 $0.0000 0.000 87.420
2 / 91 $0.0000 0.000 87.420
3 / 91 $12.2388 0.944 88.364
4 / 91 $0.0000 0.000 88.364
5 / 91 $0.0000 0.000 88.364
6 / 91 $11.4873 0.853 89.217
7 / 91 $0.0000 0.000 89.217
8 / 91 $0.0000 0.000 89.217
9 / 91 $11.5982 0.834 90.051
10 / 91 $0.0000 0.000 90.051
11 / 91 $0.0000 0.000 90.051
12 / 91 $72.0408 5.127 95.178 69.881
1 / 92 $0.0000 0.000 95.178 $0.0000 0.000 69.881
2 / 92 $0.0000 0.000 95.178 $0.0000 0.000 69.881
3 / 92 $0.0000 0.000 95.178 $0.0000 0.000 69.881
4 / 92 $11.4214 0.823 96.001 $8.3857 0.605 70.486
5 / 92 $0.0000 0.000 96.001 $0.0000 0.000 70.486
6 / 92 $0.0000 0.000 96.001 $0.0000 0.000 70.486
7 / 92 $10.5601 0.747 96.748 $7.7535 0.549 71.035
8 / 92 $0.0000 0.000 96.748 $0.0000 0.000 71.035
9 / 92 $10.6423 0.739 97.487 $7.8139 0.543 71.578
10 / 92 $0.0000 0.000 97.487 $0.0000 0.000 71.578
11 / 92 $0.0000 0.000 97.487 $0.0000 0.000 71.578
12 / 92 $19.6339 1.325 98.812 $14.4158 0.973 72.551
1 / 93 $0.0000 0.000 98.812 $0.0000 0.000 72.551
2 / 93 $0.0000 0.000 98.812 $0.0000 0.000 72.551
3 / 93 $0.0000 0.000 98.812 $0.0000 0.000 72.551
4 / 93 $10.8693 0.728 99.540 $7.9806 0.534 73.085
5 / 93 $0.0000 0.000 99.540 $0.0000 0.000 73.085
6 / 93 $0.0000 0.000 99.540 $0.0000 0.000 73.085
7 / 93 $9.9540 0.679 100.219 $7.3085 0.499 73.584
8 / 93 $0.0000 0.000 100.219 $0.0000 0.000 73.584
9 / 93 $0.0000 0.000 100.219 $0.0000 0.000 73.584
10 / 93 $10.0219 0.671 100.890 $7.3584 0.493 74.077
11 / 93 $0.0000 0.000 100.890 $0.0000 0.000 74.077
12 / 93 $20.3838 1.354 102.244 $14.9665 0.994 75.071 66.225
1 / 94 $0.0000 0.000 102.244 $0.0000 0.000 75.071 $0.0000 0.000 66.225
2 / 94 $0.0000 0.000 102.244 $0.0000 0.000 75.071 $0.0000 0.000 66.225
3 / 94 $0.0000 0.000 102.244 $0.0000 0.000 75.071 $0.0000 0.000 66.225
4 / 94 $17.2946 1.228 103.472 $12.6983 0.902 75.973 $11.2020 0.796 67.021
5 / 94 $0.0000 0.000 103.472 $0.0000 0.000 75.973 $0.0000 0.000 67.021
6 / 94 $0.0000 0.000 103.472 $0.0000 0.000 75.973 $0.0000 0.000 67.021
7 / 94 $11.8889 0.843 104.315 $8.7293 0.619 76.592 $7.7007 0.546 67.567
8 / 94 $0.0000 0.000 104.315 $0.0000 0.000 76.592 $0.0000 0.000 67.567
9 / 94 $0.0000 0.000 104.315 $0.0000 0.000 76.592 $0.0000 0.000 67.567
10 / 94 $12.1005 0.842 105.157 $8.8847 0.618 77.210 $7.8378 0.545 68.112
11 / 94 $0.0000 0.000 105.157 $0.0000 0.000 77.210 $0.0000 0.000 68.112
12 / 94 $17.8462 1.252 106.409 $13.1033 0.920 78.130 $11.5593 0.811 68.923
End of Period (update for formulas above):
106.409 78.130 68.923
</TABLE>
<TABLE>
<CAPTION>
YTD
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- -------------------------------------------------
<S> <C> <C> <C> <C>
7 / 90
8 / 90
9 / 90
10 / 90
11 / 90
12 / 90
1 / 91
2 / 91
3 / 91
4 / 91
5 / 91
6 / 91
7 / 91
8 / 91
9 / 91
10 / 91
11 / 91
12 / 91
1 / 92
2 / 92
3 / 92
4 / 92
5 / 92
6 / 92
7 / 92
8 / 92
9 / 92
10 / 92
11 / 92
12 / 92
1 / 93
2 / 93
3 / 93
4 / 93
5 / 93
6 / 93
7 / 93
8 / 93
9 / 93
10 / 93
11 / 93
12 / 93 66.225
1 / 94 $0.0000 0.000 66.225
2 / 94 $0.0000 0.000 66.225
3 / 94 $0.0000 0.000 66.225
4 / 94 $11.2020 0.796 67.021
5 / 94 $0.0000 0.000 67.021
6 / 94 $0.0000 0.000 67.021
7 / 94 $7.7007 0.546 67.567
8 / 94 $0.0000 0.000 67.567
9 / 94 $0.0000 0.000 67.567
10 / 94 $7.8378 0.545 68.112
11 / 94 $0.0000 0.000 68.112
12 / 94 $11.5593 0.811 68.923
End of Period (update for formulas above):
68.923
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS - SEC TOTAL RETURN FORMULA CLASS A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- ------------------------------------------------- --------------------------------------------
Average Annual Total Return Investment Value - End of Period
<S> <C> <C> <C>
10 Year Return: 12.18% 10 Year Value: $3,157.45
5 Year Return: 7.56% 5 Year Value: $1,439.85
3 Year Return: 1.87% 3 Year Value: $1,057.12
1 Year Return: -6.73% 1 Year Value: $932.68
YTD Return: -6.73% YTD Value: $932.68
- ------------------------------------------------- --------------------------------------------
</TABLE>
Constant Sales Charge: 5.00%
<TABLE>
<CAPTION>
10-Year
Month Offering Ex-Div Dividend Reinv Cap Gain Dividend # of Shares Shares Dividend
Ended NAV Price Date Amount Price Info Received Reinv. Outstanding Received
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 /84 $ 9.450 $ 9.950 12/14/84 $0.3750 $ 9.280 $0.2450
1 /85 $ 9.890 $10.410
2 /85 $10.140 $10.670 93.721
3 /85 $10.145 $10.680 03/15/85 $0.1300 $ 9.895 $12.1837 1.231 94.952
4 /85 $10.150 $10.680 $0.0000 0.000 94.952
5 /85 $10.720 $11.280 $0.0000 0.000 94.952
6 /85 $10.835 $11.410 06/14/85 $0.1300 $10.635 $12.3438 1.161 96.113
7 /85 $10.580 $11.140 $0.0000 0.000 96.113
8 /85 $10.630 $11.190 $0.0000 0.000 96.113
9 /85 $10.190 $10.730 09/16/85 $0.1350 $10.280 $12.9753 1.262 97.375
10 /85 $10.680 $11.240 $0.0000 0.000 97.375
11 /85 $11.355 $11.950 $0.0000 0.000 97.375
12 /85 $11.310 $11.910 12/16/85 $0.5700 $11.345 $0.4350 $55.5038 4.892 102.267
1 /86 $11.515 $12.120 $0.0000 0.000 102.267
2 /86 $12.470 $13.130 $0.0000 0.000 102.267
3 /86 $13.140 $13.830 03/14/86 $0.1350 $12.980 $13.8060 1.064 103.331
4 /86 $12.975 $13.660 $0.0000 0.000 103.331
5 /86 $13.620 $14.340 $0.0000 0.000 103.331
6 /86 $14.055 $14.790 06/13/86 $0.1350 $13.495 $13.9497 1.034 104.365
7 /86 $13.800 $14.530 $0.0000 0.000 104.365
8 /86 $14.415 $15.170 $0.0000 0.000 104.365
9 /86 $12.945 $13.630 09/16/86 $0.1400 $12.910 $14.6111 1.132 105.497
10 /86 $13.700 $14.420 $0.0000 0.000 105.497
11 /86 $13.670 $14.390 $0.0000 0.000 105.497
12 /86 $12.365 $13.020 12/15/86 $1.0050 $12.630 $0.8650 $106.0245 8.395 113.892
1 /87 $13.600 $14.320 $0.0000 0.000 113.892
2 /87 $14.015 $14.750 $0.0000 0.000 113.892
3 /87 $13.850 $14.580 03/18/87 $0.1400 $13.970 $15.9449 1.141 115.033
4 /87 $13.240 $13.940 $0.0000 0.000 115.033
5 /87 $13.290 $13.990 $0.0000 0.000 115.033
6 /87 $13.770 $14.490 06/17/87 $0.1400 $13.880 $16.1046 1.160 116.193
7 /87 $14.190 $14.940 $0.0000 0.000 116.193
8 /87 $14.640 $15.410 $0.0000 0.000 116.193
9 /87 $14.030 $14.770 09/16/87 $0.1500 $13.830 $17.4290 1.260 117.453
10 /87 $11.990 $12.620 $0.0000 0.000 117.453
11 /87 $11.570 $12.180 $0.0000 0.000 117.453
12 /87 $10.960 $11.540 12/16/87 $1.0500 $10.870 $0.9000 $123.3257 11.346 128.799
1 /88 $11.600 $12.210 $0.0000 0.000 128.799
2 /88 $11.830 $12.450 $0.0000 0.000 128.799
3 /88 $11.450 $12.050 03/16/88 $0.1500 $11.770 $19.3199 1.641 130.440
4 /88 $11.380 $11.980 $0.0000 0.000 130.440
5 /88 $11.320 $11.920 $0.0000 0.000 130.440
6 /88 $11.500 $12.110 06/16/88 $0.1500 $11.400 $19.5660 1.716 132.156
7 /88 $11.430 $12.030 $0.0000 0.000 132.156
8 /88 $11.340 $11.940 $0.0000 0.000 132.156
9 /88 $11.560 $12.170 09/16/88 $0.1500 $11.480 $19.8234 1.727 133.883
10 /88 $11.740 $12.360 $0.0000 0.000 133.883
11 /88 $11.630 $12.240 $0.0000 0.000 133.883
12 /88 $11.190 $11.780 12/22/88 $0.5360 $11.160 $0.3820 $71.7613 6.430 140.313
1 /89 $11.600 $12.210 $0.0000 0.000 140.313
2 /89 $11.470 $12.070 $0.0000 0.000 140.313
3 /89 $11.500 $12.110 03/16/89 $0.1500 $11.530 $21.0470 1.825 142.138
4 /89 $11.830 $12.450 $0.0000 0.000 142.138
5 /89 $12.280 $12.930 $0.0000 0.000 142.138
6 /89 $12.130 $12.770 06/16/89 $0.1500 $12.180 $21.3207 1.750 143.888
7 /89 $12.970 $13.650 $0.0000 0.000 143.888
8 /89 $13.000 $13.680 $0.0000 0.000 143.888
9 /89 $12.880 $13.560 09/18/89 $0.1500 $12.790 $21.5832 1.688 145.576
10 /89 $12.920 $13.600 $0.0000 0.000 145.576
11 /89 $13.190 $13.880 $0.0000 0.000 145.576
12 /89 $12.600 $13.260 12/21/89 $0.7370 $12.420 $0.5800 $107.2895 8.638 154.214
1 /90 $12.220 $12.860 $0.0000 0.000 154.214
2 /90 $12.270 $12.920 $0.0000 0.000 154.214
3 /90 $12.330 $12.980 03/16/90 $0.1500 $12.270 $23.1321 1.885 156.099 $11.6099
4 /90 $12.170 $12.810 $0.0000 0.000 156.099 $0.0000
5 /90 $12.850 $13.530 $0.0000 0.000 156.099 $0.0000
6 /90 $12.890 $13.570 06/18/90 $0.1500 $12.740 $23.4149 1.838 157.937 $11.7518
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
Month # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares Dividend
Ended Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding Received
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
12 /84
1 /85
2 /85
3 /85
4 /85
5 /85
6 /85
7 /85
8 /85
9 /85
10 /85
11 /85
12 /85
1 /86
2 /86
3 /86
4 /86
5 /86
6 /86
7 /86
8 /86
9 /86
10 /86
11 /86
12 /86
1 /87
2 /87
3 /87
4 /87
5 /87
6 /87
7 /87
8 /87
9 /87
10 /87
11 /87
12 /87
1 /88
2 /88
3 /88
4 /88
5 /88
6 /88
7 /88
8 /88
9 /88
10 /88
11 /88
12 /88
1 /89
2 /89
3 /89
4 /89
5 /89
6 /89
7 /89
8 /89
9 /89
10 /89
11 /89
12 /89
1 /90
2 /90 77.399
3 /90 0.946 78.345
4 /90 0.000 78.345
5 /90 0.000 78.345
6 /90 0.922 79.267
</TABLE>
<TABLE>
<CAPTION>
YTD
Month # of Shares Shares
Ended Reinv. Outstanding
- --------------------------------------
<S> <C> <C>
12 /84
1 /85
2 /85
3 /85
4 /85
5 /85
6 /85
7 /85
8 /85
9 /85
10 /85
11 /85
12 /85
1 /86
2 /86
3 /86
4 /86
5 /86
6 /86
7 /86
8 /86
9 /86
10 /86
11 /86
12 /86
1 /87
2 /87
3 /87
4 /87
5 /87
6 /87
7 /87
8 /87
9 /87
10 /87
11 /87
12 /87
1 /88
2 /88
3 /88
4 /88
5 /88
6 /88
7 /88
8 /88
9 /88
10 /88
11 /88
12 /88
1 /89
2 /89
3 /89
4 /89
5 /89
6 /89
7 /89
8 /89
9 /89
10 /89
11 /89
12 /89
1 /90
2 /90
3 /90
4 /90
5 /90
6 /90
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS -- SEC TOTAL RETURN FORMULA CLASS A
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- ------------------------------------------------- --------------------------------------------
Average Annual Total Return Investment Value - End of Period
<S> <C> <C> <C>
10 Year Return: 12.18% 10 Year Value: $3,157.45
5 Year Return: 7.56% 5 Year Value: $1,439.85
3 Year Return: 1.87% 3 Year Value: $1,057.12
1 Year Return: -6.73% 1 Year Value: $932.68
YTD Return: -6.73% YTD Value: $932.68
- ------------------------------------------------- --------------------------------------------
</TABLE>
Constant Sales Charge: 5.00%
<TABLE>
<CAPTION>
10-Year
-----------
Month Offering Ex-Div Dividend Reinv Cap Gain Dividend # of Shares Shares Dividend
Ended NAV Price Date Amount Price Info Received Reinv. Outstanding Received
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 /90 $12.960 $13.640 $0.0000 0.000 169.369 $0.0000
8 /90 $12.100 $12.740 $0.0000 0.000 169.369 $0.0000
9 /90 $11.580 $12.190 09/18/90 $0.1500 $11.850 $25.4054 2.144 171.513 $11.5854
10 /90 $11.540 $12.150 $0.0000 0.000 171.513 $0.0000
11 /90 $12.230 $12.870 $0.0000 0.000 171.513 $0.0000
12 /90 $11.940 $12.570 12/20/90 $0.7400 $11.920 $0.6000 $126.9196 10.648 182.161 $57.8784
1 /91 $12.290 $12.940 $0.0000 0.000 182.161 $0.0000
2 /91 $13.000 $13.680 $0.0000 0.000 182.161 $0.0000
3 /91 $13.150 $13.840 03/18/91 $0.1400 $12.970 $25.5025 1.966 184.127 $11.6298
4 /91 $13.290 $13.990 $0.0000 0.000 184.127 $0.0000
5 /91 $13.680 $14.400 $0.0000 0.000 184.127 $0.0000
6 /91 $13.160 $13.850 06/17/91 $0.1300 $13.470 $23.9365 1.777 185.904 $10.9157
7 /91 $13.670 $14.390 $0.0000 0.000 185.904 $0.0000
8 /91 $14.210 $14.960 $0.0000 0.000 185.904 $0.0000
9 /91 $14.030 $14.770 09/17/91 $0.1300 $13.910 $24.1675 1.737 187.641 $11.0210
10 /91 $14.210 $14.960 $0.0000 0.000 187.641 $0.0000
11 /91 $13.900 $14.630 $0.0000 0.000 187.641 $0.0000
12 /91 $14.310 $15.060 12/20/91 $0.8000 $14.050 $0.6700 $150.1128 10.684 198.325 $68.4552
1 /92 $14.160 $14.910 $0.0000 0.000 198.325 $0.0000
2 /92 $14.200 $14.950 $0.0000 0.000 198.325 $0.0000
3 /92 $14.020 $14.760 $0.0000 0.000 198.325 $0.0000
4 /92 $14.220 $14.970 04/03/92 $0.1200 $13.870 $23.7990 1.716 200.041 $10.8529
5 /92 $14.360 $15.120 $0.0000 0.000 200.041 $0.0000
6 /92 $14.120 $14.860 $0.0000 0.000 200.041 $0.0000
7 /92 $14.460 $15.220 07/02/92 $0.1100 $14.130 $22.0045 1.557 201.598 $10.0345
8 /92 $14.410 $15.170 $0.0000 0.000 201.598 $0.0000
9 /92 $14.490 $15.250 09/08/92 $0.1100 $14.400 $22.1758 1.540 203.138 $10.1126
10 /92 $14.430 $15.190 $0.0000 0.000 203.138 $0.0000
11 /92 $14.870 $15.650 $0.0000 0.000 203.138 $0.0000
12 /92 $14.780 $15.560 12/23/92 $0.2014 $14.820 $0.0914 $40.9120 2.761 205.899 $18.6567
1 /93 $14.800 $15.580 $0.0000 0.000 205.899 $0.0000
2 /93 $14.820 $15.600 $0.0000 0.000 205.899 $0.0000
3 /93 $15.080 $15.870 $0.0000 0.000 205.899 $0.0000
4 /93 $14.690 $15.460 04/01/93 $0.1100 $14.940 $22.6489 1.516 207.415 $10.3283
5 /93 $14.800 $15.580 $0.0000 0.000 207.415 $0.0000
6 /93 $14.820 $15.600 $0.0000 0.000 207.415 $0.0000
7 /93 $14.650 $15.420 07/02/93 $0.1000 $14.650 $20.7415 1.416 208.831 $9.4585
8 /93 $15.150 $15.950 $0.0000 0.000 208.831 $0.0000
9 /93 $14.980 $15.770 $0.0000 0.000 208.831 $0.0000
10 /93 $14.950 $15.740 10/01/93 $0.1000 $14.930 $20.8831 1.399 210.230 $9.5231
11 /93 $15.030 $15.820 $0.0000 0.000 210.230 $0.0000
12 /93 $15.100 $15.890 12/23/93 0.20204 $15.060 $0.08944 $42.4749 2.820 213.050 $19.3694
1 /94 $15.390 $16.200 $0.0000 0.000 213.050 $0.0000
2 /94 $15.060 $15.850 $0.0000 0.000 213.050 $0.0000
3 /94 $14.480 $15.240 $0.0000 0.000 213.050 $0.0000
4 /94 $14.430 $15.190 04/04/94 0.16915 $14.08 0.06025 $36.0374 2.559 215.609 $16.4338
5 /94 $14.510 $15.270 $0.0000 0.000 215.609 $0.0000
6 /94 $14.180 $14.930 $0.0000 0.000 215.609 $0.0000
7 /94 $14.490 $15.250 07/01/94 0.11490 $14.10 $24.7735 1.757 217.366 $11.2972
8 /94 $14.930 $15.720 $0.0000 0.000 217.366 $0.0000
9 /94 $14.520 $15.280 $0.0000 0.000 217.366 $0.0000
10 /94 $14.480 $15.240 10/03/94 0.11600 $14.37 $25.2145 1.755 219.121 $11.4983
11 /94 $14.140 $14.880 $0.0000 0.000 219.121 $0.0000
12 /94 $14.240 $14.990 12/23/94 0.16971 $14.25 0.05022 $37.1870 2.610 221.731 $16.9579
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period (update for formulas above):
$14.240 221.731
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
----------- ----------- -----------
Month # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares Dividend
Ended Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding Received
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 /90 0.000 77.236
8 /90 0.000 77.236
9 /90 0.978 78.214
10 /90 0.000 78.214
11 /90 0.000 78.214
12 /90 4.856 83.070
1 /91 0.000 83.070
2 /91 0.000 83.070
3 /91 0.897 83.967
4 /91 0.000 83.967
5 /91 0.000 83.967
6 /91 0.810 84.777
7 /91 0.000 84.777
8 /91 0.000 84.777
9 /91 0.792 85.569
10 /91 0.000 85.569
11 /91 0.000 85.569
12 /91 4.872 90.441 66.401
1 /92 0.000 90.441 $0.0000 0.000 66.401
2 /92 0.000 90.441 $0.0000 0.000 66.401
3 /92 0.000 90.441 $0.0000 0.000 66.401
4 /92 0.782 91.223 $7.9681 0.574 66.975
5 /92 0.000 91.223 $0.0000 0.000 66.975
6 /92 0.000 91.223 $0.0000 0.000 66.975
7 /92 0.710 91.933 $7.3673 0.521 67.496
8 /92 0.000 91.933 $0.0000 0.000 67.496
9 /92 0.702 92.635 $7.4246 0.516 68.012
10 /92 0.000 92.635 $0.0000 0.000 68.012
11 /92 0.000 92.635 $0.0000 0.000 68.012
12 /92 1.259 93.894 $13.6976 0.924 68.936
1 /93 0.000 93.894 $0.0000 0.000 68.936
2 /93 0.000 93.894 $0.0000 0.000 68.936
3 /93 0.000 93.894 $0.0000 0.000 68.936
4 /93 0.691 94.585 $7.5830 0.508 69.444
5 /93 0.000 94.585 $0.0000 0.000 69.444
6 /93 0.000 94.585 $0.0000 0.000 69.444
7 /93 0.646 95.231 $6.9444 0.474 69.918
8 /93 0.000 95.231 $0.0000 0.000 69.918
9 /93 0.000 95.231 $0.0000 0.000 69.918
10 /93 0.638 95.869 $6.9918 0.468 70.386
11 /93 0.000 95.869 $0.0000 0.000 70.386
12 /93 1.286 97.155 $14.2208 0.944 71.330 62.933
1 /94 0.000 97.155 $0.0000 0.000 71.330 $0.0000 0.000 62.933 $0.0000
2 /94 0.000 97.155 $0.0000 0.000 71.330 $0.0000 0.000 62.933 $0.0000
3 /94 0.000 97.155 $0.0000 0.000 71.330 $0.0000 0.000 62.933 $0.0000
4 /94 1.167 98.322 $12.0655 0.857 72.187 $10.6451 0.756 63.689 $10.6451
5 /94 0.000 98.322 $0.0000 0.000 72.187 $0.0000 0.000 63.689 $0.0000
6 /94 0.000 98.322 $0.0000 0.000 72.187 $0.0000 0.000 63.689 $0.0000
7 /94 0.801 99.123 $8.2943 0.588 72.775 $7.3179 0.519 64.208 $7.3179
8 /94 0.000 99.123 $0.0000 0.000 72.775 $0.0000 0.000 64.208 $0.0000
9 /94 0.000 99.123 $0.0000 0.000 72.775 $0.0000 0.000 64.208 $0.0000
10 /94 0.800 99.923 $8.4419 0.587 73.362 $7.4481 0.518 64.726 $7.4481
11 /94 0.000 99.923 $0.0000 0.000 73.362 $0.0000 0.000 64.726 $0.0000
12 /94 1.190 101.113 $12.4503 0.874 74.236 $10.9846 0.771 65.497 $10.9846
- -----------------------------------------------------------------------------------------------------------------------------------
101.113 74.236 65.497
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YTD
Month # of Shares Shares
Ended Reinv. Outstanding
- --------------------------------------
<S> <C> <C>
7 /90
8 /90
9 /90
10 /90
11 /90
12 /90
1 /91
2 /91
3 /91
4 /91
5 /91
6 /91
7 /91
8 /91
9 /91
10 /91
11 /91
12 /91
1 /92
2 /92
3 /92
4 /92
5 /92
6 /92
7 /92
8 /92
9 /92
10 /92
11 /92
12 /92
1 /93
2 /93
3 /93
4 /93
5 /93
6 /93
7 /93
8 /93
9 /93
10 /93
11 /93
12 /93 62.933
1 /94 0.000 62.933
2 /94 0.000 62.933
3 /94 0.000 62.933
4 /94 0.756 63.689
5 /94 0.000 63.689
6 /94 0.000 63.689
7 /94 0.519 64.208
8 /94 0.000 64.208
9 /94 0.000 64.208
10 /94 0.518 64.726
11 /94 0.000 64.726
12 /94 0.771 65.497
- --------------------------------
65.497
- --------------------------------
</TABLE>
<PAGE>
SOVEREIGN INVESTORS CLASS B
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A N/A 0.00% N/A
5 Year Return: N/A N/A N/A 2.00% N/A
3 Year Return: N/A N/A N/A 4.00% $0.00 N/A
0.99 Year Return: -2.06% -7.01% $979.56 5.00% $48.98 $930.58
YTD Return: -2.04% -6.94% $979.56 5.00% $48.98 $930.58
- ---------------------------------------------------------------------------------------
</TABLE>
NON ANNUALIZED RETURN SINCE INCEPTION-EX CDSC -2.04%
NON ANNUALIZED RETURN SINCE INCEPTION-INC CDSC -6.94%
Constant Sales Charge: N/A
<TABLE>
<CAPTION>
10-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01/03/94 $15.02 $15.02 N/A
1 /94 $15.39 $15.39 N/A
2 /94 $15.06 $15.06 N/A
3 /94 $14.47 $14.47 N/A
4 /94 $14.42 $14.42 N/A 04/04/94 0.14305 $14.09 0.06025
5 /94 $14.50 $14.50 N/A
6 /94 $14.16 $14.16 N/A
7 /94 $14.48 $14.48 N/A 07/01/94 0.08890 $14.11
8 /94 $14.91 $14.91 N/A
9 /94 $14.49 $14.49 N/A
10 /94 $14.47 $14.47 N/A 10/03/94 0.08990 $14.37
11 /94 $14.12 $14.12 N/A
12 /94 $14.24 $14.24 N/A 12/23/94 0.14391 $14.25 0.05022
- ------------------------------------------------------------------------------------------------------------------------------
End of Period (update for formulas above):
14.240 0.000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
----------- ----------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/03/94 66.578 66.578
1 /94 $0.0000 0.000 66.578 $0.0000 0.000 66.578
2 /94 $0.0000 0.000 66.578 $0.0000 0.000 66.578
3 /94 $0.0000 0.000 66.578 $0.0000 0.000 66.578
4 /94 $9.5240 0.676 67.254 $9.5240 0.676 67.254
5 /94 $0.0000 0.000 67.254 $0.0000 0.000 67.254
6 /94 $0.0000 0.000 67.254 $0.0000 0.000 67.254
7 /94 $5.9789 0.424 67.678 $5.9789 0.424 67.678
8 /94 $0.0000 0.000 67.678 $0.0000 0.000 67.678
9 /94 $0.0000 0.000 67.678 $0.0000 0.000 67.678
10 /94 $6.0843 0.423 68.101 $6.0843 0.423 68.101
11 /94 $0.0000 0.000 68.101 $0.0000 0.000 68.101
12 /94 $9.8004 0.688 68.789 $9.8004 0.688 68.789
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period (update for formulas above):
0.000 68.789 68.789
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YTD
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ------------------------------------------------
<S> <C> <C> <C>
01/03/94 66.578
1 /94 $0.0000 0.000 66.578
2 /94 $0.0000 0.000 66.578
3 /94 $0.0000 0.000 66.578
4 /94 $9.5240 0.676 67.254
5 /94 $0.0000 0.000 67.254
6 /94 $0.0000 0.000 67.254
7 /94 $5.9789 0.424 67.678
8 /94 $0.0000 0.000 67.678
9 /94 $0.0000 0.000 67.678
10 /94 $6.0843 0.423 68.101
11 /94 $0.0000 0.000 68.101
12 /94 $9.8004 0.688 68.789
- ------------------------------------------------
End of Period (update for formulas above):
68.789
- ------------------------------------------------
</TABLE>
<PAGE>
JOHN HANCOCK SOVEREIGN INVESTORS FUND (CLASS C) - SEC TOTAL RETURN
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: N/A 10 Year Value: N/A
5 Year Return: N/A 5 Year Value: N/A
1.65 Year Return: 2.10% 3 Year Value: $1,034.81
1 Year Return: -1.57% 1 Year Value: $984.27
YTD Return: -1.57% YTD Value: $984.27
- --------------------------------------------------------------------------------
</TABLE>
NON ANNUALIZED RETURN SINCE INCEPTION 3.48%
Constant Sales Charge: 0.00%
<TABLE>
<CAPTION>
10-Year
-----------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
05/06/93 $14.79 $14.79 0.00%
5 /93 $14.81 $14.81 0.00%
6 /93 $14.83 $14.83 0.00%
7 /93 $14.66 $14.66 0.00% 07-02-93 $0.1092 $14.65
8 /93 $15.17 $15.17 0.00%
9 /93 $15.00 $15.00 0.00%
10 /93 $14.96 $14.96 0.00% 10-01-93 $0.1093 $14.94
11 /93 $15.04 $15.04 0.00%
12 /93 $15.11 $15.11 0.00% 12-23-93 $0.2114 $15.07 0.08944
1 /94 $15.40 $15.40 0.00%
2 /94 $15.07 $15.07 0.00%
3 /94 $14.50 $14.50 0.00%
4 /94 $14.44 $14.44 0.00% 04/04/94 0.17995 $14.09 0.06025
5 /94 $14.52 $14.52 0.00%
6 /94 $14.20 $14.20 0.00%
7 /94 $14.49 $14.49 0.00% 07/01/94 0.12820 $14.10
8 /94 $14.93 $14.93 0.00%
9 /94 $14.53 $14.53 0.00%
10 /94 $14.48 $14.48 0.00% 10/03/94 0.12940 $14.37
11 /94 $14.15 $14.15 0.00%
12 /94 $14.24 $14.24 0.00% 12/23/94 0.18296 $14.25 0.05022
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period (update for formulas above):
14.240 0.000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
----------- ----------- -----------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
05/06/93 67.613
5 /93 $0.0000 0.000 67.613
6 /93 $0.0000 0.000 67.613
7 /93 $7.3833 0.504 68.117
8 /93 $0.0000 0.000 68.117
9 /93 $0.0000 0.000 68.117
10 /93 $7.4452 0.498 68.615
11 /93 $0.0000 0.000 68.615
12 /93 $14.5080 0.963 69.578 66.181
1 /94 $0.0000 0.000 69.578 $0.0000 0.000 66.181
2 /94 $0.0000 0.000 69.578 $0.0000 0.000 66.181
3 /94 $0.0000 0.000 69.578 $0.0000 0.000 66.181
4 /94 $12.5206 0.889 70.467 $11.9093 0.845 67.026
5 /94 $0.0000 0.000 70.467 $0.0000 0.000 67.026
6 /94 $0.0000 0.000 70.467 $0.0000 0.000 67.026
7 /94 $9.0339 0.641 71.108 $8.5927 0.609 67.635
8 /94 $0.0000 0.000 71.108 $0.0000 0.000 67.635
9 /94 $0.0000 0.000 71.108 $0.0000 0.000 67.635
10 /94 $9.2014 0.640 71.748 $8.7520 0.609 68.244
11 /94 $0.0000 0.000 71.748 $0.0000 0.000 68.244
12 /94 $13.1270 0.921 72.669 $12.4859 0.876 69.120
- -----------------------------------------------------------------------------------------------------------------------------
0.000 72.669 69.120
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YTD
-----------
Month Dividend # of Shares Shares
Ended Received Reinv. Outstanding
- ----------------------------------------------------
<S> <C> <C> <C>
05/06/93
5 /93
6 /93
7 /93
8 /93
9 /93
10 /93
11 /93
12 /93 66.181
1 /94 $0.0000 0.000 66.181
2 /94 $0.0000 0.000 66.181
3 /94 $0.0000 0.000 66.181
4 /94 $11.9093 0.845 67.026
5 /94 $0.0000 0.000 67.026
6 /94 $0.0000 0.000 67.026
7 /94 $8.5927 0.609 67.635
8 /94 $0.0000 0.000 67.635
9 /94 $0.0000 0.000 67.635
10 /94 $8.7520 0.609 68.244
11 /94 $0.0000 0.000 68.244
12 /94 $12.4859 0.876 69.120
- ----------------------------------------------------
End of Period (update for formulas above):
69.120
- ----------------------------------------------------
</TABLE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned Trustee of John Hancock
Sovereign Investors Fund, Inc. does hereby constitute and appoint EDWARD J.
BOUDREAU, JR., THOMAS H. DROHAN, AND JAMES B. LITTLE and each of them
individually his true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys and agents
may deem necessary or advisable
(i) to enable the Trust to comply with the Securities Act of 1933, as
amended, and any rules regulations, orders or other requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under such Securities Act of 1933 of shares of beneficial
interest of the Trust to be offered by the Trust, and
(ii) in connection with the registration of the Trust under the Investment
Company Act of 1940, as amended,
including specifically, but without limitation of the foregoing, power and
authority to sign his name in his behalf as Director as indicated below,
opposite his signature hereto, to any amendment or supplement (including
post-effective amendments) to the registration statement or statements filed
with the Securities and Exchange Commission under such Securities Act of 1933
and such Investment Company Act of 1940, and to execute any instruments or
documents filed or to be filed as a part of or in connection with such
registration statement or statements; and does hereby ratify and confirm all
that said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, we have hereunto set our hands on the date
indicated below.
SIGNATURE TITLE DATE AS OF:
/s/Edward J. Boudreau, Jr. Chairman, Director December 20, 1991
Edward J. Boudreau, Jr. and Principal
Executive Officer
/s/Thomas W. L. Cameron Director December 20, 1991
Thomas W. L. Cameron
/s/James F. Carlin Director December 8, 1992
James F. Carlin
/s/Charles F. Fretz Director December 20, 1991
Charles F. Fretz
/s/Harold R. Hiser, Jr. Director March 2, 1993
Harold R. Hiser, Jr.
/s/Charles L. Ladner Director December 20, 1991
Charles L. Ladner
/s/Patricia P. McCarter Director December 20, 1991
Patricia P. McCarter
/s/Steven R. Pruchansky Director December 20, 1991
Stevem R/ Pruchansky
/s/Norman H. Smith Director December 20, 1991
Norman H. Smith
/s/John P. Toolan Director December 8, 1992
John P. Toolan
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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