John Hancock Funds
Sovereign
Investors
Fund
SEMI-ANNUAL REPORT
June 30, 1996
DIRECTORS
Edward J. Boudreau, Jr.
Thomas W.L. Cameron
James F. Carlin*
William H. Cunningham*
Charles F. Fretz*
Harold R. Hiser, Jr.*
Anne C. Hodsdon
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
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
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Since late 1994, prospectus simplification has been a major topic in
the mutual fund industry. At that time, Securities and Exchange
Commission Chairman Arthur Levitt called on fund companies to make their
prospectuses more user-friendly. He noted that prospectuses are
often overloaded with technical detail and are hard for most investors
to understand. Many industry observers agreed, and rightly so.
So it is my pleasure to let you know that John Hancock Funds has
introduced the first in a series of new prospectuses. Covering the John
Hancock growth funds, the new prospectus made its debut on July 1 after
being under development for a year. It is simplified, using shorter,
clearer language with a streamlined design, and consolidated,
incorporating several funds with similar investment objectives into one
document. We are excited about our new prospectus because we believe it
is a bold but sensible step forward. And while it is easier to read, it
still complies with all federal and state guidelines.
We have taken the initiative to create a prospectus that dramatically
departs from the norm. Among its most innovative features is a two-page
spread highlighting each fund's goals and investment strategy, the types
of securities it buys, its portfolio management and risk factors, all in
plainer language. Fund expenses and financial highlights are now found
here, too, as is a new bar chart that shows year-to-year volatility for
each fund. Other features include a better presentation of fund
services, a new glossary of investment risks and a discussion about how
funds are organized, including a diagram showing the connection of the
various players that provide services to your Hancock fund(s).
In the coming months, we will introduce similar prospectuses for our
growth and income, income, tax-free income, international/global and
money market funds. We believe we have made a significant advancement in
the drive toward better mutual fund prospectuses. We hope you will agree
because in the end, we did it for you, our shareholders.
Sincerely,
/S/EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By John F. Snyder III and Barry Evans, Co-Portfolio Managers
John Hancock
Sovereign Investors Fund
Stock market slows, but produces strong
gains for first half of '96
Although the stock market continued to climb during the first half of
1996, the tide turned more turbulent. The year began with optimism that
economic growth would be slow and inflation low. But stronger-than-
expected employment numbers starting in March suggested the economy was
growing faster than hoped and that inflation could be a problem.
Uncertainty about the economy's direction lead to mixed results in the
stock market with no one sector taking a sustained lead. Nevertheless,
the Standard & Poor's 500-Stock Index climbed this wall of worry for a
10.10% return in the first six months of 1996, about what it has
averaged annually over the long term.
John Hancock Sovereign Investors Fund also had a strong first half,
while taking on less risk than the market. For the six months ended June
30, 1996, the Fund's Class A, Class B, and Class C shares had total
returns of 8.98%, 8.54%, and 9.12%, respectively, at net asset value. By
comparison, the average growth and income fund returned 9.24%, according
to Lipper Analytical Services.1 Please see pages six and seven for
longer-term Fund performance information.
Winners and losers
Among the Fund's top performers were some of its largest investments.
General Electric, our biggest investment, returned over 20% in the first
half as the company's earnings grew faster than expected. The stock did
well because of GE's global business, excess cash and terrific
management. Johnson & Johnson also beat the market nicely, thanks to its
broad product line, geographic reach and unique acquisition program. In
addition, PepsiCo turned in strong results as it continued to dominate
the snack food market and grow sales worldwide.
Turbulence
has returned
to the stock
market so far
this year.
A 2 1/4" x 3 3/4" photo of the Sovereign Investors Fund management team
at bottom right. Caption reads: "The Sovereign Investors management team
(l-r): Jere Estes, John Snyder, Anne McDermott."
A chart with the heading "Top Five Common Stock Holdings"
at the top of the left hand column. The chart lists five
holdings: 1) General Electric 5% 2) Emerson Electric 3% 3)
Johnson & Johnson 2.9%; 4) Procter & Gamble 2.6% 5) PepsiCo
2.4%. Footnote below reads: "As a percentage of net assets on
June 30, 1996."
"Among the
Fund's top
performers
were some
of its largest
investments."
Other stocks that helped performance included American Home Products, a
pharmaceuticals company with some interesting new products; Pep Boys, an
auto servicer and parts retailer that's gaining market share; and Bemis,
a flexible-packaging manufacturer that benefited from good acquisitions,
a global presence and lower raw materials prices.
Of course, we also had stocks whose total returns fell below our
expectations. AMP was one. The largest maker of electrical connectors,
AMP does more than 50% of its business overseas. Weak economies in
Europe and Japan, a strong dollar which made foreign-denominated
earnings worth less when converted back into dollars and the company's
investment in new plants worldwide temporarily hurt the bottom-line.
Automatic Data Processing (ADP), which is in the payroll processing and
brokerage clearing businesses, was another short-term disappointment.
After 138 consecutive quarters of double digit earnings growth, the
company announced that it would use some of its cash to make
acquisitions. The possibility that earnings might not grow by double
digits in a given quarter hurt the stock's price, as did a recent
acquisition in France. But we viewed the company's announcement as a
prudent use of cash and boosted our stake.
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is 'Investment"; the header for the right column is
"Recent performance...and what's behind the numbers." The first listing
is "General Electric" followed by an up arrow and the phrase "Global
presence, excess cash, good management attract investors." The second
listing is "Pep Boys" followed by an up arrow and the phrase "Pent-up
demand, expansion, and unique expertise boost bottom-line." The third
listing is "AMP" followed by a down arrow and the phrase "Hurt by weak
economies overseas, strong dollar and capital expenditures." Footnote
below reads: "See "Schedule of Investments." Investment holdings are
subject to change."
What we're looking for
All of the Fund's stocks are medium to large companies with consistent,
predictable and visible earnings growth. We think this is especially
important now because of increasing uncertainty in two areas: the
economy and corporate earnings. If either slows, investors will tend to
favor stocks with reliable earnings growth.
But growing earnings isn't easy in today's competitive marketplace. No
longer can companies rely solely on price increases. Going forward,
companies will have to grow earnings in other ways. First, they can grow
by restructuring. Many corporations are already looking at their
business with a microscope, and fixing or spinning off divisions that
are not meeting their targets. Second, they can grow by gaining market
share. In any sector, there are the "haves" and the "have-nots." The
"haves" are the companies that already have market share and can gain
more -- usually the number one and two players in their industries.
Third, corporations can grow by going global. Companies that can reach
developing markets outside the United States will have the greatest
growth potential.
So as opportunities arose over the first half of the year, we added to
our stakes in dominant companies with the potential to grow market
share. A good example is Emerson Electric, a leading manufacturer of
electronic equipment whose sales growth is accelerating because of their
international operations. We also reduced or eliminated stocks of
companies where there were questions about the predictability of their
earnings growth.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is a footnote reading: "For the six months ended June
30, 1996." The chart is scaled in increments of 5% from top to bottom,
with 10% at the top and 0% at the bottom. Within the chart there are
four solid bars. The first represents the 8.98% total return for John
Hancock Sovereign Investors Fund: Class A. The second represents the
8.54% total return for John Hancock Sovereign Investors Fund: Class B.
The third represents the 9.12% total return for John Hancock Sovereign
Investors Fund: Class C. The fourth represents the 9.24% total return
for the average growth and income fund. Footnote below reads: "The total
returns for John Hancock Sovereign Investors Fund are at net asset value
with all distributions reinvested. The average growth and income fund is
tracked by Lipper Analytical Services. See following page for historical
performance information."
Looking ahead
We expect the economy to slow down again some time in the second half.
The recent surge in refinancing activity, large tax refunds, and
declining mortgage rates -- all of which put money in consumers' pockets
- -- are coming to an end. Plus, consumer debt is at record highs. Going
forward, it will be difficult for the consumer to maintain the same
level of spending. Once consumer spending slows, so should the economy.
A slower economy would lower corporate earnings growth. Over the last
three years, earnings of companies in the S&P 500 have grown at a 20%
annual rate. We expect them to grow more around the market's average of
8% in 1996 and 1997. Companies that can grow double digits will be the
exception, not the rule.
Nevertheless, we remain optimistic. Steady inflows from individual and
institutional investors continue to drive the stock market. At the same
time, many companies are buying back their stock, cutting down on
supply. As long as inflation remains low -- 3% or less -- financial
assets should continue to do well. Investors will just have to be more
selective.
"We expect the economy to slow down again some time in the second half."
A history of quality
In managing the Fund, which celebrated its 60th anniversary on May 1,
we've always been selective. We have historically followed a risk-averse
course, focusing exclusively on high-quality growth stocks with a
history of raising their dividends every year for at least 10 years.
That's because these companies tend to have very predictable, increasing
earnings. We expect the Fund's stocks to grow earnings at about 12-13%
in 1996 and in 1997 -- a rate better than the market's. In addition, the
Fund's valuation -- the price we're paying for earnings power -- is
lower than the market's. As growth became more scarce, valuations
usually rise for companies with steady earnings growth. All these
factors put the Fund in an attractive position.
- ------------------------------------------------------------------------
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. Of course, the
managers' views are subject to change as market and other conditions
warrant.
1 Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Sovereign Investors
Fund. Total return is a performance measure that equals the sum of all
income and capital gain distributions, assuming reinvestment of these
distributions and the change in the price of the Fund's net asset value
per share. Performance figures include the maximum applicable sales charge
of 5% for Class A shares. The effect of the maximum contingent deferred
sales charge for Class B shares (maximum 5% and declining to 0% over six
years) is included in Class B performance. Performance is affected by a
12b-1 plan, which commenced on July 1, 1993 and January 3, 1994 for Class A
and Class B shares, respectively. Remember that all figures represent
past performance and are no guarantee of how the Fund will perform in
the future. Also, keep in mind that the total return and share price of
the Fund's investments will fluctuate. As a result, your Fund's shares
may be worth more or less than their original cost, depending on when
you sell them.
CUMULATIVE TOTAL RETURNS
For the period ended June 30, 1996
One Five Most Recent
Year Years Ten Years
-------- ------- -----------
John Hancock Sovereign
Investors Fund:
Class A 16.18% 72.92% 168.97%
John Hancock Sovereign
Investors Fund:
Class B 16.29% 33.26%(1) N/A
John Hancock Sovereign
Investors Fund:
Class C 22.69% 46.43%(2) N/A
AVERAGE ANNUAL TOTAL RETURNS
One Five Most Recent
Year Years Ten Years
-------- ------- -----------
John Hancock Sovereign
Investors Fund:
Class A 16.18% 11.58% 10.40%
John Hancock Sovereign
Investors Fund:
Class B 16.29% 12.22%(1) N/A
John Hancock Sovereign
Investors Fund:
Class C 22.69% 12.87%(2) N/A
YIELDS
As of June 30, 1996
SEC 30-Day
Yield
------------
John Hancock Sovereign
Investors Fund:
Class A 1.76%
John Hancock Sovereign
Investors Fund:
Class B 1.06%
John Hancock Sovereign
Investors Fund:
Class C 2.22%
Notes to Performance
(1) Class B shares started on January 3, 1994.
(2) Class C shares started on May 7, 1993.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock Sovereign Investors Fund would be worth on June 30, 1996,
assuming you have been invested and have reinvested all distributions
for the entire time periods represented in the graphs. For comparison,
we've shown the same $10,000 investment in the Standard & Poor's 500
Stock Index -- an unmanaged index that includes 500 widely traded common
stocks and is used often as a measure of stock market performance.
Sovereign Investors Fund
Class A shares
Line chart with the heading Sovereign Investors Fund: Class A,
representing the growth of a hypothetical $10,000 investment over the
most recent ten years. Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock
Index and is equal to $43,986 as of June 30, 1996. The second line
represents the value of the hypothetical $10,000 investment made in the
Sovereign Investors Fund on December 31, 1985, before sales charge, and
is equal to $35,894 as of June 30, 1996. The third line represents the
Sovereign Investors Fund after sales charge and is equal to $34,086 as
of June 30, 1996.
Sovereign Investors Fund
Class B shares
Line chart with the heading Sovereign Investors Fund: Class B,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock
Index and is equal to $15,340 as of June 30, 1996. The second line
represents the value of the hypothetical $10,000 investment made in the
Sovereign Investors Fund on January 3, 1994, before contingent deferred
sales charge, and is equal to $13,626 as of June 30, 1996. The third
line represents the Sovereign Investors Fund after contingent deferred
sales charge and is equal to $13,326 as of June 30, 1996.
Sovereign Investors Fund
Class C shares
Line chart with the heading Sovereign Investors Fund: Class C,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are two lines.
The first line represents the value of the Standard & Poor's 500 Stock
Index and is equal to $16,577 as of June 30, 1996. The second line
represents the hypothetical $10,000 investment made in the Sovereign
Investors Fund on May 7, 1993, and is equal to $14,643 as of June 30,
1996.
<TABLE>
<CAPTION>
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 June 30, 1996. You'll also find the net asset value and the
maximum offering price per share as of that date.
Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common and preferred stocks
(cost -- $1,050,776,110) $1,432,733,419
United States government and agencies obligations
(cost -- $127,544,086) 126,378,567
Corporate bonds (cost -- $64,598,121) 64,464,708
Joint repurchase agreement (cost -- $113,346,000) 113,346,000
Short-term notes (cost -- $4,887,926) 4,887,926
Corporate savings account 365,449
--------------
1,742,176,069
Receivable for shares sold 1,595,400
Receivable for investments sold 2,168,298
Interest receivable 3,781,085
Dividends receivable 3,364,567
Other assets 86,347
--------------
Total Assets 1,753,171,766
- --------------------------------------------------------------------------
Liabilities:
Payable for shares repurchased 684,081
Payable for investments purchased 23,482,394
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 2,696,626
Accounts payable and accrued expenses 83,819
--------------
Total Liabilities 26,946,920
- --------------------------------------------------------------------------
Net Assets:
Capital paid-in 1,283,602,147
Accumulated net realized gain on investments 61,871,178
Net unrealized appreciation of investments 380,665,670
Undistributed net investment income 85,851
--------------
Net Assets $1,726,224,846
==========================================================================
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 -- $1,364,566,409 / 70,717,040 $19.30
==========================================================================
Class B -- $337,938,297 / 17,523,677 $19.28
==========================================================================
Class C -- $23,720,140 / 1,229,369 $19.29
==========================================================================
Maximum Offering Price *
Class - A ($19.30 x 105.26%) $20.32
==========================================================================
* 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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows
net gains (losses) for the period stated.
Statement of Operations
Six months ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends $15,704,440
Interest 8,400,863
------------
24,105,303
------------
Expenses:
Investment management fee -- Note B 4,609,120
Distribution/service fee -- Note B
Class A 1,955,704
Class B 1,468,201
Transfer agent fee Note B 1,382,180
Financial services fee - Note B 151,830
Custodian fee 120,385
Trustees' fees 70,215
State taxes 49,578
Registration and filing fees 48,629
Miscellaneous 42,512
Printing 39,018
Auditing fee 20,188
Legal fees 17,174
------------
Total Expenses 9,974,734
- --------------------------------------------------------------------------
Net Investment Income 14,130,569
- --------------------------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 50,180,032
Change in net unrealized appreciation/depreciation
of investments 74,962,628
------------
Net Realized and Unrealized Gain
on Investments 125,142,660
- --------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $139,273,229
==========================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996
1995 (UNAUDITED)
-------------- --------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $32,531,034 $14,130,569
Net realized gain on investments sold 20,230,031 50,180,032
Change in net unrealized appreciation/
depreciation of investments 299,815,354 74,962,628
-------------- --------------
Net Increase in Net Assets Resulting
from Operations 352,576,419 139,273,229
-------------- --------------
Distributions to Shareholders:
Dividends from net investment income
Class A -- ($0.3959 and $0.1719
per share, respectively) (28,762,733) (12,088,555)
Class B -- ($0.2764 and $0.1045
per share, respectively) (3,339,275) (1,733,158)
Class C -- ($0.4637 and $0.2066
per share, respectively) (477,188) (246,468)
Distributions from net realized gain
on investments sold
Class A -- ($0.0837 and none per
share, respectively) (5,956,805) --
Class B -- ($0.0837 and none per
share, respectively) (1,191,400) --
Class C -- ($0.0837 and none per
share, respectively) (92,650) --
-------------- --------------
Total Distributions to Shareholders (39,820,051) (14,068,181)
-------------- --------------
From Fund Share Transactions - Net* 11,863,118 42,971,798
-------------- --------------
Beginning of period 1,233,428,514 1,558,048,000
-------------- --------------
End of period (including undistributed
net investment income of $23,463 and $85,851,
and respectively) $1,558,048,000 $1,726,224,846
============== ==============
* Analysis of Fund Share Transactions:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996
1995 (UNAUDITED)
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ------------- ------------ ----------- ------------
Shares sold 13,351,175 $214,650,741 9,268,324 $173,525,324
Shares issued to shareholders in reinvestment
of distributions 1,912,922 31,795,613 580,294 11,035,019
----------- ----------- ----------- -----------
15,264,097 246,446,354 9,848,618 184,560,343
Less shares repurchased (20,197,037) (323,191,321) (10,784,498) (201,549,494)
----------- ----------- ----------- -----------
Net decrease (4,932,940) ($76,744,967) (935,880) ($16,989,151)
=========== =========== =========== ===========
CLASS B
Shares sold 6,957,758 $112,134,961 4,311,922 $80,685,136
Shares issued to shareholders in reinvestment
of distributions 251,051 4,209,585 83,656 1,590,877
----------- ----------- ----------- -----------
7,208,809 116,344,546 4,395,578 82,276,013
Less shares repurchased (1,772,868) (28,714,271) (1,304,580) (24,432,293)
----------- ----------- ----------- -----------
Net increase 5,435,941 $87,630,275 3,090,998 $57,843,720
=========== =========== =========== ===========
CLASS C
Shares sold 325,074 $5,184,377 147,535 $2,753,149
Shares issued to shareholders in
reinvestment of distributions 34,194 569,771 12,962 246,467
----------- ----------- ----------- -----------
359,268 5,754,148 160,497 2,999,616
Less shares repurchased (305,670) (4,776,338) (47,425) (882,387)
----------- ----------- ----------- -----------
Net increase 53,598 $977,810 113,072 $2,117,229
=========== =========== =========== ===========
The Statement of Changes in Net Assets shows how the value of
the Fund's net assets has changed since the end of the previous
period. The difference reflects earnings less expenses, any investment
gains and losses, distributions paid to shareholders, and
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
the period indicated, investment returns, key ratios and supplemental data are listed as follows:
SIX
YEAR ENDED DECEMBER 31, MONTHS ENDED
------------------------------------------------------- JUNE 30, 1996
1991(1,2) 1992(1) 1993 1994 1995 (UNAUDITED)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $11.94 $14.31 $14.78 $15.10 $14.24 $17.87
-------- -------- -------- -------- -------- --------
Net Investment Income 0.54 0.47 0.44 0.46 0.40 0.17
Net Realized and Unrealized Gain (Loss) on Investments 3.03 0.54 0.39 (0.75) 3.71 1.43
-------- -------- -------- -------- -------- --------
Total from Investment Operations 3.57 1.01 0.83 (0.29) 4.11 1.60
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.53) (0.45) (0.42) (0.46) (0.40) (0.17)
Distributions from Net Realized Gain on Investments Sold (0.67) (0.09) (0.09) (0.11) (0.08) --
-------- -------- -------- -------- -------- --------
Total Distributions (1.20) (0.54) (0.51) (0.57) (0.48) (0.17)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $14.31 $14.78 $15.10 $14.24 $17.87 $19.30
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (3) 30.48% 7.23% 5.71% (1.85%) 29.15% 8.98%(7)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $194,055 $872,932 $1,258,575
Ratio of Expenses to Average Net Assets 1.18% 1.13% 1.10% 1.16% 1.14% 1.10%(8)
Ratio of Net Investment Income to Average Net Assets 4.01% 3.32% 2.94% 3.13% 2.45% 1.87%(8)
Portfolio Turnover Rate 67% 30% 46% 45% 46% 20%
Average Brokerage Commission Rate (4) N/A N/A N/A N/A N/A $0.0068
SIX
MONTHS ENDED
JUNE 30, 1996
1994(5) 1995 (UNAUDITED)
-------- -------- --------
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.02 $14.24 $17.86
-------- -------- --------
Net Investment Income 0.38(6) 0.27(6) 0.10(6)
Net Realized and Unrealized Gain (Loss) on Investments (0.69) 3.71 1.42
-------- -------- --------
Total from Investment Operations (0.31) 3.98 1.52
-------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.36) (0.28) (0.10)
Distributions from Net Realized Gain on Investments Sold (0.11) (0.08) --
-------- -------- --------
Total Distributions (0.47) (0.36) (0.10)
-------- -------- --------
Net Asset Value, End of Period $14.24 $17.86 $19.28
======== ======== ========
Total Investment Return at Net Asset Value (3) (2.04%)(7) 28.16% 8.54%(7)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $128,069 $257,781 $337,938
Ratio of Expenses to Average Net Assets 1.86%(8) 1.90% 1.86%(8)
Ratio of Net Investment Income to Average Net Assets 2.57%(8) 1.65% 1.14%(8)
Portfolio Turnover Rate 45% 46% 20%
Average Brokerage Commission Rate (4) N/A N/A $0.0068
FOR THE PERIOD
MAY 7, 1993 SIX
(COMMENCEMENT MONTHS ENDED
OPERATIONS) TO YEAR END DECEMBER 31, JUNE 30,
DECEMBER 31, -------------------- 1996
1993 1994 1995 (UNAUDITED)
-------- -------- -------- --------
CLASS C (9)
Per Share Operating Performance
Net Asset Value, Beginning of Period $14.79 $15.11 $14.24 $17.87
-------- -------- -------- --------
Net Investment Income 0.27(6) 0.52 0.46(6) 0.21
Net Realized and Unrealized (Loss) on Investments 0.48 (0.77) 3.71 1.42
-------- -------- -------- --------
Total from Investment Operations 0.75 (0.25) 4.17 1.63
-------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.34) (0.51) (0.46) (0.21)
Distributions from Net Realized Gain on Investments Sold (0.09) (0.11) (0.08) --
-------- -------- -------- --------
Total Distributions (0.43) (0.62) (0.54) (0.21)
-------- -------- -------- --------
Net Asset Value, End of Period $15.11 $14.24 $17.87 $19.29
======== ======== ======== ========
Total Investment Return at Net Asset Value (3) 5.13(7) (1.57) 29.68 9.12(7)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $10,189 $15,128 $19,946 $23,720
Ratio of Expenses to Average Net Assets 0.88%(8) 0.81% 0.74% 0.74%(8)
Ratio of Net Investment Income to Average Net Assets 3.17%(8) 3.53% 2.84% 2.25%(8)
Portfolio Turnover Rate 46% 45% 46% 20%
Average Broker Commission Rate (4) N/A N/A N/A $0.0688
(1) These periods are covered by the report of other independent auditors (not included herein).
(2) On October 23, 1991, John Hancock Advisers, Inc. became the investment adviser of the fund.
(3) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(4) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
(5) Class B shares commenced operations on January 3, 1994.
(6) Based on the average of the shares outstanding at the end of each month.
(7) Not annualized.
(8) Annualized.
(9) Class C shares commenced operations on May 3, 1993.
The Financial Highlights summarizes the impact of the following factors on a
single share for the period indicated: net investment income, gains (losses),
dividends and total investment return of the Fund. It shows how the Fund's net
asset value for a share has changed since the end of the previous period.
Additionally, important relationships between some items presented in the
financial statements are expressed in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned by
Sovereign Investors Fund on June 30, 1996. 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.
Schedule of Investments
June 30, 1996 (Unaudited)
Per share earnings and dividends and their compound growth rates are
shown for the most recently reported ten year periods on common stocks.
NUMBER GROWTH MARKET
OF SHARES RATE VALUE
- --------------------------------------------------------------------------------------------- --------- -------------
<S> <C> <C> <C>
COMMON STOCKS (80.53%)
Advertising (1.77%)
650,000 Interpublic Group, Inc. @ 46 7/8 $30,468,750
-------------
One of the largest advertising agencies
in the world
Earnings P/S $ .75, .91, 1.05, 1.19, 1.17, 1.32, 1.39, 1.69, 1.89, 1.69 9.5%
Dividends P/S $ .20, .22, .26, .32, .37, .41, .45, .49, .55, .61 13.2%
Price/Earnings Ratio 27.6
Aerospace (1.16%)
350,000 Rockwell International Corp. @ 57 1/4 20,037,500
-------------
Leading producer of aerospace, automotive
and electronics products
Earnings P/S $1.98, 2.23, 3.01, 2.84, 2.53, 2.30, 2.36, 2.72, 3.02, 3.64 7.0%
Dividends P/S $.59, .66, .72, .77, .82, .88, .92, .98, 1.04, 1.10 7.2%
Price/Earnings Ratio 14.9
Banks (5.65%)
375,000 Banc One Corp. @ 34 12,750,000
Ohio-based bank holding company offering
depository and lending services to
individuals and commercial customers
Earnings P/S $ 1.19, 1.56, 1.66, 1.83, 1.64, 1.75, 2.27, 2.70, 2.16, 3.00 10.8%
Dividends P/S $ .41, .45, .50, .57, .63, .70, .81, .98, 1.13, 1.24 13.1%
Price/Earnings Ratio 11.3
250,000 Corestates Financial Corp. @ 38 1/2 9,625,000
Operates 334 full service offices located in
PA, NJ and DE
Earnings P/S $ 1.96, 2.25, 1.02, .78, .95, 2.05, 2.31, 1.73, 2.34, 3.80 7.6%
Dividends P/S $ .64, .70, .77, .87, .96, .97, 1.02, 1.14, 1.24, 1.44 9.4%
Price/Earnings Ratio 10.0
600,000 First Tennessee National Corp. @ 30 5/8 18,375,000
Tennessee-based bank holding company
Earnings P/S $ .78, 1.10, .65, .98, 1.23, 1.50, 1.62, 1.77, 2.08, 2.48 13.7%
Dividends P/S $ .38, .40, .43, .49, .54, .57, .63, .75, .87, .97 11.0%
Price/Earnings Ratio 12.6
400,000 KeyCorp. @ 38 3/4 15,500,000
Multi-regional bank holding company
Earnings P/S $ 1.88, 2.10, 2.32, 2.32, 2.45, 2.52, 2.69, 2.97, 3.31, 3.47 7.1%
Dividends P/S $.48, .60, .68, .80, .88, .92, .98, 1.12, 1.28, 1.44 13.0%
Price/Earnings Ratio 10.9
500,000 NationsBank Corp. @ 82 5/8 41,312,500
Largest superregional bank in the Southeast
Earnings P/S $ 2.01, 2.87, 4.44, 2.61, .76, 1.39, 4.42, 5.42, 6.19, 7.23 15.3%
Dividends P/S $ .78, .86, .94, 1.10, 1.42, 1.48, 1.51, 1.64, 1.88, 2.08 11.5%
Price/Earnings Ratio 11.2
-------------
97,562,500
-------------
Chemicals (4.75%)
300,000 Air Products & Chemicals, Inc. @ 57 3/4 17,325,000
Producer of industrial and specialty
chemicals and gases
Earnings P/S $ .04, 1.95, 2.02, 2.08, 2.21, 2.32, 2.50, 1.26, 2.84, 3.74 65.6%
Dividends P/S $ .39, .45, .55, .63, .69, .75, .83, .89, .95, 1.01 11.2%
Price/Earnings Ratio 15.3
325,000 E.I. du Pont de Nemours and Co. @ 79 1/8 25,715,625
Nation's largest chemical manufacturer
Earnings P/S $ 2.46, 3.03, 3.53, 3.40, 3.38, 1.84, 1.52, 1.04, 4.46, 5.78 10.0%
Dividends P/S $ 1.02, 1.10, 1.23, 1.45, 1.62, 1.68, 1.74, 1.76, 1.82, 2.03 8.0%
Price/Earnings Ratio 13.7
175,000 PPG Inds., Inc. @ 48 3/4 8,531,250
Manufacturer of specialty chemicals,
coatings and resins
Earnings P/S $ 1.60, 2.13, 2.09, 2.22, 1.74, 1.22, 1.66, 1.45, 2.92, 3.64 9.6%
Dividends P/S $ .47, .56, .64, .74, .82, .86, .94, 1.04, 1.12, 1.18 10.8%
Price/Earnings Ratio 13.0
556,250 RPM, Inc. @ 15 5/8 8,691,406
Manufacturer of specialty chemicals and
coatings to waterproof and rustproof
structures
Earnings P/S $ .34, .38, .45, .52, .40, .50, .44, .73, .82, .89 11.3%
Dividends P/S $.18, .21, .25, .27, .30, .34, .37, .39, .42, .46 11.0%
Price/Earnings Ratio 17.4
405,000 Sigma - Aldrich Corp. @ 53 1/2 21,667,500
Manufacturer of biochemical and organic
products used for research and diagnostics
Earnings P/S $ .85, 1.15, 1.30, 1.44, 1.17, 1.67, 1.98, 2.21, 2.27, 2.72 13.8%
Dividends P/S $ .13, .15, .17, .19, .20, .23, .26, .30, .34, .38 12.7%
Price/Earnings Ratio 19.8
-------------
81,930,781
-------------
Commercial Services (2.29%)
1,155,800 Sysco Corp. @ 34 1/4 39,586,150
-------------
Largest distributor of food service products
Earnings P/S $ .35, .45, .60, .73, .81, .90, 1.00, 1.16, 1.33, 1.48 17.4%
Dividends P/S $ .06, .07, .08, .09, .10, .14, .22, .28, .36, .44 24.8%
Price/Earnings Ratio 20.3
Computer & Office Equipment (2.07%)
790,000 Alco Standard Corp @ 45 1/4 35,747,500
-------------
Distributor of office and paper products
Earnings P/S $ .84, 1.15, 1.96, .91, .89, 1.04, 1.18, .05, .74, 2.01 10.2%
Dividends P/S $ .32, .33, .35, .39, .43, .45, .47, .49, .51, .53 6.0%
Price/Earnings Ratio 22.9
Consumer Cyclicals & Services (1.52%)
350,000 Albertson's,Inc. @ 41 3/8 14,481,250
Idaho-based operator of supermarkets and
combination food-drug stores
Earnings P/S $ .47, .61, .74, .76, .91, .88, 1.21, 1.39, 1.70, 1.90 16.8%
Dividends P/S $ .10, .12, .14, .19, .23, .27, .31, .35, .42, .50 19.6%
Price/Earnings Ratio 21.9
250,000 McDonald's Corp @ 46 3/4 11,687,500
Dominant force in the fast food industry
Earnings P/S $ .73, .86, .98, 1.10, 1.12, 1.21, 1.33, 1.50, 1.74, 2.01 11.9%
Dividends P/S $ .11, .12, .14, .15, .17, .18, .20, .21, .23, .26 10.0%
Price/Earnings Ratio 22.8
-------------
26,168,750
-------------
Consumer Durables (1.75%)
60,100 Illinois Tool Works, Inc. @ 67 5/8 4,064,263
Manufactures construction fasteners and
packaging systems
Earnings P/S $ 1.03, 1.33, 1.53, 1.68, 1.67, 1.61, 1.74, 1.91, 2.66, 3.47 14.5%
Dividends P/S $ .18, .20, .22, .27, .33, .40, .45, .49, .54, .62 14.7%
Price/Earnings Ratio 19.3
700,000 Leggett & Platt, Inc. @ 27 3/4 19,425,000
Produces intermediate products for the
home furnishings industry
Earnings P/S $ .555, .545, .645, .42, .35, .64, .87, 1.12, 1.47, 1.63 12.7%
Dividends P/S $ .10, .14, .16, .185, .21, .215, .23, .27, .31, .38 9.4%
Price/Earnings Ratio 17.2
320,000 Worthington Industries, Inc. @ 20 7/8 6,680,000
Manufactures metal and plastic products
Earnings P/S $ .45, .61, .70, .61, .50, .63, .74, .94, 1.29, 1.01 9.4%
Dividends P/S $ .14, .17, .19, .23, .26, .28, .32, .34, .39, .43 13.3%
Price/Earnings Ratio 19.7
-------------
30,169,263
-------------
Consumer Non-Durables (10.18%)
430,000 CPC International Inc. @ 72 30,960,000
Major international food company
Earnings P/S $ 2.17, 1.84, 2.11, 2.42, 2.45, 2.63, 2.81, 3.00, 2.35, 3.52 5.5%
Dividends P/S $ .57, .65, .76, .88, 1.00, 1.10, 1.20, 1.28, 1.38, 1.48 11.2%
Price/Earnings Ratio 20.0
300,000 H.J. Heinz Co. @ 30 3/8 9,112,500
Leading food manufacturer and distributor
Earnings P/S $ 1.24, 1.46, 1.67, 1.26, 1.42, 1.60, 1.36, 1.57, 1.59, 1.76 4.0%
Dividends P/S $ .32, .39, .45, .52, .60, .68, .76, .84, .92, 1.01 13.6%
Price/Earnings Ratio 18.2
300,000 Kimberly-Clark Corp. @ 77 1/4 23,175,000
Leading producer of consumer and
personal care products
Earnings P/S $ 1.87, 2.36, 2.63, 2.70, 2.72, 3.25, 2.11, 3.25, 3.19, .52 NMF
Dividends P/S $ .60, .70, .78, 1.26, 1.32, 1.48, 1.59, 1.67, 1.71, 1.76 12.7%
Price/Earnings Ratio 17.2
1,170,000 PepsiCo, Inc. @ 35 3/8 41,388,750
Second largest soft drink company
Earnings P/S $ .38, .49, .57, .68, .70, .69, .82, 1.00, 1.14, 1.04 11.8%
Dividends P/S $ .105, .11, .14, .16, .19, .23, .26, .31, .35, .39 15.7%
Price/Earnings Ratio 32.3
500,000 Procter & Gamble Co. (The) @ 90 5/8 45,312,500
Leading producer of household
consumer products
Earnings P/S $ .46, 1.48, 1.74, 2.25, 2.43, 2.57, 2.54, .70, 2.43, 4.17 27.8%
Dividends P/S $ .67, .68, .70, .83, .93, 1.00, 1.08, 1.17, 1.32, 1.50 9.4%
Price/Earnings Ratio 20.8
800,000 Sara Lee Corp. @ 32 3/8 25,900,000
Manufacturer of brand name packaged food
and consumer products
Earnings P/S $ .59, .71, .88, .94, 1.03, 1.49, 1.36, 1.47, .52, 1.76 12.9%
Dividends P/S $ .20, .25, .30, .36, .42, .47, .50, .58, .64, .68 14.6%
Price/Earnings Ratio 18.0
-------------
175,848,750
-------------
Diversified Operations (1.43%)
300,000 Corning Inc. @ 38 3/8 11,512,500
Operations are in laboratory services,
fiber optics, specialty materials and
consumer products
Earnings P/S $ 1.03, 1.63, 1.40, 1.54, 1.55, 1.75, 1.32, (.071), 1.39, (.27) NMF
Dividends P/S $ .35, .36, .38, .41, .46, .53, .62, .68, .69, .72 8.3%
Price/Earnings Ratio 24.2
564,500 Federal Signal Corp. @ 23 1/2 13,265,750
Manufactures fire trucks and street sweepers,
as well as public safety, signaling
and communications equipment
Earnings P/S $ .32, .41, .50, .66, .62, .69, .70, .88, 1.08, 1.16 15.4%
Dividends P/S $ .14, .15, .16, .19, .22, .27, .32, .36, .42, .50 15.2%
Price/Earnings Ratio 19.7
-------------
24,778,250
-------------
Electrical Equipment (11.56%)
750,000 AMP Inc. @ 40 1/8 30,093,750
World's largest manufacturer of electrical/
electronic connectors
Earnings P/S $ 1.16, 1.48, 1.32, 1.35, 1.31, 1.23, 1.39, 1.44, 1.83, 2.01 6.3%
Dividends P/S $ .37, .43, .50, .60, .68, .72, .76, .80, .84, .92 10.7%
Price/Earnings Ratio 20.0
575,000 Emerson Electric Co. @ 90 3/8 51,965,625
Produces and sells electrical/electronic
products and systems
Earnings P/S $ 2.00, 2.31, 2.63, 2.75, 2.79, 2.88, 3.05, 3.81, 3.89, 4.30 8.9%
Dividends P/S $ .93, .98, 1.03, 1.16, 1.28, 1.34, 1.40, 1.47, 1.60, 1.84 7.9%
Price/Earnings Ratio 20.7
1,000,000 General Electric Co. @ 86 1/2 86,500,000
Dominant force in home appliances,
electrical power, and financial services
Earnings P/S $ 1.60, 1.88, 2.18, 2.43, 2.48, 2.54, 2.55, 2.57, 3.56, 4.01 10.8%
Dividends P/S $ .58, .65, .70, .82, .94, 1.02, 1.12, 1.26, 1.44, 1.64 12.2%
Price/Earnings Ratio 21.4
400,000 W.W. Grainger, Inc. @ 77 1/2 31,000,000
Leading distributor of electrical equipment -------------
Earnings P/S $ 1.48, 1.57, 1.96, 2.19, 2.31, 2.38, 2.70, 3.04, 2.61, 3.70 10.7%
Dividends P/S $ .36, .39, .43, .50, .57, .61, .65, .71, .78, .89 10.6%
Price/Earnings Ratio 21.0
-------------
199,559,375
-------------
Energy (2.57%)
325,000 Exxon Corp. @ 86 7/8 28,234,375
Major factor in the crude oil, natural gas and -------------
chemical industry
Earnings P/S $ 3.71, 3.43, 3.95, 2.32, 3.96, 4.45, 3.82, 4.21, 4.07, 5.18 3.8%
Dividends P/S $ 1.80, 1.90, 2.15, 2.30, 2.47, 2.68, 2.83, 2.88, 2.91, 3.00 5.8%
Price/Earnings Ratio 15.5
475,600 Questar Corp. @ 34 16,170,400
Diversified holding company for Utah,
Wyoming and Colorado natural gas
transmission, distribution and storage
Earnings P/S $ .67, .64, 1.27, 1.46, 1.57, 1.53, 2.00, 1.97, 1.11, 2.23 14.3%
Dividends P/S $ .87, .91, .94, .95, .97, 1.01, 1.04, 1.09, 1.13, 1.16 3.3%
Price/Earnings Ratio 15.1
-------------
44,404,775
-------------
Healthcare (9.31%)
500,000 Abbott Laboratories @ 43 1/2 21,750,000
Major pharmaceutical and healthcare firm
Earnings P/S $ .70, .84, .97, 1.11, 1.15, 1.32, 1.53, 1.73, 1.94, 2.21 13.6%
Dividends P/S $ .20, .24, .29, .34, .40, .48, .58, .66, .74, .82 17.0%
Price/Earnings Ratio 19.6
600,000 American Home Products Corp. @ 60 1/8 36,075,000
Research-based pharmaceutical and
healthcare products company
Earnings P/S $ (1.32), 1.61, 1.77, 3.03, 3.07, 1.85, 2.26, 2.39, 3.48, 1.84 NMF
Dividends P/S $ .78, .84, .90, .98, 1.08, 1.19, 1.33, 1.43, 1.47, 1.51 7.6%
Price/Earnings Ratio 32.5
1,026,000 Johnson & Johnson @ 49 1/2 50,787,000
Major producer of prescription and
non-prescription drugs, toiletries,
medical instruments and supplies
Earnings P/S $ .59, .71, .80, .86, .99, 1.12, 1.28, 1.41, 1.65, 1.95 14.2%
Dividends P/S $ .17, .20, .24, .28, .33, .39, .45, .51, .57, .64 15.9%
Price/Earnings Ratio 24.9
364,000 Merck & Co., Inc. @ 64 5/8 23,523,500
World's largest ethical drug manufacturer
Earnings P/S $ .74, 1.02, 1.26, 1.52, 1.59, 1.89, 2.18, 1.87, 2.45, 2.79 15.9%
Dividends P/S $ .21, .27, .43, .55, .64, .77, .92, 1.03, 1.14, 1.24 21.8%
Price/Earnings Ratio 23.1
400,000 Pfizer Inc. @ 71 3/8 28,550,000
Leading ethical pharmaceutical producer
Earnings P/S $ 1.02, 1.18, 1.01, 1.19, 1.21, 1.11, 1.69, 1.11, 2.15, 2.61 11.0%
Dividends P/S $ .41, .45, .50, .55, .60, .66, .74, .84, .94, 1.04 10.9%
Price/Earnings Ratio 27.3
-------------
160,685,500
-------------
Information Processing (1.79%)
800,000 Automatic Data Processing, Inc. @ 38 5/8 $30,900,000
-------------
Largest independent computing services
firm in the U.S.
Earnings P/S $ .42, .54, .62, .72, .79, .90, 1.01, 1.15, 1.34, 1.53 15.5%
Dividends P/S $ .09, .11, .13, .15, .17, .20, .23, .26, .29, .35 15.9%
Price/Earnings Ratio 24.8
Insurance (4.21%)
525,000 AFLAC Corp. @ 29 7/8 15,684,375
Global specialty insurer
Earnings P/S $ .62, .72, .53, .77, .82, 1.03, 1.26, 1.65, 2.01, 2.38 16.1%
Dividends P/S $ .11, .12, .13, .15, .18, .20, .23, .26, .30, .34 13.4%
Price/Earnings Ratio 12.9
300,000 American International Group @ 98 5/8 29,587,500
Broadly based property-casualty
insurance organization
Earnings P/S $ 3.92, 4.42, 4.61, 4.86, 3.09, 3.31, 3.55, 4.09, 4.73, 5.52 3.9%
Dividends P/S $ .08, .09, .13, .16, .18, .21, .24, .26, .29, .32 16.6%
Price/Earnings Ratio 17.5
200,000 Chubb Corp. @ 49 7/8 9,975,000
Broadly based property-casualty
insurance organization
Earnings P/S $ 1.99, 2.14, 2.46, 3.04, 3.15, 3.22, 3.49, 1.55, 3.39, 3.95 7.9%
Dividends P/S $ .40, .45, .54, .58, .66, .74, .80, .86, .92, .98 10.5%
Price/Earnings Ratio 12.3
160,000 Providian Corp. @ 42 7/8 6,860,000
Provides consumer financial services
Earnings P/S $ 1.68, 2.00, 2.93, 1.70, 2.00, 2.70, 3.14, 3.11, 3.11, 3.98 10.1%
Dividends P/S $ .41, .44, .50, .54, .60, .66, .73, .80, .90 9.1%
Price/Earnings Ratio 10.4
244,800 Reliastar Financial Corporation @ 43 1/8 10,557,000
Financial services company engaged in
life/health insurance and consumer finance
Earnings P/S $ 1.86, 1.58, 2.07, 1.99, 1.96, 1.67, 2.26, 2.83, 3.48, 4.62 10.6%
Dividends P/S $ .43, .47, .57, .59, .65, .69, .73, .79, .88, .98 9.6%
Price/Earnings Ratio 9.4
-------------
72,663,875
-------------
Media and Information Services (4.20%)
600,000 Electronic Data Systems Corp. @ 53 3/4 32,250,000
Provides information technology services
to companies worldwide
Earnings P/S $ .66, .79, .91, 1.04, 1.03, 1.21, 1.37, 1.55, 1.77, 1.99 13.1%
Dividends P/S $ .10, .13, .17, .24, .28, .32, .36, .40, .48, .52 20.1%
Price/Earnings Ratio 26.3
350,000 Gannett Co., Inc @ 70 3/4 24,762,500
Publishes 81 daily/50 nondaily newspapers,
operates 10 TV , 8 FM and 7 AM stations
Earnings P/S $ 1.98, 2.26, 2.47, 2.36, 2.21, 2.06, 2.48, 2.81, 3.33, 3.44 6.3%
Dividends P/S $ .86, .94, 1.02, 1.11, 1.21, 1.24, 1.26, 1.30, 1.34, 1.38 5.4%
Price/Earnings Ratio 20.2
340,000 McGraw-Hill Companies, Inc @ 45 3/4 15,555,000
Provides informational products and services
for business and industry
Earnings P/S $ 1.64, 1.92, .91, 1.77, 1.73, 1.51, 1.60, .110, 2.04, 2.30 3.8%
Dividends P/S $ .76, .84, .92, 1.00, 1.08, 1.10, 1.12, 1.14, 1.16, 1.20 5.2%
Price/Earnings Ratio 19.3
-------------
72,567,500
-------------
Packaging (2.41%)
600,000 Bemis Company, Inc. @ 35 21,000,000
Producer of a broad range of flexible
packaging and equipment and pressure
sensitive materials
Earnings P/S $ .59, .74, .90, .99, .97, 1.08, 1.10, .94, 1.45, 1.73 12.7%
Dividends P/S $.15, .18, .22, .30, .36, .42, .46, .50, .54, .64 17.5%
Price/Earnings Ratio 20.3
725,000 Sonoco Products Corp. @ 28 3/8 20,571,875
Leading manufacturer of containers,
paper products and packaging
Earnings P/S $ .77, 1.10, 1.18, .52, .53, 1.04, .94, 1.24, 1.42, 1.74 9.5%
Dividends P/S $.18, .21, .30, .39, .43, .44, .48, .50, .53, .59 14.1%
Price/Earnings Ratio 15.9
-------------
41,571,875
-------------
Retail (3.82%)
250,000 Lowe's Companies, Inc. @ 36 1/8 9,031,250
Retailer of building materials and supplies,
lumber, hardware and appliances
Earnings P/S $ .39, .46, .51, .55, .41, .13, .62, 1.05, 1.47, 1.33 14.6%
Dividends P/S $ .098, .105, .113, .12, .13, .135, .14, .16, .17, .185 7.4%
Price/Earnings Ratio 26.7
225,000 May Dept. Stores Co. (The) @ 43 3/4 9,843,750
Operates 318 department stores and
3,295 shoe stores
Earnings P/S $ 1.45, 1.82, 1.76, 1.83, 1.99, 2.03, 2.42, 2.83, 2.95, 2.93 8.1%
Dividends P/S $ .46, .50, .56, .63, .70, .73, .75, .81, .91, 1.01 9.1%
Price/Earnings Ratio 14.9
711,400 Pep Boys - Manny, Moe &
Jack (The) @ 34 24,187,600
Retailer of automotive parts and accessories
Earnings P/S $ .62, .76, .63, .66, .63, .75, .93, 1.13, 1.30, 1.40 9.5%
Dividends P/S $ .07, .08, .09, .11, .12, .13, .14, .15, .17, .19 11.7%
Price/Earnings Ratio 23.8
900,000 Wal-Mart Stores, Inc. @ 25 3/8 22,837,500
Operates chain of discount
department stores
Earnings P/S $ .28, .37, .48, .50, .59, .73, .90, 1.05, 1.20, 1.21 17.7%
Dividends P/S $ .02, .03, .04, .06, .07, .09, .11, .13, .17, .20 30.7%
Price/Earnings Ratio 19.8
-------------
65,900,100
-------------
Telecommunications (2.88%)
425,000 ALLTEL Corp. @ 30 3/4 13,068,750
One of the country's largest
telephone systems
Earnings P/S $ 1.00, .94, 1.13, 1.12, 1.18, 1.10, 1.29, 1.43, 1.46, 1.89 7.3%
Dividends P/S $ .44, .45, .51, .57, .64, .70, .74, .80, .88, .96 9.1%
Price/Earnings Ratio 16.2
792,700 Frontier Corp. @ 30 5/8 24,276,438
Provides telephone service to the city of
Rochester N.Y. and outlying areas
Earnings P/S $ .93, 1.06, .99, .86, .87, 1.20, 1.09, 1.26, 1.56, 1.08 1.7%
Dividends P/S $ .64, .66, .68, .71, .73, .75, .77, .79, .81, .83 2.9%
Price/Earnings Ratio 28
250,000 SBC Communications, Inc. @ 49 1/4 12,312,500
Provides telephone service throughout the
United States and internationally
Earnings P/S $ 1.74, 1.76, 1.82, 1.84, 1.80, 1.99, 2.24, 2.47, 2.80, 3.21 7.0%
Dividends P/S $ 1.05, 1.14, 1.22, 1.29, 1.36, 1.41, 1.45, 1.50, 1.56, 1.63 5.0%
Price/Earnings Ratio 14.8
-------------
49,657,688
-------------
Tobacco (2.34%)
389,000 Philip Morris Cos., Inc. @ 104 40,456,000
-------------
Global tobacco, brewing and food company
Earnings P/S $ 1.94, 2.22, 3.18, 3.83, 3.98, 4.45, 5.63, 4.02, 5.71, 6.80 15.0%
Dividends P/S $ .62, .79, 1.01, 1.25, 1.55, 1.91, 2.35, 2.60, 3.03, 3.65 21.8%
Price/Earnings Ratio 14.9
Transportation (0.70%)
250,000 CSX Corp. @ 48 1/4 12,062,500
-------------
International transportation company with
interests in rail and ocean container shipping
Earnings P/S $ 2.78, (.30), 4.11, 3.62, 1.99, (.33), (.25), 2.13, 3.34, 3.05 1.0%
Dividends P/S $ .58, .59, .62, .64, .70, .72, .76, .79, .88, .92 5.3%
Price/Earnings Ratio 15.1
Utilities (2.7%)
326,500 Central and South West Corp. @ 29 9,468,500
Dallas-based utility holding company
Earnings P/S $ 1.96, 1.72, 1.63, 1.90, 1.53, 1.99, 1.96, 1.40, 2.03, 2.12 0.9%
Dividends P/S $ 1.07, 1.14, 1.22, 1.30, 1.38, 1.46, 1.54, 1.62, 1.70, 1.72 5.4%
Price/Earnings Ratio 13
400,000 National Fuel Gas Co. @ 36 14,400,000
Integrated natural gas system serving
N.Y., PA. and Ohio
Earnings P/S $ 1.49, 1.65, 1.93, 1.83, 1.95, 1.89, 1.88, 2.05, 2.27, 2.40 5.4%
Dividends P/S $ 1.12, 1.19, 1.25, 1.32, 1.40, 1.45, 1.49, 1.53, 1.57, 1.61 4.1%
Price/Earnings Ratio 14.7
260,000 Union Electric Co. @ 40 1/4 10,465,000
Largest electric utility in Missouri
Earnings P/S $ 2.91, 2.56, 2.91, 2.74, 2.68, 2.98, 2.95, 2.71, 3.01, 2.99 0.3%
Dividends P/S $ 1.86, 1.92, 1.94, 2.02, 2.10, 2.18, 2.26, 2.34, 2.40, 2.46 3.2%
Price/Earnings Ratio 13.3
106,300 Wisconsin Energy Corp. @ 28 7/8 $3,069,412
Electric and gas utility holding company
Earnings P/S $ 1.70, 1.82, 1.92, 1.83, 1.86, 1.87, 1.71, 1.44, 2.03, 2.13 2.5%
Dividends P/S $ .88, .94, 1.01, 1.09, 1.16, 1.22, 1.29, 1.34, 1.40, 1.46 5.8%
Price/Earnings Ratio 13.2
-------------
37,402,912
-------------
TOTAL COMMON STOCKS
(Cost $1,017,790,593) 1,390,130,294
-------------
PREFERRED STOCKS (2.47%)
350,000 American Express Co. 6.25%
Conv. Pfd @ 65.625 22,968,750
300,000 Browning-Ferris ACES,
Conv Pfd 7.25% @ 31 3/8 9,525,000
125,000 Enron Corp. ACES,
Conv Pfd 6.25% @ 25 7/8 3,234,375
250,000 U.S.West Inc.,
Conv Pfd 7.625% @ 27.50 6,875,000
-------------
TOTAL PREFERRED STOCKS
(Cost $32,985,517) 42,603,125
-------------
PAR VALUE
(000'S OMITTED)
UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS (7.32%)
5,000 Federal Home Loan Mort. Corp. Sr
Sub 6.55%, 04-02-03 @ 96.625 4,831,250
5,000 Federal Home Loan Mort. Corp. Sr
Sub 7.50%, 07-23-07 @ 100.02 5,001,000
5,000 Federal Home Loan Mort. Corp. Sr
Sub 8.00%, 12-15-08 @ 101.343 5,067,150
10,000 Federal National Mort. Assn. Sr
Sub 6.50%, 06-26-98@ 100.125* 10,012,500
10,000 Federal National Mort. Assn. Sr
Sub 7.50%, 02-01-08 @ 100.437 10,043,700
10,011 Federal National Mort. Assn. Sr
Sub 6.50%, 04-01-11 @ 96.718 9,682,517
5,000 Government National Mort. Assn.,
7.5% 02-01-26 @ 98.562* 4,928,100
15,000 United States Treasury, Note
6.00%, 05-31-98 @ 99.781 14,967,150
25,000 United States Treasury, Note
7.875%, 11-15-99 @ 104.453 26,113,250
20,000 United States Treasury, Note
7.75%, 12-31-99 @ 104.187 20,837,400
15,000 United States Treasury, Note
6.25%, 08-31-00 @ 99.297 14,894,550
-------------
TOTAL UNITED STATES GOVERNMENT
AND AGENCIES OBLIGATIONS
(Cost $127,544,086) 126,378,567
-------------
CORPORATE BONDS (3.73%)
4,000 BankAmerica Corp., Sub Note
8.125%, 02-01-02 @ 105.045 4,201,800
1,000 BankAmerica Corp., Sub Note
8.95%, 11-15-04 @ 103.842 1,038,420
7,385 Century Communications, Inc.,
Deb. 11.875%, 10-15-03 @ 106.25 7,846,563
5,000 Comcast Corp., Sr Sub Deb
10.25%, 10-15-01 @ 104.25 5,212,500
3,000 First Union Corp., Sub Note
8.00%, 08-15-09 @ 101.651 3,049,530
5,000 Georgia-Pacific Corp.,
Deb 9.50%, 02-15-18 @ 104.596 5,229,800
5,000 GTE North Inc. ,Telephone Facility
Lease Bonds, 9.60%,
01-01-02 @ 111.799 5,589,950
3,000 Long Island Lighting Co.,
Gen Ref Mort, 9.625%,
07-01-24 @ 102.513 3,075,390
2,250 Long Island Lighting Co.,
Gen Ref Mort, 9.75%,
05-01-21 @ 102.734 2,311,515
2,000 NCNB Corp., Sub Note 9.125%,
10-15-01 @ 109.438 2,188,760
4,000 Owen-Illinois, Inc., Sr Sub Note
10.00%, 08-01-02 @ 100.75 4,030,000
10,000 Standard Credit Card Master
Trust 1, CMO 8.25%
01-07-05 @ 105.968 10,596,800
3,000 Super Rite Foods, Sr Sub Note
10.625%, 04-01-02 @ 105.50 3,165,000
5,000 TCI Communications,
Deb 8.75%, 08-01-15 @ 98.288 4,914,400
2,000 Wells Fargo & Co.,
Deb 8.20%, 11-01-96 @ 100.714 2,014,280
-------------
TOTAL CORPORATE BONDS
(Cost $64,598,121) 64,464,708
-------------
SHORT-TERM INVESTMENTS (6.87%)
113,346 Joint Repurchase Agreement ( 6.57%)
Investment in a joint repurchase
agreement transaction with
Toronto-Dominion Bank Ltd. -
Dated 06-28-96, Due 07-01-96
(secured by U.S. Treasury Bills,
5.38% Due 12-12-96 and
5.69% Due 06-26-97,
U.S Treasury Bonds, 7.25%
Due 05-15-16 and 7.50%
Due 11-15-16, and
U.S. Treasury Notes, 4.375% -
7.75% Due 08-15-96 thru
11-15-01) Note A 5.5% 113,346,000
-------------
Short-Term Notes (0.28%)
2,581 Federal Home Loan Mort.
Corp. Disc.Note 5.25%,
7/15/96 2,574,978
2,328 Federal Home Loan Mort.
Corp. Disc.Note 5.29%,
8/12/96 2,312,948
-------------
TOTAL SHORT-TERM NOTES 4,887,926
-------------
Corporate Savings Account (0.02%)
Investors Bank & Trust
Company Daily Interest
Savings Account Current
Rate 4.75% 365,449
-------------
TOTAL SHORT-TERM INVESTMENTS (6.87%) 118,599,375
======== -------------
TOTAL INVESTMENTS (100.92%) $1,742,176,069
======== =============
* These securities having an aggregate value of $14,940,600 or 0.87% of the Fund's net assets, have been purchased
on a when issued basis. The purchase price and the interest rate of such securities are fixed at trade date, although
the Fund does not earn any interest on such securities until settlement date. The Fund has instructed its Custodian
Bank to segregate assets with a current value at least equal to the amount of its when issued commitments. Accordingly,
the market value of $15,667,950 of U.S.Treasury Note, 7.875%, 11-15-99 has been segregated to cover the when issued
commitments.
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.
See notes to financial statements.
</TABLE>
Notes to Financial Statements
(UNAUDITED)
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 investment objective of the Fund is to
provide long term growth of capital and of income without assuming undue
market risks.
The Directors have authorized the issuance of multiple classes of the
Fund, designated as Class A, Class B and Class C shares. 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. 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.
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 its taxable income,
including any net realized gain on investments, to its shareholders.
Therefore, no federal income tax provision is required.
DIVIDENDS, INTEREST AND DISTRIBUTIONS 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 to
each class of shares based on the appropriate net assets of the
respective classes. 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund.
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.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
quarterly management fee to the Adviser for a continuous investment
program 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. For the period ended
June 30, 1996, net sales charges received with regard to sales of Class
A shares amounted to $2,486,184. Out of this amount, $360,220 was
retained and used for printing prospectuses, advertising, sales
literature and other purposes, $1,105,805 was paid as sales commissions
to unrelated broker-dealers and $1,020,159 was paid as sales commissions
to sales personnel of John Hancock Distributors, Inc. ("Distributors"),
Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc.
("Sutro"), all of which are broker dealers.. 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.
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 June 30, 1996 contingent deferred
sales charges paid to JH Funds amounted to $336,180.
In addition, to reimburse 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 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.
The Fund has a transfer agent agreement with John Hancock Investor
Services, Corp. ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Class A and Class B shares pay transfer agent
fees based on the number of shareholder accounts and certain out-of-
pocket expenses. Class C shares pay a monthly transfer agent fee
equivalent, on an annual basis, to 0.10% of the average daily net asset
value of Class C shares of the Fund.
On March 26, 1996 the Board of Directors approved retroactively to
January 1, 1996, an agreement with the Adviser to reimburse the Adviser
for compensation and related expenses incurred in connection with tax
and financial management services for the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Richard S. Scipione and Ms. Anne C.
Hodsdon are directors and officers of the Adviser and its affiliates, as
well as Directors of the Fund. The compensation of unaffiliated
Directors is borne by the Fund. Effective with the fees paid for 1995,
the unaffiliated Directors may elect to defer for tax purposes their
receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. At
June 30, 1996, the Fund's investment to cover the deferred compensation
had unrealized appreciation of $7,293.
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 June 30, 1996, aggregated $254,004,291 and
$269,970,822, respectively. Purchases and proceeds from sales of
obligations of the U.S. government and its agencies, during the period
ended June 30, 1996, aggregated $88,689,375 and $30,219,609,
respectively.
The cost of investments owned at June 30, 1996 (excluding the corporate
savings account), for Federal income tax purposes was $1,361,152,243.
Gross unrealized appreciation and depreciation of investments aggregated
$389,017,259 and $8,358,882, respectively, resulting in net unrealized
appreciation of $380,658,377.
<TABLE>
<CAPTION>
Dividend Increases (Unaudited)
Listed below are the most recent dividend increases for the common stocks
held in the Sovereign Investors Fund as of June 30, 1996
- --------------------------------------------------------------------------
PERCENT OF
COMPANY DIVIDEND INCREASE
- --------------------------------------------------------------------------
<S> <C>
Abbott Laboratories 14.29%
AFLAC 15.3%
Air Products 5.8%
Albertson's 15.4%
Alco Standard 7.7%
Alltel 8.3%
American Home Products 2.7%
American International Group 17.6%
AMP, Inc. 8.7%
Automatic Data Processing, Inc. 14.3%
BankOne 10.0%
Bemis, Inc. 12.5%
Central and SouthWest 1.2%
Chubb 10.2%
Corning, Inc. 5.9%
CoreStates Financial 23.5%
CPC International 5.6%
CSX Corp. 18.2%
E I DuPont De Nemours & Co., Inc. 9.6%
Electronic Data Systems 15.4%
Emerson Electric 14.0%
Exxon 5.3%
Federal Signal Corp. 16.0%
First Tennessee National Corp. 12.8%
Frontier Corp. 2.4%
Gannett 2.9%
General Electric 12.2%
W W Grainger, Inc. 8.7%
Heinz 10.4%
Illinois Tool Works 13.3%
Interpublic Group 9.7%
Johnson & Johnson 15.2%
KeyCorp. 5.6%
Kimberly Clark 2.2%
Leggett & Platt 10.0%
Lowe's Department Stores 11.1%
May Department Stores 12.5%
McDonald's 11.1%
McGraw-Hill Companies 10.0%
Merck 13.3%
National Fuel Gas 3.7%
NationsBank 16.0%
The Pep Boys 10.5%
PepsiCo 15.0%
Pfizer, Inc. 15.4%
Phillip Morris 21.2%
PPG Industries 6.7%
Procter & Gamble 12.5%
Providian Corp. 11.1%
Questar 3.5%
Reliastar Financial 12.0%
Rockwell International 7.4%
RPM, Inc. 7.1%
Sara Lee 11.8%
SBC Communications 4.2%
Sigma Aldrich 22.2%
Sonoco Products 10.0%
Sysco 18.2%
Union Electric 2.5%
Wal-Mart 5.0%
Wisconsin Energy Corp. 3.4%
Worthington Industries 9.1%
----------
The average dividend increase for this group was 10.47%
==========
</TABLE>
<TABLE>
<CAPTION>
Historical Data (Unaudited)
The table below shows the record of the Fund during the past periods.
- --------------------------------------------------------------------
CLASS A PER SHARE
YEAR ---------------------------------------
ENDED SHARES DIVIDENDS NET ASSET CAPITAL GAINS
DEC. 31 OUTSTANDING FROM INCOME VALUE DISTRIBUTION
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
1985 2,105,220 $.53 $11.31 $.44
1986 2,807,182 .55 12.36 .87
1987 3,701,248 .58 10.96 .90
1988 4,099,131 .60 11.19 .38
1989 5,274,426 .61 12.60 .58
1990 6,991,411 .59 11.94 .60
1991 13,560,178 .53 14.31 .67
1992 59,053,529 .45 14.78 .09
1993 83,332,510 .42 15.10 .09
1994 76,585,860 .46 14.24 .11
1995 71,652,920 .40 17.87 .08
1996(a) 70,717,040 .17 19.19 --
CLASS B PER SHARE
YEAR ---------------------------------------
ENDED SHARES DIVIDENDS NET ASSET CAPITAL GAINS
DEC. 31 OUTSTANDING FROM INCOME VALUE DISTRIBUTION
- -----------------------------------------------------------------
1994 8,996,738 $.36 $14.24 $.11
1995 14,432,679 .28 17.86 .08
1996(a) 17,523,667 .11 19.18 --
CLASS C PER SHARE
YEAR ---------------------------------------
ENDED SHARES DIVIDENDS NET ASSET CAPITAL GAINS
DEC. 31 OUTSTANDING FROM INCOME VALUE DISTRIBUTION
- -----------------------------------------------------------------
1993 674,320 $.34 $15.11 $.09
1994 1,062,699 .51 14.24 .11
1995 1,116,297 .46 17.87 .08
1996(a) 1,229,369 .21 19.18 --
(a) Six months ended June 30, 1996.
</TABLE>
A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
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U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
Sovereign Investors Fund. It may be used as sales literature when
preceded or accompanied by the current prospectus, which details
charges, investment objectives and operating policies.
A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper."
290SA 6/96
8/96
