SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FREEDOM INVESTMENT TRUST III
(Name of Registrant as Specified in Its Charter)
FREEDOM INVESTMENT TRUST III
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) or Schedule 14A (sent by wire transmission).
JOHN HANCOCK GOLD & GOVERNMENT FUND
JOHN HANCOCK REGIONAL BANK FUND
JOHN HANCOCK DISCIPLINED GROWTH (FORMERLY SOVEREIGN ACHIEVERS) FUND
JOHN HANCOCK GLOBAL FUND
JOHN HANCOCK INTERNATIONAL FUND
JOHN HANCOCK SHORT-TERM STRATEGIC INCOME FUND
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
JOHN HANCOCK DISCOVERY FUND
DATE
Dear Fellow Shareholder:
As an investor in one of the funds noted above, you are cordially invited to a
special shareholder meeting on Wednesday, June 26, 1996, to be held at 9:00 A.M.
in your Fund's offices at the location shown on the enclosed proxy statement. At
this meeting, you will be asked to consider and approve several proposals
pertaining to your Fund. These are highlighted below, and are discussed in more
detail in your proxy statement.
You will notice that this proxy statement addresses several funds. This is part
of our effort to minimize printing and administrative expenses for your Fund --
and, therefore, for you. However, if you invest in more than one John Hancock
fund, you may receive other proxy statements. Be sure to review and vote on
these as well.
Listed below is a brief explanation of the proposals you will find in the
enclosed proxy statement:
o Election of your Fund's Board of Trustees. The Board of Trustees is
responsible for protecting your interests as a shareholder of the Fund. You will
find a list of nominees and a brief description of their backgrounds in your
proxy statement.
o Increased investment flexibility for several funds by relaxing certain
investment restrictions, such as the single issuer limitation and the
restriction on investing in other investment companies. These proposals are
detailed in Proposals 4 and 5 of your proxy statement, and are intended to give
the affected funds more flexibility to take advantage of potential investment
opportunities. The proposals do not apply to the Special Opportunities Fund or
the International Fund.
o Other administrative issues such as adopting a new investment contract and
restating your Fund's Declaration of Trust. Both of these proposals aim to
increase efficiency by bringing the administration of your Fund into conformity
with that of other John Hancock funds. These changes will have no effect on the
way your Fund is managed.
ALL OF THE PROPOSALS HAVE BEEN REVIEWED AND UNANIMOUSLY APPROVED
BY YOUR FUND'S BOARD OF TRUSTEES, WHO BELIEVE THAT THE
CHANGES WILL BE BENEFICIAL TO YOU AND YOUR FUND.
YOUR VOTE IS IMPORTANT!
No matter how large or small your investment may be, your vote makes a
difference. We urge you to review the enclosed proxy statement carefully, and to
vote by completing, signing and returning the enclosed proxy ballot form(s) to
us immediately. Your prompt response will help avoid the cost of additional
mailings. For your convenience, we have enclosed a postage-paid envelope.
If you have any questions, please call your John Hancock Funds Customer Service
Representative at 1-800-225-5291, Monday through Friday between 8:00 A.M. and
8:00 P.M. Eastern time.
Sincerely,
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Chairman and CEO
PROXY #4
JOHN HANCOCK DISCIPLINED GROWTH FUND
JOHN HANCOCK FINANCIAL INDUSTRIES FUND
JOHN HANCOCK GOLD & GOVERNMENT FUND
JOHN HANCOCK REGIONAL BANK FUND
(each a series of Freedom Investment Trust)
JOHN HANCOCK GLOBAL FUND
JOHN HANCOCK GLOBAL INCOME FUND
JOHN HANCOCK INTERNATIONAL FUND
JOHN HANCOCK SHORT-TERM STRATEGIC INCOME FUND
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
(each a series of Freedom Investment Trust II)
JOHN HANCOCK DISCOVERY FUND
(a series of Freedom Investment Trust III)
(collectively, the "Funds")
101 Huntington Avenue
Boston, Massachusetts 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1996
A Special Meeting of Shareholders of each Fund will be held at the Funds'
offices located on the 2nd floor at 101 Huntington Avenue, Boston, Massachusetts
02199, at 9:00 a.m., Eastern time, on Wednesday, June 26, 1996. The telephone
number of each Fund is 1-800-225-5291. The Special Meetings of the Funds are
expected to be held concurrently and are referred to collectively as the
"Meeting." The purpose of the Meeting is to consider and act upon the following
proposals:
(1) To elect sixteen Trustees to hold office until their respective successors
have been duly elected and qualified. For Disciplined Growth Fund, John
Hancock Financial Industries Fund ("Financial Industries Fund"), Gold Fund
and Bank Fund voting together with the other series of Freedom Trust I and
Global Fund, Global Income Fund, International Fund, Short-Term Fund and
Special Opportunities Fund voting together with the other series of Freedom
Trust II.
(2) To approve a new investment management contract between John Hancock
Advisers, Inc. and
(a) John Hancock Disciplined Growth Fund ("Disciplined Growth Fund"). For
Disciplined Growth Fund voting separately.
(b) John Hancock Gold & Government Fund ("Gold Fund"). For Gold Fund
voting separately.
(c) John Hancock Regional Bank Fund ("Bank Fund"). For Bank Fund voting
separately.
(d) John Hancock Global Fund ("Global Fund"). For Global Fund voting
separately.
(e) John Hancock Global Income Fund ("Global Income Fund"). For Global
Income Fund voting separately.
(f) John Hancock International Fund ("International Fund"). For
International Fund voting separately.
(g) John Hancock Short-Term Strategic Income Fund ("Short-Term Fund"). For
Short-Term Fund voting separately.
(h) John Hancock Special Opportunities Fund ("Special Opportunities
Fund"). For Special Opportunities Fund voting separately.
(3) To approve an Amended and Restated Declaration of Trust for:
(a) Freedom Trust I. For Disciplined Growth Fund, Financial Industries
Fund, Gold Fund and Bank Fund voting together with other series of
Freedom Trust I.
(b) Freedom Trust II. For Global Fund, Global Income Fund, International
Fund, Short- Term Fund and Special Opportunities Fund voting together
with other series of Freedom Trust II.
(c) Freedom Investment Trust III. For Discovery Fund voting separately.
(4) To eliminate the fundamental investment restriction on investing in a
single class of securities of an issuer. For Disciplined Growth Fund, Gold
Fund, Bank Fund and Global Fund, each voting separately.
(5) To redesignate as nonfundamental the fundamental investment restriction on
investing in other investment companies. For Disciplined Growth Fund,
Global Fund, Global Income Fund and Short-Term Fund voting separately.
(6) To amend the fundamental investment objective of Global Income Fund. For
Global Income Fund voting separately.
(7) To transact other business that may properly come before the Meeting or any
adjournment of the Meeting.
YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
RELATING TO YOUR FUND.
Shareholders of record of each Fund as of the close of business on May 1,
1996 are entitled to notice of and to vote at the Meeting or any adjournment of
the Meeting. The proxy statement and proxy card are being mailed to shareholders
on or about May 17, 1996.
THOMAS H. DROHAN
Senior Vice President and
Secretary
-2-
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
Boston, Massachusetts
May 17, 1996
-3-
JOHN HANCOCK DISCIPLINED GROWTH FUND
JOHN HANCOCK FINANCIAL INDUSTRIES FUND
JOHN HANCOCK GOLD & GOVERNMENT FUND
JOHN HANCOCK REGIONAL BANK FUND
(each a series of Freedom Investment Trust)
JOHN HANCOCK GLOBAL FUND
JOHN HANCOCK GLOBAL INCOME FUND
JOHN HANCOCK INTERNATIONAL FUND
JOHN HANCOCK SHORT-TERM STRATEGIC INCOME FUND
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
(each a series of Freedom Investment Trust II)
JOHN HANCOCK DISCOVERY FUND
(a series of Freedom Investment Trust III)
(collectively, the "Funds")
101 Huntington Avenue
Boston, Massachusetts 02199
----------------------
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Trustees") of each of the investment
companies (the "Trusts") on behalf of themselves or their respective series (the
"Funds") set forth below.
The Trusts The Funds
Freedom Investment Trust John Hancock Disciplined Growth Fund
("Freedom Trust I") (the "Disciplined Growth Fund")
John Hancock Financial Industries Fund
("Financial Industries Fund")
John Hancock Gold & Government Fund
(the "Gold Fund")
John Hancock Regional Bank Fund
(the "Bank Fund")
Freedom Investment Trust II John Hancock Global Fund (the "Global
("Freedom Trust II") Fund")
John Hancock Global Income Fund (the
"Global Income Fund")
John Hancock International Fund (the
"International Fund")
John Hancock Short-Term Strategic Income
Fund (the "Short-Term Fund")
John Hancock Special Opportunities Fund
(the "Special Opportunities Fund")
Freedom Investment Trust III John Hancock Discovery Fund (the
("Freedom Trust III") "Discovery Fund")
For purposes of this Proxy Statement, the term "Funds" will also include
the Trusts where appropriate.
The proxies will be used at the special meeting of each Fund's shareholders
to be held concurrently (collectively, the "Meeting") at the Funds' offices
located on the 2nd floor at 101 Huntington Avenue, Boston, Massachusetts 02199,
at 9:00 a.m., Eastern Time, on Wednesday, June 26, 1996.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by officers, directors and/or registered representatives of the Funds'
principal distributor, John Hancock Funds, Inc. ("John Hancock Funds"), and by
employees, officers and/or directors of John Hancock Advisers, Inc. (the
"Adviser"). In addition, the Funds' transfer agent, John Hancock Investor
Services Corporation ("Investor Services") will solicit proxies in person and/or
by telephone at a cost to each Fund of between $3,000 and $5,000. Investor
Services plans to engage an independent proxy solicitation firm, _________, to
assist in soliciting proxies at an additional cost to each Fund of approximately
$________. The Adviser will reimburse the Gold Fund for a pro rata portion of
this proxy solicitation cost.
The cost of preparing and mailing this Proxy Statement and the accompanying
Notice and proxy card will be borne by each Fund. The mailing address of each
Fund, the Adviser, John Hancock Funds and Investor Services is 101 Huntington
Avenue, Boston, Massachusetts 02199. This Proxy Statement and the proxy card are
being mailed to shareholders of each Fund on or about May 17, 1996.
Each Fund will furnish without charge, a copy of its Annual Report and most
recent Semi-Annual Report succeeding the Annual Report, if any, to any
shareholder upon request. Shareholders desiring to obtain a copy of their Fund's
report(s) should direct all written requests to the attention of their Fund, 101
Huntington Avenue, Boston, Massachusetts 02199 or should call John Hancock Funds
at 1-800-225-5291.
-2-
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Trustees have fixed the close of business on May 1, 1996 as the record
date (the "Record Date") for determining the shareholders of each Fund entitled
to notice of and to vote at the Meeting. Shareholders of record of each Fund on
the Record Date are entitled to one vote per share at the Meeting or any
adjournment of the Meeting relating to their Fund.
As of April 22, 1996, each Fund had the following number of shares of
beneficial interest of each class outstanding:
Class A Shares Class B Shares
Funds Outstanding Outstanding
Disciplined Growth Fund
Financial Industries Fund
Gold Fund
Bank Fund
Global Fund
Global Income Fund
International Fund
Short-Term Fund
Special Opportunities Fund
Discovery Fund
As of April 22, 1996, the following persons or entities owned beneficially
or of record more than 5% of the outstanding Class A and Class B shares of each
Fund:
Owners of more Owners of more
than 5% of than 5% of
Funds Class A Shares Class B Shares
Disciplined Growth Fund
Financial Industries Fund
Gold Fund
Bank Fund
Global Fund
Global Income Fund
International Fund
Short-Term Fund
Special Opportunities Fund
Discovery Fund
-3-
SUMMARY OF VOTING ON PROPOSALS
Although each Fund is participating separately in the Meeting, proxies are
being solicited through the use of this combined Proxy Statement. Shareholders
of Funds that are series of the same Trust will vote separately as to those
Proposals which uniquely affect their Fund. Each class of shares of each Fund
will vote together with the other class of shares of that Fund. Voting by
shareholders of one Fund or class will not affect voting by any other Fund or
class.
Proposal Fund Entitled to Vote
(1) Disciplined Growth Fund, Financial
Industries Fund, Gold Fund and Bank
Fund will vote together with the
other series of Freedom Trust I and
Global Fund, Global Income Fund,
International Fund, Short-Term Fund
and Special Opportunities Fund will
vote together with the other series
of Freedom Trust II.
(2) (a) Gold Fund will vote separately.
(b) Bank Fund will vote separately.
(c) Disciplined Growth Fund will vote separately.
(d) Global Fund will vote separately.
(e) Global Income Fund will vote separately.
(f) International Fund will vote separately.
(g) Short-Term Fund will vote separately.
(h) Special Opportunities Fund will vote separately.
(3) (a) Disciplined Growth Fund, Financial Industries Fund, Gold
Fund and Bank Fund will vote together with the other
series of Freedom Trust I.
(b) Global Fund, Global Income Fund,
International Fund, Short-Term Fund and
Special Opportunities Fund will vote
together with the other series of Freedom
Trust II.
(c) Discovery Fund will vote separately.
(4) Disciplined Growth Fund, Gold Fund, Bank Fund and
Global Fund will each vote separately.
(5) Disciplined Growth Fund, Global Fund, Global Income
Fund and Short-Term Fund will each vote separately.
(6) Global Income Fund will vote separately.
-4-
PROPOSAL 1
ELECTION OF TRUSTEES
(For shareholders of Disciplined Growth Fund,
Financial Industries Fund, Gold Fund and
Bank Fund voting together and shareholders
of Global Fund, Global Income Fund,
International Fund, Short-Term Fund and
Special Opportunities Fund voting
together, in each case with the shareholders
of each other series in their respective Trusts)
The Funds (also referred to herein as the "Panel C Funds") are currently
governed by a Board of Trustees which will be known as the Panel C Trustees.
Other funds in the John Hancock fund complex (the "Panel A Funds") are governed
by a different Board of Trustees (the "Panel A Trustees"). On March 5, 1996, the
Panel A Trustees and the Panel C Trustees, including the Trustees on each Panel
who are not "interested persons" (as defined by the Investment Company Act of
1940, as amended (the "1940 Act")) of the Funds (the "Independent Trustees")
voted to approve and to recommend to the shareholders of their respective Funds
that they approve, a proposal to consolidate the Panel A Trustees and the Panel
C Trustees so that each Fund will be governed by the same Board of Trustees. The
Panel C Trustees hereby recommend to shareholders of each of the Funds that they
re-elect their current Trustees and elect the Panel A Trustees (collectively,
the "Nominees").
Eight of the sixteen Nominees currently serve as Panel C Trustees and nine
of the sixteen Nominees currently serve as Panel A Trustees (Mr. Boudreau serves
on both Panels). Information concerning the Nominees and other relevant factors
is discussed below in this Proposal 1.
Using the enclosed form of proxy, a shareholder may authorize the proxies
to vote his or her shares for the Nominees or may withhold from the proxies
authority to vote his or her shares for one or more of the Nominees. If no
contrary instructions are given, the proxies will vote FOR the Nominees. Each of
the Nominees has consented to his or her nomination and has agreed to serve if
elected. If, for any reason, any Nominee should not be available for election or
able to serve as a Trustee, the proxies will exercise their voting power in
favor of such substitute Nominee, if any, as the Trustees may designate. None of
the Funds has any reason to believe that it will be necessary to designate a
substitute Nominee.
Information Concerning Nominees
The following table sets forth each Nominee's principal occupation or
employment during the past five years. The table also sets forth the Panel on
which each Nominee currently serves and the date each of the Panel C Trustees
first became a Trustee of each Panel C Trust (Trusts are referenced rather than
the Funds for ease of reference).
-5-
Name, Age and Principal Occupation
Position With or Employment First Became
Each Fund During Last Five Years A Trustee
--------- ---------------------- ---------
Edward J. Boudreau, Jr.* Chairman and Chief Executive Freedom Trust I: 1992
(age 51) Officer of the Adviser and The Freedom Trust II: 1992
Chairman and Chief Executive Berkeley Financial Group ("The
Officer, Panel A and C Funds; Berkeley Group"); Chairman, John
Nominee Hancock Advisers International Ltd.
("Advisers International"), NM
Capital Management, Inc. ("NM
Capital"), John Hancock Funds,
Investor Services, First Signature
Bank and Trust Company and
Sovereign Asset Management
Corporation ("SAMCorp"); Director,
John Hancock Capital Corp., John
Hancock Freedom Securities Corp.
and New England/Canada Business
Council; Member, Investment Company
Institute Board of Governors;
Director, Asia Strategic Growth
Fund, Inc.; Trustee, Museum of
Science; Vice Chairman President,
the Adviser (until July 1992);
Chairman, John Hancock
Distributors, Inc. (until April
1994); Trustee or Director and
Chairman of 61 funds managed by the
Adviser.
Douglas M. Costle Director, Chairman of the Board and Freedom Trust I: 1991
(age 56) Distinguished Senior Fellow, Freedom Trust II: 1991
Panel C Trustee; Nominee Institute for Sustainable
Communities, Montpelier, Vermont
(since 1991); Dean, Vermont Law
School (until 1991); Director, Air
and Water Technologies Corporation
(environmental services and
equipment), Niagara Mohawk Power
Company (electric services) and
MITRE Corporation (governmental
consulting services); Trustee or
Director of 12 funds managed by the
Adviser.
-6-
Leland O. Erdahl Director of Santa Fe Ingredients Freedom Trust I: 1984
(age 67) Company of California, Inc. and Freedom Trust II: 1987
Panel C Trustee; Nominee Santa Fe Ingredients Company, Inc.
(private food processing
companies); Director of Uranium
Resources, Inc.; President of
Stolar, Inc. (from 1987 to 1991)
and President of Albuquerque
Uranium Corporation (from 1985 to
1992); Director of Freeport-McMoRan
Copper & Gold Company, Inc., Hecla
Mining Company, Canyon Resources
Corporation and Original Sixteen to
One Mine, Inc. (from 1984 to 1987
and from 1991 to 1995) (management
consultant); Trustee or Director of
12 funds managed by the Adviser.
Richard A. Farrell President of Farrell, Healer & Co., Freedom Trust I: 1984
(age 63) (venture capital management firm) Freedom Trust II: 1986
Panel C Trustee; Nominee (since 1980); Prior to 1980, headed
the venture capital group at Bank
of Boston Corporation; Trustee or
Director of 12 funds managed by the
Adviser.
William F. Glavin President, Babson College; Vice Freedom Trust I: 1992
(age 65) Chairman, Xerox Corporation (until Freedom Trust II: 1992
Panel C Trustee; Nominee June 1989); Director, Caldor Inc.,
Reebok, Ltd. (since 1994) and Inco.
Ltd; Trustee or Director of 12
funds managed by the Adviser.
Dr. John A. Moore President and Chief Executive Freedom Trust I: 1991
(age 57) Officer, Institute for Evaluating Freedom Trust II: 1991
Panel C Trustee; Nominee Health Risks (nonprofit
institution) (since September
1989); Trustee or Director of 12
funds managed by the Adviser.
Patti McGill Peterson President, St. Lawrence University; Freedom Trust I: 1993
(age 52) Director, Niagara Mohawk Power Freedom Trust II: 1993
Panel C Trustee; Nominee Corporation and Security Mutual
Life; Trustee or Director of 12
funds managed by the Adviser.
-7-
John W. Pratt Professor of Business Freedom Trust I: 1984
(age 64) Administration at Harvard Freedom Trust II: 1986
Panel C Trustee; Nominee University Graduate School of
Business Administration (since
1961); Trustee or Director of 12
funds managed by the Adviser.
Dennis S. Aronowitz
(age 64) Professor of Law, Boston University
Panel A Trustee; Nominee School of Law; Trustee, Brookline
Savings Bank; Trustee or Director
of 16 funds managed by the Adviser.
Richard P. Chapman, Jr. President, Brookline Savings Bank;
(age 61) Director, Federal Home Loan Bank of
Panel A Trustee; Nominee Boston (lending); Director, Lumber
Insurance Companies (fire and
casualty insurer); Trustee,
Northeastern University; Director,
Depositors Insurance Fund, Inc.
(insurer); Trustee or Director of
16 funds managed by the Adviser.
William J. Cosgrove Vice President, Senior Banker and
(age 63) Senior Credit Officer, Citibank,
Panel A Trustee; Nominee N.A. (retired September, 1991);
Executive Vice President, Citadel
Group Representative Inc.; EVP
Resource Evaluations Inc.
(consulting) (until October 1993);
Trustee, the Hudson City Savings
Bank (until October 1993; Trustee
or Director of 16 funds managed by
the Adviser.
Gail D. Fosler Vice President and Chief Economist,
(age 48) The Conference Board (nonprofit
Panel A Trustee; Nominee economic and business research);
Trustee or Director of 16 funds
managed by the Adviser.
-8-
Bayard Henry Corporate Advisor; Director,
(age 64) Fiduciary Trust Company (trust
Panel A Trustee; Nominee company); Director, Groundwater
Technology, Inc. (remediation);
Director, Samuel Cabot, Inc.;
Advisor, Kestrel Venture
Management; Trustee or Director of
16 funds managed by the Adviser.
Anne C. Hodsdon* President and Chief Operating
(age 42) Officer, the Adviser and John
President, Panel A and C Funds; Hancock open-end funds; Director,
Panel A Trustee; Nominee Advisers International; Executive
Vice President, the Adviser (until
December 1994); Senior Vice
President, the Adviser (until
December 1993); Vice President, the
Adviser (until 1991); Trustee or
Director of 56 funds managed by the
Adviser.
Richard S. Scipione* General Counsel, John Hancock
(age 58) Mutual Life Insurance Company;
Panel A Trustee; Nominee Director, the Adviser, John Hancock
Funds, Investor Services, John
Hancock Distributors, Inc., John
Hancock Subsidiaries, Inc., John
Hancock Property and Casualty
Insurance and its affiliates (until
November 1993), SAMCorp and NM
Capital; Trustee, The Berkeley
Group; Director, JH Networking
Insurance Agency, Inc.; Trustee or
Director of 44 funds managed by the
Adviser.
Edward J. Spellman Partner, KPMG Peat Marwick LLP
(age 63) (retired June, 1990); Trustee or
Panel A Trustee; Nominee Director of 16 funds managed by the
Adviser.
- ----------
* "Interested person," as defined in the 1940 Act, of the Funds or the Adviser.
The number of shares of beneficial interest of each class of the Funds
beneficially owned by each of the Nominees, directly or indirectly, as of April
22, 1996, is as follows:
(See Chart on next page)
-9-
Disciplined Financial
Growth Industries
Fund Fund Gold Fund Bank Fund Global Fund Global Income Fund
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Edward J. Boudreau, Jr.
Douglas M. Costle
Leland O. Erdahl
Richard A. Farrell
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
Gail D. Fosler
Bayard Henry
Anne C. Hodsdon
Richard S. Scipione
Edward J. Spellman
Special
International Fund Short-Term Fund Opportunities Fund
-10-
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
-10-
The information as to beneficial ownership set forth in the above chart is
based on statements furnished to the Funds by the Nominees. Each has all voting
and investment powers with respect to the shares indicated.
None of the Nominees beneficially owned individually, and the Nominees and
executive officers of each Fund as a group did not beneficially own, in excess
of one percent of the outstanding shares of any of the Funds as of April 22,
1996.
The Board of Trustees of each of the Funds held four meetings, during the
last completed fiscal year of each Fund. With respect to each Fund no Trustee
attended fewer than 75% of the aggregate of (1) the total number of meetings of
the Trustees of each Fund; and (2) the total number of meetings held by all
committees of the Trustees on which he or she served.
Each Fund has an Audit Committee of the Trustees. The Committee members for
each Fund are: Messrs. Costle, Erdahl, Farrell, Glavin, Moore, Pratt and Ms.
Peterson. Each of the members of each Audit Committee is an Independent Trustee.
The Audit Committee of each Fund held two meetings during the last completed
fiscal year of each Fund.
The functions performed by the Audit Committee of each Fund are to
recommend annually to the Trustees a firm of independent certified public
accountants to audit the books and records of each Fund for the ensuing year; to
monitor that firm's performance; to review with the firm the scope and results
of each audit and determine the need, if any, to extend audit procedures; to
confer with the firm and representatives of each Fund on matters concerning each
of the Funds' financial statements and reports, including the appropriateness of
their accounting practices and of their internal controls and procedures; to
evaluate the independence of the firm; to review procedures to safeguard
portfolio securities; to approve the purchase by each Fund from the firm of all
non-audit services; to review all fees paid to the firm; to recommend to the
Trustees, at the request of the Fund's officers or Trustees, a resolution of any
potential or actual conflict of interest, and to facilitate communication
between the firm and each Fund's officers and Trustees.
Each Fund has a Special Nominating Committee of the Trustees known as the
Administration Committee (the "Committee"). The Committee members for each Fund
are Messrs. Costle, Erdahl, Farrell, Glavin, Moore, Pratt and Ms. Peterson. All
of the members of each of the Committees are Independent Trustees. The Committee
of each Fund held four meetings during the last completed fiscal year of each
Fund.
Included among the functions of the Committee of each Fund is the selection
and nomination for appointment and election of candidates to serve as Trustees
who are not "interested persons," as defined in the 1940 Act. Each Committee
also coordinates with Trustees who are interested persons in the selection of
Fund officers. Each Committee will consider nominees recommended by shareholders
to serve as Trustees provided that the shareholders submit such recommendations
in compliance with all of the pertinent provisions of Rule 14a-8 under the
Securities Exchange Act of 1934.
Executive Officers
The table below lists the executive officers of each Fund except for the
Chairman (Mr. Boudreau) and the President (Ms. Hodsdon). Information about Mr.
Boudreau and Ms. Hodsdon is provided under "Information Concerning Nominees."
-11-
Name, Age and Position Principal Occupation During
With Each Trust The Past Five Years First Became an Officer
- --------------- ------------------- -----------------------
Robert G. Freedman Vice Chairman and Chief Investment Freedom Trust I: 1992
(age 57) Officer, the Adviser and each of Freedom Trust II: 1992
Vice Chairman and Chief Investment the John Hancock funds; President,
Officer the Adviser (until December 1994);
Director, the Adviser, Advisers
International, John Hancock Funds,
Investor Services, SAMCorp and NM
Capital; Senior Vice President, The
Berkeley Group.
James B. Little Senior Vice President, the Adviser, Freedom Trust I: 1992
(age 61) The Berkeley Group, John Hancock Freedom Trust II: 1992
Senior Vice President Funds, and Investor Services;
and Chief Financial Officer Senior Vice President and Chief
Financial Officer, each of the John
Hancock funds.
Thomas H. Drohan Senior Vice President and Freedom Trust I: 1992
(age 59) Secretary, the Adviser, The Freedom Trust II: 1992
Senior Vice President Berkeley Group and each of the John
and Secretary Hancock funds; Senior Vice
President, Investor Services, John
Hancock Funds and John Hancock
Distributors (until 1994);
Director, Advisers International;
Secretary, NM Capital.
John A. Morin Vice President, the Adviser, Freedom Trust I: 1992
(age 45) Investor Services and John Hancock Freedom Trust II: 1992
Vice President Funds; Vice President and
Compliance Officer, certain John
Hancock funds; Counsel, John
Hancock Mutual Life Insurance
Company; Vice President and
Assistant Secretary, The Berkeley
Group.
-12-
Susan S. Newton Vice President and Assistant Freedom Trust I: 1992
(age 46) Secretary, the Adviser; Vice Freedom Trust II: 1992
Vice President, President, Assistant Secretary and
Assistant Secretary Compliance Officer, certain John
and Compliance Officer Hancock funds; Vice President and
Secretary, John Hancock Funds,
Investor Services and John Hancock
Distributors (until 1994);
Secretary, SAMCorp; Vice President,
The Berkeley Group.
James J. Stokowski Vice President, the Adviser; Vice Freedom Trust I: 1992
(age 49) President and Treasurer, each of Freedom Trust II: 1992
Vice President and Treasurer the John Hancock funds.
Remuneration of Officers and Trustees
The following tables provide information regarding the compensation paid by
each Fund and the other investment companies in the John Hancock fund complex to
the current Independent Trustees for their services for the fiscal year end of
each Fund. Mr. Boudreau, Ms. Hodsdon, Mr. Scipione and each of the officers of
the Funds are interested persons of the Adviser who are compensated by the
Adviser and affiliates and receive no compensation from the Funds.
Aggregate Compensation From Each Fund
For Each Fund's Last Fiscal Year
Disciplined Financial Global Special
Growth Industries Gold Bank Global Income International Short-Term Opportunities
Fund Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ---- ----
Independent Trustee
- -------------------
Douglas M. Costle $2,105 $ 704 $13,754 $ 2,283 $ 2,190 $136 $ 2,003 $ 4,239
Leland O. Erdahl $2,105 $ 704 $13,754 $ 2,283 $ 2,190 $136 $ 2,003 $ 4,239
Richard A. Farrell $2,183 $ 731 $14,218 $ 2,367 $ 2,271 $143 $ 2,078 $ 4,396
William F. Glavin $ 630 $ 84 $ 4,214 $ 670 $ 651 $ 28 $ 1,835 $ 1,240
Dr. John A. Moore $2,105 $ 704 $13,754 $ 2,283 $ 2,190 $136 $ 2,003 $ 4,239
Patti McGill Peterson $2,105 $ 704 $13,754 $ 2,283 $ 2,190 $136 $ 2,003 $ 4,239
John W. Pratt $2,105 $ 704 $13,754 $ 2,283 $ 2,190 $136 $ 2,003 $ 4,239
Total $4,335 $87,202 $13,338 $14,452 $13,872 $851 $13,928 $26,831
-13-
Total Compensation*
Pension or Retirement From Each Fund and
Benefits Accrued Other Funds in the
as Part of John Hancock Fund
Independent Trustee each Fund's Expenses1 Complex
Douglas M. Costle $ 0 $ 41,750
Leland O. Erdahl 0 $ 41,750
Richard A. Farrell 0 $ 43,250
William F. Glavin $16,291 $ 37,500
Dr. John A. Moore 0 $ 41,750
Patti McGill Peterson 0 $ 41,750
John W. Pratt 0 $ 41,750
Total $16,291 $289,500
======= ========
- ----------
* Total compensation from each Fund and other John Hancock funds is as of
December 31, 1995. As of such date there were sixty-one funds in the John
Hancock fund complex, of which each of the Independent Trustees served
twelve.
1 Represents the aggregate value as of December 31, 1995 of the amount of
Trustees' fees deferred by each Independent Trustee under the John Hancock
Deferred Compensation Plan for Independent Trustees (the "Plan"). Under the
Plan, the Independent Trustees may elect to defer the receipt of all or a
portion of their Trustees' fees payable by each fund in the John Hancock
fund complex. The value of an Independent Trustee's Plan account is
determined by a hypothetical investment of the deferred Trustees' fees in
certain John Hancock funds selected by the Independent Trustee from a list
of designated funds. The Independent Trustees do not beneficially own
shares of any John Hancock fund under the Plan and a fund's obligation to
make payments of amounts deferred under the Plan is an unsecured liability,
payable solely from that fund's general assets. If the value of the
Independent Trustees' Plan accounts in all the John Hancock funds were
actually received and invested on December 31, 1995 by the Independent
Trustees in shares of the John Hancock funds against which the Plan
accounts are valued, the Independent Trustees participating in the Plan
would own shares of the John Hancock funds as set forth below:
-14-
Shares Assuming Hypothetical Investment of Deferred Trustees' Fees
Special Special
Opportunities Value
Fund Fund
---- ----
Independent Trustee
- -------------------
Douglas M. Costle
Leland O. Erdahl
Richard A. Farrell
William F. Glavin
Dr. John A. Moore 1,309 566
Patti McGill Peterson
John W. Pratt
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUNDS ELECT EACH OF THE
NOMINEES TO SERVE AS A TRUSTEE.
Required Vote
Because your Fund is part of an overriding Trust, your vote will be counted
on a Trust-wide basis. Shareholders of each Fund which is a series of a Trust
vote together with each other Fund that is a series of the same Trust on the
election of Trustees for their Trust. Shareholders of Funds which are series of
different Trusts vote separately. Election of each Nominee of a Trust requires a
plurality of votes of the shareholders of the entire Trust present at the
meetings of the Shareholders of each Fund which is a series of the Trust,
provided, in each case, that there is a quorum.
PROPOSALS 2(a), 2(b), 2(c), 2(d), 2(e), 2(f),
2(g) and 2(h)
TO APPROVE NEW INVESTMENT MANAGEMENT CONTRACTS
(For shareholders of each Fund voting separately)
General
The investment portfolios of each of the Funds are managed by the Adviser
pursuant to Advisory Agreements dated November 6, 1986, as restated January 1,
1994 (the "Existing Agreements"). The Existing Agreements were approved by
shareholders of each Fund at meetings held on [DATES].
-15-
At a meeting on March 5, 1996, the Trustees of each Fund, including the
Independent Trustees, voted to approve, and to recommend that the shareholders
of their respective Funds approve, the adoption of a new investment management
contract for each Fund in the form attached to this Proxy Statement as Exhibit A
(the "New Agreements"), in place of the Existing Agreements. The terms of the
New Agreements are substantially identical, but would reflect: (1) greater
flexibility to allocate certain legal and accounting expenses to each Fund, (2)
differences in expense limitation provisions and (3) additional changes noted
below to conform the Funds' investment management contracts to those of most
other funds in the John Hancock fund complex. Material similarities and
differences between the Existing Agreements and the New Agreements are set forth
below.
Material Similarities Between the Existing Agreements and the New Agreements
Under the Existing Agreements and the New Agreements, the Adviser provides
each Fund with a continuous investment program for the management of its assets.
The Adviser provides overall investment advice and management of each Fund,
subject to the overall supervision and review by the Trustees and to the Fund's
investment objectives, restrictions and policies, as described in the Fund's
prospectuses and statements of additional information.
The rate and terms of payment of the advisory fee paid to the Adviser by
each Fund is identical under its Existing Agreement and the New Agreement. The
advisory fee paid by each of the Funds is paid monthly at the annual rates
described below.
Amount of
Advisory Fee
Annual Rate Paid for Last
Fund of Advisory Fee Fiscal Year*
- ---- --------------- ------------
Disciplined Growth Fund 0.75% of average daily net $866,401
assets up to $500,000,000; (0.75% of average daily net
and 0.65% on amounts in assets)
excess of $500,000,000.
Gold Fund 0.80% of average daily net $354,905
assets up to $500,000,000; (0.80% of average daily net
and 0.75% on amounts in assets)
excess of $500,000,000.
Bank Fund 0.80% of average daily net $7,644,892
assets up to $500,000,000; (0.78% of average daily net
and 0.75% on amounts in assets)
excess of $500,000,000.
Global Fund 1.00% of average daily net $1,169,884
assets up to $100,000,000; (0.96% of average daily net
0.80% on the next assets)
$200,000,000; 0.75% on the
next $200,000,000 and
0.625% on amounts in
excess of $500,000,000.
-16-
Global Income Fund 0.75% of average daily net $840,527
assets up to $250,000,000; (0.75% of average daily net
and 0.70% on amounts in assets)
excess of $250,000,000.
International Fund 1.00% of average daily net $0
assets up to $250,000,000; (0.00% of average daily net
0.80% on the next $250,000,000; assets)
0.75% on the next $250,000,000
and 0.625% on amounts in
excess of $750,000,000.
Short-Term Fund 0.65% of average daily net $682,732
assets up to $500,000,000; (0.80% of average daily net
and 0.60% on amounts in assets)
excess of $500,000,000.
Special Opportunities Fund 0.80% of average daily net $1,870,771
assets up to $500,000,000; (0.80% of average daily net
0.75% on the next $500,000,000; assets)
and 0.70% on amounts in excess of
$1,000,000,000.
- -----------------------
* The latest fiscal year of each Fund ended October 31, 1995.
Under each Agreement, the Adviser pays all expenses it incurs with respect
to the performance of its duties thereunder, including expenses associated with
office space and related equipment. The Funds bear all other material expenses
as described in the Agreements (see Subsection A below). Each Agreement provides
that such Agreement will be effective for a period of up to two years after its
adoption and then for one year periods thereafter so long as it is annually
approved by (i) a majority of the Independent Trustees of the applicable Fund
and (ii) either (a) the Trustees of the Fund or (b) a 1940 Act Majority
Shareholder Vote (as defined in the "Vote Required" section of this Proposal
below) of the Fund or Funds. Each Agreement also provides that the Agreement may
be terminated on 60 days' written notice without penalty by either a 1940 Act
Majority Shareholder Vote of the affected Fund or Funds, the Trustees of the
Fund(s) or the Adviser. Each Agreement automatically terminates upon assignment
as defined by the 1940 Act. Each Agreement provides that the obligations of the
affected Fund or Funds are not binding on the Trustees of the Fund(s),
shareholders, officers, employees, agents or nominees of the Fund(s) as
individuals but bind only the Trust (under the Existing Agreements) or the Fund
(under each of the New Agreements) and its property.
Material Differences Between the Existing Agreements and the New Agreements
A. Accounting Expenses
Under the Existing Agreements, the Adviser furnishes and bears the cost of
personnel and related expenses to perform financial, tax and accounting
functions. The Adviser compensates all such personnel who are employees of the
Adviser or an affiliate of the Adviser. The Funds are responsible for paying
-17-
expenses associated with any independent accountants. This allocation of
expenses gives the Adviser little or no incentive to expand the scope, or to
dedicate more personnel and facilities to the performance of accounting and
financial services provided internally to the Funds. Instead, it creates an
incentive to have accounting and financial services provided by outside vendors
at a higher cost than would be charged by the Adviser for performing the same
service internally.
The New Agreements provide that each Fund will be responsible for paying
all fees and expenses associated with ordinary accounting, financial, tax
services provided to the Funds, including an allocable portion of the cost of
the Adviser's personnel performing such services for the Fund. Including this
provision in the New Agreements will bring the Funds' expense allocation
procedures into conformity with those of other John Hancock mutual funds. The
new provision will allow the Trustees the flexibility to approve the payment of
compensation to the Adviser for providing day-to-day accounting, financial, tax
and bookkeeping services to the Funds. Although no proposal to compensate the
Adviser for these services has yet been submitted to or approved by the Trustees
of any Fund, the Adviser expects to present such a proposal in the fall of 1996.
As stated below, the Funds' expense ratios and the fees received by the
Adviser will be slightly higher than they are now if the Trustees approve a
proposal to compensate the Adviser for performing financial, accounting and tax
services. However, because of the increased complexity of mutual fund accounting
and taxation currently, it is expected that future costs to service these
complexities which would be required to be performed by higher cost outside
vendors will result in cost offset to the Funds. The cost savings may partly
offset the additional cost associated with compensating the Adviser for
financial, accounting and tax services provided by its personnel.
Set forth in the chart below are the annual operating expenses paid by each
Fund with respect to each of its classes of shares for its last completed fiscal
year ending October 31, 1995 under the Existing Agreements. Also set forth in
the chart below are the operating expenses that would have been paid by each
Fund for the same period if the New Agreements had been in place.
-18-
Fund and
Net Assets Operating Expenses Under Operating Expenses Under
(as of 10/31/95) Existing Agreements New Agreements
Disciplined Growth Fund
Class A: $27,691,989 1.46% Class A Shares 1.48% Class A Shares
Class B: $86,177,676 2.11% Class B Shares 2.13% Class B Shares
Gold Fund
Class A: $18,299,704 1.60% Class A Shares 1.62% Class A Shares
Class B: $16,918,895 2.32% Class B Shares 2.34% Class B Shares
Bank Fund
Class A: $486,637,887 1.39% Class A Shares 1.41% Class A Shares
Class B: $1,236,447,489 2.09% Class B Shares 2.11% Class B Shares
Global Fund
Class A: $93,597,600 1.87% Class A Shares 1.89% Class A Shares
Class B: $24,569,722 2.57% Class B Shares 2.59% Class B Shares
Global Income Fund
Class A: $35,334,449 1.48% Class A Shares 1.50% Class A Shares
Class B: $65,599,953 2.16% Class B Shares 2.18% Class B Shares
International Fund
Class A: $4,215,377 1.64% Class A Shares 1.64% Class A Shares
Class B: $3,989,586 2.52% Class B Shares 2.52% Class B Shares
Short-Term Fund
Class A: $16,996,512 1.33% Class A Shares 1.35% Class A Shares
Class B: $84,601,074 2.07% Class B Shares 2.09% Class B Shares
Special Opportunities Fund
Class A: $101,561,612 1.59% Class A Shares 1.61% Class A Shares
Class B: $137,363,798 2.30% Class B Shares 2.32% Class B Shares
Exhibit B to this Proxy Statement contains comparative fee tables showing
the amount of fees and expenses paid by each Fund under the Existing Agreements
as a percentage of average net assets and the amount of fees and expenses
shareholders would have paid indirectly if the New Agreements had been in effect
and the Trustees had approved the compensation of the Adviser for its accounting
services. The information in the tables is an estimate based on actual expenses
for the Funds' fiscal year ended October 31, 1995. Also set forth in Exhibit B
is an illustrative example of expenses shareholders of each Fund would pay under
the Existing Agreements and the New Agreements.
-19-
B. Advisory Fee Limitations
Under the Existing Agreements, if the total expenses of a Fund (exclusive
of interest, taxes, brokerage expenses and extraordinary items) for any fiscal
year exceed the lowest expense limitation imposed by any state in which shares
of the Fund are qualified for sale, the Adviser will pay or reimburse the Fund
for that excess up to the amount of the advisory fees payable by the Fund during
that fiscal year. The amount of the monthly advisory fee payable by the Fund
will be reduced to the extent that the monthly expenses of the Fund, on an
annualized basis, exceed the foregoing limitations. If at the end of the fiscal
year, the expenses of the Fund are within the foregoing limitation, any excess
amount previously withheld from the monthly advisory fee during such fiscal year
will be paid to the Adviser.
Under the New Agreements, this provision has been modified to state simply
that the Adviser will adhere to applicable state law. It requires the Adviser to
reduce its fee and make additional arrangements only as required in order to
comply with applicable state law. This language incorporates the minimum
requirements of state laws both as currently in effect and as they may be
enacted or amended in the future. The Adviser may, however, make additional
arrangements at its discretion to reduce expenses of the Funds beyond those
required by state law. The New Agreements contain an additional provision
permitting the Adviser to refrain from imposing all or a portion of its fee (in
advance of the time its fee would otherwise accrue) and/or undertake to make any
other payments or arrangements necessary to limit the Funds' expenses to any
level the Adviser may specify. Any fee reduction or undertaking will constitute
a binding modification of the applicable New Agreement while it is in effect but
may be discontinued or modified prospectively by the Adviser at any time.
Neither of these revised provisions will have any immediate effect on the
advisory fee rates payable by the Funds or the expense ratios of the Funds.
C. Other Differences Between the Existing Agreements and the New Agreements
The New Agreements provide that the Funds will bear the allocable cost of
the Adviser's employees who render legal services to the Funds. Although the
Adviser reserves the right to do so, the Adviser has no current intention of
allocating these costs to the Funds and will not do so until the Trustees,
including the Independent Trustees, approve the allocation. Accordingly, there
will be no immediate increase in the Funds' expenses as a result of the
inclusion of this provision in the New Agreements. The New Agreements also
provide that the Funds will be responsible for the expense of periodic
calculations of the net asset value of the shares of the Funds.
With respect to the calculation of the advisory fees to be paid under each
of the New Agreements, the New Agreements provide that the "average daily net
assets" of the Funds will be calculated on the basis set forth in the Funds'
Prospectuses or otherwise consistent with the 1940 Act. The Existing Agreements
provide no description of how the Funds' "average daily net assets" will be
calculated.
Each Agreement provides that the Adviser may provide investment advisory
services to other clients; however, the New Agreements further provide that the
Adviser may provide services to other investment companies and that the
officers, directors and employees of the Adviser and its parent may continue to
engage in providing portfolio management services to other investment companies.
The New Agreements also provide that the Adviser is under no obligation to
acquire any particular investment on behalf of a Fund if, in the Adviser's sole
discretion, it is not feasible or desirable to acquire a position in that
investment on behalf of the Fund.
-20-
The New Agreements provide that, in connection with the purchase or sale of
securities for the account of the Funds, neither the Adviser nor any of its
subsidiaries, directors, officers or employees will act as principal or agent or
receive any commission except as the 1940 Act permits. If the Adviser advises
persons concerning shares of the Funds, the Adviser will be acting solely on its
own behalf and not on behalf of the Funds. The New Agreements further state that
the Adviser and its affiliates can buy, sell and trade securities for their own
accounts.
The New Agreements provide that the Adviser may subcontract some of its
work for the Funds to other investment advisers. The New Agreements also
specifically provide that the subcontract must be signed by the Fund that is a
party thereto and the Adviser, approved by the vote of a majority of the
Trustees who are not interested persons of the Adviser, the subadviser or the
Fund and by a 1940 Act Majority Shareholder Vote of the applicable Fund. The New
Agreements further provide that any fee, compensation or expense to be paid to a
subadviser will be paid by the Adviser (not by the Funds). The Existing
Agreements do not contain any provision regarding subcontracting or
sub-advisers.
Each New Agreement provides that each Fund may use the name "John Hancock"
or names similar to those of John Hancock Advisers, Inc. or John Hancock Mutual
Life Insurance Company only while the Agreement is in effect. John Hancock
Mutual Life Insurance Company reserves the right to grant nonexclusive rights to
use of the name "John Hancock" to other investment companies and entities.
Each Agreement limits the liability of the Adviser for any error of
judgment, mistake of law or loss to any Fund unless such liability arises out of
willful misfeasance, bad faith, gross negligence or reckless disregard by the
Adviser of its obligations under the Agreement. Each Existing Agreement further
provides that nothing in the Agreement protects any Trustee or officer of the
Fund against any liability to which that person might be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of that
person's obligations under the Agreement. The New Agreements contain no such
exception because it serves no purpose; such Trustees and officers are not
parties to, and do not assume any liabilities under, the New Agreements. The New
Agreements clarify that individuals who are employees of either a Fund or the
Adviser will be deemed to be acting solely for the Fund when acting within the
scope of their employment by the Fund and not as employees or agents of the
Adviser.
Each Existing Agreement provides that the Agreement may be amended as to
any Fund by a 1940 Act Majority Shareholder Vote of that Fund. The New
Agreements specifically require that the Adviser agree to the amendment and also
require that any amendment be in writing. The New Agreements further provide
that no amendment, transfer, assignment, sale, hypothecation or pledge of an
Agreement will be effective until approved by (i) the Trustees, including a
majority of the Trustees who are not interested persons of the Adviser, and (ii)
a 1940 Act Majority Shareholder Vote of the applicable Fund.
The New Agreements clarify that a Fund is not liable for obligations of any
other series of its Trust and no other series of the Trust is liable for the
Fund's obligations under the Agreements. The New Agreements contain other
miscellaneous provisions including a provision that the obligations of each Fund
are not personally binding on shareholders, and provisions establishing
governing law and the severability of provisions. The Existing Agreements do not
contain any similar provisions.
The form and style of the New Agreements is substantially different from
the form and style of the Existing Agreements.
Each of the changes described under this subsection C reflect an effort to
provide the Funds with an up-to-date investment management contract which
conforms substantially to the contracts of the other John Hancock funds.
-21-
If approved, the New Agreements will each become effective on July 1, 1996.
For the text of the New Agreements, see Exhibit A attached to this Proxy
Statement. This description of the New Agreements and comparison to the Existing
Agreements are qualified in their entirety by reference to Exhibit A.
Trustees' Evaluation and Recommendation
At the meeting of the Trustees on March 5, 1996, the Trustees, including
the Independent Trustees, approved the New Agreements. In making this
determination, the Trustees considered several factors, including the increase
in expenses to be borne by the Funds; the greater flexibility accorded to the
Funds with respect to accounting services; the scope and quality of accounting
services the Funds can obtain from the Adviser and outside vendors; provisions
of the contracts of other funds in the John Hancock fund complex; and the
benefits to the Adviser of its relationship with the Funds. The Trustees believe
the New Agreements to be reasonable, fair and in the best interests of the
Funds' shareholders.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE FOR THE PROPOSAL
ADOPTING THE NEW AGREEMENTS FOR THEIR FUND.
Vote Required
Approval of Proposals 2(a), 2(b), 2(c), 2(d), 2(e), 2(f), 2(g) and 2(h)
requires the affirmative vote of a majority of the outstanding voting securities
of the respective Funds. For purposes of approving these Proposals, a majority
of outstanding voting securities shall mean for each Fund the lesser of (i) 67%
or more of the shares of the Fund represented at the Meeting if at least 50% of
all outstanding shares of the Fund are represented at the Meeting or (ii) 50% or
more of the outstanding shares of the Fund entitled to vote at the Meeting (a
"1940 Act Majority Shareholder Vote").
The Investment Adviser
The Adviser is a wholly-owned subsidiary of The Berkeley Financial Group
("The Berkeley Group"), which is a wholly-owned subsidiary of John Hancock Asset
Management. John Hancock Asset Management is a wholly-owned subsidiary of John
Hancock Subsidiaries, Inc., which is a wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company (the "Life Company"). The address of the Adviser
is 101 Huntington Avenue, Boston, Massachusetts 02199. The address of the other
entities is John Hancock Place, Boston, Massachusetts 02117. The directors of
the Adviser and their principal occupations or employment are set forth under
the caption "Directors of the Adviser." The Adviser provides investment advisory
services to other mutual funds with investment objectives substantially
identical to those of the Funds. See Exhibit C for a list of those funds and the
advisory fee rates paid by those funds.
Brokerage Commissions on Portfolio Transactions
During the fiscal year ended October 31, 1995 of each Fund, none of the
Funds paid brokerage commissions to affiliated brokers.
Other Material Payments by the Funds to the Adviser and Affiliates of the
Adviser
For the fiscal year ended October 31, 1995, the Funds paid the following
amounts to John Hancock Funds for distribution related services on behalf of
Class A, Class B and Class C shares, if any:
-22-
Disciplined Growth Fund $ 62,799 Class A Shares
$ 251,285 Class B Shares
Gold Fund $ 3,733 Class A Shares
$ 66,652 Class B Shares
Bank Fund $8,366,103 Class A Shares
$1,931,207 Class B Shares
Global Fund $ 132,895 Class A Shares
$ 61,845 Class B Shares
Global Income Fund $ 23,002 Class A Shares
$ 205,763 Class B Shares
International Fund $ 21,905 Class A Shares
$ 27,200 Class B Shares
Short-Term Fund $ 128,857 Class A Shares
$ 85,980 Class B Shares
Special Opportunities $ 443,675 Class A Shares
Fund $ 741,870 Class B Shares
It is expected that John Hancock Funds will continue to provide these
services to the Funds.
Directors of the Adviser
Edward J. Boudreau, Jr., Chairman of the Funds, the principal executive
officer of the Adviser. Mr. Boudreau's principal occupations and address, as
well as those of the other Directors of the Adviser, are set forth below.
Edward J. Boudreau, Jr. Chairman and Chief Executive
101 Huntington Avenue Officer, the Adviser and The
Boston, MA 02199 Berkeley Group; Chairman and
Managing Director, John Hancock
Advisers International Ltd.;
Chairman, John Hancock Funds and
Investor Services (collectively,
the "Affiliated Companies");
Chairman, NM Capital Management,
Inc.; Chairman, Sovereign Asset
Management Corporation; and
Chairman, First Signature Bank &
Trust.
Stephen L. Brown Chairman and Chief Executive
John Hancock Place Officer, the Life Company;
Boston, MA 02117 Director, the Adviser and the
Affiliated Companies; Trustee, The
Berkeley Group and John Hancock
Asset Management.
-23-
Foster L. Aborn Vice Chairman, Director and
John Hancock Place President, Investment and Pension
Boston, MA 02117 Sector, the Life Company; Director,
the Adviser, Independence
Investment Associates, Inc., John
Hancock Funds, Investor Services,
and John Hancock Subsidiaries,
Inc.; Trustee, The Berkeley Group
and John Hancock Asset Management;
Director, Hancock Venture Partners,
Inc.; Director, John Hancock
Capital Growth Management, Inc.;
and Director, John Hancock Capital
Corp. and John Hancock Freedom
Securities Corp.
David F. D'Alessandro Senior Executive Vice President, Retail
John Hancock Place Sector, the Life Company; Director, the
Boston, MA 02117 Adviser and the Affiliated Companies;
Trustee, the Berkeley Group.
Richard S. Scipione Director, the Adviser, NM Capital
John Hancock Place Management, Inc., Sovereign Asset
Boston, MA 02117 Management Corporation and
Investor Services; General Counsel,
the Life Company; and Trustee, The
Berkeley Group.
Thomas E. Moloney Chief Financial Officer, the Life
John Hancock Place Company; Director, the Adviser and
Boston, MA 02117 the Affiliated Companies; and
Trustee, The Berkeley Group.
John M. DeCiccio Senior Vice President, Investment
John Hancock Place Technology and Financial
Boston, MA 02117 Management, the Life Company;
Director, the Adviser and the
Affiliated Companies; and Trustee,
The Berkeley Group.
Jeanne M. Livermore Senior Vice President, Group
John Hancock Place Pension Guaranteed and Stable Value
Boston, MA 02117 Products, the Life Company;
Director, the Adviser, the
Affiliated Companies and John
Hancock Advisers International
Ltd.; and Trustee, The Berkeley
Group.
John Goldsmith Chairman and Chief Executive
One Beacon Street Officer, John Hancock Freedom
Boston, MA 02108 Securities Corp.; Director, the
Adviser and the Affiliated
Companies; and Trustee, The
Berkeley Group.
Richard O. Hansen Vice President, Managerial
John Hancock Place Department, the Life Company;
Boston, MA 02117 Director, the Adviser and the
Affiliated Companies; and Trustee,
The Berkeley Group.
-24-
William C. Fletcher Director, the Adviser, John Hancock
53 State Street Funds, Investor Services; President
Boston, MA 02109 and Director, Independence
Investment Associates, Inc.;
Trustee, The Berkeley Group;
Trustee, President and Chief
Executive Officer, John Hancock
Asset Management; and Director,
Hancock Natural Resource Group,
Inc. and John Hancock Energy
Resources Management, Inc.
Robert G. Freedman Vice Chairman and Chief Investment
101 Huntington Avenue Director, the Adviser; Director,
Boston, MA 02199 the Adviser, NM Capital Management,
Inc., Sovereign Asset Management
Corporation and the Affiliated
Companies; Senior Vice President,
The Berkeley Group; and Director,
John Hancock Advisers International
Ltd.
Robert H. Watts President, Chief Executive Officer
John Hancock Place and Director, John Hancock
Boston, MA 02117 Distributors, Inc.; and Director,
the Adviser and the Affiliated
Companies.
David A. King President, Chief Executive Officer
101 Huntington Avenue and Director, Investor Services;
Boston, MA 02199 Director, the Adviser and the
Affiliated Companies.
In addition to Messrs. Boudreau and Freedman, the following persons are
officers, trustees and/or directors of the Funds and the Adviser: Anne C.
Hodsdon, President of the Funds and President and Chief Operating Officer of the
Adviser; Thomas H. Drohan, Senior Vice President and Secretary of the Funds and
the Adviser; James B. Little, Senior Vice President and Chief Financial Officer
of the Funds and Senior Vice President of the Adviser; John A. Morin, Vice
President of the Funds and Executive Vice President of the Adviser; Susan S.
Newton, Vice President, Assistant Secretary and Compliance Officer of the Funds
and Vice President and Assistant Secretary of the Adviser; and James J.
Stokowski, Vice President and Treasurer of the Funds and Vice President of the
Adviser.
-25-
PROPOSALS 3(a), 3(b) and 3(c)
APPROVING AMENDED AND RESTATED DECLARATIONS OF TRUST
(For shareholders of Disciplined Growth Fund, Financial
Industries Fund, Gold Fund and Bank Fund voting
together and shareholders of Global Fund, Global
Income Fund, International Fund, Short-Term Fund and
Special Opportunities Fund voting together and
shareholders of Discovery Fund, in each case with
each other series in their respective Trusts)
General
The Master Trust Agreements of the Funds (collectively, the "Current
Declarations") have not changed significantly since they were last amended and
restated on September 10, 1991 with respect to Disciplined Growth Fund,
Financial Industries Fund, Gold Fund and Bank Fund and Global Fund, Global
Income Fund, International Fund, Short-Term Fund and Special Opportunities Fund
and May 14, 1991 with respect to Discovery Fund. The Current Declarations are
proposed to be amended and restated (as amended and restated, the "Amended
Declarations") to provide the Trustees with greater flexibility to manage their
respective Funds and to take advantage of potential investment opportunities.
This enhanced flexibility may result in the more efficient operation of the
Funds and lower costs. In addition, the Amended Declarations contain more modern
provisions then the Current Declarations. The Amended Declarations also
substantially conform to the governing documents of other funds in the John
Hancock fund complex.
In connection with the adoption of the Amended Declarations, the Trustees
of each Fund will amend their respective By-Laws to conform them as needed to
the Fund's Amended Declaration. The Amended Declarations, each of which is
substantially in the form attached to this Proxy Statement as Exhibit D, will
become effective on July 1, 1996, if approved by the shareholders.
The description of the Amended Declaration of each Fund is qualified in its
entirety by the full text of the proposed Amended Declaration set forth as
Exhibit D to this Proxy Statement.
Material Differences Between the Current Declarations and the Amended
Declarations
Each Current Declaration is substantially similar to the other Current
Declarations. The Amended Declarations would be substantially identical to each
other. Set forth below is a description of the material differences among the
Current Declarations and the Amended Declarations. Differences among each of the
Current Declarations are also described where appropriate.
-26-
A. Shareholder Voting Rights
(i) Merger, Consolidation, Sale of Assets
The Amended Declaration of each Fund would provide that the Fund could
merge or consolidate into, or sell, lease or exchange all or substantially all
of its assets to any other entity when authorized by (a) a vote of the holders
of two-thirds of the Fund's outstanding shares present at a meeting called to
consider the question, (b) a written consent signed by the holders of two-thirds
of the Fund's outstanding shares, or (c) a 1940 Act Majority Shareholder Vote or
written consent of the same proportion of shareholders of the Fund if the
merger, consolidation or sale, lease or exchange of assets is recommended by the
Fund. No prior shareholder approval would be required if another entity merged
or consolidated into or sold, leased or exchanged all or substantially all of
its assets to the Fund.
Except as noted, the Current Declaration of each Fund requires the Fund to
obtain a 1940 Act Majority Shareholder Vote before either (a) merging or
consolidating into or selling all or substantially all of its assets to another
entity or (b) having another entity merge or consolidate into or sell all or
substantially all of its assets to the Fund. The Current Declaration of
Discovery Fund does not require prior shareholder approval in the event that
another entity is merging or consolidating into or selling all or substantially
all of its assets to Discovery Fund.
The Amended Declaration of each Fund would also provide that the Fund may,
without prior shareholder approval, create another entity and then merge or
consolidate into or sell all or substantially all of its assets to the new
entity. The Fund could also contract with the new entity. The Current
Declarations have no similar provisions.
(ii) Termination of a Fund or Class of Shares
The Amended Declaration of each Fund would provide that the Fund or any
class of shares of the Fund may be terminated by (a) a vote of the holders of
two-thirds of the outstanding shares of the Fund or class present at a meeting
called to consider the question, (b) a written consent signed by the holders of
two-thirds of the Fund's or class' outstanding shares, or (c) a 1940 Act
Majority Shareholder Vote or written consent of the same proportion of
shareholders of the Fund or class if the termination is recommended by the
Fund's Trustees. The Fund or class could also be terminated without prior
shareholder approval upon notice to shareholders by means of a written
instrument signed by a majority of the Fund's Trustees, stating that the
Trustees have determined that continuing the Fund or class is not in the best
interests of the Fund or class or their respective shareholders. In addition,
the Trustees could abolish any series or class of shares if there are no shares
of such series or class outstanding by means of a written instrument executed by
a majority of the Trustees.
The Current Declaration of each Fund provides that the Fund or any class of
shares of the Fund may be terminated by a majority of the Trustees, subject to
an affirmative 1940 Act Majority Shareholder Vote of the shares of the Fund or
class.
(iii) Amendment of Declaration of Trust
The Amended Declaration of each Fund would provide that the Declaration may
be amended upon approval of a majority of the Trustees of the Fund without prior
shareholder approval. However, the Trustees may not adopt amendments to the
Amended Declaration which would (1) impair the voting or other rights of
shareholders prescribed by law, or (2) impair the exemption from personal
liability of
-27-
the shareholders, Trustees, officers, employees and agents of the Funds or (3)
permit assessments upon shareholders.
The Current Declaration of each Fund provides that the Declaration may be
amended upon the approval of a majority of the Fund's Trustees without prior
shareholder approval, unless such amendment would repeal the limitations on
personal liability of any shareholder or Trustee or would repeal the prohibition
on assessments upon shareholders. If the amendment would repeal these rights,
then the prior consent of each shareholder or Trustee affected is required. In
addition, any amendment to the Declaration that would adversely affect the
rights of shareholders requires the prior affirmative vote of holders of a
majority of the Fund's shares entitled to vote.
(iv) Establishment of Series and Classes
The Amended Declaration and Current Declaration of each Fund provides that
the Trustees may establish and designate additional series of the Fund and
additional classes of shares. The Current Declaration further provides that if
such establishment and designation would adversely effect any of the already
established series or classes, then prior approval of holders of a majority of
the shares of the affected series or class is required. The Amended Declarations
would not contain a similar provision.
(v) Acquisition of Assets
The Amended Declaration of each Fund would provide that the Trustees may
issue shares to another party in exchange for other assets and businesses. The
Current Declarations do not contain a similar provision.
(vi) Voting Procedures
The Amended Declaration of each Fund would provide that, with certain
exceptions, all shares of all classes of all Funds vote together as a single
class. With respect to matters which affect a single Fund or class or which
affect only certain Funds or classes identically, only the shareholders of the
affected Fund(s) or class(es) will be entitled to vote.
The Current Declaration of each Fund provides that, with certain
exceptions, shareholders of each Fund vote separately from other Funds. With
respect to matters affecting only certain Funds or classes, only the affected
Fund(s) or class(es) will vote.
B. Redemption and Repurchase of Shares
The Amended Declaration for each Fund would provide that in the event
redemptions are suspended by the Fund, shareholders could revoke any application
for redemption of shares not honored prior to the suspension and resubmit the
redemption request when the suspension is lifted and the price might be more
favorable. The Current Declarations do not contain similar provisions.
The Amended Declaration for each Fund would provide that the Trustees could
withhold from any redemption proceeds any amounts arising from liability of the
redeeming shareholder to the Fund or in connection with any tax withholding
requirements. The Amended Declaration would also provide that account
administration fees and other similar charges could be deducted directly from
the income and other distributions paid to a shareholder's account. The Current
Declarations do not contain similar provisions.
-28-
In addition to the material differences described above, there are other
substantive and stylistic differences between the Amended Declarations and the
Current Declarations. You are urged to review the form of Amended Declaration
attached to this Proxy Statement as Exhibit D.
Trustees' Evaluation and Recommendation
At a meeting of the Trustees of each Fund held on March 5, 1996, the
Trustees, including the Independent Trustees of each Fund approved, and voted to
recommend to shareholders that they approve, a proposal to amend and restate
their respective Current Declaration. In taking this action and making this
recommendation, the Trustees considered the likelihood that the Amended
Declarations will result in more efficient and economical operation of the Funds
by giving the Trustees more flexibility to manage the Funds and adapt their
respective Declarations to changes in applicable law, industry developments and
other changes. This greater flexibility should reduce the need for costly and
time-consuming proxy solicitations and shareholders' meetings.
Approval of the Amended Declarations will not result in changes in the
Trustees, officers, investment programs and services or any operations and
services of the Funds that are described in the Funds' current Prospectuses.
If the proposed changes are not approved by the shareholders, each Current
Declaration will continue in its existing form. Alternatively, the Trustees may
consider submitting to shareholders at a future meeting other proposals to amend
and restate the Current Declarations.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF EACH FUND APPROVE THE ADOPTION
OF THE AMENDED AND RESTATED DECLARATION OF TRUST.
Vote Required
Approval of Proposals 3(a), 3(b) and 3(c) requires an affirmative 1940 Act
Majority Shareholder Vote of, respectively, (i) the aggregate shares of
Disciplined Growth Fund, Financial Industries Fund, Gold Fund and Bank Fund,
together with each other series of Freedom Trust I, (ii) the aggregate shares of
Global Fund, Global Income Fund, International Fund, Short-Term Fund and Special
Opportunities Fund, together with each other series of Freedom Trust II, and
(iii) Discovery Fund.
PROPOSAL 4
ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION
ON INVESTING IN A SINGLE CLASS OF
SECURITIES OF AN ISSUER
(For shareholders of Disciplined Growth Fund,
Gold Fund, Bank Fund, and Global Fund voting separately)
Each of Disciplined Growth Fund, Gold Fund, Bank Fund and Global Fund has a
fundamental investment restriction regarding investing in a single class of
securities of an issuer which states that the Funds may not:
-29-
Acquire more than 5% of any class of securities of an issuer, except
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. For this purpose, all outstanding bonds and other
evidences of indebtedness shall be deemed a single class regardless of
maturities, priorities, coupon rates, series, designations, conversion
rights, security or other differences, and with respect to the Global Fund,
all preferred stocks of an issuer shall be deemed a single class.
At the meeting of the Trustees on March 5, 1996, the Trustees voted to
approve, and to recommend to shareholders of each of Disciplined Growth Fund,
Gold Fund, Bank Fund and Global Fund that they approve, the elimination of the
Funds' fundamental investment restriction regarding investing in a single class
of securities of an issuer.
Neither the 1940 Act nor state "blue sky" laws currently require that the
Funds have the above investment restriction. This change is being proposed to
permit the Funds to acquire more than 5% of the securities of a single class of
an issuer (subject to 1940 Act and tax diversification policies) to the extent
that the Adviser believes that such an investment would be beneficial to the
Funds. The Trustees believe that the Funds would benefit from more flexible
restrictions on investments in a single issuer and from conforming its
diversification restrictions more closely to those of other John Hancock funds.
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUNDS APPROVE THIS
PROPOSAL TO ELIMINATE THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTION LIMITING THE
AMOUNT OF INVESTMENTS IN A SINGLE CLASS OF SECURITIES OF AN ISSUER.
Required Vote
Approval of Proposal 4 requires a 1940 Act Majority Shareholder Vote of
each of Gold Fund, Bank Fund, Disciplined Growth Fund and Global Fund.
PROPOSAL 5
REDESIGNATION AS NONFUNDAMENTAL OF FUNDAMENTAL INVESTMENT
RESTRICTION ON INVESTING IN OTHER INVESTMENT COMPANIES
(For shareholders of Disciplined Growth Fund, Global Fund,
Global Income Fund and Short-Term Fund voting separately)
Each of Disciplined Growth Fund, Global Fund, Global Income Fund and
Short-Term Fund currently has an existing fundamental investment restriction
regarding investments in investment companies which states that the Funds may
not:
Purchase securities of other open-end investment companies, except in
connection with a merger, consolidation, acquisition or reorganization; or
purchase more than 3% of the total outstanding voting stock of any
closed-end investment company if more than 5% of a Fund's total assets
would be invested in securities of any closed-end investment company, or
more than 10% of the Fund's total assets would be invested in securities of
any closed-end investment companies in general. In addition, a Fund may not
invest in the securities of closed-end investment companies except by
purchase in the open market involving only customary broker's commissions.
-30-
At the meeting of the Trustees on March 5, 1996, the Trustees voted to
approve, and to recommend to shareholders of Disciplined Growth Fund, Global
Fund, Global Income Fund and Short-Term Fund that they approve, the
redesignation as nonfundamental of the above fundamental investment restriction.
If redesignated as proposed, the Trustees would amend the nonfundamental
restriction to provide that each Fund may not:
Purchase a security if, as a result, (i) more than 10% of the Fund's total
assets would be invested in the securities of other investment companies,
(ii) the Fund would hold more than 3% of the total outstanding voting
securities of any one investment company, or (iii) more than 5% of the
Fund's total assets would be invested in the securities of any one
investment company. These limitations do not apply to (a) the investment of
cash collateral, received by the Fund in connection with lending the Fund's
portfolio securities, in the securities of open-end investment companies or
(b) the purchase of shares of any investment company in connection with a
merger, consolidation, reorganization or purchase of substantially all of
the assets of another investment company. Subject to the above percentage
limitations, 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. The Fund may not purchase the shares of any closed-end
investment company except in the open market where no commission or profit
to a sponsor or dealer results from the purchase, other than customary
brokerage fees.
This change is being proposed to provide the Funds with additional
investment and administrative flexibility. Currently, the Funds may only invest
in securities of other open-end investment companies in connection with a
merger, consolidation, acquisition or reorganization. The Funds may invest in
the securities of closed-end investment companies subject to certain percentage
and other limitations. The change set forth in this Proposal would permit
investment by the Funds in securities of open-end and closed-end investment
companies subject to the percentage limitations set forth in the nonfundamental
restriction. The percentage limitations would not apply in cases of a merger,
consolidation, acquisition or reorganization or with respect to investment by
the Funds of any cash collateral they are holding in open-end investment
companies. If this Proposal is approved, the Funds will have more flexibility to
invest in securities of other investment companies and will be better able to
take advantage of potential investment opportunities. In addition, by making
this investment restriction nonfundamental, the Trustees will be able to amend
the restriction without incurring the delay and cost of obtaining prior
shareholder approval. The Trustees believe that approval of this Proposal would
be beneficial to shareholders of the Funds.
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUNDS APPROVE THIS
PROPOSAL TO REDESIGNATE AS NONFUNDAMENTAL AND THEN AMEND THE FUNDS' FUNDAMENTAL
INVESTMENT RESTRICTION ON INVESTING IN OTHER INVESTMENT COMPANIES.
Required Vote
Approval of Proposal 5 requires a 1940 Act Majority Shareholder Vote of
each of Disciplined Growth Fund, Global Fund, Global Income Fund and Short-Term
Fund.
-31-
PROPOSAL 6
AMENDING THE FUNDAMENTAL INVESTMENT OBJECTIVE
OF GLOBAL INCOME FUND
(For shareholders of Global Income Fund)
At the meeting on March 5, 1996, the Trustees of Global Income Fund,
including the Independent Trustees, voted to approve, and voted to recommend to
Global Income Fund's shareholders that they approve, a proposal to amend the
Fund's investment objective and to redesignate the investment objective as
nonfundamental.
Proposed Amended Investment Objective
Global Income Fund's current investment objective (the "Current Objective")
is to:
...achieve a high total investment return, a combination of current income
and capital appreciation, by investing in a global portfolio of high
quality, fixed income securities. Normally, the Fund will invest in fixed
income securities denominated in at least three currencies or
multi-currency units, including the U.S. Dollar.
The Fund's proposed investment objective (the "Proposed Objective") would
be to:
...achieve a high total investment return, a combination of current income
and capital appreciation.
Currently, the Fund will normally invest at least 65% of its total assets
in debt securities issued or guaranteed by the U.S. Government or foreign
governments or institutions. The Fund may only invest in debt securities which
are high grade and which are rated either A or better by Standard & Poor's
Rating Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") or, if
unrated, are determined by the Adviser to be of similar creditworthiness. If the
Proposed Objective is approved, the Fund will be able to invest in lower-rated
and non-investment grade debt securities, commonly referred to as "emerging
market" or "junk" bonds. The Trustees of the Fund will add a nonfundamental
investment policy to the Fund's currently existing investment policies allowing
the Fund to invest up to 35% of its total assets in "emerging market" or "junk"
bonds if the Proposed Objective is approved by shareholders.
In making their determination to recommend this Proposal, the Trustees
considered the fact that, by being restricted to investing only in debt
securities that are highly rated, the Fund is unable to take advantage of many
investment opportunities. The Trustees expect that the Proposed Objective will
give the Fund greater flexibility to take advantage of a broader range of global
investment opportunities while maintaining the proven investment selection
process and focused portfolio management style currently used by the Fund.
The Trustees also considered the fact that lower-grade and non-investment
grade debt securities are speculative and entail risks greater than those of
higher quality debt, including a higher risk of issuer default. Lower-grade and
non-investment grade debt securities, however, offer investors the potential of
higher income and returns than is generally the case with higher quality debt.
If this Proposal is approved, the Fund will be able to maintain a more balanced
portfolio.
-32-
The Trustees also reviewed the investment objectives and policies of
competing non-proprietary global income funds. Most of such other funds have the
flexibility to invest in lower-grade and non-investment grade debt and most are
permitted to invest up to 35% of their assets in non-investment grade debt. The
Fund, therefore, is at a competitive disadvantage. If this Proposal is approved,
the Fund will be conforming its investment objective and policies to those of
most other non-proprietary global income funds and will be in a better position
to compete with such funds. Although there can be no certainty, the Trustees
believe that the Fund will be in a better position to capture a greater share of
the global income fund market and to increase its asset size if this Proposal is
adopted. An increase in asset size of the Fund may enable the Fund to take
advantage of economies of scale and thereby reduce costs.
The Proposed Objective will be nonfundamental, which means that the
investment objective may be changed at the discretion of the Trustees without a
shareholder vote. The Trustees believe that the ability to change the Fund's
investment objective will enable the Fund to better respond to changing economic
and market conditions without incurring the expense and delay associated with
holding a shareholders' meeting. If the Trustees were to decide at some future
date to amend the Fund's investment objective, no change would become effective
until the Fund's prospectus and statement of additional information had been
amended or supplemented to disclose the change.
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT GLOBAL INCOME FUND'S SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE INVESTMENT OBJECTIVE OF GLOBAL INCOME FUND AND REDESIGNATE
IT AS NONFUNDAMENTAL.
Vote Required
Approval of Proposal 6 requires a 1940 Act Majority Shareholder Vote of
Global Income Fund.
OTHER MATTERS
The Fund's management knows of no business to be brought before the Meeting
except as described above. However, if any other matters properly come before
the Meeting, the persons named in the enclosed form of proxy intend to vote on
these matters in accordance with their best judgment. If shareholders would like
additional information about the matters proposed for action, the Fund's
management will be glad to hear from them and to provide further information.
PROXIES AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the applicable Fund. In addition, although mere
attendance at the Meeting will not revoke a proxy, a Fund shareholder present at
the Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares of the Fund represented
thereby in favor of the matters set forth in Proposals 2(a), 2(b), 2(c), 2(d),
2(e), 2(f), 2(g), 2(h), 3(a), 3(b), 3(c), 4, 5 and 6 and for the Nominees in
Proposal 1, and will use their best judgment in connection with the transaction
of other business that may properly come before the Meeting or any adjournment
thereof.
-33-
In addition, John Hancock Mutual Life Insurance Company (the "Life
Company") will vote shares of any of the Funds held in individual retirement
accounts or tax shelter accounts for which the Life Company acts as custodian
and with respect to which no proxies have been received by the Life Company. The
Life Company will vote such shares in the same proportion as it has been
instructed to vote Fund shares held by all such accounts for which proxies have
been received. The Fund shares voted by the Life Company will be counted as
present at the Meeting for purposes of establishing a quorum.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present in person or by proxy for any Fund, the persons
named as proxies with respect to the Fund may vote those proxies that have been
received to adjourn the Fund's Meeting to a later date. In the event that a
quorum is present but sufficient votes by a Fund's shareholders in favor of
Proposals 2(a), 2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h), 3(a), 3(b), 3(c), 4, 5
and 6 and for the Nominees in Proposal 1 have not been received, the persons
named as proxies with respect to the Fund will vote those proxies which they are
entitled to vote in favor of the relevant Proposal for such an adjournment, and
will vote those proxies required to be voted against the Proposal against any
adjournment. A shareholder vote for a Fund may be taken on one or more of the
Proposals prior to the adjournment if sufficient votes for its approval have
been received and it is otherwise appropriate.
Shares of beneficial interest of each Fund represented in person or by
proxy (including shares which abstain or do not vote with respect to one or more
of the Proposals presented for shareholder approval) will be counted for
purposes of determining whether a quorum is present with respect to each Fund at
the Meeting. Abstentions will be treated as shares that are present and entitled
to vote with respect to the Proposal, but will not be counted as a vote in favor
of a Proposal. Accordingly, an abstention from voting on a Proposal has the same
effect as a vote against the Proposal.
If a broker or nominee holding shares in "street name" indicates on the
proxy that it does not have discretionary authority to vote as to a particular
Proposal, those shares will not be considered as present and entitled to vote
with respect to the Proposal. Accordingly, a "broker non-vote" has no effect on
the voting in determining whether a Nominee has been elected as a Trustee of a
Fund or a Proposal has been adopted pursuant to subsection (i) of the 1940 Act
Majority Shareholder Vote definition. However, in determining whether a Proposal
has been adopted pursuant to subsection (ii) of the 1940 Act Majority
Shareholder Vote definition, a "broker non-vote" will have the same effect as a
vote against the Proposal because shares represented by a "broker non-vote" are
considered outstanding shares.
In addition to the solicitation of proxies by mail or in person, each Fund
may also arrange to have votes recorded by telephone by officers and employees
of the Fund or by personnel of the Adviser, John Hancock Funds or Investor
Services. The telephone voting procedure is designed to authenticate a
shareholder's identity, to allow a shareholder to authorize the voting of shares
in accordance with the shareholder's instructions and to confirm that the voting
instructions have been properly recorded. If these procedures were subject to a
successful legal challenge, these telephone votes would not be counted at the
Meeting. None of the Funds has sought an opinion of counsel on this matter and
is unaware of any such challenge at this time.
A shareholder will be called on a recorded line at the telephone number
appearing in the shareholder's account records and will be asked to provide the
shareholder's Social Security number or other identifying information. The
shareholder will then be given an opportunity to authorize proxies to vote his
or her shares at the Meeting in accordance with the shareholder's instructions.
To ensure that the
-34-
shareholder's instructions have been recorded correctly, the shareholder will
also receive a confirmation of the voting instructions in the mail. A special
toll-free number will be available in case the voting information contained in
the confirmation is incorrect. If the shareholder decides after voting by
telephone to attend the Meeting, the shareholder can revoke the proxy at that
time and vote the shares at the Meeting.
SHAREHOLDERS' PROPOSALS
The Funds are not required, and do not intend, to hold meetings of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting for shareholders of their respective Funds must submit the
proposal in writing, so that it is received by the appropriate Fund at 101
Huntington Avenue, Boston, Massachusetts 02199 within a reasonable time before
any meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
Boston, Massachusetts
May 17, 1996 JOHN HANCOCK DISCIPLINED GROWTH FUND
JOHN HANCOCK FINANCIAL INDUSTRIES FUND
JOHN HANCOCK GOLD & GOVERNMENT FUND
JOHN HANCOCK REGIONAL BANK FUND
JOHN HANCOCK GLOBAL FUND
JOHN HANCOCK GLOBAL INCOME FUND
JOHN HANCOCK INTERNATIONAL FUND
JOHN HANCOCK SHORT-TERM STRATEGIC INCOME FUND
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
JOHN HANCOCK DISCOVERY FUND
-35-
EXHIBIT A
[NAME OF FUND]
(a series of [Name of Trust])
101 Huntington Avenue
Boston, Massachusetts 02199
July 1, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
------------------------------
Ladies and Gentlemen:
[Name of Trust] (the "Trust"), of which [Name of Fund] (the "Fund") is a
series, has been organized as a business trust under the laws of The
Commonwealth of Massachusetts to engage in the business of an investment
company. The Trust's shares of beneficial interest, no par value, may be divided
into series, each series representing the entire undivided interest in a
separate portfolio of assets. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. DELIVERY OF DOCUMENTS. The Trust has furnished the Ad- viser with
copies, properly certified or otherwise authenticated, of each of the following:
(a) Master Trust Agreement, dated ____________, as amended from time to
time (the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of this Agreement;
- 1 -
(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; and
(e) The Trust's Code of Ethics.
The Trust will furnish to the Adviser from time to time copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any.
2. INVESTMENT AND MANAGEMENT SERVICES. The Adviser will use its best
efforts to provide to the Fund continuing and suitable investment programs with
respect to investments, consistent with the investment objectives, policies 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 Fund's
then-current Prospectus and Statement of Additional Information included in the
registration statement of the Trust as in effect from time to time under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent with the
investment objectives, policies and restrictions of the Fund, with
respect to the purchase, holding and disposition of portfolio se-
curities, alone or in consultation with any subad- viser or
subadvisers appointed pursuant to this Agreement and subject to the
provisions of any sub- investment management contract respecting the
re- sponsibilities of such subadviser or subadvisers;
(b) advise the Fund in connection with policy decisions to be made by the
Trustees or any committee thereof with respect to the Fund's
investments and, as requested, furnish the Fund with research,
economic and statistical data in connection with the Fund's
investments and investment policies;
(c) provide administration of the day-to-day investment operations of the
Fund;
(d) submit such reports relating to the valuation of the Fund's securities
as the Trustees may reason- ably request;
- 2 -
(e) assist the Fund in any negotiations relating to the Fund's investments
with issuers, investment banking firms, securities brokers or dealers
and other institutions or investors;
(f) consistent with the provisions of Section 7 of this Agreement, place
orders for the purchase, sale or exchange of portfolio securities with
brokers or dealers selected by the Adviser, PROVIDED that in
connection with the placing of such orders and the selection of such
brokers or dealers the Adviser shall seek to obtain execution and
pricing within the policy guidelines determined by the Trustees and
set forth in the Prospectus and Statement of Additional Information of
the Fund as in effect from time to time;
(g) provide office space and office equipment and supplies, the use of
accounting equipment when required, and necessary executive, clerical
and secretarial personnel for the administration of the affairs of the
Fund;
(h) from time to time or at any time requested by the Trustees, make
reports to the Fund of the Adviser's performance of the foregoing
services and furnish advice and recommendations with respect to other
aspects of the business and affairs of the Fund;
(i) maintain all books and records with respect to the Fund's securities
transactions required by the 1940 Act, including subparagraphs (b)(5),
(6), (9) and (10) and paragraph (f) of Rule 31a-1 thereunder (other
than those records being maintained by the Fund's custodian or
transfer agent) and preserve such records for the periods prescribed
therefor by Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered to the
Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as the
Adviser may deem necessary or useful in the discharge of the Adviser's
duties hereunder;
(k) oversee, and use the Adviser's best efforts to assure the performance
of the activities and services of the custodian, transfer agent or
other similar agents retained by the Fund;
- 3 -
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash
for the account of the Fund; and
(m) appoint and employ one or more sub-advisors satisfactory to the Fund
under sub-investment management agreements.
3. EXPENSES PAID BY THE ADVISER. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of the
Trust;
(b) the expenses of office rent, telephone and other utilities, office
furniture, equipment, supplies and other expenses of the Fund; and
(c) any other expenses incurred by the Adviser in connection with the
performance of its duties hereunder.
4. EXPENSES OF THE FUND NOT PAID BY THE ADVISER. The Adviser will not be
required to pay any expenses which this Agreement does not expressly make
payable by it. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 3, the Adviser will not be
required to pay under this Agreement:
(a) any and all expenses, taxes and governmental fees incurred by the
Trust or the Fund prior to the ef- fective date of this Agreement;
(b) without limiting the generality of the foregoing clause (a), the
expenses of organizing the Trust and the Fund (including without
limitation, legal, accounting and auditing fees and expenses incurred
in connection with the matters referred to in this clause (b)), of
initially registering shares of the Trust under the Securities Act of
1933, as amended, and of qualifying the shares for sale under state
securities laws for the initial offering and sale of shares;
(c) the compensation and expenses of Trustees who are not interested
persons (as used in this Agreement, such term shall have the meaning
specified in the 1940 Act) of the Adviser and of independent advisers,
independent contractors, consultants, managers and other unaffiliated
agents employed by the Fund other than through the Adviser;
- 4 -
(d) legal, accounting, financial, management, tax and auditing fees and
expenses of the Fund (including an allocable portion of the cost of
its employees rendering such services to the Fund);
(e) the fees and disbursements of custodians and depositories of the
Fund's assets, transfer agents, disbursing agents, plan agents and
registrars;
(f) taxes and governmental fees assessed against the Fund's assets and
payable by the Fund;
(g) the cost of preparing and mailing dividends, dis- tributions, reports,
notices and proxy materials to shareholders of the Fund;
(h) brokers' commissions and underwriting fees;
(i) the expense of periodic calculations of the net asset value of the
shares of the Fund; and
(j) insurance premiums on fidelity, errors and omis- sions and other
coverages.
5. COMPENSATION OF THE ADVISER. [Complete as appropriate.] The "average
daily net assets" of the Fund shall be deter- mined on the basis set forth in
the Fund's Prospectus or otherwise consistent with the 1940 Act and the
regulations promulgated thereunder. The Adviser will receive a pro rata portion
of such monthly fee for any periods in which the Adviser serves as investment
adviser to the Fund for less than a full month. On any day that the net asset
value calculation is suspended as specified in the Fund's Prospectus, the net
asset value for purposes of calculating the advisory fee shall be calculated as
of the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any limitation
imposed by the law of a state where the Fund has registered its shares of
beneficial interest, the fee payable to the Adviser will be reduced to the
extent required by law, and the Adviser will make any additional arrangements
that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of its
fee (in advance of the time its fee would otherwise accrue) and/or undertake to
make any other payments or arrangements necessary to limit the Fund's expenses
to any level the Adviser may specify. Any fee reduction or undertaking shall
constitute a binding modification of this Agreement while it is in effect but
may be discontinued or modified prospectively by the Adviser at any time.
- 5 -
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES. Nothing herein
contained shall prevent the Adviser or any affiliate or associate of the Adviser
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or portfolios similar to the Fund's; and it is specifically
understood that officers, directors and employees of the Adviser and those of
its parent company, John Hancock Mutual Life Insurance Company, or other
affiliates may continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to other
investment advisory clients of the Adviser or of its affiliates and to said
affiliates themselves.
The Adviser shall have no obligation to acquire with respect to the Fund a
position in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, if, in the sole discretion of the Adviser, it is not feasible or
desirable to acquire a position in such investment on behalf of the Fund.
Nothing herein contained shall prevent the Adviser from purchasing or
recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
7. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the Adviser
nor any of its investment management subsidiaries, nor any of the Adviser's or
such investment management subsidiaries' directors, officers or employees will
act as principal or agent or receive any commission, except as may be permitted
by the 1940 Act and rules and regulations promulgated thereunder. If any
occasions shall arise in which the Adviser advises persons concerning the shares
of the Fund, the Adviser will act solely on its own behalf and not in any way on
behalf of the Fund. Nothing herein contained shall limit or restrict the Adviser
or any of its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts.
8. NO PARTNERSHIP OR JOINT VENTURE. Neither the Trust, the Fund nor the
Adviser are partners of or joint venturers with each other and nothing herein
shall be construed so as to make them such partners or joint venturers or impose
any liability as such on any of them.
9. NAME OF THE TRUST AND THE FUND. The Trust and the Fund may use the name
"John Hancock" or any name or names derived from or similar to the names "John
Hancock Advisers, Inc." or "John Hancock Mutual Life Insurance Company" only for
so long as this Agreement remains in effect. At such time as this Agreement
shall no longer be in effect, the Trust and the Fund will (to the extent
- 6 -
that they lawfully can) cease to use such a name or any other name indicating
that the Fund is advised by or otherwise connected with the Adviser. The Fund
acknowledges that it has adopted the name ["Name of Fund"] through permission of
John Hancock Mutual Life Insurance Company, a Massachusetts insurance company,
and agrees that John Hancock Mutual Life Insurance Company reserves to itself
and any successor to its business the right to grant the nonexclusive right to
use the name "John Hancock" or any similar name or names to any other
corporation or entity, including but not limited to any investment company of
which John Hancock Mutual Life Insurance Company or any subsidiary or affiliate
thereof shall be the investment adviser.
10. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. Any person, even
though also employed by the Adviser, who may be or become an employee of and
paid by the Trust shall be deemed, when acting within the scope of his
employment by the Fund, to be acting in such employment solely for the Trust and
not as the Adviser's employee or agent.
11. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain
in force until June 30, 1998, and from year to year thereafter, but only so long
as such continuance is specifically approved at least annually by (a) a majority
of the Trustees who are not interested persons of the Adviser or (other than as
Board members) of the Fund, cast in person at a meeting called for the purpose
of voting on such approval, and (b) either (i) the Trustees or (ii) a majority
of the outstanding voting securities of the Fund. This Agreement may, on 60
days' written notice, be terminated at any time without the payment of any
penalty by the vote of a majority of the outstanding voting securities of the
Fund, by the Trustees or by the Adviser. Termination of this Agreement shall not
be deemed to terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this Section 11, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of "assignment," "interested person" and
"voting security") shall be applied.
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination
- 7 -
is sought, and no amendment, transfer, assignment, sale, hypothecation or pledge
of this Agreement shall be effective until approved by (a) the Trustees,
including a majority of the Trustees who are not interested persons of the
Adviser or (other than as Trustees) of the Fund, cast in person at a meeting
called for the purpose of voting on such approval, and (b) a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act.
13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of The Commonwealth of Mas- sachusetts.
14. SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
15. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The name [Name of Fund] is a series designation of
the Trustees under the Trust's Declaration of Trust. The Declaration of Trust
has been filed with the Secretary of State of The Commonwealth of Massachusetts.
The obligations of the Fund are not personally binding upon, nor shall resort be
had to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only upon the Fund and its property. The
Fund shall not be liable for the obligations of any other series of the Trust
and no other series shall be liable for the Fund's obligations hereunder.
Yours very truly,
[NAME OF TRUST]
on behalf of [Name of Fund]
By: _______________________________
Title: ____________________________
- 8 -
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: ______________________________
Title: ___________________________
- 9 -
EXHIBIT B
COMPARATIVE FEE TABLES
Existing New
Gold Fund Agreement Agreement
- --------- --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee................. 0.80% 0.80% 0.80% 0.80%
12b-1 fee...................... 0.30% 1.00% 0.30% 1.00%
Other expenses................. 0.52% 0.52% 0.54% 0.54%
Total Fund operating expenses.. 1.62% 2.32% 1.64% 2.34%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $66 $66 $ 99 $ 99 $135 $134 $235 $233
Class B Shares
-Assuming complete redemption
at end of period......... 74 74 103 102 145 144 250 248
-Assuming no redemption... 24 24 73 72 125 124 250 248
Existing New
Bank Fund Agreement Agreement
- --------- --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ................ 0.78% 0.78% 0.78% 0.78%
12b-1 fee...................... 0.30% 1.00% 0.30% 1.00%
Other expenses................. 0.31% 0.31% 0.33% 0.33%
Total Fund operating expenses.. 1.39% 2.09% 1.41% 2.11%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $64 $64 $92 $92 $123 $122 $211 $209
Class B Shares
-Assuming complete redemption
at end of period......... 71 71 96 95 133 132 226 224
-Assuming no redemption... 21 21 66 65 113 112 226 224
B-2
Existing New
Disciplined Growth Fund Agreement Agreement
- ----------------------- --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ................ 0.75% 0.75% 0.75% 0.75%
12b-1 fee...................... 0.30% 1.00% 0.30% 1.00%
Other expenses................. 0.40% 0.40% 0.42% 0.42%
Total Fund operating expenses.. 1.45% 2.15% 1.47% 2.17%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $64 $64 $94 $94 $126 $125 $217 $215
Class B Shares
-Assuming complete redemption
at end of period......... 72 72 98 97 136 135 233 231
-Assuming no redemption... 22 22 68 67 116 115 233 231
B-3
Existing New
Global Fund Agreement Agreement
Class A Class B Class A Class B
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ......... 0.96% 0.96% 0.96% 0.96%
12b-1 fee............... 0.30% 1.00% 0.30% 1.00%
Other expenses.......... 0.61% 0.61% 0.63% 0.63%
Total gross Fund
operating expenses.... 1.87% 2.57% 1.89% 2.59%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $68 $68 $106 $106 $147 $146 $260 $258
Class B Shares
-Assuming complete redemption
at end of period......... 76 76 111 110 158 157 275 273
-Assuming no redemption... 26 26 81 80 138 137 275 273
B-4
Existing New
Global Income Fund Agreement Agreement
- ------------------ --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ................ 0.75% 0.75% 0.75% 0.75%
12b-1 fee...................... 0.30% 1.00% 0.30% 1.00%
Other expenses................. 0.43% 0.43% 0.45% 0.45%
Total Fund operating expenses.. 1.48% 2.18% 1.50% 2.20%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $59 $59 $90 $90 $123 $122 $216 $214
Class B Shares
-Assuming complete redemption
at end of period......... 72 72 99 98 138 137 236 234
-Assuming no redemption... 22 22 69 68 118 117 236 234
B-5
Existing New
International Fund Agreement Agreement
- ------------------ --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ......... 1.00% 1.00% 1.00% 1.00%
12b-1 fee............... 0.30% 1.00% 0.30% 1.00%
Other expenses.......... 3.58% 3.58% 3.60% 3.60%
Total gross Fund
operating expenses.... 4.88% 5.58% 4.90% 5.60%
Management fee waiver and
expense reimbursement. 3.16% 3.16% 3.18% 3.18%
Total net Fund operating
expenses.............. 1.72% 2.42% 1.72% 2.42%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $66 $66 $ 99 $ 99 $135 $135 $235 $235
Class B Shares
-Assuming complete redemption
at end of period......... 75 75 105 105 149 149 256 256
-Assuming no redemption... 25 25 75 75 129 129 256 256
B-6
Existing New
Short-Term Fund Agreement Agreement
- --------------- --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee (net of waiver
by Adviser).................. 0.65% 0.65% 0.65% 0.65%
12b-1 fee...................... 0.30% 1.00% 0.30% 1.00%
Other expenses................. 0.42% 0.42% 0.44% 0.44%
Total Fund operating expenses.. 1.37% 2.07% 1.39% 2.09%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $44 $44 $73 $72 $104 $103 $192 $190
Class B Shares
-Assuming complete redemption
at end of period......... 51 51 75 85 112 111 200 198
-Assuming no redemption... 21 21 65 65 112 111 200 198
B-7
Existing New
Special Opportunities Fund Agreement Agreement
- -------------------------- --------- ---------
Class A Class B Class A Class B
------- ------- ------- -------
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee ......... 0.80% 0.80% 0.80% 0.80%
12b-1 fee............... 0.30% 1.00% 0.30% 1.00%
Other expenses.......... 0.49% 0.49% 0.51% 0.51%
Total Fund operating
expenses.............. 1.59% 2.29% 1.61% 2.31%
Example
The following table illustrates the expenses on a $1,000 investment you
would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
Class A Shares............. $65 $65 $ 98 $ 98 $133 $132 $232 $229
Class B Shares
-Assuming complete redemption
at end of period......... 73 73 102 102 144 143 247 245
-Assuming no redemption... 23 23 72 72 124 123 247 245
The purpose of the examples and the tables set forth above is to assist
investors in understanding the various costs and expenses of investing in shares
of each Fund. The examples above should not be considered representations of
past or future expenses of the Funds. Actual expenses may be higher or lower
than those shown above.
B-8
EXHIBIT C
The Adviser provides investment advisory services to the following John
Hancock funds with investment objectives substantially identical to those of the
following Funds:
I. Disciplined Growth Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
------------ --------------- ---
Special Opportunities Fund $ 0.80% of the first $500,000,000 of
average daily net assets; 0.75% of
the next $500,000,000; and 0.70%
in excess of $1,000,000,000
Discovery Fund $ 0.75% of the first $750,000,000 of
average daily net assets; and 0.70%
in excess of $750,000,000
John Hancock Special Equities Fund $ 0.85% of the first $250,000,000
of average daily net assets; and 0.80%
in excess of $250,000,000
John Hancock Growth Fund $ 0.80% of the first $250,000,000 of
average daily net assets; 0.75% of
the next $250,000,000; and 0.70%
in excess of $500,000,000
John Hancock Emerging Growth Fund $ 0.75% of average daily net assets
John Hancock Multi-Sector Growth Fund $ 0.80% of the first $500,000,000
of average daily net assets; 0.75%
in excess of $500,000,000
John Hancock Independence Growth Fund $ 0.80% of the first $500,000,000
of average daily net assets; 0.75%
in excess of $500,000,000
II. Global Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
------------ --------------- ---
International Fund $ 1.00% of the first $250,000,000 of
average daily net assets; 0.80% of
the next $250,000,000; 0.75% of
the next $250,000,000; and 0.625%
in excess of $750,000,000
John Hancock International Equity Fund $ 0.90% of the first $500,000,000 of
average daily net assets; 0.65%
in excess of $500,000,000
III. Global Income Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
John Hancock Global Bond Fund $ 0.75% of the first $250,000,000 of
average daily net assets; 0.70% in
excess of $250,000,000
IV. International Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
Global Fund $ 1.00% of the first $100,000,000 of
average daily net assets; 0.80% of
the next $200,000,000; 0.75% of
the next $200,000,000; and 0.625%
in excess of $500,000,000
John Hancock International Equity Fund $ 0.90% of the first $500,000,000 of
average daily net assets; 0.65% in
excess of $500,000,000
V. Short-Term Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
John Hancock Strategic Income Fund $ 0.60% of the first $100,000,000 of
average daily net assets; 0.45% of
the next $150,000,000; 0.40% of
the next $250,000,000; 0.35% of
the next $150,000,000; and 0.30%
in excess of $650,000,000
VI. Special Opportunities Fund
Asset Size Advisory
Name of Fund (as of 4/22/96) Fee
Disciplined Growth Fund $ 0.75% of average daily net assets
Discovery Fund $ 0.75% of the first $750,000,000 of
average daily net assets; and 0.70%
in excess of $750,000,000
John Hancock Special Equities Fund $ 0.85% of the first $250,000,000
of average daily net assets; and 0.80%
in excess of $250,000,000
-2-
John Hancock Growth Fund $ 0.80% of the first $250,000,000 of
average daily net assets; 0.75% of
the next $250,000,000; and 0.70%
in excess of $500,000,000
John Hancock Emerging Growth Fund $ 0.75% of average daily net assets
John Hancock Multi-Sector Growth Fund $ 0.80% of the first $500,000,000 of
average daily net assets; 0.75% in
excess of $500,000,000
John Hancock Independence Growth Fund $ 0.80% of the first $500,000,000 of
average daily net assets; 0.75% in
excess of $500,000,000
-3-
EXHIBIT D
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
[NAME OF TRUST]
101 Huntington Avenue
Boston, Massachusetts 02199
Dated _______ , 1996
DECLARATION OF TRUST made this __day of ___________, 1996 by the
undersigned (together with all other persons from time to time duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, the "Trustees");
WHEREAS, pursuant to a declaration of trust executed and delivered on
_________ (the "Original Declaration"), the Trustees established a trust for the
investment and reinvestment of funds contributed thereto;
WHEREAS, the Trustees divided the beneficial interest in the trust assets
into transferable shares of beneficial interest, as provided therein;
WHEREAS, the Trustees declared that all money and property contributed to
the trust established thereunder be held and managed in trust for the benefit of
the holders, from time to time, of the shares of beneficial interest issued
thereunder and subject to the provisions thereof;
WHEREAS, the Trustees desire to amend and restate the Original Declaration;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, the undersigned, being all of the Trustees of the
trust, hereby amend and restate the Original Declaration as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "John Hancock
[Name] Trust" (the "Trust").
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Section 3.3 hereof.
(b) "By-laws" means the By-laws referred to in Section 2.8 hereof, as
amended from time to time.
(c) "Class" means any division of shares within a Series in accordance with
the provisions of Article V.
(d) The terms "Commission" and "Interested Person" have the meanings given
them in the 1940 Act. Except as such term may be otherwise defined by the
Trustees in conjunction with the establishment of any Series, the term "vote of
a majority of the Outstanding Shares entitled to vote" shall have the same
meaning as is assigned to the term "vote of a majority of the outstanding voting
securities" in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(f) "Declaration" means this Declaration of Trust as amended from time to
time. Reference in this Declaration of Trust to "Declaration," "hereof,"
"herein," and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(g) "Distributor" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
(h) "Fund" or "Funds" individually or collectively, means the separate
Series of the Trust, together with the assets and liabilities assigned thereto.
(i) "Fundamental Restrictions" means the investment restrictions set forth
in the Prospectus and Statement of Additional Information for any Series and
designated as fundamental restrictions therein with respect to such Series.
(j) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(m) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(n) "Prospectus" means the Prospectuses and Statements of Additional
Information included in the Registration Statement of the Trust under the
Securities Act of 1933, as amended, as such Prospectuses and Statements of
Additional Information may be amended or supplemented and filed with the
Commission from time to time.
(o) "Series" individually or collectively means the separately managed
component(s) of the Trust (or, if the Trust shall have only one such component,
then that one) as may be established and designated from time to time by the
Trustees pursuant to Section 5.11 hereof.
(p) "Shareholder" means a record owner of Outstanding Shares.
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(q) "Shares" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all Series or of any Class within any Series (as the
context may require) which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares. "Outstanding" Shares means those
Shares shown from time to time on the books of the Trust or its Transfer Agent
as then issued and outstanding, but shall not include Shares which have been
redeemed or repurchased by the Trust and which are at the time held in the
treasury of the Trust.
(r) "Transfer Agent" means any Person other than the Trust who maintains
the Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(s) "Trust" means [Name of Trust].
(t) "Trustees" means the persons who have signed this Declaration, so long
as they shall continue in office in accordance with the terms hereof, and all
other persons who now serve or may from time to time be duly elected, qualified
and serving as Trustees in accordance with the provisions of Article II hereof,
and reference herein to a Trustee or the Trustees shall refer to such person or
persons in this capacity or their capacities as trustees hereunder.
(u) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of the Trust or the
Trustees, including any and all assets of or allocated to any Series or Class,
as the context may require.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
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Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference stocks; warrants; subscription
rights; profit-sharing interests or participations and all other contracts for
or evidence of equity interests; bonds, debentures, bills, time notes and all
other evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality or other
political subdivision thereof, or any governmental or quasi-governmental agency
or instrumentality; and money market instruments including bank certificates of
deposit, finance paper, commercial paper, bankers' acceptances and all kinds of
repurchase agreements, of any corporation, company, trust, association, firm or
other business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; any other security, instrument or
contract the acquisition or execution of which is not prohibited by any
Fundamental Restriction; and the Trustees shall be deemed to have the foregoing
powers with respect to any additional securities in which the Trust may invest
should the Fundamental Restrictions be amended.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment
agreements, forward foreign currency exchange contracts, interest rate, mortgage
or currency swaps, and interest rate caps, floors and collars, to purchase and
sell options on securities, indices, currency, swaps or other financial assets,
futures contracts and options on futures contracts of all descriptions and to
engage in all types of hedging, risk management or income enhancement
transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
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(h) To enter into a plan of distribution and any related agreements whereby
the Trust may finance directly or indirectly any activity which is primarily
intended to result in the distribution and/or servicing of Shares.
(i) To adopt on behalf of the Trust or any Series thereof an alternative
purchase plan providing for the issuance of multiple Classes of Shares (as
authorized herein at Section 5.11).
(j) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or arising out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
Notwithstanding any other provision herein, the Trustees shall have full
power in their discretion as contemplated in Section 8.5, without any
requirement of approval by Shareholders, to invest part or all of the Trust
Property (or part or all of the assets of any Series), or to dispose of part or
all of the Trust Property (or part or all of the assets of any Series) and
invest the proceeds of such disposition, in securities issued by one or more
other investment companies registered under the 1940 Act. Any such other
investment company may (but need not) be a trust (formed under the laws of any
state) which is classified as a partnership or corporation for federal income
tax purposes.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein is
deemed appropriately protected. The right, title and interest of the Trustees in
the Trust Property and the Property of each Series of the Trust shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office, resignation, removal or death of a Trustee he
shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VI and VII and Section 5.11 hereof, to apply to
any such repurchase, redemption, retirement, cancellation or
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acquisition of Shares any funds or property of the Trust or of the particular
Series with respect to which such Shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or any
Series of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the same extent as such delegation is permitted by the
1940 Act.
Section 2.6. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and pay
any expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided herein
or in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees, including any meeting
held by means of a conference telephone circuit or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, or by written consents of a majority of Trustees then in office. The
Trustees may adopt By-laws not inconsistent with this Declaration to provide for
the conduct of the business of the Trust and may amend or repeal such By-laws to
the extent such power is not reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust or any Series thereof; (b) enter
into joint ventures, partnerships and any other combinations or associations;
(c) remove Trustees, fill vacancies in, add to or subtract from their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property or the property of the appropriate Series of
the Trust, insurance policies insuring the Shareholders, Trustees, officers,
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employees, agents, investment advisers, administrators, distributors, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (e) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (f) to the extent permitted by law, indemnify any
person with whom the Trust or any Series thereof has dealings, including the
Investment Adviser, Administrator, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year and taxable year of the Trust or any Series thereof and the method
by which its or their accounts shall be kept; and (i) adopt a seal for the
Trust, but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
Section 2.10. Principal Transactions. Except for transactions not permitted
by the 1940 Act or rules and regulations adopted, or orders issued, by the
Commission thereunder, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust or
any Series thereof to any Trustee or officer of the Trust or any firm of which
any such Trustee or officer is a member acting as principal, or have any such
dealings with the Investment Adviser, Distributor or Transfer Agent or with any
Interested Person of such Person; and the Trust or a Series thereof may employ
any such Person, or firm or company in which such Person is an Interested
Person, as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian upon customary terms.
Section 2.11. Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim, or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
Section 2.12. Number of Trustees. The initial Trustees shall be the persons
initially signing the Original Declaration. The number of Trustees (other than
the initial Trustees) shall be such number as shall be fixed from time to time
by vote of a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be less than one (1).
Section 2.13. Election and Term. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.15 hereof, the Trustees may
succeed themselves and shall be elected by the Shareholders owning of record a
plurality of the Shares voting at a meeting of Shareholders on a date fixed by
the Trustees. Except in the event of resignations or removals pursuant to
Section 2.14 hereof, each Trustee shall hold office until such time as less than
a majority of the Trustees holding office has been elected by Shareholders. In
such event the Trustees then in office shall call a Shareholders' meeting for
the election of Trustees. Except for the foregoing circumstances, the Trustees
shall continue to hold office and may appoint successor Trustees.
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Section 2.14. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees or by action of two-thirds of
the outstanding Shares of the Trust (for purposes of determining the
circumstances and procedures under which any such removal by the Shareholders
may take place, the provisions of Section 16(c) of the 1940 Act (or any
successor provisions) shall be applicable to the same extent as if the Trust
were subject to the provisions of that Section). Upon the resignation or removal
of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for the purpose
of conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning or removed Trustee. Upon the incapacity or death of
any Trustee, his legal representative shall execute and deliver on his behalf
such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.15. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of his death, retirement, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by vote of a majority of the Trustees then in office. Any
such appointment shall not become effective, however, until the person named in
the vote approving the appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of the Declaration.
An appointment of a Trustee may be made in anticipation of a vacancy to occur at
a later date by reason of retirement, resignation or increase in the number of
Trustees, provided that such appointment shall not become effective prior to
such retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.15, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by the Declaration. The vote by a
majority of the Trustees in office, fixing the number of Trustees shall be
conclusive evidence of the existence of such vacancy.
Section 2.16. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
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ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive distribution contract
or contracts providing for the sale of the Shares to net the Trust or the
applicable Series of the Trust not less than the amount provided for in Section
7.1 of Article VII hereof, whereby the Trustees may either agree to sell the
Shares to the other party to the contract or appoint such other party as their
sales agent for the Shares, and in either case on such terms and conditions, if
any, as may be prescribed in the By-laws, and such further terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Article III or of the By-laws; and such contract may also
provide for the repurchase of the Shares by such other party as agent of the
Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts or, if the Trustees establish multiple Series, separate
investment advisory or management contracts with respect to one or more Series
whereby the other party or parties to any such contracts shall undertake to
furnish the Trust or such Series management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider desirable and
all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers, or any of them, under any such contracts
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of portfolio
securities and other investments of the Trust on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of such Investment Advisers, or
any of them (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such meeting the
approval or continuance of any such investment advisory or management contract.
If the Shareholders of any one or more of the Series of the Trust should fail to
approve any such investment advisory or management contract, the Investment
Adviser may nonetheless serve as Investment Adviser with respect to any Series
whose Shareholders approve such contract.
Section 3.3. Administration Agreement. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof and furnish the Trust or a Series or a Class thereof with office
facilities, and shall be responsible for the ordinary clerical, bookkeeping and
recordkeeping services at such office facilities, and other facilities and
services, if any, and all upon such terms and conditions as the Trustees may in
their discretion determine.
Section 3.4. Service Agreement. The Trustees may in their discretion from
time to time enter into Service Agreements with respect to one or more Series or
Classes thereof whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration plans
and service plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
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Section 3.5. Transfer Agent. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 3.6. Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-laws of the Trust. The Trustees may also authorize
the Custodian to employ one or more sub-custodians, including such foreign banks
and securities depositories as meet the requirements of applicable provisions of
the 1940 Act, and upon such terms and conditions as may be agreed upon between
the Custodian and such sub-custodian, to hold securities and other assets of the
Trust and to perform the acts and services of the Custodian, subject to
applicable provisions of law and resolutions adopted by the Trustees.
Section 3.7. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or any
Series thereof is a shareholder, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any partnership, corporation, trust,
association or other organization or of or for any parent or affiliate of any
organization, with which a contract of the character described in Sections 3.1,
3.2, 3.3 or 3.4 above or for services as Custodian, Transfer Agent or disbursing
agent or for providing accounting, legal and printing services or for related
services may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder of or has an interest in
the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections 3.1,
3.2, 3.3 or 3.4 above or for services as Custodian, Transfer Agent or disbursing
agent or for related services may have been or may hereafter be made also has
any one or more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has other business
or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.8. Compliance with 1940 Act. Any contract entered into pursuant
to Sections 3.1 or 3.2 shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act (including any amendment thereof or other
applicable Act of Congress hereafter enacted), as modified by any applicable
order or orders of the Commission, with respect to its continuance in effect,
its termination and the method of authorization and approval of such contract or
renewal thereof.
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ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust or any Series thereof. No Trustee, officer, employee or agent of the Trust
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its Shareholders, in connection with
Trust Property or the affairs of the Trust, except to the extent arising from
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties with respect to such Person; and all such Persons shall look solely to
the Trust Property, or to the Property of one or more specific Series of the
Trust if the claim arises from the conduct of such Trustee, officer, employee or
agent with respect to only such Series, for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust or any Series
thereof, is made a party to any suit or proceeding to enforce any such liability
of the Trust or any Series thereof, he shall not, on account thereof, be held to
any personal liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such Shareholder
may become subject by reason of his being or having been a Shareholder, and
shall reimburse such Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) out of
the Trust Property for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only out of
assets of the one or more Series whose Shares were held by said Shareholder at
the time the act or event occurred which gave rise to the claim against or
liability of said Shareholder. The rights accruing to a Shareholder under this
Section 4.1 shall not impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee
or agent of the Trust or any Series thereof shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee, officer, employee or
agent of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization in which
it has any interest as a shareholder, creditor or otherwise) shall be
indemnified by the Trust, or by one or more Series thereof if the claim arises
from his or her conduct with respect to only such Series, to the fullest extent
permitted by law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes
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involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust or a Series thereof;
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b)(ii) resulting in a payment by
a Trustee or officer, unless there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or other
disposition;
(B) based upon a review of readily available facts (as opposed to
a full trial-type inquiry) by (x) vote of a majority of the
Non-interested Trustees acting on the matter (provided that a
majority of the Non-interested Trustees then in office act on the
matter) or (y) written opinion of independent legal counsel; or
(C) by a vote of a majority of the Shares outstanding and
entitled to vote (excluding Shares owned of record or
beneficially by such individual).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
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(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or Series thereof
shall be insured against losses arising out of any such advances; or
(ii) a majority of the Non-interested Trustees acting on the matter
(provided that a majority of the Non-interested Trustees act on the matter) or
an independent legal counsel in a written opinion shall determine, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the recipient ultimately will be found
entitled to indemnification.
As used in this Section 4.3, a "Non-interested Trustee" is one who (i) is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) is not involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust or a Series thereof. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The Trustees
shall at all times maintain insurance for the protection of the Trust Property
or the Trust Property of the applicable Series, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust or a Series thereof, upon an opinion of counsel, or upon
reports made to the Trust or a Series thereof by any of its officers or
employees or by the Investment Adviser, the Administrator, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
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ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest
without par value. The number of such Shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the exclusive authority without
the requirement of Shareholder approval to establish and designate one or more
Series of shares and one or more Classes thereof as the Trustees deem necessary
or desirable. Each Share of any Series shall represent an equal proportionate
Share in the assets of that Series with each other Share in that Series. Subject
to the provisions of Section 5.11 hereof, the Trustees may also authorize the
creation of additional Series of Shares (the proceeds of which may be invested
in separate, independently managed portfolios) and additional Classes of Shares
within any Series. All Shares issued hereunder including, without limitation,
Shares issued in connection with a dividend in Shares or a split in Shares,
shall be fully paid and nonassessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to share or assume any losses of the Trust or suffer an assessment of any kind
by virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in this Declaration. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any Series
or Class of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may, from
time to time without a vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, except that only Shares previously contracted to be sold may be issued
during any period when the right of redemption is suspended pursuant to Section
6.9 hereof, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the treasury. The
Trustees may from time to time divide or combine the Shares of the Trust or, if
the Shares be divided into Series or Classes, of any Series or any Class thereof
of the Trust, into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust or in the Trust Property
allocated or belonging to such Series or Class. Contributions to the Trust or
Series thereof may be accepted for, and Shares shall be redeemed as, whole
Shares and/or 1/1000ths of a Share or integral multiples thereof.
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Section 5.5. Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as provided herein or
in the By-laws, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
resold pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.13; (ii) with respect
to any investment advisory contract entered into pursuant to Section 3.2; (iii)
with respect to termination of the Trust or a Series or Class thereof as
provided in Section 8.2; (iv) with respect to any amendment of this Declaration
to the limited extent and as provided in Section 8.3; (v) with respect to a
merger, consolidation or sale of assets as provided in Section 8.4; (vi) with
respect to incorporation of the Trust to the extent and as provided in Section
8.5; (vii) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or a Series thereof or the Shareholders of either; (viii) with
respect to any plan adopted pursuant to Rule 12b-1 (or any successor rule) under
the 1940 Act, and related matters; and
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(ix) with respect to such additional matters relating to the Trust as may be
required by this Declaration, the By-laws or any registration of the Trust as an
investment company under the 1940 Act with the Commission (or any successor
agency) or as the Trustees may consider necessary or desirable. As determined by
the Trustees without the vote or consent of shareholders, on any matter
submitted to a vote of Shareholders either (i) each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote or (ii)
each dollar of net asset value (number of Shares owned times net asset value per
share of such Series or Class, as applicable) shall be entitled to one vote on
any matter on which such Shares are entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. The Trustees may,
in conjunction with the establishment of any further Series or any Classes of
Shares, establish conditions under which the several Series or Classes of Shares
shall have separate voting rights or no voting rights. There shall be no
cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the By-laws to be taken by Shareholders.
The By-laws may include further provisions for Shareholders' votes and meetings
and related matters.
Section 5.10. Meetings of Shareholders. No annual or regular meetings of
Shareholders are required. Special meetings of the Shareholders, including
meetings involving only the holders of Shares of one or more but less than all
Series or Classes thereof, may be called at any time by the Chairman of the
Board, President, or any Vice-President of the Trust, and shall be called by the
President or the Secretary at the request, in writing or by resolution, of a
majority of the Trustees, or at the written request of the holder or holders of
ten percent (10%) or more of the total number of Outstanding Shares of the Trust
entitled to vote at such meeting. Meetings of the Shareholders of any Series
shall be called by the President or the Secretary at the written request of the
holder or holders of ten percent (10%) or more of the total number of
Outstanding Shares of such Series of the Trust entitled to vote at such meeting.
Any such request shall state the purpose of the proposed meeting.
Section 5.11. Series or Class Designation. (a) Without limiting the
authority of the Trustees set forth in Section 5.1 to two and designate any
further Series or Classes, the Trustees hereby establish the following Series,
each of which consists of [a single Class][two Classes] of Shares: [Names of
Series] (the "Existing Series").
(b) The Shares of the Existing Series and Class thereof herein established
and designated and any Shares of any further Series and Classes thereof that may
from time to time be established and designated by the Trustees shall be
established and designated, and the variations in the relative rights and
preferences as between the different Series shall be fixed and determined, by
the Trustees (unless the Trustees otherwise determine with respect to further
Series or Classes at the time of establishing and designating the same);
provided, that all Shares shall be identical except that there may be variations
so fixed and determined between different Series or Classes thereof as to
investment objective, policies and restrictions, purchase price, payment
obligations, distribution expenses, right of redemption, special and relative
rights as to dividends and on liquidation, conversion rights, exchange rights,
and conditions under which the several Series or Classes shall have separate
voting rights, all of which are subject to the limitations set forth below. All
references to Shares in this Declaration shall be deemed to be Shares of any or
all Series or Classes as the context may require.
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(c) As to any Existing Series and Classes herein established and designated
and any further division of Shares of the Trust into additional Series or
Classes, the following provisions shall be applicable:
(i) The number of authorized Shares and the number of Shares of each
Series or Class thereof that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Series or Class into one or more Series or one or more Classes
that may be established and designated from time to time. The Trustees may hold
as treasury shares (of the same or some other Series or Class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series or Class reacquired by the Trust at their discretion from time to
time.
(ii) All consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors of such Series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series, the Trustees shall allocate them among any
one or more of the Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes. No holder of Shares of any
Series shall have any claim on or right to any assets allocated or belonging to
any other Series.
(iii) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series or the appropriate
Class or Classes thereof and all expenses, costs, charges and reserves
attributable to that Series or Class or Classes thereof, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and Classes for all
purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items are capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders. The assets of a particular Series of the Trust shall under no
circumstances be charged with liabilities attributable to any other Series or
Class thereof of the Trust. All persons extending credit to, or contracting with
or having any claim against a particular Series or Class of the Trust shall look
only to the assets of that particular Series for payment of such credit,
contract or claim.
(iv) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 7.2 of this Declaration. With respect to any Series
or Class, dividends and distributions on Shares of a particular Series or Class
may be paid with such frequency as the Trustees may determine, which may be
daily or otherwise, pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, to the holders
of Shares of that Series or Class, from such of the income and capital gains,
accrued or
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realized, from the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
Series or Class. All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the Shareholders of that Series
or Class in proportion to the number of Shares of that Series or Class held by
such Shareholders at the time of record established for the payment of such
dividends or distribution.
(v) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series or
Class thereof shall be entitled to receive his pro rata share of distributions
of income and capital gains made with respect to such Series or Class net of
expenses. Upon redemption of his Shares or indemnification for liabilities
incurred by reason of his being or having been a Shareholder of a Series or
Class, such Shareholder shall be paid solely out of the funds and property of
such Series of the Trust. Upon liquidation or termination of a Series or Class
thereof of the Trust, Shareholders of such Series or Class thereof shall be
entitled to receive a pro rata share of the net assets of such Series. A
Shareholder of a particular Series of the Trust shall not be entitled to
participate in a derivative or class action on behalf of any other Series or the
Shareholders of any other Series of the Trust.
(vi) On each matter submitted to a vote of Shareholders, all Shares of
all Series and Classes shall vote as a single class; provided, however, that (1)
as to any matter with respect to which a separate vote of any Series or Class is
required by the 1940 Act or is required by attributes applicable to any Series
or Class or is required by any Rule 12b-1 plan, such requirements as to a
separate vote by that Series or Class shall apply, (2) to the extent that a
matter referred to in clause (1) above, affects more than one Class or Series
and the interests of each such Class or Series in the matter are identical,
then, subject to clause (3) below, the Shares of all such affected Classes or
Series shall vote as a single Class; (3) as to any matter which does not affect
the interests of a particular Series or Class, only the holders of Shares of the
one or more affected Series or Classes shall be entitled to vote; and (4) the
provisions of the following sentence shall apply. On any matter that pertains to
any particular Class of a particular Series or to any Class expenses with
respect to any Series which matter may be submitted to a vote of Shareholders,
only Shares of the affected Class or that Series, as the case may be, shall be
entitled to vote except that: (i) to the extent said matter affects Shares of
another Class or Series, such other Shares shall also be entitled to vote, and
in such cases Shares of the affected Class, as the case may be, of such Series
shall be voted in the aggregate together with such other Shares; and (ii) to the
extent that said matter does not affect Shares of a particular Class of such
Series, said Shares shall not be entitled to vote (except where otherwise
required by law or permitted by the Trustees acting in their sole discretion)
even though the matter is submitted to a vote of the Shareholders of any other
Class or Series.
(vii) Except as otherwise provided in this Article V, the Trustees
shall have the power to determine the designations, preferences, privileges,
payment obligations, limitations and rights, including voting and dividend
rights, of each Class and Series of Shares. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that the holders of Shares of any Series or Class shall have the right to
convert or exchange said Shares into Shares of one or more Series or Classes of
Shares in accordance with such requirements, conditions and procedures as may be
established by the Trustees.
(viii) The establishment and designation of any Series or Classes of
Shares shall be effective upon the execution by a majority of the then Trustees
of an instrument setting forth such establishment and designation and the
relative rights and preferences of such Series or Classes, or as otherwise
provided in such instrument. At any time that there are no Shares
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outstanding of any particular Series or Class previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that Series or Class and the establishment and designation
thereof. Each instrument referred to in this section shall have the status of an
amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by virtue
of having become a Shareholder, shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. (a) All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust. The
Trust may require any Shareholder to pay a sales charge to the Trust, the
underwriter, or any other person designated by the Trustees upon redemption or
repurchase of Shares in such amount and upon such conditions as shall be
determined from time to time by the Trustees.
(b) The Trust shall redeem the Shares of the Trust or any Series or Class
thereof at the price determined as hereinafter set forth, upon the appropriately
verified written application of the record holder thereof (or upon such other
form of request as the Trustees may determine) at such office or agency as may
be designated from time to time for that purpose by the Trustees. The Trustees
may from time to time specify additional conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares in the Trust's then effective
Prospectus.
Section 6.2. Price. Shares shall be redeemed at a price based on their net
asset value determined as set forth in Section 7.1 hereof as of such time as the
Trustees shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be based on the net
asset value of such Shares next determined as set forth in Section 7.1 hereof
after receipt of such application. The amount of any contingent deferred sales
charge or redemption fee payable upon redemption of Shares may be deducted from
the proceeds of such redemption.
Section 6.3. Payment. Payment of the redemption price of Shares of the
Trust or any Series or Class thereof shall be made in cash or in property to the
Shareholder at such time and in the manner, not inconsistent with the 1940 Act
or other applicable laws, as may be specified from time to time in the Trust's
then effective Prospectus(es), subject to the provisions of Section 6.4 hereof.
Notwithstanding the foregoing, the Trustees may withhold from such redemption
proceeds any amount arising (i) from a liability of the redeeming Shareholder to
the Trust or (ii) in connection with any Federal or state tax withholding
requirements.
Section 6.4. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or of any
Series or Class thereof, the rights of Shareholders (including those who shall
have applied for redemption pursuant to Section 6.1 hereof but who shall not yet
have received payment) to have Shares redeemed and paid for by the Trust or a
Series or Class thereof shall be suspended until the termination of such
suspension is declared.
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Any record holder who shall have his redemption right so suspended may, during
the period of such suspension, by appropriate written notice of revocation at
the office or agency where application was made, revoke any application for
redemption not honored and withdraw any Share certificates on deposit. The
redemption price of Shares for which redemption applications have not been
revoked shall be based on the net asset value of such Shares next determined as
set forth in Section 7.1 after the termination of such suspension, and payment
shall be made within seven (7) days after the date upon which the application
was made plus the period after such application during which the determination
of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trustees, in their
sole discretion, may cause the Trust to redeem all of the Shares of one or more
Series or Class thereof held by any Shareholder if the value of such Shares held
by such Shareholder is less than the minimum amount established from time to
time by the Trustees.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. (a) If the Trustees shall, at any
time and in good faith, be of the opinion that direct or indirect ownership of
Shares or other securities of the Trust has or may become concentrated in any
Person to an extent which would disqualify the Trust or any Series of the Trust
as a regulated investment company under the Internal Revenue Code of 1986, then
the Trustees shall have the power by lot or other means deemed equitable by them
(i) to call for redemption by any such Person a number, or principal amount, of
Shares or other securities of the Trust or any Series of the Trust sufficient to
maintain or bring the direct or indirect ownership of Shares or other securities
of the Trust or any Series of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue Shares or other
securities of the Trust or any Series of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust or any Series of the
Trust in question would result in such disqualification. The redemption shall be
effected at the redemption price and in the manner provided in Section 6.1.
(b) The holders of Shares or other securities of the Trust or any Series of
the Trust shall upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other securities of
the Trust or any Series of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code of 1986, as amended, or to
comply with the requirements of any other taxing authority.
Section 6.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of outstanding Shares
of the Trust or of any Series of the Trust pursuant to the provisions of Section
7.3.
Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is
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restricted, (iii) during which an emergency exists as a result of which disposal
by the Trust or a Series thereof of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Trust or a Series
thereof fairly to determine the value of its net assets, or (iv) during any
other period when the Commission may for the protection of Shareholders of the
Trust by order permit suspension of the right of redemption or postponement of
the date of payment or redemption; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
prescribed in clauses (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the period specified in (ii) or (iii) shall have expired (as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The net asset value of each outstanding Share
of the Trust or of each Series or Class thereof shall be determined on such days
and at such time or times as the Trustees may determine. The value of the assets
of the Trust or any Series thereof may be determined (i) by a pricing service
which utilizes electronic pricing techniques based on general institutional
trading, (ii) by appraisal of the securities owned by the Trust or any Series of
the Trust, (iii) in certain cases, at amortized cost, or (iv) by such other
method as shall be deemed to reflect the fair value thereof, determined in good
faith by or under the direction of the Trustees. From the total value of said
assets, there shall be deducted all indebtedness, interest, taxes, payable or
accrued, including estimated taxes on unrealized book profits, expenses and
management charges accrued to the appraisal date, net income determined and
declared as a distribution and all other items in the nature of liabilities
which shall be deemed appropriate, as incurred by or allocated to the Trust or
any Series or Class of the Trust. The resulting amount which shall represent the
total net assets of the Trust or Series or Class thereof shall be divided by the
number of Shares of the Trust or Series or Class thereof outstanding at the time
and the quotient so obtained shall be deemed to be the net asset value of the
Shares of the Trust or Series or Class thereof. The net asset value of the
Shares shall be determined at least once on each business day, as of the close
of regular trading on the New York Stock Exchange or as of such other time or
times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Administrator, the Custodian, the Transfer Agent or such other Person as the
Trustees by resolution may determine. The Trustees may suspend the daily
determination of net asset value to the extent permitted by the 1940 Act. It
shall not be a violation of any provision of this Declaration if Shares are
sold, redeemed or repurchased by the Trust at a price other than one based on
net asset value if the net asset value is affected by one or more errors
inadvertently made in the pricing of portfolio securities or in accruing income,
expenses or liabilities.
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Section 7.2. Distributions to Shareholders. (a) The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or of a
Series or Class thereof such proportion of the net profits, surplus (including
paid-in surplus), capital, or assets of the Trust or such Series held by the
Trustees as they may deem proper. Such distributions may be made in cash or
property (including without limitation any type of obligations of the Trust or
Series or Class or any assets thereof), and the Trustees may distribute ratably
among the Shareholders of the Trust or Series or Class thereof additional Shares
of the Trust or Series or Class thereof issuable hereunder in such manner, at
such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of the Trust or Series or Class
thereof at the time of declaring a distribution or among the Shareholders of the
Trust or Series or Class thereof at such other date or time or dates or times as
the Trustees shall determine. The Trustees may in their discretion determine
that, solely for the purposes of such distributions, Outstanding Shares shall
exclude Shares for which orders have been placed subsequent to a specified time
on the date the distribution is declared or on the next preceding day if the
distribution is declared as of a day on which Boston banks are not open for
business, all as described in the then effective Prospectus under the Securities
Act of 1933. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or a Series or
Class thereof or to meet obligations of the Trust or a Series or Class thereof,
or as they may deem desirable to use in the conduct of its affairs or to retain
for future requirements or extensions of the business. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate. The Trustees may
in their discretion determine that an account administration fee or other
similar charge may be deducted directly from the income and other distributions
paid on Shares to a Shareholder's account in each Series or Class.
(b) Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or a Series or Class thereof to avoid or reduce liability for
taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.11 hereof, the net income
of the Series and Classes thereof of the Trust shall be determined in such
manner as the Trustees shall provide by resolution. Expenses of the Trust or of
a Series or Class thereof, including the advisory or management fee, shall be
accrued each day. Each Class shall bear only expenses relating to its Shares and
an allocable share of Series expenses in accordance with such policies as may be
established by the Trustees from time to time and as are not inconsistent with
the provisions of this Declaration or of any applicable document filed by the
Trust with the Commission or of the Internal Revenue Code of 1986, as amended.
Such net income may be determined by or under the direction of the Trustees as
of the close of regular trading on the New York Stock Exchange on each day on
which such market is open or as of such other time or times as the Trustees
shall determine, and, except as provided herein, all the net income of any
Series or Class, as so determined, may be declared as a dividend on the
Outstanding Shares of such Series or Class. If, for any reason, the net income
of any Series or Class determined at any time is a negative amount, or for any
other reason, the Trustees shall have the power with respect to such Series or
Class (i) to offset each Shareholder's pro rata share of such negative amount
from the accrued dividend account of such Shareholder, or (ii) to reduce the
number of Outstanding Shares of such Series or Class by reducing the number of
Shares in the account of such Shareholder by that number of full and fractional
Shares which represents the amount of such excess negative net income, or (iii)
to
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cause to be recorded on the books of the Trust an asset account in the amount of
such negative net income, which account may be reduced by the amount, provided
that the same shall thereupon become the property of the Trust with respect to
such Series or Class and shall not be paid to any Shareholder, of dividends
declared thereafter upon the Outstanding Shares of such Series or Class on the
day such negative net income is experienced, until such asset account is reduced
to zero. The Trustees shall have full discretion to determine whether any cash
or property received shall be treated as income or as principal and whether any
item of expense shall be charged to the income or the principal account, and
their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much if any of the value thereof shall be treated as income, the balance, if
any, to be treated as principal.
Section 7.4. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VII, but subject to Section 5.11
hereof, the Trustees may prescribe, in their absolute discretion, such other
bases and times for determining the per Share net asset value of the Shares of
the Trust or a Series or Class thereof or net income of the Trust or a Series or
Class thereof, or the declaration and payment of dividends and distributions as
they may deem necessary or desirable. Without limiting the generality of the
foregoing, the Trustees may establish several Series or Classes of Shares in
accordance with Section 5.11, and declare dividends thereon in accordance with
Section 5.11(d)(iv).
ARTICLE VIII
DURATION; TERMINATION OF TRUST OR A SERIES OR CLASS;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article VIII.
Section 8.2. Termination of the Trust or a Series or a Class. The Trust or
any Series or Class thereof may be terminated by (i) the affirmative vote of the
holders of not less than two-thirds of the Outstanding Shares entitled to vote
and present in person or by proxy at any meeting of Shareholders of the Trust or
the appropriate Series or Class thereof, (ii) by an instrument or instruments in
writing without a meeting, consented to by the holders of two-thirds of the
Outstanding Shares of the Trust or a Series or Class thereof; provided, however,
that, if such termination as described in clauses (i) and (ii) is recommended by
the Trustees, the vote or written consent of the holders of a majority of the
Outstanding Shares of the Trust or a Series or Class thereof entitled to vote
shall be sufficient authorization, or (iii) notice to Shareholders by means of
an instrument in writing signed by a majority of the Trustees, stating that a
majority of the Trustees has determined that the continuation of the Trust or a
Series or a Class thereof is not in the best interest of such Series or a Class,
the Trust or their respective shareholders as a result of factors or events
adversely affecting the ability of such Series or a Class or the Trust to
conduct its business and operations in an economically viable manner. Such
factors and events may include (but are not limited to) the inability of a
Series or Class or the Trust to maintain its assets at an appropriate size,
changes in laws or regulations governing the Series or Class or the Trust or
affecting assets of the type in which such Series or Class or the Trust invests
or economic developments or trends having a significant adverse impact on the
business or operations of such Series or Class or the Trust. Upon the
termination of the Trust or the Series or Class,
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(i) The Trust, Series or Class shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust,
Series or Class and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust, Series or Class shall have been
wound up, including the power to fulfill or discharge the contracts of the
Trust, Series or Class, collect its assets, sell, convey, assign, exchange,
transfer or otherwise dispose of all or any part of the remaining Trust Property
or Trust Property allocated or belonging to such Series or Class to one or more
persons at public or private sale for consideration which may consist in whole
or in part of cash, securities or other property of any kind, discharge or pay
its liabilities, and do all other acts appropriate to liquidate its business;
provided that any sale, conveyance, assignment, exchange, transfer or other
disposition of all or substantially all the Trust Property or Trust Property
allocated or belonging to such Series or Class that requires Shareholder
approval in accordance with Section 8.4 hereof shall receive the approval so
required.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or the remaining property of the
terminated Series or Class, in cash or in kind or partly each, among the
Shareholders of the Trust or the Series or Class according to their respective
rights.
(b) After termination of the Trust, Series or Class and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust and file with the Office of the Secretary
of The Commonwealth of Massachusetts an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties with respect to the Trust or the terminated
Series or Class, and the rights and interests of all Shareholders of the Trust
or the terminated Series or Class shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended by a
vote of the holders of a majority of the Shares outstanding and entitled to vote
or by any instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of a majority of the Shares outstanding
and entitled to vote.
(b) This Declaration may be amended by a vote of a majority of Trustees,
without approval or consent of the Shareholders, except that no amendment can be
made by the Trustees to impair any voting or other rights of shareholders
prescribed by Federal or state law. Without limiting the foregoing, the Trustees
may amend this Declaration without the approval or consent of Shareholders (i)
to change the name of the Trust or any Series, (ii) to add to their duties or
obligations or surrender any rights or powers granted to them herein; (iii) to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under this Declaration which will
not be inconsistent with the provisions of this Declaration; and (iv) to
eliminate or modify any provision of this Declaration which (a) incorporates,
memorializes or sets forth an existing requirement imposed by or under any
Federal or state statute or any rule,
-24-
regulation or interpretation thereof or thereunder or (b) any rule, regulation,
interpretation or guideline of any Federal or state agency, now or hereafter in
effect, including without limitation, requirements set forth in the 1940 Act and
the rules and regulations thereunder (and interpretations thereof), to the
extent any change in applicable law liberalizes, eliminates or modifies any such
requirements, but the Trustees shall not be liable for failure to do so.
(c) The Trustees may also amend this Declaration without the approval or
consent of Shareholders if they deem it necessary to conform this Declaration to
the requirements of applicable Federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code of 1986, as amended, or if requested or required to do so by any
Federal agency or by a state Blue Sky commissioner or similar official, but the
Trustees shall not be liable for failing so to do.
(d) Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(e) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Trustees or by the
Shareholders as aforesaid or a copy of the Declaration, as amended, and executed
by a majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series may merge or consolidate into any other corporation, association, trust
or other organization or may sell, lease or exchange all or substantially all of
the Trust Property or Trust Property allocated or belonging to such Series,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
the purpose by the affirmative vote of the holders of two-thirds of the Shares
of the Trust or such Series outstanding and entitled to vote and present in
person or by proxy at a meeting of Shareholders, or by an instrument or
instruments in writing without a meeting, consented to by the holders of
two-thirds of the Shares of the Trust or such Series; provided, however, that,
if such merger, consolidation, sale, lease or exchange is recommended by the
Trustees, the vote or written consent of the holders of a majority of the
Outstanding Shares of the Trust or such Series entitled to vote shall be
sufficient authorization; and any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished under and
pursuant to Massachusetts law.
Section 8.5. Incorporation. The Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all or any portion of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer all or any portion of the Trust Property or the Trust Property
allocated or belonging to such Series to any such corporation, trust,
association or organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust or such Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided
-25-
under the law then in effect. Nothing contained herein shall be construed as
requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring all or a portion of the
Trust Property to such organization or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of
each Series a written financial report of the transactions of the Trust and
Series thereof, including financial statements which shall at least annually be
certified by independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Execution and Filing. This Declaration and any amendment
hereto shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its execution. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and filed with the Secretary of The Commonwealth of
Massachusetts. A restated Declaration shall, upon execution, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Declaration and the various amendments thereto.
Section 10.2. Governing Law. This Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
Section 10.3. Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying (a) the number or identity of Trustees or Shareholders,
(b) the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact
that the number of Trustees or Shareholders present at any meeting or executing
any written instrument satisfies the requirements of this Declaration, (e) the
form of any By-laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or
-26-
facts which in any manner relate to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any Person
dealing with the Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986 or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
___ of __________, 1996.
------------------------------------
Edward J. Boudreau, Jr.
as Trustee and not individually,
34 Swan Road
Winchester, Massachusetts 01890
------------------------------------
Dennis S. Aronowitz
as Trustee and not individually,
29 Lee Road
Chestnut Hill, Massachusetts 02167
------------------------------------
Richard P. Chapman, Jr.
as Trustee and not individually,
107 Upland Road
Brookline, Massachusetts 02146
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------------------------------------
William J. Cosgrove
as Trustee and not individually,
20 Buttonwood Place
Saddle River, New Jersey 07458
------------------------------------
Gail D. Fosler
as Trustee and not individually,
4104 Woodbine Street
Chevy Chase, Maryland
------------------------------------
Bayard Henry
as Trustee and not individually,
65 Goddard Avenue
Brookline, Massachusetts 02146
------------------------------------
Anne C. Hodsdon
as Trustee and not individually,
135 Woodland Road
Hampton, New Hampshire 03842
------------------------------------
Richard S. Scipione
as Trustee and not individually,
4 Sentinel Road
Hingham, Massachusetts 02043
------------------------------------
Edward J. Spellman
as Trustee and not individually,
259C Commercial Boulevard
Suite 200
Lauderdale by the Sea, Florida 33308
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------------------------------------
Douglas M. Costle
as Trustee and not individually,
RR2 Box 480
Woodstock, Vermont 05091
------------------------------------
Leland O. Erdahl
as Trustee and not individually,
8046 MacKenzie Court
Las Vegas, Nevada 89129
------------------------------------
Richard A. Farrell
as Trustee and not individually,
50 Beacon Street
Marblehead, Massachusetts 01945
------------------------------------
Dr. John A. Moore
as Trustee and not individually,
P. O. Box 474
Wicomico, Virginia 22579
------------------------------------
William F. Glavin
as Trustee and not individually,
56 Whiting Road
Wellesley, Massachusetts 02181
------------------------------------
Patti McGill Peterson
as Trustee and not individually,
54 E. Main Street
Canton, New York 13617
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------------------------------------
John W. Pratt
as Trustee and not individually,
2 Gray Gardens East
Cambridge, Massachusetts 02138
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY, MASSACHUSETTS
_______________, 1996
Then personally appeared the above-named persons, Edward J. Boudreau, Jr.,
Dennis S. Aronowitz, Richard P. Chapman, Jr., William J. Cosgrove, Gail D.
Fosler, Bayard Henry, Anne C. Hodsdon, Richard S. Scipione, Edward J. Spellman,
Douglas M. Costle, Leland O. Erdahl, Richard A. Farrell, William Glavin, Dr.
John A. Moore, Patti McGill Peterson and John W. Pratt, who acknowledged the
foregoing instrument to be his free act and deed.
Before me,
------------------------------------
Notary Public
My commission expires:
-30-
JOHN HANCOCK DISCOVERY FUND
SPECIAL MEETING OF THE SHAREHOLDERS - JUNE 26, 1996
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward J.
Boudreau, Jr., Susan S. Newton and James B. Little, with full power of
substitution in each, to vote all the shares of beneficial interest of the
above-referenced Fund which the undersigned is (are) entitled to vote at the
Special Meeting of Shareholders (the "Meeting") of the Fund to be held at 101
Huntington Avenue, Boston, Massachusetts, on June 26, 1996 at 9:00 a.m., Boston
time, and at any adjournment of the Meeting. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting, or, if only one
votes and acts, then by that one. Receipt of the Proxy Statement dated May 17,
1996 is hereby acknowledged. If not revoked, this proxy shall be voted:
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Date __________________, 1996
NOTE: Signature(s) should
agree with name(s) printed
herein. When signing as
attorney, executor,
administrator, trustee or
guardian, please give your
full title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
-----------------------
Signature(s)
VOTE THIS PROXY CARD TODAY! YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE EXPENSE
OF ADDITIONAL MAILINGS.
THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSAL 3 AND FOR THE NOMINEES IN
PROPOSAL 1 IF NO SPECIFICATION IS MADE BELOW. AS TO ANY OTHER MATTER, SAID PROXY
OR PROXIES SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT. Please vote by
filling in the appropriate boxes below, as shown, using blue or black ink or
dark pencil. Do not use red ink.
(1) To elect sixteen Trustees to hold office until their respective
successors have been duly elected and qualified.
Dennis S. Aronowitz William F. Glavin
Edward J. Boudreau, Jr. Bayard Henry
Richard P. Chapman, Jr. Anne C. Hodsdon
William J. Cosgrove Dr. John A. Moore
Douglas M. Costle Patti McGill Peterson
Leland O. Erdahl John W. Pratt
Richard A. Farrell Richard S. Scipione
Gail D. Fosler Edward J. Spellman
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY LINING THROUGH OR
OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE.
(2) Proposal 2 as set forth in the Proxy Statement is not applicable to
your Fund.
(3) To approve an Amended and Restated Declaration of Trust for the Fund.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
(4) Proposal 4 as set forth in the Proxy Statement is not applicable to
your Fund.
(5) Proposal 5 as set forth in the Proxy Statement is not applicable to
your Fund.
(6) Proposal 6 as set forth in the Proxy Statement is not applicable to
your Fund.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.