As Filed with the Securities and Exchange Commission on May 17, 1996.
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:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
(Name of Registrant as Specified in Its Charter)
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] Fee paid previously with preliminary materials.
May , 1996
Dear Fellow Shareholder:
You are cordially invited to attend 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 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.
Because this proxy statement covers more than one fund, some of the proposals
may not apply to you. That is why we have provided a chart on the reverse side
of this letter indicating each fund and its applicable proposals.
Listed below is a brief explanation of each proposal:
Proposal 1 -- Elect 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 their backgrounds in your proxy statement. This
proposal affects all the funds listed on the front of the enclosed proxy
statement.
Proposal 2 -- Amend and restate certain Funds' Declarations of Trust. The intent
of this proposal is to operate the funds more efficiently and economically, by
giving your Trustees more flexibility to respond to changes in the mutual fund
industry. See chart for funds affected by this proposal.
Proposal 3 -- Reorganization of certain funds' underlying trust or corporate
structure. This proposal aims to increase efficiency while reducing printing,
registration, accounting and legal costs. The change has no tax consequences to
you and will have no effect on the way your Fund's portfolio is invested. See
chart for funds affected by this proposal.
Proposal 4 -- For the John Hancock Tax-Free Bond Fund Class A Shareholders ONLY:
Amendment of the 12b-1 distribution plan for Class A shares. If you hold Class A
shares of this Fund -- shares that are subject to an initial sales charge -- you
are being asked to approve an amendment to the Fund's Class A 12b-1 distribution
plan. 12b-1 distribution plans are used to develop the sales programs and
marketing materials necessary to increase Fund sales. It is these efforts that
attempt to increase your Fund's assets and may ultimately lower your share of
expenses through economies of scale. For this reason, your Board of Trustees
proposes a modest increase of the Fund's maximum Class A 12b-1 distribution fee
from 0.15% to 0.25% of average daily net Class A assets.
Proposals 5 and 6 -- Increased investment flexibility for several funds by
relaxing certain investment restrictions. For most of the affected funds, this
means easing the restriction on investing in other investment companies. For the
John Hancock Global Technology Fund only, this means a modest increase in the
percentage of portfolio securities that the Fund can lend. In all cases, the
Funds' Trustees believe that the proposals will give the Funds more flexibility
to take advantage of potential investment opportunities. See chart for funds
affected by this proposal.
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 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
Key Proxy Issues At-A-Glance
Proposal 6-
Proposal 2- Proposal 3- Proposal 4- Proposal 5- Securities
Proposal 1- Amend Declaration Reorganize Amend 12b-1 Investing in Lending
Elect Trustees of Trust Underlying Trust Plan (Class A) Other Investment Companies
-------------- -------- ---------------- -------------- ---------------- ---------
John Hancock Fund
-----------------
California Tax-Free X X
Income
Emerging Growth X X X
Global Resources X X
Global Technology X X X
Government Income X X X
Growth and Income X X X
High Yield Bond X X X
High Yield Tax-Free X X X
Intermediate Maturity X X
Government
Money Market X X X
Sovereign Balanced X X
Sovereign Investors X X
Tax-Free Bond X X X
U.S. Government Cash X X X
Reserve
JOHN HANCOCK INTERMEDIATE MATURITY GOVERNMENT FUND
(a series of John Hancock Bond Fund)
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
JOHN HANCOCK U.S. GOVERNMENT CASH RESERVE
(a series of John Hancock Current Interest)
JOHN HANCOCK ACTIVE BOND FUND
JOHN HANCOCK DIVIDEND PERFORMERS FUND
JOHN HANCOCK FUNDAMENTAL VALUE FUND
JOHN HANCOCK GLOBAL BOND FUND
JOHN HANCOCK INDEPENDENCE BALANCED FUND
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND II
JOHN HANCOCK INDEPENDENCE GROWTH FUND
JOHN HANCOCK INDEPENDENCE MEDIUM CAPITALIZATION FUND
JOHN HANCOCK INDEPENDENCE VALUE FUND
JOHN HANCOCK INTERNATIONAL EQUITY FUND
JOHN HANCOCK MULTI-SECTOR GROWTH FUND
(each a series of John Hancock Institutional Series Trust)
JOHN HANCOCK GROWTH AND INCOME FUND
(a series of John Hancock Investment Trust)
JOHN HANCOCK EMERGING GROWTH FUND
JOHN HANCOCK GLOBAL RESOURCES FUND
JOHN HANCOCK GOVERNMENT INCOME FUND
JOHN HANCOCK HIGH YIELD BOND FUND
JOHN HANCOCK HIGH YIELD TAX-FREE FUND
JOHN HANCOCK MONEY MARKET FUND (each a
series of John Hancock Series, Inc.)
JOHN HANCOCK SOVEREIGN BALANCED FUND
JOHN HANCOCK SOVEREIGN INVESTORS FUND
(each a series of John Hancock Sovereign Investors Fund, Inc.)
JOHN HANCOCK TAX-FREE BOND FUND
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
(a series of John Hancock Technology Series, Inc.)
(collectively, the "Funds")
101 Huntington Avenue
Boston, Massachusetts 02199
P50PX 5/96
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 Trustees/Directors to hold office until their respective
successors have been duly elected and qualified for the following:
(a) John Hancock Bond Fund ("Bond Trust"). For John Hancock Intermediate
Maturity Government Fund ("Intermediate Government Fund") voting
separately.
(b) John Hancock California Tax-Free Income Fund ("California Trust"). For
John Hancock California Tax-Free Income Fund ("California Fund")
voting separately.
(c) John Hancock Current Interest ("Current Interest Trust"). For John
Hancock U.S. Government Cash Reserve ("U.S. Cash Reserve Fund") voting
separately.
(d) John Hancock Institutional Series Trust ("Institutional Trust"). For
John Hancock Active Bond Fund, John Hancock Dividend Performers Fund,
John Hancock Fundamental Value Fund, John Hancock Global Bond Fund,
John Hancock Independence Balanced Fund, John Hancock Independence
Diversified Core Equity Fund II, John Hancock Independence Growth
Fund, John Hancock Independence Medium Capitalization Fund, John
Hancock Independence Value Fund, John Hancock International Equity
Fund and John Hancock Multi-Sector Growth Fund voting together.
(e) John Hancock Investment Trust ("Investment Trust"). For John Hancock
Growth and Income Fund ("Growth and Income Fund") voting separately.
(f) John Hancock Series, Inc. ("Series, Inc.") For John Hancock Emerging
Growth Fund ("Emerging Growth Fund"), John Hancock Global Resources
Fund ("Global Resources Fund"), John Hancock Government Income Fund
("Government Income Fund"), John Hancock High Yield Bond Fund ("High
Yield Bond Fund"), John Hancock High Yield Tax-Free Fund ("High Yield
Tax-Free Fund") and John Hancock Money Market Fund ("Money Market
Fund") voting together.
(g) John Hancock Sovereign Investors Fund, Inc. ("Sovereign Investors,
Inc.") For John Hancock Sovereign Balanced Fund ("Sovereign Balanced
Fund") and John Hancock Sovereign Investors Fund ("Sovereign Investors
Fund") voting together.
2
(h) John Hancock Tax-Free Bond Fund ("Tax-Free Bond Trust"). For John
Hancock Tax-Free Bond Fund ("Tax-Free Bond Fund") voting separately.
(i) John Hancock Technology Series, Inc. ("Technology Series, Inc."). For
John Hancock Global Technology Fund ("Technology Fund") voting
separately.
2. To approve an Amended and Restated Declaration of Trust for:
(a) Bond Trust. For Intermediate Government Fund voting separately.
(b) California Trust. For California Fund voting separately.
(c) Current Interest Trust. For U.S. Cash Reserve Fund voting separately.
(d) Investment Trust. For Growth and Income Fund voting separately.
(e) Tax-Free Bond Trust. For Tax-Free Bond Fund voting separately.
3. To approve an Agreement and Plan of Reorganization for each Fund which will
reorganize each Fund as follows:
(a) Emerging Growth Fund will become a series fund of John Hancock Series
Trust ("Series Trust"). For Emerging Growth Fund voting separately.
(b) Government Income Fund will become a series fund of Bond Trust. For
Government Income Fund voting separately.
(c) High Yield Bond Fund will become a series fund of Bond Trust. For High
Yield Bond Fund voting separately.
(d) High Yield Tax-Free Fund will become a series fund of Tax-Free Bond
Trust. For High Yield Tax-Free Fund voting separately.
(e) Money Market Fund will become a series fund of Current Interest Trust.
For Money Market Fund voting separately.
(f) Sovereign Balanced Fund will become a series fund of Investment Trust.
For Sovereign Balanced Fund voting separately.
(g) Sovereign Investors Fund will become a series fund of Investment
Trust. For Sovereign Investors Fund voting separately.
(h) Technology Fund will become a series fund of Series Trust. For
Technology Fund voting separately.
4. To approve an amendment to Tax-Free Bond Fund's Class A distribution plan
to increase distribution fees for Class A shares. For Class A shareholders
of Tax-Free Bond Fund voting separately.
5. To redesignate as nonfundamental the fundamental investment restriction on
investing in other investment companies for:
(a) U.S. Cash Reserve Fund. For U.S. Cash Reserve Fund voting separately.
3
(b) Growth and Income Fund. For Growth and Income Fund voting separately.
(c) Emerging Growth Fund. For Emerging Growth Fund voting separately.
(d) Global Resources Fund. For Global Resources Fund voting separately.
(e) Government Income Fund. For Government Income Fund voting separately.
(f) High Yield Bond Fund. For High Yield Bond Fund voting separately.
(g) High Yield Tax-Free Fund. For High Yield Tax-Free Fund voting
separately.
(h) Money Market Fund. For Money Market Fund voting separately.
6. To amend Technology Fund's fundamental investment restriction on the making
of loans. For Technology 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 OR DIRECTORS, AS APPLICABLE 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
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
4
JOHN HANCOCK INTERMEDIATE MATURITY GOVERNMENT FUND
(a series of John Hancock Bond Fund)
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
JOHN HANCOCK U.S. GOVERNMENT CASH RESERVE
(a series of John Hancock Current Interest)
JOHN HANCOCK ACTIVE BOND FUND
JOHN HANCOCK DIVIDEND PERFORMERS FUND
JOHN HANCOCK FUNDAMENTAL VALUE FUND
JOHN HANCOCK GLOBAL BOND FUND
JOHN HANCOCK INDEPENDENCE BALANCED FUND
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND II
JOHN HANCOCK INDEPENDENCE GROWTH FUND
JOHN HANCOCK INDEPENDENCE MEDIUM CAPITALIZATION FUND
JOHN HANCOCK INDEPENDENCE VALUE FUND
JOHN HANCOCK INTERNATIONAL EQUITY FUND
JOHN HANCOCK MULTI-SECTOR GROWTH FUND
(each a series of John Hancock Institutional Series Trust)
JOHN HANCOCK GROWTH AND INCOME FUND
(a series of John Hancock Investment Trust)
JOHN HANCOCK EMERGING GROWTH FUND
JOHN HANCOCK GLOBAL RESOURCES FUND
JOHN HANCOCK GOVERNMENT INCOME FUND
JOHN HANCOCK HIGH YIELD BOND FUND
JOHN HANCOCK HIGH YIELD TAX-FREE FUND
JOHN HANCOCK MONEY MARKET FUND (each a
series of John Hancock Series, Inc.)
JOHN HANCOCK SOVEREIGN BALANCED FUND
JOHN HANCOCK SOVEREIGN INVESTORS FUND
(each a series of John Hancock Sovereign Investors Fund, Inc.)
JOHN HANCOCK TAX-FREE BOND FUND
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
(a series of John Hancock Technology Series, Inc.)
(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 or Directors, as appropriate (collectively, 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
---------- ---------
John Hancock Bond Fund John Hancock Intermediate Maturity
(the "Bond Trust") Government Fund (the "Intermediate
Government Fund")
John Hancock California Tax-Free John Hancock California Tax-Free
Income Fund (the "California Income Fund (the "California Fund")
Trust")
John Hancock Current Interest John Hancock U.S. Government
(the "Current Interest Trust") Cash Reserve (the "U.S. Cash
Reserve Fund")
John Hancock Institutional Series John Hancock Active Bond Fund
Trust (the "Institutional Trust") (the "Active Bond Fund")
John Hancock Dividend Performers
Fund (the "Performers Fund")
John Hancock Fundamental Value
Fund (the "Fundamental Value Fund")
John Hancock Global Bond Fund
(the "Global Bond Fund")
John Hancock Independence Balanced
Fund (the "Balanced Fund")
John Hancock Independence
Diversified Core Equity Fund
II (the "Core Equity Fund")
John Hancock Independence
Growth Fund (the "Independence
Growth Fund")
John Hancock Independence
Medium Capitalization Fund
(the "Medium Cap Fund")
John Hancock Independence
Value Fund (the "Independence
Value Fund")
John Hancock International
Equity Fund (the "International
Equity Fund")
John Hancock Multi-Sector Growth
Fund (the "Multi-Sector Fund")
1
John Hancock Investment Trust John Hancock Growth and Income
(the "Investment Trust") Fund (the "Growth and Income Fund")
John Hancock Series, Inc. John Hancock Emerging Growth
(the "Series, Inc.") Fund (the "Emerging Growth Fund")
John Hancock Global Resources
Fund (the "Global Resources Fund")
John Hancock Government Income
Fund (the "Government Income Fund")
John Hancock High Yield Bond
Fund (the "High Yield Bond Fund")
John Hancock High Yield
Tax-Free Fund (the "High Yield
Tax-Free Fund")
John Hancock Money Market Fund
(the "Money Market Fund")
John Hancock Sovereign Investors John Hancock Sovereign Balanced
Fund, Inc. (the "Sovereign Fund (the "Sovereign Balanced
Investors, Inc.") Fund")
John Hancock Sovereign Investors
Fund (the "Sovereign Investors
Fund")
John Hancock Tax-Free Bond John Hancock Tax-Free Bond Fund
Fund (the "Tax-Free Bond Trust") (the "Tax-Free Bond Fund")
John Hancock Technology Series, John Hancock Global Technology
Inc. (the "Technology Series, Inc.") Fund (the "Technology Fund")
For purposes of this Proxy Statement, the term "Funds" shall 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 may engage an independent proxy solicitation firm to assist it in
soliciting proxies.
The Adviser will reimburse the Global Resources Fund for a pro-rata portion of
these proxy solicitation costs.
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
2
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.
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.
Appendix A hereto sets forth the number of shares of beneficial interest of each
class of each Fund outstanding as of April 22, 1996. Appendix B hereto sets
forth the persons who owned beneficially or of record more than 5% of any class
of shares of any Fund as of April 22, 1996.
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. Except with respect to Proposal 4,
each class of shares of each Fund will vote together with the other class or
classes 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) (a) Intermediate Government Fund will vote
separately.
(b) California Fund will vote separately.
(c) U.S. Cash Reserve Fund will vote separately.
(d) Active Bond Fund, Performers Fund,
Fundamental Value Fund, Global Bond Fund,
Balanced Fund, Core Equity Fund,
Independence Growth Fund, Medium Cap Fund,
Independence Value Fund, International
Equity Fund and Multi-Sector Fund will vote
together.
(e) Growth and Income Fund will vote separately.
(f) Emerging Growth Fund, Global Resources Fund,
Government Income Fund, High Yield Bond
Fund, High Yield Tax-Free Fund and Money
Market Fund will vote together.
(g) Sovereign Balanced Fund and Sovereign
Investors Fund will vote together.
(h) Tax-Free Bond Fund will vote separately.
(i) Technology Fund will vote separately.
3
(2) (a) Intermediate Government Fund will vote
separately.
(b) California Fund will vote separately.
(c) U.S. Cash Reserve Fund will vote separately.
(d) Growth and Income Fund will vote separately.
(e) Tax-Free Bond Fund will vote separately.
(3) (a) Emerging Growth Fund will vote separately.
(b) Government Income Fund will vote separately.
(c) High Yield Bond Fund will vote separately.
(d) High Yield Tax-Free Fund will vote
separately.
(e) Money Market Fund will vote separately.
(f) Sovereign Balanced Fund will vote
separately.
(g) Sovereign Investors Fund will vote
separately.
(h) Technology Fund will vote separately.
(4) Class A shareholders of Tax-Free Bond Fund
will vote separately.
(5) (a) U.S. Cash Reserve Fund will vote separately.
(b) Growth and Income Fund will vote separately.
(c) Emerging Growth Fund will vote separately.
(d) Global Resources Fund will vote separately.
(e) Government Income Fund will vote separately.
(f) High Yield Bond Fund will vote separately.
(g) High Yield Tax-Free Fund will vote
separately.
(h) Money Market Fund will vote separately.
(6) Technology Fund will vote separately.
PROPOSAL 1
ELECTION OF TRUSTEES
(For shareholders of (I) Intermediate Government Fund voting separately, (II)
California Fund voting separately, (III) U.S. Cash Reserve Fund voting
separately, (IV) Active Bond Fund, Performers Fund, Fundamental Value Fund,
Global Bond Fund, Balanced Fund, Core Equity Fund, Independence Growth Fund,
Medium Cap Fund, Independence Value Fund, International Equity Fund and
Multi-Sector Fund voting together, (v) Growth and Income Fund voting separately,
(VI) Emerging Growth Fund, Global Resources Fund, Government Income Fund, High
Yield Bond Fund, High Yield Tax-Free Fund and Money Market Fund voting together,
(VII) Sovereign Balanced Fund and Sovereign Investors Fund voting together,
(VIII) Tax-Free Bond Fund voting separately, and (IX) Technology Fund voting
separately.)
At a meeting on March 26, 1996, the Trustees of each Fund, including the
Trustees 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 voted to recommend to the shareholders of
their respective Funds that they approve, a proposal to (i) elect fourteen (14)
Trustees (the "Nominees") to the Board of Trustees of Active Bond Fund,
Performers Fund, Fundamental Value Fund, Global Bond Fund, Balanced Fund, Core
Equity Fund, Independence Growth Fund, Medium Cap Fund, Independence Value Fund,
International Equity Fund, Multi-Sector Fund, Sovereign Balanced Fund, Sovereign
4
Investors Fund and Technology Fund, and (ii) elect thirteen (13) Trustees to the
Board of Trustees of each remaining Fund (each of the Nominees except for Mr.
Cameron). With respect to (a) Technology Fund, thirteen of the fourteen Nominees
currently serve as Trustees and one of the Nominees (Mr. Scipione) is an
additional Trustee, (b) Sovereign Balanced Fund and Sovereign Investors Fund,
ten of the fourteen Nominees currently serve as Trustees and four of the
Nominees (Messrs. Cunningham, Linbeck, Scipione and Ms. Hodsdon) are additional
Trustees and (c) each remaining Fund, all of the thirteen or fourteen Nominees,
as applicable, currently serve as Trustees. Information concerning the Nominees
and other relevant factors is discussed below.
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 each of the Fund's 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. With respect to the Nominees who currently serve as
Trustees, the table also sets forth the date each of them became a Trustee of
each applicable Trust (Trusts are referenced rather than Funds for ease of
reference). Mr. Cameron is a Nominee for Active Bond Fund, Performers Fund,
Fundamental Value Fund, Global Bond Fund, Balanced Fund, Core Equity Fund,
Independence Growth Fund, Medium Cap Fund, Independence Value Fund,
International Equity Fund, Multi-Sector Fund, Sovereign Balanced Fund, Sovereign
Investors Fund and Technology Fund only. Each of the other Nominees are
nominated for all of the Funds.
5
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
Edward J. Boudreau, Jr.* Chairman and Chief Executive Bond Trust: 1994
(age 51) Officer of the Adviser and The California Trust: 1994
Chairman and Chief Executive Berkeley Financial Group ("The Current Interest Trust: 1994
Officer, Nominee Berkeley Group"); Chairman, John Institutional Trust: 1994
Hancock Advisers International Ltd. Investment Trust: 1994
("Advisers International"), NM Series, Inc.: 1994
Capital Management, Inc. ("NM Sovereign Investors, Inc.: 1991
Capital"), Investor Services, First Tax-Free Bond Trust: 1994
Signature Bank and Trust Company Technology Series, Inc.: 1991
and Sovereign Asset Management
Corporation ("SAMCorp"); Chairman,
Chief Executive Officer and
President, John Hancock Funds;
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 and
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.
Thomas W.L. Cameron* Chairman and Director, Sovereign Institutional Trust: 1994
(age 69) Advisers, Inc.; Senior Vice Sovereign Investors, Inc. 1980
Trustee, Nominee President, Interstate/Johnson Lane Technology Series, Inc.: 1993
Corp. (securities dealer); and
Trustee or Director of 21 funds
managed by the Adviser.
6
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
James F. Carlin Chairman and CEO, Carlin Bond Trust: 1994
(age 56) Consolidated, Inc. California Trust: 1994
Trustee, Nominee (management/investments); Director, Current Interest Trust: 1994
Arbella Mutual Insurance Company Institutional Trust: 1994
(insurance), Consolidated Group Investment Trust: 1994
Trust (insurance administration), Series, Inc.: 1994
Carlin Insurance Agency, Inc., West Sovereign Investors, Inc.: 1992
Insurance Agency, Inc. (until May, Tax-Free Bond Trust: 1994
1995) and Uno Restaurant Corp.; Technology Series, Inc.: 1992
Chairman, Massachusetts Board of
Higher Education (since 1995);
Receiver, the City of Chelsea
(until August, 1992); and Trustee
or Director of 33 funds managed by
the Adviser.
William H. Cunningham Chancellor, University of Texas Bond Trust: 1989
(age 52) System and former President of the California Trust: 1989
Trustee, Nominee University of Texas, Austin, Texas; Current Interest Trust: 1991
Lee Hage and Joseph D Jamail Regents Institutional Trust: 1995
Chair for Free Enterprise; Director, Investment Trust: 1986
LaQuinta Motor Inns, Inc. (hotel Series, Inc.: 1987
management company); Director, Tax-Free Bond Trust: 1989
Jefferson-Pilot Corporation (diversified Technology Series, Inc.: 1995
life insurance company); LBJ Foundation
Board (education foundation);
Advisory Director, Texas Commerce
Bank - Austin; and Trustee or
Director of 31 funds managed by the
Adviser.
Charles F. Fretz Retired; self employed; Former Vice Bond Trust: 1995
(age 67) President and Director, Towers, California Trust: 1995
Trustee, Nominee Perrin, Foster & Crosby, Inc. Current Interest Trust: 1995
(international management Institutional Trust: 1994
consultants) (1952-1985); and Investment Trust: 1995
Trustee or Director of 33 funds Series, Inc.: 1995
managed by the Adviser. Sovereign Investors, Inc.: 1985
Tax-Free Bond Trust: 1995
Technology Series, Inc.: 1991
7
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
Executive Vice President, Bond Trust: 1995
Harold R. Hiser, Jr. Schering-Plough Corporation California Trust: 1995
(age 64) (pharmaceuticals) (retired 1996); Current Interest Trust: 1995
Trustee, Nominee Director, ReCapital Corporation Institutional Trust: 1994
(reinsurance) (until 1995); and Investment Trust: 1995
Trustee or Director of 33 funds Series, Inc.: 1995
managed by the Adviser. Sovereign Investors, Inc.: 1992
Tax-Free Bond Trust: 1995
Technology Series, Inc.: 1992
Anne C. Hodsdon* President and Chief Operating Bond Trust: 1996
(age 42) Officer, the Adviser; Director, California Trust: 1996
President, (Executive Vice Advisers International; Executive Current Interest Trust: 1996
President of Technology Vice President, the Adviser (until Institutional Trust: 1996
Series, Inc.), Trustee, December 1994); Senior Vice Investment Trust: 1996
Nominee President, the Adviser (until Series, Inc.: 1996
December 1993); Vice President, the Tax-Free Bond Trust: 1996
Adviser (until 1991); Trustee or Technology Series, Inc.: 1996
Director of 56 funds managed by the
Adviser.
Charles L. Ladner Director, Energy North, Inc. Bond Trust: 1994
(age 58) (public utility holding company) California Trust: 1994
Trustee, Nominee (until 1992); Senior Vice Current Interest Trust: 1994
President and Chief Financial Officer Institutional Trust: 1994
of UGI Corp. Holding Company, Public Investment Trust: 1994
Utilities, LPGAS; and Trustee or Series, Inc.: 1994
Director of 33 funds managed by the Sovereign Investors, Inc.: 1979
Adviser. Tax-Free Bond Trust: 1994
Technology Series, Inc.: 1991
8
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
Leo E. Linbeck, Jr. Chairman, President, Chief Bond Trust: 1989
(age 61) Executive Officer and Director, California Trust: 1989
Trustee, Nominee Linbeck Corporation (a holding Current Interest Trust: 1991
company engaged in various phases Institutional Trust: 1995
of the construction industry and Investment Trust: 1984
warehousing interests); Former Series, Inc.: 1987
Chairman, Federal Reserve Bank of Tax-Free Bond Trust: 1994
Dallas (1992, 1993); Chairman of the Technology Series, Inc.: 1995
Board and Chief Executive Officer,
Linbeck Construction Corporation;
Director, PanEnergy Eastern Corporation
(a diversified energy company), Daniel
Industries, Inc. (manufacturer of gas
measuring products and energy related
equipment), GeoQuest International
Holdings, Inc. (a geophysical
consulting firm) (1980-1993); Director,
Greater Houston Partnership; and Trustee
or Director of 31 funds managed by the
Adviser.
Patricia P. McCarter Director and Secretary, The Bond Trust: 1994
(age 68) McCarter Corp. (machine California Trust: 1994
Trustee, Nominee manufacturer); and Trustee or Current Interest Trust: 1994
Director of 33 funds managed by the Institutional Trust: 1994
Adviser. Investment Trust: 1994
Series, Inc.: 1994
Sovereign Investors, Inc.: 1979
Tax-Free Bond Trust: 1994
Technology Series, Inc.: 1991
Steven R. Pruchansky Director and President, Mast Bond Trust: 1994
(age 51) Holdings, Inc. (since 1991); California Trust: 1994
Trustee, Nominee Director, First Signature Bank & Current Interest Trust: 1994
Trust Company (until August 1991); Institutional Trust: 1994
Director, Mast Realty Trust Investment Trust: 1994
(1982-1994); President, Maxwell Series, Inc.: 1994
Building Corp. (until 1991); and Sovereign Investors, Inc.: 1991
Trustee or Director of 33 funds Tax-Free Bond Trust: 1994
managed by the Adviser. Technology Series, Inc.: 1991
9
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
Richard S. Scipione* General Counsel, John Hancock Bond Trust: 1996
(age 58) Mutual Life Insurance Company; California Trust: 1996
Trustee, Nominee Director, the Adviser, John Hancock Current Interest Trust: 1996
Funds, Investor Services, John Institutional Trust: 1994
Hancock Distributors, Inc., John Investment Trust: 1996
Hancock Subsidiaries, Inc., John Series, Inc.: 1996
Hancock Property and Casualty Tax-Free Bond Trust: 1996
Insurance and its affiliates (until
November 1993), SAMCorp and NM
Capital; Trustee, The Berkeley
Group; Director, JH Networking
Insurance Agency, Inc.; and Trustee
or Director of 44 funds managed by
the Adviser.
Norman H. Smith Lieutenant General, USMC, Deputy Bond Trust: 1994
(age 63) Chief of Staff for Manpower and California Trust: 1994
Trustee, Nominee Reserve Affairs, Headquarters Current Interest Trust: 1994
Marine Corps; Commanding General Institutional Trust: 1994
III Marine Expeditionary Force/3rd Investment Trust: 1994
Marine Division (retired 1991); and Series, Inc.: 1994
Trustee or Director of 33 funds Sovereign Investors, Inc.: 1991
managed by the Adviser. Tax-Free Bond Trust: 1994
Technology Series, Inc.: 1991
10
Name, Age and Principal Occupation
Position With or Employment First Became
Each Trust During Last Five Years A Trustee
---------- ---------------------- ---------
John P. Toolan Director, The Smith Barney Muni Bond Trust: 1994
(age 65) Bond Funds, The Smith Barney California Trust: 1994
Trustee, Nominee Tax-Free Money Fund, Inc., Vantage Current Interest Trust: 1994
Money Market Funds (mutual funds), Institutional Trust: 1994
The Inefficient-Market Fund, Inc. Investment Trust: 1994
(closed-end investment company) and Series, Inc.: 1994
Smith Barney Trust Company of Sovereign Investors, Inc.: 1992
Florida; Chairman, Smith Barney Tax-Free Bond Trust: 1994
Trust Company (retired 1991); Technology Series, Inc.: 1990
Director, Smith Barney, Inc.,
Mutual Management Company and
Smith, Barney Advisers, Inc.
(investment advisers) (retired
1991); Senior Executive Vice
President, Director and member of
the Executive Committee, Smith
Barney, Harris Upham & Co.,
Incorporated (investment bankers)
(until 1991); and Trustee or
Director of 33 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 set forth in Appendix C hereto.
The Board of Trustees of the California Fund held five, and the Board of
Trustees of each other Fund held four, meetings during the last completed fiscal
year of each Fund. With respect to each Fund, no Trustee (with the exception of
Mr. Scipione) 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
of the Funds except for Sovereign Balanced Fund and Sovereign Investors Fund
are: Messrs. Carlin, Cunningham, Fretz, Hiser, Ladner, Linbeck, Pruchansky,
Smith and Toolan and Ms. McCarter. The Committee members for Sovereign Balanced
Fund and Sovereign Investors Fund are each of the foregoing except for Messrs.
Cunningham and Linbeck. Each of the members of each Audit Committee is an
11
Independent Trustee. The Audit Committee of each Fund held four 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 Fund's
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 members for each of the Funds except for
Sovereign Balanced Fund and Sovereign Investors Fund are: Messrs. Carlin,
Cunningham, Fretz, Hiser, Ladner, Linbeck, Pruchansky, Smith and Toolan and Ms.
McCarter. The Committee members for Sovereign Balanced Fund and Sovereign
Investors Fund are each of the foregoing except for Messrs. Cunningham and
Linbeck. All of the members of each Administration Committee are Independent
Trustees. The Administration Committee of each Fund held four meetings during
the last completed fiscal year of each Fund.
Included among the functions of the Administration 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
Administration Committee also coordinates with Trustees who are interested
persons in the selection and election 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
Except for the Chairman and President (Mr. Boudreau and Ms. Hodsdon,
respectively), the table below lists the executive officers of each Fund. The
table also lists the date on which each officer became an officer of the
applicable Trust (Trusts are referenced rather than Funds for ease of
reference). Information about Mr. Boudreau and Ms. Hodsdon is provided under
"Information Concerning Nominees."
12
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 Bond Trust: 1994
(age 57) Officer, the Adviser and each of California Trust: 1994
Vice Chairman and Chief the John Hancock funds; President, Current Interest Trust: 1994
Investment Officer the Adviser (until 1994); Director, Institutional Trust: 1994
the Adviser, Advisers Investment Trust: 1994
International, John Hancock Funds, Series, Inc.: 1994
Investor Services, SAMCorp and NM Sovereign Investors, Inc.: 1991
Capital; Senior Vice President, The Tax-Free Bond Trust: 1994
Berkeley Group. Technology Series, Inc.: 1991
James B. Little Senior Vice President, the Adviser, Bond Trust: 1994
(age 61) John Hancock Funds, and Investor California Trust: 1994
Senior Vice President Services; Senior Vice President and Current Interest Trust: 1994
and Chief Financial Officer Chief Financial Officer, each of the Institutional Trust: 1994
John Hancock funds. Investment Trust: 1994
Series, Inc.: 1994
Sovereign Investors, Inc.: 1991
Tax-Free Bond Trust: 1994
Technology Series, Inc.: 1991
Thomas H. Drohan Senior Vice President and Bond Trust: 1994
(age 59) Secretary, the Adviser, The California Trust: 1994
Senior Vice President Berkeley Group and each of the John Current Interest Trust: 1994
and Secretary Hancock funds; Senior Vice Institutional Trust: 1994
President, John Hancock Investment Trust: 1994
Distributors (until 1994), Investor Series, Inc.: 1994
Services and John Hancock Funds; Sovereign Investors, Inc.: 1991
Director, Advisers International; Tax-Free Bond Trust: 1994
Secretary, NM Capital. Technology Series, Inc.: 1991
John A. Morin Vice President, the Adviser, Bond Trust: 1994
(age 45) Investor Services, John Hancock California Trust: 1994
Vice President Funds and each of the Joh Hancock Current Interest Trust: 1994
funds; Compliance Officer, certain Institutional Trust: 1994
John Hancock funds; Counsel, John Investment Trust: 1994
Hancock Mutual Life Insurance Series, Inc.: 1994
Company (until 1996); Vice Sovereign Investors, Inc.: 1991
President and Assistant Secretary, Tax-Free Bond Trust: 1994
The Berkeley Group. Technology Series, Inc.: 1991
13
Name, Age and Position Principal Occupation During
With Each Trust The Past Five Years First Became an Officer
--------------- ------------------- -----------------------
Susan S. Newton Vice President and Assistant Bond Trust: 1994
(age 46) Secretary, the Adviser; Vice California Trust: 1994
Vice President, President, Assistant Secretary and Current Interest Trust: 1994
Assistant Secretary Compliance Officer, certain John Institutional Trust: 1994
and Compliance Officer Hancock funds; Vice President and Investment Trust: 1994
Secretary, John Hancock Series, Inc.: 1994
Distributors (until 1994), John Sovereign Investors, Inc.: 1991
Hancock Funds and Investor Tax-Free Bond Trust: 1994
Services; Secretary, SAMCorp; Vice Technology Series, Inc.: 1991
President, The Berkeley Group.
James J. Stokowski Vice President, the Adviser; Vice Bond Trust: 1994
(age 49) President and Treasurer, each of California Trust: 1994
Vice President and Treasurer the John Hancock funds. Current Interest Trust: 1994
Institutional Trust: 1994
Investment Trust: 1994
Series, Inc.: 1994
Sovereign Investors, Inc.: 1991
Tax-Free Bond Trust: 1994
Technology Series, Inc.: 1991
Barry J. Gordon President and Chairman of the Board Technology Series, Inc.: 1981
(age 50) of American Fund Advisers, Inc.
President, Technology Series, (subadviser to Technology Fund);
Inc. Chairman of the Board and
President of National Value Fund,
Inc. (until 1992); Chairman of the
Board and Chief Executive Officer
(since 1990) of Baseball Entrepreneurs,
Inc. and (from 1991 until 1992) of
Hamilton Baseball Associates, Inc.
(baseball club ownership); Chairman of
the Board and Chief Executive Officer
of Minor League Sports Enterprises, Inc.
(baseball club ownership) (since 1992);
Director of Hain Food Group (food
products) (since 1993); Director of
Sports Heroes, Inc. (sports memorabilia)
(since 1989); Director of Winfield
Capital Corp. (SBIC) (since 1995); and
Chairman of the Board of ACOL Acquisition
Corp. (baseball club ownership) (since
1994).
14
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 last completed fiscal
year of each Fund. Mr. Boudreau, Ms. Hodsdon, Mr. Cameron and Mr. Scipione and
each of the officers of the Funds are interested persons of the Adviser. They
are compensated by the Adviser or affiliates and receive no compensation from
the Funds for their services.
Aggregate Compensation From Each Fund
For Each Fund's Last Fiscal Year
Fund Independent Trustee
---- -------------------
James F. William H. Charles F. Jack P. Harold R. Charles L.
Carlin Cunningham+ Fretz Gould* Hiser, Jr.+ Ladner
------ ---------- ----- ------ ---------- ------
Intermediate Government Fund $ 207 $ 1,840 $ 0 $ 0 $ 0 $ 224
California Fund 2,967 7,336 460 0 244 3,657
U.S. Cash Reserve Fund 803 3,837 0 0 0 873
Active Bond Fund 0 0 0 0 0 0
Performers Fund 0 0 0 0 0 0
Fundamental Value Fund 0 0 0 0 0 0
Global Bond Fund 0 0 0 0 0 0
Balanced Fund 46 62 46 0 46 46
Core Equity Fund 1,552 122 1,530 0 1,439 1,530
Independence Growth Fund 0 0 0 0 0 0
Medium Cap Fund 31 42 31 0 31 31
Independence Value Fund 0 0 0 0 0 0
International Equity Fund 0 0 0 0 0 0
Multi-Sector Fund 0 0 0 0 0 0
Growth and Income Fund 1,718 2,868 0 0 0 2,045
Emerging Growth Fund 3,279 8,672 354 0 353 4,224
Global Resources Fund 305 967 23 0 18 375
Government Income Fund 1,854 5,202 149 0 442 2,357
High Yield Bond Fund 1,314 3,930 124 0 131 1,695
High Yield Tax-Free Fund 1,313 3,175 0 0 107 1,671
Money Market Fund 346 1,098 29 0 48 454
Sovereign Balanced Fund 1,777 0 2,568 0 2,851 1,510
Sovereign Investors Fund 15,878 0 22,758 0 25,266 13,422
Tax-Free Bond Fund 1,588 4,421 245 0 122 1,984
Technology Fund 1,029 340 1,306 5,300 1,497 834
Total Compensation** From
Other Funds in the John
Hancock Fund Complex $60,700 $69,700 $56,200 $9,800 $60,200 $60,700
15
Leo E. Patricia P. Steven R. Norman H. John P.
Linbeck, Jr. McCarter Pruchansky Smith Toolan+ Total
------------ -------- ---------- ----- ------ -----
Intermediate Government Fund $2,940 $ 224 $ 234 $ 234 $ 224 $ 6,127
California Fund 7,586 3,657 3,771 3,771 3,657 37,106
U.S. Cash Reserve Fund 4,516 880 909 909 873 13,600
Active Bond Fund 0 0 0 0 0 0
Performers Fund 0 0 0 0 0 0
Fundamental Value Fund 0 0 0 0 0 0
Global Bond Fund 0 0 0 0 0 0
Balanced Fund 62 46 46 46 46 492
Core Equity Fund 2,044 1,530 1,531 1,531 1,530 14,339
Independence Growth Fund 0 0 0 0 0 0
Medium Cap Fund 42 31 31 32 31 333
Independence Value Fund 0 0 0 0 0 0
International Equity Fund 0 0 0 0 0 0
Multi-Sector Fund 0 0 0 0 0 0
Growth and Income Fund 3,518 2,045 2,122 2,122 2,045 18,483
Emerging Growth Fund 8,922 4,224 4,371 4,371 3,279 42,049
Global Resources Fund 1,216 375 390 375 304 4,348
Government Income Fund 5,452 2,357 2,441 2,441 1,854 24,549
High Yield Bond Fund 4,180 1,695 1,755 1,755 1,314 17,893
High Yield Tax-Free Fund 4,145 1,671 1,730 1,730 1,298 16,840
Money Market Fund 1,348 454 470 470 346 5,063
Sovereign Balanced Fund 0 1,510 1,560 1,560 1,510 14,846
Sovereign Investors Fund 4,671 13,422 13,865 13,865 13,422 136,569
Tax-Free Bond Fund 4,671 1,984 2,050 2,050 1,984 21,099
Technology Fund 334 834 877 856 855 14,062
Total Compensation** From
Other Funds in the John
Hancock Fund Complex $73,200 $60,700 $62,700 $62,700 $60,700 $637,300
-------------
* Mr. Gould retired from the Board of Trustees of Technology Fund on March
26, 1996. He does not serve on the Board of any other Fund.
** Total compensation from each Fund and other John Hancock funds is as of
December 31, 1995. As of this date there were sixty-one funds in the John
Hancock fund complex. Messrs. Carlin, Hiser, Ladner, Pruchansky, Smith,
Fretz, Toolan and Ms. McCarter served on the boards of 33 of the funds.
Messrs. Cunningham and Linbeck served on the boards of 31 of the funds.
+ As of December 31, 1995 the value of the aggregate accrued deferred
compensation from all Funds in the John Hancock fund complex for Mr.
Cunningham was $54,413, for Mr. Hiser was $31,324, and for Mr. Toolan was
$71,437 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
16
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:
Shares Assuming Hypothetical Investment
of Deferred Trustees' Fees
Sovereign Sovereign Special Special
Bond Growth International Investors Opportunities Value
Independent Trustees Fund Fund Fund Fund Fund Fund
------------------- ---- ---- ---- ---- ---- ----
James F. Carlin -- -- -- -- -- --
William H. Cunningham -- 570 1,191 625 1,152 995
Charles F. Fretz -- -- -- -- -- --
Jack P. Gould -- -- -- -- -- --
Harold R. Hiser, Jr. -- 748 -- 827 3,026 --
Charles L. Ladner -- -- -- -- -- --
Leo E. Linbeck, Jr. -- -- -- -- -- --
Patricia P. McCarter -- -- -- -- -- --
Steven R. Pruchansky -- -- -- -- -- --
Norman H. Smith -- -- -- -- -- --
John P. Toolan 2,712 -- -- 1,661 -- --
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 meetings of the
shareholders, provided that there is a quorum.
17
PROPOSALS 2(a), 2(b), 2(c), 2(d) and 2(e)
TO APPROVE AMENDED AND RESTATED
DECLARATIONS OF TRUST
(For shareholders of Intermediate Government Fund,
California Fund, U.S. Cash Reserve Fund, Growth and Income
Fund and Tax-Free Bond Fund, each voting separately)
General
The Declarations of Trust (collectively, the "Current Declarations") of
Intermediate Government Fund, California Fund, U.S. Cash Reserve Fund, Growth
and Income Fund and Tax-Free Bond Fund have not changed significantly since they
were either adopted or last amended and restated. The Current Declarations are
proposed to be amended and restated (as amended and restated, the "Amended
Declarations") to provide the Trustees of each Fund 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.
The Amended Declarations, each of which is substantially in the form attached to
this Proxy Statement as Exhibit A, 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 A 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.
Current Declarations Amended Declarations
-------------------- --------------------
(i) The number of Trustees shall be (i) The number of Trustees shall be
such number as shall be fixed from such number as shall be fixed from
time to time by the Trustees, but time by the Trustees, but shall not
shall not be less than three or be less than one.
more than fifteen.
18
(ii) A Fund may involuntarily (ii) A Fund may involuntarily
redeem shares if a shareholder redeem shares if a minimum amount,
account does not have a value of at as established by the Trustees, is
least $100 or such lesser amount as not maintained in an account.
the Trustees may determine.
(iii) Shareholder approval may be (iii) Funds may enter into
required for a Fund to enter into administration agreements without
administration agreements. shareholder approval.
(iv) No comparable provision. (iv) Shareholders of a Fund holding
10% of the Fund's outstanding
shares may call a special
shareholder meeting.
(v) A Fund will terminate either (v) A Fund will terminate either
upon (a) a vote of shareholders upon (a) a vote of shareholders
holding a majority of the Fund's holding two-thirds of the Fund's
shares present at a meeting, (b) a outstanding shares present at a
written instrument without a meeting, (b) by a written
meeting signed by a majority of instrument, without a meeting,
Trustees and consented to by consented to by the holders of two-
holders of a majority of all thirds of the Fund's outstanding
outstanding shares of the Fund, or shares, provided that if such
(c) by the Trustees by written termination is recommended by the
notice to the shareholders. Trustees, a 1940 Act Majority
Shareholder Vote (as defined below)
or a written consent of the same
proportion of shareholders shall be
sufficient authorization, or (c) by
written notice to the shareholders
signed by a majority of Trustees of
the Fund.
19
Current Declarations Amended Declarations
-------------------- --------------------
(vi) A Fund's Current Declaration (vi) The Amended Declaration of a
may be amended by a vote of Fund may be amended by a 1940 Act
shareholders holding a majority of Majority Shareholder Vote or by a
the Fund's shares present at a written instrument without a
meeting. Trustees may amend their meeting signed by a majority of
Fund's Current Declaration without Trustees and consented to by the
a shareholder vote to, among other holders of a 1940 Act Majority (as
things, change the name of the Fund defined below) of shares. A Fund's
or conform the Declaration to Amended Declaration may also be
requirements of the law. No amended by a majority vote of Trustees
amendments that change certain without approval or consent of
shareholder rights, such as voting shareholders of the Fund, except that
rights, or that impair the shareholders' no amendment may impair voting or
exemption from personal liability, other rights of shareholders
may be made without a shareholder prescribed by law, or impair the
vote or consent. exemption from personal liability
of shareholders, Trustees,
officers, employees or agents of
the Fund or permit assessments upon
shareholders.
(vii) A Fund may merge, consolidate (vii) A Fund may merge,
or sell all or substantially all of consolidate, or sell all or
its assets upon a vote of substantially all of its assets
shareholders holding a majority of upon either (a) a vote of
the Fund's shares present at a shareholders holding two-thirds of
meeting. the Fund's outstanding shares
present at a meeting (b) the
written consent of shareholders
holding two-thirds of the Fund's
outstanding shares, provided that
if such merger or consolidation is
recommended by the Trustees, a 1940
Act Majority Shareholder Vote or
written consent of the same
proportion of shareholders shall be
sufficient authorization.
20
Current Declarations Amended Declarations
-------------------- --------------------
(viii) Upon a vote of shareholders (viii) A Fund may establish another
holding a majority of the Fund's entity to take over the Fund's
shares present at a meeting, the business without prior shareholder
Trustees of a Fund may establish approval.
another entity to take over the
Fund's business.
(ix) No comparable provision. (ix) In the event of a negative net
income the Trustees of a Fund may,
among other things, offset each
shareholder's pro rata amount of
such negative amount from the
accrued dividend account of each
shareholder or reduce the number of
outstanding shares in each
shareholder account.
(x) Each whole share of a Fund (x) As determined by the Trustees,
shall be entitled to one vote as to without shareholder vote or
any matter on which it is entitled consent, on any voting matter,
to vote and fractional shares shall either each whole share of a Fund
be entitled to a proportional vote. is entitled to one vote and
fractional shares to a proportional
vote or each dollar of net asset
value of the Fund is entitled to
one vote and fractional dollars to
a proportional vote.
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 A.
A "1940 Act Majority Shareholder Vote" of a Fund shall mean the lesser of (i)
67% or more of the shares of the Fund represented at a meeting if at least 50%
of all outstanding shares of the Fund are represented at the meeting or (ii)
more than 50% of the outstanding shares of the Fund entitled to vote at the
meeting. A "1940 Act Majority" shall mean the same proportion of shareholders as
for a 1940 Act Majority Shareholder Vote.
Trustees' Evaluation and Recommendation
At a meeting of the Trustees of each Fund held on March 26, 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
21
respective Current Declarations. 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.
Except as described in this Proxy Statement, 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 Trusts or their
respective 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 AMENDMENT AND
RESTATEMENT OF THEIR RESPECTIVE CURRENT DECLARATION AND ADOPT THE AMENDED
DECLARATION FOR THEIR FUND.
Vote Required
Approval of Proposals 2(a), 2(b), 2(c), 2(d) and 2(e) requires an affirmative
vote of shareholders holding a majority of outstanding shares present at the
Meeting of each of Intermediate Government Fund, California Fund, U.S. Cash
Reserve Fund, Growth and Income Fund and Tax-Free Bond Fund, respectively,
provided in each case that a quorum is present.
22
PROPOSALS 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g) and 3(h)
TO APPROVE AGREEMENTS AND PLANS OF REORGANIZATION
(For shareholders of Emerging Growth Fund, Government Income Fund, High Yield
Bond Fund, High Yield Tax-Free Fund, Money Market Fund, Sovereign Balanced Fund,
Sovereign Investors Fund and Technology Fund, each voting separately)
The Trustees of Series, Inc., Sovereign Investors, Inc. and Technology Series,
Inc. (for purposes of this Proposal, the "Corporations") have approved, subject
to shareholder approval, an Agreement and Plan of Reorganization (the
"Reorganization Agreement") for each of their respective Funds in the form
attached to this Proxy Statement as Exhibit B. Each Fund's Reorganization
Agreement will provide for the reorganization of the Fund (collectively, the
"Reorganizations") as a new fund of a different trust in the John Hancock fund
complex. If approved, the result of the Reorganizations will be as follows:
New Trusts (the
"Successor Trusts") and
Funds Corporations Dates of Organization
----- ------------ ---------------------
Emerging Growth Fund Series, Inc. John Hancock Series Trust
(the "Series Trust") 12/2/96
Government Income Fund Series, Inc. Bond Trust 12/12/84
High Yield Bond Fund Series, Inc. Bond Trust
High Yield Tax-Free Fund Series, Inc. Tax-Free Bond Trust 11/9/89
Money Market Fund Series, Inc. Current Interest Trust 10/3/91
Sovereign Balanced Fund Sovereign Investors, Inc. Investment Trust 12/12/84
Sovereign Investors Fund Sovereign Investors, Inc. Investment Trust
Technology Fund Technology Series, Inc. Series Trust
Each of the Corporations and the Successor Trusts is or will be a registered,
open-end management investment company. Each of the Corporations is organized as
a Maryland corporation and each of the Successor Trusts is or will be organized
as a Massachusetts business trust. Each of the Successor Trusts currently has or
will have other existing series (the "Existing Funds").
Except for reorganizing each Fund as a series fund of a Successor Trust, the
Reorganizations will not result in any changes in the investment policies or
operations of the Funds.
PURPOSE OF THE PROPOSED REORGANIZATIONS
The purpose of each Reorganization is to increase administrative efficiency in
the operation of each Fund, to reduce the operating expenses of each Fund by
achieving additional economies of scale and to improve each Fund's operational
flexibility. Specifically, it is anticipated that each Fund will incur slightly
lower registration, printing, administrative, legal and accounting expenses if
the Fund is organized as a series of its Successor Trust and adopts the same
fiscal year as the Existing Funds of its Successor Trust. The number of filings
23
with the Securities and Exchange Commission will be reduced due to the fact that
Funds with the same fiscal year ends will be organized as series of the same
Successor Trusts. In addition each Successor Trust will have additional
opportunities to consolidate the prospectuses of the Funds and its Existing
Funds, which consolidation should reduce expenses. Over time, these savings
should have a positive effect on each Fund's total return. In addition, each
Fund will be governed by the more flexible Massachusetts business trust law
rather than Maryland corporate law.
The Adviser serves as the investment adviser to each Fund and to each of the
Existing Funds. Each Fund is currently responsible for all expenses it incurs
that are not expressly stated to be payable by the Adviser under its investment
management contract. Expenses for which each Fund is responsible include,
without limitation, fees and expenses of its custodian and transfer agent; fees
and expenses of registering shares; taxes and governmental fees assessed against
the Fund's assets; preparing and mailing dividends, reports, notices and proxy
materials to shareholders of the Fund; fees of its Independent Trustees; and
legal, accounting and auditing fees.
Each Fund is currently a series of one of the Corporations. As a result of the
Reorganizations, they will each become series of a Successor Trust. The
Corporations are organized as Maryland corporations while the Successor Trusts
are organized as Massachusetts business trusts. The Corporations are subject to
more restrictive statutory provisions than the Successor Trusts. The material
differences with respect to governance of the Corporations and the Successor
Trusts are summarized below.
The Trustees have determined that the expense reductions and improved
operational flexibility resulting from the Reorganizations would benefit the
shareholders of each Fund. Expense reductions will be attributable to, among
other things, lower annual state registration fees and lower filing, printing
and related administrative costs. It is also expected that each Reorganization
may result in slightly lower annual legal and accounting expenses.
Based on the anticipated increase in administrative efficiency, reductions in
expenses and improved operational flexibility for each Fund, the Trustees have
determined that each proposed Reorganization would be in the best interest of
the Funds and the Funds' shareholders. The Trustees believe that it is in the
Funds' interest to reduce gross annual operating expense ratios to the lowest
possible level. The Trustees believe that it is generally beneficial to the
Funds to improve the efficiency, reduce the annual cost and improve the
flexibility of the Funds' operations and that each Fund will ultimately benefit
from its Reorganization.
SUMMARY OF THE AGREEMENT AND PLAN OF REORGANIZATION
FOR EACH FUND
The following discussion summarizes certain terms of each Reorganization
Agreement. The Reorganization Agreement for each Fund is substantially
identical. This summary of the Reorganization Agreements is qualified in its
24
entirety by the provisions of the form of Reorganization Agreement attached to
this Proxy Statement as Exhibit B.
Assuming that each Reorganization is approved by shareholders of each Fund, it
is currently contemplated that the closing date of the Reorganizations for
Government Income Fund and High Yield Bond Fund will be August 30, 1996; for
High Yield Tax-Free Fund and Money Market Fund will be September 30, 1996; and
for Emerging Growth Fund, Sovereign Investors Fund, Sovereign Balanced Fund and
Technology Fund will be December 2, 1996 (collectively, the "Closing Dates"). On
its Closing Date, each Fund will transfer all of its assets to its corresponding
new fund (the "Successor Fund") in exchange for the assumption by the Successor
Fund of all of the liabilities of the Fund and the issuance to the Fund of each
class of shares of the Successor Fund (the "Successor Fund Shares"). The number
and net asset value per share of each class of Successor Fund Shares to be
issued by each Successor Fund will be identical to the number and net asset
value per share of the corresponding classes of shares of the corresponding Fund
outstanding on the Closing Date.
Each Fund, as the sole shareholder of the corresponding Successor Fund, will
then vote on certain matters that require shareholder approval, as described
below. Immediately thereafter, each Fund will liquidate and distribute each
class of its Successor Fund Shares to each Fund shareholder pro rata in
proportion to such shareholder's beneficial interest in the Successor Fund
Shares and in exchange for that shareholder's Fund shares of the corresponding
class. The existence of each Fund will then be terminated. The number and net
asset value per share of Successor Fund Shares of each class to be received by
each shareholder will be identical to the number and net asset value per share
of shares of the corresponding class of each Fund held by that shareholder
immediately prior to the Reorganization.
If, at any time prior to the appropriate Closing Date, the Board of any
Corporation or Successor Trust determines that it would not be in the best
interest of the affected Fund, the Successor Trust or their respective
shareholders to proceed with that Fund's Reorganization, the Reorganization will
not be consummated, notwithstanding the approval of the Reorganization by
shareholders of the Fund at this Meeting. The obligations of each Corporation
and Successor Trust under each Reorganization Agreement are subject to various
conditions. In order to provide against unforeseen events, each Reorganization
Agreement may be terminated or amended at any time prior to the Closing Date set
forth therein by the Board of Trustees of the Corporation or the Successor Trust
which is a party thereto. The Corporation and the Successor Trust which is a
party thereto may at any time waive compliance with any of the covenants and
conditions contained in, or may amend, the Reorganization Agreement, provided
that any such waiver or amendment does not materially adversely affect the
interests of shareholders of the affected Fund.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND ELECTIONS
The Funds' transfer agent, Investor Services, will establish accounts for all
shareholders of each Fund containing the appropriate number of Successor Fund
25
Shares to be received by that shareholder under each Reorganization Agreement.
Such accounts and the elections applicable to each account will be identical in
all material respects to the accounts and elections currently maintained by each
Fund for its shareholders.
EXPENSES OF EACH REORGANIZATION
Each Fund will bear all of the expenses associated with the transactions
contemplated by its Reorganization Agreement. It is presently estimated that the
expenses of each Reorganization will be approximately $12,000.
TAX CONSEQUENCES OF EACH REORGANIZATION
It is a condition to the consummation of each Reorganization that the
Corporation and the Successor Trust receive on or before the appropriate Closing
Date an opinion from legal counsel, Hale and Dorr, concerning the federal income
tax consequences of the Reorganization. This opinion will provide, among other
things, that the transactions contemplated by the Reorganization Agreement will
constitute a reorganization under Section 368(a)(1) of the Internal Revenue Code
of 1986, as amended, and that, consequently, no gain or loss will be recognized
for federal income tax purposes by the Fund or its shareholders upon (1) the
transfer of all of the Fund's assets to the Successor Fund in exchange solely
for Successor Fund Shares and the assumption by the Successor Fund of the Fund's
liabilities or (2) the distribution by the Fund of the Successor Fund Shares, in
liquidation of the Fund, to the shareholders in exchange for their Fund shares.
The opinion will further state, among other things, that (i) the federal tax
basis of the Successor Fund Shares to be received by shareholders of the Fund
will be the same as the federal tax basis of the Fund shares surrendered in
exchange therefor and (ii) each shareholder's federal tax holding period for his
or her Successor Fund Shares will include such shareholder's tax holding period
for the Fund shares surrendered in exchange therefor, provided that such Fund
shares were held as capital assets on the date of the exchange.
GOVERNANCE OF THE CORPORATIONS AND THE SUCCESSOR TRUSTS
If Proposal 1 of this Proxy Statement is approved, the Trustees and officers of
each Corporation and Successor Trust will be identical, except that Thomas W.L.
Cameron will only be a Trustee of Sovereign Investors, Inc., Institutional Trust
and Technology Series, Inc. and Barry J. Gordon will be President of the
Technology Fund. See "Information Concerning Nominees" and "Executive Officers"
in Proposal 1 above for information concerning Mr. Cameron and Mr. Gordon,
respectively.
Currently, each Fund is governed by the Articles of Incorporation (collectively,
the "Articles") and By-Laws of the Corporation of which it is a series. If
Proposals 2(a), 2(c) and 2(d) and 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g) and
3(h) are approved, each Fund will be governed by the Declaration of Trust of its
26
respective Successor Trust and each such Declaration of Trust will be
substantially identical (collectively, the "Successor Trust Declarations"). In
addition, each Corporation is governed by Maryland corporate law while each
Successor Trust is governed by Massachusetts business trust law. Massachusetts
business trust law is silent as to most aspects of trust governance and
operation. The governance and operation of each Successor Trust, therefore, is
guided by its Successor Trust Declaration and By-Laws. Maryland corporate law,
on the other hand, contains detailed provisions regarding the governance and
operation of a corporation to which the Corporations must adhere. While there
are many similarities with respect to the governance and operation of the
Corporations and the Successor Trusts, there are some material differences based
on Maryland and Massachusetts law, respectively, and their respective Articles
and Successor Trust Declarations. Set forth below are the material differences
with respect to governance between each of the Corporations and the
corresponding Successor Trusts.
(i) Liability
Massachusetts business trusts do not have a statutory prohibition against
personal liability of shareholders and trustees for obligations of a trust. Each
Successor Trust Declaration, however, provides that shareholders will not be
subject to any personal liability whatsoever with respect to any actions or
obligations of their respective Successor Trusts. The Successor Trust
Declarations further provide that Trustees, officers, employees and agents of
the Successor Trusts will have no personal liability with respect to obligations
of the Trust, although Trustees, employees and agents may be liable if they act
in bad faith or with willful misfeasance, gross negligence or reckless disregard
of their respective duties. The Successor Trust Declarations also provide for
the indemnification of shareholders, Trustees, officers, employees and agents in
the event they are deemed liable for any acts or obligations of the Trust. Such
indemnification will not apply to Trustees or officers if their liability is a
result of actions they have taken in bad faith or with willful misfeasance,
gross negligence or reckless disregard of their respective duties.
Maryland law provides that shareholders, directors, officers and employees do
not have personal liability with respect to the obligations of a Maryland
corporation. Each Corporation's Articles further provide that the Corporations
will indemnify directors and officers in the event they are liable for the acts
or obligations of the Corporation unless their act or omission was material to
the matter giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty.
(ii) Shareholder Voting
The Successor Trust Declarations require the following shareholder votes:
(a) Election of Trustees
-- plurality of shares voting at a meeting
(b) Removal of Trustees
-- with cause, by shareholders holding two-thirds of outstanding
shares
27
(c) Termination of Trust; Merger, Consolidation, Sale of Assets
-- (i) shareholders holding two-thirds of outstanding shares and
present at a meeting, or (ii) by written consent of shareholders
holding two-thirds of outstanding shares, or (iii) by a 1940 Act
Majority Shareholder Vote of the Trust if termination is
recommended by the Trustees
(d) Amending the Successor Trust Declaration
-- 1940 Act Majority Shareholder Vote
(e) Trustees may determine whether each share of a Successor Trust will be
entitled to one vote on matters or each dollar of the Successor
Trust's net asset value will be entitled to one vote.
Maryland law provides that unless the law or articles of a corporation provide
otherwise, a majority of votes cast at a shareholder's meeting at which a quorum
is present is sufficient to approve matters brought before the meeting. The
Articles of each Corporation and/or Maryland law require the following
shareholder votes:
(a) Election of Directors
-- plurality of shares voting at a meeting
(b) Removal of Directors
-- with or without cause by shareholders holding a majority of all
outstanding shares
(c) Termination of Corporation; Merger, Consolidation, Sale of Assets
-- a majority of all outstanding shares
(d) Amending the Articles
-- a majority of all outstanding shares
Neither Maryland law nor the Corporations' Articles provide for the casting of
votes based on each dollar of the net asset value of the Corporation.
(iii) Charter Amendments
The Successor Trust Declaration of each Trust provides that the Declaration may
be amended by a majority vote of Trustees without shareholder approval except
that no amendment may be made which impairs voting or other rights of
shareholders prescribed by law or impairs the exemption from personal liability
of shareholders, Trustees, officers, employees or agents of the Successor Trust
or permits assessments upon shareholders. Amendments may also be made to a
Successor Trust Declaration by an affirmative 1940 Act Majority Shareholder Vote
or by a written consent of a 1940 Act Majority of Shareholders.
Maryland law requires that amendments to the Articles of a Corporation (except
for corporate name changes or changes to the name or designation of a class or
series of shares) be approved by shareholders holding at least two-thirds of the
Corporation's outstanding shares.
28
(iv) Authorization and Issuance of Shares
The Successor Trust Declaration of each Successor Trust provides that the number
of shares the Successor Trust may issue is unlimited and the Trustees have the
ability to issue shares without shareholder approval.
Maryland law requires that each Corporation state specifically the number of
shares it is authorized to issue and also requires that the shareholders approve
any issuance of shares unless, as is the case with each Corporation, the
Articles specifically state that such authorization is not required and certain
minimum consideration is received for the shares.
(v) Redemption of Shares
The Successor Trust Declaration of each Successor Trust provides that the
Trustees may involuntarily redeem shares from a shareholder account if a minimum
amount, as established by the Trustees, is not maintained in such account.
Each of the Articles contains different provisions regarding redemptions. The
Articles of Series, Inc. provide that the Corporation may involuntarily redeem
shares of any holder whose shares have a value of less than $1,000 or a lesser
amount as fixed by the Trustees. The Articles of Sovereign Investors, Inc.
provide that the Trustees may involuntarily redeem shares from an account if the
value of the account is less than $1,000 or if they deem such redemption to be
necessary to avoid the Corporation being classified as a "personal holding
company" under the Internal Revenue Code of 1986. The Articles of Technology
Series , Inc. provide that the Corporation may involuntarily redeem shares of
any holder if the Trustees deem such redemption necessary to avoid the
Corporation being deemed a "personal holding company" or if the number of shares
in an account is less than a number specified by the Trustees from time to time
but which number may not be more than 100.
In addition to each of the above differences, the Successor Trust Declarations,
unlike the Articles, provide that the Successor Trusts may enter into various
types of agreements without shareholder approval. There are also other
substantive and stylistic differences between the Successor Trust Declarations
and the Articles.
AGREEMENTS
If shareholders of each Fund approve its Reorganization Agreement, the Successor
Trusts, on behalf of the corresponding Successor Funds, will enter into
contracts which are substantially identical to the Funds' currently effective
contracts. These contracts will include Investment Management Contracts with the
Adviser and Transfer Agency Agreements with Investor Services. Custody services
will continue to be provided to Emerging Growth Fund, Government Income Fund,
High Yield Bond Fund, High Yield Tax-Free Fund, Sovereign Balanced Fund,
Sovereign Investors Fund and Technology Fund by Investors Bank & Trust Company
and Money Market Fund by State Street Bank & Trust Company pursuant to the
corresponding Successor Trust's Custodian Agreement. Distribution services will
continue to be provided to each Successor Fund by John Hancock Funds pursuant to
29
the corresponding Successor Trust's Distribution Contract. The terms of these
Custodian Agreements and Distribution Contracts are substantially similar to
those contained in the Funds' Custodian Agreements and Distribution Contracts.
Ernst & Young LLP, the current independent auditors for each of the Funds except
for the Technology Fund, will continue to serve as the independent auditors to
the respective Successor Funds as well as the Existing Funds of the Successor
Trusts. Price Waterhouse LLP, the current independent auditors for the
Technology Fund, will continue to serve as the independent auditors to
Technology Fund's Successor Fund. In addition, the Trustees of each of the
Successor Trusts have adopted a Distribution Plan (a "Distribution Plan") for
each class of shares of each Successor Fund which is substantially identical to
the existing Fund's current distribution plan.
The fee schedules for services provided to the Successor Funds under the
agreements described above will be identical to those in effect for the
corresponding Funds before the Reorganizations. On the Closing Date, before
distributing Successor Fund Shares to its shareholders, each Fund, as the sole
shareholder of its corresponding Successor Fund, will vote to approve the
Successor Fund's Investment Management Contract and its Distribution Plans.
Trustees' Recommendation
Based on the considerations discussed above, at a meeting held on March 26,
1996, the Trustees of the Corporations approved the adoption of the
Reorganization Agreements for the Funds and determined that the Reorganization
of each Fund (i) is in the best interest of the Fund and (ii) will not result in
dilution of the interest of the shareholders of the Fund. In addition, the
directors voted to recommend to the shareholders of the Funds that they approve
the Reorganization Agreement for their Fund and the transactions contemplated
thereunder. If the shareholders of a Fund do not approve the Reorganization
Agreement for their Fund, the Fund will retain its present status, and the
Trustees will consider other arrangements for restructuring and reducing the
expenses of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF EACH FUND APPROVE THE AGREEMENT AND
PLAN OF REORGANIZATION FOR THEIR FUND PROVIDING FOR THE REORGANIZATION OF THEIR
FUND TO BECOME A SERIES OF THE CORRESPONDING SUCCESSOR TRUST.
Vote Required
Approval of Proposals 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g) and 3(h) requires
the affirmative vote of the holders of a majority of all outstanding shares of
Emerging Growth Fund, Government Income Fund, High Yield Bond Fund, High Yield
Tax-Free Fund, Money Market Fund, Sovereign Balanced Fund, Sovereign Investors
Fund and Technology Fund, respectively.
30
PROPOSAL 4
TO APPROVE AN AMENDMENT TO TAX-FREE BOND FUND'S CLASS A
DISTRIBUTION PLAN TO INCREASE DISTRIBUTION
FEES FOR CLASS A SHARES
(For Class A Shareholders of Tax-Free Bond Fund voting separately)
On November 28, 1995, the Trustees of Tax-Free Bond Fund, including all of the
Independent Trustees, approved, and voted to recommend to Tax-Free Bond Fund's
Class A shareholders that they approve, an amendment to the Fund's distribution
plan applicable to the Fund's Class A shares and adopted pursuant to Rule 12b-1
under the 1940 Act (the "Class A Plan"). This amendment would increase the
maximum amount payable pursuant to the Plan from 0.15% to 0.25% annually of the
Fund's average daily net assets attributable to the Class A shares, effective
December 23, 1996. In approving the amendment, the Trustees determined that the
increased fee is likely to result in higher levels of sales and lower levels of
redemptions of the Fund's Class A shares than would otherwise be obtainable.
This in turn should assist in the goal of achieving net positive cash flow into
the Fund and an increase in Fund asset size. There can be no assurance, however,
that the Fund will achieve a net positive cash flow or an increase in asset
size.
The Class A Plan
The Fund's Class A Plan, dated December 22, 1994, was initially approved by the
Trustees on October 18, 1994 and by the shareholders on December 16, 1994. The
Class A Plan was most recently approved by the Trustees, including a majority of
the Independent Trustees who have no direct or indirect financial interest in
the operation of the Class A Plan or any related agreement, on May 16, 1995. For
the Fund's fiscal year ended December 31, 1995, the Fund paid $175,342 (0.15% of
average daily net assets of the Fund) in fees to John Hancock Funds with respect
to the Plan.
The Class A Plan sets forth the terms and conditions on which the Fund will pay,
from the assets attributable to Class A shares, distribution fees and service
fees to John Hancock Funds in connection with the provision by John Hancock
Funds of certain services to the Fund and its Class A shareholders. The terms of
the Class A Plan authorize the Fund to engage in any activity primarily intended
to result in the sale of its shares. The Fund is authorized to engage in such
activities directly, or through other persons with whom the Fund enters into
agreements.
Distribution fees are used to reimburse John Hancock Funds for expenses
primarily intended to result in sales of Class A shares of the Fund, including,
but not limited to, compensation and expenses (including overhead, other branch
office and telephone expenses) of registered representatives or other sales and
marketing personnel of John Hancock Funds; printing prospectuses and reports for
other than existing Class A shareholders; advertising relating to Class A
shares; and the preparation, printing and distribution of sales literature and
advertising materials relating to the Class A shares. Service fees are used to
31
reimburse John Hancock Funds for payments made to, or on account of account
executives of selected broker-dealers (including affiliates of John Hancock
Funds) and others who furnish personal and shareholder account maintenance
services to Class A shareholders, including, but not limited to the
establishment and maintenance of shareholder accounts; processing purchase and
redemption orders; processing requests and orders with respect to shareholder
services and programs described in the Fund's Prospectus and Statement of
Additional Information; and responding to routine telephone inquiries. These
payments represent additional compensation to such persons or dealers in
addition to any commissions John Hancock Funds might receive on sales of the
Fund's shares.
Under the current Class A Plan, the Fund pays up to an aggregate of 0.15%
annually of its average daily net assets attributable to the Class A shares for
both distribution fees and service fees. The Fund may, but need not, pay the
entire 0.15% in service fees.
Under the Class A Plan as proposed to be amended, the Fund would pay up to an
aggregate of 0.25% annually of its average daily net assets attributable to the
Class A shares. Within this maximum amount, the Fund could pay up to 0.25% in
service fees and the remainder in distribution fees.
Set forth below is a comparative table showing the amount of fees and expenses
paid by the Fund with respect to its Class A shares under the current Class A
Plan and the amount of fees and expenses the Class A shareholders would have
paid indirectly if the Class A Plan as proposed to be amended had been in
effect. The information in the table is an estimate based on actual expenses for
the Fund's fiscal year ended December 31, 1995.
Comparative Fee Table For Class A Shares
Existing New
Class A Plan Class A Plan
------------ ------------
Annual Fund Operating Expenses (as a
Percentage of Average Net Assets)
Management fee ........................... 0.55% 0.55%
12b-1 fee ................................ 0.15% 0.25%
Other expenses (1) ....................... 0.27% 0.27%
Total Fund Operating Expenses (2) ........ 0.97% 1.07%
----------
(1) Other expenses include transfer agent, legal, audit, custody and other
expenses.
(2) Until December 23, 1996, the Adviser has agreed to limit total fund
expenses to 0.85% for Class A shares.
Example
The following table illustrates the expenses on a $1,000 investment in Class A
shares of the Fund you would pay under the current Class A Plan and the CLass A
Plan as proposed to be amended, assuming a 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Current Class A Plan .......... $54 $75 $ 96 $159
Amended Class A Plan .......... $55 $78 $101 $170
32
The purpose of the preceding example and table is to assist investors in
understanding the various costs and expenses of investing in Class A shares of
the Fund. The example should not be considered a representation of past or
future expenses of the Fund. Actual expenses may be higher or lower than those
shown above.
These expenditures are calculated and accrued daily, charged against the assets
attributable to Class A shares only and paid monthly or at such other intervals
as the Trustees determine. Pursuant to the Class A Plan, John Hancock Funds
provides the Fund at least quarterly with a written report of the amounts
expended under the Class A Plan and the purpose for which such expenditures were
made together with such other information as from time to time is reasonably
requested by the Trustees. The Trustees review such reports on a quarterly
basis. In the event John Hancock Funds is not fully reimbursed for payments made
or other expenses incurred by it under the Class A Plan, such expenses are not
carried beyond one year from the date such expenses were incurred. Any fees paid
to John Hancock Funds during a fiscal year and not expended or allocated by John
Hancock Funds for actual or budgeted distribution and service activities during
that year are promptly returned to the Fund.
The expenditures made pursuant to the Class A Plan, and the basis upon which
such expenditures are made, are determined by the Fund in accordance with Rule
12b-1 under the 1940 Act (the "Rule") and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. (the "NASD Rules"). If any
amendment to the Rule or the NASD Rules is adopted, the Trustees will consider
what, if any, modification of the Class A Plan or the Fund's distribution
practices may be appropriate.
The Class A Plan will continue in effect for successive annual periods provided
that it is approved at least annually by a vote of the majority of the Trustees,
including a majority of the Independent Trustees who have no direct or indirect
financial interest in the operation of the plan or in any agreement related to
the plan. The Fund may terminate the Class A Plan at any time by vote of a
majority of the Trustees, a majority of the Independent Trustees who have no
direct or indirect financial interest in the operation of the plan or in any
agreement related to the plan, or a majority of the outstanding voting Class A
shares (see "Vote Required") of the Fund. No material amendment to the Class A
Plan will be effective unless it is approved by a vote of a majority of the
Trustees, including a majority of the Independent Trustees who have no direct or
indirect financial interest in the operation of the plan or in any agreement
related to the plan. The Class A Plan requires that amendments which would
materially increase the amount of the payments permitted thereunder be approved
by a majority of the outstanding voting Class A shares of the Fund.
Trustees' Evaluation and Recommendation
In connection with their decision to approve the proposed amendment and to
recommend to the Fund's Class A shareholders that they do the same, the
Trustees, including all of the Independent Trustees, reviewed all information
which they deemed necessary to arrive at an informed determination. The
33
Independent Trustees met separately and consulted with their independent counsel
in determining whether to approve the amendment to the Class A Plan. Among the
matters considered by the Trustees were: (1) the potential costs and benefits of
the amended Class A Plan to shareholders, including the fact that higher
payments made to John Hancock Funds would increase the level of expenses
incurred by Class A shareholders; (2) whether the amended Class A Plan would
assist John Hancock Funds in marketing Class A shares of the Fund and reduce the
level of share redemptions; (3) the advantages to the Fund and its Class A
shareholders that might result from growth in the Fund's assets, including
economies of scale, reduced expense ratios, and greater portfolio
diversification; and (4) the fact that net positive cash flow into the Fund
could facilitate portfolio management by eliminating the need to liquidate
favorable portfolio positions in order to generate sufficient cash to satisfy
redemption requests. The Trustees determined that the provision made by the
amended Class A Plan for additional sales and continuing shareholder service
incentives and John Hancock Fund's expenses is likely to result in higher levels
of sales and lower levels of redemptions of Class A shares of the Fund than
would otherwise occur. This in turn should assist the Fund in achieving net
positive cash flow and an increase in its asset size.
The Trustees found the fees to be paid under the amended Class A Plan reasonable
in view of the services that John Hancock Funds provides and the anticipated
expenses that John Hancock Funds will incur in distributing and marketing the
Fund's Class A shares and paying broker-dealers for ongoing service to Class A
shareholders. The Trustees also noted that the level of fees currently payable
under the Class A Plan is comparable to or below that of most other John Hancock
mutual funds, whose shares are sold through the same broker-dealer network, as
well as many funds with whom the Fund competes for the customers and sales
efforts of broker-dealers. The Board determined that the higher Rule 12b-1 fee
payable under the amended Class A Plan will enable John Hancock Funds to
compensate broker-dealers in an amount comparable to the compensation they
receive in connection with sales of shares of comparable mutual funds.
The Trustees also recognized and considered that possible benefits may be
realized by the Adviser as a result of the proposed amendment to the Class A
Plan. If the Fund's net assets grow more rapidly as a result of the
implementation of the amended Class A Plan, the investment advisory fees payable
to the Adviser (which fees are calculated as a percentage of the Fund's net
assets) will also increase. The Trustees recognized that possible benefits may
be realized by John Hancock Funds as a result of the proposed amendment to the
Class A Plan through the payment of sales charges to John Hancock Funds for
sales and distribution of the Fund's Class A shares.
As a result of their careful consideration of the above factors and other
relevant matters, the Trustees of Tax-Free Bond Fund, including a majority of
the Independent Trustees who have no direct or indirect financial interest in
the operation of the plan or in any agreement related to the plan, concluded, in
the exercise of their reasonable business judgment and in light of their
fiduciary duties under the 1940 Act, that the amendment to the Class A Plan was
likely to benefit the Fund and its Class A shareholders and recommended that it
34
be submitted to the shareholders for their approval. The amendment will not
become effective unless approved by the Fund's Class A shareholders.
THE TRUSTEES RECOMMEND THAT CLASS A SHAREHOLDERS OF TAX-FREE BOND FUND VOTE FOR
THE PROPOSAL TO APPROVE THE AMENDMENT TO THE FUND'S CLASS A PLAN UNDER RULE
12b-1.
Vote Required
Approval of this proposal by the Fund's Class A shareholders requires an
affirmative 1940 Act Majority Shareholder Vote of the Fund's outstanding Class A
shares.
PROPOSALS 5(a), 5(b), 5(c), 5(d), 5(e), 5(f), 5(g) and 5(h)
REDESIGNATION AS NONFUNDAMENTAL OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING INVESTING IN OTHER INVESTMENT COMPANIES
(For shareholders of U.S. Cash Reserve Fund, Growth and Income Fund,
Emerging Growth Fund Global Resources Fund, Government Income Fund,
High Yield Bond Fund, High Yield Tax-Free Fund and Money Market Fund,
each voting separately)
The U.S. Cash Reserve Fund's existing fundamental investment restriction
regarding investments in investment companies states that the Fund may not:
Invest ... in securities of other investment companies, except pursuant to
a merger, consolidation or acquisition of assets.
The Growth and Income Fund's existing fundamental investment restriction
regarding investments in investment companies states that the Fund may not:
Invest ... in the securities of another investment company (other than
pursuant to a plan of merger or consolidation).
The existing fundamental investment restriction regarding investments in
investment companies of each of Emerging Growth Fund, Global Resources Fund,
Government Income Fund, High Yield Bond Fund and Money Market Fund states that
the Fund may not:
Purchase securities issued by any other investment company or investment
trust except by purchase in the open market where no commission or profit
to a sponsor or dealer results from such purchase other than the customary
broker's commission, or except when such purchase, though not made in the
open market, is part of a plan of merger or consolidation; provided,
however, that a Fund will not purchase such securities if such purchase at
the time thereof would cause more than 10% of its total assets (taken at
market value) to be invested in the securities of such issuers; and,
provided, further, that a Fund will not purchase securities issued by an
open-end investment company.
35
The High Yield Tax-Free Fund's existing fundamental investment restriction
regarding investments in investment companies states that the Fund may not:
Invest in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets, and
except for the purchase, to the extent permitted by Section 12 of the 1940
Act, of shares of registered unit investment trusts whose assets consist
substantially of municipal obligations.
At the meeting of the Trustees on March 26, 1996, the Trustees of U.S. Cash
Reserve Fund, Growth and Income Fund, Emerging Growth Fund, Global Resources
Fund, Government Income Fund, High Yield Bond Fund, High Yield Tax-Free Fund and
Money Market Fund voted to approve, and to recommend to their respective
shareholders that they approve, the redesignation as nonfundamental of the above
fundamental investment restrictions. If redesignated as proposed, the Trustees
would amend the non-fundamental restrictions of their respective Funds 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 designated Funds with additional
investment and administrative flexibility, including the ability to invest cash
collateral received in connection with the lending of portfolio securities in
the securities of open-end investment companies. The change set forth in these
Proposals would permit investment by each Fund 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. Even though the purchase of securities of other investment
companies by the Funds may involve the duplication of some fees and expenses,
the Trustees believe that approval of these Proposals would be beneficial to the
Funds as the Funds will have more flexibility to invest in securities of other
investment companies, will be able to seek a greater return on cash collateral
and will be better able to take advantage of potential investment opportunities.
36
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 of U.S. Cash Reserve Fund,
Growth and Income Fund, Emerging Growth Fund, Global Resources Fund, Government
Income Fund, High Yield Bond Fund, High Yield Tax-Free Fund and Money Market
Fund believe that approval of these Proposals would be beneficial to their
respective shareholders.
Trustees' Recommendation
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS APPROVE THE REDESIGNATION AS
NONFUNDAMENTAL OF THEIR FUND'S FUNDAMENTAL INVESTMENT RESTRICTION ON INVESTING
IN OTHER INVESTMENT COMPANIES
Required Vote
Approval of Proposals 5(a), 5(b), 5(c), 5(d), 5(e), 5(f), 5(g) and 5(h) requires
a 1940 Act Majority Shareholder Vote of each of U.S. Cash Reserves Fund, Growth
and Income Fund, Emerging Growth Fund, Global Resources Fund, Government Income
Fund, High Yield Bond Fund, High Yield Tax-Free Fund and Money Market Fund,
respectively.
PROPOSAL 6
PROPOSED AMENDMENT TO TECHNOLOGY FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING THE MAKING OF LOANS
(For shareholders of Technology Fund voting separately)
At the meeting held on March 26, 1996, the Trustees of Technology Fund,
including the Independent Trustees, voted to approve, and to recommend to
shareholders of Technology Fund that they approve, a proposal to amend the
Fund's fundamental investment restriction regarding the making of loans. At
present, the Fund is subject to the following investment restriction regarding
the making of loans:
The Fund may not ...
(8) Make loans to or guarantee the debts of other persons other than
portfolio security loans secured by cash or securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities as collateral
in amounts at all times equal at least to the market value of the
securities loaned, determined daily; provided that the aggregate of all
such loans at any time outstanding shall not exceed 25% of the value of the
Fund's total assets.
37
The Trustees of Technology Fund, recommend that shareholders of the Fund approve
an amendment to the restriction by replacing it with the following new
fundamental investment restriction:
The Fund may not ...
(8) Make loans, except that the Fund may (1) lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's
total assets taken at market value, (2) enter into repurchase agreements,
and (3) purchase all or a portion of an issue of debt securities, bank loan
participation interests, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the purchase is
made upon the original issuance of the securities.
The new fundamental investment restriction would permit the Fund to lend
portfolio securities in an amount up to 33 1/3% of its total assets, the maximum
amount permitted by the 1940 Act. Currently, the Fund is only permitted to lend
portfolio securities in an amount up to 25% of its total assets. The Trustees
believe that this increase will allow the Fund greater flexibility to take
advantage of investment opportunities and increase its income. By lending
portfolio securities, the Fund subjects itself to the risk of a loss or delay in
the recovery of its securities if a party with which it has engaged in a loan
transaction breaches its agreement. The new fundamental investment restriction
also clarifies that the Fund's total assets will be taken at market value and
that the Fund may enter into repurchase agreements and purchase certain other
types of securities.
Trustees' Evaluation and Recommendation
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF TECHNOLOGY FUND ADOPT THE PROPOSED
AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING THE MAKING
OF LOANS.
Required Vote
Adoption of this Proposal requires an affirmative 1940 Act Majority Shareholder
Vote of Technology Fund.
OTHER MATTERS
The Funds' 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 Funds'
management will be glad to hear from them and to provide further information.
38
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, 3, 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.
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,
3, 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 in the Proxy Statement 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 each 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 Proposal has been adopted pursuant to
39
subsection (i) of the 1940 Act Majority Shareholder Vote definition. In
addition, a "broker non-vote" has no affect on the voting in determining whether
a Nominee has been elected as a Trustee of a Fund pursuant to Proposal 1. 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 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
40
JOHN HANCOCK INTERMEDIATE MATURITY
GOVERNMENT FUND
JOHN HANCOCK CALIFORNIA TAX-FREE
INCOME FUND
JOHN HANCOCK U.S. GOVERNMENT CASH RESERVE
JOHN HANCOCK ACTIVE BOND FUND
JOHN HANCOCK DIVIDEND PERFORMERS FUND
JOHN HANCOCK FUNDAMENTAL VALUE FUND
JOHN HANCOCK GLOBAL BOND FUND
JOHN HANCOCK INDEPENDENCE BALANCED FUND
JOHN HANCOCK INDEPENDENCE DIVERSIFIED
CORE EQUITY FUND II
JOHN HANCOCK INDEPENDENCE GROWTH FUND
JOHN HANCOCK INDEPENDENCE MEDIUM
CAPITALIZATION FUND
JOHN HANCOCK INDEPENDENCE VALUE FUND
JOHN HANCOCK INTERNATIONAL EQUITY FUND
JOHN HANCOCK MULTI-SECTOR GROWTH FUND
JOHN HANCOCK GROWTH AND INCOME FUND
JOHN HANCOCK EMERGING GROWTH FUND
JOHN HANCOCK GLOBAL RESOURCES FUND
JOHN HANCOCK GOVERNMENT INCOME FUND
JOHN HANCOCK HIGH YIELD BOND FUND
JOHN HANCOCK HIGH YIELD TAX-FREE FUND
JOHN HANCOCK MONEY MARKET FUND
JOHN HANCOCK SOVEREIGN BALANCED FUND
JOHN HANCOCK SOVEREIGN INVESTORS FUND
JOHN HANCOCK TAX-FREE BOND FUND
JOHN HANCOCK GLOBAL TECHNOLOGY FUND
41
APPENDIX A
As of April 22, 1996, each Fund had the following number of each class
outstanding:
Class A Shares Class B Shares Class C Shares Class S Shares
Funds Outstanding Outstanding Outstanting Outstanding
----- ----------- ----------- ----------- -----------
Intermediate Government Fund 2,961,240.324 849,858.967 -- --
California Fund 28,559,461.78 7,885,385.279 -- --
U.S. Cash Reserve Fund 36,788,242.28 -- -- --
Growth and Income Fund 9,059,187.742 8,306,736.143 -- --
Emerging Growth Fund 5,130,543.345 11,641,022.860 -- --
Global Resources Fund 370,617.487 2,042,973.193 -- --
Government Income Fund 46,442,115.652 22,245,413.607 -- --
High Yield Bond Fund 4,368,554.144 25,368,863.968 -- --
High Yield Tax-Free Fund 1,843,110.493 16,286,828.973 -- --
Money Market Fund 228,123,217 89,244,501.030 -- 25
Sovereign Balanced Fund 5,817,325.365 7,380,386.553 -- --
Sovereign Investors Fund 70,703,200.436 16,431,582.89 1,188,547.912 --
Tax-Free Bond Fund 10,675,548.090 7,053,051.868 -- --
Technology Fund 6,396,234.306 1,760,993.9330 -- --
Shares
Outstanding
-----------
Active Bond Fund 142,088.388
Performers Fund 367,603.732
Fundamental Value Fund 601,769.289
Global Bond Fund 120,152.028
Balanced Fund 572,951.710
Core Equity Fund 20,017,821.647
Independence Growth Fund 59,171.652
Medium Cap Fund 435,663.007
Independence Value Fund 86,829.016
International Equity Fund 330,322.725
Multi-Sector Fund 908,243.780
42
APPENDIX B
As of April 22, 1996, the following persons or entities owned beneficially or of
record more than 5% of the outstanding Class A, Class B, Class C and Class S
shares, as applicable, of each Fund:
U.S. Cash Reserve Fund -- Novell Incorporated, 1555 North Technology Way, Orem,
UT, 5,288,926.220 shares, 14.38%; Thomas R. Powers & Pat G. Powers, 1929
Olympia, Houston, TX, 4,276,972.180 shares, 11.63%; Trust Co. of America.
Institutional Division 7103 S. Revere Pkwy, Englewood CO, 3,503.022.160 shares,
9.52%.
California Fund -- Class A -- Merrill Lynch Pierce Fenner & Smith Inc., Mutual
Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 1,743,388.171
shares, 6.10%; Class B -- Merrill Lynch Pierce Fenner & Smith Inc., Mutual Fund
Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 763,702 shares, 9.69%.
Intermediate Government Fund -- Class A -- Merrill Lynch Pierce Fenner & Smith
Inc., Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL,
389,652 shares, 13.16%; Merchants & Marine Bank, P.O. Box 729, Pascagoula, MS,
244.105.183 shares, 8.24%; River Production Co. Inc., P.O. Box 909, Columbia,
MS, 161,749.49 shares, 5.46%; Class B -- Merrill Lynch Pierce Fenner & Smith
Inc., Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL,
68,375 shares, 8.05%
Global Resources Fund -- Class A -- Jupiter & Co., c/o Investors Bank & Trust
Co., Box 1537 TOP 57, Boston, MA, 99,118.943 shares, 26.74%; Charles C. Sorsby,
100 E. Huron Street, Chicago, IL, 31,655.647 shares, 8.54%; Class B -- Merrill
Lynch Pierce Fenner & Smith Inc., Mutual Fund Operations, 4800 Deer Lake Drive
East, Jacksonville, FL, 132,078.704 shares, 6.47%.
High Yield Tax-Free Fund -- Class A -- The Private Bank & Trust Co., as
Custodian for Daniel Lee, 10 Dearborn Street, Chicago, IL, 176,464.414 shares,
9.57%; Class B -- Merrill Lynch Pierce Fenner & Smith Inc., Mutual Fund
Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 2,959,608 shares,
18.17%.
Emerging Growth Fund -- Class A -- National Westminster Bank PLC as TTEE of
American Smaller Companies Trust, Juno Court, 24 Prescott Street, London,
758,923.757 shares, 14.79%; Merrill Lynch Pierce Fenner & Smith Inc., Mutual
Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 694,050, 13.53%;
Class B -- Merrill Lynch Pierce Fenner & Smith Inc., Mutual Fund Operations,
4800 Deer Lake Drive East, Jacksonville, FL, 3,062,104.199 shares, 26.30%.
High Yield Bond Fund -- Class A -- National City Bank TTEE, FBO Building
Laborers Local 310, Pension Plan, P.O. Box 94777, Cleveland OH, 475,233.122
shares, 10.88%; National City Bank TTEE, Building Laborers Local 310, Health &
Welfare Plan, P.O. Box 94777, Cleveland, OH, 308,856.806 shares, 7.07%; Class B
-- Merrill Lynch Pierce Fenner & Smith Inc., Mutual Fund Operations, 4800 Deer
Lake Drive East, Jacksonville, FL, 2,521,343 shares, 9.94%
43
Growth and Income Fund -- Class B -- Merrill Lynch Pierce Fenner & Smith Inc.,
Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 415,756.051
shares, 5.01%.
Tax-Free Bond Fund -- Class B -- Merrill Lynch Pierce Fenner & Smith Inc.,
Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 840,549.127
shares, 11.92%.
Government Income Fund -- Class B -- Merrill Lynch Pierce Fenner & Smith Inc.,
Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL,
2,894,804.085 shares, 13.01%.
Technology Fund -- Class B -- Merrill Lynch Pierce Fenner & Smith Inc., Mutual
Fund Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 133,487.000
shares, 7.58%.
Sovereign Investors Fund -- Class C -- Mellon Bank Trustee, California Savings
Plu7s Program, 1 Cabot Road, Medford MA, 922,427.843 shares, 77.61%; Mellon Bank
Trustee, California Savings Plus Program, 1 Cabot Road, Medford MA, 266,117.220
shares, 22.39%.
Money Market Fund -- Class S -- John Hancock Advisers Inc., 101 Huntington
Avenue, Boston, MA, 25 shares, 100%
Independence Growth Fund -- Independence Investment Associates, 53 State Street,
Boston, MA, 59,171.652 shares, 100.0%.
Active Bond Fund -- The Investment Incentive Plan, Beverly a. Cleathero, 18 Main
St, Malden, MA, 14,586.883 shares, 10,27%; John Hancock Funds, Aurora
Electronics, Inc., 101 Huntington Avenue, Boston, MA, 9,357.104 shares, 6.59%;
The Investment Incentive Plan, Robert G. Freedman, 8 Elm Street, Marblehead, MA,
9,210.550 shares, 6.48%.
Core Equity Fund -- Wachovia Bank of Georgia, National Service Industries, Inc.,
Defined Contribution Plan, 1420 Peachtree St. N.E., Atlanta, GA, 4,758,098.567
shares, 23.77%; Weil Gotshal & Manges, 401(k) Plan FBO The Plan, 767 Fifth Ave,
New York, NY, 1,768,781.806 shares, 8.84%; Charles Schwabb Trust Company FBO,
Gaylord Entertainment Co., 401(k) Savings Plan, 1 Montgomery Street, San
Francisco, CA, 1,619,697.103 shares, 8.09%; Food Marketing Institute, 800
Connecticut Avenue NW, Washington, D.C., 1,223,760.291 shares, 6.11%; First
Trust NA Custodian for Missionary Oblates of Mary Immaculate, P.O. Box 64010,
St. Paul, MN, 1,215,858.139 shares, 6.07%.
Balanced Fund -- John Hancock Funds, Inc., FBO Gilbane Building Company, 101
Huntington Avenue, Boston, MA, 368,218.806 shares, 64.27%; John Hancock Mutual
Life Insurance Cust for ONE Color Communications 401(k), 101 Huntington Avenue,
Boston, MA, 140,762.304 shares, 24.57%; John Hancock Mutual Life Cust for
Mokrynski Associates 401(k) Plan, 101 Huntington Avenue, Boston, MA, 39,098.532
shares, 6.82%.
Fundamental Value Fund -- John Hancock Funds, Inc., FBO Gilbane Building
Company, 101 Huntington Avenue, Boston, MA, 396,698.591 shares, 65.92%;
44
Lathers' Local No. 144L, Pension Plan II, 400 S. El Camino Real, San Mateo, CA,
68,293.468 shares, 11.35%.
Multi-Sector Fund -- Investment Incentive Program for John Hancock Employees,
John Hancock Place, P.O. Box 111, Boston, MA, 699,541.057 shares, 77.02%.
Medium Cap Fund -- John Hancock Funds, Inc. FBO Gilbane Building Company, 101
Huntington Avenue, Boston, MA, 346,918.138 shares, 79.63%; Independence
Investment Associates, 53 State Street, Boston, MA, 59,046.108 shares, 13.55%.
Global Bond Fund -- John Hancock Advisers Inc., 101 Huntington Avenue, Boston,
MA, 94,117.647 shares, 78.33%.
Performers Fund -- Lathers' Local No. 144L, Pension Plan II, 400 S. El Camino
Real, San Mateo, CA, 101,436.704 shares, 27.59%; John Hancock Funds, Aurora
Electronics, 101 Huntington Avenue, Boston, MA, 25,172.556 shares, 6.85%; John
Hancock Funds, Liguori Publications Def Savings PL, 101 Huntington Avenue,
Boston, MA, 23,500.560 shares, 6.39%.
Independence Value Fund -- Independence Investment Associates, 53 State Street,
Boston, MA, 59,408.620 shares, 68.42%; John Hancock Funds, Aurora Electronics,
101 Huntington Avenue, Boston, MA, 15,055.214 shares, 17.34%; John Hancock
Funds, Liguori Publications Def Savings PL, 101 Huntington Avenue, Boston, MA,
12,365.182 shares, 14.24%.
International Equity Fund -- John Hancock Funds, Inc., FBO Gilbane Building
Company, 101 Huntington Avenue, Boston, MA, 165,996.567 shares, 50.25%; Dan
River Inc. 401 (k) Plan, P.O. Box 261, Danville, VA, 19,763.669 shares, 5.98%.
45
APPENDIX C
Intermediate Growth Emerging
Government and Growth
Fund Income Fund Fund
---- ----------- ----
Class Class Class
A A A
Edward J. Boudreau, Jr. 106 68 33
Thomas W.L. Cameron -- -- --
James F. Carlin 105 67 24
William H. Cunningham -- -- 1,841
Charles F. Fretz -- -- --
Harold R. Hiser, Jr. -- -- --
Anne C. Hodsdon 104 67 26
Charles L. Ladner 100 200 200
Leo E. Linbeck, Jr. 320 879 33
Patricia P. McCarter 206 199 106
Steven R. Pruchansky 101 100 144
Richard S. Scipione -- -- --
Norman H. Smith 106 200 231
John P. Toolan -- -- --
Global Government High Yield
Resources Income Bond
Fund Fund Fund
---- ---- ----
Class Class Class
A A A
Edward J. Boudreau, Jr. -- 112 135
Thomas W.L. Cameron -- -- --
James F. Carlin -- 126 135
William H. Cunningham -- -- --
Charles F. Fretz -- -- --
Harold R. Hiser, Jr. -- -- --
Anne C. Hodsdon -- -- 134
Charles L. Ladner 200 200 131
Leo E. Linbeck, Jr. 67 2,715 152
Patricia P. McCarter 187 323 403
Steven R. Pruchansky 100 101 100
Richard S. Scipione -- -- --
Norman H. Smith 114 219 402
John P. Toolan -- -- --
46
High Yield Money Sovereign
Tax-Free Market Balanced
Fund Fund Fund
---- ---- ----
Class Class Class
A A A
Edward J. Boudreau, Jr. 109 8,625 165
Thomas W.L. Cameron -- -- 1,121
James F. Carlin 108 1,000 117
William H. Cunningham -- -- --
Charles F. Fretz -- -- 224
Harold R. Hiser, Jr. -- -- --
Anne C. Hodsdon 108 14,236 2,238
Charles L. Ladner 100 -- 216
Leo E. Linbeck, Jr. 110 -- --
Patricia P. McCarter 310 2,000 1,646
Steven R. Pruchansky 101 1,017 810
Richard S. Scipione -- 21,000 --
Norman H. Smith 319 5,390 626
John P. Toolan -- -- 300
Sovereign Tax-Free
Investors Bond Technology
Fund Fund Fund
---- ---- ----
Class Class Class
A A A
Edward J. Boudreau, Jr. 2,882 98 143
Thomas W.L. Cameron 69,831 -- 959
James F. Carlin 117 97 192
William H. Cunningham -- -- --
Charles F. Fretz 15,139 -- 135
Harold R. Hiser, Jr. -- -- --
Anne C. Hodsdon 312 97 41
Charles L. Ladner 540 100 376
Leo E. Linbeck, Jr. -- 100 --
Patricia P. McCarter 24,119 284 176
Steven R. Pruchansky 1,159 101 211
Richard S. Scipione 1,764 -- --
Norman H. Smith 1,553 387 288
John P. Toolan -- -- 400
47
None of the Nominees owns any shares of either the California Fund, U.S. Cash
Reserve Fund (except for Mr. Linbeck, who owns 1,046.210 shares of U.S. Cash
Reserve Fund) or any of the Funds which are series of the Institutional Trust.
Shares of the California Fund are oriented towards residents of the State of
California. U.S. Cash Reserve Fund has a $20,000 minimum initial account size
requirement. Shares of the Funds which are series of the Institutional Trust can
only be purchased by certain institutional buyers and by certain retirement
plans. None of the Nominees own any Class B shares of any of the Funds (except
for Mr. Linbeck, who owns 1,034 Class B shares of Money Market Fund) or any
Class C shares of Sovereign Investors Fund or Class S shares of Money Market
Fund.
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 except the Nominees and executive officers of the Active Bond Fund
beneficially own 6.5% of the outstanding shares of the Fund.
48
EXHIBIT A
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.
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(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.
(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
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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.
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(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.
(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
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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 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
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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, 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
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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.
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
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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.
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
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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.
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
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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.
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
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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 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.
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(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:
(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
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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
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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.
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.
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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 (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 designate any further Series or
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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.
(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
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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 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
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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 outstanding of any particular Series or Class
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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
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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. 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
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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 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
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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.
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
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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
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
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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. (a) 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,
(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
A-26
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, 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
A-27
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 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.
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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
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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 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.
[Trustees will execute here]
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY, MASSACHUSETTS
_______________, 1996
Then personally appeared the above-named persons, Edward J. Boudreau, Jr., James
F. Carlin, William H. Cunningham, Charles F. Fretz, Harold R. Hiser, Jr., Anne
C. Hodsdon, Charles L. Ladner, Leo E. Linbeck, Jr., Patricia P. McCarter, Steven
R. Pruchansky, Richard S. Scipione, Norman H. Smith and John P. Toolan, who
acknowledged the foregoing instrument to be his free act and deed.
Before me,
-----------------------------------
Notary Public
My commission expires:
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EXHIBIT B
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this ___ day
of ___________, 1996, between [Name of Corporation] (the "Corporation"), a
Maryland corporation, on behalf of [Name of Fund] (the "Fund"), and [Name of
Successor Trust], a Massachusetts business trust (the "Successor Trust"), each
with principal offices at 101 Huntington Avenue, Boston, Massachusetts 02199.
1. Plan of Reorganization and Liquidation
(a) The Corporation , on behalf of the Fund, shall assign, sell, convey,
transfer and deliver to a new series of the Successor Trust (the
"Successor Fund") at the Closing provided for in Section 2
(hereinafter called the "Closing") all of its then existing assets of
every kind and nature. In consideration therefor, the Successor Trust,
on behalf of the Successor Fund, agrees that at the Closing (i) the
Successor Fund shall assume all of the Fund's obligations and
liabilities then existing, whether absolute, accrued, contingent or
otherwise, including all unpaid fees and expenses of the Fund in
connection with the transactions contemplated hereby and (ii) the
Successor Trust shall issue and deliver to the Fund a number of full
and fractional shares of each class of shares of beneficial interest
of the Successor Fund (the "Successor Fund Shares"), which is equal to
the number of full and fractional shares of the corresponding class of
shares of the Fund then outstanding.
(b) Upon consummation of the transactions described in paragraph (a) of
this Section 1, the Corporation , on behalf of the Fund, shall
distribute in complete liquidation pro rata to its shareholders of
record as of the Closing Date the Successor Fund Shares received by
the Fund. Such distribution shall be accomplished by the establishment
of an account on the share record books of the Successor Fund in the
name of each shareholder of each class of shares of the Fund
representing with respect to each class of shares of the Successor
Fund a number of full and fractional Successor Fund Shares equal to
the number of shares of the corresponding class of shares of the Fund
owned of record by the shareholder at the Closing Date.
(c) As promptly as practicable after the liquidation of the Fund as
aforesaid, the legal existence of the Fund shall be terminated.
2. Closing and Closing Date. The Closing shall occur at 10:00 a.m. on July 1,
1996 or at such later time and date as the parties may mutually agree (the
"Closing Date").
3. Conditions Precedent. The obligations of the Corporation, the Fund, the
Successor Trust and the Successor Fund to effect the transactions
B-1
contemplated hereunder (the "Reorganization") shall be subject to the
satisfaction of each of the following conditions:
(a) All such filings shall have been made with, and all such
authorizations and orders shall have been received from, the
Securities and Exchange Commission (the "SEC") and state securities
commissions as may be necessary to permit the parties to carry out the
transactions contemplated by this Agreement.
(b) Each party shall have received an opinion of counsel substantially to
the effect that for federal income tax purposes: (1) the acquisition
of the assets and assumption of the liabilities of the Fund by the
Successor Fund in return for Successor Fund Shares, the distribution
of such Successor Fund Shares to the shareholders of the Fund in
complete liquidation of the Fund, and the termination of the Fund will
constitute a "reorganization" within the meaning of Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
Successor Fund and the Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (2) no gain or loss
will be recognized by the Fund upon the transfer of all of its assets
to the Successor Fund solely in exchange for the Successor Fund Shares
and the assumption by the Successor Fund of the liabilities of the
Fund and the distribution by the Fund of such Successor Fund Shares to
the shareholders of the Fund; (3) no gain or loss will be recognized
by the Successor Fund upon the receipt of all of the assets of the
Fund in exchange solely for Successor Fund Shares and the assumption
by the Successor Fund of the liabilities of the Fund; (4) the tax
basis of the Successor Fund in assets received from the Fund will be
the same as the tax basis of such assets in the hands of the Fund
immediately prior to the transfer of such assets to the Successor
Fund; (5) the Successor Fund's tax holding period for the assets
acquired from the Fund will include, in each instance, the Fund's tax
holding period for those assets; (6) no gain or loss will be
recognized by the Fund's shareholders upon the exchange of their
shares of the Fund solely for Successor Fund Shares as part of the
reorganization; (7) the tax basis of the Successor Fund Shares
received by the Fund's shareholders in the transaction will be, for
each shareholder, the same as the tax basis of the shares of the Fund
exchanged therefor; and (8) the tax holding period of the Successor
Fund Shares received by the Fund's shareholders will include, for each
shareholder, the shareholder's tax holding period for the shares of
the Fund surrendered therefor, provided that the surrendered shares
were held as capital assets in the hands of the Fund's shareholders on
the date of the exchange. The opinion may cover any additional matters
deemed material by such counsel.
(c) This Agreement and the Reorganization shall have been adopted and
approved by the affirmative vote of the holders of a majority of the
shares of the Fund outstanding and entitled to vote (as defined by the
Investment Company Act of 1940, as amended (the "1940 Act")). All
shares of the Fund will be voted together as a single class.
B-2
(d) The Successor Trust, on behalf of the Successor Fund, shall have
entered into an Investment Management Contract with John Hancock
Advisers, Inc. which shall be substantially identical in form and
substance to the Investment Management Contract in effect at the
Closing Date between the Fund and John Hancock Advisers, Inc. The
Investment Management Contract shall have been approved by the
Trustees of the Successor Trust, including, to the extent required by
law, the Trustees of the Successor Trust who are not "interested
persons" of the Trust as defined in the 1940 Act.
(e) The Successor Trust, on behalf of the Successor Fund, shall have
entered into a Transfer Agency Agreement with John Hancock Investor
Services Corporation and a Distribution Agreement with John Hancock
Funds, Inc. Each such agreement shall be in each case substantially
identical in form and substance to those respective agreements in
effect at the Closing Date between the Fund and said other parties.
Each such agreement shall have been approved by the Trustees of the
Successor Trust and, to the extent required by law, by the Trustees of
the Successor Trust who are not "interested persons" of the Trust as
defined in the 1940 Act.
(f) The Trustees of the Successor Trust, including those Trustees of the
Successor Trust who are not "interested persons" of the Successor
Trust as defined in the 1940 Act, shall have selected as auditors for
the Successor Fund such auditors as shall have been selected and
ratified for the Fund. Such selection shall have been ratified by the
Fund as the sole shareholder of the Successor Fund prior to the
consummation of the Reorganization.
(g) The Successor Trust, on behalf of the Successor Fund, shall have
adopted a Class A Shares Distribution Plan and a Class B Shares
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act
substantially identical in form and substance to the Fund's Class A
Shares Distribution Plan and Class B Shares Distribution Plan,
respectively, in effect at the Closing Date. Each of the Successor
Fund's Distribution Plans shall be approved by the Trustees of the
Successor Trust in accordance with Rule 12b-1 and by the Fund, as the
sole shareholder of the Successor Fund, prior to the consummation of
the Reorganization.
At any time prior to the Closing, any of the foregoing conditions except 3(c)
may be waived by the Board of Directors of the Corporation or the Board of
Trustees of the Successor Trust if, in their judgment, such waiver will not have
a material adverse effect on the interests of the shareholders of the Fund.
4. Amendment. This Agreement may be amended at any time by action of the
Directors of the Corporation and the Trustees of the Successor Trust,
notwithstanding approval thereof by the shareholders of the Fund, provided that
B-3
no amendment shall have a material adverse effect on the interests of the
shareholders of the Fund.
5. Termination. The Board of Directors of the Corporation or the Board of
Trustees of the Successor Trust may terminate this Agreement and abandon the
Reorganization, notwithstanding approval thereof by the shareholders of the
Fund, at any time prior to the Closing, if circumstances should develop that, in
their judgment, make proceeding with the Reorganization inadvisable.
6. Limitation of Liability of the Trustees and the Shareholders. A copy of the
Declaration of Trust of the Successor Trust, as amended from time to time, is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given of the limitation of shareholder liability as set forth in each
such instrument. The obligations assumed by the Successor Trust on behalf of the
Successor Fund pursuant to this Agreement shall be limited in all cases to the
Successor Trust on behalf of the Successor Fund and its assets. None of the
other series of the Successor Trust shall be liable for any obligations assumed
by the Successor Fund hereunder. No party named herein shall seek satisfaction
of any obligation hereunder from the shareholders or any shareholder of the
Successor Trust or the Successor Fund. No party named herein shall seek
satisfaction of any such obligation from the Trustees of the Successor Trust or
any individual Trustee.
This Agreement shall be executed in any number of counterparts each of which
shall be deemed to be an original, but all of such counterparts together shall
constitute only one instrument.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
[NAME OF CORPORATION ]
Attest: _________________________ By: _________________________
Secretary President
[NAME OF SUCCESSOR TRUST]
Attest: _________________________ By: _________________________
Secretary President
B-4
JOHN HANCOCK INTERMEDIATE MATURITY GOVERNMENT FUND
JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND
JOHN HANCOCK U.S. GOVERNMENT CASH RESERVE FUND
JOHN HANCOCK GROWTH AND INCOME FUND
JOHN HANCOCK TAX-FREE BOND 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) PROPOSALS 2, 4 AND 5 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 use blue or black ink or dark pencil. Do not use red ink.
FOR ALL FUNDS
(1) To elect thirteen Trustees to hold office until their respective
successors have been duly elected and qualified.
Edward J. Boudreau, Jr. Leo E. Linbeck, Jr.
James F. Carlin Patricia P. McCarter
William H. Cunningham Steven R. Pruchansky
Charles F. Fretz Richard S. Scipione
Harold R. Hiser, Jr. Norman H. Smith
Anne C. Hodsdon John P. Toolan
Charles L. Ladner
___
|___| FOR all nominees listed (except as marked to the contrary below)
___
|___| WITHHOLD AUTHORITY to vote for all nominees listed below
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY WRITING THE NOMINEE(S)
NAME(S) ON THE LINE BELOW
FOR ALL FUNDS
(2) To approve an Amended and Restated Declaration of Trust for the Fund.
______ ______ ______
FOR ______ AGAINST ______ ABSTAIN ______
(3) Proposal 3 as set forth in the Proxy Statement is not applicable to
your Fund.
ONLY FOR THE TAX-FREE BOND FUND (CLASS A SHARES ONLY)
(4) To approve an amendment to the Fund's Class A distribution plan to
increase distribution fees for Class A shares.
______ ______ ______
FOR ______ AGAINST ______ ABSTAIN ______
ONLY FOR THE U.S. CASH RESERVE AND GROWTH AND INCOME FUNDS
(5) To redesignate as nonfundamental the Fund's fundamental investment
restriction on investing in other investment companies.
______ ______ ______
FOR ______ AGAINST ______ ABSTAIN ______
(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.