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 CAPITAL SERIES
(Name of Registrant as Specified in Its Charter)
JOHN HANCOCK CAPITAL SERIES
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] Fee paid previously with preliminary materials.
<PAGE>
JOHN HANCOCK MANAGED TAX-EXEMPT FUND
JOHN HANCOCK SOVEREIGN U.S. GOVERNMENT INCOME FUND
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND
JOHN HANCOCK UTILITIES FUND
JOHN HANCOCK GROWTH FUND
May, 1996
Dear Fellow Shareholder:
As an investor in one of the funds noted above, you are cordially invited to a
special shareholder meeting on Wednesday, June 26, 1996, to be held at 9:00 A.M.
in your Fund's offices at the location shown on the enclosed proxy statement. At
this meeting, you will be asked to consider and approve several proposals
pertaining to your Fund. These are highlighted below, and are discussed in more
detail in your proxy statement.
You will notice that this proxy statement addresses several funds. This is part
of our effort to minimize printing and administrative expenses for your Fund --
and, therefore, for you. However, if you invest in more than one John Hancock
fund, you may receive other proxy statements. Be sure to review and vote on
these as well.
Listed below is a brief explanation of the proposals you will find in the
enclosed proxy statement:
o Election of your Fund's Board of Trustees. The Board of Trustees is
responsible for protecting your interests as a shareholder of the Fund. You
will find a list of nominees and a brief description of their backgrounds
in your proxy statement.
o For the Sovereign U.S. Government Income Fund and the Managed Tax-Exempt
Fund ONLY: A new investment contract to bring the funds' administration
into conformity with that of the other John Hancock funds.
o For the Sovereign U.S. Government Income Fund ONLY: increased investment
flexibility. These proposals pertain to certain investment restrictions,
such as the single-issuer limitation and the restriction on investing in
other investment companies. Relaxing these restrictions should, in the
opinion of the Fund's Trustees, give the Fund more flexibility to take
advantage of potential investment opportunities.
o Other administrative issues, such as the reorganization or restatement of
your Fund's Declaration of Trust, which are intended to increase efficiency
while reducing printing, registration, accounting, legal and other costs.
These changes have no tax consequences to you and will have no effect on
the way your Fund's portfolio is invested.
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.
Chairmand and CEO
<PAGE>
JOHN HANCOCK MANAGED TAX-EXEMPT FUND
JOHN HANCOCK SOVEREIGN U.S. GOVERNMENT INCOME FUND
(each a series of Freedom Investment Trust)
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND
JOHN HANCOCK UTILITIES FUND
(each a series of John Hancock Strategic Series)
JOHN HANCOCK GROWTH FUND
(a series of John Hancock Capital Series)
(collectively, the "Funds")
101 Huntington Avenue
Boston, Massachusetts 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1996
A Special Meeting of Shareholders of each Fund will be held at the Funds'
offices located on the 2nd floor at 101 Huntington Avenue, Boston, Massachusetts
02199, at 9:00 a.m., Eastern time, on Wednesday, June 26, 1996. The telephone
number of each Fund is 1-800-225-5291. The Special Meetings of the Funds are
expected to be held concurrently and are referred to collectively as the
"Meeting." The purpose of the Meeting is to consider and act upon the following
proposals:
1. To elect fifteen Trustees to hold office until their respective successors
have been duly elected and qualified. FOR (I) JOHN HANCOCK MANAGED
TAX-EXEMPT FUND (THE "TAX-EXEMPT FUND") AND JOHN HANCOCK SOVEREIGN U.S.
GOVERNMENT INCOME FUND (THE "U.S. GOVERNMENT FUND") VOTING TOGETHER WITH
THE OTHER SERIES OF FREEDOM INVESTMENT TRUST, (II) JOHN HANCOCK
INDEPENDENCE DIVERSIFIED CORE EQUITY FUND (THE "CORE EQUITY FUND") AND JOHN
HANCOCK UTILITIES FUND (THE "UTILITIES FUND") VOTING TOGETHER WITH THE
OTHER SERIES OF JOHN HANCOCK STRATEGIC SERIES AND (III) JOHN HANCOCK GROWTH
FUND (THE "GROWTH FUND") VOTING TOGETHER WITH THE OTHER SERIES OF JOHN
HANCOCK CAPITAL SERIES.
2. To approve an Amended and Restated Declaration of Trust for Freedom
Investment Trust. FOR TAX-EXEMPT FUND AND U.S. GOVERNMENT FUND VOTING
TOGETHER WITH THE OTHER SERIES OF FREEDOM INVESTMENT TRUST.
3. To approve an Agreement and Plan of Reorganization for each Fund which will
reorganize each Fund as a series of a different trust as follows:
(a) the Tax-Exempt Fund will become a series fund of John Hancock
Tax-Exempt Series Fund. FOR TAX-EXEMPT FUND VOTING SEPARATELY.
P20PX 5/96
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(b) the U.S. Government Fund will become a series fund of John Hancock
Strategic Series. FOR U.S. GOVERNMENT FUND VOTING SEPARATELY.
(c) the Core Equity Fund will become a series fund of John Hancock Capital
Series. FOR CORE EQUITY FUND VOTING SEPARATELY.
(d) the Utilities Fund will become a series fund of John Hancock Capital
Series. FOR UTILITIES FUND VOTING SEPARATELY.
(e) the Growth Fund will become a series fund of Freedom Investment Trust
II. FOR GROWTH FUND VOTING SEPARATELY.
4. To approve a new investment management contract between John Hancock
Advisers, Inc. and
(a) Tax-Exempt Fund. FOR TAX-EXEMPT FUND VOTING SEPARATELY.
(b) U.S. Government Fund. FOR U.S. GOVERNMENT FUND VOTING SEPARATELY.
5. To eliminate the U.S. Government Fund's fundamental investment restriction
on investing in a single class of securities of an issuer. FOR U.S.
GOVERNMENT FUND VOTING SEPARATELY.
6. To redesignate as nonfundamental the U.S. Government Fund's fundamental
investment restriction on investing in other investment companies. FOR U.S.
GOVERNMENT FUND VOTING SEPARATELY.
7. To transact other business that may properly come before the Meeting or any
adjournment of the Meeting.
YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
RELATING TO YOUR FUND.
Shareholders of record of each Fund as of the close of business on May 1, 1996
are entitled to notice of and to vote at the Meeting or any adjournment of the
Meeting. The proxy statement and proxy card are being mailed to shareholders on
or about May 17, 1996.
THOMAS H. DROHAN
Senior Vice President and
Secretary
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
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JOHN HANCOCK MANAGED TAX-EXEMPT FUND
JOHN HANCOCK SOVEREIGN U.S. GOVERNMENT INCOME FUND
(each a series of Freedom Investment Trust)
JOHN HANCOCK INDEPENDENCE DIVERSIFIED CORE EQUITY FUND
JOHN HANCOCK UTILITIES FUND
(each a series of John Hancock Strategic Series)
JOHN HANCOCK GROWTH FUND
(a series of John Hancock Capital Series)
(collectively, the "Funds")
101 Huntington Avenue
Boston, Massachusetts 02199
----------------------
PROXY STATEMENT
----------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Trustees") of each of the investment companies
(the "Trusts") on behalf of themselves or their respective series funds (the
"Funds") set forth below.
<TABLE>
<CAPTION>
The Trusts The Funds
- ---------- ---------
<S> <C>
Freedom Investment Trust (the John Hancock Managed Tax-Exempt Fund (the "Tax-
"Freedom Trust") Exempt Fund")
John Hancock Sovereign U.S. Government Income
Fund (the "U.S. Government Fund")
John Hancock Strategic Series (the John Hancock Independence Diversified Core Equity
"Strategic Series Trust") Fund (the "Core Equity Fund")
John Hancock Utilities Fund (the "Utilities Fund")
John Hancock Capital Series (the John Hancock Growth Fund (the "Growth Fund")
"Capital Series Trust")
</TABLE>
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
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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 cost of preparing and mailing this Proxy Statement and the accompanying
Notice and proxy card will be borne by each Fund. The mailing address of each
Fund, the Adviser, John Hancock Funds and Investor Services is 101 Huntington
Avenue, Boston, Massachusetts 02199. This Proxy Statement and the proxy card are
being mailed to shareholders of each Fund on or about May 17, 1996.
Each Fund will furnish without charge a copy of its Annual Report and most
recent Semi-Annual Report succeeding the Annual Report, if any, to any
shareholder upon request. Shareholders desiring to obtain a copy of their Fund's
report(s) should direct all written requests to the attention of their Fund, 101
Huntington Avenue, Boston, Massachusetts 02199 or should call John Hancock Funds
at 1-800-225-5291.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Trustees have fixed the close of business on May 1, 1996, as the record date
(the "Record Date") for determining the shareholders of each Fund entitled to
notice of and to vote at the Meeting. Shareholders of record of each Fund on the
Record Date are entitled to one vote per share at the Meeting or any adjournment
of the Meeting relating to their Fund.
As of April 22, 1996, each Fund had the following number of shares of beneficial
interest of each class outstanding:
Class A Shares Class B Shares
Funds Outstanding Outstanding
----- -------------- --------------
Tax-Exempt Fund 3,527,564.988 14,332,759.799
U.S. Government Fund 35,589,351.481 12,418,996.610
Core Equity Fund 731,463.739 665,905.312
Utilities Fund 2,499,886.162 5,325,669.578
Growth Fund 12,166,236.990 928,194.450
As of April 22, 1996, the following persons or entities owned beneficially or of
record more than 5% of the outstanding Class A and/or Class B shares of each
Fund:
Core Equity Fund-Class A-Merrill Lynch Pierce Fenner & Smith Inc., Mutual Fund
Operations, 4800 Deer Lake Drive East, Jacksonville, FL, 73,190 shares, 10.01%;
John Hancock Funds, FBO Condere Savings Plan, 101 Huntington Avenue, Boston, MA,
37,679.966 shares, 5.15%.
Growth Fund-Class B-Continental Trust Co. Cust, C/F County Employee's Annuity &
Ben Fund of Cook County IL, 231 S. LaSalle, Chicago, IL, 221,468.852 shares,
23.86%.
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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 affecting only their Fund or affecting a Fund differently than other
Funds. Each class of shares of each Fund will vote together with the other
class(es) 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. (i) Tax-Exempt Fund and U.S. Government Fund will vote
together with the other series of Freedom Trust, (ii) Core
Equity Fund and Utilities Fund will vote together with the
other series of Strategic Series Trust, and (iii) Growth
Fund will vote together with the other series of Capital
Series Trust.
2. Tax-Exempt Fund and U.S. Government Fund will vote together
with the other series of Freedom Trust.
3. (a) Tax-Exempt Fund will vote separately.
(b) U.S. Government Fund will vote separately.
(c) Core Equity Fund will vote separately.
(d) Utilities Fund will vote separately.
(e) Growth Fund will vote separately.
4. (a) Tax-Exempt Fund will vote separately.
(b) U.S. Government Fund will vote separately.
5. U.S. Government Fund will vote separately.
6. U.S. Government Fund will vote separately.
PROPOSAL 1
ELECTION OF TRUSTEES
(For shareholders of (I) Tax-Exempt Fund and U.S. Government Fund voting
together, (II) Core Equity Fund and Utilities Fund voting together and (III)
Growth Fund voting separately, in each case with the shareholders of the other
funds which are series of the same trusts)
The Core Equity Fund, Utilities Fund and Growth Fund (the "Panel A Funds") are
currently governed by a Board of Trustees which will be known as the Panel A
Trustees. The Tax-Exempt Fund and U.S. Government Fund (the "Panel C Funds") are
currently governed by a different Board of Trustees which will be known as the
Panel C Trustees. At a meeting on March 5, 1996, the Panel A Trustees and the
Panel C Trustees, 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
consolidate the Panel A Trustees and the Panel C Trustees so that each Fund will
be governed by the same Board of Trustees. The Panel A Trustees hereby recommend
to the shareholders of the Panel A Funds that they re-elect their current
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Trustees and elect the Panel C Trustees. The Panel C Trustees recommend to the
shareholders of the Panel C Funds that they re-elect their current Trustees and
elect the Panel A Trustees. If Proposal 1 is approved, each Fund will be
governed by the same fifteen Trustees (collectively, the "Nominees").
Eight of the fifteen Nominees currently serve as Panel A Trustees and eight of
the fifteen Nominees currently serve as Panel C Trustees (Mr. Boudreau serves on
both Panels). 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 the Trustees may designate. None of
the Funds has any reason to believe that it will be necessary to designate a
substitute Nominee.
Information Concerning Nominees
The following table sets forth each Nominee's principal occupation or employment
during the past five years. The table also sets forth the Panel on which each
Nominee currently serves, and the date he or she first became a Trustee of each
Fund.
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<TABLE>
<CAPTION>
Name, Age and Principal Occupation
Position With or Employment First Became
Each Fund During Last Five Years A Trustee
- ------------- ---------------------- ------------
<S> <C> <C>
Edward J. Boudreau, Jr.* Chairman and Chief Executive Tax-Exempt Fund: 1992
(age 51) Officer of the Adviser and The U.S. Government Fund: 1992
Chairman and Chief Executive Berkeley Financial Group ("The Core Equity Fund: 1988
Officer, Panel A and C Funds; Berkeley Group"); Chairman, John Utilities Fund: 1988
Nominee Hancock Advisers International Ltd. Growth Fund: 1988
("Advisers International"), NM
Capital Management, Inc. ("NM
Capital"), John Hancock Funds,
Investor Services, First Signature
Bank and Trust Company and Sovereign
Asset Management Corporation
("SAMCorp"); Director, John Hancock
Capital Corp., John Hancock Freedom
Securities Corp. and New
England/Canada Business Council;
Member, Investment Company Institute
Board of Governors; Director, Asia
Strategic Growth Fund, Inc.; Trustee,
Museum of Science; Vice Chairman 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.
Dennis S. Aronowitz Professor of Law, Boston University Core Equity Fund: 1986
(age 64) School of Law; Trustee, Brookline Utilities Fund: 1986
Panel A Trustee; Nominee Savings Bank; Trustee or Director of Growth Fund: 1988
16 funds managed by the Adviser.
Richard P. Chapman, Jr. President, Brookline Savings Bank; Core Equity Fund: 1986
(age 61) Director, Federal Home Loan Bank of Utilities Fund: 1986
Panel A Trustee; Nominee Boston (lending); Director, Lumber Growth Fund: 1984
Insurance Companies (fire and
casualty insurer); Trustee,
Northeastern University; Director,
Depositors Insurance Fund, Inc.
(insurer); Trustee or Director of 16
funds managed by the Adviser.
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<PAGE>
Name, Age and Principal Occupation
Position With or Employment First Became
Each Fund During Last Five Years A Trustee
- ------------- ---------------------- ------------
William J. Cosgrove Vice President, Senior Banker and Core Equity Fund: 1991
(age 63) Senior Credit Officer, Citibank, N.A. Utilities Fund: 1991
Panel A Trustee; Nominee (retired September, 1991); Executive Growth Fund: 1991
Vice President, Citadel Group
Representative Inc., EVP
Resource Evaluation Inc. (consulting)
(until October 1993); Trustee, the
Hudson City Savings Bank (until
October 1993); Trustee or Director of
16 funds managed by the Adviser.
Gail D. Fosler Vice President and Chief Economist, Core Equity Fund: 1994
(age 48) The Conference Board (nonprofit Utilities Fund: 1994
Panel A Trustee; Nominee economic and business research); Growth Fund: 1994
Trustee or Director of 16 funds
managed by the Adviser.
Anne C. Hodsdon* President and Chief Operating Core Equity Fund: 1996
(age 42) Officer, the Adviser and John Hancock Utilities Fund: 1996
President, Panel A and C open-end funds; Director, Advisers Growth Fund: 1996
Funds; Panel A Trustee; International; Executive Vice
Nominee President, the Adviser (until
December 1994); Senior Vice
President, the Adviser (until
December 1993); Vice President, the
Adviser (until 1991); Trustee or
Director of 56 funds managed by the
Adviser.
Richard S. Scipione* General Counsel, John Hancock Mutual Core Equity Fund: 1986
(age 58) Life Insurance Company; Director, the Utilities Fund: 1986
Panel A Trustee; Nominee Adviser, John Hancock Funds, Investor Growth Fund: 1985
Services, John Hancock Distributors,
Inc., John Hancock Subsidiaries,
Inc., John Hancock Property and
Casualty Insurance and its affiliates
(until November 1993), SAMCorp and NM
Capital; Trustee, The Berkeley Group;
Director, JH Networking Insurance
Agency, Inc.; Trustee or Director of
44 funds managed by the Adviser.
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Name, Age and Principal Occupation
Position With or Employment First Became
Each Fund During Last Five Years A Trustee
- ------------- ---------------------- ------------
Edward J. Spellman Partner, KPMG Peat Marwick LLP Core Equity Fund: 1990
(age 63) (retired June, 1990); Trustee or Utilities Fund: 1990
Panel A Trustee; Nominee Director of 16 funds managed by the Growth Fund: 1990
Adviser.
Douglas M. Costle Director, Chairman of the Board and Tax-Exempt Fund: 1991
(age 56) Distinguished Senior Fellow, U.S. Government Fund: 1991
Panel C Trustee; Nominee Institute for Sustainable
Communities, Montpelier, Vermont
(since 1991); Dean, Vermont Law
School (until 1991); Director, Air
and Water Technologies Corporation
(environmental services and
equipment), Niagara Mohawk Power
Company (electric services) and
Mitretek Systems (governmental
consulting services); Trustee or
Director of 12 funds managed by the
Adviser.
Leland O. Erdahl Director of Santa Fe Ingredients Tax-Exempt Fund: 1985
(age 67) Company of California, Inc. and Santa U.S. Government Fund: 1985
Panel C Trustee; Nominee Fe Ingredients Company, Inc. (private
food processing companies); Director
of Uranium Resources, Inc.; President
of Stolar, Inc. (from 1987 to 1991)
and President of Albuquerque Uranium
Corporation (from 1985 to 1992);
Director of Freeport-McMoRan Copper &
Gold Company Inc., Hecla Mining
Company, Canyon Resources Corporation
and Original Sixteen to One Mine,
Inc. (from 1984 to 1987 and from 1991
to 1995) (management consultant);
Trustee or Director of 12 funds
managed by the Adviser.
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Name, Age and Principal Occupation
Position With or Employment First Became
Each Fund During Last Five Years A Trustee
- ------------- ---------------------- ------------
Richard A. Farrell President of Farrell, Healer & Co. Tax-Exempt Fund: 1984
(age 63) (venture capital management firm) U.S. Government Fund: 1984
Panel C Trustee; Nominee (since 1980); prior to 1980, headed
the venture capital group at Bank of
Boston Corporation; Trustee or
Director of 12 funds managed by the
Adviser.
William F. Glavin President, Babson College; Vice Tax-Exempt Fund: 1992
(age 65) Chairman, Xerox Corporation (until U.S. Government Fund: 1992
Panel C Trustee; Nominee June 1989); Director, Caldor Inc.,
Reebok, Ltd. (since 1994), and Inco
Ltd; Trustee or Director of 12 funds
managed by the Adviser.
Dr. John A. Moore President and Chief Executive Tax-Exempt Fund: 1991
(age 57) Officer, Institute for Evaluating U.S. Government Fund: 1991
Panel C Trustee; Nominee Health Risks (nonprofit institution)
(since September 1989); Trustee or
Director of 12 funds managed by the
Adviser.
Patti McGill Peterson President, St. Lawrence University; Tax-Exempt Fund: 1993
(age 52) Director, Niagara Mohawk Power U.S. Government Fund: 1993
Panel C Trustee; Nominee Corporation (electric utilities);
Director, Security Mutual Life;
(insurance); Trustee or Director of
12 funds managed by the Adviser.
John W. Pratt Professor of Business Administration Tax-Exempt Fund: 1985
(age 64) at Harvard University Graduate School U.S. Government Fund: 1985
Panel C Trustee; Nominee of Business Administration (since
1961); Trustee or Director of 12
funds managed by the Adviser.
</TABLE>
- --------------
* "Interested person," as defined in the 1940 Act of the Funds or the
Adviser.
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The number of shares of beneficial interest of each class of the Funds
beneficially owned by each of the Nominees, directly or indirectly, as of April
22, 1996, is as follows:
<TABLE>
<CAPTION>
U.S.
Tax-Exempt Government Growth Core Equity Utilities
Fund Fund Fund Fund Fund
-------------- -------------- -------------- --------------- -------------
Class Class Class Class Class Class Class Class Class Class
A B A B A B A B A B
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Edward J. Boudreau, Jr. -- 361 1,896 -- 267
Dennis S. Aronowitz 86 145 1,087 79 133
Richard P. Chapman, Jr. -- 241 3,211 174 111
William J. Cosgrove 89 104 72 59 111
Gail D. Fosler -- 104 61 82 111
Anne C. Hodsdon -- 4,495 47 57 110
Richard S. Scipione -- -- -- -- --
Edward J. Spellman 104 110 196 2,547 261
Douglas M. Costle 111 125 -- -- --
Leland O. Erdahl 325 968 152 122 219
Richard A. Farrell 95 112 48 58 110
William F. Glavin -- -- -- -- --
Dr. John A. Moore 482 103 238 58 --
Patti McGill Peterson 497 115 72 164 109
John W. Pratt 4,931 246 240 867 --
</TABLE>
The information as to beneficial ownership set forth in the above chart is based
on statements furnished to the Funds by the Nominees. Each has all voting and
investment powers with respect to the shares indicated.
None of the Nominees beneficially owned individually, and the Nominees and
executive officers of each Fund as a group did not beneficially own, in excess
of one percent of the outstanding shares of any of the Funds as of April 22,
1996.
The Board of Trustees of each 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.
Mr. Bayard Henry retired from his position as a Panel A Trustee effective April
26, 1996.
Each Fund has an Audit Committee of the Trustees. The Committee members for the
Panel A Funds are: Messrs. Aronowitz, Chapman, Cosgrove and Spellman and Ms.
Fosler. The Committee members for the Panel C Funds are: Messrs. Costle, Erdahl,
Farrell, Glavin, Moore and Pratt and Ms. Peterson. Each of the members of each
Audit Committee is an Independent Trustee. The Audit Committee of each Fund held
two meetings during the last completed fiscal year of each Fund.
The functions performed by each Audit Committee 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
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<PAGE>
and representatives of each Fund on matters concerning each of the Funds'
financial statements and reports, including the appropriateness of their
accounting practices and of their internal controls and procedures; to evaluate
the independence of the firm; to review procedures to safeguard portfolio
securities; to approve the purchase from the firm of all non-audit services; to
review all fees paid to the firm; to recommend to the Trustees, at the request
of the Fund's officers or Trustees, a resolution of any potential or actual
conflict of interest, and to facilitate communication between the firm and each
Fund's officers and Trustees.
Each Fund has a Special Nominating Committee of the Trustees known as the
Administration Committee (the "Committee"). The Committee members for the Panel
A Funds are: Messrs. Aronowitz, Chapman, Cosgrove and Spellman and Ms. Fosler.
The Committee members for the Panel C Funds are: Messrs. Costle, Erdahl,
Farrell, Glavin, Moore and Pratt and Ms. Peterson. All of the members of each
Committee are Independent Trustees. Each Fund's Committee held four meetings
during the last completed fiscal year of each Fund.
Included among the functions of each Committee is the selection and nomination
for appointment and election of candidates to serve as Trustees who are not
"interested persons," as defined in the 1940 Act. Each Committee also
coordinates with Trustees who are interested persons in the selection of Fund
officers. Each Committee will consider nominees recommended by shareholders to
serve as Trustees provided that the shareholders submit such recommendations in
compliance with all of the pertinent provisions of Rule 14a-8 under the
Securities Exchange Act of 1934.
Executive Officers
Except for the Chairman (Mr. Boudreau) and the President (Ms. Hodsdon), the
table below lists the executive officers of each Fund. Information about Mr.
Boudreau and Ms. Hodsdon is provided under "Information Concerning Nominees."
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<PAGE>
<TABLE>
<CAPTION>
Name, Age and Position Principal Occupation During
With Each Fund the Past Five Years First Became an Officer
- ---------------------- --------------------------- -----------------------
<S> <C> <C>
Robert G. Freedman Vice Chairman and Chief Investment Officer, Tax-Exempt Fund: 1992
(age 57) the Adviser and each of the John Hancock U.S. Government Fund: 1992
Vice Chairman and Chief Investment funds; President, the Adviser (until Core Equity Fund: 1987
Officer 1994); Director, the Adviser, Advisers Utilities Fund: 1987
International, John Hancock Funds, Investor Growth Fund: 1984
Services, SAMCorp and NM Capital; Senior
Vice President, The Berkeley Group.
James B. Little Senior Vice President, the Adviser, The Tax-Exempt Fund: 1992
(age 61) Berkeley Group, John Hancock Funds, and U.S. Government Fund: 1992
Senior Vice President Investor Services; Senior Vice President and Core Equity Fund: 1986
and Chief Financial Officer Chief Financial Officer, each of the John Utilities Fund: 1986
Hancock funds. Growth Fund: 1986
Thomas H. Drohan Senior Vice President and Secretary, the Tax-Exempt Fund: 1992
(age 59) Adviser, The Berkeley Group and each of the U.S. Government Fund: 1992
Senior Vice President John Hancock funds; Senior Vice President, Core Equity Fund: 1986
and Secretary Investor Services, John Hancock Funds and Utilities Fund: 1986
John Hancock Distributors (until 1994); Growth Fund: 1978
Director, Advisers International; Secretary,
NM Capital.
John A. Morin Vice President, the Adviser, Investor Tax-Exempt Fund: 1992
(age 45) Services, John Hancock Funds and each of the U.S. Government Fund: 1992
Vice President John Hancock funds; Vice President and Core Equity Fund: 1991
Compliance Officer, certain John Hancock Utilities Fund: 1991
funds; Vice President and Assistant Growth Fund: 1991
Secretary, The Berkeley Group.
13
<PAGE>
Name, Age and Position Principal Occupation During
With Each Fund the Past Five Years First Became an Officer
- ---------------------- --------------------------- -----------------------
Susan S. Newton Vice President and Assistant Secretary, the Tax-Exempt Fund: 1992
(age 46) Adviser; Vice President, Assistant Secretary U.S. Government Fund: 1992
Vice President, and Compliance Officer, certain John Hancock Core Equity Fund: 1986
Assistant Secretary funds; Vice President and Secretary, John Utilities Fund: 1986
and Compliance Officer Hancock Funds, Investor Services and John Growth Fund: 1985
Hancock Distributors (until 1994);
Secretary, SAMCorp; Vice President, The
Berkeley Group.
James J. Stokowski Vice President, the Adviser; Vice President Tax-Exempt Fund: 1992
(age 49) and Treasurer, each of the John Hancock U.S. Government Fund: 1992
Vice President and Treasurer funds. Core Equity Fund: 1987
Utilities Fund: 1987
Growth Fund: 1991
</TABLE>
Renumeration 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 fiscal year of each
Fund. Mr. Boudreau, Ms. Hodsdon, Mr. Scipione and each officer of the Funds are
interested persons of the Adviser who are compensated by the Adviser or
affiliates and receive no compensation from the Funds.
14
<PAGE>
Aggregate Compensation From Each Fund
For Each Fund's Last Fiscal Year
<TABLE>
<CAPTION>
Total Compensation***
From Each Fund and
U.S. Other Funds in the
Tax-Exempt Government Core Equity Utilities Growth John Hancock Fund
Independent Trustee Fund Fund Fund Fund Fund Complex
- ------------------- ---------- ---------- ------------ --------- ------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Dennis S. Aronowitz N/A N/A $1,601 $ 524 $ 2,366 $ 61,050
Richard P. Chapman, Jr.+ N/A N/A $1,638 $ 544 $ 2,441 $ 62,800
William J. Cosgrove+ N/A N/A $1,601 $ 524 $ 2,366 $ 61,050
Gail D. Fosler N/A N/A $1,601 $ 524 $ 2,366 $ 60,800
Bayard Henry** N/A N/A $1,638 $ 544 $ 2,282 $ 58,850
Edward J. Spellman N/A N/A $1,601 $ 524 $ 2,366 $ 61,050
William A. Barron, III* $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Douglas M. Costle $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Leland O. Erdahl $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Richard A. Farrell $ 4,388 $ 9,690 N/A N/A N/A $ 43,250
William F. Glavin+ $ 3,877 $ 8,540 N/A N/A N/A $ 37,500
Patrick Grant* $ 4,440 $ 9,805 N/A N/A N/A $ 43,750
Ralph Lowell, Jr.* $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Dr. John A. Moore $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Patti McGill Peterson $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
John W. Pratt $ 4,232 $ 9,344 N/A N/A N/A $ 41,750
Total $42,329 $93,443 $9,680 $3,184 $14,187 $782,350
======= ======= ====== ====== ======= ========
</TABLE>
- -----------
* Messrs. Barron, Grant and Lowell retired from their respective positions as
Panel C Trustees effective January 1, 1996.
** Mr. Henry retired from his position as a Panel A Trustee effective April
26, 1996.
*** 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. Aronowitz, Chapman, Cosgrove, Henry and
Spellman and Ms. Fosler served 16 and Messrs. Barron, Costle, Erdahl,
Farrell, Glavin, Grant, Lowell, Moore and Pratt and Ms. Peterson served 12
of these funds.
+ As of December 31, 1995 the value of the aggregate accrued deferred
compensation amount from all funds in the John Hancock fund complex for Mr.
Chapman was $54,681, for Mr. Cosgrove was $54,243 and for Mr. Glavin was
$32,061 under the John Hancock Deferred Compensation Plan for Independent
Trustees (the "Plan").
15
<PAGE>
Under the Plan, the Independent Trustees may elect to defer the receipt of all
or a portion of their Trustees' fees payable by each fund in the John Hancock
fund complex. The value of an Independent Trustee's Plan account is determined
by a hypothetical investment of the deferred Trustees' fees in certain John
Hancock Funds selected by the Independent Trustee from a list of designated
funds. The Independent Trustees do not beneficially own shares of any John
Hancock fund under the Plan and a fund's obligation to make payments of amounts
deferred under the Plan is an unsecured liability, payable solely from that
fund's general assets. If the value of the Independent Trustees' Plan accounts
in all the John Hancock funds were actually received and invested on December
31, 1995 by the Independent Trustees in shares of the John Hancock funds against
which the Plan accounts are valued, the Independent Trustees participating in
the Plan would own shares of the John Hancock funds as set forth below:
<TABLE>
<CAPTION>
Shares Assuming Hypothetical Investment of Deferred Trustees' Fees
-----------------------------------------------------------------
Special Special Sovereign Sovereign
Opportunities Growth International Value Bond Investors
Independent Trustee Fund Fund Fund Fund Fund Fund
- ------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Panel A Trustees:
Dennis S. Aronowitz -- -- -- -- -- --
Richard P. Chapman, Jr. -- 1,192 2,490 1,041
William J. Cosgrove -- -- -- 995 675 1,875
Gail D. Fosler -- -- -- -- -- --
Bayard Henry -- -- -- -- -- --
Edward J. Spellman -- -- -- -- -- --
Panel C Trustees:
William A. Barron, III -- -- -- -- -- --
Douglas M. Costle -- -- -- -- -- --
Leland O. Erdahl -- -- -- -- -- --
Richard A. Farrell -- -- -- -- -- --
William F. Glavin 1,309 648 -- 566 -- --
Patrick Grant -- -- -- -- -- --
Ralph Lowell, Jr. -- -- -- -- -- --
Dr. John A. Moore -- -- -- -- -- --
Patti McGill Peterson -- -- -- -- -- --
John W. Pratt -- -- -- -- -- --
</TABLE>
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
16
<PAGE>
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.
PROPOSAL 2
TO APPROVE AN AMENDED AND RESTATED
DECLARATION OF TRUST
(For shareholders of Tax-Exempt Fund and U.S. Government Fund voting
together with each other series in the Freedom Trust)
GENERAL
The Master Trust Agreement of the Tax-Exempt Fund and U.S. Government Fund (the
"Current Declaration") has not changed significantly since it was last amended
and restated on September 10, 1991. The Current Declaration is proposed to be
amended and restated (the "Amended Declaration") to provide the Trustees of the
Funds with greater flexibility to manage the Funds and each other series of the
Freedom Trust 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 Declaration contains more modern
provisions then the Current Declaration and substantially conforms to the
governing documents of other John Hancock funds.
Effective March 6, 1996, the Trustees of the Funds voted to amend and modernize
the Funds' By-Laws. The Amended Declaration, 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 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 DECLARATION
AND THE AMENDED DECLARATION
Set forth below is a description of the material differences between the Current
Declaration and the Amended Declaration.
A. Shareholder Voting Rights
(i) Merger, Consolidation, Sale of Assets
The Amended Declaration would provide that the Freedom Trust,
Tax-Exempt Fund, U.S. Government Fund or any other fund which is a series of the
Freedom Trust could merge or consolidate into, or sell, lease or exchange all or
substantially all of its assets to or with any other entity when authorized by
(a) a vote of the holders of two-thirds of the Trust's or Fund's outstanding
shares present at a meeting called to consider the question, (b) a written
17
<PAGE>
consent signed by the holders of two-thirds of the Trust's or Fund's outstanding
shares, or (c) a 1940 Act Majority Shareholder Vote (as defined in the "Vote
Required" section below) or written consent of the same proportion of
shareholders of the Trust or Fund if the merger, consolidation, sale, lease or
exchange of assets is recommended by the Trustees. No prior shareholder approval
would be required if another entity merged or consolidated into or sold, leased
or exchanged all or substantially all of its assets to or with the Trust or a
Fund.
The Current Declaration requires the Freedom Trust or the affected
Fund to obtain a 1940 Act Majority Shareholder Vote before either (a) merging or
consolidating into or selling all or substantially all of its assets to another
entity or (b) having another entity merge or consolidate into or sell all or
substantially all of its assets to the Trust or Fund.
The Amended Declaration would also provide that the Freedom Trust may,
without prior shareholder approval, create another entity and then merge or
consolidate into or sell all or substantially all of its assets or the assets of
the Tax-Exempt Fund, U.S. Government Fund or any other fund which is a series of
the Freedom Trust to the new entity. The Trust could also contract with the new
entity. The Current Declaration has no similar provisions.
(ii) Termination of the Trust, a Fund or a class of Shares
The Amended Declaration would provide that the Freedom Trust,
Tax-Exempt Fund, U.S. Government Fund or any other fund which is a series of the
Trust, or any class of shares of a Fund may be terminated by (a) a vote of the
holders of two-thirds of the outstanding shares of the Trust, Fund or class
present at a meeting called to consider the question, (b) a written consent
signed by the holders of two-thirds of the Trust's, Fund's or class' outstanding
shares, or (c) a 1940 Act Majority Shareholder Vote or written consent of the
same proportion of shareholders of the Trust, Fund or class if the termination
is recommended by the Trustees. The Trust, Fund or class could also be
terminated without prior shareholder approval upon notice to shareholders by
means of a written instrument signed by a majority of the Trustees, stating that
the Trustees have determined that continuing the Trust, Fund or class is not in
the best interests of the Trust, Fund or class or their respective shareholders.
In addition, the Trustees could abolish any series or class of shares if there
are no shares of such series or class outstanding by means of a written
instrument executed by a majority of the Trustees.
The Current Declaration provides that the Freedom Trust, Tax-Exempt
Fund, U.S. Government Fund or any other fund which is a series of the Trust, or
any class of shares of a Fund may be terminated by a majority of the Trustees,
subject to an affirmative 1940 Act Majority Shareholder Vote of the shares of
the Trust, Fund or class.
(iii) Amendment of Declaration of Trust
The Amended Declaration would provide that the Declaration may be
amended upon approval of a majority of the Trustees without prior shareholder
approval. However, the Trustees may not adopt amendments to the Amended
18
<PAGE>
Declaration which would (1) impair the voting or other rights of shareholders
prescribed by law, or (2) impair the exemption from personal liability of the
shareholders, Trustees, officers, employees and agents of the Funds or (3)
permit assessments upon shareholders.
The Current Declaration provides that the Declaration may be amended
upon the approval of a majority of the Trustees without prior shareholder
approval, unless such amendment would repeal the limitations on personal
liability of any shareholder or Trustee or would repeal the prohibition on
assessments upon shareholders. If the amendment would repeal these rights, then
the prior consent of each shareholder or Trustee affected is required. In
addition, any amendment to the Declaration that would adversely affect the
rights of shareholders requires the prior affirmative vote of holders of a
majority of the Trust's shares entitled to vote.
(iv) Establishment of Series and Classes
The Amended Declaration and Current Declaration provide that the
Trustees may establish and designate additional series of the Freedom Trust and
additional classes of shares. The Current Declaration further provides that if
such establishment and designation would adversely effect any of the already
established series or classes, then prior approval of holders of a majority of
the shares of the affected series or class is required. The Amended Declaration
would not contain a similar provision because the Trustees believe that
comparable shareholder protection is provided in other sections of the Amended
Declaration.
(v) Acquisition of Assets
The Amended Declaration would provide that the Trustees may issue
shares to another party in exchange for other assets and businesses. The Current
Declaration does not contain a similar provision.
(vi) Voting Procedures
The Amended Declaration would provide that, with certain exceptions,
all shares of all classes of all Funds vote together as a single class. With
respect to matters which affect a single Fund or class or which affect only
certain Funds or classes identically, only the shareholders of the affected
Fund(s) or class(es) will be entitled to vote.
The Current Declaration provides that, with certain exceptions,
shareholders of each Fund vote separately from other Funds. With respect to
matters affecting only certain Funds or classes, only the affected Fund(s) or
class(es) will vote.
B. Redemption and Repurchase of Shares
The Amended Declaration would provide that in the event redemptions
are suspended by a Fund, shareholders could revoke any application for
redemption of shares not honored prior to the suspension and resubmit the
redemption request when the suspension is lifted and the price might be more
favorable. The Current Declaration does not contain similar provisions.
19
<PAGE>
The Amended Declaration would provide that the Trustees could withhold
from any redemption proceeds any amounts arising from liability of the redeeming
shareholder to the Fund or the Freedom Trust or in connection with any tax
withholding requirements. The Amended Declaration would also provide that
account administration fees and other similar charges could be deducted directly
from the income and other distributions paid to a shareholder's account. The
Current Declaration does not contain similar provisions.
In addition to the material differences described above, there are
other substantive and stylistic differences between the Amended Declaration and
the Current Declaration. You are urged to review the form of Amended Declaration
attached to this Proxy Statement as Exhibit A.
Trustees' Evaluation and Recommendation
At the meeting of the Trustees of Tax-Exempt Fund and U.S. Government Fund held
on March 5, 1996, the Trustees, including the Independent Trustees approved, and
voted to recommend to shareholders that they approve, a proposal to amend and
restate the Current Declaration. In taking this action and making this
recommendation, the Trustees considered the likelihood that the Amended
Declaration will result in more efficient and economical operation of the
Tax-Exempt Fund and U.S. Government Fund by giving the Trustees more flexibility
to manage the Funds and adapt the Declaration 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 Declaration
will not result in changes in the Trustees, officers, investment programs and
services or any operations and services of the Funds that are described in the
Funds' current Prospectuses.
If the proposed changes are not approved by the shareholders, the 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 Declaration.
THE TRUSTEES OF TAX-EXEMPT FUND AND U.S. GOVERNMENT FUND RECOMMEND THAT
SHAREHOLDERS OF TAX-EXEMPT FUND AND U.S. GOVERNMENT FUND APPROVE THE AMENDMENT
AND RESTATEMENT OF THE CURRENT DECLARATION AND ADOPT THE AMENDED DECLARATION.
Vote Required
Because your Fund is part of Freedom Trust, your vote will be counted on a
Trust-wide basis. Approval of Proposal 2 requires an affirmative vote of a
majority of the aggregate outstanding shares of Tax-Exempt Fund, U.S. Government
Fund and each other fund which is a series fund of Freedom Trust. For purposes
of approving this Proposal, a majority of outstanding voting securities shall
mean approval by the lesser of (i) 67% or more of the aggregate shares of
Freedom Trust represented at shareholder meetings if at least 50% of Freedom
20
<PAGE>
Trust's outstanding shares are present in person or by proxy at the shareholder
meetings or (ii) more than 50% of the aggregate of Freedom Trust's outstanding
shares (a "1940 Act Majority Shareholder Vote").
PROPOSALS 3(a), 3(B), 3(c), 3(d) AND 3(e)
TO APPROVE AGREEMENTS AND PLANS OF REORGANIZATION
(For shareholders of each Fund voting separately)
The Trustees 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. The
Reorganization Agreements provide for the reorganization of each Fund (the
"Reorganizations") as a new fund of a different trust (the "Successor Trusts")
in the John Hancock fund complex. If approved, the result of the Reorganizations
will be as follows:
<TABLE>
<CAPTION>
Successor Trusts and
Funds Current Trusts Dates of Organization
----- -------------- ---------------------
<S> <C> <C>
Tax-Exempt Fund Freedom Trust John Hancock Tax-Exempt Series Fund
(the "Tax-Exempt Series Trust") (3/24/87)
U.S. Government Fund Freedom Trust Strategic Series Trust (4/16/86)
Core Equity Fund Strategic Series Capital Series Trust (10/5/84)
Trust
Utilities Fund Strategic Series Capital Series Trust
Trust
Growth Fund Capital Series Freedom Investment Trust II (the "Freedom
Trust Trust II") (9/10/91)
</TABLE>
Each of the Trusts and the Successor Trusts are registered, open-end management
investment companies organized as Massachusetts business trusts. Each of the
Successor Trusts currently have other existing series funds (the "Existing
Funds").
THE REORGANIZATION OF THESE FUNDS INTO SUCCESSOR TRUSTS 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 and to reduce each Fund's operating expenses by
achieving additional economies of scale. 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 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,
Successor Trusts will have additional opportunities to consolidate the
21
<PAGE>
prospectuses of the Funds and their Existing Funds, which consolidation should
reduce expenses. Over time, these savings should have a positive effect on each
Fund's total return.
The Adviser serves as the investment adviser to each Fund and to each Existing
Fund. Each Fund is currently responsible for all expenses it incurs that are not
expressly stated to be payable by the Adviser under each investment management
contract. Expenses for which Core Equity Fund, Utilities Fund, Growth Fund and,
if Proposals 4(a) and 4(b) in this Proxy Statement are approved, Tax-Exempt Fund
and U.S. Government Fund, are 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; and legal, accounting and auditing fees. If Proposals
4(a) and 4(b) are not approved, then Tax-Exempt Fund and U.S. Government Fund
will be responsible for these expenses except for certain legal, accounting and
auditing fees.
The Trustees have determined that expense reductions resulting from the
Reorganizations will benefit shareholders of each Fund. These expense reductions
include, among other things, lower annual state registration fees and lower
filing, printing and related administrative costs.
Based on the anticipated increase in administrative efficiency and reductions in
the expenses of each Fund, the Trustees have determined that each proposed
Reorganization will 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
and reduce the annual cost 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 summarizes certain terms of each Reorganization Agreement. The
Reorganization Agreement for each Fund is substantially identical and this
summary is qualified in its 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 expected that the closing date of the Growth Fund Reorganization will be July
1, 1996 and the closing date of the other Reorganizations will be September 1,
1996 (collectively, the "Closing Dates"). In order to accomplish the
Reorganizations, new funds (the "Successor Funds") corresponding to each of the
Funds will be established as new series funds of the corresponding Successor
Trust. On the respective Closing Dates, each Fund will transfer all of its
assets to its corresponding 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
22
<PAGE>
Fund Shares will be identical to the number and net asset value per share of
each class 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 to each
Fund shareholder a proportional amount of Successor Fund Shares in exchange for
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 a Closing Date, the Board of Trustees of any Trust 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 Trust 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 its stated Closing Date by the appropriate Board of
Trustees of the Trust and the Successor Trust. Each Trust and Successor Trust
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 respective 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
Shares to be received by that shareholder under each Reorganization Agreement.
Each account and its elections will be identical in all material respects to
those 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 except for the expenses associated
with printing and mailing this Proxy Statement which will be borne by each Fund
pro rata based on the number of shareholders of each Fund. 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 Trust and
the Successor Trust receive on or before the appropriate Closing Date an opinion
23
<PAGE>
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 a 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 each shareholder's tax holding period
for the surrendered Fund shares, provided that these Fund shares were held as
capital assets on the date of the exchange.
GOVERNANCE OF THE TRUSTS AND THE SUCCESSOR TRUSTS
If Proposal 1 of this Proxy Statement is approved, the Trustees of each Trust
and Successor Trust will be identical. Currently, the Trustees of each Successor
Trust except for Freedom Trust II are the Panel A Trustees as defined in
Proposal 1 and the Trustees of the Freedom Trust and Freedom Trust II are the
Panel C Trustees as defined in Proposal 1. The officers of each of the Trusts
and the Successor Trusts are currently identical.
If Proposals 3(a) and 3(b) are approved, the Tax-Exempt Fund and the U.S.
Government Fund will be governed by the terms of the Declarations of Trust of
the Tax-Exempt Series Trust and the Strategic Series Trust, respectively, rather
than the Master Trust Agreement of the Freedom Trust. The current shareholders
of Tax-Exempt Series Trust are considering a proposal under a separate proxy
statement to adopt an Amended and Restated Declaration of Trust which is
substantially identical to the current Declaration of Trust of Strategic Series
Trust and to the Amended and Restated Declaration of Trust being considered by
the shareholders of Freedom Trust under Proposal 2 of this Proxy Statement (a
form of which is attached hereto as Exhibit A). If the shareholders of
Tax-Exempt Series Trust and Freedom Trust vote to adopt their respective Amended
and Restated Declarations of Trust, then the terms of the Declaration of Trust
of each of Tax-Exempt Series Trust, Strategic Series Trust and Freedom Trust
will be substantially identical.
If Proposals 3(c) and 3(d) are approved, the Core Equity Fund and Utilities
Fund, respectively, will be governed by the Declaration of Trust of the Capital
Series Trust (the "Capital Series Trust Declaration"), rather than the
Declaration of Trust of the Strategic Series Trust (the "Strategic Series Trust
Declaration"). The Strategic Series Trust Declaration is substantially similar
to the Capital Series Trust Declaration except that the Strategic Series Trust
Declaration provides that Trustees may not amend the Trust Declaration to impair
any voting or other rights of shareholders prescribed by federal or state law
while the Capital Series Trust Declaration provides that any amendment
24
<PAGE>
decreasing the amounts payable to shareholders upon liquidation or diminishing
or eliminating voting rights requires prior approval by two-thirds of the
outstanding shares of the affected series or class of shares.
If Proposal 3(e) is approved, the Growth Fund will be governed by the
Declaration of Trust of Freedom Trust II rather than the Capital Series Trust
Declaration. The current shareholders of Freedom Trust II are considering a
proposal under a separate proxy statement to adopt an Amended and Restated
Declaration of Trust (the "Freedom Trust II Trust Declaration") which is
substantially similar to the Capital Series Trust Declaration, except that the
proposed Freedom Trust II Trust Declaration provides that the Trustees may not
amend the Trust Declaration to impair any voting or other rights of shareholders
prescribed by federal or state law while the Capital Series Trust Declaration
provides that any amendment decreasing the amounts payable to shareholders upon
liquidation or diminishing or eliminating voting rights requires prior approval
by two-thirds of the outstanding shares of the affected series or class of
shares. If the shareholders of Freedom Trust II vote to adopt the proposed
Freedom Trust II Trust Declaration, the new Trust Declaration will be
substantially similar except as noted.
AGREEMENTS AND PLANS
If shareholders of each Fund approve the Fund's Reorganization Agreement, 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 (See Proposal 4 below)
and transfer agency agreements with Investor Services. Custody and distribution
services will continue to be provided to each Successor Fund by Investors Bank &
Trust Company and John Hancock Funds, respectively, pursuant to the
corresponding Successor Trust's custodian agreement and distribution contract.
The terms of these agreements are substantially similar to those contained in
the Funds' current custodian agreements and distribution contracts. Price
Waterhouse LLP, the current independent auditors for each of the Funds except
for Growth Fund, and Ernst & Young LLP, the current independent auditors for
Growth Fund, will continue to serve as the independent auditors to the
respective Successor Funds as well as the Existing Funds of the Successor
Trusts. 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 each corresponding Fund's
current distribution plans.
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 appropriate 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.
25
<PAGE>
Ttustees' Recommendation
Based on the considerations discussed above, at a meeting held on March 5, 1996,
the Trustees 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 Trustees 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), and 3(e) requires the affirmative
1940 Act Majority Shareholder Vote of the Tax-Exempt Fund, U.S. Government Fund,
Core Equity Fund, Utilities Fund and Growth Fund, respectively.
PROPOSALS 4(a) AND 4(b)
TO APPROVE THE TERMS OF NEW INVESTMENT
MANAGEMENT CONTRACTS
(For shareholders of Tax-Exempt Fund and U.S. Government
Fund voting separately)
GENERAL
The investment portfolios of Tax-Exempt Fund and U.S. Government Fund are
managed by the Adviser pursuant to an Advisory Agreement dated November 6, 1986,
as restated January 1, 1994 (the "Existing Agreement"). The Existing Agreement
was approved by shareholders of each Fund at meetings held on October 28, 1993.
At the meeting on March 5, 1996, the Trustees of Tax-Exempt Fund and U.S.
Government Fund, including the Independent Trustees, voted to approve, and to
recommend that the shareholders of Tax-Exempt Fund and U.S. Government Fund
approve, the adoption of a new investment management contract for each Fund in
the form attached to this Proxy Statement as Exhibit C (the "New Agreements").
The New Agreements would replace the Existing Agreement. The terms of the New
Agreements are substantially identical, but would reflect: (1) greater
flexibility to allocate certain legal and accounting expenses to each Fund, (2)
differences in expense limitation provisions and (3) additional changes noted
26
<PAGE>
below to conform the Funds' investment management contracts to those of most
other funds in the John Hancock fund complex. Material similarities and
differences between the Existing Agreement and the New Agreements are set forth
below.
MATERIAL SIMILARITIES BETWEEN THE EXISTING AGREEMENT
AND THE NEW AGREEMENTS
Under both the Existing Agreement and the New Agreements, the Adviser provides
the Funds with a continuous investment program for the management of their
assets. The Adviser provides investment advice and management of the Funds,
subject to supervision and review by the Board of Trustees and subject to
conformity with the Funds' investment objectives, restrictions and policies, as
described in the Funds' Prospectuses and Statements of Additional Information.
The rate and terms of payment of the advisory fee paid to the Adviser by the
Funds are identical under both the Existing Agreement and the New Agreements.
The advisory fee paid by the Tax-Exempt Fund is paid monthly at an annual rate
equal to (i) 0.60% of the average daily net asset value of the Fund for the
calendar month up to $250,000,000 of average daily net assets, (ii) 0.50% on the
next $500,000,000, and (iii) 0.45% on amounts in excess of $750,000,000. The
Fund paid the Adviser $1,247,519 (0.55% of average daily net assets) in advisory
fees for the fiscal year of the Fund ended October 31, 1995.
The advisory fee paid by the U.S. Government Fund is paid monthly at an annual
rate equal to (i) 0.50% of the first $500,000,000 of the average daily net asset
value of the Fund for such calendar month, and (ii) 0.45% on amounts in excess
of $500,000,000. The Fund paid the Adviser $2,514,147 (0.50% of average daily
net assets) in advisory fees for the fiscal year of the Fund ended October 31,
1995.
Under each Agreement, the Adviser pays all expenses it incurs with respect to
the performance of its duties thereunder, including expenses associated with
office space and related equipment. The Fund bears all other material expenses
as described in the Agreements (see Subsection A below). Each Agreement provides
that it shall be effective for a period of up to two years after its adoption
and then for one year periods thereafter so long as it is annually approved by
(i) a majority of the Independent Trustees of the Funds and (ii) either (a) the
Trustees or (b) a 1940 Act Majority Shareholder Vote (as defined in the "Vote
Required" section of Proposal 2 above). Each Agreement also provides that it may
be terminated on 60 days written notice without penalty by either a 1940 Act
Majority Shareholder Vote, the Trustees or the Adviser. Each Agreement
automatically terminates upon assignment as defined by the 1940 Act. Each
Agreement provides that the obligations of the Fund under the Agreement are not
binding on the Trustees, shareholders, officers, employees, agents or nominees
of Freedom Trust or the Fund as individuals but bind only Freedom Trust (under
the Existing Agreement) or the Fund (under each of the New Agreements) and its
property.
27
<PAGE>
MATERIAL DIFFERENCES BETWEEN THE EXISTING AGREEMENT
AND THE NEW AGREEMENTS
A. Accounting and Other Expenses
Under the Existing Agreement, the Adviser furnishes and bears the cost
of personnel and related costs to perform financial and accounting functions for
the benefit of the Funds. The Adviser compensates all personnel who are
employees of the Adviser or an affiliate of the Adviser. The Funds are
responsible for paying expenses associated with any independent accountants and
custodians retained by the Funds. This allocation of expenses creates an
incentive to have accounting services provided by outside vendors at a higher
cost than would be charged by the Adviser for performing the same service
internally.
The New Agreements provide that each Fund will be responsible for
paying all fees and expenses associated with financial, accounting and tax
services provided to the Funds by the Adviser's personnel. Including this
provision in the New Agreements will bring the Funds' expense allocation
procedures into conformity with those of other John Hancock mutual funds. The
new provision will allow the Funds the flexibility to approve the payment of
compensation to the Adviser for providing day-to-day financial, accounting, tax
and bookkeeping services to the Funds. Although no proposal to compensate the
Adviser for accounting services has been approved by the Funds' Trustees, the
Adviser expects to present a proposal in the fall of 1996.
As stated below, the Funds' expense ratios and the fees received by
the Adviser will be slightly higher than they are now if the Trustees approve a
proposal to compensate the Adviser for performing accounting services. However,
in response to the increased complexity of fund accounting and taxation, the
Adviser must employ additional financial and tax professionals with a higher
level of expertise than required in the past, and must provide increasingly
complex technological resources for financial and risk analyses. These costs
were not envisioned as recently as ten years ago, when the current contracts
were written. As a result, the Adviser has been absorbing costs that normally
would be billed directly to the Funds by an outside vendor at a higher cost. The
comparative fee analyses presented to the Trustees showed that the Adviser could
continue to provide these services to the Funds at a significantly lower cost
than an outside vendor, if the Adviser were reimbursed by the Funds for the
expenses associated with maintaining the Adviser's existing high level of
service to the Funds.
The New Agreements also provide that the Funds will bear the allocable
cost of the Adviser's employees who render legal services to the Funds. Although
the Adviser reserves the right to do so, the Adviser has no intention of
allocating these costs to the Funds during the Funds' current fiscal years and
will not do so until the Trustees of the Funds, including the Independent
Trustees, approve the allocation. Accordingly, there will be no immediate
increase in the Funds' expenses as a result of the inclusion of this provision
in the New Agreements. In the event that the Adviser and the Funds agree to
allocate these costs to the Funds in the future, the Funds' expenses will
increase. The extent of any resulting increase is indeterminable at this time.
28
<PAGE>
The New Agreements also provide that the Funds will be responsible for
the expense of periodic calculations of the net asset value of the shares of the
Funds. These expenses are included in the Comparative Fee Table below.
Under the Existing Agreement, the annual operating expenses paid by
Tax-Exempt Fund with respect to its Class A and Class B shares for its fiscal
year ended October 31, 1995, were 1.06% and 1.73%, respectively, on average net
assets of $27,792,950 and $199,028,645, respectively. The annual operating
expenses paid by U.S. Government Fund with respect to its Class A and Class B
shares for its fiscal year ended October 31, 1995, were 1.17% and 1.72%,
respectively, on average net assets of $334,932,570 and $168,279,601,
respectively.
Under the New Agreements, the annual operating expenses paid by
Tax-Exempt Fund with respect to its Class A and Class B shares for its fiscal
year ended October 31, 1995 would have been 1.08% and 1.75%, respectively,
representing an increase of 0.02% and 0.02%, respectively. The annual operating
expenses paid by U.S. Government Fund with respect to its Class A and Class B
shares for its fiscal year ended October 31, 1995 would have been 1.19% and
1.74%, respectively, representing an increase of 0.02% and 0.02%, respectively.
Set forth below is a comparative fee table showing the amount of fees
and expenses paid by each Fund under the Existing Agreement as a percentage of
average net assets and the amount of fees and expenses shareholders would have
paid indirectly if the New Agreements had been in effect and the Trustees had
approved the compensation of the Adviser for its accounting services. Increases
in Fund expenses which would result from the allocation to the Funds of the
costs of the Adviser's employees who render legal services to the Funds are not
reflected under the "New Agreement" column. These costs are not currently
allocated to the Funds and the Adviser has no intention of allocating these
costs to the Funds during the Funds' current fiscal years. The information in
the table is an estimate based on actual expenses for the Funds' fiscal years
ended October 31, 1995.
COMPARATIVE FEE TABLE
Tax-Exempt Fund Existing Agreement New Agreement
- --------------- ------------------ ----------------
Class A Class B Class A Class B
------- ------- ------- -------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fee (net of waiver
by Adviser).......................... 0.55% 0.55% 0.55% 0.55%
12b-1 fee.............................. 0.30% 1.00% 0.30% 1.00%
Other expenses......................... 0.16% 0.16% 0.18% 0.18%
Total Fund Operating Expenses.......... 1.01% 1.71% 1.03% 1.73%
29
<PAGE>
Example
The following table illustrates the expenses on a $1,000 investment you would
pay under the Existing Agreement and the New Agreement, assuming a 5% annual
return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------- -------------------- -------------------- --------------------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares........ $55 $55 $76 $76 $ 99 $ 98 $165 $163
Class B Shares
-Assuming complete
redemption at end
of period........... $67 $67 $84 $84 $114 $113 $186 $183
-Assuming no
redemption.......... $17 $17 $54 $54 $ 94 $ 93 $186 $183
</TABLE>
U.S. Government Fund Existing Agreement New Agreement
- -------------------- ------------------ ----------------
Class A Class B Class A Class B
------- ------- ------- -------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fee ........................ 0.50% 0.50% 0.50% 0.50%
12b-1 fee.............................. 0.30% 1.00% 0.30% 1.00%
Other expenses......................... 0.32% 0.32% 0.34% 0.34%
Total Fund Operating Expenses.......... 1.12% 1.82% 1.14% 1.84%
Example
The following table illustrates the expenses on a $1,000 investment
you would pay under the Existing Agreement and the New Agreement, assuming a 5%
annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------------------- -------------------- -------------------- --------------------
New Existing New Existing New Existing New Existing
Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares............ $56 $56 $80 $79 $105 $104 $177 $175
Class B Shares
-Assuming complete
redemption at end
of period............... $68 $68 $88 $87 $120 $119 $198 $195
-Assuming no redemption.. $18 $18 $58 $57 $100 $ 99 $198 $195
</TABLE>
The purpose of the preceding examples and tables is to assist
investors in understanding the various costs and expenses of investing in shares
of each Fund. These examples should not be considered representations of past or
future expenses of the Funds. Actual expenses may be higher or lower than those
shown above.
B. Advisory Fee Limitations
Under the Existing Agreement, if the total expenses of each Fund
(exclusive of interest, taxes, brokerage expenses and extraordinary items) for
any fiscal year exceed the lowest expense limitation imposed by any state in
which shares of the Fund are qualified for sale, the Adviser will pay or
reimburse the Fund for that excess up to the amount of the advisory fees payable
30
<PAGE>
by the Fund during that fiscal year. The amount of the monthly advisory fee
payable by the Fund will be reduced to the extent that the monthly expenses of
the Fund, on an annualized basis, exceed these limitations. If at the end of the
fiscal year, the expenses of the Fund are within the limitation, any excess
amount previously withheld from the monthly advisory fee during that fiscal year
will be paid to the Adviser.
Under the New Agreements, this provision has been modified to state
simply that the Adviser will adhere to applicable state law. It requires the
Adviser to reduce its fee and make additional arrangements only as required in
order to comply with that state's law. This language reflects the minimum
requirements of state laws currently in effect and eliminates the need to revise
the agreement if a state changes its law. The Adviser may, however, make
additional arrangements at its discretion to reduce expenses of the Funds beyond
those required by state law. The New Agreements contain an additional provision
permitting the Adviser to refrain from imposing all or a portion of its fee (in
advance of the time its fee would otherwise accrue) and/or undertake to make any
other payments or arrangements necessary to limit the Funds' expenses to any
level the Adviser may specify. Any fee reduction or undertaking will constitute
a binding modification of the applicable New Agreement while it is in effect but
may be discontinued or modified prospectively by the Adviser at any time.
Neither of these revised provisions will have any immediate effect on the
advisory fee rates payable by the Funds or the expense ratios of the Funds.
C. Other Differences Between the Existing Agreement and the New
Agreements
With respect to the calculation of the advisory fees to be paid under
each of the New Agreements, the New Agreements provide that the "average daily
net assets" of the Funds will be calculated on the basis set forth in the Funds'
Prospectuses or otherwise consistent with the 1940 Act. The Existing Agreement
provides no description of how the Funds' "average daily net assets" will be
calculated.
Each Agreement provides that the Adviser may provide investment
advisory services to other clients; however, the New Agreements further provide
that the Adviser may provide services to other investment companies and that the
officers, directors and employees of the Adviser and its parent may continue to
engage in providing portfolio management services to other investment companies.
The New Agreements also provide that the Adviser is under no obligation to
acquire any particular investment on behalf of the Funds if, in the Adviser's
sole discretion, it is not feasible or desirable to acquire a position in that
investment on behalf of the Funds.
The New Agreements provide that, in connection with the purchase or
sale of securities for the account of the Funds, neither the Adviser nor any of
its subsidiaries, directors, officers or employees will act as principal or
agent or receive any commission except as the 1940 Act permits. If the Adviser
advises persons concerning shares of the Funds, the Adviser will be acting
solely on its own behalf and not on behalf of the Funds. The New Agreements
31
<PAGE>
further state that the Adviser and its affiliates can buy, sell and trade
securities for their own accounts.
The New Agreements provide that the Funds may use the name "John
Hancock" or similar names to those of John Hancock Advisers, Inc. or John
Hancock Mutual Life Insurance Company only while the Agreements are in effect.
John Hancock Mutual Life Insurance Company reserves the right to grant
nonexclusive rights to use of the name "John Hancock" to other investment
companies and entities.
Each Agreement limits the liability of the Adviser for any error of
judgment, mistake of law or loss to the Funds unless such liability arises out
of willful misfeasance, bad faith, gross negligence or reckless disregard by the
Adviser of its obligations under the Agreement. The Existing Agreement further
provides that nothing in the Agreement protects any Trustee or officer of the
Funds against any liability to which that person might be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of that
person's obligations under the Agreement. The New Agreements contain no such
exception because it serves no purpose; Trustees and officers are not parties
to, and do not assume any liabilities under, the New Agreements. The New
Agreements clarify that individuals who are employees of either the Funds or the
Adviser will be deemed to be acting solely for the applicable Fund when acting
within the scope of their employment for the Fund and not as employees or agents
of the Adviser.
The Existing Agreement provides that the Agreement may be amended as
to any series of the Trust by a 1940 Act Majority Shareholder Vote of that
series. The New Agreements specifically require that the Adviser agree to the
amendment and also require that any amendment be in writing. The New Agreements
further provide that no amendment, transfer, assignment, sale, hypothecation or
pledge of the Agreements will be effective until approved by (i) the Trustees of
the Funds, including a majority of the Trustees who are not interested persons
of the Adviser, and (ii) a 1940 Act Majority Shareholder Vote of the applicable
Fund.
The New Agreements clarify that the Funds are not liable for
obligations of any other series of their Trust and no other series of the Trust
is liable for the Funds' obligations under the Agreements.
The New Agreements contain miscellaneous provisions including a
provision that the obligations of the Funds are not personally binding on
shareholders, and provisions establishing governing law and the severability of
provisions. The Existing Agreement does not contain any similar provisions.
The form and style of the New Agreements is substantially different
from the form and style of the Existing Agreement.
Each of the changes described under this subsection C reflect an
effort to provide the Funds with an up-to-date investment management contract
which conforms substantially to the contracts of the other John Hancock funds.
If approved, the New Agreements will each become effective on July 1,
1996. If the Reorganizations described in Proposal 3 are also approved, the
32
<PAGE>
agreements adopted by the Successor Funds will be identical to those described
in this Proposal 4.
For text of the New Agreements, see Exhibit C attached to this Proxy
Statement. This description of the New Agreements and comparison to the Existing
Agreement are qualified in their entirety by reference to Exhibit C.
Trustees' Evaluation and Recommendation
At the meeting of the Trustees of Tax-Exempt Fund and U.S. Government Fund on
March 5, 1996, the Trustees, including the Independent Trustees, approved the
New Agreements. In making this determination, the Trustees considered several
factors.
The Trustees considered the fact that while the expenses borne by the Funds will
increase under the New Agreements, the Adviser will be able to continue
providing the Funds with a high level of service and will be better able to
provide the Funds with accounting, legal and other technical support. The
Trustees also considered the fact that under the New Agreements there is more
incentive to have the Adviser provide the Funds with accounting and legal
services rather than having such services provided by more costly outside
vendors. The Trustees believe that improving the already high quality of
professional services provided to the Funds by the Adviser will benefit the
Funds and ultimately the shareholders.
The Trustees also considered the fact that the New Agreements contain provisions
which are substantially similar to the management contracts of the other funds
in the John Hancock fund complex. Adopting the New Agreements will therefore
provide more uniformity among the funds in the John Hancock fund complex and
make administration of the funds more efficient.
The Trustees also considered the benefits to the Adviser of the New Agreements.
The benefits include the fact that the Funds may pay a portion of the costs
associated with the Adviser's accounting and legal personnel and that the New
Agreements are substantially similar to the management contracts of other funds
in the John Hancock fund complex. While these factors will benefit the Adviser,
the Funds will also benefit as described above.
Based on these factors and others they deem relevant, the Trustees believe the
New Agreements to be reasonable, fair and in the best interests of the Funds'
shareholders.
THE TRUSTEES OF TAX-EXEMPT FUND AND U.S. GOVERNMENT FUND RECOMMEND THAT
SHAREHOLDERS OF TAX-EXEMPT FUND AND U.S. GOVERNMENT FUND VOTE FOR THE PROPOSAL
ADOPTING THE NEW AGREEMENTS FOR THEIR RESPECTIVE FUNDS.
Vote Required
Approval of Proposals 4(a) and 4(b) requires a 1940 Act Majority Shareholder
Vote of Tax-Exempt Fund and U.S. Government Fund, respectively.
33
<PAGE>
THE INVESTMENT ADVISER
The Adviser is a wholly-owned subsidiary of The Berkeley Financial Group ("The
Berkeley Group"), which is a wholly-owned subsidiary of John Hancock Asset
Management. John Hancock Asset Management is a wholly-owned subsidiary of John
Hancock Subsidiaries, Inc., which is a wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company (the "Life Company"). The address of the Adviser
is 101 Huntington Avenue, Boston, Massachusetts 02199. The address of the other
entities is John Hancock Place, Boston, Massachusetts 02117. The directors of
the Adviser and their principal occupations or employment are set forth under
the caption, "Directors of the Adviser." The Adviser provides investment
advisory services to other mutual funds with investment objectives substantially
identical to those of the Funds. See Exhibit D for a list of those funds and the
advisory fee rates paid by those funds.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the fiscal year ended October 31, 1995 of Tax-Exempt Fund and U.S.
Government Fund, neither Fund paid brokerage commissions to affiliated brokers.
OTHER MATERIAL PAYMENTS BY THE FUNDS TO THE ADVISER
AND AFFILIATES OF THE ADVISER
For the fiscal year ended October 31, 1995, the Tax-Exempt Fund paid $83,379 and
$1,967,708 to John Hancock Funds for distribution related services on behalf of
Class A and Class B shares, respectively, and U.S. Government Fund paid
$1,004,768 and $1,677,203 to John Hancock Funds for distribution related
services on behalf of Class A and Class B shares, respectively. It is expected
that John Hancock Funds will continue to provide these services to the Funds.
DIRECTORS OF THE ADVISER
Edward J. Boudreau, Jr., Chairman of the Funds, is the principal executive
officer of the Adviser. Mr. Boudreau's principal occupations and address, as
well as those of the other Directors of the Adviser, are set forth below.
<TABLE>
<S> <C>
Edward J. Boudreau, Jr. Chairman and Chief Executive Officer, the
101 Huntington Avenue Adviser and The Berkeley Group;
Boston, MA 02199 Chairman and Managing Director, John Hancock Advisers International Ltd.; Chairman, John
Hancock Funds and Investor Services (collectively, the "Affiliated Companies"); Chairman,
NM Capital Management, Inc.; Chairman, Sovereign Asset Management Corporation; and
Chairman, First Signature Bank & Trust.
Stephen L. Brown Chairman and Chief Executive Officer, the
John Hancock Place Life Company; Director, the Adviser
Boston, MA 02117 and the Affiliated Companies; Trustee, The Berkeley Group and John Hancock Asset
Management.
Foster L. Aborn Vice Chairman, Director and President,
John Hancock Place Investment and Pension Sector, the
Boston, MA 02117 Life Company; Director, the Adviser, Independence Investment Associates, Inc., John
Hancock Funds, Investor Services, and John Hancock Subsidiaries, Inc.; Trustee, The
Berkeley Group and John Hancock Asset Management; Director, Hancock Venture Partners,
Inc.; Director, John Hancock Capital Growth Management, Inc.; and Director, John Hancock
Capital Corp. and John Hancock Freedom Securities Corp.
David F. D'Alessandro Director and Senior Executive Vice President, Retail
John Hancock Place Sector, the Life Company; Director, the
Boston, MA 02117 Adviser and the Affiliated Companies;
Trustee, the Berkeley Group.
Richard S. Scipione Director, the Adviser, NM Capital
John Hancock Place Management, Inc., Sovereign Asset
Boston, MA 02117 Management Corporation and Investor Services; General Counsel, the Life Company; and
Trustee, The Berkeley Group.
Thomas E. Moloney Chief Financial Officer, the Life
John Hancock Place Company; Director, the Adviser and the
Boston, MA 02117 Affiliated Companies; Chairman, John Hancock
Property & Casualty, Inc.; Director, Maritime
Life Insurance Company; and Trustee, The
Berkeley Group.
John M. DeCiccio Senior Vice President, Investment and Pension
John Hancock Place group, the Life Company; Director, the Adviser and
Boston, MA 02117 the Affiliated Companies; and Trustee, The Berkeley Group.
35
<PAGE>
Jeanne M. Livermore Senior Vice President, Group Pension
John Hancock Place Guaranteed and Stable Value Products, the
Boston, MA 02117 Life Company; Director, the Adviser, the Affiliated Companies and John Hancock Advisers
International Ltd.; and Trustee, The Berkeley Group.
John Goldsmith Chairman and Chief Executive Officer,
One Beacon Street John Hancock Freedom Securities Corp.;
Boston, MA 02108 Director, the Adviser and the Affiliated Companies; and Trustee, The Berkeley
Group.
Richard O. Hansen Vice President, Managerial Department,
John Hancock Place the Life Company; Director, the Adviser
Boston, MA 02117 and the Affiliated Companies; and Trustee, The Berkeley Group.
William C. Fletcher Director, the Adviser, John Hancock Funds,
53 State Street Investor Services; President and Director,
Boston, MA 02109 Independence Investment Associates, Inc.; Trustee, The Berkeley Group; Trustee, President
and Chief Executive Officer, John
Hancock Asset Management; and Director, Hancock Natural
Resource Group, Inc. and John Hancock Energy Resources Management, Inc.
Robert G. Freedman Vice Chairman and Chief Investment
101 Huntington Avenue Director, the Adviser; Director, the
Boston, MA 02199 Adviser, NM Capital Management, Inc.,
Sovereign Asset Management Corporation and the Affiliated Companies;
Senior Vice President, The Berkeley Group; and Director, John Hancock
Advisers International Ltd.
Robert H. Watts President, Chief Executive Officer and
John Hancock Place Director, John Hancock Distributors,
Boston, MA 02117 Inc.; Director, the Adviser and the Affiliated Companies
and Senior Vice President, the Life Insurance Company.
David A. King President, Chief Executive Officer and
101 Huntington Avenue Director, Investor Services; Director,
Boston, MA 02199 the Adviser and the Affiliated Companies.
</TABLE>
In addition to Messrs. Boudreau, Scipione and Freedman, the following persons
are officers, trustees and/or directors of the Funds and the Adviser: Anne C.
Hodsdon, President of the Funds and President and Chief Operating Officer of the
Adviser; Thomas H. Drohan, Senior Vice President and Secretary of the Funds and
36
<PAGE>
the Adviser; James B. Little, Senior Vice President and Chief Financial Officer
of the Funds and Senior Vice President of the Adviser; John A. Morin, Vice
President of the Funds and Executive Vice President of the Adviser; Susan S.
Newton, Vice President, Assistant Secretary and Compliance Officer of the Funds
and Vice President and Assistant Secretary of the Adviser; and James J.
Stokowski, Vice President and Treasurer of the Funds and Vice President of the
Adviser.
PROPOSAL 5
ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTING IN A SINGLE CLASS OF
SECURITIES OF AN ISSUER
(For shareholders of U.S. Government Fund)
The U.S. Government Fund's existing fundamental investment restriction regarding
investing in a single class of securities of an issuer states that the Fund may
not:
Acquire more than 5% of any class of securities of an issuer, except
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities. For this purpose, all outstanding bonds and
other evidences of indebtedness shall be deemed a single class
regardless of maturities, priorities, coupon rates, series,
designations, conversion rights, security or other differences . . .
At the meeting of the Trustees of U.S. Government Fund on March 5, 1996, the
Trustees voted to approve, and to recommend to shareholders of the U.S.
Government Fund that they approve, the elimination of the Fund's fundamental
investment restriction regarding investing in a single class of securities of an
issuer.
Neither the 1940 Act nor state "blue sky" laws currently require that the Fund
have the above investment restriction. This change is being proposed to permit
the Fund to acquire more than 5% of the securities of a single class of an
issuer (subject to 1940 Act and tax diversification policies). While the Fund's
exposure to loss in the event of bankruptcy, liquidation or default of an issuer
increases with the amount of the Fund's investment in the issuer, the Fund will
acquire more than 5% of the securities of a single class of an issuer only to
the extent that the Adviser believes that such an investment would be beneficial
to the Fund. The Trustees believe that the Fund would benefit from more flexible
restrictions on investments in one class of one single issuer and from
conforming its diversification restrictions to those of other John Hancock
funds.
Trustees' Recommendation
THE TRUSTEES OF U.S. GOVERNMENT FUND RECOMMEND THAT THE SHAREHOLDERS OF
U.S. GOVERNMENT FUND APPROVE THIS PROPOSAL TO ELIMINATE THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION LIMITING THE AMOUNT OF INVESTMENTS IN A SINGLE CLASS OF
SECURITIES OF AN ISSUER.
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Required Vote
Approval of Proposal 5 requires a 1940 Act Majority Shareholder Vote of U.S.
Government Fund.
PROPOSAL 6
REDESIGNATION AS NONFUNDAMENTAL OF FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING INVESTING IN OTHER INVESTMENT COMPANIES
(For shareholders of U.S. Government Fund)
The U.S. Government Fund's existing fundamental investment restriction regarding
investing in other investment companies states that the Fund may not:
Purchase securities of other open-end investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization; or purchase more than 3% of the total outstanding
voting stock of any closed-end investment company if more than 5% of a
Fund's total assets would be invested in securities of any closed-end
investment company, or more than 10% of the Fund's total assets would
be invested in securities of any closed-end investment companies in
general. In addition, a Fund may not invest in the securities of
closed-end investment companies except by purchase in the open market
involving only customary broker's commissions.
References in the above investment restriction to "a Fund" include the U.S.
Government Fund.
At the meeting of the Trustees of U.S. Government Fund on March 5, 1996, the
Trustees voted to approve, and to recommend to shareholders of U.S. Government
Fund that they approve, the redesignation as nonfundamental of the above
fundamental investment restriction. If redesignated as proposed, the Trustees
would then amend the nonfundamental restriction to provide that the 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
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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 U.S. Government Fund with
additional investment and administrative flexibility. Currently, the Fund may
only invest in securities of other open-end investment companies in connection
with a merger, consolidation, acquisition or reorganization. The Fund may invest
in the securities of closed-end investment companies subject to certain
percentage and other limitations. The change set forth in this Proposal would
permit investment by the 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 Fund of any cash collateral in open-end investment companies
set up specifically for the investment of cash collateral held in connection
with securities lending. Even though the purchase of securities of other
investment companies by the Fund may involve the duplication of some fees and
expenses, the Trustees believe that approval of this Proposal would be
beneficial to the Fund, since the Fund will have more flexibility to invest in
securities of other investment companies and will be better able to take
advantage of potential investment opportunities. In addition, by making this
investment restriction nonfundamental, the Trustees will be able to amend the
restriction without incurring the delay and cost of obtaining prior shareholder
approval. The Trustees believe that approval of this Proposal would be
beneficial to shareholders of the Fund.
Trustees Recommendation
THE TRUSTEES OF U.S. GOVERNMENT FUND RECOMMEND THAT THE SHAREHOLDERS OF U.S.
GOVERNMENT FUND APPROVE THIS PROPOSAL TO REDESIGNATE AS NONFUNDAMENTAL AND THEN
AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING INVESTING IN OTHER
INVESTMENT COMPANIES.
Required Vote
Approval of Proposal 6 requires a 1940 Act Majority Shareholder Vote of U.S.
Government 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.
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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, 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.
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, with respect to Proposals requiring
approval by a 1940 Act Majority Shareholder Vote, a "broker non-vote" has no
effect on the voting in determining whether a Proposal has been adopted under
subsection (i) of the 1940 Act Majority Shareholder Vote definition. In
addition, a "broker non-vote" has no effect on the voting in determining whether
a Nominee has been elected as a Trustee of a Fund pursuant to Proposal 1. In
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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
JOHN HANCOCK MANAGED TAX-EXEMPT FUND
JOHN HANCOCK SOVEREIGN U.S. GOVERNMENT
INCOME FUND
JOHN HANCOCK INDEPENDENCE DIVERSIFIED
CORE EQUITY FUND
JOHN HANCOCK UTILITIES FUND
JOHN HANCOCK GROWTH FUND
41
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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
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or death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and interest of
such Trustee in the Trust Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VI and VII and Section 5.11
hereof, to apply to any such repurchase, redemption, retirement, cancellation
or acquisition of Shares any funds or property of the Trust or of the
particular Series with respect to which such Shares are issued, whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of The Commonwealth of Massachusetts governing business
corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or
to officers, employees or agents of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or any Series of
the Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient, to the same extent as such delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. The Trustees shall have power to collect
all property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims
relating to the Trust Property; to foreclose any security interest securing
any obligations, by virtue of which any property is owed to the Trust; and to
enter into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The
Trustees shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided herein or
in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees, including any
meeting held by means of a conference telephone circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, or by written consents of a majority of Trustees
then in office. The Trustees may adopt By-laws not inconsistent with this
Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in addition
to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of
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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 satisfy any debts,
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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 the Declaration. In the
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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
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consider desirable and all upon such terms and conditions as the Trustees may
in their discretion determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize the Investment Advisers, or any of
them, under any such contracts (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of portfolio securities and other investments of the
Trust on behalf of the Trustees or may authorize any officer, employee or
Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of such Investment Advisers, or any of them (and all without
further action by the Trustees). Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the Trustees. The
Trustees may, in their sole discretion, call a meeting of Shareholders in
order to submit to a vote of Shareholders at such meeting the approval or
continuance of any such investment advisory or management contract. If the
Shareholders of any one or more of the Series of the Trust should fail to
approve any such investment advisory or management contract, the Investment
Adviser may nonetheless serve as Investment Adviser with respect to any Series
whose Shareholders approve such contract.
Section 3.3. Administration Agreement. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement
shall undertake to manage the business affairs of the Trust or of a Series or
Class thereof and furnish the Trust or a Series or a Class thereof with office
facilities, and shall be responsible for the ordinary clerical, bookkeeping
and recordkeeping services at such office facilities, and other facilities and
services, if any, and all upon such terms and conditions as the Trustees may
in their discretion determine.
Section 3.4. Service Agreement. The Trustees may in their discretion from time
to time enter into Service Agreements with respect to one or more Series or
Classes thereof whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration
plans and service plans, and all upon such terms and conditions as the
Trustees in their discretion may determine.
Section 3.5. Transfer Agent. The Trustees may in their discretion from time to
time enter into a transfer agency and shareholder service contract whereby the
other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 3.6. Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) to serve as Custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in the By-laws of the Trust. The Trustees may also
authorize the Custodian to employ one or more sub-custodians, including such
foreign banks and securities depositories as meet the requirements of
applicable provisions of the 1940 Act, and upon such terms and conditions as
may be agreed upon between the Custodian and such sub-
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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
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Series of the Trust if the claim arises from the conduct of such Trustee,
officer, employee or agent with respect to only such Series, for satisfaction
of claims of any nature arising in connection with the affairs of the Trust.
If any Shareholder, Trustee, officer, employee, or agent, as such, of the
Trust or any Series thereof, is made a party to any suit or proceeding to
enforce any such liability of the Trust or any Series thereof, he shall not,
on account thereof, be held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by reason of his
being or having been a Shareholder, and shall reimburse such Shareholder or
former Shareholder (or his or her heirs, executors, administrators or other
legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) out of the Trust Property for all legal
and other expenses reasonably incurred by him in connection with any such
claim or liability. The indemnification and reimbursement required by the
preceding sentence shall be made only out of assets of the one or more Series
whose Shares were held by said Shareholder at the time the act or event
occurred which gave rise to the claim against or liability of said
Shareholder. The rights accruing to a Shareholder under this Section 4.1 shall
not impair any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust or any
Series thereof to indemnify or reimburse a Shareholder in any appropriate
situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee or
agent of the Trust or any Series thereof shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee, officer, employee or
agent of the Trust (including any individual who serves at its
request as director, officer, partner, trustee or the like of another
organization in which it has any interest as a shareholder, creditor
or otherwise) shall be indemnified by the Trust, or by one or more
Series thereof if the claim arises from his or her conduct with
respect to only such Series, to the fullest extent permitted by law
against all liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding
in which he becomes 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
matter) or an
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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 establish and designate any
further Series or Classes, the Trustees hereby establish the following Series,
each of which consists of
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[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 Shareholders of all
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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
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Series or Class thereof of the Trust, Shareholders of such Series or
Class thereof shall be entitled to receive a pro rata share of the
net assets of such Series. A Shareholder of a particular Series of
the Trust shall not be entitled to participate in a derivative or
class action on behalf of any other Series or the Shareholders of
any other Series of the Trust.
(vi) On each matter submitted to a vote of Shareholders, all Shares of
all Series and Classes shall vote as a single class; provided,
however, that (1) as to any matter with respect to which a separate
vote of any Series or Class is required by the 1940 Act or is
required by attributes applicable to any Series or Class or is
required by any Rule 12b-1 plan, such requirements as to a separate
vote by that Series or Class shall apply, (2) to the extent that a
matter referred to in clause (1) above, affects more than one Class
or Series and the interests of each such Class or Series in the
matter are identical, then, subject to clause (3) below, the Shares
of all such affected Classes or Series shall vote as a single Class;
(3) as to any matter which does not affect the interests of a
particular Series or Class, only the holders of Shares of the one or
more affected Series or Classes shall be entitled to vote; and (4)
the provisions of the following sentence shall apply. On any matter
that pertains to any particular Class of a particular Series or to
any Class expenses with respect to any Series which matter may be
submitted to a vote of Shareholders, only Shares of the affected
Class or that Series, as the case may be, shall be entitled to vote
except that: (i) to the extent said matter affects Shares of another
Class or Series, such other Shares shall also be entitled to vote,
and in such cases Shares of the affected Class, as the case may be,
of such Series shall be voted in the aggregate together with such
other Shares; and (ii) to the extent that said matter does not
affect Shares of a particular Class of such Series, said Shares
shall not be entitled to vote (except where otherwise required by
law or permitted by the Trustees acting in their sole discretion)
even though the matter is submitted to a vote of the Shareholders of
any other Class or Series.
(vii) Except as otherwise provided in this Article V, the Trustees shall
have the power to determine the designations, preferences,
privileges, payment obligations, limitations and rights, including
voting and dividend rights, of each Class and Series of Shares.
Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of
Shares of any Series or Class shall have the right to convert or
exchange said Shares into Shares of one or more Series or Classes
of Shares in accordance with such requirements, conditions and
procedures as may be established by the Trustees.
(viii) The establishment and designation of any Series or Classes of
Shares shall be effective upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such Series
or Classes, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular Series
or Class previously established and
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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
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net asset value with respect to Shares of the Trust or of any Series or Class
thereof, the rights of Shareholders (including those who shall have applied
for redemption pursuant to Section 6.1 hereof but who shall not yet have
received payment) to have Shares redeemed and paid for by the Trust or a
Series or Class thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right
so suspended may, during the period of such suspension, by appropriate written
notice of revocation at the office or agency where application was made,
revoke any application for redemption not honored and withdraw any Share
certificates on deposit. The redemption price of Shares for which redemption
applications have not been revoked shall be based on the net asset value of
such Shares next determined as set forth in Section 7.1 after the termination
of such suspension, and payment shall be made within seven (7) days after the
date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract
of purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for
the Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trustees, in their sole
discretion, may cause the Trust to redeem all of the Shares of one or more
Series or Class thereof held by any Shareholder if the value of such Shares
held by such Shareholder is less than the minimum amount established from time
to time by the Trustees.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated Investment
Company; Disclosure of Holding. (a) If the Trustees shall, at any time and in
good faith, be of the opinion that direct or indirect ownership of Shares or
other securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify the Trust or any Series of the Trust as a
regulated investment company under the Internal Revenue Code of 1986, then the
Trustees shall have the power by lot or other means deemed equitable by them
(i) to call for redemption by any such Person a number, or principal amount,
of Shares or other securities of the Trust or any Series of the Trust
sufficient to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust or any Series of the Trust into conformity with
the requirements for such qualification and (ii) to refuse to transfer or
issue Shares or other securities of the Trust or any Series of the Trust to
any Person whose acquisition of the Shares or other securities of the Trust or
any Series of the Trust in question would result in such disqualification. The
redemption shall be effected at the redemption price and in the manner
provided in Section 6.1.
(b) The holders of Shares or other securities of the Trust or any Series of
the Trust shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of Shares or
other securities of the Trust or any Series of the Trust as the Trustees
deem necessary to comply with
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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
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nature of liabilities which shall be deemed appropriate, as incurred by or
allocated to the Trust or any Series or Class of the Trust. The resulting
amount which shall represent the total net assets of the Trust or Series or
Class thereof shall be divided by the number of Shares of the Trust or Series
or Class thereof outstanding at the time and the quotient so obtained shall be
deemed to be the net asset value of the Shares of the Trust or Series or Class
thereof. The net asset value of the Shares shall be determined at least once
on each business day, as of the close of regular trading on the New York Stock
Exchange or as of such other time or times as the Trustees shall determine.
The power and duty to make the daily calculations may be delegated by the
Trustees to the Investment Adviser, the Administrator, the Custodian, the
Transfer Agent or such other Person as the Trustees by resolution may
determine. The Trustees may suspend the daily determination of net asset value
to the extent permitted by the 1940 Act. It shall not be a violation of any
provision of this Declaration if Shares are sold, redeemed or repurchased by
the Trust at a price other than one based on net asset value if the net asset
value is affected by one or more errors inadvertently made in the pricing of
portfolio securities or in accruing income, expenses or liabilities.
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
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books, the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, additional amounts sufficient to enable the Trust or a
Series or Class thereof to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value; Reduction
of Outstanding Shares. Subject to Section 5.11 hereof, the net income of the
Series and Classes thereof of the Trust shall be determined in such manner as
the Trustees shall provide by resolution. Expenses of the Trust or of a Series
or Class thereof, including the advisory or management fee, shall be accrued
each day. Each Class shall bear only expenses relating to its Shares and an
allocable share of Series expenses in accordance with such policies as may be
established by the Trustees from time to time and as are not inconsistent with
the provisions of this Declaration or of any applicable document filed by the
Trust with the Commission or of the Internal Revenue Code of 1986, as amended.
Such net income may be determined by or under the direction of the Trustees as
of the close of regular trading on the New York Stock Exchange on each day on
which such market is open or as of such other time or times as the Trustees
shall determine, and, except as provided herein, all the net income of any
Series or Class, as so determined, may be declared as a dividend on the
Outstanding Shares of such Series or Class. If, for any reason, the net income
of any Series or Class determined at any time is a negative amount, or for any
other reason, the Trustees shall have the power with respect to such Series or
Class (i) to offset each Shareholder's pro rata share of such negative amount
from the accrued dividend account of such Shareholder, or (ii) to reduce the
number of Outstanding Shares of such Series or Class by reducing the number of
Shares in the account of such Shareholder by that number of full and
fractional Shares which represents the amount of such excess negative net
income, or (iii) to cause to be recorded on the books of the Trust an asset
account in the amount of such negative net income, which account may be
reduced by the amount, provided that the same shall thereupon become the
property of the Trust with respect to such Series or Class and shall not be
paid to any Shareholder, of dividends declared thereafter upon the Outstanding
Shares of such Series or Class on the day such negative net income is
experienced, until such asset account is reduced to zero. The Trustees shall
have full discretion to determine whether any cash or property received shall
be treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made
in good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in
the light of the particular circumstances, how much if any of the value
thereof shall be treated as income, the balance, if any, to be treated as
principal.
Section 7.4. Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VII, but subject to Section 5.11 hereof,
the Trustees may prescribe, in their absolute discretion, such other bases and
times for determining the per Share net asset value of the Shares of the Trust
or a Series or Class thereof or net income of the Trust or a Series or Class
thereof, or the declaration and payment of dividends and distributions as they
may deem necessary or desirable. Without limiting the generality of the
foregoing, the Trustees may
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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,
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exchange, transfer or other disposition of all or substantially all
the Trust Property or Trust Property allocated or belonging to such
Series or Class that requires Shareholder approval in accordance
with Section 8.4 hereof shall receive the approval so required.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection,
the Trustees may distribute the remaining Trust Property or the
remaining property of the terminated Series or Class, in cash or in
kind or partly each, among the Shareholders of the Trust or the
Series or Class according to their respective rights.
(b) After termination of the Trust, Series or Class and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust and file with the Office of the
Secretary of The Commonwealth of Massachusetts an instrument in writing
setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties with
respect to the Trust or the terminated Series or Class, and the rights
and interests of all Shareholders of the Trust or the terminated Series
or Class shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended by a
vote of the holders of a majority of the Shares outstanding and entitled to
vote or by any instrument in writing, without a meeting, signed by a majority
of the Trustees and consented to by the holders of a majority of the Shares
outstanding and entitled to vote.
(b) This Declaration may be amended by a vote of a majority of Trustees,
without approval or consent of the Shareholders, except that no amendment
can be made by the Trustees to impair any voting or other rights of
shareholders prescribed by Federal or state law. Without limiting the
foregoing, the Trustees may amend this Declaration without the approval
or consent of Shareholders (i) to change the name of the Trust or any
Series, (ii) to add to their duties or obligations or surrender any
rights or powers granted to them herein; (iii) to cure any ambiguity, to
correct or supplement any provision herein which may be inconsistent with
any other provision herein or to make any other provisions with respect
to matters or questions arising under this Declaration which will not be
inconsistent with the provisions of this Declaration; and (iv) to
eliminate or modify any provision of this Declaration which (a)
incorporates, memorializes or sets forth an existing requirement imposed
by or under any Federal or state statute or any rule, 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
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requirements of applicable Federal or state laws or regulations or the
requirements of the regulated investment company provisions of the
Internal Revenue Code of 1986, as amended, or if requested or required to
do so by any Federal agency or by a state Blue Sky commissioner or
similar official, but the Trustees shall not be liable for failing so to
do.
(d) Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.
(e) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Trustees or by the
Shareholders as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of
such amendment when lodged among the records of the Trust.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any Series
may merge or consolidate into any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
the Trust Property or Trust Property allocated or belonging to such Series,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
the purpose by the affirmative vote of the holders of two-thirds of the Shares
of the Trust or such Series outstanding and entitled to vote and present in
person or by proxy at a meeting of Shareholders, or by an instrument or
instruments in writing without a meeting, consented to by the holders of
two-thirds of the Shares of the Trust or such Series; provided, however, that,
if such merger, consolidation, sale, lease or exchange is recommended by the
Trustees, the vote or written consent of the holders of a majority of the
Outstanding Shares of the Trust or such Series entitled to vote shall be
sufficient authorization; and any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished under and
pursuant to Massachusetts law.
Section 8.5. Incorporation. The Trustees may cause to be organized or assist
in organizing a corporation or corporations under the laws of any jurisdiction
or any other trust, partnership, association or other organization to take
over all or any portion of the Trust Property or the Trust Property allocated
or belonging to such Series or to carry on any business in which the Trust
shall directly or indirectly have any interest, and to sell, convey and
transfer all or any portion of the Trust Property or the Trust Property
allocated or belonging to such Series to any such corporation, trust,
association or organization in exchange for the shares or securities thereof
or otherwise, and to lend money to, subscribe for the shares or securities of,
and enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust,
association or organization in which the Trust or such Series holds or is
about to acquire shares or any other interest. The Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law, as provided 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
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<PAGE>
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring all or a portion of the Trust Property to
such organization or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of each
Series a written financial report of the transactions of the Trust and Series
thereof, including financial statements which shall at least annually be
certified by independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Execution and Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such
amendment, such amendment shall be effective upon its execution. A restated
Declaration, integrating into a single instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from time
to time by a majority of the Trustees and filed with the Secretary of The
Commonwealth of Massachusetts. A restated Declaration shall, upon execution,
be conclusive evidence of all amendments contained therein and may thereafter
be referred to in lieu of the original Declaration and the various amendments
thereto.
Section 10.2. Governing Law. This Declaration is executed by the Trustees and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
Section 10.3. Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying (a) the number or identity of Trustees or Shareholders,
(b) the due authorization of the execution of any instrument or writing, (c)
the form of any vote passed at a meeting of Trustees or Shareholders, (d) the
fact that the number of
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Trustees or Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (e) the form of any
By-laws adopted by or the identity of any officers elected by the Trustees, or
(f) the existence of any fact or 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 to execute here]
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<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY, MASSACHUSETTS
, 1996
Then personally appeared the above-named persons, Edward J. Boudreau, Jr.,
Dennis S. Aronowitz, Richard P. Chapman, Jr., William J. Cosgrove, Gail D.
Fosler, Anne C. Hodsdon, Richard S. Scipione, Edward J. Spellman, Douglas M.
Costle, Leland O. Erdahl, Richard A. Farrell, John A. Moore, William F.
Glavin, Patti McGill Peterson and John W. Pratt, who acknowledged the
foregoing instrument to be his free act and deed.
Before me,
------------------------------------------
Notary Public
My commission expires:
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<PAGE>
EXHIBIT B
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 1st
day of July, 1996, between [Name of Trust] (the "Existing Trust"), a
Massachusetts business trust, 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 Existing Trust, 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 Existing Trust, 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 Existing Trust, the Fund, the
Successor Trust and the Successor Fund to effect the transactions contemplated
hereunder (the "Reorganization") shall be subject to the satisfaction of each
of the following conditions:
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<PAGE>
(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.
(d) The Successor Trust, on behalf of the Successor Fund, shall have
entered into an Investment Management Contract with John Hancock
Advisers,
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<PAGE>
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 Trustees of the Existing Trust 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
Trustees of the Existing Trust and the Trustees of the Successor Trust,
notwithstanding approval thereof by the shareholders of the Fund, provided
that no amendment shall have a material adverse effect on the interests of the
shareholders of the Fund.
5. Termination. The Board of Trustees of the Existing Trust 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,
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<PAGE>
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. Copies of
the Declaration of Trust of the Existing Trust and the Declaration of Trust of
the Successor Trust, as each may be amended from time to time, are 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 Existing Trust on behalf of the Fund
and the Successor Trust on behalf of the Successor Fund pursuant to this
Agreement shall be limited in all cases to the Existing Trust on behalf of the
Fund and the Successor Trust on behalf of the Successor Fund and their
respective assets. None of the other series of the Existing Trust or the
Successor Trust shall be liable for any obligations assumed by the Fund or the
Successor Fund hereunder. No party named herein shall seek satisfaction of any
obligation hereunder from the shareholders or any shareholder of the Existing
Trust, the Fund, 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 the Trustees of the Existing 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 EXISTING TRUST]
Attest: _____________________ By: _______________________
Secretary President
[NAME OF SUCCESSOR TRUST]
Attest: _____________________ By: _______________________
Secretary President
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<PAGE>
EXHIBIT C
[NAME OF FUND]
(a series of Freedom Investment Trust)
101 Huntington Avenue
Boston, Massachusetts 02199
July 1, 1996
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
INVESTMENT MANAGEMENT CONTRACT
Ladies and Gentlemen:
Freedom Investment Trust (the "Trust"), of which [Name of Fund] (the "Fund") is
a series, has been organized as a business trust under the laws of The
Commonwealth of Massachusetts to engage in the business of an investment
company. The Trust's shares of beneficial interest, no par value, may be divided
into series, each series representing the entire undivided interest in a
separate portfolio of assets. This Agreement relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected John Hancock
Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as follows:
1. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Master Trust Agreement as Amended and Restated, dated September 10,
1991, as amended from time to time (the "Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of this Agreement;
(d) Commitments, limitations and undertakings made by the Fund to state
securities or "blue sky" authorities for the purpose of qualifying
shares of the Fund for sale in such states; and
(e) The Trust's Code of Ethics.
The Trust will furnish to the Adviser from time to time copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any.
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<PAGE>
2. INVESTMENT AND MANAGEMENT SERVICES. The Adviser will use its best efforts
to provide to the Fund continuing and suitable investment programs with
respect to investments, consistent with the investment objectives, policies
and restrictions of the Fund. In the performance of the Adviser's duties
hereunder, subject always (x) to the provisions contained in the documents
delivered to the Adviser pursuant to Section 1, as each of the same may
from time to time be amended or supplemented, and (y) to the limitations
set forth in the Fund's then-current Prospectus and Statement of Additional
Information included in the registration statement of the Trust as in
effect from time to time under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended (the "1940 Act"), the
Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent with the
investment objectives, policies and restrictions of the Fund, with
respect to the purchase, holding and disposition of portfolio
securities, alone or in consultation with any subadviser or
subadvisers appointed pursuant to this Agreement and subject to the
provisions of any sub-investment management contract respecting the
responsibilities of such subadviser or subadvisers;
(b) advise the Fund in connection with policy decisions to be made by the
Trustees or any committee thereof with respect to the Fund's
investments and, as requested, furnish the Fund with research,
economic and statistical data in connection with the Fund's
investments and investment policies;
(c) provide administration of the day-to-day investment operations of the
Fund;
(d) submit such reports relating to the valuation of the Fund's securities
as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's investments
with issuers, investment banking firms, securities brokers or dealers
and other institutions or investors;
(f) consistent with the provisions of Section 7 of this Agreement, place
orders for the purchase, sale or exchange of portfolio securities with
brokers or dealers selected by the Adviser, PROVIDED that in
connection with the placing of such orders and the selection of such
brokers or dealers the Adviser shall seek to obtain execution and
pricing within the policy guidelines determined by the Trustees and
set forth in the Prospectus and Statement of Additional Information of
the Fund as in effect from time to time;
(g) provide office space and office equipment and supplies, the use of
accounting equipment when required, and necessary executive, clerical
and secretarial personnel for the administration of the affairs of the
Fund;
(h) from time to time or at any time requested by the Trustees, make
reports to the Fund of the Adviser's performance of the foregoing
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<PAGE>
services and furnish advice and recommendations with respect to other
aspects of the business and affairs of the Fund;
(i) maintain all books and records with respect to the Fund's securities
transactions required by the 1940 Act, including subparagraphs (b)(5),
(6), (9) and (10) and paragraph (f) of Rule 31a-1 thereunder (other
than those records being maintained by the Fund's custodian or
transfer agent) and preserve such records for the periods prescribed
therefor by Rule 31a-2 of the 1940 Act (the Adviser agrees that such
records are the property of the Fund and will be surrendered to the
Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as the
Adviser may deem necessary or useful in the discharge of the Adviser's
duties hereunder;
(k) oversee, and use the Adviser's best efforts to assure the performance
of the activities and services of the custodian, transfer agent or
other similar agents retained by the Fund;
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash
for the account of the Fund; and
(m) appoint and employ one or more sub-advisors satisfactory to the Fund
under sub-investment management agreements.
3. EXPENSES PAID BY THE ADVISER. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of the
Trust;
(b) the expenses of office rent, telephone and other utilities, office
furniture, equipment, supplies and other expenses of the Fund; and
(c) any other expenses incurred by the Adviser in connection with the
performance of its duties hereunder.
4. EXPENSES OF THE FUND NOT PAID BY THE ADVISER. The Adviser will not be
required to pay any expenses which this Agreement does not expressly make
payable by it. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 3, the Adviser will not
be required to pay under this Agreement:
(a) any and all expenses, taxes and governmental fees incurred by the
Trust or the Fund prior to the effective date of this Agreement;
(b) without limiting the generality of the foregoing clause (a), the
expenses of organizing the Trust and the Fund (including without
limitation, legal, accounting and auditing fees and expenses incurred
in connection with the matters referred to in this clause (b)), of
initially registering shares of the Trust under the Securities Act of
1933, as amended, and of qualifying the shares for sale under state
securities laws for the initial offering and sale of shares;
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<PAGE>
(c) the compensation and expenses of Trustees who are not interested
persons (as used in this Agreement, such term shall have the meaning
specified in the 1940 Act) of the Adviser and of independent advisers,
independent contractors, consultants, managers and other unaffiliated
agents employed by the Fund other than through the Adviser;
(d) legal, accounting, financial management, tax and auditing fees and
expenses of the Fund (including an allocable portion of the cost of
its employees rendering such services to the Fund);
(e) the fees and disbursements of custodians and depositories of the
Fund's assets, transfer agents, disbursing agents, plan agents and
registrars;
(f) taxes and governmental fees assessed against the Fund's assets and
payable by the Fund;
(g) the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Fund;
(h) brokers' commissions and underwriting fees;
(i) the expense of periodic calculations of the net asset value of the
shares of the Fund; and
(j) insurance premiums on fidelity, errors and omissions and other
coverages.
5. COMPENSATION OF THE ADVISER. [FOR TAX-EXEMPT FUND: For all services to be
rendered, facilities furnished and expenses paid or assumed by the Adviser
as herein provided, the Adviser shall be entitled to a fee, paid monthly in
arrears, at an annual rate equal to (i) 0.60% of the average daily net
asset value of the Fund up to $250,000,000 of average daily net assets,
(ii) 0.50% of the next $500,000,000 of the average daily net asset value of
the Fund and (iii) 0.45% of the average daily net asset value of the Fund
in excess of $750,000,000.]
[FOR U.S. GOVERNMENT FUND: For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as herein provided,
the Adviser shall be entitled to a fee, paid monthly in arrears, at an
annual rate equal to (i) 0.50% of the first $500,000,000 of the average
daily net asset value of the Fund and (ii) 0.45% of the average daily net
asset value of the Fund in excess of $500,000,000.]
The "average daily net assets" of the Fund shall be determined on the basis
set forth in the Fund's Prospectus or otherwise consistent with the 1940
Act and the regulations promulgated thereunder. The Adviser will receive a
pro rata portion of such monthly fee for any periods in which the Adviser
serves as investment adviser to the Fund for less than a full month. On any
day that the net asset value calculation is suspended as specified in the
Fund's Prospectus, the net asset value for purposes of calculating the
advisory fee shall be calculated as of the date last determined.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any limitation
imposed by the law of a state where the Fund has registered its shares of
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<PAGE>
beneficial interest, the fee payable to the Adviser will be reduced to the
extent required by law, and the Adviser will make any additional
arrangements that the Adviser is required by law to make.
In addition, the Adviser may agree not to impose all or a portion of its
fee (in advance of the time its fee would otherwise accrue) and/or
undertake to make any other payments or arrangements necessary to limit the
Fund's expenses to any level the Adviser may specify. Any fee reduction or
undertaking shall constitute a binding modification of this Agreement while
it is in effect but may be discontinued or modified prospectively by the
Adviser at any time.
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES. Nothing herein
contained shall prevent the Adviser or any affiliate or associate of the
Adviser from engaging in any other business or from acting as investment
adviser or investment manager for any other person or entity, whether or
not having investment policies or portfolios similar to the Fund's; and it
is specifically understood that officers, directors and employees of the
Adviser and those of its parent company, John Hancock Mutual Life Insurance
Company, or other affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or
not registered, to other investment advisory clients of the Adviser or of
its affiliates and to said affiliates themselves.
The Adviser shall have no obligation to acquire with respect to the Fund a
position in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, if, in the sole discretion of the Adviser, it is not
feasible or desirable to acquire a position in such investment on behalf of
the Fund. Nothing herein contained shall prevent the Adviser from
purchasing or recommending the purchase of a particular security for one or
more funds or clients while other funds or clients may be selling the same
security.
7. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or sales
of portfolio securities for the account of the Fund, neither the Adviser
nor any of its investment management subsidiaries, nor any of the Adviser's
or such investment management subsidiaries' directors, officers or
employees will act as principal or agent or receive any commission, except
as may be permitted by the 1940 Act and rules and regulations promulgated
thereunder. If any occasions shall arise in which the Adviser advises
persons concerning the shares of the Fund, the Adviser will act solely on
its own behalf and not in any way on behalf of the Fund. Nothing herein
contained shall limit or restrict the Adviser or any of its officers,
affiliates or employees from buying, selling or trading in any securities
for its or their own account or accounts.
8. NO PARTNERSHIP OR JOINT VENTURE. Neither the Trust, the Fund nor the
Adviser are partners of or joint venturers with each other and nothing
herein shall be construed so as to make them such partners or joint
venturers or impose any liability as such on any of them.
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<PAGE>
9. NAME OF THE TRUST AND THE FUND. The Trust and the Fund may use the name
"John Hancock" or any name or names derived from or similar to the names
"John Hancock Advisers, Inc." or "John Hancock Mutual Life Insurance
Company" only for so long as this Agreement remains in effect. At such time
as this Agreement shall no longer be in effect, the Trust and the Fund will
(to the extent that they lawfully can) cease to use such a name or any
other name indicating that the Fund is advised by or otherwise connected
with the Adviser. The Fund acknowledges that it has adopted the name ["Name
of Fund"] through permission of John Hancock Mutual Life Insurance Company,
a Massachusetts insurance company, and agrees that John Hancock Mutual Life
Insurance Company reserves to itself and any successor to its business the
right to grant the nonexclusive right to use the name "John Hancock" or any
similar name or names to any other corporation or entity, including but not
limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the
investment adviser.
10. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also employed by the Adviser, who may be
or become an employee of and paid by the Trust shall be deemed, when acting
within the scope of his employment by the Fund, to be acting in such
employment solely for the Trust and not as the Adviser's employee or agent.
11. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until June 30, 1998, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (a)
a majority of the Trustees who are not interested persons of the Adviser or
(other than as Board members) of the Fund, cast in person at a meeting
called for the purpose of voting on such approval, and (b) either (i) the
Trustees or (ii) a majority of the outstanding voting securities of the
Fund. This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the vote of a majority of the
outstanding voting securities of the Fund, by the Trustees or by the
Adviser. Termination of this Agreement shall not be deemed to terminate or
otherwise invalidate any provisions of any contract between the Adviser and
any other series of the Trust. This Agreement shall automatically terminate
in the event of its assignment. In interpreting the provisions of this
Section 11, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "assignment," "interested person" and
"voting security") shall be applied.
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no amendment, transfer,
assignment, sale, hypothecation or pledge of this Agreement shall be
C-6
<PAGE>
effective until approved by (a) the Trustees, including a majority of the
Trustees who are not interested persons of the Adviser or (other than as
Trustees) of the Fund, cast in person at a meeting called for the purpose
of voting on such approval, and (b) a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
13. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of The Commonwealth of Massachusetts.
14. SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any
other or others of them may be deemed invalid or unenforceable in whole or
in part.
15. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument. The name [Name of Fund] is a series designation of the
Trustees under the Trust's Declaration of Trust. The Declaration of Trust
has been filed with the Secretary of State of The Commonwealth of
Massachusetts. The obligations of the Fund are not personally binding upon,
nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Trust, but only upon the
Fund and its property. The Fund shall not be liable for the obligations of
any other series of the Trust and no other series shall be liable for the
Fund's obligations hereunder.
Yours very truly,
FREEDOM INVESTMENT TRUST
on behalf of [Name of Fund]
By:__________________________
Title:_______________________
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By:________________________
Title:_____________________
C-7
<PAGE>
EXHIBIT D
The Adviser provides investment advisory services to the following John
Hancock funds with investment objectives substantially identical to that of
the Tax-Exempt Fund:
ASSET SIZE
(AS OF 4/22/96)
NAME OF FUND (IN MILLIONS) ADVISORY FEE
- -------------------------- ---------------- --------------------------
John Hancock Tax-Exempt $476.0 0.55% of the first
Income Fund $500,000,000 of the Fund's
average daily net assets;
0.50% of the next
$500,000,000; and 0.45% in
excess of $1,000,000,000.
John Hancock Tax-Free Bond $181.9 0.55% of the Fund's
Fund average daily net assets.
The Adviser provides investment advisory services to the following John
Hancock fund with investment objectives substantially identical to that of the
U.S. Government Fund:
ASSET SIZE
(AS OF 4/22/96)
NAME OF FUND (IN MILLIONS) ADVISORY FEE
- -------------------------- ---------------- --------------------------
John Hancock U.S. $466.2 0.65% of the first
Government Fund $200,000,000 of the Fund's
average daily net assets;
0.625% of the next
$300,000,000; and .60% in
excess of $500,000,000.
D-1
<PAGE>
JOHN HANCOCK GROWTH 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)
<PAGE>
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, 3, 4, 5 AND 6 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.
(1) To elect fifteen Trustees to hold office until their respective
successors have been duly elected and qualified.
Dennis S. Aronowitz William F. Glavin
Edward J. Boudreau, Jr. Anne C. Hodsdon
Richard P. Chapman, Jr. Dr. John A. Moore
William J. Cosgrove Patti McGill Peterson
Douglas M. Costle John W. Pratt
Leland O. Erdahl Richard S. Scipione
Richard A. Farrell Edward J. Spellman
Gail D. Fosler
---
|___| 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(S) BY WRITING THE NOMINEE(S)
NAME(S) ON THE LINE BELOW.
ONLY FOR THE U.S. GOVERNMENT AND TAX-EXEMPT FUNDS
(2) To approve an Amended and Restated Declaration of Trust for the Fund
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
FOR ALL FUNDS
(3) To approve an Agreement and Plan of Reorganization for the Fund which
will reorganize the Fund as specified in Proposal 3 of the Proxy
Statement.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
ONLY FOR THE U.S. GOVERNMENT AND TAX-EXEMPT FUNDS
(4) To approve a new investment management contract between John Hancock
Advisers, Inc. and the Fund.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
ONLY FOR THE U.S. GOVERNMENT FUND
(5) To eliminate the Fund's fundamental investment restriction on
investing in a single class of securities of an issuer.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
ONLY FOR THE U.S. GOVERNMENT FUND
(6) To redesignate as nonfundamental the Fund's fundamental investment
restriction on investing in other investment companies.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
<PAGE>
