File No. 333-04119
As filed with the Securities and Exchange Commission on July 3, 1996.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /____/
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Pre-Effective Amendment No. __ /____/
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Post-Effective Amendment No. 1 /_X__/
(Check appropriate box or boxes)
FREEDOM INVESTMENT TRUST II
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(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199-7603
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(Address of principal executive office) Zip Code
(617) 375-1700
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(Registrant's Telephone Number, including Area Code)
With a copy to:
Susan S. Newton, Esq. Jeffrey N. Carp, Esq.
John Hancock Advisers, Inc. Hale and Dorr
101 Huntington Avenue 60 State Street
Boston, MA 02199 Boston, MA 02109
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(Name and address of agent for service)
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended. This Registration Statement relates to shares previously registered
on Form N-1A (File Nos. 33-4559 and 811-4630).
It is proposed that this filing will become effective:
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/_X_/ Immediately upon filing pursuant to Rule 485(b)
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/___/ On [date] pursant to Rule 485(b)
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/___/ 60 days after filing pursuant to Rule 485(a)(1)
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/___/ On [date] pursuant to Rule 485(a)(1)
<PAGE>
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
(a series of Freedom Investment Trust II)
CROSS-REFERENCE SHEET
Items Required by Form N-14
PART A
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<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C>
1. Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside Front STATEMENT; FRONT COVER PAGE OF
Cover Page of Prospectus PROSPECTUS
2. Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3. Fee Table, Synopsis SUMMARY; RISK FACTORS AND SPECIAL
Information and Risk Factors CONSIDERATIONS
4. Information About the SUMMARY; INFORMATION CONCERNING THE
Transaction MEETING; PROPOSAL TO APPROVE THE
AGREEMENT AND PLAN OF REORGANIZATION; CAPITALIZATION
5. Information About the PROSPECTUS COVER PAGE: INTRODUCTION;
Registrant SUMMARY; BUSINESS OF SPECIAL
OPPORTUNITIES FUND
6. Information About the PROSPECTUS COVER PAGE: INTRODUCTION;
Company Being Acquired SUMMARY; BUSINESS OF GOLD &
GOVERNMENT FUND
7. Voting Information PROSPECTUS COVER PAGE; NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS;
SUMMARY; INFORMATION CONCERNING THE MEETING
8. Interest of Certain Persons NONE
and Experts
9. Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters
</TABLE>
<PAGE>
PART B
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<TABLE>
<CAPTION>
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
<S> <C> <C>
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. Additional Information ADDITIONAL INFORMATION ABOUT
About the Registrant SPECIAL OPPORTUNITIES FUND
13. Additional Information About ADDITIONAL INFORMATION ABOUT
the Company Being Acquired GOLD & GOVERNMENT FUND
14. Financial Statements ADDITIONAL INFORMATION ABOUT SPECIAL
OPPORTUNITIES FUND; ADDITIONAL
INFORMATION ABOUT GOLD & GOVERNMENT
FUND; PRO FORMA COMBINED FINANCIAL
STATEMENTS
<CAPTION>
PART C
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Item No. Item Caption
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<S> <C> <C>
15. Indemnification INDEMNIFICATION
16. Exhibits EXHIBITS
17. Undertakings UNDERTAKINGS
</TABLE>
-2-
<PAGE>
STATEMENT OF INCORPORATION BY REFERENCE
The Registrant hereby incorporates by reference into Part A of
post-effective amendment no. 1 to the registration statement on Form N-14 (the
"Amendment") the following document from the Registration Statement on Form N-14
(File no. 33-04119) (the "Registration Statement"):
The Form of Proxy.
The Registrant hereby incorporates by reference into Part B of the
Amendment the following documents from the Registration Statement:
The Statement of Additional Information of John Hancock Gold & Government Fund
dated March 1, 1996;
The Statement of Additional Information of John Hancock Special Opportunities
Fund dated March 1, 1996;
The audited financial statements of John Hancock Gold & Government Fund dated
October 31, 1995 and the auditors' report; and
The audited financial statements of John Hancock Special Opportunities Fund
dated October 31, 1995 and the auditors' report.
<PAGE>
JOHN HANCOCK GOLD & GOVERNMENT FUND
101 Huntington Avenue
Boston, Massachusetts 02199
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 1996
Notice is hereby given that a Special Meeting of Shareholders (the "Meeting")
of John Hancock Gold & Government Fund ("Gold & Government Fund"), a series
of Freedom Investment Trust, a Massachusetts business trust ("Freedom
Trust"), will be held at 101 Huntington Avenue, Boston, Massachusetts 02116
on Wednesday, August 14, 1996 at 9:00 a.m., Boston time, and at any
adjournment thereof, for the following purposes:
1. To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization between Freedom Trust, on behalf of Gold & Government Fund,
and Freedom Investment Trust II ("Freedom Trust II"), on behalf of John
Hancock Special Opportunities Fund ("Special Opportunities Fund"),
providing for Special Opportunities Fund's acquisition of all of Gold &
Government Fund's assets in exchange solely for the assumption of Gold &
Government Fund's liabilities by Special Opportunities Fund and the
issuance of Class A and Class B shares of Special Opportunities Fund to
Gold & Government Fund for distribution to its Class A and Class B
shareholders; and
2. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
The Freedom Trust Board of Trustees has fixed the close of business on
June 17, 1996 as the record date for determination of shareholders who are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
If you cannot attend the Meeting in person, please complete, date and sign
the enclosed proxy and return it to John Hancock Investor Services
Corporation, 101 Huntington Avenue, Boston, Massachusetts 02199 in the
enclosed envelope. It is important that you exercise your right to vote. THE
ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF JOHN HANCOCK
GOLD & GOVERNMENT FUND.
By order of the Board of Trustees,
SUSAN S. NEWTON, Secretary
Boston, Massachusetts
June 28, 1996
040PX 6/96
<PAGE>
JOHN HANCOCK GOLD & GOVERNMENT FUND
a series of Freedom Investment Trust
PROXY STATEMENT
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
a series of Freedom Investment Trust II
PROSPECTUS
This Proxy Statement and Prospectus sets forth the information you should
know before voting on the proposed reorganization of John Hancock Gold &
Government Fund ("Gold & Government Fund") into John Hancock Special
Opportunities Fund ("Special Opportunities Fund"). Please read it carefully
and retain it for future reference. Gold & Government Fund is a series of
Freedom Investment Trust, a Massachusetts business trust ("Freedom Trust")
and Special Opportunities Fund is a series of Freedom Investment Trust II
("Freedom Trust II"), a Massachusetts business trust.
This Proxy Statement and Prospectus includes the Prospectus of Special
Opportunities Fund for Class A and Class B shares, dated March 1, 1996, as
supplemented April 3, 1996. Information about Gold & Government Fund's Class
A and Class B shares is incorporated herein by reference to the Gold &
Government Fund Prospectus which is available at no charge upon request to
Special Opportunities Fund at 1-800-225-5291.
A Statement of Additional Information dated June 28, 1996 relating to this
Proxy Statement and Prospectus, and containing additional information about
each of Special Opportunities Fund and Gold & Government Fund, including
historical financial statements, is on file with the Securities and Exchange
Commission ("SEC"). It is available, upon telephone request at no charge at
the toll-free number stated above, from Special Opportunities Fund. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
- ------------------------
(continued on next page)
Shares of Special Opportunities Fund are not deposits or obligations of, or
guaranteed or endorsed by, any bank or other depository institution, and the
shares of Special Opportunities Fund are not federally insured by The Federal
Deposit Insurance Corporation, The Federal Reserve Board or any other
government agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
This Proxy Statement and Prospectus relates to Class A and Class B shares of
beneficial interest (collectively, the "Special Opportunities Fund Shares")
of Special Opportunities Fund which will be issued in exchange for all of
Gold & Government Fund's assets. In exchange for these assets, Special
Opportunities Fund will assume all liabilities of Gold & Government Fund.
The Class A Special Opportunities Fund Shares issued to Gold & Government
Fund for distribution to Gold & Government Fund's Class A shareholders will
have an aggregate net asset value equal to that of Gold & Government Fund's
Class A shares. The Class B Special Opportunities Fund Class B Shares issued
to Gold & Government Fund for distribution to Gold & Government Fund's Class
B shareholders will have an aggregate net asset value equal to that of Gold &
Government Fund's Class B shares. The asset values of Gold & Government Fund
and Special Opportunities Fund will be determined at the close of business
(4:00 p.m. Boston time) on the Closing Date (as defined below) for purposes
of the proposed reorganization.
Following the receipt of Special Opportunities Fund Shares (1) Gold &
Government Fund will be liquidated, (2) the Special Opportunities Fund Shares
will be distributed to Gold & Government Fund's shareholders pro rata in
exchange for their shares of Gold & Government Fund and (3) Gold & Government
Fund will be terminated as a series of Freedom Trust. Consequently, Class A
Gold & Government Fund shareholders will become Class A shareholders of
Special Opportunities Fund, and Class B Gold & Government Fund shareholders
will become Class B shareholders of Special Opportunities Fund. These
transactions are collectively referred to in this Proxy Statement and
Prospectus as the "Reorganization." The Reorganization is being structured as
a tax-free reorganization so that, in the opinion of tax counsel, no gain or
loss will be recognized by Special Opportunities Fund, Gold & Government Fund
or the shareholders of Gold & Government Fund. The terms and conditions of
this transaction are more fully described in this Proxy Statement and
Prospectus, and in the Agreement and Plan of Reorganization that is attached
as EXHIBIT A.
Special Opportunities Fund is a non-diversified series of Freedom Trust II,
an open-end management investment company organized as a Massachusetts
business trust in 1986. Special Opportunities Fund's investment objective is
long-term capital appreciation. Special Opportunities Fund seeks to achieve
its investment objective by varying the relative weighting of its portfolio
securities among several economic sectors based upon both macroeconomic
factors and the outlook for each particular sector. The Fund may focus on as
many as five of the following economic sectors at any one time: automotive
and housing, consumer goods and services, defense and aerospace, energy,
financial services, health care, heavy industry, leisure and entertainment,
machinery and equipment, precious metals, retailing, technology,
transportation, utilities, foreign and environmental.
The principal place of business of both Special Opportunities Fund and Gold &
Government Fund is at 101 Huntington Avenue, Boston, Massachusetts 02199.
Their toll-free telephone number is 1-800-225-5291.
The date of this Proxy Statement and Prospectus is June 28, 1996.
<PAGE>
TABLE OF CONTENTS
Page
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INTRODUCTION 1
SUMMARY 2
RISK FACTORS AND SPECIAL CONSIDERATIONS 19
INFORMATION CONCERNING THE MEETING 19
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF
REORGANIZATION 21
CAPITALIZATION 27
COMPARATIVE PERFORMANCE INFORMATION 29
BUSINESS OF GOLD & GOVERNMENT FUND 32
General 32
Investment Objective and Policies 32
Portfolio Management 32
Trustees 32
Investment Adviser and Distributor 32
Expenses 32
Custodian and Transfer Agent 32
Gold & Government Fund Shares 32
Purchase of Gold & Government Fund Shares 32
Redemption of Gold & Government Fund Shares 33
Dividends, Distributions and Taxes 33
BUSINESS OF SPECIAL OPPORTUNITIES FUND 33
General 33
Investment Objective and Policies 33
Portfolio Management 33
Trustees 33
Investment Adviser and Distributor 33
Expenses 33
Custodian and Transfer Agent 33
Special Opportunities Fund Shares 34
Purchase of Special Opportunities Fund Shares 34
Redemption of Special Opportunities Fund Shares 34
Dividends, Distributions and Taxes 34
EXPERTS 34
AVAILABLE INFORMATION 34
EXHIBIT A A-1
EXHIBIT B B-1
i
<PAGE>
EXHIBITS
A--Agreement and Plan of Reorganization by and between Freedom Investment
Trust, on behalf of John Hancock Gold & Government Fund, and Freedom
Investment Trust II, on behalf of John Hancock Special Opportunities Fund
(attached to this document).
B--Prospectus of John Hancock Special Opportunities Fund for Class A and
Class B shares, dated March 1, 1996, as supplemented April 3, 1996
(attached to this document).
C--Annual Report to Shareholders of Special Opportunities Fund, dated
October 31, 1995 (included with this document).
ii
<PAGE>
PROXY STATEMENT AND PROSPECTUS
FOR SPECIAL MEETING OF SHAREHOLDERS OF
JOHN HANCOCK GOLD & GOVERNMENT FUND
TO BE HELD ON AUGUST 14, 1996
INTRODUCTION
This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of Freedom Trust on behalf
of Gold & Government Fund. The proxies will be voted at the Special Meeting
of Shareholders (the "Meeting") of Gold & Government Fund to be held at 101
Huntington Avenue, Boston, Massachusetts 02199 on Wednesday, August 14, 1996
at 9:00 a.m., Boston time, and at any adjournment or adjournments of the
Meeting. The purposes of the Meeting are set forth in the accompanying Notice
of Special Meeting of Shareholders.
This Proxy Statement and Prospectus is accompanied by and incorporates by
reference the prospectus of John Hancock Special Opportunities Fund ("Special
Opportunities Fund") for Class A and Class B shares, dated March 1, 1996, as
supplemented April 3, 1996 (the "Special Opportunities Fund Prospectus"). The
Annual Report to Shareholders of Special Opportunities Fund, dated October
31, 1995, accompanies this Proxy Statement and Prospectus. These materials
are being mailed to shareholders of Gold & Government Fund on or after June
28, 1996. Information about Gold & Government Fund is incorporated by
reference to the Gold & Government Fund prospectus dated March 1, 1996 (the
"Gold & Government Prospectus") which is available upon request. Gold &
Government Fund's Annual Report to Shareholders was previously sent to
shareholders on or about December 30, 1995.
As of May 31, 1996, 1,183,875 Class A and 934,996 Class B shares of
beneficial interest of Gold & Government Fund were outstanding. Shareholders
of record on June 17, 1996 (the "Record Date") are entitled to notice of and
to vote at the Meeting.
All properly executed proxies received by management prior to the Meeting,
unless revoked, will be voted at the Meeting according to the instructions on
the proxies. If no instructions are given, shares of Gold & Government Fund
represented by proxies will be voted FOR the proposal (the "Proposal") to
approve the Agreement and Plan of Reorganization (the "Agreement") between
Freedom Trust, on behalf of Gold & Government Fund, and Freedom Trust II, on
behalf of Special Opportunities Fund.
The Board of Trustees knows of no business to be presented for consideration
at the Meeting other than that mentioned in the immediately preceding
paragraph. If other business is properly brought before the Meeting, proxies
will be voted according to the best judgment of the persons named as proxies.
In addition to the mailing of these proxy materials, proxies may be solicited
in person or by telephone by Trustees, officers and employees of Gold &
1
<PAGE>
Government Fund; by personnel of Gold & Government Fund's investment adviser,
John Hancock Advisers, Inc., and its transfer agent, John Hancock Investor
Services Corporation ("Investor Services"); or by broker-dealer firms.
Investor Services has agreed to provide proxy solicitation services to Gold &
Government Fund at a cost of approximately $5,000. Investor Services is
providing this proxy solicitation service to the Fund at a lower cost than
would be charged by a third party solicitation firm. Gold & Government Fund
and Special Opportunities Fund (each, a "Fund" and collectively, the "Funds")
will each bear its own fees and expenses in connection with the
Reorganization discussed in this Proxy Statement and Prospectus.
The information concerning Gold & Government Fund and Special Opportunities
Fund in this Proxy Statement and Prospectus has been supplied by Freedom
Trust and Freedom Trust II, respectively.
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement and Prospectus. The summary is qualified by reference to the
more complete information contained in this Proxy Statement and Prospectus,
and in the Exhibits attached to or included with this document. Please read
this entire Proxy Statement and Prospectus carefully.
Reasons for the Proposed Reorganization
The Freedom Trust's Board of Trustees has determined that the proposed
Reorganization is in the best interests of Gold & Government Fund and its
shareholders. In making this determination, the Trustees considered several
relevant factors, including (1) the fact that the investment objectives and
policies of Gold & Government Fund and Special Opportunities Fund are
similar, (2) the fact that the Reorganization will result in improved
economies of scale and a corresponding decrease in the expenses currently
borne by Gold & Government Fund's shareholders and (3) the fact that
combining the Funds' assets into a single portfolio will enable Special
Opportunities Fund to achieve greater diversification than Gold & Government
Fund is now able to achieve. The Board of Trustees believes that the Special
Opportunities Fund Shares received in the Reorganization will provide
existing Gold & Government Fund shareholders with substantially the same
investment advantages that they currently enjoy at a comparable level of
risk. For a more detailed discussion of the reasons for the proposed
Reorganization, see "Proposal to Approve the Agreement and Plan of
Reorganization--Reasons For The Proposed Reorganization."
The Adviser provides investment advisory services to John Hancock Global
Resources Fund ("Global Resources Fund"), a series of John Hancock Series,
Inc., a Maryland corporation (the "Company"). The Company's Board of
Directors, including the Directors not affiliated with the Funds, has
approved the reorganization of Global Resources Fund into Special
Opportunities Fund (the "Global
2
<PAGE>
Resources Reorganization" and, together with the Reorganization, the
"Reorganizations"). On October 31, 1995, Global Resources Fund had net assets
of $28,726,170. The Reorganization of Gold & Government Fund described in
this Proxy Statement and Prospectus is not contingent in any way upon the
consummation of the Global Resources Reorganization. The Global Resources
Reorganization will not affect the net asset value of the Special
Opportunities Fund Shares or the number of those Shares to be received by the
shareholders of Gold & Government Fund in the Reorganization. Gold &
Government Fund and Global Resources Fund may be referred to collectively as,
the "Acquired Funds."
The Funds' Expenses
The Funds and their shareholders are subject to various fees and expenses.
The tables set forth below show the shareholder transaction and operating
expenses of Class A and Class B shares of the Funds. These expenses are based
on fees and expenses incurred during each Fund's most recently completed
fiscal year.
GOLD & GOVERNMENT FUND
Class A Class B
Shares Shares
------- ---------
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested
dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses*** 0.52% 0.52%
----- -------
Total Fund operating expenses 1.62% 2.32%
- ---------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed in the event of certain redemption transactions
within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will be
used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
3
<PAGE>
SPECIAL OPPORTUNITIES FUND
Class A Class B
Shares Shares
------- ---------
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested
dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses*** 0.49% 0.49%
----- -------
Total Fund operating expenses 1.59% 2.29%
- ----------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed in the event of certain redemption transactions
within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will
be used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
SPECIAL OPPORTUNITIES FUND (PRO FORMA)
(Consummation of Gold & Government Reorganization Only)
The table set forth below shows the pro forma operating expenses of Class A
and Class B shares of Special Opportunities Fund which assumes that
shareholders of Gold & Government Fund approved the Reorganization, that
shareholders of Global Resources Fund did not approve the Global Resources
Reorganization and that the Reorganization took place on October 31, 1995.
These expenses are based on fees and expenses incurred during Special
Opportunities Fund's and Gold & Government Fund's most recently completed
fiscal years.
Class A Class B
Shares Shares
------- ---------
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested
dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
4
<PAGE>
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses*** 0.48% 0.48%
----- -------
Total Fund operating expenses 1.58% 2.28%
- ------------------
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed in the event of certain redemption transactions
within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will
be used to cover distribution expenses
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
If the Reorganization is consummated, the actual total operating expenses of
Class A and Class B shares of Special Opportunities Fund may vary from the
pro forma operating expenses indicated above due to changes in the net asset
value of Gold & Government Fund or Special Opportunities Fund between October
31, 1995 and the Closing Date (defined below).
Example
The following example illustrates the expenses you would pay on a $1,000
investment under the existing fees for each of Gold & Government Fund and
Special Opportunities Fund and under the pro forma fees if the Reorganization
had occurred on October 31, 1995. The example assumes (1) a 5% annual return
and (2) redemption at the end of each time period.
Pro
Class A Class B Class A Class B Forma Pro
Gold & Gold & Special Special Class Forma
Government Government Opportunities Opportunities A Class B
Fund Fund Fund Fund Shares Shares
---------- ---------- ------------- ------------- ------ ------
1 year $ 66 $ 74 $ 65 $ 73 $ 65 $ 73
3 years 99 102 98 102 97 101
5 years 135 144 132 143 131 142
10 years 235 248 229 245 228 244
5
<PAGE>
Assuming there is no redemption at the end of each time period, the expenses
you would pay on the same investment would be as follows:
Class B Class B Pro
Gold & Special Forma
Government Opportunities Class B
Fund Fund Shares
-------- ----------- -------
1 year $ 24 $ 23 $ 23
3 years 72 72 71
5 years 124 123 122
10 years 248 245 244
The purpose of this example and the tables set forth above is to assist
investors in understanding the various costs and expenses of investing in
shares of each Fund and what such costs would be had the Reorganization
occurred. The example above should not be considered a representation of
future expenses of Gold & Government Fund or Special Opportunities Fund after
the Reorganization. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
SPECIAL OPPORTUNITIES FUND (PRO FORMA)
(Consummation of Gold & Government Reorganization and Global
Resources Reorganization)
The table set forth below shows the pro forma operating expenses of Class A
and Class B shares of Special Opportunities Fund which assumes that
shareholders of each Acquired Fund approved the respective Reorganizations,
and that both Reorganizations took place on October 31, 1995. These expenses
are based on fees and expenses incurred during each Acquired Fund's and
Special Opportunities Fund's most recently completed fiscal years and include
some expense savings due to the completion of both Reorganizations.
Class A Class B
Shares Shares
------- ---------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested
dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
6
<PAGE>
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses*** 0.49% 0.49%
----- -----
Total Fund operating expenses 1.59% 2.29%
* No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales
charge may be imposed in the event of certain redemption transactions
within one year of purchase.
** The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Class's average net assets, and the remaining portion will be
used to cover distribution expenses.
*** Other expenses include transfer agent, legal, audit, custody and other
expenses.
+ Redemption by wire fee (currently $4.00) not included.
If the Reorganizations are consummated, the actual total operating expenses
of Class A and Class B shares of Special Opportunities Fund may vary from the
pro forma operating expenses indicated above due to changes in the net asset
value of one or more of the Acquired Funds or Special Opportunities Fund
between October 31, 1995 and the Closing Date (defined below).
Example
The following example illustrates the expenses you would pay on a $1,000
investment under the existing fees for each Acquired Fund and Special
Opportunities Fund and under the pro forma fees if both Reorganizations had
occurred on October 31, 1995. The example assumes (1) a 5% annual return and
(2) redemption at the end of each time period.
Class A Class A Class A Pro Forma
Gold & Global Special Class A
Government Resources Opportunities Shares
--------- -------- ------------ ---------
1 year $ 66 $ 69 $ 65 $ 65
3 years 99 109 98 98
5 years 135 151 132 132
10 years 235 269 229 229
7
<PAGE>
Class B Class B Class B Pro Forma
Gold & Global Special Class B
Government Resources Opportunities Shares
--------- -------- ------------ ---------
1 year $ 74 $ 78 $ 73 $ 73
3 years 102 115 102 102
5 years 144 164 143 143
10 years 248 288 245 245
Assuming there is no redemption at the end of each time period, the expenses
you would pay on the same investment would be as follows:
Class B Class B Class B Pro Forma
Gold & Global Special Class B
Government Resources Opportunities Shares
--------- -------- ------------ ---------
1 year $ 24 $ 28 $ 23 $ 23
3 years 72 85 72 72
5 years 124 144 123 123
10 years 248 288 245 245
The purpose of this example and the tables set forth above is to assist
investors in understanding the various costs and expenses of investing in
shares of each Fund and what the cost would be if both Reorganizations had
occurred. The example above should not be considered representative of future
expenses. Actual expenses may vary from year to year and may be higher or
lower than those shown above.
The Funds' Investment Adviser
John Hancock Advisers, Inc. (the "Adviser") acts as investment adviser to
both Funds.
Business of Gold & Government Fund
Gold & Government Fund is a diversified series of Freedom Trust, an open-end
management investment company organized as a Massachusetts business trust in
1984. As of October 31, 1995, Gold & Government Fund's net assets were
$35,218,599. Ann M. McDonley and Kevin R. Baker are co-portfolio managers of
Gold & Government Fund. Ms. McDonley joined the Adviser in 1992 as a fixed-
income derivatives specialist. Prior to 1992, Ms. McDonley was a Vice
President and Treasurer of First Signature Bank & Trust Company, an affiliate
of the Adviser. Mr. Baker was President of Baker Capital Management. He also
worked as a registered representative for Kidder, Peabody & Co. Incorporated.
Business of Special Opportunities Fund
Special Opportunities Fund is a non-diversified series of Freedom Trust II.
As of October 31, 1995, Special Opportunities Fund's net assets were
$238,925,410. Kevin R. Baker is portfolio manager of Special Opportunities
Fund and is assisted by a team of portfolio managers and analysts.
Comparison of the Investment Objectives and Policies of
Gold & Government Fund and Special Opportunities Fund
Gold & Government Fund's investment objective is fundamental and may not be
changed without shareholder approval. Special Opportunities Fund's
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investment objective is non-fundamental and may be changed by a vote of the
Fund's Board of Trustees. Prior to the implementation of a change to the
Fund's investment objective, the Fund's prospectus and statement of
additional information will be revised or supplemented.
In considering whether to approve the Reorganization, you should consider the
differences between the two Funds' investment objectives and policies and
whether an investment in Special Opportunities Fund is a suitable investment
for you. For a discussion of the risks associated with an investment in the
Funds, see "Risk Factors and Special Considerations."
<TABLE>
<CAPTION>
Investment
Policies Special Opportunities Fund Gold & Government Fund
- -------- -------------------------- ----------------------
<S> <C> <C>
Investment The Fund's investment The Fund seeks to achieve capital
Objective: objective is long-term appreciation and preservation of
capital appreciation. the purchasing power of the
investor's capital. Moderate
income is a secondary objective.
Primary The types of securities in The types of securities/ sectors
Investments: which the Fund may invest in which the Fund may invest
include: include:
(1) Common stocks, (1) During an inflationary cycle:
preferred stocks, equity securities (common stock,
convertible debt securities preferred stock and securities
and warrants of U.S. and convertible into common and
foreign issuers. The Fund preferred stock) of domestic and
may also invest in fixed- foreign companies engaged in the
income securities including exploration for, mining and
U.S. Government securities, processing of, or dealing in gold
convertible and and other precious metals ("Gold
non-convertible corporate Stocks") and gold, particularly
preferred stocks and debt gold bullion and gold coins
securities. Corporate (collectively, "Gold").
fixed-income securities
will be rated at least
investment grade or if
unrated determined by the
Adviser to be of comparable
quality.
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(2) Sectors include:
automotive and housing, (2) During a deflationary cycle:
consumer goods and securities of the U.S. Government
services, defense and and its agencies and securities
aerospace, energy, of the U.S. Government in the
financial services, health form of separately traded
care, heavy industry, principal and interest components
leisure and entertainment, of securities guaranteed by the
machinery and equipment, U.S. Treasury ("U.S. Government
precious metals, retailing, Securities").
technology, transportation,
utilities, foreign and
environmental (the
"Sectors").
Investment (1) Under normal market (1) At least 65% of the Fund's
Policies: conditions, at least 90% of total assets will at all times be
the Fund's investment in invested in some combination of
equity securities will be Gold Stocks and Gold and U.S.
in issuers in five or fewer Government Securities.
of the Sectors.
(2) No more than 25% of the (2) During an inflationary cycle
Fund's total assets in any the Fund will invest at least 25%
one industry, but up to and up to 80% of its total assets
100% of the Fund's net in Gold Stocks and may invest up
assets may be in one to 10% of its total assets in
Sector. Gold. During periods of actual or
anticipated inflation, the Fund
will concentrate its investments
principally in Gold or Gold
Stock.
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During a deflationary cycle the
Fund may invest up to 90% of its
total assets in U.S. Government
securities having varied
maturities. During periods of
actual or anticipated
disinflation the Fund will move
from a concentration of
investments in Gold and Gold
Stock to a concentration of
investments in U.S. Government
securities.
(3) The Fund is classified (3) The Fund is classified as
as non-diversifield to diversified and is required, with
permit investment of more respect to 75% of its total
than 5% of its assets in assets, to limit investments in
the obligations of any one obligations of any one issuer to
issuer. 5% of the Fund's total assets and
to 10% of an issuer's voting
securities.
Investment The investment restrictions applicable to Special Opportunities
Restrictions: Fund are substantially similar to or more restrictive than those
of Gold & Government Fund, except as noted below:
(1) The Fund may not borrow (1) The Fund may not borrow
money, except from banks as money, except from banks as a
a temporary or emergency temporary measure or emergency
measure and not to exceed measure and not to exceed 5% of
33% of the Fund's total the Fund's net assets.
assets taken at market
value.
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(2) The Fund may not (2) The Fund may not pledge,
pledge, mortgage or mortgage or hypothecate its
hypothecate its assets, assets, except to secure
except to secure borrowings borrowings and then only up to 5%
and then only up to 33% of of the value of the Fund's total
the value of the Fund's assets cost taken at market
total assets taken at value.
market value.
(3) The Fund may not make (3) The Fund may not make short
short sales of securities sales of securities except
except "against the box," "against the box."
to hedge exposure to an
actual or anticipated
market decline in the value
of its investments or to
profit from an anticipated
decline in the value of a
security.
(4) The Fund may not invest (4) The Fund may not invest more
more than 15% of its assets than 10% of its assets in
in restricted or illiquid restricted or illiquid
securities. securities.
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Other The Fund may enter into The Fund may enter into
Investments: repurchase agreements, repurchase agreements, purchase
purchase securities on a restricted and illiquid
forward commitment or securities, buy call and put
when-issued basis, lend its options and sell covered call
portfolio securities, options on gold bullion, U.S.
engage in short sales, Government securities and Gold
purchase restricted and Stocks and buy and sell gold
illiquid securities, engage bullion, financial futures
in short-term trading, contracts and options on such
purchase and sell options contracts.
on securities and indices
composed of securities in
which it may invest, buy
and sell financial futures
contracts and options on
such futures for hedging
and enter into forward
foreign currency exchange
contracts for hedging
foreign currency.
</TABLE>
Form of Organization
Each of Gold & Government Fund and Special Opportunities Fund is a series of
a Massachusetts business trust. Both Funds have authorized and outstanding
two classes of shares: Class A and Class B. Each share of a series of the
respective Trust represents an equal proportionate interest in the assets
belonging to that series. The liabilities attributable to each series are not
charged against the assets of the other series of the respective Trust.
Shares of each series and the other series of the respective Trust are voted
separately with respect to matters pertaining to that series, but all shares
vote together for the election of Trustees and the ratification of
independent accountants of the respective Trust. The shares of each class of
Gold & Government Fund and Special Opportunities Fund represent an interest
in the same portfolio of investments of that Fund. Except as stated below,
each class of each Fund has equal rights as to voting, redemption, dividends
and liquidation. Each class bears different Rule 12b-1 distribution and
service fees and may bear other expenses properly attributable to that class.
Class A and Class B shareholders of each Fund have exclusive voting rights
with regard to the Rule 12b-1 distribution plan covering their class of
shares.
Sales Charges and Distribution and Service Fees
Class A Shares. Special Opportunities Fund and Gold & Government Fund impose
an initial sales charge on Class A shares as described above under the
caption, "The Funds' Expenses." An initial sales charge does not apply to
Class A
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shares acquired through the reinvestment of dividends from net investment
income or capital gain distributions.
Class A shares of Special Opportunities Fund acquired by Gold & Government
Fund's Class A shareholders pursuant to the Reorganization will not be
subject to any initial sales charge or CDSC. However, the CDSC imposed upon
certain redemptions within one year of purchase will continue to apply to the
Class A shares of Special Opportunities Fund issued in the Reorganization.
The holding period for determining the application of this CDSC will be
calculated from the date the Gold & Government Fund Class A shares were
originally issued.
Class B Shares. Gold & Government Fund and Special Opportunities Fund do not
impose an initial sales charge on Class B shares. However, Class B shares
redeemed within a specified number of years of purchase will be subject to a
CDSC at the rates set forth below. This CDSC will be assessed on an amount
equal to the lesser of the current market value or the original purchase cost
of the Class B shares being redeemed. Accordingly, Class B shareholders will
not be assessed a CDSC on increases in account value above the initial
purchase price, including shares derived from reinvested dividends. The
amount of the CDSC, if any, will vary depending on the number of years from
the time the Class B shares were purchased until the time they are redeemed,
as follows:
Contingent
Deferred Sales
Year in Charge As a
Which Class B Percentage of
Shares Redeemed Dollar Amount
Following Purchase Subject to CDSC
- ------------------------- ------------------
First.......................... 5.0%
Second ........................ 4.0%
Third.......................... 3.0%
Fourth ........................ 3.0%
Fifth.......................... 2.0%
Sixth.......................... 1.0%
Seventh and thereafter... None
Class B shares of Special Opportunities Fund acquired by Gold & Government
Fund's Class B shareholders pursuant to the Reorganization will not be
subject to any CDSC at the time of the Reorganization. However, these shares
will remain subject to the original CDSC applicable when you redeem those
shares. For purposes of computing the CDSC payable upon redemption of Class B
Special Opportunities Fund Shares acquired by Gold & Government Fund's Class
B shareholders pursuant to the Reorganization and the automatic conversion of
Class B shares into Class A shares, the holding period of the Gold &
Government Fund Class B shares will be added to that of the Class B Special
Opportunities Fund Shares acquired in the Reorganization.
Distribution and Service Fees. Both Funds have adopted distribution plans
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended
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(the "Investment Company Act"). Under these plans, each Fund may pay fees to
John Hancock Funds, Inc. ("John Hancock Funds"), the distributor of the
Funds' shares, to reimburse distribution and service expenses in connection
with Class A shares. These fees are payable at an annual rate of up to 0.30%
of the average daily net assets attributable to the Class A shares of Gold &
Government Fund and Special Opportunities Fund, respectively.
In addition, under the plans, each Fund may pay fees to John Hancock Funds to
reimburse it for distribution and service expenses in connection with Class B
shares. These fees are payable at an annual rate of up to 1.00% of each
Fund's average daily net assets attributable to its Class B shares. With
respect to Class B shares only, if John Hancock Funds is not fully reimbursed
for payments made or expenses incurred in any fiscal year, it is entitled to
carry forward these expenses to subsequent fiscal years for submission to the
applicable Fund for payment, subject always to the maximum annual Class B
distribution fee described above. With respect to Class A shares, John
Hancock Funds may carry forward unreimbursed expenses for 12 months from the
date incurred.
The Board of Trustees of Freedom Trust II, on behalf of Special Opportunities
Fund, has determined that, if the Reorganization is consummated, unreimbursed
distribution and shareholder service expenses originally incurred in
connection with Gold & Government Fund's Class A and Class B shares will be
reimbursable under Special Opportunities Fund's Rule 12b-1 plans. As of
October 31, 1995, the unreimbursed distribution and shareholder service
expenses for Class A shares of Special Opportunities Fund and Gold &
Government Fund were $341,951 and $26,623, respectively. The unreimbursed
distribution and shareholder service expenses for Class B shares of Special
Opportunities Fund and Gold & Government Fund were $6,051,842 and $17,354,
respectively. See "Unreimbursed Distribution and Shareholder Expenses" below.
Purchases and Exchanges
Shares of Special Opportunities Fund may be purchased through certain
broker-dealers and through John Hancock Funds at the public offering price,
which is based on the next determined net asset value per share, plus any
applicable sales charge. The minimum initial investment in Special
Opportunities Fund is $1,000 ($250 for group investments or $500 for
retirement plans). In anticipation of the Reorganization, after the Record
Date, no new accounts may be opened in Gold & Government Fund. Existing
shareholders of Gold & Government Fund may continue to purchase shares of the
Fund after the Record Date.
Shareholders of both Funds may exchange their shares at net asset value for
shares of the same class, if applicable, of certain other funds managed by
the Adviser. Shares of any fund acquired in this manner that are subject to a
CDSC will incur the CDSC, if still applicable, upon redemption. The exchange
privilege is available only in those states where exchanges can be made
legally.
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Distribution Procedures
Gold & Government Fund generally declares and distributes dividends
representing all or substantially all net investment income quarterly and may
distribute net short-term capital gains, if any, quarterly, and will
distribute net long-term capital gains, if any, annually after the close of
the fiscal year. Special Opportunities Fund generally declares and
distributes dividends representing all or substantially all net investment
income, if any, at least annually and distributes net short-term or long-term
capital gains, if any, annually after the close of the fiscal year.
Reinvestment Options
Unless an election is made to receive cash, the shareholders of both Funds
automatically reinvest all of their respective dividends and capital gain
distributions in additional shares of the same class of the same Fund. These
reinvestments are made at the net asset value per share and are not subject
to any sales charge.
Redemption Procedures
Shares of both Funds may be redeemed on any day that the Fund is open for
business at a price equal to the net asset value of the shares next
determined after receipt of a redemption request in good order, less any
applicable CDSC. Alternatively, shareholders of both Funds may sell their
shares through securities dealers, who may charge a fee. Redemptions and
repurchases of Class B shares and certain Class A shares of Gold & Government
Fund and Special Opportunities Fund are subject to the applicable CDSC, if
any. Class A and Class B shares of Gold & Government Fund may be redeemed up
to and including the Closing Date (as defined below).
Reorganization
Effect of the Reorganization. Pursuant to the terms of the Agreement, the
proposed Reorganization will consist of the acquisition by Special
Opportunities Fund of all the assets of Gold & Government Fund in exchange
solely for (i) the assumption by Special Opportunities Fund of all the
liabilities of Gold & Government Fund and (ii) the issuance of Special
Opportunities Fund Shares equal to the value of these assets, less the amount
of these liabilities, to Gold & Government Fund. As part of the liquidation
process, Gold & Government Fund will immediately distribute to its
shareholders these Special Opportunities Fund Shares in exchange for their
shares of Gold & Government Fund. Consequently, Class A shareholders of Gold
& Government Fund will become Class A shareholders of Special Opportunities
Fund and Class B shareholders of Gold & Government Fund will become Class B
shareholders of Special Opportunities Fund. After completion of the
Reorganization, the existence of Gold & Government Fund as a series of
Freedom Trust will be terminated.
The Reorganization will become effective as of 5:00 p.m. on the closing date,
scheduled for August 16, 1996, or another date on or before December 31, 1996
as authorized representatives of the Funds may agree (the "Closing Date").
The Class A Special Opportunities Fund Shares issued to Gold & Government
Fund
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<PAGE>
for distribution to Gold & Government Fund's Class A shareholders will have
an aggregate net asset value equal to that of Gold & Government Fund's Class
A shares. The Class B Special Opportunities Fund Shares issued to Gold &
Government Fund for distribution to Gold & Government Fund's Class B
shareholders will have an aggregate net asset value equal to that of Gold &
Government Fund's Class B shares. For purposes of the Reorganization, the
Funds' respective asset values will be determined as of the close of business
(4:00 p.m. Boston time) on the Closing Date.
The Board of Trustees of Freedom Trust on behalf of Gold & Government Fund,
including the Trustees not affiliated with the Funds, unanimously approved
the Reorganization and determined that it was in the best interests of Gold &
Government Fund and that the interests of Gold & Government Fund's
shareholders would not be diluted as a result of the Reorganization.
Similarly, the Board of Trustees of Freedom Trust II on behalf of Special
Opportunities Fund, including the Trustees not affiliated with the Funds,
approved the Reorganization and determined that it was in the best interests
of Special Opportunities Fund and that the interests of Special Opportunities
Fund's shareholders would not be diluted as a result of the Reorganization.
For a discussion of the factors considered by the Boards of Trustees, see
"Proposal to Approve the Agreement and Plan of Reorganization--Reasons for
the Proposed Reorganization."
Tax Considerations
The consummation of the Reorganization is subject to the receipt of an
opinion of Hale and Dorr, counsel to the Funds, satisfactory to Freedom Trust
and Freedom Trust II on behalf of the respective Funds and substantially to
the effect that:
(a) The acquisition by Special Opportunities Fund of all of the assets of
Gold & Government Fund solely in exchange for the issuance of Special
Opportunities Fund Shares to Gold & Government Fund and the assumption of all
of Gold & Government Fund's liabilities by Special Opportunities Fund,
followed by the distribution by Gold & Government Fund, in liquidation of
Gold & Government Fund, of Special Opportunities Fund Shares to the
shareholders of Gold & Government Fund in exchange for their shares of
beneficial interest of Gold & Government Fund and the termination of Gold &
Government Fund, will constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Code, and Gold & Government Fund and Special
Opportunities Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by Gold & Government Fund upon (a) the
transfer of all of its assets to Special Opportunities Fund solely in
exchange for the issuance of Special Opportunities Fund Shares to Gold &
Government Fund, and the assumption of all of Gold & Government Fund's
liabilities by Special Opportunities Fund; and (b) the distribution by Gold &
Government Fund of these Special Opportunities Fund Shares to the
shareholders of Gold & Government Fund;
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(c) no gain or loss will be recognized by Special Opportunities Fund upon the
receipt of Gold & Government Fund's assets solely in exchange for the
issuance of Special Opportunities Fund Shares to Gold & Government Fund and
the assumption of all of Gold & Government Fund's liabilities by Special
Opportunities Fund;
(d) the basis of the assets of Gold & Government Fund acquired by Special
Opportunities Fund will be, in each instance, the same as the basis of those
assets in the hands of Gold & Government Fund immediately prior to the
transfer;
(e) the tax holding period of the assets of Gold & Government Fund in the
hands of Special Opportunities Fund will, in each instance, include Gold &
Government Fund's tax holding period for those assets;
(f) the shareholders of Gold & Government Fund will not recognize gain or
loss upon the exchange of all of their shares of beneficial interest of Gold
& Government Fund solely for Special Opportunities Fund Shares as part of the
Reorganization;
(g) the basis of the Special Opportunities Fund Shares received by Gold &
Government Fund shareholders in the Reorganization will be the same as the
basis of the Gold & Government Fund Shares surrendered in exchange therefor;
and
(h) the tax holding period of the Special Opportunities Fund Shares received
by Gold & Government Fund shareholders will include, for each shareholder,
the tax holding period for the Gold & Government Fund shares surrendered in
exchange therefor, provided the Gold & Government Fund shares were held as
capital assets on the date of the exchange.
The Meeting
Time, Place and Date. The Meeting will be held on Wednesday, August 14, 1996,
at 101 Huntington Avenue, Boston, Massachusetts 02199, at 9:00 a.m. Boston
time.
Record Date. The Record Date for determining shareholders entitled to notice
of and to vote at the Meeting is June 17, 1996.
Vote Required for Approval. Approval of the Agreement by the shareholders of
Gold & Government Fund requires the affirmative vote of a "majority of the
outstanding securities" of Gold & Government Fund as defined in the
Investment Company Act, which means the lesser of (1) 67 percent or more of
the shares of the Fund represented at the Meeting if at least 50 percent of
all outstanding shares of the Fund are represented at the Meeting or (2) 50
percent or more of the outstanding shares of the Fund entitled to vote at the
meeting ("Majority Shareholder Vote"). The Reorganization does not require
the approval of Special Opportunities Fund's or Global Resources Fund's
shareholders. See "Proposal to Approve the Agreement and Plan of
Reorganization--Voting Rights and Required Vote."
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RISK FACTORS AND SPECIAL CONSIDERATIONS
Each Fund is subject to risks that result from the investment strategies the
Fund uses to achieve its investment objective. Special Opportunities Fund
limits its investments to certain specified economic sectors and, under
normal conditions, further limits the number of the sectors in which it may
invest to five. The Adviser determines the distribution of the Fund's
securities among the various sectors, the specific industries within each
sector and the specific securities within each industry. Furthermore, the
Fund has elected to be treated as "non-diversified" under the Investment
Company Act. This means that the Fund is permitted to invest more than 5% of
its assets in the securities of any one issuer. If the Adviser does not
accurately predict the economic performance of a particular sector or issuer,
the value of the Fund's shares may be more susceptible to any single
economic, political or regulatory event, and to credit and market risks
associated with a single issuer than would a more diversified fund.
Gold and Government Fund's portfolio is changed to respond to changes in the
inflationary cycles in the United States economy. The Fund depends to a high
degree on the Adviser's ability to anticipate the onset and termination of
inflationary and disinflationary cycles. A failure to anticipate a
disinflationary cycle could result in the Fund's assets being
disproportionately invested in Gold Stocks or Gold. Conversely, a failure to
predict an inflationary cycle could result in the Fund's assets being
disproportionately invested in U.S. Government Securities.
Each Fund invests in foreign securities which involve a greater degree of
risk than investment in domestic securities due to exchange controls, less
publicly available information, more volatile or less liquid securities
markets and the possibility of expropriation, confiscatory taxation or
political, economic or social instability.
Special Opportunities Fund's ability to invest up to 15% of its net assets in
illiquid securities may subject it to the risks of such securities to a
greater extent than Gold & Government Fund, which may invest up to 10% of its
assets in these securities. The sale of illiquid securities, if they can be
sold at all, generally requires more time and results in higher brokerage
charges and other selling expenses than does the sale of liquid securities.
INFORMATION CONCERNING THE MEETING
Solicitation, Renovation And Use Of Proxies
A majority of Gold & Government Fund's outstanding shares that are
represented and entitled to vote at the Meeting will be a quorum for the
transaction of business. A Gold & Government Fund shareholder executing and
returning a proxy has the power to revoke it at any time before it is
exercised, by filing a written notice of revocation with Gold & Government
Fund's transfer agent, Investor Services, P.O. Box 9116, Boston,
Massachusetts 02205-9116, or by returning a
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duly executed proxy with a later date before the time of the Meeting. Any
shareholder who has executed a proxy but is present at the Meeting and wishes
to vote in person may revoke his or her proxy by notifying the Secretary of
Gold & Government Fund (without complying with any formalities) at any time
before it is voted. Presence at the Meeting alone will not serve to revoke a
previously executed and returned proxy.
If a quorum is not present in person or by proxy at the time any session of
the Meeting is called to order, the persons named as proxies may vote those
proxies that have been received to adjourn the Meeting to a later date. If a
quorum is present but there are not sufficient votes in favor of the
Proposal, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies with respect to the
Proposal. Any adjournment will require the affirmative vote of a majority of
the shares of Gold & Government Fund, represented in person or by proxy, at
the session of the Meeting to be adjourned. If an adjournment of the Meeting
is proposed because there are not sufficient votes in favor of the
Reorganization, the persons named as proxies will vote those proxies in favor
of the Reorganization in favor of adjournment, and will vote those proxies
against the Reorganization against adjournment.
In addition to the solicitation of proxies by mail or in person, Gold &
Government Fund may also arrange to have votes recorded by telephone by
officers and employees of the Fund or by personnel of the Adviser 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, such votes would not be counted at
the Meeting. The Fund has not sought to obtain an opinion of counsel on this
matter and is unaware of any such challenge at this time. A shareholder would
be called on a recorded line at the telephone number the Fund has in its
records for the account and would be asked the shareholder's Social Security
number or other identifying information. The shareholder would then be given
an opportunity to authorize proxies to vote his 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.
Outstanding Shares and Record Date
At the close of business on May 31, 1996, 1,183,875 Class A and 934,996 Class
B shares of beneficial interest of Gold & Government Fund were outstanding
and entitled to vote. Only Gold & Government Fund shareholders of record at
the close of business on June 17, 1996 (the "Record Date") are entitled to
notice of and to vote at the Meeting and any adjournment of the Meeting. As
of May 31,
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1996, 10,259,837 Class A and 15,126,623 Class B shares of beneficial interest
of Special Opportunities Fund were outstanding.
Security Ownership of Certain Beneficial Owners and Management of
Gold & Government Fund and Special Opportunities Fund
To the knowledge of the Freedom Trust, as of May 31, 1996, no persons owned
of record or beneficially 5% or more of the outstanding Class A shares of
Gold & Government Fund and the following person owned of record or
beneficially 5% or more of the outstanding Class B shares of Gold &
Government Fund: Merrill Lynch Pierce Fenner & Smith, Inc., Attn: Mutual Fund
Operations, 4800 Deer Lake Drive East, Jacksonville, FL 32246-6484 (52,388
shares (5.60%)).
To the knowledge of the Freedom Trust II, as of May 31, 1996, no persons
owned of record or beneficially, 5% or more of the outstanding Class A or
Class B shares of Special Opportunities Fund.
As of May 31, 1996, the Trustees and officers of the Freedom Trust and the
Freedom Trust II, as a group, owned in the aggregate less than 1% of the
outstanding Class A and Class B shares of beneficial interest of Gold &
Government Fund and Special Opportunities Fund, respectively.
PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
General
The shareholders of Gold & Government Fund are being asked to approve the
Agreement, a copy of which is attached as Exhibit A. The Reorganization will
consist of: (a) the transfer of all of Gold & Government Fund's assets to
Special Opportunities Fund in exchange solely for the issuance of Special
Opportunities Fund Shares to Gold & Government Fund and the assumption of
Gold & Government Fund's liabilities by Special Opportunities Fund, (b) the
subsequent distribution by Gold & Government Fund, as part of its
liquidation, of the Special Opportunities Fund Shares to Gold & Government
Fund's shareholders and (c) the termination of Gold & Government Fund's
existence. The Class A Special Opportunities Fund Shares issued upon the
consummation of the Reorganization will have an aggregate net asset value
equal to that of Gold & Government Fund's Class A shares. The Class B Special
Opportunities Fund Shares issued upon consummation of the Reorganization will
have an aggregate net asset value equal to that of Gold & Government Fund's
Class B shares. As noted above, the asset values of Gold & Government Fund
and Special Opportunities Fund will be determined at the close of business
(4:00 p.m. Eastern Time) on the Closing Date for purposes of the
Reorganization. See "Description of Agreement" below.
Pursuant to the Agreement, Gold & Government Fund will liquidate and
distribute the Special Opportunities Fund Shares received, as described
above, pro rata to the shareholders of record of each class determined as of
the close of regular
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trading on the New York Stock Exchange on the Closing Date. The result of the
transfer of assets will be that Special Opportunities Fund will add to its
portfolio the net assets of Gold & Government Fund. Class A shareholders of
Gold & Government Fund will become Class A shareholders of Special
Opportunities Fund, and Class B shareholders of Gold & Government Fund will
become Class B shareholders of Special Opportunities Fund. Shareholder
approval of the Agreement shall constitute shareholder approval to terminate
the existence of Gold & Government Fund as a series of Freedom Trust.
The Agreement and the Reorganization were unanimously approved by the Freedom
Trust Board of Trustees on behalf Gold & Government Fund and by the Freedom
Trust II Board of Trustees on behalf of Special Opportunities Fund at
meetings held on March 5, 1996.
Reasons for the Proposed Reorganization
The Freedom Trust Board of Trustees believes that the proposed Reorganization
will be advantageous to the shareholders of Gold & Government Fund in several
respects. The Freedom Trust Board of Trustees considered the following
matters, among others, in approving the Proposal.
First, a combined fund offers economies of scale that will have a positive
effect on the expenses currently borne by the shareholders of Gold &
Government Fund. Both Funds incur substantial overhead costs for accounting,
legal, transfer agency services, insurance, and custodial and administrative
services. The Board of Trustees expects that the Reorganization will result
in a decrease in the expenses currently borne by Gold & Government Fund's
shareholders. See "Summary--The Funds' Expenses."
Second, the Board of Trustees of the Freedom Trust considered the performance
history of each Fund, including the fact that Special Opportunities Fund has
achieved a better return for investors over the most recent one year period
ended October 31, 1995.
Third, the Board of Trustees believes that the Special Opportunities Fund
Shares received in the Reorganization will provide existing Gold & Government
Fund shareholders with substantially the same investment advantages that they
currently enjoy at a comparable level of risk. The Board of Trustees also
considered the performance history of each Fund.
Fourth, the Board of Trustees believes that it is not advantageous to operate
and market Gold & Government Fund separately from Special Opportunities Fund,
because the investment objectives and policies of the two Funds are generally
similar.
Fifth, the Board of Trustees considered the fact that Gold & Government Fund
is significantly smaller than Special Opportunities Fund. The Board of
Trustees determined that the existence of a larger competing fund within the
same fund
22
<PAGE>
complex with generally similar investment characteristics is likely to impede
the marketing and asset growth of Gold & Government Fund.
Sixth, the Board of Trustees considered that shareholders of both Funds may
be better served by a fund offering greater diversification. To the extent
that the Funds' assets are combined into a single portfolio and a larger
asset base is created as a result of the Reorganization, greater
diversification of Special Opportunities Fund's investment portfolio can be
achieved than is currently possible. Greater diversification is expected to
be beneficial to shareholders of both Funds, because it may reduce the
negative effect which the adverse performance of any one security may have on
the performance of the entire portfolio. The Freedom Trust Board of Trustees
also considered that the Reorganization presents an opportunity for Special
Opportunities Fund to acquire assets without the obligation to pay
commissions or other similar costs that are normally associated with the
purchase of securities. This opportunity provides an economic benefit to
Special Opportunities Fund and its shareholders.
In determining that the Reorganization is in the best interests of Gold &
Government Fund and its shareholders, the Board of Trustees considered the
fact that the Adviser will receive certain benefits from the Reorganization.
The Reorganization will result in a consolidated portfolio management effort,
and may result in time savings to the Adviser by reducing the number of
reports and regulatory filings that its personnel must prepare.
Capital Loss Carryovers
As of October 31, 1995, Gold & Government Fund had capital loss carryovers,
as determined for federal income tax purposes, in the aggregate amount of
approximately $11,789,591, of which $8,066,420 expires on October 31, 2002
and $3,723,171 expires on October 31, 2003. If the Reorganization does not
occur, Gold & Government Fund may use the capital loss carryovers to offset
any net capital gain, which would reduce the amount of net capital gain the
Fund would be required to distribute to its respective shareholders in order
to avoid fund-level income and/or excise taxes on undistributed capital gain.
If the Reorganization is consummated, Special Opportunities Fund will succeed
to and take into account Gold & Government Fund's capital loss carryovers and
will be able to use such carryovers, along with any carryovers it may have,
to offset its net capital gain, subject to certain limitations under the Code
that may be applicable because of the Reorganizations and certain other
changes in the past or future share ownership of Special Opportunities Fund,
including the issuance of shares of Special Opportunities Fund in other
reorganization transactions. These limitations could result in the expiration
of all or portions of such carryovers before they are fully used. However,
Gold & Government Fund had, as of October 31, 1995, net unrealized gains of
$568,849 that, when realized, the capital loss carryovers could be used to
offset.
23
<PAGE>
Unreimbursed Distribution and Shareholder Service Expenses
The Freedom Trust II Board of Trustees has determined that, if the
Reorganization is consummated, distribution and shareholder service expenses
incurred in connection with shares of Gold & Government Fund and not
reimbursed under the Fund's Rule 12b-1 plans or through CDSCs, will be
reimbursable expenses under Special Opportunities Fund's Rule 12b-1 plans
(the "assumption"). However, the maximum aggregate amounts payable during any
fiscal year under Special Opportunities Fund's Rule 12b-1 Plan (0.30% of
average daily net assets attributable to Class A shares and 1.00% of average
daily net assets attributable to Class B shares) will not be affected by the
assumption.
With respect to both Class A and Class B shares of Special Opportunities
Fund, the percentage of net assets on a pro forma combined basis that the
unreimbursed expenses represent will decrease as a result of the
Reorganization and the assumption. As of October 31, 1995, the unreimbursed
distribution and shareholder service expenses of Special Opportunities Fund
attributable to Class A and Class B shares were $341,951 (0.34% of Special
Opportunities Fund's net assets attributable to Class A shares) and
$6,051,842 (4.4% of Special Opportunities Fund's net assets attributable to
Class B shares), respectively. As of the same date, the unreimbursed
distribution and shareholder service expenses of Gold & Government Fund
attributable to Class A and Class B shares were $26,623 (0.145% of Gold &
Government Fund's net assets attributable to Class A shares) and $17,354
(0.10% of Gold & Government Fund's net assets attributable to Class B
shares), respectively.
After the Reorganization, on a pro forma combined basis, the unreimbursed
distribution and shareholder service expenses of Special Opportunities Fund
attributable to Class A and Class B shares will be $368,574 (0.31% of Special
Opportunities Fund's pro forma net assets attributable to Class A shares) and
$6,069,196 (3.93% of Special Opportunities Fund's pro forma net assets
attributable to Class B shares), respectively.
The assumption will have no immediate effect upon the payments made under
Special Opportunities Fund's Rule 12b-1 Plans. While John Hancock Funds hopes
to recover unreimbursed distribution and shareholder service expenses over an
extended period of time, Special Opportunities Fund is not obligated to
assure that these amounts are recouped by John Hancock Funds. Unreimbursed
distribution and shareholder service expenses do not currently appear as an
expense or liability in the financial statements of either Fund, nor will
they appear in the financial statements of Special Opportunities Fund after
the Reorganization until paid or accrued. Unreimbursed expenses do not enter
into the calculation of the Fund's net asset value or the formula for
calculating Rule 12b-1 payments. Even in the event of termination or
noncontinuance of Special Opportunities Fund's 12b-1 Plans, Special
Opportunities Fund is not legally committed, and is not required to commit,
to the payment of any unreimbursed distribution and shareholder ser-
24
<PAGE>
vice expenses. The staff of the SEC has not approved or disapproved the
treatment of the unreimbursed distribution and shareholder service expenses
described in this Proxy Statement.
Boards' Evaluation and Recommendation
On the basis of the factors described above and other factors, the Freedom
Trust Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act) of the Funds,
determined that the Reorganization is in the best interests of Gold &
Government Fund and that the interests of Gold & Government Fund's
shareholders will not be diluted as a result of the Reorganization. On the
same basis, the Freedom Trust II's Board of Trustees including a majority of
the Trustees who are not "interested persons" (as defined in the Investment
Company Act) of the Funds, determined that the Reorganization is in the best
interests of Special Opportunities Fund and the interests of Special
Opportunities Fund's shareholders will not be diluted as a result of the
Reorganization.
THE TRUSTEES OF JOHN HANCOCK GOLD & GOVERNMENT FUND RECOMMEND THAT THE
SHAREHOLDERS OF JOHN HANCOCK GOLD & GOVERNMENT FUND VOTE FOR THE PROPOSAL TO
APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
Description of Agreement
The following description of the Agreement is a summary, does not purport to
be complete, and is subject in all respects to the provisions of the
Agreement, and is qualified in its entirety by reference to the Agreement. A
copy of the Agreement is attached to this Proxy Statement and Prospectus as
Exhibit A and should be read in its entirety. Paragraph references are to
appropriate provisions of the Agreement.
Method of Carrying Out Reorganization. If Gold & Government Fund shareholders
approve the Agreement, the Reorganization will be consummated promptly after
the various conditions to the obligations of each of the parties are
satisfied (see Agreement, paragraphs 6 through 8). The Reorganization will be
completed on the Closing Date.
On the Closing Date, Gold & Government Fund will transfer all of its assets
to Special Opportunities Fund in exchange for Special Opportunities Fund
Shares with an aggregate net asset value equal to the value of the assets
delivered, less the liabilities of Gold & Government Fund assumed, as of the
close of business on the Closing Date (see Agreement, paragraphs 1 and 2).
The value of Gold & Government Fund's assets shall be determined in
accordance with the Fund's current prospectus and statement of additional
information and Special Opportunities Fund's net asset values per Class A
share and per Class B share will be determined according to the valuation
procedures set forth in the Freedom Trust II Declaration of Trust and By-laws
and the Special
25
<PAGE>
Opportunities Fund Prospectus, (see "Share Price" in the Special
Opportunities Fund Prospectus). No initial sales charge or CDSC will be
imposed upon delivery of the Special Opportunities Fund Shares in exchange
for the assets of Gold & Government Fund.
Surrender of Share Certificates. Gold & Government Fund shareholders whose
Class A or Class B shares are represented by one or more share certificates
should, prior to the Closing Date, either surrender their certificates to
Gold & Government Fund or deliver to Gold & Government Fund an affidavit with
respect to lost certificates, in the form and accompanied by the surety bonds
that Gold & Government Fund may require (collectively, an "Affidavit"). On
the Closing Date, all certificates which have not been surrendered will be
deemed to be cancelled, will no longer evidence ownership of Gold &
Government Fund's shares and will evidence ownership of Special Opportunities
Fund Shares. Shareholders may not redeem or transfer Special Opportunities
Fund Shares received in the Reorganization until they have surrendered their
Gold & Government Fund share certificates or delivered an Affidavit relating
to them. Special Opportunities Fund will not issue share certificates in the
Reorganization.
Conditions Precedent to Closing. The obligation of Gold & Government Fund
to consummate the Reorganization is subject to the satisfaction of certain
conditions precedent, including the Freedom Trust's performance of all acts
and undertakings required under the Agreement and the receipt of all
consents, orders and permits necessary to consummate the Reorganization (see
Agreement, paragraphs 6 through 8).
The obligation of Special Opportunities Fund to consummate the Reorganization
is subject to the satisfaction of certain conditions precedent, including
Freedom Trust II's performance of all acts and undertakings to be performed
under the Agreement, the receipt of certain documents and financial
statements from Freedom Trust, on behalf of Gold & Government Fund, and the
receipt of all consents, orders and permits necessary to consummate the
Reorganization (see Agreement, paragraphs 6 through 8).
The obligations of both parties are subject to the receipt of approval and
authorization of the Agreement by the vote of not less than a Majority
Shareholder Vote of Gold & Government Fund (as described in the section
captioned "Voting Rights and Required Vote") and the receipt of a favorable
opinion of Hale and Dorr as to the federal income tax consequences of the
Reorganization.
Termination of Agreement. The Agreement may be terminated, whether or not
approval of Gold & Government Fund's shareholders has been obtained, by
mutual agreement of the parties. In addition, either party may terminate its
obligations under the Agreement at or prior to the Closing Date, because of a
material breach by the other party of any representations, warranties or
agreements contained in the Agreement, or if a condition precedent in the
Agreement has not been met.
26
<PAGE>
Expenses of the Reorganization. Special Opportunities Fund and Gold &
Government Fund will each be responsible for its own expenses incurred in
connection with entering into and carrying out the provisions of the
Agreement, whether or not the Reorganization is consummated.
Tax Considerations
The consummation of the Reorganization is subject to the receipt of a
favorable opinion of Hale and Dorr, counsel to the Funds, satisfactory to
Freedom Trust on behalf of Gold & Government Fund and Freedom Trust II on
behalf of Special Opportunities Fund and described above under the caption,
"Summary--Reorganization--Tax Considerations."
Voting Rights and Required Vote
Each Gold & Government Fund share is entitled to one vote. Class A and Class
B shareholders of Gold & Government Fund vote together with respect to the
Proposal. Approval of the Proposal requires a Majority Shareholder Vote of
Gold & Government Fund.
Shares of beneficial interest of Gold & Government Fund represented in person
or by proxy, including shares which abstain or do not vote with respect to
the Proposal, will be counted for purposes of determining whether a quorum is
present at the Meeting. Accordingly, an abstention from voting has the same
effect as a vote against the Proposal. However, if a broker or nominee
holding shares in "street name" indicates on the proxy card that it does not
have discretionary authority to vote on the Proposal, those shares will not
be considered as present and entitled to vote with respect to the Proposal.
Accordingly, a "broker non-vote" has no effect on the voting in determining
whether the Proposal has been adopted pursuant to the requirement that the
Proposal be approved by 67% or more of the shares of the Fund represented at
the Meeting if at least 50% of all outstanding shares of the Fund are
represented at the Meeting. However, in determining whether a Proposal has
been adopted pursuant to the requirement that the Proposal be approved by 50%
or more of the outstanding shares of the Fund entitled to vote, because
shares represented by a "broker non-vote" are considered outstanding shares,
a "broker non-vote" will have the same effect as a vote against the Proposal.
If the requisite approval of shareholders is not obtained, Gold & Government
Fund will continue to engage in business as a registered open-end, management
investment company and the Board of Trustees of Freedom Trust will consider
what further action may be appropriate.
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of October
31, 1995, and the pro forma combined capitalization of Special Opportunities
Fund as if the Reorganization had occurred on that date. The table reflects
pro forma exchange ratios of approximately (i) 1.4171 Class A Special
Opportunities Fund
27
<PAGE>
Shares being issued for each Class A share of Gold & Government Fund and (ii)
approximately 1.4339 Class B Special Opportunities Fund Shares being issued
for each Class B share of Gold & Government Fund. If the Reorganization is
consummated, the actual exchange ratios on the Closing Date may vary from
those indicated due to (i) changes in the market value of the portfolio
securities of Special Opportunities Fund and Gold & Government Fund between
October 31, 1995 and the Closing Date; (ii) changes in the amount of
undistributed net investment income and net realized capital gains of Special
Opportunities Fund and Gold & Government Fund during that period resulting
from income and distributions; and (iii) changes in the accrued liabilities
of Special Opportunities Fund and Gold & Government Fund during the same
period.
OCTOBER 31, 1995
Gold & Special
Government Opportunities Pro Forma
Fund Fund Combined
---------- ----------- -------------
Net Assets $35,218,599 $238,925,410 $274,144,009
Net Asset Value Per
Share
Class A $13.20 $9.32 $9.32
Class B $13.18 $9.19 $9.19
Shares Outstanding
Class A 1,386,291 10,902,887 12,867,405
Class B 1,284,093 14,949,105 16,790,364
(1) If the Reorganization had taken place on October 31, 1995, Gold &
Government Fund would have received 1,964,518 Class A shares and
1,841,259 Class B shares of Special Opportunities Fund, which would have
been available for distribution to shareholders of the applicable class
of Gold & Government Fund. No assurance can be given as to the number of
Class A Shares or Class B shares of Special Opportunities Fund that will
be received by Gold & Government Fund on the Closing Date. The foregoing
is merely an example of what Gold & Government Fund would have received
and distributed had the Reorganization been consummated on October 31,
1995, and should not be relied upon to reflect the amount that will
actually be received on the Closing Date.
(2) If both the Reorganization and the Global Resources Reorganization had
taken place on October 31, 1995, Special Opportunities Fund's pro forma
combined net assets would be $302,870,179 and the number of Class A and
Class B Special Opportunities Fund Shares outstanding would have been
13,116,891 and 19,663,676 respectively. The Global Resources
Reorganization does not affect the net asset value of the Class A or
Class B Special Opportunities Fund Shares to be issued in the
Reorganization to Gold & Government Fund for distribution to its
shareholders.
28
<PAGE>
COMPARATIVE PERFORMANCE INFORMATION
Total Return
The average annual total return of each class of the Funds is determined by
multiplying a hypothetical initial investment of $1,000 in a class by the
average annual compound rate of return (including capital
appreciation/depreciation, and dividends and distributions paid and
reinvested) attributable to that class for the stated period and annualizing
the result. Total return on Class B shares reflects the applicable CDSC.
The table below indicates the total return (capital changes plus reinvestment
of all dividends and distributions) on a hypothetical investment of $1,000 in
each class of each Acquired Fund and Special Opportunities Fund covering the
indicated periods ending October 31, 1995. The data below represent
historical performance which should not be considered indicative of future
performance of a fund. Some performance results would be lower absent expense
limitations that were in effect during the periods described. Each Acquired
Fund's and Special Opportunities Fund's performance and net asset value will
fluctuate so that their shares, when redeemed, may be worth more or less than
their original cost.
29
<PAGE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK GOLD & GOVERNMENT FUND
(UNAUDITED)
Value of
Investment on
October 31,
1995
Investment Amount of Including
Investment Period Date Investment Sales Charge
- ------------------------------- -------- --------- --------------
Class A Shares:
From inception (January 3,
1992) to October 31, 1995 1/3/92 $1,000 $ 975.77
1 year ended October 31, 1995 10/31/94 $1,000 $ 895.96
Class B Shares:
10 years ended October 31, 1995 10/31/85 $1,000 $1,722.67
5 years ended October 31, 1995 10/31/90 $1,000 $1,139.75
1 year ended October 31, 1995 10/31/94 $1,000 $ 889.79
<TABLE>
<CAPTION>
Total Return Total Return
Including Sales Charge Excluding Sales Charge
---------------------- ------------------------
Investment Period Cumulative Annualized Cumulative Annualized
- ------------------------------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C>
Class A Shares:
From inception (January 3,
1992) to October 31, 1995 (2.42%) (0.64%) 2.74% 0.71%
1 year ended October 31, 1995 (10.40%) (10.40%) (5.66%) (5.66%)
Class B Shares:
10 years ended October 31, 1995 72.27% 5.60% 72.27% 5.60%
5 years ended October 31, 1995 13.98% 2.65% 15.98% 3.01%
1 year ended October 31, 1995 (11.02%) (11.02%) (6.32%) (6.32%)
</TABLE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK GLOBAL RESOURCES FUND
(UNAUDITED)
Value of
Investment on
October 31,
1995
Investment Amount of Including
Investment Period Date Investment Sales Charge
- ------------------------------- -------- --------- --------------
Class A Shares:
From inception (June 15, 1994)
to October 31, 1995 6/15/94 $1,000 $ 893.42
1 year ended October 31, 1995 10/31/94 $1,000 $ 851.58
Class B Shares:
From inception (October 26,
1987) to October 31, 1995 10/26/87 $1,000 $1,770.24
5 years ended October 31, 1995 10/31/90 $1,000 $1,242.29
1 year ended October 31, 1995 10/31/94 $1,000 $ 845.12
<TABLE>
<CAPTION>
Total Return Total Return
Including Sales Charge Excluding Sales Charge
---------------------- ------------------------
Investment Period Cumulative Annualized Cumulative Annualized
- ------------------------------- --------- --------- --------- -----------
<C> <C> <C> <C> <C>
Class A Shares:
From inception (June 15, 1994)
to October 31, 1995 (10.65)% (7.87)% (5.98)% (4.38)%
1 year ended October 31, 1995 (14.84)% (14.84)% (10.37)% (10.37)%
Class B Shares:
From inception (October 26,
1987) to October 31, 1995 77.02% 7.39% 77.02% 7.39%
5 years ended October 31, 1995 24.23% 4.43% 26.23% 4.77%
1 year ended October 31, 1995 (15.49)% (15.49)% (11.04)% (11.04)%
</TABLE>
30
<PAGE>
VALUE OF A $1,000 INVESTMENT IN JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
(UNAUDITED)
Value of
Investment on
October 31,
1995
Investment Amount of Including
Investment Period Date Investment Sales Charge
- ------------------------------- -------- --------- --------------
Class A Shares:
From inception (January 1,
1993) to October 31, 1995 1/1/93 $1,000 $1,041.34
1 year ended October 31, 1995 10/31/94 $1,000 $1,116.16
Class B Shares:
From inception (January 1,
1993) to October 31, 1995 1/1/93 $1,000 $1,031.18
1 year ended October 31, 1995 10/31/94 $1,000 $1,117.73
<TABLE>
<CAPTION>
Total Return Total Return
Including Sales Charge Excluding Sales Charge
---------------------- ------------------------
Investment Period Cumulative Annualized Cumulative Annualized
- ------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Class A Shares:
From inception (January 1,
1993) to October 31, 1995 4.13% 2.05% 9.65% 4.73%
1 year ended October 31, 1995 11.62% 11.62% 17.53% 17.53%
Class B Shares:
From inception (January 1,
1993) to October 31, 1995 3.12% 1.55% 8.12% 4.00%
1 year ended October 31, 1995 11.77% 11.77% 16.77% 16.77%
</TABLE>
31
<PAGE>
BUSINESS OF GOLD & GOVERNMENT FUND
General
For a discussion of the organization and operation of Gold & Government Fund,
see "Investment Objectives and Policies" and "Organization and Management of
the Funds" in the Gold & Government Fund Prospectus.
Investment Objective and Policies
For a discussion of Gold & Government Fund's investment objective and
policies, see "Investment Objectives and Policies" in the Gold & Government
Fund Prospectus.
Portfolio Management
Ann M. McDonley and Kevin R. Baker are co-portfolio managers of Gold &
Government Fund. Ms. McDonley joined the Adviser in 1992 as a fixed-income
specialist. Prior to 1992, Ms. McDonley was a Vice President and Treasurer of
First Signature Bank & Trust Company, an affiliate of the Adviser. Mr. Baker
was President of Baker Capital Management. He also worked as a registered
representative for Kidder, Peabody & Co. Incorporated.
Trustees
For a discussion of the responsibilities of the Board of Trustees of Freedom
Trust, see "Organization and Management of the Funds" in the Gold &
Government Fund Prospectus.
Investment Adviser and Distributor
For a discussion regarding Gold & Government Fund's investment adviser and
distributor, see "Organization and Management of the Funds," "How to Buy
Shares" and "Share Price" in the Gold & Government Fund Prospectus.
Expenses
For a discussion of Gold & Government Fund's expenses, see "Expense
Information" and "The Funds' Expenses" in the Gold & Government Fund
Prospectus.
Custodian and Transfer Agent
Gold & Government Fund's custodian is Investors Bank & Trust Company. Gold &
Government Fund's transfer agent is John Hancock Investor Services
Corporation.
Gold & Government Fund Shares
For a discussion of Gold & Government Fund's shares of beneficial interest,
see "Organization and Management of the Funds" in the Gold & Government Fund
Prospectus.
Purchase of Gold & Government Fund Shares
For a discussion of how shares of Gold & Government Fund may be purchased or
exchanged, see "How to Buy Shares," "Alternative Purchase Arrangements" and
"Additional Services and Programs" in the Gold & Government Fund Prospectus.
In anticipation of the Reorganization, no new accounts may be opened in Gold
& Government Fund. Existing shareholders of Gold & Government Fund may
continue to purchase shares of the Fund after the Record Date.
32
<PAGE>
Redemption of Gold & Government Fund Shares
For a discussion of how Class A and Class B shares of Gold & Government Fund
may be redeemed (other than in the Reorganization), see "How to Redeem
Shares" in the Gold & Government Fund Prospectus. Gold & Government Fund
shareholders whose shares are represented by share certificates will be
required to surrender their certificates for cancellation or deliver an
affidavit of loss accompanied by an adequate surety bond to Investor Services
in order to redeem Special Opportunities Fund Shares received in the
Reorganization.
Dividends, Distributions and Taxes
For a discussion of Gold & Government Fund's policy with respect to
dividends, distributions and taxes, see "Dividends and Taxes" in the Gold &
Government Fund Prospectus.
BUSINESS OF SPECIAL OPPORTUNITIES FUND
General
For a discussion of the organization and current operation of Special
Opportunities Fund, see "Investment Objective and Policies and Certain Risk
Considerations" and "Organization and Management of the Fund" in the Special
Opportunities Fund Prospectus.
Investment Objective and Policies
For discussion of Special Opportunities Fund's investment objective and
policies, see "Investment Objective and Policies and Certain Risk
Considerations" in the Special Opportunities Fund Prospectus.
Portfolio Management
Kevin R. Baker is portfolio manager of Special Opportunities Fund and is
assisted by a team of portfolio managers and analysts.
Trustees
For a discussion of the responsibilities of Freedom Trust II's Board of
Trustees, see "Organization and Management of the Fund" in the Special
Opportunities Fund Prospectus.
Investment Adviser and Distributor
For a discussion regarding Special Opportunities Fund's investment adviser
and distributor, see "Organization and Management of the Fund," "How to Buy
Shares" and "Share Price" in the Special Opportunities Fund Prospectus.
Expenses
For a discussion of Special Opportunities Fund's expenses, see "Expense
Information" and "The Fund's Expenses" in the Special Opportunities Fund
Prospectus.
Custodian and Transfer Agent
Special Opportunities Fund's custodian is Investors Bank & Trust Company.
Special Opportunities Fund's transfer agent is John Hancock Investor Services
Corporation.
33
<PAGE>
Special Opportunities Fund Shares
For a discussion of the Special Opportunities Fund Shares, see "Organization
and Management of the Fund" in the Special Opportunities Fund Prospectus.
Purchase of Special Opportunities Fund Shares
For a discussion of how Class A and Class B shares of Special Opportunities
Fund may be purchased or exchanged, see "How to Buy Shares," "Alternative
Purchase Arrangements" and "Additional Services and Programs" in the Special
Opportunities Fund Prospectus.
Redemption of Special Opportunities Fund Shares
For a discussion of how Class A and Class B shares of Special Opportunities
Fund may be redeemed, see "How to Redeem Shares" in the Special Opportunities
Fund Prospectus. Former shareholders of Gold & Government Fund whose shares
are represented by share certificates will be required to surrender their
certificates for cancellation or deliver an affidavit of loss accompanied by
an adequate surety bond to Investor Services in order to redeem Special
Opportunities Fund Shares received in the Reorganization.
Dividends, Distributions and Taxes
For a discussion of Special Opportunities Fund's policy with respect to
dividends, distributions and taxes, see "Dividends and Taxes" in the Special
Opportunities Fund Prospectus.
EXPERTS
The respective financial statements and the financial highlights of Special
Opportunities Fund and Gold & Government Fund as of October 31, 1995 and for
the year then ended, incorporated by reference into this Proxy Statement and
Prospectus, have been audited by Price Waterhouse LLP, independent auditors,
as set forth in their report thereon appearing in the Statement of Additional
Information, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act, and in accordance
therewith files reports, proxy statements and other information with the SEC.
These reports, proxy statements and other information filed by Freedom Trust
and Freedom Trust II, respectively, on behalf of each Fund, can be inspected
and copied (at prescribed rates) at the public reference facilities of the
SEC at 450 Fifth Street, N.W., Washington, D.C., and at the following
regional office: New York (7 World Trade Center, Suite 1300, New York, New
York). Copies of such material can also be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
34
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 28th
day of June, 1996, by and between John Hancock Special Opportunities Fund (the
"Acquiring Fund"), a series of Freedom Investment Trust II, a Massachusetts
business trust (the "Trust II"), and John Hancock Gold & Government Fund (the
"Acquired Fund"), a series of Freedom Investment Trust, a Massachusetts business
trust (the "Trust") each with their principal place of business at 101
Huntington Avenue, Boston, Massachusetts 02199. The Acquiring Fund and the
Acquired Fund are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of "reorganization,"
as such term is used in Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization will consist of the transfer of all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for the
issuance of Class A and Class B shares of beneficial interest of the Acquiring
Fund (the "Acquiring Fund Shares") to the Acquired Fund and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund, followed by
the distribution by the Acquired Fund, on or promptly after the Closing Date
hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in liquidation and termination of the Acquired Fund as provided
herein, all upon the terms and conditions set forth in this Agreement.
In consideration of the premises of the covenants and agreements hereinafter set
forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES; LIQUIDATION OF THE
ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets (consisting, without
limitation, of portfolio securities and instruments, dividends and interest
receivables, cash and other assets), as set forth in the statement of
assets and liabilities referred to in Paragraph 7.2 hereof (the "Statement
of Assets and Liabilities"), to the Acquiring Fund free and clear of all
liens and encumbrances, except as otherwise provided herein, in exchange
for (i) the assumption by the Acquiring Fund of the known and unknown
liabilities of the Acquired Fund, including the liabilities set forth in
the Statement of Assets and Liabilities (the "Acquired Fund Liabilities"),
which shall be assigned and transferred to the Acquiring Fund by the
Acquired Fund and assumed by the Acquiring Fund, and (ii) delivery by the
Acquiring Fund to the Acquired Fund, for distribution pro rata by the
Acquired Fund to its shareholders in proportion to their respective
ownership of Class A and/or Class B shares of beneficial interest of the
Acquired Fund, as of the close of business on August 16, 1996 (the "Closing
Date"), of a number of the Acquiring Fund Shares having an aggregate net
asset value equal, in the case of each class of Acquiring Fund Shares, to
the value of the assets, less
<PAGE>
such liabilities (herein referred to as the "net value of the assets")
attributable to the applicable class, assumed, assigned and delivered, all
determined as provided in Paragraph 2.1 hereof and as of a date and time as
specified therein. Such transactions shall take place at the closing
provided for in Paragraph 3.1 hereof (the "Closing"). All computations
shall be provided by Investors Bank & Trust Company (the "Custodian"), as
custodian and pricing agent for the Acquiring Fund and the Acquired Fund.
1.2 The Acquired Fund has provided the Acquiring Fund with a list of the
current securities holdings of the Acquired Fund as of the date of
execution of this Agreement. The Acquired Fund reserves the right to sell
any of these securities (except to the extent sales may be limited by
representations made in connection with issuance of the tax opinion
provided for in paragraph 8.6 hereof) but will not, without the prior
approval of the Acquiring Fund, acquire any additional securities other
than securities of the type in which the Acquiring Fund is permitted to
invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear its own expenses
in connection with the transactions contemplated by this Agreement.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund will liquidate and distribute pro
rata to shareholders of record (the "Acquired Fund shareholders"),
determined as of the close of regular trading on the New York Stock
Exchange on the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of
the Acquiring Fund, to open accounts on the share records of the Acquiring
Fund in the names of the Acquired Fund shareholders and representing the
respective pro rata number and class of Acquiring Fund Shares due such
shareholders. Acquired Fund shareholders who own Class A shares of the
Acquired Fund will receive Class A Acquiring Fund Shares and Acquired Fund
shareholders who own Class B shares of the Acquired Fund will receive Class
B Acquiring Fund Shares. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such exchange.
1.5 The Acquired Fund shareholders holding certificates representing their
ownership of shares of beneficial interest of the Acquired Fund shall
surrender such certificates or deliver an affidavit with respect to lost
certificates in such form and accompanied by such surety bonds as the
Acquired Fund may require (collectively, an "Affidavit"), to John Hancock
Investor Services Corporation prior to the Closing Date. Any Acquired Fund
share certificate which remains outstanding on the Closing Date shall be
deemed to be canceled, shall no longer evidence ownership of shares of
beneficial interest of the Acquired Fund and shall evidence ownership of
Acquiring Fund Shares. Unless and until any such certificate shall be so
surrendered or an Affidavit relating thereto shall be delivered, dividends
and other distributions payable by the Acquiring Fund subsequent to the
Liquidation Date with respect to Acquiring Fund Shares shall be paid to the
holder of such certificate(s), but such
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<PAGE>
shareholders may not redeem or transfer Acquiring Fund Shares received in
the Reorganization. The Acquiring Fund will not issue share certificates in
the Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a name
other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance
and transfer, be paid by the person to whom such Acquiring Fund Shares are
to be issued and transferred.
1.7 The existence of the Acquired Fund shall be terminated as promptly as
practicable following the Liquidation Date.
1.8 Any reporting responsibility of the Trust, including, but not limited to,
the responsibility for filing of regulatory reports, tax returns, or other
documents with the Securities and Exchange Commission (the "Commission"),
any state securities commissions, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Trust.
2. VALUATION
2.1 The net asset values of the Class A and Class B Acquiring Fund Shares and
the net values of the assets and liabilities of the Acquired Fund
attributable to its Class A and Class B shares to be transferred shall, in
each case, be determined as of the close of business (4:00 p.m. Boston
time) on the Closing Date. The net asset values of the Class A and Class B
Acquiring Fund Shares shall be computed by the Custodian in the manner set
forth in the Acquiring Fund's Declaration of Trust as amended and restated
(the "Declaration"), or By-Laws and the Acquiring Fund's then-current
prospectus and statement of additional information and shall be computed in
each case to not fewer than four decimal places. The net values of the
assets of the Acquired Fund attributable to its Class A and Class B shares
to be transferred shall be computed by the Custodian by calculating the
value of the assets of each class transferred by the Acquired Fund and by
subtracting therefrom the amount of the liabilities of each class assigned
and transferred to and assumed by the Acquiring Fund on the Closing Date,
said assets and liabilities to be valued in the manner set forth in the
Acquired Fund's then current prospectus and statement of additional
information and shall be computed in each case to not fewer than four
decimal places.
2.2 The number of shares of each class of Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's
assets shall be determined by dividing the value of the Acquired Fund's
assets attributable to a class, less the liabilities attributable to that
class assumed by the Acquiring Fund, by the Acquiring Fund's net asset
value per share of the same class, all as determined in accordance with
Paragraph 2.1 hereof.
2.3 All computations of value shall be made by the Custodian in accordance with
its regular practice as pricing agent for the Funds.
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<PAGE>
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be August 16, 1996 or such other date on or before
December 31, 1996 as the parties may agree. The Closing shall be held as of
5:00 p.m. at the offices of the Trust II and the Trust, 101 Huntington
Avenue, Boston, Massachusetts 02199, or at such other time and/or place as
the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name of
the Custodian as record holder for the Acquired Fund shall be presented by
the Acquired Fund to the Custodian for examination no later than three
business days preceding the Closing Date. Portfolio securities which are
not held in book-entry form shall be delivered by the Acquired Fund to the
Custodian for the account of the Acquiring Fund on the Closing Date, duly
endorsed in proper form for transfer, in such condition as to constitute
good delivery thereof in accordance with the custom of brokers, and shall
be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof. Portfolio securities
held of record by the Custodian in book-entry form on behalf of the
Acquired Fund shall be delivered to the Acquiring Fund by the Custodian by
recording the transfer of beneficial ownership thereof on its records. The
cash delivered shall be in the form of currency or by the Custodian
crediting the Acquiring Fund's account maintained with the Custodian with
immediately available funds.
3.3 In the event that on the Closing Date (a) the New York Stock Exchange shall
be closed to trading or trading thereon shall be restricted or (b) trading
or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date
shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored;
provided that if trading shall not be fully resumed and reporting restored
on or before December 31, 1996, this Agreement may be terminated by the
Acquiring Fund or by the Acquired Fund upon the giving of written notice to
the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding
and nonresident alien withholding status of the Acquired Fund shareholders
and the number of outstanding shares of each class of beneficial interest
of the Acquired Fund owned by each such shareholder, all as of the close of
business on the Closing Date, certified by its Treasurer, Secretary or
other authorized officer (the "Shareholder List"). The Acquiring Fund shall
issue and deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or provide
evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares
have been credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.
-4-
<PAGE>
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust on behalf of the Acquired Fund represents, warrants and covenants
to the Acquiring Fund as follows:
(a) The Trust is a business trust, duly organized, validly existing and in
good standing under the laws of The Commonwealth of Massachusetts and
has the power to own all of its properties and assets and, subject to
approval by the shareholders of the Acquired Fund, to carry out the
transactions contemplated by this Agreement. Neither the Trust nor the
Acquired Fund is required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure to
qualify would subject it to any material liability or disability. The
Trust has all necessary federal, state and local authorizations to own
all of its properties and assets and to carry on its business as now
being conducted;
(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), is in full force and effect. The Acquired
Fund is a diversified series of the Trust;
(c) The Trust and the Acquired Fund are not, and the execution, delivery
and performance of their obligations under this Agreement will not
result, in violation of any provision of the Trust's Declaration of
Trust, as amended and restated (the "Trust's Declaration") or By-Laws
or of any agreement, indenture, instrument, contract, lease or other
undertaking to which the Trust or the Acquired Fund is a party or by
which it is bound;
(d) Except as otherwise disclosed in writing and accepted by the Acquiring
Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Trust or the Acquired Fund or any of
the Acquired Fund's properties or assets. The Trust knows of no facts
which might form the basis for the institution of such proceedings,
and neither the Trust nor the Acquired Fund is a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the Acquired
Fund's business or its ability to consummate the transactions herein
contemplated;
(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement or agreements for the purchase of
securities entered into in the ordinary course of business and
consistent with its obligations under this Agreement) which will not
be terminated without liability to the Acquired Fund at or prior to
the Closing Date;
(f) The unaudited statement of assets and liabilities, including the
schedule of investments, of the Acquired Fund as of October 31, 1995
and the related statement of operations (copies of which have been
furnished to the Acquiring Fund) present fairly in all material
respects the financial condition of the Acquired Fund as of October
31, 1995 and the results of its operations for the period then ended
in accordance with generally accepted accounting
-5-
<PAGE>
principles consistently applied, and there were no known actual or
contingent liabilities of the Acquired Fund as of the respective dates
thereof not disclosed therein;
(g) Since October 31, 1995, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by the
Acquiring Fund;
(h) At the date hereof and by the Closing Date, all federal, state and
other tax returns and reports, including information returns and payee
statements, of the Acquired Fund required by law to have been filed or
furnished by such dates shall have been filed or furnished, and all
federal, state and other taxes, interest and penalties shall have been
paid so far as due, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no such
return is currently under audit and no assessment has been asserted
with respect to such returns or reports;
(i) The Acquired Fund has elected to be treated as a regulated investment
company for federal income tax purposes, has qualified as such for
each taxable year of its operation and will qualify as such as of the
Closing Date with respect to its final taxable year ending on the
Closing Date;
(j) The authorized capital of the Acquired Fund consists of an unlimited
number of shares of beneficial interest, no par value. All issued and
outstanding shares of beneficial interest of the Acquired Fund are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Trust. All of the
issued and outstanding shares of beneficial interest of the Acquired
Fund will, at the time of Closing, be held by the persons and in the
amounts and classes set forth in the Shareholder List submitted to the
Acquiring Fund pursuant to Paragraph 3.4 hereof. The Acquired Fund
does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of beneficial interest,
nor is there outstanding any security convertible into any of its
shares of beneficial interest;
(k) At the Closing Date, the Acquired Fund will have good and marketable
title to the assets to be transferred to the Acquiring Fund pursuant
to Paragraph 1.1 hereof, and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, and upon delivery
and payment for such assets, the Acquiring Fund will acquire good and
marketable title thereto subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the
Securities Act of 1933, as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Trust on
behalf of the Acquired Fund, and this Agreement constitutes a valid
and binding obligation of the Trust and the Acquired Fund enforceable
in accordance with its terms, subject to the approval of the Acquired
Fund's shareholders;
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<PAGE>
(m) The information to be furnished by the Acquired Fund to the Acquiring
Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate
and complete and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable
thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy Statement") to be
included in the Registration Statement referred to in Paragraph 5.7
hereof (other than written information furnished by the Acquiring Fund
for inclusion therein, as covered by the Acquiring Fund's warranty in
Paragraph 4.2(m) hereof), on the effective date of the Registration
Statement, on the date of the meeting of the Acquired Fund
shareholders and on the Closing Date, shall not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this Agreement;
(p) All of the issued and outstanding shares of beneficial interest of the
Acquired Fund have been offered for sale and sold in conformity with
all applicable federal and state securities laws;
(q) The prospectus of the Acquired Fund, dated March 1, 1996 (the
"Acquired Fund Prospectus"), previously furnished to the Acquiring
Fund, does not contain any untrue statements of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
4.2 The Trust II on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:
(a) The Trust II is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts
and has the power to own all of its properties and assets and to carry
out the Agreement. Neither the Trust II nor the Acquiring Fund is
required to qualify to do business in any jurisdiction in which it is
not so qualified or where failure to qualify would subject it to any
material liability or disability. The Trust II has all necessary
federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted;
(b) The Trust II is a registered investment company classified as a
management company and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect. The
Acquiring Fund is a non-diversified series of the Trust II;
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<PAGE>
(c) The prospectus (the "Acquiring Fund Prospectus") and statement of
additional information for Class A and Class B shares of the Acquiring
Fund, each dated March 1, 1996, and any amendments or supplements
thereto on or prior to the Closing Date, and the Registration
Statement on Form N-14 to be filed in connection with this Agreement
(the "Registration Statement") (other than written information
furnished by the Acquired Fund for inclusion therein, as covered by
the Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform
in all material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Commission
thereunder, the Acquiring Fund Prospectus does not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and the Registration Statement will not include any untrue
statement of material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(d) At the Closing Date, the Trust II on behalf of the Acquiring Fund will
have good and marketable title to the assets of the Acquiring Fund;
(e) The Trust II and the Acquiring Fund are not, and the execution,
delivery and performance of their obligations under this Agreement
will not result, in violation of any provisions of the Trust II's
Declaration, or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Trust II or the
Acquiring Fund is a party or by which the Trust II or the Acquiring
Fund is bound;
(f) Except as otherwise disclosed in writing and accepted by the Acquired
Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or threatened against the Trust II or the Acquiring Fund or
any of the Acquiring Fund's properties or assets. The Trust II knows
of no facts which might form the basis for the institution of such
proceedings, and neither the Trust II nor the Acquiring Fund is a
party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely
affects the Acquiring Fund's business or its ability to consummate the
transactions herein contemplated;
(g) The unaudited statement of assets and liabilities, including the
schedule of investments, of the Acquiring Fund as of October 31, 1995
and the related statement of operations (copies of which have been
furnished to the Acquired Fund), present fairly in all material
respects the financial condition of the Acquiring Fund as of October
31, 1995 and the results of its operations for the period then ended
in accordance with generally accepted accounting principles
consistently applied, and there were no known actual or contingent
liabilities of the Acquiring Fund as of the respective dates thereof
not disclosed herein;
(h) Since October 31, 1995, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Trust II on behalf of the Acquiring
-8-
<PAGE>
Fund of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed to and accepted by the
Acquired Fund;
(i) The Acquiring Fund has elected to be treated as a regulated investment
company for federal income tax purposes, has qualified as such for
each taxable year of its operation and will qualify as such as of the
Closing Date;
(j) The authorized capital of the Trust II consists of an unlimited number
of shares of beneficial interest, no par value per share. All issued
and outstanding shares of beneficial interest of the Acquiring Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Trust II. The
Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any of its shares of
beneficial interest, nor is there outstanding any security convertible
into any of its shares of beneficial interest;
(k) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Trust II on
behalf of the Acquiring Fund, and this Agreement constitutes a valid
and binding obligation of the Acquiring Fund enforceable in accordance
with its terms;
(l) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund pursuant to the terms of this Agreement, when so issued and
delivered, will be duly and validly issued shares of beneficial
interest of the Acquiring Fund and will be fully paid and
nonassessable by the Trust II;
(m) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with federal securities and
other laws and regulations applicable thereto; and
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by the Agreement,
except for the registration of the Acquiring Fund Shares under the
1933 Act, the 1940 Act and under state securities laws.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary, the Trust on
behalf of the Acquired Fund and the Trust II on behalf of Acquiring Fund,
will operate their respective businesses in the ordinary course between the
date hereof and the Closing Date, it being understood that such ordinary
course of business will include customary dividends and distributions and
any other distributions necessary or desirable to avoid federal income or
excise taxes.
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<PAGE>
5.2 The Trust will call a meeting of the Acquired Fund shareholders to consider
and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of
this Agreement.
5.4 The Trust on behalf of the Acquired Fund will provide such information
within its possession or reasonably obtainable as the Trust II on behalf of
the Acquiring Fund requests concerning the beneficial ownership of the
Acquired Fund's shares of beneficial interest.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund each shall take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
5.6 The Trust on behalf of the Acquired Fund shall furnish to the Trust II on
behalf of the Acquiring Fund on the Closing Date the Statement of Assets
and Liabilities of the Acquired Fund as of the Closing Date, which
statement shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall be certified by the
Acquired Fund's Treasurer or Assistant Treasurer. As promptly as
practicable but in any case within 60 days after the Closing Date, the
Acquired Fund shall furnish to the Acquiring Fund, in such form as is
reasonably satisfactory to the Trust II, a statement of the earnings and
profits of the Acquired Fund for federal income tax purposes and of any
capital loss carryovers and other items that will be carried over to the
Acquiring Fund as a result of Section 381 of the Code, and which statement
will be certified by the President of the Acquired Fund.
5.7 The Trust II on behalf of the Acquiring Fund will prepare and file with the
Commission the Registration Statement in compliance with the 1933 Act and
the 1940 Act in connection with the issuance of the Acquiring Fund Shares
as contemplated herein.
5.8 The Trust on behalf of the Acquired Fund will prepare a Proxy Statement, to
be included in the Registration Statement in compliance with the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
1940 Act and the rules and regulations thereunder (collectively, the
"Acts") in connection with the special meeting of shareholders of the
Acquired Fund to consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE ACQUIRED
FUND
The obligations of the Trust on behalf of the Acquired Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Trust II on behalf of the
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<PAGE>
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the Trust II on behalf of the
Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date;
and
6.2 The Trust II on behalf of the Acquiring Fund shall have delivered to the
Acquired Fund a certificate executed in its name by the Trust II's
President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the Acquired Fund and dated as of the
Closing Date, to the effect that the representations and warranties of the
Trust II on behalf of the Acquiring Fund made in this Agreement are true
and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other
matters as the Trust on behalf of the Acquired Fund shall reasonably
request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST II ON BEHALF OF THE
ACQUIRING FUND
The obligations of the Trust II on behalf of the Acquiring Fund to complete the
transactions provided for herein shall be, at its election, subject to the
performance by the Acquired Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Acquired Fund contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as
if made on and as of the Closing Date;
7.2 The Trust on behalf of the Acquired Fund shall have delivered to the Trust
II on behalf of the Acquiring Fund the Statement of Assets and Liabilities
of the Acquired Fund, together with a list of its portfolio securities
showing the federal income tax bases and holding periods of such
securities, as of the Closing Date, certified by the Treasurer or Assistant
Treasurer of the Trust;
7.3 The Trust on behalf of the Acquired Fund shall have delivered to the Trust
II on behalf of the Acquiring Fund on the Closing Date a certificate
executed in the name of the Acquired Fund by a President or Vice President
and a Treasurer or Assistant Treasurer of the Trust, in form and substance
satisfactory to the Trust II on behalf of the Acquiring Fund and dated as
of the Closing Date, to the effect that the representations and warranties
of the Acquired Fund in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Trust
II on behalf of the Acquiring Fund shall reasonably request; and
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<PAGE>
7.4 At or prior to the Closing Date, the Acquired Fund's investment adviser, or
an affiliate thereof, shall have made all payments, or applied all credits,
to the Acquired Fund required by any applicable contractual or
state-imposed expense limitation.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE TRUST II
The obligations hereunder of the Trust II on behalf of the Acquiring Fund and
the Trust on behalf of the Acquired Fund are each subject to the further
conditions that on or before the Closing Date:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
beneficial interest of the Acquired Fund in accordance with the provisions
of the Trust's Declaration and By-Laws, and certified copies of the
resolutions evidencing such approval by the Acquired Fund's shareholders
shall have been delivered by the Acquired Fund to the Trust II on behalf of
the Acquiring Fund;
8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain
or prohibit, or obtain changes or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and permits of
federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities, including
"no-action" positions of such federal or state authorities) deemed
necessary by the Trust or the Trust II to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Acquired Fund, provided that either
party hereto may waive any such conditions for itself;
8.4 The Registration Statement shall have become effective under the 1933 Act
and the 1940 Act and no stop orders suspending the effectiveness thereof
shall have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or
be pending, threatened or contemplated under the 1933 Act or the 1940 Act;
8.5 The Acquired Fund shall have distributed to its shareholders all of its
investment company taxable income (as defined in Section 852(b)(2) of the
Code) for its taxable year ending on the Closing Date and all of its net
capital gain (as such term is used in Section 852(b)(3)(C) of the Code),
after reduction by any available capital loss carryforward, for its taxable
year ending on the Closing Date; and
-12-
<PAGE>
8.6 The parties shall have received an opinion of Messrs. Hale and Dorr,
satisfactory to the Trust on behalf of the Acquired Fund and the Trust II
on behalf of the Acquiring Fund, substantially to the effect that for
federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund
Shares to the Acquired Fund and the assumption of all of the Acquired
Fund Liabilities by the Acquiring Fund, followed by the distribution
by the Acquired Fund, in liquidation of the Acquired Fund, of
Acquiring Fund Shares to the shareholders of the Acquired Fund in
exchange for their shares of beneficial interest of the Acquired Fund
and the termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and
the Acquired Fund and the Acquiring Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon (i) the
transfer of all of its assets to the Acquiring Fund solely in exchange
for the issuance of Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring
Fund; and (ii) the distribution by the Acquired Fund of such Acquiring
Fund Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
issuance of the Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring
Fund;
(d) The basis of the assets of the Acquired Fund acquired by the Acquiring
Fund will be, in each instance, the same as the basis of those assets
in the hands of the Acquired Fund immediately prior to the transfer;
(e) The tax holding period of the assets of the Acquired Fund in the hands
of the Acquiring Fund will, in each instance, include the Acquired
Fund's tax holding period for those assets;
(f) The shareholders of the Acquired Fund will not recognize gain or loss
upon the exchange of all of their shares of beneficial interest of the
Acquired Fund solely for Acquiring Fund Shares as part of the
transaction;
(g) The basis of the Acquiring Fund Shares received by the Acquired Fund
shareholders in the transaction will be the same as the basis of the
shares of beneficial interest of the Acquired Fund surrendered in
exchange therefor; and
(h) The tax holding period of the Acquiring Fund Shares received by the
Acquired Fund shareholders will include, for each shareholder, the tax
holding period for the shares of the Acquired Fund surrendered in
exchange therefor, provided that the Acquired Fund shares were held as
capital assets on the date of the exchange.
-13-
<PAGE>
The Trust II and the Trust agree to make and provide representations with
respect to the Acquiring Fund and the Acquired Fund, respectively, which are
reasonably necessary to enable Hale and Dorr to deliver an opinion substantially
as set forth in this Paragraph 8.6. Notwithstanding anything herein to the
contrary, neither the Trust nor the Trust II may waive the conditions set forth
in this Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust II on behalf of the Acquiring Fund, and the Trust on behalf of
the Acquired Fund, each represent and warrant to the other, that there are
no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 The Acquiring Fund and the Acquired Fund shall each be liable solely for
its own expenses incurred in connection with entering into and carrying out
the provisions of this Agreement whether or not the transactions
contemplated hereby are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust II on behalf of the Acquiring Fund, and the Trust on behalf of
the Acquired Fund agree that neither party has made any representation,
warranty or covenant not set forth herein or referred to in Paragraph 4
hereof and that this Agreement constitutes the entire agreement between the
parties.
10.2 The representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Trust II,
on behalf of the Acquiring Fund, and the Trust on behalf of the Acquired
Fund. In addition, either party may at its option terminate this Agreement
at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Trust II's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the
Acquiring Fund's shareholders; or
-14-
<PAGE>
(d) by resolution of the Trust's Board of Trustees if circumstances should
develop that, in the good faith opinion of such Board, make proceeding
with the Agreement not in the best interests of the Acquired Fund's
shareholders.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Trust II, the Acquiring Fund, the Trust, or the
Acquired Fund, or the Trustees or officers of the Trust II or the Trust,
but each party shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon by the authorized officers of the Trust and the Trust II.
However, following the meeting of shareholders of the Acquired Fund held
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund shareholders
under this Agreement to the detriment of such shareholders without their further
approval; provided that nothing contained in this Article 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquiring Fund or to the Acquired
Fund, each at 101 Huntington Avenue, Boston, Massachusetts 02199, Attention:
President, and, in either case, with copies to Hale and Dorr, 60 State Street,
Boston, Massachusetts 02109, Attention: Pamela J.
Wilson, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
-15-
<PAGE>
14.5 All persons dealing with the Trust or the Trust II must look solely to the
property of the Trust or the Trust II, respectively, for the enforcement of
any claims against the Trust or the Trust II as the Trustees, officers,
agents and shareholders of the Trust or the Trust II assume no personal
liability for obligations entered into on behalf of the Trust or the Trust
II, respectively. None of the other series of the Trust or the Trust II
shall be responsible for any obligations assumed by on or behalf of the
Acquired Fund or the Acquiring Fund, respectively, under this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and has caused its corporate seal to be affixed hereto.
FREEDOM INVESTMENT TRUST II on behalf of
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
By: /s/ Anne C. Hodsdon
----------------------------------------
Anne C. Hodsdon
President
FREEDOM INVESTMENT TRUST on behalf of
JOHN HANCOCK GOLD & GOVERNMENT FUND
By: Susan S. Newton
----------------------------------------
Susan S. Newton
Vice President
-16-
<PAGE>
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
SUPPLEMENT TO CLASS A AND CLASS B SHARES PROSPECTUS DATED MARCH 1, 1996
The discussion of who is responsible for the day-to-day management of the Fund
contained in the "Organization and Management of the Fund" section is replaced
with the following:
Kevin R. Baker is portfolio manager of the Fund. He is supported by a
team of portfolio managers and analysts. Prior to joining the Adviser in 1994,
Mr. Baker was president of Baker Capital Management. He also worked as a
registered representative for Kidder Peabody.
3900S-4/96
April 3, 1996
<PAGE>
John Hancock
Special Opportunities Fund
Class A and Class B Shares
Prospectus
March 1, 1996
-----------------------------------------------------------------------------
TABLE OF CONTENTS
Page
-------
Expense Information 2
The Fund's Financial Highlights 3
Investment Objective and Policies and Certain Risk Considerations 5
Organization and Management of the Fund 10
Alternative Purchase Arrangements 11
The Fund's Expenses 12
Dividends and Taxes 13
Performance 14
How to Buy Shares 15
Share Price 16
How to Redeem Shares 22
Additional Services and Programs 24
This Prospectus sets forth information about John Hancock Special
Opportunities Fund (the "Fund"), a non-diversified series of Freedom Investment
Trust II, (the "Trust") that you should know before investing.
Please read and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated March 1, 1996, and incorporated by reference
into this Prospectus, free of charge by writing or telephoning: John Hancock
Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291 (1-800-544-6713 TDD).
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
The purpose of the following information is to help you understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating fees and expenses included in the table and
hypothetical example below are based on actual fees and expenses for the Class A
and Class B shares of the Fund for the fiscal year ended October 31, 1995,
adjusted to reflect current fees and expenses. Actual fees and expenses may be
greater or less than those indicated.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases (as a
percentage of offering price) 5.00% None
Maximum sales charge imposed on reinvested dividends None None
Maximum deferred sales charge None* 5.00%
Redemption fee+ None None
Exchange fee None None
Annual Fund Operating Expenses (as a percentage of
average net assets)
Management fee 0.80% 0.80%
12b-1 fee** 0.30% 1.00%
Other expenses 0.49% 0.49%
----- -------
Total Fund operating expenses 1.59% 2.29%
* No sales charge is payable at the time of purchase on investments in Class A
shares of $1 million or more, but for these investments a contingent deferred
sales charge may be imposed, as described under the caption "Share Price, "
in the event of certain redemption transactions within one year of purchase.
** The amount of the 12b-1 plan used to cover service expenses will be up to
0.25% of average daily net assets, and the remaining portion will be used to
cover distribution expenses.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
1 3 5 10
Example Year Years Years Years
- ------- ---- ----- ----- -----
You would pay the following expenses for the indicated period of years on a
hypothetical $1,000 investment, assuming 5% annual return:
<S> <C> <C> <C> <C>
Class A Shares $65 $ 98 $132 $229
Class B Shares
--Assuming complete redemption at end of
period $73 $102 $143 $245
--Assuming no redemption $23 $ 72 $123 $245
</TABLE>
(The example should not be considered as a representation of past or
future investment returns. Actual expenses may be greater or less than
shown.)
The Fund's payment of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the maximum
front-end sales charge permitted under the National Association of Securities
Dealers Rules of Fair Practice.
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."
2
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following Table of Financial Highlights has been audited by Price
Waterhouse LLP, the Fund's independent accountants, whose unqualified report is
included in the Fund's 1995 Annual Report and is included in the Statement of
Additional Information. Further information about the performance of the Fund is
contained in the Fund's Annual Report to Shareholders which may be obtained free
of charge by writing or telephoning John Hancock Investor Services Corporation
("Investor Services") at the address or telephone number listed on the front
page of this Prospectus.
<TABLE>
Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<CAPTION>
For the Period
November 1, 1993
Year Ended (Commencement of
October 31, Operations) to
1995 October 31, 1994
------------- --------------------
CLASS A
- -------
<S> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 7.93 $ 8.50
----------- ------------------
Net Investment Loss (0.07)(b) (0.03)(b)
Net Realized and Unrealized Gain (Loss) on Investments 1.46 (0.54)
----------- ------------------
Total from Investment Operations 1.39 (0.57)
Net Asset Value, End of Period $ 9.32 $ 7.93
=========== ==================
Total Investment Return at Net Asset Value 17.53% (6.71%)(f)
Total Adjusted Investment Return at Net Asset Value (a) -- (6.83%)(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $101,562 $ 92,325
Ratio of Expenses to Average Net Assets * * 1.59% 1.50%
Ratio of Adjusted Expenses to Average Net Assets (a) -- 1.62%
Ratio of Net Investment Loss to Average Net Assets (0,87%) (0.41%)
Ratio of Adjusted Net Investment Loss to Average Net Assets
(a) -- (0.53%)
Portfolio Turnover Rate 155% 57%
* * Expense Reimbursement Per Share -- $ 0.01(b)
CLASS B
- -------
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 7.87 $ 8.50
----------- ------------------
Net Investment Loss (0.13)(b) (0.09)(b)
Net Realized and Unrealized Gain (Loss) on Investments 1.45 (0.54)
----------- ------------------
Total from Investment Operations 1.32 (0.63)
----------- ------------------
Net Asset Value, End of Period $ 9.19 $ 7.87
=========== ==================
Total Investment Return at Net Asset Value (d) 16.77% (7.41%)(f)
Total Adjusted Investment Return at Net Asset Value (a) -- (7.53%)(c)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $137,363 $131,983
Ratio of Expenses to Average Net Assets * * 2.30% 2.22%*
Ratio of Adjusted Expenses to Average Net Assets (a) -- 2.34%*
Ratio of Net Investment Loss to Average Net Assets (1.55%) (1.13%)*
Ratio of Adjusted Net Investment Loss to Average Net Assets
(a) -- (1.25%)*
Portfolio Turnover Rate 155% 57%
* * Expense Reimbursement Per Share -- $ 0.01(b)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
For the Period
Period July 6, 1994
Ended (Commencement of
April 11, Operations) to
1995 October 31, 1994
CLASS C (e)
- ----------
<S> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period $7.94 $7.60
----- -----
Net Investment Income 0.01 --
Net Realized and Unrealized Gain on Investments 0.29 (d) 0.34(d)
Total from Investment Operations 0.30 0.34
Net Asset Value, End of Period $8.24 $7.94
===== =====
Total Investment Return at Net Asset Value 3.40 % (4.47%)
----- -----
Total Adjusted Investment Return at Net Asset Value (a) -- (4.85%)(c)
===== =====
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $ 218 $ 165
Ratio of Expenses to Average Net Assets * * 0.98 %* 1.01%*
Ratio of Adjusted Expenses to Average Net Assets (a) -- 1.39%*
Ratio of Net Investment Income to Average Net Assets 0.23 %* 0.03%*
Ratio of Adjusted Net Investment Income to Average Net Assets
(a) -- (0.35%)*
Portfolio Turnover Rate N/A 57%
* * Expense Reimbursement Per Share -- $0.01(b)
* On an annualized basis.
(a) On an unreimbursed basis without expense reduction.
(b) On average month end shares outstanding.
(c) An estimated total return calculation which takes into consideration fees
and expenses waived or borne by the adviser during the periods shown.
(d) May not accord to amounts shown elsewhere in the financial statements.
(e) Per share operating performance and the ratios and supplemental data are
calculated as of April 11, 1995, the date on which Class C shares were
redeemed.
(f) Without the reimbursement, total investment return would be lower.
</TABLE>
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
AND CERTAIN RISK CONSIDERATIONS
The investment objective of
the Fund is long-term capital
appreciation.
The investment objective of the Fund is long-term capital appreciation. The Fund
seeks to achieve its objective by emphasizing investments in equity securities
of issuers in various economic sectors. There are market fluctuations and risks
in any investment and therefore there is no assurance that the Fund will realize
its objective.
The Fund emphasizes issuers in certain economic sectors.
The equity securities in which the Fund invests consist primarily of common
stocks of U.S. and foreign issuers but may also include preferred stocks,
convertible debt securities and warrants. The Fund seeks to achieve its
investment objective by varying the relative weighting of its portfolio
securities among various economic sectors based upon both macroeconomic factors
and the outlook for each particular sector. John Hancock Advisers, Inc. (the
"Adviser") selects equity securities for the Fund from various economic sectors,
including, but not limited to, the following: automotive and housing, consumer
goods and services, defense and aerospace, energy, financial services, health
care, heavy industry, leisure and entertainment, machinery and equipment,
precious metals, retailing, technology, transportation, utilities, foreign and
environmental. The Fund may modify these sectors if the Adviser believes that
they no longer represent appropriate investments for the Fund, or if other
sectors offer better opportunities for investment. See the Appendix to the
Statement of Additional Information for a further description of the sectors in
which the Fund invests.
The Adviser will adjust the Fund's relative weighting among the sectors in
response to changes in economic and market conditions. The Fund may focus on as
many as five of the foregoing economic sectors at any time. Under normal market
conditions, at least 90% of the Fund's investments in equity securities will be
invested in the equity securities of issuers in five or fewer of the sectors.
Subject to the Fund's policy of investing not more than 25% of its total assets
in any one industry, issuers in any one sector may represent all of the Fund's
net assets. Due to the Fund's emphasis on a few sectors, the Fund may be subject
to a greater degree of volatility than a fund that is structured in a more
diversified manner. However, the Fund retains the flexibility to invest its
assets in a broader group of sectors if a narrower range of investments is not
desirable. This flexibility may offer greater diversification than a fund that
is limited to investing in a single sector or industry. The Fund may hold
securities of issuers in fewer than all of the sectors at any given time.
In selecting securities for the Fund's portfolio, the Adviser will determine the
allocation of assets among equity securities, fixed income securities and cash,
the sectors that will be emphasized at any given time, the distribution of
securities among the various sectors, the specific industries within each sector
and the specific securities within each industry. In making the sector analysis,
the Adviser considers the general economic environment, the outlook for real
economic growth in the United States and abroad, trends and developments within
specific sectors and the outlook for interest rates and the securities markets.
A sector is a "special opportunity" when, in the opinion of the Adviser, the
issuers in that sector have a high earnings potential. In selecting particular
issuers, the Adviser considers price/earnings ratios, ratios of market to book
value, earnings growth, product innovation, market share, management quality and
capitalization.
5
<PAGE>
The Fund's investments may include securities of both large, widely traded
companies and smaller, less well-known issuers. The Fund seeks growth companies
that either occupy a dominant position in an emerging or established industry or
have a significant and growing market share in a large, fragmented industry. The
Fund seeks to invest in those companies with potential for high growth, stable
earnings, ability to self-finance, a position of industry leadership and strong
visionary management. Higher risks are often associated with investments in
companies with smaller market capitalizations. These companies may have limited
product lines, market and financial resources, or they may be dependent upon
smaller or less experienced management groups. In addition, trading volume for
these securities may be limited. Historically, the market price for these
securities has been more volatile than for securities of companies with greater
capitalization. However, securities of companies with smaller capitalization may
offer greater potential for capital appreciation, since they may be overlooked
and thus undervalued by investors.
The Fund may also invest in fixed income securities in pursuing its investment
objective or for temporary defensive purposes.
The Fund may also invest in the following fixed income securities: U.S.
Government securities and convertible and non-convertible corporate preferred
stocks and debt securities. The market value of fixed income securities varies
inversely with changes in the prevailing levels of interest rates. The market
value of convertible securities, while influenced by the prevailing level of
interest rates, is also affected by the changing value of the equity securities
into which they are convertible. The Fund may purchase fixed income debt
securities with stated maturities of up to thirty years. The corporate fixed
income securities in which the Fund may invest will be rated at least BBB by
Standard & Poors' Ratings Group ("S&P") or Baa by Moody's Investors Service,
Inc. ("Moody's") or, if unrated, determined to be of comparable quality by the
Adviser. Debt securities rated Baa or BBB are considered medium grade
obligations with speculative characteristics, and adverse economic conditions or
changing circumstances may weaken capacity to pay interest and repay principal.
If the rating of a debt security is reduced below Baa or BBB, the Adviser will
consider whatever action is appropriate consistent with the Fund's investment
objectives and policies.
The Fund is classified as a non-diversified fund. The Fund is classified as a
"non-diversified" fund to permit investment of more than 5% of its assets in the
obligations of any one issuer. Since a relatively high percentage of the Fund's
assets may be invested in the obligations of a limited number of issuers, the
value of the Fund's shares may be more susceptible to any single economic,
political or regulatory event, and to credit and market risks associated with a
single issuer, than would the shares of a diversified fund.
The Fund may employ certain investment strategies to help achieve its investment
objectives.
Foreign Securities. The Fund may invest in securities of foreign issuers,
including securities in the form of sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or other securities
convertible into securities of foreign issuers. ADRs are receipts typically
issued by an American bank or trust company, which evidence ownership of
underlying securities issued by a foreign corporation. EDRs are receipts issued
in Europe which evidence a similar ownership arrangement. Generally, ADRs are
designed for use in United States securities markets and EDRs are designed for
use in European securities markets. Issuers of unsponsored ADRs are not
contractually obligated to disclose material information
6
<PAGE>
in the United States and, therefore, there may not be a correlation between that
information and the market value of the ADR.
Foreign Currencies. Due to its investments in foreign securities, the Fund may
hold a portion of its assets in foreign currencies. As a result, the Fund may
enter into forward foreign currency contracts to protect against changes in
foreign currency exchange rates. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future date
at a price set at the time of the contract. Although hedging strategies might
reduce the risk of loss due to a decline in the value of the hedged foreign
currency, they may also limit any potential gain which might result from an
increase in the value of the currency.
Futures Contracts and Options on Futures. The Fund may buy and sell financial
futures contracts and options on futures to hedge against the effects of
fluctuations in securities prices, interest rates, currency exchange rates and
other market conditions and for speculative purposes. The potential loss
incurred by the Fund in writing options on futures is unlimited and may exceed
the amount of the premium received. The Fund's futures contracts and options on
futures will be traded on a U.S. or foreign commodity exchange or board of
trade. The Fund will not engage in a futures or options transaction for
speculative purposes, if immediately thereafter, the sum of initial margin
deposits on existing positions and premiums required to establish speculative
positions in futures contracts and options on futures would exceed 5% of the
Fund's net assets. The Fund intends to comply with the CFTC regulations with
respect to its speculative transactions. These regulations are discussed further
in the Statement of Additional Information.
Options Transactions. The Fund may write (sell) listed and over-the-counter
covered call and put options on securities in which it may invest, and on
indices composed of securities in which it may invest. The Fund may also
purchase put and call options on these securities and indices. All call options
written by the Fund are covered, which means that the Fund will own the
securities subject to the option as long as the option is outstanding. All put
options written by the Fund are also covered, which means that the Fund will
have deposited with its custodian cash, or liquid high grade debt securities
with a value at least equal to the exercise price of the put option. Call and
put options written by the Fund will also be considered to be covered, to the
extent that the Fund's liabilities under these options are wholly or partially
offset by its rights under call and put options purchased by the Fund. The Fund
will treat purchased over-the-counter options and assets used to cover written
over-the-counter options as illiquid securities. However, with respect to
options written with primary dealers in U.S. Government securities pursuant to
an agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the formula
price.
While transactions in options and futures contracts may reduce certain risks,
they may entail other risks. Certain risks arise due to the imperfect
correlations between movements in the price of the contracts, and movements in
the prices of the securities or currency that underly the contract. In addition,
the Fund could be prevented from opening, or realizing the benefits of closing
out, a futures or options position because of position limits or limits on daily
price fluctuations imposed by an exchange. There can be no assurance that a
liquid secondary market will exist for any option or futures
7
<PAGE>
contract. The Fund's ability to hedge successfully will depend on the Adviser's
ability to predict accurately the future direction of securities and currency
markets and interest rates. Transactions in futures contracts involve brokerage
costs, require margin deposits, and require the Fund to segregate liquid high
grade debt securities in an amount equal to the value of contracts that involve
the purchase of the underlying asset or its economic equivalent. The potential
loss from writing options is potentially unlimited and may exceed the amount of
the premium received.
Short Sales. The Fund may engage in short sales "against the box", as well as
short sales to hedge against or profit from an anticipated decline in the value
of a security. When the Fund engages in a short sale, it will place in a
segregated account, cash or U.S. government securities in accordance with
applicable regulatory requirements. These will be marked to market daily. See
the Statement of Additional Information.
Restricted Securities. The Fund may purchase restricted securities, including
those eligible for resale to "qualified institutional buyers" pursuant to Rule
144A under the Securities Act of 1933 (the "Securities Act"). The Trustees will
monitor the Fund's investments in these securities, focusing on certain factors,
including valuation, liquidity and availability of information. Purchases of
other restricted securities are subject to an investment restriction limiting
all the Fund's illiquid securities to not more than 15% of its net assets.
Lending of Securities. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the loaned securities. As a result, the Fund may incur a loss or in the event of
the borrower's bankruptcy may be delayed in or prevented from liquidating the
collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value in excess of 33-1/3% of its total assets.
Repurchase Agreements, Forward Commitments and When-Issued Securities. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment or when-issued basis. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back to the issuer at a
higher price. These transactions must be fully collateralized at all times, but
involve some credit risk to the Fund if the other party defaults on its
obligation and the Fund is delayed in or prevented from liquidating the
collateral. The Fund will segregate in a separate account cash or liquid, high
grade debt securities equal in value to its forward commitments and when-issued
securities. Purchasing securities for future delivery or on a when-issued basis
may increase the Fund's overall investment exposure and involves a risk of loss
if the value of the securities declines before the settlement date.
Short-Term Trading. Short-term trading means the purchasing and subsequent
sale of a security after it has been held for a relatively brief period of
time. The Fund engages in short-term trading in response to changes in
interest rates, securities prices or other economic trends and developments.
8
<PAGE>
Investment in foreign securities may involve risks that are not present in
domestic investments.
Global Risks. Investments in foreign securities may involve certain risks not
present in domestic securities due to exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of expropriation, confiscatory taxation or political, economic or
social instability. There may be difficulty in enforcing legal rights outside
the United States. Some foreign companies are not subject to the same uniform
financial reporting requirements, accounting standards and government
supervision as domestic companies, and foreign exchange markets are regulated
differently from the U.S. stock market. Security trading practices abroad may
offer less protection to investors such as the Fund. In addition, foreign
securities may be denominated in the currency of the country in which the issuer
is located. Consequently, changes in foreign exchange rates will affect the
value of the Fund's shares and dividends. Finally, the expense ratios of
international funds generally are higher than those of domestic funds because
there are greater costs associated with maintaining custody of foreign
securities and the increased research necessary for international investing
results in a higher advisory fee.
These risks may be intensified in the case of investments in emerging markets or
countries with limited or developing capital markets. These countries are
located in the Asia-Pacific region, Eastern Europe, Latin and South America and
Africa. Security prices in these markets can be significantly more volatile than
in more developed countries, reflecting the greater uncertainties of investing
in less established markets and economies. Political, legal and economic
structures in many of these emerging market countries may be undergoing
significant evolution and rapid development, and they may lack the social,
political, legal and economic stability characteristic of more developed
countries. Emerging market countries may have failed in the past to recognize
private property rights. They may have relatively unstable governments, present
the risk of nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of property
rights than more developed countries. Their economies may be predominantly based
on only a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rate and currency exchange rates. Local securities markets may trade a
small number of securities and may be unable to respond effectively to increases
in trading volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. The Fund may be required to establish special
custodial or other arrangements before making certain investments in those
countries. Securities of issuers located in these countries may have limited
marketability and may be subject to more abrupt or erratic price movements.
Investment Restrictions. The Fund has adopted certain investment restrictions
which are detailed in the Statement of Additional Information, where they are
designated as fundamental or nonfundamental. Fundamental investment restrictions
may not be changed without shareholder approval. All other investment policies
and restrictions are nonfundamental and can be changed by a vote of the Trustees
without shareholder approval. Portfolio turnover rates of the Fund for recent
years are shown in the section "The Fund's Financial Highlights."
9
<PAGE>
Brokers are chosen based on best price and execution.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable prices, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. They are indirectly owned by John Hancock Mutual Life Insurance
Company, (the "Life Company"), which in turn indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
The Trustees elect officers and retain the investment adviser, who is
responsible for the day-to-day operations of the Fund, subject to the Trustees'
policies and supervision.
The Fund is a non-diversified series of Freedom Investment Trust II, an open-end
management investment company organized as a Massachusetts business trust in
1986. The Fund has an unlimited number of authorized shares of beneficial
interest. The Trust's Declaration of Trust permits the Trustees to create,
classify and reclassify the shares into one or more classes. The Trustees have
authorized the issuance of two classes of the Fund, designated Class A and Class
B. The shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights as to voting, redemption,
dividends and liquidation. However, each class bears different distribution and
transfer agent fees and Class A and Class B shareholders have exclusive voting
rights with respect to their distribution plans.
The Fund is not required to hold annual shareholder meetings, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental policies or approving a management contract. The Fund,
under certain circumstances, will assist in shareholder communications with
other shareholders.
John Hancock Advisers, Inc.
advises investment companies
having a total asset value of
more than $16 billion.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds"), an indirect subsidiary of the Life Company, distributes
shares for all of the John Hancock funds through selected broker-dealers
("Selling Brokers"). Certain Fund officers are also officers of the Adviser and
John Hancock Funds. Pursuant to an order granted by the Securities and Exchange
Commission, the Fund has adopted a deferred compensation plan for its
independent Trustees which allows Trustees' fees to be invested by the Fund in
other John Hancock funds.
Day-to-day management of the Fund is carried out by Michael P. DiCarlo and
Kevin R. Baker. Mr. DiCarlo also manages John Hancock Special Equities Fund
and other John Hancock funds. Mr. DiCarlo is Executive Vice President of the
Adviser and has been associated with the Adviser since 1984. Prior to joining
the Adviser in 1994, Mr. Baker was President of Baker Capital Management. He
also worked as a registered representative for Kidder Peabody.
In order to avoid conflicts with portfolio trades for the Fund, the Adviser and
the Fund have adopted extensive restrictions on personal securities trading by
personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions
10
<PAGE>
to specified charities of profits on securities held for less than 91 days.
These restrictions are a continuation of the basic principle that the interests
of the Fund and its shareholders come first.
ALTERNATIVE PURCHASE ARRANGEMENTS
An alternative purchase plan allows you to choose the method of purchase that is
best for you.
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge Alternative--Class
A Shares") or on a contingent deferred basis (see "Contingent Deferred Sales
Charge Alternative--Class B Shares"). If you do not specify on your account
application the class of shares you are purchasing, it will be assumed that you
are investing in Class A shares.
Investments in Class A shares
are subject to an initial
sales charge.
Class A Shares. If you elect to purchase Class A shares, you will incur an
initial sales charge unless the amount you purchase is $1 million or more. If
you purchase $1 million or more of Class A shares you will not be subject to an
initial sales charge, but you will incur a sales charge if you redeem your
shares within one year of purchase. Class A shares are subject to ongoing
distribution and service fees at a combined annual rate of up to 0.30% of the
Fund's average daily net assets attributable to the Class A shares. Certain
purchases of Class A shares qualify for reduced initial sales charges. See
"Share Price-Qualifying for a Reduced Sales Charge."
Investments in Class B shares are subject to a contingent deferred sales charge.
Class B Shares. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the "contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
Class A shares. To the extent that any dividends are paid by the Fund, these
higher expenses will also result in lower dividends than those paid on Class A
shares.
Class B shares are not available to full-service defined contribution plans
administered by John Hancock Investor Services Corporation ("Investor Services")
or The Life Company that had more than 100 eligible employees at the inception
of the Fund account.
Factors to Consider in Choosing an Alternative
You should consider which class of shares will be more beneficial for you.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares, given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time, and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on the inside cover page of this Prospectus shows examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for reduced sales charges. See "Share
Price--Qualifying for a Reduced Sales Charge."
11
<PAGE>
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent any
dividends are paid. However, because initial sales charges are deducted at the
time of purchase, you would not have all of your funds invested initially and,
therefore, would initially own fewer shares. If you do not qualify for reduced
initial sales charges and expect to maintain your investment for an extended
period of time, you might consider purchasing Class A shares. This is because
the accumulated distribution and service charges on Class B shares may exceed
the initial sales charge and accumulated distribution and service charges on
Class A shares during the life of your investment.
Alternatively, you might determine than it is more advantageous to purchase
Class B shares in order to have all your funds invested initially. However, you
will be subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of shares will be paid from the proceeds of
the initial sales charge and the ongoing distribution and service fees. In the
case of Class B shares, expenses will be paid from the proceeds of the ongoing
distribution and service fees, as well as from the CDSC incurred upon redemption
within six years of purchase. The purpose and function of the Class B shares'
CDSC and ongoing distribution and service fees are the same as those of the
Class A shares' initial sales charge and ongoing distribution and service fees.
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount, except for differences resulting from each class bearing only its own
distribution and service fees and shareholder meeting expenses. See "Dividends
and Taxes."
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net asset value as follows: 0.80% on the first $500 million of average daily net
assets of the Fund, 0.75% on the next $500 million of average net assets and
0.70% of average net assets in excess of $1 billion. The investment management
fee paid by the Fund is higher than the fee paid by most mutual funds, but is
believed to be comparable to the fee paid by those funds with a similar
investment objective.
The Fund pays distribution and service fees for marketing and sales-related
shareholder servicing.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). Under these Plans, the Fund will pay distribution and service fees
at an aggregate annual rate of up to 0.30% of the Class A shares' average daily
net assets and an aggregate annual rate of up to 1.00% of the Class B shares'
average daily net assets. In each case, up to 0.25% is for service expenses and
the remaining amount is for distribution expenses. The distribution fees will be
used to reimburse John Hancock Funds for its distribution expenses, including
but not limited to: (i) initial and ongoing sales compensation to Selling
Brokers and others (including affiliates of John Hancock Funds) engaged in the
sale of Fund shares; (ii) marketing, promotional and overhead expenses incurred
in connection with the distribution of Fund shares; and (iii) with respect to
Class B shares only, interest expenses on unreimbursed distri
12
<PAGE>
bution expenses. The service fees are paid to compensate Selling Brokers and
others providing personal and account maintenance services to shareholders.
In the event John Hancock Funds is not fully reimbursed for payments it makes or
expenses it incurs under the Class A Plan, these expenses will not be carried
beyond one year from the date they were incurred. These unreimbursed expenses
under the Class B Plan will be carried forward together with interest on the
balance of these unreimbursed expenses.
For the fiscal year ended October 31, 1995 an aggregate of $6,051,842 of
distribution expenses or 4.49%, of the average net assets of the Class B shares
of the Fund, was not reimbursed or recovered by John Hancock Funds through the
receipt of deferred sales charges or 12b-1 fees in prior periods.
Information on the Fund's total expenses is in the Fund's Financial
Highlights section of this Prospectus.
DIVIDENDS AND TAXES
Dividends. The Fund generally declares and distributes dividends representing
all or substantially all net investment income, if any, at least annually. The
Fund will generally also distribute net short-term or long-term capital gains,
if any, at least annually.
Dividends are reinvested in additional shares of your class unless you elect the
option to receive cash. If you elect the cash option and the U.S. Postal Service
cannot deliver your checks, your election will be converted to the reinvestment
in additional shares option. Because of the higher expenses associated with
Class B shares, any dividend on these shares will be lower than those on the
Class A shares. See "Share Price".
Taxation. Dividends from the Fund's net investment income, certain net foreign
currency gains and net short-term capital gains are taxable to you as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains. These dividends are taxable whether received in cash or
reinvested in additional shares. Certain dividends may be paid in January of a
given year but may be taxable to you as if you received them the prior December.
Corporate shareholders may be entitled to take the corporate dividends received
deduction for dividends received by the Fund from U.S. domestic corporations,
subject to certain restrictions under the Internal Revenue Code. The Fund will
send you a statement by January 31 showing the tax status of the dividends you
received for the prior year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to the Federal income taxes on any net investment income or net realized
capital gains that are distributed to its shareholders within the time period
prescribed by the Code. When you redeem (sell) or exchange shares, you may
realize a taxable gain or loss.
On the account application you must certify that your social security or other
taxpayer identification number is correct and that you are not subject to backup
withholding of Federal income tax. If you do not provide this information or are
otherwise subject to this withholding, the Fund may be required to withhold 31%
of your dividends and the proceeds of redemptions or exchanges.
13
<PAGE>
The Fund anticipates that it will be subject to foreign withholding taxes or
other foreign taxes on income (possibly including in some cases capital gains)
on certain of its foreign investments, which will reduce the yield on these
investments. However, if more than 50% of the Fund's total assets at the close
of its taxable year consists of stock or securities of foreign corporations and
if the Fund so elects, shareholders will include in their gross incomes their
pro-rata shares of qualified foreign taxes paid by the Fund and may be entitled,
subject to certain conditions and limitations under the Code, to claim a Federal
income tax credit or deduction for their share of these taxes.
In addition to Federal taxes, you may be subject to state, local or foreign
taxes with respect to your investments in and distributions from the Fund.
Non-U.S. shareholders and tax-exempt shareholders are subject to a different
tax treatment not described above. In many states, a portion of the Fund's
dividends that represent interest received by the Fund on direct U.S.
Government obligations may be exempt from tax. You should consult your tax
adviser for specific advice.
PERFORMANCE
The Fund may advertise its total return.
Total return shows the overall dollar or percentage change in value of a
hypothetical investment in the Fund, assuming the reinvestment of all dividends.
Cumulative total return shows the Fund's performance over a period of time.
Average annual total return shows the cumulative return divided over the number
of years included in the period. Because average annual total return tends to
smooth out variations in the Fund's performance, you should recognize that it is
not the same as actual year-to-year results.
Total return calculations for Class A shares generally include the effect of
paying the maximum sales charge (except as shown in "The Fund's Financial
Highlights"). Investments at lower sales charges would result in higher
performance figures. Total return for the Class B shares reflect deduction of
the applicable CDSC imposed on a redemption of shares held for the applicable
period (except as shown in "The Fund's Financial Highlights"). All calculations
assume that dividends are reinvested at net asset value on the reinvestment
dates during the periods. The total return for Class A and Class B shares will
be calculated separately and, because each class is subject to different
expenses, the total return may differ with respect to each class for the same
period. The relative performance of the Class A and Class B shares will be
affected by a variety of factors, including the higher operating expenses
attributable to the Class B shares, whether the Fund's investment performance is
better in the earlier or later portions of the period measured and the level of
net assets of the classes during the period. The Fund will include the total
return of both classes in any advertisement or promotional materials including
Fund's performance data. The value of the Fund's shares, when redeemed, may be
more or less than their original cost. Total return is a historical calculation
and is not an indication of future performance. See "Factors to Consider in
Choosing an Alternative."
14
<PAGE>
HOW TO BUY SHARES
Opening an account.
Buying additional Class A and
Class B shares
<TABLE>
<CAPTION>
The minimum initial investment is $1,000 ($250 for group investments and
retirement plans). Complete the Account Application attached to this Prospectus.
Indicate whether you are purchasing Class A or Class B shares. If you do not
specify which class of shares you are purchasing, Investor Services will assume
you are investing in Class A shares.
- ----------------------------------------------------------------------------------------------------------
<S> <C>
By Check: 1. Make your check payable to John Hancock Investor Services Corporation.
2. Deliver the completed application and check to your
registered representative, Selling Broker, or mail it
directly to Investor Services.
- ----------------------------------------------------------------------------------------------------------
By Wire: 1. Obtain an account number by contacting your registered representative or Selling
Broker or by calling 1-800-225-5291.
2. Instruct your Bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to:
John Hancock Special Opportunities Fund
[Class A or Class B shares]
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered representative or Selling
Broker or mail it directly to Investor Services.
- ----------------------------------------------------------------------------------------------------------
Monthly Automatic 1. Complete the "Automatic Investing" and "Bank Information" sections on the
Accumulation Account Privileges Application, designating a bank account from which your funds
Program (MAAP) may be drawn.
2. The amount you elect to invest will be automatically
withdrawn from your bank or credit union account.
- ----------------------------------------------------------------------------------------------------------
By Telephone: 1. Complete the "Invest-By-Phone" and "Bank
Information" sections on the Account Privileges
Application designating a bank account from which your
funds may be drawn. Note that in order to invest by
phone, your account must be in a bank or credit union
that is a member of the Automated Clearing House
System (ACH).
2. After your authorization form has been processed, you
may purchase additional Class A and Class B shares by
calling Investor Services toll-free at 1-800-225-5291.
3. Give the Investor Services representative the name(s)
in which your account is registered, the Fund name,
the class of shares you own, your account number and
the amount you wish to invest.
4. Your investment normally will be credited to your account the business day
following your phone request.
</TABLE>
15
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<S> <C>
By Check: 1. Either complete the detachable stub included on your account statement or
include a note with your investment listing the name of the Fund, the class of
shares you own, your account number and the name(s) in which the account is
registered.
2. Make your check payable to John Hancock Investor Services Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling Broker.
- ----------------------------------------------------------------------------------------------------------
By Wire: Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA No. 211475000
For credit to:
John Hancock Special Opportunities Fund [Class A or
Class B shares] Your Account Number Name(s) under
which account is registered.
Other Requirements. All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Shares of the Fund are priced at the offering
price based on the net asset value computed after John Hancock Funds receives
notification of the dollar equivalent from the Fund's custodian bank. Wire
purchases normally take two or more hours to complete and, to be accepted the
same day, must be received by 4:00 P.M., New York time. Your bank may charge a
fee to wire funds. Telephone transactions are recorded to verify information.
Certificates are not issued unless a request is made in writing to Investor
Services.
</TABLE>
Buying additional Class A and Class B shares.
(continued)
You will receive account
statements that you should
keep to help with your
personal recordkeeping.
You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.
SHARE PRICE
The offering price of your shares is their net asset value plus a sales charge,
if applicable, which will vary with the purchase alternative you choose.
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the net assets of each class by the number of outstanding
shares of that class. The NAV of each class can differ. Securities in the Fund's
portfolio are valued on the basis of market quotations, valuations provided by
independent pricing services or at fair value as determined in good faith
according to procedures approved by the Trustees. Short-term debt investments
maturing within 60 days are valued at amortized cost which the Board of Trustees
has determined to approximate market value. Foreign securities are valued on the
basis of quotations from the primary market in which they are traded, and are
translated from the local currency into U.S. dollars using current exchange
rates. If quotations are not readily available or, the value has been materially
affected by events occurring after the closing of a foreign market, assets are
valued by a method that the Trustees believe accurately reflects fair value. The
NAV is calculated once daily as of the close of regular trading on the New York
Stock Exchange (generally at 4:00 p.m., New York time) on each day that the
Exchange is open.
16
<PAGE>
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment is received in good order by John Hancock Funds. If you
buy shares of the Fund through a Selling Broker, the Selling Broker must receive
your investment before the close of regular trading on the New York Stock
Exchange and transmit it to John Hancock Funds before its close of business to
receive that day's offering price.
<TABLE>
Initial Sales Charge Alternative--Class A Shares. The offering price you pay
for Class A shares of the Fund equals the NAV plus sales charge as follows:
<CAPTION>
Combined
Reallowance
Sales Sales and Reallowance
Charge Charge Service to Selling
as a as a Fee as a Broker as a
Percentage Percentage Percentage Percentage
Amount Invested of of the of of
(Including Sales Offering Amount Offering Offering
Charge) Price Invested Price(+) Price(*)
- --------------------- -------- -------- --------- -----------
<S> <C> <C> <C> <C>
Less than $50,000 5.00% 5.26% 4.25% 4.01%
$50,000 to $99,999 4.50% 4.71% 3.75% 3.51%
$100,000 to $249,999 3.50% 3.63% 2.85% 2.61%
$250,000 to $499,999 2.50% 2.56% 2.10% 1.86%
$500,000 to $999,999 2.00% 2.04% 1.60% 1.36%
$1,000,000 and over 0.00%(***)
0.00%((**)) 0.00%((**)) (***)
(*) Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales
charge. A Selling Broker to whom substantially the entire sales charge is
reallowed may be deemed to be an underwriter under the Securities Act of
1933.
(**) No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a CDSC may be imposed in the event of certain
redemption transactions made within one year of purchase.
(***) John Hancock Funds may pay a commission and first year's service fee (as
described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more in the aggregate as
follows: 1% on sales to $4,999,999, plus 0.50% on the next $5 million, and
0.25% on $10 million and over.
(+) At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.
</TABLE>
Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
Class A shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of the accounts attributable to these
brokers.
Under certain circumstances described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge."
17
<PAGE>
Contingent Deferred Sales Charge--Investments of $1 Million or More in Class A
Shares. Purchases of $1 million or more of the Fund's Class A shares will be
made at net asset value with no initial sales charge, but if the shares are
redeemed within 12 months after the beginning of the calendar month in which the
purchase was made (the CDSC period), a CDSC will be imposed. The rate of the
CDSC will depend on the amount invested as follows:
Amount Invested CDSC Rate
- -------------------------------- ----------
$1 million to $4,999,999 1.00%
Next $5 million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%
Existing full service clients of the Life Company who were group annuity
contract holders as of September 1, 1994, and participant directed defined
contribution plans with at least 100 eligible employees at the inception of the
Fund account, may purchase Class A shares with no initial sales charge. However,
if the shares are redeemed within 12 months after the end of the calendar year
in which the purchase was made, a CDSC will be imposed at the above rate.
The CDSC will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the redeemed Class A shares. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any dividends which have been reinvested in additional Class A
shares.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
Therefore, it will be assumed that the redemption is first made from any shares
in your account that are not subject to the CDSC. The CDSC is waived on
redemptions in certain circumstances. See "Waiver of Contingent Deferred Sales
Charges" below.
Qualifying for a Reduced Sales Charge.
You may qualify for a reduced sales charge on your investment in Class A Shares.
If you invest more than $50,000 in Class A shares of the Fund or combination of
John Hancock funds (except money market funds), you may qualify for a reduced
sales charge on your investments in Class A shares through a LETTER OF
INTENTION. You may also be able to use the ACCUMULATION PRIVILEGE and
COMBINATION PRIVILEGE to take advantage of the value of your previous
investments in shares of the John Hancock funds in meeting the breakpoints for a
reduced sales charge. For the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE,
the applicable sales charge will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a)
all Class A shares of the Fund you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
Example:
If you hold Class A shares of a John Hancock fund with a net asset value of
$20,000 and, subsequently, invest $30,000 in Class A shares of the Fund, the
sales charge
18
<PAGE>
on this subsequent investment would be 4.50% and not 5.00%. This is the rate
that would otherwise be applicable to investments of less than $50,000. See
"Initial Sales Charge Alternative--Class A Shares."
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
Class A shares may be
available without a sales
charge to certain individuals
and organizations.
(bullet) A Trustee or officer of the Trust; a Director or officer of the Adviser
and its affiliates or Selling Brokers; employees or sales
representatives of any of the foregoing; retired officers, employees or
Directors of any of the foregoing; a member of the immediate family of
any of the foregoing; or any Fund, pension, profit sharing or other
benefit plan for the individuals described above.
(bullet) Any state, county, city or any instrumentality, department, authority,
or agency of these entities that is prohibited by applicable investment
laws from paying a sales charge or commission when it purchases shares
of any registered investment management company.*
(bullet) A bank, trust company, credit union, savings institution or other
depository institution, its trust departments or common trust funds if
it is purchasing $1 million or more for non-discretionary customers or
accounts.*
(bullet) A broker, dealer, financial planner, consultant or registered
investment adviser that has entered into an agreement with John Hancock
Funds providing specifically for the use of Fund shares in fee-based
investment products or services made available to their clients.
(bullet) A former participant in an employee benefit plan with John Hancock
funds, when he or she withdraws from his or her plan and transfers any
or all of his or her plan distributions directly to the Fund.
(bullet) A member of an approved affinity group financial services plan.*
* For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
Contingent Deferred Sales Charge Alternative--Class B Shares. Class B shares are
offered at net asset value per share without an initial sales charge, so that
your entire investment will go to work at the time of purchase. However, Class B
shares redeemed within six years of purchase will be subject to a CDSC at the
rates set forth below. The charge will be assessed on an amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. Accordingly, you will not be assessed a CDSC on increases in
account value above the initial purchase price, including shares derived from
dividend reinvestments.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be
19
<PAGE>
assumed that your redemption comes first from shares you have held beyond the
six-year CDSC redemption period or those you acquired through reinvestment of
dividends, and next from the shares you have held the longest during the
six-year period. The CDSC is waived on redemptions in certain circumstances. See
the discussion "Waiver of Contingent Deferred Sales Charges" below.
Example:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment.
If you redeem 50 shares at this time, your CDSC will be calculated as
follows:
<TABLE>
<CAPTION>
<S> <C>
(bullet) Proceeds of 50 shares redeemed at $12 per share $ 600 (bullet) Minus
proceeds of 10 shares not subject to CDSC because they were acquired
through dividend reinvestment (10 X $12) -120
(bullet) Minus appreciation on remaining shares, also not subject to CDSC (40 X $2) -80
---
(bullet) Amount subject to CDSC $ 400
</TABLE>
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
them to defray its expenses related to providing the Fund with distribution
services in connection with the sale of the Class B shares, such as compensating
Selling Brokers for selling these shares. The combination of the CDSC and the
distribution and service fees makes it possible for the Fund to sell the Class B
shares without an initial sales charge.
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining this holding period, any payments you make during
the month will be aggregated and deemed to have been made on the last day of the
month.
<TABLE>
<CAPTION>
Contingent Deferred Sales
Year in Which Class B Shares Charge As a Percentage of
Redeemed Following Purchase Amount Redeemed
- ------------------------------ ---------------------------
<S> <C>
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
</TABLE>
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for the provision of
personal and account maintenance services to shareholders during the twelve
months following the sale, and thereafter the service fee is paid in arrears.
Under certain circumstances, the CDSC on Class B and certain Class A share
redemptions will be waived.
Waiver of Contingent Deferred Sales Charges. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a
CDSC, unless indicated otherwise, in the circumstances defined below:
(bullet) Redemptions of Class B shares made under a Systematic Withdrawal Plan
(see "How to Redeem Shares"), as long as your annual redemptions do not
exceed 10%
20
<PAGE>
of your account value at the time you established your Systematic
Withdrawal Plan and 10% of the value of subsequent investments (less
redemptions) in that account at the time you notify Investor Services.
This waiver does not apply to Systematic Withdrawal Plan redemptions of
Class A shares that are subject to a CDSC.
(bullet) Redemptions made to effect distributions from an Individual Retirement
Account either before or after age 59-1/2, as long as the distributions
are based on your life expectancy or the joint-and-last survivor life
expectancy of you and your beneficiary. These distributions must be
free from penalty under the Code.
(bullet) Redemptions made to effect mandatory distributions under the Code after
age 70-1/2 from a tax-deferred retirement plan.
(bullet) Redemptions made to effect distributions to participants or
beneficiaries from certain employer-sponsored retirement plans
including those qualified under Section 401(a) of the Code, custodial
accounts under Section 403(b)(7) of the Code and deferred compensation
plans under Section 457 of the Code. The waiver also applies to certain
returns of excess contributions made to these plans. In all cases, the
distributions must be free from penalty under the Code.
(bullet) Redemptions due to death or disability.
(bullet) Redemptions made under the Reinvestment Privilege, as described in
"Additional Services and Programs" of this Prospectus.
(bullet) Redemptions made pursuant to the Fund's right to liquidate your account
if you own fewer than 50 shares.
(bullet) Redemptions made in connection with certain liquidation, merger or
acquisition transactions involving other investment companies or
personal holding companies.
(bullet) Redemptions from certain IRA and retirement plans which purchased
shares prior to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
Conversion of Class B Shares. Your Class B shares and an appropriate portion of
reinvested dividends on those shares will be converted into Class A shares
automatically. This will occur no later than the month following eight years
after the shares were purchased, and will result in lower annual distribution
fees. If you exchanged Class B shares into this Fund from another John Hancock
fund, the calculation will be based on the time you purchased the shares in the
original fund were purchased. The Fund has been advised that the conversion of
Class B shares to Class A shares should not be taxable for Federal income tax
purposes and should not change your tax basis or tax holding period for the
converted shares.
21
<PAGE>
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services, less any applicable CDSC. The Fund
may hold payment until reasonably satisfied that investments recently made by
check or Invest-by-Phone have been collected (which may take up to 10 calendar
days).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares you may realize a taxable gain or
loss, depending usually on the difference between what you paid for them and
what you receive for them, subject to certain tax rules. Under unusual
circumstances, the Fund may suspend redemptions or postpone payment for up to
three business days or longer, as permitted by Federal securities laws.
22
<PAGE>
To assure acceptance of your redemption request, please follow these procedures.
<TABLE>
<S> <C>
By Telephone: All shareholders of the Fund are eligible automatically for the telephone redemption
privilege. Call 1-800-225-5291 from 8:00 A.M. to 4:00 P.M. (Eastern Time), Monday through
Friday, excluding days on which the New York Stock Exchange is closed. Investor Services
employs the following procedures to confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer identification number applicable to the
account and other relevant information may be requested. In addition, telephone
instructions are recorded.
You may redeem up to $100,000, but the address on the account must not have changed for
the last thirty days. A check will be mailed to the exact name(s) and address shown on
the account.
If reasonable procedures, such as those described above, are not followed, the Fund may
be liable for any loss due to unauthorized or fraudulent telephone instructions. In all
other cases, neither the Fund nor Investor Services will be liable for any loss or
expense for acting upon telephone instructions made according to the telephone
transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other tax-qualified retirement plans or
shares of the Fund that are in certificated form.
During periods of extreme economic conditions or market changes, telephone requests may
be difficult to implement due to a large volume of calls. During these times, you should
consider placing redemption requests in writing or use EASI-Line. EASI-Line's telephone
number is 1-800-338-8080.
By Wire: If you have a telephone redemption form on file with the Fund, redemption proceeds of
$1,000 or more can be wired on the next business day to your designated bank account and
a fee (currently $4.00) will be deducted. You may also use electronic funds transfer to
your assigned bank account and the funds are usually collectible after two business days.
Your bank may or may not charge a fee for this service. Redemptions of less than $1,000
will be sent by check or electronic funds transfer.
This feature may be elected by completing the "Telephone Redemption" section on the
Account Privileges Application that is included with this Prospectus.
In Writing: Send a stock power or letter of
instruction specifying the name of the Fund, the
dollar amount or the number of shares to be
redeemed, your name, class of shares, your account
number, and the additional requirements listed
below that apply to your particular account.
Type of
Registration Requirements
Individual, A letter of instruction signed with titles by all persons
Joint Tenants, authorized to sign for the account, exactly as it is
Sole Proprietorship, registered with the signature(s) guaranteed.
(Uniform Gifts or
Transfer to Minor
Act), General
Partners
Corporation, A letter of instruction and a corporate resolution, signed by
Association person(s) authorized to act on the account with the
signature(s) guaranteed.
Trusts A letter of instruction signed by the Trustee(s)
with signature guarantees. (If the Trustee(s) name
is not registered on your account, also provide a
copy of the trust document, certified within the
last 60 days.)
If you do not fall into any of these registration categories, (i.e., Executors,
Administrators, Conservators of Guardians) please call 1-800-225-5291 for
further instructions.
</TABLE>
23
<PAGE>
Who may guarantee your signature.
Additional information about
redemptions.
A signature guarantee is a widely accepted way to protect you and the Funds by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency. Through Your Broker: Your broker may be able to initiate the redemption.
Contact your broker for instructions.
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone. Due to the proportionately high cost of
maintaining small accounts, the Fund reserves the right to redeem at net asset
value all shares in an account which holds fewer than 50 shares (except accounts
under retirement plans) and to mail the proceeds to the shareholder or the
transfer agent may impose an annual fee of $10.00. No account will be
involuntarily redeemed or additional fee imposed, if the value of the account is
in excess of the Fund's minimum initial investment. No CDSC will be imposed on
involuntary redemption of shares. Shareholders will be notified before these
redemptions are to be made or this fee is imposed and will have 30 days to
purchase additional shares to bring their account balance to the required
minimum. Unless the number of shares acquired by additional purchases and any
dividend reinvestments exceeds the number of shares redeemed, repeated
redemptions from a smaller account may eventually trigger this policy. If you
have certificates for your shares, you must submit them with your stock power or
a letter of instruction. Unless you specify to the contrary, any outstanding
Class A shares will be redeemed before Class B shares. Redemptions of
certificated shares may not be made by telephone.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege
You may exchange shares of the
Fund for shares of the same
class of another John Hancock
fund.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock fund that interests you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for shares of the same class of another John Hancock fund. For
this purpose, John Hancock funds with only one class of shares will be treated
as Class A whether or not they have been so designated.
Exchanges between funds which are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged into
Class B shares of another John Hancock fund without incurring the CDSC; however,
these shares will be subject to the CDSC schedule of the shares acquired (except
that exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Intermediate Maturity Government Fund and John Hancock Limited-Term Government
Fund will be subject to the initial Fund's CDSC). For purposes of computing the
CDSC payable upon
24
<PAGE>
redemption of shares acquired in an exchange, the holding period of the original
shares is added to the holding period of the shares acquired in an exchange.
However if you exchange Class B shares purchased prior to January 1, 1994 for
Class B shares of any other John Hancock fund, you will continue to be subject
to the CDSC schedule in effect on your initial purchase date.
The Fund reserves the right to require you to keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted a
new exchange. The Fund may also terminate or alter the terms of the exchange
privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and
the purchase of shares of another for Federal income tax purposes. An
exchange may result in a taxable gain or loss.
When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give prior notice whenever it is reasonably
able to do so, it may impose these restrictions at any time.
By Telephone:
1. When you complete the application for your initial purchase of Fund shares,
you authorize exchanges automatically by telephone, unless you check the box
indicating that you do not wish to authorize telephone exchanges.
2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give the telephone
representative.
3. Your name, the account number, taxpayer identification number applicable
to the account and other relevant information may be requested. In
addition, telephone instructions are recorded.
25
<PAGE>
In Writing:
1. In a letter request an exchange and list the following:
--name and class of the Fund whose shares you currently own --your account
number --name(s) in which the account is registered --name of the fund in
which you wish your exchange to be invested --the number of shares, all shares
or the dollar amount you wish to
exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Reinvestment Privilege
If you redeem shares of the Fund, you may be able to reinvest all or part of the
proceeds in shares of this Fund or another John Hancock fund without paying an
additional sales charge.
1. You will not be subject to a sales charge on Class A shares that you reinvest
in a John Hancock fund that is otherwise subject to a sales charge, as long
as you reinvest within 120 days from the redemption date. If you paid a CDSC
upon a redemption, you may reinvest at net asset value in the same class of
shares from which you redeemed within 120 days. Your account will be credited
with the amount of the CDSC previously charged, and the reinvested shares
will continue to be subject to a CDSC. The holding period of the shares
acquired through reinvestment for purposes of computing the CDSC payable upon
a subsequent redemption will include the holding period of the redeemed
shares.
2. Any portion of your redemption may be reinvested in Fund shares or in shares
of other John Hancock funds, subject to the minimum investment limit of that
fund.
3. To reinvest, you must notify Investor Services in writing. Include the Fund's
name, account number and class from which the shares were originally
redeemed.
Systematic Withdrawal Plan
You can pay routine bills from your account, or make periodic disbursements from
your retirement account to comply with IRS regulations.
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the application from your registered representative or by calling
1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually or
on a selected monthly basis, to yourself or any other designated payee.
4. There is no limit on the number of payees you may authorize, but all
payments must be made at the same time or intervals.
5. It is not advantageous to maintain a Systematic Withdrawal Plan concurrently
with purchases of additional Class A or Class B shares, because you may be
subject to an initial sales charge on your purchases of Class A shares or to
a CDSC on your redemptions of Class B shares. In addition, your redemptions
are taxable events.
26
<PAGE>
6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.
You can make automatic
investments and simplify your
investing.
Monthly Automatic Accumulation Program (MAAP)
1. You can authorize an investment to be withdrawn automatically each month on
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections on the Account Privileges Application.
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program at any time.
4. There is no charge to you for this program, and there is no cost to the
Fund.
5. If you have payments withdrawn from a bank account and we are notified that
the account has been closed, your withdrawals will be discontinued.
Group Investment Program (Class A only)
Organized groups of at least
four persons may establish
accounts.
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225-5291.
2. The initial aggregate investments of all participants in the group must be
at least $250.
3. There is no additional charge for this program. There is no obligation to
make investments beyond the minimum and you may terminate the program at
any time.
Retirement Plans
1. You may use the Fund for various types of qualified retirement plans,
including Individual Retirement Accounts, Keogh plans (H.R.10), pension and
profit sharing plans (including 401(k) Plans), Tax Sheltered Annuity
retirement plans (403(b) plans or TSA plans ), and Section 457 plans.
2. The initial investment minimum or aggregate minimum for any of these plans is
$250. However, accounts being established as group IRA, SEP, SARSEP, TSA,
401(k) and Section 457 plans will be accepted without an initial minimum
investment.
27
<PAGE>
[COVER]
JOHN HANCOCK
SPECIAL OPPORTUNITIES FUND
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Independent Auditors
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
For: TDD call 1-800-554-6713
JHD-3900P 3/96
JOHN HANCOCK
SPECIAL
OPPORTUNITIES
FUND
Prospectus
March 1, 1996
A mutual fund seeking long-term capital appreciation.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Telephone 1-800-225-5291
["Recycle" symbol] Printed on Recycled Paper
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
June 28, 1996
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the related Proxy Statement and Prospectus (also dated June
28, 1996) relating to Class A and Class B shares of John Hancock Special
Opportunities Fund ("Special Opportunities Fund") to be issued in exchange for
all of the net assets of John Hancock Gold & Government Fund ("Gold & Government
Fund"). Please retain this Statement of Additional Information for future
reference. A copy of the Proxy Statement and Prospectus can be obtained free of
charge by calling Shareholder Services at 1-800-225-5291 or by written request
to Special Opportunities Fund at 101 Huntington Avenue, Boston, Massachusetts
02199.
TABLE OF CONTENTS
Page
Introduction.............................................................. 3
Additional Information About Special Opportunities Fund................... 3
General Information and History
Investment Objective and Policies
Management of Special Opportunities Fund
Control Persons and Principal Holders of Shares
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Shares of Beneficial Interest
Purchase, Redemption and Pricing of
Special Opportunities Fund Shares
Underwriters
Calculation of Performance Data
Financial Statements
Additional Information about Gold & Government Fund....................... 5
General Information and History
Investment Objective and Policies
Management of Gold & Government Fund
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Shares of Beneficial Interest
Purchase, Redemption and Pricing of
Gold & Government Fund Shares
Underwriters
Calculation of Performance Data
Financial Statements
<PAGE>
EXHIBITS
A - Statement of Additional Information, dated March 1, 1996, of John
Hancock Special Opportunities Fund including audited financial
statements as of October 31, 1995.
B - Statement of Additional Information, dated March 1, 1996, of John
Hancock Gold & Government Fund including audited financial statements
as of October 31, 1995.
C - Pro Forma Combined Financial Statements at October 31, 1995 and for
the period then ended of Special Opportunities Fund, Gold & Government
Fund and John Hancock Global Resources Fund.
2
<PAGE>
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated June 28, 1996
(the "Proxy Statement and Prospectus"). The Proxy Statement and Prospectus has
been sent to the shareholders of Gold & Government Fund in connection with the
solicitation by the management of Gold & Government Fund of proxies to be voted
at the Special Meeting of Shareholders of Gold & Government Fund to be held on
August 14, 1996. This Statement of Additional Information incorporates by
reference the statement of additional information of Gold & Government Fund,
dated March 1, 1996 (the "Gold & Government Fund SAI"), and the statement of
additional information of Special Opportunities Fund, dated March 1, 1996 (the
"Special Opportunities Fund SAI"). The Gold & Government Fund SAI and the
Special Opportunities Fund SAI are included with this Statement of Additional
Information.
ADDITIONAL INFORMATION ABOUT SPECIAL OPPORTUNITIES FUND
General Information and History
For additional information about Special Opportunities Fund generally and
its history, see "Organization of the Fund" in the Special Opportunities Fund
SAI.
Investment Objective and Policies
For additional information about Special Opportunities Fund's investment
objective, policies and restrictions see "Investment Objective and Policies,"
"Certain Investment Practices" and "Investment Restrictions" in the Special
Opportunities Fund SAI.
Management of Special Opportunities Fund
For additional information about the Special Opportunities Fund's Board of
Trustees, officers and management personnel, see "Those Responsible for
Management" in the Special Opportunities Fund SAI.
Control Persons and Principal Holders of Shares
For additional information about control persons of Special Opportunities
Fund and principal holders of shares of beneficial interest of Special
Opportunities Fund see "Those Responsible for Management" in the Special
Opportunities Fund SAI.
3
<PAGE>
Investment Advisory and Other Services
For additional information about Special Opportunities Fund's investment
adviser, custodian, transfer agent and independent accountants, see "Investment
Advisory and Other Services," "Distribution Contract," "Transfer Agent
Services," "Custody of Portfolio" and "Independent Auditors" in the Special
Opportunities Fund SAI.
Brokerage Allocation and Other Practices
For additional information about Special Opportunities Fund's brokerage
allocation practices, see "Brokerage Allocation" in the Special Opportunities
Fund SAI.
Shares of Beneficial Interest
For additional information about the voting rights and other
characteristics of Special Opportunities Fund's shares of beneficial interest,
see "Description of the Fund's Shares" in the Special Opportunities Fund SAI.
Purchase, Redemption and Pricing of Special Opportunities Fund Shares
For additional information about the determination of net asset value, see
"Net Asset Value" in the Special Opportunities Fund SAI.
Underwriters
For additional information about Special Opportunities Fund's principal
underwriter and the distribution contract between the principal underwriter and
Special Opportunities Fund, see "Distribution Contract" in the Special
Opportunities Fund SAI.
Calculation of Performance Data
For additional information about the investment performance of Special
Opportunities Fund, see "Calculation of Performance" in the Special
Opportunities Fund SAI.
Financial Statements
Audited financial statements of Special Opportunities Fund at October 31,
1995 are attached to the Special Opportunities Fund SAI.
Pro Forma combined financial statements at October 31, 1995 for Special
Opportunities Fund as though the Reorganization and the John Hancock Global
Resources Reorganization had occurred on October 31, 1995 are attached hereto.
4
<PAGE>
ADDITIONAL INFORMATION ABOUT GOLD & GOVERNMENT FUND
General Information and History
For additional information about Gold & Government Fund generally and its
history, see "Organization of the Fund" in the Gold & Government Fund SAI.
Investment Objective and Policies
For additional information about Gold & Government Fund's investment
objectives and policies, see "Investment Objectives and Policies," "Certain
Investment Practices" and "Investment Restrictions" in the Gold & Government
Fund SAI.
Management of Gold & Government Fund
For additional information about Gold & Government Fund's Board of
Trustees, officers and management personnel, see "Those Responsible for
Management" in the Gold & Government Fund SAI.
Investment Advisory and Other Services
For additional information about Gold & Government Fund's investment
adviser, custodian, transfer agent and independent accountants, see "Investment
Advisory and Other Services," "Distribution Contracts," "Transfer Agent
Services," "Custody of Portfolio" and "Independent Auditors" in the Gold &
Government Fund SAI.
Brokerage Allocation and Other Practices
For additional information about Gold & Government Fund's brokerage
allocation practices, see "Brokerage Allocation" in the Gold & Government Fund
SAI.
Shares of Beneficial Interest
For additional information about the voting rights and other
characteristics of Gold & Government Fund's shares of beneficial interest, see
"Description of the Funds' Shares" in the Gold & Government Fund SAI.
Purchase, Redemption and Pricing of Gold & Government Fund Shares
For additional information about the net asset value of Gold & Government
Fund's shares, see "Net Asset Value" in the Gold & Government Fund SAI.
5
<PAGE>
Underwriters
For additional information about Gold & Government Fund's principal
underwriter and the distribution contract between the principal underwriter and
Gold & Government Fund, see "Distribution Contract" in the Gold & Government
Fund SAI.
Calculation of Performance Data
For additional information about the investment performance of Gold &
Government Fund, see "Calculation of Performance" in the Gold & Government Fund
SAI.
Financial Statements
Audited financial statements of Gold & Government Fund at October 31, 1995
are attached to the Gold & Government Fund SAI.
6
<PAGE>
John Hancock Special Opportunities Fund
Proforma Combined Statement of Assets and Liabilities
October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Special Global Gold & Pro
Opportunities Resources Government Forma
Fund Fund Fund Adjustments Combined
------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value 228,022,123 28,363,048 33,008,378 - 289,393,549
Receivable for shares sold 241,136 902 977 - 243,015
Receivable for investments sold 24,025,617 540,732 1,810,885 - 26,377,234
Interest Receivable 4,211 0 472,857 - 477,068
Dividends Receivable 67,410 16,088 26,880 - 110,378
Deferred Organization Expenses 78,290 0 0 - 78,290
Other assets 726 13,198 7,553 - 21,477
------------- ---------- ---------- ----------- -----------
Total Assets 252,439,513 28,933,968 35,327,530 - 316,701,011
Liabilities:
Temporary overdraft of cash 243,454 103,818 0 - 347,272
Payable for investments purchased 12,750,625 0 0 - 12,750,625
Payable for shares repurchased 129,854 35,221 19,743 - 184,818
Payable to JH Advisers, Inc. and Affiliates 326,416 19,537 35,150 - 381,103
Accounts payable and accrued expenses 63,754 49,222 54,038 - 167,014
------------- ---------- ---------- ----------- -----------
Total Liabilities 13,514,103 207,798 108,931 - 13,830,832
Net Assets:
Capital paid-in 209,681,269 28,604,072 46,354,966 - 284,640,307
Accumulated net realized loss on
investments, financial futures contracts
and foreign currency transactions (5,914,444) (421,721) (12,267,172) - (18,603,337)
Net unrealized appreciation of investments
and foreign currency transactions 35,158,585 543,819 1,030,790 - 36,733,194
Undistributed net investment income 0 0 100,015 - 100,015
------------- ---------- ---------- ----------- -----------
Net Assets 238,925,410 28,726,170 35,218,599 - 302,870,179
============= ========== ========== =========== ===========
Net Assets:
Special Opportunities Fund
Class A 101,561,612 20,623,692 (a) 122,185,304
Class B 137,363,798 43,321,077 (a) 180,684,875
Global Resources Fund
Class A 2,323,988 (2,323,988)(a) 0
Class B 26,402,182 (26,402,182)(a) 0
Gold & Government Fund
Class A 18,299,704 (18,299,704)(a) 0
Class B 16,918,895 (16,918,895)(a) 0
------------- ---------- ---------- ----------- -----------
238,925,410 28,726,170 35,218,599 0 302,870,179
============= ========== ========== =========== ===========
Shares Outstanding:
Special Opportunities Fund
Class A 10,902,887 2,214,004 (a) 13,116,891
Class B 14,949,105 4,714,571 (a) 19,663,676
Global Resources Fund
Class A 165,952 (165,952)(a) 0
Class B 1,905,178 (1,905,178)(a) 0
Gold & Government Fund
Class A 1,386,291 (1,386,291)(a) 0
Class B 1,284,093 (1,284,093)(a) 0
Net Asset Value Per Share:
Special Opportunities Fund
Class A $9.32 - - - $9.32
Class B $9.19 - - - $9.19
Global Resources Fund
Class A - $14.00 -
Class B - $13.86 -
Global Resources Fund
Class A - $13.20 -
Class B - $13.18 -
</TABLE>
See Notes to Proforma Combined Financial Statements
<PAGE>
John Hancock Special Opportunities Fund
Projected Proforma Combined Statement of Operations
October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Special Global Gold & Pro
Opportunities Resources Government Forma
Fund Fund Fund Adjustments Combined
------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income
Interest & Dividends(net of foreign
withholding taxes) $ 1,715,816 $ 444,879 $ 1,871,876 $ - $ 4,032,571
Expenses
Management Fee 1,870,771 263,434 354,905 17,501 (b) $ 2,506,611
Distribution/Service Fee
Class A 296,691 8,283 49,874 1,630 (c) 356,478
Class B 1,348,679 305,777 274,154 0 1,928,610
Transfer Agent Fee 945,811 132,727 112,262 0 1,190,800
Registration & Filing Fees 0 34,089 9,605 (6,554)(d) 37,140
Custodian Fee 44,422 68,885 42,500 (82,805)(d) 73,002
Auditing 23,300 36,134 37,003 (56,437)(d) 40,000
Legal Fees 16,506 8,791 1,051 0 26,348
Trustee Fees 44,135 11,929 7,397 0 63,461
Printing 47,581 43,195 19,830 (27,651)(d) 82,955
Organization Expense 26,046 0 0 0 26,046
Miscellaneous 5,966 3,821 1,828 (3,484)(d) 8,131
------------- ---------- ---------- ----------- -----------
Gross Fund Total Expenses 4,669,908 917,065 910,409 (157,800) 6,339,582
------------- ---------- ---------- ----------- -----------
Less Expense Reductions 0 0 0 0 0
Less Expense Reimbursement 0 0 0 0 0
------------- ---------- ---------- ----------- -----------
Net Fund Total Expenses 4,669,908 917,065 910,409 (157,800) 6,339,582
------------- ---------- ---------- ----------- -----------
Net Investment Income/(Loss) $ (2,954,092) $ (472,186) $ 961,467 $ 157,800 $ (2,307,011)
------------- ---------- ---------- ----------- -----------
Realized and Unrealized Gain (Loss) on Investments,
Financial Futures Contract and Foreign Currency
Transactions:
Net Realized gain/(loss) on investments sold 17,052,914 (314,860) (3,599,702) 0 13,138,352
Net Realized gain on futures contracts 0 2,682 (139,109) 0 (136,427)
Net Realized loss on foreign currency
transactions (17,231) 0 (1,590) 0 (18,821)
Change in appreciation/(depreciation)
of investments and financial
futures contracts 23,246,748 (3,606,930) (277,671) 0 19,362,147
Change in appreciation/(depreciation)
of foreign currency transactions 11,288 57 0 0 11,345
------------- ---------- ---------- ----------- -----------
Net Realized and Unrealized Gain on
Investments, Futures Contracts and
Foreign Currency Transactions 40,293,719 (3,919,051) (4,018,072) 0 32,356,596
------------- ---------- ---------- ----------- -----------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 37,339,627 $(4,391,237) $(3,056,605) $ 157,800 $ 30,049,585
============= ========== ========== =========== ===========
</TABLE>
See Notes to Proforma Combined Financial Statements
<PAGE>
JOHN HANCOCK SPECIAL OPPORTUNITIES FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS - (UNAUDITED)
OCTOBER 31, 1995
Pro forma information is intended to provide shareholders of John Hancock Global
Resources Fund (JHGRS) and John Hancock Gold & Government (JHGG) with
information about the impact of the proposed merger by indicating how the merger
might have affected information had the merger been consummated during the
fiscal year ended October 31, 1995.
The pro forma combined statements of assets and liabilities and results of
operations as of October 31, 1995, have been prepared to reflect the merger of
Special Opportunities Fund (JHSOP) and JHGRS and JHGG after giving effect to pro
forma adjustments described in the notes listed below.
(a) Acquisition by JHSOP of all of the net assets of JHGRS and JHGG issuance of
JHSOP Class A and Class B shares in exchange for all of the outstanding
Class A and Class B shares, respectively of JHGRS and of JHGG.
(b) The investment advisory fee was adjusted to reflect the application of the
fee structure in effect for JHSOP: 0.80% of the first $500,000,000 of the
Fund's average daily net asset value, 0.75% of the next $500,000,000 and
0.70% of the Fund's average daily net asset value in excess of
$1,000,000,000.
(c) The 12b-1 fee was adjusted to reflect the application of the fee structure
which will be in effect for JHSOP: 0.30% of Class A average daily net
assets and 1.00% of Class B average daily net assets.
(d) The actual expenses incurred by JHSOP and JHGRS and JHGG for various
expenses included on a pro forma basis were reduced to reflect the
estimated savings arising from the merger.
<PAGE>
SCHEDULE OF INVESTMENTS
October 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Resources Fund and the Special Opportunities Fund combined on October 31,
1995.
<TABLE>
<CAPTION>
Gold & Govt
----------------------------------
Global
Par Value Resources
% of Interest Maturity (000's Market ---------
State - Issuer - Description Net Assets Rate % Date Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C> <C>
U.S.GOVERNMENT AND AGENCIES OBLIGATIONS
Governmental - U.S. 5.35%
United States Treasury, Note 9.375% 04/15/96 $ 3,000 $ 3,049,680
United States Treasury, Note 9.000% 05/15/98 6,300 6,787,242
United States Treasury, Bond 13.125% 05/15/01 2,000 2,681,240
United States Treasury, Bond 13.375% 08/15/01 2,700 3,680,856
------------
$ 16,199,018
------------
TOTAL U.S.GOVERNMENT AND AGENCIES
OBLIGATIONS 5.35% 16,199,018
------------
COMMON STOCKS
Audio/Video 2.05%
Polygram NV (Netherlands)
Broadcasting 0.27%
New World Communications Group,Inc. **
Computers 15.15%
HBO & Co
Intuit, Inc. **
Microsoft Corp. **
Parametric Technology Co. **
Sun Microsystems, Inc. **
3Com Corp. **
Construction 0.19%
Australian National Industries, Ltd. (Australia)
CEMEX SA (Class B) American Depository Receipt
(ADR) (Mexico)
Ekran Berhad (Malaysia)
Hopewell Holdings (Hong Kong)
Tolmex SA de CV (Mexico) **
Consumer Goods & Services 0.19%
Reliance Industries Ltd. (ADR) (India)** 40,000
Diversified Operations 4.45%
</TABLE>
<TABLE>
<CAPTION>
Global Resources Special Opportunities Combined
------------------ ----------------------------- --------
Par Value Par Value
(000's Market (000's Market
State - Issuer - Description Omitted) Value* Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C>
U.S.GOVERNMENT AND AGENCIES OBLIGATIONS
Governmental - U.S.
United States Treasury, Note
United States Treasury, Note
United States Treasury, Bond
United States Treasury, Bond
TOTAL U.S.GOVERNMENT AND AGENCIES
OBLIGATIONS
COMMON STOCKS
Audio/Video
Polygram NV (Netherlands) 100,000 $ 6,200,000 100,000
-----------
Broadcasting
New World Communications Group,Inc. ** 49,900 823,350 49,900
-----------
Computers
HBO & Co 35,000 2,476,250 35,000
Intuit, Inc. ** 259,900 18,712,800 259,900
Microsoft Corp. ** 75,000 7,500,000 75,000
Parametric Technology Co. ** 35,000 2,340,625 35,000
Sun Microsystems, Inc. ** 52,000 4,056,000 52,000
3Com Corp. ** 230,000 10,810,000 230,000
-----------
45,895,675
-----------
Construction
Australian National Industries, Ltd. (Australia) 200,000 156,680 200,000
CEMEX SA (Class B) American Depository Receipt
(ADR) (Mexico) 18,812 60,466 18,812
Ekran Berhad (Malaysia) 70,000 177,548 70,000
Hopewell Holdings (Hong Kong) 200,000 126,100 200,000
Tolmex SA de CV (Mexico) ** 11,000 41,749 11,000
-----------
562,543
-----------
Consumer Goods & Services
Reliance Industries Ltd. (ADR) (India)** $ 568,416 40,000
-----------
Diversified Operations
</TABLE>
<TABLE>
<CAPTION>
Combined
------------------------
Par Value
(000's Market
State - Issuer - Description Omitted) Value*
<S> <C> <C>
U.S.GOVERNMENT AND AGENCIES OBLIGATIONS
Governmental - U.S.
United States Treasury, Note $ 3,000 $ 3,049,680
United States Treasury, Note 6,300 6,787,242
United States Treasury, Bond 2,000 2,681,240
United States Treasury, Bond 2,700 3,680,856
------------
$ 16,199,018
------------
TOTAL U.S.GOVERNMENT AND AGENCIES
OBLIGATIONS 16,199,018
------------
COMMON STOCKS
Audio/Video
Polygram NV (Netherlands) 6,200,000
------------
Broadcasting
New World Communications Group,Inc. ** 823,350
------------
Computers
HBO & Co 2,476,250
Intuit, Inc. ** 18,712,800
Microsoft Corp. ** 7,500,000
Parametric Technology Co. ** 2,340,625
Sun Microsystems, Inc. ** 4,056,000
3Com Corp. ** 10,810,000
------------
45,895,675
------------
Construction
Australian National Industries, Ltd. (Australia) 156,680
CEMEX SA (Class B) American Depository Receipt
(ADR) (Mexico) 60,466
Ekran Berhad (Malaysia) 177,548
Hopewell Holdings (Hong Kong) 126,100
Tolmex SA de CV (Mexico) ** 41,749
------------
562,543
------------
Consumer Goods & Services
Reliance Industries Ltd. (ADR) (India)** 568,416
------------
Diversified Operations
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Gold & Govt
----------------------------
Global
Par Value Resources
% of Interest Maturity (000's Market ---------
State - Issuer - Description Net Assets Rate % Date Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C> <C>
CUC International Inc. **
Hutchinson Whampoa (Hong Kong)
Ogden Corp.
Electrical 0.00%
Consolidated Electric Power Asia Ltd.(Hong Kong)
Electronics 8.24%
HADCO Corp. **
Helix Technology Corp.
Linear Technology Corp.
Micron Technology, Inc.
SCI Systems, Inc. **
Energy - Equipment 0.30%
Camco International Inc. 40,000
Energy - Exploration and Production 1.98%
Abacan Resource Corp.(Canada) ** 350,000
Bellwether Exploration Co. 190,000
Benton Oil & Gas Co. ** 80,000
International Petroleum Corp.(Canada) ** 500,000
Newscope Resources Ltd.(Canada) ** 255,200
Noble Affiliates Inc. ** 175,000
Energy - Services 2.23%
Amercian Ecology Corp. 95,000
Cairn Energy USA, Inc. ** 100,000
Energy Ventures Inc. ** 50,000
Global Industries Ltd ** 45,000
Nuevo Energy Co. ** 55,000
Reading and Bates Corp. ** 90,000
Transocean AS(Norway) ** 55,000
Engineering 0.19%
Fluor Corp.
Foster Wheeler Corp.
Entertainment 0.25%
Brassie Golf Corp.(Canada) ** 407,900
Hazardous Waste 0.91%
Handex Environmental Recovery, Inc. **
TETRA Technologies, Inc. **
Healthcare 3.45%
HealthCare COMPARE Corp. **
Healthsource, Inc. **
Johnson & Johnson
Industrial - Intermediate Materials 1.09%
</TABLE>
<TABLE>
<CAPTION>
Global Resources Special Opportunities
------------------ ------------------------------
Par Value Par Value Combined
(000's Market (000's Market --------
State - Issuer - Description Omitted) Value* Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C>
CUC International Inc. ** 375,000 12,984,375 375,000
Hutchinson Whampoa (Hong Kong) 50,000 275,485 50,000
Ogden Corp. 10,000 227,500 10,000
------------
13,487,360
------------
Electrical
Consolidated Electric Power Asia Ltd.(Hong Kong) 1,503 3,042 1,503
------------
Electronics
HADCO Corp. ** 85,000 2,380,000 85,000
Helix Technology Corp. 86,200 3,232,500 86,200
Linear Technology Corp. 250,000 10,937,500 250,000
Micron Technology, Inc. 35,000 2,471,875 35,000
SCI Systems, Inc. ** 169,100 5,939,638.0 169,100
------------
24,961,513
------------
Energy - Equipment
Camco International Inc. 915,000 40,000
----------
Energy - Exploration and Production
Abacan Resource Corp.(Canada) ** 858,725 350,000
Bellwether Exploration Co. 1,021,250 190,000
Benton Oil & Gas Co. ** 970,000 80,000
International Petroleum Corp.(Canada) ** 1,187,500 500,000
Newscope Resources Ltd.(Canada) ** 733,700 255,200
Noble Affiliates Inc. ** 1,225,000 175,000
----------
5,996,175
----------
Energy - Services
Amercian Ecology Corp. 332,500 95,000
Cairn Energy USA, Inc. ** 1,200,000 100,000
Energy Ventures Inc. ** 950,000 50,000
Global Industries Ltd ** 1,181,250 45,000
Nuevo Energy Co. ** 1,216,875 55,000
Reading and Bates Corp. ** 1,035,000 90,000
Transocean AS(Norway) ** 838,811 55,000
---------
6,754,436
---------
Engineering
Fluor Corp. 5,000 282,500 5,000
Foster Wheeler Corp. 8,000 300,000 8,000
------------
582,500
------------
Entertainment
Brassie Golf Corp.(Canada) ** 764,813 407,900
----------
Hazardous Waste
Handex Environmental Recovery, Inc. ** 16,000 100,000 16,000
TETRA Technologies, Inc. ** 200,000 2,650,000 200,000
------------
2,750,000
------------
Healthcare
HealthCare COMPARE Corp. ** 80,000 2,960,000 80,000
Healthsource, Inc. ** 95,000 5,035,000 95,000
Johnson & Johnson 30,000 2,445,000 30,000
------------
10,440,000
------------
Industrial - Intermediate Materials
</TABLE>
<TABLE>
<CAPTION>
Combined
----------------------
Par Value
(000's Market
State - Issuer - Description Omitted) Value*
<S> <C> <C>
CUC International Inc. ** 12,984,375
Hutchinson Whampoa (Hong Kong) 275,485
Ogden Corp. 227,500
----------
13,487,360
----------
Electrical
Consolidated Electric Power Asia Ltd.(Hong Kong) 3,042
----------
Electronics
HADCO Corp. ** 2,380,000
Helix Technology Corp. 3,232,500
Linear Technology Corp. 10,937,500
Micron Technology, Inc. 2,471,875
SCI Systems, Inc. ** 5,939,638
----------
24,961,513
----------
Energy - Equipment
Camco International Inc. 915,000
----------
Energy - Exploration and Production
Abacan Resource Corp.(Canada) ** 858,725
Bellwether Exploration Co. 1,021,250
Benton Oil & Gas Co. ** 970,000
International Petroleum Corp.(Canada) ** 1,187,500
Newscope Resources Ltd.(Canada) ** 733,700
Noble Affiliates Inc. ** 1,225,000
----------
5,996,175
----------
Energy - Services
Amercian Ecology Corp. 332,500
Cairn Energy USA, Inc. ** 1,200,000
Energy Ventures Inc. ** 950,000
Global Industries Ltd ** 1,181,250
Nuevo Energy Co. ** 1,216,875
Reading and Bates Corp. ** 1,035,000
Transocean AS(Norway) ** 838,811
----------
6,754,436
----------
Engineering
Fluor Corp. 282,500
Foster Wheeler Corp. 300,000
----------
582,500
----------
Entertainment
Brassie Golf Corp.(Canada) ** 764,813
----------
Hazardous Waste
Handex Environmental Recovery, Inc. ** 100,000
TETRA Technologies, Inc. ** 2,650,000
----------
2,750,000
----------
Healthcare
HealthCare COMPARE Corp. ** 2,960,000
Healthsource, Inc. ** 5,035,000
Johnson & Johnson 2,445,000
----------
10,440,000
----------
Industrial - Intermediate Materials
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
Gold & Govt
---------------------------- Global
Par Value Resources
% of Interest Maturity (000's Market ---------
State - Issuer - Description Net Assets Rate % Date Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C> <C>
Concordia Paper Holdings, (ADR) (Hong Kong)** 40,000
Hindalco Industries Ltd.(India) ** 20,000
Kymmene Oy(Finland) 20,000
PT Indah Kiat Pulp & Paper Corp.(Indonesia) 614,400
PT Indocement Tunggal Prakar(Indonesia) 170,000
Venezolana de Prerreducidos Caroni(Venezuela) ** 101,000
Industrial - Miscellaneous 1.12%
Eastern Aluminium Ltd.(Australia) ** 620,000
Grupo Mexico S.A. B (Mexico) 120,000
Holderbank Financiere Glarus AG(Switzerland) ** 712
York Research Corp. ** 240,000
Leisure & Recreation 2.95%
Walt Disney Co.,(The)
Medical 4.25%
Boston Scientific Corp. **
Community Health Systems, Inc. **
Metals,Gold and Mining Products 9.44%
Amax Gold Inc. ** 150,000
Asarco, Inc.
Barrick Gold Corp.(Canada) 35,000
Battle Mountain Gold Co. 55,000 419,375 100,000
Cambior Inc.(Canada) 80,000
Freeport-McMoRan Copper & Gold Inc. 40,000
Hecla Mining Co. ** 200,000 1,475,000
Hemlo Gold Mines, Inc. (Canada) 50,000 412,500 100,000
Kinross Gold Corp. (Canada) ** 500,000 3,625,000
Newmont Gold Co. 35,000 1,260,000 15,000
Pan American Silver Corp. (Canada) ** 100,000 662,500
Placer Dome, Inc. (Canada) 32,000 700,000
Prime Resource Group, Inc. (Canada) ** 281,800 2,042,740
Santa Fe Pacific Gold Corp. 100,000 987,500 70,000
Stillwater Mining Co. ** 100,000 1,687,500
TVX Gold, Inc. (Canada) ** 105,000 682,500
----------
13,954,615
----------
Oil & Gas 12.21%
Cairn Energy USA, Inc. **
Chesapeake Energy Corp. **
Diamond Offshore Drilling, Inc. **
Falcon Drilling Co.,Inc. **
Global Marine, Inc. **
Nabors Industries, Inc. **
Pride Petroleum Services, Inc. **
Reading & Bates Corp. **
Sonat Offshore Drilling Co.
Triton Energy Corp. **
Publishing 1.02%
</TABLE>
<TABLE>
<CAPTION>
Global Resources Special Opportunities
------------------ -----------------------------
Par Value Par Value Combined
(000's Market (000's Market --------
State - Issuer - Description Omitted) Value* Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C>
Concordia Paper Holdings, (ADR) (Hong Kong)** 370,000 40,000
Hindalco Industries Ltd.(India) ** 637,600 20,000
Kymmene Oy(Finland) 546,253 20,000
PT Indah Kiat Pulp & Paper Corp.(Indonesia) 601,928 614,400
PT Indocement Tunggal Prakar(Indonesia) 628,796 170,000
Venezolana de Prerreducidos Caroni(Venezuela) ** 530,250 101,000
----------
3,314,827
----------
Industrial - Miscellaneous
Eastern Aluminium Ltd.(Australia) ** 570,586 620,000
Grupo Mexico S.A. B (Mexico) 501,048 120,000
Holderbank Financiere Glarus AG(Switzerland) ** 571,348 712
York Research Corp. ** 1,740,000 240,000
----------
3,382,982
----------
Leisure & Recreation
Walt Disney Co.,(The) 155,000 8,931,875 155,000
------------
Medical
Boston Scientific Corp. ** 230,000 9,688,750 230,000
Community Health Systems, Inc. ** 100,000 3,175,000 100,000
------------
12,863,750
------------
Metals,Gold and Mining Products
Amax Gold Inc. ** 843,750 150,000
Asarco, Inc. 70,000 2,257,500 70,000
Barrick Gold Corp.(Canada) 809,375 35,000
Battle Mountain Gold Co. 762,500 155,000
Cambior Inc.(Canada) 790,000 80,000
Freeport-McMoRan Copper & Gold Inc. 915,000 40,000
Hecla Mining Co. ** 200,000
Hemlo Gold Mines, Inc. (Canada) 825,000 150,000
Kinross Gold Corp. (Canada) ** 385,100 2,863,141 885,100
Newmont Gold Co. 540,000 37,000 1,332,000 87,000
Pan American Silver Corp. (Canada) ** 100,000
Placer Dome, Inc. (Canada) 32,000
Prime Resource Group, Inc. (Canada) ** 140,000 1,014,846 421,800
Santa Fe Pacific Gold Corp. 691,250 100,000 987,500 270,000
Stillwater Mining Co. ** 100,000
TVX Gold, Inc. (Canada) ** 105,000
---------- ----------
6,176,875 8,454,987
---------- ----------
Oil & Gas
Cairn Energy USA, Inc. ** 147,000 1,764,000 147,000
Chesapeake Energy Corp. ** 100,000 2,925,000 100,000
Diamond Offshore Drilling, Inc. ** 88,000 2,189,000 88,000
Falcon Drilling Co.,Inc. ** 435,000 4,513,125 435,000
Global Marine, Inc. ** 450,000 2,925,000 450,000
Nabors Industries, Inc. ** 540,000 4,657,500 540,000
Pride Petroleum Services, Inc. ** 536,800 4,697,000 536,800
Reading & Bates Corp. ** 420,000 4,830,000 420,000
Sonat Offshore Drilling Co. 130,000 4,127,000 130,000
Triton Energy Corp. ** 93,600 4,364,100 93,600
------------
36,992,225
------------
Publishing
</TABLE>
<TABLE>
<CAPTION>
Combined
---------
Par Value
(000's Market
State - Issuer - Description Omitted) Value*
<S> <C> <C>
Concordia Paper Holdings, (ADR) (Hong Kong)** 370,000
Hindalco Industries Ltd.(India) ** 637,600
Kymmene Oy(Finland) 546,253
PT Indah Kiat Pulp & Paper Corp.(Indonesia) 601,928
PT Indocement Tunggal Prakar(Indonesia) 628,796
Venezolana de Prerreducidos Caroni(Venezuela) ** 530,250
---------
3,314,827
---------
Industrial - Miscellaneous
Eastern Aluminium Ltd.(Australia) ** 570,586
Grupo Mexico S.A. B (Mexico) 501,048
Holderbank Financiere Glarus AG(Switzerland) ** 571,348
York Research Corp. ** 1,740,000
---------
3,382,982
---------
Leisure & Recreation
Walt Disney Co.,(The) 8,931,875
---------
Medical
Boston Scientific Corp. ** 9,688,750
Community Health Systems, Inc. ** 3,175,000
---------
12,863,750
---------
Metals,Gold and Mining Products
Amax Gold Inc. ** 843,750
Asarco, Inc. 2,257,500
Barrick Gold Corp.(Canada) 809,375
Battle Mountain Gold Co. 1,181,875
Cambior Inc.(Canada) 790,000
Freeport-McMoRan Copper & Gold Inc. 915,000
Hecla Mining Co. ** 1,475,000
Hemlo Gold Mines, Inc. (Canada) 1,237,500
Kinross Gold Corp. (Canada) ** 6,488,141
Newmont Gold Co. 3,132,000
Pan American Silver Corp. (Canada) ** 662,500
Placer Dome, Inc. (Canada) 700,000
Prime Resource Group, Inc. (Canada) ** 3,057,586
Santa Fe Pacific Gold Corp. 2,666,250
Stillwater Mining Co. ** 1,687,500
TVX Gold, Inc. (Canada) ** 682,500
---------
28,586,477
---------
Oil & Gas
Cairn Energy USA, Inc. ** 1,764,000
Chesapeake Energy Corp. ** 2,925,000
Diamond Offshore Drilling, Inc. ** 2,189,000
Falcon Drilling Co.,Inc. ** 4,513,125
Global Marine, Inc. ** 2,925,000
Nabors Industries, Inc. ** 4,657,500
Pride Petroleum Services, Inc. ** 4,697,000
Reading & Bates Corp. ** 4,830,000
Sonat Offshore Drilling Co. 4,127,500
Triton Energy Corp. ** 4,364,100
---------
36,992,225
---------
Publishing
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
Gold & Govt
-----------------------------
Par Value Resources
% of Interest Maturity (000's Market ---------
State - Issuer - Description Net Assets Rate % Date Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C> <C>
Scholastic Corp. **
Solid Waste 0.23%
Brambles Industries Ltd. (Australia)
Laidlaw, Inc.(Class B)
Waste Management Intl.,PLC,(ADR)(United Kingdom) **
Telecommunications 8.31%
America Online, Inc. **
Cascade Communications Corp. **
U.S. Order, Inc. **
Utilities 0.16%
OEMV AG(Austria) ** 5,625
Water Treatment 0.15%
Compagnie Generale des Eaux (France)
Lyonnaise Des Eaux Dumez (France)
Wessex Water, PLC (United Kingdom)
TOTAL COMMON STOCKS 80.78%
13,954,615
----------
PREFERRED STOCKS
Gold and Mining Products 0.83%
Freeport-McMoran Copper & Gold, Inc. Ser SILV ** 120,000 2,520,000
----------
TOTAL PREFERRED STOCKS 0.83% 2,520,000
----------
WARRANTS
Industrial - Miscellaneous 0.00%
Holderbank Financiere Glarus AG(Switzerland) ** 3,560
TOTAL WARRANTS 0.00%
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement 8.59%
Investment in a joint repurchase agreement
transaction with SBC Capital Markets Inc.-Dated
10-31-95, Due 11-01-95 (secured by U.S. Treasury
Bond, 8.75% Due 05-15-17, U.S. Treasury Note,
5.750% Due 09-30-97) 5.89% 11/1/95 $ 334 $ 334,000
Corporate Savings Account 0.00%
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% 745
</TABLE>
<TABLE>
<CAPTION>
Global Resources Special Opportunities
------------------ -----------------------------
Par Value Par Value Combined
(000's Market (000's Market --------
State - Issuer - Description Omitted) Value* Shares Omitted) Value* Shares
<S> <C> <C> <C> <C> <C> <C>
Scholastic Corp. ** 50,000 3,087,500 50,000
-----------
Solid Waste
Brambles Industries Ltd. (Australia) 30,000 318,561 30,000
Laidlaw, Inc.(Class B) 23,500 211,500 23,500
Waste Management Intl.,PLC,(ADR)(United Kingdom) ** 15,000 151,875 15,000
-----------
681,936
-----------
Telecommunications
America Online, Inc. ** 145,000 11,600,000 145,000
Cascade Communications Corp. ** 158,000 11,257,500 158,000
U.S. Order, Inc. ** 155,000 2,325,000 155,000
-----------
25,182,500
-----------
Utilities
OEMV AG(Austria) ** 485,295 5,625
----------
Water Treatment
Compagnie Generale des Eaux (France) 1,316 122,243 1,316
Lyonnaise Des Eaux Dumez (France) 2,000 194,976 2,000
Wessex Water, PLC (United Kingdom) 25,000 132,148 25,000
-----------
449,367
-----------
TOTAL COMMON STOCKS
28,358,819 202,350,123
---------- -----------
PREFERRED STOCKS
Gold and Mining Products
Freeport-McMoran Copper & Gold, Inc. Ser SILV ** 120,000
TOTAL PREFERRED STOCKS
WARRANTS
Industrial - Miscellaneous
Holderbank Financiere Glarus AG(Switzerland) ** 4,229 3,560
------
TOTAL WARRANTS 4,229
------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement
Investment in a joint repurchase agreement
transaction with SBC Capital Markets Inc.-Dated
10-31-95, Due 11-01-95 (secured by U.S. Treasury
Bond, 8.75% Due 05-15-17, U.S. Treasury Note,
5.750% Due 09-30-97) $ 25,672 $ 25,672,000
Corporate Savings Account
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%
</TABLE>
<TABLE>
<CAPTION>
Combined
---------------------------
Par Value
(000's Market
State - Issuer - Description Omitted) Value*
<S> <C> <C>
Scholastic Corp. ** 3,087,500
-----------
Solid Waste
Brambles Industries Ltd. (Australia) 318,561
Laidlaw, Inc.(Class B) 211,500
Waste Management Intl.,PLC,(ADR)(United Kingdom) ** 151,875
-----------
681,936
-----------
Telecommunications
America Online, Inc. ** 11,600,000
Cascade Communications Corp. ** 11,257,500
U.S. Order, Inc. ** 2,325,000
-----------
25,182,500
-----------
Utilities
OEMV AG(Austria) ** 485,295
-----------
Water Treatment
Compagnie Generale des Eaux (France) 122,243
Lyonnaise Des Eaux Dumez (France) 194,976
Wessex Water, PLC (United Kingdom) 132,148
-----------
449,367
-----------
TOTAL COMMON STOCKS 244,663,557
-----------
PREFERRED STOCKS
Gold and Mining Products
Freeport-McMoran Copper & Gold, Inc. Ser SILV ** 2,520,000
-----------
TOTAL PREFERRED STOCKS 2,520,000
-----------
WARRANTS
Industrial - Miscellaneous
Holderbank Financiere Glarus AG(Switzerland) ** 4,229
-----------
TOTAL WARRANTS
4,229
-----------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement
Investment in a joint repurchase agreement
transaction with SBC Capital Markets Inc.-Dated
10-31-95, Due 11-01-95 (secured by U.S. Treasury
Bond, 8.75% Due 05-15-17, U.S. Treasury Note,
5.750% Due 09-30-97) $ 26,006 26,006,000
Corporate Savings Account
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00% 745
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Gold & Govt
----------------------------------
Par Value
% of Interest Maturity (000's Market
State - Issuer - Description Net Assets Rate % Date Shares Omitted) Value*
<S> <C> <C> <C> <C> <C> <C>
TOTAL SHORT-TERM INVESTMENTS 8.59% $ 334,745
------------
TOTAL INVESTMENTS 95.55% $ 33,008,378
============
Combined Net Assets $ 35,218,599
</TABLE>
<TABLE>
<CAPTION>
Global Resources Special Opportunities
----------------------------- ---------------------------
Par Value Par Value
(000's Market (000's Market
State - Issuer - Description Shares Omitted) Value* Shares Omitted) Value*
<S> <C> <C> <C> <C> <C> <C>
TOTAL SHORT-TERM INVESTMENTS $ 25,672,000
----------- -------------
TOTAL INVESTMENTS $28,363,048 $ 228,022,123
=========== =============
Combined Net Assets $28,726,170 $ 238,925,410
</TABLE>
<TABLE>
<CAPTION>
Combined
---------------------------------
Par Value
(000's Market
State - Issuer - Description Shares Omitted) Value*
<S> <C> <C> <C>
TOTAL SHORT-TERM INVESTMENTS $ 26,006,745
------------
TOTAL INVESTMENTS $289,393,549
============
Combined Net Assets $302,870,179
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
*Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or, at
fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost which approximates market value. All
portfolio transactions initially expressed in terms of foreign currencies
have been translated into U.S. dollars.
** Non-income producing security.
The percentages shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
<PAGE>
PART C
FREEDOM INVESTMENT TRUST II
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 27 of the Registration
Statement of Freedom Investment Trust II (the "Registrant") on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940 (File Nos.
33-4559 and 811-4630), which information is incorporated herein by reference.
ITEM 16. EXHIBITS:
1.1 Registrant's Master Trust Filed as Exhibit 1 to Registrant's
Agreement, as amended Registration Statement on Form N-1A
and incorporated herein by
reference to post-effective
amendment no. 28 (File Nos.
811-4630 and 33-4559 on February
27, 1995; accession no.
0000950146-95-000057) ("PEA 28").
1.2 Amendment to Master Trust Filed as Exhibit 1.1 to
Agreement Registrant's Registration Statement
on Form N-1A as filed on February
9, 1996 (file nos. 811-4630 and
33-4559, accession no.
0000950146-96-000307) and
incorporated herein by reference.
2. Amended By-Laws of Registrant. Filed as Exhibit 2 to PEA 28 and
incorporated herein by reference.
3. Not applicable.
4. Agreement and Plan of Filed herewith as Exhibit A to the
Reorganization between the Proxy Statement and Prospectus
Registrant and John Hancock included as Part A of the
Series, Inc. on behalf of John Amendment.
Hancock Global Resources Fund.
5. Not applicable.
<PAGE>
6. Investment Management Contract Filed as Exhibit 5 to PEA 28 and
between the Registrant and John incorporated herein by reference.
Hancock Advisers, Inc.
7.1 Distribution Agreement among the Filed as Exhibit 6 to PEA 28 and
Registrant and John Hancock Funds, incorporated herein by reference.
Inc. (formerly named John Hancock
Broker Distribution Services,
Inc.) and Freedom Distributors
Corporation.
7.2 Form of Soliciting Dealer Filed as Exhibit 6.1 to PEA 28 and
Agreement between John Hancock incorporated herein by reference.
Funds, Inc. and Selected Dealers
7.3 Form of Financial Institution Filed as Exhibit 6.2 to PEA 28 and
Sales and Service Agreement. incorporated herein by reference.
8. Not applicable.
9. Master Custodian Agreement Filed as Exhibit 8.1 to PEA 28 and
between John Hancock Mutual Funds incorporated by reference herein.
(including Registrant) and
Investors Bank & Trust Company.
10. Class A and Class B Distribution Filed as Exhibit 15 to PEA 28 and
Plan between Registrant and John incorporated herein by reference.
Hancock Funds, Inc.
11. Opinion as to legality of shares, Filed as Exhibit 11 to the
and consent. Registration Statement filed on May
19, 1996 (File no. 33-04079;
accession no. 0001010521-96-000079)
("Registration Statement") and
incorporated herein by reference.
12. Opinion as to tax matters, and To be filed by amendment.
consent.
13. Not applicable.
14.1 Consent of Price Waterhouse LLP Filed herewith as Exhibit 14.1.
regarding the audited financial
statements of Registrant.
2
<PAGE>
14.2 Consent of Ernst & Young LLP Filed herewith as Exhibit 14.2.
regarding the audited financial
statement of John Hancock Global
Resources Fund.
15. Not applicable.
16. Powers of Attorney. Filed herewith as addendum to
signature pages.
17. Declaration of the Registrant Filed as Exhibit 17 to the
pursuant to Rule 24f-2 under the Registration Statement and
Investment Company Act of 1940. incorporated by reference herein.
18. Prospectus of John Hancock Global Filed as Exhibit 18 to the
Resources Fund dated March 1, 1996. Registration Statement and
incorporated by reference herein.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of 1933,
as amended (the "1933 Act"), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The Registrant undertakes to file the executed opinion of counsel as to
tax matters relating to the Reorganization in a post-effective amendment to the
Registration Statement subsequent to the closing of the Reorganization.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and The
Commonwealth of Massachusetts, on the 1st day of July, 1996.
FREEDOM INVESTMENT TRUST II
By: Edward J. Boudreau, Jr.*
------------------------
Edward J. Boudreau, Jr.
Chairman, Chief Executive Officer
and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
Edward J. Boudreau, Jr.* Chairman and Chief ) July 1, 1996
------------------------ Executive Officer )
Edward J. Boudreau, Jr. (Principal Executive )
Officer) )
)
)
James B. Little* Senior Vice President ) July 1, 1996
----------------------- and Chief Financial )
James B. Little Officer (Principal )
Financial and )
Accounting Officer) )
)
Trustees:
Douglas Costle* Trustee )
-----------------------
Douglas Costle )
)
)
Leland O. Erdahl* Trustee )
-----------------------
Leland O. Erdahl )
)
4
<PAGE>
)
Richard A. Farrell* Trustee )
-----------------------
Richard A. Farrell )
)
)
William F. Glavin* Trustee )
-----------------------
William F. Glavin )
)
)
Trustee )
-----------------------
Dr. John A. Moore )
)
)
Patti McGill Peterson* Trustee )
-----------------------
Patti McGill Peterson )
)
)
John W. Pratt* Trustee )
-----------------------
John W. Pratt )
)
)
*By:/s/ Susan S. Newton July 1, 1996
-----------------------------
Susan S. Newton
Attorney-in-fact
5
<PAGE>
POWER OF ATTORNEY
The undersigned Trustee of each of the above listed Trusts, each a
Massachusetts business trust, does hereby severally constitute and appoint
EDWARD J. BOUDREAU, JR., SUSAN S. NEWTON, AND JAMES B. LITTLE, and each acting
singly, to be my true, sufficient and lawful attorneys, with full power to each
of them, and each acting singly, to sign for me, in my name and in the capacity
indicated below, any Registration Statement on Form N-1A and any Registration
Statement on Form N-14 to be filed by the Trust under the Investment Company Act
of 1940, as amended (the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of shares and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the Trust to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any such Registration
Statements and any and all amendments thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as of
the 21st day of May, 1996.
/s/Dennis S. Aronowitz /s/William F. Glavin
- ----------------------------- ------------------------------
Dennis S. Aronowitz William F. Glavin
/s/Edward J. Boudreau, Jr. /s/ Anne C. Hodsdon
- ----------------------------- ------------------------------
Edward J. Boudreau, Jr. Anne C. Hodsdon
/s/Richard P. Champman, Jr. /s/Patti McGill Peterson
- ----------------------------- ------------------------------
Richard P. Chapman, Jr. Patti McGill Peterson
/s/William J. Cosgrove
- ----------------------------- ------------------------------
William J. Cosgrove John A. Moore
/s/Douglas M. Costle /s/John W. Pratt
- ----------------------------- ------------------------------
Douglas M. Costle John W. Pratt
/s/Leland O. Erdahl /s/Richard S. Scipione
- ----------------------------- ------------------------------
Leland O. Erdahl Richard S. Scipione
/s/Richard A. Farrell /s/Edward J. Spellman
- ----------------------------- ------------------------------
Richard A. Farrell Edward J. Spellman
/s/Gail D. Fosler
- -----------------------------
Gail D. Fosler
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement.
Exhibit No. Description
14.1 Consent of Price Waterhouse LLP
EXHIBIT 14.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy Statement and
Prospectus constituting part of this Post-Effective Amendment No. 1 to the
Registration Statement on Form N-14 (File No. 33-4559) (the "Registration
Statement") of our reports dated December 14, 1995, relating to the financial
statements and financial highlights appearing in the October 31, 1995 Annual
Reports to Shareholders of John Hancock Special Opportunities Fund and John
Hancock Gold & Government Fund which financial statements and financial
highlights are also incorporated by reference into the Proxy Statement and
Prospectus. We also consent to the reference to us under the heading "Experts"
in the Prospectus and Proxy Statement. We also consent to the references to us
under the heading "The Fund's Financial Highlights" in the Prospectus of John
Hancock Special Opportunities Fund, dated March 1, 1996, which appears in the
Proxy Statement and Prospectus, under the heading "Independent Auditors" in the
Statement of Additional Information of John Hancock Special Opportunities Fund,
dated March 1, 1996, which is incorporated by reference into the Registration
Statement, and under the heading "Independent Auditors" in the Statement of
Additional Information of John Hancock Gold & Government Fund dated March 1,
1996, which is incorproated by reference into the Registration Statement.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
June 28, 1996
