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
July 5, 1996
040PX2nd7/96
<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 July 1, 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 July 5, 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 July 5, 1996.
<PAGE>
TABLE OF CONTENTS
Page
---
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
i
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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 July 1, 1996 included with 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 July 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 July
5, 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
8
<PAGE>
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.
9
<PAGE>
(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.
10
<PAGE>
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.
11
<PAGE>
(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.
12
<PAGE>
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
13
<PAGE>
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
14
<PAGE>
(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.
15
<PAGE>
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
16
<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;
17
<PAGE>
(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."
18
<PAGE>
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
19
<PAGE>
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,
20
<PAGE>
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
21
<PAGE>
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
-2-
<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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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.
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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
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<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 July 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
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<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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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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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
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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.
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<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 Disciplined Growth Fund
John Hancock Discovery Fund
John Hancock Emerging Growth Fund
John Hancock Growth Fund
John Hancock Regional Bank Fund
John Hancock Special Equities Fund
John Hancock Special Opportunities Fund
(together, the "Funds")
Supplement to Class A and B Prospectus, effective July 1, 1996
(to be distributed to investors in the State of Maryland)
The Funds' investment objectives and primary investment policies are described
from page 4 to page 17 of the prospectus. The Funds may also use additional
investment practices which have specific risks associated with them.
Particularly, please note:
o The Funds may engage in transactions in some or all of the following
derivative instruments: financial futures and related options, securities
and index options and currency contracts. The risks associated with their
use include: interest rate risk, currency risk, market risk, hedged or
speculative leverage risk, correlation risk, liquidity risk, credit risk
and opportunity risk.
o John Hancock Emerging Growth Fund may invest up to 10% of total assets in
non-investment grade convertible securities ("convertibles"), which are
debt securities that can be converted into equity securities at a future
time. Convertibles rated below BBB/Baa are considered "junk" bonds. The
risks associated with their use include: credit risk, valuation and
information risk, interest rate risk, market risk and liquidity risk.
These instruments and other "higher-risk securities and practices" are described
on page 29 of the prospectus. The risks associated with these instruments are
defined under the heading "Types of Investment Risk" on page 28 of the
prospectus.
July 1, 1996
GRMDS
<PAGE>
JOHN HANCOCK
GROWTH
FUNDS
[John Hancock's graphic logo. A
circle, diamond, triangle and a
cube.]
- --------------------------------------------------------------------------------
PROSPECTUS
JULY 1, 1996
This prospectus gives vital information about these funds. For your own benefit
and protection, please read it before you invest, and keep it on hand for future
reference.
Please note that these funds:
- - are not bank deposits
- - are not federally insured
- - are not endorsed by any bank or
government agency
- - are not guaranteed to achieve
their goal(s)
Like all mutual fund shares, 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.
DISCIPLINED GROWTH FUND
DISCOVERY FUND
EMERGING GROWTH FUND
GROWTH FUND
REGIONAL BANK FUND
SPECIAL EQUITIES FUND
SPECIAL OPPORTUNITIES FUND
[John Hancock's graphic logo. A circle, diamond, triangle and a cube.]
101 Huntington Avenue, Boston, Massachusetts 02199-7603
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
A fund-by-fund look at goals, DISCIPLINED GROWTH FUND 4
strategies, risks, expenses and
financial history. DISCOVERY FUND 6
EMERGING GROWTH FUND 8
GROWTH FUND 10
REGIONAL BANK FUND 12
SPECIAL EQUITIES FUND 14
SPECIAL OPPORTUNITIES FUND 16
Policies and instructions for Your account
opening, maintaining and closing
an account in any growth fund. Choosing a share class 18
How sales charges are calculated 18
Sales charge reductions and waivers 19
Opening an account 19
Buying shares 20
Selling shares 21
Transaction policies 23
Dividends and account policies 23
Additional investor services 24
Details that apply to the growth FUND DETAILS
funds as a group.
Business structure 25
Sales compensation 26
More about risk 28
FOR MORE INFORMATION BACK COVER
<PAGE>
OVERVIEW
- --------------------------------------------------------------------------------
FUND INFORMATION KEY
Concise fund-by-fund descriptions begin on the next page. Each description
provides the following information:
[A graphic image of a bullseye with an arrow in the middle of it.] GOAL AND
STRATEGY The fund's particular investment goals and the strategies it intends
to use in pursuing those goals.
[A graphic image of a black folder that contains a couple sheets of paper.]
PORTFOLIO SECURITIES The primary types of securities in which the fund invests.
Secondary investments are described in "More about risk" at the end of the
prospectus.
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] RISK FACTORS The major risk factors associated with the fund.
[A graphic image of a generic person.] PORTFOLIO MANAGEMENT The individual or
group (including subadvisers, if any) designated by the investment adviser to
handle the fund's day-to-day management.
[A graphic image of a percent symbol.] EXPENSES The overall costs borne by an
investor in the fund, including sales charges and annual expenses.
[A graphic image of a dollar sign.] FINANCIAL HIGHLIGHTS A table showing the
fund's financial performance for up to ten years, by share class. A bar chart
showing total return allows you to compare the fund's historical risk level to
those of other funds.
GOAL OF THE GROWTH FUNDS
John Hancock growth funds seek long-term growth by investing primarily in common
stocks. Each fund employs its own strategy and has its own risk/reward profile.
Because you could lose money by investing in these funds, be sure to read all
risk disclosure carefully before investing.
WHO MAY WANT TO INVEST
These funds may be appropriate for investors who:
* have longer time horizons
* are willing to accept higher short-term risk along with higher potential
long-term returns
* want to diversify their portfolios
* are seeking funds for the growth portion of an asset allocation portfolio
* are investing for retirement or other goals that are many years in the
future
Growth funds may NOT be appropriate if you:
* are investing with a shorter time horizon in mind
* are uncomfortable with an investment that will go up and down in value
THE MANAGEMENT FIRM
All John Hancock growth funds are managed by John Hancock Advisers, Inc. Founded
in 1968, John Hancock Advisers is a wholly owned subsidiary of John Hancock
Mutual Life Insurance Company and manages more than $19 billion in assets.
<PAGE>
DISCIPLINED GROWTH FUND
<TABLE>
<S> <C>
REGISTRANT NAME: FREEDOM INVESTMENT TRUST TICKER SYMBOL CLASS A: SVAAX CLASS B: FEQVX
</TABLE>
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
established, growing companies that have demonstrated superior earnings growth
and stability. Under normal circumstances, the fund will invest at least 65% of
assets in these companies, without concentration in any one industry. The fund
also looks for the following characteristics:
* predictability of earnings
* a low level of debt
* seasoned management
* a strong market position
Many of the fund's investments are in medium or large capitalization companies.
The fund invests for income as a secondary goal.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in the common stocks of U.S. companies. It may also
invest in warrants, preferred stocks and investment-grade convertible debt
securities.
The fund expects any foreign investments to remain below 10% of assets.
For liquidity and flexibility, the fund may place up to 15% of net assets in
cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest up to 80% in these securities as a defensive tactic.
The fund also may invest in certain higher-risk securities, and may engage in
other investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. To the extent that the fund invests in
higher-risk securities, it takes on additional risks that could adversely
affect its performance. Before you invest, please read "More about risk"
starting on page 28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] John F. Snyder III and Jere E. Estes are
the leaders of the fund's portfolio management team. Mr. Snyder is an executive
vice president of the adviser and has been a team member since July 1992. He
has been an investment manager since 1971. Mr. Estes has been a part of the
fund's management team since joining John Hancock in July 1992. He has been in
the investment business since 1967.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
<TABLE>
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
Management fee 0.75% 0.75%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.40% 0.40%
Total fund operating expenses 1.45% 2.15%
</TABLE>
<TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A shares $64 $94 $125 $215
Class B shares
Assuming redemption
at end of period $72 $97 $135 $231
Assuming no redemption $22 $67 $115 $231
This example is for comparison purposes only and is not a representation of
the fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
</TABLE>
4 DISCIPLINED GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
Financial highlights
[A graphic image of a dollar sign.] The figures below have been audited by the
fund's independent auditors, Price Waterhouse LLP.
VOLATILITY, AS INDICATED BY CLASS B
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%) [BAR GRAPH]
<CAPTION>
======================================================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1992(1) 1993 1994 1995
======================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.81 $ 10.99 $ 12.39 $ 12.02
Net investment income (loss) 0.06(2) 0.08(2) 0.10 0.08(2)
Net realized and unrealized gain (loss) on investments (0.06) 1.34 0.07 1.29
Total from investment operations 0.00 1.42 0.17 1.37
Less distributions:
Dividends from net investment income (0.07) (0.02) (0.10) (0.10)
Distributions from net realized gain on investments sold (1.74) -- (0.44) (0.52)
Distributions from capital paid-in (0.01) -- -- --
Total distributions (1.82) (0.02) (0.54) (0.62)
Net asset value, end of period $10.99 $ 12.39 $ 12.02 $ 12.77
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3)(%) 0.19(4) 12.97 1.35 12.21
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 1,771 23,372 23,292 27,692
Ratio of expenses to average net assets(%) 1.73(5) 1.60 1.53 1.46
Ratio of net investment income (loss) to average net assets(%) 0.62(5) 0.64 0.83 0.69
Portfolio turnover rate(%) 246 71 60 65
Average brokerage commission rate(6)($) N/A N/A N/A N/A
</TABLE>
<TABLE>
=========================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1987(1) 1988 1989 1990 1991 1992
=========================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 8.34 $ 10.29 $ 11.52 $ 9.22 $ 11.71
Net investment income (loss) 0.06 0.13 0.19 0.18 0.07 0.01(2)
Net realized and unrealized gain (loss) on investments (1.70) 2.05 1.25 (2.00) 2.67 1.05
Total from investment operations (1.64) 2.18 1.44 (1.82) 2.74 1.06
Less distributions:
Dividends from net investment income (0.02) (0.09) (0.12) (0.20) (0.20) (0.03)
Distributions from net realized gain on investments sold -- (0.14) (0.09) (0.28) (0.05) (1.76)
Distributions from capital paid-in -- -- -- -- -- (0.01)
Total distributions (0.02) (0.23) (0.21) (0.48) (0.25) (1.80)
Net asset value, end of period $ 8.34 $ 10.29 $ 11.52 $ 9.22 $ 11.71 $ 10.97
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3)(%) (16.44)(4) 26.69 14.27 (16.46) 30.21 7.22
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 14,016 14,927 23,813 17,714 21,826 23,525
Ratio of expenses to average net assets(%) 2.56(5,7) 2.61(7) 2.30 2.13 2.24 2.27
Ratio of net investment income (loss) to average net assets(%) 0.93(5,7) 1.46(7) 1.75 1.64 0.66 0.10
Portfolio turnover rate(%) 40(5) 54 94 165 217 246
Average brokerage commission rate(6)($) N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
======================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1993 1994 1995
======================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.97 $ 12.31 $ 11.95
Net investment income (loss) 0.02(2) 0.03 0.01(2)
Net realized and unrealized gain (loss) on investments 1.33 0.07 1.28
Total from investment operations 1.35 0.10 1.29
Less distributions:
Dividends from net investment income (0.01) (0.02) (0.03)
Distributions from net realized gain on investments sold -- (0.44) (0.52)
Distributions from capital paid-in -- -- --
Total distributions (0.01) (0.46) (0.55)
Net asset value, end of period $ 12.31 $ 11.95 $ 12.69
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3)(%) 12.34 0.78 11.51
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 93,853 94,431 86,178
Ratio of expenses to average net assets(%) 2.09 2.10 2.11
Ratio of net investment income (loss) to average net assets(%) 0.17 0.25 0.06
Portfolio turnover rate(%) 71 60 65
Average brokerage commission rate(6)($) N/A N/A N/A
(1) Class A and Class B shares commenced operations on January 3, 1992 and
April 22, 1987, respectively.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(7) Net of advisory expense reimbursements per share of $0.01 for the fiscal
year ended October 31, 1988 and less than $0.01 for the fiscal year ended
October 31, 1987.
</TABLE>
DISCIPLINED GROWTH FUND 5
<PAGE>
DISCOVERY FUND
<TABLE>
<S> <C>
REGISTRANT NAME: FREEDOM INVESTMENT TRUST III TICKER SYMBOL CLASS A: FRDAX CLASS B: FRDIX
</TABLE>
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
companies that appear to offer superior growth prospects. Under normal
circumstances, the fund will invest at least 65% of assets in these companies.
The fund looks for companies, including small- and medium-sized companies, that
have broad market opportunities and consistent or accelerating earnings growth.
These companies may:
- - occupy a profitable market niche
- - have products or technologies that are new, unique or proprietary
- - are in an industry that has a favorable long-term growth outlook
- - have a capable management team with a significant equity stake
These companies may be in a relatively early stage of development, but will
usually have established a record of profitability and a strong financial
position. The fund does not invest for income.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in common stocks of U.S. companies and may also invest
in warrants, preferred stocks and investment-grade convertible debt securities.
For liquidity and flexibility, the fund may place up to 15% of net assets in
cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest up to 80% in these securities as a defensive tactic.
The fund may invest up to 25% of assets in foreign securities, which carry
additional risks. The fund also may invest in certain higher-risk securities,
and may engage in other investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. To the extent that the fund invests in
small and medium-sized company stocks, foreign securities and other higher-risk
securities, it takes on additional risks that could adversely affect its
performance. The fund may experience higher volatility than many other types of
growth funds. Before you invest, please read "More about risk" starting on page
28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] Bernice S. Behar, leader of the fund's
portfolio management team since March 1994, is a senior vice president of the
adviser. She joined the adviser in 1991 and has been in the investment business
since 1986.
- --------------------------------------------------------------------------------
<TABLE>
INVESTOR EXPENSES
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management fee 0.75% 0.75%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.80% 0.80%
Total fund operating expenses 1.85% 2.55%
</TABLE>
<TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A shares $68 $105 $145 $256
Class B shares
Assuming redemption
at end of period $76 $109 $155 $271
Assuming no redemption $26 $ 79 $135 $271
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
</TABLE>
6 DISCOVERY FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
[A graphic image of a dollar sign.] The figures below for the period ended July
31, 1992, were audited by the fund's former independent auditors, Price
Waterhouse LLP. Figures for subsequent years have been audited by the fund's
current independent auditors, Ernst & Young LLP.
Volatility, as indicated by Class B
year-by-year total investment return (%) [BAR GRAPH]
<CAPTION>
============================================================================================================================
CLASS A - YEAR ENDED JULY 31, 1992(1) 1993 1994 1995 1996(2)
============================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.40 $ 8.95 $ 10.81 $ 8.56 $ 12.95
Net investment income (loss) (0.05) (0.16) (0.16)(3) (0.10)(3) (0.10)(3)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (0.40) 2.15 (0.43) 4.83 0.55
Total from investment operations (0.45) 1.99 (0.59) 4.66 0.45
Less distributions:
Distributions from net realized gain on investments sold -- (0.13) (1.66) (0.27) (0.13)
Net asset value, end of period $ 8.95 $ 10.81 $ 8.56 $ 12.95 $ 13.27
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) (4.79)(5) 22.33 (6.45) 55.80 3.52(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 3,866 4,692 3,226 5,075 6,583
Ratio of expenses to average net assets (%) 1.78(6) 2.17 2.01 2.10 1.74(6)
Ratio of net investment income (loss) to average net assets (%) (1.20)(6) (1.61) (1.64) (1.73) (1.51)(6)
Portfolio turnover rate (%) 138 148 108 118 73
Average brokerage commission rate(7) ($) N/A N/A N/A N/A N/A
<CAPTION>
===========================================================================================================================
CLASS B - YEAR ENDED JULY 31, 992(1) 1993 1994 1995 1996(2)
===========================================================================================================================
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.00 $ 8.87 $ 10.65 $ 8.34 $ 12.54
Net investment income (loss) (0.11) (0.23) (0.22)(3) (0.22)(3) (30.14)(3)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 0.98 2.14 (0.43) 4.69 0.53
Total from investment operations 0.87 1.91 (0.65) 4.47 0.39
Less distributions:
Distributions from net realized gain on investments sold -- (0.13) (1.66) (0.27) (0.13)
Net asset value, end of period $ 8.87 $ 10.65 $ 8.34 $ 12.54 $ 12.80
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) 10.88(5) 21.63 (7.18) 54.97 3.15(5)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) ($) 34,636 38,672 26,537 31,645 34,452
Ratio of expenses to average net assets (%) 2.56(6) 2.86 2.62 2.70 2.43(6)
Ratio of net investment income (loss) to average net assets (%) (1.56)(6) (2.26) (2.24) (2.34) (2.20)(6)
Portfolio turnover rate (%) 138 148 108 118 73
Average brokerage commission rate(7) ($) N/A N/A N/A N/A N/A
(1) Class A and Class B shares commenced operations on January 3, 1992 and
August 30, 1991, respectively.
(2) Six months ended January 31, 1996. (Unaudited.)
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Not annualized.
(6) Annualized.
(7) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
</TABLE>
DISCOVERY FUND 7
<PAGE>
EMERGING GROWTH FUND
<TABLE>
<S><C>
REGISTRANT NAME: JOHN HANCOCK SERIES, INC. TICKER SYMBOL CLASS A: TAEMX CLASS B: TSEGX
</TABLE>
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
emerging companies (market capitalization of less than $1 billion). Under
normal circumstances, the fund will invest at least 80% of assets in a
diversified portfolio of these companies. The fund looks for companies that
show rapid growth but are not yet widely recognized. The fund also may invest
in established companies that, because of new management, products or
opportunities, offer the possibility of accelerating earnings. The fund does
not invest for income.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in the common stocks of U.S. and foreign emerging growth
companies, although it may invest up to 20% of assets in other types of
companies. The fund may also invest in warrants, preferred stocks and
investment-grade convertible debt securities.
For liquidity and flexibility, the fund may place up to 20% of net assets in
cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest more assets in these securities as a defensive tactic.
The fund also may invest in certain higher-risk securities, and may engage in
other investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Stocks of emerging growth companies carry
higher risks than stocks of larger companies. This is because emerging growth
companies:
- - may be in the early stages of development
- - may be dependent on a small number of products or services
- - may lack substantial capital reserves
- - do not have proven track records
In addition, stocks of emerging companies are often traded in low volumes,
which can increase market and liquidity risks. Before you invest, please read
"More about risk" starting on page 28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] Bernice S. Behar, leader of the fund's
portfolio management team since April 1996, is a senior vice president of the
adviser. She joined the adviser in 1991 and has been in the investment
business since 1986.
- --------------------------------------------------------------------------------
<TABLE>
INVESTOR EXPENSES
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management fee 0.75% 0.75%
12b-1 fee(3) 0.25% 1.00%
Other expenses 0.40% 0.40%
Total fund operating expenses 1.40% 2.15%
</TABLE>
<TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<CAPTION>
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A shares $64 $92 $123 $210
Class B shares
Assuming redemption
at end of period $72 $97 $135 $229
Assuming no redemption $22 $67 $115 $229
This example is for comparison purposes only and is not a representation of
the fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
</TABLE>
8 EMERGING GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
FINANCIAL HIGHLIGHTS
[A graphic image of a dollar sign.] The figures below have been audited by the
fund's independent auditors, Ernst & Young LLP.
VOLATILITY, AS INDICATED BY CLASS B
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%) [BAR CHART]
<CAPTION>
======================================================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1991(1) 1992 1993 1994 1995(2)
======================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.12 $ 19.26 $ 20.60 $ 25.89 $ 26.82
Net investment income (loss)(3) (0.03) (0.20) (0.16) (0.18) (0.25)
Net realized and unrealized gain (loss) on investments 1.17 1.60 5.45 1.11 9.52
Total from investment operations 1.14 1.40 5.29 0.93 9.27
Less distributions:
Distributions from net realized gain on investments sold -- (0.06) -- -- --
Net asset value, end of period $ 19.26 $ 20.60 $ 25.89 $ 26.82 $ 36.09
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(4) (%) 6.29 7.32 25.68 3.59 34.56
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 38,859 46,137 81,263 131,053 179,481
Ratio of expenses to average net assets (%) 0.33 1.67 1.40 1.44 1.38
Ratio of net investment income (loss) to average net assets (%) (0.15) (1.03) (0.70) (0.71) (0.83)
Portfolio turnover rate (%) 66 48 29 25 23
Average brokerage commission rate(5) ($) N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1987(1) 1988 1989 1990 1991 1992
=============================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.89 $ 7.89 $ 10.54 $ 12.76 $ 11.06 $ 19.22
Net investment income (loss)(3) (0.0021) 0.09 (0.08) (0.22) (0.30) (0.38)
Net realized and unrealized gain (loss) on investments 0.0021 2.56 2.83 (1.26) 8.46 1.56
Total from investment operations 0.0000 2.65 2.75 (1.48) 8.16 1.18
Less distributions:
Dividends from net investment income -- -- (0.04) -- -- --
Distributions from net realized gain on investments sold -- -- (0.49) (0.22) -- (0.06)
Total distributions -- -- (0.53) (0.22) -- (0.06)
Net asset value, end of period $ 7.89 $10.54 $ 12.76 $ 11.06 $ 19.22 $ 20.34
Total investment return at net asset value(4) (%) 0.00 33.59 27.40 (11.82) 73.78 6.19
TOTAL ADJUSTED INVESTMENT RETURN AT NET ASSET VALUE(4,6) (%) (0.41) 31.00 27.37 -- -- --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 79 3,232 7,877 11,668 52,743 86,923
Ratio of expenses to average net assets (%) 0.03 3.05 3.48 3.11 2.85 2.64
Ratio of adjusted expenses to average net assets(7) (%) 0.44 5.64 3.51 -- -- --
Ratio of net investment income (loss) to average net assets (%) (0.03) 0.81 (0.67) (1.64) (1.83) (1.99)
Ratio of adjusted net investment income (loss) to average net assets(7)(%) (0.44) (1.78) (0.70) -- -- --
Portfolio turnover rate (%) 0 252 90 82 66 48
Fee reduction per share ($) 0.03 0.29 0.004 -- -- --
Average brokerage commission rate(5) ($) N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
======================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1993 1994 1995(2)
======================================================================================================================
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C>
Net asset value, beginning of period $ 20.34 $ 25.33 $ 26.04
Net investment income (loss)(3) (0.36) (0.36) (0.45)
Net realized and unrealized gain (loss) on investments 5.35 1.07 9.20
Total from investment operations 4.99 0.71 8.75
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized gain on investments sold -- -- --
Total distributions -- -- --
Net asset value, end of period $ 25.33 $ 26.04 $ 34.79
Total investment return at net asset value(4) (%) 24.53 2.80 33.60
Total adjusted investment return at net asset value(4,6) (%) -- -- --
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 219,484 283,435 393,478
Ratio of expenses to average net assets (%) 2.28 2.19 2.11
Ratio of adjusted expenses to average net assets(7) (%) -- --
Ratio of net investment income (loss) to average net assets (%) (1.58) (1.46) (1.55)
Ratio of adjusted net investment income (loss) to average net assets(7)(%)
Portfolio turnover rate (%) 29 25 23
Fee reduction per share ($) -- -- --
Average brokerage commission rate(5) ($) N/A N/A N/A
(1) Class A and Class B shares commenced operations on August 22, 1991 and
October 26, 1987, respectively. (Not annualized.)
(2) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the fund.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(6) An estimated total return calculation, which does not take into
consideration fee reductions by the adviser during the periods shown.
(7) Unreimbursed, without fee reduction.
</TABLE>
EMERGING GROWTH FUND 9
<PAGE>
GROWTH FUND
REGISTRANT NAME: FREEDOM INVESTMENT TRUST II
TICKER SYMBOL CLASS A: JHNGX CLASS B: JHGBX
- --------------------------------------------------------------------------------
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
stocks that are diversified with regard to industries and issuers. The fund
favors stocks of companies whose operating earnings and revenues have grown
more than twice as fast as the gross domestic product (GDP) over the past five
years, although not all stocks in the fund's portfolio will meet this
criterion.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
portfolio invests primarily in the common stocks of U.S. companies. It may also
invest in warrants, preferred stocks and convertible debt securities.
For liquidity and flexibility, the fund may invest up to 35% of net assets in
investment-grade short-term securities. In abnormal market conditions, it may
invest more than 35% in these securities as a defensive tactic. The fund may
also invest in certain higher-risk securities, and may engage in other
investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. To the extent that the fund invests in
higher-risk securities, it takes on additional risks that could adversely
affect its performance. Before you invest, please read "More about risk"
starting on page 28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] Bernice S. Behar, leader of the fund's
portfolio management team since August 1995, is a senior vice president of the
adviser. She joined the adviser in 1991 and has been in the investment business
since 1986.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management fee 0.80% 0.80%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.40% 0.40%
Total fund operating expenses 1.50% 2.20%
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
Class A shares $65 $95 $128 $220
Class B shares
Assuming redemption
at end of period $72 $99 $138 $236
Assuming no redemption $22 $69 $118 $236
This example is for comparison purposes only and is not a representation of
the fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
10 GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
[A graphic image of a dollar sign.] The figures below have been audited by the
fund's independent auditors, Ernst & Young LLP.
VOLATILITY, AS INDICATED BY CLASS A YEAR-BY-YEAR [BAR GRAPHIC]
TOTAL INVESTMENT RETURN (%)
<CAPTION>
==============================================================================================================================
CLASS A - YEAR ENDED DECEMBER 31, 1986 1987 1988 1989 1990
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.50 $ 14.03 $ 12.34 $ 13.33 $ 15.18
Net investment income (loss) 0.11 0.22 0.23 0.28 0.16
Net realized and unrealized gain (loss) on investments 1.79 0.64 1.16 3.81 (1.47)
Total from investment operations 1.90 0.86 1.39 4.09 (1.31)
Less distributions:
Dividends from net investment income (0.17) (0.28) (0.23) (0.29) (0.16)
Distributions from net realized gain on investments sold (2.20) (2.27) (0.17) (1.95) (0.78)
Total distributions (2.37) (2.55) (0.40) (2.24) (0.94)
Net asset value, end of period $ 14.03 $ 12.34 $ 13.33 $ 15.18 $ 12.93
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(2)(%) 13.83 6.03 11.23 30.96 (8.34)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 87,468 86,426 101,497 105.014 102,416
Ratio of expenses to average net assets(%) 1.03 1.00 1.06 0.96 1.46
Ratio of net investment income (loss) to average net assets(%) 0.77 1.41 1.76 1.73 1.12
Portfolio turnover rate (%) 62 68 47 61 102
Average brokerage commission rate(4)($) N/A N/A N/A N/A N/A
<CAPTION>
==============================================================================================================================
CLASS A - YEAR ENDED DECEMBER 31, 1991 1992 1993 1994 1995
==============================================================================================================================
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.93 $ 17.48 $ 17.32 $ 17.40 $ 15.89
Net investment income (loss) 0.04 (0.06) (0.11) (0.10) (0.09)(1)
Net realized and unrealized gain (loss) on investments 5.36 1.10 2.33 (1.21) 4.40
Total from investment operations 5.40 1.04 2.22 (1.31) 4.31
Less distributions:
Dividends from net investment income (0.04) -- -- -- --
Distributions from net realized gain on investments sold (0.81) (1.20) (2.14) (0.20) (0.69)
Total distributions (0.85) (1.20) (2.14) (0.20) (0.69)
Net asset value, end of period $ 17,48 $ 17.32 $ 17.40 $ 15.89 $ 19.51
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(2)(%) 41.68 6.06 13.03 (7.50) 27.17
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 145,287 153,057 162,937 146,466 241,700
Ratio of expenses to average net assets(%) 1.44 1.60 1.56 1.65 1.48
Ratio of net investment income (loss) to average net assets(%) 0.27 (0.36) (0.67) (0.64) (0.46)
Portfolio turnover rate (%) 82 71 68 52 68(3)
Average brokerage commission rate(4)($) N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
======================================================================================================================
CLASS B - YEAR ENDED DECEMBER 31, 1994(5) 1995
======================================================================================================================
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $17.16 $15.83
Net investment income (loss) (0.20)(1) (0.26)(1)
Net realized and unrealized gain (loss) on investments (0.93) 4.73
Total from investment operations (1.13) 4.11
Less distributions:
Distributions from net realized gain on investments sold (0.20) (0.69)
Net asset value, end of period $15,83 $19.25
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(2) (%) (6.56)(6) 26.01
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 3,807 15,913
Ratio of expenses to average net assets (%) 2.38(7) 2.31
Ratio of net investment income (loss) to average net assets (%) (1.25)(7) (1.39)
Portfolio turnover rate (%) 52 68(3)
Average brokerage commission rate(4) ($) N/A N/A
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(3) Excludes merger activity.
(4) Per portfolio share traded. Required for fiscal years that began
September 1, 1995 or later.
(5) Class B shares commenced operations on January 3, 1994.
(6) Not annualized.
(7) Annualized.
</TABLE>
GROWTH FUND 11
<PAGE>
REGIONAL BANK FUND
<TABLE>
<S> <C>
REGISTRANT NAME: FREEDOM INVESTMENT TRUST TICKER SYMBOL CLASS A: FRBAX CLASS B: FRBFX
- ----------------------------------------------------------------------------------------------
</TABLE>
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
regional banks and lending institutions, including:
- commercial and industrial banks
- savings and loan associations
- bank holding companies
These financial institutions provide full-service banking, have primarily
domestic assets and are typically based outside of New York City and Chicago.
They may or may not be members of the Federal Reserve, and their deposits may or
may not be FDIC-insured. Under normal circumstances, the fund will invest at
least 65% of assets in these companies; it may invest up to 35% of assets in
other financial services companies, including lending companies and money center
banks. Because regional banks typically pay regular dividends, moderate income
is an investment goal.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in the common stocks of U.S. companies. It may also
invest in warrants, preferred stocks and investment-grade convertible debt
securities, as well as foreign stocks.
For liquidity and flexibility, the fund may place up to 15% of net assets in
cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest up to 80% in these securities as a defensive tactic.
The fund may also invest in certain higher-risk securities, and may engage in
other investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because the fund concentrates in a
single industry, its performance is largely dependent on the industry's
performance, which may differ in direction and degree from that of the overall
stock market. Falling interest rates or deteriorating economic conditions can
adversely affect the performance of bank stocks, while rising interest rates
will cause a decline in the value of any debt securities the fund holds. Before
you invest, please read "More about risk" starting on page 28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] James K. Schmidt joined John Hancock in
1985 and has served as the fund's portfolio manager since its inception that
year. A senior vice president of the adviser, he has been in the investment
business since 1974.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
<TABLE>
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
<CAPTION>
================================================================================
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
================================================================================
<S> <C> <C>
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
================================================================================
<CAPTION>
Annual fund operating expenses (as a % of average net assets)
================================================================================
Management fee 0.78% 0.78%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.31% 0.31%
Total fund operating expenses 1.39% 2.09%
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<CAPTION>
=======================================================================================
Share class Year 1 Year 3 Year 5 Year 10
=======================================================================================
Class A shares $63 $92 $122 $209
- ---------------------------------------------------------------------------------------
Class B shares
- ---------------------------------------------------------------------------------------
Assuming redemption
at end of period $71 $95 $132 $224
- ---------------------------------------------------------------------------------------
Assuming no redemption $21 $65 $112 $224
- ---------------------------------------------------------------------------------------
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
</TABLE>
12 REGIONAL BANK FUND
<PAGE>
FINANCIAL HIGHLIGHTS
[A graphic image of a dollar sign.]
The figures below have been audited by the fund's independent auditors, Price
Waterhouse LLP.
Volatility, as indicated by Class B [Bar Graph]
year-by-year total investment return (%)
<TABLE>
<CAPTION>
======================================================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1992(1) 1993 1994 1995
======================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.47 $ 17.47 $ 21.62 $ 21.52
Net investment income (loss) 0.21 0.26(2) 0.39(2) 0.52(2)
Net realized and unrealized gain (loss) on investments 3.98 5.84 0.91 5.92
Total from investment operations 4.19 6.10 1.30 6.44
Less distributions:
Dividends from net investment income (0.19) (0.26) (0.34) (0.48)
Distributions from net realized gain on investments sold -- (1.69) (1.06) (0.34)
Total distributions (0.19) (1.95) (1.40) (0.82)
Net asset value, end of period $ 17.47 $ 21.62 $ 21.52 $ 27.14
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 31.26(4) 37.45 6.44 31.00
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 31,306 94,158 216,978 486,631
Ratio of expenses to average net assets (%) 1.41(5) 1.35 1.34 1.39
Ratio of net investment income to average net assets (%) 1.64(5) 1.29 1.78 2.23
Portfolio turnover rate (%) 53 35 13 14
Average brokerage commission rate(6) ($) N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1987(7) 1987(8) 1988 1989 1990
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.51 $ 12.68 $ 10.02 $ 11.89 $ 13.00
Net investment income (loss) 0.20 0.05 0.16 0.20 0.30
Net realized and unrealized gain (loss) on investment 1.74 (2.17) 3.12 2.02 (4.19)
Total from investment operations 1.94 (2.12) 3.28 2.22 (3.89)
Less distributions:
Dividends from net investment income (0.26) (0.04) (0.15) (0.16) (0.19)
Distributions from net realized gain on investments sold (1.51) (0.50) (1.26) (0.95) (0.76)
Distributions from capital paid-in -- -- -- -- (0.03)
Total distributions (1.77) (0.54) (1.41) (1.11) (0.98)
Net asset value, end of period $ 12.68 $ 10.02 $ 11.89 $ 13.00 $ 8.13
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3) (%) 17.44 (17.36)(4) 36.89 20.46 (32.29)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 54,626 38,721 50,965 81,167 38,992
Ratio of expenses to average net assets (%) 1.48 2.47(5) 2.17 1.99 1.99
Ratio of net investment income (loss) to average net assets (%) 1.62 0.73(5) 1.50 1.67 2.51
Portfolio turnover rate (%) 89 58(5) 87 85 56
Average brokerage commission rate(6) ($) N/A N/A N/A N/A N/A
<CAPTION>
====================================================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1991 1992 1993 1994 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.13 $ 13.76 $ 17.44 $ 21.56 $ 21.43
Net investment income (loss) 0.29 0.18 0.15(2) 0.23(2) 0.36(2)
Net realized and unrealized gain (loss) on investment 5.68 4.56 5.83 0.91 5.89
Total from investment operations 5.97 4.74 5.98 1.14 6.25
Less distributions:
Dividends from net investment income (0.34) (0.28) (0.17) (0.21) (0.32)
Distributions from net realized gain on investments sold -- (0.78) (1.69) (1.06) (0.34)
Distributions from capital paid-in -- -- -- -- --
Total distributions (0.34) (1.06) (1.86) (1.27) (0.66)
Net asset value, end of period $ 13.76 $ 17.44 $ 21.56 $ 21.43 $ 27.02
Total investment return at net asset value(3) (%) 75.35 37.20 36.71 5.69 30.11
Ratios and supplemental data
Net assets, end of period (000s omitted) ($) 52,098 56,016 171,808 522,207 1,236
Ratio of expenses to average net assets (%) 2.04 1.96 1.88 2.06 2.09
Ratio of net investment income (loss) to average net assets (%) 2.65 1.21 0.76 1.07 1.53
Portfolio turnover rate (%) 75 53 35 13 14
Average brokerage commission rate(6) ($) N/A N/A N/A N/A N/A
(1) Class A shares commenced operations on January 3, 1992.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(4) Not annualized.
(5) Annualized.
(6) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
(7) Year ended March 31, 1987.
(8) For the period April 1, 1987 to October 31, 1987.
</TABLE>
REGIONAL BANK FUND 13
<PAGE>
SPECIAL EQUITIES FUND
<TABLE>
<S> <C>
REGISTRANT NAME: JOHN HANCOCK SPECIAL EQUITIES FUND TICKER SYMBOL CLASS A: JHNSX CLASS B: SPQBX
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
small-capitalization companies and companies in situations offering unusual or
non-recurring opportunities. Under normal circumstances, the fund will invest
at least 65% of assets in a diversified portfolio of these companies. The fund
looks for companies that dominate an emerging industry or hold a growing market
share in a fragmented industry, and that have demonstrated annual earnings and
revenue growth of at least 25%, self-financing capabilities and strong
management. The fund does not invest for income.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in the common stocks of U.S. and foreign companies. It
may also invest in warrants, preferred stocks and investment-grade convertible
debt securities. For liquidity and flexibility, the fund may place up to 35% of
assets in cash or in investment-grade short-term securities. In abnormal market
conditions, it may invest more than 35% in these securities as a defensive
tactic. The fund also may invest in certain higher-risk securities, and may
engage in other investment practices.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Stocks of small-capitalization and
special-situation companies carry higher risks than stocks of larger companies.
This is because these companies:
- may lack proven track records
- may be dependent on a small
number of products or services
- may be undercapitalized
- may have highly priced stocks
that are sensitive to adverse news
In addition, stocks of these companies are often traded in low volumes, which
can increase market and liquidity risks. Before you invest, please read "More
about risk" starting on page 28.
MANAGEMENT/SUBADVISER
[A graphic image of a generic person.] Michael P. DiCarlo is responsible for
the fund's day-to-day investment management. He has served as the fund's
portfolio manager since January 1988, and has been in the investment business
since 1984. He is currently one of three principals in DFS Advisors, LLC, which
was founded in 1996 and serves as subadviser to the fund.
This fund will be closed to new investors at the end of the day its total assets
reach $2.5 billion. Further investments will be limited to existing accounts.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
<TABLE>
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the
past year, adjusted to reflect any changes. Future expenses may be greater or
less.
<CAPTION>
================================================================================
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
================================================================================
<S> <C> <C>
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
================================================================================
<CAPTION>
================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
================================================================================
Management fee(3) 0.82% 0.82%
12b-1 fee(4) 0.30% 1.00%
Other expenses 0.38% 0.40%
Total fund operating expenses 1.50% 2.22%
</TABLE>
<TABLE>
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
<CAPTION>
=======================================================================================
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
=======================================================================================
<S> <C> <C> <C> <C>
Class A shares $65 $95 $128 $220
Class B shares
Assuming redemption
at end of period $73 $99 $139 $237
Assuming no redemption $23 $69 $119 $237
This example is for comparison purposes only and is not a representation of the fund's
actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Includes a subadviser fee equal to 0.25% of the fund's net assets.
(4) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
</TABLE>
14 SPECIAL EQUITIES FUND
<PAGE>
FINANCIAL HIGHLIGHTS
[A graphic image of a dollar sign.] The figures below have been audited by the
fund's independent auditors, Ernst & Young LLP.
VOLATILITY, AS INDICATED BY CLASS A [Bar Graph]
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%)
<TABLE>
<CAPTION>
==================================================================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1986(7) 1987(8) 1988 1989 1990
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 5.21 $ 6.08 $ 4.30 $ 4.89 $ 6.38
Net investment income (loss) (0.03) (0.03) 0.04 0.01 (0.12)
Net realized and unrealized gain (loss) on investments 0.93 (1.26) 0.55 1.53 (1.27)
Total from investment operations 0.90 (1.29) 0.59 1.54 (1.39)
Less distributions:
Dividends from net investment income (0.02) -- -- (0.05) (0.02)
Distributions from net realized gain on investments sold (0.01) (0.45) -- -- --
Distributions from capital paid-in -- (0.04) -- -- --
Total distributions (0.03) (0.49) -- (0.05) (0.02)
Net asset value, end of period $ 6.08 $ 4.30 $ 4.89 $ 6.38 $ 4.97
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(1,2) (%) 17.38 (28.68) 13.72 31.82 (21.89)
Total adjusted investment return at net asset value (2,3) 15.41 (29.41) 12.28 30.75 (22.21)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 13,780 10,637 11,714 12,285 8,166
Ratio of expenses to average net assets (%) 1.50 1.50 1.50 1.50 2.63
Ratio of adjusted expenses to average net assets (4) (%) 3.47 2.23 2.94 2.57 2.95
Ratio of net investment income (loss) to average net assets (%) (0.57) (0.57) 0.82 0.47 (1.58)
Ratio of adjusted net investment income (loss) to average
Portfolio turnover rate (%) 64 93 91 115 113
Fee reduction per share 0.09 0.04 0.07 0.03 0.02
Average brokerage commission rate(5) ($) N/A N/A N/A N/A N/A
<CAPTION>
====================================================================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1991 1992 1993 1994 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 4.97 $ 9.71 $ 10.99 $ 16.13 $ 16.11
Net investment income (loss) 0.10 0.19(1) 0.20(1) 0.21(1) 0.18(1)
Net realized and unrealized gain (loss) on investments 4.84 2.14 5.43 0.19 6.22
Total from investment operations 4.74 1.95 5.23 (0.02) 6.04
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain on investments sold -- (0.67) (0.09) -- --
Distributions from capital paid-in -- -- -- -- --
Total distributions -- (0.67) (0.09) -- --
Net asset value, end of period $ 9.71 $ 10.99 $ 16.13 $ 16.11 $ 22.15
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(1,2) (%) 95.37 20.25 47.83 (0.12) 37.49
Total adjusted investment return at net asset value (2,3) 95.33 -- -- -- --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 19,713 44,665 296,793 310,625 555,655
Ratio of expenses to average net assets (%) 2.75 2.24 1.84 1.62 1.48
Ratio of adjusted expenses to average net assets (4) (%) (2.21) (1.91) (1.49) (1.40) (0.97)
Ratio of net investment income (loss) to average net assets (%) 2.79 -- -- -- --
Ratio of adjusted net investment income (loss) to average
net assets(4)(%) (2.12) (1.91) (1.49) (1.40) (0.97)
Portfolio turnover rate (%) (2.16) -- -- -- --
Fee reduction per share 0.09 0.04 0.07 0.03 0.02
Average brokerage commission rate(5) ($) N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1993(6) 1994 1995
==========================================================================================================
<S> <C> <C> <C>
Per share operating performance
Net asset value, beginning of period $ 12.30 $ 16.08 $ 15.97
Net investment income (loss) 0.18(1) 0.30(1) 0.31(1)
Net realized and unrealized gain (loss) on investments 3.96 0.19 6.15
Total from investment operations 3.78 (0.11) 5.84
Net asset value, end of period $ 16.08 $ 15.97 $ 21.81
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(2) (%) 30.73(7) (0.68) 36.57
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) ($) 158,281 191,979 454,934
Ratio of expenses to average net assets (%) 2.34(8) 2.25 2.20
Ratio of net investment income to average net assets (%) (2.03)(8) (2.02) (1.69)
Portfolio turnover rate (%) 33 66 82
Average brokerage commission rate(5) ($) N/A N/A N/A
- -------------
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(3) An estimated total return calculation which does not take into
consideration fee reductions by the adviser during the periods shown.
(4) Unreimbursed, without fee reduction.
(5) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
(6) Class B shares commenced operations on March 1, 1993.
(7) Not annualized.
(8) Annualized.
SPECIAL EQUITIES FUND 15
</TABLE>
<PAGE>
SPECIAL OPPORTUNITIES FUND
<TABLE>
<S> <C> <C>
REGISTRANT NAME: FREEDOM INVESTMENT TRUST II TICKER SYMBOL CLASS A: SPOAX CLASS B:SPOBX
- --------------------------------------------------------------------------------------------------
</TABLE>
GOAL AND STRATEGY
[A graphic image of a bullseye with an arrow in the middle of it.] The fund
seeks long-term capital appreciation. To pursue this goal, the fund invests in
those economic sectors that appear to have a higher than average earning
potential.
Under normal circumstances, at least 90% of the fund's equity securities will be
invested within five or fewer sectors (e.g., financial serv ices, energy,
technology). At times, the fund may focus on a single sector. The fund first
determines the inclusion and weighting of sectors, using macroeconomic as well
as other factors, then selects portfolio securities by seeking the most
attractive companies. The fund may add or drop sectors. Because the fund may
invest more than 5% of assets in a single issuer, it is classified as a
non-diversified fund.
PORTFOLIO SECURITIES
[A graphic image of a black folder that contains a couple sheets of paper.] The
fund invests primarily in common stocks of U.S. and foreign companies of any
size. It may also invest in warrants, preferred stocks, convertible debt
securities, U.S. Government securities and corporate bonds rated at least
BBB/Baa, or equivalent. The fund also may invest in certain higher-risk
securities, and may engage in other investment practices.
For liquidity and flexibility, the fund may place up to 10% of net assets in
cash or investment-grade short-term securities. In abnormal market conditions,
it may invest more than 10% in these securities as a defensive tactic.
RISK FACTORS
[A graphic image of a line chart with a single line that depicts some peaks and
valleys.] As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. By focusing on a relatively small number
of sectors or issuers, the fund runs the risk that any factor influencing those
sectors or issuers will have a major effect on performance. The fund may invest
in companies with smaller market capitalizations, which represent higher
near-term risks than larger capitalization companies. These factors make the
fund likely to experience higher volatility than most other types of growth
funds. Before you invest, please read "More about risk" starting on page 28.
PORTFOLIO MANAGEMENT
[A graphic image of a generic person.] Kevin R. Baker is leader of the portfolio
management team for the fund. A second vice president of the adviser, he has
been a member of the management team since joining the adviser in January 1994.
He has been in the investment business since 1986.
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
[A graphic image of a percent symbol.] Fund investors pay various expenses,
either directly or indirectly. The figures below show the expenses for the past
year, adjusted to reflect any changes. Future expenses may be greater or less.
================================================================================
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
================================================================================
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(1) 5.00%
Redemption fee(2) none none
Exchange fee none none
================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
================================================================================
Management fee 0.80% 0.80%
12b-1 fee(3) 0.30% 1.00%
Other expenses 0.49% 0.49%
Total fund operating expenses 1.59% 2.29%
EXAMPLE The table below shows what you would pay if you invested $1,000 over the
various time frames indicated. The example assumes you reinvested all dividends
and that the average annual return was 5%.
================================================================================
SHARE CLASS YEAR 1 YEAR 3 YEAR 5 YEAR 10
================================================================================
Class A shares $65 $ 98 $132 $229
Class B shares
Assuming redemption
at end of period $73 $102 $143 $245
Assuming no redemption $23 $ 72 $123 $245
This example is for comparison purposes only and is not a representation of the
fund's actual expenses and returns, either past or future.
(1) Except for investments of $1 million or more; see "How sales charges are
calculated."
(2) Does not include wire redemption fee (currently $4.00).
(3) Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
16 SPECIAL OPPORTUNITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
[A graphic image of a dollar sign.] The figures below have been audited by the
fund's independent auditors, Price Waterhouse LLP.
VOLATILITY, AS INDICATED BY CLASS A
YEAR-BY-YEAR TOTAL INVESTMENT RETURN (%) [BAR GRAPH]
<TABLE>
<CAPTION>
============================================================================================
CLASS A - YEAR ENDED OCTOBER 31, 1994(1) 1995
============================================================================================
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.50 $ 7.93
Net investment income (loss) (0.03)(2) (0.07)(2)
Net realized and unrealized gain (loss) on investments (0.54) 1.46
Total from investment operations (0.57) 1.39
Net asset value, end of period $ 7.93 $ 9.32
TOTAL INVESTMENT RETURN AT NET ASSET VALUE(3)(%) (6.71) 17.53
Total adjusted investment return at net asset value(3,4)(%) (6.83) --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted)($) 92,325 101,562
Ratio of expenses to average net assets (%) 1.50 1.59
Ratio of adjusted expenses to average net assets(5)(%) 1.62 --
Ratio of net investment income (loss) to average net assets (%) (0.41) (0.87)
Ratio of adjusted net investment (loss) to average net assets(5)(%) (0.53) --
Portfolio turnover rate (%) 57 155
Fee reduction per share ($) 0.01(2) --
Average brokerage commission rate(6)($) N/A N/A
============================================================================================
CLASS B - YEAR ENDED OCTOBER 31, 1994(1) 1995
============================================================================================
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.50 $ 7.87
Net investment income (loss) (0.09)(2) (0.13)(2)
Net realized and unrealized gain (loss) on investments (0.54) 1.45
Total from investment operations (0.63) 1.32
Net asset value, end of period $ 7.87 $ 9.19
Total investment return at net asset value(3)(%) (7.41)(4) 16.77
Total adjusted investment return at net asset value(3,4)(%) (7.53) --
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)($) 131,983 137,363
Ratio of expenses to average net assets (%) 2.22 2.30
Ratio of adjusted expenses to average net assets(5)(%) 2.34 --
Ratio of net investment income (loss) to average net assets (%) (1.13) (1.55)
Ratio of adjusted net investment (loss) to average net assets(5)(%) (1.25) --
Portfolio turnover rate (%) 57 155
Fee reduction per share ($) 0.01(2) --
Average brokerage commission rate(6) ($) N/A N/A
- --------------
(1) Class A and B shares commenced operations on November 1, 1993.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(4) An estimated total return calculation which does not take into consideration fee
reductions by the adviser during the periods shown.
(5) Unreimbursed, without fee reduction.
(6) Per portfolio share traded. Required for fiscal years that began September 1, 1995
or later.
</TABLE>
SPECIAL OPPORTUNITIES FUND 17
<PAGE>
YOUR ACCOUNT
- --------------------------------------------------------------------------------
CHOOSING A SHARE CLASS
All John Hancock growth funds offer two classes of shares, Class A and Class B.
Each class has its own cost structure, allowing you to choose the one that best
meets your requirements. Your financial representative can help you decide.
================================================================================
CLASS A CLASS B
================================================================================
- - Front-end sales charge, - No front-end sales charge; all of
as described below. There your monet goes to work for you
are several ways to right away.
reduce these charges,
also described below. - Higher annual expenses than class
A shares.
- - Lower annual expenses
than Class B shares. - A deferred sales charge on shares
you sell within six years of
purchase, as described below.
- Automatic conversion to Class A
shares after eight years, thus
reducing future annual expenses.
For actual past expenses of Class A and B shares, see the fund-by-fund
information earlier in this prospectus.
Special Equities Fund offers Class C shares, which have their own expense
structure and are available to financial institutions only. Call Investor
Services for more information (see the back cover of this prospectus).
- --------------------------------------------------------------------------------
HOW SALES CHARGES ARE CALCULATED
<TABLE>
CLASS A Sales charges are as follows:
<CAPTION>
================================================================================
CLASS A SALES CHARGES
================================================================================
<CAPTION>
AS A % OF AS A % OF YOUR
YOUR INVESTMENT OFFERING PRICE INVESTMENT
<S> <C> <C>
Up to $49,999 5.00% 5.26%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 and over See below
</TABLE>
INVESTMENTS OF $1 MILLION OR MORE Class A shares are available with no
front-end sales charge. However, there is a contingent deferred sales charge
(CDSC) on any shares sold within one year of purchase, as follows:
================================================================================
CDSC ON $1 MILLION+ INVESTMENT
================================================================================
YOUR INVESTMENT CDSC ON SHARES BEING SOLD
First $1M - $4,999,999 1.00%
Next $1 - $5M above that 0.50%
Next $1 or more above that 0.25%
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the LAST day of that month.
The CDSC is based on the lesser of the original purchase cost or the current
market value of the shares being sold, and is not charged on shares you
acquired by reinvesting your dividends. To keep your CDSC as low as possible,
each time you place a request to sell shares we will first sell any shares in
your account that are not subject to a CDSC.
CLASS B Shares are offered at their net asset value per share, without any
initial sales charge. However, there is a contingent deferred sales charge
(CDSC) on shares you sell within six years of buying them. There is no CDSC
on shares acquired through reinvestment of dividends. The CDSC is based on
the original purchase cost or the current market value of the shares being
sold, whichever is less. The longer the time between the purchase and the
sale of shares, the lower the rate of the CDSC:
================================================================================
CLASS B DEFERRED CHARGES
================================================================================
YEARS AFTER PURCHASE CDSC ON SHARES BEING SOLD
1st year 5.00%
2nd year 4.00%
3rd or 4th years 3.00%
5th year 2.00%
6th year 1.00%
After 6 years None
For purposes of this CDSC, all purchases made during a calendar month are
counted as having been made on the First day of that month.
CDSC calculations are based on the number of shares involved, not on the
value of your account. To keep your CDSC as low as possible, each time you
place a request to sell shares we will first sell any shares in your account
that carry no CDSC. If there are not enough of these to meet your request, we
will sell those shares that have the lowest CDSC.
18 YOUR ACCOUNT
<PAGE>
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGES There are several ways you can combine
multiple purchases of Class A shares in John Hancock funds to take advantage
of the breakpoints in the sales charge schedule. The first three ways can be
combined in any manner.
- - Accumulation Privilege -- lets you add the value of any Class A shares you
already own to the amount of your next Class A investment for purposes of
calculating the sales charge.
- - Letter of Intention -- lets you purchase Class A shares of a fund over a
13-month period and receive the same sales charge as if all shares had been
purchased at once.
- - Combination Privilege -- lets you combine Class A shares of multiple funds
for purposes of calculating the sales charge.
To utilize: complete the appropriate section on your application, or contact
your financial representative or Investor Services to add these options to an
existing account.
GROUP INVESTMENT PROGRAM Allows established groups of four or more investors to
invest as a group. Each has an individual account, but for sales charge
purposes, their investments are lumped together, making the investors
potentially eligible for reduced sales charges. There is no charge, no
obligation to invest (although initial aggregate investments must be at least
$250) and you may terminate the program at any time.
To utilize: contact your financial representative or Investor Services to find
out how to qualify.
CDSC WAIVERS In general, the CDSC for either share class may be waived on
shares you sell for the following reasons:
- - to make payments through certain systematic withdrawal plans
- - to make certain distributions from a retirement plan
- - because of shareholder death or disability
To utilize: contact your financial representative or Investor Services, or
consult the SAI (see the back cover of this prospectus).
REINSTATEMENT PRIVILEGE If you sell shares of a John Hancock fund, you may
invest some or all of the proceeds in the same share class of any John Hancock
fund within 120 days without a sales charge. If you paid a CDSC when you sold
your shares, you will be credited with the amount of the CDSC. All accounts
involved must have the same registration.
To utilize: contact your financial representative or Investor Services.
WAIVERS FOR CERTAIN INVESTORS Class A shares may be offered without front-end
sales charges or CDSCs to various individuals and institutions, including:
- - government entities that are prohibited from paying mutual fund sales
charges
- - financial institutions or common trust funds investing $1 million or more
for non-discretionary accounts
- - selling brokers and their employees and sales representatives
- - financial representatives utilizing fund shares in fee-based investment
products under agreement with John Hancock Funds
- - fund trustees and other individuals who are affiliated with these or other
John Hancock funds
- - individuals transferring assets to a John Hancock growth fund from an
employee benefit plan that has John Hancock funds
- - members of an approved affinity group financial services program
- - certain insurance company contract holders (one-year CDSC applies)
- - participants in certain plans with at least 100 members (one-year CDSC
applies)
To utilize: if you think you may be eligible for a sales charge waiver,
contact Investor Services or consult the SAI.
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
1 Read this prospectus carefully.
2 Determine how much you want to invest. The minimum initial investments for
the John Hancock growth funds are as follows:
- non-retirement account: $1,000
- retirement account: $250
- group investments: $250
- Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must
invest at least $25 a month
3 Complete the appropriate parts of the account application, carefully
following the instructions. If you have questions, please contact your
financial representative or call Investor Services at 1-800-225-5291.
4 Complete the appropriate parts of the account privileges section of the
application. By applying for privileges now, you can avoid the delay and
inconvenience of having to file an additional application if you want to
add privileges later.
5 Make your initial investment using the table on the next page. You can
initiate any purchase, exchange or sale of shares through your financial
representative.
YOUR ACCOUNT 19
<PAGE>
<TABLE>
====================================================================================================================================
BUYING SHARES
====================================================================================================================================
<CAPTION>
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
<S> <C>
BY CHECK
[A graphic image of a blank check.]
- Make out a check for the investment amount, payable - Make out a check for the investment amount payable
to "John Hancock Investor Services Corporation." to "John Hancock Investor Services Corporation."
- Deliver the check and your completed application - Fill out the detachable investment lip from an account
to your financial representative, or mail them to Investor statement. If no slip is available, include a note specifying
Services (address on next page). the fund name, your share class, your account number,
and the name(s) in which the account is registered.
- Deliver the check and your investment slip or note to
your financial representative, or mail them to Investor
Services (address on next page).
BY EXCHANGE
[A graphic image of a white arrow outlined in black that points
to the right above a black that points to the left.]
- Call your financial representative or Investor Services to - Call Investor Services to request an exchange.
request an exchange.
BY WIRE
[A graphic image of a jagged white arrow outlined in black that
points upwards at a 45 degree angle.]
- Deliver your completed application to your financial repre- - Instruct your bank to wire the amount of your
sentative, or mail it to Investor Services. investment to:
First Signature Bank & Trust
- Obtain your account number by calling your financial Account # 900000260
representative or Investor Services. Routing # 211475000
Specify the fund name, your share class, your account
- Instruct your bank to wire the amount of your number and the name(s) in which the account is regis-
investment to: tered. Your bank may charge a fee to wire funds.
First Signature Bank & Trust
Account # 900000260
Routing # 211475000
Specify the fund name, your choice of share class, the new
account number and the name(s) in which the account is
registered. Your bank may charge a fee to wire funds.
BY PHONE
[A graphic image of a telephone.]
See "By wire" and "By exchange." - Verify that your bank or credit union is a member of
the Automated Clearing House (ACH) system.
- Complete the "Invest-By-Phone" and "Bank Information"
sections on you account application.
- Call Investor Services to verify that these features are in
place on your account.
- Tell the Investor Services representative the fund name,
your share class, your account number, the name(s) in
which the account is registered and the amount of
your investment.
To open or add to an account using the Monthly Automatic Accumulation Program, see "Additional investor services."
</TABLE>
20 YOUR ACCOUNT
<PAGE>
<TABLE>
===============================================================================================================================
SELLING SHARES
===============================================================================================================================
<CAPTION>
DESIGNED FOR TO SELL SOME OR ALL OF YOUR SHARES
<S> <C>
BY LETTER
[A graphic image of the back of an envelope.]
- Accounts of any type. - Write a letter of instruction or complete a stock power
indicating the fund name, your share class, your account
- Sales of any amount. number, the name(s) in which the account is registered
and the dollar value or number of shares you wish to sell.
- Include all signatures and any additional documents
that may be required (see next page).
- Mail the materials to Investor Services.
- A check will be mailed to the name(s) and address in
which the account is registered, or otherwise according
to your letter of instruction.
BY PHONE
[A graphic image of a telephone.]
- Most accounts. - For automated service 24 hours a day using your
touch-tone phone, call the John Hancock Funds
- Sales of up to $100,000. EASI-Line at 1-800-338-8080.
- To place your order with a representative at John Han-
cock Funds, call Investor Services between 8 a.m. and
4 p.m. on most business days.
BY WIRE OR ELECTRONIC FUNDS TRANSFER (EFT)
[A graphic image of a jagged white arrow outlined in black
that points upwards at a 45 degree angle.]
- Requests by letter to sell any amount (accounts of - Fill out the "Telephone Redemption" section of your
any type). new account application.
- Requests by phone to sell up to $100,000 (accounts - To verify that the telephone redemption privilege is in
with telephone redemption privileges). place on an account, or to request the forms to add it
to an existing account, call Investor Services.
- Amounts of $1,000 or more will be wired on the next
business day. A $4 fee will be deducted from your
account.
- Amounts of less than $1,000 may be sent by EFT or by
check. Funds from EFT transactions are generally avail-
able by the second business day. Your bank may charge
a fee for this service.
BY EXCHANGE
[A graphic image of a white arrow outlined in black that
points to the right above a black that points to the left.]
- Accounts of any type. - Obtain a current prospectus for the fund into which
you are exchanging by calling your financial representa-
- Sales of any amount. tive or Investor Services.
- Call Investor Services to request an exchange.
</TABLE>
- --------------------------------------------------------------------------------
Address
John Hancock Investor Services Corporation
P.O. Box 9116 Boston, MA 02205-9116
Phone
1-800-225-5291
Or contact your financial representative for instructions and assistance.
- --------------------------------------------------------------------------------
To sell shares through a systematic withdrawal plan, see "Additional investor
services."
YOUR ACCOUNT 21
<PAGE>
SELLING SHARES IN WRITING In certain circumstances, you will need to make
your request to sell shares in writing. You may need to include additional
items with your request, as shown in the table below. You may also need to
include a signature guarantee, which protects you against fraudulent orders.
You will need a signature guarantee if:
- - your address of record has changed within the past 30 days
- - you are selling more than $100,000 worth of shares
- - you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
You can generally obtain a signature guarantee from the following sources:
- - a broker or securities dealer
- - a federal savings, cooperative or other type of bank
- - a savings and loan or other thrift institution
- - a credit union
- - a securities exchange or clearing agency A notary public cannot provide a
signature guarantee.
A notary public CANNOT provide a signature guarantee.
<TABLE>
====================================================================================================== [A graphic image of the
back of an envelope.]
<CAPTION>
SELLER REQUIREMENTS FOR WRITTEN REQUESTS
======================================================================================================
<S> <C>
Owners of individual, joint, or sole propriertorship, UGMA/UTMA - Letter of instruction.
(custodial accounts for minors) or general partner accounts. - On the letter, the signatures and titles of all persons
authorized to sign for the account, exactly as the
account is registered.
- Signature garuntee if applicable (see above)
Owners of corporate or association accounts. - Letter of instruction.
- Corporate resolution, certified within the past 90 days.
- On the letter and the resolution, the signature of the
person(s) authorized to sign for the account.
- Signature garuntee if applicable (see above).
Owners or Trustees of trust accounts - Letter of instruction.
- Corporate resolution, certified within the past 90 days.
- If the names of all trustees are not registered on the
account, please also provide a copy of the trust document
certified within the past 60 days.
- Signature garuntee if applicable (see above)
Joint tenancy shareholders whose co-tenants are deceased - Letter of instruction signed by surviving tenant.
- Copy of death certificate.
- Signature garuntee if applicable (see above).
Adsministrators, conservatore, guardians and other sellers or - Call 1-800-225-5291 for instructions.
account types not listed above.
</TABLE>
22 YOUR ACCOUNT
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION POLICIES
VALUATION OF SHARES The net asset value per share (NAV) for each fund and class
is determined each business day at the close of regular trading on the New York
Stock Exchange (typically 4 p.m. Eastern Time) by dividing a class's net assets
by the number of its shares outstanding.
BUY AND SELL PRICES When you buy shares, you pay the NAV plus any applicable
sales charges, as described earlier. When you sell shares, you receive the NAV
minus any applicable deferred sales charges.
EXECUTION OF REQUESTS Each fund is open on those days when the New York Stock
Exchange is open, typically Monday - Friday. Buy and sell requests are executed
at the next NAV to be calculated after your request is accepted by Investor
Services.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider using EASI-Line or sending your request in writing.
In unusual circumstances, any fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business days
or longer, as allowed by federal securities laws.
TELEPHONE TRANSACTIONS For your protection, telephone requests may be recorded
in order to verify their accuracy. In addition, Investor Services will take
measures to verify the identity of the caller, such as asking for name, account
number, Social Security or taxpayer ID number and other relevant information. If
these measures are not taken, Investor Services is responsible for any losses
that may occur to any account due to an unauthorized telephone call. Also for
your protection, telephone transactions are not permitted on accounts whose
names or addresses have changed within the past 30 days. Proceeds from telephone
transactions can only be mailed to the address of record.
EXCHANGES You may exchange shares of one John Hancock fund for shares of the
same class of any other, generally without paying any additional sales charges.
Class B shares will continue to age from the original date and will retain the
same CDSC rate as they had before the exchange, except that the rate will change
to that of the new fund if the new fund's rate is higher. A CDSC rate that has
increased will drop again with a future exchange into a fund with a lower rate.
To protect the interests of other investors in the fund, a fund may cancel the
exchange privileges of any parties that, in the opinion of the fund, are using
market timing strategies or making more than seven exchanges per owner or
controlling party per calendar year. A fund may change or cancel its exchange
privilege at any time, upon 60 days' notice to its shareholders. A fund may also
refuse any exchange order.
CERTIFICATED SHARES Most shares are electronically recorded. If you wish to have
certificates for your shares, please write to Investor Services. Certificated
shares can only be sold by returning the certificates to Investor Services,
along with a letter of instruction or a stock power and a signature guarantee.
SALES IN ADVANCE OF PURCHASE PAYMENTS When you place a request to sell shares
for which the purchase money has not yet been collected, the request will be
executed in a timely fashion, but the fund will not release the proceeds to you
until your purchase payment clears. This may take up to ten calendar days after
the purchase.
ELIGIBILITY BY STATE You may only invest in, or exchange into, fund shares
legally available in your state.
- --------------------------------------------------------------------------------
DIVIDENDS AND ACCOUNT POLICIES
ACCOUNT STATEMENTS In general, you will receive account statements as follows:
- - After every transaction (except a dividend reinvestment) that affects your
account balance.
- - After any changes of name or address of the registered owner(s).
- - In all other circumstances, every quarter.
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
DIVIDENDS The funds generally distribute most or all of their net earnings in
the form of dividends. Any capital gains are distributed annually. Most of the
funds do not typically pay income dividends, with the exception of Disciplined
Growth Fund and Regional Bank Fund, which typically pay income dividends
semi-annually and quarterly, respectively.
YOUR ACCOUNT 23
<PAGE>
DIVIDEND REINVESTMENTS Most investors have their dividends reinvested in
additional shares of the same fund and class. If you choose this option, or if
you do not indicate any choice, your dividends will be reinvested on the
dividend record date. Alternatively, you can choose to have a check for your
dividends mailed to you. However, if the check is not deliverable, your
dividends will be reinvested.
TAXABILITY OF DIVIDENDS As long as a fund meets the requirements for being a
tax-qualified regulated investment company, which each fund has in the past and
intends to in the future, it pays no federal income tax on the earnings it
distributes to shareholders.
Consequently, dividends you receive from a fund, whether reinvested or taken as
cash, are generally considered taxable. Dividends from a fund's long-term
capital gains are taxable as capital gains; dividends from other sources are
generally taxable as ordinary income.
Some dividends paid in January may be taxable as if they had been paid the
previous December. Corporations may be entitled to take a dividends-received
deduction for a portion of certain dividends they receive.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
TAXABILITY OF TRANSACTIONS Any time you sell or exchange shares, it is
considered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
SMALL ACCOUNTS (NON-RETIREMENT ONLY) If you draw down a non-retirement account
so that its total value is less than $1,000, you may be asked to purchase more
shares within 30 days. If you do not take action, your fund may close out your
account and mail you the proceeds. Alternatively, Investor Services may charge
you $10 a year to maintain your account. You will not be charged a CDSC if your
account is closed for this reason, and your account will not be closed if its
drop in value is due to fund performance or the effects of sales charges.
- --------------------------------------------------------------------------------
ADDITIONAL INVESTOR SERVICES
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)
MAAP lets you set up regular investments from your paycheck or bank account to
the John Hancock fund(s) of your choice. You determine the frequency and amount
of your investments, and you can terminate your program at any time. To
establish:
- - Complete the appropriate parts of your Account Application.
- - If you are using MAAP to open an account, make out a check ($25 minimum)
for your first investment amount payable to "John Hancock Investor Services
Corporation." Deliver your check and application to your financial
representative or Investor Services.
SYSTEMATIC WITHDRAWAL PLAN This plan may be used for routine bill payment or
periodic withdrawals from your account. To establish:
- - Make sure you have at least $5,000 worth of shares in your account.
- - Make sure you are not planning to invest more money in this account (buying
shares during a period when you are also selling shares of the same fund is
not advantageous to you, because of sales charges).
- - Specify the payee(s). The payee may be yourself or any other party, and
there is no limit to the number of payees you may have, as long as they are
all on the same payment schedule.
- - Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
- - Fill out the relevant part of the account application. To add a systematic
withdrawal plan to an existing account, contact your financial
representative or Investor Services.
RETIREMENT PLANS John Hancock Funds offers a range of qualified retirement
plans, including IRAs, SEPs, SARSEPs, 401(k) plans, 403(b) plans (including
TSAs) and other pension and profit-sharing plans. Using these plans, you can
invest in any John Hancock fund with a low minimum investment of $250 or, for
some group plans, no minimum investment at all. To find out more, call Investor
Services at 1-800-225-5291.
24 YOUR ACCOUNT
<PAGE>
FUND DETAILS
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
HOW THE FUNDS ARE ORGANIZED Each John Hancock growth fund is an open-end
management investment company or a series of such a company.
Each fund is supervised by a board of trustees or a board of directors, an
independent body which has ultimate responsibility for the fund's activities.
The board retains various companies to carry out the fund's operations,
including the investment adviser, custodian, transfer agent and others (see
diagram). The board has the right, and the obligation, to terminate the fund's
relationship with any of these companies and to retain a different comp any if
the board believes that it is in the shareholders' best interests.
At a mutual fund's inception, the initial shareholder (typically the adviser)
appoints the fund's board. Thereafter, the board and the shareholders determine
the board's membership. The boards of the John Hancock growth funds may include
individuals who are affiliated with the investment adviser. However, the
majority of board members must be independent.
The funds do not hold annual shareholder meetings, but may hold special meetings
for such purposes as electing or removing board members, changing fundamental
policies, approving a management contract or approving a 12b-1 plan (12b-1 fees
are explained in "Sales compensation").
[A flow chart that contains 8 rectangular-shaped boxes and illustrates the
hierarchy of how the funds are organized. Within the flowchart, there are 5
tiers. The tiers are connected by shaded lines.
Shareholders represent the first tier. There is a shaded vertical arrow on the
left-hand side of the page. The arrow has arrowheads on both ends and is
contained within two horizontal, shaded lines. This is meant to highlight tiers
two and three which focus on Distribution and Shareholder Services.
Financial Services Firms and their Representatives are shown on the second
tier. Principal Distributor and Transfer Agent are shown on the third tier.
A shaded vertical arrow on the right-hand side of the page denotes those
entities involved in the Asset Management. The arrow has arrowheads on both
ends and is contained within two horizontal, shaded lines. This fourth tier
includes the Subadvisor, Investment Advisor and the Custodian.
The fifth tier contains the Trustees/Directors.]
FUND DETAILS 25
<PAGE>
ACCOUNTING COMPENSATION The funds compensate the adviser for performing tax and
financial management services. Annual compensation for 1996 will not exceed
0.02% of each fund's average net assets.
PORTFOLIO TRADES In placing portfolio trades, the adviser may use brokerage
firms that market the fund's shares or are affiliated with John Hancock Mutual
Life Insurance Company, but only when the adviser believes no other firm offers
a better combination of quality execution (i.e., timeliness and completeness)
and favorable price.
INVESTMENT GOALS Except for Discovery Fund, Special Opportunities Fund
and Emerging Growth Fund, each fund's investment goal is fundamental and may
only be changed with shareholder approval.
DIVERSIFICATION Except for Special Opportunities Fund, all growth funds are
diversified.
- --------------------------------------------------------------------------------
SALES COMPENSATION
As part of their business strategies, the funds, along with John Hancock Funds,
pay compensation to financial services firms that sell the funds' shares. These
firms typically pass along a portion of this compensation to your financial
representative.
Compensation payments originate from two sources: from sales charges and from
12b-1 fees that are paid out of the fund's in assets ("12b-1" refers to the
federal securities regulation authorizing annual fees of this type). The 12b-1
fee rates vary by fund and by share class, according to Rule 12b-1 plans adopted
by the funds. The sales charges and 12b-1 fees paid by investors are detailed in
the fund-by-fund information. The portions of these expenses that are reallowed
to financial services firms are shown on the next page.
Distribution fees may be used to pay for sales compensation to financial
services firms, marketing and overhead expenses and, for Class B shares,
interest expenses.
- -------------------------------------------------------------------------------
<TABLE>
CLASS B UNREIMBURSED DISTRIBUTION EXPENSES(1)
UNREIMBURSED AS A % OF
FUND EXPENSES NET ASSETS
<S> <C> <C>
Disciplined Growth $ 3,620,687 3.99%
Discovery $ 552,329 1.75%
Emerging Growth $ 9,697,401 3.02%
Growth $ 165,787 2.01%
Regional Bank $41,492,867 5.90%
Special Equities $15,131,619 5.42%
Special Opportunities $ 6,051,842 4.49%
(1) As of the most recent fiscal year end covered by each fund's financial
highlights. These expenses may be carried forward indefinitely.
</TABLE>
INITIAL COMPENSATION Whenever you make an investment in a fund or funds, the
financial services firm receives either a reallowance from the initial sales
charge or a commission, as described below. The firm also receives the first
year's service fee at this time.
ANNUAL COMPENSATION Beginning with the second year after an investment is made,
the financial services firm receives an annual service fee of 0.25% of its total
eligible net assets. This fee is paid quarterly in arrears. Firms affiliated
with John Hancock, which include Tucker Anthony, Sutro & Company and John
Hancock Distributors, may receive an additional fee of up to 0.05% a year of
their total eligible net assets.
26 FUND DETAILS
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A INVESTMENTS
<CAPTION>
MAXIMUM
SALES CHARGE REALLOWANCE FIRST YEAR MAXIMUM
PAID BY INVESTORS OR COMMISSION SERVICE FEE TOTAL COMPENSATION(1)
(% of offering price) (% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Up to $49,999 5.00% 4.01% 0.25% 4.25%
$50,000 - $99,999 4.50% 3.51% 0.25% 3.75%
$100,000 - $249,999 3.50% 2.61% 0.25% 2.85%
$250,000 - $499,999 2.50% 1.86% 0.25% 2.10%
$500,000 - $999,999 2.00% 1.36% 0.25% 1.60%
REGULAR INVESTMENTS OF
$1 MILLION OR MORE
First $1M - $4,999,999 -- 1.00% 0.25% 1.24%
Next $1 - $5M above that -- 0.50% 0.25% 0.74%
Next $1 and more above that -- 0.25% 0.25% 0.49%
Waiver investments(2) -- 0.00% 0.25% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B INVESTMENTS
MAXIMUM
REALLOWANCE MAXIMUM
OR COMMISSION SERVICE FEE TOTAL COMPENSATION
(% of offering price) (% of net investment) (% of offering price)
All amounts 3.75% 0.25% 4.00%
(1) Reallowance/commission percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition.
(2) Refers to any investments made by municipalities, financial institutions,
trusts and affinity group members that take advantage of the sales charge
waivers described earlier in this prospectus.
CDSC revenues collected by John Hancock Funds may be used to fund commission
payments when there is no initial sales charge.
</TABLE>
FUND DETAILS 27
<PAGE>
- --------------------------------------------------------------------------------
MORE ABOUT RISK
A fund's risk profile is largely defined by the fund's primary securities and
investment practices. You may find the most concise description of each fund's
risk profile in the fund-by-fund information.
The funds are permitted to utilize -- within limits established by the trustees
- -- certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent a fund utilizes these
securities or practices, its overall performance may be affected, either
positively or negatively. On the following page are brief descriptions of these
securities and practices, along with the risks associated with them. The funds
follow certain policies that may reduce these risks.
As with any mutual fund, there is no guarantee that the performance of a John
Hancock growth fund will be positive over any period of time -- days, months or
years. However, stock funds as a category have historically performed better
over the long term than bond or money market funds.
- --------------------------------------------------------------------------------
TYPES OF INVESTMENT RISK
CORRELATION RISK The risk that changes in the value of a hedging instrument will
not match those of the asset being hedged (hedging is the use of one investment
to offset the effects of another investment). Incomplete correlation can result
in unanticipated risks.
CREDIT RISK The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
CURRENCY RISK The risk that fluctuations in the exchange rates
between the U.S. dollar and foreign currencies may negatively affect an
investment. Adverse changes in exchange rates may erode or reverse any gains
produced by foreign currency denominated investments and may widen any losses.
INFORMATION RISK The risk that key information about a security or market is
inaccurate or unavailable.
INTEREST RATE RISK The risk of market losses attributable to changes in interest
rates. With fixed-rate securities, a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.
LEVERAGE RISK Associated with securities or practices (such as borrowing) that
multiply small index or market movements into large changes in value.
* HEDGED When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position which
the fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains.
* SPECULATIVE To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
LIQUIDITY RISK The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like. The seller may
have to lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund management or
performance.
MANAGEMENT RISK The risk that a strategy used by a fund's management may fail to
produce the intended result. Common to all mutual funds.
MARKET RISK The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industry, sector of
the economy or the market as a whole. Common to all stocks and bonds and the
mutual funds that invest in them.
NATURAL EVENT RISK The risk of losses attributable to natural disasters, crop
failures and similar events.
OPPORTUNITY RISK The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in other investments.
POLITICAL RISK The risk of losses directly attributable to government or
political actions of any sort. These actions may range from changes in tax or
trade statutes to expropriation, governmental collapse and war.
VALUATION RISK The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
28 FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
HIGHER-RISK SECURITIES AND PRACTICES
- --------------------------------------------------------------------------------
<TABLE>
This table shows each fund's investment limitations
as a percentage of portfolio assets. In each case the
principal types of risk are listed (see previous
page for definitions).
10 Percent of total assets (italic type)
<CAPTION>
10 Percent of net assets (roman type)
* No policy limitation on usage; fund may be
using currently
@ Permitted, but has not typically been used DISCIPLINED EMERGING REGIONAL SPECIAL SPECIAL
- -- Not permitted GROWTH DISCOVERY GROWTH GROWTH BANK EQUITIES OPPORTUNITIES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT PRACTICES
BORROWING; REVERSE REPURCHASE AGREEMENTS The
borrowing of money from banks or through
reverse repurchase agreements. Leverage, credit risks. 5 5 33.3 33.3 5 33.3 33.3
REPURCHASE AGREEMENTS The purchase of a security
that must later be sold back to the seller at the
same price plus interest. Credit risk. * * * * * * *
SECURITIES LENDING The lending of securities to
financial institutions, which provide cash or
government securities as collateral. Credit risk. 5 33.3 30 33.3 -- 33.3 33.3
SHORT SALES The selling of securities which have
been borrowed on the expectation that the market
price will drop.
* Hedged. Hedged leverage, market, correlation,
liquidity, opportunity risks. -- @ @ @ -- @ @
* Seculative. Speculative leverage, market,
liquidity risks. -- @ -- @ -- @ @
SHORT-TERM TRADING Selling a security soon after
purchase. A portfolio engaging in short-term
trading will have higher turnover and transaction
expenses. Market risk. * * * * * * *
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The purchase or sale of securities for delivery
at a future date; market value may change before
delivery. Market, opportunity, leverage risks. * * * * * * *
- -----------------------------------------------------------------------------------------------------------------------------------
CONVENTIONAL SECURITIES
NON-INVESTMENT-GRADE CONVERTIBLE SECURITIES Debt
securities that convert into equity securities at
a future time. Convertibles rated below BBB/Baa are
considered "junk" bonds. Credit, market, interest
rate, liquidity, valuation and information risks. -- -- 10 5 5 -- --
FOREIGN EQUITIES
* Stocks issued by foreign companies. Market,
currency, information, natural event, political risks. -- 25 * 15 @ * *
* American or European depository receipts, which are
dollar-denominated securities typically issued by
American or European banks and are based on ownership
of securities issued by foreign companies. Market,
currency, information, natural event, political risks. 10 25 * 15 @ * *
RESTRICTED AND ILLIQUID SECURITIES Securities not
traded on the open market. May include illiquid Rule
144A securities. Liquidity, market risks. 15 15 10 15 15 15 15
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERAGED DERIVATIVE SECURITIES
FINANCIAL FUTURES AND OPTIONS; SECURITIES AND INDEX
OPTIONS Contracts involving the right or obligation
to deliver or receive assets or money depending on the
performance of one or more assets or an economic index.
* Futures and related options. Interest rate, currency,
market, hedged or speculative leverage, correlation,
liquidity, opportunity risks. * @ * @ @ @ *
* Options on securities and indices. Interest rate,
currency, market, hedged or speculative leverage,
correlation, liquidity, credit, opportunity risks. 5(1) 5(1) 10(1) @ 5(1) @ *
CURRENCY CONTRACTS Contracts involving the right or
obligation to buy or sell a given amount of foreign
currency at a specified price and future date.
* Hedged. Currency, hedged leverage, correlation,
liquidity, opportunity risks. -- * * * @ @ *
* Speculative. Currency, speculative leverage,
liquidity risks. -- -- -- -- @ @ --
(1) Applies to purchased options only.
</TABLE>
FUND DETAILS 29
<PAGE>
<PAGE>
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
Two documents are available that To request a free copy of the cur-
offer further information on John rent annual/semi-annual report or
Hancock Growth Funds: SAI, please write or call:
ANNUAL/SEMI-ANNUAL John Hancock Investor Services
REPORT TO SHAREHOLDERS Corporation
Includes financial statements, P.O.Box 9116
detailed performance information Boston, MA 02205-9116
portfolio holdings, a statement from Telephone: 1-800-225-5291
portfolio management and the EASI-Line: 1-800-338-8080
auditor's report. TDD: 1-800-544-6713
STATEMENT OF ADDITIONAL
INFORMATION (SAI)
The SAI contains more detailed
information on all aspects of the
funds. The current annual/
semi-annual report is included
in the SAI.
A current SAI has been filed with
the Securities and Exchange
Commission and is incorporated
by reference into this prospectus
(is legally a part of this prospectus).
[John Hancock's graphic logo.
A circle, diamond, triangle and a cube.]
JOHN HANCOCK FUNDS
A GLOBAL INVESTMENT MANAGEMENT FILM
101 Huntington Avenue
Boston, Massachusetts 02199-7603
[Copyright] John Hancock Funds, Inc.
GROPN 7/96
[John Hancock script logo]
<PAGE>
Dear Fellow Gold & Government Fund Shareholder:
As you know, the last several years have been difficult for the precious metals
sector. And while there are recent signs of improvement in certain areas, the
outlook for a long-term, broad-based industry recovery seems uncertain. For this
reason, we are proposing a merger of the John Hancock Gold & Government Fund
into the John Hancock Special Opportunities Fund.
We believe this merger will benefit you in two ways:
Increased Investment Flexibility. The Special Opportunities Fund was created to
offer investors access to not just one, but several of the most promising
industry sectors. The Fund targets up to five industry sectors that the Fund's
management team believes to offer extraordinary growth prospects, and then
selects the companies within those sectors that show the greatest promise. In
fact, the Special Opportunities Fund currently counts the precious metals sector
among its targeted industries.
The Special Opportunities Fund offers you:
* Access to the top growth sectors
* The opportunity to invest in the fastest-growing companies within these
sectors
* Timely repositioning for highest growth potential
Lower Fund Expenses. Your Trustees firmly believe that combining these two funds
may benefit shareholders by allowing the Fund to capitalize on expected
economies of scale in investment research, operations and other important areas.
By creating a larger combined fund, the reorganization may lead to reduced
expenses and, ultimately, lower costs for you.
Your Vote is Important!
At a special meeting of shareholders on August 14, 1996 at 9:00 A.M., you will
be asked to approve the merger of the Gold & Government Fund into the Special
Opportunities Fund. Your Board of Trustees has already unanimously approved this
merger.
We urge you to consider this proposal and vote by completing, signing and
returning the enclosed proxy ballot form immediately. Your prompt response will
help avoid the cost of additional mailings to the Fund. For your convenience, we
have provided a postage-paid envelope.
If you have questions, please call your Customer Service Representative at
1-800-225-5291, Monday through Friday between 8:00 A.M and 8:00 P.M. Eastern
time.
Sincerely,
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
Chairman and CEO
<PAGE>
JOHN HANCOCK GOLD & GOVERNMENT FUND
101 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02199
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 14, 1996
PROXY SOLICITATION BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward J.
Boudreau, Jr., Susan S. Newton and James B. Little, with full power of
substitution in each, to vote all the shares of beneficial interest of John
Hancock Gold & Government Fund ("Gold & Government Fund" or the "Fund") which
the undersigned is (are) entitled to vote at the Special Meeting of Shareholders
(the "Meeting") of Gold & Government Fund to be held at 101 Huntington Avenue,
Boston, Massachusetts, on Wednesday, August 14, 1996 at 9:00 a.m., Boston time,
and at any adjournment of the Meeting. All powers may be exercised by a majority
of said proxy holders or substitutes voting or acting, or, if only one votes and
acts, then by that one. Receipt of the Proxy Statement dated July 5, 1996 is
hereby acknowledged. If not revoked, this proxy shall be voted:
THIS PROXY SHALL BE VOTED IN FAVOR OF (FOR) PROPOSAL 1 IF NO SPECIFICATION IS
MADE BELOW. AS TO ANY OTHER MATTER, SAID PROXY OR PROXIES SHALL VOTE IN
ACCORDANCE WITH THEIR BEST JUDGEMENT. PLEASE VOTE BY FILLING IN THE APPROPRIATE
BOX BELOW, AS SHOWN, USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT USE RED INK.
VOTE THIS PROXY CARD TODAY! YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE EXPENSE
OF ADDITIONAL MAILINGS.
(1) To approve an Agreement and Plan of Reorganization between Freedom
Investment Trust, on behalf of Gold & Government Fund, and Freedom
Investment 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, and the
issuance of Class A and Class B shares of Special Opportunities Fund to
Gold & Government Fund for distribution to its shareholders.
---- ---- ----
FOR |____| AGAINST |____| ABSTAIN |____|
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THIS CARD.
NOTE: Signature(s) should agree with name(s) printed herein. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
- -------------------------- --------------------------- ----------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
