<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION APRIL 25, 1995
REGISTRATION NO. 2-57785
REGISTRATION NO. 811-2712
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
---
THE SECURITIES ACT OF 1933 X
---
PRE-EFFECTIVE AMENDMENT NO.
---
POST-EFFECTIVE AMENDMENT NO. 23 X
---
AND/OR
REGISTRATION STATEMENT UNDER
---
THE INVESTMENT COMPANY ACT OF 1940 X
---
AMENDMENT NO. 18
(CHECK APPROPRIATE BOX OR BOXES)
--------------
JOHN HANCOCK TAX-EXEMPT INCOME FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(617) 375-1700
THOMAS H. DROHAN
SENIOR VICE PRESIDENT AND SECRETARY
JOHN HANCOCK ADVISERS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective (check appropriate box)
-- immediately upon filing pursuant to paragraph (b)
X on May 1, 1995 pursuant to paragraph (b)
-- 60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
<TABLE>
Calculation of Registration Fees Under the Securities Act of 1933
<CAPTION>
Proposed Maximum Proposed Aggregate
Title of Securities Amount of Shares Offering Price Maximum Amount of
Being Registered Being Registered Per Share Offering Price Registration Fee
<S> <C> <C> <C> <C>
Shares of Beneficial Interest Indefinite<F1> N/A N/A N/A
Shares of Beneficial Interest 3,193,956 $11.03 $289,998 $100.00
<FN>
<F1> Registrant continues its election to register an indefinite number of
shares of beneficial inderest pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.
<F2> Registrant elects to calculate the maximum aggregate offering price
pursuant to Rule 24e-2. 7,474,176 shares were redeemed during the fiscal
year ended December 31, 1994. 4,306,512 shares were used for reductions
pursuant to Paragraph (c) of Rule 24f-2 during the current fiscal year.
3,193,956 shares is the amount of redeemed shares used for reduction in
this Amendment. Pursuant to Rule 457(c) under the Securities Act of 1933,
the maximum public offering price of $11.03 per share on April 18, 1995 is
the price used as the basis for calculating the registration fee. While no
fee is required for the 3,167,664 shares, the Registrant has elected to
register, for $100, an additional $289,998 of shares (approximately 26,292
shares at $11.03 per share).
</TABLE>
--------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite number of securities under the Securities Act of
1933. The Registrant filed the notice required by Rule 24f-2 for its most recent
fiscal year on or about February 23, 1995.
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<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND
Cross Reference Sheet
Pursuant to Rule 495(a) under the Securities Act of 1933
ITEM NUMBER PROSPECTUS CAPTION STATEMENT OF ADDITIONAL
FORM N-1A, PART A INFORMATION CAPTION
- --------------------------------------------------------------------------------
1 Front Cover Page *
2 Expense Information; The *
Fund's Expenses; Share Price
3 The Fund's Financial *
Highlights; Performance
4 Investment Objectives and *
Policies; Organization and
Management of the Fund
5 Organization and Management of *
the Fund; The Fund's
Expenses; Back Cover Page
6 Organization and Management of *
the Fund; Dividends and Taxes;
How to Buy Shares; How to
Redeem Shares; Additional
Services and Programs
7 How to Buy Shares; Shares *
Price; Additional Services
and Programs; Alternative
Purchase Arrangements; The
Fund's Expenses; Back Cover
Page
8 How to Redeem Shares *
9 Not Applicable *
10 * Front Cover Page
11 * Table of Contents
12 * Organization of the Fund
13 * Investment Objectives
and Policies; Certain
Investment Practices;
Investment Restrictions
14 * Those Responsible for
Management
15 * Those Responsible for
Management
<PAGE>
ITEM NUMBER PROSPECTUS CAPTION STATEMENT OF ADDITIONAL
FORM N-1A, PART A INFORMATION CAPTION
- --------------------------------------------------------------------------------
16 * Investment Advisory and
Other Services;
Distribution Contract;
Transfer Agent Services;
Custody of Portfolio;
Independent Auditors
17 * Brokerage Allocation
18 * Description of Fund's
Shares
19 * Net Asset Value;
Additional Services and
Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of
Performance
23 * Financial Statements
<PAGE>
JOHN HANCOCK
TAX-EXEMPT
INCOME FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
MAY 1, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
--
Expense Information .................................................... 2
The Fund's Financial Highlights ........................................ 3
Investment Objective and Policies ...................................... 5
Organization and Management of the Fund ................................ 8
Alternative Purchase Arrangements ...................................... 9
The Fund's Expenses .................................................... 11
Dividends and Taxes .................................................... 11
Performance ............................................................ 12
How to Buy Shares ...................................................... 13
Share Price ............................................................ 15
How to Redeem Shares ................................................... 19
Additional Services and Programs ....................................... 22
This Prospectus sets forth information about John Hancock Tax-Exempt Income
Fund (the "Fund"), a diversified fund, that you should know before investing.
Please read and retain it for future reference.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC"). You can obtain a copy of the Fund's Statement
of Additional Information, dated May 1, 1995, which is incorporated by reference
into this Prospectus, free of charge by writing or telephoning: John Hancock
Investor Services Corporation, P.O. Box 9116, Boston, Massachusetts 02205-9116,
1-800-225-5291, (1-800-554-6713 TDD).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
The purpose of the following information is to help you understand the
various fees and expenses that you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses of the Fund's Class A
and Class B shares for the fiscal year ended December 31, 1994, adjusted to
reflect current fees and expenses. Actual fees and expenses in the future may be
greater or less than those indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of
offering price) ................................................. 4.50%<F1> None
Maximum sales charge imposed on reinvested dividends ............ None None
Maximum deferred sales charge ................................... None<F1> 5.00%
Redemption fee<F3> .............................................. None None
Exchange fee .................................................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fee .................................................. 0.55% 0.55%
12b-1 fee<F2> ................................................... 0.30% 1.00%
Other expenses .................................................. 0.22% 0.27%
Total Fund operating expenses ................................... 1.07% 1.82%
<FN>
<F1> No sales charge is payable at the time of purchase on investments in Class
A shares of $1 million or more, but for a contingent deferred sales charge
may be imposed on these investments, as described under the caption "Share
Price," in the event of certain redemption transactions within one year of
purchase.
<F2> The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of the Fund's average net assets, and the remaining portion will be
used to cover distribution expenses. See "The Fund's Expenses."
<F3> Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated
period of years on a hypothetical $1,000 investment,
assuming a 5% annual return: $55 $78 $101 $170
Class A shares
Class B shares
--Assuming complete redemption at end of period .... $68 $87 $119 $194
--Assuming no redemption ........................... $18 $57 $ 99 $194
</TABLE>
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.)
The Fund's payment of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the maximum
front-end sales charge permitted under the National Association of Securities
Dealers Rules of Fair Practice.
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table of Financial Highlights has been audited by Ernst &
Young LLP, the Fund's independent auditors,whose unqualified report is included
in the Fund's 1994 Annual Report and is included in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to shareholders that may be obtained free of charge
by writing or telephoning John Hancock Investor Services Corporation ("Investor
Services"), at the address or telephone number listed on the front page of this
Prospectus.
Selected data for each class of shares outstanding throughout each period
indicated is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
CLASS A ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period .................... $11.21 $10.96 $11.01 $10.59 $10.68 $10.49 $10.07 $11.10 $10.35 $ 9.32
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Investment Income ....... 0.57 0.58 0.63 0.68 0.68 0.72 0.72 0.71 0.77 0.81
Net Realized and Unrealized
Gain (Loss) on Investments
and Financial Futures
Contracts ................. (1.22) 0.66 0.26 0.57 (0.05) 0.20 0.40 (0.67) 1.23 1.10
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations ............ (0.65) 1.24 0.89 1.25 0.63 0.92 1.12 0.04 2.00 1.91
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income ....... (0.57) (0.58) (0.63) (0.68) (0.68) (0.73) (0.70) (0.77) (0.75) (0.88)
Distributions from Net
Realized Gain on
Investments Sold and
Financial Futures
Contracts ............... (0.03) (0.41) (0.31) (0.15) (0.04) -- -- (0.30) (0.50) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ..... (0.60) (0.99) (0.94) (0.83) (0.72) (0.73) (0.70) (1.07) (1.25) (0.88)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period .................... $ 9.96 $11.21 $10.96 $11.01 $10.59 $10.68 $10.49 $10.07 $11.10 $10.35
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Investment Return at
Net Asset Value(c) ........ (5.90%) 11.53% 8.35% 12.18% 6.15% 9.06% 11.38% 0.47% 20.42% 21.51%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratios and Supplemental Data
Net Assets, End of Period
(000's omitted) ........... $467,475 $541,281 $481,730 $422,311 $377,738 $382,421 $361,011 $357,624 $341,670 $238,558
Ratio of Expenses to Average
Net Assets ................ 1.11% 1.27% 1.28% 1.21% 1.23% 0.94% 0.84% 0.78% 0.71% 0.72%
Ratio of Net Investment
Income to Average Net
Assets .................... 5.43% 5.06% 5.71% 6.23% 6.43% 6.76% 6.95% 6.96% 7.17% 8.30%
Portfolio Turnover Rate ..... 74% 81% 93% 56% 59% 44% 94% 129% 114% 131%
</TABLE>
<PAGE>
FOR THE PERIOD
JANUARY 3, 1994
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1994
----------------------------
CLASS B
Net Asset Value, Beginning of Period ................ $ 11.17(a)
-------
Net Investment Income ............................... 0.49
Net Realized and Unrealized Loss on Investments and
Financial Futures Contracts ......................... (1.19)
-------
Total from Investment Operations ................ (0.70)
-------
Less Distributions:
Dividends from Net Investment Income .............. (0.49)
Distributions from Net Realized Gain on Investments
Sold and Financial Futures Contracts ................ (0.03)
-------
Total Distributions ............................. (0.52)
-------
Net Asset Value, End of Period ...................... $ 9.95
=======
Total Investment Return at Net Asset Value (c) ...... (6.23%)(b)
Ratios and Supplemental Data
Net Assets, End of Period (000's Omitted) .......... $ 3,974
Ratio of Expenses to Average Net Assets ............. 1.83%*
Ratio of Net Investment Income to Average Net Assets 4.88%*
Portfolio Turnover Rate ............................. 74%
* On an annualized basis.
(a) Initial price to commence operations.
(b) Not annualized.
(c) Without the expense reduction, total investment return would have been
lower.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK AS HIGH A LEVEL OF DIVIDEND INCOME
EXEMPT FROM FEDERAL INCOME TAX AS IS CONSISTENT WITH PRESERVATION OF CAPITAL.
The Fund's investment objective is to provide as high a level of dividend income
exempt from Federal income tax as is consistent with preservation of capital and
the Fund's requirements for liquidity. The Fund seeks to achieve its objective
by investing in a diversified portfolio of municipal bonds and other securities
(including certain industrial development or private activity bonds), the
interest on which is, at the time of issue, excludable from gross income for
Federal income tax purposes in the opinion of bond counsel to the issuer (all of
which are commonly known as "Tax-Exempt Bonds"). There is no assurance that the
Fund will achieve its investment objective.
The Fund's assets may consist of Tax-Exempt Bonds, short-term municipal debt
instruments (Tax-Exempt Bonds issued for terms of less than one year), cash,
receivables, and short-term taxable investments, which include securities such
as (1) U.S. Treasury obligations; (2) obligations of agencies and
instrumentalities of the United States government; and (3) money market
instruments, such as domestic bank certificates of deposit, repurchase
agreements, finance company and other corporate commercial paper and bankers'
acceptances. It is not expected that the portion of the Fund's total assets
consisting of short-term taxable investments will exceed 15%.
It is expected that at least 85% of the Fund's total assets will consist of
Tax-Exempt Bonds, the interest on which is not treated as a tax preference item
under the Federal alternative minimum tax; and that at least 65% of the Fund's
investments in Tax-Exempt Bonds will consist of bonds falling into either of two
categories:
1. Tax-Exempt Bonds that, at the time of investment, have a rating within the
three highest ratings determined by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, and A), by Standard and Poor's Ratings Group ("Standard
& Poor's") (AAA, AA, and A) or by Fitch Investor Services, Inc. ("Fitch")
(AAA, AA, A), and
2. Tax-Exempt Bonds issued for terms of less than one year (short-term municipal
debt instruments) that (a) have a rating within the three highest ratings as
determined by Moody's (MIG 1, MIG 2, or MIG 3), by Standard & Poor's
(SP-1,SP-2, SP-3) or by Fitch (F-1, F-2, F-3) or (b) bear no rating but are,
in the judgment of John Hancock Advisers, Inc. ("the Adviser"), of equivalent
quality to a MIG 3, SP-3 or F-3 rating or better. Not more than 25% of the
value of the Fund's total assets will under normal market conditions, be
invested in short-term Tax-Exempt instruments.
The portion of the Fund's investment in Tax-Exempt Bonds not falling within
either of the two foregoing categories may consist of Tax-Exempt Bonds that, at
the time of investment, are rated within the next three highest ratings (Baa,
Ba, B or BBB, BB or B) or their equivalent, and unrated Tax-Exempt Bonds of
comparable quality as determined by the Adviser. The Fund's investment in
long-term Tax-Exempt Bonds that are not rated will not, however, exceed 20% of
the Fund's investments in Tax-Exempt Bonds. It will be limited to those which,
in the judgment of the Adviser, are of equivalent quality to Tax-Exempt Bonds in
the rating categories noted above. Bonds which have a rating of BBB or lower,
Baa or lower or an equivalent rating, and unrated bonds of comparable quality,
are considered speculative. While generally providing greater income than
investments in higher quality securities, these bonds involve greater risk of
principal and income loss, including the possibility of default. These bonds may
have greater price volatility, especially during periods of economic uncertainty
or change. Bonds rated B are currently meeting debt service requirements but
provide a limited margin of safety and are vulnerable to default in the event of
adverse business, financial or economic conditions. The bonds are considered
highly speculative. In addition, the market for bonds rated BBB, Baa or lower
may be less liquid than the market for higher rated securities. Therefore, the
Adviser's judgment may at times play a greater role in the performance and
valuation of the Fund's investments in these bonds.
The two principal classifications of municipal securities in which the Fund may
invest are "general obligation" and "revenue" bonds. General obligation bonds
are secured by the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. Revenue bonds are payable only from
the revenues derived from a particular facility or class of facilities or a
specific revenue source, and generally are not payable from the unlimited
revenues of the issuer. The Fund may also invest up to 5% of its net assets in
certificates of participation in municipal lease obligations.
The Fund's investments in Tax-Exempt Bonds entail certain risks. These include
adverse income and principal value fluctuation associated with economic
conditions affecting the market for Tax-Exempt Bonds in general, the
creditworthiness of issuers and guarantors of these securities and the
facilities financed by them; and adverse interest rate changes. The value of the
Fund's investments in Tax-Exempt Bonds, and thus the net asset value of the
Fund's shares, can generally be expected to vary inversely with changes in
interest rates.
It is expected that, under normal market conditions, the Fund's average
portfolio maturity will range from 20 to 25 years. Portfolio securities with
longer maturities generally are more susceptible to adverse interest rate
changes than securities with shorter maturities.
LENDING OF SECURITIES. The Fund may lend portfolio securities to brokers,
dealers, and financial institutions if the loan is collateralized by cash or
U.S. Government securities according to applicable regulatory requirements. The
Fund may reinvest any cash collateral in short-term securities. When the Fund
lends portfolio securities, there is a risk that the borrower may fail to return
the securities. As a result, the Fund may incur a loss or, in the event of the
borrower's bankruptcy, the Fund may be delayed in or prevented from liquidating
the collateral. It is a fundamental policy of the Fund not to lend portfolio
securities having a total value exceeding 33 1/3% of its total assets.
THE FUND MAY EMPLOY CERTAIN INVESTMENT STRATEGIES TO ACHIEVE ITS INVESTMENT
OBJECTIVE.
RESTRICTED SECURITIES. The Fund may purchase restricted securities, including
those that can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act of 1933 (the "Securities Act"). The Trustees
will monitor the Fund's investments in these securities, focusing on certain
factors, including valuation, liquidity and availability of information.
Purchases of restricted securities are subject to an investment restriction
limiting all the Fund's illiquid securities to not more than 15% of its net
assets.
REPURCHASE AGREEMENTS, FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund
may enter into repurchase agreements and may purchase securities on a forward
commitment or when-issued basis. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back to the seller at a
higher price. These transactions must be fully collateralized at all times, but
involve some credit risk to the Fund if the other party defaults on its
obligation and the Fund is delayed in or prevented from liquidating the
collateral. The Fund will segregate in a separate account cash or liquid, high
grade debt securities equal in value to its forward commitments and when-issued
securities. Purchasing securities for future delivery or on a when-issued basis
may increase the Fund's overall investment exposure and involve a risk of loss
if the value of the securities declines before the settlement date.
FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may buy and sell municipal
bond index futures contracts, interest rate futures contracts and related
options. It may make these investments either to hedge against changes in
securities prices, interest rates and other market conditions, or for
speculative purposes. Transactions in these contracts involve a risk of loss or
depreciation due to unanticipated adverse changes in interest rates or
securities prices. The loss on futures contracts and written options may exceed
the Fund's initial investment in these contracts. In addition, the Fund may lose
the entire premium paid for purchased options that cannot be profitably
exercised by the Fund. The Fund's success in using futures and options on
futures to hedge portfolio assets depends on the degree of price correlation
between the derivative instrument and the hedged asset. The Fund's futures
contracts and options on futures will be traded on a U.S. commodity exchange or
board of trade. Futures contracts and options on futures may become illiquid
under adverse market conditions and may be subject to trading limitations
imposed by a commodity exchange. The Fund will not engage in a futures or
options transaction for speculative purposes, if immediately thereafter, the sum
of initial margin deposits on existing positions and premiums required to
establish these speculative positions exceeds 5% of the Fund's net assets.
VARIABLE AND FLOATING-RATE OBLIGATIONS. The Fund may invest in variable rate and
floating rate obligations on which the interest may fluctuate based on changes
in market rates. The interest rates payable on variable rate obligations are
adjusted at designated periodic intervals. The interest rates payable on
floating rate obligations are adjusted whenever there is a change in the market
interest rate on which the interest payable is based.
SHORT-TERM TRADING. Short-term trading means the purchase and subsequent sale of
a security after it has been held for a relatively brief period of time. The
Fund engages in short-term trading in response to changes in interest rates or
other economic trends and developments, or to take advantage of yield
disparities between various fixed-income securities in order to realize capital
gains or improve income. Portfolio turnover rates of the Fund for recent years
are shown in the section "The Fund's Financial Highlights."
CERTAIN INVESTMENTS MAY BE SUBJECT TO THE ALTERNATIVE MINIMUM TAX.
The Fund may invest in certain types of Tax-Exempt Bonds on which the interest
income is treated as an item of tax preference for purposes of the Federal
alternative minimum tax. To the extent the Fund invests in these Tax-Exempt
Bonds as described above, shareholders will be required to treat as a Federal
income tax preference item that part of the Fund's distributions that is derived
from interest on these Tax-Exempt Bonds. Dividends derived from interest income
from all Tax-Exempt Bonds are included in corporate "adjusted current earnings"
for purposes of computing the alternative minimum taxable income of corporate
shareholders of the Fund.
THE FUND FOLLOWS CERTAIN POLICIES, WHICH MAY HELP TO REDUCE INVESTMENT RISK.
INVESTMENT RESTRICTIONS. The Fund has adopted certain investment restrictions
that are detailed in the Statement of Additional Information, where they are
classified as fundamental or non-fundamental. The Fund's investment restrictions
designated as fundamental may not be changed without shareholder approval. The
Fund's investment objective and all other investment policies and restrictions,
however, are nonfundamental and can be changed by a vote of the Trustees without
shareholder approval. These changes may result in the Fund having an investment
objective different from the objective you considered appropriate at the time of
your investment. The Fund's portfolio turnover rates for recent years are shown
in the section "The Fund's Financial Highlights."
BROKERS ARE CHOSEN ON BEST PRICE AND EXECUTION.
When choosing brokerage firms to carry out the Fund's transactions, the Adviser
gives primary consideration to execution at the most favorable price, taking
into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sales of Fund shares. Pursuant
to procedures established by the Trustees, the Adviser may place securities
transactions with brokers affiliated with the Adviser. These brokers include
Tucker Anthony Incorporated, John Hancock Distributors, Inc. and Sutro &
Company, Inc. which are indirectly owned by John Hancock Mutual Life Insurance
Company, which in turn indirectly owns the Adviser.
ORGANIZATION AND MANAGEMENT OF THE FUND
THE TRUSTEES ELECT OFFICERS AND RETAIN THE INVESTMENT ADVISER WHO IS RESPONSIBLE
FOR THE DAY-TO-DAY OPERATIONS OF THE FUND, SUBJECT TO THE TRUSTEES' POLICIES AND
SUPERVISION.
The Fund is a diversified open-end management investment company organized as a
Massachusetts business trust in 1976. The Fund has an unlimited number of
authorized shares of beneficial interest. The Fund's Declaration of Trust
permits the Trustees, without shareholder approval, to create and classify
shares of beneficial interest into separate series of the Fund. As of the date
of this Prospectus, the Trustees have not authorized the creation of any new
series of the Fund. Although additional series may be added in the future, the
Trustees have no current intention of creating additional series of the Fund.
The Trust's Declaration of Trust also permits the Trustees to classify and
reclassify any series or portfolio of shares into one or more classes.
Accordingly, the Trustees have authorized the issuance of two classes of the
Fund, designated Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund. Each class has equal
rights as to voting, redemption, dividends and liquidation. However, each class
bears different distribution and transfer agent fees and other expenses. Also,
Class A and Class B shareholders have exclusive voting rights with respect to
their distribution plans.
Shareholders have certain rights to remove Trustees. The Fund is not required
and does not intend to hold annual shareholder meetings, although special
meetings may be held for such purposes as electing or removing Trustees,
changing fundamental restrictions and policies or approving a management
contract. The Fund, under certain circumstances, will assist in shareholder
communications with other shareholders.
JOHN HANCOCK ADVISERS, INC. ADVISES INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the John Hancock Mutual Life Insurance Company, a financial services company. It
provides the Fund, and other investment companies in the John Hancock group of
funds, with investment research and portfolio management services. John Hancock
Funds, Inc. ("John Hancock Funds") distributes shares for all of the John
Hancock funds through selected broker-dealers ("Selling Brokers"). Certain Fund
officers are also officers of the Adviser and John Hancock Funds. Pursuant to an
order granted by the Securities and Exchange Commission, the Fund has adopted a
deferred compensation plan for its independent Trustees which allows Trustees'
fees to be invested by the Fund in other John Hancock funds.
Thomas C. Goggins is Senior Vice President and portfolio manager of the Fund.
Mr. Goggins heads up John Hancock's team of municipal bond portfolio managers
and analysts. He joined the Adviser in 1995. Previously to that date, Mr.
Goggins was a municipal bond portfolio manager at Putnam Investments and
Transamerica Investment Services, Inc.
In order to avoid any conflict with portfolio trades for the Fund, the Adviser
and the Fund have adopted extensive restrictions on personal securities trading
by personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less then 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
ALTERNATIVE PURCHASE ARRANGEMENTS
AN ALTERNATIVE PURCHASE PLAN ALLOWS YOU TO CHOOSE THE METHOD OF PURCHASE THAT IS
BEST FOR YOU.
You can purchase shares of the Fund at a price equal to their net asset value
per share, plus a sales charge. At your election, this charge may be imposed
either at the time of the purchase (see "Initial Sales Charge Alternative--
Class A shares") or on a contingent deferred basis (see "Contingent Deferred
Sales Charge Alternative--Class B shares"). If you do not specify on your
account application the class of shares you are purchasing, it will be assumed
that you are investing in Class A shares.
INVESTMENTS IN CLASS A SHARES ARE SUBJECT TO AN INITIAL SALES CHARGE.
CLASS A SHARES. If you elect to purchase Class A shares, you will incur an
initial sales charge unless your purchase is $1 million or more. If you purchase
$1 million or more of Class A shares, you will not be subject to an initial
sales charge, but you will incur a sales charge if you redeem your shares within
one year of purchase. Class A shares are subject to ongoing distribution and
service fees at a combined annual rate of up to 0.30% of the Fund's average
daily net assets attributable to the Class A shares. Certain purchases of Class
A shares qualify for reduced initial sales charges. See "Share Price --
Qualifying for a Reduced Sales Charge."
INVESTMENTS IN CLASS B SHARES ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE.
CLASS B SHARES. You will not incur a sales charge when you purchase Class B
shares, but the shares are subject to a sales charge if you redeem them within
six years of purchase (the"contingent deferred sales charge" or the "CDSC").
Class B shares are subject to ongoing distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to the Class B shares. Investing in Class B shares permits all of
your dollars to work from the time you make your investment, but the higher
ongoing distribution fee will cause these shares to have higher expenses than
that of Class A shares. To the extent that any dividends are paid by the Fund,
these higher expenses will result in lower dividends than those paid on Class A
shares.
Class B shares are not available to full-service defined contribution plans
administered by Investor Services or John Hancock Mutual Life Insurance Company
that had more than 100 eligible employees at the inception of the Fund
account.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
YOU SHOULD CONSIDER WHICH CLASS OF SHARES WOULD BE MORE BENEFICIAL FOR YOU.
The alternative purchase arrangement allows you to choose the most beneficial
way to buy shares, given the amount of your purchase, the length of time you
expect to hold your shares and other circumstances. You should consider whether,
during the anticipated life of your Fund investment, the CDSC and accumulated
fees on Class B shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the same time; and to what
extent this differential would be offset by the Class A shares' lower expenses.
To help you make this determination, the table under the caption "Expense
Information" on page 2 of this Prospectus gives examples of the charges
applicable to each class of shares. Class A shares will normally be more
beneficial if you qualify for a reduced sales charge. See "Share Price--
Qualifying for a Reduced Sales Charge."
Class A shares are subject to lower distribution and service fees and,
accordingly, pay correspondingly higher dividends per share, to the extent that
any dividends are paid. However, because initial sales charges are deducted at
the time of purchase, you would not have all of your funds invested initially
and, therefore, would initially own fewer shares. If you do not qualify for
reduced initial sales charges and expect to maintain your investment for an
extended period of time, you might consider purchasing Class A shares. This is
because the accumulated distribution and service charges on Class B shares may
exceed the initial sales charge and accumulated distribution and service charges
on Class A shares during the life of your investment.
Alternatively, you might determine that it is more advantageous to purchase
Class B shares to have all your funds invested initially. However, you will be
subject to higher distribution fees and, for a six-year period, a CDSC.
In the case of Class A shares, distribution expenses that John Hancock Funds
incurs in connection with the sale of shares will be paid from the proceeds of
the initial sales charge and the ongoing distribution and service fees. In the
case of Class B shares, expenses will be paid from the proceeds of the ongoing
distribution and service fees, as well as from the CDSC incurred upon redemption
within six years of purchase. The purpose and function of the Class B shares'
CDSC and ongoing distribution and service fees are the same as those of the
Class A shares' initial sales charge and ongoing distribution and service fees.
Sales personnel distributing the Fund's shares may receive different
compensation for selling each class of shares.
Dividends, if any, on Class A and Class B shares will be calculated in the same
manner, at the same time and on the same day. They will also be in the same
amount, except for differences resulting from each class bearing only its own
distribution and service fees, shareholder meeting expenses and any incremental
transfer agency costs. See "Dividends and Taxes."
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a fee to the
Adviser which for the 1994 fiscal year, was 0.55% of the Fund's average daily
net asset value.
THE FUND PAYS DISTRIBUTION AND SERVICE FEES FOR MARKETING AND SALES- RELATED
SHAREHOLDER SERVICING.
The Class A and Class B shareholders have adopted distribution plans (each a
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
these Plans, the Fund will pay distribution and service fees at an aggregate
annual rate of 0.30% of the Class A shares' average daily net assets and an
aggregate annual rate of 1.00% of the Class B shares' average daily net assets.
In each case, up to 0.25% is for service expenses and the remaining amount is
for distribution expenses. Distribution fees are used to reimburse John Hancock
Funds for its distribution expenses including but not limited to: (i) initial
and ongoing sales compensation to Selling Brokers and others (including
affiliates of John Hancock Funds) engaged in the sale of Fund shares; (ii)
marketing, promotional and overhead expenses incurred in connection with the
distribution of Fund shares; and (iii) with respect to Class B shares only,
interest expenses on unreimbursed distribution expenses. In the event John
Hancock Funds is not fully reimbursed for payments made or expenses incurred by
it under the Class A Plan, these expenses will not be carried beyond one year
from the date they were incurred. These unreimbursed expenses under the Class B
Plan will be carried forward together with interest on the balance of these
unreimbursed expenses. For the fiscal year ended December 31, 1994 an aggregate
of $175,709 of distribution expenses or 8.5% of the average net assets of the
Class B shares of the Fund, was not reimbursed or recovered by the John Hancock
Funds through the receipt of deferred sales charges or 12b-1 fees in prior
periods.
Information on the Fund's total expenses is in the Fund's Financial Highlights
section of this Prospectus.
DIVIDENDS AND TAXES
Dividends from the Fund's net investment income are generally declared daily and
distributed monthly. Capital gains, if any, are generally distributed annually.
Dividends are reinvested in additional shares of your class unless you elect the
option to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option. Because of the higher expenses associated with Class B
shares, any dividend on Class B shares will be lower than that on Class A
shares. See "Share Price."
IN 1992, 1993 AND 1994, 99.8%, 99.8% AND 99.7%, RESPECTIVELY, OF THE FUND'S
INCOME DIVIDENDS WERE EXEMPT FROM FEDERAL INCOME TAX.
TAXATION. The Fund intends to satisfy applicable tax requirements so that
interest earned by the Fund from Tax-Exempt Bonds will be federally tax-free
when paid to you as income distributions. Dividends derived from interest on
certain Tax-Exempt Bonds that are "private activity bonds" may, however,
increase the Federal alternative minimum tax liability of shareholders that are
subject to the individual alternative minimum tax, and all tax-exempt dividends
may increase a corporate shareholder's liability, if any, for the federal
alternative minimum tax.
Shareholders receiving social security benefits and certain railroad retirement
benefits may be subject to federal income tax on a portion of such benefits as a
result of receiving investment income, including tax-exempt income (such as
exempt-interest) and other dividends paid by the Fund. The Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development or private activity bonds or persons related
to substantial users. Consult your tax adviser if you think this may apply to
you.
Certain of the Fund's permitted investments may produce taxable income or
capital gains. Dividends from any net short-term capital gains or any taxable
income the Fund earns, including accrued market discount included in the Fund's
income, are taxable to you as ordinary income and dividends from the Fund's net
long-term capital gains are taxable as long-term capital gains. These dividends
are taxable, whether received in cash or reinvested in additional shares.
Certain dividends paid by the Fund in January of a given year may be taxable as
if you received them the previous December. The Fund will send you a statement
by January 31 showing the tax status of the dividends you received for the prior
year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to Federal income tax on any net investment income and net realized
capital gains that are distributed to its shareholders at least annually. When
you redeem (sell) or exchange shares, you may realize a taxable gain or loss.
On the account application, you must certify that your social security or other
taxpayer identification number is correct and that you are not subject to backup
withholding of Federal income tax. If you do not provide this information or are
otherwise subject to backup withholding, the Fund may be required to withhold
31% of your taxable dividends and the proceeds of redemptions and exchanges.
In addition to Federal taxes with respect to any taxable dividends, you may be
subject to state, local or foreign taxes, depending on your residence. In some
states, a portion of the Fund's dividends which represents interest received by
the Fund on direct U.S. government obligations is exempt from tax. Some states
and localities exempt Fund distributions of interest on their own municipal
obligations. You will receive tax information each year showing the percentage
of the Fund's dividends attributable to obligations of each state. Non-U.S.
shareholders and tax-exempt shareholders are subject to different tax treatment
not described above. You should consult your tax adviser for specific advice.
PERFORMANCE
THE FUND MAY ADVERTISE ITS YIELD AND TOTAL RETURN.
Yield reflects the Fund's rate of income on portfolio investments as a
percentage of its share price. Yield is computed by annualizing the result of
dividing the net investment income per share over a 30 day period by the maximum
offering price per share on the last day of that period. Yield is calculated
according to accounting methods that are standardized for all stock and bond
funds. Because yield accounting methods differ from the methods used for other
accounting purposes, the Fund's yield may not equal the income paid on your
shares or the income reported in the Fund's financial statements. The Fund may
also quote a tax-equivalent yield, which shows the taxable yield you would have
to earn before taxes to equal the Fund's tax-free yield. A tax-equivalent yield
is calculated by dividing the Fund's tax-free yield by one minus a stated tax
rate.
The Fund's total return shows the overall change in value of a hypothetical
investment in the Fund, assuming the reinvestment of all dividends. Cumulative
total return shows the Fund's performance over a period of time. Average annual
total return shows the cumulative return of the Fund shares divided over the
number of years included in the period. Because average annual total return
tends to smooth out variations in the Fund's performance, you should recognize
that it is not the same as actual year-to-year results.
Both total return and yield calculations for Class A shares generally include
the effect of paying the maximum sales charge (except as shown in "The Fund's
Financial Highlights"). Investments at lower sales charges would result in
higher performance figures. Yield and total return for the Class B shares
reflect the deduction of the applicable CDSC imposed on a redemption of shares
held for the applicable period. All calculations assume that all dividends are
reinvested at net asset value on the reinvestment dates during the periods.
Yield and total return of Class A and Class B shares will be calculated
separately, and, because each class is subject to different expenses, the yield
or total return may differ with respect to that class for the same period. The
relative performance of the Class A and Class B shares will be affected by a
variety of factors, including the higher operating expenses attributable to the
Class B shares, whether the Fund's investment performance is better in the
earlier or later portions of the period measured and the level of net assets of
the classes during the period. The Fund will include the total return of both
classes in any advertisement or promotional materials including the Fund's
performance data. The value of Fund shares, when redeemed, may be more or less
than their original cost. Both yield and total return are historical
calculations, and are not indications of future performance. See "Factors to
Consider in Choosing an Alternative."
HOW TO BUY SHARES
- ------------------------------------------------------------------------------
OPENING AN ACCOUNT
The minimum initial investment in Class A and Class B shares is $1,000 ($250
for group Complete the Account Application attached to this Prospectus.
Indicate whether you are purchasing Class A or Class B shares. If you do not
specify which class of shares you are purchasing, Investors Services will
assume you are investing in Class A shares.
- ------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor
Services Corporation ("Investor Services").
2. Deliver the completed application and check to
your registered representative or Selling Broker,
or mail it directly to Investor Services.
- ------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your
registered representative or Selling Broker, or
by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Tax-Exempt Income
Fund
(Class A or Class B shares)
Your account number
Name(s) under which account is registered
3. Deliver the completed application to your
registered representative or Selling Broker, or
mail it directly to Investor Services.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES
MONTHLY AUTOMATIC 1. Complete the "Automatic Investing" and "Bank
ACCUMULATION Accumulation sections on the Account Privileges
PROGRAM (MAAP) Application, designating a bank account from
which funds may be drawn.
2. The amount you elect to invest will be
automatically withdrawn from your bank or credit
union account.
- ------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank
Information" sections on the Account Privileges
Application, designating a bank account from
which your funds may be drawn. Note that in order
to invest by phone, your account must be in a
bank or credit union that is a member of the
Automated Clearing House system (ACH).
2. After your authorization form has been processed,
you may purchase Class A or Class B shares by
calling Investor Services toll-free at
1-800-225-5291.
3. Give the Investor Services representative the
name(s) in which your account is registered, the
Fund name, the class of shares you own, your
account number and the amount you wish to invest.
4. Your investment normally will be credited to your
account the business day following your phone
request.
- ------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included on
your account statement or include a note with
your investment listing the name of the Fund, the
class of shares you own, your account number and
the name(s) in which the account is registered.
2. Make your check payable to John Hancock Investor
Services Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston,MA 02205-9115
or deliver it to your registered representative
or Selling Broker.
- ------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For Credit To: John Hancock Tax-Exempt Income
Fund
(Class A or Class B shares)
Your account number
Name(s) under which account is registered
- ------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written
on foreign banks will delay purchases until U.S. funds are received, and a
collection charge may be imposed. Shares of the Fund are priced at the
offering price based on the net asset value computed after John Hancock Funds
receives notification of the dollar equivalent from the Fund's custodian bank.
Wire purchases normally take two or more hours to complete and, to be accepted
the same day, must be received by 4:00 p.m. New York time. Your bank may
charge a fee to wire funds. Telephone transactions are recorded to verify
information. Certificates are not issued unless a request is made in writing
to Investor Services.
- ------------------------------------------------------------------------------
YOU WILL RECEIVE ACCOUNT STATEMENTS, WHICH YOU SHOULD KEEP TO HELP WITH YOUR
PERSONAL RECORDKEEPING.
You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.
SHARE PRICE
THE OFFERING PRICE OF YOUR SHARES IS THEIR NET ASSET VALUE PLUS A SALES CHARGE,
IF APPLICABLE, WHICH WILL VARY WITH THE PURCHASE ALTERNATIVE YOU CHOOSE.
The net asset value per share ("NAV") is the value of one share. The NAV of each
class can differ. Securities in the Fund's portfolio are valued on the basis of
market quotations, valuations provided by independent pricing services, or at
fair value as determined in good faith according to procedures approved by the
Trustees. Short-term debt investments maturing within 60 days are valued at
amortized cost which approximates market value. The NAV is calculated once daily
as of the close of regular trading on the New York Stock Exchange (generally at
4:00 p.m., New York time) on each day that the Exchange is open.
Shares of the Fund are sold at the offering price based on the NAV computed
after your investment request is received in good order by John Hancock Funds.
If you buy shares of the Fund through a Selling Broker, the Selling Broker must
receive your investment before the close of regular trading on the New York
Stock Exchange, and transmit it to John Hancock Funds before its close of
business, to receive that day's offering price.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES. The offering price you pay
for Class A shares of the Fund equals the NAV plus a sales charge, as follows:
COMBINED
REALLOWANCE REALLOWANCE
SALES CHARGE SALES CHARGE AND SERVICE TO SELLING
AS A AS A FEE AS A BROKER AS
AMOUNT INVESTED PERCENTAGE PERCENTAGE PERCENTAGE A PERCENTAGE
(INCLUDING SALES OF THE OF THE OF OFFERING OF OFFERING
CHARGE) OFFERING PRICE AMOUNT INVESTED PRICE<F4> PRICE<F1>
- --------------- -------------- --------------- ----------- ------------
Less than $100,000 4.50% 4.71% 4.00% 3.76%
$100,000 to
$249,999 3.75% 3.90% 3.25% 3.01%
$250,000 to
$499,999 3.00% 3.09% 2.50% 2.26%
$500,000 to
$999,999 2.00% 2.04% 1.75% 1.51%
$1,000,000 and over 0.00%<F2> 0.00%<F2> <F3> 0.00%<F3>
<F1> Upon notice to Selling Brokers with whom it has sales agreements, John
Hancock Funds may reallow an amount up to the full applicable sales charge.
In addition to the reallowance allowed to all Selling Brokers, John Hancock
Funds will pay the following: round trip airfare to a resort will be
offered to each registered representative of a Selling Broker (if the
Selling Broker has agreed to participate) who sells certain amounts of
shares of John Hancock funds. John Hancock Funds will make these incentive
payments out of its own resources. Other than distribution fees, the Fund
does not bear distribution expenses. A Selling Broker to whom substantially
the entire sales charge is reallowed or who receives these incentives may
be deemed to be an underwriter under the Securities Act of 1933.
<F2> No sales charge is payable at the time of purchase of Class A shares of $1
million or more, but a contingent deferred sales charge may be imposed in
the event of certain redemption transactions within one year of purchase.
<F3> John Hancock Funds may pay a commission and first year's service fee (as
described in (+) below) to Selling Brokers who initiate and are
responsible for purchases of $1 million or more of shares in aggregate, as
follows: 1% on sales to $4,999,999, plus 0.50% on the next $5 million and
0.25% on $10 million and over.
<F4> At the time of sale, John Hancock Funds pays to Selling Brokers the first
year's service fee in advance, in an amount equal to 0.25% of the net
assets invested in the Fund. Thereafter it pays the service fee
periodically in arrears in an amount up to 0.25% of the Fund's average
annual net assets. Selling Brokers receive the fee as compensation for
providing personal and account maintenance services to shareholders.
Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
of up to 0.05% of the daily net assets of the accounts attributable to these
brokers.
Under certain circumstances described below, investors in Class A shares may
be entitled to pay reduced sales charges. See "Qualifying For a Reduced Sales
Charge" below.
CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE IN CLASS A
SHARES. Purchases of $1 million or more of Class A shares will be made at net
asset value with no initial sales charge, but if the shares are redeemed within
12 months after the end of the calendar month in which the purchase was made
(the contingent deferred sales charge period), a contingent deferred sales
charge ("CDSC") will be imposed. The rate of the CDSC will depend on the amount
invested as follows:
AMOUNT INVESTED CDSC RATE
---------------- ---------
$1 million to $4,999,999 1.00%
Next $5 million to $9,999,999 0.50%
Amounts of $10 million and over 0.25%
The charge will be assessed on an amount equal to the lesser of the current
market value or the original purchase cost of the redeemed Class A shares
redeemed. Accordingly, no CDSC will be imposed on increases in account value
above the initial purchase price, including any dividends which have been
reinvested in additional Class A shares.
In determining whether a CDSC is applicable to a redemption, the calculation
will be determined in a manner that results in the lowest possible rate being
charged. Therefore, it will be assumed that the redemption is first made from
any shares in your account that are not subject to the CDSC. The CDSC is waived
on redemption in certain circumstances. See the discussion under "Waiver of
Contingent Deferred Sales Charges".
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE ON YOUR INVESTMENTS IN CLASS A
SHARES.
QUALIFYING FOR A REDUCED SALES CHARGE. If you invest more than $100,000 in Class
A shares of the Fund or a combination of funds in the John Hancock funds (except
money market funds), you may qualify for a reduced sales charge on your
investments in Class A shares through a LETTER OF INTENTION. You may also be
able to use the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE to take
advantage of the value of your previous investments in Class A shares of the
John Hancock funds when meeting the breakpoints for a reduced sales charge. For
the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE, the applicable sales
charge will be based on the total of:
1. Your current purchase of Class A shares of the Fund;
2. The net asset value (at the close of business on the previous day) of (a) all
Class A shares of the Fund you hold, and (b) all Class A shares of any John
Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
EXAMPLE:
If you hold Class A shares of a John Hancock fund with a net asset value of
$80,000, and subsequently invest $20,000 in Class A shares of the Fund, the
sales charge on this subsequent investment would be 3.75% and not 4.50%. This
rate is the rate that would otherwise be applicable to investments of less than
$100,000. See "Initial Sales Charge Alternative--Class A Shares."
If you are in one of the following categories, you may purchase Class A shares
of the Fund without paying a sales charge:
FUND EMPLOYEES AND AFFILIATES
* A Trustee or officer of the Fund; a Director or officer of the Adviser and its
affiliates or Selling Brokers; employees or sales representatives of any of
the foregoing; retired officers, employees or Directors of any of the
foregoing; a member of the immediate family of any of the foregoing; or any
fund, pension, profit sharing or other benefit plan for the individuals
described above.
<PAGE>
SPECIAL TRANSACTIONS
* Any state, county, city or any instrumentality, department, authority or
agency of these entities that is prohibited by applicable investment laws from
paying a sales charge or commission when it purchases shares of any registered
investment management company.*
* A bank, trust company, credit union, savings institution or other type of
depository institution, its trust departments or common trust funds (an
"eligible depository institution") if it is purchasing $1 million or more for
non-discretionary customers or accounts.*
* A broker, dealer or registered investment adviser that has entered into an
agreement with John Hancock Funds providing specifically for the use of Fund
shares in fee-based investment products made available to their clients.
* A former participant in an employee benefit plan with John Hancock funds, when
he/she withdraws from his/her plan and transfers any or all of his/her plan
distributions directly to the Fund.
- ---------
*For investments made under these provisions, John Hancock Funds may make a
payment out of its own resources to the Selling Broker in an amount not to
exceed 0.25% of the amount invested.
Class A shares of the Fund may also be purchased without an initial sales charge
in connection with certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding companies.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES. Class B shares
are offered at net asset value per share without a sales charge, so that your
entire initial investment will go to work at the time of purchase. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates set forth below. This charge will be assessed on an amount equal to
the lesser of the current market value or the original purchase cost of the
shares being redeemed. Accordingly, you will not be assessed a CDSC on increases
in account value above the initial purchase price, including shares derived from
dividend reinvestments.
In determining whether a CDSC applies to a redemption, the calculation will be
determined in a manner that results in the lowest possible rate being charged.
It will be assumed that your redemption comes first from shares you have held
beyond the six-year CDSC redemption period or those you acquired through
dividend reinvestment, and next from the shares you have held the longest during
the six-year period. The CDSC is waived on redemptions in certain circumstances.
See the discussion "Waiver of Contingent Deferred Sales Charges" below.
EXAMPLE:
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment's net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time, your CDSC will be calculated as follows:
* Proceeds of 50 shares redeemed at $12 per share $ 600
* Minus proceeds of 10 shares not subject to CDSC because they were
acquired through dividend reinvestment (10 x $12) -120
* Minus appreciation on remaining shares, also not subject to CDSC
(40 x $2) - 80
* Amount subject to CDSC $ 400
Proceeds from the CDSC are paid to John Hancock Funds. John Hancock Funds uses
all or part of them to defray its expenses related to providing the Fund with
distribution services connected to the sale of the Class B shares, such as
compensating selected Selling Brokers for selling these shares. The combination
of the CDSC and the distribution and service fees makes it possible for the Fund
to sell Class B shares without deducting a sales charge at the time of the
purchase.
The amount of the CDSC, if any, will vary depending on the number of years from
the time you purchase your Class B shares until the time you redeem them. Solely
for purposes of determining the holding period, any payments you make during the
month will be aggregated and deemed to have been made on the last day of the
month.
YEAR IN WHICH CLASS B CONTINGENT DEFERRED SALES
SHARES REDEEMED CHARGE AS A PERCENTAGE OF
FOLLOWING PURCHASE DOLLAR AMOUNT 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
A commission equal to 3.75% of the amount invested and a first year's service
fee equal to 0.25% of the amount invested, are paid to Selling Brokers. The
initial service fee is paid in advance at the time of sale for personal and
account maintenance services provided to shareholders during the twelve months
following the sale. Thereafter the service fee is paid in arrears.
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON CLASS B AND CERTAIN CLASS A SHARE
REDEMPTIONS WILL BE WAIVED.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES. The CDSC will be waived on
redemptions of Class B shares and of Class A shares that are subject to a CDSC,
unless indicated otherwise, in the circumstances defined below:
* Redemptions of Class B shares made under a Systematic Withdrawal Plan (see
"How to Redeem Shares"), as long as your annual redemptions do not exceed 10%
of your account value at the time you established your Systematic Withdrawal
Plan and 10% of your value of subsequent investments (less redemptions) in
that account at the time you notify Investor Services. This waiver does not
apply to Systematic Withdrawal Plan redemptions of Class A shares that are
subject to a CDSC.
* Redemptions due to death or disability.
* Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of the Prospectus.
* Redemptions made pursuant to the Fund's right to liquidate your account if you
own fewer than 50 shares.
* Redemptions made in connection with certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
* Redemptions from certain IRA and retirement plans that purchased shares prior
to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
CONVERSION OF CLASS B SHARES. Your Class B shares, and an appropriate portion of
reinvested dividends on those shares, will be converted into Class A shares
automatically. This will occur at the end of the month eight years after the
shares were purchased, and will result in lower annual distribution fees. If you
exchanged Class B shares into this Fund from another John Hancock fund, the
calculation will be based on the time you purchased the shares in the original
fund. The Fund has been advised that the conversion of Class B shares to Class A
shares should not be taxable for Federal income tax purposes, nor should it
change your tax basis or tax holding period for the converted shares.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services, less any applicable CDSC. The Fund
may hold payment until it is reasonably satisfied that investments recently made
by check or Invest-by-Phone have been collected (which may take up to 10
calendar days).
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. When you redeem your shares, you may realize a taxable gain or
loss depending usually on the difference between what you paid for them and what
you receive for them, subject to certain tax rules. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for up to seven days or
longer, as permitted by Federal securities laws.
- ------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION REQUEST, PLEASE FOLLOW THESE PROCEDURES.
BY TELEPHONE All Fund shareholders are automatically eligible for
privilege. Call 1-800-225-5291, from 8:00 A.M. to 4:00
P.M.(New York time), Monday through Friday, excluding
days on which the New York Stock Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the
address on the account must not have changed for the last
30 days. A check will be mailed to the exact name(s) and
address shown on the account.
If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.
Telephone redemption is not available for shares of the
Fund that are in certificate form.
During periods of extreme economic conditions or market
changes, telephone requests may be difficult to implement
due to a large volume of calls. During these times you
should consider placing redemption requests in writing or
using EASI-Line. EASI-Line's telephone number is
1-800-338-8080.
- ------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired
on the next business day to your designated bank account,
and a fee (currently $4.00) will be deducted. You may
also use electronic funds transfer to your assigned bank
account, and the funds are usually collectable after two
business days. Your bank may or may not charge for this
service. Redemptions of less than $1,000 will be sent by
check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
that is included with this
Prospectus.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
IN WRITING Send a stock power or letter of instruction specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, class of shares, your
account number, and the additional requirements listed
below that apply to your particular account.
- ------------------------------------------------------------------------------
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
Individual, Joint Tenants, Sole A letter of instruction signed
Proprietorship, Custodial (with titles, where applicable)
(Uniform Gifts or Transfer to by all persons authorized to sign
Minors Act), General Partners. for the account, exactly as it is
registered, with the signature(s)
guaranteed.
Corporation, Association A letter of instruction and a
corporate resolution, signed by
person(s) authorized to act on
the account, with the
signature(s) guaranteed.
Trusts A letter of instruction signed by
the Trustee(s), with the
signature(s) guaranteed. (If the
Trustee's name is not registered
on your account, also provide a
copy of the trust document,
certified within the last 60
days.)
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the on your request. It may not be provided by a notary public. If
the net asset value of the shares redeemed is $100,000 or less, John Hancock
Funds may guarantee the signature. The following institutions may provide you
with a signature guarantee, provided that the institution meets credit
standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net
capital requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v)
a national securities exchange, a registered securities exchange or a clearing
agency.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
THROUGH YOUR BROKER Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- ------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your stock
power or a letter of instruction. Unless you specify to the contrary, any
outstanding Class A shares will be redeemed before Class B shares. You may not
redeem certificated shares by telephone.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
Due to the proportionately high cost of maintaining smaller accounts, the Fund
reserves the redeem at net asset value all shares in an account which holds
fewer than 50 shares (except accounts under retirement plans) and to mail the
proceeds to the shareholder, or the transfer agent may impose an annual fee of
$10.00. No account will be involuntarily redeemed or additional fee imposed,
if the value of the account is in excess of the Fund's minimum initial
investment. No CDSC will be imposed on involuntary redemptions of shares.
Shareholders will be notified before these redemptions are to be made or this
fee is imposed, and will have 30 days to purchase additional shares to bring
their account balance up to the required minimum. Unless the number of shares
acquired by further purchases and dividend reinvestments, if any, exceeds the
number of shares redeemed, repeated redemptions from a small account may
eventually trigger this policy.
- ------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
YOU MAY EXCHANGE SHARES OF THE FUND FOR SHARES OF THE SAME CLASS OF ANOTHER JOHN
HANCOCK FUND.
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Read the prospectus
carefully before exchanging your shares. You can exchange shares of each class
of the Fund only for shares of the same class of another John Hancock fund. For
this purpose, John Hancock funds with only one class of shares will be treated
as Class A, whether or not they have been so designated.
Exchanges between funds that are not subject to a CDSC are based on their
respective net asset values. No sales charge or transaction charge is imposed.
Class B shares of the Fund that are subject to a CDSC may be exchanged for Class
B shares of another John Hancock fund without incurring the CDSC; however these
shares will be subject to the CDSC schedule of the shares acquired (except that
exchanges into John Hancock Short-Term Strategic Income Fund, John Hancock
Adjustable U.S. Government Trust and John Hancock Limited-Term Government Fund
will be subject to the initial fund's CDSC). For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in an
exchange. However, if you exchange Class B shares purchased prior to January 1,
1994 for Class B shares of any other John Hancock fund, you will continue to be
subject to the CDSC schedule that was in effect at your initial purchase date.
You may exchange Class B shares of any John Hancock fund into shares of a John
Hancock money market fund at net asset value. However, you will continue to be
subject to a CDSC upon redemption. The rate of the CDSC will be the rate in
effect on the original fund at the time of the exchange.
The Fund reserves the right to require that you keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also alter the terms of or terminate the
exchange privilege upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares in another for Federal income tax purposes, and may result in
a taxable gain or loss.
When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
BY TELEPHONE
1. When you fill out the application for your purchase of Fund shares, you
automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to have the telephone exchange privilege.
2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.
3. Your name, the account number, taxpayer identification number applicable to
the account and other relevant information may be requested. In addition,
telephone instructions are recorded.
IN WRITING
1. In a letter, request an exchange and list the following:
-- the name and class of the fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or the dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
REINVESTMENT PRIVILEGE
IF YOU REDEEM SHARES OF THE FUND, YOU MAY BE ABLE TO REINVEST THE PROCEEDS IN
THE FUND OR ANOTHER JOHN HANCOCK FUND WITHOUT PAYING AN ADDITIONAL SALES CHARGE.
1. You will not be subject to a sales charge on Class A shares that you reinvest
in any John Hancock fund that is otherwise subject to a sales charge, as long
as you reinvest within 120 days from the redemption date. If you paid a CDSC
upon a redemption, you may reinvest at net asset value in the same class of
shares from which you redeemed within 120 days. Your account will be credited
with the amount of the CDSC previously charged, and the reinvested shares
will continue to be subject to a CDSC. For purposes of computing the CDSC
payable upon a subsequent redemption, the holding period of the shares
acquired through reinvestment will include the holding period of the redeemed
shares.
2. Any portion of your redemption may be reinvested in the Fund shares or in
shares of any of the other John Hancock funds, subject to the minimum
investment limit of that fund.
3. To reinvest in shares of the Fund, you must notify Investor Services in
writing. Include the Fund(s) name, account number and class from which your
shares were originally redeemed.
SYSTEMATIC WITHDRAWAL PLAN
YOU CAN PAY ROUTINE BILLS OR MAKE PERIODIC DISBURSEMENTS FROM YOUR ACCOUNT.
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the Application from your registered representative or by calling
1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.
4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.
5. It is not advantageous to maintain a systematic withdrawal plan concurrently
with purchases of additional Class A or Class B shares because you may be
subject to an initial sales charge on your purchases of Class A shares or to
a CDSC on your redemptions of Class B shares. In addition, your redemptions
are taxable events.
6. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks, or if deposits to a bank account are returned for any reason.
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)
YOU CAN MAKE AUTOMATIC INVESTMENTS AND SIMPLIFY YOUR INVESTING.
1. You can authorize an investment to be drawn automatically each month from
your bank for investment in Fund shares, under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
2. You can also authorize automatic investing through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program at any time.
4. There is no charge to you for this program, and there is no cost to the Fund.
5. If you have payments being withdrawn from a bank account and we are notified
that the account has been closed, your withdrawals will be discontinued.
GROUP INVESTMENT PROGRAM
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS MAY ESTABLISH ACCOUNTS.
1. An individual account will be established for each participant, but the
initial sales charge for Class A shares will be based on the aggregate dollar
amount of all participants' investments. To determine how to qualify for this
program, contact your registered representative or call 1-800-225- 5291.
2. The initial aggregate investment of all participants in the group must be at
least $250.
3. There is no additional charge for program. There is no obligation to make
investments beyond the minimum, and you may terminate the program at any
time.
<PAGE>
QUALITY DISTRIBUTION
The average weighted quality distribution of the securities in the portfolio for
the year ended December 31, 1994:
<TABLE>
<CAPTION>
RATING RATING
AVERAGE % OF ASSIGNED % OF ASSIGNED % OF
SECURITY RATINGS VALUE PORTFOLIO BY ADVISER PORTFOLIO BY SERVICE PORTFOLIO
- ---------------- ----- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
AAA $125,541,795 25.4% 0 0.0% $125,541,795 25.4%
AA 128,065,160 26.0% 0 0.0% 128,065,160 26.0%
A 133,053,100 27.0% 0 0.0% 133,053,100 27.0%
BBB 96,601,270 19.5% 9,526,518 1.9% 87,074,752 17.6%
BB 8,664,235 1.8% 0 0.0% 8,664,235 1.8%
B 0 0.0% 0 0.0% 0 0.0%
CCC 0 0.0% 0 0.0% 0 0.0%
CC 0 0.0% 0 0.0% 0 0.0%
C 0 0.0% 0 0.0% 0 0.0%
D 0 0.0% 0 0.0% 0 0.0%
------------ ----- --------- --- ------------ ----
Debt Securities 491,925,560 99.7% 9,526,518 1.9% $482,399,042 97.8%
Equity Securities 0 0.0%
Short-Term Securities 1,575,462 0.3%
------------ -----
Total Portfolio $493,501,022 100.0%
------------ -----
Other Assets -- Net $ 11,138,728
------------
Net Assets $504,639,750
============
</TABLE>
The ratings are described in the Statement of Additional Information.
<PAGE>
JOHN HANCOCK TAX-EXEMPT
INCOME FUND
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
Investors Bank & Trust
Company
24 Federal Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor
Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For: Service Information
Telephone Exchange
Investment-by-Phone
Telephone Redemption
call 1-800-225-5291
For: TDD
call 1-800-554-6713
JHD-2300P 5-95 Printed on Recycled Paper
JOHN HANCOCK
TAX-EXEMPT
INCOME FUND
CLASS A AND CLASS B SHARES
PROSPECTUS
MAY 1, 1995
A MUTUAL FUND SEEKING AS HIGH A LEVEL OF
DIVIDEND INCOME EXEMPT FROM FEDERAL INCOME
TAX AS IS CONSISTENT WITH PRESERVATION OF
CAPITAL.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
<PAGE>
JOHN HANCOCK
TAX-EXEMPT INCOME FUND
CLASS A AND CLASS B SHARES
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This Statement of Additional Information provides information about John
Hancock Tax-Exempt Income Fund (the "Fund") in addition to the information that
is contained in the Fund's Class A and Class B Prospectus (the "Prospectus"),
dated May 1, 1995.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Fund's Prospectus, a copy of which can be
obtained free of charge by writing or telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
1-800-225-5291
TABLE OF CONTENTS
Statement of
Additional
Information
Page
ORGANIZATION OF THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES 2
CERTAIN INVESTMENT PRACTICES 5
INVESTMENT RESTRICTIONS 9
THOSE RESPONSIBLE FOR MANAGEMENT 13
INVESTMENT ADVISORY AND OTHER SERVICES 20
DISTRIBUTION CONTRACT 22
NET ASSET VALUE 24
INITIAL SALES CHARGE ON CLASS A SHARES 24
DEFERRED SALES CHARGE ON CLASS B SHARES 26
SPECIAL REDEMPTIONS 26
ADDITIONAL SERVICES AND PROGRAMS 27
DESCRIPTION OF THE FUND'S SHARES 28
TAX STATUS 29
CALCULATION OF PERFORMANCE 32
BROKERAGE ALLOCATION 34
TRANSFER AGENT SERVICES 36
CUSTODY OF PORTFOLIO 36
INDEPENDENT AUDITORS 36
APPENDIX A 37
FINANCIAL STATEMENTS
ORGANIZATION OF THE FUND
John Hancock Tax-Exempt Income Fund (the "Fund") is a diversified,
open-end management investment company organized in 1976 by John Hancock
Advisers, Inc. (the "Adviser") as a Massachusetts business trust under the laws
of The Commonwealth of Massachusetts. The Adviser is an indirect wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (the "Life Insurance
Company"), a Massachusetts life insurance company chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts. Prior to May
1, 1991, the Fund was known as "John Hancock Tax-Exempt Income Trust."
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide its shareholders
with as high a level of dividend income exempt from Federal income tax as is
consistent with preservation of capital and the Fund's requirements for
liquidity. The Fund will seek to achieve its objective by investing in a
diversified portfolio of municipal bonds and other securities (including certain
industrial development or private activity bonds), the interest on which is, at
the time of issue, excludable from gross income for Federal income tax purposes
in the opinion of bond counsel to the issuer (all of which are commonly known as
"Tax-Exempt Bonds"). The type of securities the Fund invests in are described in
the Prospectus.
Subsequent to its purchase by the Fund, an issue of Tax-Exempt Bonds
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. Neither event will require the elimination of the
issue from the Fund's portfolio, but the change may affect the Fund's ability to
buy additional Tax-Exempt Bonds within categories restricted by the limitations
referred to in the Prospectus and will be analyzed by the Fund in determining
whether it should continue to hold the issue. If at any time the nature of the
ratings utilized by Moody's Investors Service Inc. ("Moody's"), Standard &
Poor's Ratings Group ("Standard and Poor's") or Fitch Investors Services, Inc.
("Fitch") should no longer be comparable to the description of ratings included
in Appendix A to the Prospectus, the Fund will attempt to use ratings comparable
to those described in Appendix A as standards for making investments in
Tax-Exempt Bonds in accordance with its investment objective.
Securities will be purchased and sold principally in response to the
Fund's current evaluation of an issuer's ability to meet its debt obligations in
the future and the Fund's current assessment of future changes in the levels of
interest rates on Tax-Exempt Bonds of varying maturities. In some instances, the
sale of a portfolio security could result in a capital loss to the Fund.
When-Issued Securities. Newly issued Tax-Exempt Bonds may be purchased by the
Fund on a "when-issued" basis, which means that the bonds are not delivered
until a future date that may be as many as 45 days after the Fund has agreed to
purchase the Bonds. Until delivery, the Fund does not pay for Tax-Exempt Bonds
purchased on a "when-issued" basis and does not start earning interest on them,
but the Fund is committed to pay for the Bonds on a fixed date at a fixed price.
During the period before the delivery of the Bonds, the Fund could have
unrealized gains or losses if the Bonds' market value increased or decreased
relative to the agreed-upon purchase price. The Fund does not intend to make
when-issued commitments for speculative purposes but only to accomplish the
investment objective of the Fund as set forth above. On the date the Fund enters
into an agreement to purchase Tax-Exempt Bonds on a when-issued basis, the Fund
segregates in a separate account cash or liquid high grade debt securities equal
in value to the when-issued commitment. These assets will be valued daily at
market, and additional cash or securities will be segregated in a separate
account to the extent that the total value of the assets in the account declines
below the amount of the when-issued commitment.
In general, Tax-Exempt Bonds are debt obligations issued by states,
territories and possessions of the United States, the District of Columbia and
their political subdivisions, agencies and instrumentalities.
Tax-Exempt Bonds are issued to obtain funds for various public
purposes, including the construction of bridges, highways, housing, hospitals,
mass transportation, schools, streets, and water and sewer works. Other public
purposes for which Tax-Exempt Bonds may be issued include the refunding of
outstanding obligations, obtaining funds for general operating expenses,
obtaining funds to loan to other public institutions and facilities and in
anticipation of the receipt of revenue or the issuance of other obligations. In
addition, the term Tax-Exempt Bonds includes certain types of private activity
bonds, including industrial development bonds, issued by public authorities to
obtain funds to provide privately-operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit, port or
parking facilities, air or water pollution control facilities and certain
facilities for water supply, gas, electricity or sewage or solid waste disposal.
Other types of industrial development bonds, the proceeds of which are used for
the acquisition, construction, reconstruction, or improvement of or to provide
equipment for privately-operated industrial or commercial facilities, may
qualify as Tax-Exempt Bonds, although current Federal tax laws place substantial
limitations on the size of such issues. Federal tax legislation enacted in the
1980's placed substantial new restrictions on the issuance of the bonds
described above and in some cases eliminated the ability of state or local
governments to issue Tax-Exempt Bonds for some of the above purposes. Such
restrictions do not affect the Federal income tax treatment of Tax-Exempt Bonds
in which the Fund may invest which were issued prior to the effective dates of
the provisions imposing such restrictions. The effect of these restrictions may
be to reduce the volume of newly issued Tax-Exempt Bonds.
Obligations of issuers of Tax-Exempt Bonds are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Act, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations. There is also the possibility that as a result
of litigation or other conditions the power or ability of any one or more
issuers to pay when due, principal of and interest on, their Tax-Exempt Bonds,
may be affected.
Tax-Exempt Bonds may be either "general obligation" bonds or "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest. The taxes or
special assessments that can be levied for the payment of debt service may be
limited or unlimited as to rate or amount. Revenue bonds are payable only from
the revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue
source. Private Activity bonds which are Tax-Exempt Bonds are in most cases
revenue bonds and do not generally constitute the pledge of the credit or taxing
power of the issuer of such bonds. The credit quality of such Tax-Exempt Bonds
is usually directly related to the credit standing of the user of the
facilities. Private activity bonds may be backed by bank letters of credit or by
guarantees of banks or other institutions, which may be called upon by the
holders of the underlying obligations in the event of the issuer's default.
There are three major classes of short-term Tax-Exempt debt
instruments. The names used to designate these loans are "bond anticipation
notes," "tax anticipation notes," and "revenue anticipation notes". Bond
anticipation notes are issued as interim debt instruments in anticipation of
funding through longer term bond financing. Tax anticipation notes are issued
against and are repayable from tax collections. Revenue anticipation notes are
issued against and repayable from the receipt of a specific future revenue or
are general obligations of the issuer.
The yields on Tax-Exempt Bonds are dependent on a variety of factors,
including general money market conditions, supply and demand, general conditions
of the Tax-Exempt Bond market, the size of a particular offering, the maturity
of the obligation and the rating of the issuer. The ratings of Moody's, Standard
and Poor's and Fitch represent their opinions as to the quality of the
Tax-Exempt Bonds which they undertake to rate. It should be emphasized, however,
that such ratings are general and are not absolute standards of quality.
Consequently, Tax-Exempt Bonds with the same maturity, coupon and rating may
have different yields when purchased in the open market, while Tax-Exempt Bonds
of the same maturity and coupon with different ratings may have the same yield.
Generally, however, higher quality Tax-Exempt Bonds produce lower
yields, but are more readily marketable. To protect shareholders' capital under
adverse market conditions, the Fund from time to time may deem it prudent to
purchase higher quality Tax-Exempt Bonds or taxable short-term investments with
a resultant decrease in yield or increase in the proportion of dividend income
taxable to shareholders.
From time to time, proposals have been introduced before Congress which
would further restrict the issuance of Tax-Exempt Bonds or adversely affect the
Federal income tax consequences of holding such bonds. Similar proposals may be
introduced in the future. It is not possible to determine the effect on the
availability of Tax-Exempt Bonds for investment by the Fund, the value of the
Fund's portfolio if such proposals were enacted, or the Federal income tax
consequences to the Fund's shareholders.
The Internal Revenue Code affects the excludable nature of interest on
"private activity bonds" and industrial development bonds received by
"substantial users" of facilities financed by such bonds or by "related persons"
of such substantial users. Any person who is such a substantial user or related
person should consult his own tax adviser before purchasing shares of the Fund.
While the investment objective of the Fund is to earn a high level of
Tax-Exempt interest income, the Fund may temporarily hold cash or invest a
portion of its assets in short-term taxable investments, the interest on which
is subject to Federal income tax. Short-term taxable investments include
securities such as: (1) U.S. Treasury notes, bills, and bonds; (2) obligations
of agencies and instrumentalities of the United States government; and (3) money
market instruments, such as domestic bank certificates of deposit, finance
company and other corporate commercial paper, repurchase agreements and bankers'
acceptances. Occasions for acquiring short-term taxable investments may arise as
a result of market conditions adverse to investments in Tax-Exempt Bonds or
delays in investing the proceeds of sales of Fund shares or sales of portfolio
securities. In addition, the Fund may acquire short-term taxable investments to
be in a position to meet cash requirements for Fund expenses or for the
redemption of shares by Fund shareholders, and thus avoid the necessity of
liquidating long-term portfolio investments. It is not expected that the portion
of the Fund's total assets consisting of short-term taxable investments will
exceed 15%.
CERTAIN INVESTMENT PRACTICES
Repurchase Agreements. A repurchase agreement is a contract under which the Fund
would acquire a security for a relatively short period (usually not more than 7
days) subject to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the Fund's cost
plus interest). The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with "primary dealers" in U.S.
Government securities. The Adviser will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements. The Fund has established a procedure providing that the securities
serving as collateral for each repurchase agreement must be delivered to the
Fund's custodian either physically or in book-entry form and that the collateral
must be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, the Fund could experience delays in
liquidating the underlying securities and could experience losses, including the
possible decline in the value of the underlying securities during the period
while the Fund seeks to enforce its rights thereto, possible subnormal levels of
income and lack of access to income during this period, and expense of enforcing
its rights.
Municipal Lease Obligations. A municipal lease is an obligation in the form of a
lease or installment purchase which is issued by a state or local government to
acquire equipment and facilities. Income from such obligations is generally
exempt from state and local taxes in the state of issuance. Municipal leases
frequently involve special risks not normally associated with general obligation
or revenue bonds. Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass eventually to the
governmental issuer) have evolved as a means for governmental issuers to acquire
property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt issuance limitations are deemed
to be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that relieve the governmental issuer of any
obligation to make future payments under the lease or contract unless funds are
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. In addition, such leases or contracts may be subject to
the temporary abatement of payments in the event the issuer is prevented from
maintaining occupancy of the leased premises or utilizing the leased equipment.
Although the obligations may be secured by the leased equipment or facilities,
the disposition of the property in the event of non appropriation or foreclosure
might prove difficult, time consuming and costly, and result in an
unsatisfactory or delayed repayment of the Fund's original investment.
Certain municipal lease obligations may be deemed illiquid for the
purpose of the Fund's 15% limitation on investments in illiquid securities.
Other municipal lease obligations acquired by the Fund may be determined by the
Adviser, pursuant to guidelines adopted by the Trustees of the Fund, to be
liquid securities for the purpose of such limitation. In determining the
liquidity of municipal lease obligations, the Adviser will consider a variety of
factors including: (1) the willingness of dealers to bid for the security; (2)
the number of dealers willing to purchase or sell the obligation and the number
of other potential buyers; (3) the frequency of trades or quotes for the
obligation; and (4) the nature of marketplace trades. In addition, the Adviser
will consider factors unique to particular lease obligations affecting the
marketability thereof. These include the general creditworthiness of the issuer,
the importance to the issuer of the property covered by the lease and the
likelihood that the marketability of the obligation will be maintained
throughout the time the obligation is held by the Fund.
Financial Futures Contracts. The Fund may hedge its portfolio by selling
financial futures contracts to offset the effect of expected increases in
interest rates and by purchasing such futures contracts as an offset against the
effect of expected declines in interest rates. Although other techniques could
be used to reduce the Fund's exposure to interest rate fluctuations, the Fund
may be able to hedge its exposure more effectively and perhaps at a lower cost
by using financial futures contracts. The Fund may enter into financial futures
contracts for hedging and speculative purposes to the extent permitted by
regulations of the Commodity Futures Trading Commission ("CFTC").
In general, the sale of a financial futures contract creates an
obligation of the Fund, as seller, to deliver the specific type of instrument
called for in the contract or the cash value of a securities index at a
specified future time in exchange for receipt of a specified price. The purchase
of a financial futures contract creates an obligation of the Fund, as purchaser,
to take delivery of the specific type of instrument or the cash value of a
securities index at a specified future time in exchange for payment of a
specified price.
Financial futures contracts have been designed by boards of trade which
have been designated "contract markets" by the CFTC. Futures contracts are
traded on these markets in a manner that is similar to the way a stock is traded
on a stock exchange. The boards of trade, through their clearing corporations,
guarantee that the contracts will be performed. Currently, financial futures
contracts are based on interest rate instruments such as long-term U.S. Treasury
bonds, U.S. Treasury notes, Government National Mortgage Association ("GNMA")
modified pass-through mortgage-backed securities, three-month U.S. Treasury
bills, 90-day commercial paper, bank certificates of deposit and Eurodollar
certificates of deposit and The Municipal Bond Buyer Index. It is expected that
if other financial futures contracts are developed and traded the Fund may
engage in transactions in such contracts.
Although some financial futures contracts by their terms call for
actual delivery or acceptance of financial instruments, in most cases the
contracts are closed out prior to delivery by offsetting purchases or sales of
matching financial futures contracts (same exchange, underlying security and
delivery month). Other financial futures contracts, such as futures contracts on
securities indices, by their terms call for cash settlements. If the offsetting
purchase price is less than the Fund's original sale price, the Fund realizes a
gain, or if it is more, the Fund realizes a loss. Conversely, if the offsetting
sale price is more than the Fund's original purchase price, the Fund realizes a
gain, or if it is less, the Fund realizes a loss. The transaction costs must
also be included in these calculations. The Fund will pay a commission in
connection with each purchase or sale of financial futures contracts, including
a closing out transaction. For a discussion of the Federal income tax
considerations of trading in financial futures contracts, see the information
under the caption "Tax Status" below.
At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
government securities, known as "initial margin," ranging upward from 1.1% of
the value of the financial futures contract being traded. The margin required
for a financial futures contract is set by the board of trade or exchange on
which the contract is traded and may be modified during the term of the
contract. The initial margin is in the nature of a performance bond or good
faith deposit on the financial futures contract which is returned to the Fund
upon termination of the contract, assuming all contractual obligations have been
satisfied. The Fund expects to earn interest income on its initial margin
deposits. Each day, the futures contract is valued at the official settlement
price of the board of trade or exchange on which it is traded. Subsequent
payments, known as "variation margin," to and from the broker are made on a
daily basis as the market price of the financial futures contract fluctuates.
This process is known as "mark to market." Variation margin does not represent a
borrowing or lending by the Fund but is instead settlement between the Fund and
the broker of the amount one would owe the other if the financial futures
contract expired. In computing net asset value, the Fund will mark to market its
open financial futures positions.
Successful hedging depends on a strong correlation between the market
for the underlying securities and the futures contract market for those
securities. There are several factors that will probably prevent this
correlation from being a perfect one, and even a correct forecast of general
interest rate trends may not result in a successful hedging transaction. There
are significant differences between the securities and futures markets which
could create an imperfect correlation between the markets and which could affect
the success of a given hedge. The degree of imperfection of correlation depends
on circumstances such as: variations in speculative market demand for financial
futures and debt securities, including technical influences in futures trading
and differences between the financial instruments being hedged and the
instruments underlying the standard financial futures contracts available for
trading in such respects as interest rate levels, maturities, and
creditworthiness of issuers. The degree of imperfection may be increased where
the underlying debt securities are lower-rated and, thus, subject to greater
fluctuation in price than higher-rated securities.
A decision as to whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived hedge may be unsuccessful to
some degree because of market behavior or unexpected interest rate trends. The
Fund will bear the risk that the price of the securities being hedged will not
move in complete correlation with the price of the futures contracts used as a
hedging instrument. Although the Adviser believes that the use of financial
futures contracts will benefit the Fund, an incorrect prediction could result in
a loss on both the hedged securities in the Fund's portfolio and the hedging
vehicle so that the Fund's return might have been better had hedging not been
attempted. However, in the absence of the ability to hedge, the Adviser might
have taken portfolio actions in anticipation of the same market movements with
similar investment results but, presumably, at greater transaction costs. The
low margin deposits required for futures transactions permit an extremely high
degree of leverage. A relatively small movement in a futures contract may result
in losses or gains in excess of the amount invested.
Futures exchanges may limit the amount of fluctuation permitted in
certain futures contract prices during a single trading day. The daily limit
establishes the maximum amount the price of a futures contract may vary either
up or down from the previous day's settlement price at the end of the current
trading session. Once the daily limit has been reached in a futures contract
subject to the limit, no more trades may be made on that day at a price beyond
that limit. The daily limit governs only price movements during a particular
trading day and, therefore, does not limit potential losses because the limit
may work to prevent the liquidation of unfavorable positions. For example,
futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses.
Finally, although the Fund engages in financial futures transactions
only on boards of trade or exchanges where there appears to be an adequate
secondary market, there is no assurance that a liquid market will exist for a
particular futures contract at any given time. The liquidity of the market
depends on participants closing out contracts rather than making or taking
delivery. In the event participants decide to make or take delivery, liquidity
in the market could be reduced. In addition, the Fund could be prevented from
executing a buy or sell order at a specified price or closing out a position due
to limits on open positions or daily price fluctuation limits imposed by the
exchanges or boards of trade. If the Fund cannot close out a position, it will
be required to continue to meet margin requirements until the position is
closed.
Options on Financial Futures Contracts. The Fund may purchase and write call and
put options on financial futures contracts. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time during
the period of the option. Upon exercise, the writer of the option delivers the
futures contract to the holder at the exercise price. The Fund would be required
to deposit with its custodian initial and variation margin with respect to put
and call options on futures contracts written by it. Options on futures
contracts involve risks similar to the risks relating to transactions in
financial futures contracts. Also, an option purchased by the Fund may expire
worthless, in which case the Fund would lose the premium paid for that option.
Other Considerations. The Fund will engage in futures transactions for bona fide
hedging or speculative purposes to the extent permitted by CFTC regulations. The
Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities held by the Fund or which it expects to purchase.
Except as stated below, the Fund's futures transactions will be entered into for
traditional hedging purposes -- i.e., futures contracts will be sold to protect
against a decline in the price of securities that the Fund owns, or futures
contracts will be purchased to protect the Fund against an increase in the price
of securities it intends to purchase. As evidence of this hedging intent, the
Fund expects that on 75% or more of the occasions on which it takes a long
futures or option position (involving the purchase of futures contracts), the
Fund will have purchased, or will be in the process of purchasing, equivalent
amounts of related securities in the cash market at the time when the futures
or, option position is closed out. However, in particular cases, when it is
economically advantageous for a Fund to do so, a long futures position may be
terminated or an option may expire without the corresponding purchase of
securities.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the aggregate initial margin and premiums required
to establish speculative positions in futures contracts and options on futures
will not exceed 5% of the net asset value of the Fund's portfolio, after taking
into account unrealized profits and losses on any such positions and excluding
the amount by which such options were in-the-money at the time of purchase. The
Fund will engage in transactions in futures contracts only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
for maintaining its qualification as a regulated investment company for Federal
income tax purposes.
The Fund's investment objective and the investment policies and
practices described above are not fundamental (except where noted) and may be
changed by the Trustees without shareholder approval.
When the fund purchases a financial futures contract, or writes a put
option or purchases a call option thereon, cash and high grade liquid debt
securities will be deposited in a segregated account with the Fund's custodian
in an amount that together with the amount of initial and variation margin held
in the account of its broker, equals the market value of the futures contract.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions:
The following investment restrictions will not be changed without approval of a
majority of outstanding voting securities which, as used in the Prospectus and
the Statement of Additional Information, means approval of the lesser of (1) the
holders of 67% or more of the shares represented at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy or (2)
the holders of more than 50% of the outstanding shares.
The Fund observes the following fundamental investment restrictions.
The Fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2) and (7)
below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale
of options, futures contracts and options on futures contracts, forward
commitments, and repurchase agreements entered into in accordance with
the Fund's investment policies, and the pledge, mortgage or
hypothecation of the Fund's assets within the meaning of paragraph (3)
below are not deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure where such
borrowings would not exceed 5% of the market value of the Fund's total
assets at the time each such borrowing is made.
(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such
pledging, mortgaging or hypothecating does not exceed 10% of the Fund's
total assets taken at cost.
(4) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio investments, the Fund may be deemed to be
an underwriter for purposes of the Securities Act of 1933. The Fund may
also participate as part of a group in bidding for the purchase of
Tax-Exempt Bonds directly from an issuer in order to take advantage of
the lower purchase price available to members of such groups.
(5) Purchase real estate or any interest therein, but this restriction
shall not prevent the Fund from investing in Tax-Exempt Bonds secured
by real estate or interests therein.
(6) Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies in an amount up to 33
1/3% of the Fund's total assets taken at market value, (2) enter into
repurchase agreements, and (3) purchase all or a portion of an issue of
debt securities, bank loan participation interests, bank certificates
of deposit, bankers' acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the
securities.
(7) Purchase or sell commodities or commodity contracts or puts, calls or
combinations of both, except options on securities, securities indices,
currency and other financial instruments, futures contracts on
securities, securities indices, currency and other financial
instruments and options on such futures contracts, forward commitments,
interest rate swaps, caps and floors, securities index put or call
warrants and repurchase agreements entered into in accordance with the
Fund's investment policies.
(8) Purchase any security (other than securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase
agreements collateralized by such securities) if, as a result: (a) more
than 5% of its total assets would be invested in the securities of any
one issuer, or (b) the Fund would own more than 10% of the voting
securities of any one issuer. For purposes of this paragraph 8, each
governmental unit (state, county, city, for example) and each
subdivision, agency or instrumentality thereof and each multi-member
agency of which any of them is a member shall be considered a separate
issuer.
(9) Purchase securities of an issuer conducting its principal activity in
any particular industry if immediately after such purchase the value of
the Fund's investments in all issuers in this industry would exceed 25%
of its total assets taken at market value. (Tax-Exempt Bonds and
securities issued or guaranteed by the United States government and its
agencies and instrumentalities are not subject to this limitation.)
(10) Purchase securities other than Tax-Exempt Bonds and short-term taxable
investments, as those terms are defined in this Statement of Additional
Information.
Non fundamental Investment Restrictions
The following restrictions are designated as non fundamental and may be
changed by the Trustees without shareholder approval.
The Fund may not:
(a) Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the
management of the Adviser to save commissions or to average prices
among them and the participation of the Fund as a part of a group
bidding for the purchase of Tax-Exempt Bonds as permitted by
fundamental investment restriction No. 4 are not deemed to result in a
securities trading account.
(b) Purchase securities on margin or make short sales unless by virtue of
its ownership of other securities, the Fund has the right to obtain
securities equivalent in kind and amount to the securities sold and, if
the right is conditional, the sale is made upon the same conditions,
except that the Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of securities.
(c) Purchase a security if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment
company being held by the Fund, or (iii) more than 5% of the Fund's
total assets would be invested in any one such closed-end investment
company. The Fund will not purchase the securities of any open-end
investment company, except in a merger, consolidation or other
reorganization.
(d) Purchase securities of any issuer which, together with any predecessor,
has a record of less than three years' continuous operations prior to
the purchase if such purchase would cause investments of the Fund in
all such issuers to exceed 5% of the value of the total assets of the
Fund. (This limitation does not apply to securities that are issued or
guaranteed by the United States government and its agencies or
instrumentalities or that are secured by the pledge of the faith,
credit and taxing power of any entity authorized to issue Tax-Exempt
Bonds.)
(e) Invest for the purpose of exercising control over or management of any
company.
(f) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's total assets would be invested
in warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange or more than 5% of the value of the total
assets of the Fund would be invested in warrants generally, whether or
not so listed. For these purposes, warrants are to be valued at the
lesser of cost or market, but warrants acquired by the Fund in units
with or attached to debt securities shall be deemed to be without
value.
(g) Knowingly purchase or retain securities of an issuer if one or more of
the Trustees or officers of the Fund or directors or officers of the
Adviser or any investment management subsidiary of the Adviser
individually owns beneficially more than 0.5%, and together own
beneficially more than 5%, of the securities of such issuer.
(h) Purchase or sell interests in real estate limited partnerships or in
oil, gas or other mineral leases or exploration or development
programs; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of
oil, gas or other minerals.
(i) Write, purchase or sell puts, calls or combinations thereof except in
accordance with its investment objective and policies. The Fund will
not purchase or write options on equity securities.
(j) Knowingly purchase any security that is subject to legal or contractual
delays in or restrictions on resale.
(k) Notwithstanding any investment restriction to the contrary, the Fund
may, in connection with the John Hancock Group of Funds Deferred
Compensation Plan for Independent Trustees/Directors, purchase
securities of other investment companies within the John Hancock Group
of Funds provided that, as a result, (i) no more than 10% of the Fund's
assets would be invested in securities of all other investment
companies, (ii) such purchase would not result in more than 3% of the
total outstanding voting securities of any one such investment company
being held by the Fund and (iii) no more than 5% of the Fund's assets
would be invested in any one such investment company.
In order to permit the sale of shares of the Fund in certain states,
the Trustees may, in their sole discretion, adopt restrictions on investment
policy more restrictive than those described above. Should the Trustees
determine that any such restrictive policy is no longer in the best interest of
the Fund and its shareholders, the Fund may cease offering shares in the state
involved and the Trustees may revoke such restrictive policy. Moreover, if the
states involved shall no longer require any such restrictive policy, the
Trustees may, at their sole discretion, revoke such policy.
If a percentage restriction on investment or utilization of assets as
set forth above is adhered to at the time an investment is made, a later change
in percentage resulting from changes in the values or the total costs of the
Fund's assets will not be considered a violation of the restriction.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by its Trustees, who elect officers
who are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Trustees. Several of the officers and Trustees of the
Fund are also officers and directors of the Adviser or officers and directors of
the Fund's principal distributor, John Hancock Funds, Inc. ("John Hancock
Funds).
<PAGE>
The following table sets forth the principal occupation or employment
of the Trustees and principal officers of the Fund during the past five years:
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ----------------- -------------- --------------------------
<S> <C> <C>
<F1>Edward J. Boudreau, Jr. Chairman <F2><F3> Chairman and Chief Executive Officer, the
101 Huntington Avenue Adviser and The Berkeley Financial Group
Boston, Massachusetts ("The Berkeley Group"); Chairman, NM Capital
Management, Inc. ("NM Capital"); John Hancock
Advisers International Limited; ("Advisers
International"); John Hancock Funds, Inc.,
("John Hancock Funds"); John Hancock Investor
Services Corporation ("Investor Services")
and Sovereign Asset Management Corporation
("SAMCorp"); (herein after the Adviser, the
Berkeley Group, NM Capital, Advisers
International, John Hancock Funds, Investor
Services and SAMCorp are collectively
referred to as the "Affiliated Companies");
Chairman, First Signature Bank & Trust;
Director, John Hancock Freedom Securities
Corp., John Hancock Capital Corp., New
England/Canada Business Council; Member,
Investment Company Institute Board of
Governors; Director, Asia Strategic Growth
Fund, Inc.; Trustee, Museum of Science;
President, the Adviser (until July 1992).
Chairman, John Hancock Distributors, Inc.
(until April, 1994).
- --------------
<FN>
<F1>An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act:).
<F2>A Member of the Executive Committee.
<F3>A Member of Investment Committee of the Adviser.
<F4>An Alternate Member of the Executive Committee.
<F5>A Member of the Audit and Administration Committees.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ----------------- -------------- --------------------------
<S> <C> <C>
Dennis S. Aronowitz Trustee<F5> Professor of Law, Boston University School
Boston University of Law; Trustee, Brookline Savings Bank;
Boston, Massachusetts Director, Boston University Center for
Banking Law Studies (until 1990).
Richard P. Chapman, Jr. Trustee<F5> President, Brookline Savings Bank.
160 Washington Street
Brookline, Massachusetts
William J. Cosgrove Trustee<F5> Vice President, Senior Banker and Senior
20 Buttonwood Place Credit Officer, Citibank, N.A. (retired
Saddle River, New Jersey September 1991); Executive Vice President,
Citadel Group Representative, Inc.
Gail D. Fosler Trustee<F5> Vice President and Chief Economist, The
4104 Woodbine Street Conference Board (non-profit economic and
Chevy Chase, MD business research).
Bayard Henry Trustee<F5> Corporate Advisor; Director, Fiduciary Trust
121 High Street Company (a trust company); Director,
Boston, Massachusetts Groundwater Technology, Inc. (remediation);
Samuel Cabot, Inc.; Advisor, Corning Capital
Corp.
- -------------------
<FN>
<F1>An "interested person" of the Fund, as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
<F2>A Member of the Executive Committee.
<F3>A Member of Investment Committee of the Adviser.
<F4>An Alternate Member of the Executive Committee.
<F5>A Member of the Audit and Administration Committees.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ----------------- -------------- --------------------------
<S> <C> <C>
<F1>Richard S. Scipione Trustee<F4> General Counsel, the Life Insurance Company;
John Hancock Place Director, the Adviser, the Affiliated
P.O. Box 111 Companies, John Hancock Distributors, Inc., JH
Boston, Massachusetts Networking Insurance Agency, Inc., John
Hancock Subsidiaries, Inc., SAMCorp, NM
Capital and John Hancock Property and Casualty
Insurance and its affiliates (until November,
1993); Trustee; The Berkeley Group; Director,
John Hancock Home Mortgages Corp. and John
Hancock Financial Access, Inc. (until July
1990).
Edward J. Spellman Trustee<F5> Partner, KPMG Peat Marwick (retired June 1990).
259C Commercial Bld.
Suite 200
Lauderdale by the Sea, FL
<F1>Robert G. Freedman Vice Chairman and Chief Vice Chairman and Chief Investment Officer,
101 Huntington Avenue Investment Officer<F3> the Adviser; President, the Adviser (until
Boston, Massachusetts December 1994).
<F1>Anne C. Hodsdon President<F3> President and Chief Operations Officer, the
101 Huntington Avenue Adviser; Executive Vice President, the Adviser
Boston, Massachusetts (until December 1994).
<F1>Thomas H. Drohan Senior Vice President and Senior Vice President and Secretary, the
101 Huntington Avenue Secretary Adviser.
Boston, Massachusetts
<F1>James K. Ho Senior Vice President<F3> Senior Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
- ------------------
<FN>
<F1>An "interested person" of the Fund, as such term is defined in the Investment Company Act.
<F2>A Member of the Executive Committee.
<F3>A Member of Investment Committee of the Adviser.
<F4>An Alternate Member of the Executive Committee.
<F5>A Member of the Audit and Administration Committees.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ----------------- -------------- --------------------------
<S> <C> <C>
<F1>James B. Little Senior Vice President and Senior Vice President the Adviser.
101 Huntington Avenue Chief Financial Officer<F3>
Boston, Massachusetts
<F1>Michael P. DiCarlo Senior Vice President<F3> Senior Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
<F1>John A. Morin Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
<F1>Susan S. Newton Vice President, Assistant Vice President and Assistant Secretary,
101 Huntington Avenue Secretary and Compliance the Adviser.
Boston, Massachusetts Officer
<F1>James J. Stokowski Vice President and Treasurer Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
<F1>Andrew F. St. Pierre Senior Vice President<F3> Senior Vice President, the Adviser;
101 Huntington Avenue President, John Hancock Closed-End Funds;
Boston, Massachusetts Portfolio Manager, Harvard Management
Corp. (until October, 1991).
- ------------------
<FN>
<F1>An "interested person" of the Fund, as such term is defined in the Investment Company Act.
<F2>A Member of the Executive Committee.
<F3>A Member of Investment Committee of the Adviser.
<F4>An Alternate Member of the Executive Committee.
<F5>A Member of the Audit and Administration Committees.
</TABLE>
<PAGE>
As of the date of this Statement of Additional Information, the
officers and Trustees of the Fund as a group owned less than 1% of the
outstanding shares of the Fund and to the knowledge of the registrant, no
persons owned of record or beneficially 5% or more of any class of registrant's
outstanding securities.
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the directors and officers may also be officers
and/or directors or trustees of one or more of the other funds for which the
Adviser serves as investment adviser.
The following table provides information regarding the compensation
paid by the Fund and the other investment companies in the John Hancock Fund
Complex to the Independent Trustees for their services for each Fund's 1994
fiscal year. The two non-Independent Trustees, Messrs. Boudreau and Scipione,
and each of the officers of the Funds are interested persons of the Adviser, are
compensated by the Adviser and receive no compensation from the Fund for their
services.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM THE FUND AND
PENSION OR JOHN HANCOCK FUND
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL COMPLEX TO
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON (TOTAL OF 18 FUNDS)
INDEPENDENT TRUSTEES THE FUND THE FUND'S EXPENSES RETIREMENT TRUSTEES<F1>
<S> <C> <C> <C> <C>
Dennis S. Aronowitz $ 7,950 - - $ 60,950
Richard P. Chapman, Jr. 8,216 - - 62,950
William J. Cosgrove 7,950 - - 60,950
Gail D. Fosler 7,950 - - 60,950
Bayard Henry 8,216 - - 62,950
Edward J. Spellman 7,950 - - 60,950
------- ----------- ----------- ---------
$48,232 $ 369,700
<FN>
<F1>The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is as of the calendar year ended December 31, 1994.
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, the Fund receives its investment advice
from the Adviser. Investors should refer to the Prospectus for a description of
certain information concerning the investment management contract. Each of the
Trustees and principal officers of the Fund who is also an affiliated person of
the Adviser is named above, together with the capacity in which such person is
affiliated with the Fund and the Adviser.
As described in the Fund's Prospectus under the caption "Organization
and Management of the Fund," the Fund has entered into an investment management
contract with the Adviser. Under the investment management contract the Adviser
provides the Fund with (i) a continuous investment program, consistent with the
Fund's stated investment objective and policies (ii) supervision of all aspects
of the Fund's operations except those that are delegated to a custodian,
transfer agent or other agent and (iii) such executive administrative and
clerical personnel, officers and equipment as are necessary for the conduct of
its business. The Adviser is responsible for the management of the Fund's
portfolio assets.
Securities held by the Fund may also be held by other funds or
investment advisory clients for which the Adviser or its affiliates provide
investment advice. Because of different investment objectives or other factors,
a particular security may be bought for one or more funds or clients when one or
more other funds or clients are selling the same security. If opportunities for
purchase or sale of securities by the Adviser for the Fund or for other funds or
clients for which the Adviser renders investment advice arise for consideration
at or about the same time, transactions in such securities will be made, insofar
as feasible, for the respective funds or clients in a manner deemed equitable to
all of them. To the extent that transactions on behalf of more than one client
of the Adviser or its affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.
No person other than the Adviser and its directors and employees
regularly furnishes advice to the Fund with respect to the desirability of the
Fund's investing in, purchasing or selling securities. The Adviser may from time
to time receive statistical or other similar factual information, and
information regarding general economic factors and trends, from the Life
Insurance Company and its affiliates.
Under the terms of the investment management contract with the Fund,
the Adviser provides the Fund with office space, supplies and other facilities
required for the business of the Fund. The Adviser pays the compensation of all
other officers and employees of the Fund, and pays the expenses of clerical
services relating to the administration of the Fund.
All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Fund (including fees of Trustees of the
Fund who are not "interested persons", as such term is defined in the Investment
Company Act, but excluding certain distribution related activities required to
be paid by the Adviser or John Hancock Funds) and the continuous public offering
of the shares of the Fund are borne by the Fund. Class expenses properly
allocable to either Class A shares or Class B shares will be borne exclusively
by such class of shares, subject to conditions set forth in a private letter
ruling that the Trust has received from the Internal Revenue Service relating to
its multiple-class structure.
As discussed in the Prospectus and as provided by the investment
management contract, the Fund pays the Adviser monthly an investment management
fee, which is accrued daily, based on a stated percentage of the average of the
daily net assets of the Fund as follows:
Net Asset Value Annual Rate
--------------- -----------
First $500,000,000 0.55%
Next $500,000,000 0.50%
Amount over $1,000,000,000 0.45%
From time to time, the Adviser may reduce its fee or make other
arrangements to limit the Fund's expenses to a specified percentage of average
daily net assets. The Adviser retains the right to re-impose a fee and recover
any other payments to the extent that, at the end of any fiscal year, the Fund's
annual expenses fall below this limit.
On December 31, 1994, the net assets of the Fund were $471,488,790. For
the years ended December 31, 1992, 1993 and 1994, the Adviser received fees of
$2,179,523, $2,460,892 and $2,763,233 respectively. The 1992 and 1993 advisory
fee figures reflects the different advisory fee schedule that was in effect
before January 3, 1994.
If the total of all ordinary business expenses of the Fund for any
fiscal year exceeds limitations prescribed in any state in which shares of the
Fund are qualified for sale, the fee payable to the Adviser will be reduced to
the extent required by these limitations. At this time, the most restrictive
limits on expenses applicable to the Fund imposed by a state require that
expenses charged to the Fund in any fiscal year not exceed 2 1/2% of the first
$30,000,000 of the Fund's average net asset value, 2% of the next $70,000,000 of
such assets and 1 1/2% of the remaining average net asset value. When
calculating the above limit, the Fund may exclude interest, brokerage
commissions and extraordinary expenses.
Pursuant to its investment management contract, the Adviser is not
liable to the Fund or its shareholders for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
the investment management contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
obligations and duties under the investment management contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and presently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
the other mutual funds and publicly traded investment companies in the John
Hancock group of funds having a combined total of over 1,060,000 shareholders.
The Adviser is an affiliate of the Life Insurance Company, one of the most
recognized and respected financial institutions in the nation. With total assets
under management of $80 billion, the Life Insurance Company is one of the ten
largest life insurance companies in the United States, and carries Standard &
Poor's and A.M. Best's highest ratings. Founded in 1862, the Life Insurance
Company has been serving clients for over 130 years.
Under the investment management contract, the Fund may use the name
"John Hancock" or any name derived from or similar to it only for so long as the
contract or any extension, renewal or amendment thereof remains in effect. If
the contract is no longer in effect, the Fund (to the extent that it lawfully
can) will cease to use such a name or any other name indicating that it is
advised by or otherwise connected with the Adviser. In addition, the Adviser or
the Life Insurance Company may grant the non-exclusive right to use the name
"John Hancock" or any similar name to any other corporation or entity, including
but not limited to any investment company of which the Life Insurance Company or
any subsidiary or affiliate thereof or any successor to the business of any
subsidiary or affiliate thereof shall be the investment adviser.
The investment management contract and the distribution contract
discussed below continue in effect from year to year if approved annually by
vote of a majority of the Fund's Trustees who are not interested persons of one
of the parties to the contract, cast in person at a meeting called for the
purpose of voting on such approval, and by either the Fund's Trustees or the
holders of a majority of the Fund's outstanding voting securities. The contract
automatically terminates upon assignment. The contract may be terminated without
penalty on 60 days' notice at the option of either party to the contract or by
vote of a majority of the outstanding voting securities of the Fund.
DISTRIBUTION CONTRACT
The Fund has a distribution contract with John Hancock Funds. Under the
contract, John Hancock Funds is obligated to use its best efforts to sell shares
on behalf of the Fund. Shares of the Fund are also sold by selected
broker-dealers (the "Selling Brokers") which have entered into selling agency
agreements with John Hancock. John Hancock accepts orders for the purchase of
the shares of the Fund which are continually offered at net asset value next
determined plus applicable sales charge. In connection with the sale of Class A
and Class B shares, John Hancock Funds and Selling Brokers receive compensation
in the form of a sales charge imposed, in the case of Class A shares, at the
time of sale or, in the case of Class B shares, on a deferred basis. The sales
charges are discussed further in the Fund's Class A and Class B Prospectus.
The Fund's Trustees adopted Distribution Plans with respect to Class A
and Class B shares pursuant to Rule 12b-1 under the Investment Company Act.
Under the Class A and Class B Plans, the Fund will pay distribution and service
fees at an aggregate annual rate of up to 0.30% and 1.00%, respectively, of the
Fund's average daily net assets. However, the amount of the service fee will not
exceed 0.25% of the Fund's average daily net assets attributable to each class
of shares. The distribution fees reimburse John Hancock Funds for its
distribution costs incurred in the promotion of sales of shares of the Fund, and
the service fees compensate Selling Brokers for providing personal and account
maintenance services to shareholders. In the event that John Hancock Funds is
not fully reimbursed for expenses incurred by it under the Class B Plan in any
fiscal year, John Hancock Funds may carry these expenses forward, provided
however, that the Trustees may terminate the Class B Plan and thus the Fund's
obligation to make further payments at any time. Accordingly, the Fund does not
treat unreimbursed expenses relating to the Class B shares as a liability of the
Fund. The Plans were approved by a majority of the voting securities of the
applicable class of the Fund. The Plans with all amendments were approved by a
majority of the Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plans (the "Independent Trustees"), by votes
cast in person at meetings called for the purpose of voting on such Plans.
Pursuant to the Plans, at least quarterly, John Hancock Funds provides
the Fund with a written report of the amounts expended under the Plans and the
purpose for which expenditures were made. The Trustees review these reports on a
quarterly basis.
During the fiscal year ended December 31, 1994 the Funds paid Investor
Services the following amounts of expenses with respect to the Class A shares
and Class B shares of each of the Funds:
<TABLE>
<CAPTION>
Expense Items
Printing and
Mailing of Interest Carrying
Prospectus to New Compensation to Expenses of John or Other Finance
Tax Exempt Advertising Shareholders Selling Brokers Hancock Funds Charges Other
<S> <C> <C> <C> <C> <C>
Class A Shares $63,743 $25,047 $1,165,602 $247,947 $0
Class B Shares 482 159 17,602 1,850 282
</TABLE>
Each of the Plans provides that it will continue in effect only so long
as its continuance is approved at least annually by a majority of both the
Trustees and the Independent Trustees. Each of the Plans provides that it may be
terminated without penalty (a) by vote of a majority of the Independent
Trustees, (b) by a majority of the Fund's outstanding shares of the applicable
class upon 60 days' written notice to John Hancock Funds, and (c) automatically
in the event of assignment. Each of the Plans further provides that it may not
be amended to increase the maximum amount of the fees for the services described
therein without the approval of a majority of the outstanding shares of the
class of the Fund which has voting rights with respect to the Plans. And
finally, each of the Plans provides that no material amendment to the Plan will,
in any event, be effective unless it is approved by a vote of the Trustees and
the Independent Trustees. In adopting the Plan, the Trustees concluded that, in
their judgment, there is a reasonable likelihood that each Plan will benefit the
holders of the applicable class of shares of the Fund.
When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Trustees. The members of the Committee
on Administration are all Independent Trustees and are identified in this
Statement of Additional Information under the heading "Those Responsible for
Management."
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of a Fund's
shares, the following procedures are utilized wherever applicable. Debt
investment securities are valued on the basis of valuations furnished by a
principal market maker or a pricing service, both of which generally utilize
electronic data processing techniques to determine valuations for normal
institutional size trading units of debt securities without exclusive reliance
upon quoted prices.
Short-term debt investments which have a remaining maturity of 60 days
or less are generally valued at amortized cost which approximates market value.
If market quotations are not readily available or if in the opinion of the
Adviser any quotation or price is not representative of true market value, the
fair value of the security may be determined in good faith in accordance with
procedures approved by the Trustees.
A Fund will not price its securities on the following national
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
INITIAL SALES CHARGE ON CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund
are described in the Fund's Class A and Class B Prospectus. Methods of obtaining
reduced sales charges referred to generally in the Prospectus are described in
detail below. In calculating the sales charge applicable to current purchases of
Class A shares, the investor is entitled to cumulate current purchases with the
greater of the current value (at offering price) of the Class A shares of the
Fund, or if Investor Services is notified by the investor's dealer or the
investor at the time of the purchase, the cost of the Class A shares owned.
Combined Purchases. In calculating the sales charge applicable to purchases of
Class A shares made at one time, the purchases will be combined if made by (a)
an individual, his spouse and their children under the age of 21, purchasing
securities for his or their own account, (b) a trustee or other fiduciary
purchasing for a single trust, estate or fiduciary account and (c) certain
groups of four or more individuals making use of salary deductions or similar
group methods of payment whose funds are combined for the purchase of mutual
fund shares. Further information about combined purchases, including certain
restrictions on combined group purchases, is available from Investor Services or
a selling Broker's representative.
Without Sales Charge. As described in the Class A and Class B Prospectus, Class
A shares of the Fund may be sold without a sales charge to certain persons
described in the Prospectus.
Accumulation Privilege. Investors (including investors combining purchases) who
are already Class A shareholders may also obtain the benefit of the reduced
sales charge by taking into account not only the amount then being invested but
also the purchase price or value of the Class A shares already held by such
person.
Combination Privilege. Reduced sales charges (according to the schedule set
forth in the Class A and Class B Prospectus) also are available to an investor
based on the aggregate amount of his concurrent and prior investments in Class A
shares of the Fund and shares of all other John Hancock funds which carry a
sales charge.
Letter of Intention. Reduced sales charges are also applicable to investments
made over a specified period pursuant to a Letter of Intention (the "LOI"),
which should be read carefully prior to its execution by an investor. Such an
investment (including accumulation and combinations) must aggregate $100,000 or
more invested during a period of thirteen months from the date of the LOI or
from a date within ninety days prior thereto, upon written request to Investor
Services. The sales charge applicable to all amounts invested under the LOI is
computed as if the aggregate amount intended to be invested had been invested
immediately. If such aggregate amount is not actually invested, the difference
in the sales charge actually paid and the sales charge payable had the LOI not
been in effect is due from the investor. However, for the purchases actually
made within the thirteen-month period the sales charge applicable will not be
higher than that which would have applied (including accumulations and
combinations) had the LOI been for the amount actually invested.
The LOI authorizes Investor Services to hold in escrow sufficient Class
A shares (approximately 5% of the aggregate) to make up any difference in sales
charges on the amount intended to be invested and the amount actually invested,
until such investment is completed within the thirteen-month period, at which
time the escrow shares will be released. If the total investment specified in
the LOI is not completed, the Class A shares held in escrow may be redeemed and
the proceeds used as required to pay such sales charge as may be due. By signing
the LOI, the investor authorizes Investor Services to act as his
attorney-in-fact to redeem any escrowed shares and adjust the sales charge, if
necessary. An LOI does not constitute a binding commitment by an investor to
purchase, or by the Fund to sell, any additional Class A shares and may be
terminated at any time.
DEFERRED SALES CHARGE ON CLASS B SHARES
Investments in Class B shares are purchased at net asset value per
share without the imposition of an initial sales charge so that the Fund will
receive the full amount of the purchase payment.
Contingent Deferred Sales Charge. Class B shares which are redeemed within six
years of purchase will be subject to a contingent deferred sales charge ("CDSC")
at the rates set forth in the Class A and Class B Prospectus as a percentage of
the dollar amount subject to the CDSC. The charge 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, no CDSC will be imposed on
increases in account value above the initial purchase prices, including Class B
shares derived from reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchases of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.
Proceeds from the CDSC are paid to John Hancock Funds and are used in
whole or in part by John Hancock Funds to defray its expenses related to
providing distribution-related services to the Fund in connection with the sale
of the Class B shares, such as the payment of compensation to select Selling
Brokers for selling Class B shares. The combination of the CDSC and the
distribution and service fees facilitates the ability of the Fund to sell the
Class B shares without a sales charge being deducted at the time of the
purchase. See the Class A and Class B Prospectus for additional information
regarding the CDSC.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. If the shareholder were to sell
portfolio securities received in this fashion he would incur a brokerage charge.
Any such securities would be valued for the purposes of making such payment at
the same value as used in determining net asset value. The Fund has, however,
elected to be governed by Rule 18f-1 under the Investment Company Act. Under
that rule, the Fund must redeem its shares for cash except to the extent that
the redemption payments to any shareholder during any 90-day period would exceed
the lesser of $250,000 or 1% of the Fund's net asset value at the beginning of
such period.
ADDITIONAL SERVICES AND PROGRAMS
Exchange Privilege. As described more fully in the Prospectus, the Fund permits
exchanges of shares of any class of the Fund for shares of the same class in any
other John Hancock fund offering that class.
Systematic Withdrawal Plan. As described briefly in the Class A and Class B
Prospectus, the Fund permits the establishment of a Systematic Withdrawal Plan.
Payments under this plan represent proceeds arising from the redemption of Fund
shares. Since the redemption price of Fund the shares may be more or less than
the shareholder's cost, depending upon the market value of the securities owned
by the Fund at the time of redemption, the distribution of cash pursuant to this
plan may result in realization of gain or loss for purposes of Federal, state
and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with purchases of additional Class A or Class B shares of the Fund
could be disadvantageous to a shareholder because of the initial sales charge
payable on such purchases of Class A shares and the CDSC imposed on redemptions
of Class B shares and because redemptions are taxable events. Therefore, a
shareholder should not purchase Fund shares at the same time as a Systematic
Withdrawal Plan is in effect. The Fund reserves the right to modify or
discontinue the Systematic Withdrawal Plan of any shareholder on 30 days' prior
written notice to such shareholder, or to discontinue the availability of such
plan in the future. The shareholder may terminate the plan at any time by giving
proper notice to Investor Services.
Monthly Automatic Accumulation Program ("MAAP"). This program is explained fully
in the Fund's Class A and Class B Prospectus and the Account Privileges
Application. The program, as it relates to automatic investment checks, is
subject to the following conditions:
The investments will be drawn on or about the day of the month
indicated.
The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice if
any investment is not honored by the shareholder's bank. The bank shall be under
no obligation to notify the shareholder as to the non-payment of any check.
The program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is received
at least five (5) business days prior to the due date of any investment.
Reinvestment Privilege. A shareholder who has redeemed Fund shares may, within
120 days after the date of redemption, reinvest without payment of a sales
charge any part of the redemption proceeds in shares of the same class of the
Fund or another John Hancock mutual fund, subject to the minimum investment
limit in that fund. The proceeds from the redemption of Class A shares may be
reinvested at net asset value without paying a sales charge in Class A shares of
the Fund or in Class A shares of another John Hancock fund. If a CDSC was paid
upon a redemption, a shareholder may reinvest the proceeds from that redemption
at net asset value in additional shares of the class from which the redemption
was made. The shareholder's account will be credited with the amount of any CDSC
charged upon the prior redemption and the new shares will continue to be subject
to the CDSC. The holding period of the shares acquired through reinvestment
will, for purposes of computing the CDSC payable upon a subsequent redemption,
include the holding period of the redeemed shares. The Fund may modify or
terminate the reinvestment privilege at any time.
A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes even if the reinvestment privilege is exercised, and
any gain or loss realized by a shareholder on the redemption or other
disposition of Fund shares will be treated for tax purposes as described under
the caption "Tax Status."
DESCRIPTION OF THE FUND'S SHARES
The Trustees of the Fund are responsible for the management and
supervision of the Fund. The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest without
par value. Under the Declaration of Trust, the Trustees have the authority to
create and classify shares of beneficial interest in separate series, without
further action by shareholders. As of the date of this Statement of Additional
Information, the Trustees have authorized shares of the Fund but not any
additional series, although they may do so in the future. The Declaration of
Trust also authorizes the Trustees to classify and reclassify the shares of the
Trust, or any other series of the Trust, into one or more classes. As of the
date of this Statement of Additional Information, the Trustees have authorized
the issuance of two classes of shares of the Fund, designated as Class A and
Class B.
The shares of each class of the Fund represent an equal proportionate
interest in the aggregate net assets attributable to that class of the Fund.
Class A shares and Class B shares of the Fund will be sold exclusively to
members of the public (other than the institutional investors described in the
Prospectuses) at net asset value. A sales charge will be imposed either at the
time of the purchase, for Class A shares, or on a contingent deferred basis, for
Class B shares. For Class A shares, no sales charge is payable at the time of
purchase on investments of $1 million or more, but for such investments a
contingent deferred sales charge may be imposed in the event of certain
redemption transactions within one year of purchase
Holders of Class A and Class B shares each have certain exclusive
voting rights on matters relating to their respective Rule 12b-1 distribution
plans. The different classes of the Fund may bear different expenses relating to
the cost of holding shareholder meetings necessitated by the exclusive voting
rights of any class of shares.
Dividends paid by the Fund, if any, with respect to each class of
shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that (i) Class B shares will pay
higher distribution and service fees than Class A shares and (ii) each of Class
A shares and Class B shares will bear any class expenses properly allocable to
such class of shares, subject to the conditions set forth in a private letter
ruling that the Fund has received from the Internal Revenue Service relating to
its multiple-class structure. Similarly, the net asset value per share may vary
depending whether Class A shares or Class B shares are purchased. In the event
of liquidation, shareholders of each class are entitled to share pro rata in the
net assets of the Fund available for distribution to these shareholders. Shares
entitle their holders to one vote per share, are freely transferable and have no
preemptive subscription or conversion rights. When issued, shares are fully paid
and non-assessable, except as set forth below.
Unless otherwise required by the Investment Company Act or the
Declaration of Trust, the Fund has no intention of holding annual meetings of
shareholders. Fund shareholders may remove a Trustee by the affirmative vote of
at least two-thirds of the Fund's outstanding shares and the Trustees shall
promptly call a meeting for such purpose when requested to do so in writing by
the record holders of not less than 10% of the outstanding shares of the Fund.
Shareholders may, under certain circumstances, communicate with other
shareholders in connection with requesting a special meeting of shareholders.
However, at any time that less than a majority of the Trustees holding office
were elected by the shareholders, the Trustees will call a special meeting of
shareholders for the purpose of electing Trustees.
Under Massachusetts law, shareholders of a Massachusetts business trust
could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts, obligations or affairs of
the Fund. The Declaration of Trust also provides for indemnification out of the
Fund's assets for all losses and expenses of any shareholder held personally
liable by reason of being or having been a shareholder. Liability is therefore
limited to circumstances in which the Fund itself would be unable to meet its
obligations, and the possibility of this occurrence is remote.
TAX STATUS
The Fund has qualified and elected and intends to continue to be
treated as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timing of its distributions and the diversification of its assets, the Fund will
not be subject to Federal income tax on tax-exempt income or taxable income
(including net realized capital gains) distributed to shareholders at least
annually in accordance with the timing requirements of the Code.
The Fund will be subject to a four percent nondeductible Federal excise
tax on certain taxable amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability for
such tax by satisfying such distribution requirements.
Distributions from the Fund's current or accumulated earnings and
profits ("E&P"), as computed for Federal income tax purposes, will be taxable as
described in the Fund's Prospectus whether taken in shares or in cash. Amounts
that are not allowable as a deduction in computing taxable income, including
expenses associated with earning tax-exempt interest income, do not reduce
current E&P for this purpose. Distributions, if any, in excess of E&P will
constitute a return of capital, which will first reduce an investor's tax basis
in Fund shares and thereafter (after such basis is reduced to zero) will
generally give rise to capital gains. Taxable distributions include
distributions from income or gains from the Fund's taxable investments,
including repurchase agreements, securities loans, options and futures, any
dispositions of the rights to acquire when-issued securities prior to issuance,
income attributable to accrued market discount, and a portion of the discount
from certain stripped tax-exempt obligations or their coupons. Corporate
shareholders of the Fund will not be entitled to the corporate dividends
received deduction for any of the Fund's dividends or other distributions.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the amount of cash that they would have received had they elected to
receive the distribution in cash, dividend by the number of shares received.
Distributions of the tax-exempt interest (i.e., interest excludable
from gross income under the Code) the Fund earns will be treated as tax-exempt
interest in shareholders' hands provided that, as anticipated, the Fund
qualifies as a regulated investment company, has at least 50% of the value of
its total assets at the end of each quarter of its taxable year invested in
tax-exempt obligations, and properly designates such distributions as
"exempt-interest dividends."
Interest income from certain types of tax-exempt bonds that are private
activity bonds in which the Fund may invest is treated as an item of tax
preference for purposes of the Federal alternative minimum tax. To the extent
that the Fund invests in these types of tax-exempt bonds, shareholders will be
required to treat as an item of tax preference for Federal alternative minimum
tax purposes that part of the Fund's exempt-interest dividends which is derived
from interest on these tax-exempt bonds. Further, exempt-interest dividends
derived from tax-exempt interest income that is not an item of tax preference
will be included in corporate "adjusted current earnings" for purposes of
computing the alternative minimum tax liability, if any, of corporate
shareholders of the Fund.
The amount of net realized capital gains, if any, in any given year
will vary depending upon the Adviser's current investment strategy and whether
the Adviser believes it to be in the best interest of the Fund to dispose of
portfolio securities that will generate capital gains or to enter into options
or futures transactions. At the time of an investor's purchase of Fund shares, a
portion of the purchase price is often attributable to realized or unrealized
appreciation in the Fund's portfolio or undistributed taxable income of the
Fund. Consequently, subsequent distributions from such appreciation or income
may be taxable to such investor even if the net asset value of the investor's
shares is, as a result of the distributions, reduced below the investor's cost
for such shares, and the distributions in reality represent a return of a
portion of the purchase price.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder will ordinarily realize a taxable gain or loss
depending upon his basis in his shares. This gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's hands
and will be long-term or short-term, depending upon the shareholder's tax
holding period for the shares. Shareholders should consider, in determining the
timing of any redemption, that the portion of a redemption distribution
attributable to tax-exempt interest income that the Fund has accrued but not yet
declared as a dividend will be treated as part of the proceeds of the redemption
of shares in determining any gain or loss, rather than as tax-exempt interest.
Consequently, redeeming shares shortly before the anticipated record date of a
forthcoming exempt-interest dividend may result in the realization of a larger
gain (or a smaller loss) than if the redemption had occurred shortly after
receipt of the exempt-interest dividend, and the effect may be to convert an
amount that would have been tax-exempt (the accrued tax-exempt interest) into an
amount that is taxable as part of the redemption proceeds. A sales charge paid
in purchasing Class A shares of the Fund cannot be taken into account for
purposes of determining gain or loss on the redemption or exchange of these
shares within ninety (90) days after their purchase to the extent Class A shares
of the Fund or another John Hancock fund are subsequently acquired without
payment of a sales charge pursuant to the reinvestment or exchange privileges.
This disregarded charge will result in an increase in the shareholder's tax
basis in the shares subsequently acquired. Also, any loss realized on a
redemption or exchange may be disallowed for tax purposes to the extent the
shares disposed of are replaced with other shares of the Fund within a period of
sixty-one (61) days beginning thirty (30) days before and ending thirty (30)
days after the shares are disposed of, such as pursuant to the Dividend
Reinvestment Plan. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss. Any loss realized upon the redemption
of shares with a tax holding period of six months or less will be disallowed to
the extent of any exempt-interest dividends received with respect to such
shares, and any such loss not disallowed will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
Although its present intention is to distribute all net capital gains
annually, if any, the Fund reserves the right to retain and reinvest all or any
portion of the excess, as computed for Federal income tax purposes, of net
long-term capital gain over net short-term capital loss in any year. The Fund
will not in any event distribute net long-term capital gains realized in any
year to the extent that a capital loss is carried forward from prior year
against such gain. To the extent such excess was retained and not exhausted by
the carryforward of prior years' capital losses, it would be subject to Federal
income tax in the hands of the Fund. Each shareholder would be treated for
Federal income tax purposes as if the Fund had distributed to him on the last
day of its taxable year his pro rata share of such excess, and he had paid his
pro rata share of the taxes paid by the Fund and reinvested the remainder in the
Fund. Accordingly, each shareholder would (a) include his pro rata share of such
excess as long-term capital gain income in his tax return for his taxable year
in which the last day of the Fund's taxable year falls, (b) be entitled either
to a tax credit on his return for, or to a refund of, his pro rata share of the
taxes paid by the Fund, and (c) be entitled to increase the adjusted tax basis
for his shares in the Fund by the difference between his pro rata share of this
excess and his pro rata share of such taxes.
The percentage of Fund income that is tax-exempt is applied uniformly
to all distributions made during each calendar year to determine the percentage
of distributions to shareholders which will be treated as exempt-interest
dividends. As a result, the percentage of distributions designated as
exempt-interest dividends on shares held for less than a full calendar year may
differ from the percentage of the Fund's income which is tax-exempt during the
period for which the distributions are received. However, because the Fund
invests primarily in tax-exempt bonds, the percentage of its income which is
tax-exempt for the calendar year will generally be substantially the same as the
tax-exempt portion of income actually earned during any distribution period.
Shareholders are required to report their receipt of tax-exempt distributions
under the Code.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Fund will not be deductible for Federal income tax purposes to the
extent it is deemed related to the Fund's exempt-interest dividends. Moreover,
pursuant to published guidelines, the Internal Revenue Service may deem
indebtedness to have been incurred for the purpose of acquiring or carrying
shares of the Fund even though the borrowed funds may not be directly traceable
to the purchase of shares.
Shares of the Fund may not be an appropriate investment for persons who
are "substantial users" of facilities financed by private activity bonds and
industrial development bonds or persons related to such "substantial users."
Such persons should consult their tax advisers before investing in shares of the
Fund.
For Federal income tax purposes, the Fund is permitted to carry forward
a net capital loss in any year to offset net capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent net capital
gains are offset by such losses, they would not result in Federal income tax
liability to the Fund and, as noted above, would not be distributed to
shareholders. The Fund has $2,374,664 of capital loss carryforward available to
the extent provided by regulations, to offset future net realized capital gains.
The carryforward expires December 31, 2002.
Limitations imposed by the Code on regulated investment companies like
the Fund may restrict the Fund's ability to enter into futures and options
transactions. The options and futures transactions undertaken by the Fund may
cause the Fund to recognize taxable capital gains or losses from marking to
market even though its positions have not been sold or terminated and affect the
character as long-term or short-term, and timing, of some capital gains and
losses realized by the Fund. Also, some of the Fund's losses on its transactions
involving options and futures contracts and/or offsetting portfolio positions
may be deferred rather than being taken into account currently in calculating
the Fund's taxable income. The tax provisions applicable to these transactions,
including these mark to market, recharacterization, and loss deferral rules, may
affect the amount, timing and character of the Fund's distributions to
shareholders. Some of the applicable tax rules may be modified if the Fund is
eligible and chooses to make one or more of certain tax elections that may be
available. The Fund will take into account the special tax rules (including
consideration of available elections) applicable to options and futures
contracts in order to minimize any potential adverse tax consequences.
The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under
this law. The discussion does not address special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies
and financial institutions.. Dividends, capital gain distributions, and
ownership of or gains realized on the redemption (including an exchange) of Fund
shares may also be subject to state and local taxes. A state income (and
possibly local income and/or intangible property) tax exemption is generally
available to the extent the Fund's distributions are derived from interest on
(or, in the case of intangibles taxes, the value of its assets is attributable
to) certain U.S. Government obligations and/or tax-exempt municipal obligations
issued by or on behalf of the particular state or a political subdivision
thereof, provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. Shareholders should
consult their own tax advisors as to the Federal, state or local tax
consequences of ownership of shares of, and receipt of distributions from, the
Fund in their particular circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which
their Fund investment is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above. These
investors may be subject to non-resident alien withholding tax at the rate of
30% (or a lower rate under an applicable tax treaty) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute is on file, to 31% backup withholding on certain other
payments from the Fund. Non-U.S. investors should consult their tax advisers
regarding such treatment and the application of foreign taxes to an investment
in the Fund.
The Fund is not subject to Massachusetts corporate franchise or
corporate excise taxes. Provided that the Fund qualifies as a regulated
investment company under the Code, it will also not be required to pay any
Massachusetts income tax.
CALCULATION OF PERFORMANCE
For the 30-day period ended December 31, 1994, the Fund's annualized
yield was 5.43% for Class A and 4.97% for Class B, respectively. The average
annual total return of the Class A shares of the Fund for the 1, 5 and 10 years
ended December 31, 1994 was (10.14)%, 5.29%, and 8.73%, respectively. The
cumulative total return since inception of Class B shares of the Fund was
(10.92)% as of December 31, 1994.
The Fund's yield is computed by dividing net investment income per
share determined for a 30-day period by the maximum offering price per share
(which includes the full sales charge) on the last day of the period, according
to the following standard formula:
_ _
| a - b 6 |
Yield = 2 | (_____ + 1) -1 |
|_ cd _|
Where:
a = dividends and interest earned during the period.
b = net expenses accrued during the period.
c = the average daily number of fund shares outstanding during the period that
would be entitled to receive dividends.
d = the maximum offering price per share on the last day of the period (NAV
where applicable).
The Fund may advertise a tax-equivalent yield, which is computed by
dividing that portion of the yield of the Fund which is Tax-Exempt by one minus
a stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund that is not Tax-Exempt. John Hancock Tax-Exempt Income Fund's
tax equivalent yield at a 31% and 36% tax rate for the 30 day period ended
December 31, 1994 was 7.87% and 8.48% for Class A shares and 7.20% and 7.77% for
Class B shares.
The Fund's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 year and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
____________________
n /
/ -1
T = V ERV / P
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 investment made at the
beginning of the 1 year, 5 year and life-of-fund periods.
In the case of Class A shares or Class B shares, this calculation
assumes the maximum sales charge is included in the initial investment or the
CDSC is applied at the end of the period. This calculation also assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The "distribution rate" is determined by
annualizing the result of dividing the declared dividends of the Fund during the
period stated by the maximum offering price or net asset value at the end of the
period.
In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single investment,
a series of investments, and/or a series of redemptions, over any time period.
Total returns may be quoted with or without taking the Fund's 4.50% sales charge
on Class A shares or the 5.00% CDSC on Class B shares into account. Excluding
the Fund's sales charge on Class A shares and the CDSC on Class B shares from a
total return calculation produces a higher total return figure.
From time to time, in reports and promotional literature, the Fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper Analytical Services, Inc.'s "Lipper - Fixed
Income Fund Performance Analysis," a monthly publication which tracks net
assets, total return, and yield on approximately 1,700 fixed income mutual funds
in the United States. Ibottson and Associates, CDA Weisenberger and F.C. Towers
are also used for comparison purposes, as well as the Russell and Wilshire
Indices.
Performance rankings and ratings reported periodically in national
financial publications such as MONEY Magazine, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRON'S, etc. will
also be utilized.
The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by the Adviser pursuant to
recommendations made by its investment committee, which consists of officers and
directors of the Adviser and affiliates and officers and Trustees who are
interested persons of the Fund. Orders for purchases and sales of securities are
placed in a manner which, in the opinion of the Adviser, will offer the best
price and market for the execution of each such transaction. Purchases from
underwriters of portfolio securities may include a commission or commissions
paid by the issuer and transactions with dealers serving as market makers
reflect a "spread." Investments in debt securities are generally traded on a net
basis through dealers acting for their own account as principals and not as
brokers; no brokerage commissions are payable on such transactions.
The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing primary
policy, the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. and other policies that the Trustees may determine, the Adviser
may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute the Fund's portfolio transactions.
To the extent consistent with the foregoing, the Fund will be governed
in the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research information
and to a lesser extent statistical assistance furnished to the Adviser of the
Fund, and their value and expected contribution to the performance of the Fund.
It is not possible to place a dollar value on information and services to be
received from brokers and dealers, since it is only supplementary to the
research efforts of the Adviser. The receipt of research information is not
expected to reduce significantly the expenses of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Life Insurance Company or other advisory clients of the Adviser,
and, conversely, brokerage commissions and spreads paid by other advisory
clients of the Adviser may result in research information and statistical
assistance beneficial to the Fund. The Fund will make no commitments to allocate
portfolio transactions upon any prescribed basis. While the Fund's officers will
be primarily responsible for the allocation of the Fund's brokerage business,
their policies and practices in this regard must be consistent with the
foregoing and will at all times be subject to review by the Trustees. For the
years ended on December 31, 1993 and 1992, no negotiated brokerage commissions
were paid on portfolio transactions. For 1994, negotiated brokerage commissions
were $28,975.
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Fund may pay to a broker which provides brokerage and research services to
the Fund an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This practice
is subject to a good faith determination by the Trustees that the price is
reasonable in light of the services provided and to policies that the Trustees
may adopt from time to time. During the fiscal year ended December 31, 1994, the
Fund did not pay commissions as compensation to any brokers for research
services such as industry, economic and company reviews and evaluations of
securities.
The Adviser's indirect parent, the Life Insurance Company, is the
indirect sole shareholder of John Hancock Freedom Securities Corporation and its
subsidiaries, three of which, Tucker Anthony Incorporated ("Tucker Anthony")
John Hancock Distributors, Inc. ("Distributors") and Sutro & Company, Inc.
("Sutro"), are broker-dealers ("Affiliated Brokers"). Pursuant to procedures
determined by the Trustees and consistent with the above policy of obtaining
best net results, the Fund may execute portfolio transactions with or through
Affiliated Brokers. During the year ended December 31, 1994, the Fund did not
execute any portfolio transactions with Affiliated Brokers.
Any of the Affiliated Brokers may act as broker for the Fund on
exchange transactions, subject, however, to the general policy of the Fund set
forth above and the procedures adopted by the Trustees pursuant to the
Investment Company Act. Commissions paid to an Affiliated Broker must be at
least as favorable as those which the Trustees believe to be contemporaneously
charged by other brokers in connection with comparable transactions involving
similar securities being purchased or sold. A transaction would not be placed
with an Affiliated Broker if the Fund would have to pay a commission rate less
favorable than the Affiliated Broker's contemporaneous charges for comparable
transactions for its other most favored, but unaffiliated, customers, except for
accounts for which the Affiliated Broker acts as clearing broker for another
brokerage firm, and any customers of the Affiliated Broker not comparable to the
Fund as determined by a majority of the Trustees who are not interested persons
(as defined in the Investment Company Act) of the Fund, the Adviser or the
Affiliated Brokers. Because the Adviser, which is affiliated with the Affiliated
Brokers, has, as an investment adviser to the Fund, the obligation to provide
investment management services, which includes elements of research and related
investment skills, such research and related skills will not be used by the
Affiliated Brokers as a basis for negotiating commissions at a rate higher than
that determined in accordance with the above criteria. The Fund will not effect
principal transactions with Affiliated Brokers.
TRANSFER AGENT SERVICES
John Hancock Investor Services Corporation. ("Investor Services"), P.O.
Box 9116, Boston, MA 02205-9116, a wholly owned indirect subsidiary of the Life
Insurance Company, is the transfer and dividend paying agent for the Fund. The
Fund pays Investor Services an annual fee for Class A of $19.00 per shareholder
account and for Class B shares $21.50, plus certain out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and Investors Bank & Trust Company, 24 Federal
Street, Boston, Massachusetts 02110. Under the custodian agreement, Investors
Bank & Trust performs custody, portfolio and Fund accounting services.
INDEPENDENT AUDITORS The independent auditors of the Fund are Ernst &
Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116. Ernst & Young
audits and renders an opinion of the Fund's annual financial statements and
prepares the Fund's annual Federal income tax return.
<PAGE>
APPENDIX A
TAX EXEMPT BOND RATINGS
Below is a description of the six ratings that may apply to the Fund's
investments in Tax-Exempt Bonds.
TAX-EXEMPT BOND RATINGS
Moody's describes its six highest ratings for Tax-Exempt Bonds as
follows:
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some time in the future.
Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
The six highest ratings of Standard & Poor's for Tax-Exempt Bonds are
AAA (Prime), AA (High Grade), A (Good Grade), BBB (Medium Grade), BB and B:
AAA This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to
pay principal and interest.
AA Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in
small degree.
A Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
BBB Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
to pay principal and interest for bonds in this category than
for bonds in the A category.
BB Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. The BB rating
category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied BB or BB- rating.
Fitch describes its ratings for Tax-Exempt Bonds as follows:
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely
to be affected by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong
as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foresee
future developments, short-term debt of these issuers is
generally rated F-1+.
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more
likely to have adverse impact on these bonds and, therefore,
impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than
for bonds with higher ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified that could assist the obligor
in satisfying its debt service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity
throughout the life of the issue.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower are uppermost in
importance in short-term borrowing, while various factors of the first
importance in bond risk are of lesser importance in the short-term run. Symbols
used will be as follows:
MIG 1 Loans bearing this designation are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG 2 Loans bearing this designation are of high quality, with margins
of protection ample although not so large as in the preceding group.
MIG 3 Loans bearing this designation are of favorable quality, with all
securities elements accounted for but lacking the undeniable strength
of the preceding grades. Market access for refinancing, in particular,
is likely to be less well established.
Standard & Poor's ratings for state and municipal notes and other
short-term loans are designated Standard & Poor's Grade (SP).
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
Fitch Ratings for short-term debt obligations that are payable on
demand or have original maturities of up to three years including commercial
paper, certificates of deposits, medium term notes and municipal and investment
notes are designated by the following ratings:
F-1+ Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin for
safety is not as great as for issues assigned F-1+ and F-1 ratings.
F-S Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial
and economic conditions.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Tax-exempt long-term bonds (cost - $469,197,178) . . . . . . . . . . . $458,512,064
Tax-exempt short-term notes (cost - $2,000,000) . . . . . . . . . . . . 2,000,000
Joint repurchase agreement (cost - $96,000) . . . . . . . . . . . . . . 96,000
Corporate savings account . . . . . . . . . . . . . . . . . . . . . . . 1,730
------------
460,609,794
Receivable for shares sold . . . . . . . . . . . . . . . . . . . . . . . 62,061
Receivable for investments sold . . . . . . . . . . . . . . . . . . . . . 3,210,000
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,561,343
Receivable for variation margin - Note A . . . . . . . . . . . . . . . . 84,375
Segregated assets for financial futures contracts . . . . . . . . . . . . 562,500
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . 475,090,073
-------------------------------------------------------------------------------
LIABILITIES:
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,422
Payable for shares repurchased . . . . . . . . . . . . . . . . . . . . . 28,925
Payable for investments purchased . . . . . . . . . . . . . . . . . . . . 3,179,070
Payable to John Hancock Advisers, Inc.
and affiliates - Note B . . . . . . . . . . . . . . . . . . . . . . . . 291,598
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . 69,268
------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . 3,641,283
-------------------------------------------------------------------------------
NET ASSETS:
Capital paid-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486,600,302
Accumulated net realized loss on investments and
financial futures contracts . . . . . . . . . . . . . . . . . . . . . . ( 3,473,882)
Net unrealized depreciation of investments and
financial futures contracts . . . . . . . . . . . . . . . . . . . . . . (11,680,426)
Undistributed net investment Income . . . . . . . . . . . . . . . . . . . 2,796
------------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . $471,448,790
===============================================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial interest outstanding -
unlimited number of shares authorized with no par value, respectively)
Class A - $467,474,910/46,945,981 . . . . . . . . . . . . . . . . . . . . $ 9.96
============================================================================================
Class B - $3,973,880/399,205 . . . . . . . . . . . . . . . . . . . . . . $ 9.95
============================================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($9.96 x 104.71%) . . . . . . . . . . . . . . . . . . . . . . . $ 10.43
============================================================================================
</TABLE>
* On single retail sales of less than $100,000. On sales of $100,000 or more and
on group sales the offering price is reduced.
**Class B shares commenced operations on January 3, 1994.
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON DECEMBER 31, 1994. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.
STATEMENT OF OPERATIONS
Year ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,894,653
-----------
Expenses:
Investment management fee - Note B . . . . . . . . . . . . . . . . . . 2,763,233
Distribution/service fee - Note B
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,502,239
Class B ** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,375
Transfer agent fee - Note B
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001,624
Class B ** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,482
Custodian fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,376
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . 72,885
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,945
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,125
Auditing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,100
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,310
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,368
------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 5,685,062
---------------------------------------------------------------------------
Less Expense Reductions -
Note B . . . . . . . . . . . . . . . . . . . . . . . . . ( 94,444)
---------------------------------------------------------------------------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 5,590,618
---------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . 27,304,035
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FINANCIAL FUTURES CONTRACTS:
Net realized loss on investments sold . . . . . . . . . . . . . . . . . . ( 5,111,771)
Net realized gain on financial futures contracts . . . . . . . . . . . . 1,645,744
Change in net unrealized appreciation/depreciation of
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 54,450,304)
Change in net unrealized appreciation/depreciation of
financial futures contracts . . . . . . . . . . . . . . . . . . . . . . ( 995,312)
------------
Net Realized and Unrealized Loss
on Investments and Financial
Futures Contracts . . . . . . . . . . . . . . . . . . . ( 58,911,643)
---------------------------------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations . . . . . . . . . . . . . . . ($31,607,608)
===========================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993
------------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,304,035 $ 26,311,507
Net realized gain (loss) on investments sold and financial futures contracts . . . . . . . . . ( 3,466,027) 20,280,139
Change in net unrealized appreciation/depreciation of investments . . . . . . . . . . . . . . . ( 55,445,616) 9,374,845
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . ( 31,607,608) 55,966,491
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.5664 and $0.5753 per share, respectively) . . . . . . . . . . . . . . . . . . . ( 27,204,549) ( 26,311,507)
Class B ** - ($0.4918 and none per share, respectively) . . . . . . . . . . . . . . . . . . . ( 99,486) -----
Distributions from net realized gain on investments sold and financial futures contracts
Class A - ($0.0296 and $0.4085 per share, respectively) . . . . . . . . . . . . . . . . . . . ( 1,428,226) ( 19,000,656)
Class B ** - ($0.0296 and none per share, respectively) . . . . . . . . . . . . . . . . . . . ( 2,933) -----
------------ ------------
Total Distributions to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 28,735,194) ( 45,312,163)
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 9,489,468) 48,896,970
------------ ------------
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,281,060 481,729,762
------------ ------------
End of period (including undistributed net investment income of $2,796 and none, respectively). $471,448,790 $541,281,060
============ ============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994 1993
--------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,879,115 $ 40,764,635 6,665,255 $ 75,747,360
Shares issued to shareholders in reinvestment of distributions . . 2,197,798 22,752,848 3,270,449 36,758,053
---------- ------------ ------------ ------------
6,076,913 63,517,483 9,935,704 112,505,413
Less shares repurchased . . . . . . . . . . . . . . . . . . . . . . ( 7,437,980) ( 77,174,049) ( 5,585,543) ( 63,608,443)
---------- ------------ ------------ ------------
Net increase (decrease) . . . . . . . . . . . . . . . . . . . . . . ( 1,361,067) ($ 13,656,566) 4,350,161 $ 48,896,970
========== ============ ============ ============
CLASS B**
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427,397 $ 4,462,005
Shares issued to shareholders in reinvestment of distributions . . 8,004 81,368
---------- ------------
435,401 4,543,373
Less shares repurchased . . . . . . . . . . . . . . . . . . . . . . ( 36,196) ( 376,275)
---------- ------------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . . . . 399,205 $ 4,167,098
========== ============
</TABLE>
** Class B shares commenced operations on January 3, 1994.
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE
FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD, REINVESTED AND
REDEEMED DURING THE LAST TWO PERIODS, ALONG WITH THE CORRESPONDING DOLLAR
VALUES.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . $ 11.21 $ 10.96 $ 11.01 $ 10.59 $ 10.68
-------- -------- -------- -------- --------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . 0.57 0.58 0.63 0.68 0.68
Net Realized and Unrealized Gain (Loss) on Investments and
Financial Futures Contracts . . . . . . . . . . . . . . . . . . . ( 1.22) 0.66 0.26 0.57 ( 0.05)
-------- -------- -------- -------- --------
Total from Investment Operations . . . . . . . . . . . . . . . ( 0.65) 1.24 0.89 1.25 0.63
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income . . . . . . . . . . . . . . ( 0.57) ( 0.58) ( 0.63) ( 0.68) ( 0.68)
Distributions from Net Realized Gain on Investments Sold and
Financial Futures Contracts . . . . . . . . . . . . . . . . . . ( 0.03) ( 0.41) ( 0.31) ( 0.15) ( 0.04)
-------- -------- -------- -------- --------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . ( 0.60) ( 0.99) ( 0.94) ( 0.83) ( 0.72)
-------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . $ 9.96 $ 11.21 $ 10.96 $ 11.01 $ 10.59
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (c) . . . . . . . . . . ( 5.90%) 11.53% 8.35% 12.18% 6.15%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's Omitted) . . . . . . . . . . . . . $467,475 $541,281 $481,730 $422,311 $377,738
Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . . 1.11% 1.27% 1.28% 1.21% 1.23%
Ratio of Net Investment Income to Average Net Assets . . . . . . . 5.43% 5.06% 5.71% 6.23% 6.43%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . 74% 81% 93% 56% 59%
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIODS INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DIVIDENDS AND TOTAL INVESTMENT RETURNS OF THE FUND. IT SHOWS HOW THE
FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 3, 1994
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31,
1994
--------------
<S> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.17(a)
--------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49
Net Realized and Unrealized Loss on Investments and Financial Futures Contracts . . . . . . . . . ( 1.19)
--------
Total from Investment Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 0.70)
--------
Less Distributions:
Dividends from Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 0.49)
Distributions from Net Realized Gain on Investments Sold and Financial Futures Contracts . . . ( 0.03)
--------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 0.52)
--------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.95
========
Total Investment Return at Net Asset Value (c) . . . . . . . . . . . . . . . . . . . . . . . . . ( 6.23%)(b)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,974
Ratio of Expenses to Average Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.83%*
Ratio of Net Investment Income to Average Net Assets . . . . . . . . . . . . . . . . . . . . . . 4.88%*
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74%
</TABLE>
* On an annualized basis.
(a) Initial price to commence operations.
(b) Not annualized.
(c) Without the expense reduction, total investment return would have been
lower.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
SCHEDULE OF INVESTMENTS
December 31, 1994
- --------------------------------------------------------------------------------
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY
TAX-EXEMPT INCOME FUND ON DECEMBER 31, 1994. IT'S DIVIDED INTO THREE MAIN
CATEGORIES: TAX-EXEMPT LONG-TERM BONDS, TAX-EXEMPT SHORT-TERM NOTES AND
SHORT-TERM INVESTMENTS. THE TAX-EXEMPT BONDS AND NOTES ARE FURTHER BROKEN DOWN
BY STATE. UNDER EACH STATE IS A LIST OF THE SECURITIES OWNED BY THE FUND.
SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED
LAST.
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
TAX-EXEMPT LONG-TERM BONDS
ALABAMA (0.43%)
Birmingham, City of,
GO Ref Ser 1985 . . . . . . . . . . . . . . . . . . . . . . . . . 9.800% 10/01/11 AA $ 1,920 $ 2,026,522 9.28%
------------
ALASKA (1.08%)
Alaska Housing Finance Corp,
Ins Mtg Prog 1990 1st Ser . . . . . . . . . . . . . . . . . . . . 7.750 12/01/14 A+ 1,000 1,029,010 7.53
Ins Mtg Prog 1990 1st Ser . . . . . . . . . . . . . . . . . . . . 7.800 12/01/30 A+ 1,380 1,423,304 7.56
Alaska, State of,
Cert of Part In Rent 1985 Ser A . . . . . . . . . . . . . . . . . 9.700 10/01/07 AAA 2,500 2,633,425 9.21
------------
5,085,739
------------
ARIZONA (0.52%)
Salt River Project Agricultural Improvement and Power District,
Salt River Proj Elec Sys Rev Ref Ser 1993C . . . . . . . . . . . 5.250 01/01/19 AA *3,000 2,453,550 6.42
------------
CALIFORNIA (2.10%)
Central Valley Financing Auth,
Cogeneration Proj Rev Carson Ice Gen Proj 1993 Ser . . . . . . . 6.200 07/01/20 BBB- *3,000 2,571,540 7.23
Los Angeles County Transportation Commission,
Sales Tax Rev Ser 1991 A . . . . . . . . . . . . . . . . . . . . 6.750 07/01/20 AAA 4,000 4,267,440 6.33
Los Angeles, County of,
Cert of Part Civic Center Heating & Refrigeration Plant Proj . . 8.000 06/01/10 A 1,000 1,094,100 7.31
Sacramento County Sanitation District Finance Auth,
Rev Ser 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . 4.750 12/01/23 AA 2,750 1,978,900 6.60
------------
9,911,980
------------
COLORADO (1.04%)
Colorado Housing Finance Auth,
Single Family Rev 1985 Ser C . . . . . . . . . . . . . . . . . . 9.375 03/01/12 AAA** 195 201,419 9.08
Colorado Springs, City of,
Util Sys Rev Ser 1991C . . . . . . . . . . . . . . . . . . . . . 6.750 11/15/21 AAA 2,665 2,675,287 6.72
Denver, City and County of,
Airport Sys Rev Ser 1985 . . . . . . . . . . . . . . . . . . . . 8.875 08/01/15 BB 1,000 1,016,900 8.73
Airport Sys Rev Ser 1985 . . . . . . . . . . . . . . . . . . . . 9.250 08/01/20 BB 1,000 1,022,180 9.05
------------
4,915,786
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
CONNECTICUT (0.34%)
Connecticut State Health and Educational Facilities Auth,
Rev Ser D Quinnipiac College Iss . . . . . . . . . . . . . . . . 6.000% 07/01/23 BBB- $*2,000 $ 1,600,100 7.50%
-----------
FLORIDA (8.46%)
Broward, County of,
Resource Recovery Rev Ser 1984 Ses Broward Co. L.P. South Proj . 7.950 12/01/08 A 4,590 4,948,204 7.37
Citrus, County of,
Poll Control Ref Rev Ser 1992A Florida Pwr Corp Crystal River
Pwr Plant Proj . . . . . . . . . . . . . . . . . . . . . . . . 6.625 01/01/27 A+ 6,180 6,063,260 6.75
Poll Control Ref Rev Ser 1992B Florida Pwr Corp Crystal River
Pwr Plant Proj . . . . . . . . . . . . . . . . . . . . . . . . 6.350 02/01/22 A+ 7,000 6,661,690 6.67
Florida, State of,
Full Faith & Credit State Board of Ed Pub Ed Cap Outlay Ser
1991C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.625 06/01/22 AA *4,500 4,477,500 6.66
Full Faith & Credit State Board of Ed Cap Outlay Ser 1994A . . . 5.750 01/01/12 AA *3,000 2,776,320 6.21
Sunshine Skyway Rev Ser of 1984 . . . . . . . . . . . . . . . . . 10.250 06/01/10 AAA 1,250 1,407,787 9.10
Hillsborough, County of,
Ref Util Rev Ser 1991A . . . . . . . . . . . . . . . . . . . . . 7.000 08/01/14 BBB+ 1,245 1,246,482 6.99
Jacksonville Electric Auth,
St. Johns River Pwr Park Sys Ref Rev Iss Two Ser Seven . . . . . 5.750 10/01/12 AA *2,000 1,835,260 6.27
Orlando Utilities Commission,
Wtr & Elec Sub Rev Ser 1989D . . . . . . . . . . . . . . . . . . 6.750 10/01/17 AA- 2,200 2,260,500 6.57
Palm Beach, County of,
Solid Waste Ind'L Dev Rev Ser 1993A Okeelanta Pwr Lp Proj . . . . 6.850 02/15/21 NR 4,000 3,619,280 7.57
Solid Waste Ind'L Dev Rev Ser 1994A Osceola Pwr Lp Proj . . . . . 6.850 01/01/14 NR *5,000 4,602,650 7.44
-----------
39,898,933
-----------
GEORGIA (2.83%)
Atlanta, City of,
GO Ser A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.000 12/01/16 AA *3,000 2,809,230 6.41
Spec Facil Rev Ser B Delta Airlines Proj Ser 1989B . . . . . . . 7.900 12/01/18 BB *2,075 2,033,334 8.06
Wtr & Swr Rev Ser 1993 . . . . . . . . . . . . . . . . . . . . . 5.000 01/01/15 AA- 3,150 2,546,838 6.18
Georgia Municipal Electric Auth,
Pwr Rev Ser M . . . . . . . . . . . . . . . . . . . . . . . . . . 8.375 01/01/20 A+ 1,000 1,063,650 7.87
Metropolitan Atlanta Rapid Transportation Auth,
Sales Tax Rev Ser O . . . . . . . . . . . . . . . . . . . . . . . 6.550 07/01/20 AA- 5,000 4,873,150 6.72
-----------
13,326,202
-----------
HAWAII (0.32%)
Hawaii, State of,
Airport Sys Rev Second Ser of 1991 . . . . . . . . . . . . . . . 7.000 07/01/18 A- 1,500 1,488,045 7.06
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
ILLINOIS (6.07%)
Chicago, City of,
Chicago-O'Hare Int'L Airport Gen Airport Rev 1990 Ser A . . . . . 7.500% 01/01/16 A+ $ 2,000 $ 2,124,280 7.06%
Chicago-O'Hare Int'L Airport Int'L Terminal Spec Rev Ser 1990A . 6.500 01/01/18 A 1,000 944,320 6.88
Chicago-O'Hare Int'L Airport Int'L Terminal Spec Rev Ser 1992 . . 6.750 01/01/12 AAA 3,000 2,990,970 6.77
Chicago-O'Hare Int'L Airport Spec Facil Rev Ser 1990 Lufthansa
German Airlines Proj . . . . . . . . . . . . . . . . . . . . . 7.125 05/01/18 AAA 1,000 999,850 7.13
Chicago-O'Hare Int'L Airport Spec Facil Rev Ser 1990A American
Airlines Proj . . . . . . . . . . . . . . . . . . . . . . . . . 7.875 11/01/25 BB+ 3,000 2,919,990 8.09
Skyway Toll Bridge Rev Ref Ser 1994 . . . . . . . . . . . . . . . 6.750 01/01/14 BBB- *5,400 5,097,330 7.15
Skyway Toll Bridge Rev Ref Ser 1994 . . . . . . . . . . . . . . . 6.750 01/01/17 BBB- *4,000 3,711,480 7.27
Illinois Health Facilities Auth,
Rev Ref Ser 1992 Mercy Hosp & Medical-Center . . . . . . . . . . 7.000 01/01/07 A- 1,500 1,482,060 7.08
Illinois, State of,
Civic Center Spec State Oblig Ser 1991 . . . . . . . . . . . . . 6.250 12/15/20 AAA 3,000 2,817,300 6.66
Sales Tax Rev Ser V . . . . . . . . . . . . . . . . . . . . . . . 6.375 06/15/17 AAA *5,750 5,521,380 6.64
------------
28,608,960
------------
INDIANA (1.74%)
Indianapolis Local Public Improvement Bond Bank,
Ser 1992 D . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.750 02/01/20 A+ 8,500 8,210,830 6.99
------------
KANSAS (2.26%)
Johnson County Water District No. 1,
Wtr Rev Ref Ser 1984 . . . . . . . . . . . . . . . . . . . . . . 10.500 12/01/08 AAA 2,000 2,343,240 8.96
Kansas City, City of,
Util Sys Ref & Imp Rev Ser 1994 . . . . . . . . . . . . . . . . . 6.375 09/01/23 AAA *8,500 8,286,225 6.54
------------
10,629,465
------------
KENTUCKY (0.82%)
Kenton County Airport Board,
Rev Spec Facil Delta Airlines Proj Ser 1992A . . . . . . . . . . 6.750 02/01/02 BB *2,000 1,934,460 6.98
Rev Spec Facil Delta Airlines Proj Ser 1992A . . . . . . . . . . 7.500 02/01/12 BB *2,000 1,923,640 7.80
------------
3,858,100
------------
LOUISIANA (2.02%)
St. Charles, Parish of,
Poll Control Rev Ser 1991 Louisiana Pwr & Light Co Proj . . . . . 7.500 06/01/21 BBB+ 4,000 3,931,920 7.63
West Feliciana, Parish of,
Poll Control Rev Gulf States Util Co Proj III Remarketed
12-1-1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.700 12/01/14 BBB- *3,600 3,607,020 7.69
Poll Control Rev Gulf States Util Co. Proj III Remarketed
12-1-1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.700 12/01/14 AA- *2,000 2,003,900 7.69
------------
9,542,840
------------
MARYLAND (0.80%)
Maryland State Health & Higher Educational Facilities Auth,
Ref Rev Francis Scott Key Medical Center . . . . . . . . . . . . 5.000 07/01/18 AAA *1,750 1,386,437 6.31
Northeast Maryland Waste Disposal Auth,
Solid Waste Rev Montgomery County Resource Recovery Proj Ser
1993A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.300 07/01/16 A** 2,650 2,364,648 7.06
------------
3,751,085
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
MASSACHUSETTS (11.44%)
Massachusetts Bay Transportation Auth,
Gen Trans Sys 1990 Ser B . . . . . . . . . . . . . . . . . . . . 7.875% 03/01/21 AAA $ 2,000 $ 2,251,560 7.00%
Massachusetts Health and Educational Facilities Auth,
Rev Brigham & Women's Hosp Iss Ser D . . . . . . . . . . . . . . 6.750 07/01/24 A+ 2,450 2,347,516 7.04
Rev Lowell Gen Hosp Iss Ser A . . . . . . . . . . . . . . . . . . 8.400 06/01/11 BAA1** 1,100 1,154,560 8.00
Rev Mass Institute of Technology Ser H . . . . . . . . . . . . . 5.000 07/01/23 AA+ 3,000 2,345,700 6.39
Rev New England Deaconess Hosp Iss Ser D . . . . . . . . . . . . 6.625 04/01/12 A 2,000 1,885,220 7.03
Rev New England Deaconess Hosp Iss Ser D . . . . . . . . . . . . 6.875 04/01/22 A 7,960 7,560,886 7.24
Rev New England Medical Center Hosp Iss Ser E . . . . . . . . . . 7.875 07/01/11 A- 1,950 2,119,416 7.25
Rev Worcester Polytechnic Institute Ser E . . . . . . . . . . . . 6.750 09/01/11 A+ *2,000 2,006,780 6.73
Massachusetts Housing Finance Agency,
Hsg Proj Ser A . . . . . . . . . . . . . . . . . . . . . . . . . 6.150 10/01/15 AAA 2,000 1,837,600 6.69
Multi-Family Hsg 1985 Ser A . . . . . . . . . . . . . . . . . . . 8.875 07/01/18 AAA 870 895,769 8.62
Multi-Family Mtg Rev 1985 Ser A . . . . . . . . . . . . . . . . . 9.125 12/01/20 AAA 980 1,017,808 8.79
Residential Dev 1992 Ser A . . . . . . . . . . . . . . . . . . . 6.900 11/15/24 AAA 2,700 2,662,713 7.00
Residential Dev 1992 Ser E . . . . . . . . . . . . . . . . . . . 6.250 11/15/12 AAA 5,000 4,722,350 6.62
Single Family Hsg Ser 8 . . . . . . . . . . . . . . . . . . . . . 7.700 06/01/17 A+ 1,500 1,549,995 7.45
Single Family Mtg Purchase 1985 Ser A . . . . . . . . . . . . . . 9.500 12/01/16 A+ 275 286,564 9.12
Massachusetts Municipal Wholesale Electric Co,
Pwr Supply Sys Rev 1992 Ser A A Pub Corp of The Commonwealth
of Mass . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.750 07/01/08 BBB+ *3,000 3,056,790 6.62
Pwr Supply Sys Rev 1992 Ser B A Pub Corp of The Commonwealth
of Mass . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.750 07/01/17 BBB+ 4,405 4,330,027 6.87
Massachusetts Turnpike Auth,
Turnpike Rev 1993 Ser A . . . . . . . . . . . . . . . . . . . . . 5.000 01/01/20 A+ 3,500 2,712,920 6.45
Turnpike Rev 1993 Ser A . . . . . . . . . . . . . . . . . . . . . 5.125 01/01/23 AAA 2,500 1,978,850 6.47
Massachusetts Water Resource Auth,
Gen Rev Ref Ser 1992B . . . . . . . . . . . . . . . . . . . . . . 5.500 11/01/15 AAA *3,000 2,598,510 6.35
Massachusetts, Commonwealth of,
GO Consol Loans Ser B . . . . . . . . . . . . . . . . . . . . . . 6.000 08/01/14 A+ *2,000 1,850,440 6.48
Plymouth, County of,
Cert of Part Ser A Plymouth County Correctional Facil Proj . . . 7.000 04/01/22 A- 2,750 2,751,485 7.00
------------
53,923,459
------------
MICHIGAN (0.88%)
Detroit, City of,
Wtr Supply Sys Rev Ref Ser 1993 . . . . . . . . . . . . . . . . . 4.750 07/01/19 AAA *1,000 748,480 6.35
Michigan Housing Development Auth,
Rental Hsg Rev 1992 Ser A . . . . . . . . . . . . . . . . . . . . 6.600 04/01/12 A+ 3,500 3,418,625 6.76
------------
4,167,105
------------
MINNESOTA (1.06%)
Robbinsdale Hospital,
Rev Ser B North Memorial Medical Center . . . . . . . . . . . . . 5.450 05/15/13 AAA 2,000 1,747,420 6.24
Saint Paul Housing and Redevelopment Auth,
Sales Tax Rev Ser 1993 Civic Center Proj . . . . . . . . . . . . 5.450 11/01/13 A 2,500 2,151,375 6.33
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
MINNESOTA (CONTINUED)
Southern Minnesota Municipal Power Agency,
Pwr Supply Sys Rev Ser 1988A . . . . . . . . . . . . . . . . . . . . 8.125% 01/01/18 AAA $ 1,000 $1,088,970 7.46%
----------
4,987,765
----------
MISSISSIPPI (0.04%)
Mississippi Home Corp,
Single Family Sr Rev Ref Ser 1990A . . . . . . . . . . . . . . . . . 9.250 03/01/12 AAA 160 171,011 8.65
----------
MISSOURI (0.36%)
Missouri Housing Development Commission,
Single Family Mtg Rev 1991 Ser A . . . . . . . . . . . . . . . . . . 7.375 08/01/23 AAA 1,415 1,436,324 7.27
Missouri State Environmental Improvement and Energy Resource,
Floating/Fixed Rate Poll Control Rev Ser 1984G-4 Assoc
Elec Coop Proj . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.250 11/15/14 A+ 265 280,314 7.80
----------
1,716,638
----------
NEBRASKA (3.26%)
Lincoln Electric System,
Rev Ref Ser A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.250 09/01/15 AA 1,550 1,306,417 6.23
Omaha Public Power District,
Elec Sys Rev 1989 Ser A . . . . . . . . . . . . . . . . . . . . . . . 6.800 02/01/17 AA 4,000 4,243,920 6.41
Elec Sys Rev 1992 Ser A . . . . . . . . . . . . . . . . . . . . . . . 6.500 02/01/17 AA 4,500 4,736,295 6.18
Elec Sys Rev 1992 Ser B . . . . . . . . . . . . . . . . . . . . . . . 6.200 02/01/17 AA *2,250 2,133,450 6.54
Elec Sys Rev 1993 Ser B . . . . . . . . . . . . . . . . . . . . . . . 5.700 02/01/17 AA 1,810 1,602,719 6.44
Elec Sys Rev 1993 Ser D . . . . . . . . . . . . . . . . . . . . . . . 5.300 02/01/16 AA *1,600 1,348,848 6.29
----------
15,371,649
----------
NEW JERSEY (1.87%)
Cape May County Municipal Utilities Auth,
Swr Rev Ref Ser 1985 . . . . . . . . . . . . . . . . . . . . . . . . 9.000 01/01/16 AAA 2,000 2,109,100 8.53
New Jersey Turnpike Auth,
Turnpike Rev 1991 Ser C . . . . . . . . . . . . . . . . . . . . . . . 6.500 01/01/16 A *4,500 4,436,685 6.59
Turnpike Rev Ser 1984 . . . . . . . . . . . . . . . . . . . . . . . . 10.375 01/01/03 AAA 1,900 2,256,953 8.73
----------
8,802,738
----------
NEW MEXICO (0.33%)
Albuquerque, City of,
Gross Receipts Tax Adjustable/Fixed Rate Demand Rev Ser December 1984
Airport Rev Supported Sub Lien . . . . . . . . . . . . . . . . . . 8.250 07/01/14 AA 1,500 1,567,350 7.90
----------
NEW YORK (17.09%)
Metropolitan Transportation Auth,
Transit Facil 1987 Serv Contract Ser 1 . . . . . . . . . . . . . . . 8.500 07/01/17 AAA 1,000 1,095,010 7.76
Transit Facil 1987 Serv Contract Ser 2 . . . . . . . . . . . . . . . 8.000 07/01/18 AAA 1,500 1,648,260 7.28
New York Local Government Assistance Corp,
Rev Ser B Pub Benefit Corp . . . . . . . . . . . . . . . . . . . . . 6.250 04/01/21 A *3,000 2,795,400 6.71
Ser 1992 A Pub Benefit Corp . . . . . . . . . . . . . . . . . . . . . 6.875 04/01/19 A 4,200 4,217,850 6.85
Ser 1993 B Pub Benefit Corp . . . . . . . . . . . . . . . . . . . . . 5.375 04/01/16 A *3,000 2,500,710 6.45
Ser 1993 C Pub Benefit Corp . . . . . . . . . . . . . . . . . . . . . 5.500 04/01/17 A 2,000 1,695,640 6.49
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Dormitory Auth,
City Univ Ref 1988B Iss . . . . . . . . . . . . . . . . . . . . . . . 8.125% 07/01/08 BBB $ 1,000 $ 1,092,720 7.44%
Cornell Univ Rev Ser 1990A . . . . . . . . . . . . . . . . . . . . . 7.375 07/01/30 AA 1,000 1,045,870 7.05
Court Facil Lease Rev Ser A . . . . . . . . . . . . . . . . . . . . . 5.375 05/15/16 BBB+ *12,750 10,312,200 6.65
State Univ Ed Facil Rev Ser 1990B . . . . . . . . . . . . . . . . . . 7.500 05/15/11 BBB+ 500 527,080 7.11
New York State Energy Research and Development Auth,
Elec Facil Rev Ser 1990 A Long Island Lighting Co Proj . . . . . . . 7.150 06/01/20 BB+ 6,000 5,497,020 7.80
Elec Facil Rev Ser 1991 A Consol Edison Co of NY Inc Proj . . . . . . 7.500 01/01/26 A+ 2,000 2,025,960 7.40
New York State Environmental Facilities Corp,
State Wtr Poll Control Revolving Fund Rev Ser 1990 A . . . . . . . . 7.500 06/15/12 A 3,770 3,973,882 7.12
New York State Housing Finance Agency,
State Univ Construction Ref 1986 Ser A . . . . . . . . . . . . . . . 8.000 05/01/11 AAA 2,000 2,279,200 7.02
New York State Medical Care Facilities Finance Agency,
Mental Hlth Serv Facil Imp Rev 1990 Ser B . . . . . . . . . . . . . . 7.875 08/15/08 BBB+ 500 534,720 7.36
Mental Hlth Serv Facil Imp Rev 1990 Ser B . . . . . . . . . . . . . . 7.875 08/15/20 BBB+ 460 485,341 7.46
Mental Hlth Serv Facil Imp Rev 1991 Ser A . . . . . . . . . . . . . . 7.750 08/15/11 BBB+ 540 572,929 7.30
Mental Hlth Serv Facil Imp Rev 1991 Ser A . . . . . . . . . . . . . . 7.750 08/15/11 AAA 1,460 1,633,419 6.93
Mental Hlth Serv Facil Imp Rev 1992 Ser F . . . . . . . . . . . . . . 6.500 08/15/12 BBB+ *4,720 4,419,242 6.94
Mental Hlth Serv Facil Imp Rev 1993 Ser F . . . . . . . . . . . . . . 5.375 02/15/14 BBB+ *1,500 1,221,960 6.60
Mental Hlth Serv Facil Imp Rev 1993 Ser F . . . . . . . . . . . . . . 5.250 02/15/19 BBB+ 3,000 2,306,670 6.83
Mental Hlth Serv Facil Imp Rev 1994 Ser E . . . . . . . . . . . . . . 6.250 08/15/19 BBB+ *3,500 3,118,710 7.01
New York State Mortgage Agency,
Rev Homeownership Ser BB-2 . . . . . . . . . . . . . . . . . . . . . 7.950 10/01/15 AA** 1,135 1,184,758 7.62
New York State Power Auth,
Gen Purpose Ser V . . . . . . . . . . . . . . . . . . . . . . . . . . 7.875 01/01/13 AAA 2,400 2,550,480 7.41
Gen Purpose Ser V . . . . . . . . . . . . . . . . . . . . . . . . . . 8.000 01/01/17 AA 1,850 1,988,750 7.44
New York State Urban Development Corp,
Rev Ref Correctional Facil 1993 Ser A . . . . . . . . . . . . . . . . 5.500 01/01/16 BBB *1,500 1,230,210 6.71
New York, City of,
GO Fiscal 1991 Ser D . . . . . . . . . . . . . . . . . . . . . . . . 8.000 08/01/04 A- 250 267,000 7.49
GO Fiscal 1991 Ser F . . . . . . . . . . . . . . . . . . . . . . . . 8.200 11/15/03 A- 1,250 1,370,188 7.48
GO Fiscal 1992 Ser A . . . . . . . . . . . . . . . . . . . . . . . . 7.750 08/15/12 A- 2,000 2,078,580 7.46
GO Fiscal 1992 Ser A . . . . . . . . . . . . . . . . . . . . . . . . 7.750 08/15/17 A- 400 414,416 7.48
GO Fiscal 1992 Ser D . . . . . . . . . . . . . . . . . . . . . . . . 7.700 02/01/09 A- 1,000 1,044,320 7.37
GO Fiscal 1992 Ser H . . . . . . . . . . . . . . . . . . . . . . . . 7.000 02/01/08 A- 2,000 2,011,820 6.96
GO Fiscal 1995 Ser B . . . . . . . . . . . . . . . . . . . . . . . . 7.000 08/15/16 A- *3,000 2,947,230 7.13
New York, State of,
GO Fiscal 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.700 11/01/11 A- 590 598,944 6.60
Triborough Bridge and Tunnel Auth,
Gen Purpose Rev Ser L . . . . . . . . . . . . . . . . . . . . . . . . 8.125 01/01/12 A+ 1,750 1,904,683 7.47
Gen Purpose Rev Ser R . . . . . . . . . . . . . . . . . . . . . . . . 7.375 01/01/16 AAA 1,600 1,743,488 6.77
Spec Oblig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.250 01/01/12 AAA *2,000 1,942,980 6.43
Spec Oblig Ref Ser 1991B . . . . . . . . . . . . . . . . . . . . . . 6.875 01/01/15 A- 2,300 2,309,085 6.85
----------
80,586,725
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
NORTH CAROLINA (0.99%)
North Carolina Eastern Municipal Power Agency,
Rev Pwr Sys Ser G Remarketed 9-1-93 Ser G . . . . . . . . . . . . . . 5.750% 12/01/16 A- $*3,000 $2,512,260 6.87%
Rev Ser 1993A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.875 01/01/13 A- *2,500 2,166,450 6.78
----------
4,678,710
----------
OHIO (1.10%)
Cleveland Public Power System,
Elec Sys Rev Ser A First Mtg . . . . . . . . . . . . . . . . . . . . 7.000 11/15/24 AAA *4,000 4,103,280 6.82
Franklin, County of,
Hosp Facil Ref & Imp Rev Ser 1990B Riverside United Methodist
Hosp Proj . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.600 05/15/20 AA- 1,000 1,103,020 6.89
----------
5,206,300
----------
OKLAHOMA (1.84%)
Oklahoma Municipal Power Auth,
Pwr Supply Sys Rev Ser 1994A . . . . . . . . . . . . . . . . . . . . 4.750 01/01/22 AAA 2,250 1,685,385 6.34
Oklahoma Turnpike Auth,
Turnpike Sys 1st Sr Rev Ser 1989 . . . . . . . . . . . . . . . . . . 7.875 01/01/21 A+ 55 59,773 7.25
Turnpike Sys 1st Sr Rev Ser 1989 . . . . . . . . . . . . . . . . . . 7.875 01/01/21 A+ 1,745 1,918,087 7.16
Tulsa Municipal Airport Trust, Trustees of,
Rev Ser 1985 American Airlines Inc . . . . . . . . . . . . . . . . . 9.500 06/01/20 BB+ 3,000 3,159,600 9.02
Rev American Airlines Inc. . . . . . . . . . . . . . . . . . . . . . 7.375 12/01/20 BB+ *2,000 1,864,000 7.91
----------
8,686,845
----------
OREGON (0.96%)
Western Generation Agency,
Rev 1994 Ser A Wauna Cogeneration Proj . . . . . . . . . . . . . . . 7.125 01/01/21 NR *2,000 1,871,580 7.61
Rev 1994 Ser B Wauna Cogeneration Proj . . . . . . . . . . . . . . . 7.400 01/01/16 NR *2,800 2,657,564 7.80
----------
4,529,144
----------
PENNSYLVANIA (10.13%)
Allegheny County Industrial Development Auth,
Rev Ref Ser 1994A Environmental Imp USX Corp Proj 6.700 12/01/20 BB+ *5,000 4,513,850 7.42
Delaware County Industrial Development Auth,
Poll Control Rev Ref 1991 Ser A Philadelphia Elec Co Proj 7.375 04/01/21 BBB+ 6,095 6,107,007 7.36
Montgomery County Redevelopment Auth,
Multifamily Hsg Rev Ser A KBF Assoc L.P. Proj 6.400 07/01/14 NR 2,000 1,848,420 6.92
Pennsylvania Convention Center Auth,
Rev Ref Ser 1994A 6.700 09/01/14 BB *4,950 4,593,204 7.22
Pennsylvania Economic Development Finance Auth,
Resource Recovery Rev Ser 1994D Colver Proj 7.125 12/01/15 BBB- *7,000 6,632,710 7.52
Pennsylvania Intergovernmental Cooperation Auth,
Spec Tax Rev City of Philadelphia Funding Proj Ser 1993 5.750 06/15/15 A- *2,000 1,731,800 6.64
Pennsylvania State Turnpike Commission,
Turnpike Rev Ser N 6.500 12/01/13 A *2,840 2,818,416 6.55
Philadelphia Hospitals and Higher Education Facilities Auth,
Hosp Rev Ser 1993A Temple Univ Hosp Proj 6.625 11/15/23 BBB+ 8,000 7,008,160 7.56
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia, City of,
Gas Works Rev Fifteenth Ser Subseries 3 . . . . . . . . . . . . . . . 5.250% 08/01/15 BBB $*4,205 $ 3,360,047 6.57%
Gas Works Rev Fourteenth Ser . . . . . . . . . . . . . . . . . . . . 6.375 07/01/14 BBB *2,000 1,868,080 6.83
Gas Works Rev Fourteenth Ser . . . . . . . . . . . . . . . . . . . . 6.375 07/01/26 BBB *5,150 4,667,548 7.03
Pittsburgh Water & Sewer Auth,
Wtr & Swr Sys Rev Ref Ser 1993 A . . . . . . . . . . . . . . . . . . 4.750 09/01/16 AAA 2,000 1,529,140 6.21
York County Solid Waste and Refuse Auth,
Adj Tender Ind'L Dev Rev Ser of 1985 Resource Recovery Proj . . . . . 8.200 12/01/14 AA- 1,000 1,052,790 7.79
-----------
47,731,172
-----------
SOUTH CAROLINA (0.69%)
South Carolina Public Service Auth,
Santee Cooper Elec Sys Exp Rev Ref 1988 Ser A . . . . . . . . . . . . 7.875 07/01/21 A+ 550 575,157 7.53
Santee Cooper Elec Sys Exp Rev Ref 1988 Ser A . . . . . . . . . . . . 7.875 07/01/21 A+ 2,615 2,697,006 7.64
-----------
3,272,163
-----------
SOUTH DAKOTA (0.23%)
South Dakota Health and Educational Facilities Auth,
Rev Ser 1989 Sioux Valley Hosp Iss . . . . . . . . . . . . . . . . . 7.625 11/01/13 AA- 75 78,389 7.30
Rev Ser 1989 Sioux Valley Hosp Iss . . . . . . . . . . . . . . . . . 7.625 11/01/13 AA- 925 1,004,347 7.02
-----------
1,082,736
-----------
TENNESSEE (2.11%)
Memphis-Shelby County Airport Auth,
Rev Ref Federal Express Corp . . . . . . . . . . . . . . . . . . . . 6.750 09/01/12 BBB *3,500 3,380,685 6.99
Metropolitan Nashville Airport Auth,
Spec Facil Rev Ser 1985 American Airlines Inc Proj . . . . . . . . . 9.875 10/01/05 BB+ 1,000 1,048,540 9.42
The Industrial Development Board of Maury County,
Multi-Modal Interchangeable Rate Poll Control Ref Rev Saturn Corp Proj
Ser 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.500 09/01/24 BBB+* 6,000 5,514,720 7.07
-----------
9,943,945
-----------
TEXAS (4.33%)
Alliance Airport Auth Inc.,
Spec Facil Rev Ser 1990 American Airlines Inc Proj 7.500 12/01/29 BB+ 2,000 1,887,300 7.95
Austin, City of,
Combined Util Sys Rev Ser 1986A 8.000 11/15/16 AAA 1,250 1,400,975 7.14
Combined Util Sys Rev Ref Ser 1994 5.750 05/15/24 AAA *1,000 873,970 6.58
Brazos River Auth,
Coll Rev Ref Ser 1988B Houston Lighting & Pwr Co Proj 8.250 05/01/15 A 2,000 2,120,580 7.78
Dallas-Fort Worth International Airport,
Rev Delta Air Lines Inc 7.600 11/01/11 BB *3,000 2,881,500 7.91
Grapevine Industrial Developmental Corp,
Airport Rev Facil Imp American Airlines Inc Proj 9.250 12/01/12 BB+ *3,025 3,163,999 8.84
Gulf Coast Waste Disposal Auth,
Coll Rev Ref Houston Lighting & Pwr Co Proj Ser 1992A 6.375 04/01/12 AAA *1,800 1,776,618 6.46
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE MARKET+
- -------------------------- ---- ---- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
TEXAS (CONTINUED)
Harris County Health Facilities Development Corp,
Hosp Rev Ser 1988A St. Luke's Episcopal Hosp Proj . . . . . . . . . . 8.250% 02/15/08 AAA $ 1,000 $ 1,113,200 7.41%
Harris, County of,
Rev Ref Sr Lien Toll Road Ser 1994 . . . . . . . . . . . . . . . . . 5.375 08/15/20 AAA *3,350 2,791,789 6.45
Rev Ref Sr Lien Toll Road Ser 1994 . . . . . . . . . . . . . . . . . 5.000 08/15/16 AAA *3,000 2,407,020 6.23
-----------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,416,951
-----------
UTAH (0.67%)
Intermountain Power Agency,
Pwr Supply Rev Ref 1985 Ser A . . . . . . . . . . . . . . . . . . . . 10.000 07/01/09 AA 2,000 2,096,520 9.54
Pwr Supply Rev Ref 1985 Ser C . . . . . . . . . . . . . . . . . . . . 9.625 07/01/19 AA 1,000 1,041,560 9.24
-----------
3,138,080
-----------
VIRGINIA (1.76%)
Fairfax County Water Auth,
Wtr Rev Ser 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.000 04/01/16 AA- *2,900 2,322,929 6.24
Lynchburg City Industrial Development Auth,
Hosp Facil Rev Ref Centra Hlth Inc Ser 1988 Lynchburg Gen Hosp &
Virginia Baptist Hospital . . . . . . . . . . . . . . . . . . . . 8.125 01/01/16 A+ 500 537,775 7.55
Virginia Housing Development Auth,
Commonwealth Mtg 1988 Ser C-2 . . . . . . . . . . . . . . . . . . . . 8.000 01/01/38 A+ 1,000 1,032,330 7.75
Virginia Transportation Board,
Trans Contract Rev Ref Ser 1992 Rte 28 Proj . . . . . . . . . . . . . 6.500 04/01/18 AA 2,200 2,162,600 6.61
Trans Contract Rev Ref Ser 1993B Rte 58 Proj . . . . . . . . . . . . 5.625 05/15/13 AA *2,500 2,222,975 6.33
-----------
8,278,609
-----------
WASHINGTON (4.36%)
Seattle, City of,
Municipal Light & Pwr Rev 1994 . . . . . . . . . . . . . . . . . . . 6.625 07/01/16 AA *3,600 3,577,536 6.67
Washington Public Power Supply System,
Nuclear Proj No. 1 Ref Rev Ser 1989A . . . . . . . . . . . . . . . . 7.500 07/01/15 AA 1,455 1,492,481 7.31
Nuclear Proj No. 1 Ref Rev Ser 1989B . . . . . . . . . . . . . . . . 7.125 07/01/16 AA 1,500 1,525,695 7.01
Nuclear Proj No. 1 Ref Rev Ser 1990A . . . . . . . . . . . . . . . . 7.000 07/01/11 AA 4,450 4,488,582 6.94
Nuclear Proj No. 1 Ref Rev Ser 1991A . . . . . . . . . . . . . . . . 6.875 07/01/17 AA 1,250 1,222,738 7.03
Nuclear Proj No. 2 Ref Rev Ser 1990C . . . . . . . . . . . . . . . . 7.625 07/01/10 AAA 5,000 5,541,200 6.88
Nuclear Proj No. 3 Ref Rev Ser 1989B . . . . . . . . . . . . . . . . 7.250 07/01/15 AA 2,500 2,708,800 6.69
-----------
20,557,032
-----------
WISCONSIN (0.93%)
Wisconsin Public Power Inc,
Pwr Supply Sys Rev Ser 1990A . . . . . . . . . . . . . . . . . . . . . 7.400 07/01/20 AAA 4,000 4,387,800 6.75
-----------
TOTAL TAX-EXEMPT LONG TERM BONDS
(Cost $469,197,178) (97.26%) 458,512,064
------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST MATURITY (000'S) MARKET
STATE, ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- -------------------------- ---- ---- -------- -----
<S> <C> <C> <C> <C>
TAX-EXEMPT SHORT-TERM NOTES
LOUISIANA (0.21%)
Louisiana Recovery District,
Sales Tax Rev Ser 1988 . . . . . . . . . . . . . . . . . . . . . . . . 5.850%# 07/01/97 $ 1,000 $1,000,000
----------
NEW YORK (0.21%)
New York, City of
GO Fiscal 1993 Ser B . . . . . . . . . . . . . . . . . . . . . . . . . 4.800# 10/01/22 1,000 1,000,000
----------
TOTAL TAX-EXEMPT SHORT TERM NOTES ( 0.42%) 2,000,000
------ ----------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (0.02%)
Investment in a joint repurchase agreement transaction with Lehman Brothers
Inc., Dated 12-30-94, Due 01-03-95 (secured by U.S. Treasury Bonds, 9.25%
Due 02-15-16 and 8.125% Due 08-15-21, and U.S.
Treasury Notes, 5.50% Due 02-15-95 and 4.625% Due 08-15-95) - Note A . 5.850 01/03/95 96 96,000
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account Current Rate 3.00% . . . . . . . . . . 1,730
------------
TOTAL SHORT-TERM INVESTMENTS ( 0.02%) 97,730
------- ------------
TOTAL INVESTMENTS (97.70%) $460,609,794
------- ============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
* Securities, other than short term investments, newly added to the
portfolio, during the period ended December 31, 1994
** Credit ratings are rated by Moody's Investors Services or John Hancock
Advisers, Inc. where Standard & Poor's ratings are not available.
*** Credit ratings are unaudited.
NR Not rated.
+ The yield is not calculated in accordance with guidelines established by
the U.S. Securities Exchange Commission and is unaudited.
# Securities redeemable at par value at any time subject to prior
notification to issuer. Represents the rate in effect on December 31, 1994.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
Portfolio Concentration
- ------------------------------------------------------------------------------
THE TAX-EXEMPT INCOME FUND INVESTS PRIMARILY IN SECURITIES ISSUED BY THE VARIOUS
STATES AND THEIR VARIOUS POLITICAL SUBDIVISIONS. THE PERFORMANCE OF THE FUND IS
CLOSELY TIED TO ECONOMIC CONDITIONS WITHIN THE APPLICABLE STATES AND THE
FINANCIAL CONDITION OF THE STATES AND THEIR AGENCIES AND MUNICIPALITIES. THE
CONCENTRATION OF INVESTMENTS BY STATES AND CREDIT RATINGS FOR INDIVIDUAL
SECURITIES HELD BY THE FUND ARE SHOWN IN THE SCHEDULE OF INVESTMENTS. IN
ADDITION, THE CONCENTRATION OF INVESTMENTS CAN BE AGGREGATED BY VARIOUS SECTOR
CATEGORIES.
THE TABLE BELOW SHOWS THE PERCENTAGES OF THE FUND'S INVESTMENTS AT DECEMBER 31,
1994 ASSIGNED TO THE VARIOUS SECTOR CATEGORIES.
<TABLE>
<CAPTION>
MARKET VALUE AS A PERCENTAGE OF
SECTOR DISTRIBUTION THE FUND'S NET ASSETS:
- ------------------- ----------------------
<S> <C>
General Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.70%
Revenue Bonds - Certificate of Participation . . . . . . . . . . . . . . . . . . . . . . . . . 1.35
Revenue Bonds - Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
Revenue Bonds - Electric Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.64
Revenue Bonds - Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.82
Revenue Bonds - Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18
Revenue Bonds - Industrial Development Bond . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
Revenue Bonds - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.46
Revenue Bonds - Pollution Control Facilities . . . . . . . . . . . . . . . . . . . . . . . . . 9.78
Revenue Bonds - Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.56
Revenue Bonds - Water & Sewer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.54
-----
TOTAL TAX-EXEMPT LONG-TERM BONDS 97.26%
=====
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Tax-Exempt Income Fund (the "Fund") is a diversified open-end
investment management company registered under the Investment Company Act of
1940.
The Trustees have authorized the issuance of multiple classes of the
Fund, designated as Class A and Class B shares. The shares of each class
represent an interest in the same portfolio of investments of the Fund and have
equal rights to voting, redemption, dividends and liquidation, except that
certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class which bears distribution/service expenses under the
terms of a distribution plan, have exclusive voting rights regarding such
distribution plan. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $2,374,664 of capital
loss carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. If such carryforward is used by the Fund, no
capital gain distributions will be made. The carryforward expires December 31,
2002.
Additionally, net capital losses of $858,729 attributable to security
transactions occurring after October 31, 1994 are treated as arising on the
first day (January 1, 1995) of the Fund's next taxable year.
DIVIDENDS, DISTRIBUTIONS, AND INTEREST Interest income on investment securities
is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund with
respect to each class of shares will be calculated in the same manner, at the
same time and will be in the same amount, except for the effect of expenses that
may be applied differently to each class as explained previously.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes. Transfer
agent expenses and distribution/service fees, if any, are calculated daily at
the class level based on the appropriate net assets of each class and the
specificexpense rate(s) applicable of each class.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates. The
Fund will not engage in transactions in futures contracts for speculation, but
only for hedging or other permissible risk management purposes. The Fund's
ability to hedge successfully will depend on the Adviser's ability to predict
accurately the future direction of interest rate changes and other market
factors. At the time the Fund enters into a financial futures contract, it is
required to deposit with its custodian a specified amount of cash or U.S.
government securities, known as "initial margin", equal to a certain percentage
of the value of the financial futures contract being traded. Each day, the
futures contract is valued at the official settlement price of the board of
trade or U.S. commodities exchange. Subsequent payments, known as "variation
margin", to and from the broker are made on a daily basis as the market price of
the financial futures contract fluctuates. Daily variation margin adjustments,
arising from this "mark to market", are recorded by the Fund as unrealized gains
or losses.
When the contracts are closed, the Fund recognizes a gain or loss.
Risks of entering into futures contracts include the possibility that there may
be an illiquid market and/or that a change in the value of the contract may not
correlate with changes in the value of the underlying securities. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange.
For federal income tax purposes, the amount, character and timing of
the Fund's gains and/or losses can be affected as a result of futures
transactions.
At December 31, 1994, open positions in financial futures contracts
were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
- ---------- -------------- -------- ------------
<S> <C> <C> <C>
MAR 1995 150 Muni Bond SHORT ($554,687)
MAR 1995 150 U.S. Treasury Bond SHORT ( 440,625)
----------
($995,312)
==========
</TABLE>
At December 31, 1994, the Fund has deposited in a segregated account
$562,500 to cover margin requirements on open financial futures contracts.
PREMIUM AND DISCOUNT For tax-exempt issues, the Fund amortizes the amount paid
in excess of par value on securities purchased from either the date of purchase
or date of issue to date of sale, maturity or to next call date, if applicable.
The Fund accretes original issue discount from par value on securities purchased
from either the date of issue or the date of purchase over the life of the
security, as required by the Internal Revenue Code. The Fund records market
discount on bonds purchased after April 30, 1993 at the time of disposition.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of: (a) 0.55% of the first $500,000,000 of the
Fund's average daily net asset value, (b) 0.50% of the next $500,000,000, and
(c) 0.45% of the Fund's average daily net asset value in excess of
$1,000,000,000.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares, the fee payable to the
Adviser will be reduced to the extent of such excess, and the Adviser will make
additional arrangements necessary to eliminate any remaining excess expenses.
The current limits are 2.5% of the first $30,000,000 of the Fund's average daily
net asset value, 2.0% of the next $70,000,000, and 1.5% of the remaining average
daily net asset value. $94,444 of custodian fees have been reduced by balance
credits applied during the period ended December 31, 1994.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1,
1995, JH Funds was known as John Hancock Broker Distribution Services, Inc. For
the period ended December 31,
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
1994, JH Funds received net sales charges on sales of Class A shares of the Fund
in the amount of $1,188,012. Out of this amount, $142,733 was retained and used
for printing prospectuses, advertising, sales literature and other purposes,
$89,054 was paid as sales commissions and service fees to unrelated
broker-dealers and $956,225 was paid as sales commissions and service fees to
sales personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker
Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"). The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is the
indirect sole shareholder of Distributors and John Hancock Freedom Securities
Corporation and its subsidiaries, which include Tucker Anthony and Sutro, all of
which are broker-dealers.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from CDSC are paid to JH Funds and are used in whole or in part to defray its
expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended December 31,
1994, contingent deferred sales charges received by JH Funds amounted to $9,999.
In addition, to compensate JH Funds for the services it provides as
distributors of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments to JH Funds for
distribution and service expenses at an annual rate not to exceed 0.30% of Class
A average daily net assets and 1.00% of Class B average daily net assets to
reimburse JH Funds for its distribution and service costs. Up to a maximum of
0.25% of these payments may be service fees as defined by the amended Rules of
Fair Practice of the National Association of Securities Dealers, which became
effective July 7, 1993. Under the amended Rules of Fair Practice, curtailment of
a portion of the Fund's 12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. Prior to January 1, 1995, Investor Services was known
as John Hancock Fund Services, Inc. For the period ended December 31, 1994, the
Fund paid Investor Services a monthly transfer agent fee equivalent, on an
annual basis, to 0.20% and 0.22% of the average daily net asset value of Class A
and Class B shares of the Fund, respectively, plus out of pocket expenses
incurred by Investor Services on behalf of the Fund for proxy mailings.
Effective January 1, 1995, the Fund will pay transfer agent fees based on
transaction volume and the number of shareholder accounts.
Messrs. Edward J. Boudreau, Jr., Francis C. Cleary, Jr. (until
December 14, 1994), and Richard S. Scipione are directors and/or officers of
the Adviser, and/or its affiliates as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Income Fund
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended December 31, 1994, aggregated $365,620,763 and $383,714,903, respectively.
Purchases and proceeds from sales of short-term municipal obligations during the
period ended December 31, 1994, aggregated $2,500,000 and $2,000,000,
respectively. There were no purchases or sales of long-term obligations of the
U.S. government and its agencies during the period ended December 31, 1994.
The cost of investments owned at December 31, 1994 for Federal income
tax purposes was $471,533,780. Gross unrealized appreciation and depreciation of
investments aggregated $9,305,543 and $20,231,259, respectively, resulting in
net unrealized depreciation of $10,925,716.
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended December 31, 1994, the Fund has reclassified amounts to
reflect increases in accumulated net investment income and accumulated realized
loss on investments of $2,796. This represents the cumulative amounts necessary
to report these balances on a tax basis, excluding certain temporary
differences, as of December 31, 1994. Additional adjustments may be needed in
subsequent reporting periods. These reclassifications, which have no impact on
the net asset value of the Fund, are primarily attributable to certain
differences in the computation of distributable income and capital gains under
federal tax rules versus generally accepted accounting principles.
<PAGE>
John Hancock Funds - Tax-Exempt Income Fund
REPORTS OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Trustees and Shareholders of
John Hancock Tax-Exempt Income Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Tax-Exempt Income Fund (the "Fund"), including the schedule of
investments, as of December 31, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian and a broker. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of John Hancock Tax-Exempt Income Fund at December 31, 1994, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 13, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December 31,
1994.
The Fund designated distributions to shareholders of $1,431,200 as
long-term capital gain dividends. Shareholders were mailed a 1994 U.S. Treasury
Department Form 1099-DIV in January 1995 representing their proportionate share.
For specific information on exemption provisions in your state, consult
your local state tax office or your tax adviser.
Income dividends are 99.7% tax-exempt. Approximately 14% of the 1994
income dividends are subject to the alternative minimum tax. None of the income
was derived from U.S. Treasury obligations, or qualify for the corporate
dividends received deductions.
<PAGE>
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Registration Statement:
John Hancock Tax-Exempt Income Fund
Statement of Assets and Liabilities as of December 31, 1994.
Statement of Operations of the year ended December 31, 1994.
Statement of Changes in Net Assets for each of the two years ended
December 31.
Notes to Financial Statements.
Financial Highlights for each of the 10 years ended December 31, 1994.
Schedule of Investments as of December 31, 1994.
Report of Independent Auditors
(b) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibit
Index hereto and are incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is directly or indirectly controlled by or under common
control with Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of April 7, 1995, the number of record holders of shares of
Registrant as as follows:
TITLE OF CLASS NUMBER OF RECORD HOLDERS
TAX-EXEMPT INCOME
FUND
Class A Shares 27,883
Class B Shares 316
<PAGE>
ITEM 27. INDEMNIFICATION
Section 4.3 of Registrant's Declaration of Trust provides that (i)
every person who is, or has been, a Trustee, officer, employee or agent
of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise)
shall be indemnified by the Trust, or by one or more Series thereof if
the claim arises from his or her conduct with respect to only such
Series, to the fullest extent permitted by law against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof; and that (ii) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims, actions,
suits or proceedings (civil, criminal, or other, including appeals),
actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
However, no indemnification shall be provided to a Trustee or officer
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office; (ii) with respect to any matter as to which he shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust
or a Series thereof; (iii) in the event of a settlement or other
disposition not involving a final adjudication resulting in a payment
by a Trustee or officer, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office by (A) a court by (B) a majority of the Non-
interested trustees or independent legal counsel, or (C) a vote of the
majority of the Fund's outstanding shares.
The rights of indemnification may be insured against by policies
maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing
contained herein shall affect any rights to indemnification to which
personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding may be advanced by the Trust or a Series thereof
before final disposition, if the recipient undertakes to repay the amount if it
is ultimately determined that he is not entitled to indemnification, provided
that either:
<PAGE>
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust
or Series thereof shall be insured against losses arising out
of any such advances; or (ii) a majority of the Non-interested
Trustees acting on the matter (provided that a majority of the
Non-interested Trustees act on the matter) or an independent
legal counsel in a written opinion shall determine, based upon
a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to
indemnification.
For purposes of indemnification Non-interested Trustee" is one
who (i) is not an "Interested Person" of the Trust (including
anyone who has been exempted from being an "Interested Person"
by any rule, regulation or order of the Commission), and (ii)
is not involved in the claim, action, suit or proceeding.
(b) Under the Distribution Agreement. Under Section 12 of the
Distribution Agreement, John Hancock Funds, Inc. ("John Hancock Funds" ) has
agreed to indemnify the Registrant and its Trustees, officers and controlling
persons against claims arising out of certain acts and statements of John
Hancock Funds.
Section 9(a) of the By-Laws of the Insurance Company provides, in effect,
that the Insurance Company will, subject to limitations of law, indemnify each
present and former director, officer and employee of the of the Insurance
Company who serves as a Trustee or officer of the Registrant at the direction or
request of the Insurance Company against litigation expenses and liabilities
incurred while acting as such, except that such indemnification does not cover
any expense or liability incurred or imposed in connection with any matter as to
which such person shall be finally adjudicated not to have acted in good faith
in the reasonable belief that his action was in the best interests of the
Insurance Company. In addition, no such person will be indemnified by the
Insurance Company in respect of any liability or expense incurred in connection
with any matter settled without final adjudication unless such settlement shall
have been approved as in the best interests of the Insurance Company either by
vote of the Board of Directors at a meeting composed of directors who have no
interest in the outcome of such vote, or by vote of the policyholders. The
Insurance Company may pay expenses incurred in defending an action or claim in
advance of its final disposition, but only upon receipt of an undertaking by the
person indemnified to repay such payment if he should be determined to be
entitled to indemnification.
Article IX of the respective By-Laws of John Hancock Funds and the
Adviser provide as follows:
"Section 9.01. Indemnity: Any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and the liability was not
incurred by reason of gross negligence or reckless disregard of the duties
involved in the conduct of his office, and expenses in connection therewith may
be advanced by the Corporation, all to the full extent authorized by the law."
"Section 9.02. Not Exclusive; Survival of Rights: The indemnification provided
by Section 9.01 shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such as person."
Insofar as indemnification for liabilities under the Securities Act of 1933 (the
"Act") may be permitted to Trustees, officers and controlling persons of
Registrant pursuant to the Registrant's Amended and Restated Articles of
Incorporation, Article 10.1 of the Registrant's By-Laws, The Underwriting
Agreement, the By-Laws of John Hancock Funds, the Adviser, or the Insurance
Company or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and Directors of the Investment
Adviser, reference is made to Forms ADV (801-8124) filed under the Investment
Advisers Act of 1940, herein incorporated by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) John Hancock Funds acts as principal underwriter for the Registrant and also
serves as principal underwriter or distributor of shares for John Hancock Cash
Reserve, Inc., John Hancock Bond Fund, John Hancock Capital Growth Fund, John
Hancock Current Interest, John Hancock Special Series, Inc., John Hancock
Tax-Free Bond Fund, John Hancock California Tax-Free Income Fund, John Hancock
Capital Series, John Hancock Limited-Term Government Fund, John Hancock
Tax-Exempt Income Fund, John Hancock Sovereign Investors Fund, Inc., John
Hancock Cash Management Fund, John Hancock Special Equities Fund, John Hancock
Sovereign Bond Fund, John Hancock Tax-Exempt Series, John Hancock Strategic
Series, John Hancock Technology Series, Inc. and John Hancock World Fund, John
Hancock Investment Trust, John Hancock Institutional Series Trust, Freedom
Investment Trust, Freedom Investment Trust II and Freedom Investment Trust III.
(b) The following table lists, for each director and officer of John Hancock
Funds, the information indicated.
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts
Robert H. Watts Director and Senior None
John Hancock Place Vice President
P.O. Box 111
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer and
Boston, Massachusetts Director
Robert G. Freedman Director Vice President, Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts
Stephen M. Blair Executive Vice President- None
101 Huntington Avenue Sales
Boston, Massachusetts
Thomas H. Drohan Senior Vice President Senior Vice President and
101 Huntington Avenue Secretary
Boston, Massachusetts
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer
David A. King Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
James B. Little Senior Vice President Senior Vice President and
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
<PAGE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President and Secretary Vice President,
101 Huntington Avenue Assistant Secretary
Boston, Massachusetts and Compliance Officer
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
<PAGE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Hugh A. Dunlap, Jr. Director None
101 Huntington Avenue
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records required to be maintained by it under
Rules 31a-1 (a), 31a-a(b), and 31a-2(a) under the Investment Company
Act of 1940 as its principal executive offices at 101 Huntington
Avenue, Boston Massachusetts 02199-7603. Certain records, including
records relating to Registrant's shareholders and the physical
possession of its securities, may be maintained pursuant to Rule 31a-3
at the main office of Registrant's Transfer Agent and Custodian.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended which relates to the
assistance to be rendered to shareholders by the Trustees of the Trust
in calling a meeting of shareholders for the purpose of voting upon the
question of the removal of a trustee.
(b) Not applicable.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus with respect to a series of the Registrant is delivered with
a copy of the latest annual report to shareholders with respect to that
series upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Boston, and the
Commonwealth of Massachusetts on the 25th day of April 1995.
JOHN HANCOCK TAX EXEMPT
INCOME TRUST
By:
-----------------------
Edward J. Boudreau, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933, the
Registration has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*
- ------------------------ Chairman April 25, 1995
Edward J. Boudreau, Jr. (Principal Executive Officer)
/s/ James B. Little
- ------------------------ Senior Vice President and Chief April 25, 1995
James B. Little Financial Officer (Principal
Financial and Accounting Officer)
*
- ------------------------ Trustee April 25, 1995
Dennis S. Aronowitz
*
- ------------------------ Trustee April 25, 1995
Richard P. Chapman
*
- ------------------------ Trustee April 25, 1995
William J. Cosgrove
<PAGE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*
- ------------------------ Trustee April 25, 1995
Gail D. Fosler
*
- ------------------------ Trustee April 25, 1995
Bayard Henry
*
- ------------------------ Trustee April 25, 1995
Richard S. Scipione
*
- ------------------------ Trustee April 25, 1995
Edward J. Spellman
*By: /s/ Thomas H. Drohan April 25, 1995
-------------------
Thomas H. Drohan,
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE NUMBER
- ----------- ------------------- -----------
99.B1 Amended and Restated Declaration of Trust of Registrant
dated December 8, 1993.
99.B2 Amended and Restated By-Laws of Registrant as adopted on
December 8, 1993.
99.B2.1 Amendment to By-Laws dated December 13, 1994.
99.B4 Specimen share certificate for the Registrant.
99.B5 Investment Management Contract between Registrant
and John Hancock Advisers, Inc. dated January 1, 1994.
99.B6 Distribution Agreement with Registrant and John
Hancock Broker Distribution Services, Inc.
dated August 1, 1991.
99.B6.1 Form of Soliciting Dealer Agreement between John
Hancock Broker Distribution Services, Inc.
and Selected Dealers.
99.B6.2 Form of Financial Institution Sales and Service
Agreement.
99.B7 None
99.B8 Master Custodian Agreement between John Hancock
Mutual Funds and Investors Bank and Trust Company
dated December 15, 1992.
99.B9 Transfer Agency Agreement between Registrant and
John Hancock Fund Services, Inc. dated January 1, 1991.
99.B10 Rule 24(e) opinion.
99.B11 Auditor's Consent.
99.B12 Financial Statement of the Registrant for the fiscal
year ended December 31, 1994 included in Parts A and B.
99.B13 None
99.B14 None
99.B15 Class A Distribution Plan between Registrant and John
Hancock Broker Services, Inc.
99.B15.1 Class B Distribution Plan between Registrant and John
Hancock Broker Services, Inc.
99.B16 Schedule for Computation of Yield and Total Return.
99.B17 Powers of Attorney dated December 13, 1984, April 23, 1988,
April 23, 1987, November 15, 1988, May 17, 1988,
October 23, 1990, October 15, 1991, January 1, 1994.
99.27 Class A Financial Data Schedules - Class A
99.27 Class B Financial Data Schedules - Class B
<PAGE>
EXHIBIT 99.B1
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
JOHN HANCOCK TAX-EXEMPT INCOME FUND
DECLARATION OF TRUST made this 8th day of December, 1993 by the undersigned
(together with all other persons from time to time duly elected, qualified and
serving as Trustees in accordance with the provisions of Article II hereof, the
"Trustees");
WHEREAS, pursuant to a Declaration of Trust dated November 30, 1976, as
amended, the Trustees established a trust for the investment and reinvestment of
funds contributed thereto;
WHEREAS, said Declaration of Trust provides that the beneficial interest in
the trust assets be divided into transferable shares of beneficial interest;
WHEREAS, said Declaration of Trust provides that all money and property
contributed to the trust established thereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the shares of
beneficial interest issued thereunder and subject to the provisions thereof; and
WHEREAS, the Trustees desire to amend and restate said Declaration of Trust
in its entirety, as hereinafter provided;
NOW, THEREFORE, the undersigned, being a majority of the Trustees of the
Trust, hereby amend and restate said Declaration of Trust in its entirety, as
follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "John Hancock
Tax-Exempt Income Fund" (the "Trust").
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Section 3.3 hereof.
(b) "By-laws" means the By-laws of the Trust referred to in Section 2.8
hereof, as from time to time amended.
(c) "Class" means any division of shares within a Series, which Class is or
has been established within such Series in accordance with the provisions of
Article V hereof.
(d) The terms "Commission" and "Interested Person" have the meanings given
them in the 1940 Act. Except as such term may be otherwise defined by the
Trustees in conjunction with the establishment of any Series or Class of Shares,
the term "vote of a majority of the Shares outstanding and entitled to vote"
shall have the same meaning as is assigned to the term "vote of a majority of
the outstanding voting securities" in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(f) "Declaration" means this Declaration of Trust as amended from time to
time. Reference in this Declaration of Trust to "Declaration," "hereof,"
"herein," or "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which any such word appears.
(g) "Distributor" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
(h) "Fund" or "Funds," individually or collectively, means the separate
Series of Shares of the Trust, together with the assets and liabilities assigned
thereto.
(i) "Fundamental Restrictions" means the investment restrictions set forth
in the Prospectus and designated as fundamental restrictions therein.
(j) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(m) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(n) "Prospectus" means the Prospectus and Statement of Additional
Information included in the Registration Statement of the Trust under the
Securities Act of 1933, as amended, as such Prospectus and Statement of
Additional Information may be amended or supplemented and filed with the
Commission from time to time.
(o) "Series" individually or collectively means the separately managed
component(s) of the Trust (or, if the Trust shall have only one such component,
then that one) as may be established and designated from time to time by the
Trustees pursuant to Section 5.11 hereof.
(p) "Shareholder" means a record owner of Outstanding Shares.
(q) "Shares" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all Series or of any Class within any Series (as the
context may require) which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares. "Outstanding Shares" means those
Shares shown from time to time on the books of the Trust or its Transfer Agent
as then issued and outstanding, but shall not include Shares which have been
redeemed or repurchased by the Trust and which are at the time held in the
treasury of the Trust.
(r) "Transfer Agent" means any Person other than the Trust who maintains
the Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(s) "Trust" means John Hancock Tax-Exempt Income Fund.
(t) The "Trustees" means the persons who have signed this Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who now serve or may from time to time be duly elected,
qualified and serving as trustees of the Trust in accordance with the provisions
of Article II hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in this capacity or their capacities as Trustees
hereunder.
(u) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of the Trust or the
Trustees, including any and all assets of or allocated to any Series or Class,
as the context may require.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
to exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference stocks; warrants; subscription
rights; profit-sharing interests or participations and all other contracts for
or evidences of equity interests; bonds, debentures, bills, time notes and all
other evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality or other
political subdivision, or any governmental or quasi-governmental agency or
instrumentality; and money market instruments including bank certificates of
deposit, finance paper, commercial paper, bankers' acceptances and all kinds of
repurchase agreements, of any corporation, company, trust, association, firm or
other business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; and the Trustees shall be deemed
to have the foregoing powers with respect to any additional securities in which
the Trust may invest should the Fundamental Restrictions be amended.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment
agreements, and forward foreign currency exchange contracts, to purchase and
sell options on securities, indices, currency or other financial assets, futures
contracts and options on futures contracts of all descriptions and to engage in
all types of hedging and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money and in this connection issue notes or other evidences
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related agreements whereby
the Trust may finance directly or indirectly any activity which is primarily
intended to result in sales of the Shares.
(i) To adopt on behalf of the Trust or any Series thereof an alternative
purchase plan providing for the issuance of multiple Classes of Shares (as
authorized herein at Section 5.11).
(j) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or arising out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine; provided, that the interest of the Trust therein is
deemed appropriately protected. The right, title and interest of the Trustees in
the Trust Property shall vest automatically in each Person who may hereafter
become a Trustee. Upon the termination of the term of office, resignation,
removal or death of a Trustee he shall automatically cease to have any right,
title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VI and VII and Section 5.11 hereof, to apply to
any such repurchase, redemption, retirement, cancellation or acquisition of
Shares any funds or property of the Trust, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or any
Series of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the same extent as such delegation is permitted by the
1940 Act.
Section 2.6. Collection and Payment. Subject to Section 5.11 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligation, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 2.7. Expenses. Subject to Section 5.11 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of this
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers
and employees of the Trust and of the Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided herein
or in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
entire number of Trustees then in office. The Trustees may adopt By-laws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-laws to the extent such power is not
reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11 hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the Trust
or any Series thereof; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) remove Trustees or fill vacancies in or add to
their number, elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, and appoint from their own
number, and terminate, any one or more committees which may exercise some or all
of the power and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust Property or the Trust Property of the
appropriate Series of the Trust, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, administrators,
distributors, selected dealers or independent contractors of the Trust against
all claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension,
profit-sharing, Share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust or any Series
thereof has dealings, including the Investment Adviser, Administrator,
Distributor, Transfer Agent and selected dealers, to such extent as the Trustees
shall determine; (g) guarantee indebtedness or contractual obligations of
others; (h) determine and change the fiscal year of the Trust or any Series
thereof and the method by which its accounts shall be kept; and (i) adopt a seal
for the Trust, but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
Section 2.10. Principal Transactions. Except in transactions not permitted
by the 1940 Act or rules and regulations adopted by the Commission, the Trustees
may, on behalf of the Trust, buy any securities from or sell any securities to,
or lend any assets of the Trust or any Series thereof to any Trustee or officer
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with the Investment Adviser, Distributor
or Transfer Agent or with any Interested Person of such Person; and the Trust or
a Series thereof may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
Section 2.11. Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim, or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
Section 2.12. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than two (2) nor more than fifteen (15).
Section 2.13. Election and Term. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.15 hereof, the Trustees may
succeed themselves and shall be elected by the Shareholders owning of record a
plurality of the Shares voting at a meeting of Shareholders on a date fixed by
the Trustees. Except in the event of resignations or removals pursuant to
Section 2.14 hereof, each Trustee shall hold office until such time as less than
a majority of the Trustees holding office have been elected by Shareholders. In
such event the Trustees then in office will call a Shareholders' meeting for the
election of Trustees. Except for the foregoing circumstances, the Trustees shall
continue to hold office and may appoint successor Trustees.
Section 2.14. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than two) with cause, by
the action of two-thirds of the remaining Trustees or by action of two-thirds of
the outstanding Shares of the Trust (for purposes of determining the
circumstances and procedures under which any such removal by the Shareholders
may take place, the provisions of Section 16(c) of the 1940 Act shall be
applicable to the same extent as if the Trust were subject to the provisions of
that Section). Upon the resignation or removal of a Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
Section 2.15. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of his death, retirement, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.15, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.16. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided, that in no case
shall fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive distribution contract
or contracts providing for the sale of the Shares to net the Trust or the
applicable Series of the Trust not less than the amount provided for in Section
7.1 of Article VII hereof, whereby the Trustees may either agree to sell the
Shares to the other party to the contract or appoint such other party as their
sales agent for the Shares, and in either case on such terms and conditions, if
any, as may be prescribed in the By-Laws, and such further terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Article III or of the By-Laws; and such contract may also
provide for the repurchase of the Shares by such other party as agent of the
Trustees.
Section 3.2. Advisory or Management Contract. Subject to approval by a vote
of a majority of the Shares outstanding and entitled to vote, the Trustees may
in their discretion from time to time enter into one or more investment advisory
or management contracts or, if the Trustees establish multiple Series, separate
investment advisory or management contracts with respect to one or more Series
whereby the other party or parties to any such contracts shall undertake to
furnish the Trust or such Series management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider desirable and
all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers, or any of them, under any such contracts
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of portfolio
securities and other investments of the Trust on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of such Investment Advisers, or
any of them (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such meeting the
approval or continuance of any such investment advisory or management contract.
If the Shareholders of any one or more of the Series of the Trust should fail to
approve any such investment advisory or management contract, the Investment
Adviser may nonetheless serve as Investment Adviser with respect to any Series
whose Shareholders approve such contract.
Section 3.3. Administration Agreement. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof and furnish the Trust or a Series or Class thereof with office
facilities, and shall be responsible for the ordinary clerical, bookkeeping and
recordkeeping services at such office facilities, and other facilities and
services, if any, and all upon such terms and conditions as the Trustees may in
their discretion determine.
Section 3.4. Service Agreement. The Trustees may in their discretion from
time to time enter into Service Agreements with respect to one or more Series or
Classes of Shares whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration plans
and service plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
Section 3.5. Transfer Agent. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 3.6. Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-laws of the Trust. The Trustees may also authorize
the Custodian to employ one or more sub-custodians, including such foreign banks
and securities depositories as meet the requirements of applicable provisions of
the 1940 Act, and upon such terms and conditions as may be agreed upon between
the Custodian and such sub-custodian, to hold securities and other assets of the
Trust and to perform the acts and services of the Custodian, subject to
applicable provisions of law and resolutions adopted by the Trustees.
Section 3.7. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or any
Series thereof is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization or of or for any
parent or affiliate of any organization, with which a contract of the
character described in Sections 3.1, 3.2, 3.3 or 3.4 above or for services
as Custodian, Transfer Agent or disbursing agent or for related services
may have been or may hereafter be made, or that any such organization, or
any parent or affiliate thereof, is a Shareholder of or has an interest in
the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections
3.1, 3.2, 3.3 or 3.4 above or for services as Custodian, Transfer Agent or
disbursing agent or for related services may have been or may hereafter be
made also has any one or more of such contracts with one or more other
partnerships, corporations, trusts, associations or other organizations, or
has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.8. Compliance with 1940 Act. Any contract entered into pursuant
to Sections 3.1 or 3.2 shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act (including any amendment thereof or other
applicable Act of Congress hereafter enacted), as modified by any applicable
order or orders of the Commission, with respect to its continuance in effect,
its termination and the method of authorization and approval of such contract or
renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust or any Series thereof. No Trustee, officer, employee or agent of the Trust
or any Series thereof shall be subject to any personal liability whatsoever to
any Person, other than to the Trust or its Shareholders, in connection with
Trust Property or the affairs of the Trust, save only that arising from bad
faith, willful misfeasance, gross negligence or reckless disregard of his duties
with respect to such Person; and all such Persons shall look solely to the Trust
Property, or to the Trust Property of one or more specific Series of the Trust
if the claim arises from the conduct of such Trustee, officer, employee or agent
with respect to only such Series, for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust or any Series
thereof, is made a party to any suit or proceeding to enforce any such liability
of the Trust or any Series thereof, he shall not, on account thereof, be held to
any personal liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such Shareholder
may become subject by reason of his being or having been a Shareholder, and
shall reimburse such Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) out of
the Trust Property for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only out of
assets of the one or more Series whose Shares were held by said Shareholder at
the time the act or event occurred which gave rise to the claim against or
liability of said Shareholder. The rights accruing to a Shareholder under this
Section 4.1 shall not impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee
or agent of the Trust or any Series thereof shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee, officer, employee or
agent of the Trust (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization in
which it has any interest as a shareholder, creditor or otherwise) shall be
indemnified by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, to the
fullest extent permitted by law against all liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer and
against amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust or a Series thereof;
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b)(ii) resulting in a
payment by a Trustee or officer, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement or other
disposition;
(B) based upon a review of readily available facts (as opposed to a
full trial-type inquiry) by (x) vote of a majority of the Non-interested
Trustees acting on the matter (provided that a majority of the Non-interested
Trustees then in office act on the matter) or (y) written opinion of independent
legal counsel; or
(C) a vote of a majority of the Shares outstanding and entitled to
vote (excluding Shares owned of record or beneficially by such individual).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust or any Series thereof other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or Series
thereof shall be insured against losses arising out of any such advances;
or
(ii) a majority of the Non-interested Trustees acting on the matter
(provided that a majority of the Non-interested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Non-interested Trustee" is one who (i) is
not an Interested Person of the Trust (including anyone who has been exempted
from being an Interested Person by any rule, regulation or order of the
Commission), and (ii) is not involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust or a Series thereof. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees or the Shareholders
individually. The Trustees shall at all times maintain insurance for the
protection of the Trust Property or the Trust Property of the applicable Series,
its Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust or a Series thereof, upon an opinion of counsel, or upon
reports made to the Trust or a Series thereof by any of its officers or
employees or by the Investment Adviser, the Administrator, the Distributor, the
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest
without par value. The number of such Shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the exclusive authority without
the requirement of Shareholder approval to establish and designate one or more
Series of shares and one or more Classes thereof as the Trustees deem necessary
or desirable. Each Share of any Series shall represent an equal proportionate
Share in the assets of that Series with each other Share in that Series. Subject
to the provisions of Section 5.11 hereof, the Trustees may also authorize the
creation of additional Series of Shares (the proceeds of which may be invested
in separate, independently managed portfolios) and additional Classes of Shares
within any Series. All Shares issued hereunder including, without limitation,
Shares issued in connection with a dividend in Shares or a split in Shares,
shall be fully paid and nonassessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to share or assume any losses of the Trust or suffer an assessment of any kind
by virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in this Declaration. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any Series
or Class of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may, from
time to time without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, except that only Shares previously contracted to be sold may be issued
during any period when the right of redemption is suspended pursuant to Section
6.8 hereof, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the treasury. The
Trustees may from time to time divide or combine the Shares of the Trust or, if
the Shares be divided into Series or Classes, of any Series or any Class thereof
of the Trust, into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust or in the Trust Property
allocated or belonging to such Series or Class. Contributions to the Trust or
any Series thereof may be accepted for, and Shares shall be redeemed as, whole
Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as provided herein or
in the By-laws, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
resold pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.13; (ii) with respect
to any investment advisory contract entered into pursuant to Section 3.2; (iii)
with respect to termination of the Trust or a Series or Class thereof as
provided in Section 8.2; (iv) with respect to any amendment of this Declaration
to the limited extent provided in Section 8.3; (v) with respect to any merger,
consolidation or sale of assets as provided in Section 8.4; (vi) with respect to
incorporation of the Trust to the extent and as provided in Section 8.5; (vii)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or a Series thereof or the Shareholders of either; (viii) with respect to any
plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940 Act,
and related matters; and (ix) with respect to such additional matters relating
to the Trust as may be required by this Declaration, the By-laws or any
registration of the Trust as an investment company under the 1940 Act with the
Commission (or any successor agency) or as the Trustees may consider necessary
or desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. On any matter submitted to a vote of
Shareholders, all Shares shall be voted by individual Series except (1) when
permitted by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series; and (2) when the Trustees have determined that the matter
affects only the interests of one or more Series or Classes thereof, then only
the Shareholders of such Series or Classes shall be entitled to vote thereon.
The Trustees may, in conjunction with the establishment of any further Series or
any Classes of Shares, establish conditions under which the several Series or
Classes of Shares shall have separate voting rights or no voting rights. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration or the By-laws to be taken by
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 5.10. Meetings of Shareholders. No annual or regular meetings of
Shareholders are required. Special meetings of the Shareholders, including
meetings involving only the holders of Shares of one or more but less than all
Series or Classes thereof, may be called at any time by the Chairman of the
Board, the President, or any Vice-President of the Trust, and shall be called by
the President or the Secretary at the request, in writing or by resolution, of a
majority of the Trustees, or at the written request of the holder or holders of
ten percent (10%) or more of the total number of Shares then issued and
outstanding of the Trust entitled to vote at such meeting. Meetings of the
Shareholders of any Series or Class thereof shall be called by the President or
the Secretary at the written request of the holder or holders of ten percent
(10%) or more of the total number of Shares then issued and outstanding of such
Series or Class entitled to vote at such meeting. Any such request shall state
the purpose of the proposed meeting.
Section 5.11. Series or Class Designation. (a) Without limiting the
authority of the Trustees set forth in Section 5.1 to establish and designate
any further Series, it is hereby confirmed that the Trust consists of the
presently Outstanding Shares of a single Series: John Hancock Tax-Exempt Income
Fund (the "Existing Series"), which consists of one Class of Shares.
(b) The Shares of the Existing Series and such Classes thereof herein
established and designated and any Shares of any further Series and Classes
thereof that may from time to time be established and designated by the Trustees
shall be established and designated, and the variations in the relative rights
and preferences as between the different Series and Classes shall be fixed and
determined, by the Trustees (unless the Trustees otherwise determine with
respect to further Series or Classes at the time of establishing and designating
the same); provided, that all Shares shall be identical except that there may be
variations so fixed and determined between different Series or Classes thereof
as to investment objective, policies and restrictions, purchase price, payment
obligations, distribution expenses, right of redemption, special and relative
rights as to dividends and on liquidation, conversion rights, exchange rights,
and conditions under which the several Series or Classes shall have separate
voting rights, all of which are subject to the limitations set forth below. All
references to Shares in this Declaration shall be deemed to be Shares of any or
all Series or Classes as the context may require.
(c) As to any existing Series and Classes, both heretofore and herein
established and designated, and any further division of Shares of the Trust into
additional Series or Classes, the following provisions shall be applicable:
(i) The number of authorized Shares and the number of Shares of each
Series or Class thereof that may be issued shall be unlimited. The Trustees
may classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any Series or Class into one or more Series or one
or more Classes that may be established and designated from time to time.
The Trustees may hold as treasury shares (of the same or some other Series
or Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Series or Class reacquired by the
Trust at their discretion from time to time.
(ii) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the
rights of creditors of such Series and except as may otherwise be required
by applicable tax laws, and shall be so recorded upon the books of account
of the Trust. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Series, the Trustees shall
allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all
Series for all purposes. No holder of Shares of any Series shall have any
claim on or right to any assets allocated or belonging to any other Series.
(iii) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series or the
appropriate Class or Classes thereof and all expenses, costs, charges and
reserves attributable to that Series or Class or Classes thereof, and any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The
assets of a particular Series of the Trust shall, under no circumstances,
be charged with liabilities attributable to any other Series or Class
thereof of the Trust. All persons extending credit to, or contracting with
or having any claim against a particular Series of the Trust shall look
only to the assets of that particular Series for payment of such credit,
contract or claim.
(iv) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 7.2 of this Declaration. Dividends and
distributions on Shares of a particular Series or Class may be paid with
such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the holders
of Shares of that Series or Class, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series or Class. All dividends and
distributions on Shares of a particular Series or Class shall be
distributed pro rata to the Shareholders of that Series or Class in
proportion to the number of Shares of that Series or Class held by such
Shareholders at the time of record established for the payment of such
dividends or distributions.
(v) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series or Class thereof shall be entitled to receive his pro rata share of
distributions of income and capital gains made with respect to such Series
or Class net of expenses. Upon redemption of his Shares or indemnification
for liabilities incurred by reason of his being or having been a
Shareholder of a Series or Class, such Shareholder shall be paid solely out
of the funds and property of such Series of the Trust. Upon liquidation or
termination of a Series or Class thereof of the Trust, Shareholders of such
Series or Class thereof shall be entitled to receive a pro rata share of
the net assets of such Series. A Shareholder of a particular Series of the
Trust shall not be entitled to participate in a derivative or class action
on behalf of any other Series or the Shareholders of any other Series of
the Trust.
(vi) On each matter submitted to a vote of Shareholders, all Shares of
all Series and Classes shall vote as a single class; provided, however,
that (1) as to any matter with respect to which a separate vote of any
Series or Class is required by the 1940 Act or is required by attributes
applicable to any Class or is required by any Rule 12b-1 plan, such
requirements as to a separate vote by that Series or Class shall apply, (2)
to the extent that a matter referred to in (1) above, affects more than one
Class or Series and the interests of each such Class or Series in the
matter are identical, then, subject to (3) below, the Shares of all such
affected Classes or Series shall vote as a single class; (3) as to any
matter which does not affect the interests of a particular Series or Class,
only the holders of Shares of the one or more affected Series or Classes
shall be entitled to vote; and (4) the provisions of the following sentence
shall apply. On any matter that pertains to any particular Class of a
particular Series or to any Class expenses with respect to any Series which
matter may be submitted to a vote of Shareholders, only Shares of the
affected Class or that Series, as the case may be, shall be entitled to
vote except that: (i) to the extent said matter affects Shares of another
Class or Series, such other Shares shall also be entitled to vote, and in
such case Shares of the affected Class or Series, as the case may be, shall
be voted in the aggregate together with such other Shares; and (ii) to the
extent that said matter does not affect Shares of a particular Class of
such Series, said Shares shall not be entitled to vote (except where
otherwise required by law or permitted by the Trustees acting in their sole
discretion) even though the matter is submitted to a vote of the
Shareholders of any other Class or Series.
(vii) Except as otherwise provided in this Article V, the Trustees
shall have the power to determine the designations, preferences,
privileges, payment obligations, limitations and rights, including voting
and dividend rights, of each Class and Series of Shares. Subject to
compliance with the requirements of the 1940 Act, the Trustees shall have
the authority to provide that the holders of Shares of any Series or Class
shall have the right to convert or exchange said Shares into Shares of one
or more Series or Classes of Shares in accordance with such requirements,
conditions and procedures as may be established by the Trustees.
(viii) The establishment and designation of any Series or Class of
Shares shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation
and the relative rights and preferences of such Series or Class, or as
otherwise provided in such instrument. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Trustees may by an instrument executed by a majority of
their number abolish that Series or Class and the establishment and
designation thereof. Each instrument referred to in this section shall have
the status of an amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by virtue
of having become a Shareholder, shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. (a) All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust. The
Trust may require any Shareholder to pay a sales charge to the Trust, the
underwriter, or any other person designated by the Trustees upon redemption or
repurchase of Shares in such amount and upon such conditions as shall be
determined from time to time by the Trustees.
(b) The Trust shall redeem the Shares of the Trust or any Series or Class
thereof at the price determined as hereinafter set forth, upon the appropriately
verified written application of the record holder thereof (or upon such other
form of request as the Trustees may determine) at such office or agency as may
be designated from time to time for that purpose by the Trustees. The Trustees
may from time to time specify additional conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares in the Trust's then effective
Prospectus.
Section 6.2. Price. Shares shall be redeemed at a price based on their net
asset value determined as set forth in Section 7.1 hereof as of such time as the
Trustees shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be based on the net
asset value of such Shares next determined as set forth in Section 7.1 hereof
after receipt of such application. The amount of any contingent deferred sales
charge or redemption fee payable upon redemption of Shares may be deducted from
the proceeds of such redemption.
Section 6.3. Payment. Payment of the redemption price of Shares of the
Trust or any Series or Class thereof shall be made in cash or in property to the
Shareholder at such time and in the manner, not inconsistent with the 1940 Act
or other applicable laws, as may be specified from time to time in the Trust's
then effective Prospectus, subject to the provisions of Section 6.4 hereof.
Notwithstanding the foregoing, the Trustees may withhold from such redemption
proceeds any amount arising (i) from a liability of the redeeming Shareholder to
the Trust or (ii) in connection with any federal or state tax withholding
requirements.
Section 6.4. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 6.8 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or of any
Series or Class thereof, the rights of Shareholders (including those who shall
have applied for redemption pursuant to Section 6.1 hereof but who shall not yet
have received payment) to have Shares redeemed and paid for by the Trust or a
Series or Class thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right so
suspended may, during the period of such suspension, by appropriate written
notice of revocation at the office or agency where application was made, revoke
any application for redemption not honored and withdraw any Share certificates
on deposit. The redemption price of Shares for which redemption applications
have not been revoked shall be based on the net asset value of such Shares next
determined as set forth in Section 7.1 after the termination of such suspension,
and payment shall be made within seven (7) days after the date upon which the
application was made plus the period after such application during which the
determination of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trustees, in their
sole discretion, may cause the Trust to redeem all of the Shares of one or more
Series or Classes thereof held by any Shareholder if the value of such Shares is
less than the minimum amount established from time to time by the Trustees.
Section 6.7. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of Outstanding Shares
of the Trust or of any Series of the Trust pursuant to the provisions of Section
7.3.
Section 6.8. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust or a Series
thereof of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Trust or a Series thereof fairly to determine the
value of its net assets, or (iv) during any other period when the Commission may
for the protection of Shareholders of the Trust by order permit suspension of
the right of redemption or postponement of the date of payment or redemption;
provided, that applicable rules and regulations of the Commission shall govern
as to whether the conditions prescribed in (ii), (iii), or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an end,
except that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in (ii) or
(iii) shall have expired (as to which in the absence of an official ruling by
the Commission, the determination of the Trustees shall be conclusive). In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the net asset
value existing after the termination of the suspension as described in Section
6.4 hereof.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The net asset value of each Outstanding Share
of the Trust or of each Series or Class thereof shall be determined on such days
and at such time or times as the Trustees may determine. The value of the assets
of the Trust or any Series thereof may be determined (i) by a pricing service
which utilizes electronic pricing techniques based on general institutional
trading, (ii) by appraisal of the securities owned by the Trust or any Series
thereof, (iii) in certain cases, at amortized cost, or (iv) by such other method
as shall be deemed to reflect the fair value thereof, determined in good faith
by or under the direction of the Trustees. From the total value of said assets,
there shall be deducted all indebtedness, interest, taxes, payable or accrued,
including estimated taxes on unrealized book profits, expenses and management
charges accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities which shall be
deemed appropriate, as incurred by or allocated to the Trust or any Series or
Class of the Trust. The resulting amount which shall represent the total net
assets of the Trust or Series or Class thereof shall be divided by the number of
Shares of the Trust or Series or Class thereof outstanding at the time and the
quotient so obtained shall be deemed to be the net asset value of the Shares of
the Trust or Series or Class thereof. The net asset value of the Shares shall be
determined at least once on each business day, as of the close of regular
trading on the New York Stock Exchange or as of such other time or times as the
Trustees shall determine. The power and duty to make the daily calculations may
be delegated by the Trustees to the Investment Adviser, the Administrator, the
Custodian, the Transfer Agent or such other Person as the Trustees by resolution
may determine. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act. It shall not be a violation of
any provision of this Declaration if Shares are sold, redeemed or repurchased by
the Trust at a price other than one based on net asset value if the net asset
value is affected by one or more errors inadvertently made in the pricing of
portfolio securities or in accruing income, expenses or liabilities.
Section 7.2. Distributions to Shareholders. (a) The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or of a
Series or Class thereof such proportion of the net profits, surplus (including
paid-in surplus), capital, or assets of the Trust or of such Series or Class as
they may deem proper. Such distributions may be made in cash or property
(including without limitation any type of obligations or assets of the Trust or
Series or Class thereof), and the Trustees may distribute ratably among the
Shareholders of the Trust or Series or Class thereof additional Shares of the
Trust or Series or Class thereof issuable hereunder in such manner, at such
times, and on such terms as the Trustees may deem proper. Such distributions may
be among the Shareholders of the Trust or Series or Class thereof at the time of
declaring a distribution or among the Shareholders of the Trust or Series or
Class thereof at such other date or time or dates or times as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, Outstanding Shares shall exclude Shares for
which orders have been placed subsequent to a specified time on the date the
distribution is declared or on the next preceding day if the distribution is
declared as of a day on which Boston banks are not open for business, all as
described in the Trust's then effective Prospectus. The Trustees may always
retain from the net profits such amount as they may deem necessary to pay the
debts or expenses of the Trust or a Series or Class thereof or to meet
obligations of the Trust or a Series or Class thereof, or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees shall deem appropriate. The Trustees may in their
discretion determine that an account administration fee or other similar charge
may be deducted directly from the income or other distributions paid on Shares
to a Shareholder's account in each Series or Class.
(b) Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gain distributions, respectively, additional amounts sufficient to
enable the Trust or a Series or Class thereof to avoid or reduce liability for
taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.11 hereof, the net income
of the Series and Classes thereof of the Trust shall be determined in such
manner as the Trustees shall provide by resolution. Expenses of the Trust or of
a Series or Class thereof, including the advisory or management fee, shall be
accrued each day. Each Class shall bear only expenses relating to its Shares and
an allocable share of Series expenses in accordance with such policies as may be
established by the Trustees from time to time and as are not inconsistent with
the provisions of this Declaration or of any applicable document filed by the
Trust with the Commission or of the Internal Revenue Code of 1986, as amended.
Such net income may be determined by or under the direction of the Trustees as
of the close of trading on the New York Stock Exchange on each day on which such
market is open or as of such other time or times as the Trustees shall
determine, and, except as provided herein, all the net income of any Series or
Class of the Trust, as so determined, may be declared as a dividend on the
Outstanding Shares of such Series or Class. If, for any reason, the net income
of any Series or Class of the Trust determined at any time is a negative amount,
the Trustees shall have the power with respect to such Series or Class (i) to
offset each Shareholder's pro rata share of such negative amount from the
accrued dividend account of such Shareholder, or (ii) to reduce the number of
Outstanding Shares of such Series or Class by reducing the number of Shares in
the account of such Shareholder by that number of full and fractional Shares
which represents the amount of such excess negative net income, or (iii) to
cause to be recorded on the books of the Trust an asset account in the amount of
such negative net income, which account may be reduced by the amount, provided
that the same shall thereupon become the property of the Trust with respect to
such Series or Class and shall not be paid to any Shareholder, of dividends
declared thereafter upon the Outstanding Shares of such Series or Class on the
day such negative net income is experienced, until such asset account is reduced
to zero. The Trustees shall have full discretion to determine whether any cash
or property received shall be treated as income or as principal and whether any
item of expense shall be charged to the income or the principal account, and
their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much if any of the value thereof shall be treated as income, the balance, if
any, to be treated as principal.
Section 7.4. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VII, but subject to Section 5.11
hereof, the Trustees may prescribe, in their absolute discretion, such other
bases and times for determining the per Share net asset value of the Shares of
the Trust or a Series or Class thereof or net income of the Trust or a Series or
Class thereof, or the declaration and payment of dividends and distributions as
they may deem necessary or desirable. Without limiting the generality of the
foregoing, the Trustees may establish several Series or Classes of Shares in
accordance with Section 5.11, and declare dividends thereon in accordance with
Section 5.11(c)(iv).
ARTICLE VIII
DURATION; TERMINATION OF TRUST OR A SERIES OR CLASS;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article VIII.
Section 8.2. Termination of the Trust or a Series or a Class. The Trust or
any Series or Class thereof may be terminated by (i) the affirmative vote of the
holders of not less than two-thirds of the Shares outstanding and entitled to
vote and present in person or by proxy at any meeting of Shareholders of the
Trust or the appropriate Series or Class thereof, (ii) by an instrument or
instruments in writing without a meeting, consented to by the holders of
two-thirds of the Shares of the Trust or a Series or Class thereof; provided,
however, that, if such termination is recommended by the Trustees, the vote or
written consent of the holders of a majority of the Shares of the Trust or a
Series or Class thereof outstanding and entitled to vote shall be sufficient
authorization, or (iii) notice to Shareholders by means of an instrument in
writing signed by a majority of the Trustees, stating that a majority of the
Trustees has determined that the continuation of the Trust or a Series or a
Class thereof is not in the best interest of such Series or such Class, the
Trust or their respective shareholders as a result of such factors or events
adversely affecting the ability of such Series or such Class or the Trust to
conduct its business and operations in an economically viable manner. Such
factors and events may include (but are not limited to) the inability of a
Series or Class or the Trust to maintain its assets at an appropriate size,
changes in laws or regulations governing the Series or Class or the Trust or
affecting assets of the type in which such Series or Class or the Trust invests
or economic developments or trends having a significant adverse impact on the
business or operations of such Series or Class or the Trust. Upon the
termination of the Trust or of a Series or Class:
(i) The Trust, Series or Class shall carry on no business except for
the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust,
Series or Class and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust, Series or Class
shall have been wound up, including the power to fulfill or discharge the
contracts of the Trust, Series or Class, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of the
remaining Trust Property or Trust Property allocated or belonging to such
Series or Class to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business; provided, that any sale,
conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property or Trust Property allocated or
belonging to such Series or Class that requires Shareholder approval in
accordance with Section 8.4 hereof shall receive the approval so required;
and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or the remaining property of the
terminated Series or Class, in cash or in kind or partly each, among the
Shareholders of the Trust or the Series or Class according to their
respective rights.
(b) After termination of the Trust, Series or Class and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust and file with the Office of the Secretary
of The Commonwealth of Massachusetts an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties with respect to the Trust or the terminated
Series or Class, and the rights and interests of all Shareholders of the Trust
or of the terminated Series or Class shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended by a
vote of a majority of Trustees, without approval of the Shareholders, except
that no amendment can be made by the Trustees to impair any voting or other
rights of shareholders prescribed by federal or state law. Nothing contained in
this Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(b) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Trustees or by the
Shareholders as aforesaid or a copy of the Declaration, as amended, and executed
by a majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge into or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property or Trust Property allocated or belonging
to such Series, including its good will, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Shareholders called
for the purpose by the affirmative vote of the holders of two-thirds of the
Shares of the Trust or such Series outstanding and entitled to vote, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of two-thirds of the Shares of the Trust or such Series; provided,
however, that, if such merger, consolidation, sale, lease or exchange is
recommended by the Trustees, the vote or written consent of the holders of a
majority of the Shares of the Trust or such Series outstanding and entitled to
vote shall be sufficient authorization; and any such merger, consolidation,
sale, lease or exchange shall be deemed for all purposes to have been
accomplished under and pursuant to Massachusetts law.
Section 8.5. Incorporation. The Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all or any portion of the Trust Property or of the Trust Property
allocated or belonging to a Series of the Trust or to carry on any business in
which the Trust shall directly or indirectly have any interest, and to sell,
convey and transfer all or any portion of the Trust Property or of the Trust
Property allocated or belonging to such Series to any such corporation, trust,
association or organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust or such Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring all or a portion of the Trust Property to such organization or
entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of
each Series a written financial report of the transactions of the Trust,
including financial statements which shall at least annually be certified by
independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Execution and Filing. This Declaration and any amendment
hereto shall be filed in the office of the Secretary of State of The
Commonwealth of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Each amendment so filed shall be accompanied
by a certificate signed and acknowledged by a Trustee stating that such action
was duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its execution. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and filed with the Secretary of State of The
Commonwealth of Massachusetts. A restated Declaration shall, upon execution, be
conclusive evidence of all amendments contained therein and may hereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
Section 10.2. Governing Law. This Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
Section 10.3. Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying (a) the number or identity of Trustees or Shareholders,
(b) the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact
that the number of Trustees or Shareholders present at any meeting or executing
any written instrument satisfies the requirements of this Declaration, (e) the
form of any By-laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986, as amended, or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
date first shown above.
/s/ Edward J. Boudreau, Jr.
Edward J. Boudreau, Jr.
as Trustee and not individually
34 Swan Road
Winchester, Massachusetts 01890
<PAGE>
/s/ Dennis S. Aronowitz
Dennis S. Aronowitz
as Trustee and not individually
29 Lee Road
Chestnut Hill, Massachusetts 02167
/s/ Richard P. Chapman, Jr.
Richard P. Chapman, Jr.
as Trustee and not individually
107 Upland Road
Brookline, Massachusetts 02146
/s/ Francis Cleary, Jr.
Francis C. Cleary, Jr.
as Trustee and not individually
58 Avalon Road
Needham, Massachusetts 02192
/s/ William J. Cosgrove
William J. Cosgrove
as Trustee and not individually
20 Buttonwood Place
Saddle River, New Jersey 07458
/s/ Bayard Henry
Bayard Henry
as Trustee and not individually
65 Goddard Avenue
Brookline, Massachusetts 02146
/s/ Richard S. Scipione
Richard S. Scipione
as Trustee and not individually
4 Sentinel Road
Hingham, Massachusetts 02043
/s/ Edward J. Spellman
Edward J. Spellman
as Trustee and not individually
175 East Centre Street
Apartment 501
Quincy, Massachusetts 02169
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY, MASSACHUSETTS December 8, 1993
Then personally appeared the above-named persons, Edward J. Boudreau, Jr.,
Dennis S. Aronowitz, Richard P. Chapman, Jr., Francis C. Cleary, Jr., William J.
Cosgrove, Bayard Henry, Richard S. Scipione and Edward J. Spellman, who
acknowledged the foregoing instrument to be their free act and deed.
Before me,
s/s/ Ann Marie Kalapinski
Notary Public
My commission expires: 10/20/00
<PAGE>
EXHIBIT 99.B2
BY-LAWS
OF
JOHN HANCOCK TAX-EXEMPT INCOME FUND
As Adopted on December 8, 1993
<PAGE>
Table Of Contents
-----------------
Page
----
ARTICLE I -- Definitions ........................................... 1
ARTICLE II -- Offices and Seal ........................................... 1
Section 2.1 Principal Office........................... 1
Section 2.2 Other Offices.............................. 1
Section 2.3 Seal....................................... 1
ARTICLE III -- Shareholders ........................................... 2
Section 3.1 Meetings................................... 2
Section 3.2 Place of Meeting........................... 2
Section 3.3 Notice of Meetings......................... 2
Section 3.4 Shareholders Entitled to Vote.............. 2
Section 3.5 Quorum..................................... 3
Section 3.6 Treatment of Abstentions................... 3
Section 3.7 Voting of Shares Held in Street Name....... 3
Section 3.8 Adjournment................................ 3
Section 3.9 Proxies.................................... 3
Section 3.10 Inspection of Records...................... 4
Section 3.11 Record Dates............................... 4
ARTICLE IV -- Meetings of Trustees........................................... 4
Section 4.1 Regular Meetings........................... 4
Section 4.2 Special Meetings........................... 4
Section 4.3 Notice..................................... 4
Section 4.4 Waiver of Notice........................... 5
Section 4.5 Quorum, Adjournment and Voting............. 5
Section 4.6 Compensation............................... 5
ARTICLE V -- Executive Committee and Other
Committees ........................................... 5
Section 5.1 How Constituted............................ 5
Section 5.2 Powers of the Executive
Committee................................ 6
Section 5.3 Other Committees of Trustees............... 6
Section 5.4 Proceedings, Quorum and Manner of
Acting................................... 6
Section 5.5 Other Committees........................... 6
ARTICLE VI -- Officers ........................................... 6
Section 6.1 General.................................... 6
Section 6.2 Election, Term of Office and
Qualifications........................... 7
Section 6.3 Resignations and Removals.................. 7
Section 6.4 Vacancies and Newly Created
Offices.................................. 7
Section 6.5 Chairman of the Board...................... 7
Section 6.6 President.................................. 8
Section 6.7 Vice President............................. 8
Section 6.8 Chief Financial Officer, Treasurer
and Assistant Treasurers................. 8
Section 6.9 Secretary and Assistant
Secretaries.............................. 9
Section 6.10 Subordinate Officers....................... 9
Section 6.11 Remuneration............................... 9
Section 6.12 Surety Bonds............................... 9
ARTICLE VII -- Execution of Instruments; Voting of
Securities..................................................10
Section 7.1 Execution of Instruments...................10
Section 7.2 Voting of Securities.......................10
ARTICLE VIII -- Fiscal Year, Accountants.....................................10
Section 8.1 Fiscal Year................................10
Section 8.2 Accountants................................10
ARTICLE IX -- Amendments 11
Section 9.1 General....................................11
<PAGE>
BY-LAWS
OF
JOHN HANCOCK TAX-EXEMPT INCOME FUND
ARTICLE I
Definitions
-----------
The terms "Class," "Commission," "Declaration," "Interested Person," "1940
Act," "Series," "Shareholder," "Shares," "Trust," "Trust Property" and
"Trustees" have the meanings given them in the Amended and Restated Declaration
of Trust of John Hancock Sovereign Bond Fund dated December __, 1993, as amended
from time to time.
ARTICLE II
Offices And Seal
----------------
Section 2.1. Principal Office. The principal office of the Trust shall be
located in the City of Boston, The Commonwealth of Massachusetts.
Section 2.2. Other Offices. The Trust may establish and maintain such other
offices and places of business within or without The Commonwealth of
Massachusetts as the Trustees may from time to time determine.
Section 2.3. Seal. The seal of the Trust shall be circular in form and
shall bear the name of the Trust, the year of its organization, and the words
"Common Seal" and "A Massachusetts Voluntary Association." The form of the seal
shall be subject to alteration by the Trustees and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or otherwise
reproduced. Any officer or Trustee of the Trust shall have authority to affix
the seal of the Trust to any document requiring the same but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE III
Shareholders
------------
Section 3.1. Meetings. A Shareholders' meeting for the election of Trustees
and the transaction of other proper business shall be held when authorized or
required by the Declaration.
Section 3.2. Place of Meeting. All Shareholders' meetings shall be held at
such place within or without The Commonwealth of Massachusetts as the Trustees
shall designate.
Section 3.3. Notice of Meetings. Notice of all Shareholders' meetings,
stating the time, place and purpose of the meeting, shall be given by the
Secretary or an Assistant Secretary of the Trust by mail to each Shareholder
entitled to notice of and to vote at such meeting at his address as recorded on
the register of the Trust. Such notice shall be mailed at least 10 days and not
more than 60 days before the meeting. Such notice shall be deemed to be given
when deposited in the United States mail, with postage thereon prepaid. Any
adjourned meeting may be held as adjourned without further notice. No notice
need be given (A) to any Shareholder if a written waiver of notice, executed
before or after the meeting by such Shareholder or his attorney thereunto duly
authorized, is filed with the records of the meeting, or (B) to any Shareholder
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A waiver of notice need not specify the purposes of
the meeting.
Section 3.4. Shareholders Entitled to Vote. If, pursuant to Section 3.11
hereof, a record date has been fixed for the determination of Shareholders
entitled to notice of and to vote at any Shareholders' meeting, each Shareholder
of the Trust shall be entitled to vote, in accordance with the applicable
provisions of the Declaration, in person or by proxy, each Share or fraction
thereof standing in his name on the register of the Trust at the time of
determining net asset value on such record date. If the Declaration or the 1940
Act requires that Shares be voted by Series or Class, each Shareholder shall
only be entitled to vote, in person or by proxy, each Share or fraction thereof
of such Series or Class standing in his name on the register of the Trust at the
time of determining net asset value on such record date. If no record date has
been fixed for the determination of Shareholders so entitled, the record date
for the determination of Shareholders entitled to notice of and to vote at a
Shareholders' meeting shall be at the close of business on the day on which
notice of the meeting is mailed or, if notice is waived by all Shareholders, at
the close of business on the tenth day next preceding the day on which the
meeting is held.
Section 3.5. Quorum. The presence at any Shareholders' meeting in person or
by proxy, of Shareholders entitled to cast a majority of the votes thereat shall
be a quorum for the transaction of business.
Section 3.6. Treatment of Abstentions. Shares represented in person or by
proxy, including Shares which abstain or do not vote with respect to one or more
proposals presented for shareholder approval, will be counted for purposes of
determining whether a quorum is present. Abstentions will be treated as Shares
that are present and entitled to vote with respect to any particular proposal,
but will not be counted as a vote in favor of such proposal. An abstention from
voting on a proposal will have the same effect as a vote against such proposal.
Section 3.7. Voting of Shares Held in Street Name. If a broker or nominee
holding Shares in "street name" indicates on a proxy that it does not have
discretionary authority to vote those Shares as to a particular proposal
presented for shareholder approval, those Shares will be considered to be
outstanding, but will not be considered as present and entitled to vote with
respect to such proposal.
Section 3.8. Adjournment. The holders of a majority of the Shares entitled
to vote at the meeting and present thereat, in person or by proxy, whether or
not constituting a quorum, or, if no Shareholder entitled to vote is present
thereat, in person or by proxy, any Trustee or officer present thereat entitled
to preside or act as Secretary of such meeting, may adjourn the meeting sine die
or from time to time. Any business that might have been transacted at the
meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present.
Section 3.9. Proxies. Shares may be voted in person or by proxy. When any
Share is held jointly by several persons, any one of them may vote at any
meeting, in person or by proxy in respect of such Share unless at or prior to
exercise of the vote the Trustees receive a specific written notice to the
contrary from any one of them. If more than one such joint owner shall be
present at such meeting, in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote cast, such vote shall not be received
in respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Section 3.10. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted shareholders of
a Massachusetts business corporation.
Section 3.11. Record Dates. The Trustees may fix in advance a date as a
record date for the purpose of determining the Shareholders who are entitled to
notice of and to vote at any meeting or any adjournment thereof, or to express
consent in writing without a meeting to any action of the Trustees, or who shall
receive payment of any dividend or of any other distribution, or for the purpose
of any other lawful action, provided that such record date shall be not more
than 60 days before the date on which the particular action requiring such
determination of Shareholders is to be taken. In such case, subject to the
provisions of Section 3.4, each eligible Shareholder of record on such record
date shall be entitled to notice of, and to vote at, such meeting or
adjournment, or to express such consent, or to receive payment of such dividend
or distribution or to take such other action, as the case may be,
notwithstanding any transfer of Shares on the register of the Trust after the
record date.
ARTICLE IV
Meetings of Trustees
Section 4.1. Regular Meetings. The Trustees from time to time shall
provide by resolution for the holding of regular meetings for the election of
officers and the transaction of other proper business and shall fix the place
and time for such meetings to be held within or without The Commonwealth of
Massachusetts.
Section 4.2. Special Meetings. Special meetings of the Trustees shall
be held whenever called by the Chairman of the Board, the President (or, in the
absence or disability of the President, by any Vice President), the Treasurer,
the Secretary or two or more Trustees, at the time and place within or without
The Commonwealth of Massachusetts specified in the respective notices or waivers
of notice of such meetings.
Section 4.3. Notice. Notice of regular and special meetings, stating
the time and place, shall be (a) mailed to each Trustee at his residence or
regular place of business at least five days before the day on which the meeting
is to be held or (b) caused to be delivered to him personally or to be
transmitted to him by telegraph, cable or wireless at least two days before the
day on which the meeting is to be held. Unless otherwise required by law, such
notice need not include a statement of the business to be transacted at, or the
purpose of, the meeting. No notice of adjournment of a meeting of the Trustees
to another time or place need be given if such time and place are announced at
such meeting.
Section 4.4. Waiver of Notice. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him. A waiver of notice need not specify the purposes of the meeting.
Section 4.5. Quorum, Adjournment and Voting. At all meetings of the
Trustees, the presence of a majority of the total number of Trustees authorized,
but not less than two, shall constitute a quorum for the transaction of
business. A majority of the Trustees present, whether or not constituting a
quorum, may adjourn the meeting, from time to time. The action of a majority of
the Trustees present at a meeting at which a quorum is present shall be the
action of the Trustees unless the concurrence of a greater proportion is
required for such action by law, by the Declaration or by these By-Laws.
Section 4.6. Compensation. Each Trustee may receive such remuneration for
his services as such as shall be fixed from time to time by resolution of the
Trustees.
ARTICLE V
Executive Committee and Other Committees
----------------------------------------
Section 5.1. How Constituted. The Trustees may, by resolution, designate
one or more committees, including an Executive Committee, an Audit Committee and
a Committee on Administration, each consisting of at least two Trustees. The
Trustees may, by resolution, designate one or more alternate members of any
committee to serve in the absence of any member or other alternate member of
such committee. Each member and alternate member of a committee shall be a
Trustee and shall hold office at the pleasure of the Trustees. The Chairman of
the Board and the President shall be members of the Executive Committee.
Section 5.2. Powers of the Executive Committee. Unless otherwise provided
by resolution of the Trustees, the Executive Committee shall have and may
exercise all of the power and authority of the Trustees, provided that the power
and authority of the Executive Committee shall be subject to the limitations
contained in the Declaration.
Section 5.3. Other Committees of Trustees. To the extent provided by
resolution of the Trustees, other committees shall have and may exercise any of
the power and authority that may lawfully be granted to the Executive Committee.
Section 5.4. Proceedings, Quorum and Manner of Acting. In the absence of
appropriate resolution of the Trustees, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable, provided that the quorum shall not be less than two
Trustees. In the absence of any member or alternate member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a Trustee to act in the place of such absent
member or alternate member. Members and alternate members of a committee may
participate in a meeting of such committee by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5.5. Other Committees. The Trustees may appoint other committees,
each consisting of one or more persons who need not be Trustees. Each such
committee shall have such powers and perform such duties as may be assigned to
it from time to time by the Trustees, but shall not exercise any power which may
lawfully be exercised only by the Trustees or a committee thereof.
ARTICLE VI
Officers
Section 6.1. General. The officers of the Trust shall be a Chairman of the
Board, a President, a Secretary, and a Treasurer, and may include one or more
Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 6.10 of this Article VI.
Section 6.2. Election, Term of Office and Qualifications. The officers of
the Trust and any Series thereof (except those appointed pursuant to Section
6.10) shall be elected by the Trustees at their first meeting. If any officer or
officers are not elected at any such meeting, such officer or officers may be
elected at any subsequent regular or special meeting of the Trustees. Except as
provided in Sections 6.3 and 6.4 of this Article VI, each officer elected by the
Trustees shall hold office until his successor shall have been chosen and
qualified. No person shall hold more than one office of the Trust or any Series
thereof, except that the President may hold the office of Chairman of the Board
and any Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the
Trust may also hold the office of Vice President. The Chairman of the Board and
the President shall be selected from among the Trustees and may hold such
offices only so long as they continue to be Trustees. Any Trustee or officer may
be but need not be a Shareholder of the Trust.
Section 6.3. Resignations and Removals. Any officer may resign his office
at any time by delivering a written resignation to the Trustees, the President,
the Secretary or any Assistant Secretary. Unless otherwise specified therein,
such resignation shall take effect upon delivery. Any officer may be removed
from office with or without cause by the vote of a majority of the Trustees at
any regular meeting or any special meeting. Except to the extent expressly
provided in a written agreement with the Trust, no officer resigning and no
officer removed shall have any right to any compensation for any period
following his resignation or removal or any right to damages on account of such
removal.
Section 6.4. Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Trustees at any regular or special meeting
or, in the case of any office created pursuant to Section 6.10 of this Article
VI, by any officer upon whom such power shall have been conferred by the
Trustees.
Section 6.5. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Trust and each Series thereof, shall preside at
all Shareholders' meetings and at all meetings of the Trustees and shall be ex
officio a member of all committees of the Trustees and each Series thereof,
except the Audit Committee. Subject to the supervision of the Trustees, he shall
have general charge of the business of the Trust and each Series thereof, the
Trust Property and the officers, employees and agents of the Trust and each
Series thereof. He shall have such other powers and perform such other duties as
may be assigned to him from time to time by the Trustees.
Section 6.6. President. The President shall be the chief operating officer
of the Trust and each Series thereof and, at the request of or in the absence or
disability of the Chairman of the Board, he shall preside at all Shareholders'
meetings and at all meetings of the Trustees and shall in general exercise the
powers and perform the duties of the Chairman of the Board. Subject to the
supervision of the Trustees and such direction and control as the Chairman of
the Board may exercise, he shall have general charge of the operations of the
Trust and each Series and Class thereof and its officers, employees and agents.
He shall exercise such other powers and perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 6.7. Vice President. The Trustees may, from time to time, designate
and elect one or more Vice Presidents who shall have such powers and perform
such duties as from time to time may be assigned to them by the Trustees or the
President. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior in
length of time in office of the Vice Presidents present and able to act) may
perform all the duties of the President and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
Section 6.8 Chief Financial Officer, Treasurer and Assistant Treasurers.
The Chief Financial Officer shall be the principal financial and accounting
officer of the Trust and each Series thereof and shall have general charge of
the finances and books of account of the Trust and each Series and Class
thereof. Except as otherwise provided by the Trustees, he shall have general
supervision of the funds and property of the Trust and each Series thereof and
of the performance by the Custodian, appointed pursuant to Section 3.6 of the
Declaration of its duties with respect thereto. The Chief Financial Officer
shall render a statement of condition of the finances of the Trust and each
Series and Class thereof to the Trustees as often as they shall require the same
and he shall in general perform all the duties incident to the office of the
Chief Financial Officer and such other duties as from time to time may be
assigned to him by the Trustees.
The Treasurer or any Assistant Treasurer may perform such duties of the
Chief Financial Officer as the Chief Financial Officer or the Trustees may
assign. In the absence of the Chief Financial Officer, the Treasurer may perform
all duties of the Chief Financial Officer. In the absence of the Chief Financial
Officer and the Treasurer, any Assistant Treasurer may perform all duties of the
Chief Financial Officer.
Section 6.9. Secretary and Assistant Secretaries. The Secretary shall
attend to the giving and serving of all notices of the Trust and each Series and
Class thereof and shall record all proceedings of the meetings of the
Shareholders and Trustees in one or more books to be kept for that purpose. He
shall keep in safe custody the seal of the Trust, and shall have charge of the
records of the Trust and each Series and Class thereof, including the register
of shares and such other books and papers as the Trustees may direct and such
books, reports, certificates and other documents required by law to be kept, all
of which shall at all reasonable times be open to inspection by any Trustee. He
shall perform such other duties as appertain to his office or as may be required
by the Trustees.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Trustees may assign, and, in the absence of the Secretary, he
may perform all the duties of the Secretary.
Section 6.10. Subordinate Officers. The Trustees from time to time may
appoint such other subordinate officers or agents as they may deem advisable,
each of whom shall have such title, hold office for such period, have such
authority and perform such duties as the Trustees may determine. The Trustees
from time to time may delegate to one or more officers or agents the power to
appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 6.11. Remuneration. The salaries or other compensation of the
officers of the Trust and any Series thereof shall be fixed from time to time by
resolution of the Trustees, except that the Trustees may by resolution delegate
to any person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in accordance with
the provisions of Section 6.10 hereof.
Section 6.12. Surety Bonds. The Trustees may require any officer or agent
of the Trust or any Series thereof to execute a bond (including, without
limitation, any bond required by the 1940 Act and the rules and regulations of
the Commission) to the Trustees in such sum and with such surety or sureties as
the Trustees may determine, conditioned upon the faithful performance of his
duties to the Trust, including responsibility for negligence and for the
accounting of any of the Trust Property that may come into his hands. In any
such case, a new bond of like character shall be given at least every six years,
so that the date of the new bond shall not be more than six years subsequent to
the date of the bond immediately preceding.
ARTICLE VII
Execution of Instruments, Voting of Securities
----------------------------------------------
Section 7.1. Execution of Instruments. All deeds, documents, transfers,
contracts, agreements, requisitions or orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Trust or any
Series thereof, and other instruments requiring execution either in the name of
the Trust or the names of the Trustees or otherwise may be signed by the
Chairman, the President, a Vice President or the Secretary and by the Chief
Financial Officer, Treasurer or an Assistant Treasurer, or as the Trustees may
otherwise, from time to time, authorize, provided that instructions in
connection with the execution of portfolio securities actions may be signed by
one such officer. Any such authorization may be general or confined to specific
instances.
Section 7.2. Voting of Securities. Unless otherwise ordered by the
Trustees, the Chairman, the President or any Vice President shall have full
power and authority on behalf of the Trustees to attend and to act and to vote,
or in the name of the Trustees to execute proxies to vote, at any meeting of
stockholders of any company in which the Trust or any Series thereof may hold
stock. At any such meeting such officer shall possess and may exercise (in
person or by proxy) any and all rights, powers, and privileges incident to the
ownership of such stock. The Trustees may by resolution from time to time confer
like powers upon any other person or persons.
ARTICLE VIII
Fiscal Year; Accountants
------------------------
Section 8.1. Fiscal Year. The fiscal year of the Trust and any Series
thereof shall be established by resolution of the Trustees.
Section 8.2. Accountants.
(a) The Trustees shall employ a public accountant or firm of independent
public accountants as their accountant to examine the accounts of the Trust and
to sign and certify at least annually financial statements filed by the Trust.
The accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders.
(b) A majority of the Trustees who are not Interested Persons of the Trust
shall select the accountant at any meeting held before the initial registration
statement of the Trust becomes effective, and thereafter shall select the
accountant annually by votes, cast in person, at a meeting held within 30 days
before or after the beginning of the fiscal year of the Trust.
(c) Any vacancy occurring due to the death or resignation of the
accountant, may be filled at a meeting called for the purpose by the vote, cast
in person, of a majority of those Trustees who are not Interested Persons of the
Trust.
ARTICLE IX
Amendments
----------
Section 9.1. General. These By-Laws may be amended or repealed, in whole or
in part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
EXHIBIT 99.B2.1
John Hancock Capital Series
John Hancock Cash Management Fund
John Hancock Income Securities Trust
John Hancock Investors Trust
John Hancock Limited Term Government Fund
John Hancock Sovereign Bond Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Exempt Series Fund
John Hancock World Fund
AMENDMENT TO BY-LAWS
RESOLVED, that the By-Laws of the Trust be and hereby are amended to
create the office of Vice Chairman of the Trust by adding the following as
Article VI, Sub-Section 6.5A of the By-Laws:
Section 6.5A. Powers and Duties of the Vice Chairman. The Trustees may, but need
not, appoint one or more Vice Chairmen of the Trust. A Vice Chairman shall be an
executive officer of the Trust and shall have the powers and duties of a Vice
President of the Trust, as provided in Section 6.7 of this Article VI. The Vice
Chairman shall perform such duties as may be assigned to him or her from time to
time by the Trustees of the Chairman.
MEMORANDUM
To: Avery Maher
From: Ross F. S. Hall
Date: December 19, 1994
RE: The "Vice Chairman" By-Laws amendement to all the Funds.
- -------------------------------------------------------------------------------
The Trustees' resolutions to amend the By-Laws of all the John Hancock Funds, to
create the office of Vice Chairman of the Trust, require that the amendments be
matched to the appropriate section of each Fund. The conforming Amendments
follow. (Additionally, the relevant sections of each Fund's By-Laws have been
attached for reference.)
<PAGE>
EXHIBIT 99.B4
JOHN HANCOCK
TAX-EXEMPT INCOME FUND
A MASSACHUSETTS VOLUNTARY ASSOCIATION
CLASS A
fully paid and non-assessable shares of beneficial interest, without par value,
in John Hancock Tax-Exempt Income Fund (the "Fund"), a Massachusetts voluntary
association established by the Declaration of Trust dated November 30, 1976, as
amended from time to time, a copy of which, together with any amendments thereto
(the "Declaration"), is on file with the Secretary of the Commonwealth of
Massachusetts. The provisions of the Declaration are hereby incorporated in and
made a part of this certificate as fully as if set forth herein in their
entirety, to all of which provisions the holder and every transferee or assignee
hereof by accepting or holding the same agrees to be bound. This certificate,
and the shares represented hereby are negotiable and transferable on the books
of the Fund by the registered holder hereof in person or by attorney upon
surrender of this certificate properly endorsed. This certificate is issued by
the Trustees of John Hancock Tax-Exempt Income Fund, acting not individually but
as such Trustees, and is not valid until countersigned by the Transfer Agent.
The name John Hancock Tax-Exempt Income Fund is the designation of the Trustees
under the Declaration of Trust dated November 30, 1976, as amended from time to
time. The obligations hereunder are not personally binding upon, nor shall
resort be had to the private property of, any of the Trustees, shareholders,
officers, employees or agents of the Fund, but the Fund property or a specific
portion thereof only shall be bound.
- -------------------------------------------
Update date 1/3/94 jjm
Mass Fund
Signed by Boudreau, Chairman
fund #23
<PAGE>
JOHN HANCOCK
TAX-EXEMPT INCOME FUND
A MASSACHUSETTS VOLUNTARY ASSOCIATION
CLASS B
- -------------------------------------------
Update date 1/3/94 jjm
Mass Fund
Signed by Boudreau, Chairman
fund #123
<PAGE>
EXHIBIT 99.B5
JOHN HANCOCK TAX-EXEMPT INCOME FUND
Investment Management Contract
Dated January 1, 1994
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND
Boston, Massachusetts
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
------------------------------
Ladies and Gentlemen:
John Hancock Tax-Exempt Income Fund (the "Fund") has been organized as a
business trust under the laws of the Commonwealth of Massachusetts to engage in
the business of an investment company. The Fund's shares of beneficial interest
may be classified into series, each series representing the entire undivided
interest in a separate portfolio of assets. Series may be established or
terminated from time to time by action of the Board of Trustees of the Fund. As
of the date hereof, other than the Fund, there are no additional series of the
Fund.
The Board of Trustees of the Fund (the "Trustees") has selected John
Hancock Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth. Accordingly,
the Fund and the Adviser agree as follows:
1. Delivery of Documents. The Fund has furnished the Adviser with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Restated and Amended Declaration of Trust of the Fund, dated December
8, 1993 (the "Declaration of Trust");
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as investment adviser
for the Fund and approving the form of this Agreement; and
(d) commitments, limitations and undertakings made by the Fund to state
securities or "blue sky" authorities for the purpose of qualifying shares of the
Fund for sale in such states.
The Fund will furnish to the Adviser from time to time copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any.
2. Investment and Management Services. The Adviser will use its best efforts to
provide to the Fund continuing and suitable investment programs with respect to
investments, consistent with the investment policies, objectives and
restrictions of the Fund. In the performance of the Adviser's duties hereunder,
subject always (x) to the provisions contained in the documents delivered to the
Adviser pursuant to Section 1, as each of the same may from time to time be
amended or supplemented, and (y) to the limitations set forth in the
registration statement of the Fund as in effect from time to time under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent with the
investment policies, objectives and restrictions of the Fund, with respect to
the purchase, holding and disposition of portfolio securities including, the
purchase and sale of options, alone or in consultation with any sub-adviser or
sub-advisers appointed pursuant to this Agreement and subject to the provisions
of any sub-investment management contract respecting the responsibilities of
such sub-adviser or sub-advisers;
(b) advise the Fund in connection with policy decisions to be made by the
Trustees or any committee thereof with respect to the Fund's investments and, as
requested, furnish the Fund with research, economic and statistical data in
connection with the Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations of the
Fund;
(d) submit such reports relating to the valuation of the Fund's securities
as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's investments
with issuers, investment banking firms, securities brokers or dealers and other
institutions or investors;
(f) consistent with the provisions of Section 7 of this Agreement, place
orders for the purchase, sale or exchange of portfolio securities with brokers
or dealers selected by the Adviser, provided that in connection with the placing
of such orders and the selection of such brokers or dealers the Adviser shall
seek to obtain execution and pricing within the policy guidelines determined by
the Trustees and set forth in the Prospectus and Statement of Additional
Information of the Fund as in effect from time to time;
(g) provide office space and office equipment and supplies, the use of
accounting equipment when required, and necessary executive, clerical and
secretarial personnel for the administration of the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees, make
reports to the Fund of the Adviser's performance of the foregoing services and
furnish advice and recommendations with respect to other aspects of the business
and affairs of the Fund;
(i) maintain all books and records with respect to the Fund's securities
transactions required by the 1940 Act, including sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 thereunder (other than those records
being maintained by the Fund's custodian or transfer agent) and preserve such
records for the periods prescribed therefor by Rule 31a-2 of the 1940 Act (the
Adviser agrees that such records are the property of the Fund and will be
surrendered to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies, industries,
businesses, securities markets and securities as the Adviser may deem necessary
or useful in the discharge of the Adviser's duties hereunder;
(k) oversee, and use the Adviser's best efforts to assure the performance
of the activities and services of the custodian, transfer agent or other similar
agents retained by the Fund;
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash for the
account of the Fund; and
(m) appoint and employ one or more sub-advisers satisfactory to the Fund
under sub-investment management agreements.
3. Expenses paid by the Adviser. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of the
Fund;
(b) the expenses of office rent, telephone and other utilities, office
furniture, equipment, supplies and other expenses of the Fund;
(c) any other expenses incurred by the Adviser in connection with the
performance of its duties hereunder; and
(d) premiums for such insurance as may be agreed upon by the Adviser and
the Trustees.
4. Expenses of the Fund Not Paid by the Adviser. The Adviser will not be
required to pay any expenses which this Agreement does not expressly make
payable by it. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 3, the Adviser will not be
required to pay under this Agreement:
(a) the expenses of organizing the Fund (including without limitation,
legal, accounting and auditing fees and expenses incurred in connection with the
matters referred to in this clause (a)), of initially registering shares of the
Fund under the Securities Act of 1933, as amended, and of qualifying the shares
for sale under state securities laws for the initial offering and sale of
shares;
(b) the compensation and expenses of Trustees who are not interested
persons (as used in this Agreement, such term shall have the meaning specified
in the 1940 Act) of the Adviser and of independent advisers, independent
contractors, consultants, managers and other unaffiliated agents employed by the
Fund other than through the Adviser;
(c) legal, accounting and auditing fees and expenses of the Fund;
(d) the fees and disbursements of custodians and depositories of the Fund's
assets, transfer agents, disbursing agents, plan agents and registrars;
(e) taxes and governmental fees assessed against the Fund's assets and
payable by the Fund;
(f) the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Fund;
(g) brokers' commissions and underwriting fees; and
(h) the expense of periodic calculations of the net asset value of the
shares of the Fund.
5. Compensation of the Adviser. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as herein provided, the
Fund will pay to the Adviser monthly in arrears a fee based on a stated
percentage of the average daily net assets of the Fund for the preceding month
as set forth below:
Net Asset Value Annual Rate
--------------- -----------
First $500,000,000 0.55%
Next $500,000,000 0.50%
Amount Over $1,000,000,000 0.45%
The "average daily net assets" of the Fund shall be determined on the basis set
forth in the Fund's Prospectus or otherwise consistent with the 1940 Act and the
regulations promulgated thereunder. The Adviser will receive a pro rata portion
of such monthly fee for any periods in which the Adviser serves as investment
adviser to the Fund for less than a full month.
In the event that normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of any limitation
imposed by the law of a state where the Fund is registered to sell shares of
beneficial interest, the fee payable to the Adviser will be reduced to the
extent required by law, and the Adviser will make any additional arrangements
that the Adviser is required by law to make.
In addition to the foregoing, the Adviser may from time to time agree not
to impose all or a portion of its fee otherwise payable hereunder (in advance of
the time such fee or portion thereof would otherwise accrue) and/or undertake to
pay or reimburse the Fund for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the Adviser. Any such fee reduction or
undertaking may be discontinued or modified by the Adviser at any time.
6. Other Activities of the Adviser and Its Affiliates. Nothing herein contained
shall prevent the Adviser or any affiliate or associate of the Adviser from
engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or portfolios similar to the Fund's; and it is specifically
understood that officers, directors and employees of the Adviser and those of
its parent company, John Hancock Mutual Life Insurance Company, or other
affiliates may continue to engage in providing portfolio management services and
advice to other investment companies, whether or not registered, to other
investment advisory clients of the Adviser or of its affiliates and to said
affiliates themselves.
7. Avoidance of Inconsistent Position. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Adviser nor any of
its investment management subsidiaries, nor any of the Adviser's or such
investment management subsidiaries' directors, officers or employees will act as
principal or agent or receive any commission, except as may be permitted by the
1940 Act and rules and regulations promulgated thereunder. If any occasions
shall arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way on behalf
of the Fund.
Nothing herein contained shall limit or restrict the Adviser or any of its
officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts. The Fund acknowledges that
the Adviser and its officers, affiliates, and employees, and its other clients
may at any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of hereunder.
The Adviser shall have no obligation to acquire with respect to the Fund, a
position in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, if in the sole discretion of the Adviser, it is not feasible or
desirable to acquire a position in such investment on behalf of the Fund.
Nothing herein contained shall prevent the Adviser from purchasing or
recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
8. No Partnership or Joint Venture. The Fund and the Adviser are not partners of
or joint venturers with each other and nothing herein shall be construed so as
to make them such partners or joint venturers or impose any liability as such on
any of them.
9. Name of the Fund. The Fund may use the name "John Hancock" or any name
derived from or similar to the name "John Hancock Advisers, Inc." or "John
Hancock Mutual Life Insurance Company" only for so long as this Agreement
remains in effect. At such time as this Agreement shall no longer be in effect,
the Fund will (to the extent that it lawfully can) cease to use such a name or
any other name indicating that the Fund is advised by or otherwise connected
with the Adviser. The Fund acknowledges that it has adopted the name "John
Hancock Tax-Exempt Income Fund" through permission of John Hancock Mutual Life
Insurance Company, a Massachusetts insurance company, and agrees that John
Hancock Mutual Life Insurance Company reserves to itself and any successor to
its business the right to grant the non-exclusive right to use the name "John
Hancock" or any similar name to any other corporation or entity, including but
not limited to any investment company of which John Hancock Mutual Life
Insurance Company or any subsidiary or affiliate thereof shall be the investment
adviser.
10. Limitation of Liability of the Adviser. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though also
employed by the Adviser, who may be or become an employee of and paid by the
Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as the
Adviser's employee or agent.
11. Duration and Termination of this Agreement. This Agreement shall remain in
force until the second anniversary of the date upon which this Agreement was
executed by the parties hereto, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (a) a
majority of the Trustees who are not interested persons of the Adviser or (other
than as Board members) of the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and (b) either (i) the Trustees or (ii) a
majority of the outstanding voting securities of the Fund. This Agreement may,
on 60 days' written notice, be terminated at any time without the payment of any
penalty by the Fund by vote of a majority of the outstanding voting securities
of the Fund, by the Trustees or by the Adviser. Termination of this Agreement
with respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between the Adviser and any other
series of the Fund. This Agreement shall automatically terminate in the event of
its assignment. In interpreting the provisions of this Section 11, the
definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "assignment," "interested person" or "voting security"), shall be
applied.
12. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until approved by
(a) the Trustees, including a majority of the Trustees who are not interested
persons of the Adviser or (other than as Board members) of the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and (b) a
majority of the outstanding voting securities of the Fund, as defined in the
1940 Act.
13. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
14. Severability. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
15. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The name John Hancock Tax-Exempt Income Fund is the designation of
the Trustees under the Restated and Amended Declaration of Trust of the Fund
dated December 8, 1993, as amended from time to time. The Restated and Amended
Declaration of Trust has been filed with the Secretary of the Commonwealth of
Massachusetts. The obligations of the Fund are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund, but only the Fund's
property shall be bound. The Fund shall not be liable for the obligations of any
other series of the Fund.
Yours very truly,
JOHN HANCOCK TAX-EXEMPT INCOME FUND
By: /s/ Robert G. Freedman
Title: President
The foregoing contract
is hereby agreed to as
of the date hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/ Robert G. Freedman
Title: President
<PAGE>
EXHIBIT 99.B6
August 1, 1991
John Hancock Broker Distribution Services, Inc.
Boston, Massachusetts
Distribution Agreement
----------------------
Dear Sir:
John Hancock Tax-Exempt Income Fund (the "Fund") has been organized as a
business trust under the laws of the Commonwealth of Massachusetts to engage in
the business of an investment company. The Fund's Board of Directors has
selected you to act as principal underwriter (as such term is defined in Section
2(a)(29) of the Investment Company Act of 1940, as amended) of the shares of
beneficial interest ("shares") of the Fund and you are willing, as agent for the
Fund, to sell the shares to the public, to broker-dealers or to both, in the
manner and on the conditions hereinafter set forth. Accordingly, the Fund hereby
agrees with you as follows:
1. Delivery of Documents. The Fund will furnish you promptly with copies,
properly certified or otherwise authenticated, of any registration statements
filed by it with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, or the Investment Company Act of 1940, as amended, together
with any financial statements and exhibits included therein, and all amendments
or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to time
use its best efforts to register under the Securities Act of 1933, as amended,
such shares not already so registered as you may reasonably be expected to sell
as agent on behalf of the Fund. This Agreement relates to the issue and sale of
shares that are duly authorized and registered and available for sale by the
Fund if, but only if, the Fund sees fit to sell them. You and the Fund will
cooperate in taking such action as may be necessary from time to time to qualify
shares for sale in Massachusetts and in any other states mutually agreeable to
you and the Fund, and to maintain such qualification if and so long as such
shares are duly registered under the Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in states in
which you may lawfully do so) to obtain from investors unconditional orders for
shares authorized for issue by the Fund and registered under the Securities Act
of 1933, as amended, provided that you may in your discretion refuse to accept
orders for such shares from any particular applicant.
4. Sale of Shares. Subject to the provisions of Sections 5 and 6 hereof and to
such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus, you are authorized to sell as agent on
behalf of the Fund authorized and issued shares registered under the Securities
Act of 1933, as amended. Such sales may be made by you on behalf of the Fund by
accepting unconditional orders to purchase such shares placed with your
investors. The sales price to the public of such shares shall be the public
offering price as defined in Section 6 hereof.
5. Sale of Shares to Investors by the Fund. Any right granted to you to accept
orders for shares or make sales on behalf of the Fund will not apply to shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all the assets of any investment company or substantially all the
outstanding shares of any such company, and such right shall not apply to shares
that may be offered or otherwise issued by the Fund to shareholders by virtue of
their being shareholders of the Fund.
6. Public Offering Price. All shares sold by you as agent for the Fund will be
sold at the public offering price, which will be determined in the manner
provided in the Fund's prospectus or statement of additional information, as now
in effect or as it may be amended .
7. No Sales Discount. The Fund shall receive the applicable net asset value on
all sales of shares by you as agent of the Fund.
8. Delivery of Payments. You will deliver to the Transfer Agent all payments
made pursuant to orders accepted by you, and accompanied by proper applications
for the purchase of shares, no later than the first business day following the
receipt by you in your home office of such payments and applications.
9. Suspension of Sales. If and whenever a suspension of the right of redemption
or a postponement of the date of payment or redemption has been declared
pursuant to the Fund's Articles of Incorporation and has become effective, then,
until such suspension or postponement is terminated, no further orders for
shares shall be accepted by you except such unconditional orders placed with you
before you have knowledge of the suspension. The Fund reserves the right to
suspend the sale of shares and your authority to accept orders for shares on
behalf of the Fund if, in the judgment of a majority of the Fund's Board of
Directors, it is in the best interests of the Fund to do so, such suspension to
continue for such period as may be determined by such majority; and in that
event, no shares will be sold by the Fund or by you on behalf of the Fund while
such suspension remains in effect except for shares necessary to cover
unconditional orders accepted by you before you had knowledge of the suspension.
10. Expenses. The Fund will pay (or will enter into arrangements providing that
persons other than you will pay) all fees and expenses in connection with the
preparation and filing of any registration statement and prospectus or
amendments thereto under the Securities Act of 1933, as amended, covering the
issue and sale of shares and in connection with the qualification of shares for
sale in the various states in which the fund shall determine it advisable to
qualify such shares for sale. It will also pay the issue taxes or (in the case
of shares redeemed) any initial transfer taxes thereon. You will pay all
expenses of printing prospectuses and other sales literature, all fees and
expenses in connection with your qualification as a dealer in various states,
and all other expenses in connection with the sale and offering for sale of the
shares of the Fund which have not been herein specifically allocated to the
Fund.
11. Conformity with Law. You agree that in selling the shares you will duly
conform in all respects with the laws of the United States and any state in
which such shares may be offered for sale by you pursuant to this Agreement.
12. Indemnification. You agree to indemnify and hold harmless the Fund and each
of its Board members and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the Securities Act of 1933, as amended,
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which the Fund or such Board members,
officers or controlling person may become subject under such Act, under any
other statute, at common law or otherwise, arising out of the acquisition of any
shares by any person which (a) may be based upon any wrongful act by you or any
of your employees or representatives or (b) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus or statement of additional information
covering shares of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon information furnished or
confirmed in writing to the Fund by you, or (c) may be incurred or arise by
reason of your acting as the Fund's agent instead of purchasing and reselling
shares as principal in distributing shares to the public, provided that in no
case is your indemnity in favor of a Board member or officer of the Fund or any
other person deemed to protect such Board member or officer of the Fund or other
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of shares
other than the information and representations contained in a registration
statement, prospectus, or statement of additional information covering shares,
as such registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time. No person other
than you is authorized to act as principal underwriter for the Fund.
13. Duration and Termination of this Agreement. This Agreement shall remain in
force until the conclusion of the first meeting of shareholders of the Fund
following the first public offering of shares and, if approved at that meeting,
from year to year thereafter, but only so long as such continuance is
specifically approved at least annually by (a) a majority of the Board of
Directors who are not interested persons of you (other than as Board members) or
of the Fund, cast in person at a meeting called for the purpose of voting on
such approval, and (b) either (i) the Board of Directors of the Fund, or (ii) a
majority of the outstanding voting securities of the Fund. This Agreement may,
on 60 days' written notice, be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund, by a vote of a majority of
the outstanding voting securities of the Fund, or by you. This Agreement will
automatically terminate in the event of its assignment by you. In interpreting
the provisions of this Section 13, the definitions contained in Section 2(a) of
the Investment Company Act of 1940 (particularly the definitions of "interested
person", "assignment" and "voting security") shall be applied.
14. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. If the Fund should at any time deem it necessary or
advisable in the best interests of the Fund that any amendment of this agreement
be made in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or other governmental authority or to obtain
any advantage under state or federal tax laws and should notify you of the form
of such amendment, and the reasons therefor, and if you should decline to assent
to such amendment, the Fund may terminate this agreement forthwith. If you
should at any time request that a change be made in the Fund's Certificate of
Incorporation or By-Laws, or in its methods of doing business, in order to
comply with any requirements of federal law or regulations of the Securities and
Exchange Commission or of a national securities association of which you are or
may be a member, relating to the sale of shares, and the Fund should not make
such necessary change within a reasonable time, you may terminate this Agreement
forthwith.
15. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Very truly yours,
JOHN HANCOCK TAX-EXEMPT INCOME FUND
By:
Chairman
The foregoing Agreement is hereby accepted as of the date hereof.
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By:
President
<PAGE>
EXHIBIT 99.B6.1
SOLICITING DEALER AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
BOSTON -- MASSACHUSETTS -- 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
SOLICITING DEALER AGREEMENT
Date
------------------------------
John Hancock Funds, Inc. ("the Distributor" or "Distributor") is the
principal distributor of the shares of beneficial interest (the "securities") of
each of the John Hancock Funds, ("We" or "us"), (the "Funds"). Such Funds are
those listed on Schedule A hereto which may be amended or supplemented from time
to time by the Distributor to include additional Funds for which the Distributor
is the principal distributor. You represent that you are a member of the
National Association of Securities Dealers, Inc., (the "NASD") and, accordingly,
we invite you to become a non-exclusive soliciting dealer to distribute the
securities of the Funds and you agree to solicit orders for the purchase of the
securities on the following terms. Securities are offered pursuant to each
Fund's prospectus and statement of additional information, as such prospectus
and statement of additional information may be amended from time to time. To the
extent that the prospectus or statement of additional information contains
provisions that are inconsistent with the terms of this Agreement, the terms of
the prospectus or statement of additional information shall be controlling.
OFFERINGS
1. You agree to abide by the Rules of Fair Practice of the NASD and to all other
rules and regulations that are now or may become applicable to transactions
hereunder.
2. As principal distributor of the Funds, we shall have full authority to take
such action as we deem advisable in respect of all matters pertaining to the
distribution. This offer of shares of the Funds to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Funds.
3. You shall not make any representation concerning the Funds or their
securities except those contained in the then- current prospectus or statement
of additional information for each Fund.
4. With the exception of listings of product offerings, you agree not to furnish
or cause to be furnished to any person or display, or publish any information or
materials relating to any Fund (including, without limitation, promotional
materials, sales literature, advertisements, press releases, announcements,
posters, signs and other similar materials), except such information and
materials as may be furnished to you by the Distributor or the Fund. All other
materials must receive written approval by the Distributor before distribution
or display to the public. Use of all approved advertising and sales literature
materials is restricted to appropriate distribution channels.
5. You are not authorized to act as our agent. Nothing shall constitute you as a
syndicate, association, joint venture, partnership, unincorporated business, or
other separate entity or otherwise partners with us, but you shall be liable for
your proportionate share of any tax, liability or expense based on any claim
arising from the sale of shares of the Funds under this Agreement. We shall not
be under any liability to you, except for obligations expressly assumed by us in
this Agreement and liabilities under Section 11(f) of the Securities Act of
1933, and no obligations on our part shall be implied or inferred herefrom.
6. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering and
selling shares of these Funds to investors. All dealers offering shares of the
Funds and their associated persons agree to comply with these general
suitability and compliance standards.
-2-
<PAGE>
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and your
registered representatives in light of all the facts and circumstances, to
ascertain that the class of shares to be purchased by each investor is
appropriate and suitable. These recommendations should be based on several
factors, including but not limited to:
(A) the amount of money to be invested initially and over a period of
time;
(B) the current level of front-end sales load or back-end sales load
imposed by the Fund;
(C) the period of time over which the client expects to retain the
investment;
(D) the anticipated level of yield from fixed income funds' Class A and
Class B shares;
(E) any other relevant circumstances such as the availability of reduced
sales charges under letters of intent and/or rights of accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity discount
on the front-end sales charge. In addition, shares subject to a contingent
deferred sales charge may be more appropriate for investors whose orders would
not qualify for quantity discounts and who, therefore, may prefer to defer sales
charges and also for investors who determine it to be advantageous to have all
of their funds invested without deduction of a front-end sales commission.
However, if it is anticipated that an investor may redeem his or her shares
within a short period of time, the investor may, depending on the amount of his
or her purchase, bear higher distribution expenses by purchasing contingent
deferred sales charge shares than if he or she had purchased shares subject to a
front-end sales charge.
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Soliciting Dealer Agreement for compliance with the foregoing standards. In
certain instances, it may be appropriate to discuss the purchase with the
registered representatives involved or to review the advantages and
disadvantages of selecting one class of shares over another with the client. The
Distributor will not accept orders for Class B Shares in any Fund from you for
accounts maintained in street name. Trades for Class B Shares will only be
accepted in the name of the shareholder.
7. CLASS C SHARES - Certain mutual funds distributed by the Distributor may be
offered with Class C shares. Refer to each Fund prospectus for availability and
details. Class C shares are designed for institutional investors and qualified
benefit plans, including pension funds, and are sold without a sales charge or
12b-1 fee. If a commission is paid to you for transactions in Class C shares, it
will be paid by the Distributor out of its own resources.
SALES
8. Orders for securities received by you from investors will be for the sale of
the securities at the public offering price, which will be the net asset value
per share as determined in the manner provided in the relevant Fund's
prospectus, as now in effect or as amended from time to time, next after receipt
by us (or the relevant Fund's transfer agent) of the purchase application and
payment for the securities, plus the relevant sales charges set forth in the
relevant Fund's then- current prospectus (the "Public Offering Price"). The
procedures relating to the handling of orders shall be subject to our
instructions which we will forward from time to time to you. All orders are
subject to acceptance by us, and we reserve the right in our sole discretion to
reject any order.
-3-
<PAGE>
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for each Fund.
9. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
10. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then-current prospectus pertaining to "Methods
of Obtaining Reduced Sales Charges," the Reallowance shall be reduced pro rata.
11. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by a registered representative in your employ and remitted to us
promptly by you, (b) where a subsequent investment is made to an account
established by a registered representative in your employ or (c) where a
subsequent investment is made to an account established by a broker/dealer other
than you and is accompanied by a signed request from the account shareholder
that your registered representative receive the Reallowance for that investment
and/or for subsequent investments made in such account. If for any reason, a
purchase transaction is reversed, you shall not be entitled to receive or retain
any part of the Reallowance on such purchase and shall pay to us on demand in
full the amount of the Reallowance received by you in connection with any such
purchase. We may withhold and retain from the amount of the Reallowance due you
a sum sufficient to discharge any amount due and payable by you to us.
12. Certain of the Funds have adopted a plan under Investment Company Act Rule
12b-1 ("Distribution Plan" as described in the the prospectus). To the extent
you provide distribution and marketing services in the promotion of the sale of
shares of these Funds, including furnishing services and assistance to your
customers who invest in and own shares of such Funds and including, but not
limited to, answering routine inquiries regarding such Funds and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule C hereto. All
compensation, including 12b-1 fees, shall be payable to you only to the extent
that funds are received and in the possession of the Distributor.
13. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to your
right to sell the shares of the Funds in any state or jurisdiction.
14. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
15. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates, when
requested, will be delivered to you upon payment in full of the sum due for the
sale of the shares of the Funds. If payment is not so received or made, we
reserve the right forthwith to cancel the sale, or, at our option, to liquidate
the shares of the Fund subject to such sale at the then prevailing net asset
value, in which latter case you will agree to be responsible for any loss
resulting to the Funds or to us from your failure to make payments as aforesaid.
-4-
<PAGE>
INDEMNIFICATION
16. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be deemed
to be a controlling person of each other, from and against any losses, claims,
damages, liabilities or expenses (including reasonable fees of counsel), whether
joint or several, to which any such person or entity may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon, (a) any untrue statement or alleged
untrue statement of material fact, or any omission or alleged omission to state
a material fact made or omitted by it herein, or, (b) any willful misfeasance or
gross misconduct by it in the performance of its duties and obligations
hereunder.
17. NSCC INDEMNITY - SHAREHOLDER AND HOUSE ACCOUNTS - In consideration of the
Distributor and John Hancock Investor Services Corporation ("Investor Services")
liquidating, exchanging, and/or transferring unissued shares of the Funds for
your customers without the use of original or underlying documentation
supporting such instructions (e.g., a signed stock power or signature
guarantee), you hereby agree to indemnify the Distributor, Investor Services and
each respective Fund against any losses, including reasonable attorney's fees,
that may arise from such liquidation exchange, and/or transfer of unissued
shares upon your direction. This indemnification shall apply only to the
liquidation, exchange and/or transfer of unissued shares in shareholder and
house accounts executed as wire orders transmitted via NSCC's Fund/SERVsystem.
You represent and warrant to the Funds, the Distributor and Investor Services
that all such transactions shall be properly authorized by your customers.
The indemnification in this Section 16 shall not apply to any losses
(including attorney's fees) caused by a failure of the Distributor, Investor
Services or a Fund to comply with any of your instructions governing any of the
above transactions, or any negligent act or omission of the Distributor,
Investor Services or a Fund, or any of their directors, officers, employees or
agents. All transactions shall be settled upon your confirmation through NSCC
transmission to Investor Services.
The Distributor, Investor Services or you may revoke the indemnity
contained in this Section 16 upon prior written notice to each of the other
parties hereto, and in the case of such revocation, this indemnity agreement
shall remain effective as to trades made prior to such revocation.
MISCELLANEOUS
18. We will supply to you at our expense additional copies of the prospectus and
statement of additional information for each of the Funds and any printed
information supplemental to such material in reasonable quantities upon request.
19. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
20. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
21. This agreement, which shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, may be terminated by any party hereto at any time
upon written notice.
-5-
<PAGE>
SOLICITING DEALER
-------------------------------------------------
Name of Organization
By:-------------------------------------------------
Authorized Signature of Soliciting Dealer
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the following
information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
-------------------------------- ------------------------------
<TABLE>
<S> <C>
TO BE COMPLETED BY: TO BE COMPLETED BY:
JOHN HANCOCK FUNDS, INC. JOHN HANCOCK INVESTOR
SERVICES CORPORATION
BY: BY:
------------------------------------------- -------------------------------------------
- ---------------------------------------------- ----------------------------------------------
TITLE TITLE
</TABLE>
DEALER NUMBER:
------------------------------------
-6-
<PAGE>
JOHNHANCOCK
MUTUAL FUNDS
John Hancock Broker Distrubution Services, Inc.
101 Huntington Avenue Boston, MA 02199-7608 1-800-225-5291
/s/ John Hancock
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Resources Fund
John Hancock Limited-Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government Securities Fund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Government Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, Inc., as principal distributor of the
John Hancock funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
*Closed to new investors as of 9/30/94
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to the selling Brokers for sales of John Hancock
Funds is set forth in each Fund's then- current prospectus. No Commission will
be paid on sales of John Hancock Cash Management Fund or any John Hancock Fund
that is without a sales charge. Purchases of Class A shares of $1 million or
more, or purchases into an account or accounts whose aggregate value of fund
shares is $1 million or more will be made at net asset value with no initial
sales charge. On purchases of this type, John Hancock Funds, Inc. will pay a
commission as set forth in each Fund's then-current prospectus. John Hancock
Funds, Inc. will pay Brokers for sales of Class B shares of the Funds a
marketing fee as set forth in each Fund's then-current prospectus.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DATED JANUARY 1, 1995 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEES
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, John Hancock Funds, Inc. will advance to you a First Year
Service Fee related to the purchase of Class A shares (only if subject to sales
charge) or Class B shares of any of the Funds, as the case may be, sold by your
firm. This Service Fee will be compensation for your personal service and/or the
maintenance of shareholder accounts ("Customer Servicing") during the
twelve-month period immediately following the purchase of such shares, in the
amount not to exceed .25 of 1% of net assets invested in Class A shares or Class
B shares of the Fund, as the case may be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your firm has under management
with the Funds combined average daily net assets for the preceding quarter of no
less than $1 million, or an individual representative of your firm has under
management with the Funds combined average daily net assets for the preceding
quarter of no less than $250,000 (an "Eligible Firm").
<PAGE>
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
SCHEDULE D
DATED JULY 1, 1992 TO THE
SOLICITING DEALER AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK MUTUAL FUNDS
No broker/dealer shall represent the FUnds or Distribution Services in any
written communications without prior receipt of written approval from John
Hancock Broker Distribution Services, Inc. This includes but is not limited to
all advertising, public relations, marketing and sales literature, and media
contacts.
Further, subsequent to the creation of such materialsbefore written
approval from JHBDS will be given, a copy of the NASD review document applicable
to such materials must be furnished to John Hancock Broker Distribution
Services, Inc. for its review and files.
FOR PURPOSES OF THIS SCHEDULE D, THE FOLLOWING TERMS ARE DEFINED:
Advertising:
materials designed for the mass market, e.g. print ads, radio and tv
commercials, billboards, etc.
Sales literature:
materials designed for a directed market, e.g. prospecting letters,
brochures, mailers, stuffers, etc.
Coop Advertising:
advertising materials (as defined above) used by selling group members
for which John Hancock pays some or all of the costs of publication
whether the materials were developed by JHBDS Marketing or not.
John Hancock Broker Distribution Services, Inc. Approval of Advertising:
Approval has four meanings:approval of the material itself from a
marketing perspective (JHBDS product managers), proactive compliance
officer), parent company corporate advertising approval (John Hancock
Mutual Life Insurance Company Advertising Dept. personnel) and approval
for use and related cost-sharing arrangements (national sales
coordinators).
NASD Filing:
Materials created by JHBDS will be filed with the NASD by the JHBDS
Compliance Department. Materials not created by JHBDS but to be included
in the coop program will be filed with the NASD by the broker-dealer
creating the materials. However, prior to use of the materials in our
coop program, we will need a copy of the final version of the material
as well as the NASDcomment letter. When this is received, the above
approvals can be obtained.
<PAGE>
EXHIBIT 99.B6.2
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
[LOGO]
JOHN HANCOCK FUNDS, INC.
Boston - Massachusetts - 02199-7603
<PAGE>
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MA 02199-7603
FINANCIAL INSTITUTION
SALES AND SERVICE AGREEMENT
Date---------------------------------
John Hancock Funds, Inc. ("The Distributor", or "Distributor"), ("We" or
"us"), is the principal distributor of the shares of beneficial interest (the
"securities") of each of the John Hancock Funds (the "Funds"). Such Funds are
those listed on Schedule A hereto which may be amended or supplemented from time
to time by the Distributor to include additional Funds for which the Distributor
is the principal distributor. You hereby represent that you are a "bank" as
defined in Section 3(a)(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and at the time of each transaction in shares of the
Funds, are not required to register as a broker/dealer under the Exchange Act or
regulations thereunder. We invite you to become a non-exclusive soliciting
financial institution ("Financial Institution") to distribute the securities of
the Funds and you agree to solicit orders for the purchase of the securities on
the following terms. Securities are offered pursuant to each Fund's prospectus
and statement of additional information, as such prospectus and statement of
additional information may be amended from time to time. To the extent that the
prospectus or statement of additional information contains provisions that are
inconsistent with the terms of this Agreement, the terms of the prospectus or
statement of additional information shall be controlling.
OFFERINGS
1. You represent and warrant that you will use your best efforts to ensure that
any purchase of shares of the Funds by your customers constitutes a suitable
investment for such customers. You acknowledge that you will base such a
decision of suitability on all the facts you have gathered about your customer's
financial situation, investment objectives, risk tolerance and sophistication.
2. You represent and warrant that a copy of the then-current prospectus of a
Fund will be delivered to your customer before any purchase of shares of that
Fund are effected for that customer. You shall not effect any transaction in, or
induce any purchase or sale of, any shares of the Funds by means of any
manipulative, deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with respect to
transactions in shares of a Fund.
3. You represent and warrant that you will not make shares of any Fund available
to your customers, including your fiduciary customers, except in compliance with
all Federal and state laws and rules and regulations of regulatory agencies or
authorities applicable to you, or any of your affiliates engaging in such
activity, which may affect your business practices. You confirm that you are not
in violation of any banking law or regulations as to which you are subject. You
agree that you will comply with the requirements of Banking Circular 274 issued
by the Office of the Comptroller of the Currency in offering shares of the Funds
to your customers. We agree that we will comply with all Federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
us. We and you acknowledge and agree that the offering of shares of the Funds
pursuant to this agreement is subject to the oversight of your management and
the regulatory authorities by which you are subject to review, and that
appropriate records and materials relating to any activity by you or us
undertaken pursuant to this agreement may be accessed by bank examiners in the
due course of any regulatory review to which you may be subject.
4. As principal distributor of the Funds, we shall have full authority to take
such action as we deem advisable in respect of all matters pertaining to the
distribution. This offer of shares of the Funds to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Funds.
5. You shall not make any representation concerning the Funds or their
securities except those contained in the then-current prospectus or statement of
additional information for each Fund.
6. We will supply to you at our expense additional copies of the then-current
prospectus and statement of additional information for each of the Funds and any
printed information supplemental to such material in reasonable quantities upon
request. It shall be your obligation to ensure that all such information and
-2-
<PAGE>
materials are distributed to your customers who own or seek to own shares of the
Funds in accordance with securities and/or banking law and regulations and any
other applicable regulations.
7. With the exception of listings of product offerings, you agree not to furnish
or cause to be furnished to any person or display, or publish any information or
materials relating to any Fund (including, without limitation, promotional
materials, sales literature, advertisements, press releases, announcements,
posters, signs and other similar materials), except such information and
materials as may be furnished to you by us the Distributor or the Fund. All
other materials must receive written approval by the Distributor before
distribution or display to the public. Use of all approved advertising and sales
literature materials is restricted to appropriate distribution channels.
8. You are not authorized to act as our agent. In making available shares of the
Funds under this Financial Institution Sales and Service Agreement, nothing
herein shall be construed to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or employee of the
Funds, and you shall not make any representations to the contrary. Nothing shall
constitute you as a syndicate, association, unincorporated business, or other
separate entity or partners with us, but you shall be liable for your
proportionate share of any tax, liability or expense based on any claim arising
from the sale of shares of the Funds under this Agreement. We shall not be under
any liability to you, except for obligations expressly assumed by us in this
Agreement and liabilities under Section 11(f) of the Securities Act of 1933, and
no obligations on our part shall be implied or inferred herefrom.
9. DEALER COMPLIANCE/SUITABILITY STANDARDS (CLASS A AND CLASS B SHARES) -
Certain mutual funds distributed by the Distributor are being offered with two
or more classes of shares of the same investment portfolio ("Fund") - refer to
each Fund prospectus for availability and details. It is essential that the
following minimum compliance/suitability standards be adhered to in offering and
selling shares of these Funds to investors. All soliciting financial
institutions offering shares of the Funds and their agents, employees and
representatives agree to comply with these general suitability and compliance
standards.
SUITABILITY
With two classes of shares of certain funds available to individual
investors, (Class A and Class B), it is important that each investor purchases
not only the fund that best suits his or her investment objective but also the
class of shares that offers the most beneficial distribution financing method
for the investor based upon his or her particular situation and preferences.
Fund share recommendations and orders must be carefully reviewed by you and your
agents, employees and representatives in light of all the facts and
circumstances, to ascertain that the class of shares to be purchased by each
investor is appropriate and suitable. These recommendations should be based on
several factors, including but not limited to:
(A) the amount of money to be invested initially and over
a period of time;
(B) the current level of front-end sales load or back-end
sales load imposed by the Fund;
(C) the period of time over which the customer expects to
retain the investment;
(D) the anticipated level of yield from fixed income funds' Class A and
Class B shares;
(E) any other relevant circumstances such as the availability of reduced
sales charges under letters of intent and/or rights of accumulation.
There are instances when one distribution financing method may be more
appropriate than another. For example, shares subject to a front-end sales
charge may be more appropriate than shares subject to a contingent deferred
sales charge for large investors who qualify for a significant quantity discount
on the front-end sales charge. In addition, shares subject to a contingent
deferred sales charge may be more appropriate for investors whose orders would
not qualify for quantity discounts and who, therefore, may prefer to defer sales
charges and also for investors who determine it to be advantageous to have all
of their funds invested without deduction of a front-end sales commission.
However, if it is anticipated that an investor may redeem his or her shares
within a short period of time, the investor may, depending on the amount of his
or her purchase, bear higher distribution expenses by purchasing contingent
deferred sales charge shares than if he or she had purchased shares subject to a
front-end sales charge.
-3-
<PAGE>
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person reviews and approves transactions entered into pursuant to
this Financial Institution Sales and Service Agreement for compliance with the
foregoing standards. In certain instances, it may be appropriate to discuss the
purchase with the agents, employees and representatives involved or to review
the advantages and disadvantages of selecting one class of shares over another
with the client. The Distributor will not accept orders for Class B Shares in
any Fund from you for accounts maintained in your name or in the name of your
nominee for the benefit of certain of your customers. Trades for Class B Shares
will only be accepted in the name of the shareholder.
10. CLASS C SHARES - Certain mutual funds distributed by the Distributor may be
offered with Class C shares. Refer to each Fund prospectus for availability and
details. Class C shares are designed for institutional investors and qualified
benefit plans, including pension funds, and are sold without a sales charge or
12b-1 fee. If a commission is paid to you for transactions in Class C shares, it
will be paid by the Distributor out of its own resources.
SALES
11. With respect to any and all transactions in the shares of any Fund pursuant
to this Financial Institution Sales and Service Agreement it is understood and
agreed in each case that: (a) you shall be acting solely as agent for the
account of your customer; (b) each transaction shall be initiated solely upon
the order of your customer; (c) we shall execute transactions only upon
receiving instructions from you acting as agent for your customer or upon
receiving instructions directly from your customer; (d) as between you and your
customer, your customer will have full beneficial ownership of all shares; (c)
each transaction shall be for the account of your customer and not for your
account; and (f) unless otherwise agreed in writing we will serve as a clearing
broker for you on a fully disclosed basis, and you shall serve as the
introducing agent for your customers' accounts. Subject to the foregoing,
however, and except for Class B shares, as described in Section 8 above, you may
maintain record ownership of such customers' shares in an account registered in
your name or the name of your nominee, for the benefit of such customers. Each
transaction shall be without recourse to you provided that you act in accordance
with the terms of this Financial Institution Sales and Service Agreement. You
represent and warrant to us that you will have full right, power and authority
to effect transactions (including, without limitation, any purchases and
redemptions) in shares of the Funds on behalf of all customer accounts provided
by you.
12. Orders for securities received by you from your customers will be for the
sale of the securities at the public offering price, which will be the net asset
value per share as determined in the manner provided in the relevant Fund's
prospectus, as now in effect or as amended from time to time, next after receipt
by us (or the relevant Fund's transfer agent) of the purchase application and
payment for the securities, plus the relevant sales charges set forth in the
relevant Fund's then-current prospectus (the "Public Offering Price"). The
procedures relating to the handling of orders shall be subject to our
instructions which we will forward from time to time to you. All orders are
subject to acceptance by us, and we reserve the right in our sole discretion to
reject any order.
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for each Fund.
13. You agree to sell the securities only (a) to your customers at the public
offering price then in effect, or (b) back to the Funds at the currently quoted
net asset value.
14. The amount of sales charge to be reallowed to you (the "Reallowance") as a
percentage of the offering price is set forth in the then-current prospectus of
each Fund.
If a sales charge on the purchase is reduced in accordance with the
provisions of the relevant Fund's then- current prospectus pertaining to
"Methods of Obtaining Reduced Sales Charges," the Reallowance shall be reduced
pro rata.
-4-
<PAGE>
15. We shall pay a Reallowance subject to the provisions of this agreement as
set forth in Schedule B hereto on all purchases made by your customers pursuant
to orders accepted by us (a) where an order for the purchase of securities is
obtained by you and remitted to us promptly by you, (b) where a subsequent
investment is made to an account established by you or (c) where a subsequent
investment is made to an account established by a financial institution or
registered broker/dealer other than you and is accompanied by a signed request
from the account shareholder that you receive the Reallowance for that
investment and/or for subsequent investments made in such account. If for any
reason, a purchase transaction is reversed, you shall not be entitled to receive
or retain any part of the Reallowance on such purchase and shall pay to us on
demand in full the amount of the Reallowance received by you in connection with
any such purchase. We may withhold and retain from the amount of the Reallowance
due you a sum sufficient to discharge any amount due and payable by you to us.
16. Certain of the Funds have adopted a plan under Investment Company Act Rule
12b-1 ("Distribution Plan" as described in the prospectus). To the extent you
provide distribution and marketing services in the promotion of the sale of
shares of these Funds, including furnishing services and assistance to your
customers who invest in and own shares of such Funds and including, but not
limited to, answering routine inquiries regarding such Funds and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule C hereto. All
compensation, including 12b-1 fees, shall be payable to you only to the extent
that funds are received and in the possession of the Distributor.
17. We will advise you as to the jurisdictions in which we believe the shares
have been qualified for sale under the respective securities or "blue sky" laws
of such jurisdictions, but we assume no responsibility or obligations as to your
right to sell the shares of the Funds in any state or jurisdiction.
18. Orders may be placed through:
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, MA 02199-7603
1-800-338-4265
SETTLEMENT
19. Settlements for wire orders shall be made within five business days after
our acceptance of your order to purchase shares of the Funds. Certificates, when
requested, will be delivered to you upon payment in full of the sum due for the
sale of the shares of the Funds. If payment is not so received or made, we
reserve the right forthwith to cancel the sale, or, at our option, to liquidate
the shares of the Fund subject to such sale at the then prevailing net asset
value, in which latter case you will agree to be responsible for any loss
resulting to the Funds or to us from your failure to make payments as aforesaid.
INDEMNIFICATION
20. The parties to this agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be deemed
to be a controlling person of each other, from and against any losses, claims,
damages, liabilities or expenses (including reasonable fees of counsel), whether
joint or several, to which any such person or entity may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon, (a) any untrue statement or alleged
untrue statement of material fact, or any omission or alleged omission to state
a material fact made or omitted by it herein, or, (b) any willful misfeasance or
gross misconduct by it in the performance of its duties and obligations
hereunder.
MISCELLANEOUS
21. Any notice to you shall be duly given if mailed or telegraphed to you at
your address as most recently furnished to us by you.
22. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
23. This agreement, which shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, may be terminated by any party hereto at any time
upon written notice.
-5-
<PAGE>
FINANCIAL INSTITUTION
-------------------------------------------------
Financial Institution
By:
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Authorized Signature of Financial Institution
-------------------------------------------------
Please Print or Type Name
-------------------------------------------------
Title
-------------------------------------------------
Print or Type Address
-------------------------------------------------
Telephone Number
Date:
-------------------------------------------------
In order to service you efficiently, please provide the following
information on your Mutual Funds Operations Department:
OPERATIONS MANAGER:
---------------------------------------------
ORDER ROOM MANAGER:
---------------------------------------------
OPERATIONS ADDRESS:
---------------------------------------------
---------------------------------------------
TELEPHONE: FAX:
--------------------- ----------------------------
TO BE COMPLETED BY: JOHN HANCOCK INVESTOR
JOHN HANCOCK FUNDS, INC. SERVICES CORPORATION
By: By:
--------------------------------- ------------------------------------
- ------------------------------------ ------------------------------------
Title Title
TO BE COMPLETED BY:
FINANCIAL INSTITUTION NUMBER:
----------------------------------------------
-6-
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE A
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
<TABLE>
<S> <C>
John Hancock Sovereign Achievers Fund John Hancock National Aviation & Technology Fund
John Hancock Sovereign Investors Fund John Hancock Regional Bank Fund
John Hancock Sovereign Balanced Fund John Hancock Gold and Government Fund
John Hancock Sovereign Bond Fund John Hancock Global Rx Fund
John Hancock Sovereign U.S. Government Income Fund John Hancock Global Technology Fund
John Hancock Special Equities Fund* John Hancock Global Fund
John Hancock Special Opportunities Fund John Hancock Pacific Basin Equities Fund
John Hancock Discovery Fund John Hancock Global Income Fund
John Hancock Growth Fund John Hancock International Fund
John Hancock Strategic Income Fund John Hancock Global Rescources Fund
John Hancock Limited Term Government Fund John Hancock Emerging Growth Fund
John Hancock Cash Management Fund John Hancock Capital Growth Fund
John Hancock Managed Tax-Exempt Fund John Hancock Growth & Income Fund
John Hancock Tax-Exempt Income Fund John Hancock High Yield Bond Fund
John Hancock Tax-Exempt Series Fund John Hancock Investment Quality Bond Fund
John Hancock Special Value Fund John Hancock Government SecurritiesFund
John Hancock Strategic Short-Term Income Fund John Hancock U.S. Government Fund
John Hancock CA Tax-Free Fund John Hancock Governtment Income Fund
John Hancock High Yield Tax-Free Fund John Hancock Intermediate Government Fund
John Hancock Tax-Free Bond Fund John Hancock Adjustable U.S. Government Fund
John Hancock U.S. Government Cash Reserve Fund John Hancock Cash Reserve Money Market B Fund
</TABLE>
From time to time John Hancock Funds, as principal distributor of the
John Hancock Funds, will offer additional funds for sale. These funds will
automatically become part of this Agreement and will be subject to all its
provisions unless otherwise directed by John Hancock Funds, Inc.
* Closed to new invstors as of 9/30/94.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE B
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
I. REALLOWANCE
The Reallowance paid to Financial Institutions for sales of John Hancock
Funds is the same as that paid to Selling Brokers described and set forth in
each Fund's then-current prospectus. No Commission will be paid on sales of
John Hancock Cash Management Fund or any John Hancock Fund that is without a
sales charge. Purchases of Class A shares of $1 million or more, or
purchases into an account or accounts whose aggregate value of fund shares
is $1 million or more will be made at net asset value with no initial sales
charge. On purchases of this type, the Distributor will pay a commission as
set forth in each Fund's then-current prospectus. John Hancock Funds, Inc.
will pay Financial Institutions for sales of Class B shares of the Funds a
marketing fee as set forth in each Fund's then-current prospectus for
Selling Brokers.
<PAGE>
JOHN HANCOCK FUNDS, INC.
SCHEDULE C
DISTRIBUTION PLAN SCHEDULE OF COMPENSATION
DATED JANUARY 1, 1995 TO THE
FINANCIAL INSTITUTION SALES AND SERVICE
AGREEMENT RELATING TO SHARES OF
JOHN HANCOCK FUNDS
FIRST YEAR SERVICE FEE
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will advance to you a First Year Service
Fee related to the purchase of Class A shares (only if subject to sales charge)
or Class B shares of any of the Funds, as the case maybe, sold by your firm on
or after July 1, 1993. This Service Fee will be compensation for your personal
service and/or the maintenance of shareholder accounts ("Customer Servicing")
during the twelve-month period immediately following the purchase of such
shares, in an amount not to exceed .25 of 1% of the average daily net assets
attributable to Class A shares or Class B shares of the Fund, as the case may
be, purchased by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to each of the Funds
listed in Schedule A, the Distributor will pay you quarterly, in arrears, a
Service Fee commencing at the end of the twelve-month period immediately
following the purchase of Class A shares (only if subject to sales charge) or
Class B shares, as the case may be, sold by your firm, for Customer Servicing,
in an amount not to exceed .25 of 1% of the average daily net assets
attributable to the Class A shares or Class B shares of the Fund, as the case
may be, purchased by your customers, provided your Financial Institution has
under management with the Funds combined average daily net assets for the
preceding quarter of no less than $1 million, or an individual representative of
your Financial Institution has under management with the Funds combined average
daily net assets for the preceding quarter of no less than $250,000 (an
"Eligible Financial Institution").
<PAGE>
EXHIBIT 99.B8
MASTER CUSTODIAN AGREEMENT
between
JOHN HANCOCK MUTUAL FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
2. Employment of Custodian and Property to be held by it . . . . . . . . . . . . . . . 3-4
3. Duties of the Custodian with Respect toProperty of the Fund . . . . . . . . . . . . 4
A. Safekeeping and Holding of Property . . . . . . . . . . . . . . . . . . . . . 4
B. Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
C. Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
E. Payments for Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . 9
F. Investment and Availability of Federal Funds . . . . . . . . . . . . . . . . . 9
G. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10
H. Payment of Fund Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12
I. Liability for Payment in Advance of Receipt of Securities Purchased . . . . . 12-13
J. Payments for Repurchases of Redemptions of Shares of the Fund . . . . . . . . 13
K. Appointment of Agents by the Custodian . . . . . . . . . . . . . . . . . . . . 13
L. Deposit of Fund Portfolio Securities in Securities Systems . . . . . . . . . . 13-16
M. Deposit of Fund Commercial Paper in an Approved
Book-Entry System for Commercial Paper . . . . . . . . . . . . . . . . . . 16-18
N. Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-19
O. Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . 19
P. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Q. Communications Relating to Fund Portfolio Securities . . . . . . . . . . . . . 19-20
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
R. Exercise of Rights; Tender Offers . . . . . . . . . . . . . . . . . . . . . . 20
S. Depository Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21
T. Interest Bearing Call or Time Deposits . . . . . . . . . . . . . . . . . . . . 21
U. Options, Futures Contracts and Foreign Currency Transactions . . . . . . . . . 21-23
V. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . . 23-24
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Records and Miscellaneous Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 24-25
6. Opinion of Fund`s Independent Public Accountants . . . . . . . . . . . . . . . . . . 25
7. Compensation and Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . . 25-26
8. Responsibility of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-27
9. Persons Having Access to Assets of the Fund . . . . . . . . . . . . . . . . . . . . 27
10. Effective Period, Termination and Amendment; Successor Custodian . . . . . . . . . . 27-28
11. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . 28-29
12. Certification as to Authorized Officers . . . . . . . . . . . . . . . . . . . . . . 29
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15. Adoption of the Agreement by the Fund . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE>
MASTER CUSTODIAN AGREEMENT
This Agreement is made as of December 15, 1992 between each investment
company advised by John Hancock Advisers, Inc. which has adopted this Agreement
in the manner provided herein and Investors Bank & Trust Company (hereinafter
called "Bank", "Custodian" and "Agent"), a trust company established under the
laws of Massachusetts with a principal place of business in Boston,
Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean the investment company which has adopted this
Agreement and is listed on Appendix A hereto. If the Fund is a Massachusetts
business trust or Maryland corporation, it may in the future establish and
designate other separate and distinct series of shares, each of which may be
called a "portfolio"; in such case, the term "Fund" shall also refer to each
such separate series or portfolio.
(b) "Board" shall mean the board of directors/trustees/managing general
partners/director general partners of the Fund, as the case may be.
(c) "The Depository Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Authorized Officer", shall mean any of the following officers of the
Trust: The Chairman of the Board of Trustees, the President, a Vice President,
the Secretary, the Treasurer or Assistant Secretary or Assistant Treasurer, or
any other officer of the Trust duly authorized to sign by appropriate resolution
of the Board of Trustees of the Trust.
(e) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
<PAGE>
(f) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository but
only if the Custodian has received a certified copy of a vote of the Board
approving such clearing agency as a securities depository for the Fund.
(g) "Federal Book-Entry System" shall mean the book-entry system referred
to in Rule 17f-4(b) under the Investment Company Act of 1940 for United States
and federal agency securities (i.e., as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart O).
(h) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(i) "Approved Book-Entry System for Commercial Paper" shall mean a system
maintained by the Custodian or by a subcustodian employed pursuant to Section 2
hereof for the holding of commercial paper in book-entry form but only if the
Custodian has received a certified copy of a vote of the Board approving the
participation by the Fund in such system.
(j) The Custodian shall be deemed to have received "proper instructions"
in respect of any of the matters referred to in this Agreement upon receipt of
written or facsimile instructions signed by such one or more person or persons
as the Board shall have from time to time authorized to give the particular
class of instructions in question. Electronic instructions for the purchase and
sale of securities which are transmitted by John Hancock Advisers, Inc. to the
Custodian through the John Hancock equity trading system and the John Hancock
fixed income trading system shall be deemed to be proper instructions; the Fund
shall cause all such instructions to be confirmed in writing. Different persons
may be authorized to give instructions for different purposes. A certified copy
of a vote of the Board may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms and, where
appropriate, may be standing instructions. Unless the vote delegating authority
to any person or persons to give a particular class of instructions specifically
requires that the approval of any person, persons or committee shall first have
been obtained before the Custodian may act on instructions of that class, the
Custodian shall be under no obligation to question the right of the person or
persons giving such instructions in so doing. Oral instructions will be
considered proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral
<PAGE>
instructions to be confirmed in writing. The Fund authorizes the Custodian to
tape record any and all telephonic or other oral instructions given to the
Custodian. Upon receipt of a certificate signed by two officers of the Fund as
to the authorization by the President and the Treasurer of the Fund accompanied
by a detailed description of the communication procedures approved by the
President and the Treasurer of the Fund, "proper instructions" may also include
communications effected directly between electromechanical or electronic devices
provided that the President and Treasurer of the Fund and the Custodian are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
In performing its duties generally, and more particularly in connection with the
purchase, sale and exchange of securities made by or for the Fund, the Custodian
may take cognizance of the provisions of the governing documents and
registration statement of the Fund as the same may from time to time be in
effect (and votes, resolutions or proceedings of the shareholders or the Board),
but, nevertheless, except as otherwise expressly provided herein, the Custodian
may assume unless and until notified in writing to the contrary that so-called
proper instructions received by it are not in conflict with or in any way
contrary to any provisions of such governing documents and registration
statement, or votes, resolutions or proceedings of the shareholders or the
Board.
2. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby appoints and employs the Bank as its Custodian and Agent
in accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Fund agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), by-laws, prospectus, statement of
additional information and distribution agreement with its principal
underwriter, together with such resolutions, votes and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of its
duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Fund held by such subcustodian. Any
foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the Board
and shall be in accordance with and subject to the provisions of said Rule. For
<PAGE>
the purposes of this Agreement, any property of the Fund held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
------------------------------------------------------------
A. SAFEKEEPING AND HOLDING OF PROPERTY The Custodian shall keep safely
all property of the Fund and on behalf of the Fund shall from time
to time receive delivery of Fund property for safekeeping. The
Custodian shall hold, earmark and segregate on its books and
records for the account of the Fund all property of the Fund,
including all securities, participation interests and other assets
of the Fund (1) physically held by the Custodian, (2) held by any
subcustodian referred to in Section 2 hereof or by any agent
referred to in Paragraph K hereof, (3) held by or maintained in The
Depository Trust Company or in Participants Trust Company or in an
Approved Clearing Agency or in the Federal Book- Entry System or in
an Approved Foreign Securities Depository, each of which from time
to time is referred to herein as a "Securities System", and (4)
held by the Custodian or by any subcustodian referred to in Section
2 hereof and maintained in any Approved Book-Entry System for
Commercial Paper.
B. DELIVERY OF SECURITIES The Custodian shall release and deliver
securities or participation interests owned by the Fund held (or
deemed to be held) by the Custodian or maintained in a Securities
System account or in an Approved Book-Entry System for Commercial
Paper account only upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities or participation interests for
the account of the Fund, BUT ONLY against receipt of
payment therefor; if delivery is made in Boston or New York
City, payment therefor shall be made in accordance with
generally accepted clearing house procedures or by use of
Federal Reserve Wire System procedures; if delivery is made
elsewhere payment therefor shall be in accordance with the
then current "street delivery" custom or in accordance with
such procedures agreed to in writing from time to time by
the parties hereto; if the sale is effected through a
Securities System, delivery and payment therefor shall be
made in accordance with the provisions of Paragraph L
hereof; if the sale of commercial paper is to be effected
through an Approved Book-Entry System for Commercial Paper,
delivery and payment therefor shall be made in accordance
with the provisions of Paragraph M hereof; if the
securities are to be sold outside the United States,
delivery may be made in accordance with procedures agreed
to in writing from time to time by the parties hereto; for
the purposes of this subparagraph, the term "sale" shall
include the disposition of a portfolio
<PAGE>
security (i) upon the exercise of an option written by the
Fund and (ii) upon the failure by the Fund to make a
successful bid with respect to a portfolio security, the
continued holding of which is contingent upon the making of
such a bid;
2) Upon the receipt of payment in connection with any
repurchase agreement or reverse repurchase agreement
relating to such securities and entered into by the Fund;
3) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
5) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Paragraph K hereof or into the name
or nominee name of any subcustodian employed pursuant to
Section 2 hereof; or for exchange for a different number of
bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities or participation
interests are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
6) To the broker selling the same for examination in
accordance with the "street delivery" custom; provided that
the Custodian shall adopt such procedures as the Fund from
time to time shall approve to ensure their prompt return to
the Custodian by the broker in the event the broker elects
not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion of
such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
<PAGE>
8) In the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian or any subcustodian employed pursuant to Section
2 hereof;
9) For delivery in connection with any loans of securities
made by the Fund (such loans to be made pursuant to the
terms of the Fund's current registration statement), but
only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may
be in the form of cash or obligations issued by the United
States government, its agencies or instrumentalities.
10) For delivery as security in connection with any borrowings
by the Fund requiring a pledge or hypothecation of assets
by the Fund (if then permitted under circumstances
described in the current registration statement of the
Fund), provided, that the securities shall be released only
upon payment to the Custodian of the monies borrowed,
except that in cases where additional collateral is
required to secure a borrowing already made, further
securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such loan
upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
11) When required for delivery in connection with any
redemption or repurchase of Shares of the Fund in
accordance with the provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any
agreement between the Custodian (or a subcustodian employed
pursuant to Section 2 hereof) and a broker-dealer
registered under the Securities Exchange Act of 1934 and,
if necessary, the Fund, relating to compliance with the
rules of The Options Clearing Corporation or of any
registered national securities exchange, or of any similar
organization or organizations, regarding deposit or escrow
or other arrangements in connection with options
transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian (or a subcustodian
employed pursuant to Section 2 hereof),
and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission
and/or of any
<PAGE>
contract market or commodities exchange or similar
organization, regarding futures margin account deposits or
payments in connection with futures transactions by the
Fund;
14) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a certified
copy of a vote of the Board specifying the securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
C. REGISTRATION OF SECURITIES Securities held by the Custodian (other
than bearer securities) for the account of the Fund shall be
registered in the name of the Fund or in the name of any nominee of
the Fund or of any nominee of the Custodian, or in the name or
nominee name of any agent appointed pursuant to Paragraph K hereof,
or in the name or nominee name of any subcustodian employed
pursuant to Section 2 hereof, or in the name or nominee name of The
Depository Trust Company or Participants Trust Company or Approved
Clearing Agency or Federal Book-Entry System or Approved Book-Entry
System for Commercial Paper; provided, that securities are held in
an account of the Custodian or of such agent or of such
subcustodian containing only assets of the Fund or only assets held
by the Custodian or such agent or such subcustodian as a custodian
or subcustodian or in a fiduciary capacity for customers. All
certificates for securities accepted by the Custodian or any such
agent or subcustodian on behalf of the Fund shall be in "street" or
other good delivery form or shall be returned to the selling broker
or dealer who shall be advised of the reason thereof.
D. BANK ACCOUNTS The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft
or order by the Custodian acting in pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to
the provisions hereof, all cash received by it from or for the
account of the Fund other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each
such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved in writing by two
officers of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be subject to
withdrawal only by the Custodian in that capacity.
<PAGE>
E. PAYMENT FOR SHARES OF THE FUND The Custodian shall make appropriate
arrangements with the Transfer Agent and the principal underwriter
of the Fund to enable the Custodian to make certain it promptly
receives the cash or other consideration due to the Fund for such
new or treasury Shares as may be issued or sold from time to time
by the Fund, in accordance with the governing documents and
offering prospectus and statement of additional information of the
Fund. The Custodian will provide prompt notification to the Fund of
any receipt by it of payments for Shares of the Fund.
F. INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS Upon agreement between
the Fund and the Custodian, the Custodian shall, upon the receipt
of proper instructions, which may be continuing instructions when
deemed appropriate by the parties, invest in such securities and
instruments as may be set forth in such instructions on the same
day as received all federal funds received after a time agreed upon
between the Custodian and the Fund.
G. COLLECTIONS The Custodian shall promptly collect all income and
other payments with respect to registered securities held hereunder
to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall promptly collect all
income and other payments with respect to bearer securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or agent thereof and shall credit such income, as
collected, to the Fund's custodian account.
The Custodian shall do all things necessary and proper in connection with such
prompt collections and, without limiting the generality of the foregoing, the
Custodian shall
1) Present for payment all coupons and other income items
requiring presentations;
2) Present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the
Fund, checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities
System or in an Approved Book-Entry System for Commercial
Paper at the time funds become available to the Custodian;
in the case of securities maintained in The Depository
Trust Company funds shall be deemed available to the Fund
not later than the opening of business on the first
business day after receipt of such funds by the Custodian.
<PAGE>
The Custodian shall notify the Fund as soon as reasonably practicable whenever
income due on any security is not promptly collected. In any case in which the
Custodian does not receive any due and unpaid income after it has made demand
for the same, it shall immediately so notify the Fund in writing, enclosing
copies of any demand letter, any written response thereto, and memoranda of all
oral responses thereto and to telephonic demands, and await instructions from
the Fund; the Custodian shall in no case have any liability for any nonpayment
of such income provided the Custodian meets the standard of care set forth in
Section 8 hereof. The Custodian shall not be obligated to take legal action for
collection unless and until reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights and
other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. PAYMENT OF FUND MONEYS Upon receipt of proper instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of the Fund in the
following cases only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options
on futures contracts purchased for the account of the Fund
but only (a) against the receipt of
(i) such securities registered as provided in
Paragraph C hereof or in proper form for transfer
or
(ii) detailed instructions signed by an officer of the
Fund regarding the participation interests to be
purchased or
(iii) written confirmation of the purchase by the Fund
of the options, futures contracts, forward
contracts or options on futures contracts
by the Custodian (or by a subcustodian employed pursuant to
Section 2 hereof or by a clearing corporation of a national
securities exchange of which the Custodian is a member or
by any bank, banking institution or trust company doing
business in the United States or abroad which is qualified
under the Investment Company Act of 1940 to act as a
custodian and which has been designated by the Custodian as
its agent for this purpose or by the agent specifically
designated in such instructions as representing the
purchasers of a new issue of privately placed securities);
(b) in the case of a purchase effected through a Securities
System, upon receipt of the securities by the Securities
System in accordance with the conditions set forth in
Paragraph L hereof; (c) in the case of a purchase of
commercial paper effected through an Approved Book-Entry
System for Commercial Paper, upon
<PAGE>
receipt of the paper by the Custodian or subcustodian in
accordance with the conditions set forth in Paragraph M
hereof; (d) in the case of repurchase agreements entered
into between the Fund and another bank or a broker-dealer,
against receipt by the Custodian of the securities
underlying the repurchase agreement either in certificate
form or through an entry crediting the Custodian's
segregated, non-proprietary account at the Federal Reserve
Bank of Boston with such securities along with written
evidence of the agreement by the bank or broker-dealer to
repurchase such securities from the Fund; or (e) with
respect to securities purchased outside of the United
States, in accordance with written procedures agreed to
from time to time in writing by the parties hereto;
2) When required in connection with the conversion, exchange
or surrender of securities owned by the Fund as set forth
in Paragraph B hereof;
3) When required for the redemption or repurchase of Shares of
the Fund in accordance with the provisions of Paragraph J
hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments
for the account of the Fund: advisory fees, distribution
plan payments, interest, taxes, management compensation and
expenses, accounting, transfer agent and legal fees, and
other operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated
as deferred expenses;
5) For the payment of any dividends or other distributions to
holders of Shares declared or authorized by the Board; and
6) For any other proper corporate purpose, but only upon
receipt of, in addition to proper instructions, a certified
copy of a vote of the Board, specifying the amount of such
payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
such payment is to be made.
I. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED
In any and every case where payment for purchase of securities for
the account of the Fund is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions signed by two officers of the Fund to so pay
in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had
been received by the Custodian; EXCEPT that in the case of a
repurchase agreement
<PAGE>
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the
account of such bank prior to the receipt of (i) the securities in
certificate form subject to such repurchase agreement or (ii)
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the
Federal Reserve Bank of Boston or (iii) the safekeeping receipt,
PROVIDED that such securities have in fact been so transferred by
book-entry and the written repurchase agreement is received by the
Custodian in due course; AND EXCEPT that if the securities are to
be
purchased outside the United States, payment may be made in
accordance with procedures agreed to from time to time by the
parties hereto.
J. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND From
such funds as may be available for the purpose, but subject to any
applicable votes of the Board and the current redemption and
repurchase procedures of the Fund, the Custodian shall, upon
receipt of written instructions from the Fund or from the Fund's
transfer agent or from the principal underwriter, make funds and/or
portfolio securities available for payment to holders of Shares who
have caused their Shares to be redeemed or repurchased by the Fund
or for the Fund's account by its transfer agent or principal
underwriter.
The Custodian may maintain a special checking account upon which
special checks may be drawn by shareholders of the Fund holding
Shares for which certificates have not been issued. Such checking
account and such special checks shall be subject to such rules and
regulations as the Custodian and the Fund may from time to time
adopt. The Custodian or the Fund may suspend or terminate use of
such checking account or such special checks (either generally or
for one or more shareholders) at any time. The Custodian and the
Fund shall notify the other immediately of any such suspension or
termination.
K. APPOINTMENT OF AGENTS BY THE CUSTODIAN The Custodian may at any
time or times in its discretion appoint (and may at any time
remove) any other bank or trust company (provided such bank or
trust company is itself qualified under the Investment Company Act
of 1940 to act as a custodian or is itself an eligible foreign
custodian within the meaning of Rule 17f-5 under said Act) as the
agent of the Custodian to carry out such of the duties and
functions of the Custodian described in this Section 3 as the
Custodian may from time to time direct; provided, however, that the
appointment of any such agent shall not relieve the Custodian of
any of its responsibilities or liabilities hereunder, and as
between the Fund and the Custodian the Custodian shall be fully
responsible for the acts and omissions of any such agent. For the
purposes of this Agreement, any property of the Fund held by any
such agent shall be deemed to be held by the Custodian hereunder.
<PAGE>
L. DEPOSIT OF FUND PORTFOLIO SECURITIES IN SECURITIES SYSTEMS The
Custodian may deposit and/or maintain securities owned by the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep securities of
the Fund in a Securities System provided that such securities are
maintained in a non-proprietary account ("Account") of the
Custodian or such subcustodian in the Securities System which shall
not include any assets of the Custodian or such subcustodian or any
other person other than assets held by the Custodian or such
subcustodian as a fiduciary, custodian, or otherwise for its
customers.
(b) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund, and the
Custodian shall be fully and completely responsible for maintaining
a recordkeeping system capable of accurately and currently stating
the Fund's holdings maintained in each such Securities System.
(c) The Custodian shall pay for securities purchased in book-entry form
for the account of the Fund only upon (i) receipt of notice or
advice from the Securities System that such securities have been
transferred to the Account, and (ii) the making of any entry on the
records of the Custodian to reflect such payment and transfer for
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund only upon (i) receipt of notice or
advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all notices or
advises from the Securities System of transfers of securities for
the account of the Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be promptly provided to the Fund at
its request.
<PAGE>
The Custodian shall promptly send to the Fund confirmation of each
transfer to or from the
account of the Fund in the form of a written advice or notice of
each such transaction, and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's transactions in the
Securities System for the account of the Fund on the next business
day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to the
Securities System's accounting system, system of internal
accounting controls or procedures for safeguarding securities
deposited in the Securities System; the Custodian shall promptly
send to the Fund any report or other communication relating to the
Custodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System; and the
Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to Section
2 hereof shall promptly send to the Fund and to the Custodian any
report or other communication relating to such agent's or
subcustodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System. The
Custodian's books and records relating to the Fund's participation
in each Securities System will at all times during regular business
hours be open to the inspection of the Fund's authorized officers,
employees or agents.
(e) The Custodian shall not act under this Paragraph L in the absence
of receipt of a certificate of an officer of the Fund that the
Board has approved the use of a particular Securities System; the
Custodian shall also obtain appropriate assurance from the officers
of the Fund that the Board has annually reviewed and approved the
continued use by the Fund of each Securities System, so long as
such review and approval is required by Rule 17f-4 under the
Investment Company Act of 1940, and the Fund shall promptly notify
the Custodian if the use of a Securities System is to be
discontinued; at the request of the Fund, the Custodian will
terminate the use of any such Securities System as promptly as
practicable.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of
its agents or subcustodians or of any of its or their employees or
from any failure of the Custodian or any such agent or subcustodian
to enforce effectively such rights as it may have against the
Securities System or any other person; at the election of the Fund,
it shall be entitled to be
<PAGE>
subrogated to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if
and to the extent that the Fund has not been made whole for any
such loss or damage.
M. DEPOSIT OF FUND COMMERCIAL PAPER IN AN APPROVED BOOK-ENTRY SYSTEM FOR
COMMERCIAL PAPER Upon receipt of proper instructions with respect to
each issue of direct issue commercial paper purchased by the Fund, the
Custodian may deposit and/or maintain direct issue commercial paper
owned by the Fund in any Approved Book-Entry System for Commercial
Paper, in each case only in accordance with applicable Securities and
Exchange Commission rules, regulations, and no-action correspondence,
and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep
commercial paper of the Fund in an Approved Book-Entry
System for Commercial Paper, provided that such paper is
issued in book entry form by the Custodian or subcustodian
on behalf of an issuer with which the Custodian or
subcustodian has entered into a book-entry agreement and
provided further that such paper is maintained in a
non-proprietary account ("Account") of the Custodian or
such subcustodian in an Approved Book-Entry System for
Commercial Paper which shall not include any assets of the
Custodian or such subcustodian or any other person other
than assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial
paper of the Fund which is maintained in an Approved
Book-Entry System for Commercial Paper shall identify by
book-entry each specific issue of commercial paper
purchased by the Fund which is included in the System and
shall at all times during regular business hours be open
for inspection by authorized officers, employees or agents
of the Fund. The Custodian shall be fully and completely
responsible for maintaining a recordkeeping system capable
of accurately and currently stating the Fund's holdings of
commercial paper maintained in each such System.
(c) The Custodian shall pay for commercial paper purchased in
book-entry form for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice
from the issuer that such paper has been issued, sold and
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such purchase,
payment and transfer for the account of the Fund. The
Custodian shall transfer such commercial
<PAGE>
paper which is sold or cancel such commercial paper which
is redeemed for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice that
payment for such paper has been transferred to the Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such transfer or redemption and
payment for the account of the Fund. Copies of all notices,
advises and confirmations of transfers of commercial paper
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be promptly
provided to the Fund at its request. The Custodian shall
promptly send to the Fund confirmation of each transfer to
or from the account of the Fund in the form of a written
advice or notice of each such transaction, and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the System for the
account of the Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or
other communication received or obtained by the Custodian
relating to each System's accounting system, system of
internal accounting controls or procedures for safeguarding
commercial paper deposited in the System; the Custodian
shall promptly send to the Fund any report or other
communication relating to the Custodian's internal
accounting controls and procedures for safeguarding
commercial paper deposited in any Approved Book-Entry
System for Commercial Paper; and the Custodian shall ensure
that any agent appointed pursuant to Paragraph K hereof or
any subcustodian employed pursuant to Section 2 hereof
shall promptly send to the Fund and to the Custodian any
report or other communication relating to such agent's or
subcustodian's internal accounting controls and procedures
for safeguarding securities deposited in any Approved
Book-Entry System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph M in the
absence of receipt of a certificate of an officer of the
Fund that the Board has approved the use of a particular
Approved Book-Entry System for Commercial Paper; the
Custodian shall also obtain appropriate assurance from the
officers of the Fund that the Board
has annually reviewed and approved the continued use by the
Fund of each Approved Book-Entry System for Commercial
Paper, so long as such review and approval is required by
Rule 17f-4 under the Investment Company Act of 1940, and
the Fund shall promptly notify the Custodian if the use of
an Approved Book-Entry System for Commercial Paper is to be
discontinued; at the request of the Fund, the Custodian
will terminate the use of any such System as promptly as
practicable.
<PAGE>
(f) The Custodian (or subcustodian, if the Approved Book-Entry
System for Commercial Paper is maintained by the
subcustodian) shall issue physical commercial paper or
promissory notes whenever requested to do so by the Fund or
in the event of an electronic system failure which impedes
issuance, transfer or custody of direct issue commercial
paper by book-entry.
(g) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of any Approved
Book-Entry System for Commercial Paper by reason of any
negligence, misfeasance or misconduct of the Custodian or
any of its agents or subcustodians or of any of its or
their employees or from any failure of the Custodian or any
such agent or subcustodian to enforce effectively such
rights as it may have against the System, the issuer of the
commercial paper or any other person; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the System, the issuer of the commercial paper or any other
person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
N. SEGREGATED ACCOUNT The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Paragraph L hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and any registered
broker-dealer (or any futures commission merchant), relating to
compliance with the rules of the Options Clearing Corporation and
of any registered national securities exchange (or of the Commodity
Futures Trading Commission or of any contract market or commodities
exchange), or of any similar
organization or organizations, regarding escrow or deposit or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of segregating cash or U.S. Government securities in
connection with options purchased, sold or written by the Fund or
futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper purposes,
but only, in the case of clause (iv), upon receipt of, in addition
to proper instructions, a certificate signed by two officers of the
Fund, setting forth the purpose such segregated account and
declaring such purpose to be a proper purpose.
<PAGE>
O. OWNERSHIP CERTIFICATES FOR TAX PURPOSES The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
P. PROXIES The Custodian shall, with respect to the securities held by
it hereunder, cause to be promptly delivered to the Fund all forms
of proxies and all notices of meetings and any other notices or
announcements or other written information affecting or relating to
the securities, and upon receipt of proper instructions shall
execute and deliver or cause its nominee to execute and deliver
such proxies or other authorizations as may be required. Neither
the Custodian nor its nominee shall vote upon any of the securities
or execute any proxy to vote thereon or give any consent or take
any other action with respect thereto (except as otherwise herein
provided) unless ordered to do so by proper instructions.
Q. COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES The Custodian
shall deliver promptly to the Fund all written information
(including, without limitation, pendency of call and maturities of
securities and participation interests and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the Custodian from
issuers and other persons relating to the securities and
participation interests being held for the Fund. With respect to
tender or exchange offers, the Custodian shall deliver promptly to
the Fund all written information
received by the Custodian from issuers and other persons relating
to the securities and participation interests whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer.
R. EXERCISE OF RIGHTS; TENDER OFFERS In the case of tender offers,
similar offers to purchase or exercise rights (including, without
limitation, pendency of calls and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options and the
maturity of futures contracts) affecting or relating to securities
and participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for promptly
notifying the Fund of all such offers in accordance with the
standard of reasonable care set forth in Section 8 hereof. For all
such offers for which the Custodian is responsible as provided in
this Paragraph R, the Fund shall have responsibility for providing
the Custodian with all necessary instructions in timely fashion.
Upon receipt of proper instructions, the Custodian shall timely
deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, rights or similar
<PAGE>
securities for the purpose of being exercised or sold upon proper
receipt therefor and upon receipt of assurances satisfactory to the
Custodian that the new securities and cash, if any, acquired by
such action are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof. Upon receipt of
proper instructions, the Custodian shall timely deposit securities
upon invitations for tenders of securities upon proper receipt
therefor and upon receipt of assurances satisfactory to the
Custodian that the consideration to be paid or delivered or the
tendered securities are to be returned to the Custodian or
subcustodian employed pursuant to Section 2 hereof. Notwithstanding
any provision of this Agreement to the contrary, the Custodian
shall take all necessary action, unless otherwise directed to the
contrary by proper instructions, to comply with the terms of all
mandatory or compulsory exchanges, calls, tenders, redemptions, or
similar rights of security ownership, and shall thereafter promptly
notify the Fund in writing of such action.
S. DEPOSITORY RECEIPTS The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign
securities to the depository used by an issuer of American
Depository Receipts, European Depository Receipts or International
Depository Receipts (hereinafter collectively referred to as
"ADRs") for such securities,
against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that
the depository has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of a nominee of
the Custodian or in the name or nominee name of any subcustodian
employed pursuant to Section 2 hereof, for delivery to the
Custodian or such subcustodian at such place as the Custodian or
such subcustodian may from time to time designate. The Custodian
shall, upon receipt of proper instructions, surrender ADRs to the
issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory
to the Custodian that the issuer of the ADRs has acknowledged
receipt of instructions to cause its depository to deliver the
securities underlying such ADRs to the Custodian or to a
subcustodian employed pursuant to Section 2 hereof.
T. INTEREST BEARING CALL OR TIME DEPOSITS The Custodian shall, upon
receipt of proper instructions, place interest bearing fixed term
and call deposits with the banking department of such banking
institution (other than the Custodian) and in such amounts as the
Fund may designate. Deposits may be denominated in U.S. Dollars or
other currencies. The Custodian shall include in its records with
respect to the assets of the Fund appropriate notation as to the
amount and currency of each such deposit, the accepting banking
institution and other appropriate details and shall retain such
forms of advice or receipt evidencing the deposit, if any, as may
be forwarded to the Custodian by the banking
<PAGE>
institution. Such deposits shall be deemed portfolio securities of
the applicable Fund for the purposes of this Agreement, and the
Custodian shall be responsible for the collection of income from
such accounts and the transmission of cash to and from such
accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
------------------------------------------------------------
1. OPTIONS. The Custodians shall, upon receipt of proper
instructions and in accordance with the provisions of any
agreement between the Custodian, any registered
broker-dealer and, if necessary, the Fund, relating to
compliance with the rules of the Options Clearing
Corporation or of any registered national securities
exchange or similar organization or organizations, receive
and retain confirmations or other documents, if any,
evidencing the purchase or writing of an option on a
security, securities index, currency or other financial
instrument or index by the Fund;
deposit and maintain in a segregated account for each Fund
separately, either physically or by book-entry in a
Securities System, securities subject to a covered call
option written by the Fund; and release and/or transfer
such securities or other assets only in accordance with a
notice or other communication evidencing the expiration,
termination or exercise of such covered option furnished by
the Options Clearing Corporation, the securities or options
exchange on which such covered option is traded or such
other organization as may be responsible for handling such
options transactions. The Custodian and the broker-dealer
shall be responsible for the sufficiency of assets held in
each Fund's segregated account in compliance with
applicable margin maintenance requirements.
2. FUTURES CONTRACTS The Custodian shall, upon receipt of
proper instructions, receive and retain confirmations and
other documents, if any, evidencing the purchase or sale of
a futures contract or an option on a futures contract by
the Fund; deposit and maintain in a segregated account, for
the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation
"margin" deposits (including mark- to-market payments)
intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold
or any options on futures contracts written by Fund, in
accordance with the provisions of any agreement or
agreements among the Fund, the Custodian and such futures
commission merchant, designed to comply with the rules of
the Commodity Futures Trading Commission and/or of any
contract market or commodities exchange or similar
organization regarding such margin deposits or payments;
and release and/or transfer assets in such margin accounts
only in
<PAGE>
accordance with any such agreements or rules. The Custodian
and the futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated
account in compliance with the applicable margin
maintenance and mark-to-market payment requirements.
3. FOREIGN EXCHANGE TRANSACTIONS The Custodian shall, pursuant
to proper instructions, enter into or cause a subcustodian
to enter into foreign exchange contracts, currency swaps or
options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of the
Fund. Such transactions may be undertaken by the Custodian
or subcustodian with such
banking or financial institutions or other currency
brokers, as set forth in proper instructions. Foreign
exchange contracts, swaps and options shall be deemed to be
portfolio securities of the Fund; and accordingly, the
responsibility of the Custodian therefor shall be the same
as and no greater than the Custodian's responsibility in
respect of other portfolio securities of the Fund. The
Custodian shall be responsible for the transmittal to and
receipt of cash from the currency broker or banking or
financial institution with which the contract or option is
made, the maintenance of proper records with respect to the
transaction and the maintenance of any segregated account
required in connection with the transaction. The Custodian
shall have no duty with respect to the selection of the
currency brokers or banking or financial institutions with
which the Fund deals or for their failure to comply with
the terms of any contract or option. Without limiting the
foregoing, it is agreed that upon receipt of proper
instructions and insofar as funds are made available to the
Custodian for the purpose, the Custodian may (if determined
necessary by the Custodian to consummate a particular
transaction on behalf and for the account of the Fund) make
free outgoing payments of cash in the form of U.S. dollars
or foreign currency before receiving confirmation of a
foreign exchange contract or swap or confirmation that the
countervalue currency completing the foreign exchange
contract or swap has been delivered or received. The
Custodian shall not be responsible for any costs and
interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third
parties to deliver foreign exchange; provided that the
Custodian shall nevertheless be held to the standard of
care set forth in, and shall be liable to the Fund in
accordance with, the provisions of Section 8.
V. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY The Custodian may in its
discretion, without express authority from the Fund:
<PAGE>
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, PROVIDED, that all such
payments shall be accounted for by the Custodian to the
Treasurer of the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and
property of the Fund except as otherwise directed by the
Fund.
4. Duties of Bank with Respect to Books of Account and Calculations of Net
Asset Value
-----------------------------------------------------------------------
The Bank shall as Agent (or as Custodian, as the case may be) keep such books of
account and render as at the close of business on each day a detailed statement
of the amounts received or paid out and of securities received or delivered for
the account of the Fund during said day and such other statements, including a
daily trial balance and inventory of the Fund's portfolio securities; and shall
furnish such other financial information and data as from time to time requested
by the Treasurer or any authorized officer of the Fund; and shall compute and
determine, as of the close of regular trading on the New York Stock Exchange, or
at such other time or times as the Board may determine, the net asset value of a
Share in the Fund, such computation and determination to be made in accordance
with the governing documents of the Fund and the votes and instructions of the
Board at the time in force and applicable, and promptly notify the Fund and its
investment adviser and such other persons as the Fund may request of the result
of such computation and determination. In computing the net asset value the
Custodian may rely upon security quotations received by telephone or otherwise
from sources or pricing services designated by the Fund by proper instructions,
and may further rely upon information furnished to it by any authorized officer
of the Fund relative (a) to liabilities of the Fund not appearing on its books
of account, (b) to the existence, status and proper treatment of any reserve or
reserves, (c) to any procedures established by the Board regarding the valuation
of portfolio securities, and (d) to the value to be assigned to any bond, note,
debenture, Treasury bill, repurchase agreement, subscription right, security,
participation interest or other asset or property for which market quotations
are not readily available.
5. Records and Miscellaneous Duties
--------------------------------
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund
<PAGE>
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and state
tax laws and any other law or administrative rules or procedures which may be
applicable to the Fund. All books of account and records maintained by the Bank
in connection with the performance of its duties under this Agreement shall be
the property of the Fund, shall at all times during the regular business hours
of the Bank be open for inspection by authorized officers, employees or agents
of the Fund, and in the event of termination of this Agreement shall be
delivered to the Fund or to such other person or persons as shall be designated
by the Fund. Disposition of any account or record after any required period of
preservation shall be only in accordance with specific instructions received
from the Fund. The Bank shall assist generally in the preparation of reports to
shareholders, audits of accounts, and other ministerial matters of like nature;
and, upon request, shall furnish the Fund's auditors with an attested inventory
of securities held with appropriate information as to securities in transit or
in the process of purchase or sale and with such other information as said
auditors may from time to time request. The Custodian shall also maintain
records of all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic verifications
(including sampling counts at the Custodian) of certificates representing bonds
and other securities for which it is responsible under this Agreement in such
manner as the Custodian shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. The Bank shall not disclose or
use any books or records it has prepared or maintained by reason of this
Agreement in any manner except as expressly authorized herein or directed by the
Fund, and the Bank shall keep confidential any information obtained by reason of
this Agreement.
6. Opinion of Fund's Independent Public Accountants
------------------------------------------------
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to enable the Fund to obtain from year to year favorable opinions
from the Fund's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement and Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
7. Compensation and Expenses of Bank
---------------------------------
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Fund and the
Bank. The Bank shall entitled to receive from the Fund on demand reimbursement
for its cash disbursements, expenses and charges, including counsel fees, in
connection with its duties as Custodian and Agent hereunder, but excluding
salaries and usual overhead expenses.
8. Responsibility of Bank
----------------------
<PAGE>
So long as and to the extent that it is in the exercise of reasonable care, the
Bank as Custodian and Agent shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement but shall be liable only for
its own negligent or bad faith acts or failures to act. Notwithstanding the
foregoing, nothing contained in this paragraph is intended to nor shall it be
construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to subcustodians
generally in Section 2 hereof, provided that, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign county including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
acts of war, civil war or terrorism, insurrection, revolution, military or
usurped powers, nuclear fission, fusion or radiation, earthquake, storm or other
disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Bank, result in the Bank or its nominee assigned to the Fund
being liable for the payment of money or incurring liability of some other form,
the Fund, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
9. Persons Having Access to Assets of the Fund
-------------------------------------------
(i) No trustee, director, general partner, officer, employee or
agent of the Fund shall have physical access to the assets
of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor
shall the Custodian deliver any assets of the Fund to any
such person. No officer or director, employee or agent of
the Custodian who holds any similar position with the Fund
or the
<PAGE>
investment adviser of the Fund shall have access to the
assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only be
available to duly authorized officers, employees,
representatives or agents of the Custodian or other persons
or entities for whose actions the Custodian shall be
responsible to the extent permitted hereunder, or to the
Fund's independent public accountants in connection with
their auditing duties performed on behalf of the Fund.
(iii) Nothing in this Section 9 shall prohibit any officer,
employee or agent of the Fund or of the investment adviser
of the Fund from giving instructions to the Custodian or
executing a certificate so long as it does not result in
delivery of or access to assets of the Fund prohibited by
paragraph (i) of this Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
----------------------------------------------------------------
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; provided, that the Fund may at any
time by action of its Board, (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or by the Banking Commissioner of The Commonwealth of Massachusetts
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Upon termination of the
Agreement, the Fund shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
Unless the holders of a majority of the outstanding Shares of the Fund vote to
have the securities, funds and other properties held hereunder delivered and
paid over to some other bank or trust company, specified in the vote, having not
less than $2,000,000 of aggregate capital, surplus and undivided profits, as
shown by its last published report, and meeting such other qualifications for
custodians set forth in the Investment Company Act of 1940, the Board shall,
forthwith, upon giving or receiving notice of termination of this Agreement,
appoint as successor custodian, a bank or trust company having such
qualifications. The Bank, as Custodian, Agent or otherwise, shall, upon
termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no such vote has been
<PAGE>
adopted by the shareholders and that no written order designating a successor
custodian shall have been delivered to the Bank on or before the date when such
termination shall become effective, then the Bank shall not deliver the
securities, funds and other properties of the Fund to the Fund but shall have
the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all funds, securities and properties of the Fund held by or
deposited with the Bank, and all books of account and records kept by the Bank
pursuant to this Agreement, and all documents held by the Bank relative thereto.
Thereafter such bank or trust company shall be the successor of the Custodian
under this Agreement.
11. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
governing instruments of the Fund. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
12. Certification as to Authorized Officers
---------------------------------------
The Secretary of the Fund shall at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of the
names and signatures of the authorized officers of each fund, it being
understood that upon the occurence of any change in the information set forth in
the most recent certification on file (including without limitation any person
named in the most recent certification who has ceased to hold the office
designated therein), the Secretary of the Fund shall sign a new or amended
certification setting forth the change and the new, additional or ommitted names
or signatures. The Bank shall be entitled to rely and act upon any officers
named in the most recent certification.
13. Notices
-------
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to Thomas H. Drohan, John Hancock Advisers, Inc., 101 Huntington
Avenue, Boston, Massachusetts 02199, or to such other address as the Fund may
have designated to the Bank, in writing, or to Investors Bank & Trust Company,
24 Federal Street, Boston, Massachusetts 02110, shall be deemed to have been
properly delivered or given hereunder to the respective addressees.
<PAGE>
14. Massachusetts Law to Apply; Limitations on Liability
----------------------------------------------------
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts.
If the Fund is a Massachusetts business trust, the Custodian expressly
acknowledges the provision in the Fund's declaration of trust limiting the
personal liability of the trustees and shareholders of the Fund; and the
Custodian agrees that it shall have recourse only to the assets of the Fund for
the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund. Each
Fund, and each series or portfolio of a Fund, shall be liable only for its own
obligations to the Custodian under this Agreement and shall not be jointly or
severally liable for the obligations of any other Fund, series or portfolio
hereunder.
<PAGE>
15. Adoption of the Agreement by the Fund
-------------------------------------
The Fund represents that its Board has approved this Agreement and has duly
authorized the Fund to adopt this Agreement. This Agreement shall be deemed to
supersede and terminate, as of the date first written above, all prior
agreements between the Fund and the Bank relating to the custody of the Fund's
assets.
* * * *
<PAGE>
In Witness Whereof, the parties hereto have caused this agreement to be executed
in duplicate as of the date first written above by their respective officers
thereunto duly authorized.
John Hancock Mutual Funds
by: /s/ Robert G. Freedman
----------------------
Attest:
/s/Avery P. Maher
- -----------------
Investors Bank & Trust Company
by: /s/ Henry M. Joyce
------------------
Attest:
/s/ JM Keenan
- -------------
<PAGE>
Page 1 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Limited Term Government Fund
John Hancock Capital Series
John Hancock Special Value Fund
John Hancock Growth Fund
John Hancock Income Securities Trust John Hancock Investors Trust John Hancock
Sovereign Bond Fund John Hancock Sovereign Investors Fund, Inc.
John Hancock Sovereign Investors Fund
John Hancock Sovereign Balanced Fund
John Hancock Special Equities Fund
John Hancock Strategic Series
John Hancock Independence Diversified Core Equity Fund
John Hancock Strategic Income Fund
John Hancock Utilities Fund
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Exempt Series Fund
California Portfolio
Massachusetts Portfolio
New York Portfolio
John Hancock Technology Series, Inc.
John Hancock National Aviation & Technology Fund
John Hancock Global Technology Fund
Freedom Investment Trust
John Hancock Gold & Government Fund
John Hancock Regional Bank Fund
John Hancock Sovereign U.S. Government Income Fund
John Hancock Managed Tax-Exempt Fund
John Hancock Sovereign Achievers Fund
Freedom Investment Trust II
John Hancock Special Opportunities Fund
Freedom Investment Trust III
John Hancock Discovery Fund
<PAGE>
Page 2 of 2
INVESTORS BANK & TRUST COMPANY
APPENDIX A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Series, Inc.
John Hancock Emerging Growth Fund
John Hancock Global Resources Fund
John Hancock Government Income Fund
John Hancock High Yield Bond Fund
John Hancock High Yield Tax-Free Fund
John Hancock Money Market Fund B
John Hancock Cash Reserve, Inc.
John Hancock Current Interest
John Hancock U.S. Government Cash Reserve
John Hancock Capital Growth Fund
John Hancock Investment Trust
John Hancock Growth and Income Fund
John Hancock California Tax-Free Income Fund
John Hancock Tax-Free Bond Fund
John Hancock Bond Fund
John Hancock Investment Quality Bond Fund
John Hancock Government Securities Trust
John Hancock U.S. Government Trust
John Hancock Adjustable U.S. Government Trust
John Hancock Adjustable U.S. Government Fund
John Hancock Intermediate Government Trust
John Hancock Institutional Series Trust John Hancock Berkeley Dividend
Performers Fund John Hancock Berkeley Bond Fund John Hancock Berkeley
Fundamental Value Fund John Hancock Berkeley Sector Opportunity Fund
John Hancock Independence Diversified Core Equity Fund II John Hancock
Independence Value Fund John Hancock Independence Growth Fund John
Hancock Independence Medium Capitalization Fund John Hancock
Independence Balanced Fund
<PAGE>
EXHIBIT 99.B9
JOHN HANCOCK EXEMPT INCOME TRUST
TRANSFER AGENCY AND SERVICE AGREEMENT
Dated January 1, 1991
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of January, 1991 by and between John
Hancock Exempt Income Trust, a Massachusetts business trust, having its
principal office and place of business at 101 Huntington Avenue, Boston,
Massachusetts (the "Fund"), and John Hancock Fund Services, Inc., a Delaware
corporation having its principal office and place of business at 101 Huntington
Avenue, Boston, Massachusetts 02117 ("JHFSI").
WITNESSETH:
WHEREAS, the Fund desires to appoint JHFSI as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and JHFSI desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1 TERMS OF APPOINTMENT: DUTIES OF JHFSI
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby, employs and appoints JHFSI to act as, and JHFSI agrees to act
as transfer agent for the Fund's authorized and issued shares of capital stock
("Shares"), with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") and set out in the currently effective
prospectus of the Fund, including without limitation any periodic investment
plan or periodic withdrawal program.
1.02 JHFSI agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and JHFSI, JHFSI shall:
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefor to the Custodian of the Fund
authorized pursuant to the Declaration of Trust of the
Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance, redemption requests and
redemption directions and deliver the appropriate
documentation therefor to the Custodian;
(iv) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund; and
(vii) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
(viii) Record the issuance of Shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of Shares of the Fund which are authorized, based
upon data provided to it by the Fund, and issued and
outstanding. JHFSI shall also provide the Fund on a
regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance
of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the
Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), JHFSI shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program); including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmations forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and (ii) provide
a system which will enable the Fund to monitor the total number of Shares sold
in each State.
(c) In addition, the Fund shall (i) identify to JHFSI in writing those
transactions and assets to be treated as exempt from the blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of JHFSI for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Additionally, JHFSI shall:
(i) Utilize a system to identify all share transactions which
involve purchase and redemption orders that are processed at a time
other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect
upon the Fund of such transactions so identified on a daily and
cumulative basis.
(ii) If upon any day the cumulative net effect of such
transactions upon the Fund is negative and exceed a dollar amount
equivalent to 1/2 of 1 cent per share, JHFSI shall promptly make a
payment to the Fund in cash or through the use of a credit, in the
manner described in paragraph (iv) below, in such amount as may be
necessary to reduce the negative cumulative net effect to less than 1/2
of 1 cent per share.
(iii) If on the last business day of any month the cumulative
net effect upon the Fund (adjusted by the amount of all prior payments
and credits by JHFSI and the Fund) is negative, the Fund shall be
entitled to a reduction in the fee next payable under the Agreement by
an equivalent amount, except as provided in paragraph (iv) below. If on
the last business day in any month the cumulative net effect upon the
Fund (adjusted by the amount of all prior payments and credits by JHFSI
and the Fund) is positive, JHFSI shall be entitled to recover certain
past payments and reductions in fees, and to credit against all future
payments and fee reductions that may be required under the Agreement as
herein described in paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net
effect upon the Fund shall be deemed to be a credit to JHFSI which shall
first be applied to permit JHFSI to recover any prior cash payments and
fee reductions made by it to the Fund under paragraphs (ii) and (iii)
above during the calendar year, by increasing the amount of the monthly
fee under the Agreement next payable in an amount equal to prior
payments and fee reductions made by JHFSI during such calendar year, but
not exceeding the sum of that month's credit and credits arising in
prior months during such calendar year to the extent such prior credits
have not previously been utilized as contemplated by this paragraph. Any
portion of a credit to JHFSI not so used by it shall remain as a credit
to be used as payment against the amount of any future negative
cumulative net effects that would otherwise require a cash payment or
fee reduction to be made to the Fund pursuant to paragraphs (ii) or
(iii) above (regardless of whether or not the credit or any portion
thereof arose in the same calendar year as that in which the negative
cumulative net effects or any portion thereof arose).
(v) JHFSI shall supply to the Fund from time to time, as
mutually agreed upon, reports summarizing the transactions identified
pursuant to paragraph (i) above, and the daily and cumulative net
effects of such transactions, and shall advise the Fund at the end of
each month of the net cumulative effect at such time. JHFSI shall
promptly advise the Fund if at any time the cumulative net effect
exceeds a dollar amount equivalent to 1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever
cause, or this provision 1.02 (d) is terminated pursuant to paragraph
(vii) below, the Fund shall promptly pay to JHFSI an amount in cash
equal to the amount by which the cumulative net effect upon the Fund is
positive or, if the cumulative net effect upon the Fund is negative,
JHFSI shall promptly pay to the Fund an amount in cash equal to the
amount of such cumulative net effect.
(vii) This provision 1.02 (d) of the Agreement may be terminated
by JHFSI at any time without cause, effective as of the close of
business on the date written notice (which may be by telex) is received
by the Fund.
Procedures applicable to certain of these services may be establishes
from time to time by agreement between the Fund and JHFSI.
ARTICLE 2 FEES AND EXPENSES
2.01 For performance by JHFSI pursuant to this Agreement, the Fund
agrees to pay JHFSI an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and JHFSI.
2.02 In addition to the fee paid under Section 2.01 above. the Fund
agrees to reimburse JHFSI for out-of-pocket expenses or advances incurred by
JHFSI for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by JHFSI at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses promptly
following the mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to JHFSI by the Fund at least seven (7) days prior to the
mailing date of such materials.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF JHFSI
JHFSI represents and warrants to the Fund that:
3.01 It is a Delaware corporation duly organized and existing and in
good standing under the laws of the State of Delaware, and as a Foreign
Corporation under the Laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to JHFSI that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All Trust proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified investment company registered
under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
ARTICLE 5 INDEMNIFICATION
5.01 JHFSI shall not be responsible for, and the Fund shall indemnify
and hold JHFSI harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(a) All actions of JHFSI or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by JHFSI or its agents or subcontractors of
information, records and documents which (i) are received by JHFSI or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund.
(d) The reliance on, or the carrying out by JHFSI or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 JHFSI shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liabilities arising out of or attributed to any action or failure or
omission to act by JHFSI as a result of JHFSI's lack of good faith, negligence
or willful misconduct.
5.03 At any time JHFSI may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by JHFSI under this
Agreement, and JHFSI and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. JHFSI, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided JHFSI or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. JHFSI, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Fund, and the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
ARTICLE 6 COVENANTS OF THE FUND AND JHFSI
6.01 The Fund shall promptly furnish to JHFSI the following:
(a) A certified copy of the resolution of the Trustee of the Fund
authorizing the appointment of JHFSI and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
6.02 JHFSI hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 JHFSI shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, JHFSI agrees that all such records prepared or maintained
by JHFSI relating to the services to be performed by JHFSI hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered to the Fund on
and in accordance with its request.
6.04 JHFSI and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, JHFSI will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
instruction. JHFSI reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
ARTICLE 7 TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, JHFSI reserves the right to charge for any other
reasonable expenses associated with such termination.
ARTICLE 8 ASSIGNMENT
8.01 Except as provided in Section 8.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
8.03 JHFSI may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A (c)(1) of the Securities Exchange Act of
1934 ("Section 17A (c)(1)"), (ii) 440 Financial Group, (iii) or any other entity
JHFSI deems appropriate in order to comply with the terms and conditions of this
Agreement, provided, however, that JHFSI shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions.
ARTICLE 9 AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Trustees of the Fund.
ARTICLE 10 MASSACHUSETTS LAW TO APPLY
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and In accordance with the laws of The Commonwealth of
Massachusetts.
ARTICLE 11 MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
12.01 The name John Hancock Tax-Exempt Income Trust is the designation of
the Trustees under the Declaration of Trust dated November 30, 1976, as amended
from time to time. The obligations of such Trust as not personally binding upon,
nor shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the Trust's property only shall
be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: JOHN HANCOCK TAX-EXEMPT TRUST
/s/ Thomas H. Drohan BY: /s/ Edward J. Boudreau, Jr.
ATTEST: JOHN HANCOCK FUND SERVICES, INC.
/s/ Thomas H. Drohan BY: /s/ Robert H. Watts
EXHIBIT 99.B10
April 25, 1995
EDGAR
Securities and Exchange Commission
File Desk
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
RE: John Hancock Tax-Exempt Income Fund (the "Fund")
File Nos. 2-57785; 811-2712 (0000202049)
Ladies and Gentlemen:
Enclosed herewith for filing on behalf of the Fund pursuant to (1) the
Securities Act of 1933, as amended (the "1933 Act"), and Rules 472 and 485(b)
thereunder, (2) the Investment Company Act of 1940, as amended (the "1940 Act")
and Rules 8b-11 and 24e-2 thereunder and (3) General Instruction D to Form N-1A
is Post-Effective Amendment No. 23 (Amendment No. 18 under the 1940 Act) to the
Fund's Registration Statement on Form N-1A (the "Amendment"), including the
prospectus and statement of additional information of the Fund, Part C and
exhibits, all marked to show changes from the current Registration Statement.
One copy of the filing has been manually signed by the persons specified in
Section 6(a) of the 1933 Act and is held with the Fund's records.
The Amendment is being filed pursuant to paragraph (b) of Rule 485 and is
intended to become effective on May 1, 1995. The purposes for which the
Amendment is being filed include updating annual financial information in
accordance with Section 10(a)(3) of the 1933 Act, registering shares under Rule
24e-2 and making certain non-material changes.
If you have any questions or comments please call me collect at (617) 375-1672.
Sincerely,
Avery P. Maher
Enclosures
EXHIBIT 99.B11
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
We consent to the references to our firm under the captions "The Fund's
Financial Highlights" in the Class A and Class B Shares Prospectus and
"Independent Auditors" in the Class A and Class B Shares Statement of Additional
Information and to the use, in this Post-Effective Amendment Number 23 to
Registration Statement (Form N-1A No. 2-57785 ) dated May 1, 1995, of our report
on the financial statements and financial highlights of John Hancock Tax-Exempt
Income Fund dated February 13, 1995.
Ernst & Young LLP
Boston, Massachusetts
April 24, 1995
<PAGE>
EXHIBIT 99.B15
JOHN HANCOCK TAX-EXEMPT INCOME FUND
Amended and Restated Distribution Plan
Class A Shares
January 3, 1994
ARTICLE I. THIS PLAN
This amended and restated Distribution Plan (the "Plan") sets forth the
terms and conditions on which John Hancock Tax-Exempt Income Fund (the "Fund"),
on behalf of its Class A shares, will, after the effective date hereof, pay
certain amounts to John Hancock Broker Distribution Services, Inc. ("Broker
Services") in connection with the provision by Broker Services of certain
services to the Fund and its Class A shareholders, as set forth herein. Certain
of such payments by the Fund may, under Rule 12b-1 of the Securities and
Exchange Commission, as from time to time amended (the "Rule"), under the
Investment Company Act of 1940, as amended (the "Act"), be deemed to constitute
the financing of distribution by the Fund of its shares. This Plan describes all
material aspects of such financing as contemplated by the Rule and shall be
administered and interpreted, and implemented and continued, in a manner
consistent with the Rule. The Fund and Broker Services heretofore entered into a
Distribution Agreement, dated January 13, 1977 (the "Agreement"), the terms of
which, as heretofore and from time to time continued, are incorporated herein by
reference.
ARTICLE II. DISTRIBUTION AND SERVICE EXPENSES
The Fund shall pay to Broker Services a fee in the amount specified in
Article III hereof. Such fee may be spent by Broker Services on any activities
or expenses primarily intended to result in the sale of Class A shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (a) initial and ongoing sales compensation out
of such fee as it is received by Broker Services of the Fund or other
broker-dealers ("Selling Brokers") that have entered into an agreement with
Broker Services for the sale of Class A shares of the Fund, (b) direct
out-of-pocket expenses incurred in connection with the distribution of Class A
shares of the Fund, including expenses related to printing of prospectuses and
reports to other than existing Class A shareholders of the Fund, and
preparation, printing and distribution of sales literature and advertising
materials, and (c) an allocation of overhead and other branch office expenses of
Broker Services related to the distribution of Class A shares of the Fund.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class A shareholders of the Fund.
ARTICLE III. MAXIMUM EXPENDITURES
The expenditures to be made by the Fund pursuant to this Plan, and the
basis upon which such expenditures will be made, shall be determined by the
Fund, and in no event shall such expenditures exceed 0.30% of the average daily
net asset value of the Class A shares of the Fund (determined in accordance with
the Fund's prospectus as from time to time in effect) on an annual basis to
cover Distribution Expenses and Service Expenses, provided that the portion of
such fee used to cover service expenses shall not exceed an annual rate of up to
0.25% of the average daily net asset value of the Class A shares of the Fund.
Such expenditures shall be calculated and accrued daily and paid monthly or at
such other intervals as the Trustees shall determine. In the event Broker
Services is not fully reimbursed for payments made or other expenses incurred by
it under this Plan, such expenses will not be carried beyond one year from the
date such expenses were incurred. Any fees paid to Broker Services under this
Plan during any fiscal year of the Fund and not expended or allocated by Broker
Services for actual or budgeted Distribution Expenses and Service Expenses
during such fiscal year will be promptly returned to the Fund.
ARTICLE IV. EXPENSES BORNE BY THE FUND
Notwithstanding any other provision of this Plan, the Trust, the Fund
and its investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall
bear the respective expenses to be borne by them under the Investment Management
Contract, dated January 1, 1994, as from time to time continued and amended (the
"Management Contract"), and under the Fund's current prospectus as it is from
time to time in effect. Except as otherwise contemplated by this Plan, the Fund
shall not, directly or indirectly, engage in financing any activity which is
primarily intended to or should reasonably result in the sale of shares of the
Fund.
ARTICLE V. APPROVAL BY TRUSTEES, ETC.
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Trustees
of the Fund and (b) those Trustees of the Fund who are not "interested persons"
of the Fund, as such term may be from time to time defined under the Act, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Independent Trustees").
ARTICLE VI. CONTINUANCE
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article V.
ARTICLE VII. INFORMATION
Broker Services shall furnish the Fund and its Trustees quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Service Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
ARTICLE VIII. TERMINATION
This Plan may be terminated (a) at any time by vote of a majority of
the Trustees, a majority of the Independent Trustees, or a majority of the
Fund's outstanding voting Class A shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
ARTICLE IX. AGREEMENTS
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the Fund's then outstanding voting Class A
shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
ARTICLE X. AMENDMENTS
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class A shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article V.
ARTICLE XI. LIMITATION OF LIABILITY
The name "John Hancock Tax-Exempt Income Fund" is the designation of
the Trustees under the Restated Declaration of Trust, dated December 8, 1993, as
amended from time to time. The Declaration of Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Fund are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. No series of the Fund
shall be responsible for the obligations of any other series of the Fund.
IN WITNESS WHEREOF, the Fund has executed this amended and restated
Distribution Plan effective as of the 3rd day of January, 1994 in Boston,
Massachusetts.
JOHN HANCOCK TAX-EXEMPT INCOME FUND
By
--------------------------------------------
President
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By
---------------------------------------------
President
<PAGE>
EXHIBIT 99.B15.1
JOHN HANCOCK TAX-EXEMPT INCOME FUND
Amended and Restated Distribution Plan
Class B Shares
January 3, 1994
ARTICLE I. THIS PLAN
This amended and restated Distribution Plan (the "Plan") sets forth the
terms and conditions under which John Hancock Tax-Exempt Income Fund (the
"Fund"), will, after the effective date hereof, pay certain amounts to John
Hancock Broker Distribution Services, Inc. ("Broker Services") in connection
with the provision by Broker Services of certain services to the Fund and its
Class B shareholders, as set forth herein. Certain of such payments by the Fund
may, under Rule 12b-1 of the Securities and Exchange Commission, as from time to
time amended (the "Rule"), under the Investment Company Act of 1940, as amended
(the "Act"), be deemed to constitute the financing of distribution by the Fund
of its shares. This Plan describes all material aspects of such financing as
contemplated by the Rule and shall be administered and interpreted, and
implemented and continued, in a manner consistent with the Rule. The Fund and
Broker Services heretofore entered into a Distribution Agreement, dated January
13, 1977 (the "Agreement"), the terms of which, as heretofore and from time to
time continued, are incorporated herein by reference.
ARTICLE II. DISTRIBUTION AND SERVICE EXPENSES
The Fund shall pay to Broker Services a fee in the amount specified in
Article III hereof. Such fee may be spent by Broker Services on any activities
or expenses primarily intended to result in the sale of Class B shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (a) initial and ongoing sales compensation out
of such fee as it is received by Broker Services or other broker-dealers
("Selling Brokers") that have entered into an agreement with Broker Services for
the sale of Class B shares of the Fund, (b) direct out-of pocket expenses
incurred in connection with the distribution of Class B shares of the Fund,
including expenses related to printing of prospectuses and reports to other than
existing Class B shareholders of the Fund, and preparation, printing and
distribution of sales literature and advertising materials, (c) an allocation of
overhead and other branch office expenses of Broker Services related to the
distribution of Class B shares of the Fund, and (d) interest expenses on
unreimbursed distribution expenses related to Class B shares, as described in
Article IV.
Service Expenses include payments made to, or on account of account
executives of selected broker-dealers (including affiliates of Broker Services)
and others who furnish personal and shareholder account maintenance services to
Class B shareholders of the Fund.
ARTICLE III. MAXIMUM EXPENDITURES
The expenditures to be made by the Fund pursuant to this Plan, and the
basis upon which such expenditures will be made, shall be determined by the
Fund, and in no event shall such expenditures exceed 1.00% of the average daily
net asset value of the Class B shares of the Fund (determined in accordance with
the Fund's prospectus as from time to time in effect) on an annual basis to
cover Distribution Expenses and Service Expenses, provided that the portion of
such fee used to cover Service Expenses, shall not exceed an annual rate of up
to 0.25% of the average daily net asset value of the Class B shares of the Fund.
Such expenditures shall be calculated and accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
ARTICLE IV. UNREIMBURSED DISTRIBUTION EXPENSES
In the event that Broker Services is not fully reimbursed for payments
made or expenses incurred by it as contemplated hereunder, in any fiscal year,
Broker Services shall be entitled to carry forward such expenses to subsequent
fiscal years for submission to the Class B shares of the Fund for payment,
subject always to the annual maximum expenditures set forth in Article III
hereof; provided, however, that nothing herein shall prohibit or limit the
Trustees from terminating this Plan and all payments hereunder at any time
pursuant to Article IX hereof.
ARTICLE V. EXPENSES BORNE BY THE FUND
Notwithstanding any other provision of this Plan, the Trust, the Fund
and its investment adviser, John Hancock Advisers, Inc. (the "Adviser"), shall
bear the respective expenses to be borne by them under the Investment Management
Contract between them, dated January 1, 1994 as from time to time continued and
amended (the "Management Contract"), and under the Fund's current prospectus as
it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Trust and the Fund shall not, directly or indirectly, engage in
financing any activity which is primarily intended to or should reasonably
result in the sale of shares of the Fund.
ARTICLE VI. APPROVAL BY TRUSTEES, ETC.
This Plan shall not take effect until it has been approved, together
with any related agreements, by votes, cast in person at a meeting called for
the purpose of voting on this Plan or such agreements, of a majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of (a) all of the Trustees
of the Fund and (b) those Trustees of the Fund who are not "interested persons"
of the Fund, as such term may be from time to time defined under the Act, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Independent Trustees").
ARTICLE VII. CONTINUANCE
This Plan and any related agreements shall continue in effect for so
long as such continuance is specifically approved at least annually in advance
in the manner provided for the approval of this Plan in Article VI.
ARTICLE VIII. INFORMATION
Broker Services shall furnish the Fund and its Trustees quarterly, or
at such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Services Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
ARTICLE IX. TERMINATION
This Plan may be terminated (a) at any time by vote of a majority of
the Trustees, a majority of the Independent Trustees, or a majority of the
Fund's outstanding voting Class B shares, or (b) by Broker Services on 60 days'
notice in writing to the Fund.
ARTICLE X. AGREEMENTS
Each Agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be
terminated at any time, without payment of any penalty, by
vote of a majority of the Independent Trustees or by vote of a
majority of the Fund's then outstanding Class B shares.
(b) That such agreement shall terminate automatically in the event
of its assignment.
ARTICLE XI. AMENDMENTS
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class B shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article VII.
ARTICLE XII. LIMITATION OF LIABILITY
The name "John Hancock Tax-Exempt Income Fund" is the designation of
the Trustees under the Restated Declaration of Trust, dated December 8, 1993, as
amended from time to time. The Declaration of Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Fund are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. No series of the Trust
shall be responsible for the obligations of any other series of the Trust.
IN WITNESS WHEREOF, the Fund has executed this amended and restated
Distribution Plan effective as of the third day of January, 1994 in Boston,
Massachusetts.
JOHN HANCOCK TAX-EXEMPT INCOME FUND
By________________________________
President
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By_________________________________
President
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK TAX-EXEMPT INCOME FUND CLASS A Impact
ADJUSTED YIELD CALCULATION 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 46,983,131 47,341,846 (358,715) 0.0409%
POP $10.43 $10.22 $0.21 -0.1128%
Net Assets $490,034,056 $483,833,666 $6,200,390 -0.0719%
Income $2,621,862 $2,655,423 ($33,561) -0.0840%
Adj. to Income $0 * $0 ** $0 0.0000%
------------ ------------ ------------ -------
Adj. Income $2,621,862 $2,655,423 ($33,561) -0.0840%
Expenses $430,182 $418,310 $11,872 -0.0297%
------------ ------------ ------------ -------
Net Income $2,191,680 $2,237,113 ($45,433) -0.1137%
Net Income $2,191,680 $2,237,113 ($45,433)
Net Assets $490,034,056 $483,833,666 $6,200,390
NI/NA 0.0044725055 0.0046237233 -0.0001512178
SEC Yield 5.4274% 5.6130% -0.1856% -0.1856%
* Current Month's Adjustments: $0.00
** Prior Month's Adjustments: $0.00
</TABLE>
SUMMARY OF PUCHASE/SALE TRANSACTIONS:
<TABLE>
<CAPTION>
Monthly
Total Par (000) YTM Income
<S> <C> <C> <C>
Purchases $39,065 6.21% $202,161
Sales $41,000 6.30% $215,250
--------
($13,089)
========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JOHN HANCOCK TAX-EXEMPT INCOME FUND CLASS B Impact
ADJUSTED YIELD CALCULATION 30-Dec-94 30-Nov-94 Change on Yield
<S> <C> <C> <C> <C>
Avg. Shares 371,411 333,814 37,597 -0.5172%
POP $9.96 $9.76 $0.20 -0.1029%
Net Assets $3,699,254 $3,258,025 $441,229 -0.6201%
Income $20,723 $18,725 $1,998 0.6606%
Adj. to Income $0 * $0 ** $0 0.0000%
------------ ------------ ------------- -------
Adj. Income $20,723 $18,725 $1,998 0.6606%
Expenses $5,569 $4,873 $696 -0.2306%
------------ ------------ ------------- -------
Net Income $15,154 $13,852 $1,302 0.4300%
Net Income $15,154 $13,852 $1,302
Net Assets $3,699,254 $3,258,025 $441,229
NI/NA 0.0040965021 0.0042516560 -0.0001551539
SEC Yield 4.9664% 5.1565% -0.1901% -0.1901%
* Current Month's Adjustments: $0.00
** Prior Month's Adjustments: $0.00
</TABLE>
SUMMARY OF PUCHASE/SALE TRANSACTIONS:
<TABLE>
<CAPTION>
Monthly
Total Par (000) YTM Income
<S> <C> <C> <C>
Purchases $39,065 6.21% $202,161
Sales $41,000 6.30% $215,250
--------
($13,089)
========
</TABLE>
<PAGE>
CLASS A TAX EXEMPT INCOME
<TABLE>
<CAPTION>
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/1/94 87,410.8813 13929.08 47,065,306.685
2 12/2/94 87,444.6637 13953.72 47,030,192.350
3 12/3/94 87,444.6637 14056.16 47,030,192.350
4 12/4/94 87,444.6637 14056.12 47,030,192.350
5 12/5/94 87,289.7645 14056.16 47,010,022.569
6 12/6/94 86,999.6153 14083.89 46,992,531.398
7 12/7/94 88,880.8626 14170.91 46,986,750.666
8 12/8/94 87,613.7565 14024.62 46,993,167.788
9 12/9/94 87,322.2674 14022.61 46,962,466.344
10 12/10/94 87,322.2674 14044.66 46,962,466.344
11 12/11/94 87,322.2674 14044.66 46,962,466.344
12 12/12/94 87,708.8511 14044.66 47,106,627.445
13 12/13/94 87,317.6612 14070.96 47,089,300.134
14 12/14/94 87,070.1278 14098.2 47,067,564.718
15 12/15/94 87,221.0332 14137.78 47,043,007.750
16 12/16/94 87,389.1932 14128.1 47,035,451.878
17 12/17/94 87,389.1932 14120.26 47,035,451.878
18 12/18/94 87,389.1932 14120.26 47,035,451.878
19 12/19/94 87,051.5199 14120.26 47,015,382.979
20 12/20/94 86,949.7250 14823.87 46,963,601.993
21 12/21/94 87,655.8039 14817.37 46,924,833.169
22 12/22/94 87,700.5929 14797.58 46,913,217.686
23 12/23/94 87,751.6083 14794.93 46,925,255.054
24 12/24/94 87,751.6083 14797.58 46,925,255.054
25 12/25/94 87,751.6083 14797.58 46,925,255.054
26 12/26/94 87,751.6083 14797.58 46,925,255.054
27 12/27/94 87,016.9018 14797.58 46,874,400.412
28 12/28/94 86,702.6427 14824.13 46,859,828.567
29 12/29/94 86,158.4630 14824.63 46,860,449.426
30 12/30/94 87,639.2476 14826.43 46,942,576.439 10.430000 5.4273
TOTAL 2,621,862.2564 430,182.33 1,409,493,921.756
AVERAGED SHARES: 46,983,130.725
</TABLE>
Page 1
<PAGE>
CLASS B TAX EXEMPT INCOME
<TABLE>
<CAPTION>
DAY DATE INCOME EXPENSES SHARES MAX OFFERING PRICE YIELD
<S> <C> <C> <C> <C> <C> <C>
1 12/1/94 657.9429 170.01 354,252.496
2 12/2/94 666.3500 174.08 358,372.198
3 12/3/94 666.3500 176.48 358,372.198
4 12/4/94 666.3500 176.48 358,372.198
5 12/5/94 661.2794 176.48 356,122.813
6 12/6/94 664.1891 176.60 358,749.204
7 12/7/94 677.5946 178.55 358,198.328
8 12/8/94 667.2464 176.45 357,877.652
9 12/9/94 665.4606 176.35 357,877.652
10 12/10/94 665.4606 176.87 357,877.652
11 12/11/94 665.4606 176.87 357,877.652
12 12/12/94 670.3723 176.87 360,031.924
13 12/13/94 667.7327 177.6 360,088.052
14 12/14/94 671.3644 178.5 362,908.555
15 12/15/94 672.6368 179.97 362,913.031
16 12/16/94 675.7387 180.07 363,826.250
17 12/17/94 675.7387 180.96 363,826.250
18 12/18/94 675.7387 180.96 363,826.250
19 12/19/94 680.7750 180.96 367,803.095
20 12/20/94 680.7368 187.9 367,805.618
21 12/21/94 700.6034 189.32 375,180.424
22 12/22/94 719.9426 193.43 385,248.455
23 12/23/94 739.7978 199.45 395,742.904
24 12/24/94 739.7978 203.53 395,742.904
25 12/25/94 739.7978 203.53 395,742.904
26 12/26/94 739.7978 203.53 395,742.904
27 12/27/94 739.4249 203.53 398,450.020
28 12/28/94 736.9829 204.96 398,450.020
29 12/29/94 727.5424 204.55 395,835.600
30 12/30/94 745.0419 204.19 399,204.746 9.960000 4.9664
TOTAL 20,723.2476 5,569.03 11,142,319.949
AVERAGED SHARES: 371,410.665
</TABLE>
Page 1
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND (CLASS A) - SEC TOTAL RETURN FORMULA
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 9.23% 10 Year Value: $2,418.20
5 Year Return: 6.25% 5 Year Value: $1,354.24
3 Year Return: 4.38% 3 Year Value: $1,137.24
1 Year Return: -5.90% 1 Year Value: $941.04
YTD Return: -5.90% YTD Value: $941.04
- -------------------------------------------------------------------------------
</TABLE>
NOTE: YTD includes Ex-Dividend for the
period
Constant Sales Charge: 0.00% $0.0015
<TABLE>
<CAPTION>
10-Year
-----------------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Received Reinv. Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 84 $9.32 $9.32 0.00% 107.296
1 / 85 $9.61 $9.61 0.00% 01/25/85 $0.1875 $9.63 $20.1180 $20.1180 2.089 109.385
2 / 85 $9.34 $9.34 0.00% 02/05/85 $0.0625 $9.42 $6.8366 $6.8366 0.726 110.111
3 / 85 $9.33 $9.33 0.00% 03/05/85 $0.0625 $9.25 $6.8819 $6.8819 0.744 110.855
4 / 85 $9.55 $9.55 0.00% 04/03/85 $0.0625 $9.31 $6.9284 $6.9284 0.744 111.599
5 / 85 $9.88 $9.88 0.00% 05/03/85 $0.0625 $9.54 $6.9749 $6.9749 0.731 112.330
6 / 85 $9.90 $9.90 0.00% 06/05/85 $0.0625 $9.91 $7.0206 $7.0206 0.708 113.038
7 / 85 $9.87 $9.87 0.00% 07/03/85 $0.0625 $9.92 $7.0649 $7.0649 0.712 113.750
8 / 85 $9.79 $9.79 0.00% 08/05/85 $0.0625 $9.75 $7.1094 $7.1094 0.729 114.479
9 / 85 $9.60 $9.60 0.00% 09/05/85 $0.0625 $9.67 $7.1549 $7.1549 0.740 115.219
10 / 85 $9.87 $9.87 0.00% 10/03/85 $0.0625 $9.71 $7.2012 $7.2012 0.742 115.961
11 / 85 $10.11 $10.11 0.00% 11/05/85 $0.0625 $10.03 $7.2476 $7.2476 0.723 116.684
12 / 85 $10.35 $10.35 0.00% 12/04/85 $0.0625 $10.24 $7.2928 $7.2928 0.712 117.396
1 / 86 $10.50 $10.50 0.00% 01/06/86 $0.3378 $10.21 $0.2753 C.G. $39.6564 $39.6564 3.884 121.280
2 / 86 $10.91 $10.91 0.00% 02/05/86 $0.0625 $10.66 $7.5800 $7.5800 0.711 121.991
3 / 86 $10.98 $10.98 0.00% 03/05/86 $0.0625 $10.75 $7.6244 $7.6244 0.709 122.700
4 / 86 $10.85 $10.85 0.00% 04/03/86 $0.0625 $10.84 $7.6688 $7.6688 0.707 123.407
5 / 86 $10.63 $10.63 0.00% 05/05/86 $0.0625 $10.66 $7.7129 $7.7129 0.724 124.131
6 / 86 $10.69 $10.69 0.00% 06/04/86 $0.0625 $10.49 $7.7582 $7.7582 0.740 124.871
7 / 86 $10.68 $10.68 0.00% 07/03/86 $0.0625 $10.72 $7.8044 $7.8044 0.728 125.599
8 / 86 $11.20 $11.20 0.00% 08/05/86 $0.0625 $10.93 $7.8499 $7.8499 0.718 126.317
9 / 86 $11.02 $11.02 0.00% 09/04/86 $0.0625 $11.01 $7.6948 $7.6948 0.717 127.034
10 / 86 $11.25 $11.25 0.00% 10/03/86 $0.0625 $11.07 $7.9396 $7.9396 0.717 127.751
11 / 86 $11.39 $11.39 0.00% 11/05/86 $0.0625 $11.31 $7.9844 $7.9844 0.706 128.457
12 / 86 $11.10 $11.10 0.00% 12/03/86 $0.2881 $11.03 $0.2256 C.G. $37.0085 $37.0085 3.355 131.812
1 / 87 $11.04 $11.04 0.00% 01/06/87 $0.3653 $10.95 $0.3053 C.G. $48.1509 $48.1509 4.397 136.209
2 / 87 $11.05 $11.05 0.00% 02/06/87 $0.0600 $11.00 $8.1725 $8.1725 0.743 136.952
3 / 87 $10.94 $10.94 0.00% 03/06/87 $0.0600 $11.06 $8.2171 $8.2171 0.743 137.695
4 / 87 $10.21 $10.21 0.00% 04/06/87 $0.0600 $10.24 $8.2617 $8.2617 0.807 138.502
5 / 87 $10.11 $10.11 0.00% 05/06/87 $0.0600 $9.94 $8.3101 $8.3101 0.836 139.338
6 / 87 $10.29 $10.29 0.00% 06/05/87 $0.0600 $10.35 $8.3603 $8.3603 0.808 140.146
7 / 87 $10.32 $10.32 0.00% 07/06/87 $0.0600 $10.33 $8.4088 $8.4088 0.814 140.960
8 / 87 $10.29 $10.29 0.00% 08/06/87 $0.0600 $10.28 $8.4576 $8.4576 0.823 141.783
9 / 87 $9.77 $9.77 0.00% 09/04/87 $0.0575 $9.86 $8.1525 $8.1525 0.827 142.610
10 / 87 $9.79 $9.79 0.00% 10/06/87 $0.0575 $9.26 $8.2001 $8.2001 0.886 143.496
11 / 87 $10.01 $10.01 0.00% 11/06/87 $0.0575 $9.98 $8.2510 $8.2510 0.827 144.323
12 / 87 $10.07 $10.07 0.00% 12/04/87 $0.0575 $9.96 $8.2986 $8.2986 0.833 145.156
12/30/87 $0.0575 $10.14 $8.3465 $8.3465 0.823 145.979
1 / 88 $10.50 $10.50 0.00% $0.0000 $0.0000 0.000 145.979
2 / 88 $10.53 $10.53 0.00% 02/05/88 $0.0575 $10.51 $8.3938 $8.3938 0.799 146.778
3 / 88 $10.25 $10.25 0.00% 03/04/88 $0.0575 $10.36 $8.4397 $8.4397 0.815 147.593
4 / 88 $10.25 $10.25 0.00% 04/04/88 $0.0575 $10.20 $8.4866 $8.4866 0.832 148.425
5 / 88 $10.18 $10.18 0.00% 05/06/88 $0.0575 $10.18 $8.5344 $8.5344 0.838 149.263
6 / 88 $10.32 $10.32 0.00% 06/03/88 $0.0575 $10.23 $8.5826 $8.5826 0.839 150.102
7 / 88 $10.31 $10.31 0.00% 07/01/88 $0.0575 $10.23 $8.6309 $8.6309 0.844 150.946
8 / 88 $10.29 $10.29 0.00% 08/05/88 $0.0575 $10.32 $8.6794 $8.6794 0.841 151.787
9 / 88 $10.46 $10.46 0.00% 09/02/88 $0.0575 $10.36 $8.7278 $8.7278 0.842 152.629
10 / 88 $10.63 $10.63 0.00% 10/03/88 $0.0575 $10.49 $8.7762 $8.7762 0.837 153.466
11 / 88 $10.45 $10.45 0.00% 11/04/88 $0.0575 $10.53 $8.8243 $8.8243 0.838 154.304
12 / 88 $10.49 $10.49 0.00% 12/02/88 $0.0600 $10.38 $9.2582 $9.2582 0.892 155.196
12/29/88 $0.0600 $10.50 $9.3118 $9.3118 0.887 156.083
1 / 89 $10.65 $10.65 0.00% $0.0000 $0.0000 0.000 156.083
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
- ----------------------------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares PLOT POINTS
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding FOR GRAPH
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 84 $9,999.99
1 / 85 $10,511.90
2 / 85 $10,284.37
3 / 85 $10,342.77
4 / 85 $10,657.70
5 / 85 $11,098.20
6 / 85 $11,190.76
7 / 85 $11,227.13
8 / 85 $11,207.49
9 / 85 $11,081.02
10 / 85 $11,445.35
11 / 85 $11,796.75
12 / 85 $12,150.49
1 / 86 $12,734.40
2 / 86 $13,309.22
3 / 86 $13,472.46
4 / 86 $13,389.66
5 / 86 $13,195.13
6 / 86 $13,348.71
7 / 86 $13,413.97
8 / 86 $14,147.50
9 / 86 $13,999.15
10 / 86 $14,371.99
11 / 86 $14,631.25
12 / 86 $14,631.13
1 / 87 $15,037.47
2 / 87 $15,133.20
3 / 87 $15,063.83
4 / 87 $14,141.05
5 / 87 $14,087.07
6 / 87 $14,421.02
7 / 87 $14,547.07
8 / 87 $14,589.47
9 / 87 $13,933.00
10 / 87 $14,048.26
11 / 87 $14,446.73
12 / 87 $14,617.21
$14,700.09
1 / 88 $15,327.80
2 / 88 $15,455.72
3 / 88 $15,128.28
4 / 88 $15,213.56
5 / 88 $15,194.97
6 / 88 $15,490.53
7 / 88 $15,562.53
8 / 88 $15,618.88
9 / 88 $15,964.99
10 / 88 $16,313.44
11 / 88 $16,124.77
12 / 88 $16,280.08
$16,373.11
1 / 89 $16,622.84
</TABLE>
<PAGE>
`
JOHN HANCOCK TAX-EXEMPT INCOME FUND (CLASS A) - SEC TOTAL RETURN FORMULA
NOTE: YTD includes Ex-Dividend for the
period
Constant Sales Charge: 0.00% $0.0015
<TABLE>
<CAPTION>
10-Year
----------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Received Reinv. Outstanding
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 / 89 $10.50 $10.50 0.00% 02/03/89 $0.0600 $10.54 $9.3650 $9.3650 0.889 156.972
3 / 89 $10.43 $10.43 0.00% 03/03/89 $0.0600 $10.43 $9.4183 $9.1576 0.878 153.504
4 / 89 $10.61 $10.61 0.00% 04/03/89 $0.0600 $10.42 $9.4725 $9.4725 0.909 158.764
5 / 89 $10.72 $10.72 0.00% 05/05/89 $0.0625 $10.53 $9.9240 $9.9240 0.942 159.726
6 / 89 $10.80 $10.80 0.00% 06/02/89 $0.0625 $10.79 $9.9829 $9.9829 0.925 160.641
7 / 89 $10.85 $10.85 0.00% 07/05/89 $0.0625 $10.79 $10.0407 $10.0407 0.931 161.582
8 / 89 $10.66 $10.66 0.00% 08/04/89 $0.0625 $10.73 $10.0989 $10.0989 0.941 162.523
9 / 89 $10.57 $10.57 0.00% 09/01/89 $0.0625 $10.64 $10.1577 $10.1577 0.955 163.476
10 / 89 $10.62 $10.62 0.00% 10/05/89 $0.0625 $10.62 $10.2174 $10.2174 0.962 164.440
11 / 89 $10.72 $10.72 0.00% 11/06/89 $0.0625 $10.59 $10.2775 $10.2775 0.970 165.410
12 / 89 $10.68 $10.68 0.00% 12/06/89 $0.0575 $10.68 $9.5111 $9.5111 0.891 166.301
12/29/89 $0.0575 $10.66 $9.5623 $9.5623 0.697 167.198
1 / 90 $10.57 $10.57 0.00% $0.0000 $0.0000 0.000 167.196
2 / 90 $10.61 $10.61 0.00% 02/02/90 $0.0575 $10.61 $9.6139 $9.6139 0.906 168.104
3 / 90 $10.55 $10.55 0.00% 03/02/90 $0.0575 $10.54 $9.6660 $9.6660 0.917 169.021
4 / 90 $10.36 $10.36 0.00% 04/02/90 $0.0575 $10.52 $9.7167 $9.7167 0.924 169.945
5 / 90 $10.57 $10.57 0.00% 05/04/90 $0.0600 $10.46 $0.0025 C.G. $10.1967 $10.1967 0.975 170.920
6 / 90 $10.62 $10.62 0.00% 06/01/90 $0.0575 $10.57 $9.0279 $9.6279 0.930 171.650
7 / 90 $10.74 $10.74 0.00% 07/06/90 $0.0575 $10.60 $9.6814 $9.6814 0.932 172.762
8 / 90 $10.47 $10.47 0.00% 08/03/90 $0.0575 $10.59 $9.9350 $9.9350 0.936 173.720
9 / 90 $10.40 $10.40 0.00% 09/04/90 $0.0560 $10.46 $9.7263 $9.7263 0.930 174.650
10 / 90 $10.52 $10.52 0.00% 10/05/90 $0.0565 $10.35 $9.9677 $9.9677 0.953 175.603
11 / 90 $10.70 $10.70 0.00% 11/02/90 $0.0565 $10.57 $9.9216 $9.9216 0.939 176.542
12 / 90 $10.59 $10.59 0.00% 12/03/90 $0.0562 $10.69 $9.9217 $9.9217 0.926 177.470
12/31/90 $0.0911 $10.60 $0.0346 C.G. $16.1675 $16.1675 1.525 179.995
1 / 91 $10.73 $10.73 0.00% $0.0000 $0.0000 0.000 176.995
2 / 91 $10.74 $10.74 0.00% 02/01/91 $0.0567 $10.81 $10,1490 $10,1490 0.939 179.934
3 / 91 $10.70 $10.70 0.00% 03/01/91 $0.0569 $10.68 $10,2382 $10.2382 0.959 160.893
4 / 91 $10.80 $10.80 0.00% 04/03/91 $0.0560 $10.72 $10.1300 $10.1300 0.945 161.838
5 / 91 $10.81 $10.81 0.00% 05/03/91 $0.0817 $10.76 $0.0253 C.G. $14.8562 $14.8562 1.301 183.219
6 / 91 $10.72 $10.72 0.00% 06/03/91 $0.0557 $10.68 $10.2063 $10.2063 0.956 184.175
7 / 91 $10.81 $10.81 0.00% 07/03/91 $0.0556 $10.70 $10.2401 $10.2401 0.957 185.132
8 / 91 $10.90 $10.90 0.00% 08/02/91 $0.0565 $10.81 $10.4600 $10.4600 0.968 186.100
9 / 91 $10.98 $10.98 0.00% 09/03/91 $0.0563 $10.86 $10.4774 $10.4774 0.965 187.065
10 / 91 $11.04 $11.04 0.00% 10/03/91 $0.0567 $11.02 $10.6066 $10.6066 0.962 188.027
11 / 91 $11.00 $11.00 0.00% 11/01/91 $0.0565 $11.00 $10.6235 $10.6235 0.966 168.993
12 / 91 $11.01 $11.01 0.00% 12/03/91 $0.0565 $10.97 $10.6781 $10.6781 0.973 189.966
12/31/91 $0.18496 $11.08 $0.12846 C.G. $38.1361 $38.1361 3.171 193.137
1 / 92 $10.98 $10.98 0.00% $0.0000 $0.0000 0.000 193.137
2 / 92 $10.95 $10.95 0.00% 02/03/92 $0.0550 $10.92 $10.6225 $10.6225 0.973 194.110
3 / 92 $10.89 $10.89 0.00% 03/03/92 $0.0545 $10.89 $10.5790 $10.5790 0.971 195.081
4 / 92 $10.93 $10.93 0.00% 04/03/92 $0.0540 $10.87 $10.6344 $10.6344 0.969 196.050
5 / 92 $11.03 $11.03 0.00% 05/01/92 $0.0538 $10.88 $10.5475 $10.5475 0.969 197.019
6 / 92 $11.19 $11.19 0.00% 06/03/92 $0.0535 $10.97 $10.5405 $10.5405 0.961 197.990
7 / 92 $11.49 $11.49 0.00% 07/02/92 $0.0533 $11.21 $10.5523 $10.5523 0.941 199.921
8 / 92 $11.27 $11.27 0.00% 08/03/92 $0.0531 $11.40 $10.5627 $10.5627 0.927 199.648
9 / 92 $11.28 $11.28 0.00% 09/03/92 $0.0523 $11.25 $10.4521 $10.4521 0.929 200.777
10 / 92 $11.04 $11.04 0.00% 10/02/92 $0.0522 $11.24 $10.4806 $10.4806 0.932 201.709
11 / 92 $11.25 $11.25 0.00% 11/03/92 $0.0512 $11.01 $10.3275 $10.3275 0.936 202.647
12 / 92 $10.96 $10.96 0.00% 12/03/92 $0.0502 $11.20 $10.1729 $10.1729 0.908 203.666
12/23/92 $0.35798 $10.93 $0.30798 C. G. $72.8686 $72.8686 6.667 210.222
1 / 93 $11.07 $11.07 0.00% $0.0000 $0.0000 0.000 210.222
2 / 93 $11.42 $11.42 0.00% 02/03/93 $0.05000 $11.03 $10.5111 $10.5111 0.953 211.175
3 / 93 $11.23 $11.23 0.00% 03/03/93 $0.05000 $11.40 $10.5588 $10.5588 0.926 212.101
4 / 93 $11.29 $11.29 0.00% 04/01/93 $0.04862 $11.18 $10.3124 $10.3214 0.922 213.023
5 / 93 $11.33 $11.33 0.00% 05/03/93 $0.04831 $11.29 $10.2911 $10.2911 0.912 213.935
6 / 93 $11.48 $11.48 0.00% 06/03/93 $0.04800 $11.31 $10.2689 $10.2689 0.908 214.643
7 / 93 $11.42 $11.42 0.00% 07/02/93 $0.04789 $11.45 $10.2888 $10.2888 0.899 215.742
8 / 93 $11.64 $11.64 0.00% 08/03/93 $0.04789 $11.40 $10.3319 $10.3319 0.906 216.648
9 / 93 $11.71 $11.71 0.00% 09/03/93 $0.04750 $11.66 $10.2908 $10.2908 0.883 217.531
10 / 93 $11.69 $11.69 0.00% 10/01/93 $0.04785 $11.67 $10.4089 $10.4089 0.892 218.423
11 / 93 $11.51 $11.51 0.00% 11/03/93 $0.04700 $11.53 $10.2659 $10.2659 0.890 219.313
12 / 93 $11.21 $11.21 0.00% 12/03/93 $0.45530 $11.10 $0.40845 C. G. $99.6532 $99.6532 0.996 226.309
12 / 93 $11.21 $11.21 0.00% 12/23/93 $0.04536 $11.19 $10.3561 $10.3561 0.925 229.234
1 / 94 $11.30 $11.30 0.00% $0.0000 $0.0000 0.000 229.234
2 / 94 $10.97 $10.97 0.00% 02/10/94 $0.06351 $11.18 $14,5587 $14.5587 1.302 230.536
3 / 94 $10.47 $10.47 0.00% 03/10/94 $0.0455 $10.74 $10.4894 $10.4894 0.977 231.513
4 / 94 $10.41 $10.41 0.00% 04/04/94 $0.0296 $10.20 LT C. G. $6.8526 $6.8526 0.673 232.185
4 / 94 $10.41 $10.41 0.00% 04/08/94 $0.0431 $10.39 $10.0095 $10.0095 0.963 233.148
5 / 94 $10.46 $10.46 0.00% 05/10/94 $0.0483 $10.34 $11.2610 $11.2610 1.089 234.237
6 / 94 $10.38 $10.38 0.00% 06/10/94 $0.0467 $10.61 $10.9412 $10.9412 1.031 235.268
7 / 94 $10.50 $10.50 0.00% 07/08/94 $0.0438 $10.36 $10.3118 $10.3118 0.995 236.263
8 / 94 $10.48 $10.48 0.00% 08/10/94 $0.0509 $10.40 $12.0329 $12.0329 1.157 237.420
9 / 94 $10.25 $10.25 0.00% 09/09/94 $0.0468 $10.37 $11,1184 $11,1184 1.072 238.492
10 / 94 $10.01 $10.01 0.00% 10/10/94 $0.0494 $10.15 $11.7767 $11.7767 1.160 239.652
11 / 94 $9.76 $9.76 0.00% 11/10/94 $0.0491 $9.73 $11.7673 411.7673 1.208 240.860
12 / 94 $9.96 $9.96 0.00% 12/09/94 $0.0466 $9.87 $11,2337 $11,2337 1.136 241.996
12 / 94 $9.96 $9.96 0.00% 12/29/94 $0.0311 $9.95 $7,5237 $7,5237 0.756 242.764
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
- ---------------------------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares PLOT POINTS
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding FOR GRAPH
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 / 89 $16,482.06
3 / 89 $16,466.36
4 / 89 $16,946.99
5 / 89 $17,122.63
6 / 89 $17,350.31
7 / 89 $17,531.65
8 / 89 $17,324.95
9 / 89 $17,279.62
10 / 89 $17,463.63
11 / 89 $17,731.95
12 / 89 $17,760.95
93.633 $17,865.75
1 / 90 $0.0000 0.000 93.633 $17,672.83
2 / 90 $5.3839 0.507 94.140 $17,835.83
3 / 90 $5.4131 0.514 94.654 $17,631.72
4 / 90 $5.4426 0.517 95.171 $17,606.30
5 / 90 $5.7103 0.546 95.717 $18,066.24
6 / 90 $5.6037 0.521 96.238 $18,250.47
7 / 90 $5.6337 0.522 96.760 $18,556.79
8 / 90 $5.5637 0.525 97.285 $18,188.48
9 / 90 $5.4480 0.521 97.806 $18,163.60
10 / 90 $5.5260 0.534 98.340 $18,473.44
11 / 90 $5.5562 0.526 98.866 $18,688.99
12 / 90 $5.5563 0.520 99.386 $18,794.07
$9.0541 0.854 100.240 $18,956.57
1 / 91 $0.0000 0.000 100.240 $19,206.16
2 / 91 $5,6836 0.526 100.766 $19,324.91
3 / 91 $5.7336 0.537 101.303 $19,355.55
4 / 91 $5.6730 0.520 101.032 $19,630.60
5 / 91 $8.3197 0.773 102.606 $19,906.97
6 / 91 $5.7151 0.535 103.140 $19,743.54
7 / 91 $5.7346 0.536 103.676 $20,012.77
8 / 91 $5.0577 0.542 104.216 $20,284.90
9 / 91 $5.0675 0.540 104.758 $20,539.74
10 / 91 $5.9396 0.538 105.297 $20.759.19
11 / 91 $5.9493 0.541 105.838 $20,789.23
12 / 91 $5.9798 0.545 106.383 $20,916.26
$19,6766 1.776 108.158 90.027 $21,264.38
1 / 92 $0.0000 0.000 108.158 $0.000 0.000 90.827 $21,206.44
2 / 92 $5.9407 0.545 108.704 $4.9955 0.457 91.284 $21,265.05
3 / 92 $5.9244 0.544 109.240 $4.9750 0.457 91.741 $21,244.32
4 / 92 $5.0994 0.543 109.791 $4,9540 0.456 92.197 $21,426.27
5 / 92 $5,9068 0.543 110.334 $4.9602 0.456 92.663 $21,731,20
6 / 92 $5.9029 0.538 110.872 $4,9569 0.452 93.105 $22,163.96
7 / 92 $5.9095 0.527 111.399 $4.9625 0.443 93.549 $22,656.02
8 / 92 $5.9153 0.519 111.916 $4.9674 0.436 93.984 $22,622.97
9 / 92 $5,8533 0.520 112.438 $4.9154 0.437 94.421 $22,647.65
10 / 92 $5.0693 0.522 112.960 $4.9268 0.439 94.860 $22,268.67
11 / 92 $5.7836 0.525 113.485 $4.8568 0.441 95.301 $22,797.79
12 / 92 $5.6969 0.509 113.994 $4.7641 0.427 95.728 $22,309.63
$40.8076 3.734 117.720 $34,2607 3.135 98.863 $23,040.33
1 / 93 $0.0000 0.000 117.720 $0.0000 0.000 98.863 $23,271.58
2 / 93 $5.8864 0.534 118.262 $4.9432 0.448 99.311 $24,116.19
3 / 93 $5.9131 0.519 118.701 $4.9565 0.436 99.747 $23,818.94
4 / 93 $5.7751 0.517 119.290 $4.8497 0.434 100.101 $24,050.30
5 / 93 $5.7633 0.510 119.808 $4.0397 0.429 100.610 $24,238.84
6 / 93 $5.7508 0.508 120.316 $4,8293 0.427 101.037 $24,663.98
7 / 93 $5.7619 0.503 120.819 $4.8387 0.423 101.460 $24,637.74
8 / 93 $5.7860 0.508 121.327 $4.8589 0.426 101.886 $26,217.83
9 / 93 $5.7630 0.494 121.821 $4.8396 0.415 102.301 $25,472.88
10 / 93 $5.6291 0.499 122.320 $4,6951 0.419 102.720 $25,633.65
11 / 93 $5.7490 0.499 122.819 $4.8276 0.419 103.139 $25,242.93
12 / 93 $55.9195 5.038 127.857 $46.9592 4.231 107.370 $25,693.44
12 / 93 $5.7996 0.516 128.375 $4.8703 0.435 107.605 92.206 $25,697.13
1 / 94 $0.0000 0.000 128.375 $0.0000 0.000 107.605 $0.0000 0.000 99.206 $25,903.44
2 / 94 $8.1531 0.729 129.104 $6.9467 0.612 108.417 $5.6655 0.507 99.713 $25,289.90
3 / 94 $5,6742 0.547 129.6512 $4.9330 0.459 108.876 $4.0819 0.380 90.093 $24,239.41
4 / 94 $3.8377 0.376 130.027 $3.2227 0.316 109.192 $2.6668 0.261 90.354 $24,170.46
4 / 94 $5.6055 0.540 130.567 $4.7073 0.453 109.645 $3.8952 0.375 90.729 $24,270.71
5 / 94 $6,3064 0.610 131.177 $6,2959 0.512 110.157 $4.3822 0.424 91.153 $24,501.19
6 / 94 $6.1273 0.578 131.755 $5.1454 0.485 110.642 $4.2578 0.401 91.654 $24,420.82
7 / 94 $5.7748 0.557 132.312 $4.8494 0.468 111.110 $4.0128 0.387 91.941 $24,907.62
8 / 94 $6.7387 0.648 132.960 $5.6588 0.544 111.654 $4.6826 0.450 92.391 $24,891.62
9 / 94 $6.2265 0.600 133.560 $5.2288 0.504 112.158 $4.3267 0.417 92.808 $24,445.43
10 / 94 $6.5952 0.650 134.210 $5.5384 0.546 112.704 $4.6829 0.452 93.260 $23,989.17
11 / 94 $6.5843 0.677 134.007 $5.6293 0.568 113.272 $4,5753 0.470 95.730 $23,507,94
12 / 94 $6.2911 0.637 135.524 $5.2830 0.535 113.807 $4.3716 0.443 94.173 $24,103.00
12 / 94 $4.2134 0.423 135.947 $3.5383 0.356 114.163 $2.9278 0.294 94.467 $24,182.01
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND (CLASS A) - SEC TOTAL RETURN FORMULA
NOTE: YTD includes Ex-Dividend for the period
Constant Sales Charge: 0.00% $0.0015
<TABLE>
<CAPTION>
YTD
------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 93 $11.21 $11.21 0.00% 12/23/93 $0.04536 $11.19 89.206
1 / 94 $11.30 $11.30 0.00% $0.0000 0.000 89.206
2 / 94 $10.97 $10.97 0.00% 02/10/94 $0.06351 $11.18 $5.6655 0.507 89.713
3 / 94 $10.47 $10.47 0.00% 03/10/94 $0.0455 $10.74 $4.0819 0.380 90.093
4 / 94 $10.41 $10.41 0.00% 04/04/94 $0.0296 $10.20 LT Cap Gain $2.6668 0.261 90.354
4 / 94 $10.41 $10.41 0.00% 04/08/94 $0.0431 $10.39 $3.8952 0.375 90.729
5 / 94 $10.46 $10.46 0.00% 05/10/94 $0.0483 $10.34 $4.3822 0.424 91.153
6 / 94 $10.38 $10.38 0.00% 06/10/94 $0.0467 $10.61 $4.2578 0.401 91.554
7 / 94 $10.50 $10.50 0.00% 07/08/94 $0.0438 $10.36 $4.0128 0.387 91.941
8 / 94 $10.48 $10.48 0.00% 08/10/94 $0.0509 $10.40 $4.6826 0.450 92.391
9 / 94 $10.25 $10.25 0.00% 09/09/94 $0.0468 $10.37 $4.3267 0.417 92.808
10 / 94 $10.01 $10.01 0.00% 10/10/94 $0.0494 $10.15 $4.5829 0.452 93.260
11 / 94 $9.76 $9.76 0.00% 11/10/94 $0.0491 $9.73 $4.5753 0.470 93.730
12 / 94 $9.96 $9.96 0.00% 12/09/94 $0.0466 $9.87 $4.3716 0.443 94.173
12 / 94 $9.96 $9.96 0.00% 12/29/94 $0.0311 $9.95 $2.9278 0.294 94.467
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND (CLASS A) - SEC TOTAL RETURN FORMULA
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return Rate Investment Value at End of Period
<S> <C> <C> <C>
10 Year Return: 8.73% 10 Year Value: $2,309.15
5 Year Return: 5.29% 5 Year Value: $1,293.74
3 Year Return: 2.79% 3 Year Value: $1,085.96
1 Year Return: -10.14% 1 Year Value: $898.57
YTD Return: -10.14% YTD Value: $898.57
- -------------------------------------------------------------------------------
</TABLE>
NOTE: YTD includes Ex-Dividend for
the period
Constant Sales Charge: 4.50% $0.0015
<TABLE>
<CAPTION>
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12 / 84 $9.32 $9.76 4.50%
1 / 85 $9.61 $10.06 4.50% 01/25/85 $0.1875 $9.63
2 / 85 $9.34 $9.78 4.50% 02/05/85 $0.0625 $9.42
3 / 85 $9.33 $9.77 4.50% 03/05/85 $0.0625 $9.25
4 / 85 $9.55 $10.00 4.50% 04/03/85 $0.0625 $9.31
5 / 85 $9.88 $10.35 4.50% 05/03/85 $0.0625 $9.54
6 / 85 $9.90 $10.37 4.50% 06/05/85 $0.0625 $9.91
7 / 85 $9.87 $10.34 4.50% 07/03/85 $0.0625 $9.92
8 / 85 $9.79 $10.25 4.50% 08/05/85 $0.0625 $9.75
9 / 85 $9.60 $10.05 4.50% 09/05/85 $0.0625 $9.67
10 / 85 $9.87 $10.34 4.50% 10/03/85 $0.0625 $9.71
11 / 85 $10.11 $10.59 4.50% 11/05/85 $0.0625 $10.03
12 / 85 $10.35 $10.84 4.50% 12/04/85 $0.0625 $10.24
1 / 86 $10.50 $10.99 4.50% 01/06/86 $0.3378 $10.21 $0.2753 C.G.
2 / 86 $10.91 $11.42 4.50% 02/05/86 $0.0625 $10.66
3 / 86 $10.98 $11.50 4.50% 03/05/86 $0.0625 $10.75
4 / 86 $10.85 $11.36 4.50% 04/03/86 $0.0625 $10.84
5 / 86 $10.63 $11.13 4.50% 05/05/86 $0.0625 $10.66
6 / 86 $10.69 $11.19 4.50% 06/04/86 $0.0625 $10.49
7 / 86 $10.68 $11.18 4.50% 07/03/86 $0.0625 $10.72
8 / 86 $11.20 $11.73 4.50% 08/05/86 $0.0625 $10.93
9 / 86 $11.02 $11.54 4.50% 09/04/86 $0.0625 $11.01
10 / 86 $11.25 $11.78 4.50% 10/03/86 $0.0625 $11.07
11 / 86 $11.39 $11.93 4.50% 11/05/86 $0.0625 $11.31
12 / 86 $11.10 $11.62 4.50% 12/03/86 $0.2881 $11.03 $0.2256 C.G.
1 / 87 $11.04 $11.56 4.50% 01/06/87 $0.3653 $10.95 $0.3053 C.G.
2 / 87 $11.05 $11.57 4.50% 02/06/87 $0.0600 $11.00
3 / 87 $10.94 $11.46 4.50% 03/06/87 $0.0600 $11.06
4 / 87 $10.21 $10.69 4.50% 04/06/87 $0.0600 $10.24
5 / 87 $10.11 $10.59 4.50% 05/06/87 $0.0600 $9.94
6 / 87 $10.29 $10.77 4.50% 06/05/87 $0.0600 $10.35
7 / 87 $10.32 $10.81 4.50% 07/06/87 $0.0600 $10.33
8 / 87 $10.29 $10.77 4.50% 08/06/87 $0.0600 $10.28
9 / 87 $9.77 $10.23 4.50% 09/04/87 $0.0575 $9.86
10 / 87 $9.79 $10.25 4.50% 10/06/87 $0.0575 $9.26
11 / 87 $10.01 $10.48 4.50% 11/06/87 $0.0575 $9.98
12 / 87 $10.07 $10.54 4.50% 12/04/87 $0.0575 $9.96
12/30/87 $0.0575 $10.14
1 / 88 $10.50 $10.99 4.50%
2 / 88 $10.53 $11.03 4.50% 02/05/88 $0.0575 $10.51
3 / 88 $10.25 $10.73 4.50% 03/04/88 $0.0575 $10.36
4 / 88 $10.25 $10.73 4.50% 04/04/88 $0.0575 $10.20
5 / 88 $10.18 $10.66 4.50% 05/06/88 $0.0575 $10.18
6 / 88 $10.32 $10.81 4.50% 06/03/88 $0.0575 $10.23
7 / 88 $10.31 $10.80 4.50% 07/01/88 $0.0575 $10.23
8 / 88 $10.29 $10.77 4.50% 08/05/88 $0.0575 $10.32
9 / 88 $10.46 $10.95 4.50% 09/02/88 $0.0575 $10.36
10 / 88 $10.63 $11.13 4.50% 10/03/88 $0.0575 $10.49
11 / 88 $10.45 $10.94 4.50% 11/04/88 $0.0575 $10.53
12 / 88 $10.49 $10.98 4.50% 12/02/88 $0.0600 $10.38
12/29/88 $0.0600 $10.50
1 / 89 $10.65 $11.15 4.50%
</TABLE>
<TABLE>
<CAPTION>
10-Year
-----------------------------------------------
Month Dividend Dividend # of Shares Shares
Ended Received Received Reinv. Outstanding
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
12 / 84 102.459
1 / 85 $19.2111 $19.2111 1.995 104.454
2 / 85 $6.5284 $6.5824 0.693 105.147
3 / 85 $6.5717 $6.5717 0.710 105.857
4 / 85 $6.6161 $6.6161 0.711 106.568
5 / 85 $6.6605 $6.6605 0.698 107.266
6 / 85 $6.7041 $6.7041 0.676 107.942
7 / 85 $6.7464 $6.7464 0.680 108.622
8 / 85 $6.7889 $6.7889 0.696 109.318
9 / 85 $6.8324 $6.8324 0.707 110.025
10 / 85 $6.8766 $6.8766 0.708 110.733
11 / 85 $6.9208 $6.9208 0.690 111.423
12 / 85 $6.9639 $6.9639 0.680 112.103
1 / 86 $37.8684 $37.8684 3.709 115.812
2 / 86 $7.2383 $7.2383 0.679 116.491
3 / 86 $7.2807 $7.2807 0.677 117.168
4 / 86 $7.3230 $7.3230 0.676 117.844
5 / 86 $7.3653 $7.3653 0.691 118.535
6 / 86 $7.4084 $7.4084 0.706 119.241
7 / 86 $7.4526 $7.4526 0.695 119.936
8 / 86 $7.4960 $7.4960 0.686 120.622
9 / 86 $7.5389 $7.5389 0.685 121.307
10 / 86 $7.5817 $7.5817 0.685 121.992
11 / 86 $7.6245 $7.6245 0.674 122.666
12 / 86 $35.3401 $35.3401 3.204 125.870
1 / 87 $45.9803 $45.9803 4.199 130.069
2 / 87 $7.8041 $7.8041 0.709 130.778
3 / 87 $7.8467 $7.8467 0.709 131.487
4 / 87 $7.8892 $7.8892 0.770 132.257
5 / 87 $7.9354 $7.9354 0.798 133.055
6 / 87 $7.9833 $7.9833 0.771 133.826
7 / 87 $8.0296 $8.0296 0.777 134.603
8 / 87 $8.0762 $8.0762 0.786 135.389
9 / 87 $7.7849 $7.7849 0.790 136.179
10 / 87 $7.8303 $7.8303 0.846 137.025
11 / 87 $7.8789 $7.8789 0.789 137.814
12 / 87 $7.9243 $7.9243 0.796 138.610
$7.9701 $7.9701 0.786 139.396
1 / 88 $0.0000 $0.0000 0.000 139.396
2 / 88 $8.0153 $8.0153 0.763 140.159
3 / 88 $8.0591 $8.0591 0.778 140.937
4 / 88 $8.1039 $8.1039 0.795 141.732
5 / 88 $8.1496 $8.1496 0.801 142.533
6 / 88 $8.1956 $8.1956 0.801 143.334
7 / 88 $8.2417 $8.2417 0.806 144.140
8 / 88 $8.2881 $8.2881 0.803 144.943
9 / 88 $8.3342 $8.3342 0.804 145.747
10 / 88 $8.3805 $8.3805 0.799 146.546
11 / 88 $8.4264 $8.4264 0.800 147.346
12 / 88 $8.8408 $8.8408 0.852 148.198
$8.8919 $8.8919 0.847 149.045
1 / 89 $0.0000 $0.0000 0.000 149.045
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares PLOT POINTS
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. FOR GRAPH
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 84 $10,000.00
1 / 85 $10,038.00
2 / 85 $9,820.73
3 / 85 $9,876.46
4 / 85 $10,177.24
5 / 85 $10,597.88
6 / 85 $10,686.26
7 / 85 $10,720.99
8 / 85 $10,702.23
9 / 85 $10,562.40
10 / 85 $10,929.35
11 / 85 $11,264.87
12 / 85 $11,602.66
1 / 86 $12,160.26
2 / 86 $12,709.17
3 / 86 $12,865.05
4 / 86 $12,786.07
5 / 86 $12,600.27
6 / 86 $12,746.86
7 / 86 $12,809.16
8 / 86 $13,509.66
9 / 86 $13,368.03
10 / 86 $13,724.10
11 / 86 $13,971.66
12 / 86 $13,971.57
1 / 87 $14,359.62
2 / 87 $14,450.97
3 / 87 $14,384.68
4 / 87 $13,503.44
5 / 87 $13,451.86
6 / 87 $13,770.70
7 / 87 $13,891.03
8 / 87 $13,931.53
9 / 87 $13,304.69
10 / 87 $13,414.75
11 / 87 $13,795.18
12 / 87 $13,958.03
$14,037.18
1 / 88 $14,636.58
2 / 88 $14,758.74
3 / 88 $14,446.04
4 / 88 $14,527.53
5 / 88 $14,509.86
6 / 88 $14,792.07
7 / 88 $14,860.83
8 / 88 $14,914.63
9 / 88 $15,245.14
10 / 88 $15,577.84
11 / 88 $15,397.66
12 / 88 $15,545.97
$15,634.82
1 / 89 $15,873.29
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND (CLASS A) - SEC TOTAL RETURN FORMULA
NOTE: YTD includes Ex-Dividend for
the period
Constant Sales Charge: 4.50% $0.0015
<TABLE>
<CAPTION>
10-Year
-------------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 / 89 $10.50 $10.99 4.50% 02/03/89 $0.0600 $10.54 $8.9427 $8.9427 O.848 149.893
3 / 89 $10.43 $10.92 4.50% 03/03/89 $0.0600 $10.43 $8.9936 $8.9936 0.862 150.755
4 / 89 $10.61 $11.11 4.50% 04/03/89 $0.0600 $10.42 $9.0453 $9.0453 0.868 151.623
5 / 89 $10.72 $11.23 4.50% 05/05/89 $0.0625 $10.53 $9.4764 $9.4764 0.900 152.523
6 / 89 $10.80 $11.31 4.50% 06/02/89 $0.0625 $10.79 $9.5327 $9.5327 0.883 153.406
7 / 89 $10.85 $11.36 4.50% 07/05/89 $0.0625 $10.79 $9.5879 $9.5879 0.889 154.295
8 / 89 $10.66 $11.16 4.50% 08/04/89 $0.0625 $10.73 $9.6434 $9.6434 0.899 155.194
9 / 89 $10.57 $11.07 4.50% 09/01/89 $0.0625 $10.64 $9.6996 $9.6996 0.912 156.106
10 / 89 $10.62 $11.12 4.50% 10/05/89 $0.0625 $10.62 $9.7566 $9.7566 0.919 157.025
11 / 89 $10.72 $11.23 4.50% 11/06/89 $0.0625 $10.59 $9.8141 $9.8141 0.927 157.952
12 / 89 $10.68 $11.18 4.50% 12/06/89 $0.0575 $10.68 $9.0822 $9.0822 0.850 158.802
12/29/89 $0.0575 $10.66 $9.1311 $9.1311 0.857 159.659
1 / 90 $10.57 $11.07 4.50% $0.0000 $0.0000 0.000 159.659
2 / 90 $10.61 $11.11 4.50% 02/02/90 $0.0575 $10.61 $9.1804 $9.1804 0.865 160.524
3 / 90 $10.55 $11.05 4.50% 03/02/90 $0.0575 $10.54 $9.2301 $9.2301 0.876 161.40
4 / 90 $10.36 $10.85 4.50% 04/02/90 $0.0575 $10.52 $9.2805 $9.2805 0.882 162.282
5 / 90 $10.57 $11.07 4.50% 05/04/90 $0.0600 $10.46 $0.0025 C.G. $9.7369 $9.7369 0.931 163.213
6 / 90 $10.62 $11.12 4.50% 06/01/90 $0.0575 $10.57 $9.3847 $9.3847 0.888 164.101
7 / 90 $10.74 $11.25 4.50% 07/06/90 $0.0575 $10.60 $9.4358 $9.4358 0.890 164.991
8 / 90 $10.47 $10.96 4.50% 08/03/90 $0.0575 $10.59 $9.4870 $9.4870 0.896 165.887
9 / 90 $10.40 $10.89 4.50% 09/04/90 $0.0560 $10.46 $9.2897 $9.2897 0.888 166.775
10 / 90 $10.52 $11.02 4.50% 10/05/90 $0.0565 $10.35 $9.4228 $9.4228 0.910 167.685
11 / 90 $10.70 $11.20 4.50% 11/02/90 $0.0565 $10.57 $9.4742 $9.4742 0.896 168.581
12 / 90 $10.59 $11.09 4.50% 12/03/90 $0.0562 $10.69 $9.4743 $9.4743 0.886 169.467
12/31/90 $0.0911 $10.60 $0.0346 C.G. $15.4364 $15.4364 1.456 170.923
1 / 91 $10.73 $11.24 4.50% $0.0000 $0.0000 0.000 170.923
2 / 91 $10.74 $11.25 4.50% 02/01/91 $0.0567 $10.81 $9.6913 $9.6913 0.897 171.820
3 / 91 $10.70 $11.20 4.50% 03/01/91 $0.0569 $10.68 $9.7766 $9.7766 0.915 172.735
4 / 91 $10.80 $11.31 4.50% 04/03/91 $0.0560 $10.72 $9.6732 $9.6732 0.902 173.637
5 / 91 $10.81 $11.32 4.50% 05/03/91 $0.0817 $10.76 $0.0253 C.G. $14.1861 $14.1861 1.318 174.955
6 / 91 $10.72 $11.23 4.50% 06/03/91 $0.0557 $10.68 $9.7450 $9.7450 0.912 175.867
7 / 91 $10.81 $11.32 4.50% 07/03/91 $0.0556 $10.70 $9.7782 $9.7782 0.914 176.761
8 / 91 $10.90 $11.41 4.50% 08/02/91 $0.0565 $10.81 $9.9881 $9.9881 0.924 177.705
9 / 91 $10.98 $11.50 4.50% 09/03/91 $0.0563 $10.86 $10.0048 $10.0048 0.921 178.626
10 / 91 $11.04 $11.56 4.50% 10/03/91 $0.0567 $11.02 $10.1281 $10.1281 0.919 179.545
11 / 91 $11.00 $11.52 4.50% 11/01/91 $0.0565 $11.00 $10.1443 $10.1443 0.922 180.467
12 / 91 $11.01 $11.53 4.50% 12/03/91 $0.0565 $10.97 $10.1964 $10.1964 0.929 181.396
12/31/91 $0.18496 $11.08 $0.12846 C.G. $33.5510 $33.5510 3.028 184.424
1 / 92 $10.98 $11.50 4.50% $0.0000 $0.0000 0.000 184.424
2 / 92 $10.95 $11.47 4.50% 02/03/92 $0.0550 $10.92 $10.1433 $10.1433 0.929 185.353
3 / 92 $10.89 $11.40 4.50% 03/03/92 $0.0545 $10.89 $10.1017 $10.1017 0.928 186.201
4 / 92 $10.93 $11.45 4.50% 04/03/92 $0.0540 $10.87 $10.0592 $10.0592 0.925 187.206
5 / 92 $11.03 $11.55 4.50% 05/01/92 $0.0538 $10.88 $10.0717 $10.0717 0.926 188.132
6 / 92 $11.19 $11.72 4.50% 06/03/92 $0.0535 $10.97 $10.0651 $10.0651 0.918 189.050
7 / 92 $11.49 $12.03 4.50% 07/02/92 $0.0533 $11.21 $10.0764 $10.0764 0.899 189.949
8 / 92 $11.27 $11.80 4.50% 08/03/92 $0.0531 $11.40 $10.0863 $10.0863 0.885 190.834
9 / 92 $11.28 $11.81 4.50% 09/03/92 $0.0523 $11.25 $9.9806 $9.9806 0.887 191.721
10 / 92 $11.04 $11.56 4.50% 10/02/92 $0.0522 $11.24 $10.0078 $10.0078 0.890 192.611
11 / 92 $11.25 $11.78 4.50% 11/03/92 $0.0512 $11.01 $9.8617 $9.8617 0.896 193.607
12 / 92 $10.96 $11.48 4.50% 12/03/92 $0.0502 $11.20 $9.7141 $9.7141 0.867 194.374
12/23/92 $0.35798 $10.93 $0.30798 Cap Gain $69.5820 $69.5820 6.366 200.740
1 / 93 $11.07 $11.59 4.50% $0.0000 $0.0000 0.000 200.740
2 / 93 $11.42 $11.96 4.50% 02/03/93 $0.05000 $11.03 $10.0370 $10.0370 0.910 201.650
3 / 93 $11.23 $11.76 4.50% 03/03/93 $0.05000 $11.40 $10.0825 $10.0825 0.884 202.534
4 / 93 $11.29 $11.82 4.50% 04/01/93 $0.04862 $11.18 $9.8472 $9.8472 0.881 203.415
5 / 93 $11.33 $11.86 4.50% 05/03/93 $0.04831 $11.29 $9.8270 $9.8270 0.870 204.285
6 / 93 $11.48 $12.02 4.50% 06/03/93 $0.04800 $11.31 $9.8057 $9.8057 0.867 205.152
7 / 93 $11.42 $11.96 4.50% 07/02/93 $0.04789 $11.45 $9.8247 $9.8247 0.858 206.010
8 / 93 $11.64 $12.19 4.50% 08/03/93 $0.04789 $11.40 $9.8658 $9.8658 0.865 206.875
9 / 93 $11.71 $12.26 4.50% 09/03/93 $0.04750 $11.66 $9.8266 $9.8266 0.843 207.718
10 / 93 $11.69 $12.24 4.50% 10/01/93 $0.04785 $11.67 $9.9393 $9.9393 0.852 208.570
11 / 93 $11.51 $12.05 4.50% 11/03/93 $0.04700 $11.53 $9.8028 $9.8028 0.850 209.420
12 / 93 $11.21 $11.74 4.50% 12/03/93 $0.45530 $11.10 $0.40845 Cap Gain $95.3489 $95.3489 8.590 218.010
12 / 93 $11.21 $11.74 4.50% 12/23/93 $0.04536 $11.19 $9.8889 $9.8889 0.884 218.894
1 / 94 $11.30 $11.83 4.50% $0.0000 $0.0000 0.000 218.894
2 / 94 $10.97 $11.49 4.50% 02/10/94 $0.06351 $11.18 $13.9020 $13.9020 1.243 220.137
3 / 94 $10.47 $10.96 4.50% 03/10/94 $0.0455 $10.74 $10.0162 $10.0162 0.933 221.070
4 / 94 $10.41 $10.90 4.50% 04/04/94 $0.0296 $10.20 LT Cap Gain $6.5437 $6.5437 0.642 221.712
4 / 94 $10.41 $10.90 4.50% 04/08/94 $0.0431 $10.39 $9.5580 $9.5580 0.920 222.632
5 / 94 $10.46 $10.95 4.50% 05/10/94 $0.0483 $10.34 $10.7531 $10.7531 1.040 223.672
6 / 94 $10.38 $10.87 4.50% 06/10/94 $0.0467 $10.61 $10.4477 $10.4477 0.985 224.657
7 / 94 $10.50 $10.99 4.50% 07/08/94 $0.0438 $10.36 $9.8467 $9.8467 0.950 225.607
8 / 94 $10.48 $10.97 4.50% 08/10/94 $0.0509 $10.40 $11.4902 $11.4902 1.105 226.712
9 / 94 $10.25 $10.73 4.50% 09/09/94 $0.0468 $10.37 $10.6169 $10.6169 1.024 227.736
10 / 94 $10.01 $10.48 4.50% 10/10/94 $0.0494 $10.15 $11.2456 $11.2456 1.108 228.844
11 / 94 $9.76 $10.22 4.50% 11/10/94 $0.0491 $9.73 $11.2271 $11.2271 1.154 229.998
12 / 94 $9.96 $10.43 4.50% 12/09/94 $0.0466 $9.87 $10.7271 $10.7271 1.087 231.085
12 / 94 $9.96 $10.43 4.50% 12/29/94 $0.0311 $9.95 $7.1844 $7.1844 0.722 231.807
</TABLE>
<TABLE>
<CAPTION>
5-Year 3-Year 1-Year
------------------------------------------------------------------------------------------------------------------------
Month Dividend # of Shares Shares Dividend # of Shares Shares Dividend # of Shares Shares PLOT POINTS
Ended Received Reinv. Outstanding Received Reinv. Outstanding Received Reinv. Outstanding FOR GRAPH
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 / 89 $15,738.77
3 / 89 $15,723.75
4 / 89 $16,087.20
5 / 89 $16,350.47
6 / 89 $16,567.85
7 / 89 $16,741.01
8 / 89 $16,643.68
9 / 89 $16,600.40
10 / 89 $16,676.06
11 / 89 $16,932.45
12 / 89 $16,960.05
89.445 $17,051.58
1 / 90 $0.0000 0.000 89.445 $16,875.96
2 / 90 $5.1431 0.485 89.930 $17,031.60
3 / 90 $5.1710 0.491 90.421 $17,027.70
4 / 90 $5.1992 0.494 90.915 $16,812.42
5 / 90 $5.4549 0.522 91.437 $17,251.61
6 / 90 $5.2576 0.497 91.934 $17,427.53
7 / 90 $5.2862 0.499 92.433 $17,720.03
8 / 90 $5.3149 0.502 92.935 $17,368.37
9 / 90 $5.2044 0.498 93.433 $17,344.60
10 / 90 $5.2790 0.510 93.943 $17,640.46
11 / 90 $5.3078 0.502 94.445 $18,038.17
12 / 90 $5.3078 0.497 94.942 $17,946.56
$8.6492 0.616 95.758 $18,100.75
1 / 91 $0.0000 0.000 95.758 $18,340.04
2 / 91 $5.4295 0.502 96.260 $18,453.47
3 / 91 $5.4772 0.513 96.773 $18,482.65
4 / 91 $5.4193 0.506 97.279 $18,752.80
5 / 91 $7.9477 0.739 98.018 $18,912.64
6 / 91 $5.4596 0.611 98.629 $18,852.94
7 / 91 $5.4782 0.612 99.041 $19,110.03
8 / 91 $5.5958 0.618 99.559 $19,369.85
9 / 91 $5.6052 0.516 100.075 $19,613.13
10 / 91 $5.6743 0.515 100.590 $19,821.77
11 / 91 $5.6833 0.517 101.107 $19,651.37
12 / 91 $5.7125 0.521 101.628 $19,971.70
$18.7971 1.696 103.324 86.730 $20,305.08
1 / 92 $0.0000 0.000 103.324 86.730 $20,249.76
2 / 92 $5.6828 0.620 103.344 $0.0000 0.000 87.167 $20,286.15
3 / 92 $5.6595 0.520 104.364 $4.7606 0.436 87.603 $20,286.00
4 / 92 $5.6357 0.518 104.882 $4.7306 0.435 88.038 $20,461.62
5 / 92 $5.6427 0.519 105.401 $4.7364 0.435 88.473 $20,750.96
6 / 92 $5.6390 0.514 105.915 $4.7333 0.431 88.904 $21,154.70
7 / 92 $5.6453 0.504 106.419 $4.7386 0.423 89.327 $21,825.14
8 / 92 $5.6508 0.496 106.915 $4.7433 0.416 89.743 $21,606.99
9 / 92 $5.5917 0.497 107.412 $4.6936 0.417 90.160 $21,626.13
10 / 92 $5.6069 0.499 107.911 $4.7064 0.419 90.579 $21,264.25
11 / 92 $5.5250 0.502 108.413 $4.6376 0.421 91.000 $21,769.64
12 / 92 $5.4423 0.486 108.899 $4.5682 0.408 91.408 $21,303.39
$38.9837 3.567 112.466 $32.7222 2.994 94.402 $22,001.10
1 / 93 $0.0000 0.000 112.466 $0.0000 0.000 94.402 $22,221.92
2 / 93 $5.6233 0.510 112.976 $4.7201 0.428 94.830 $22,028.43
3 / 93 $5.6488 0.496 113.472 $4.7415 0.416 95.246 $22,744.57
4 / 93 $5.5170 0.493 113.965 $4.6309 0.414 95.660 $22,965.55
5 / 93 $5.5056 0.488 114.453 $4.6213 0.409 96.069 $23,145.49
6 / 93 $5.4937 0.486 114.939 $4.6113 0.408 96.477 $23,551.45
7 / 93 $5.5044 0.481 115.420 $4.6203 0.404 96.881 $23,526.34
8 / 93 $5.5275 0.485 115.905 $4.6396 0.407 97.288 $24,080.25
9 / 93 $5.5055 0.472 116.377 $4.6212 0.396 97.684 $24,323.78
10 / 93 $5.5686 0.477 116.854 $4.6742 0.401 98.085 $24,381.83
11 / 93 $5.4921 0.476 117.330 $4.6100 0.400 98.485 $24,104.24
12 / 93 $53.4203 4.813 122.143 $44.8402 4.040 102.525 $24,438.92
12 / 93 $5.5404 0.495 122.638 $4.6505 0.416 102.941 85.179 $24,538.02
1 / 94 $0.0000 0.000 122.638 $0.0000 0.000 102.994 $0.0000 0.000 85.179 $24,735.02
2 / 94 $7.7887 0.697 123.335 $6.5378 0.585 103.526 $5.4097 0.484 85.633 $24,149.03
3 / 94 $5.6117 0.523 123.858 $4.7104 0.439 103.965 $3.8977 0.363 86.026 $23,146.03
4 / 94 $3.6662 0.359 124.217 $3.0774 0.302 104.267 $2.5464 0.250 86.276 $23,060.22
4 / 94 $5.3550 0.515 124.732 $4.4950 0.433 104.700 $3.7194 0.358 86.634 $23,175.99
5 / 94 $6.0246 0.583 125.315 $5.0579 0.489 105.189 $4.1844 0.405 87.039 $23,396.09
6 / 94 $5.8535 0.552 125.867 $4.9134 0.463 105.652 $4.0656 0.383 87.422 $23,319.40
7 / 94 $5.5168 0.533 126.400 $4.6307 0.447 106.099 $3.8317 0.370 87.792 $23,688.74
8 / 94 $6.4376 0.619 127.019 $5.4036 0.520 106.619 $4.4712 0.430 88.222 $23,759.42
9 / 94 $5.9483 0.574 127.593 $4.9930 0.481 107.100 $4.1314 0.398 88.620 $22,342.94
10 / 94 $6.3005 0.621 128.214 $5.2886 0.521 107.621 $4.3761 0.431 89.051 $22,907.28
11 / 94 $6.2902 0.646 128.860 $5.2799 0.543 108.164 $4.3688 0.449 89.500 $22,447.80
12 / 94 $6.0100 0.609 129.469 $5.0448 0.511 108.675 $4.1743 0.423 89.923 $23,016.07
12 / 94 $4.0252 0.405 129.874 $3.3787 0.340 109.015 $2.7957 0.281 90.204 $23,091.52
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT INCOME FUND CLASS A - SEC TOTAL RETURN FORMULA
NOTE: YTD includes Ex-Dividend for
the period
Constant Sales Charge: 4.50% $0.0015
<TABLE>
<CAPTION>
YTD
-----------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 / 93 $11.21 $11.74 4.50% 12/23/93 $0.04536 $11.19 85.179
1 / 94 $11.30 $11.83 4.50% $0.0000 0.000 85.179
2 / 94 $10.97 $11.49 4.50% 02/10/94 $0.06351 $11.18 $5.4097 0.484 85.663
3 / 94 $10.47 $10.96 4.50% 03/10/94 $0.0455 $10.74 $3.8977 0.363 86.026
4 / 94 $10.41 $10.90 4.50% 04/04/94 $0.0296 $10.20 LT Cap Gain $2.5464 0.250 86.276
4 / 94 $10.41 $10.90 4.50% 04/08/94 $0.0431 $10.39 $3.7194 0.358 86.634
5 / 94 $10.46 $10.95 4.50% 05/10/94 $0.0483 $10.34 $4.1844 0.405 87.039
6 / 94 $10.38 $10.87 4.50% 06/10/94 $0.0467 $10.61 $4.0656 0.383 87.422
7 / 94 $10.50 $10.99 4.50% 07/08/94 $0.0438 $10.36 $3.8317 0.370 87.792
8 / 94 $10.48 $10.97 4.50% 08/10/94 $0.0509 $10.40 $4.4712 0.430 88.222
9 / 94 $10.25 $10.73 4.50% 09/09/94 $0.0468 $10.37 $4.1314 0.398 88.620
10 / 94 $10.01 $10.48 4.50% 10/10/94 $0.0494 $10.15 $4.3761 0.431 89.051
11 / 94 $9.76 $10.22 4.50% 11/10/94 $0.0491 $9.73 $4.3688 0.449 89.500
12 / 94 $9.96 $10.43 4.50% 12/09/94 $0.0466 $9.87 $4.1743 0.423 89.923
12 / 94 $9.96 $10.43 4.50% 12/29/94 $0.0311 $9.95 $2.7957 0.281 90.204
</TABLE>
<PAGE>
JOHN HANCOCK TAX EXEMPT INCOME FUND (CLASS B) - SEC TOTAL RETURN FORMULA
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return Investment Value at End of Period
CDSC
Excluding With Excluding % CDSC Ending
CDSC CDSC CDSC CDSC Amount Value
<S> <C> <C> <C> <C> <C> <C>
10 Year Return: N/A N/A $0.00 0.00% $0.00 $0.00
5 Year Return: N/A N/A $0.00 2.00% $0.00 $0.00
3 Year Return: N/A N/A $0.00 3.00% $0.00 $0.00
0.99 Year Return: -6.28% -11.01% $937.68 5.00% $46.88 $890.80
YTD Return: -6.23% -10.92% $937.68 5.00% $46.88 $890.80
- --------------------------------------------------------------------------------
</TABLE>
# Since Inception NOTE: YTD includes Ex-dividend for the period
$0.0013
*1 yr return will include Ex-dividends for the period until January, 1995
Constant Sales Charge: N/A
<TABLE>
<CAPTION> 1-Year
------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Outstanding
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/04/ 94 $11.17 $11.17 N/A 89.526
1 / 94 $11.29 $11.29 N/A $0.0000 0.000 89.526
2 / 94 $10.96 $10.96 N/A 02/10/94 $0.0545 $11.17 $4.8792 0.437 89.963
3 / 94 $10.46 $10.46 N/A 03/10/94 $0.0402 $10.73 $3.6165 0.337 90.300
4 / 94 $10.41 $10.41 N/A 04/04/94 $0.0296 $10.20 LT Cap Gains $2.6711 0.262 90.562
4 / 94 $10.41 $10.41 N/A 04/08/94 $0.0370 $10.39 $3.3508 0.323 90.885
5 / 94 $10.46 $10.46 N/A 05/10/94 $0.0413 $10.34 $3.7536 0.363 91.248
6 / 94 $10.37 $10.37 N/A 06/10/94 $0.0403 $10.61 $3.6782 0.347 91.595
7 / 94 $10.50 $10.50 N/A 07/08/94 $0.0381 $10.36 $3.4916 0.337 91.932
8 / 94 $10.48 $10.48 N/A 08/10/94 $0.0440 $10.40 $4.0459 0.389 92.321
9 / 94 $10.25 $10.25 N/A 09/09/94 $0.0406 $10.37 $3.7482 0.361 92.682
10 / 94 $10.01 $10.01 N/A 10/10/94 $0.0432 $10.15 $3.9992 0.394 93.076
11 / 94 $9.76 $9.76 N/A 11/10/94 $0.0429 $9.73 $3.9911 0.410 93.486
12 / 94 $9.96 $9.96 N/A 12/09/94 $0.0411 $9.87 $3.8413 0.389 93.875
12 / 94 $9.96 $9.96 N/A 12/29/94 $0.0272 $9.95 $2.5553 0.257 94.132
</TABLE>
<TABLE>
<CAPTION>
YTD
------------------------------------------------------------------------
Month Dividend # of Shares Shares VALUE VALUE
Ended Received Reinv. Outstanding W/O CDSC CDSC WITH CDSC
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
01/04/ 94 89.526 $10,000.05 $10,000.05
1 / 94 $0.0000 0.000 89.526 $10,107.49 $500.00 $9,607.49
2 / 94 $4.8792 0.437 89.963 $9,859.94 $493.00 $9,366.95
3 / 94 $3.6165 0.337 90.300 $9,445.38 $472.27 $8,973.11
4 / 94 $2.6711 0.262 90.562 $9,427.50 $471.38 $8,956.13
4 / 94 $3.3508 0.323 90.885 $9,461.13 $473.06 $8,988.07
5 / 94 $3.7536 0.363 91.248 $9,544.54 $477.23 $9,067.31
6 / 94 $3.6782 0.347 91.595 $9,498.40 $474.92 $9,023.48
7 / 94 $3.4916 0.337 91.932 $9,652.86 $482.64 $9,170,22
8 / 94 $4.0459 0.389 92.321 $9,675.24 $483.76 $9,191.48
9 / 94 $3.7482 0.361 92.682 $9,499.91 $475.00 $9,024.91
10 / 94 $3.9992 0.394 93.076 $9,316.91 $465.85 $8,851.06
11 / 94 $3.9911 0.410 93.486 $9,124.23 $456.21 $8,668.02
12 / 94 $3.8413 0.389 93.875 $9,349.95 $467.50 $8,882.45
12 / 94 $2.5553 0.257 94.132 $9,376.77 $468.84 $8,907.93
</TABLE>
<PAGE>
EXHIBIT 99.B17
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned Trustee of John Hancock
Tax-Exempt Income Fund does hereby constitute and appoint EDWARD J. BOUDREAU,
JR., THOMAS H. DROHAN, AND JAMES B. LITTLE and each of them individually his
true and lawful attorneys and agents to take any and all action and execute any
and all instruments which said attorneys and agents may deem necessary or
advisable
(i) to enable the Trust to comply with the Securities Act of 1933, as
amended, and any rules regulations, orders or other requirements of the
Securities and Exchange Commission thereunder, in connection with the
registration under such Securities Act of 1933 of shares of beneficial interest
of the Trust to be offered by the Trust, and
(ii) in connection with the registration of the Trust under the
Investment Company Act of 1940, as amended,
including specifically, but without limitation of the foregoing, power and
authority to sign his name in his behalf as Director as indicated below,
opposite his signature hereto, to any amendment or supplement (including
post-effective amendments) to the registration statement or statements filed
with the Securities and Exchange Commission under such Securities Act of 1933
and such Investment Company Act of 1940, and to execute any instruments or
documents filed or to be filed as a part of or in connection with such
registration statement or statements; and does hereby ratify and confirm all
that said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, we have hereunto set our hands on the date
indicated below.
SIGNATURE TITLE DATE AS OF:
/s/Edward J. Boudreau, Jr. Chairman, Trustee November 15, 1988
- -------------------------- and Principal
Edward J. Boudreau, Jr. Executive Officer
/s/Dennis S. Aronowitz Trustee May 17, 1988
- --------------------------
Dennis S. Aronowitz
/s/Richard P. Chapman, Jr. Trustee October 5, 1981
- --------------------------
Richard P. Chapman, Jr.
/s/William J. Cosgrove Trustee October 15, 1991
- --------------------------
William J. Cosgrove
/s/Gail D. Fosler Trustee January 1, 1994
- --------------------------
Gail D. Fosler
/s/Bayard Henry Trustee October 5, 1981
- --------------------------
Bayard Henry
/s/Richard S. Scipione Trustee April 23, 1987
- --------------------------
Richard S. Scipione
/s/Edward J. Spellman Trustee October 23, 1990
- --------------------------
Edward J. Spellman
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> JOHN HANCOCK TAX-EXEMPT INCOME FUND, CLASS B
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