REGISTRATION NO. 2-57785
REGISTRATION NO. 811-3712
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 24 /X/
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 19
(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)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
Registrant has filed a Declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940. On June 21, 1996 registrant filed its final Rule
24f-2 Notice. The sole purpose of this Post-Effective Amendment is to terminate,
pursuant to Rule 24f-2(b)(3), registrant's prior Rule 24f-2 Declaration, in as
much as registrant has ceased its operations.
================================================================================
<PAGE>
John Hancock Funds
JOHN HANCOCK
TAX-EXEMPT INCOME
FUND
FINAL REPORT
May 3, 1996
<PAGE>
John Hancock Funds - Tax-Exempt Income Fund
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz *
Richard P. Chapman, Jr. *
William J. Cosgrove *
Gail D. Fosler *
Bayard Henry *
Anne C. Hodsdon
Richard S. Scipione
Edward J. Spellman *
* Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President, Assistant Secretary and
Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
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
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
<PAGE>
JOHN HANCOCK FUNDS - TAX-EXEMPT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
FINAL REPORT MAY 3, 1996* (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments at value - Note C:
Tax-exempt long-term bonds (cost - $449,604,252) $ 463,898,171
Options (cost - $138,819) 38,282
-------------
463,936,453
Receivable for investments sold 21,670,470
Interest receivable 9,536,842
Receivable for futures variation margin - Note A 266,850
Segregated assets for financial futures contracts 868,748
Other assets 18,262
-------------
Total Assets 496,297,625
------------------------------------------------------
LIABILITIES:
Temporary overdraft of cash 5,441,958
Payable for investments purchased 20,774,082
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 103,850
Accounts payable and accrued expenses 70,402
-------------
Total Liabilities 26,390,292
------------------------------------------------------
NET ASSETS:
Capital paid-in 462,334,943
Accumulated net realized loss on investments and financial
futures contracts (7,370,476)
Net unrealized appreciation of investments and
financial futures contracts 14,942,866
=============
Net Assets $ 469,907,333
======================================================
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 - $460,732,564 / 44,161,282 $ 10.43
================================================================================================
Class B - $9,174,769 / 879,650 $ 10.43
================================================================================================
MAXIMUM OFFERING PRICE PER SHARE**
Class A - ($10.43 x 104.71%) $ 10.92
================================================================================================
</TABLE>
* The net assets of the John Hancock Tax-Exempt Income Fund ("the Fund")
were merged into the John Hancock Tax-Free Bond Fund as of the close of
business on May 3, 1996 and the Fund was subsequently terminated. The
Statement of Assets and Liabilities reflects the Fund's position prior
to the transfer of net assets and the termination of the Fund. (See
Note A to the Notes to Financial Statements).
** 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.
See notes to financial statements.
<PAGE>
JOHN HANCOCK FUNDS - TAX-EXEMPT INCOME FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1, 1996 TO
MAY 3, 1996* (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
INVESTMENT INCOME:
<S> <C> <C>
Interest $ 10,940,114
------------
EXPENSES:
Investment management fee - Note B 930,436
Distribution/service fee - Note B
Class A 497,801
Class B 32,366
Transfer agent fee - Note B 274,871
Trustees' fees 35,229
Financial services fee 31,191
Registration and filing fees 16,601
Custodian fee 3,778
Printing 569
Miscellaneous 411
Legal fees 320
------------
Total Expenses 1,823,573
-----------------------------------------------
Net Investment Income 9,116,541
-----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FINANCIAL FUTURES CONTRACTS:
Net realized gain on investments sold 552,635
Net realized gain on financial futures contracts 1,429,444
Change in net unrealized appreciation/depreciation
of investments (28,780,398)
Change in net unrealized appreciation/depreciation
of financial futures contracts 1,010,156
------------
Net Realized and Unrealized Loss
on Investments and Financial
Futures Contracts (25,788,163)
-----------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ($16,671,622)
===============================================
</TABLE>
* The net assets of the John Hancock Tax-Exempt Income Fund ("the Fund")
were merged into the John Hancock Tax-Free Bond Fund as of the close of
business on May 3, 1996 and the Fund was subsequently terminated. The
Statement of Operations reflects the Fund's position prior to the
transfer of net assets and the termination of the Fund. (See Note A to
the Notes to Financial Statements).
See notes to financial statements.
<PAGE>
JOHN HANCOCK FUNDS - TAX-EXEMPT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1996 TO YEAR ENDED
MAY 3, 1996 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: (UNAUDITED)** 1995
---------------------------------
FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 9,116,541 $ 26,767,588
Net realized gain (loss) on investments sold and financial futures contracts 1,982,079 (5,790,750)
Change in net unrealized appreciation/depreciation of investments (27,770,242) 54,393,534
------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations (16,671,622) 75,370,372
------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.2044 and $0.5754 per share, respectively) (9,053,428) (26,480,078)
Class B - ($0.1781 and $0.4931 per share, respectively) (153,832) (287,510)
------------------------------
Total Distributions to Shareholders (9,207,260) (26,767,588)
------------------------------
FROM FUND SHARE TRANSACTIONS - NET* (8,591,624) (15,673,735)
------------------------------
NET ASSETS:
Beginning of period 504,377,839 471,448,790
------------------------------
End of period (including undistributed net investment income of none and $90,719, respectively) $ 469,907,333 $ 504,377,839
==============================
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1996 TO YEAR ENDED
MAY 3, 1996 DECEMBER 31,
(UNAUDITED)** 1995
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A
<S> <C> <C> <C> <C>
Shares sold 3,627,183 $ 39,293,683 5,088,200 $ 53,881,602
Shares issued to shareholders in reinvestment of distributions 678,367 7,290,625 1,996,923 21,071,918
---------------------------------------------------------------
4,305,550 46,584,308 7,085,123 74,953,520
Less shares repurchased (5,201,171) (56,217,824) (8,974,201) (94,717,342)
===============================================================
Net decrease (895,621) $ (9,633,516) (1,889,078) $(19,763,822)
===============================================================
CLASS B
Shares sold 176,828 $ 1,927,163 434,135 $ 4,589,783
Shares issued to shareholders in reinvestment of distributions 10,921 117,220 19,968 211,465
---------------------------------------------------------------
187,749 2,044,383 454,103 4,801,248
Less shares repurchased (94,282) (1,002,491) (67,125) (711,161)
===============================================================
Net increase 93,467 $ 1,041,892 386,978 $ 4,090,087
===============================================================
</TABLE>
** The net assets of the John Hancock Tax-Exempt Income Fund ("the Fund")
were merged into the John Hancock Tax-Free Bond Fund as of the close of
business on May 3, 1996 and the Fund was subsequently terminated. The
Statement of Changes in Net Assets reflects the Fund's position prior
to the transfer of net assets and the termination of the Fund. (See
Note A to the Notes to Financial Statements).
See notes to financial statements.
<PAGE>
John Hancock Funds - Tax-Exempt Income Fund
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1996 TO
MAY 3, 1996 YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 11.00 $ 9.96 $ 11.21 $ 10.96 $ 11.01 $ 10.59
------ -------- -------- -------- -------- --------
Net Investment Income 0.20 0.58(d) 0.57 0.58 0.63 0.68
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures Contracts (0.57) 1.04 (1.22) 0.66 0.26 0.57
------ -------- -------- -------- -------- --------
Total from Investment Operations (0.37) 1.62 (0.65) 1.24 0.89 1.25
------ -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.20) (0.58) (0.57) (0.58) (0.63) (0.68)
Distributions from Net Realized Gain on
Investments Sold and Financial Futures
Contracts ---- ---- (0.03) (0.41) (0.31) (0.15)
------ -------- -------- -------- -------- --------
Total Distributions (0.20) (0.58) (0.60) (0.99) (0.94) (0.83)
------ -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 10.43(e) $ 11.00 $ 9.96 $ 11.21 $ 10.96 $ 11.01
====== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (c) (3.37%)(b) 16.60% (5.90%) 11.53% 8.35% 12.18%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) $460,733 $495,731 $467,475 $541,281 $481,730 $422,311
Ratio of Expenses to Average Net Assets 1.06%* 1.04% 1.11% 1.27% 1.28% 1.21%
Ratio of Net Investment Income to Average
Net Assets 5.39%* 5.49% 5.43% 5.06% 5.71% 6.23%
Portfolio Turnover Rate 35% 133% 74% 81% 93% 56%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE PERIOD JANUARY 3, 1994
JANUARY 1, 1996 TO (COMMENCEMENT
MAY 3, 1996 YEAR ENDED OF OPERATIONS)
(UNAUDITED) DECEMBER 31, 1995 TO DECEMBER 31, 1994
<S> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $ 11.00 $ 9.95 $ 11.17(a)
--------- --------- ---------
Net Investment Income 0.18 0.49(d) 0.49
Net Realized and Unrealized Gain (Loss) on Investments
and Financial Futures Contracts (0.57) 1.05 (1.19)
--------- --------- ---------
Total from Investment Operations (0.39) 1.54 (0.70)
--------- --------- ---------
Less Distributions:
Dividends from Net Investment Income (0.18) (0.49) (0.49)
Distributions from Net Realized Gain on Investments Sold
and Financial Futures Contracts ---- ---- (0.03)
--------- --------- ---------
Total Distributions (0.18) (0.49) (0.52)
--------- --------- ---------
Net Asset Value, End of Period $ 10.43(e) $ 11.00 $ 9.95
========= ========= =========
Total Investment Return at Net Asset Value (c) (3.60%)(b) 15.70% (6.23%)(b)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) $ 9,175 $ 8,647 $ 3,974
Ratio of Expenses to Average Net Assets 1.77%* 1.82% 1.83%*
Ratio of Net Investment Income to Average Net Assets 4.70%* 4.70% 4.88%*
Portfolio Turnover Rate 35% 133% 74%
</TABLE>
* On an annualized basis.
(a) Initial price to commence operations.
(b) Not annualized.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(d) On average month end shares outstanding.
(e) Net asset value per share, before the merger of assets to the John
Hancock Tax-Free Bond Fund, and the termination of the Fund (See Note A
to the Notes to Financial Statements).
See notes to financial statements.
<PAGE>
JOHN HANCOCK FUNDS - TAX-EXEMPT INCOME FUND
SCHEDULE OF INVESTMENTS
May 3, 1996 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a list of all securities owned by Tax-Exempt
Income Fund on May 3, 1996. It's divided into two main categories: tax- exempt
long term bonds and options. The tax-exempt long-term bonds are further broken
down by state. Under each state is a list of the securities owned by the 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>
TAX-EXEMPT LONG-TERM BONDS
ALABAMA ( 1.15%)
Mobile Industrial Development Board,
Solid Waste Disp Rev Ref Mobile Energy Serv Co Proj 6.950% 01/01/20 BBB- $ 5,250 $ 5,403,825 6.75%
----------
ALASKA ( 0.22%)
Alaska Housing Finance Corp,
Ins Mtg Prog 1990 1st Ser 7.750 12/01/14 A+ 1,000 1,019,910 7.60
----------
ARIZONA ( 3.05%)
Maricopa County Pollution Control Corp,
Poll Control Rev Ref Ser A Public Service Co Palo Verde Proj 6.375 08/15/23 BB 8,550 7,863,520 6.93
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 2,665,290 5.91
Scottsdale Industrial Development Auth,
Hosp Rev Ref Ser 1997A Scottsdale Memorial Hosp Proj** 6.000 09/01/12 AAA 4,000 3,803,360 6.31
----------
14,332,170
----------
CALIFORNIA ( 12.13%)
Central Coast Water Auth,
Rev Regional Facil St Wtr Proj 6.350 10/01/07 AAA 2,090 2,225,578 5.96
Central Valley Financing Auth,
Cogeneration Proj Rev Carson Ice-Gen Proj Ser 1993 6.200 07/01/20 BBB- 5,000 4,756,050 6.52
Duarte, City of,
Cert of Part City of Hope National Medical Center Proj 6.250 04/01/23 Baa1*** 1,500 1,434,195 6.54
Foothill/Eastern Transportation Corridor Agency,
Toll Rd Rev Fixed Rate Cap Apprec Ser 1995A Zero 01/01/19 BBB- 36,600 7,714,548 6.99
Toll Rd Rev Fixed Rate Cap Apprec Ser 1995A Zero 01/01/20 BBB- 10,000 1,967,800 6.99
Toll Rd Rev Fixed Rate Current Int Ser 1995A 6.000 01/01/16 BBB- 14,500 13,654,360 6.37
Los Angeles, County of,
Cert of Part Civic Center Heating & Refrigeration Plant Proj 8.000 06/01/10 A 1,000 1,091,680 7.33
Madera, County of,
Cert of Part Valley Children's Hosp Proj 6.500 03/15/15 AAA 13,185 13,907,011 6.16
San Bernardino, County of,
Cert of Part Ser 1994 Medical Center Fin Proj 5.500 08/01/17 A- 9,130 8,047,091 6.24
Cert of Part Ser 1994 Medical Center Fin Proj 5.500 08/01/22 A- 2,500 2,181,225 6.30
----------
56,979,538
----------
COLORADO ( 2.05%)
Arapahoe County Capital Improvement Trust Fund,
Highway Rev Current Ser E-470 6.950 08/31/20 Baa*** 4,000 4,133,400 6.73
Denver, City and County of,
Airport Sys Rev Ser 1992A Preref 7.250 11/15/25 NR 1,415 1,605,954 6.39
Airport Sys Rev Ser 1992A Unref Bal 7.250 11/15/25 BBB 3,585 3,909,514 6.65
---------
9,648,868
---------
DELAWARE ( 1.01%)
Delaware State Economic Development Auth,
Rev Ref Poll Control Ser B Delmarva Pwr Proj 6.750 05/01/19 AAA 4,500 4,743,945 6.40
---------
FLORIDA ( 3.81%)
Alachua County Health Facilities Auth,
Hlth Facil Rev Ser A Shands Teaching Hosp Proj 6.250 12/01/16 AAA 6,695 6,947,335 6.02
Broward, County of,
Resource Recovery Rev Ser 1984 Ses Broward Co. L.P. South Proj 7.950 12/01/08 A 4,445 4,868,786 7.26
Florida, State of,
Sunshine Skyway Rev Ser of 1984 10.250 06/01/10 AAA 1,250 1,357,250 9.44
Hillsborough, County of,
Ref Util Rev Ser 1991A 7.000 08/01/14 BBB+ 1,245 1,328,278 6.56
Nassau, County of,
Poll Control Rev Ref ITT Rayonier Inc Proj 6.200 07/01/15 BBB 1,000 969,730 6.39
Orlando Utilities Commission,
Wtr & Elec Sub Rev Ser 1989D 6.750 10/01/17 AA- 2,200 2,439,822 6.09
---------
17,911,201
----------
GEORGIA ( 1.22%)
Georgia Municipal Electric Auth,
Pwr Rev Ref Ser BB 5.700 01/01/19 A 1,000 937,170 6.08
Pwr Rev Ser M 8.375 01/01/20 A 1,000 1,044,220 8.02
Municipal Electric Auth,
Spec Oblig 5th Crossover Proj 1 6.500 01/01/17 AAA 3,500 3,757,250 6.05
---------
5,738,640
---------
</TABLE>
See notes to financial statements.
<PAGE>
<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 ( 3.84%)
Chicago, City of,
Chicago-O'Hare Int'l Airport Gen Airport Rev 1990 Ser A 7.500% 01/01/16 A+ $ 2,000 $ 2,148,420 6.98%
Chicago-O'Hare Int'l Airport Int'l Terminal Spec Rev Ser 1992 6.750 01/01/12 AAA 3,000 3,117,600 6.50
Chicago-O'Hare Int'l Airport Spec Facil Rev Ser 1990A American
Airlines Proj 7.875 11/01/25 BB+ 3,000 3,217,260 7.34
Illinois Development Finance Auth,
Poll Control Rev Ref Commonwealth Edison Co Proj 5.850 01/15/14 BBB 3,000 2,747,190 6.39
Illinois Health Facilities Auth,
Rev Ref Ser 1992 Mercy Hosp & Medical Center Proj 7.000 01/01/07 A- 1,500 1,560,090 6.73
Metropolitan Pier and Exposition Auth,
Hosp Facil Rev Ser 1996A McCormick Place Convention Complex 7.000 07/01/26 BBB- 5,000 5,278,700 6.63
---------
18,069,260
----------
Indiana ( 0.21%)
Indianapolis Airport Auth,
Spec Facil Rev Ser A United Airlines Proj 6.500 11/15/31 BB 1,000 967,870 6.72
----------
Kansas ( 0.49%)
Johnson County Water District No. 1,
Wtr Rev Ref Ser 1984 0.500 12/01/08 AAA 2,000 2,291,220 9.17
---------
Kentucky ( 1.33%)
Kenton County Airport Board,
Rev Spec Facil Delta Airlines Proj Ser 1992A 6.750 02/01/02 BB 2,000 2,076,460 6.50
Rev Spec Facil Delta Airlines Proj Ser 1992A 7.500 02/01/12 BB 2,000 2,122,140 7.07
Rev Spec Facil Delta Airlines Proj Ser 1992A 7.125 02/01/21 BB 2,000 2,064,780 6.90
---------
6,263,380
---------
Louisiana ( 2.26%)
Calcasieu Parish Industrial Development Board,
Poll Control Rev Ref Ser 1992 Gulf States Util Co Proj 6.750 10/01/12 BB+ 2,975 2,951,468 6.80
Louisiana Public Facilities Auth,
Rev Ser B Alton Ochsner Medical Funding Proj 6.500 05/15/22 AAA 3,405 3,499,080 6.33
St. Charles, Parish of,
Poll Control Rev Ser 1991 Louisiana Pwr & Light Co Proj 7.500 06/01/21 BBB 4,000 4,182,960 7.17
---------
10,633,508
----------
Maryland ( 0.38%)
Maryland State Energy Financing Administration,
Solid Waste Disp Rev Ltd Oblig Recycling Hagerstown Proj 9.000 10/15/16 NR 1,900 1,785,981 9.57
---------
Massachusetts ( 7.67%)
Massachusetts Bay Transportation Auth,
Gen Trans Sys 1990 Ser B 7.875 03/01/21 AAA 2,000 2,297,100 6.86
Massachusetts Health and Educational Facilities Auth,
Rev Brigham & Women's Hosp Iss Ser D 6.750 07/01/24 A+ 2,450 2,502,601 6.61
Rev Lowell Gen Hosp Iss Ser A 8.400 06/01/11 Baa1*** 1,100 1,193,038 7.74
Rev New England Deaconess Hosp Iss Ser D 6.625 04/01/12 A 3,500 3,526,460 6.58
Rev New England Deaconess Hosp Iss Ser D 6.875 04/01/22 A 7,960 8,246,162 6.64
Rev New England Medical Center Hosp Iss Ser E 7.875 07/01/11 A- 1,950 2,122,087 7.24
Rev Worcester Polytechnic Institute Ser E 6.750 09/01/11 A+ 2,000 2,153,580 6.27
Massachusetts Housing Finance Agency,
Residential Dev 1992 Ser A 6.900 11/15/24 AAA 2,700 2,790,531 6.68
Single Family Hsg Ser 8 7.700 06/01/17 A+ 1,500 1,585,350 7.29
Massachusetts Municipal Wholesale Electric Co,
Pwr Supply Sys Rev 1992 Ser B A Pub Corp of The Commonwealth
of Mass 6.750 07/01/17 BBB+ 4,405 4,626,836 6.43
Massachusetts, Commonwealth of,
GO Consol Ln of 1994 Ser B 6.000 08/01/14 A+ 2,000 2,008,900 5.97
Plymouth, County of,
Cert of Part Ser A Plymouth County Correctional Facil Proj 7.000 04/01/22 A- 2,750 2,973,300 6.47
---------
36,025,945
----------
Michigan ( 2.59%)
Michigan State Hospital Finance Auth,
Hosp Rev Ref Ser 1995 Sinai Hospital Proj 6.700 01/01/26 Baa*** 2,500 2,441,525 6.86
Hosp Rev Ref Ser 1995A Genesys Hlth Sys Oblig Group 8.100 10/01/13 BBB 4,250 4,591,998 7.50
Wayne Charter County of,
Spec Airport Facil Rev Ref Ser 1995 Northwest Airlines Facil 6.750 12/01/15 BB+*** 5,200 5,134,636 6.84
---------
12,168,159
----------
Mississippi ( 0.03%)
Mississippi Home Corp,
Single Family Sr Rev Ref Ser 1990A 9.250 03/01/12 AAA 120 129,934 8.54
----------
Missouri ( 1.14%)
St Louis Regional Convention and Sports Complex Auth,
Rev Ser 1991C 7.900 08/15/21 NR 5,000 5,360,200 7.37
---------
</TABLE>
See notes to financial statements.
<PAGE>
<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>
NEBRASKA ( 0.27%)
Omaha Public Power District,
Elec Sys Rev 1992 Ser B 6.200% 02/01/17 AA $ 1,200 $ 1,257,348 5.92%
-----------
NEW JERSEY ( 1.50%)
New Jersey Economic Development Auth,
1st Mtg Rev Ser A Winchester Gardens 8.500 11/01/16 NR 2,630 2,538,792 8.81
Rev Ref Ind'l Development Newark Airport Marriott Hotel Proj 7.000 10/01/14 NR 2,500 2,465,725 7.10
New Jersey Turnpike Auth,
Turnpike Rev Ser 1984 0.375 01/01/03 AAA 1,740 2,070,235 8.72
---------
7,074,752
---------
NEW YORK ( 12.87%)
Metropolitan Transportation Auth,
Transit Facil 1987 Serv Contract Ser 1 8.500 07/01/17 AAA 1,000 1,071,910 7.93
New York City Industrial Development Agency,
Solid Waste Disposal Rev 1995 Visy Paper NY Inc Proj 7.950 01/01/28 BB*** 3,250 3,257,995 7.93
New York Local Government Assistance Corp,
Ser 1992 A Pub Benefit Corp 6.875 04/01/19 A 8,700 9,436,194 6.34
New York State Dormitory Auth,
City Univ Ref Iss 1988B 8.125 07/01/08 BBB 1,000 1,089,330 7.46
Cornell Univ Rev Ser 1990A 7.375 07/01/30 AA 1,000 1,093,350 6.75
Nyack Hosp Rev Ser 1996** 6.250 07/01/13 Baa*** 1,000 962,080 6.50
State Univ Ed Facil Rev Iss Ser 1990B 7.500 05/15/11 BBB+ 500 562,430 6.67
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 5,999,520 7.15
Elec Facil Rev Ser 1991 A Consol Edison Co of NY Inc Proj 7.500 01/01/26 A+ 2,000 2,150,500 6.98
New York State Environmental Facilities Corp,
State Wtr Poll Control Revolving Fund Rev Ser 1990 A 7.500 06/15/12 A 3,770 4,141,420 6.83
New York State Housing Finance Agency,
State Univ Construction Ref 1986 Ser A 8.000 05/01/11 AAA 2,000 2,409,020 6.64
New York State Medical Care Facilities Finance Agency,
Mental Hlth Serv Facil Imp Rev 1990 Ser B 7.875 08/15/08 BBB+ 500 552,030 7.13
Mental Hlth Serv Facil Imp Rev 1990 Ser B 7.875 08/15/20 BBB+ 460 507,868 7.13
Mental Hlth Serv Facil Imp Rev 1991 Ser A 7.750 08/15/11 BBB+ 540 595,636 7.03
Mental Hlth Serv Facil Imp Rev 1991 Ser A 7.750 08/15/11 AAA 1,460 1,671,335 6.77
New York State Mortgage Agency,
Homeowner Mtg Rev Ser BB-2 7.950 10/01/15 AA*** 1,135 1,196,267 7.54
New York State Power Auth,
Gen Purpose Ser V 7.875 01/01/13 AAA 2,400 2,593,104 7.29
Gen Purpose Ser V 8.000 01/01/17 AA 1,850 2,000,812 7.40
New York, City of,
GO Fiscal 1991 Ser D 8.000 08/01/04 BBB+ 250 276,832 7.22
GO Fiscal 1991 Ser F 8.200 11/15/03 BBB+ 1,250 1,405,163 7.29
GO Fiscal 1992 Ser A 7.750 08/15/12 BBB+ 2,000 2,185,760 7.09
GO Fiscal 1992 Ser D 7.700 02/01/09 BBB+ 1,000 1,096,210 7.02
GO Fiscal 1992 Ser H 7.000 02/01/08 BBB+ 2,000 2,109,100 6.64
GO Fiscal 1995 Ser B 7.000 08/15/16 BBB+ 3,000 3,110,820 6.75
GO Rev Ref Ad Valorem Property Tax Ser D 5.750 08/15/13 BBB+ 3,170 2,873,066 6.34
Triborough Bridge and Tunnel Auth,
Gen Purpose Rev Ser L 8.125 01/01/12 A+ 1,750 1,877,225 7.57
Gen Purpose Rev Ser R 7.375 01/01/16 AAA 1,600 1,766,224 6.68
Spec Oblig Ref Ser 1991B 6.875 01/01/15 A- 2,300 2,476,778 6.38
---------
60,467,979
----------
NORTH CAROLINA ( 4.13%)
North Carolina Eastern Municipal Power Agency,
Pwr Sys Rev Ref Ser 1991A 5.750 01/01/19 BBB+ 4,000 3,594,080 6.40
Pwr Sys Rev Ref Ser 1993C 5.000 01/01/21 BBB+ 5,000 4,099,800 6.10
North Carolina Municipal Power Agency Number 1,
Catawba Elec Rev Ser 1992 5.750 01/01/15 AAA 7,410 7,082,997 6.02
Catawba Elec Rev Ser 1993 5.000 01/01/15 AAA 5,220 4,622,206 5.65
---------
19,399,083
----------
OHIO ( 5.91%)
Cleveland Public Power System,
Elec Sys Rev 1st Mtg Ser A 7.000 11/15/24 AAA 6,200 6,828,556 6.36
Franklin, County of,
Hosp Facil Ref & Imp Rev Ser 1990B Riverside United
Methodist Hosp Proj 7.600 05/15/20 AAA 1,000 1,122,300 6.77
Lorain, County of,
Rev 1st Mtg Ser A Kendal At Oberlin Proj 8.625 02/01/22 BBB-*** 3,600 3,885,192 7.99
Ohio State Air Quality Development Auth,
Rev Adj Ser B Columbus & South Proj 6.250 12/01/20 Baa2*** 4,500 4,216,230 6.67
Ohio State Water Development Auth,
Poll Control Facil Rev Ref Ser 1989A Ohio Edison Co Proj 7.625 07/01/23 BB+ 8,390 8,864,035 7.22
Poll Control Facil Rev Ref Ser 1995 Cleveland Elec Co Proj 7.700 08/01/25 BB 2,800 2,852,192 7.56
---------
27,768,505
----------
</TABLE>
See notes to financial statements.
<PAGE>
<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> <C> <C>
OKLAHOMA ( 1.99%)
Oklahoma Turnpike Auth,
Turnpike Sys 1st Sr Rev Ser 1989 7.875% 01/01/21 A+ $ 1,745 $ 1,918,976 7.16%
Tulsa Municipal Airport Trust, Trustees of,
Rev Ser 1988 American Airlines Inc 6.250 06/01/20 BB+ 5,500 5,328,895 6.45
Rev Ser 1988 American Airlines Inc 7.375 12/01/20 BB+ 2,000 2,105,720 7.00
---------
9,353,591
---------
OREGON ( 1.04%)
Western Generation Agency,
Rev 1994 Ser A Wauna Cogeneration Proj 7.125 01/01/21 BB-*** 4,800 4,877,328 7.01
---------
PENNSYLVANIA ( 7.13%)
Allegheny County Industrial Development Auth,
Rev Ref Ser 1994A Environmental Imp USX Corp Proj 6.700 12/01/20 BB+ 5,000 5,004,350 6.69
Beaver County Industrial Development Auth,
Coll Poll Control Rev Ref Ser 1995A Toledo Edison Co Beaver
Valley Proj 7.750 05/01/20 BB 2,200 2,253,768 7.57
Delaware County Industrial Development Auth,
Poll Control Rev Ref 1991 Ser A Philadelphia Elec Co Proj 7.375 04/01/21 BBB+ 6,095 6,468,928 6.95
Pennsylvania Convention Center Auth,
Rev Ref Ser 1994A 6.700 09/01/14 BBB- 4,950 5,139,981 6.45
Pennsylvania Economic Development Finance Auth,
Resource Recovery Rev Ser 1994D Colver Proj 7.125 12/01/15 BBB- 7,000 7,272,370 6.86
Pennsylvania State Turnpike Commission,
Turnpike Rev Ser N 6.500 12/01/13 AAA 2,840 2,930,511 6.30
Philadelphia Industrial Development Auth,
Commercial Development Rev Ser 1995 Philadelphia Airport
Hotel Proj 7.750 12/01/17 B+*** 3,250 3,356,210 7.50
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 1,065,040 7.70
---------
33,491,158
----------
PUERTO RICO ( 4.80%)
Puerto Rico Highway and Transportation Auth,
Highway Rev Rites PA Rte 114 #8.508 07/01/11 A 7,130 7,700,400 7.88
Puerto Rico, Commonwealth of,
GO Pub Imp Inverse Floater Ser 1996 #8.220 07/01/11 A 14,000 14,857,500 7.75
----------
22,557,900
----------
SOUTH CAROLINA ( 0.58%)
Piedmont Municipal Power Agency,
Rev Ref South Carolina Elec Sys 5.375 01/01/25 AAA 3,000 2,737,020 5.89
---------
SOUTH DAKOTA ( 0.21%)
South Dakota Health and Educational Facilities Auth,
Rev Ser 1989 Sioux Valley Hosp Iss 7.625 11/01/13 AA- 925 1,012,496 6.97
---------
TENNESSEE ( 2.83%)
Maury County Industrial Development Board,
Multi-Modal Interchangeable Rate Poll Control Ref Rev Saturn
Corp Proj 6.500 09/01/24 A- 9,000 9,173,790 6.38
Memphis-Shelby County Airport Auth,
Rev Ref Federal Express Corp 6.750 09/01/12 BBB 4,000 4,133,360 6.53
---------
13,307,150
----------
TEXAS ( 4.09%)
Brazos River Auth,
Coll Rev Ref Ser 1988B Houston Lighting & Pwr Co Proj 8.250 05/01/15 A 2,000 2,139,940 7.71
Dallas-Fort Worth International Airport,
Rev Delta Air Lines Inc 7.600 11/01/11 BB 3,000 3,195,240 7.14
Spec Facil Rev American Airlines Inc 7.250 11/01/12 BB+ 1,900 1,900,950 7.25
Harris County Health Facilities Development Corp,
Hosp Rev Ser 1988A Saint Luke's Episcopal Hosp Proj 8.250 02/15/08 AAA 1,000 1,122,730 7.35
Texas Turnpike Auth,
Dallas North Thruway Rev Ref Ser 1996** 5.000 01/01/10 AAA 7,000 6,294,750 5.56
Dallas North Thruway Rev Ref Ser 1996** 5.500 01/01/15 AAA 5,000 4,547,600 6.05
---------
19,201,210
----------
WASHINGTON ( 5.84%)
Port of Walla Walla Public Corp,
Solid Waste Recycling Rev Ser 1995 Ponderosa Fibres Proj 9.125 01/01/26 BB-*** 11,000 10,771,970 9.32
Seattle, City of,
Municipal Light & Pwr Rev 1994 6.625 07/01/16 AA 3,600 3,771,756 6.32
Washington Public Power Supply System,
Nuclear Proj No. 1 Ref Rev Ser 1989A 7.500 07/01/15 AA 1,455 1,552,674 7.03
Nuclear Proj No. 1 Ref Rev Ser 1989B 7.125 07/01/16 AA 1,500 1,625,595 6.57
Nuclear Proj No. 1 Ref Rev Ser 1991A 6.875 07/01/17 AA 1,250 1,303,187 6.59
Nuclear Proj No. 2 Ref Rev Ser 1990C 7.625 07/01/10 AAA 5,000 5,670,100 6.72
Nuclear Proj No. 3 Ref Rev Ser 1989B 7.250 07/01/15 AAA 2,500 2,754,975 6.58
---------
27,450,257
----------
</TABLE>
See notes to financial statements.
<PAGE>
<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>
Wisconsin ( 0.95%)
Wisconsin Public Power Inc,
Pwr Supply Sys Rev Ser 1990A 7.400% 07/01/20 AAA $ 4,000 $ 4,468,840 6.62%
----------
TOTAL TAX-EXEMPT LONG-TERM BONDS
(Cost $449,604,252) (98.72%) 463,898,171
======= ===========
Number
of Expiration Market
Contracts Date Value
--------- ---------- ------
PURCHASED OPTIONS ( 0.01%)
U.S. Treasury Bond Option 114 USN6C 500 06/22/96 $ 23,438
U.S. Treasury Bond Option 114 USU6C 50 08/24/96 14,844
---------
TOTAL PURCHASED OPTIONS (Cost $138,819) $ 38,282
---------
TOTAL INVESTMENTS (Cost $449,743,071) (98.73%) 463,936,453
======= ===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
**These securities having an aggregate value of $15,607,790 or 3.32% of the
Fund's net asset value, have been purchased as forward commitments - that
is, the Fund has agreed on the trade date, to take delivery of and make
payment for such securities on a delayed basis subsequent to the date of
this schedule. The purchase price and interest rate of such securities is
fixed at trade date, although the Fund does not earn any interest on such
securities until settlement date. The Fund has instructed its Custodian
Bank to segregate assets with the current value at least equal to the
amount of its forward commitment. Accordingly, the market values of
$13,395,452 of Madera, County of, Cert of Part Valley Children's Hosp Proj,
6.500%, 03-15-15, Mobile Industrial Development Board, Solid Waste Disp Rev
Ref Mobile Energy Serv Co Proj, 6.950%, 01-01-20, and New York State
Dormitory Auth, City Univ Ref Iss 1988B, 8.125%, 07/01/08, has been
segregated to cover the forward commitments.
***Credit Ratings are rated by Moody's Investors Services, Fitch or John
Hancock Advisers, Inc. where Standard & Poor's ratings are not available.
NR Not rated.
+ The yield shown is the current yield which represents the annual interest
earned divided by the market price. This calculation is not representative
of the guidelines established by the U.S. Securities and Exchange
Commission.
Zero coupon bond yields are at yield to maturity.
# Represents rate in effect on May 3, 1996.
The percentages 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>
JOHN HANCOCK FUNDS - TAX EXEMPT INCOME FUND
Portfolio Concentration (Unaudited)
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
May 3, 1996 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 ........................................ 6.37%
Revenue Bonds - Certificate of Participation .............. 0.63
Revenue Bonds - Education ................................. 0.58
Revenue Bonds - Electric Power ............................ 18.86
Revenue Bonds - Health .................................... 17.23
Revenue Bonds - Housing ................................... 3.31
Revenue Bonds - Industrial Development Bond ............... 7.61
Revenue Bonds - Other ..................................... 5.52
Revenue Bonds - Pollution Control Facilities .............. 15.94
Revenue Bonds - Transportation ............................ 20.54
Revenue Bonds - Water & Sewer ............................. 2.13
Options - ................................................. 0.01
-----
TOTAL TAX-EXEMPT LONG-TERM BONDS .................. 98.73%
=====
</TABLE>
See Notes to Financial Statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - JOHN HANCOCK TAX-EXEMPT INCOME FUND
(UNAUDITED)
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 investment objective of the Fund 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 Trustees authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represented an
interest in the same portfolio of investments of the Fund and had equal rights
to voting, redemptions, dividends, and liquidation, except that certain
expenses, subject to the approval of the Trustees, may have been 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 beard distribution/service expenses under the
terms of a distribution plan had exclusive voting rights regarding such
distribution plan. Class A shares were subject to an initial sales charge of up
to 4.50% and a 12b-1 distribution plan. Class B shares were subject to a
contingent deferred sales charge and a separate 12b-1 distribution plan.
On May 2, 1996, the shareholders of the Fund approved a plan of
reorganization between the Fund and John Hancock Tax-Free Bond Fund ("Tax-Free
Bond Fund") providing for the transfer of substantially all of the assets and
liabilities of the Fund to Tax-Free Bond Fund in exchange solely for shares of
beneficial interest of Tax-Free Bond Fund. After this transaction and as of the
close of business on May 3, 1996, the Fund was terminated. The financial
statements presented herein reflect the position of the Fund prior to the
exchange of net assets and termination of the Fund. Significant accounting
policies of the Fund were as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio
were 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 were 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 transaction. Aggregate cash
balances were invested in one or more repurchase agreements, whose underlying
securities were obligations of the U.S. government and/or its agencies. The
Fund's custodian bank received delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser was responsible for ensuring
that the agreement was fully collateralized at all times.
FINANCIAL FUTURES CONTRACTS The Fund may have bought and sold financial futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. At the time the Fund entered into a financial futures
contract, it was 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 was 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 were made on a daily basis as the
market price of the financial futures contract fluctuated. Daily variation
margin adjustments, arising from this "mark to market", were recorded by the
Fund as unrealized gains or losses.
When the contracts were closed, the Fund recognized a gain or loss.
Risks of entering into futures contracts included the possibility that there may
have been an illiquid market and/or that a change in the value of the contracts
may not have correlated with changes in the value of the underlying securities.
In
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - JOHN HANCOCK TAX-EXEMPT INCOME FUND
addition, the Fund could have been 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 could have been affected as a result of futures
contracts.
At May 3, 1996 open positions in financial futures contracts were as
follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Open Contracts Position Appreciation
- ----------- -------------- -------- -------------
<S> <C> <C> <C>
JUNE 1996 400 U.S. Treasury Bond SHORT $747,656
========
</TABLE>
At May 3, 1996, the Fund had deposited in a segregated account $868,748
to cover margin requirements on open financial futures contracts.
INVESTMENT TRANSACTIONS Investment transactions were recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments were determined on the identified cost basis.
PREMIUM AND DISCOUNT For tax-exempt issues, the Fund amortized 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 accreted 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 recorded market
discount on bonds purchased after April 30, 1993 at time of disposition.
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. It
will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders. As of May 3, 1996, the Fund's final tax year end,
for Federal income tax purposes, the Fund had $6,286,343 of capital loss
carryforwards available. To the extent that such carryforwards were used by the
Fund, no capital gains distributions were made. The carryforwards expire as
follows: 2001--$550,687 and 2002--$5,735,656. The unused capital loss
carryforwards as of May 3, 1996 were transferred to the John Hancock Tax-Free
Bond Fund. These capital loss carryforwards will be available, to the extent
provided by regulations, to offset future net capital gains of the John Hancock
Tax-Free Bond Fund. Expired capital loss carryforwards are reclassified to
capital paid-in, in the year of expiration
DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
was recorded on the accrual basis.
The Fund recorded all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions were
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund, if any,
with respect to each class of shares were calculated in the same manner, at the
same time and were in the same amount, except for the effect of expenses that
may have been applied differently to each class as explained previously.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) were determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, were calculated daily at the class level based
on the appropriated net assets of each class and the specific expense rate(s)
applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporated estimates made by
management in determining the reported amounts of assets, liabilities, revenues,
and expenses of the Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - JOHN HANCOCK TAX-EXEMPT INCOME FUND
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS
Under the investment management contract, the Fund paid 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, were in excess of the most restrictive
state limit where the Fund was registered to sell shares, the fee payable to the
Adviser was reduced to the extent of such excess and the Adviser made additional
arrangements necessary to eliminate any remaining excess expenses. The limits
were 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.
The Fund had a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. For the period ended May
3, 1996, JH Funds received net sales charges of $257,736 with regard to sales of
Class A shares. Out of this amount, $25,969 was retained and used for printing
prospectuses, advertising, sales literature and other purposes, $60,867 was paid
as sales commissions to unrelated broker-dealers and $170,900 was paid as sales
commissions to sales personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker dealers. 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.
Class B shares which were redeemed within six years of purchase were
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 the CDSC were paid to JH Funds and were 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 May 3, 1996
contingent deferred sales charges received by JH Funds amounted to $53,423.
In addition, to compensate JH Funds for the services it provided as
distributor of shares of the Fund, the Fund had adopted a Distribution Plan with
respect to Class A and Class B shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund made payments to JH Funds
, which in total did not exceed on an annual basis 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 such
payments may have been service fees as defined by the amended Rules of Fair
Practice of the National Association of Securities Dealers. Under the amended
Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1 payments
could have occurred under certain circumstances.
The Fund had a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. The Fund paid Investor Services a fee based on the
number of shareholder accounts and certain out-of-pocket expenses.
On March 5, 1996, the Board of Trustees approved retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary tax and
financial management services for the Funds. The compensation for 1996 was
estimated to be at an annual rate of 0.01875% of the average net assets of the
Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - JOHN HANCOCK TAX-EXEMPT INCOME FUND
Messrs. Edward J. Boudreau, Jr., Richard S. Scipione and Ms. Anne C.
Hodsdon are directors and/or officers of the Adviser and/or its affiliates, as
well as Trustees of the Fund. The compensation of unaffiliated Trustees was
borne by the Fund. Effective with the fees paid for 1995, the unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund made
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability were recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset were always equal
and were marked to market on a periodic basis to reflect any income earned by
the investment as well as any unrealized gains or losses. At May 3, 1996, the
Fund's investments to cover the deferred compensation liability had unrealized
appreciation of $1,828.
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 May 3, 1996, aggregated $173,072,084 and $198,181,765, respectively. There
were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended May 3, 1996.
The cost of investments owned at May 3, 1996 for Federal income tax
purposes was $449,863,383. Gross unrealized appreciation and depreciation of
investments aggregated $18,377,704 and $4,304,634, respectively, resulting in
net unrealized appreciation of $14,073,070.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness OF 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
26th day of June, 1996.
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
- ---------------------------
Edward J. Boudreau, Jr. (Principal Executive Officer)
/s/James B. Little
- ---------------------------
James B. Little Senior Vice President and Chief June 26, 1996
Financial Officer (Principal
Financial and Accounting Officer)
* Trustee
- ---------------------------
Dennis S. Aronowitz
* Trustee
- ---------------------------
Richard P. Chapman
* Trustee
- ---------------------------
William J. Cosgrove
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Trustee
- ---------------------------
Gail D. Fosler
Trustee
- ---------------------------
Anne C. Hodsdon
* Trustee
- ---------------------------
Richard S. Scipione
* Trustee
- ---------------------------
Edward J. Spellman
*By: /s/ Thomas H. Drohan June 26, 1996
--------------------
Thomas H. Drohan,
Attorney-in-Fact
</TABLE>
C-2
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> JOHN HANCOCK TAX-EXEMPT SERIES FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-03-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAY-03-1996
<INVESTMENTS-AT-COST> 449,743,071
<INVESTMENTS-AT-VALUE> 463,936,453
<RECEIVABLES> 31,474,162
<ASSETS-OTHER> 137,526
<OTHER-ITEMS-ASSETS> 14,942,866
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<NAME> JOHN HANCOCK TAX-EXEMPT SERIES FUND - CLASS B
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