<PAGE>
As Filed with the Securities and Exchange Commission on December , 1995
Registration No. 811-5079
Registration No. 33-12947
================================================================================
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. 10 [X]
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11
(Check appropriate box or boxes)
----------------------
JOHN HANCOCK TAX-EXEMPT SERIES FUND
(Exact name of Registrant as Specified in Charter)
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
(Address of Principal Executive Officers)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617) 375-1700
----------------------
THOMAS H. DROHAN, ESQ.
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7608
(Name and Address of Agent for Service)
Copies to:
JEFF N. CARP, ESQ.
Hale and Dorr
60 State Street
Boston, MA 02109
----------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b)
[x] ON JANUARY 1, 1996 PURSUANT TO PARAGRAPH (b)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a) OF RULE (485 OR 486)
<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 354,760 $12.61 $290,000 $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. 2,518,348 shares were
redeemed during the fiscal year ended August 31, 1995. 2,186,586 shares were used for reductions pursuant to
Paragraph (c) of Rule 24f-2 during the current fiscal year. 354,760 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 $12.61 per share on December 15, 1995 is the price used as the basis for calculating the registration
fee. While no fee is required for the 331,762 shares, the Registrant has elected to register, for $100, an
additional $290,000 of shares (approximately 22,998 shares at $12.61 per share).
</TABLE>
PURSUANT TO THE PROVISIONS OF RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF
1940, REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SECURITIES UNDER THE
SECURITIES ACT OF 1933, AND REGISTRANT'S RULE 24f-2 NOTICE FOR FISCAL YEAR ENDED
AUGUST 31, 1995 WAS FILED ON OR ABOUT OCTOBER 20, 1995.
================================================================================
<PAGE>
JOHN HANCOCK TAX-EXEMPT SERIES FUND
Cross Reference Sheet
Pursuant to Rule 495(b) 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 SERIES
FUND --
MASSACHUSETTS PORTFOLIO
NEW YORK PORTFOLIO
PROSPECTUS
JANUARY 1, 1996
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
--
Expense Information .................................................... 2
The Fund's Financial Highlights ........................................ 3
Investment Objective and Policies ...................................... 5
Organization and Management of the Fund ................................ 10
The Portfolios' Expenses ............................................... 11
Dividends and Taxes .................................................... 11
Performance ............................................................ 13
How to Buy Shares ...................................................... 14
Share Price ............................................................ 16
How to Redeem Shares ................................................... 19
Additional Services and Programs ....................................... 21
This Prospectus sets forth information about John Hancock Tax-Exempt Series
Fund (the "Fund") and its non-diversified series, the Massachusetts Portfolio
and the New York Portfolio (each "a Portfolio" and collectively "the
Portfolios"), that an investor should know before investing. Please read and
retain it for future reference.
Additional information about the Fund and the Portfolios has been filed with
the Securities and Exchange Commission (the "SEC"). You can obtain a copy of the
Statement of Additional Information, dated January 1, 1996, and incorporated by
reference into this Prospectus, free of charge upon request 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 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 to understand the
various fees and expenses that you will bear directly or indirectly when you
purchase shares of the Portfolios. The operating expenses are based on actual
expenses for each Portfolio's fiscal year ended August 31, 1995, adjusted to
reflect current fees and expenses. Actual fees and expenses may be greater or
less than those indicated.
MASSACHUSETTS NEW YORK
PORTFOLIO PORTFOLIO
-------------- ---------
SHAREHOLDER TRANSACTION EXPENSE
Maximum sales charge imposed on purchases (as a
percentage of offering price) ................... 4.50% 4.50%
Maximum sales charge imposed on reinvested
dividends ....................................... None None
Maximum deferred sales load* ...................... None None
Redemption fees+ .................................. None None
Exchange fee ...................................... None None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fee (net of reduction) ................. 0.05% 0.05%
12b-1 fee** ....................................... 0.30% 0.30%
Other expenses .................................... 0.35% 0.35%
Total Portfolio operating expenses*** (net of
reduction) ...................................... 0.70% 0.70%
- ----------
*No sales charge is payable at the time of purchase on investments of $1
million or more, but for these investments a contingent deferred sales charge
may be imposed, as described under the caption "Share Price" in the event of
certain redemption transactions within one year of purchase.
**The amount of the 12b-1 fee used to cover service expenses will be up to
0.25% of average net assets, and the remaining portion will be used to
cover distribution expenses. See "The Portfolios" Expenses."
***Expenses reflect the reduction of the management fee by the Portfolio's
investment adviser. Without such a reduction, the management fee and total
fund operating expenses of the Massachusetts Portfolio and New York
Portfolio, respectively, would have been estimated as 0.50% and 0.50%, and
1.15% and 1.15%.
+Redemption by wire fee (currently $4.00) not included.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
You would pay the following expenses in
each of the Portfolios for the
indicated period of years on a
hypothetical $1,000 investment,
assuming 5% annual return: .......... $52 $66 $82 $128
(This example should not be considered a representation of 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
Dealer's Rules of Fair Practice.
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the section "The Portfolios" 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 information has been audited by the Fund's independent
accountants, Price Waterhouse LLP, whose unqualified report on the Fund's
financial statements and financial highlights for the year ended August 31, 1995
is included in the Annual Report which is included in the Fund's Statement of
Additional Information ("SAI"). Further information about the performance of
each Portfolio is contained in the Fund's Annual Report to shareholders which
may be obtained free of charge by writing or telephoning John Hancock Investor
Services Corporation, at the address or telephone number listed on the front
page of this Prospectus.
MASSACHUSETTS PORTFOLIO
Selected data for a Portfolio share outstanding throughout each period
indicated, investment returns, key ratios and supplemental data are listed as
follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988<F4>
---- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning
of Period .............. $11.56 $12.43 $11.75 $11.15 $10.63 $10.94 $10.63 $10.00
------ ------ ------ ------ ------ ------ ------ ------
Net Investment Income<F5> 0.65 0.63 0.67 0.71 0.73 0.69 0.70 0.65
Net Realized and
Unrealized Gain (Loss)
on Investments
and Financial Futures
Contracts ............. 0.20 (0.75) 0.82 0.60 0.53 (0.31) 0.31 0.63
------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations ............. 0.85 (0.12) 1.49 1.31 1.26 0.38 1.01 1.28
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income .... (0.65) (0.63) (0.67) (0.71) (0.73) (0.69) (0.70) (0.65)
------ ------ ------ ------ ------ ------ ------ ------
Distributions from Net
Realized Gain on
Investments Sold ..... -- (0.12) (0.14) -- (0.01) -- -- --
Total Distributions ...... (0.65) (0.75) (0.81) (0.71) (0.74) (0.69) (0.70) (0.65)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period ................. $11.76 $11.56 $12.43 $11.75 $11.15 $10.63 $10.94 $10.63
====== ====== ====== ====== ====== ====== ====== ======
Total Investment Return at
Net Asset Value ........ 7.66% (0.97%) 13.29% 12.11% 12.10% 3.49% 9.67% l13.13%<F1>
------ ------ ------ ------ ------ ------ ------ ------
Total Adjusted Investment
Return at Net Asset
Value<F1><F2>........... 7.21% (1.50%) 12.38% 10.93% 10.66% 2.72% 9.16% 10.38%<F1>
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(000's omitted) ........ $54,416 $54,122 $50,019 $29,113 $15,015 $9,968 $9,138 $4,757
Ratio of Expenses to
Average Net Assets<F5>.. 0.70% 0.70% 0.67% 0.60% 0.60% 1.00% 1.00% 1.00%<F1>
Ratio of Adjusted Expenses
to Average Net Assets<F1> 1.15% 1.23% 1.58% 1.78% 2.04% 1.77% 1.51% 3.75%<F1>
Ratio of Net Investment
Income to Average Net
Assets ................. 5.67% 5.28% 5.61% 6.18% 6.64% 6.31% 6.35% 6.28%<F1>
Ratio of Adjusted Net
Investment Income to
Average Net Assets<F1>.. 5.22% 4.75% 4.70% 5.00% 5.20% 5.54% 5.84% 3.53%<F1>
Portfolio Turnover Rate .. 24% 29% 79% 56% 29% 2% 2% 20%
Expense Reduction Per
Share .................. $ 0.05 $ 0.06 $ 0.11 $ 0.14 $ 0.16 $ 0.08 $ 0.11 $ 0.28
<FN>
- ----------
<F1> Without expense reduction.
<F2> Unaudited.
<F3> On an annualized basis.
<F4> For the period from the date shares of beneficial interest were initially sold to the public which was September 3, 1987.
<F5> Reflects expense reductions in effect during the year.
</TABLE>
<PAGE>
NEW YORK PORTFOLIO
Selected data for a Portfolio share outstanding throughout each period
indicated, investment returns, key ratios and supplemental data are listed as
follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988<F4>
---- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning
of Period .............. $11.73 $12.63 $11.90 $11.29 $10.74 $11.01 $10.48 $10.00
------ ------ ------ ------ ------ ------ ------ ------
Net Investment Income<F5> 0.65 0.64 0.68 0.72 0.72 0.67 0.68 0.61
Net Realized and
Unrealized Gain (Loss)
on Investments
and Financial Futures
Contracts .............. 0.15 (0.77) 0.87 0.63 0.55 (0.25) 0.55 0.48
------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations ............. 0.80 (0.13) 1.55 1.35 1.27 0.42 1.23 1.09
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income .... 0.65 (0.64) (0.68) (0.72) (0.72) (0.67) (0.68) (0.61)
------ ------ ------ ------ ------ ------ ------ ------
Distributions from Net
Realized Gain on
Investments Sold ..... -- (0.13) (0.14) (0.02) -- (0.02) (0.02) --
Total Distributions ...... (0.65) (0.77) (0.82) (0.74) (0.72) (0.69) (0.70) (0.61)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period ................. $11.88 $11.73 $12.63 $11.90 $11.29 $10.74 $11.01 $10.48<F3>
====== ====== ====== ====== ====== ====== ====== ======
Total Investment Return at
Net Asset Value ........ 7.19% (1.05%) 13.70% 12.17% 12.24% 3.74% 11.87% 11.40%<F3>
------ ------ ------ ------ ------ ------ ------ ------
Total Adjusted Investment
Return at Net Asset
Value<F1><F2>........... 6.74% (1.58%) 12.83% 11.09% 11.02% 3.05% 11.22% 7.56%<F3>
------ ------ ------ ------ ------ ------ ------ ------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of Period
(000's omitted) ........ $55,753 $55,690 $52,444 $33,806 $20,878 $13,357 $8,795 $4,306
Ratio of Expenses to
Average Net Assets<F5>.. 0.70% 0.70% 0.67% 0.60% 0.60% 1.00% 1.00% 1.00%<F3>
Ratio of Adjusted Expenses
to Average Net Assets<F1> 1.15% 1.23% 1.54% 1.68% 1.82% 1.69% 1.65% 4.84%<F3>
Ratio of Net Investment
Income to Average Net
Assets ................. 5.67% 5.28% 5.63% 6.22% 6.57% 6.17% 6.30% 6.11%<F3>
Ratio of Adjusted Net
Investment Income to
Average Net Assets<F1>.. 5.22% 4.75% 4.76% 5.14% 5.35% 5.48% 5.65% 2.27%<F3>
Portfolio Turnover Rate .. 70% 23% 56% 48% 12% 10% 10% 16%
Expense Reduction Per
Share .................. $ 0.05 $ 0.06 $ 0.11 $ 0.13 $ 0.13 $ 0.08 $ 0.13 $ 0.38
<FN>
- ----------
<F1> Without expense reduction.
<F2> Unaudited.
<F3> On an annualized basis.
<F4> For the period from the date shares of beneficial interest were initially sold to the public which was September 11, 1987.
<F5> Reflects expense reductions in effect during the year.
</TABLE>
<PAGE>
THE PORTFOLIOS SEEK TO PROVIDE INCOME THAT IS EXCLUDABLE FROM FEDERAL AND STATE
TAX.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of each Portfolio is to provide current income that is
excludable from gross income for Federal income tax purposes and, for the
Massachusetts and New York Portfolios, respectively, is exempt from the personal
income tax of Massachusetts and New York, and from New York City personal income
taxes. The Portfolios seek to provide the maximum level of tax exempt income
that is consistent with preservation of capital. There is no assurance that the
Portfolios will achieve their investment objective.
As a fundamental policy, at least 80% of each Portfolio's net assets (taken at
market value) will consist of municipal bonds and notes and other debt
instruments, whose interest is excludable from Federal gross income and exempt
from the personal income tax of Massachusetts or New York State and New York
City, as the case may be ("Tax-Exempt Bonds").
From time to time, however, limited availability of these obligations may result
from market conditions. As a temporary defensive posture, a Portfolio may seek
to invest its assets in debt securities whose interest is excludable for Federal
income tax purposes during these periods, but not necessarily exempt from the
personal income tax of the applicable State and New York City, and subject to
the possible application of alternative minimum taxes.
When John Hancock Advisers, Inc. (the "Adviser") determines that unfavorable
investment conditions warrant a temporary defensive posture, each Portfolio may
invest up to 50% of its net assets in cash or in short-term obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, or in
commercial paper and bank obligations (as limited below). Dividends derived from
interest earned on these obligations generally are taxable to shareholders for
Federal purposes. They may also be taxable for state and local purposes unless
treated as derived from interest on direct obligations of the U.S. Government
under the laws of certain states, including Massachusetts.
Municipal bonds generally are classified as either general obligation bonds or
revenue bonds. General obligation bonds are backed by the credit of an issuer
having taxing power and are payable from the issuer's general unrestricted
revenues. Their payment may depend on an appropriation of the issuer's
legislative body. Revenue bonds, by contrast, are payable only from the revenues
derived from a particular project, facility or a specific revenue source. They
are not generally payable from the unrestricted revenues of the issuer.
Municipal notes include tax anticipation notes, bond anticipation notes, revenue
anticipation notes, and project notes.
Municipal commercial paper obligations are unsecured promissory notes issued by
municipalities to meet short-term credit needs.
All of the investments of each Portfolio will be made in:
(1) Tax-Exempt Bonds which are rated A or better by Standard & Poor's Ratings
Group ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's")
or Fitch Investors Services, Inc. ("Fitch"). Alternatively, the bonds may
be unrated but considered by the Adviser to be of comparable quality, and
issued by issuers which have other securities rated not lower than A by
Standard & Poor's, Moody's or Fitch.
(2) Tax-Exempt Bonds which are rated BBB or BB by Standard & Poor's, Baa or Ba
by Moody's or BBB or BB by Fitch, or which are unrated but are considered by
the Adviser to be of comparable quality. Not more than one-third of a
Portfolio's total assets will be invested in Tax-Exempt Bonds rated lower
than A or determined to be of comparable quality.
(3) Notes of issuers having an issue of outstanding Tax-Exempt Bonds rated not
lower than A by Standard & Poor's, Moody's or by Fitch, or notes which are
guaranteed by the U.S. Government or rated MIG-1 or MIG-2 by Moody's, or
unrated notes which are determined to be of comparable quality by the
Adviser.
(4) Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Some obligations issued by an agency or instrumentality
may be supported by the full faith and credit of the U.S. Treasury, while
others may be supported only by the credit of the particular Federal agency
or instrumentality.
(5) Commercial paper which is rated A-1 or A-2 by Standard & Poor's, P-1 or P- 2
by Moody's, or at least F-1 by Fitch, or which is not rated, but is
considered by the Adviser to be of comparable quality; obligations of banks
with $1 billion of assets and cash equivalents, including certificates of
deposit, bankers acceptances and repurchase agreements. Ratings of A-2 or
P-2 on commercial paper indicate a strong capacity for timely payment,
although the relative degree of safety is not as high as for issues
designated A-1 or P-1.
The Portfolio may invest in certain types of Tax-Exempt Bonds whose interest
income may be treated as a tax preference item under the Federal alternative
minimum tax. The Portfolios will not include tax-exempt bonds generating this
income for purposes of measuring compliance with the 80% fundamental investment
policy described above.
Debt obligations rated in the lower rating categories, or which are unrated,
involve greater price volatility and risk of loss of principal and income. In
addition, the issuer of lower rated debt obligations may have more difficulty
making principal and interest payments in adverse financial conditions. The
market price and liquidity of lower rated securities generally responds to
short-term market developments to a greater extent than for higher rated
securities, because these developments are perceived to have a more direct
relationship to the issuer's ability to meet its ongoing debt obligations. Bonds
rated BB or Ba are generally referred to as junk bonds. See "Appendix."
Each Portfolio has registered as a "non-diversified" investment company,
permitting the Adviser to invest more than 5% of the assets of each Portfolio in
the obligations of any one issuer. Since a relatively high percentage of a
Portfolio's assets may be invested in the obligations of a limited number of
issuers, the value of Portfolio shares may be more susceptible to any single
economic, political or regulatory event than would the shares of a diversified
investment company.
EACH PORTFOLIO MAY EMPLOY CERTAIN INVESTMENT STRATEGIES TO HELP ACHIEVE ITS
INVESTMENT OBJECTIVE.
RESTRICTED SECURITIES. Each Portfolio may purchase restricted securities,
including those eligible for resale to "qualified institutional buyers" pursuant
to Rule 144A under the Securities Act of 1933 (the "Securities Act"). The
Trustees will monitor the Fund's investments in these securities, focusing on
certain factors, including valuation, liquidity and availability of information.
Purchases of other restricted securities are subject to an investment
restriction limiting each Portfolio's investments in illiquid securities to not
more than 10% of its net assets.
REPURCHASE AGREEMENTS, FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. Each
Portfolio may enter into repurchase agreements and may purchase securities on a
forward commitment or a when-issued basis. In a repurchase agreement, a
Portfolio buys a security subject to the right and obligation to sell it back at
a higher price. These transactions must be fully collateralized at all times,
but involve some credit risk to the Portfolio if the other party defaults on its
obligation and the Portfolio is delayed in or prevented from liquidating the
collateral. Each Portfolio 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 Tax-Exempt Bonds for future delivery or on a
when-issued basis may increase a Portfolio's overall investment exposure and
involves a risk of loss if the value of the securities declines before the
settlement date.
SHORT-TERM TRADING. Short-term trading might be utilized to take advantage of
market developments, yield disparities and variations in the creditworthiness of
issuers. A high turnover rate involves greater transaction expenses to a
Portfolio, and could involve a higher proportion of short-term capital gains,
distributions of which are taxable to shareholders as ordinary income. Portfolio
turnover rates are shown in the section "The Fund's Financial Highlights."
VARIABLE AND FLOATING RATE OBLIGATIONS. A Portfolio may invest in variable rate
and floating rate obligations, whose interest payments 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 on floating
rate obligations are adjusted whenever there is a change in the market interest
rate on which the obligation's interest is based.
FINANCIAL FUTURES CONTRACTS. A Portfolio may buy and sell futures contracts and
options on futures contracts to hedge against changes in securities prices and
interest rates or for speculative purposes. A Portfolio's ability to hedge
successfully through futures transactions will depend on the Adviser's ability
to predict accurately the future direction of interest rate changes and other
market factors. There is no assurance that a liquid market for futures and
options will always exist. In addition, a Portfolio could be prevented from
opening or realizing the benefits of closing out a futures or options position
because of position limits or exchange-imposed limits on daily price
fluctuations. The potential loss incurred by a Portfolio in writing options on
futures is unlimited and may exceed the premium received.
All of the Portfolios' futures contracts and options will be traded on a U.S.
commodity exchange or board of trade. A Portfolio will not engage in a futures
or related option transaction, except for closing purchase and sale
transactions, if immediately thereafter the sum of the amount of initial margin
deposits on the Portfolio's outstanding speculative positions in futures and
related options, plus the amount of premiums paid for outstanding options on
futures, exceeds 5% of the market value of the Portfolio's net assets.
THE PORTFOLIOS FOLLOW CERTAIN POLICIES WHICH MAY HELP REDUCE INVESTMENT RISK.
The Portfolios have adopted certain fundamental investment restrictions which
are detailed in the Statement of Additional Information. The Portfolios'
respective investment objectives and restrictions are fundamental and may not be
changed without shareholder approval.
BROKERS ARE CHOSEN BASED ON BEST PRICE AND EXECUTION.
When choosing brokerage firms to carry out each Portfolio's transactions, the
Adviser gives primary consideration to execution at the most favorable prices,
taking into account the broker's professional ability and quality of service.
Consideration may also be given to the broker's sale of the Portfolios shares.
Pursuant to procedures established by the Trustees, the Adviser may place
securities transactions with brokers affiliated with the Adviser. These brokers
include Tucker Anthony Incorporated, John Hancock Distributors, Inc., and Sutro
& Company, Inc. They are indirectly owned by or affiliated with John Hancock
Mutual Life Insurance Company the ("Life Company"), which in turn indirectly
owns the Adviser.
THE STATE PORTFOLIOS: CONSIDERATIONS AND RISKS
MASSACHUSETTS PORTFOLIO. The Massachusetts Portfolio's ability to achieve its
investment objective depends on the ability of the issuers of Tax-Exempt Bonds
issued by the Commonwealth of Massachusetts (the "Commonwealth") and its
political subdivisions, agencies, municipalities, instrumentalities or public
authorities to meet their continuing obligations to make timely payments of
interest and principal.
The Commonwealth's economy has recently stabilized with unemployment falling to
5.3% in August 1995, 0.3% below the national average of 5.6%. This expansion
reflects continuing gains in the service and construction sectors, aided in part
by major highway and harbor cleanup projects in Boston. Since 1992, the
Commonwealth has posted operating surpluses for three consecutive years and
projects another surplus in fiscal 1995. These positive results reflect a
combination of more conservative fiscal policy and budgetary practices, as well
as increased tax revenues. Fiscal 1992 closed with an operating fund balance of
$549 million, followed by balances of $563 million in 1993 and $589 million in
1994. Unaudited results from fiscal 1995 show the balance increasing to $721
million. On June 21, 1995, the Governor signed into law the fiscal 1996 budget.
The budget calls for expenditures of $16.99 billion, a 4.5% increase over fiscal
1995 spending levels.
The rating agencies have assigned the following long-term credit ratings to the
Commonwealth: "A1" from Moody's; "A+" from Standard and Poor's, and "A+" from
Fitch.
Commonwealth-funded local aid represents an important component of the operating
budgets of cities and towns, and decreases in this funding could negatively
impact their ratings. Changes in local aid funding could also negatively impact
a locality's ability to pay assessments from certain Commonwealth agencies,
including the Massachusetts Bay Transportation Authority and the Massachusetts
Water Resources Authority. In the event that a locality incurs substantial
financial difficulties, the Commonwealth may intervene and place the locality
under State receivership.
The tax on personal property and real estate is virtually the only source of
local tax revenues available to the Commonwealth's cities and towns to meet
local costs. "Proposition 2 1/2", an initiative adopted by the voters in
November 1980, limits the power of Massachusetts cities and towns and certain
tax-supported districts to raise revenue from property taxes to support their
operations, including the payment of debt service. Proposition 2 1/2 required
many cities and towns to reduce their property tax levies to a stated percentage
of full and fair cash value of taxable property and real estate, and limited the
amount that all cities and towns might increase their property tax from year to
year.
Growth of tax revenues in the Commonwealth is limited by law. Effective July 1,
1990, the amount of direct bonds the Commonwealth could have outstanding in any
fiscal year was limited, and the total appropriation for any fiscal year for
general obligation debt service was limited to ten percent. Moreover,
Massachusetts local government entities are subject to certain limitations on
their taxing power. These limits could affect their ability, or the ability of
the Commonwealth, to meet their respective financial obligations.
If either Massachusetts or any of its local government entities is unable to
meet its financial obligations, the income derived by the Portfolio, the
Portfolio's net asset value, the Portfolio's ability to preserve or realize
capital appreciation or the Portfolio's liquidity could be impaired.
NEW YORK PORTFOLIO. The New York Portfolio's ability to achieve its investment
objective is dependent upon the ability of the issuers of Tax-Exempt Bonds of
New York State (the "State") and its political subdivisions and authorities
("New York tax-exempt bonds") to meet their continuing obligations for the
payment of principal and interest. New York tax-exempt bonds can be affected by
political and economic developments within the State, or by the financial
condition of the State, its public authorities (the "Authorities") and political
subdivisions, particularly the City of New York ("New York City"). A brief
summary of these risks and special considerations follows.
The New York State economy has entered its third year of slow recovery from the
national recession of 1990. Expansion in the service, trade and construction
sectors has netted the State approximately 185,000 new jobs since the recession
trough of 1992. Much of the service growth has been in the business, social
services, and health sectors. The State's Budget Division, in light of the
forecasts for national economic growth, anticipates continued, but slowing
economic growth for New York State. Mirroring national trends, personal income
growth is expected to increase 5% in 1995, down from 6% in 1994, and continue to
increase at a slower rate. Employment growth in 1995 is expected to be slightly
lower than the prior year, or .8%, with a net increase of roughly 60,000 jobs.
Industries that have benefited from the lower dollar abroad will be offset by
U.S. Government cutbacks and shrinking of the banking industry. Unemployment,
which peaked to 9.3% in 1992, was reported at a more favorable 6.3% in May 1995.
New York cities and towns have experienced financial stress due to the slow rate
of recovery from the recession of 1992 and from cutbacks to local assistance.
The 1995-1996 State Financial Plan projects total receipts of the State's
General Fund to be $33.1 billion, a decline of $48 million from the prior fiscal
year. The absence of one-time transactions, the impact of tax reductions enacted
in 1994 and 1995, the reduction of the business tax surcharge, and reductions in
the General Fund's share of petroleum-based taxes account for the anticipated
decline in receipts. State General Fund disbursements and transfers will be $334
million below the level of disbursements in 1994-1995. Grants to local
governments are anticipated to decline $392 million and direct payments to local
governments, including school aid and revenue sharing, are projected to increase
$74 million from the prior fiscal year. Social welfare, including Medicaid,
welfare and other social services, will be cut 6.5%, largely due to a reduction
of nearly 9% in Medicaid spending.
In light of the State's slow recovery and persistent financial strains, Moody's,
S&P, and Fitch have confirmed ratings of "A", "A-", and "A+", respectively, for
New York State's general obligation bonds.
For more discussion of tax-exempt bonds held by the Portfolios, the risks to
which they are subject and the special considerations associated with investing
in Massachusetts and New York, see the Statement of Additional Information.
THE TRUSTEES ELECT OFFICERS AND RETAIN THE INVESTMENT ADVISER WHO IS RESPONSIBLE
FOR THE DAY-TO-DAY OPERATIONS OF THE PORTFOLIOS, SUBJECT TO THE TRUSTEES'
POLICIES AND SUPERVISION.
ORGANIZATION AND MANAGEMENT OF THE FUND
Each of the Portfolios is a non-diversified series of the Fund. The Fund is an
open-end investment management company organized as a Massachusetts business
trust in 1987. The Fund's Declaration of Trust permits the Trustees to create
and classify shares of beneficial interest into separate series of the Fund with
different investment objectives. The Fund has an unlimited number of authorized
shares which are divided into two series of shares. The shares of each Portfolio
are of one class and have equal rights as to voting, redemption, dividends and
liquidation in their respective portfolio. The Portfolios are not required and
do not intend to hold annual shareholder meetings, although special meetings may
be held for such purposes as electing or removing Trustees, changing fundamental
policies or approving a management contract.
JOHN HANCOCK ADVISERS, INC. ADVISES INVESTMENT COMPANIES HAVING A TOTAL VALUE OF
MORE THAN $16 BILLION.
The Adviser was organized in 1968 and is a wholly-owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the
Portfolios 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 of the Fund's
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.
Frank A. Lucibella is the portfolio manager of the New York Portfolio and John
Hancock Managed-Tax Exempt Fund. He joined the Adviser in 1988 after six years
of investment experience with Eaton Vance and The Travelers Corporation.
Dianne Sales-Singer is the portfolio manager of the Massachusetts Portfolio.
Ms. Sales-Singer has been with the Adviser since 1989. Prior to joining the
Adviser, she was employed at Bear Stearns & Co., Inc.
In order to avoid conflicts with portfolio trades for the Fund, the Adviser and
the Fund have adopted extensive restrictions on personal securities trading by
personnel of the Adviser and its affiliates. Some of these restrictions are:
pre-clearance for all personal trades and a ban on the purchase of initial
public offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
THE PORTFOLIOS' EXPENSES
For managing its investment and business affairs, each Portfolio pays a fee to
the Adviser which is based on a stated percentage of the Portfolio's average
daily net asset value.
THE PORTFOLIOS PAY DISTRIBUTION AND SERVICE FEES FOR MARKETING AND SALES-RELATED
SHAREHOLDER SERVICING.
The Fund has adopted a distribution plan under Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940. Under the Plan, the Fund will pay distribution
and service fees at an aggregate annual rate of up to 0.30% of each Portfolio's
average daily net assets, provided that the amount of the service fee will not
exceed 0.25% of average daily net assets. The distribution fees will be used to
reimburse John Hancock Funds for its distribution expenses. These include, but
are 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, and (ii) marketing, promotional and overhead expenses
incurred in connection with the distribution of Fund shares. The service fees
will be used to compensate Selling Brokers for providing personal and account
maintenance services to shareholders. Any unreimbursed expenses will not be
carried beyond one year from the date incurred.
From time to time, the Adviser may reduce its fee or make other arrangements to
limit a Portfolio'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 the Portfolio's annual expenses fall below the
limit. See "The Fund's Financial Highlights" for a statement of each Portfolio's
expenses.
DIVIDENDS AND TAXES
DIVIDENDS. Dividends from each Portfolio's net investment income are declared
daily and paid monthly. Capital gains, if any, are generally declared and
distributed annually. Dividends are reinvested in additional shares 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.
TAXATION. The Portfolios intend to comply with certain Federal tax requirements
so that interest earned by the Portfolios from Tax-Exempt Bonds will be
Federally tax-free when paid to you as "exempt-interest dividends". Dividends
derived from interest on certain Tax-Exempt Bonds that are "private activity
bonds" may, however, increase the alternative minimum tax liability of certain
shareholders.
Shareholders receiving social security benefits and certain railroad retirement
benefits may be subject to Federal income tax on a portion of these benefits as
a result of receiving investment income, including tax-exempt income (such as
exempt-interest dividends) and other dividends paid by the Portfolios. Shares of
the Portfolios 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.
Dividends from a Portfolio's net taxable income, if any, including any accrued
market discount included in a Portfolio's income and dividends from any net
short-term capital gains, are taxable to you as ordinary income. Dividends from
a Portfolio's net long-term capital gains are taxable as long-term capital gain.
These dividends are taxable, whether received in cash or reinvested in
additional shares. Certain dividends may be paid by a Portfolio in January of a
given year, but they may be taxable as if you received them the previous
December. The Portfolios will send you a statement by January 31 showing the tax
status of the dividends you received for the prior year.
The Portfolios have qualified and intend to continue to qualify as regulated
investment companies under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each Portfolio will not
be subject to Federal income tax on any net investment income and net realized
capital gains that are distributed to its shareholders within the time period
prescribed by the Code. When you redeem (sell) or exchange shares, you may
realize a taxable gain or loss.
On the account application, you are asked to certify that the social security or
other taxpayer identification number you provided is your correct number and
that you are not subject to backup withholding of Federal income tax. If you do
not provide this information or are otherwise subject to this withholding, the
Portfolio may be required to withhold 31% of your taxable dividends and the
proceeds of redemptions and exchanges.
MASSACHUSETTS TAXES
To the extent that exempt-interest dividends paid to shareholders by the
Massachusetts Portfolio are derived from interest on tax-exempt bonds of the
Commonwealth of Massachusetts and its political subdivisions or Puerto Rico, the
U.S. Virgin Islands or Guam and are properly designated as such, these
distributions will also be exempt from Massachusetts personal income tax. For
Massachusetts personal income tax purposes, dividends from the Portfolio's
taxable net investment income, tax-exempt income from obligations not described
in the preceding sentence, and any short-term capital gains will generally be
taxable as ordinary income, whether received in cash or additional shares.
However, any dividends that are properly designated as attributable to interest
the Portfolio receives on direct U.S. Government obligations will not be subject
to Massachusetts personal income tax. Dividends properly designated as from net
long-term capital gains ("capital gain dividends") are generally taxable as
long-term capital gains, regardless of how long shareholders have held their
Portfolio shares. However, a portion of capital gain dividends will be exempt
from Massachusetts personal income tax if it is properly designated as
attributable to gains realized on the sale of certain tax-exempt bonds issued
pursuant to Massachusetts Statutes that specifically exempt such gains from
Massachusetts taxation. Dividends from investment income (including
exempt-interest dividends) and from capital gains will be subject to, and shares
of the Portfolio will be included in the net worth of intangible property
corporations for purposes of, the Massachusetts corporation excise tax if
received by a corporation subject to this tax.
NEW YORK TAXES
Exempt-interest dividends derived from interest on tax-exempt bonds of New York
State and its political subdivisions and authorities and certain other
governmental entities (for example, U.S. possessions), paid by the Portfolio to
New York resident individuals, estates and trusts otherwise subject to these
taxes, will not be subject to New York State and New York City personal income
taxes and certain municipal tax surcharges.
Dividends, whether received in cash or additional shares, derived from the New
York Portfolio's other investment income (including interest on Tax-Exempt Bonds
other than those described in the preceding paragraph), and from the Portfolio's
net realized short-term capital gains, are taxable for New York State and New
York City personal income tax purposes as ordinary income. Tax surcharges will
also apply. Dividends derived from net realized long-term capital gains of the
Portfolio are taxable as long-term capital gains for New York State and New York
City personal income tax purposes regardless of the length of time shareholders
have held their shares.
Dividends derived from investment income and capital gains, including exempt-
interest dividends, will be subject to the New York State franchise tax and the
New York City General Corporation Tax if received by a corporation subject to
those taxes. Certain distributions may, however, be eligible for a 50% dividend
subtraction. Shares of the Portfolio will be included in a corporate
shareholder's investment capital in determining its liability, if any, for these
taxes.
The foregoing description of Federal, State and New York City tax consequences
is based on the law currently in effect for the 1995 taxable year and is subject
to change by legislative, administrative or judicial action, which may have
prospective and/or retroactive effect.
For further information on the tax consequences of ownership of Portfolio
shares, see the Statement of Additional Information.
PERFORMANCE
A PORTFOLIO MAY ADVERTISE ITS YIELD, TAX-EQUIVALENT YIELD AND TOTAL RETURN.
Yield reflects a Portfolio's rate of income on portfolio investments as a
percentage of the Portfolio's 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. Yields are
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, a Portfolio's yield may not equal the income paid
on your shares or the income reported in the Portfolio's financial statements.
Tax-equivalent yield is computed by dividing that portion of the yield of a
Portfolio which is tax-exempt by one minus a stated income tax rate and then
adding the product to any portion of the Portfolio's yield that is not
tax-exempt.
Total return shows the overall dollar or percentage change in value of a
hypothetical investment in a Portfolio, assuming the reinvestment of all
dividends. Cumulative total return shows the Portfolio's performance over a
period of time. Average annual total return shows the cumulative return divided
over the number of years included in the period. Because average annual total
return tends to smooth out variations in the Portfolio's performance, you should
recognize that it is not the same as actual year-to-year results.
Both total return and yield figures include the effect of paying the maximum
sales charge of 4.5%. Investments at a lower sales charge would achieve higher
returns than those advertised. The value of Portfolio shares, when redeemed, may
be more or less than their original cost. Both yield and total return are
historical calculations, and are not an indication of future performance.
HOW TO BUY SHARES
- -------------------------------------------------------------------------------
OPENING AN ACCOUNT.
The minimum initial investment is $1,000 ($250 for group investments).
Complete the Account application attached to this Prospectus.
- -------------------------------------------------------------------------------
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation.
2. Deliver the completed application and check to your registered
representative, Selling Broker or mail it directly to Investor
Services.
- -------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker or by calling
1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock Tax-Exempt Series
(Specify name of Portfolio)
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative, Selling Broker or mail it directly to
Investor Services.
- -------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES.
MONTHLY AUTOMATIC 1. Complete the "Automatic Investing" and "Bank Information"
ACCUMULATION sections Account Privileges Application, designating a
PROGRAM (MAAP) bank account from which your 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 additional shares by calling Investor Services
toll-free at 1-800-225-5291.
3. Give the Investor Services representative the name in
which your account is registered, the Fund and Portfolio
name and 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 in your
account statement or include a note with your investment
listing the name of the Fund and Portfolio, 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 Series Fund
(Specify name of Portfolio)
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.
THE OFFERING PRICE OF YOUR SHARES IS THEIR NET ASSET VALUE PLUS A SALES CHARGE.
SHARE PRICE
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the Portfolio's net assets by the number of outstanding
shares. Securities in each Portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services, or at fair
value as determined in good faith according to procedures approved by the
Trustees. Short-term debt investments maturing within 60 days are valued at
amortized cost, which the Board of Trustees has determined 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.
The offering price you pay for shares of a Portfolio equals the NAV plus a sales
charge, as follows:
<TABLE>
<CAPTION>
COMBINED
SALES CHARGE REALLOWANCE REALLOWANCE TO
SALES CHARGE AS A PERCENTAGE AND SERVICE FEE SELLING BROKER AS
AMOUNT INVESTED AS A PERCENTAGE OF THE AS A PERCENTAGE A PERCENTAGE OF
(INCLUDING SALES CHARGE) OF THE OFFERING PRICE AMOUNT INVESTED OF THE OFFERING PRICE<F4> OFFERING PRICE<F1>
- ------------------------ --------------------- --------------- --------------------- -----------------
<S> <C> <C> <C> <C>
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%<F2>
<FN>
<F1> Upon notice to Selling Brokers with whom it has sales agreements, John Ha ncock Funds may reallow an amount up to
the full applicable sales charge. A Selling Broker to whom substantially the entire sales charge is reallowed may
be deemed to be an underwriter under the Securities Act of 1933.
<F2> No sales charge is payable at the time of purchase on investments of $1 million or more, but a contingent deferred
sales charge may be imposed in the event of certain redemption transactions made within one year of purchase.
<F3> John Hancock Funds may pay a commission and first year's service fee (as described in <F4> below) to Selling
Brokers who initiate and are responsible for purchases of $1 million or more in the aggregate, as follows: 1% on
sales to $4,999,999, 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 up to 0.25% of the net assets invested in the Fund. Thereafter, it pays the service fee periodically in
arrears in an amount up to 0.25% of the Fund's average annual net assets. Selling Brokers receive the fee as
compensation for providing personal and account maintenance services to shareholders.
</TABLE>
Sales charges ARE NOT APPLIED to any dividends that are reinvested in additional
shares of the Fund.
John Hancock Funds will pay certain affiliated Selling Brokers at an annual rate
up to 0.05% of the daily net assets of accounts attributable to these brokers.
Under certain circumstances described below, investors in fund shares
(identical with "Class A" shares of other John Hancock funds) may be entitled
to pay reduced sales charges. See "Qualifying for a Reduced Sales Charge."
CONTINGENT DEFERRED SALES CHARGE -- INVESTMENTS OF $1 MILLION OR MORE
Purchases of $1 million or more of Fund 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%
Existing full service clients of the Life Company who were group annuity
contract holders as of September 1, 1994 and participant directed defined
contribution plans with at least 100 eligible employees at the inception of the
Portfolio account, may purchase shares with no initial sales charge. However, if
the shares are redeemed within 12 months after the end of the calendar year in
which the purchase was made, a contingent deferred sales charge will be imposed
at the above rate.
The CDSC will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the 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 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 of any
shares in the shareholder's account not subject to the CDSC. The CDSC is waived
on redemptions in certain circumstances. See "Waiver of Contingent Deferred
Sales Charges" below.
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE ON YOUR INVESTMENT.
QUALIFYING FOR A REDUCED SALES CHARGE. If you invest more than $100,000 in
shares of the Fund or a combination of John Hancock funds (except money market
funds), you may qualify for a reduced sales charge on your investments through a
LETTER OF INTENTION. You may also be able to use the ACCUMULATION PRIVILEGE and
COMBINATION PRIVILEGE to take advantage of the value of your previous
investments in shares of the John Hancock funds in meeting the breakpoints for a
reduced sales charge. For the ACCUMULATION PRIVILEGE and COMBINATION PRIVILEGE,
the applicable sales charge will be based on the total of:
1. Your current purchase of shares of the Portfolio;
2. The net asset value (at the close of business on the previous day) of (a)
all shares of the Portfolio you hold, and (b) all Class A shares of any
other John Hancock funds you hold; and
3. The net asset value of all shares held by another shareholder eligible to
combine his or her holdings with you into a single "purchase."
EXAMPLE:
If you hold Class A shares of a John Hancock mutual fund with a net asset value
of $80,000 and, subsequently, invest $20,000 in shares of the Fund, the sales
charge on this subsequent investment would be 3.75% and not 4.50%. This is the
rate that would otherwise be applicable to investments of less than $50,000. See
"Initial Sales Charge Alternative."
SHARES MAY BE AVAILABLE WITHOUT A SALES CHARGE TO CERTAIN INDIVIDUALS AND
ORGANIZATIONS.
If you are in one of the following categories, you may purchase shares of the
Fund without paying a sales charge:
* 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.
* Any state, county, city or any instrumentality, department, authority, or
agency of these entities that is prohibited by applicable investment law 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 depository
institution, its trust department or its common trust funds if it is
purchasing $1 million or more for non-discretionary customers or accounts.*
* A broker, dealer, financial planner, consultant or registered investment
adviser that has entered into an agreement with John Hancock Funds providing
specifically for the use of Fund shares in fee-based investment products or
services made available to their clients.
* A former participant in an employee benefit plan with John Hancock Funds, when
he or she withdraws from his or her plan and transfers any or all of his or
her plan distributions directly to the Fund.
- ----------
*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.
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.
UNDER CERTAIN CIRCUMSTANCES, THE CDSC ON SHARE REDEMPTIONS WILL BE WAIVED.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES. The CDSC will be waived on
redemptions of shares that are subject to a CDSC, unless indicated otherwise, in
these circumstances defined below:
* Redemptions of 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 the value of subsequent investments (less redemptions) in that account
at the time you notify Investor Services. This waiver does not apply to
Systematic Withdrawal Plan redemptions of shares that are subject to a CDSC.
* Redemptions made to effect distributions from an Individual Retirement Account
either before or after age 59 1/2, as long as the distributions are based on
your life expectancy or the joint-and-last survivor life expectancy of you and
your beneficiary. These distributions must be free from penalty under the
Code.
* Redemptions made to effect mandatory distributions under the Code after age 70
1/2 from a tax-deferred retirement plan.
* Redemptions made to effect distributions to participants or beneficiaries from
certain employer-sponsored retirement plans including those qualified under
Section 401(a) of the Code, custodian accounts under Section 403(b)(7) of the
Code and deferred compensation plans under Section 457 of the Code. The waiver
also applies to certain returns of excess contributions made to these plans.
In all cases, the distributions must be free from penalty under the Code.
* Redemptions due to death or disability.
* Redemptions made under the Reinvestment Privilege, as described in "Additional
Services and Programs" of this 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 which purchased shares prior
to October 1, 1992.
If you qualify for a CDSC waiver under one of these situations, you must notify
Investor Services either directly or through your Selling Broker at the time you
make your redemption. The waiver will be granted once Investor Services has
confirmed that you are entitled to the waiver.
HOW TO REDEEM SHARES
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION REQUEST, PLEASE FOLLOW THESE PROCEDURES.
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. A
Portfolio may withhold payment until reasonably satisfied that investments
recently made by check or Invest-by-Phone have been collected (which may take up
to 10 calendar days).
Once your shares are redeemed, the applicable Portfolio generally sends you
payment on the next business day. When you redeem your shares, you may realize a
gain or loss, depending usually on the difference between what you paid for them
and what you receive for them, subject to tax rules. Under unusual
circumstances, the Portfolio may suspend redemptions or postpone payment for up
to three business days or longer, as permitted by Federal securities laws.
- -------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are eligible automatically for the telephone
redemption 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 according to
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 collectible
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 and Portfolio, the dollar amount or the number of
shares to be redeemed, your name, 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 (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners. 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 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 signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that any such 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.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
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. You may not redeem certificated shares by
telephone.
Due to the proportionately high cost of maintaining small accounts, the Fund
reserves the right to redeem at net asset value all shares in an account which
holds fewer than 50 shares (except accounts under retirement plans) and to mail
the proceeds to the shareholder or the transfer agent may impose an annual fee
of $10.00. No 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 any dividend reinvestments, exceeds the number
of shares redeemed, repeated redemptions from a smaller account may eventually
trigger this redemption policy.
- ------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
YOU MAY EXCHANGE SHARES OF THE PORTFOLIOS ONLY FOR CLASS A SHARES 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 the Fund
only for shares of the same class of another John Hancock fund. For this
purpose, shares of 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.
Shares of a Portfolio that are subject to a CDSC (see discussion under the
caption "Share Price") may be exchanged into another John Hancock fund at net
asset value without incurring the CDSC; however, the shares acquired in an
exchange may be subject to a CDSC upon redemption. 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.
The Portfolios reserve the right to require you to keep previously exchanged
shares (and reinvested dividends) in a Portfolio for 90 days before you are
permitted a new exchange. The Portfolios may also terminate or alter the terms
of the exchange privilege, upon 60 days' notice to shareholders.
An exchange of shares is treated as a redemption of shares of one fund and the
purchase of shares of another for Federal income tax purposes. An exchange may
result in a taxable gain or loss.
When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
BY TELEPHONE
1. When you complete the application for your initial purchase of shares of a
Portfolio, you automatically authorize exchanges by telephone unless you
check the box indicating that you do not wish to authorize telephone
exchange.
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, the 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:
-- name of the Portfolio whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the Portfolio or 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 A PORTFOLIO, YOU MAY BE ABLE TO REINVEST ALL OR PART OF
THE PROCEEDS IN THESE PORTFOLIOS OR ANOTHER JOHN HANCOCK FUND WITHOUT PAYING AN
ADDITIONAL SALES CHARGE.
1. You will not be subject to a sales charge on investing the proceeds of a
redemption of shares of the Portfolios in any John Hancock funds that are
otherwise subject to a sales charge, as long as you reinvest within 120 days
from the redemption date. If you paid a CDSC upon a redemption, you may
reinvest at net asset value in the same class of shares from which you
redeemed within 120 days. Your account will be credited with the amount of
the CDSC previously charged, and the reinvested shares will continue to be
subject to a CDSC. The holding period of the shares acquired through
reinvestment for purposes of computing the CDSC payable upon a subsequent
redemption will include the holding period of the redeemed shares.
2. Any portion of the redemption may be reinvested in shares of a Portfolio or
in any of the other John Hancock mutual funds, subject to the minimum
investment limit in any fund.
3. To reinvest, you must notify Investor Services in writing. Include the
Portfolio's name and account number from which your shares were originally
redeemed.
SYSTEMATIC WITHDRAWAL PLAN
YOU CAN PAY ROUTINE BILLS FROM YOUR ACCOUNT OR MAKE PERIODIC DISBURSEMENTS FROM
YOUR RETIREMENT ACCOUNT TO COMPLY WITH IRS REGULATIONS.
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application which is attached to this Prospectus. You can
also obtain the application from your registered representative or by calling
1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually, on
a selected month basis or annually 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 shares, because you may be subject to initial
sales charges on your purchases. 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 withdrawn automatically each month on
your bank for investment in Portfolio shares, under the "Automatic
Investing" and "Bank Information" Sections of the Account Privileges
Application.
2. You can also authorize automatic investment 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 additional charge to you for this program, and there is no cost
to the Portfolios.
5. If you have payments withdrawn from a bank account and we are notified that
the account has been closed, your withdrawals will be discontinued.
GROUP INVESTMENT PROGRAM
ORGANIZED GROUPS OF AT LEAST FOUR PERSONS MAY ESTABLISH ACCOUNTS.
1. An individual account will be established for each participant, but the sales
charge 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 this program. There is no obligation to
make investments beyond the minimum, and you may terminate the program at
any time.
<PAGE>
APPENDIX
As described in the Prospectus, the Portfolios may invest in tax-exempt bonds in
the lower rating categories (that is, rated Baa or Ba by Moody's or BBB or BB by
Standard & Poor's, or BBB or BB by Fitch).
Moody's describes its lower rating categories for tax-exempt bonds as follows:
Bonds that 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.
These bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Bonds that 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.
Standard & Poor's describes its lower rating categories for tax-exempt bonds as
follows:
Debt rated "BBB" is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Debt rated "BB" is regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations. While this debt will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Fitch describes its lower rating categories for tax-exempt bonds as follows:
BBB Bonds are 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.
Plus (+) or Minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA" category.
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 which could assist the
obligor in satisfying its debt service requirements.
Moody's describes its two highest ratings for commercial paper as follows:
Issuers rated P-1 (or related supporting institutions) have a superior capacity
for repayment of short-term promissory obligations. Issuers rated P-2 (or
related supporting institutions) have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Ratings for state and municipal notes and other short-term obligations will be
designated Moody's Investment Grade ("MIG").
MIG-1 Notes 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 Notes bearing this designation are of high quality with margins of
protection ample although not so large as in the preceding group.
Standard & Poor's describes its two highest ratings for commercial paper as
follows:
A-1. This designation indicates that the degree of safety regarding timely
payment is very strong.
A-2. Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated A-1.
Fitch describes its two highest ratings for commercial paper as follows:
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+".
JOHN HANCOCK TAX-EXEMPT SERIES FUND
For the year ended August 31, 1995, the average weighted quality distribution of
the securities of each Portfolio was as follows:
MASSACHUSETTS PORTFOLIO
- -----------------------
<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 $14,428,458 27.9% 0 0.0% $14,428,458 27.9%
AA 7,336,369 14.2 0 0.0 7,336,369 14.2
A 20,502,195 39.6 0 0.0 20,502,195 39.6
BBB 9,184,891 17.6 0 0.0 9,184,891 17.6
BB 0 0.0 0 0.0 0 0.0
Debt-Unrated 273,020 0.5 0 0.0 273,020 0.5
----------- ----- - --- ----------- ----
Debt Securities 51,724,933 99.8 0 0.0 $51,724,933 99.8%
- --- ----------- ----
Equity Securities 0 0.0
Short-Term Securities 81,462 0.2
----------- -----
Total Portfolio $51,806,395 100.0%
----------- ======
Other Assets -- Net 1,416,324
-----------
Net Assets $53,222,719
===========
</TABLE>
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
- ------------------
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 $11,260,728 21.3% 0 0.0% $11,260,728 21.3%
AA 12,376,835 23.4 0 0.0 12,376,835 23.4
A 13,363,199 25.3 0 0.0 13,363,199 25.3
BBB 13,145,937 24.7 0 0.0 13,145,937 24.8
BB 2,551,645 4.8 0 0.0 2,551,645 4.8
----------- ----- - --- ----------- ----
Debt Securities 52,698,345 99.6 0 0.0 $52,698,345 99.6%
- --- ----------- ----
Equity Securities 0 0.0
Short-Term Securities 222,615 0.4
----------- ------
Total Portfolio 52,920,960 100.0%
----------- ======
Other Assets -- Net 1,506,242
-----------
Net Assets $54,427,203
===========
The ratings are described in the Statement of Additional Information.
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT SERIES FUND JOHN HANCOCK
INVESTMENT ADVISER TAX-EXEMPT
John Hancock Advisers, Inc. SERIES FUND --
101 Huntington Avenue MASSACHUSETTS PORTFOLIO
Boston, Massachusetts 02199-7603 NEW YORK PORTFOLIO
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PROSPECTUS
CUSTODIAN JANUARY 1, 1996
Investors Bank & Trust Company
24 Federal Street
Boston, Massachusetts 02110
TRANSFER AGENT A MUTUAL FUND SEEKING TO
John Hancock Investor Services Corporation PROVIDE CURRENT INCOME
P.O. Box 9116 EXCLUDABLE FROM GROSS INCOME
Boston, Massachusetts 02205-9116 FOR FEDERAL INCOME TAX
PURPOSES AND EXEMPT FROM
INDEPENDENT AUDITORS THE PERSONAL INCOME TAX OF
Price Waterhouse LLP MASSACHUSETTS OR NEW YORK
160 Federal Street STATE AND NEW YORK CITY,
Boston, Massachusetts 02110 CONSISTENT WITH PRESERVATION
OF CAPITAL.
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
HOW TO OBTAIN INFORMATION
ABOUT A PORTFOLIO
For: Service Information
Telephone Exchange call 1-800-225-5291
call 1-800-225-5291
Investment-by-Phone
Telephone Redemption
TDD call 1-800-544-6713
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
[LOGO] Printed on Recycled Paper
JHD -- 0000P 1/96
<PAGE>
JOHN HANCOCK
TAX-EXEMPT SERIES FUND
MASSACHUSETTS PORTFOLIO
NEW YORK PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1996
This Statement of Additional Information provides information about
John Hancock Tax-Exempt Series Fund (the "Fund") and its two portfolios, the
Massachusetts Portfolio and the New York Portfolio (each a "Portfolio" and
together, the "Portfolios"), in addition to the information that is contained in
the Fund's Prospectus dated January 1, 1996.
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 CROSS-REFERENCED
ADDITIONAL TO CAPTIONS
INFORMATION IN PROSPECTUS
PAGE PAGE
Organization of the Fund 2 10
Investment Objective and Policies 2 5
Certain Investment Practices 5 5
Special Risks 9 8
Investment Restrictions 17 5
Ratings 19 25
Those Responsible For Management 23 10
Investment Advisory And Other Services 28 10
Distribution Contract 31 19
Methods Of Obtaining Reduced Sales Charge 32 20
Special Redemptions 33 --
Additional Services And Programs 33 21
Tax Status 35 11
State Income Tax Information 38 12
Net Asset Value 39 16
Description Of The Fund's Shares 39 16
Calculation Of Performance 41 13
Brokerage Allocation 42 --
Transfer Agent Services 44 Back Cover
Custody Of Portfolios 44 Back Cover
Independent Accountants 44 Back Cover
Financial Statements -- --
ORGANIZATION OF THE FUND
John Hancock Tax-Exempt Series Fund is an open-end management investment company
presently consisting of two non-diversified separate portfolios.
Massachusetts Portfolio (the "Massachusetts Portfolio"). The Massachusetts
Portfolio is intended to provide investors with current income excludable from
gross income for Federal income tax purposes and exempt from the personal income
tax of Massachusetts, consistent with preservation of capital.
New York Portfolio (the "New York Portfolio"). The New York Portfolio is
intended to provide investors with current income excludable from gross income
for Federal income tax purposes and exempt from the personal income tax of New
York State and New York City, consistent with preservation of capital.
The Fund was organized in March 1987 by John Hancock Advisers, Inc. (the
"Adviser") as a Massachusetts business trust under the laws of The Commonwealth
of Massachusetts. Prior to January 2, 1991, when the Fund changed its name, it
was known as John Hancock Tax-Exempt Series Trust. The Adviser is an indirect
wholly-owned subsidiary of John Hancock Mutual Life Insurance Company (the "Life
Company"), a Massachusetts life insurance company chartered in 1862, with
national headquarters at John Hancock Place, Boston, Massachusetts.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide income from gross income for
Federal income tax purposes and exempt from the personal income taxes of
Massachusetts, or New York State and New York City, consistent with preservation
of capital. For a discussion of each Portfolio's investment objective and
policies, investors should refer to the caption "Investment Objective and
Policies" in the Prospectus. As defined in this Statement of Additional
Information, "Tax-Exempt Bonds" and tax-exempt securities refer to debt
securities issued by or on behalf of states, territories and possessions of the
United States and the District of Columbia and their political subdivisions,
agencies or instrumentalities, the interest on which is excludable from gross
income for Federal income tax purposes, without regard to whether the interest
income thereon is exempt from the personal income tax of any state.
Tax-Exempt Bonds. Tax-Exempt Bonds are issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as 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 or obtaining funds
for general operating expenses. In addition, certain types of "private activity
bonds" may be issued by public authorities to finance privately operated housing
facilities and certain local facilities for water supply, gas, electricity, or
sewage or solid waste disposal, student loans, or the obtaining of funds to lend
to public or private institutions for the construction of facilities such as
educational, hospital and housing facilities. Such private activity bonds are
included within the term Tax-Exempt Bonds if the interest paid thereon is
excluded from gross income for Federal income tax purposes.
Other types of private activity bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may also constitute Tax-Exempt Bonds, but current
Federal tax law places substantial limitations on the size of such issues.
Notes. Tax-Exempt Notes generally are used to provide for short-term capital
needs and generally have maturities of one year or less. Tax-Exempt Notes
include:
1. Project Notes. Project notes are backed by an agreement between a local
issuing agency and the Federal Department of Housing and Urban Development
("HUD") and carry a United States Government guarantee. These notes provide
financing for a wide range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income housing programs and urban
renewal programs). Although they are the primary obligations of the local public
housing agencies or local urban renewal agencies, the HUD agreement provides for
the additional security of the full faith and credit of the United States
Government. Payment by the United States pursuant to its full faith and credit
obligation does not impair the tax-exempt character of the income from Project
Notes.
2. Tax-Anticipation Notes. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation of
various tax revenues, such as income, sales, use and business taxes, and are
specifically payable from these particular future tax revenues.
3. Revenue Anticipation Notes. Revenue Anticipation Notes are issued in
expectation of receipt of specific types of revenue, other than taxes, such as
federal revenues available under Federal Revenue Sharing Programs.
4. Bond Anticipation Notes. Bond Anticipation Notes are issued to provide
interim financing until long-term bond financing can be arranged. In most cases,
the long-term bonds then provide the funds for the repayment of the Notes.
5. Construction Loan Notes. Construction Loan Notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of Construction Loan Notes, is sometimes provided by a commitment
by the Government National Mortgage Association to purchase the loan,
accompanied by a commitment by the Federal Housing Administration to insure
mortgage advances thereunder. In other instances, permanent financing is
provided by the commitments of banks to purchase the loan.
Commercial Paper. Issues of commercial paper typically represent short-term,
unsecured, negotiable promissory notes. These obligations are issued by agencies
of state and local governments to finance seasonal working capital needs of
municipalities or to provide interim construction financing and are paid from
general revenues of municipalities or are refinanced with long-term debt. In
most cases, tax-exempt commercial paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.
Yields. The yields on Tax-Exempt Bonds depend on a variety of factors, including
general money market conditions, effective marginal tax rates, the financial
condition of the issuer, general conditions of the Tax-Exempt Bond market, the
size of a particular offering, the maturity of the obligation and the rating (if
any) of the issue. The ratings of Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Services, Inc. ("Fitch") and Standard & Poor's Rating Group
("Standard & Poor's") represent their opinions as to the quality of various
Tax-Exempt Bonds which they undertake to rate. It should be emphasized, however,
that ratings are not absolute standards of quality. Consequently, Tax-Exempt
Bonds with the same maturity and interest rate with different ratings may have
the same yield. Yield disparities may occur for reasons not directly related to
the investment quality of particular issues or the general movement of interest
rates, due to such factors as changes in the overall demand or supply of various
types of Tax-Exempt Bonds or changes in the investment objectives of investors.
"Moral Obligation" Bonds. No Portfolio currently intends to invest in so-called
"moral obligation" bonds, where repayment is backed by a moral commitment of an
entity other than the issuer, unless the credit of the issuer itself, without
regard to the "moral obligation," meets the investment criteria established for
investments by the Portfolio.
Lower Rated High Yield "High Risk" Debt Obligations. As discussed in the Fund's
Prospectus, each Portfolio may invest in high yielding, fixed income securities
rated below Baa by Moody's or BBB by Standard & Poor's or Fitch. Ratings are
based largely on the historical financial condition of the issuer. Consequently,
the rating assigned to any particular security is not necessarily a reflection
of the issuer's current financial condition, which may be better or worse than
the rating would indicate.
The values of lower-rated securities generally fluctuate more than those of
high-rated securities. In addition, the lower rating reflects a greater
possibility of an adverse change in financial condition affecting the ability of
the issuer to make payments of interest and principal. Although the Adviser
seeks to minimize these risks through diversification, investment analysis and
attention to current developments in interest rates and economic conditions,
there can be no assurance that the Adviser will be successful in limiting a
Portfolio's exposure to the risks associated with lower securities. Because each
Portfolio invests in securities in the lower rated categories, the achievement
of each Portfolio's goals is more dependent on the Adviser's ability than would
be the case if each Portfolio's were investing in securities in the higher rated
categories.
The market value of debt securities which carry no equity participation usually
reflects yields generally available on securities of similar quality and type.
When such yields decline, the market value of a portfolio already invested at
higher yields can be expected to rise if such securities are protected against
early call. In general, in selecting securities for its portfolio, the portfolio
manager of each Portfolio intends to seek protection against early call.
Similarly, when such yields increase, the market value of a portfolio already
invested at lower yields can be expected to decline. Each Portfolio may invest
in debt securities which sell at substantial discounts from par. These
securities are low coupon bonds which, during periods of high interest rates,
because of their lower acquisition cost tend to sell on a yield basis
approximating current interest rates.
Additional Risks. Securities in which a Portfolio may invest are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or, as the case may be, the Massachusetts, or
New York legislature 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 materially affected.
From time to time, proposals have been introduced before Congress which would
adversely affect the Federal income tax consequences of holding Tax-Exempt
Bonds. Federal tax legislation enacted primarily during the 1980's limits the
types and amounts of Tax-Exempt Bonds issuable for certain purposes, especially
for industrial development bonds and other types of so-called "private activity"
bonds. Such limits may affect the future supply and yields of these types of
Tax-Exempt Bonds. Further proposals limiting the issuance of Tax-Exempt Bonds
may well be introduced in the future. If it appeared that the availability of
Tax-Exempt Bonds for investment by a Portfolio and the value of the Portfolio's
investments could be materially affected by such changes in law, the Trustees
would reevaluate such Portfolio's investment objective and policies and consider
changes in the structure of the Portfolio or its dissolution.
Portfolio Turnover. It is impossible to predict portfolio turnover rates
accurately. The portfolio turnover rate for a Portfolio is calculated by
dividing the lower of that Portfolio's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of all securities whose maturities
at the time of acquisition were 1 year or less) by the monthly average value of
the securities in the Portfolio during the year.
Ratings. Ratings for Bonds issued by various jurisdictions are noted herein.
Such ratings reflect only the respective views of such organizations, and an
explanation of the significance of such ratings may be obtained from the rating
agency furnished the same. There is no assurance that a rating will continue for
any given period of time or that a rating will not be revised or withdrawn
entirely by any or all of such rating agencies, if, in its or their judgment,
circumstances so warrant. Any downward revision or withdrawal of a rating could
have an adverse effect on the market prices of any of the bonds described
herein.
CERTAIN INVESTMENT PRACTICES
"When-Issued" Securities. As discussed in the Prospectus, "when-issued" refers
to securities whose terms are available and for which a market exists, but which
have not yet been issued. If a Portfolio enters into a "when-issued"
transaction, the Portfolio will segregate in a separate account, cash or liquid
high-grade debt securities equal in value to its commitment to acquire
"when-issued" securities. These assets will be valued at market value daily, and
additional cash or liquid assets will be segregated in the separate account to
the extent the total value of the assets in the account declines below the
amount of such commitment.
Repurchase Agreements. As discussed in the Prospectus, a Portfolio may enter
into repurchase agreements with respect to its portfolio securities. Each
Portfolio has established a procedure providing that the securities serving as
collateral for each repurchase agreement must be delivered to such Portfolio'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, a Portfolio 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 in
which the Portfolio seeks to enforce its rights thereto, possible subnormal
levels of income and lack of access to income during this period, and the
expense of enforcing its rights. The Adviser will monitor the creditworthiness
of the parties with whom the Fund enters into repurchase agreements. The
Portfolios will enter into repurchase agreements only with member banks of the
Federal Reserve System and with "primary dealers" in U.S. Government securities.
It is a fundamental policy of each Portfolio not to invest more than 10% of its
net assets in illiquid securities, including repurchase agreements maturing in
more than 7 days.
Financial Futures Contracts. A Portfolio 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 to offset the effect of
expected declines in interest rates. Although other techniques could be used to
reduce a Portfolio's exposure to interest rate fluctuations, a Portfolio may be
able to hedge its exposure more effectively and economically by using financial
futures contracts. A portfolio may enter into futures contracts and related
options for hedging and speculative purposes to the extent permitted by the
regulations of the Commodity Futures Trading Commission ("CFTC").
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-sensitive 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, the municipal bond buyer index, and Eurodollar certificates of deposit.
It is expected that if other financial futures contracts are developed and
traded, a Portfolio may engage in transactions in such contracts.
Although financial futures contracts by their terms call for actual delivery or
acceptance of interest rate instruments, in most cases these contracts are
closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts (same exchange, underlying security and delivery
month). If the offsetting purchase price is less than a Portfolio's original
sale price, such Portfolio realizes a gain, or if it is more, the Portfolio
realizes a loss. Conversely, if the offsetting sale price is more than a
Portfolio's original purchase price, such Portfolio realizes a gain, or if it is
less, the Portfolio realizes a loss. A Portfolio 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 a Portfolio 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." 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 a Portfolio upon termination of
the contract, assuming all contractual obligations have been satisfied. The
Portfolios expect to earn interest income on their 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 "marking to the market." Variation margin does not represent borrowing or
lending by a Portfolio, but is instead settlement between the Portfolio and the
broker of the amount one would owe the other if the financial futures contract
expired at that time. In computing net asset value, a Portfolio will mark to the
market its open financial futures positions.
Successful hedging depends on a strong correlation between the market for the
portfolio securities being hedged and the futures contract market for those
securities. There are several factors that may prevent this correlation from
being perfect, and thus, 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 impair the
effectiveness 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 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 prices than higher-rated
securities. In addition, the degree of imperfection may also be increased by the
fact that the Portfolios will enter into financial futures contracts on taxable
securities, and there is no guarantee that the prices of taxable securities will
move in a similar manner to the prices of a Portfolio's tax-exempt 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. Although the
Adviser believes that the use of financial futures contracts will benefit the
Portfolios, an incorrect prediction could result in a loss on both the hedged
securities in a Portfolio's investments and hedging vehicle so that a
Portfolio'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 price of
certain futures contract during a single trading day. The daily limit
establishes the maximum amount by which the price of a futures contract may vary
either up or down from the previous day's settlement price. 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 a Portfolio 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, a Portfolio 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 a Portfolio 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. As discussed in the Portfolios'
Prospectus, a Portfolio 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. A Portfolio 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 those risks relating to
transactions in financial futures contracts described above. Also, an option
purchased by a Portfolio may expire worthless, in which case a Portfolio would
lose the premium paid therefor.
Other Considerations. The Portfolios will engage in futures transactions for
bona fide hedging or speculative purposes to the extent permitted by CFTC
regulations. A Portfolio 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 Portfolio
or which it expects to purchase. Except as stated below, the Portfolios' 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 a Portfolio owns, or futures contracts will be purchased to
protect the Portfolio against an increase in the price of securities or the
currency in which they are denominated it intends to purchase. As evidence of
this hedging intent, each Portfolio 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 Portfolio will have purchased or will be in the process
of purchasing, equivalent amounts of related securities or assets denominated in
the related currency 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 Portfolio to do so, a long futures position may be terminated
or an option may expire without the corresponding purchase of securities or
other assets.
As an alternative to literal compliance with the bona fide hedging definition, a
CFTC regulation permits the Portfolios 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 a Portfolio'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. Each
Portfolio will engage in transactions in futures contracts and options 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.
When a Portfolio purchases a futures contract, writes a put option thereon or
purchases a call option thereon, an amount of cash or high grade, liquid debt
securities will be deposited in a segregated account with the Portfolio's
custodian which is equal to the underlying value of the futures contract reduced
by the amount of initial and variation margin held in the account of its broker.
The investment practices described above under the caption "Certain Investment
Practices" are not fundamental and may be changed by the Trustees without
shareholder approval.
SPECIAL RISKS
The following information as to certain special risks associated with investing
in Massachusetts and New York constitutes only a brief summary and does not
purport to be a complete description of the considerations associated with such
investments. The information is based in part on information from official
statements related to securities offerings of Massachusetts and New York issuers
and is believed to be accurate.
MASSACHUSETTS TAX-EXEMPT BONDS
The Commonwealth of Massachusetts has improved over the last four years. This
improvement reflects the combination of implementing more conservative fiscal
policy and budgetary practices, as well as increasing tax revenues through a
combination of tax increases and the slowly rebounding state economy. Since
Fiscal 1992, the state revenues have increased from $9.48 billion to an
estimated $11.16 billion in Fiscal 1995, an annual gain of 5.6%. For Fiscal
1996, tax revenues are projected to increase by 4.4% to $11.65 billion. This
consistent growth in tax revenues coupled with restrained expenditure levels
produced an operating surplus for the Fiscal 1992 through Fiscal 1994 period.
The ending fund balances for Fiscal 1996 are projected to be $169.9 million, or
23.5% lower than the Fiscal 1995 year-end balances.
In connection with his proposal to reorganize state government, Governor Weld
announced on November 1, 1995 that he would propose to reduce the personal
income tax rate on earned income from 5.95% to 5.45%. Legislation to effectuate
such tax reduction is expected to be filed by the Governor in January, 1996 in
conjunction with the filing of his budget recommendations for Fiscal 1997. The
cost to the Commonwealth of the proposed tax reduction has been estimated to be
approximately $500 million per year.
FISCAL 1992. Fiscal 1992 ended with an excess of operating revenues over
expenditures of $312 million and a positive fund balance of $549 million, which
included $230 million in the Stabilization Fund. Overall, budgeted revenues
increased only 0.7% to $13.7 billion and budgeted expenditures declined by 1.7%
to $13.4 billion.
FISCAL 1993. The Commonwealth ended Fiscal 1993 with an operating surplus of $13
million and aggregate ending operating fund balance of approximately $562
million, including a Stabilization Fund balance of $309 million. Budget revenues
increased by 4.7% to over $14.7 billion in Fiscal 1992. Budgeted expenditures in
Fiscal 1993 totalled approximately $14.7 billion, approximately 9.6% higher than
the Fiscal 1992 expenditures.
FISCAL 1994. The Commonwealth ended Fiscal 1994 with an operating surplus of $27
million and aggregate ending operating fund balance of approximately $589
million, including a Stabilization Fund balance of $383 million. For the year,
budgeted revenues totaled $15.5 billion, representing an increase of 5.7% over
Fiscal 1993. The Commonwealth budgeted expenditures in Fiscal 1994 totalled
$15.523 billion, 5.6% higher than the Fiscal 1993 budgeted expenditures.
FISCAL 1995. The Commonwealth is in the process of closing its Fiscal 1995
financial records. Current financial information is unaudited and is based upon
a preliminary financial report of the Commonwealth's Controller for Fiscal 1995
issued on September 15, 1995.
Fiscal 1995 budgeted revenues totaled approximately $16.4 billion or 5.4% above
Fiscal 1994 levels and exceeded budgeted expenditures by $90 million. Budgeted
expenditures in Fiscal 1995 were approximately $16.259 billion, or 4.7% above
the Fiscal 1994 budgeted expenditures. During Fiscal 1995, a modification was
enacted creating a formula for assigning certain year-end surpluses to the
Stabilization Fund. The new allocations called for sharing funds between the
Stabilization Fund and the newly created Cost Stabilization Fund. Amounts in the
Cost Relief Fund can be appropriated for the following purposes: 1) to subsidize
costs of the Massachusetts Water Pollution Abatement Trust projects; 2) finance
homeowner loans to facilitate compliance with sanitary waste regulations; 3)
mitigate sewer rate increases; and 4) unanticipated obligations or extraordinary
expenditures of the Commonwealth. Based upon this formula, it is anticipated
that the expected $90 million surplus would be allocated as follows: $55 million
would be carried forward as an initial balance for Fiscal 1996; $27.9 million
deposited in the Stabilization Fund; and $7 million to the Cost Relief Fund.
FISCAL 1996. On June 21, 1995, the Governor signed into law the Fiscal 1996
Budget totalling $16.8 billion in appropriations. A final supplemental budget
passed for Fiscal 1995 added $71 million in continuing appropriations to the
Fiscal Budget. Overall, the Commonwealth expects the Fiscal 1996 budget to total
approximately $16.9 billion, a 4.5% increase over Fiscal 1995 spending.
Comprehensive educational reform funding with a $233 million addition
represented the largest individual expenditure increase. Budgeted revenues are
estimated to equal approximately $16.8 billion in Fiscal 1996.
In August 1995, the Commonwealth received a waiver of federal regulations
subject to certain conditions for the proposed changes to the administration of
its AFDC program. This action followed the passing of legislation approved by
the Governor in February 1995 and was accepted by the Governor in September
1995. The changes proposed for the AFDC program were implemented in November
1995. For Fiscal 1996, these changes are budgeted to decline by 4.1% from Fiscal
1995 expenditures.
The Fiscal 1996 budget centers on numerous projections for spending requirements
of specific programs and expected generation of revenue from individual taxes or
fees; however, achievement of these estimates cannot be assured. During the
first quarter of Fiscal 1996, tax revenue collections have totaled $2.8 billion,
approximately 6.5% higher than the same period in Fiscal 1995.
The reserves of the Massachusetts Unemployment Compensation Trust Fund had been
exhausted by September 1991 due to persistently high levels of unemployment. To
compensate for this shortfall, benefit payments in excess of contributions were
financed through repayable advances from the federal unemployment loan account.
Legislation enacted in September 1992 significantly increased employer
contributions in order to reduce advances from the federal loan account with
1993 contributions exceeding outlays by $200 million. Since September 1994 when
all federal advances and related interest were repaid, the Fund has remained
solvent. As of September 30, 1995, the Trust Fund had a private contribution
balance of $481.07 million. It is expected, as of August, 1995, that the
contributions provided by current law should result in a private contributory
balance of $375 million in the Trust Fund by December, 1995. The Commonwealth
estimates that the reserves of the Trust Fund should total $1.25 billion by
1999.
CREDIT FACTORS
The fiscal viability of the authorities and municipalities in Massachusetts is
inextricably linked to the financial health of the Commonwealth as well as to
the guarantee of the debt of several authorities, most notably, the
Massachusetts Bay Transportation Authority and the University of Massachusetts
Building Authority. These agency ratings are based on this guarantee and can be
expected to follow any changes in the Commonwealth's rating. In addition,
Massachusetts statutes which limit the taxing authority of the Commonwealth or
certain governmental entities may impair the ability of issuers to maintain debt
service on their obligations.
The tax on personal property and real estate is virtually the only source of
local tax revenues available to the Commonwealth's cities and towns to meet
local costs. "Proposition 2 1/2", an initiative adopted by the voters in
November 1980, limits the power of Massachusetts cities and towns and certain
tax-supported districts to raise revenue from property taxes to support their
operations, including the payment of debt service. Proposition 2 1/2 required
many cities and towns to reduce their property tax levies to a stated percentage
of full and fair cash value of taxable property and real estate, and limited the
amount that all cities and towns might increase their property tax from year to
year.
RATINGS
The rating agencies have assigned the following long term credit ratings to the
Commonwealth: "A1" from Moody's; "A+" from Standard and Poor's, and "A+" from
Fitch.
NEW YORK TAX-EXEMPT BONDS
The following section provides only a brief summary of the complex factors
affecting the financial situation in New York and is based on information
obtained from the State, certain of its authorities and the City, as publicly
available on the date of this Statement of Additional Information. The
information contained in such publicly available documents has not been
independently verified. It should be noted that the creditworthiness of
obligations issued by local issuers may be unrelated to the creditworthiness of
the State, and that there is no obligation on the part of the State to make
payment on such local obligations in the event of default in the absence of a
specific guarantee of pledge provided by the State. It should also be noted that
the fiscal stability of New York State is related to the fiscal stability of New
York City and of the State's Authorities. New York State's experience has been
that if New York City or any other major political subdivision or any of the
State's Authorities suffers serious financial difficulty, the ability of New
York State, New York State's political subdivisions (including New York City)
and the State's Authorities to obtain financing in the public credit markets is
adversely affected. This results in part from the expectation that to the extent
that any Authority or local government experiences financial difficulty, it will
seek and receive New York State financial assistance. Moreover, New York City
accounts for approximately 40 percent of New York State's population and tax
receipts, so New York City's financial integrity in particular affects New York
State directly. Accordingly, if there should be a default by New York City or
any other major political subdivision or any of the State's Authorities, the
market value and marketability of all New York Tax-Exempt Bonds issued by New
York State, its political subdivisions and Authorities ("New York Tax-Exempt
Bonds") could be adversely affected. This would have an adverse effect on the
asset value and liquidity of the New York Portfolio, even though securities of
the defaulting entity may not be held by the Portfolio.
REGIONAL ECONOMY
The New York State economy has entered its third year of slow recovery from the
national recession of 1990. Expansion in the service, trade, and construction
sectors has netted the State approximately 185,000 new jobs since the recession
trough of 1992. Much of the service growth has been in business, social
services, and in the health sectors. The State's Budget Division, in light of
the forecasts for national economic growth, anticipates continued but slowing
economic growth for New York State. Mirroring national trends, personal income
growth is expected to increase 5% in 1995, down from 6% in 1994, and continue to
increase at a slower rate. Employment growth in 1995 is expected to be slightly
lower than the prior year, or .8%, with a net increase of roughly 60,000 jobs.
Industries that have benefited from the lower dollar abroad will be offset by
Government cutbacks and shrinking of the banking industry. Unemployment, which
peaked to 9.3% in 1992 was reported at a more favorable 6.3% in May 1995.
1995-1996 FISCAL YEAR. On June 7, 1995, the State Legislature passed the
1995-1996 budget and the 1995-1996 Financial Plan was formulated on June 20,
1995. The Financial Plan reflects a deposit of $15 million in the Tax
Stabilization Reserve Fund and a year end fund balance of $172 million. The
Financial Plan projects total receipts of the General Fund to be $33.1 billion,
a decline of $48 million from the prior fiscal year. The absence of one-time
transactions, the impact of tax reductions enacted in 1994 and 1995, the
reduction of the business tax surcharge, and reductions in the General Fund
share of petroleum based taxes account for the anticipated decline in receipts.
Tax cuts enacted this year are expected to reduce personal income tax receipts
by $515 million. Business taxes are projected to fall to $4.7 billion, or $360
million less than Fiscal 1995 levels. User taxes deposited in the General Fund
are expected to increase $73 million from the preceding fiscal year. These taxes
include cigarette, alcoholic beverage, and auto rental taxes; and a portion of
motor fuel excise levies and vehicle registration fees. Miscellaneous receipts
and transfers from other funds are projected to increase $550 million, largely
due to several one-time transactions.
General Fund disbursements and transfers to other governmental funds, combined,
are projected at $33.1 billion, or $334 million below the level of disbursements
in 1994-1995. Grants to local governments are anticipated to decline $392
million and direct payments to local governments, including school aid and
revenue sharing, are projected to increase $74 million from the prior fiscal
year. Social welfare, including Medicaid, welfare, and other social services
will be cut 6.5%, largely due to a reduction of nearly 9% in Medicaid spending.
Other governmental funds, the Special Revenue Funds, Capital Projects Funds, and
the Debt Service Funds, project disbursements of $26 billion, $4 billion, and
$2.5 billion, respectively. Transfers from the General Fund to these funds are
projected at $2.04 billion.
1994-1995 FISCAL YEAR. The State ended the 1994-95 Fiscal Year with the General
Fund in balance. The closing fund balance of $158 million reflects $157 million
in the Tax Stabilization Reserve Fund and $1 million in the Contingency Reserve
Fund.
General Fund receipts fell short of projections by $1.163 billion. Personal
income tax collections reflected weak estimated tax collections and lower
withholding due to reduced wage and salary growth, weakness in the brokerage
industry, and deferral of capital gains realizations in anticipation of Federal
tax changes. Business taxes fell short by $373 million, reflecting lower bank
payments as substantial overpayments of the 1993 liability depressed net
collections. Offsetting these shortfalls were user taxes and fees, which
exceeded projections by $210 million.
Disbursements of the General Fund were lower than original projections by $848
million. Educational costs fell short of projections by $188 million in part due
to the availability of $110 million in additional lottery proceeds and the use
of LGAC bond proceeds. The spending reductions also reflect measures taken by
the Governor to avert a gap in the 1994-95 State Financial Plan in January 1995.
These actions included a hiring freeze, halting the development of certain
services, and the suspension of non-essential capital projects.
1993-1994 FISCAL YEAR. The State of New York completed its 1993-1994 fiscal year
(ending March 30, 1994) with an accumulated surplus of $370 million from
combined Governmental Funds. This includes a General Fund accumulated deficit of
$1.637 billion, a Capital Fund accumulated deficit of $622 million, and
accumulated surpluses in the Special Revenue and Debt Service Funds. On an
operating basis, the State reported an operating surplus of $1.051 billion from
combined Governmental Funds.
General Fund operations completed Fiscal Year 1993-1994 with a surplus of $914
million reported on GAAP-basis. The surplus reflects several major factors
including the use of $671 million of the 1992-1993 operating surplus to fund
1993-1994 expenditures, $575 million in net Local Government Assistance
Corporation ("LGAL") bond proceeds, and the accumulation of a $265 million
balance in the Contingency Reserve.
Receipts of the General Fund increased $800 million or 2.5% over the prior
fiscal year. Primarily, the increase stemmed from gains of over $1 billion in
personal income and business taxes. This 10% growth was driven by the changes in
Federal business laws and the strong performance of the banking and securities
firms in 1993. Expenditures increased $1.05 billion or 3.2% over the prior year.
The growth in expenditures primarily consisted of $850 million in additional
social service costs. The majority of these costs related to Medicaid and Income
Maintenance programs. In addition, the settlement of outstanding labor contracts
and unfavorable judicial decisions caused another $240 million in departmental
operations expenditures. On a cash basis the state closed 1993-1994 with a
surplus of $332 million based upon receipts of $32.2 billion and disbursements
of $31.9 billion.
1992-1993 FISCAL YEAR. In 1992-1993, the State recorded a GAAP-based General
Fund operating surplus of $2.065 billion and ended the years with an accumulated
General Fund deficit of $2.5 billion. The year was highlighted by higher than
expected revenue growth generated by the improving economy combined with the
effects of a tax-induced one-time year end acceleration of income into 1992.
After reflecting a 1992-1993 year-end deposit to the tax refund reserve of $671
million, General Fund receipts exceeded 1992 projections by $45 million. If not
for that year-end transaction, which had the effect of reducing 1992-1993
receipts by $671 million and making them available in Fiscal Year 1993-1994,
General Fund receipts would have been $716 million higher than originally
projected. The favorable revenue performance was primarily attributable to the
withholding and estimated tax components of the income tax exceeding projections
by $800 million. Disbursements ended 1992-1993 at $45 million above projections.
After adjusting for the impact of a $150 million payment from the Medicaid
Malpractice Insurance Association to health insurers pursuant to January 1993
legislation, all other expenditures fell $105 million below projections. The
State closed Fiscal Year 1992-1993 with a cash-basis surplus of $67 million
based on receipts of $31.4 billion and disbursements of $30.8 billion.
RATINGS
The State of New York had its A rating by Moody's and A- by Standard & Poor's
reconfirmed during June 1994 and July 1994, respectively. In affirming the
ratings of long term general obligations both agencies cited the positive trends
establish over the last two fiscal years. Fitch also retained its A+ rating on
New York State.
Current Budget The revised Fiscal Year 1994-1995 budget was developed from
projections of moderate economic growth and slightly higher expectations
regarding social service case loads and required State services and slightly
lower estimates of tax receipts. The budget calls for a balanced General Fund on
a cash basis. Total receipts are projected to increase to $34.1 billion and
expenditures to $34.0 billion. The 1994-1995 revenue projections incorporate a
$1.5 billion transfer from the tax refund reserve fund, a rate sustaining the
1993-94 income tax growth and moderate user tax expansion. Disbursement
estimates call for a $1.9 billion increase in grants to local education
governments consisting primarily of $554 million increase in local education
support and a $143 million local tax relief package. In addition, increased
disbursement for pension contributions of $110 million, salary increases of $193
million and a $153 million capital fund contribution represent significant new
expenditures. At the close of 1994-1995, the balance of the Tax Stabilization
Reserve Fund is projected to total $207 million.
New York State anticipates that its 1994-1995 borrowings for capital purposes
will total approximately $3.1 billion in general obligation and contractual
obligation debt. Of this issuance, general obligations will total only $375
million, the lowest level since 1988-1989. Major projects to be undertaken with
these funds include highway and bridge improvements, mental hygiene facilities,
university building improvements, housing programs and prisons.
Authorities The fiscal stability of New York is related, at least in part, to
the fiscal stability of its localities and Authorities. Authorities are not
subject to the constitutional restrictions on the incurrence of debt which apply
to New York itself and may issue bonds and notes within the amounts of, and as
otherwise restricted by, their legislative authorization.
Authorities are generally supported by revenues generated by the projects
financed or operated, such as fares, user fees on bridges, highway tolls, mass
transportation and rentals for dormitory rooms and housing. In recent years,
however, New York has provided financial assistance through appropriations, in
some cases of a recurring nature, to certain Authorities for operating and other
expenses and, in fulfillment of its commitments on moral obligation indebtedness
or otherwise, for debt service. This assistance is expected to continue to be
required in future years. Failure of New York to appropriate necessary amounts
or to take other action to permit the Authorities to meet their obligations
could result in a default by one or more of the Authorities. If a default were
to occur, it would likely have a significant adverse effect on the market price
of obligations of the State and its Authorities.
As of March 31, 1994, there was outstanding a $26.4 billion aggregate principal
amount of bonds and notes issued by Authorities which were either guaranteed by
the State or supported by the State through lease-purchase and
contractual-obligation arrangements or moral obligation provisions. Debt service
on outstanding Authority obligations is normally paid out of revenues generated
by the Authorities' projects or programs, but in recent years the State has
provided special financial assistance, in some cases of a recurring nature, for
operating capital and debt service expenses.
Agencies and Localities Beginning in 1975 (in part as a result of the then
current New York City and UDC financial crises), various localities of New York
State began experiencing difficulty in marketing their securities. As a result,
certain localities, in addition to New York City, have experienced financial
difficulties leading to requests for State assistance. If future financial
difficulties cause agencies or localities to seek special State assistance, this
could adversely affect New York State's ability to pay its obligations.
Similarly, if financial difficulties of New York State result in New York City's
inability to meet its regular aid commitments or to provide further emergency
financing, issuers may default on their outstanding obligations, which would
affect the marketability of debt obligations of New York, its agencies and
municipalities such as the New York Municipal Obligations held by the Portfolio.
Reductions in Federal spending could materially and adversely affect the
financial condition and budget projections of New York State's localities.
Should localities be adversely affected by Federal cutbacks, they may seek
additional assistance from the State which might, in turn, have an adverse
impact on New York State's ability to maintain a balanced budget.
New York City and the Municipal Assistance Corporation In 1975, New York City
encountered severe financial difficulties which impaired the borrowing ability
of New York City, New York State, and the Authorities. New York City (the
"City") lost access to public credit markets and was not able to sell debt to
the public until 1979.
As a result of the City's financial difficulties, certain organizations were
established to provide financial assistance and oversee and review the City's
financing. These organizations continue to exercise various monitoring functions
relating to the City's financial position.
New York City has maintained a balanced budget for each of its last nine fiscal
years and has retired all of its federally guaranteed debt. As a result of the
City's success in balancing its budget, certain restrictions imposed on the City
by the new York Financial Control Board (the "Control Board"), which was created
in response to the City's 1975 fiscal crises, have been suspended. Those
restrictions, including the Control Board's power to approve or disapprove
certain contracts, long-term and short-term borrowings and the four-year
financial plan of the City, will remain suspended unless and until, among other
things, there is a substantial threat of an actual failure by New York City to
pay debt service on its notes and bonds or to keep its operating deficits below
$100 million. Although the City has maintained a balanced budget in recent
years, the ability to balance future budgets is contingent upon accrual versus
expected levels of Federal and State Aid and the effects of the economy on City
revenues and services.
The City requires certain amounts of financing for seasonal and capital spending
purposes. The City has issued $2.2 billion in notes to finance the City's
current estimate of its seasonal financing needs during its 1995 fiscal year.
The City's capital financing program projects long-term financing requirements
of approximately $11.3 billion for the City's fiscal years 1995 through 1998 for
the construction and rehabilitation of the City's infrastructure and other fixed
assets. The major capital requirements include expenditures for the City's water
supply system, sewage and waste disposal systems, roads, bridges, mass transit,
schools and housing.
Certain localities in addition to the City could have financial problems which,
if significant, could lead to requests for additional State assistance during
the State's 1994-95 fiscal years and thereafter. Fiscal difficulties experienced
by the City of Yonkers, for example, could result in State actions to allocate
State resources in amounts that cannot yet be determined. In the recent past,
the State provided substantial financial assistance to its political
subdivisions, totaling approximately 67% of General Fund disbursements in the
State's fiscal year 1992-93 and estimated to account for 68% of General Fund
disbursements in the State's 1993-94 fiscal year, primarily for aid to
elementary, secondary and higher education (34% in fiscal year 1992-93 and 34%
in fiscal year 1993-94 of local assistance) and medicaid and income maintenance
(33% in fiscal year 1992-93 and 34% in fiscal year 1993-94). The legislature
enacted substantial reductions for previously budgeted levels of State aid since
December 1990. To the extent the State is constrained by its financial
condition, State assistance to localities may be further reduced, compounding
the serious fiscal constraints already experienced by many local governments.
Localities also face anticipated and potential problems resulting from pending
litigation (including challenges to local property tax assessments), judicial
decisions and socio-economic trends.
The total indebtedness of all localities in the State, other than New York City,
was approximately $15.7 billion as of the localities' fiscal year ending during
1992. A small portion (approximately $71.6 million) if this indebtedness
represented borrowing to finance budgetary deficits issued pursuant to enabling
State legislation (requiring budgetary review by the State Comptroller).
Subsequently, certain counties and other local governments have encountered
significant financial difficulties, including Nassau County and Suffolk County
(which each received approval by the legislature to issue deficit notes). The
State has imposed financial control on the City of New York from 1977 to 1986
and on the City of Yonkers in 1984, 1988 and 1989, under an appointed control
board in response to fiscal crises encountered by these municipalities.
Litigation Certain litigation pending against New York State, its subdivisions
and their officers and employees could have a substantial or long-term adverse
effect on State finances. Among the more significant of these lawsuits are those
that involve: (i) the validity and fairness of certain eighteenth century
agreements and treaties by which Oneida and Cayuga Indian tribes transferred
title to the State of approximately five million acres of land in central New
York; (ii) certain aspects of the State's Medicaid rates and regulations,
including reimbursements to providers of mandatory and optional Medicaid
services; (iii) the care and housing for individuals released from State mental
health facilities; (iv) the treatment provided at several State mental hygiene
facilities; (v) contamination of the Love Canal area of Niagara Falls; (vi)
education accommodations for learning-disabled students at a State University;
(vii) alleged employment discrimination by the State and its agencies; (viii)
the State's practice of reimbursing certain mental hygiene patient-care expenses
with the client's Social Security benefits; (ix) methods by which the State
computes its aid to localities for the administrative costs of food stamp
programs; (xi) retirement benefits payable to certain State and municipal
employees; (xii) State reimbursement of local governments for Medicaid
expenditures made for certain mentally disturbed patients; (xiii) the State's
possession of certain assets taken pursuant to the State's Abandoned Property
Law; (xiv) alleged responsibility of New York State officials to assist in
remedying racial segregation in the City of Yonkers; and (xv) liability for
maintenance of erosion barriers constructed along Long Island's shorelines.
INVESTMENT RESTRICTIONS
The Portfolios observe the following fundamental restrictions. The Portfolios
may not:
(1) Issue senior securities, except as permitted by paragraph (2) below. For
purposes of this restriction, financial futures contracts and repurchase
agreements entered into in accordance with a Portfolio's investment policy are
not deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure for extraordinary
emergency purposes in amounts not to exceed 5% of the Portfolio' s total assets
(including the amount borrowed) taken at market value. The Portfolio will not
leverage to attempt to increase income. The Portfolio will not purchase
securities while borrowings are outstanding.
(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 Portfolio's total assets taken at
market value. (The Portfolios have no present intention of engaging in
transactions permitted under this paragraph (3).)
(4) Act as an underwriter, except to the extent that in connection with the
disposition of portfolio securities, the Portfolio may be deemed to be an
underwriter for purpose of the Securities Act of 1933. A Portfolio 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 or sell real estate or any interest therein, but this restriction
shall not prevent a Portfolio from investing in Tax-Exempt Bonds secured by real
estate or interests therein.
(6) Make loans, except for the purchase of a portion of an issue of Tax-Exempt
Bonds or short-term taxable investment, whether or not the purchase is made upon
the original issuance of such securities, and repurchase agreements entered into
in accord with a Portfolio's investment policy.
(7) Except as permitted by paragraph (4) above, participate in a joint or
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 is not deemed to result in a joint securities trading account.
(8) Buy or sell commodity contracts, except financial futures contracts as
described in the Prospectus under the caption "Investment Objective and
Policies."
(9) Purchase securities on margin (except that it may obtain such short-term
credits as may be necessary for the clearance of purchase or sales of securities
and may make margin payments in connection with transactions in financial
futures) or make short sales of securities.
(10) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of each investment. (Tax-Exempt Bonds and securities
issued or guaranteed by the United States Government and its agencies and
instrumentalities are not subject to this limitation.)
(11) Purchase securities of an issuer (other than the U.S. Government, its
agencies or instrumentalities), if
(a) such purchase would cause more than 10 percent of the
outstanding voting securities of such issuer to be held by the Fund; or
(b) to the Portfolio's knowledge, 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 percent and together own beneficially more than 5 percent of the securities
of such issuer, nor will the Portfolio hold the securities of any such issuer.
For the purposes of this paragraph (11), each government unit (state, county,
city, for example) and each subdivision, agency or instrumentality thereof, and
each multimember agency of which any of them is a member, shall be considered a
separate issuer.
(12) Invest in securities of another registered investment company.
(13) Except for investments which, in the aggregate, taken at cost do not exceed
5 percent of the Portfolio's total assets taken at market value, purchase
securities unless the issuer thereof has a record of at least 3 years'
continuous operation prior to the purchase. (This limitation does not apply to
securities that are issued or guaranteed by the United States government and its
agencies or instrumentalities or are secured by the pledge of the faith, credit,
and taxing power of any entity authorized to issue Tax-Exempt Bonds.)
(14) Purchase any security, including any repurchase agreement maturing in more
than seven days, which is subject to legal or contractual delays in or
restrictions on resale, or which is not readily marketable, if more than 10% of
the net assets of the Portfolio, taken at market value, would be invested in
such securities.
The Portfolios observe the following non-fundamental restriction. The Portfolios
may not:
(1) Notwithstanding any investment restriction to the contrary, each Portfolio
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 each Portfolio 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 the Portfolios in certain states the Trustees
may, in their sole discretion, adopt restrictions on investment policies more
restrictive than those described above. Should the Trustees determine that a
restrictive policy is no longer in the best interest of a Portfolio and its
shareholders, the Portfolio may cease offering shares in the state involved and
the Trustees may revoke the restrictive policy. Moreover, if the states involved
no longer require any such restrictive policy, the Trustees may, at their
discretion, revoke the policy.
The investment objective and the fundamental restrictions of a Portfolio may not
be changed without approval of a majority of the outstanding voting securities
of the respective Portfolio. As used in the Prospectus and this Statement of
Additional Information, such approval means the approval of the lesser of (i)
the holders of 67 percent or more of the shares represented at the meeting if
the holders of more than 50 percent of the outstanding shares of the affected
Portfolio are present in person or by proxy, or (ii) the holders of more than 50
percent of the outstanding shares.
RATINGS
Moody's describes its ratings for Tax-Exempt Bonds as follows:
Bonds. "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 grater 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 sometime 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 the 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.
"Bonds which are rated 'CAA' are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
"Bonds which are rated 'CA' represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
"Bonds which are rated 'C' are the lowest rated classes of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever obtaining any
real investment standing."
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue. Should
no rating be assigned, the reason may be one of the following: (i) an
application for rating was not received or accepted; (ii) the issue or issuer
belongs to a group of securities that are not rated as a matter of policy; (iii)
there is a lack of essential data pertaining to the issue or issuer; or (iv) the
issue was privately placed, in which case the rating is not published in Moody's
publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Standard & Poor's describes its ratings for Tax-Exempt Bonds as follows:
"AAA. Debt rated 'AAA' has the highest rating by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong.
"AA. Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
"A. Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
"BBB. Debt rated 'BBB' is regarded as having adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
Debt rated "BB," "B," "CCC," or "CC" is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and pay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major risk exposures to adverse
conditions.
UNRATED. This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
Fitch describes its rating 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 the 'AA' categories are not significantly vulnerable to
foreseeable 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 to be
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 which
could assist the obligor in satisfying its debt service requirements.
NOTES. Ratings for state and municipal notes and other short-term obligations
will be 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 on bond risk are of lesser importance in the short run.
Symbols will be used as follows:
"MIG-1 Notes 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 Notes bearing this designation are of high quality with margins of
protection ample although not so large as in the preceding group."
COMMERCIAL PAPER. As described in the Prospectus, the Fund may invest in
commercial paper which is rated A-1 or A-2 by Standard & Poor's, P-1 or P-2 by
Moody's or F-1+ or f1 by Fitch.
Moody's ratings for commercial paper are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's two highest commercial paper rating categories
are as follows:
"P-1 -- "Prime-1" indicates the highest quality repayment capacity of the rated
issues.
"P-2 -- "Prime-2" indicates that the issuer has a strong capacity for repayment
of short-term promissory obligations. Earnings trends and coverage ratios, while
sound, will be more subjective to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained."
Standard & Poor's commercial paper ratings are current assessments of the
likelihood of timely payment of debts having an original maturity of no more
than 365 days. Standard & Poor's two highest commercial paper rating categories
are as follows:
"A-1 -- This designation indicates that the degree of safety regarding timely
payment is very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+) sign designation.
"A-2 -- Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1."
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium notes, and municipal and investment
notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch's short-term ratings are as follows:
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+"
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by the Trustees of the Fund 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").
The following table sets forth the principal occupation or employment of the
Trustees and principal officers of the Fund during the past five years.
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING THE PAST FIVE YEARS
- ----------------- -------------- --------------------------
<S> <C> <C>
*Edward J. Boudreau, Jr. Chairman (1,2) 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>
- --------------
*An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act:).
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) 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 (4) 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 (4) President, Brookline Savings Bank.
160 Washington Street
Brookline, Massachusetts
William J. Cosgrove Trustee (4) 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 Representatives, Inc.;
Director, the Hudson City Savings Bank.
Gail D. Fosler Trustee (4) Vice President and Chief Economist, The
4104 Woodbine Street Conference Board (non-profit economic and
Chevy Chase, MD business research).
Bayard Henry Trustee (4) Corporate Advisor; Director, Fiduciary Trust
31 Milk Street Company (a trust company); Director,
Boston, Massachusetts Groundwater Technology, Inc. (remediation);
Samuel Cabot, Inc.; Advisor, Kestrel Venture
Management.
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) 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>
*Richard S. Scipione Trustee (3) General Counsel, the Life Company; Director,
John Hancock Place the Adviser, the Affiliated Companies, John
P.O. Box 111 Hancock Distributors, Inc., JH Networking
Boston, Massachusetts 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.
Edward J. Spellman, CPA Trustee (4) Partner, KPMG Peat Marwick LLP (retired June
259C Commercial Bld. 1990).
Lauderdale, FL
*Robert G. Freedman Vice Chairman and Chief Vice Chairman and Chief Investment Officer,
101 Huntington Avenue Investment Officer (2) the Adviser; President, the Adviser (until
Boston, Massachusetts December 1994).
*Anne C. Hodsdon President (2) President and Chief Operating Officer, the
101 Huntington Avenue Adviser; Executive Vice President, the Adviser
Boston, Massachusetts (until December 1994); Senior Vice President;
the Adviser (until December 1993); Vice
President, the Adviser, until 1991.
*Thomas H. Drohan Senior Vice President and Senior Vice President and Secretary, the
101 Huntington Avenue Secretary Adviser.
Boston, Massachusetts
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) 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>
*James B. Little Senior Vice President and Senior Vice President the Adviser.
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
*John A. Morin Vice President Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
*Susan S. Newton Vice President, Assistant Vice President and Assistant Secretary,
101 Huntington Avenue Secretary and Compliance the Adviser.
Boston, Massachusetts Officer
*James J. Stokowski Vice President and Treasurer Vice President, the Adviser.
101 Huntington Avenue
Boston, Massachusetts
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the Investment Company Act.
(1) A Member of the Executive Committee.
(2) A Member of Investment Committee of the Adviser.
(3) An Alternate Member of the Executive Committee.
(4) 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
each Portfolio and to the knowledge of the registrant, no persons owned of
record or beneficially 5% or more of any of the Fund's outstanding securities .
All of the officers listed are officers or employees of the Adviser or
Affiliated Companies. Some of the Trustees and officers may also be officers
and/or directors and/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 the Fund's 1995 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
PENSION OR RETIREMENT FROM THE FUND AND JOHN HANCOCK
AGGREGATE BENEFITS ACCRUED AS FUND
COMPENSATION PART OF THE FUND'S COMPLEX TO
FROM THE EXPENSES TRUSTEES
INDEPENDENT TRUSTEES FUND (TOTAL OF 17 FUND(S)
MA NY MA NY
<S> <C> <C> <C> <C> <C>
Dennis S. Aronowitz $819 $832 $-- $-- $ 61,050
Richard P. Chapman, Jr. 843 858 578 588 62,800
William Cosgrove 874 889 553 562 61,050
Gail D. Fosler 832 845 -- -- 60,800
Bayard Henry 791 804 -- -- 58,850
Edward J. Spellman 857 871 -- -- 61,050
--- --- -- -- - ------
Total $5,016 $5,099 $1,131 $1,150 $365,600
------ ------ ------ ------ --------
</TABLE>
The total compensation paid by John Hancock Fund Complex to the Independent
Trustees is as of the calendar year ended December 31, 1995.
INVESTMENT ADVISORY AND OTHER SERVICES
Each of the Trustees and principal officers affiliated with the Fund and the
Portfolios 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, on behalf of the Portfolios, has entered into
an investment management contract with the Adviser, under which the Adviser
provides each Portfolio with a continuous investment program, consistent with
the Portfolio's stated investment objective and policies. Investors should refer
to the Prospectus for a description of certain information concerning the
investment management contract of the Fund. The Adviser is responsible for the
management of each Portfolio's assets.
Securities held by a Portfolio may also be held by other funds or investment
advisory clients for which the Adviser or its affiliates provide investment
advice. Securities may be held by, or be appropriate investments for, a
Portfolio as well as such other clients or funds. 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 are selling the same security. If
opportunities for purchase or sale of securities by the Adviser for a Portfolio
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 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 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 for by the Adviser or John Hancock Funds), and the continuous public
offering of the shares of the Fund are borne by the Fund on behalf of each of
the Portfolios.
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 daily net assets of each Portfolio as follows:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.500%
Next $250,000,000 0.450%
Next $500,000,000 0.425%
Next $250,000,000 0.400%
Amount over $1,250,000,000 0.300%
From time to time, the Adviser may reduce its fee or make other arrangements to
limit a Portfolio's expenses to a specified percentage of its 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, a Portfolio's annual
expenses fall below this limit.
On August 31, 1995, the net assets of the Massachusetts and New York Portfolios
were $54,415,695 and $55,752,967, respectively. For the years ended August 31,
1993 and 1994, as a result of the expense limitations described in the
Prospectus, the Adviser did not receive a fee from any Portfolio. For the year
ended August 31, 1995, the management fee paid by the Massachusetts and New York
Portfolios to the Adviser amounted to $62,994 and $57,450, respectively.
If the total of all ordinary business expenses of any Portfolio for any fiscal
year exceeds the limitations prescribed in any state in which shares of the
Portfolio are registered for sale, the fee payable to the Adviser will be
reduced to the extent of such excess and the Adviser will make any additional
arrangements necessary to eliminate any remaining excess expenses.
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 limit on
expenses imposed by a state requires that expenses charged to the Fund in any
fiscal year may not exceed 2 1/2% of the first $30,000,000 of the Fund's average
net assets, 2% of the next $70,000,000 of such net assets and 1 1/2% of the
remaining average net assets. 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 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
management contract.
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts 02199-7603,
was organized in 1968 and currently has more than $16 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 1,080,000 shareholders. The Adviser is
an affiliate of the Life Company, one of the most recognized and respected
financial institutions in the nation. With total assets under management of more
than $80 billion, the Life Company is one of the ten largest life insurance
companies in the United States, and carries high ratings from Standard & Poor's
and A.M. Best's. Founded in 1862, the Life Company has been serving clients for
over 130 years.
Under the investment management contract, the Fund and each Portfolio 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 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 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 continues in effect from year to year if
approved annually by vote of a majority of the 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 Trustees or
the holders of a majority of each affected Portfolio's outstanding voting
securities. This contract automatically terminates upon assignment and may be
terminated as to any Portfolio 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 that Portfolio.
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 Funds. John Hancock Funds accepts orders for the
purchase of the shares of the Fund which are offered at net asset value next
determined, plus the applicable sales charge. John Hancock Funds and Selling
Brokers receive compensation in the form of a sales charge at rates which are
listed in the Portfolios' Prospectus.
The Fund's Trustees have adopted a Distribution Plan (the "Plan"), on behalf of
each Portfolio pursuant to Rule 12b-1 under the Investment Company Act. Under
the Plan, the Fund will pay distribution and service fees at an aggregate annual
rate of up to 0.30% of the average daily net assets of the Portfolio, provided
that the service fee will not exceed 0.25% of such assets. The distribution fees
reimburse John Hancock Funds for its distribution costs incurred in the
promotion of sales of Portfolio shares, and the service fees compensate Selling
Brokers for providing personal and account maintenance services to shareholders.
The Plan was approved by a majority of the voting securities of each Portfolio
and the Plan with all amendments was 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
Plan (the "Independent Trustees") by votes cast in person at meetings called for
the purpose of voting on the Plan.
Pursuant to the Plan, at least quarterly, John Hancock Funds shall provide the
Fund on behalf of each Portfolio with a written report of the amounts expended
under the Plan and the purpose for which such expenditures were made. The
Trustees shall review such reports on a quarterly basis.
During the fiscal year ended August 31, 1995, each Portfolio paid John Hancock
Funds the following amounts of expenses:
<TABLE>
<CAPTION>
Expense Items
Printing and
Mailing of
Prospectuses Interest Carrying
to New Compensation to Expense of or Other Finance
Advertising Shareholders Selling Brokers Distributors Charges Other
<S> <C> <C> <C> <C> <C>
New York Portfolio $ 8,207 $3,247 $43,803 $106,993 $0
Massachusetts Portfolio $10,383 $1,257 $44,137 $103,758 $0
</TABLE>
The Plan 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. The Plan provides that it may be terminated as to any
Portfolio without penalty (a) by vote of a majority of the Independent Trustees,
(b) upon 60 days' written notice to John Hancock Funds of the affected Portfolio
and (c) automatically in the event of assignment. It 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 voting
securities of the affected Portfolio. It also provides that no material
amendment to the Plan will, in any event, be effective unless it is approved by
a vote of a majority of the Trustees and of the Independent Trustees of the
Fund.
In adopting the Plan the Trustees concluded that, in their judgment, there is a
reasonable likelihood that the Plan will benefit each Portfolio's shareholders.
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, 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."
The distribution contract continues in effect from year to year if approved
annually by vote of a majority of the 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 Trustees or the holders of
a majority of the affected Portfolio's outstanding voting securities. The
distribution contract automatically terminated upon assignment. Such contract
may be terminated as to any Portfolio 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 that Portfolio.
METHODS OF OBTAINING REDUCED SALES CHARGE
The sales charge applicable to purchases of shares of a Portfolio is described
in the Fund's Prospectus. Methods of obtaining a reduced sales charge referred
to generally in the Prospectus are described in detail below.
COMBINED PURCHASES. For each Portfolio, in calculating the sales charge
applicable to purchases 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 a Investor
Services or Selling Broker's representative.
WITHOUT SALES CHARGE. As described in the Prospectus, shares of a Portfolio may
be sold without a sales charge to John Hancock affiliates and certain government
authorities.
ACCUMULATION PRIVILEGE. Investors (including investors combining purchases) who
are already shareholders may also obtain the benefit of a reduced sales charge
by taking into account not only the amount then being invested but also the
purchase price or current account value of the shares already held by such
person.
COMBINATION PRIVILEGE. For each Portfolio, reduced sales charges (according to
the schedule set forth in the Prospectus) also are available to an investor
based on the aggregate amount of his concurrent and prior investments in shares
of the Portfolio and shares of all other John Hancock funds which carry a sales
charge.
LETTER OF INTENTION. For each Portfolio, the 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 accumulations and combinations) must
aggregate $100,000 or more invested during the 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 specified 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 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 specified period, at which time the
escrow shares will be released. If the total investment specified in the LOI is
not completed, the 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 shares and may be terminated at any time.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of each Portfolio in whole or in part in portfolio
securities as prescribed by the Trustees of the Fund. When the shareholder sells
portfolio securities received in this fashion the shareholder 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, each Portfolio 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 each Portfolio's net asset
value at the beginning of such period.
ADDITIONAL SERVICES AND PROGRAMS
SYSTEMATIC WITHDRAWAL PLAN. As described briefly in the Prospectus, each of the
Portfolios permits the establishment of a Systematic Withdrawal Plan. Payments
under this plan represent proceeds arising from the redemption of a Portfolio's
shares. Since the redemption price of the shares of a Portfolio may be more or
less than the shareholder's cost, depending upon the market value of the
securities owned by the Portfolio 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 shares of
the Portfolio could be disadvantageous to a shareholder because of the sales
charge payable on such purchases and because redemptions are taxable events.
Therefore, a shareholder should not purchase Portfolio 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 in
the Prospectus. The program, as it relates to automatic investment checks, is
subject to the following conditions:
The investment 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 check is
not honored by your 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 shares of a Portfolio
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 that Portfolio or
in shares of any of the other John Hancock mutual funds, subject to the minimum
investment limit in any fund. Each of the Portfolios may modify or terminate the
reinvestment privilege at any time.
No sales charge will apply to shares of a Portfolio reinvested in any of the
other John Hancock funds which are otherwise subject to a sales charge. If a
CDSC was paid upon a redemption, you may reinvest in the same class of shares
from which the redemption was made within 120 days at net asset value, receive a
reinstatement of the CDSC previously charged and reinvested shares will continue
to be subject to the CDSC. For the purpose of calculating the CDSC, the holding
period of the shares acquired through reinvestment will include the holding
period of the redeemed shares.
A redemption or exchange of Portfolio 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 shares will be treated as described under the heading "Tax
Status."
TAX STATUS
Each Portfolio is treated as a separate entity for accounting and tax purposes,
qualified as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and intends to so qualify for each
taxable year. 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, each Portfolio will not be subject to Federal
income tax on taxable income (including gain from the disposition of portfolio
securities or the right to when-issued securities prior to issuance or the
lapse, exercise, delivery under or closing out of options and financial futures
contracts, income from repurchase agreements and other taxable securities,
income attributable to accrued market discount, and a portion of the discount
from certain stripped tax-exempt obligations or their coupons) which is
distributed to shareholders in accordance with the timing requirements of the
Code.
Each Portfolio will be subject to a four percent non-deductible 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. Each Portfolio intends under normal circumstances to avoid
liability for such tax by satisfying such distribution requirements.
Distributions of tax-exempt interest ("exempt-interest dividends") timely
designated as such by a Portfolio to its shareholders will be treated as
tax-exempt interest under the Code, provided that the Portfolio qualifies as a
regulated investment company and at least 50% of the value of its assets at the
end of each quarter of its taxable year is invested in obligations, the interest
on which is excluded from gross income under Section 103(a) of the Code.
Shareholders are required to report their receipt of tax-exempt interest,
including such distributions, on their Federal income tax returns.
Interest income from certain types of tax-exempt bonds that are private activity
bonds in which the Portfolios may invest is treated as an item of tax preference
for purposes of the Federal alternative minimum tax. To the extent that a
Portfolio invests in these tax-exempt bonds, shareholders will be required to
treat as an item of tax preference for Federal alternative minimum purposes that
part of the Portfolio's exempt-interest dividends which is derived from interest
on these tax-exempt bonds. Exempt-interest dividends derived from interest
income from all tax-exempt bonds are taken into account in determining the
alternative minimum tax liability, if any, of corporate shareholders of each
Portfolio.
The amount of 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 Portfolio to dispose of portfolio
securities and/or engage in options or futures transactions that will generate
capital gains. At the time of an investor's purchase of a Portfolio's shares, a
portion of the purchase price is often attributable to realized or unrealized
appreciation in the Portfolio's holdings. Consequently, subsequent distributions
from such appreciation 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 (or portions
thereof) 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. Such 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. A sales charge paid in purchasing shares of a Portfolio cannot be
taken into account for purposes of determining gain or loss on the redemption or
exchange of such shares within 90 days after their purchase to the extent shares
of the Portfolio or another John Hancock fund are subsequently acquired without
payment of a sales charge pursuant to the reinvestment or exchange privilege.
This 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 to the extent the shares disposed of are replaced
with other shares of the same Portfolio within a period of 61 days beginning 30
days before and ending 30 days after the shares are disposed of, such as may
occur when dividends are reinvested. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.
Although its present intention is to distribute all net capital gains, if any,
each Portfolio 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. A Portfolio will not,
in any event, distribute net long-term capital gain realized in any year to the
extent that a capital loss is carried forward from prior years against such
gain. To the extent such excess was retained and not exhausted by the
carryforward of prior year capital losses, it would be subject to federal income
tax in the hands of the Portfolio. Each shareholder would be treated for federal
income tax purposes as if the Portfolio 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 Portfolio and reinvested the remainder in
the Portfolio. Accordingly, each shareholder would (a) include his pro rata
share of such excess as long-term capital gain income in his return for his
taxable year in which the last day of the Portfolio'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 Portfolio and (c) be entitled to increase
the adjusted tax basis for his shares in a Portfolio by the difference between
his pro rata share of each excess and his pro rata share of such taxes.
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Portfolio will not be deductible for Federal income tax purposes to the
extent it is deemed related to exempt-interest dividends paid by such Portfolio.
Pursuant to published guidelines, the Internal Revenue Service may deem
indebtedness to have been incurred for the purpose of purchasing or carrying
shares of a Portfolio even though the borrowed funds may not be directly
traceable to the purchase of shares.
For Federal income tax purposes, each of the Portfolios is permitted to
carryforward a net capital loss in any year to offset its net capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent capital gains are offset by such losses, they would not result in
federal income tax liability to the Portfolio and, as noted above, would not be
distributed to shareholders. The Massachusetts Portfolio has realized capital
loss carryforwards of $398,976. Of this amount $2,465 expires August 31, 2002
and $396,511 expires August 31, 2003. The New York Portfolio has a realized
capital loss carryforward of $77,663 that expires August 31, 2003.
A Portfolio that invests in securities with original issue discount (or with
market discount if an election is made to include market discount in income
currently) must accrue income on such securities prior to the receipt of the
corresponding cash payments. Each Portfolio must distribute, at least annually,
all or substantially all of its net income, including such accrued income, to
shareholders to qualify as a regulated investment company under the Code and
avoid Federal income and excise taxes. Therefore, a Portfolio may have to
dispose of its portfolio securities under disadvantageous circumstances to
generate cash to satisfy distribution requirements.
The Portfolios may invest in debt obligations that are in the lower rating
categories or are unrated, including debt obligations of issuers not currently
paying interest as well as issuers who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Portfolios. Tax rules are not entirely clear about issues such as when the
Portfolios may cease to accrue interest, original issue discount, or market
discount, when and to what extent deductions may be taken for bad debts or
worthless securities, how payments received on obligations in default should be
allocated between principal and income, and whether exchanges of debt
obligations in a workout context are taxable. These and other issues will be
addressed by the Portfolios, in the event they invest in such securities, in
order to ensure that they distribute sufficient income to preserve their status
as regulated investment companies and to avoid becoming subject to Federal
income or excise tax.
The options and futures transactions undertaken by a Portfolio produce taxable
capital gain or loss and may affect the character as long-term or short-term of
some capital gains and losses realized by the Portfolio. Also, the Portfolio's
losses on its transactions involving options and futures contracts and related
securities positions may be deferred rather than being taken into account
currently. Each Portfolio's options and futures contracts will generally be
required to be marked to market for tax purposes as of the close of its taxable
year, even if they have not been actually disposed of, and any gain or loss
recognized will generally be treated as 60% long-term and 40% short-term capital
gain or loss. Accordingly, the special tax rules applicable to options and
futures transactions may affect the amount, timing and character of each
Portfolio's gain or loss and hence of its distributions to shareholders.
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 such law.
Dividends, capital gain distributions, and ownership of or gains realized on the
redemption (including an exchange) of Portfolio shares may also be subject to
state and local taxes. The discussion does not address special tax rules
applicable to certain types of investors, such as banks, insurance companies, or
tax-exempt entities. Shareholders should always consult their own tax advisers
as to the Federal, state or local tax consequences of ownership of shares of a
Portfolio in their particular circumstances.
Non-U.S. investors not engaged in a U.S. trade or business with which their
Portfolio investment is effectively connected will be subject to U.S. Federal
income tax treatment 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 a Portfolio and, unless an effective IRS Form W-8 or authorized substitute
is on file, to 31% backup withholding on certain other payments from a
Portfolio. Non-U.S. investors should consult their tax advisers regarding such
treatment and the application of foreign taxes to an investment in a Portfolio.
The Portfolios are not subject to Massachusetts corporate excise or franchise
taxes. Provided that each Portfolio qualifies as a regulated investment company
under the Code, it will also not be required to pay any Massachusetts income
tax.
STATE INCOME TAX INFORMATION
MASSACHUSETTS TAXES
Massachusetts legislation enacted on December 9, 1994 (the "Act") substantially
changed the Massachusetts income tax treatment of capital gains realized by
persons subject to Massachusetts income taxation, effective for taxable years
beginning on or after January 1, 1996. Under the Act, long-term capital gains
from the sale of a capital asset will generally be taxed on a sliding scale at
rates ranging from 5% to 0%, with the applicable tax rate declining as the tax
holding period of the asset (beginning on the later of January 1, 1995 or the
date of actual acquisition) increases from more than one year to more than six
years. Massachusetts resident individuals, as well as estates or personal trusts
subject to Massachusetts income taxation, will be subject to this new tax
structure with respect to redemption, exchanges or other dispositions of their
shares of the Massachusetts Portfolio in their taxable years beginning after
1995, assuming that they hold their shares of the Massachusetts Portfolio as
capital assets for purposes of the Act. The Act does not address the
Massachusetts tax treatment of dividends paid by the Massachusetts. Portfolio
that are designated and treated as long-term capital gains for Federal income
tax purposes, and it is accordingly not clear how such dividends will be treated
for Massachusetts tax purposes for taxable years beginning after 1995.
NEW YORK TAXES
New York State and New York City personal income taxes are imposed on "New York
taxable income," which is defined, in the case of New York resident individuals,
estates and trusts as "New York adjusted gross income" minus the New York
deductions and New York exemptions. "New York adjusted gross income", in the
case of a New York resident individual, estate or trust, is federal adjusted
gross income with certain modifications Because distributions that qualify as
exempt-interest dividends under IRC ss. 852(b) (5) will be excluded from Federal
gross income and adjusted gross income, such distributions will also be excluded
from New York adjusted gross income, unless specifically modified by New York
law.
New York law requires that New York resident individuals, estates and trusts add
certain items to their federal adjusted gross income. One such modification is
the addition, to the extent not properly includible in Federal adjusted gross
income, of interest income on obligations of any state (or political subdivision
of any state) other than New York and its political subdivisions.
Distributions that are taxable under the IRC, including distributions properly
designated as capital gain dividends pursuant to IRC ss.852(b)(3) and
distributions derived from interest on U.S. Government obligations, will be
includible in New York adjusted gross income, as there is no provision in the
New York tax law that permits their subtraction from federal adjusted gross
income. New York tax law does not currently contain any special provisions that
would impose differing rates of tax on capital gain and ordinary income in the
hands of individual taxpayers.
Under New York tax law, New York resident individuals, estates and trusts are
subject to a minimum income tax (sometimes referred to as the "New York
alternate minimum tax") at the rate of six percent of "New York minimum taxable
income." This tax is imposed in addition to the regular personal income tax
imposed by the State of New York. For purposes of this minimum tax, New York
minimum taxable income is, prior to certain reductions, equal to the sum of the
federal items of tax preference defined in IRC ss.57, with certain modifications
and adjustments, but excludes from New York minimum taxable income "the federal
item of tax preference with respect to tax-exempt interest". Distributions by
the portfolio of exempt-interest dividends (including any portion of such
dividends derived from interest on private activity bonds, the interest on which
is a tax preference item enumerated in IRC ss.57) thus will not be included in
income subject to the New York State or New York City minimum income tax on New
York resident individuals, estates and trusts.
Distributions that are properly designated as exempt-interest dividends under
IRC ss.852 (b) (5) made by the Portfolio to corporations, will be included in
entire net income in the computation of the New York State franchise tax and New
York City business taxes and shares of the Portfolio will be included in
investment capital for purposes of these taxes. If such distributions increase a
corporate shareholder's liability, they will also result in an increased
liability for tax surcharges. However, distributions that are taxable under the
IRC, with the possible exception of distributions properly treated as capital
gain dividends pursuant to IRC ss.852(b) (3), may be eligible for a 50% dividend
subtraction.
Under New York tax law, a portion of interest on indebtedness incurred or
continued to purchase or carry shares of an investment company paying dividends
which are exempt from the New York State and New York City personal income
taxes, such as the New York Portfolio, will not be deductible by the investor
for New York State and New York City personal income tax purposes.
NET ASSET VALUE
For purposes of calculating the net asset value ("NAV") of Portfolio 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.
No Portfolio will 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.
DESCRIPTION OF THE FUND'S SHARES
The Trustees of the Fund are responsible for the management and supervision of
the Portfolios. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, without
par value, in an unlimited number of series. Each Portfolio share represents an
equal proportionate interest in the Portfolio with each other share of that
Portfolio. In the event of liquidation of a Portfolio, shareholders are entitled
to share pro rata in the net assets of the Fund attributable to such Portfolio
and available for the distribution to such holders. Shares have no preemptive or
conversion rights. Shares are fully paid and nonassessable by the Fund.
The Trustees have to date authorized the issuance of two series of shares (the
Massachusetts Portfolio and the New York Portfolio) and have no current
intention to create additional series. The Trustees, however, may authorize the
creation of additional series of shares with such preferences, privileges,
limitations and voting and dividend rights as the Trustees may determine. The
proceeds of any additional series would be invested in separate, independently
managed portfolios with distinct investment objectives, policies and
restrictions, and share purchase, redemption and net asset valuation procedures.
All consideration received by the Fund for shares of any additional series, and
all assets in which such consideration is invested, would belong to that series
(subject only to the rights of creditors of such series) and would be subject to
the liabilities related thereto. Pursuant to the Investment Company Act,
shareholders of any additional series would normally have to approve the
adoption of any management contract or distribution plan relating to such series
and any changes in the fundamental investment policies related thereto.
The shareholders of the Fund are entitled to a full vote for each full share
held and to a fractional vote for fractional shares. The Trustees themselves
have the power to alter the number and the terms of office of the Trustees, to
lengthen their own terms, or to make their terms of unlimited duration, subject
to certain removal procedures, and appoint their own successors, provided that
at least a majority of Trustees have been elected by the shareholders. The
voting rights of shareholders are not cumulative so that holders of more than
50% of the shares voting can, if they choose, elect all Trustees being selected
while holders of the remaining shares would be unable to elect any Trustees.
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 Fund 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.
CALCULATION OF PERFORMANCE
For the 30-day period ended August 31, 1995, the Portfolios' annualized yield
and tax-equivalent yields at the maximum tax rates were 5.07% and 9.54% for
Massachusetts and 5.04% and 9.06% for New York respectively. The average annual
total returns of the Portfolios for the 1 year, 5 years and the life-of-fund
periods ended August 31, 1995 were respectively 2.85%, 7.82% and 8.10% for
Massachusetts and 2.38%, 7.81% and 8.24% for New York.
Each Portfolio'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:
[GRAPHIC OMITTED]
Where:
a = dividends and interest earned during the period.
b = expenses accrued during the period (net of fee reductions and expense
limitation payments, if any).
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.
Each Portfolio's total return is computed by finding the average annual
compounded rate of return over the 1 year, 5 years and life-of-fund period that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
[GRAPHIC OMITTED]
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 years and life-of-fund periods.
This calculation assumes the maximum sales charge of 4.5% is included in the
initial investment and also assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period.
In addition to average annual total returns, each Portfolio 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 Portfolio's 4.5% sales
charge into account. Excluding the Portfolio's sales charge from a total return
calculation produces a higher total return figure.
The Portfolios may advertise a tax-equivalent yield, which is computed by
dividing that portion of the yield of the Portfolio 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 Portfolio that is not tax-exempt.
From time to time, in reports and promotional literature, a Portfolio'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 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. Comparisons may also be
made to bank certificates of deposit, ("CDs") which differ from mutual funds,
such as a Portfolio, in several ways. The interest rate established by the
sponsoring bank is fixed for the term of a CD, there are penalties for early
withdrawal from CDs, and the principal on a CD is insured.
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, BARRON'S, ETC., AS WELL
AS LIPPER, MAY BE UTILIZED.
The performance of a Portfolio is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of a
Portfolio for any period in the future. The performance of a Portfolio 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 Portfolio's performance.
BROKERAGE ALLOCATION
For each Portfolio decisions concerning the purchase and sale of securities held
by the Portfolio and the allocation of brokerage commissions are made by the
officers of the Fund pursuant to recommendations made by an investment committee
of the Adviser, which consists of officers and directors of the Adviser and
affiliates, and officers and Trustees who are interested persons of the Fund.
For each Portfolio, orders for purchases and sales of securities are placed in a
manner which, in the opinion of the officers of the Fund, 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 commission paid
by the issuer and transactions with dealers serving as market maker reflect a
"spread." 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 primary policy of each Portfolio 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 such other policies as the Trustees may determine, the Adviser
may consider sales of shares of a Portfolio as a factor in the selection of
broker-dealers to execute the Portfolios' portfolio transactions.
To the extent consistent with the foregoing, the Portfolios 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
Portfolios, and their value and expected contribution to the performance of the
Portfolios. 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 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 Portfolios will make no commitment 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,
the policies 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 August
31, 1993, 1994 and 1995 the Fund paid no brokerage commissions. For the year
ended August 31, 1995, the Fund paid brokerage commissions of $575.00.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Portfolios may pay to a broker which provides brokerage and research services to
the Portfolios 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 such
price is reasonable in light of the services provided and to such policies as
the Trustees may adopt from time to time. During the fiscal year ended August
31, 1995, each Portfolio 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 Company, is the indirect sole
shareholder of John Hancock Distributors, Inc. ("Distributors"), a broker-dealer
and John Hancock Freedom Securities Corporation and its two broker-dealer
subsidiaries, Tucker Anthony Incorporated and Sutro & Company, Inc., ("Sutro")
each an "Affiliated Broker"). Pursuant to procedures determined by the Trustees
and consistent with the above policy of obtaining best net results, each
Portfolio may execute portfolio transactions with or through Affiliated Brokers.
During the year ending August 31, 1995, no Portfolio executed any portfolio
transactions with Affiliated Brokers.
Any of the Affiliated Brokers may act as broker for the Portfolios 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 Trustee 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 and 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 Broker. 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 commission at a rate higher than
that determined in accordance with the above criteria.
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 Company,
is the transfer and dividend paying agent for the Fund. The Fund pays an annual
fee of $19.00 for each shareholder, plus certain out-of-pocket expenses. These
expenses are aggregated and charged to the Fund on the basis of the relative net
asset value.
CUSTODY OF PORTFOLIOS
Securities of each Portfolio are held pursuant to a custodian agreement between
the Fund and Investors Bank & Trust Company, 24 Federal Street, Boston, MA
02110. Under the custodian agreement, Investors Bank & Trust Company performs
custody, portfolio and fund accounting services.
INDEPENDENT ACCOUNTANTS
The independent accountants of the Fund are Price Waterhouse LLP, 160 Federal
Street, Boston, Massachusetts 02110. Price Waterhouse LLP audits and renders an
opinion on each Portfolio's annual financial statements and reviews each
Portfolio's annual Federal income tax return.
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CALIFORNIA MASSACHUSETTS NEW YORK
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments at value - Note C:
Tax-exempt long-term bonds (cost - $43,938,622, $50,866,573
and $52,675,229, respectively) ..................................... $ 45,753,821 $ 52,827,111 $ 54,722,577
Joint repurchase agreement (cost - none, none and $1,512,000,
respectively) ...................................................... -- -- 1,512,000
Corporate savings account ........................................... -- -- 660
------------ ------------ ------------
45,753,821 52,827,111 56,235,237
Cash ................................................................. 1,809,147 815,155 --
Receivable for shares sold ........................................... 46,258 -- --
Receivable for investments sold ...................................... 45,286 -- 1,724,216
Interest receivable .................................................. 764,158 821,711 757,682
Receivable from John Hancock Advisers, Inc. - Note B ................. 15,662 14,199 19,319
------------ ------------ ------------
Total Assets ....................................... 48,434,332 54,478,176 58,736,454
----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividend payable ..................................................... 6,286 8,342 8,286
Payable for investments purchased .................................... 788,832 -- 2,921,276
Payable to John Hancock Advisers, Inc. and affiliates - Note B ....... 21,849 28,082 29,692
Accounts payable and accrued expenses ................................ 68,557 26,057 24,233
------------ ------------ ------------
Total Liabilities .................................. 885,524 62,481 2,983,487
----------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital paid-in ...................................................... 45,776,502 53,147,400 54,062,322
Accumulated net realized loss on investments and financial
futures contracts ................................................... (45,654) (694,237) (364,795)
Net unrealized appreciation of investments ........................... 1,815,199 1,960,538 2,047,348
Undistributed net investment income .................................. 2,761 1,994 8,092
------------ ------------ ------------
Net Assets ......................................... $ 47,548,808 $ 54,415,695 $ 55,752,967
================================================================================================================
NET ASSET VALUE PER SHARE ($NAV)
(based on 4,089,010, 4,627,583 and 4,694,309 shares,
respectively, of beneficial interest outstanding -
unlimited number of shares authorized with no par value) ............ $ 11.63 $ 11.76 $ 11.88
====================================================================================================================================
MAXIMUM OFFERING PRICE PER SHARE*
($NAV x 104.71%) ..................................................... $ 12.18 $ 12.31 $ 12.44
====================================================================================================================================
</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.
THE STATEMENT OF ASSETS AND LIABILITIES IS THE PORTFOLIO'S BALANCE SHEET AND
SHOWS THE VALUE OF WHAT THE PORTFOLIO OWNS, IS DUE AND OWES AS OF AUGUST 31,
1995. YOU'LL ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER
SHARE AS OF THAT DATE.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended August 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MASSACHUSETTS NEW YORK
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ................................................................... $ 2,967,124 $ 3,386,143 $ 3,447,241
----------- ----------- -----------
Expenses:
Investment management fee - Note B ........................................ 236,251 265,892 270,417
Distribution/service fee - Note B ......................................... 141,751 159,535 162,250
Transfer agent fee - Note B ............................................... 67,396 84,239 96,927
Custodian fee ............................................................. 52,828 54,714 53,387
Auditing fee .............................................................. 20,435 20,435 20,435
Printing .................................................................. 8,160 7,938 7,298
Trustees' fees ............................................................ 5,646 6,433 6,587
Legal fees ................................................................ 4,863 1,231 1,325
Miscellaneous ............................................................. 3,769 3,869 3,522
Registration and filing fees .............................................. 2,307 4,747 2,267
----------- ----------- -----------
Total Expenses ........................................... 543,406 609,033 624,415
Less Expense Reimbursements and Reductions - Note B ...... (212,654) (236,784) (245,832)
----------- ----------- -----------
Net Expenses ............................................. 330,752 372,249 378,583
----------------------------------------------------------------------------------------------------------------
Net Investment Income .................................... 2,636,372 3,013,894 3,068,658
----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FINANCIAL
FUTURES CONTRACTS:
Net realized gain (loss) on investments sold ............................... 258,603 (218,685) 9,105
Net realized loss on financial futures contracts ........................... (224,847) (215,439) (247,549)
Change in net unrealized appreciation/depreciation of investments .......... 970,039 1,280,641 848,255
Change in net unrealized appreciation/depreciation of financial futures
contracts ................................................................. 21,406 21,406 21,406
----------- ----------- -----------
Net Realized and Unrealized Gain on Investments and
Financial Futures Contracts ............................ 1,025,201 867,923 631,217
----------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations ..... $ 3,661,573 $ 3,881,817 $ 3,699,875
================================================================================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES FOR EACH OF THE PORTFOLIOS, THE
INVESTMENT INCOME EARNED AND EXPENSES INCURRED IN OPERATING THE PORTFOLIO. IT
ALSO SHOWS NET GAINS (LOSSES) FOR THE PERIOD STATED.
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF NET ASSETS FOR
EACH PORTFOLIO OF THE FUND HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE
DIFFERENCE REFLECTS NET INVESTMENT INCOME, ANY INVESTMENT GAINS AND LOSSES,
DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR DECREASE IN MONEY
SHAREHOLDERS INVESTED IN EACH PORTFOLIO. THE FOOTNOTES ILLUSTRATE THE NUMBER OF
PORTFOLIO SHARES SOLD, REINVESTED AND REDEEMED DURING THE LAST TWO PERIODS,
ALONG WITH THE PER SHARE AMOUNT OF DISTRIBUTIONS MADE TO SHAREHOLDERS OF EACH
PORTFOLIO FOR THE PERIOD INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA PORTFOLIO MASSACHUSETTS PORTFOLIO
--------------------------- ---------------------------
YEAR ENDED AUGUST 31, YEAR ENDED AUGUST 31,
--------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............................... $ 2,636,372 $ 2,521,862 $ 3,013,894 $ 2,763,249
Net realized gain (loss) on investments sold and
financial futures contracts ........................ 33,756 49,982 (434,124) (258,100)
Change in net unrealized appreciation/depreciation
of investments and financial futures contracts ..... 991,445 (3,123,300) 1,302,047 (3,052,218)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .................................... 3,661,573 (551,456) 3,881,817 (547,069)
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS: *
Dividends from net investment income ................ (2,636,372) (2,521,862) (3,013,894) (2,763,249)
Distributions from net realized gain on
investments sold and financial futures contracts ... -- (881,280) -- (524,451)
------------ ------------ ------------ ------------
Total Distributions to Shareholders ................ (2,636,372) (3,403,142) (3,013,894) (3,287,700)
------------ ------------ ------------ ------------
FROM PORTFOLIO SHARE TRANSACTIONS: **
Shares sold ......................................... 4,671,968 11,239,290 6,835,830 15,050,941
Shares issued to shareholders in reinvestment
of distributions ................................... 1,753,168 2,175,583 2,120,129 2,294,219
------------ ------------ ------------ ------------
6,425,136 13,414,873 8,955,959 17,345,160
Less shares repurchased ............................. (8,943,159) (8,042,576) (9,530,624) (9,407,294)
------------ ------------ ------------ ------------
Net Capital Increase (Decrease) ..................... (2,518,023) 5,372,297 (574,665) 7,937,866
------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period ................................. 49,041,630 47,623,931 54,122,437 50,019,340
------------ ------------ ------------ ------------
End of period (including undistributed net investment
income of $2,761, none, $1,994, none, $8,092
and none, respectively) ............................ $ 47,548,808 $ 49,041,630 $ 54,415,695 $ 54,122,437
=========================================================
* DISTRIBUTIONS TO SHAREHOLDERS:
Per share dividends from net investment income ...... $ 0.6283 $ 0.6241 $ 0.6469 $ 0.6315
------------ ------------ ------------ ------------
Per share distributions from net realized gain on
investments sold and financial futures contracts ... -- $ 0.2232 -- $ 0.1246
------------ ------------ ------------ ------------
** ANALYSIS OF PORTFOLIO SHARE TRANSACTIONS:
Shares sold ......................................... 414,708 956,177 595,309 1,234,833
Shares issued to shareholders in reinvestment
of distributions ................................... 155,996 183,733 186,027 216,441
------------ ------------ ------------ ------------
570,704 1,139,910 781,336 1,451,274
Less shares repurchased ............................. (791,874) (683,714) (836,966) (791,757)
------------ ------------ ------------ ------------
Net increase (decrease) ............................. (221,170) 456,196 (55,630) 659,517
=========================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
---------------------------
YEAR ENDED AUGUST 31,
---------------------------
1995 1994
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............................... $ 3,068,658 $ 2,906,252
Net realized gain (loss) on investments sold and
financial futures contracts ........................ (238,444) (40,700)
Change in net unrealized appreciation/depreciation
of investments and financial futures contracts ..... 869,661 (3,532,063)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .................................... 3,699,875 (666,511)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS: *
Dividends from net investment income ................ (3,068,658) (2,906,252)
Distributions from net realized gain on
investments sold and financial futures contracts ... -- (580,857)
------------ ------------
Total Distributions to Shareholders ................ (3,068,658) (3,487,109)
------------ ------------
FROM PORTFOLIO SHARE TRANSACTIONS: **
Shares sold ......................................... 7,226,005 13,602,510
Shares issued to shareholders in reinvestment
of distributions ................................... 2,366,589 2,650,147
------------ ------------
9,592,594 16,252,657
Less shares repurchased ............................. (10,161,142) (8,852,991)
------------ ------------
Net Capital Increase (Decrease) ..................... (568,548) 7,399,666
------------ ------------
NET ASSETS:
Beginning of period ................................. 55,690,298 52,444,252
------------ ------------
End of period (including undistributed net investment
income of $2,761, none, $1,994, none, $8,092
and none, respectively) ............................ $ 55,752,967 $ 55,690,298
===========================
* DISTRIBUTIONS TO SHAREHOLDERS:
Per share dividends from net investment income ...... $ 0.6533 $ 0.6421
------------ ------------
Per share distributions from net realized gain on
investments sold and financial futures contracts ... -- $ 0.1319
------------ ------------
** ANALYSIS OF PORTFOLIO SHARE TRANSACTIONS:
Shares sold ......................................... 628,844 1,112,508
Shares issued to shareholders in reinvestment
of distributions ................................... 205,702 217,546
------------ ------------
834,546 1,330,054
Less shares repurchased ............................. (889,508) (732,616)
------------ ------------
Net increase (decrease) ............................. (54,962) 597,438
===========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- California Portfolio
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ........ $ 11.38 $ 12.36 $ 11.68 $ 11.25 $ 10.72
---------- ---------- ---------- ---------- ----------
Net Investment Income ....................... 0.63 0.62 0.67 0.70 0.70
Net Realized and Unrealized Gain (Loss)
on Investments and Financial
Futures Contracts .......................... 0.25 (0.76) 0.82 0.43 0.53
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ......... 0.88 (0.14) 1.49 1.13 1.23
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ....... (0.63) (0.62) (0.67) (0.70) (0.70)
Distributions from Net Realized Gain on
Investments Sold .......................... -- (0.22) (0.14) -- --
---------- ---------- ---------- ---------- ----------
Total Distributions ...................... (0.63) (0.84) (0.81) (0.70) (0.70)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period .............. $ 11.63 $ 11.38 $ 12.36 $ 11.68 $ 11.25
========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value .. 8.06% (1.13%) 13.36% 10.34% 11.83%
Total Adjusted Investment Return at Net
Asset Value (a)(b) ......................... 7.61% (1.69%) 12.48% 9.30% 10.71%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ... $ 47,549 $ 49,042 $ 47,624 $ 33,896 $ 25,914
Ratio of Expenses to Average Net Assets ..... 0.70% 0.70% 0.67% 0.60% 0.60%
Ratio of Adjusted Expenses to Average Net
Assets (a) ................................. 1.15% 1.26% 1.55% 1.64% 1.72%
Ratio of Net Investment Income to Average Net
Assets ..................................... 5.58% 5.27% 5.62% 6.09% 6.35%
Ratio of Adjusted Net Investment Income to
Average Net Assets (a) ..................... 5.13% 4.71% 4.74% 5.05% 5.23%
Portfolio Turnover Rate ..................... 35% 38% 93% 50% 7%
Expense Reimbursement Per Share ............. $ 0.05 $ 0.07 $ 0.10 $ 0.12 $ 0.12
</TABLE>
(a) On an unreimbursed basis without expense reduction.
(b) Unaudited.
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: THE NET INVESTMENT INCOME, DIVIDENDS,
GAINS (LOSSES) AND TOTAL INVESTMENT RETURN OF THE PORTFOLIO. IT SHOWS HOW THE
PORTFOLIO'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.
12
<PAGE>
Financial Statements
John Hancock Funds - Tax-Exempt Series Fund -- Massachusetts Portfolio
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..... $ 11.56 $ 12.43 $ 11.75 $ 11.15 $ 10.63
---------- ---------- ---------- ---------- ----------
Net Investment Income .................... 0.65 0.63 0.67 0.71 0.73
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures
Contracts ............................... 0.20 (0.75) 0.82 0.60 0.53
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ...... 0.85 (0.12) 1.49 1.31 1.26
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income .... (0.65) (0.63) (0.67) (0.71) (0.73)
Distributions from Net Realized Gain on
Investments Sold ....................... -- (0.12) (0.14) -- (0.01)
---------- ---------- ---------- ---------- ----------
Total Distributions ................... (0.65) (0.75) (0.81) (0.71) (0.74)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ........... $ 11.76 $ 11.56 $ 12.43 $ 11.75 $ 11.15
========== ========== ========== ========== ==========
Total Investment Return at Net
Asset Value ............................. 7.66% (0.97%) 13.29% 12.11% 12.10%
Total Adjusted Investment Return at Net
Asset Value (a)(b) ...................... 7.21% (1.50%) 12.38% 10.93% 10.66%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's
omitted) ................................ $ 54,416 $ 54,122 $ 50,019 $ 29,113 $ 15,015
Ratio of Expenses to Average Net Assets .. 0.70% 0.70% 0.67% 0.60% 0.60%
Ratio of Adjusted Expenses to Average Net
Assets (a) .............................. 1.15% 1.23% 1.58% 1.78% 2.04%
Ratio of Net Investment Income to Average
Net Assets .............................. 5.67% 5.28% 5.61% 6.18% 6.64%
Ratio of Adjusted Net Investment Income to
Average Net Assets (a) .................. 5.22% 4.75% 4.70% 5.00% 5.20%
Portfolio Turnover Rate .................. 24% 29% 79% 56% 29%
Expense Reimbursement Per Share .......... $ 0.05 $ 0.06 $ 0.11 $ 0.14 $ 0.16
</TABLE>
(a) On an unreimbursed basis without expense reduction.
(b) Unaudited.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- New York Portfolio
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period .......... $ 11.73 $ 12.63 $ 11.90 $ 11.29 $ 10.74
---------- ---------- ---------- ---------- ----------
Net Investment Income ......................... 0.65 0.64 0.68 0.72 0.72
Net Realized and Unrealized Gain (Loss)
on Investments and Financial Futures
Contracts .................................... 0.15 (0.77) 0.87 0.63 0.55
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ........... 0.80 (0.13) 1.55 1.35 1.27
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ......... (0.65) (0.64) (0.68) (0.72) (0.72)
Distributions from Net Realized Gain on
Investments Sold ............................ -- (0.13) (0.14) (0.02) --
---------- ---------- ---------- ---------- ----------
Total Distributions ........................ (0.65) (0.77) (0.82) (0.74) (0.72)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ................ $ 11.88 $ 11.73 $ 12.63 $ 11.90 $ 11.29
========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value .... 7.19% (1.05%) 13.70% 12.17% 12.24%
Total Adjusted Investment Return at Net Asset
Value (a)(b) ................................. 6.74% (1.58%) 12.83% 11.09% 11.02%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ..... $ 55,753 $ 55,690 $ 52,444 $ 33,806 $ 20,878
Ratio of Expenses to Average Net Assets ....... 0.70% 0.70% 0.67% 0.60% 0.60%
Ratio of Adjusted Expenses to Average Net
Assets (a) ................................... 1.15% 1.23% 1.54% 1.68% 1.82%
Ratio of Net Investment Income to Average
Net Assets ................................... 5.67% 5.28% 5.63% 6.22% 6.57%
Ratio of Adjusted Net Investment Income to
Average Net Assets (a) ....................... 5.22% 4.75% 4.76% 5.14% 5.35%
Portfolio Turnover Rate ....................... 70% 23% 56% 48% 12%
Expense Reimbursement Per Share ............... $ 0.05 $ 0.06 $ 0.11 $ 0.13 $ 0.13
</TABLE>
(a) On an unreimbursed basis without expense reduction.
(b) Unaudited.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- California Portfolio
SCHEDULE OF INVESTMENTS
August 31, 1995
- --------------------------------------------------------------------------------
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY EACH
PORTFOLIO OF THE TAX-EXEMPT SERIES FUND ON AUGUST 31, 1995. EACH SCHEDULE
CONSISTS OF ONE MAIN CATEGORY: TAX-EXEMPT LONG-TERM BONDS. THE TAX-EXEMPT BONDS
ARE FURTHER BROKEN DOWN BY STATE. UNDER EACH STATE IS A LIST OF THE SECURITIES
OWNED BY THE PORTFOLIO. 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
CALIFORNIA (95.15%)
Alameda, County of,
Cert of Part 1992 Cap Proj ......................... 6.750% 06-01-16 A $ 500 $ 517,945 6.52%
California Educational Facilities Auth,
Rev 1993 Ser B Pooled College & Univ Proj .......... 6.125 06-01-09 Baa** 1,000 1,000,970 6.12
California Health Facilities Financing Auth,
Hosp Rev 1991 Ser A San Diego Hosp Assoc ........... 6.950 10-01-21 A 250 262,405 6.62
Ins Hosp Rev Ser 1990 Children's Hosp San Diego .... 6.500 07-01-20 AAA 500 515,485 6.30
Rev 1990 Ser A Kaiser Permanente ................... 7.000 12-01-10 AA 600 645,948 6.50
Rev Ser 1994A Scripps Research Institute ........... 6.300 07-01-09 A** 500 512,170 6.15
Sec Rev 1991 Ser Hosp of the Good Samaritan ........ 7.000 09-01-21 A- 250 258,013 6.78
California Housing Finance Agency,
Home Mtg Rev 1986 Ser A ............................ 8.100 08-01-16 AA- 75 78,141 7.77
Home Mtg Rev 1988 Ser B ............................ 8.600 08-01-19 AA- 40 42,378 8.12
Home Mtg Rev 1988 Ser D ............................ 8.000 08-01-19 AA- 90 96,407 7.47
Home Mtg Rev 1989 Ser A ............................ 7.625 08-01-09 AA- 35 37,259 7.16
Home Mtg Rev 1989 Ser B ............................ 8.000 08-01-29 AA- 100 106,626 7.50
Home Mtg Rev 1989 Ser D ............................ 7.500 08-01-29 AA- 150 157,482 7.14
Home Mtg Rev 1990 Ser D ............................ 7.875 08-01-31 AA- 15 15,658 7.54
Home Mtg Rev 1991 Ser A ............................ 7.375 08-01-17 AA- 155 165,707 6.90
Home Mtg Rev 1991 Ser C ............................ 7.450 08-01-11 AA- 65 69,340 6.98
Home Mtg Rev 1994 Ser C ............................ 6.650 08-01-14 AA- 1,000 1,029,640 6.46
Hsg Rev 1991 Ser E ................................. 7.000 08-01-26 AAA 525 549,024 6.69
California Pollution Control Financing Auth,
Poll Control Rev 1991 Ser Southern Calif Edison Co.. 6.900 12-01-17 A+ 500 523,580 6.59
Poll Control Rev 1992 Ser A Pacific Gas & Elec Co... 6.625 06-01-09 A 500 518,560 6.39
California State Public Works Board,
Lease Rev 1994 Ser A Depart of Corrections
Calif State Prison-Monterey County (Soledad II)... 6.875 11-01-14 A- *500 531,825 6.46
Lease Rev Ref Ser A Various Univ Proj .............. 5.500 06-01-21 A- *1,250 1,123,250 6.12
Campbell, City of,
1991 Cert of Part Civic Center Proj ................ 6.750 10-01-17 A- 155 176,271 5.94
1991 Cert of Part Civic Center Proj ................ 6.750 10-01-17 A- 1,565 1,611,950 6.55
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- California Portfolio
<TABLE>
<CAPTION>
PAR VALUE YIELD
INTEREST MATURITY S&P (000'S MARKET AT
STATE, ISSUER, DESCRIPTION RATE DATE RATING*** OMITTED) VALUE ARKET+
- -------------------------- -------- -------- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Carson Redevelopment Agency,
Tax Alloc Ser 1992 Area No. 1 Redevel Proj ......................... 6.375% 10-01-12 BBB+ $ 500 $ 500,810 6.36%
Tax Alloc Ser 1993B Area No. 1 Redevel Proj ........................ 6.000 10-01-16 BBB+ 500 467,685 6.41
Castaic Lake Water Agency,
Cert of Part Ser 1990 Wtr Sys Imp Proj ............................. 7.350 08-01-20 A** 200 227,618 6.46
Central California Joint Powers Health Financing Auth,
Cert of Part Ser 1993 Community Hosp of Central Calif Proj ......... 5.250 02-01-13 A** 750 671,040 5.87
Central Coast Water Auth,
Rev State Wtr Proj Regional Facil Ser 1992 ......................... 6.600 10-01-22 AAA 500 525,015 6.29
Central Valley Financing Auth,
Cogeneration Proj Rev Carson Ice-Gen Proj 1993 Ser ................. 6.100 07-01-13 BBB- 2,300 2,231,713 6.29
Cogeneration Proj Rev Carson Ice-Gen Proj 1993 Ser ................. 6.200 07-01-20 BBB- 1,000 957,230 6.48
Contra Costa Water District,
Wtr Treatment Rev Ser E ............................................ 6.250 10-01-12 AAA 1,000 1,070,820 5.84
Costa Mesa Public Financing Auth,
1991 Local Agency Rev Ser A ........................................ 7.100 08-01-21 NR 220 220,504 7.08
Desert Hospital District,
Hosp Rev Cert of Part Ser 1990 Desert Hosp Corp Proj ............... 8.000 07-01-10 AAA 300 351,753 6.82
Fairfield Public Financing Auth,
1995 Rev Ser A Pennsylvania Ave Storm Drainage Proj ................ 6.500 08-01-21 A- *1,085 1,060,989 6.65
Fontana Public Financing Auth,
Sub Lien Tax Alloc Rev 1991 Ser A North Fontana Redevel Proj ....... 7.750 12-01-20 BBB 195 230,597 6.55
Tax Alloc Rev Ser 1990 Ser A North Fontana Redevel Proj ............ 7.250 09-01-20 A 325 343,577 6.86
Foothill/Eastern Transportation Corridor Agency,
Toll Rd Rev Fixed Rate Current Int Ser 1995A ....................... 6.500 01-01-32 BBB- *1,490 1,464,327 6.61
Toll Rd Rev Fixed Rate Current Int Ser 1995A ....................... 6.000 01-01-34 BBB- *1,000 911,380 6.58
Fresno, City of,
Hlth Facil Rev Ser 1991 Saint Agnes Medical Center ................. 6.625 06-01-21 AA- 250 258,082 6.42
Los Angeles City Department of Water and Power,
Elec Plant Ref Rev Second Iss of 1993 .............................. 5.400 11-15-12 AA- 1,000 932,000 5.79
Los Angeles County Health Facilities Auth,
Lease Rev Ref Olive View Medical Center Proj ....................... 7.500 03-01-08 NR 450 493,119 6.84
Metropolitan Water District,
Waterworks Ref Rev Iss of 1986 ...................................... 6.750 06-01-22 AA+ 155 159,955 6.54
Wtr Rev Iss of 1991 ................................................. 6.625 07-01-12 AA 750 796,665 6.24
Moreno Valley, City of,
Cert of Part Ser 1995 City Hall Proj ............................... 6.500 11-01-16 Baa1** *1,500 1,502,880 6.49
Mount Diablo Hospital District,
Hosp Rev Ser A ..................................................... 6.000 12-01-05 AAA 1,640 1,756,538 5.60
Mountain View City Capital Improvements Financing Auth,
1992 Rev City Hall/Community Theatre Complex & Shoreline Regional Park
Community Tax Alloc Refinancing .................................. 6.500 08-01-16 AAA 600 622,854 6.26
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- California Portfolio
<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>
CALIFORNIA (CONTINUED)
Northern California Transmission Agency,
Rev 1990 Ser A Calif-Oregon Transm Proj .......................... 7.000% 05-01-13 AAA $ 100 $ 115,259 6.07%
Rev 1992 Ser A Calif-Oregon Transm Proj .......................... 6.500 05-01-16 AAA 1,000 1,043,580 6.23
Oakland, Port of,
Port Rev Ser E ................................................... 6.400 11-01-07 AAA 1,000 1,068,480 5.99
Spec Facil Rev 1992 Ser A Mitsui O.S.K. Lines Ltd Proj ........... 6.800 01-01-19 A+ 500 509,895 6.67
Orange, County of,
Ser A of 1990 Spec Tax of Community Facil Dist No. 87-3
Mission Viejo .................................................. 7.800 08-15-15 NR 350 405,549 6.73
Ser A of 1992 Spec Tax of Community Facil Dist No. 88-1
Aliso Viejo .................................................... 7.350 08-15-18 AAA 1,000 1,179,940 6.23
Pasadena, City of,
1993 Ref Cert of Part Old Pasadena Parking Facil Proj ............ 6.250 01-01-18 A+ 1,000 1,031,670 6.06
Rancho Mirage, City of, Joint Powers Financing Auth,
Civic Center Rev Ref Ser 1991A ................................... 7.500 04-01-17 BBB 195 225,580 6.48
Civic Center Rev Unref Ser 1991A ................................. 7.500 04-01-17 BBB 55 58,112 7.10
Riverside County Asset Leasing Corp,
Leasehold Rev 1993 Ser A County of Riverside Hosp Proj ........... 6.500 06-01-12 A 1,000 1,028,750 6.32
Sacramento City Financing Auth,
Lease Rev Ref Ser A .............................................. 5.375 11-01-14 AAA 500 475,565 5.65
San Bernardino, County of,
Cert of Part Medical Center Fin Proj ............................. 5.500 08-01-17 A- *1,000 885,010 6.21
Cert of Part Ser B Cap Facil Proj ................................ 6.875 08-01-24 AAA 350 407,361 5.91
Trans Auth Sales Tax Rev Ser A ................................... 5.400 03-01-10 AAA 1,000 972,580 5.55
San Diego County Regional Transportation Commission,
Sales Tax Rev 1991 Ser A ......................................... 7.000 04-01-06 AA- 90 97,484 6.46
San Diego County Water Auth,
Wtr Rev Cert of Part Reg ......................................... 5.681 04-22-09 AAA *800 803,712 5.65
San Diego, City of,
Ind'l Dev Rev 1986 Ser A San Diego Gas & Elec Co. ................ 7.625 07-01-21 A+ 300 312,126 7.33
San Francisco State Building Auth,
Lease Ref Rev 1993 Ser A Dept of Gen Serv ........................ 5.000 10-01-13 A- 2,245 1,974,365 5.69
San Jose Financing Auth,
Reassessment Rev 1994 Ser C ...................................... 6.750 09-02-11 NR 980 1,001,423 6.61
San Jose, City of,
1986 Cert of Part Convention Center Proj ......................... 7.875 09-01-10 NR 300 317,691 7.44
San Mateo County Joint Powers Financing Auth,
Lease Rev 1994 Ser A San Mateo County Hlth Center ................ 6.125 07-15-14 AAA 250 251,650 6.08
Santa Barbara, County of,
1990 Cert of Part ................................................ 7.50 02-01-11 A+ 250 282,098 6.65
1991 Cert of Part ................................................ 6.400 02-01-11 A+ 250 255,895 6.25
Santa Rosa, City of,
Wastewater Rev 1992 Ser A Subregional Wastewater Proj ............ 6.500 09-01-22 AAA 500 519,650 6.25
Southern California Home Financing Auth,
Single Family Mtg Rev 1990 Iss B ................................. 7.750 03-01-24 AAA 45 47,632 7.32
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- California Portfolio
<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>
CALIFORNIA (CONTINUED)
Southern California Public Power Auth,
Pwr Proj Rev 1987 Ref Ser A Palo Verde Proj ..................... 6.875% 07-01-15 AA- $ 215 $ 221,729 6.67%
Torrance City Redevelopment Agency,
Tax Alloc Ref Ser 1992 Downtown Redevel Proj .................... 7.125 09-01-21 BBB 500 515,175 6.92
University of California, The Regents of,
1993 Ref Cert of Part UCLA Central Chiller/Cogeneration Facil ... 5.400 11-01-11 Aa** *1,000 934,440 5.78
-----------
45,245,586
-----------
GUAM (1.07%)
Guam Airport Auth,
Gen Rev 1993 Ser B .............................................. 6.600 10-01-10 BBB 500 508,235 6.49
-----------
TOTAL TAX-EXEMPT LONG TERM BONDS
(Cost $ 43,938,622) (96.22%) $45,753,821
======= ===========
</TABLE>
*Securities, other than short term investments, newly added to the portfolio
during the period ended August 31, 1995.
**Rated by Moody's Investors Services, Fitch or John Hancock Adviser's, Inc.
where Standard & Poors ratings are not available. NR not rated.
***Credit Ratings are unaudited.
+The yield is unaudited and not calculated in accordance with guidelines
established by the U.S. Securities and Exchange Commission.
The percentage shown for each category is the total value of that category
as a percentage of the net assets of the Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- Massachusetts Portfolio
<TABLE>
SCHEDULE OF INVESTMENTS
August 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<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
MASSACHUSETTS (88.90%)
Boston City Industrial Development Financing Auth,
Sewage Facil Rev 1991 Ser Harbor Elec Energy Co Proj ................ 7.375% 05-15-15 BBB $ 250 $ 262,750 7.02%
Boston Water and Sewer Commission,
Gen Rev 1991 Ser A Sr Ser ........................................... 7.000 11-01-18 AAA 500 572,470 6.11
Gen Rev 1992 Ser A Sr Ser ........................................... 5.750 11-01-13 A 500 496,060 5.80
Boston, City of,
GO 1990 Ser A ....................................................... 7.375 02-01-10 A 350 395,479 6.53
GO 1991 Ser A MBIA .................................................. 6.750 07-01-11 AAA 350 394,604 5.99
GO 1992 Ser A AMBAC ................................................. 6.500 07-01-12 AAA 500 530,070 6.13
Rev Boston City Hosp FHA Ins Mtg Ser A .............................. 7.625 02-15-21 Aaa** 500 572,145 6.66
Brockton, City of,
State Qualified Municipal Purpose Ln of 1993 ........................ 6.125 06-15-18 A- 1,000 999,880 6.13
Greater New Bedford Regional Refuse Management District,
Ma GO Landfill ...................................................... 5.875 05-01-13 Baa** 915 884,201 6.08
Holyoke, City of,
GO School Proj Ln Act of 1948 ....................................... 7.650 08-01-09 Baa** *1,000 1,099,380 6.96
Massachusetts Bay Transportation Auth,
Gen Trans Sys Rev Ref 1993 MBIA Ser A ............................... 5.500 03-01-22 AAA 985 918,818 5.90
Gen Trans Sys Rev Ref 1994 Ser A .................................... 7.000 03-01-14 A+ *1,000 1,137,510 6.15
Gen Trans Sys Rev Ref 1995 Ser A .................................... 5.750 03-01-18 A+ *1,000 968,150 5.94
Massachusetts Educational Financing Auth,
Ed Ln Rev Iss D Ser 1991A ........................................... 7.250 01-01-09 AAA 510 551,947 6.70
Massachusetts Health and Educational Facilities Auth,
Rev Anna Jaques Hosp Iss Ser B ...................................... 6.875 10-01-12 Baa1** 1,250 1,264,587 6.80
Rev Bentley College Iss Ser H ....................................... 6.875 07-01-12 AAA 250 269,792 6.37
Rev Boston College Iss Ser J ........................................ 6.625 07-01-21 AAA 1,000 1,049,960 6.31
Rev Charlton Memorial Hosp Iss Ser B ................................ 7.250 07-01-13 A- 2,250 2,360,430 6.91
Rev Community Colleges Prog Iss Ser A ............................... 6.600 10-01-22 AAA 250 258,073 6.39
Rev Dana Farber Cancer Institute Ser G-1 ............................ 6.250 12-01-22 A *1,000 988,260 6.32
Rev Faulkner Hosp Iss Ser C ......................................... 6.000 07-01-13 Baa1** 750 697,958 6.45
Rev Faulkner Hosp Iss Ser C ......................................... 6.000 07-01-23 Baa1** 1,000 878,070 6.83
Rev Lowell Gen Hosp Iss Ser A ....................................... 8.400 06-01-11 Baa1** 600 655,218 7.69
Rev Melrose-Wakefield Hosp Iss Ser B ................................ 6.350 07-01-06 A- 500 514,570 6.17
Rev Melrose-Wakefield Hosp Iss Ser B ................................ 5.875 07-01-18 A- 1,000 923,820 6.36
Rev New England Baptist Hosp Iss Ser B .............................. 7.350 07-01-17 BBB+ 250 257,293 7.14
Rev New England Deaconess Hosp Iss Ser D ............................ 6.875 04-01-22 A 2,710 2,793,766 6.67
Rev New England Medical Center Hosp Iss Ser D ....................... 7.200 07-01-10 A1** 280 293,376 6.87
Rev Northeastern Univ Iss Ser E ..................................... 6.550 10-01-22 AAA 1,000 1,050,140 6.24
Rev Ref Worcester Polytechnic Institute Iss Ser E ................... 6.625 09-01-17 A+ 250 264,300 6.27
Rev Saint Elizabeth's Hosp of Boston Iss Ser B FHA Ins Proj ......... 7.750 08-01-27 AA 350 380,656 7.13
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- Massachusetts Portfolio
<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 (CONTINUED)
Rev Smith College Iss Ser D ......................................... 5.750% 07-01-24 AA- $ 560 $ 541,598 5.95%
Rev Tufts Univ Iss Ser C ............................................ 7.400 08-01-18 A+ 90 98,896 6.73
Rev Tufts Univ Iss Ser C ............................................ 7.400 08-01-18 AAA 430 476,126 6.68
Massachusetts Housing Finance Agency,
Rev Insured Rental Hsg 1994 Ser A ................................... 6.600 07-01-14 AAA 1,100 1,129,832 6.43
Rev Residential Devel FNMA Coll Ser C ............................... 6.875 11-15-11 AAA 2,000 2,108,760 6.52
Rev Residential Devel FNMA Coll Ser D ............................... 6.800 11-15-12 AAA 500 522,450 6.51
Single Family Hsg Rev Ser 5 ......................................... 8.375 06-01-15 A+ 50 53,530 7.82
Single Family Hsg Rev Ser 7 ......................................... 8.40 12-01-16 A+ 100 108,016 7.78
Single Family Hsg Rev Ser 7 ......................................... 8.100 06-01-20 A+ 85 90,873 7.58
Single Family Hsg Rev Ser 9 ......................................... 8.100 12-01-21 A+ 100 107,261 7.55
Single Family Hsg Rev Ser 13 ........................................ 7.950 06-01-23 A+ 195 207,925 7.46
Single Family Hsg Rev Ser 16 ........................................ 7.900 06-01-14 A+ 95 101,467 7.40
Single Family Hsg Rev Ser 18 ........................................ 7.350 12-01-16 A+ 550 587,592 6.88
Massachusetts Industrial Finance Agency,
Resource Recovery Rev Ref Ser 1993 A Mass Refusetech Inc Proj ....... 6.300 07-01-05 BBB 1,825 1,889,678 6.08
Rev Phillips Academy ................................................ 5.375 09-01-23 AA 695 639,956 5.84
Rev Ref Emerson College Iss Ser 1991A ............................... 8.900 01-01-18 NR 250 275,083 8.09
Rev Ref Holy Cross College Iss II Ser 1992 .......................... 6.375 11-01-15 A+ 500 512,310 6.22
Massachusetts Municipal Wholesale Electric Co,
Pwr Supply Sys Rev 1992 Ser B A Pub Corp of the Commonwealth of Mass. 6.750 07-01-05 BBB+ 500 545,345 6.19
Pwr Supply Sys Rev 1992 Ser B A Pub Corp of the Commonwealth of Mass. 6.750 07-01-06 BBB+ 1,500 1,627,050 6.22
Pwr Supply Sys Rev 1992 Ser B A Pub Corp of the Commonwealth of Mass. 6.750 07-01-17 BBB+ 400 422,536 6.39
Pwr Supply Sys Rev Ser C A Pub Corp of the Commonwealth of Mass ..... 6.625 07-01-10 AAA 1,000 1,075,290 6.16
Pwr Supply Sys Rev Ser D A Pub Corp of the
Commonwealth of Mass AMBAC.......................................... 6.000 07-01-06 AAA 1,000 1,069,150 5.61
Massachusetts Port Auth,
Rev Ref Ser 1992 A .................................................. 6.000 07-01-13 AA- 1,000 994,490 6.03
Rev Ref Ser 1992 A .................................................. 6.000 07-01-23 AA- *1,620 1,596,121 6.09
Rev Ref Ser 1993 B .................................................. 5.000 07-01-13 AA- 500 444,650 5.62
Massachusetts Water Resource Auth,
Gen Rev Ref 1993 Ser B .............................................. 5.500 03-01-17 A 400 374,640 5.87
Gen Rev Ref 1993 Ser B .............................................. 5.000 03-01-22 A *360 310,392 5.80
Massachusetts, the Commonwealth of,
GO Consol Ln of 1991 Ser D .......................................... 6.87 07-01-10 A+ 1,750 1,983,170 6.07
GO Consol Ln of 1995 Ser C .......................................... 5.625 08-01-14 AAA *1,000 971,060 5.79
Spec Oblig Rev 1994 Ser A ........................................... 5.800 06-01-14 AA- 1,000 989,750 5.86
Nantucket, Town of,
GO Municipal Purpose Ln of 1991 ..................................... 6.800 12-01-11 A** 450 485,208 6.31
Plymouth, County of,
Cert of Part Ser A Plymouth County Correctional Facil Proj .......... 7.000 04-01-22 A- 750 816,645 6.43
Springfield, City of,
GO School Proj Ln Act of 1992 Ser B ................................. 7.100 09-01-11 Baa** 500 537,675 6.60
-----------
$48,378,258
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- Massachusetts Portfolio
<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>
PUERTO RICO (8.18%)
Puerto Rico Highway and Transportation Auth,
Highway Rev Ref Ser W .............................. 5.500% 07-01-13 A $*1,000 $ 949,790 5.79%
Puerto Rico Infrastructure Financing Auth,
Spec Tax Rev Ser 1988A ............................. 7.750 07-01-08 BBB+ 450 498,163 7.00
Puerto Rico Ports Auth,
Spec Facil Rev 1993 Ser A American Airlines
Inc Proj ........................................... 6.300 06-01-23 BB+ 2,000 1,966,260 6.41
Puerto Rico, Commonwealth of,
GO Pub Imp Unltd Ref Ser 1994 ...................... 6.400 07-01-11 A 1,000 1,034,640 6.19
-----------
4,448,853
-----------
TOTAL TAX-EXEMPT LONG-TERM BONDS
(Cost $50,866,573) ( 97.08%) $52,827,111
======= ===========
</TABLE>
*Securities other than short-term investments newly added to the portfolio
during the period ended August 31, 1995.
**Rated by Moody's Investors Services, Fitch or John Hancock Advisers, Inc.
where Standard & Poor's ratings are not available. NR not rated.
***Credit ratings are unaudited.
+The yield is unaudited and not calculated in accordance with the guidelines
established by the U.S. Securities and Exchange Commission.
The percentage shown for each investment category is the total of that
category as a percentage of the net assets of the Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- New York Portfolio
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
August 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
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
NEW YORK (91.79%)
34th Street Partnership, Inc,
34th Street Business Imp Dist Cap Imp Bonds Ser 1993 ...... 5.500% 01-01-23 A1** $ 500 $ 455,360 6.04%
Albany, County of,
Ref Ser 1993 .............................................. 5.000 10-01-12 AAA 600 552,036 5.43
Battery Park City Auth,
Jr Rev Ref Ser 1993A ...................................... 5.000 11-01-13 AA 2,500 2,210,300 5.66
Dutchess County Resource Recovery Agency,
Solid Waste Mgmt Sys Rev Ser 1990 A ....................... 7.500 01-01-09 AAA 250 279,235 6.71
Grand Central District Management Association Inc,
Business Imp District Cap Imp Ser 1994 .................... 5.125 01-01-14 A 500 447,105 5.73
Metropolitan Transportation Auth,
Commuter Facil 1987 Serv Contract Ser 3 ................... 7.375 07-01-08 BBB 1,000 1,133,760 6.50
Commuter Facil 1992 Serv Contract Ser N ................... 7.125 07-01-09 BBB 1,000 1,080,800 6.59
New York City Housing Development Corp,
Multi-Family Mtg Rev FHA Ins Mtg Ln 1993 Ser A ............ 6.550 10-01-15 AAA 1,000 1,035,140 6.33
New York City Industrial Development Agency,
Spec Facil Rev 1990 American Airlines Inc Proj ............ 8.000 07-01-20 BB+ 400 426,604 7.50
Spec Facil Rev 1994 Terminal One Group Assn L.P. Proj ..... 6.000 01-01-19 A *1,000 957,590 6.27
New York City Municipal Water Finance Auth,
Wtr & Swr Sys Rev 1994 Ser B .............................. 5.500 06-15-19 A- 1,000 922,140 5.96
Wtr & Swr Sys Rev 1994 Ser F MBIA ......................... 5.500 06-15-23 AAA *1,000 937,810 5.86
New York Local Government Assistance Corp,
Ser 1991 A Pub Benefit Corp. .............................. 7.250 04-01-18 A 1,000 1,152,120 6.29
Ser 1992 A Pub Benefit Corp. .............................. 6.875 04-01-19 A *2,000 2,169,920 6.34
Ser 1993 E Pub Benefit Corp. .............................. 5.250 04-01-16 A 500 457,630 5.74
New York State Dormitory Auth,
City Univ Rev Iss Ser U ................................... 6.375 07-01-08 BBB 500 508,375 6.27
City Univ Sys Consol Rev Construction
2nd Generation Ser 1993A................................... 6.000 07-01-20 BBB 1,000 987,180 6.08
City Univ Sys Consol Rev Ser 1990A ........................ 7.625 07-01-20 BBB+ 485 560,825 6.59
Court Facil Lease Rev Ser 1993A ........................... 5.500 05-15-10 BBB+ *1,000 941,260 5.84
Court Facil Lease Rev Ser 1993A ........................... 5.375 05-15-16 BBB+ *2,000 1,793,800 5.99
Court Facil Lease Rev Ser 1993A ........................... 5.500 05-15-23 BBB+ *1,000 900,480 6.11
Genessee Valley Presbyterian Nursing Center FHA-Ins Mtg
Rev Ser 1992B ........................................... 6.850 08-01-16 AAA 250 269,020 6.37
KMH Homes Inc FHA-Ins Mtg Rev Ser 1991 .................... 6.950 08-01-31 AAA 1,200 1,263,192 6.60
Manhattanville College Ins Rev Ser 1990 ................... 7.500 07-01-22 AAA 305 351,040 6.52
Skidmore College Rev Ser 1993 ............................. 5.250 07-01-13 AAA 1,000 942,470 5.57
State Univ Ed Facil Rev Ser 1990A ......................... 7.700 05-15-12 BBB+ 300 346,869 6.66
State Univ Ed Facil Rev Ser 1993A ......................... 5.500 05-15-19 BBB+ *1,000 920,500 5.98
United Hlth Serv Inc FHA-Ins Mtg Rev Ser 1989 ............. 7.350 08-01-29 AAA 200 215,914 6.81
Univ of Rochester Rev Ser 1987 ............................ 6.500 07-01-09 A+ 625 650,344 6.25
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- New York Portfolio
<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)
Upstate Community Colleges 1988A Iss ......................... 7.750% 07-01-18 Baa1** $ 300 $ 333,558 6.97%
Vassar College Rev Ser 1990 .................................. 7.250 07-01-15 AA- 250 273,562 6.63
New York State Energy Research and Development Auth,
Elec Facil Rev Ser 1986 A Consol Edison Co of NY Inc Proj .... 7.500 11-15-21 A+ 200 208,946 7.18
Elec Facil Rev Ser 1989 A Consol Edison Co of NY Inc Proj .... 7.750 01-01-24 A+ 200 215,264 7.20
Elec Facil Rev Ser 1989 A Long Island Lighting Co Proj ....... 7.150 09-01-19 BB+ 500 505,760 7.07
Elec Facil Rev Ser 1989 B Consol Edison Co of NY Inc Proj .... 7.375 07-01-24 A+ 200 212,380 6.95
Elec Facil Rev Ser 1990 A Consol Edison Co of NY Inc Proj .... 7.500 07-01-25 A+ 260 280,582 6.95
Elec Facil Rev Ser 1990 A Long Island Lighting Co Proj ....... 7.150 06-01-20 BB+ 1,000 1,011,520 7.07
Elec Facil Rev Ser 1991 A Consol Edison Co of NY Inc Proj .... 7.500 01-01-26 A+ 420 453,755 6.94
Elec Facil Rev Ser 1992 B Long Island Lighting Co Proj ....... 7.150 02-01-22 BB+ 1,000 1,011,520 7.07
Elec Facil Rev Ser 1992 C Long Island Lighting Co Proj ....... 6.900 08-01-22 BB+ 500 500,630 6.89
Elec Facil Rev Ser 1993 Consol Edison Co of NY Inc Proj ...... 6.000 03-15-28 A+ 500 490,865 6.11
New York State Environmental Facilities Corp,
State Wtr Poll Control Revolving Fund Rev Ser 1990 A ......... 7.500 06-15-12 A 630 703,634 6.72
State Wtr Poll Control Revolving Fund Rev Ser 1991 E ......... 6.875 06-15-10 A 400 435,664 6.31
New York State Housing Finance Agency,
Ins Multi-Family Mtg Hsg 1992 Ser C .......................... 6.450 08-15-14 AAA 500 513,645 6.28
Ins Multi-Family Mtg Hsg 1994 Ser C .......................... 6.450 08-15-14 AAA 1,000 1,030,610 6.26
State Univ Construction 1986 Ser A ........................... 8.000 11-01-16 AAA 250 262,075 7.63
New York State Medical Care Facilities Finance Agency,
FHA-Ins Mtg St Lukes Roosevelt Rev Ser A ..................... 5.600 08-15-13 AAA 815 801,390 5.70
Hosp & Nursing Home FHA-Ins Mtg Rev 1988 Ser C ............... 7.700 02-15-22 AAA 450 503,703 6.88
Hosp & Nursing Home Ins Mtg Rev 1992 Ser B ................... 6.950 02-15-32 AAA 1,000 1,053,430 6.60
Mental Hlth Serv Facil Imp Rev 1990 Ser B .................... 7.875 08-15-20 BBB+ 90 98,562 7.19
Mental Hlth Serv Facil Imp Rev 1990 Ser B .................... 7.875 08-15-20 AAA 150 175,578 6.73
Mental Hlth Serv Facil Imp Rev 1991 Ser A .................... 7.750 08-15-11 BBB+ 60 65,778 7.07
Mental Hlth Serv Facil Imp Rev 1991 Ser A .................... 7.750 08-15-11 AAA 165 193,619 6.60
Mental Hlth Serv Facil Imp Rev 1991 Ser B .................... 7.625 08-15-17 BBB+ 245 268,640 6.95
Mental Hlth Serv Facil Imp Rev 1991 Ser C Preref ............. 7.300 02-15-21 AAA 300 348,732 6.28
Mental Hlth Serv Facil Imp Rev 1991 Ser C Unref Bal .......... 7.300 02-15-21 A 100 107,363 6.80
Sec Hosp Rev 1991 Ser A ...................................... 7.350 08-15-11 BBB 250 263,660 6.97
New York State Mortgage Agency,
Homeowner Mtg Rev Ser 27 ..................................... 6.900 04-01-15 Aa** *1,175 1,234,596 6.57
Homeowner Mtg Rev Ser 28 ..................................... 7.050 10-01-23 Aa** 500 519,495 6.79
Homeowner Mtg Rev Ser 31A .................................... 5.375 10-01-17 Aa** 500 450,155 5.97
Homeowner Mtg Rev Ser BB-2 ................................... 7.950 10-01-15 Aa** *230 246,026 7.43
Homeowner Mtg Rev Ser EE-4 ................................... 7.800 10-01-13 Aa** 300 321,363 7.28
Homeowner Mtg Rev Ser JJ ..................................... 7.500 10-01-17 Aa** 330 350,259 7.07
Homeowner Mtg Rev Ser VV ..................................... 7.375 10-01-11 Aa** 195 208,627 6.89
New York State Power Auth,
Gen Purpose Ser W ............................................ 6.500 01-01-08 AA- 250 275,690 5.89
Gen Purpose Ser Y ............................................ 6.500 01-01-11 AA- 250 264,430 6.15
Gen Purpose Ser Y ............................................ 6.750 01-01-18 AA- 250 267,630 6.31
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Tax-Exempt Series Fund -- New York Portfolio
<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 Thruway Auth,
Local Highway & Bridge Serv Contract Ser 1991 .............. 7.250% 01-01-10 BBB $ 300 $ 320,388 6.79%
New York State Urban Development Corp,
Rev Correctional Facil Ser 1993 ............................ 5.500 01-01-15 BBB 2,900 2,648,512 6.02
Rev Ser 1990 Onondaga County Convention Center Proj ........ 7.875 01-01-20 BBB 250 275,222 7.15
New York, City of,
GO Fiscal 1991 Ser B ....................................... 8.250 06-01-07 BBB+ 200 236,406 6.98
GO Fiscal 1991 Ser D ....................................... 8.000 08-01-04 BBB+ 250 283,768 7.05
GO Fiscal 1991 Ser F ....................................... 8.200 11-15-03 BBB+ 250 288,152 7.11
GO Fiscal 1992 Ser A ....................................... 7.750 08-15-12 BBB+ 250 274,790 7.05
GO Fiscal 1992 Ser B ....................................... 7.000 10-01-13 BBB+ *500 521,780 6.71
GO Fiscal 1992 Ser C ....................................... 7.500 08-01-21 BBB+ 250 267,000 7.02
GO Fiscal 1992 Ser H ....................................... 7.000 02-01-22 BBB+ 620 641,824 6.76
GO Fiscal 1995 Ser A-1 ..................................... 6.500 08-01-14 BBB+ *1,000 1,007,340 6.45
New York, State of,
GO Environmental Quality Fiscal 1994 ....................... 6.500 12-01-14 A- *1,000 1,062,230 6.12
North Country Development Auth,
Solid Waste Mgt Sys Rev Ser 1992A .......................... 6.750 07-01-12 Baa** 490 496,517 6.66
Onondaga County Industrial Development Agency,
Civic Facil Rev 1993 Ser B Community Gen Hosp
of Greater Syracuse Proj 6.625 01-01-18 BBB 1,000 984,420 6.73
Triborough Bridge and Tunnel Auth,
Spec Oblig Ref Ser 1991B ................................... 6.875 01-01-15 A- 500 537,880 6.39
-----------
51,177,744
-----------
PUERTO RICO (6.36%)
Puerto Rico Electric Power Auth,
Pwr Rev Ser X .............................................. 5.500 07-01-25 A- *1,330 1,231,115 5.94
Puerto Rico Public Building Auth,
Gtd Rev Gov't Facil Ser A .................................. 6.250 07-01-15 AAA *1,110 1,179,131 5.88
Puerto Rico, Commonwealth of,
GO Pub Imp Unltd Ref Ser 1994 .............................. 6.400 07-01-11 A 500 517,320 6.19
University of Puerto Rico,
Univ Rev Ser M ............................................. 5.250 06-01-25 AAA *675 617,267 5.74
-----------
3,544,833
-----------
TOTAL TAX-EXEMPT LONG-TERM BONDS
(Cost $ 52,675,229) ( 98.15%) 54,722,577
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
Financial Statements
John Hancock Funds - Tax-Exempt Series Fund -- New York Portfolio
<TABLE>
<CAPTION>
PAR VALUE
INTEREST MATURITY (000'S MARKET
STATE, ISSUER, DESCRIPTION RATE DATE OMITTED) VALUE
- -------------------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (2.71%)
Investment in a joint repurchase agreement transaction with
UBS Securities Inc., Dated 08-31-95, due 09-01-95
(secured by U.S. Treasury Bill, 5.540% due 05-30-96,
by U.S. Treasury Bonds, 12.50% thru 14.00% due 11-15-10
thru 08-15-14, and by U.S. Treasury Notes, 4.375% thru 7.25%
due 08-15-96 thru 12-31-98) - Note A........................................... 5.800% 09-01-95 $ 1,512 $ 1,512,000
-----------
CORPORATE SAVINGS ACCOUNT (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%............................................................. 660
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $1,512,660) ( 2.71%) 1,512,660
-------- -----------
TOTAL INVESTMENTS (100.86%) $56,235,237
======== ===========
</TABLE>
* Securities, other than short term investments, newly added to the portfolio
during the period ended August 31, 1995.
** Rated by Moody's Investors Services, Fitch or John Hancock Adviser's, Inc.
where Standard & Poors ratings are not available. NR not rated.
*** Credit ratings are unaudited.
+ The yield is not calculated in accordance with guidelines established by
the U.S. Securities and Exchange Commission.
The percentage shown for each category is the total value of that category
as a percentage of the net assets of the Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
Financial Statements
John Hancock Funds - Tax-Exempt Series Fund
PORTFOLIO CONCENTRATION (UNAUDITED)
- -------------------------------------------------------------------------------
THE CALIFORNIA, MASSACHUSETTS, AND NEW YORK PORTFOLIOS INVEST PRIMARILY IN
SECURITIES ISSUED BY THE STATES OF CALIFORNIA, MASSACHUSETTS AND NEW YORK
RESPECTIVELY, AND THEIR VARIOUS POLITICAL SUBDIVISIONS. THE PERFORMANCE OF THESE
PORTFOLIOS IS CLOSELY TIED TO ECONOMIC CONDITIONS WITHIN THE APPLICABLE STATE
AND THE FINANCIAL CONDITION OF THE STATE AND ITS AGENCIES AND MUNICIPALITIES.
THE CONCENTRATION OF INVESTMENTS BY STATES AND CREDIT RATINGS FOR INDIVIDUAL
SECURITIES HELD BY EACH PORTFOLIO 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 EACH PORTFOLIO'S INVESTMENTS AT AUGUST
31, 1995 ASSIGNED TO THE VARIOUS SECTOR CATEGORIES.
<TABLE>
<CAPTION>
MARKET VALUE AS A PERCENTAGE OF EACH
PORTFOLIO'S NET ASSETS:
---------------------------------
CALIFORNIA MASSACHUSETTS NEW YORK
SECTOR DISTRIBUTION PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------- ---------- ------------- ---------
<S> <C> <C> <C>
General Obligation......................................................................... - % 14.40% 10.14%
Revenue Bonds - Certificate of Participation............................................... 16.97 1.50 -
Revenue Bonds - Education.................................................................. 4.47 13.02 18.16
Revenue Bonds - Electric Power............................................................. 10.20 8.71 1.45
Revenue Bonds - Health..................................................................... 14.43 23.12 11.86
Revenue Bonds - Housing.................................................................... 5.04 9.22 11.07
Revenue Bonds - Industrial Development Bond................................................ 1.73 7.57 16.61
Revenue Bonds - Other...................................................................... 22.21 1.81 15.76
Revenue Bonds - Pollution Control Facilities............................................... 2.19 1.63 2.21
Revenue Bonds - Transportation............................................................. 10.56 12.88 5.51
Revenue Bonds - Water & Sewer.............................................................. 8.42 3.22 5.38
----- ----- -----
TOTAL TAX-EXEMPT LONG-TERM BONDS 96.22% 97.08% 98.15%
===== ===== =====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
Notes to Financial Statements
John Hancock Funds - Tax-Exempt Series Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Tax-Exempt Series Fund (the "Fund") is an
open-end non-diversified investment management company, registered under the
Investment Company Act of 1940. The Fund is organized as a Massachusetts
business trust under the laws of the Commonwealth of Massachusetts. As of August
31, 1995, the Fund consisted of three separate series portfolios: the California
Portfolio, the Massachusetts Portfolio, and the New York Portfolio (the
"Portfolios"). The Trustees may authorize the creation of additional portfolios
from time to time to satisfy various investment objectives. Significant
accounting policies of each portfolio are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolios 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 transaction. 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 its taxable income, including any net gains on investments, to
its shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes and to the extent provided by regulations, to offset
future net realized capital gains, the California Portfolio has a capital loss
carryforward available of $35,841 expiring August 31, 2003, the Massachusetts
Portfolio has capital loss carryforwards available of $2,465 expiring August 31,
2002 and $396,511 expiring August 31, 2003 and the New York Portfolio has a
capital loss carryforward available of $77,663 expiring August 31, 2003. To the
extent that such carryforwards are used by the Portfolios, no capital gain
distribution will be made. Expired capital loss carryforwards are reclassified
to capital paid-in, in the year of expiration.
Additionally, federal income tax regulations require that net capital losses
attributed to security transactions which occurred after October 31, 1994 be
treated as arising on the first day (September 1, 1995) of the Portfolio's next
taxable year. For the Massachusetts Portfolio and the New York Portfolio the
losses amounted to $230,732 and $287,053, respectively.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities
is recorded on the accrual basis.
Each Portfolio records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Each portfolio records
dividends from net investment income daily and distributes monthly.
EXPENSES The majority of the expenses of the Fund are directly identifiable to
an individual Portfolio. Expenses which are not identifiable to a specific
Portfolio are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Portfolios.
PREMIUM AND DISCOUNT For tax-exempt issues, the Portfolios amortize 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 Portfolios accrete 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
portfolios record market discount on bonds purchased after April 30, 1993 at the
time of disposition.
27
<PAGE>
Notes to Financial Statements
John Hancock Funds - Tax-Exempt Series Fund
FINANCIAL FUTURES CONTRACTS The Portfolios may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates and other market conditions. At the time the
Portfolio 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 Portfolio as unrealized gains or
losses.
When the contracts are closed, the Portfolio 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 Portfolios 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
Portfolio's gains and/or losses can be affected as a result of futures
transactions.
At August 31, 1995 there were no open positions in financial futures
contracts.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND
TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, each Portfolio pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of (a) 0.500% of the first $250,000,000 of such
Portfolio's average daily net asset value, (b) 0.450% of the next $250,000,000,
(c) 0.425% of the next $500,000,000, (d) 0.400% of the next $250,000,000 and (e)
0.300% of each Portfolio's average daily net asset value in excess of
$1,250,000,000.
In the event normal operating expenses of each Portfolio, exclusive of
certain expenses prescribed by state law, are in excess of the most restrictive
state limit where the Portfolio is registered to sell shares of beneficial
interest, 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 California Portfolio'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 Adviser has agreed to limit each Portfolio's expenses further to the
extent required to prevent expenses from exceeding 0.70% of each Portfolio's
average daily net asset value, exclusive of certain expenses prescribed by state
law. Accordingly, for the period ended August 31, 1995, the reduction in the
Adviser's fee collectively with any additional amounts not borne by each
Portfolio by virtue of the expense limit for the California Portfolio, the
Massachusetts Portfolio, and the New York Portfolio amounted to $178,982,
$202,898, and $212,967, respectively. This waiver may be discontinued at any
time. Furthermore, payments to the custodian have been reduced by balance
credits applied to each portfolio for the period ended August 31, 1995. For the
California Portfolio, the Massachusetts Portfolio, and the New York Portfolio
the reduction amounted to $33,672, $33,886 and $32,865, respectively.
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 August 31, 1995, the table that follows details for each Portfolio
the amount of net sales charges received by the distributor and dealer of each
portfolio's shares and the amount of commissions paid to sales personnel of
affiliated broker-dealers. John Hancock Distributors, Inc. ("Distributors"),
Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro")
are affiliated broker-dealers. The Adviser's indirect parent, John Hancock
28
<PAGE>
Notes to Financial Statements
John Hancock Funds - Tax-Exempt Series Fund
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. The balance
is either retained and used for printing prospectuses, advertising, sales
literature, and other purposes or paid as sales commissions to sales personnel
of unrelated broker-dealers.
<TABLE>
<CAPTION>
CALIFORNIA MASSACHUSETTS NEW YORK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31, 1995:
Net sales charges received ..... $153,765 $181,355 $205,880
Less commissions paid
to affiliated broker-dealers .. ( 117,079) ( 149,892) ( 162,413)
to unrelated broker-dealers ... ( 16,346) ( 9,113) ( 18,737)
-------- -------- --------
Balance retained .............. $ 20,340 $ 22,350 $ 24,730
======== ======== ========
</TABLE>
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the three Portfolios, the Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940. Accordingly, each Portfolio makes payments to JH Funds for distribution
and service expenses at an annual rate not to exceed 0.30% of the Portfolio's
average daily net assets to reimburse JH Funds for their distribution/service
costs. Up to a maximum of 0.25% of such payments may be 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 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. Effective January 1, 1995, each Portfolio pays
transfer agent fees based on transaction volume and the number of shareholder
accounts. Prior to January 1, 1995, each Portfolio paid Investor Services a
monthly transfer agent fee equivalent, on an annual basis, to 0.25% of each
Portfolio's average daily net asset value, plus out of pocket expenses incurred
by Investor Services on behalf of the Fund for proxy mailings.
Messrs. Edward J. Boudreau, Jr. 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 each Portfolio. 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. Each Portfolio will make investments into
other John Hancock Funds, as applicable, to cover their liability with regard to
the deferred compensation. Investments to cover each Portfolio's deferred
compensation liability will be recorded on each Portfolio's books as an other
asset. The deferred compensation liability will be marked to market on a
periodic basis and income earned by the investment will be recorded on each
Portfolio's books.
NOTE C --
INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
CALIFORNIA MASSACHUSETTS NEW YORK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31, 1995:
LONG-TERM MUNICIPAL OBLIGATIONS
Purchases .................. $16,009,240 $12,210,364 $36,796,584
Proceeds ................... 18,942,975 12,952,082 37,135,539
</TABLE>
There were no purchases or sales of long-term U.S. government and agency
obligations for the period ended August 31, 1995.
<TABLE>
AT AUGUST 31, 1995:
<S> <C> <C> <C>
Cost of investments for
Federal income tax
purposes ................... $43,938,622 $50,866,573 $54,187,229
=========== =========== ===========
Gross unrealized
appreciation of
investments................. $ 2,012,986 $ 2,262,566 $ 2,458,668
Gross unrealized
depreciation of
investments................. ( 197,787) ( 302,028) ( 411,320)
----------- ----------- -----------
Net unrealized
appreciation of
investments................. $ 1,815,199 $ 1,960,538 $ 2,047,348
=========== =========== ===========
</TABLE>
29
<PAGE>
Notes to Financial Statements
John Hancock Funds - Tax-Exempt Series Fund
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended August 31, 1995, the Portfolios have reclassified amounts
to reflect increases in accumulated net investment income and accumulated
realized loss on investments of $2,761 for the California Portfolio, $1,994 for
the Massachusetts Portfolio and $8,092 for the New York Portfolio. These
represent the cumulative amounts necessary to report these balances on a tax
basis, excluding certain temporary differences, as of August 31, 1995.
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. The calculation of net investment income per
share in the financial highlights excludes these adjustments.
NOTE E --
SUBSEQUENT EVENT
On September 15, 1995 the California Portfolio of the John Hancock Tax-Exempt
Series Fund merged with the John Hancock California Tax-Free Income Fund. The
transaction was approved by the shareholders on September 8, 1995 and was
accounted for as a tax-free business combination.
30
<PAGE>
John Hancock Funds - Tax-Exempt Series Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
John Hancock Tax-Exempt Series Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's and Standard & Poor's
ratings and yields at market), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the three Portfolios (California
Portfolio, Massachusetts Portfolio and New York Portfolio) comprising John
Hancock Tax-Exempt Series Fund (the "Fund") at August 31,1995, the results of
their operations, the changes in their net assets and the financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at August 31,1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 17, 1995
<PAGE>
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Registration Statement:
John Hancock Tax-Exempt Series Fund-
Massachusetts Portfolio
Statement of Assets and Liabilities as of August 31, 1995
Statement of Operations for the period ended August 31, 1995
Statement of Changes in Net Assets for each of the two years
ended August 31,1995
Notes to Financial Statements
Schedule of Investments as of August 31, 1995
New York Portfolio
Statement of Assets and Liabilities as of August 31, 1995
Statement of Operations for the period ended August 31, 1995
Statement of Changes in Net Assets for each of the two years
ended August 31, 1995
Notes to Financial Statements
Schedule of Investments as of August 31, 1995
(b) Exhibits:
The exhibits to this Registration Statement are listed in the
Exhibits 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 December 1, 1995 the number of record holders of shares of
Registrant was as follows:
Title of Class Number of Record Holders
(Shares of Beneficial Interest,
without par value)
John Hancock Tax-Exempt Series Fund-
Massachusetts Portfolio 2,320
New York Portfolio 2,530
ITEM 27. INDEMNIFICATION
(a) Under Registrant's Declaration of Trust. Sections 4.1, 4.2 and 4.3
of Article VI of the Registrant's Amended and Restated Declaration of Trust
provide for indemnification of the Registrant's Trustees and Officers under
certain circumstances. A copy of the Registrant's Amended and Restated
Declaration of Trust is attached as Exhibit 1 to this Post-Effective Amendment
No. 10 to the Registration Statement of the Registrant.
(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
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 Distributors, 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
The Registrant's sole principal underwriter is JH Funds, Inc., which also
acts as principal underwriter for the following investment companies: John
Hancock Institutional Series Trust, John Hancock Capital Series, John
Hancock Sovereign Bond Fund, John Hancock Sovereign Investors Fund, Inc.,
John Hancock Special Equities Fund, John Hancock Strategic Series, John
Hancock Tax-Exempt Income Fund, John Hancock Tax-Exempt Series Fund, John
Hancock Technology Series, Inc., John Hancock Limited-Term Government Fund,
John Hancock World Fund, Freedom Investment Trust, Freedom Investment Trust
II, Freedom Investment Trust III, John Hancock Bond Fund, John Hancock
California Tax-Free Income Fund, John Hancock Cash Reserve, Inc., John
Hancock Current Interest, John Hancock Investment Trust, John Hancock
Series, Inc. and John Hancock Tax-Free Bond Fund.
(b) The following table lists, for each director and officer of JH Funds,
Inc., the information indicated.
<PAGE>
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
<S> <C> <C>
Edward J. Boudreau, Jr. Chairman of Chairman and
101 Huntington Avenue the Board Chief Executive
Boston, Massachusetts Officer
Foster L. Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
Robert H. Watts Director None
101 Huntington Avenue
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer
Boston, Massachusetts and Director
Stephen W. Blair Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
James V. Bowhers Executive Vice None
101 Huntington Avenue President
Boston, Massachusetts
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and Chief Financial
Boston, Massachusetts Officer
Thomas H. Drohan Senior Vice Senior Vice
101 Huntington Avenue President President and
Boston, Massachusetts Secretary
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- --------------
<S> <C> <C>
David A. King Director and Senior None
101 Huntington Avenue Vice President
Boston, Massachusetts
James B. Little Senior Vice Senior Vice
101 Huntington Avenue President President and
Boston, Massachusetts Chief
Financial Officer
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President Vice President,
101 Huntington Avenue and Secretary Assistant Secretary
Boston, Massachusetts and Compliance
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
Michael T. Carpenter Senior Vice President None
1000 Louisiana Street
Houston, Texas
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Robert G. Freedman Director Vice Chairman and
101 Huntington Avenue Chief Investment
Boston, Massachusetts Officer
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Officer
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
<S> <C> <C>
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
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
</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) Not applicable.
(b) Not applicable
(c) The Registrant on behalf of each of its each of its series
undertakes to furnish each person to whom a prospectus is delivered with a copy
of such series' annual report to shareholders, 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 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
21st day of December, 1995.
JOHN HANCOCK TAX EXEMPT SERIES FUND
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 December 21, 1995
Financial Officer (Principal
Financial and Accounting Officer)
- -------------------------- Trustee
Dennis S. Aronowitz*
- -------------------------- Trustee
Richard P. Chapman, Jr.*
- -------------------------- Trustee
Francis C. Cleary, Jr.*
- -------------------------- Trustee
William J. Cosgrove*
- -------------------------- Trustee
Gail D. Fosler*
- -------------------------- Trustee
Bayard Henry*
- -------------------------- Trustee
Richard S. Scipione*
- -------------------------- Trustee
Edward J. Spellman*
/s/Thomas H. Drohan
*By: ----------------------- December 21, 1995
Thomas H. Drohan
(Attorney-in-Fact)
</TABLE>
<PAGE>
EXHIBIT INDEX
The exhibits listed below which are marked by an asterisk (*) have previously
been filed with the Commission and are incorporated by reference.
Exhibit No. Description Page Number
1 Declaration of Trust of Registrant dated March 24, 1987
1a Amendment to Declaration of Trust dated March 24, 1987
effective January 1, 1991.
1b Amendment to Declaration of Trust Termination of Series
dated September 15, 1995.
2 By-Laws as adopted on March 24, 1987.
2a Amendement to By-Laws dated December 19, 1994.
3 None
4 Specimen share certificate for John Hancock Tax-Exempt
Series Fund, New York Portfolio.
4a Specimen share certificate for John Hancock Tax-Exempt
Series Fund, Massachusetts Portfolio.
5 Investment Management Contract between Registrant and
John Hancock Advisers, Inc. dated May 5, 1987 and Amendment
dated December 19, 1989.
6 Distribution Agreement with Registrant and John Hancock
Broker Distribution Services, Inc. dated August 1, 1991.
6a Form of Soliciting Dealer Agreement between John Hancock
Broker Distribution Services, Inc. and Selected Dealers.
7 None
8 Master Custodian Agreement with Registrant and Investors
Bank & Trust Company.
<PAGE>
Exhibit No. Description Page Number
9 Transfer Agency and Service Agreement between Registrant
and John Hancock Fund Services, Inc. dated January 1, 1991.
10 Opinion and Consent of Debevoise & Plimpton
10a 24e2 opinion
11 Consent of Price Waterhouse LLP.
12 Financial Statement of the John Hancock Tax-Exempt Series
Fund for the fiscal year ended August 31, 1995 included
in Part B.
13 Subscription Agreement between Registrant and John Hancock
Advisers, Inc.
14 None
15 Amended and Restated Distribution Plan for Class A shares
between John Hancock Tax-Exempt Series Fund and John Hancock
Funds, Inc.
16 Schedule for Computation of Yield and Total Return.
17 Powers of Attorney
27.1 Massachusetts Portfolio
27.2 New York Portfolio
<PAGE>
EXHIBIT 99.1
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
-----------------
DECLARATION OF TRUST
DATED MARCH 24, 1987
-----------------
<PAGE>
Table of Contents
Page
ARTICLE I -- NAME AND DEFINITIONS..........................................2
Section 1.1 Name..................................................2
Section 1.2 Definitions...........................................2
ARTICLE II -- TRUSTEES.....................................................6
Section 2.1 Powers................................................6
Section 2.2 Legal Title..........................................16
Section 2.3 Number of Trustees; Term of Office...................18
Section 2.4 Qualification of Trustees............................18
Section 2.5 Election of Trustees.................................18
Section 2.6 Resignation and Removal..............................19
Section 2.7 Vacancies............................................20
Section 2.8 Committees; Delegation...............................22
Section 2.9 Action Without a Meeting; Participation by
Conference Telephone...............................23
Section 2.10 By-Laws..............................................24
Section 2.11 No Bond Required.....................................24
Section 2.12 Reliance on Experts, Etc.............................24
ARTICLE III -- CONTRACTS.............................................25
Section 3.1 Distribution Contract................................25
Section 3.2 Advisory or Management Contracts.....................26
Section 3.3 Affiliations of Trustees or Officers, Etc............27
ARTICLE IV -- LIMITATION OF LIABILITY; INDEMNIFICATION....................28
Section 4.1 No Personal Liability of Shareholders,
Trustees, Etc......................................28
Section 4.2 Execution of Documents; Notice; Apparent Authority...29
Section 4.3 Indemnification of Trustees, Officers, Etc...........30
Section 4.4 Indemnification of Shareholders......................34
ARTICLE V -- SHARES OF BENEFICIAL INTEREST................................35
Section 5.1 Beneficial Interest..................................35
Section 5.2 Series Designation...................................35
Section 5.3 Additional Series....................................36
Section 5.4 Series Shares, Assets, Liabilities and Expenses......37
Section 5.4.1 Series Shares.....................................37
Section 5.4.2 Series Assets.....................................37
Section 5.4.3 Series Liabilities and Expenses...................38
Section 5.4.4 Termination of a Series...........................39
Section 5.5 Rights of Shareholders...............................40
Section 5.6 Trust Only...........................................41
Section 5.7 Issuance of Shares...................................41
Section 5.7.1 General...........................................41
Section 5.7.2 Price.............................................42
Section 5.7.3 On Merger or Consolidation........................42
Section 5.7.4 Fractional Shares.................................43
Section 5.8 Register of Shares...................................43
Section 5.9 Share Certificates...................................43
Section 5.9.1 General...........................................44
Section 5.9.2 Loss of Certificates..............................45
Section 5.9.3 Issuance of New Certificates to Pledgee...........45
Section 5.9.4 Discontinuance of Issuance of Certificates........45
Section 5.10 Transfer of Shares...................................46
Section 5.11 Voting Powers........................................46
Section 5.12 Meetings of Shareholders.............................49
Section 5.13 Action Without a Meeting.............................49
Section 5.14 Removal of Trustees by Shareholders..................50
ARTICLE VI -- REDEMPTION AND REPURCHASE OF SHARES.........................52
Section 6.1 Redemption of Shares.................................52
Section 6.2 Price................................................52
Section 6.3 Payment..............................................52
Section 6.4 Effect of Suspension of Right of Redemption..........53
Section 6.5 Repurchase by Agreement..............................54
Section 6.6 Suspension of Right of Redemption....................54
Section 6.7 Involuntary Redemption of Shares; Disclosure of Holding
ARTICLE VII -- DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS............57
Section 7.1 By Whom Determined...................................57
Section 7.2 When Determined......................................58
Section 7.3 Computation of Per Share Net Asset Value.............58
Section 7.3.1 Net Asset Value Per Share........................58
Section 7.3.2 Value of the Net Assets of a Series..............58
Section 7.4 Interim Determinations...............................62
Section 7.5 Outstanding Shares...................................62
Section 7.6 Distribution to Shareholders.........................64
Section 7.7 Power to Modify Foregoing Procedures.................65
ARTICLE VIII -- CUSTODIAN.................................................65
Section 8.1 Appointment and Duties...............................66
Section 8.2 Action Upon Termination of Custodian Agreement.......67
Section 8.3 Central Certificate System, Etc......................68
Section 8.4 Acceptance of Receipts in Lieu of Certificates.......68
ARTICLE IX -- DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.....69
Section 9.1 Duration and Termination.............................69
Section 9.2 Amendment Procedure..................................71
Section 9.3 Merger, Consolidation and Sale of Assets.............72
Section 9.4 Incorporation........................................73
Section 9.5 Series Vote..........................................74
ARTICLE X -- REPORTS TO SHAREHOLDERS......................................74
ARTICLE XI -- MISCELLANEOUS...............................................74
Section 11.1 Filing...............................................74
Section 11.2 Governing Law........................................75
Section 11.3 Counterparts.........................................75
Section 11.4 Reliance by Third Parties............................76
Section 11.5 Provisions in Conflict with Law or Regulations.......76
Section 11.6 Section Headings; Interpretations....................77
<PAGE>
DECLARATION OF TRUST
OF
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
Dated March 24, 1987
DECLARATION OF TRUST made on March 24, 1987 by R. Bruce Oliver and Richard
S. Scipione (the "Trustees").
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto;
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided;
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder and all proceeds thereof shall be
held and managed in trust for the pro rata benefit of the holders, from time to
time, of the shares of beneficial interest issued hereunder and subject to the
provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "John
Hancock Tax-Exempt Series Trust", and as far as may be practicable the Trustees
shall conduct the business and activities of the trust created hereby and
execute all documents and take all actions under that name or any other name
they may from time to time determine, which name (and the word "Trust" whenever
used in this Declaration, except where the context requires otherwise) shall
refer to the Trustees in their capacity as Trustees, and not individually or
personally, and shall not refer to the officers, agents, employees or
shareholders of the trust created hereby or of such Trustees.
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following meanings:
"Affiliated Person" shall have the meaning set forth in Section 2(a) (3) of
the 1940 Act.
"By-Laws" shall mean the By-Laws, if any adopted pursuant to Section 2.10
hereof, as from time to time amended.
"Commission" shall mean the Securities and Exchange Commission.
"Custodian" shall mean any Person other than the Trustees who has custody
of any Trust Property as required by Section 17(f) of the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended from time to
time.
"Distributor" shall have the meaning set forth in Section 3.1 hereof.
"Interested Person" shall have the meaning set forth in Section 2(a)(19) of
the 1940 Act.
"Investment Advisers" shall have the meaning set forth in Section 3.2
hereof.
"Majority Shareholder Vote" shall mean the vote of a majority of the
outstanding voting securities, as defined in Section 2(a)(42) of the 1940 Act,
of the Trust, provided that if there are two or more Series of Shares
outstanding, then "Majority Shareholder Vote" shall have, when used with respect
to any matter required to be submitted to the holders of the outstanding Shares
of any Series pursuant to this Declaration or the 1940 Act, the meaning set
forth in Rule 18f-2 under the 1940 Act.
"1940 Act" shall mean the Investment Company Act of 1940, as amended from
time to time.
"Person" shall mean an individual, a company, a corporation, partnership,
trust, or association, a joint venture, an organization, a business, a firm or
other entity, whether or not a legal entity, or a country, a state, municipality
or other political subdivision or any governmental agency or instrumentality.
"Portfolio" shall mean the assets and liabilities of the Trust which relate
to a Series of Shares.
"Principal Underwriter" shall have the meaning set forth in Section
2(a)(29) of the 1940 Act.
"Registration Statement" shall mean the Registration Statement on Form N-1A
of the Trust filed with the Commission.
"Series" shall mean the one or more separate series of Shares authorized by
Section 5.3 of this Declaration.
"Series Majority Shareholder Vote" shall mean the vote of a "majority of
the outstanding voting securities," as defined in Section 2(a)(42) of the
1940 Act, of a Series.
"Shareholder" shall mean a record owner of Shares.
"Shares" shall mean the units of interest into which the beneficial
interest in the Trust (or, if more than one Series of Shares is authorized, in
each Series) shall be divided from time to time and includes fractions of Shares
as well as whole Shares. All references to Shares shall be deemed to refer to
Shares of any or all Series, as the context may require.
"Transfer Agent" shall mean any Person other than the Trustees 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.
"Trust" shall mean the Massachusetts business trust (the "John Hancock
Tax-Exempt Series Trust") established by this Declaration of Trust, as from time
to time amended.
"Trust Property" shall mean 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, as the context may require.
"Trustees" shall mean the individuals who have signed this Declaration of
Trust, so long as they shall continue in office in accordance with the terms
hereof, and all other individuals who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the provisions
of Article II hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in his or her capacity or their capacities as
trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1 Powers. The Trustees, subject only to the specific
limitations contained in this Declaration, shall have exclusive and absolute
power, control and authority 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, including such power, control
and authority to do all such acts and things as in their sole judgment and
discretion are necessary, incidental, convenient or desirable for the carrying
out of or conducting of the business of the Trust or in order to promote the
interests of the Trust, but with such powers of delegation as may be permitted
by this Declaration. The enumeration of any specific power, control or authority
herein shall not be construed as limiting the aforesaid power, control and
authority or any other specific power, control or authority. The Trustees shall
have power to conduct and carry on the business of the Trust, or any part
thereof, to have one or more offices and to exercise any or all of its trust
powers and rights, in the Commonwealth of Massachusetts, in any other states,
territories, districts, colonies and dependencies of the United States and in
any foreign countries. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees. Such powers
of the Trustees may be exercised without order of or resort to any court.
Without limiting the foregoing, the Trustees shall have the power:
(a) To operate as and to 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 subscribe for and to invest and reinvest funds in, and
hold for investment, the securities (including but not limited to
bonds, debentures, notes, certificates of deposit, commercial
paper, bankers' acceptances and all other evidences of
indebtedness and shares, stock, subscription rights, warrants,
profit-sharing interests or participations and all other contracts
for or evidences of equity interests) of any Person and to hold
cash uninvested.
(c) To acquire (by purchase, subscription or otherwise), to
trade in and deal in, to sell or otherwise dispose of, to enter
into repurchase agreements, reverse repurchase agreements and firm
forward commitment agreements with respect to, and to lend and to
pledge any such securities, and to effect spot (i.e. cash)
transactions in, or enter into forward contracts with respect to,
foreign currency exchange for the purpose of hedging the value of
any securities denominated in currencies other than United States
dollars;
(d) To exercise all rights, powers and privileges of ownership
or interest in all securities included in the Trust Property,
including the right to vote, give assent, execute and deliver
proxies or powers of attorney to such person or persons as the
Trustees shall deem proper 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 to delegate,
assign, waive or otherwise dispose of any of such rights, powers
or privileges.
(e) To exercise powers and rights of subscription or otherwise
which in any manner arise out of the Trust's ownership of
securities.
(f) To declare (from interest, dividends or other income
received or accrued, from accruals of original issue or other
discounts on obligations held, from capital or other profits
whether realized or unrealized and from any other lawful sources)
dividends and distributions on the Shares and to credit the same
to the account of Shareholders, or at the election of the Trustees
to accrue income to the account of Shareholders, on such dates
(which may be as frequently as every day) as the Trustees may
determine. Such dividends, distributions or accruals shall be
payable in cash, property or Shares at such intervals as the
Trustees may determine at any time in advance of such payment,
whether or not the amount of such dividend, distribution or
accrual can at the time of declaration or accrual be determined or
must be calculated subsequent to declaration or accrual and prior
to payment by reference to amounts or other factors not yet
determined at the time of declaration or accrual (including but
not limited to the amount of a dividend or distribution to be
determined by reference to what is sufficient to enable the Trust
to qualify as a regulated investment company under the United
States Internal Revenue Code or to avoid liability for Federal
income tax).
The power granted by this Subsection (f) shall
include, without limitation, and if otherwise lawful, the power
(A) to declare dividends or distributions or to accrue income to
the account of Shareholders by means of a formula or other similar
method of determination whether or not the amount of such dividend
or distribution can be calculated at the time of such declaration;
(B) to establish record or payment dates for dividends or
distributions on any basis, including power to establish a number
of record or payment dates subsequent to the declaration of any
dividend or distribution; (C) to establish the same payment date
for any number of dividends or distributions declared prior to
such date; (D) to provide for payment of dividends or
distributions declared and as yet unpaid, or unpaid accrued
income, to Shareholders redeeming Shares prior to the payment date
otherwise applicable; and (E) to provide in advance for conditions
under which any dividend or distribution may be payable in Shares
to all or less than all of the Shareholders.
(g) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop and dispose of (by sale, lease or
otherwise) any property, real or personal, and any interest
therein.
(h) To borrow money, and in this connection to issue notes or
other evidence of indebtedness; to secure borrowings by
mortgaging, pledging or otherwise subjecting to security interests
the Trust Property; and to lend Trust Property.
(i) To aid by further investment any Person, if any obligation
of or interest in such Person is included in the Trust Property or
if the Trustees have any direct or indirect interest in the
affairs of such Person; to do anything designed to preserve,
protect, improve or enhance the value of such obligation or
interest; and to endorse or guarantee or become surety on any or
all of the contracts, stocks, bonds, notes, debentures and other
obligations of any such Person; and to mortgage the Trust property
or any part thereof to secure any of or all such obligations.
(j) To promote or aid the incorporation of any organization or
enterprise under the law of any country, state, municipality or
other political subdivision, and to cause the same to be
dissolved, wound up, liquidated, merged or consolidated.
(k) To enter into joint ventures, general or limited
partnerships and any other combinations or associations.
(l) To purchase and pay for entirely out of Trust Property
insurance policies insuring the Shareholders, Trustees, officers,
employees and agents of the Trust, the Investment Advisers, the
Distributor and dealers or independent contractors of the Trust
against all claims and liabilities of every nature arising by
reason of holding or having held any such position or by reason of
any action taken or omitted by any such Person in such capacity,
whether or not constituting negligence, to the extent the Trust
would have the power, under provisions of applicable law, to
indemnify such Person against such liability.
(m) To establish and carry out pension, profit-sharing, share
purchase, share bonus, savings, thrift and other retirement,
incentive and benefit plans for any Trustees, officers, employees
or agents of the Trust.
(n) To the extent permitted by law and determined by the
Trustees, to indemnify any Person with whom the Trust has
dealings, including, without limitation, the Shareholders, the
Trustees, the officers, employees and agents of the Trust, the
Investment Advisers, the Distributor, the Transfer Agent, the
Custodian and dealers.
(o) To incur and pay any charges, taxes and expenses which in
the opinion of the Trustees are necessary or incidental to or
proper for carrying out any of the purposes of this Declaration,
and to pay from the funds of the Trust Property to themselves as
Trustees reasonable compensation and reimbursement for expenses.
(p) To prosecute or abandon and to compromise, arbitrate or
otherwise adjust claims in favor of or against the Trust or any
matter in controversy, including but not limited to claims for
taxes.
(q) To foreclose any security interest securing any
obligations owed to the Trust.
(r) To exercise the right to consent, and to enter into
releases, agreements and other instruments, including, but not
limited to, the right to consent or participate in any plan for
the reorganization, consolidation or merger of any corporation or
issuer any security of which is or was held by the Trust; to
consent to any contract, lease, mortgage, purchase or sale of such
property by said corporation or issuer, and to pay calls or
subscriptions with respect to securities held by the Trust.
(s) To employ or contract with such Persons as the Trustees
may deem desirable for the transaction of the business of the
Trust.
(t) To determine and change the fiscal year of the Trust and
the method in which its accounts shall be kept.
(u) To 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.
(v) To purchase liability, casualty, property or other
insurance and to pay from the Trust Property the premiums
therefor.
(w) To take such actions as are authorized or required to be
taken by the Trustees pursuant to other provisions of this
Declaration.
(x) In general to carry on any other business in connection
with or incidental to any of the objects and purposes of the
Trust, 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 herein set forth, either alone or in
association with others, and to take any action incidental or
appurtenant to or growing out of or connected with the business,
purposes, objects or powers of the Trustees.
The foregoing clauses shall be construed both as objects and as 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 by any law now or hereafter in effect
limiting the investments which may be made or retained by fiduciaries, but they
shall have full power and authority to make any and all investments within the
limitation of this Declaration that they, in their sole and absolute discretion,
shall determine, and without liability for loss even though such investments do
not or may not produce income or are of a character or in an amount not
considered proper for the investment of trust funds.
Section 2.2. Legal Title. Legal title to all the Trust Property shall
as far as may be practicable be vested in the name of the Trust, which name
shall refer to the Trustees in their capacity as Trustees, and not individually
or personally, and shall not refer to the officers, agents, employees or
Shareholders of the Trust or of the Trustees, provided 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 with suitable reference to their trustee
status, or in the name of the Trust, or any Series thereof, or in a form not
indicating any trust, whether in bearer, unregistered or other negotiable form,
or in the name of a custodian or sub-custodian or a nominee or nominees or
otherwise. 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 of a Trustee, whether upon such Trustee's
resignation or removal, or upon the due election and qualification of his
successor or upon the occurrence of any of the events specified in the first
sentence of Section 2.7 hereof or otherwise, such Trustee 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 2.3. Number of Trustees; Term of Office. The number of Trustees
shall be two, which number may be increased and thereafter decreased from time
to time by written instrument signed by a majority of the Trustees, provided
that the number of Trustees shall not be fewer than two nor more than 15. The
two initial Trustees named in Section 2.5 hereof and each Trustee elected
(whenever such election occurs) shall hold office until his successor is elected
and qualified or until the earlier occurrence of any of the events specified in
the first sentence of Section 2.7 hereof.
Section 2.4. Qualification of Trustees. Of the total number of
Trustees, unless they continue to be limited to the two initial Trustees named
in Section 2.5 hereof, at least 40% shall be persons who are not Interested
Persons of the Trust or of the Distributor.
Section 2.5. Election of Trustees. The initial Trustees shall be R.
Bruce Oliver and Richard S. Scipione. Trustees may succeed themselves in office.
Trustees may be elected at a Shareholders' meeting. At such a Shareholders'
meeting, Trustees shall be elected by a plurality of the votes validly cast. The
election of any Trustee (other than an individual who was serving as a Trustee
immediately prior thereto) shall not become effective, however, until the
individual named shall have accepted in writing such election and agreed in
writing to be bound by the terms of this Declaration. Trustees need not own
Shares.
Section 2.6. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the Chairman of the Board, or the Secretary or
any Assistant Secretary, and such resignation shall be effective upon such
delivery, or at any later date specified in the instrument. Any of the Trustees
may be removed (i) with cause by the affirmative vote of two-thirds of the
remaining Trustees (provided that the aggregate number of Trustees after such
removal shall not be less than two) or (ii) by the Shareholders pursuant to
Section 5.14 hereof. 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 2.7. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, retirement, resignation or
removal (whether pursuant to Section 2.6 hereof or otherwise), bankruptcy,
adjudication of incompetence or other incapacity to perform the duties of the
office of a Trustee. A vacancy shall also occur upon an increase in the number
of Trustees in accordance with Section 2.3 hereof. No vacancy shall operate to
annul this 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 authorized number of Trustees,
the remaining Trustees shall, subject to the requirements of Section 2.4 hereof,
fill such vacancy by the appointment of such individual as they in their sole
and absolute discretion shall see fit, made by a written instrument signed by a
majority of the Trustees then in office, provided that immediately after filing
any such vacancy (except during the period preceding the effectiveness of the
Registration Statement covering the initial public offering of securities of the
Trust) at least two-thirds of the Trustees then holding office shall have been
elected to such office by the Shareholders. In the event that at any time, other
than the time preceding the effectiveness of the Registration Statement covering
the initial public offering of securities of the Trust, less than a majority of
the Trustees holding office at that time were elected by the Shareholders, a
meeting of the Shareholders shall be held promptly and in any event within 60
days (unless the Commission shall by order extend such period) for the purpose
of electing Trustees to fill any existing vacancies. No such appointment or
election shall become effective, however, until the person named shall have
accepted in writing such appointment or election and agreed in writing to be
bound by the terms of this Declaration. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in this Section
2.7, 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.
Section 2.8. Committees; Delegation. The Trustees shall have the power
to appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including an executive committee which may
exercise some or all of the power and authority of the Trustees as the Trustees
may determine (including but not limited to the power to determine net asset
value and net income), subject to any limitations contained in the By-Laws, and
in general to delegate from time to time to one or more of their number or to
officers, employees or agents of the Trust such power and authority and the
doing of such things and the execution of such instruments, either in the name
of the Trust or the names of the Trustees or otherwise, as the Trustees may deem
expedient, provided that no committee shall have the power
(a) to change the principal office of the Trust;
(b) to amend the By-Laws;
(c) to issue Shares of any Series;
(d) to elect or remove from office any Trustee or the Chairman of the
Board, the President, the Chief Financial Officer, the Treasurer or
the Secretary of the Trust;
(e) to increase or decrease the number of Trustees;
(f) to declare a dividend or other distribution on the Shares of any
Series;
(g) to authorize the repurchase of Shares of any Series; or
(h) to authorize any merger, consolidation or sale, lease or exchange
of all or substantially all of the Trust Property.
Section 2.9. Action Without a Meeting; Participation by Conference
Telephone. Unless the 1940 Act requires that a particular action must be taken
only at a meeting of Trustees, any action required or permitted to be taken at
any meeting of the Trustees (or of any committee of the Trustees) may be taken
without a meeting if written consents thereto are signed by a majority of the
Trustees then in office (or by a majority of the members of such committee) and
such written consents are filed with the records of the meetings. Unless the
1940 Act requires that Trustees must be present in person at a meeting of
Trustees, Trustees may participate in a meeting of the Trustees (or of any
committee of the Trustees) by means of a conference telephone or similar
communications equipment if all individuals participating can hear each other at
the same time. Participation in a meeting by these means shall constitute
presence in person at the meeting.
Section 2.10. By-Laws. The Trustees may adopt By-Laws not inconsistent
with this Declaration or law to provide for the conduct of the business of the
Trust, and may amend or repeal such By-Laws.
Section 2.11. No Bond Required. No Trustee shall be obliged to give any
bond or other security for the performance of any of his duties hereunder.
Section 2.12. Reliance on Experts, Etc. Each Trustee, officer, agent
and employee of the Trust or any Series thereof shall, in the performance of his
duties, be fully and completely justified and protected by relying in good faith
upon the books of account or other records of the Trust, or upon reports made to
the Trustees (a) by any of the officers or employees of the Trust or any Series
thereof, (b) by the Investment Advisers, the Distributor, the Custodian or the
Transfer Agent, or (c) by any accountants, selected dealers or appraisers or
other agents, experts or consultants selected with reasonable care by the
Trustees, regardless of whether such agent, expert or consultant may also be a
Trustee. The Trustees, officers, agents and employees of the Trust or any Series
thereof may take advice of counsel with respect to the meaning and operation of
this Declaration, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The exercise
by the Trustees of their powers and discretion hereunder and the construction in
good faith by the Trustees of the meaning or effect of any provision of this
Declaration shall be binding upon everyone interested. A Trustee, officer, agent
or employee shall be liable for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office, and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may from time to time
enter into a distribution contract with another Person (the "Distributor")
providing for the sale of Shares, pursuant to which the Trustees may agree to
sell the Shares of one or more Series to the Distributor or appoint the
Distributor their sales agent for the Shares. Such contract may provide that the
Distributor may enter into contracts with other persons to sell the Shares of
one or more Series on behalf of the Distributor and the Trust. Such contract may
also provide for the repurchase of Shares by the Distributor as agent of the
Trustees and shall contain such terms and conditions, if any, as may be
prescribed in the By-Laws and such further terms and conditions not inconsistent
with the provisions of this Article III or of the By-Laws as the Trustees may in
their discretion determine.
Section 3.2. Advisory or Management Contracts. Subject to approval by a
Majority Shareholder Vote or, where appropriate pursuant to Section 5.11 hereof,
a Series Majority Shareholder Vote, the Trustees may from time to time enter
into investment advisory or management contracts with one or more other Persons
(the "Investment Advisers") pursuant to which the Investment Advisers shall
agree to furnish to the Trustees management, investment advisory, statistical
and research facilities or other services with respect to one or more Series of
the Trust. Such contract shall contain such other terms and conditions, if any,
as may be prescribed in the By-Laws and such further terms and conditions not
inconsistent with the provisions of this Article III, the By-Laws or applicable
law as the Trustees may in their discretion determine, including the grant of
authority to the Investment Advisers to determine what securities shall be
purchased or sold by the Portfolios of the Trust and what portions of its assets
shall be uninvested and to implement its determinations by making changes in the
Portfolios' investments.
Section 3.3. Affiliations of Trustees or Officers, Etc. The fact that
any Shareholder, Trustee, officer, agent or employee of the Trust or any Series
thereof is a shareholder, member, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any Person or for any parent or
affiliate of any Person with which an investment advisory or management
contract, principal underwriter or distributor contract or custodian, transfer
agent, disbursing agent or similar agency contract may have been or may
hereafter be made, or that any such Person, or any parent or affiliate thereof,
is a Shareholder of or has any other interest in the Trust or any Series
thereof, or that any such Person also has any one or more similar contracts with
one or more other such Persons, or has other businesses or interests, shall not
affect the validity of any such contract made or that may hereafter be made with
the Trustees or disqualify any Shareholder, Trustee, officer, agent or employee
of the Trust or any Series thereof from voting upon or executing the same or
create any liability or accountability to the Trustees, the Trust, any Series
thereof or the Shareholders.
ARTICLE IV
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever in connection
with Trust Property or the acts, obligations or affairs of the Trust or any
Series thereof. All Persons extending credit to, contracting with or having any
claim against the Trust or any Series thereof shall look only to the assets of
the Trust or the Portfolio of any affected Series for payment under such credit,
contract or claim, and neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. The Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, employee or agent
(including, without limitation, the Investment Advisers, the Distributor, the
Custodian and the Transfer Agent) of the Trust or any Series thereof, nor shall
any Trustee be responsible or liable for the act or omission of any other
Trustee. Nothing in this Declaration shall, however, protect any Trustee,
officer, employee or agent of the Trust against any liability to which such
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office.
Section 4.2. Execution of Documents; Notice; Apparent Authority. Every
note, bond, contract, instrument, certificate or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust or any Series
thereof or the Trustees or any of them in connection with the Trust or any
Series thereof shall be conclusively deemed to have been executed or done only
in or with respect to their or his or her capacity as Trustees or Trustee, and
such Trustees or Trustee shall not be personally liable thereon. Every note,
bond, contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer shall give notice that this Declaration
of Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts and shall recite that the obligations of such instruments are not
binding upon any of the Trustees, Shareholders, officers, employees or agents of
the Trust individually but are binding only upon the assets and property of the
Trust, but the omission thereof shall not operate to bind any Trustees,
Shareholders or officers, employees and agents of the Trust individually. No
purchaser, lender, Transfer Agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by such officer, employee or agent or make inquiry concerning or be liable
for the application of money or property paid, loaned or delivered to or on the
order of the Trustees or of such officer, employee or agent.
Section 4.3. Indemnification of Trustees, Officers, Etc. The Trust
shall indemnify each of its Trustees, officers, employees and agents (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) against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably incurred by
him or her in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or legislative body in which he or she may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while acting as Trustee or as an officer, employee or agent of the Trust or the
Trustees, as the case may be, or thereafter, by reason of his or her being or
having been such a Trustee, officer, employee or agent, except with respect to
any matter as to which he or she shall have been adjudicated not to have acted
in good faith in the reasonable belief that his or her action was in the best
interests of the Trust or any Series thereof. Notwithstanding anything herein to
the contrary, if any matter which is the subject of indemnification hereunder
relates only to one Series (or to more than one but not all of the Series of the
Trust), then the indemnity shall be paid only out of the assets of the Portfolio
of the affected Series. No individual shall be indemnified hereunder against any
liability to the Trust or any 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 or her office. In addition, no such
indemnity shall be provided with respect to any matter disposed of by settlement
or a compromise payment by such Trustee, officer, employee or agent, pursuant to
a consent decree or otherwise, either for said payment or for any other expenses
unless there has been a determination that such compromise is in the best
interests of the Trust or, if appropriate, of any affected Series thereof and
that such Person appears to have acted in good faith in the reasonable belief
that his or her action was in the best interests of the Trust or, if
appropriate, of any affected Series thereof, and did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. All determinations that the
applicable standards of conduct have been met for indemnification hereunder
shall be made by (a) a majority vote of a quorum consisting of disinterested
Trustees who are not parties to the proceeding relating to indemnification, or
(b) if such a quorum is not obtainable or, even if obtainable, if a majority
vote of such quorum so directs, by independent legal counsel in a written
opinion, or (c) a Majority Shareholder Vote (excluding Shares owned of record or
beneficially by such individual). In addition, unless a matter is disposed of
with a court determination (i) on the merits that such Trustee, officer,
employee or agent was not liable or (ii) that such Person was not guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, no indemnification shall be
provided hereunder unless there has been a determination by independent legal
counsel in a written opinion that such Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
The Trustees may make advance payments out of the assets of the Trust
or, if appropriate, the Portfolio of the affected Series in connection with the
expense of defending any action with respect to which indemnification might be
sought under this Section 4.3. The indemnified Trustee, officer, employee or
agent shall give a written undertaking to reimburse the Trust or the Series in
the event it is subsequently determined that he or she is not entitled to such
indemnification and (a) the indemnified Trustee, officer, employee or agent
shall provide security for his or her undertaking, (b) the Trust shall be
insured against losses arising by reason of lawful advances, or (c) a majority
of a quorum of disinterested Trustees or an independent legal counsel in a
written opinion shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the indemnitee ultimately will be found entitled to indemnification. The rights
accruing to any Trustee, officer, employee or agent under these provisions shall
not exclude any other right to which he or she may be lawfully entitled and
shall insure to the benefit of his or her heirs, executors, administrators or
other legal representatives.
Section 4.4. Indemnification of Shareholders. In case any Shareholder
or former Shareholder shall be held to be personally liable solely by reason of
his or her being or having been a Shareholder and not because of acts or
omissions or for some other reason, the 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) shall be entitled out of the assets of the Trust or, if there are two
or more Series of the Trust, the assets of the Portfolio of the affected Series
of which such Shareholder held Shares, to be held harmless from and indemnified
against all loss and expense, including legal expenses reasonably incurred,
arising from such liability. The rights accruing to a Shareholder under this
Section 4.4 shall not exclude any other right to which such Shareholder may be
lawfully entitled, nor shall anything contained herein 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.
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
("Shares"), without par value. The Trustees may from time to time divide or
combine the Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. The number of shares of
beneficial interest authorized hereunder is unlimited. 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.
No shares shall have any approval, conversion or preemptive rights.
Section 5.2. Series Designation. Subject to the designation of
additional Series pursuant to Section 5.3, the Shares shall initially constitute
three Series, the Shares of which represent undivided beneficial interests in
three Portfolios designated, respectively, "John Hancock Tax-Exempt Series Trust
- -- California Portfolio," "John Hancock Tax-Exempt Series Trust--Massachusetts
Portfolio," and "John Hancock Tax-Exempt Series Trust--New York Portfolio".
Section 5.3. Additional Series. The Trustees may, without Shareholder
approval, from time to time authorize additional Series, each such additional
Series relating to a separate Portfolio. The establishment and designation of
any Series additional to the initial Series of Shares shall be effective upon
the execution by a majority of the Trustees of an instrument setting forth the
establishment and designation of such Series (which instrument shall have the
status of an amendment to this Declaration). Such instrument shall also set
forth any rights and preferences of such series which are in addition to the
rights and preferences of Shares set forth in this Declaration. Each reference
to "Shares" in this Declaration shall be deemed to be a reference to Shares of
any or all Series, as the context may require. All Shares of any Series shall
have equal voting, distribution, redemption, liquidation and other rights and
shall be entitled to a preference over Shares of other Series with respect to
the assets of or allocated (pursuant to subsection 5.4.2) to such Series.
Subject to the provisions of this Declaration, the Trustees may establish
variations between different Series as to purchase price, determination of net
asset value, the price, terms and manner of redemption, special and relative
rights as to dividends and on liquidation, and conditions under which the
several Series shall have separate voting rights. The Trustees may from time to
time divide or combine the Shares of any Series into a greater or lesser number
of Shares of such Series without thereby changing the proportionate beneficial
interests of holders of Shares in such Series. The number of Shares of each
Series that may be issued shall be unlimited.
Section 5.4. Series Shares, Assets, Liabilities and Expenses.
Section 5.4.1. Series Shares. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any Series
into Shares of such Series or Shares of one or more other Series. The Trustees
may hold as treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series repurchased or redeemed by the Trust at their discretion from time to
time.
Section 5.4.2. Series Assets. 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,
loan, 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, 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.
Section 5.4.3. Series Liabilities and Expenses. The assets belonging to
each particular Series shall be charged with the liabilities of the Trust in
respect of that Series and all expenses, costs, charges and reserve attributable
to that Series, 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 in such manner and on such basis as the Trustees
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.
Section 5.4.4. Termination of a Series. Any Series may be terminated by
the affirmative vote of at least two-thirds of the Shares of such Series
outstanding or, when authorized by a Series Majority Shareholder Vote, by an
instrument in writing signed by a majority of the Trustees. Upon the termination
of a Series, the Series shall carry on no business except for the purpose of
winding up its affairs, and the Trustees shall proceed to wind up the affairs of
the Series, having with respect to such Series all powers contemplated by
Section 9.1 of this Declaration in the event of the termination of the Trust.
At any time that there are no Shares outstanding of any particular
Series previously established, the Trustees may by an instrument executed by a
majority of their number, abolish the Series.
Section 5.5. Rights of Shareholders. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration. 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. The ownership of the Trust Property and the right to conduct any
business herinbefore 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
or any Series thereof nor can they be called upon to share or assume any losses
of the Trust or any Series thereof or suffer an assessment of any kind by virtue
of their ownership of Shares. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust or any Series thereof nor
to entitle the legal representative of such Shareholder to an accounting or to
take any action in any court or otherwise against other Shareholders or the
Trustees or the Trust Property, but only to the rights of such Shareholder
hereunder. The Shares shall not entitle the holder to preference, preemptive,
appraisal, conversion or exchange rights.
Section 5.6. Trust Only. The Trust shall be of the type commonly termed
a Massachusetts business trust. 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 5.7. Issuance of Shares.
Section 5.7.1. General. The Trustees may from time to time without vote
of the Shareholders issue and sell or cause to be issued and sold Shares of any
Series, except that only Shares previously contracted to be sold may be issued
during any period when the right of redemption is suspended pursuant to the
provisions o Section 6.6 hereof. All such Shares, when issued in accordance with
the terms of this Section 5.7, shall be fully paid and nonassessable.
Section 5.7.2. Price. No Shares of any Series shall be issued or sold y
the Trustees for less than an amount which would result in proceeds to the
Trust, before taxes and other expenses payable by the Trust in connection with
such transaction, of at least the net asset value per share of Shares of such
Series next determined as set forth in Article VII hereof after receipt of a
purchase order for such Shares. For this purpose, the time of receipt of an
order shall be the time it is first received in proper form at such office or
agency as may be designated for the purpose.
Section 5.7.3. On Merger or Consolidation. In connection with the
acquisition of assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities), businesses or stock of another
Person, the Trustees may issue or cause to be issued Shares of any Series and
accept in payment therefor, in lieu of cash, such assets or businesses at their
market value (as determined by the Trustees) or such stock at the market value
(as determined by the Trustees) of the assets held by such other Person, either
with or without adjustment for contingent costs or liabilities, provided that
the funds of the Trust are permitted by law to be invested in such assets,
businesses or stock.
Section 5.7.4. Fractional Shares. The Trustees may issue and sell
fractions of Shares of any Series, to two decimal places, having pro rata all
the rights of full Shares of such Series, including, without limitation, the
right to vote and to receive dividends and distributions.
Section 5.8. 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 of each Series and the
number of Shares of each such Series 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 or
each Series. No Shareholder shall be entitled to receive payment of any dividend
or distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent or such other
officer or agent of the Trust as shall keep the said register for entry thereon.
Section 5.9. Share Certificates.
Section 5.9.1. General. For each Series each shareholder, upon a
specific request in writing, shall be entitled to a certificate, in such form as
shall be prescribed from time to time by the Trustees, stating the number of
Shares of that Series he or she owns. Such certificates shall be signed by the
Chairman of the Board, President or Vice President and by the Chief Financial
Officer, Treasurer or Assistant Treasurer. Such signatures may be facsimile if
the certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for Shares, the Trustees or the
transfer agent may, for any Series, the Trustees or the transfer agent may, for
any Series, either issue receipts therefor or keep accounts upon the books of
the Trust for the record holders of such Shares. Such record holders shall in
either case be deemed, for all purposes hereunder, to be the holders of
certificates for such Shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
Section 5.9.2. Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificates of any Series, a duplicate
certificate may be issued in place thereof, upon such terms as the Trustees
shall prescribe.
Section 5.9.3. Issuance of New Certificates to Pledgee. A Pledgee of
Shares of any Series transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially describes the debt
or duty that is intended to be secured thereby. Such new certificate shall
express on its face that it is held as collateral security, and the name of the
plegor shall be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
Section 5.9.4. Discontinuance of Issuance of Certificates. The Trustees
may at any time discontinue the issuance of share certificates for any Series
and may, by written notice to each shareholder, requires the surrender of share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of Shares of any Series.
Section 5.10. Transfer of Shares. Shares of any Series shall be
transferable on the records of the Trust upon delivery to the Trust or the
Transfer Agent or Agents of appropriate evidence of assignment, transfer,
succession or authority to transfer accompanied by any certificate or
certificates representing such Shares previously issued to the transferor. Upon
such delivery the transfer shall be recorded on the register of the appropriate
Series. Until such record is made, the Trustees, the Transfer Agent, and the
officers, employees and agents of the Trust or any Series shall not be entitled
or required to treat the assignee or transferee of any Share as the absolute
owner thereof for any purpose, and accordingly shall not be bound to recognize
any legal, equitable or other claim or interest in such Share on the part of any
Person, other than the holder of record, whether or not any of them shall have
express or other notice of such claim or interest.
Section 5.11. Voting Powers. The Shareholders shall have power to vote
only: (a) for the election of Trustees as provided in Sections 2.5 and 2.7
hereof; (b) with respect to any investment advisory or management contract
entered into pursuant to Section 3.2 hereof; (c) with respect to the removal of
Trustees pursuant to Section 5.14 hereof; (d) with respect to any termination of
the Trust, as provided in Section 9.1 hereof; (e) with respect to any amendment
of this Declaration to the extent and as provided in Section 9.2 hereof; (f)
with respect to any merger, consolidation or sale of assets of the Trust as
provided in Section 9.3 hereof; (g) with respect to incorporation of the Trust
to the extent and as provided in Section 9.4 hereof; (h) 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
derivitavely or as a class action on behalf of the Trust or the Shareholders;
and (i) with respect to such additional matters relating to the Trust as may be
required by this Declaration or the By-Laws or by reason of the registration of
the Trust or the Shares with the Commission or any State or by any applicable
law or any regulation or order of the Commission or any State or as the Trustees
may consider necessary or desirable. On any matter submitted to a vote of
Shareholders, all Shares issued and outstanding shall, subject to applicable
law, be voted as a single class in the aggregate and not by Series, except with
respect to the following matters: (i) any investment advisory or management
contract pertaining to any particular Series entered into pursuant to Section
3.2 hereof; (ii) any amendment of this Declaration affecting the Shareholders of
any particular Series differently from the Shareholders of any other Series; and
(iii) such additional matters relating to a particular Series as may be required
by this Declaration or by the By-Laws or by reason of the registration of the
Trust or the Shares of such Series with the Commission or any State or by any
applicable law (including the 1940 Act) or any regulation or order of the
Commission or any State or as the Trustees may consider necessary or desirable.
With respect to such matters, the Shareholders of each affected Series shall
have the power to vote as a separate Series. A majority of the Shares voted
shall decide any questions, except when a different vote is specified by
applicable law, any provision of the By-Laws or this Declaration. Each whole
Share shall be entitled to one vote as to any matter on which Shareholders are
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by Proxy. Until Shares are issued,
the Trustees may exercise all rights of Shareholders (including the right to
authorize an amendment to this Declaration under Section 9.2 hereof) and may
take any action required by law, the By-Laws or this Declaration to be taken by
Shareholders. The By-Laws may include further provisions for Shareholders' votes
and related matters.
Section 5.12. Meetings of Shareholders. Meetings of the Shareholders
may be called at any time by the Chairman of the Board, the President or any
Vice President of the Trust, or by a majority of the Trustees for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matters deemed to be necessary
or desirable. Without limiting the provisions of Section 5.14 hereof, a special
meeting of Shareholders may also be called at any time upon the written request
of a holder or the holders of not less than 25% of all of the Shares entitled to
be voted at such meeting, provided that the Shareholder or Shareholders
requesting such meeting shall have paid to the Trust the reasonably estimated
cost of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such Shareholder or Shareholders.
Section 5.13. Action Without a Meeting. Any action which may be taken
by Shareholders may be taken without a meeting if such proportion of
Shareholders as is required to vote for approval of the matter by law, the
Declaration or the By-Laws consents to the action in writing and the written
consents are filed with the records of Shareholders' meetings. Such consents
shall be treated for all purposes as a vote taken at a Shareholders' meeting.
Section 5.14. Removal of Trustees by Shareholders. No Trustee shall
serve as trustee of the Trust after the holders of record of not less than
two-thirds of the outstanding Shares of the Trust have declared that such
Trustee be removed from office either by a declaration in writing filed with the
Secretary of the Trust or by votes cast in person or by proxy at a meeting
called for such purpose. Notwithstanding the provisions of Section 5.12 hereof,
the Trustees shall promptly call a meeting of Shareholders for the purpose of
voting upon the question of removal of any Trustee or all of the Trustees when
requested in writing to do so by the record holders of not less than 10 per
centum of the outstanding Shares of the Trust. Whenever ten or more Shareholders
who have been such for at least six months preceding the date of application and
who hold in the aggregate either Shares having a net asset value of at least
$25,000 or at least 1 per centum of the outstanding Shares of the Trust,
whichever is less, shall apply to the Trustees in writing, stating that they
wish to communicate with other Shareholders with a view to obtaining signatures
to a request for a meeting for consideration of the removal of any or all of the
Trustees and accompanied by a form of communication and request which they wish
to transmit, the Trustees shall within five business days after receipt of such
application either afford to such applicants access to a list of the names and
addresses of all Shareholders as recorded on the books of the Trust; or inform
such applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request. If the Trustees elect to follow the latter course, the Trustees, upon
the written request of such Shareholders, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all Shareholders of record at their
addresses as recorded on the books of the Trust, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. The Trustees shall redeem Shares of
any Series, subject to the conditions and at the price determined as herein set
forth, upon proper application of the record holder thereof at such office or
agency as may be designated from time to time for that purpose by the Trustees.
The Trustees shall have power to determine from time to time the form and the
other accompanying documents which shall be necessary to constitute a proper
application for redemption.
Section 6.2. Price. Such Shares shall be redeemed for an amount not
exceeding the net asset value of such Shares next determined as set forth in
Article VII hereof after receipt of a proper application for redemption.
Section 6.3. Payment. Payment for such Shares redeemed shall be made to
the Shareholder of record within 7 days after the date upon which proper
application is received, subject to the Trustees or their designated agent being
satisfied that the purchase price of such Shares has been collected and to the
provisions of Section 6.4 hereof. Such payment shall be made in cash or other
assets of the Trust or both, as the Trustees shall prescribe. For the purposes
of such payment for Shares redeemed, the value of assets delivered shall be
determined as set forth in Article VII hereof as of the same time as of which
the per share net asset value of such Shares is determined.
Section 6.4. Effect of Suspension of Right of Redemption. If, pursuant
to Section 6.6 hereof, the Trustees shall declare a suspension of the right of
redemption, 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 shall be
suspended until the time specified in Section 6.6. 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.
The redemption price of Shares for which redemption applications have not been
revoked shall not exceed the net asset value of such Shares next determined as
set forth in Article VII hereof after the termination of such suspension, and
payment shall be made within 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, or an agent designated by such
owner, at a price not exceeding the net asset value per share next determined as
set forth in Article VII hereof after the time when the contract of purchase is
made.
Section 6.6. Suspension of Right of Redemption. The Trustees 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 (a) during which the New
York Stock Exchange is closed, other than customary weekend and holiday
closings, (b) during which trading on the New York Stock Exchange is restricted,
(c) during which an emergency exists as a result of which disposal by the
Trustees of securities owned by them is not reasonably practicable or it is not
reasonably practicable for the Trustees fairly to determine the value of the net
assets of the Trust, or (d) during which the Commission may for the protection
of security holders of the Trust by order permit suspension of the right of
redemption or postponement of the date of payment or redemption. Such suspension
shall take effect at such time as the Trustees shall specify, which shall not be
later than the close of business on the business day next following the
declaration, and thereafter there shall be no determination of net asset value
until the Trustees shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which (i) the
condition giving rise to the suspension shall have ceased to exist and (ii) no
other condition exists under which suspension is authorized under this Section
6.6. Each declaration by the Trustees pursuant to this Section 6.6 hall be
consistent with such applicable rules and regulations, if any, relating to the
subject matter thereof as shall have been promulgated by the Commission or any
other governmental body having jurisdiction over the Trust and as shall be in
effect at the time. To the extent not inconsistent with such rules and
regulations, the determination of the Trustees shall be conclusive.
Section 6.7. Involuntary Redemption of Shares; Disclosure of Holding.
(a) If the Trustees shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of Shares or other securities of
the Trust or any Series thereof has or may become concentrated in any
Person to an extent which would disqualify the Trust or any Series thereof
as a regulated investment company under the United States Internal Revenue
Code, then the Trustees shall have the power by lot or other means deemed
equitable by them.
(i) to call for redemption a number, or principal amount, of
Shares sufficient in the opinion of the Trustees to maintain or
bring the direct or indirect ownership of Shares into conformity
with the requirements or such qualification and
(ii) to refuse to transfer or issue Shares to any Person whose
acquisition of the Shares in question would in the opinion of the
Trustees result in such disqualification.
Any redemption pursuant to this Section 6.7(a) shall be effected at a
redemption price determined in accordance with Section 6.2 hereof.
(b) The holders of Shares of the Trust or any Series thereof shall,
upon request, disclose to the Trustees in writing such information with
respect to direct and indirect ownership of Shares of the Trust or any
Series thereof as the Trustees deem necessary to comply with the
provisions of the United States Internal Revenue Code, or to comply with
the requirements of any other taxing authority.
(c) The Trustees shall have the power to redeem Shares of any Series in
any account at a redemption price determined in accordance with Section
6.2 hereof if at any time the total number of Shares of such Series held
in such account is fewer than 50, in which event Shareholders shall be
notified that the number of their Shares is fewer than 50 and allowed 30
days to purchase additional Shares before their Shares are redeemed.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS
Section 7.1. By Whom Determined. The Trustees shall have the power and
duty to determine from time to time the net asset value per share of the Shares
of each Series. They may appoint one or more Persons to assist them in the
determination of the value of securities in the Portfolio of each Series and to
make the actual calculations pursuant to their directions. Any determination
made pursuant to this Article VII shall be binding on all parties concerned.
Section 7.2. When Determined. The net asset value shall be determined
at such times as the Trustees shall prescribe in accordance with the applicable
provisions of the 1940 act and regulations and orders from time to time in
effect thereunder. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act or the regulations and orders from
time to time in effect thereunder.
Section 7.3. Computation of Per Share Net Asset Value.
Section 7.3.1. Net Asset Value Per Share. The net asset value of each
Share of each Series as of any particular time shall be the quotient obtained by
dividing the value of the net assets of such Series (determined in accordance
with Section 7.3.2.) by the total number of outstanding Shares of that Series.
Section 7.3.2. Value of the Net Assets of a Series. The value of the
net assets of any Series as of any particular time shall be the value of that
Series' assets less its liabilities, determined and computed as follows:
(1) Assets. The assets of any Series shall be deemed to include the
following assets relating to that Series: (A) all cash on hand or on
deposit, including any interest accrued thereon, (B) all bills and demand
notes and accounts receivable, (C) all securities owned or contracted for
by the Trustees, (D) all stock and cash dividends and cash distributions
payable to but not yet received by the Trustees (when the valuation of the
underlying security is being determined ex-dividend), (E) all interest
accrued on any interest-bearing securities owned by the Trustees (except
accrued interest included in the valuation of the underlying security) and
(F) all other property of every kind and nature, including prepaid
expenses.
(2) Valuation of Assets. The value of such assets is to be determined
as follows:
(i) Cash and Prepaid Expenses. The value of any cash on hand
and of any prepaid expenses shall be deemed to be their full amount.
(ii) Other Current Assets. The value of any accounts
receivable and cash dividends and interest declared or accrued as
aforesaid and not yet received shall be deemed to be the full
amount thereof, unless the Trustees shall determine that any such
item is not worth its full amount. In such case the value of the
item shall be deemed to be its reasonable value, as determined by
the Trustees.
(iii) Securities and Other Property. A security for which
market quotations are readily available, which is not subject to
restrictions against sale and has a remaining maturity of more
than 60 days from the date of valuation may be valued on the basis
of such quotations. Any security which has a remaining maturity of
60 days or less may be valued on the basis of market quotations or
may be valued at cost plus earned discount; if such security was
acquired with a remaining maturity of more than 60 days, the cost
thereof for purposes of such valuation shall be deemed to be the
value on the sixty-first day prior to maturity. Any security for
which market quotations are not readily available and any other
property the valuation of which is not provided for above, shall
be valued at its fair market value as determined in such manner as
the Trustees shall from time to time prescribe by resolution. For
the purposes of this Article VII, market quotations shall not be
deemed to be readily available if in the judgment of the Trustees
such quotations, if any, do not afford a fair and adequate basis
for valuing holdings of securities of a size normally held by any
Series of the Trust, whether due to the infrequency or size of the
transactions represented by such quotations or otherwise.
(3) Liabilities. The liabilities of any Series shall not be deemed to
include any Shares of that Series and surplus, but they shall be deemed to
include the following liabilities relating to that Series: (A) all bills
and accounts payable, (B) all administrative expenses accrued and unpaid,
(C) all contractual obligations for the payment of money or property,
including the amount of any declared but unpaid dividends upon Shares of
that Series and the amount of all income accrued but not paid to
Shareholders of that Series, (D) all reserves authorized or approved by
the Trustees for taxes or contingencies and (E) all other liabilities of
whatsoever kind and nature except any liabilities represented by Shares of
that Series and surplus.
Section 7.4. Interim Determinations. Any determination of net asset
value other than as of the close of trading on the New York Stock Exchange may
be made either by appraisal or by calculation or estimate. Any such calculation
or estimate shall be based on changes in the market value of representative or
selected securities or on changes in recognized market averages since the last
closing appraisal and made in a manner which in the opinion of the Trustees will
fairly reflect the changes in the net asset value.
Section 7.5. Outstanding Shares. For the purposes of this Article VII,
outstanding Shares of any Series shall mean those Shares shown from time to time
on the books of such Series or the Transfer Agent as then issued and
outstanding, adjusted as follows:
(a) Shares sold shall be deemed to be outstanding Shares from
the time when the sale is reported to the Trustees or their agents
for determining net asset value, but not before (i) an
unconditional purchase order therefor has been received by the
Trustees (directly or through one of their agents) or by the
Principal Underwriter or the Distributor of the Shares of such
Series and the sale price in currency has been determined and (ii)
receipt by the Trustees (directly or through one of their agents)
of federal funds in the amount of the sale price; and such sale
price (net of commission, if any, and any stamp or other tax
payable by the Trust in connection with the issue and sale of the
Shares sold) shall be thereupon deemed to be an asset of the
Trust.
(b) Shares distributed pursuant to Section 7.6 shall be deemed
to be outstanding as of the time that Shareholders who shall
receive the distribution are determined.
(c) Shares for which a proper application for redemption has
been made or which are subject to repurchase by the Trustees shall
be deemed to be outstanding Shares up to and including the time as
of which the redemption or repurchase price is determined. After
such time, they shall be deemed to be no longer outstanding Shares
and the redemption or purchase price until paid shall be deemed to
be a liability of the Trust.
Section 7.6. Distributions to Shareholders. Without limiting the powers
of the Trustees under Subsection (f) of Section 2.1 of Article II hereof, the
Trustees may at any time and from time to time, as they may determine, allocate
or distribute to Shareholders of a Series such income and capital gains of the
Portfolio relating to that Series, accrued or realized, as the Trustees may
determine, after providing for actual, accrued or estimated expenses and
liabilities (including such reserves as the Trustees may establish) determined
in accordance with generally accepted accounting practices. The Trustees shall
have full discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding upon the
Shareholders. Such distributions shall be made in cash, property or Shares of
the appropriate Series or any combination thereof as determined by the Trustees.
Any such distribution paid in Shares shall be paid at the net asset value
thereof as determined pursuant to this Article VII. 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. Inasmuch as the
computation of net income and gains for Federal income tax purpose may vary from
the computation thereof on the books of the Trust, the above provisions shall be
interpreted to give the Trustees the power in their discretion to allocate or
distribute for any fiscal year as ordinary dividends and as capital gains
distributions respectively, additional amounts sufficient to enable the Trust to
avoid or reduce liability for taxes.
Section 7.7. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for the determination of
the per share net asset value of Shares of any Series as may be permitted by, or
as they deem necessary or desirable to enable the Trust to comply with, any
provision of the 1940 Act, any rule or regulation thereunder (including any rule
or regulation adopted pursuant to Section 22 of the 1940 Act by the Commission
or any securities association or exchange registered under the Securities
Exchange Act of 1934, as amended) or any order of exemption issued by the
Commission, all as in effect now or as hereafter amended or modified.
ARTICLE VIII
CUSTODIAN
Section 8.1. Appointment and Duties. Subject to the 1940 Act and such
rules, regulations and orders as the Commission may adopt, the Trustees shall
employ a bank or trust company having capital, surplus and undivided profits of
at least $2,000,000 as Custodian for the Trust or any Series thereof with
authority as the agent of the Trust, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the By-Laws
of the Trust:
(a) to hold the securities owned by the Series or by the Trust on
behalf of such Series and deliver the same upon written order;
(b) to receive and receipt for any moneys due to the Series, or to the
Trust on behalf of such Series, and deposit the same in its own banking
department or elsewhere as the Trustees may direct; and
(c) to disburse such funds upon orders or vouchers. The Trustees may
also authorize such custodian as the agent of the Trust (x) to keep the books
and accounts of the Series and furnish clerical and accounting services and (y)
to compute the net income and the value of the net assets of the Series.
The acts and services of the Custodian shall be performed upon such
basis of compensation as may be agreed upon by the Trustees and the Custodian.
If so directed by a Majority Shareholder Vote, the Custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
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 8.2. Action Upon termination of Custodian Agreement. Upon
termination of a custodian agreement or inability of any Custodian to continue
to serve, the Trustees shall promptly appoint a successor Custodian, but in the
event that no successor Custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders of the applicable Series to
determine whether the Series shall function without a Custodian or shall be
liquidated. If so directed by a Series Majority Shareholder Vote, the Custodian
shall deliver and pay over all property of the Series held by it as specified in
such vote.
Section 8.3. Central Certificate System, Etc. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities owned by the Trust or any
Series thereof in a system for the central handling of securities established by
a national securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
Section 8.4. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. Duration and Termination. (a) Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated by the affirmative vote of at least 66 2/3% of the Shares
outstanding or, when authorized by a Majority Shareholder Vote, by an instrument
in writing signed by a majority of the Trustees. Upon the termination of the
Trust,
(i) The Trust 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 and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been
wound up, including the power to fulfill or discharge the
contracts of the Trust, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any
part of the remaining Trust Property to one of 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 that
requires Shareholder approval under Section 9.3 hereof shall
receive the approval so required.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities
and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust
Property, in cash or in kind or partly each, among the
Shareholders according to their respective rights.
(b) After termination of the Trust and distribution to the Shareholders
as herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease.
Section 9.2. Amendment Procedure. (a) This Declaration may be amended
from time to time by an instrument in writing signed by a majority of the
Trustees when authorized by a Majority Shareholder Vote or, subject to the
provisions of Section 5.11, a Series Majority Shareholder Vote, as the case
may be, provided that any amendment having the purpose of changing the name
of the Trust or of any Series or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision shall not require authorization by the Shareholders.
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 any
Series thereof 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 as aforesaid, or a copy of
this Declaration as amended, executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when lodged among the records of
the Trust.
(c) Notwithstanding any other provision hereof, until such time as the
Registration Statement covering the first public offering of securities of
the Trust shall become effective, this Declaration may be terminated or
amended in any respect by the affirmative vote of a majority f the Trustees
or by an instrument signed by a majority of the Trustees.
Section 9.3. Merger, Consolidation and Sale of Assets. The Trust may
merge 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, including its good will, upon such terms and conditions and for
such consideration when and as authorized at any Shareholders' meeting called
for the purpose by a Majority Shareholder Vote.
Section 9.4. Incorporation. With the approval of a Majority Shareholder
Vote, the Trustees may cause to be organized or assist in organizing under the
laws of any jurisdiction a corporation or corporations or any other trust,
partnership, association or other organization to take over all of the Trust
Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and may sell, convey and transfer the Trust
Property to any such corporation, trust, partnership, association or other
organization in exchange for the shares or securities thereof or otherwise, and
may lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust partnership, association or other
organization, or any corporation, partnership, trust, association or other
organization in which the Trust 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. 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 less than all or
substantially all of the Trust Property to such organization or entities.
Section 9.5. Series Vote. When the 1940 Act or provisions of other
applicable law so require, the actions permitted under this Article IX shall be
authorized by a Series Majority Shareholder Vote.
ARTICLE X
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 appropriate
Series, including financial statements which shall at least annually be
accompanied by a report thereon of independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall
be filed with the Secretary of the Commonwealth of Massachusetts and in such
other places as may be required under the laws of the Commonwealth of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Unless any amendment sets forth some later time for
the effectiveness of such amendment, such amendment shall be effective upon its
filing with the Secretary of the Commonwealth of Massachusetts. A restated
Declaration, integrating into a single instrument all of the provisions of this
Declaration which are then in effect and operative, may be executed from time to
time by a majority of the Trustees and shall, upon filing with the Secretary of
the Commonwealth of Massachusetts, 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 11.2. 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 11.3. 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 11.4. Reliance on Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, certifying to: (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 or any Series thereof, shall be
conclusive evidence as to the matters so certified in favor of any Person
dealing with the Trustees and their successors.
Section 11.5. 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 requirements of the 1940 Act, would be inconsistent with any of
the conditions necessary for qualification of the Trust as a regulated
investment company under the United States Internal Revenue Code or is
inconsistent with other applicable laws and regulations, such provision shall be
deemed never to have constituted a part of this Declaration, provided that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not in
any manner affect such provision in any other jurisdiction or any other
provision of this Declaration in any jurisdiction.
Section 11.6. Section Headings; Interpretation. Section headings in
this Declaration are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof. References in this Declaration to "this
Declaration" shall be deemed to refer to this Declaration as from time to time
amended, and all expressions such as "hereof", "herein" and "hereunder" shall be
deemed to refer to this Declaration and not exclusively to the article or
section in which such words appear.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
24th day of March, 1987.
/s/ R. Bruce Oliver
-------------------
R. Bruce Oliver
/s/ Richard S. Scipione
-----------------------
Richard S. Scipione
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS BOSTON, MASSACHUSETTS
March 24, 1987
Then personally appeared the above-named R. Bruce Oliver and Richard S.
Scipione who severally acknowledged the foregoing instrument to be their free
act and deed.
Before me
/s/ Catherine M. Blushi
-----------------------
Notary Public
My commission expires:
4-24-92
- -------------------------
<PAGE>
EXHIBIT 99.1A
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
Instrument Changing Name of the Trust
The Trustees of John Hancock Tax-Exempt Series Trust (the "Trust"),
hereby amend the Trust's Declaration of Trust, dated March 24, 1987 (the
"Declaration of Trust"), to the extent necessary to reflect the change of name
of the John Hancock Tax-Exempt Series Trust to John Hancock Tax-Exempt Series
Fund, effective January 1, 1991.
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
Instrument on the 18th day of September, 1990.
/s/ Dennis S. Aronowitz
----------------------------
Dennis S. Aronowitz
Trustee
/s/ Elliott L. Atamian
----------------------------
Elliott L. Atamiam
Trustee
/s/ Edward J. Boudreau, Jr.
----------------------------
Edward J. Boudreau, Jr.
Trustee
/s/ Richard P. Chapman, Jr.
----------------------------
Richard P. Chapman, Jr.
Trustee
----------------------------
Francis C. Cleary, Jr.
Trustee
/s/ James V. Fetchero
----------------------------
James V. Fetchero
Trustee
/s/ Bayard Henry
----------------------------
Bayard Henry
Trustee
/s/ Richard S. Scipione
----------------------------
Richard S. Scipione
Trustee
The name John Hancock Tax-Exempt Series Trust is the designation of the
Trustees under the Declaration of Trust, dated March 24, 1987, 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 Registrant
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
Registrant, but Registrant's property only shall be bound.
<PAGE>
EXHIBIT 99.1B
JOHN HANCOCK TAX-EXEMPT SERIES FUND
Termination of Series
California Portfolio
THE UNDERSIGNED, constituting a majority of the Trustees of John
Hancock Tax-Exempt Series Fund, a Massachusetts business trust (the "Trust"),
acting pursuant to Section 5.4.4. of the Declaration of Trust dated March 24,
1987 of the Trust and pursuant to approval by a "Majority Shareholder Vote" (as
defined in Section 1.2 therein) authorizing the termination of the series of the
Trust designated as the "California Portfolio", do hereby terminate and abolish
such series.
IN WITNESS WHEREOF, the undersigned being at least a majority of the
Trustees of the Trust, have executed this amendment as of the 15th day of
September, 1995.
/s/Dennis S. Aronowitz /s/Gail D. Fosler
---------------------- ---------------------
Dennis S. Aronowitz Gail D. Fosler
/s/Edward J. Boudreau, Jr. ---------------------
---------------------- Bayard Henry
Edward J. Boudreau, Jr.
/s/Richard P. Chapman, Jr. ---------------------
---------------------- Richard S. Scipione
/s/William J. Cosgrove /s/Edward J. Spellman
---------------------- ---------------------
William J. Cosgrove Edward J. Spellman
The Declaration of Trust establishing John Hancock Tax-Exempt Series
Fund, dated March 24, 1987, a copy of which together with all amendments thereto
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name John Hancock Tax-Exempt Series Fund refers to the
Trustees under the Declaration of Trust collectively as Trustees, but not as
individuals or personally; and no Trustees, shareholder, officer, employee or
agent of John Hancock Tax-Exempt Series Fund shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Trust but the Trust Estate only shall be liable.
<PAGE>
EXHIBIT 99.2
BY-LAWS
OF
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
AS ADOPTED ON MARCH 24, 1987
<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 Adjournment......................................3
Section 3.7 Proxies..........................................3
Section 3.8 Inspection of Records............................4
Section 3.9 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...........................................5
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.................6
Section 5.1 How Constituted..................................6
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.................................7
ARTICLE VI -- Officers................................................7
Section 6.1 General..........................................7
Section 6.2 Election, Term of Office and Qualifications......7
Section 6.3 Resignations and Removals........................8
Section 6.4 Vacancies and Newly Created Offices..............8
Section 6.5 Chairman of the Board............................8
Section 6.6 President........................................8
Section 6.7 Vice President...................................9
Section 6.8 Chief Financial Officer, Treasurer and
Assistant Treasurers.............................9
Section 6.9 Secretary and Assistant Secretaries.............10
Section 6.10 Subordinate Officers............................10
Section 6.11 Remuneration....................................10
Section 6.12 Surety Bonds....................................10
ARTICLE VII -- Execution of Instruments; Voting of Securities........11
Section 7.1 Execution of Instruments........................11
Section 7.2 Voting of Securities............................11
ARTICLE VIII -- Fiscal Year, Accountants.............................12
Section 8.1 Fiscal Year.....................................12
Section 8.2 Accountants.....................................12
ARTICLE IX -- Amendments.............................................12
Section 9.1 General.........................................12
<PAGE>
BY-LAWS
OF
John Hancock Tax Exempt Series Trust
ARTICLE I
Definitions
The terms "Affiliated Person", "Commission", "Declaration", "Interested
Person", "Investment Adviser", "Majority Shareholder Vote", "1940 Act",
"Principal Underwriter", "Series", "Series Majority Shareholder Vote",
"Shareholder", "Shares", "Trust", "Trust Property" and "Trustees" have the
meanings given them in the Declaration of Trust (the "Declaration") of John
Hancock Tax-Exempt Series Trust dated March 24, 1987, 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.
<PAGE>
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 as 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 no specify the purposes of
the meeting.
Section 3.4. Shareholders Entitled to Vote. If, pursuant to Section 3.9
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 require that Shares be voted by Series, each Shareholder shall only be
entitled to vote, in person or by proxy, each Share or fraction thereof of such
Series 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 vote
thereat shall be a quorum for the transaction of business.
Section 3.6. 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 3.7. 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 owners 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 3.8. 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 3.9. 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 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 Chief
Financial Officer, 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 Chief Financial Officer, and may
include one or more Vice Presidents, one or more Assistant Secretaries, one or
more Treasurers or 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 meting of the Trustees. Except as
provided in Section 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 Chief Financial Officer, 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 be a Shareholder of the Trust.
Section 6.3. Resignation 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 the 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 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 Executive Vice President (or, in the absence of both the
President and the Executive Vice President, if there are two or more Senior Vice
Presidents, then the senior in length and time in office of the Senior 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
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 8.1 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 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
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 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 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 and 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, orders, promissory notes, assignments,
endorsements, checks and drafts for the payment of money by the Trust or any
Series thereof, and any 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 transactions 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 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 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 each Series thereof 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.
<PAGE>
EXHIBIT 99.2A
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.
<PAGE>
EXHIBIT 99.4
JOHN HANCOCK TAX-EXEMPT SERIES FUND
NEW YORK PORTFOLIO
A MASSACHUSETTS VOLUNTARY ASSOCIATION
fully paid and non-assessable shares of beneficial interest, without par value,
in John Hancock Tax-Exempt Series Fund - New York Portfolio (the "Fund"), a
Massachusetts voluntary association established by the Declaration of Trust
dated March 24, 1987, 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 Series Fund -
New York Portfolio, acting not individually but as such Trustees, and is not
valid until countersigned by the Transfer Agent.
The name John Hancock Tax-Exempt Series Fund - New York Portfolio is the
designation of the Trustees under the Declaration of Trust dated March 24, 1987,
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 9/10/93
Mass Fund
Signed by Boudreau, Chairman
<PAGE>
EXHIBIT 99.4A
JOHN HANCOCK TAX-EXEMPT SERIES FUND
MASSACHUSETTS PORTFOLIO
A MASSACHUSETTS VOLUNTARY ASSOCIATION
fully paid and non-assessable shares of beneficial interest, without par value,
in John Hancock Tax-Exempt Series Fund - Massachusetts Portfolio (the "Fund"), a
Massachusetts voluntary association established by the Declaration of Trust
dated March 24, 1987, 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 Series Fund -
Massachusetts Portfolio, acting not individually but as such Trustees, and is
not valid until countersigned by the Transfer Agent.
The name John Hancock Tax-Exempt Series Fund - Massachusetts Portfolio is the
designation of the Trustees under the Declaration of Trust dated March 24, 1987,
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 9/10/93....fpb
Mass Fund
Signed by Boudreau, Chairman
<PAGE>
EXHIBIT 99.5
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
INVESTMENT MANAGEMENT CONTRACT
DATED MAY 5, 1987
AS AMENDED: DECEMBER 19, 1989 SECTION 5 (SEE ATTACHED)
<PAGE>
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
May 5, 1987
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Investment Management Contract
Dear Sirs:
John Hancock Tax-Exempt Series Trust (the "Trust") has been organized
as a business trust under the laws of the Commonwealth of Massachusetts to
engage in the business of an investment company. The Trust's shares of
beneficial interest may be classified into series, each series representing the
entire undivided interest in a separate portfolio of assets. As of the data
hereof, the Trust has three series of shares, the California Portfolio, the
Massachusetts Portfolio and the New York Portfolio (each, a "Fund" and,
collectively, the "Funds"), each with a separate portfolio of assets.
The Trustees of the Trust (the "Trustees") have selected you to provide
investment advice and management for the Trust and the Funds and to provide
certain other services, as more fully set forth below, and you are willing to
provide such advice, management and services under the terms and conditions
hereinafter set forth. Accordingly, the Trust agrees with you as follows:
1. Delivery of Documents. The Trust has furnished you with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Declaration of Trust of the Trust, dated March 24, 1987 (the
"Declaration of Trust").
(b) By-Laws of the Trust as in effect on the data hereof
(c) Resolutions of the Trustees selecting you as investment adviser for
the Trust and the Funds and approving the form of this Contract.
(d) Commitments, limitations and undertakings made by the Trust to
state "blue sky" authorities for the purpose of qualifying shares of
the Trust for sale in such states.
The Trust will furnish you from time to time with copies, properly certified or
otherwise authenticated, of all amendments of or supplements to the foregoing,
if any.
2. Investment Management Services. You will use your best efforts to
provide to each Fund continuing and suitable investment programs consistent with
the investment policies, objectives and restrictions of such Fund. In the
performance of your duties hereunder, subject always (x) to the provisions
contained in the documents delivered to you 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 as in effect from time to time, under
the Securities Act of 1933, as amended, you will, at your expense:
(a) furnish each Fund with advice and recommendations consistent with
the investment policies, objectives and restrictions of such Fund, with
respect to the purchase, holding and disposition of portfolio assets,
including the purchase and sale of financial futures contracts;
(b) advise each Fund in connection with policy decisions to be made by
the Trustees or any committee thereof with respect to such Fund's
investments and, as requested, furnish such Fund with research,
economic and statistical data in connection with such Fund's
investments and investment policies;
(c) provide administration of the day-to-day investment operations of
each Fund;
(d) submit such reports relating to the valuation of each Fund's
securities as the Trustees may reasonably request;
(e) assist each Fund in any negotiations relating to its investments
with issuers, investment banking firms, securities brokers or dealers
and other institutions or investors;
(f) 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 each
Fund;
(g) from time to time or at any time requested by the Trustees, make
reports to the Trust of your performance of the foregoing services and
furnish advice and recommendations with respect to other aspects of the
business and affairs of each Fund;
(h) maintain and preserve the records required by the Investment
Company Act of 1940, as amended, to be maintained and preserved by the
Trust on behalf of each Fund (you agree that such records are the
property of the Trust and will be surrendered to the Trust promptly
upon request therefor);
(i) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as you may
deem necessary or useful in the discharge of your duties hereunder;
(j) oversee, and use your best efforts to assure the performance of,
the activities and services of each custodian, transfer agent and other
similar agents retained by the Trust.
3. Expenses of the Funds. You will pay:
(a) the compensation and expenses of all officers and employees of the
Trust and the Funds, except as expressly paid by the Trust or the
Funds, either directly or by reimbursement of John Hancock Advisers,
Inc., pursuant to Section 4(j);
(b) the expenses of office rent, telephone and other utilities, office
furniture, equipment, supplies and other office expenses of the Trust
and the Funds;
(c) any other expenses incurred by you in connection with the
performance of your duties hereunder; and
(d) premiums for such insurance as may be agreed upon by you and the
Trustees.
4. Expenses of the Trust or the Funds Not Paid by You. You will not be
required to pay any expenses which this Contract does not expressly make payable
by you. In particular, and without limiting the generality of the foregoing but
subject to the provisions of Section 3, you will not be required to pay:
(a) any and all expenses, taxes and governmental fees incurred by the
Trust or any Fund prior to the effective date of the first registration
statement of the Trust under the Securities Act of 1933, as amended;
(b) without limiting the generality of the foregoing clause (a), the
expenses of organizing the Trust and the Funds (including without
limitation legal, accounting and auditing fees and expenses incurred in
connection with the matters referred to in this clause (b)), of
registering the Trust under the Investment Company Act of 1940, as
amended, and of initially registering the shares of the Trust under the
Securities Act of 1933, as amended, and of qualifying the shares for
sale under state securities laws for the initial offering and sale of
the shares;
(c) the compensation and expenses of Trustees who are not interested
persons (as used in this Contract, such term shall have the meaning
specified in the Investment Company Act of 1940, as amended) of you,
and of independent advisers, independent contractors, consultants,
managers and other unaffiliated agents employed by the Trust or the
Funds other than through you;
(d) legal, accounting and auditing fees and expenses of the Trust or
the Funds;
(e) the fees or disbursements of custodians and depositories of the
Trust's assets, transfer agents, disbursing agents, plan agents and
registrars;
(f) taxes and governmental fees assessed against the Trust's assets and
payable by the Trust;
(g) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy material to shareholders of any Fund;
(h) brokers' commissions and underwriting fees;
(i) the expense of periodic calculations of the net asset value of the
shares of the Funds;
(j) with respect to each Fund, the compensation, in the form of salary,
fringe benefits and incentive compensation of the Fund's Chairman of
the Board and President, the Fund's Secretary and the Fund's Compliance
Officer who provide administrative and compliance services to the Fund,
the amount of such compensation to be paid by the Fund to be determined
from time to time by the Trustees who are not interested persons,
provided that such compensation paid by the Fund will not exceed in any
fiscal year 0.03 percent of the average daily net asset value of the
Fund during the year. Any such compensation to be paid by a Fund will
be accrued daily and, if paid by reimbursement of John Hancock
Advisers, Inc., will be paid quarterly or, if paid directly, will be
paid from time to time at intervals to be agreed upon by the Fund and
affected officers.
5. Compensation of the Adviser. For all services to be rendered,
facilities furnished and expenses paid or assumed by you as herein provided, for
each Fund the Trust will pay you quarterly, based on the average daily net asset
value of such Fund for the preceding quarter, a fee as set forth below:
Net Asset Value Annual Rate
First $250,000,000 0.50%
Next $250,000,000 0.45%
Next $500,000,000 0.425%
Next $250,000,000 0.40%
Amount Over $1,250,000,000 0.30%
If in any fiscal year of a Fund, after excluding taxes, interest,
brokerage commissions and extraordinary expenses beyond your control but
including only so much of the fee calculated pursuant to the foregoing
provisions of this paragraph 5 as is attributable to such fiscal year, the
normal expenses of such Fund chargeable to its income account shall exceed the
sum of
(a) 1.5% of the first $30,000,000 of such Fund's daily average
net asset value, and
(b) 1.0% of the Fund's daily average net asset value in excess
of $30,000,000,
you will waive your fee payable under the foregoing provisions of this paragraph
5 to the extent of such excess, and you will reimburse such Fund for any amount
by which such excess exceeds such fee. The waiver and reimbursement contemplated
by the foregoing sentence shall be given effect by your paying such Fund an
amount equal to the amount of such waiver of reimbursement promptly after the
end of such fiscal year. You understand that, in connection with the
qualification of securities of the Trust for sale in certain states, the Trust
has agreed, and may find it desirable to agree in the future, that it will
secure the consent of the securities commissioners of certain states prior to
treating any expense as an extraordinary expense beyond your control within the
meaning of the foregoing sentence. Accordingly, you agree that no expense shall
be so treated without the consent of such commissioners. The net asset value of
the Funds shall be determined pursuant to the applicable provisions of the
Declaration of Trust of the Trust and applicable law.
6. Other Activities of the Adviser and Its Affiliates. Nothing herein
contained shall prevent you or any affiliate or associate of yours 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 those of any of the Funds; and it is specifically
understood that officers, directors, and employees of yours, of your
subsidiaries and those of your parent company, John Hancock Mutual Life
Insurance Company, 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 yours, of your subsidiaries or of said
Insurance Company and to the said Insurance Company itself.
7. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Trust neither you nor any
investment management subsidiary of yours, nor any of your or their directors,
officers or employees will act as principal or agent or receive any commission.
If any occasion should arise in which you advise persons concerning the shares
of the Trust, you will act solely on your own behalf and not in any way on
behalf of the Trust or the Massachusetts Portfolio.
8. No Partnership of Joint Venture. The Trust, the Funds and you 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 Trust and Funds. The Trust and the Funds 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 Contract or any extension, renewal, or amendment hereof remains in
effect. At such time as such Contract shall no longer be in effect, the Trust
and the Funds will (to the extent they lawfully can) cease to use such a name or
any other name indicating that the Funds are advised or they are otherwise
connected with you. The Trust acknowledges that it has adopted the name "John
Hancock Tax-Exempt Series Trust" 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 names "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 or any successor to the
business of any thereof shall be the investment adviser.
10. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust or the
Funds in connection with the matters to which this Contract relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on your
part in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Contract. Any person, even though also
employed by you, who may be or become an employee of and paid by the Trust or
the Funds shall be deemed, when acting within the scope of his employment by the
Trust or the Funds, to be acting in such employment solely for the Trust or the
Funds and not as your employee or agent.
11. Duration and Termination of this Contract. This Contract shall
remain in force until the second anniversary of the date upon which this
Contract 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 you or
(other than as trustees) of the Trust, cast in person at a meeting called for
the purpose of voting on such approval, and (b) either (i) the Trustees or (ii)
with respect to each Fund, a majority of the outstanding voting securities of
each such Fund. This Contract may, on 60 days' written notice, be terminated at
any time by the Trustees without they payment of any penalty by the Trust or the
Funds by vote with respect to each Fund of a majority of the outstanding voting
securities of such Fund, or by you. Termination of this Contract with respect to
a Fund shall not be deemed to terminate or otherwise invalidate any provision of
any contract between you and any other series of the Trust. This Contract 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
Investment Company Act of 1940, as amended (particularly the definitions of
"assignment", "interested person" and "voting security") shall be applied.
12. Amendment of This Contract. No provision of this Contract 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 Contract shall be effective until approved
by (a) the Trustees, including a majority of the Trustees who are not interested
persons of you or (other than as trustees) of the Trust or any Fund, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
with respect to each Fund, a majority of the outstanding voting securities of
such Fund, as defined in the Investment Company Act of 1940, as amended,
provided that no approval shall be required pursuant to this clause (b) in
respect of any contract between you and the holders of outstanding voting
securities of any other series of the Trust.
13. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Contract 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 Series Trust is
the designation of the Trustees under the Declaration of Trust, dated March 24,
1987, 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 Trust and the Funds are not personally binding upon, nor shall resort be had
to the private property of, an of the Trustees, shareholders, officers,
employees or agents of the Trust or the Funds, but only the Trust's property
shall be bound.
Yours very truly,
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
By: /s/R. B. Oliver
-----------------------------------
Chairman of the Board and President
The foregoing Contract is
hereby agreed to as the date
hereof.
JOHN HANCOCK ADVISERS, INC.
By: /s/R. B. Oliver
- ----------------------------------
Vice Chairman of the Board,
President and Chief Executive Officer
<PAGE>
AMENDMENT TO INVESTMENT MANAGEMENT CONTRACT
It is hereby agreed that the second paragraph of Section 5 of the
Investment Management Contract between the undersigned parties dated May 5, 1987
is deleted in its entirety and replaced by the following:
If the total of all ordinary business expenses of the Fund for any
fiscal year exceeds the lowest applicable percentage of average net assets or
income limitations prescribed in any state in which shares of the Fund are
qualified for sale, you shall waive your fee to the extent of such excess and
will reimburse the Fund for any amount by which such excess exceeds your fee.
The waiver and reimbursement contemplated by the foregoing sentence shall be
given effect by your paying the Fund an amount equal to the amount of such
waiver or reimbursement on the same schedule as the fund pays the Advisory fee,
provided that if at the end of the fiscal year, Fund expenses do not exceed the
annual expense limitations, the Fund will reimburse you for monies paid by you
or fees foregone during the course of the fiscal year.
Unless prescribed otherwise by state law, ordinary business expenses
shall be calculated excluding taxes, interest, brokerage commissions, and
extraordinary expenses beyond your control. You understand that, in connection
with the qualification of securities of the Fund for sale in certain states, the
Fund has agreed, and may find it desirable to agree in the future, that it will
secure the consent of the securities commissioners of certain states prior to
treating any expenses as an extraordinary expense beyond your control within the
meaning of the foregoing sentence. Accordingly, you agree that no expense shall
be so treated without the consent of such commissioners. The net asset value of
the Fund shall be determined pursuant to the provisions in the Declaration of
Trust and applicable law.
Executed this 19th day of December, 1989.
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
By: /s/Edward J. Boudreau, Jr.
-----------------------------------
Chairman and President
JOHN HANCOCK ADVISERS, INC.
By: /s/Edward J. Boudreau, Jr.
-----------------------------------
President and Chief Executive Officer
<PAGE>
EXHIBIT 99.6
August 1, 1991
John Hancock Broker Distribution Services, Inc.
Boston, Massachusetts
Distribution Agreement
Dear Sir:
John Hancock Tax-Exempt Series 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 SERIES FUND
By: /s/ Edward J. Boudreau, Jr.
--------------------------------
Chairman
The foregoing Agreement is hereby accepted as of the date hereof.
JOHN HANCOCK BROKER DISTRIBUTION SERVICES, INC.
By: /s/ C. Troy Shaver, Jr.
-----------------------
President
<PAGE>
EXHIBIT 99.6A
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>
JOHN HANCOCK
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 99.8
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 to Property 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 99.9
JOHN HANCOCK TAX-EXEMPT SERIES FUND
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 Tax-Exempt Series Fund, 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;
WHEREAS, the Fund is authorized to issue shares in one series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer Shares in three series, the
California Portfolio, the Massachusetts Portfolio, and the New York Portfolio;
(such series, together with all other series subsequently established by the
Fund and made subject to this Agreement in accordance with Article 8, being
herein referred to as the "Fund(s)");
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 ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more of series of
Shares in addition to the California Portfolio, the Massachusetts Portfolio and
the New York Portfolio with respect to which it desires to have JHFSI render
services as a transfer agent under the terms hereof, it shall so notify JHFSI in
writing, and if JHFSI agrees in writing to provide such services, such series of
Shares shall become a Fund hereunder.
ARTICLE 9 ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 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 10 AMENDMENT
10.01 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 11 MASSACHUSETTS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and In accordance with the laws of The Commonwealth of
Massachusetts.
ARTICLE 12 MERGER OF AGREEMENT
12.01 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.
ARTICLE 13 LIMITATION ON LIABILITY
13.01 The name John Hancock Tax-Exempt Series Fund is the designation of
the Trustees under the Declaration of Trust dated March 24, 1987, 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.
<PAGE>
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 SERIES FUND
/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 99.10
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, N.Y. 10022
(212) 909-6000
May 6, 1987
John Hancock Tax-Exempt Series Trust
101 Huntington Avenue
Boston, Massachusetts 02199
John Hancock Tax-Exempt Series Trust
Dear Sirs:
We have acted as counsel for John Hancock Tax-Exempt Series Trust (the
"Trust") in connection with the offer by the Trust of an unlimited number of
shares of beneficial interest of the Trust (the "Shares") which have been
classified as three series portfolios -- California Portfolio, Massachusetts
Portfolio and New York Portfolio (each a "Fund" and, together, the "Funds"). We
have participated in the preparation of the Trust's Registration Statement (the
"Registration Statement") on Form N-1A (Registration No. 33-12947) relating to
the Shares filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended, on March 27, 1987 and
Pre-Effective Amendment No. 1 to the Registration Statement to be filed with the
Commission on May 7, 1987. Each Prospectus included in the Registration
Statement as amended to date is herein called a "Prospectus."
In so acting, we have participated in the preparation of the
Declaration of Trust of the Trust, dated March 24, 1987 (the "Declaration of
Trust"). We have also examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, or such records,
documents, certificates and other instruments, and have made such other
investigations as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below.
We are of the following opinion:
1. The Trust has been duly established as an unincorporated voluntary
association under Massachusetts law and has made all filings required to be made
by a voluntary association under Chapter 182 of the Massachusetts General Law.
2. Upon the issue of Shares for cash at a Fund's net asset value and
receipt by the Trust of the authorized consideration therefor as set forth in
each Fund's Prospectus, the Shares so issued will be validly issued, fully paid
and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, holders of Shares could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts,
obligations or affairs of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the Trustees on behalf of the Trust. The Declaration of Trust
provides for indemnification out of the Trust's property for all loss and
expense of any shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
registration of the Shares for offering and sale pursuant to the Securities Act
of 1933, as amended. We consent to the filing of this opinion with and as a part
of the Registration Statement.
Very truly yours,
/s/ Debevoise & Plimpton
-------------------------------
December 19, 1995
EXHIBIT 99.10A
John Hancock Tax-Exempt Series Fund
101 Huntington Avenue
Boston, MA 02199
RE: John Hancock Tax-Exempt Series Fund
Massachusetts Portfolio
New York Portfolio
(File Nos. 33-12947; 811-5079) (0000811921)
Ladies and Gentlemen:
In connection with the filing of Post-Effective Amendment No. 11 pursuant to
Rule 24e-2 under the Investment Company Act of 1940, as amended, registering by
Post-Effective Amendment No. 10 under the Securities Act of 1933, as amended,
22,998 shares of the John Hancock Tax-Exempt Series Fund (the "Fund") sold in
reliance upon Rule 24e-2 during the fiscal year ending August 31, 1995, it is
the opinion of the undersigned that such shares will be legally issued, fully
paid and nonassessable.
In connection with this opinion it should be noted that the Fund is an entity of
the type generally known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of a Massachusetts business trust may be held
personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for obligations of the Fund
and indemnifies any shareholder of the Fund, with this indemnification to be
paid solely out of the assets of the Fund. Therefore, the shareholder's risk is
limited to circumstances in which the assets of the Fund are insufficient to
meet the obligations asserted against Fund assets.
Sincerely,
/s/ Avery P. Maher
Avery P. Maher
Assistant Secretary
Member of Massachusetts Bar
EXHIBIT 99.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statements of Additional Information
constituting part of this Post Effective Amendment No. 10 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
October 17, 1995, relating to the financial statements and financial highlights
appearing in the August 31, 1995 Annual Reports to Shareholders of John Hancock
Tax-Exempt Series (Massachusetts Portfolio and New York Portfolio), which appear
in such Statements of Additional Information and to the incorporation by
reference of our reports into the Prospectuses which constitute part of this
Registration Statement. We also consent to the reference to us under the heading
"Independent Auditors" in the Statements of Additional Information and "The
Fund's Financial Highlights" in the Prospectuses.
/s/PRICE WATERHOUSE LLP
Boston, Massachusetts
December 19, 1995
EXHIBIT 99.13
May 4, 1987
SUBSCRIPTION AGREEMENT
JOHN HANCOCK TAX-EXEMPT SERIES TRUST, a business trust organized under
the laws of the Commonwealth of Massachusetts (the "Trust") and consisting of
three series portfolios, namely, John Hancock Tax-Exempt Series Trust --
California Portfolio ("California Portfolio"), John Hancock Tax-Exempt Series
Trust -- Massachusetts Portfolio, ("Massachusetts Portfolio") and John Hancock
Tax-Exempt Series Trust -- New York Portfolio ("New York Portfolio") (the
"Funds"), and JOHN HANCOCK ADVISERS, INC., a Delaware corporation (the
"Purchaser"), hereby agree with each other as follows:
1. Proposed Registration of Shares of Beneficial Interest. The Trust
and the Funds propose to issue and sell to the public shares of beneficial
interest ("Shares") pursuant to a registration statement on Form N-1A (the
"Registration Statement") to be filed with the Securities and Exchange
Commission. In order to provide the Trust with a net worth of at least $100,000
as required by Section 14 of the Investment Company Act of 1940, as amended, and
additional capitalization, the Trust hereby offers the Purchaser at private
placement $30,000 Shares of the Trust representing 10,000 shares each of the
California Portfolio, the Massachusetts Portfolio and the New York Portfolio at
a price of $10.00 per share for purchase prior to the effective date of the
Registration Statement.
2. Purchase of Shares. The Purchaser agrees to purchase 30,000 Shares
two days prior to the effective date of the Registration Statement (or such
earlier date as the parties may agree upon). The Shares will be purchased at the
purchase price of $10.00 per share. The Purchaser will make payment for the
30,000 Shares to be purchased by it by delivery of a certified or official bank
check payable to the order of the Trust at least two business days prior to the
date specified by the Trust as the proposed effective date of the Registration
Statement in a written notice delivered to the Purchaser by the Trust no later
than three business days prior to such proposed effective date.
3. Purchase for Investment. The Purchaser represents and warrants to
the Trust that the Shares are being acquired by it for investment and not with a
view to the resale or further distribution thereof and that it has no present
intention to redeem the Shares.
4. Execution. This instrument is executed and made on behalf of the
Trust and the Funds by an officer of the Trust and the Funds. The name John
Hancock Tax-Exempt Series Trust is the designation of the Trustees under the
Declaration of Trust, dated March 1987, 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 Trust are not personally
binding upon, nor shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees, or agents of the Trust or the
Funds, but the Trust's property only shall be bound.
5. Assignment. The right of the Purchaser to purchase the Shares as set
forth herein is not assignable without the consent of the Trust.
6. Notices, etc. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been sufficiently
given if mailed by first-class mail or telegraphed and addressed as follows:
To the Trust: 101 Huntington Avenue
Boston, Massachusetts 02199
To the Funds: 101 Huntington Avenue
Boston, Massachusetts 02199
To the Purchaser: 101 Huntington Avenue
Boston, Massachusetts 02199
or in any case to such other address as shall have been specified by notice from
the addressee to the sender of such notice, request or other communication.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
JOHN HANCOCK TAX-EXEMPT SERIES TRUST
By: /s/R. B. Oliver
-----------------------------------
Chairman of the Board and President
JOHN HANCOCK ADVISERS, INC.
By: /s/R. B. Oliver
------------------------------------
Vice Chairman of the Board,
President and Chief Executive Officer
<PAGE>
Exhibit 99.15
JOHN HANCOCK TAX-EXEMPT SERIES FUND --
MASSACHUSETTS PORTFOLIO
NEW YORK PORTFOLIO
January 3, 1994
Amended and Restated Distribution Plan
As of September 15, 1995
Class A Shares
ARTICLE I. THIS PLAN
This amended and restated Distribution Plan (the "Plan") sets forth the
terms and conditions on which John Hancock Tax-Exempt Series Fund (the "Trust"),
on behalf of the Massachusetts Portfolio and New York Portfolio (the
"Portfolios"), two series portfolios of the Trust, on behalf of the Portfolios'
Class A shares, will, after the effective date hereof, pay certain amounts to
John Hancock Funds ("JH Funds") in connection with the provision by JH Funds of
certain services to the Fund and its Class A shareholders, as set forth herein.
Certain of such payments by each Portfolio 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 a Portfolio 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 Trust and JH Funds heretofore entered into
a Distribution Agreement, dated August 1, 1991 (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
Each Portfolio shall pay to JH Funds a fee in the amount specified in
Article III hereof. Such fee may be spent by JH Funds on any activities or
expenses primarily intended to result in the sale of Class A shares of a
Portfolio, 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 JH Funds of a Portfolio or
other broker-dealers ("Selling Brokers") that have entered into an agreement
with Broker Services for the sale of Class A shares of a Portfolio, (b) direct
out-of-pocket expenses incurred in connection with the distribution of Class A
shares of a Portfolio, including expenses related to printing of prospectuses
and reports to other than existing Class A shareholders of a Portfolio, and
preparation, printing and distribution of sales literature and advertising
materials, and (c) an allocation of overhead and other branch office expenses of
JH Funds related to the distribution of Class A shares of a Portfolio.
Service Expenses include payments made to, or on account of, account
executives of selected broker-dealers (including affiliates of JH Funds) and
others who furnish personal and shareholder account maintenance services to
Class A shareholders of a Portfolio.
ARTICLE III. MAXIMUM EXPENDITURES
The expenditures to be made by each Portfolio pursuant to this Plan,
and the basis upon which such expenditures will be made, shall be determined by
each Portfolio, and in no event shall such expenditures exceed 0.30% of the
average daily net asset value of the Class A shares of a Portfolio (determined
in accordance with each Portfolio'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 Portfolio. Such expenditures shall be calculated and accrued daily
and paid monthly or at such other intervals as the Trustees shall determine. In
the event JH Funds 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 JH Funds under
this Plan during any fiscal year of a Portfolio and not expended or allocated by
JH Funds for actual or budgeted Distribution Expenses and Service Expenses
during such fiscal year will be promptly returned to the Portfolio.
ARTICLE IV. EXPENSES BORNE BY THE PORTFOLIO
Notwithstanding any other provision of this Plan, the Trust, each
Portfolio 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, as amended, dated May 5, 1987, as from time to
time continued and amended (the "Management Contract"), and under the
Portfolios' current prospectus as it is from time to time in effect. Except as
otherwise contemplated by this Plan, the Trust, and as Portfolio 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 Portfolio.
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 Portfolios and (b) those Trustees of the Portfolios who are not
"interested persons" of the Portfolios, 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
JH Funds shall furnish the Portfolio and its Trustees quarterly, or at
such other intervals as the Portfolio 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
Portfolio's outstanding voting Class A shares, or (b) by Broker Services on 60
days' notice in writing to the Portfolio.
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 Portfolio, 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 Portfolio'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 Portfolio hereunder without the approval of a majority of the
outstanding voting Class A shares of the Portfolio. 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.
<PAGE>
ARTICLE XI. LIMITATION OF LIABILITY
The names "John Hancock Tax-Exempt Series Fund -- Massachusetts
Portfolio; New York Portfolio" are the designations of the Trustees under the
Declaration of Trust, dated March 24, 1987, 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 Trust and each Portfolio
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
Portfolio, but only each Portfolio's property shall be bound. No Portfolio of
the Trust shall be responsible for the obligations of any other Portfolio of the
Trust.
IN WITNESS WHEREOF, the Trust has executed this amended and restated
Distribution Plan effective as of the 15th day of September, 1995 in Boston,
Massachusetts.
JOHN HANCOCK TAX-EXEMPT SERIES FUND --
MASSACHUSETTS PORTFOLIO
NEW YORK PORTFOLIO
By /s/ Anne C. Hodsdon
----------------------
Anne C. Hodsdon
President
JOHN HANCOCK FUNDS, INC.
By /s/ C.Troy Shaver, Jr.
----------------------
C.Troy Shaver, Jr.
President
EXHIBIT 99.16
JH TAX-EXEMPT SERIES FUND - CALIFORNIA PORTFOLIO
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at Period End
For $10,000 initial investment placed
Average Annual Total Return Rate Investment Value at End of Period CUMULATIVE into the Fund on inception date
<S> <C> <C> <C> <C> <C>
7.99 Year Return: 8.55%* 10 Year Value: $1,925.39 92.54% $19,253.92
5 Year Return: 8.44% 5 Year Value: $1,499.72 49.97%
3 Year Return: 6.71% 3 Year Value: $1,215.09
1 Year Return: 8.40% 1 Year Value: $1,083.97 8.40%
YTD Return: 11.69% YTD Value: $1,116.94
MTD Return: 1.14% MTD Value $1,011.36
* Since Inception NOTE: YTD includes Ex-dividend
for the period
$0.00154 Monthly Declared
Constant Sales Charge: 0.00% $0.0513
<CAPTION>
Payment/
Month Option Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/2/87 $10.00 $10.00 0.00%
0.00%
9/87 $9.84 $9.84 0.00%
10/87 $9.85 $9.85 0.00% 10/20/87 $0.0649 $9.45
11/87 $10.07 $10.07 0.00% 11/20/87 $0.0474 $10.14
12/87 $10.24 $10.24 0.00% 12/18/87 $0.0455 $10.10
1/88 $10.67 $10.67 0.00% 01/08/88 $0.0224 $10.24
2/88 $10.72 $10.72 0.00% 02/10/88 $0.0757 $10.71
3/88 $10.40 $10.40 0.00% 03/10/88 $0.0544 $10.62
4/88 $10.36 $10.36 0.00% 04/08/88 $0.0511 $10.37
5/88 $10.24 $10.24 0.00% 05/10/88 $0.0568 $10.30
6/88 $10.42 $10.42 0.00% 06/10/88 $0.0559 $10.33
7/88 $10.39 $10.39 0.00% 07/08/88 $0.0508 $10.37
8/88 $10.36 $10.36 0.00% 08/10/88 $0.0587 $10.47
9/88 $10.55 $10.55 0.00% 09/09/88 $0.0546 $10.51
10/88 $10.77 $10.77 0.00% 10/07/88 $0.0516 $10.64
11/88 $10.54 $10.54 0.00% 11/10/88 $0.0610 $10.72
12/88 $10.72 $10.72 0.00% 12/09/88 $0.0541 $10.54
1/89 $10.90 $10.90 0.00% 01/09/89 $0.0379 $10.72
2/89 $10.70 $10.70 0.00% 02/10/89 $0.0793 $10.78
3/89 $10.65 $10.65 0.00% 03/10/89 $0.0553 $10.71
4/89 $10.87 $10.87 0.00% 04/10/89 $0.0586 $10.69
5/89 $11.02 $11.02 0.00% 05/10/89 $0.0568 $10.85
6/89 $11.06 $11.06 0.00% 06/09/89 $0.0556 $11.14
7/89 $11.14 $11.14 0.00% 07/10/89 $0.0573 $11.10
8/89 $10.93 $10.93 0.00% 08/10/89 $0.0559 $11.05
9/89 $10.84 $10.84 0.00% 09/08/89 $0.0532 $10.96
10/89 $10.90 $10.90 0.00% 10/10/89 $0.0594 $10.95
11/89 $11.03 $11.03 0.00% 11/10/89 $0.0562 $10.93
12/89 $11.03 $11.03 0.00% 12/08/89 $0.0516 $11.01
1/90 $10.83 $10.83 0.00% 01/10/90 $0.0373 $11.03
2/90 $10.92 $10.92 0.00% 02/09/90 $0.0772 $10.94
3/90 $10.86 $10.86 0.00% 03/09/90 $0.0537 $10.88
4/90 $10.65 $10.65 0.00% 04/10/90 $0.0580 $10.88
5/90 $10.90 $10.90 0.00% 05/10/90 $0.0553 $10.80
6/90 $10.94 $10.94 0.00% 06/08/90 $0.0523 $10.94
7/90 $11.07 $11.07 0.00% 07/10/90 $0.0585 $10.94
8/90 $10.72 $10.72 0.00% 08/10/90 $0.0547 $10.95
9/90 $10.63 $10.63 0.00% 09/10/90 $0.0571 $10.75
10/90 $10.84 $10.84 0.00% 10/10/90 $0.0587 $10.63
11/90 $11.00 $11.00 0.00% 11/09/90 $0.0564 $10.92
12/90 $10.98 $10.98 0.00% 12/10/90 $0.0599 $11.05
1/91 $11.08 $11.08 0.00% 01/10/91 $0.0407 $10.98
2/91 $11.07 $11.07 0.00% 02/08/91 $0.0764 $11.19
3/91 $11.01 $11.01 0.00% 03/08/91 $0.0575 $11.04
4/91 $11.13 $11.13 0.00% 04/10/91 $0.0626 $11.06
5/91 $11.18 $11.18 0.00% 05/10/91 $0.0579 $11.16
6/91 $11.08 $11.08 0.00% 06/10/91 $0.0585 $11.04
7/91 $11.18 $11.18 0.00% 07/10/91 $0.0573 $11.10
8/91 $11.26 $11.26 0.00% 08/09/91 $0.0564 $11.21
9/91 $11.36 $11.36 0.00% 09/10/91 $0.0615 $11.24
10/91 $11.40 $11.40 0.00% 10/10/91 $0.0584 $11.40
11/91 $11.34 $11.34 0.00% 11/08/91 $0.0554 $11.41
12/91 $11.49 $11.49 0.00% 12/10/91 $0.0612 $11.33
/ 0.00% 12/31/91 $0.0399 $11.49
1/92 $11.41 $11.41 0.00%
2/92 $11.40 $11.40 0.00% 02/10/92 $0.0786 $11.39
3/92 $11.36 $11.36 0.00% 03/10/92 $0.0574 $11.37
4/92 $11.39 $11.39 0.00% 04/10/92 $0.0587 $11.44
5/92 $11.47 $11.47 0.00% 05/08/92 $0.0536 $11.44
6/92 $11.61 $11.61 0.00% 06/10/92 $0.0628 $11.47
7/92 $11.92 $11.92 0.00% 07/10/92 $0.0580 $11.76
8/92 $11.68 $11.68 0.00% 08/10/92 $0.0585 $11.85
9/92 $11.67 $11.67 0.00% 09/10/92 $0.0585 $11.76
10/92 $11.39 $11.39 0.00% 10/09/92 $0.0550 $11.62
11/92 $11.48 $11.48 0.00% 11/03/92 $0.1407 $11.27 $0.1407 LT
11/92 $11.48 $11.48 0.00% 11/10/92 $0.0600 $11.37
12/92 $11.58 $11.58 0.00% 12/10/92 $0.0565 $11.53
/ 0.00% 12/30/92 $0.0365 $11.57
1/93 $11.65 $11.65 0.00% 01/08/93 $0.0162 $11.52
2/93 $12.07 $12.07 0.00% 02/10/93 $0.0615 $11.74
3/93 $11.86 $11.86 0.00% 03/10/93 $0.0540 $12.04
4/93 $11.96 $11.96 0.00% 04/08/93 $0.0524 $11.92
5/93 $12.00 $12.00 0.00% 05/10/93 $0.0582 $12.03
6/93 $12.16 $12.16 0.00% 06/10/93 $0.0553 $12.02
7/93 $12.07 $12.07 0.00% 07/09/93 $0.0522 $12.17
8/93 $12.36 $12.36 0.00% 08/10/93 $0.0557 $12.17
9/93 $12.44 $12.44 0.00% 09/10/93 $0.0543 $12.50
10/93 $12.42 $12.42 0.00% 10/08/93 $0.0495 $12.49
11/93 $12.18 $12.18 0.00% 11/10/93 $0.0566 $12.22
12/93 $12.16 $12.16 0.00% 12/03/93 $0.2230 $12.01 $0.22302 LT&ST
12/93 $12.16 $12.16 0.00% 12/10/93 $0.0522 $12.17
12/93 $12.16 $12.16 0.00% 12/30/93 $0.0335 $12.16
1/94 $12.26 $12.26 0.00%
2/94 $11.94 $11.94 0.00% 2/10/94 $0.0717 $12.12
3/94 $11.31 $11.31 0.00% 3/10/94 $0.0504 $11.64
4/94 $11.24 $11.24 0.00% 4/08/94 $0.0481 $11.24
5/94 $11.33 $11.33 0.00% 5/10/94 $0.0520 $11.14
6/94 $11.23 $11.23 0.00% 6/10/94 $0.0520 $11.49
7/94 $11.39 $11.39 0.00% 7/08/94 $0.0486 $11.22
8/94 $11.38 $11.38 0.00% 8/10/94 $0.0558 $11.28
9/94 $11.15 $11.15 0.00% 9/09/94 $0.0518 $11.27
10/94 $10.93 $10.93 0.00% 10/10/94 $0.0544 $11.04
11/94 $10.64 $10.64 0.00% 11/10/94 $0.0529 $10.63
12/94 $10.80 $10.80 0.00% 12/09/94 $0.0508 $10.71
12/94 $10.80 $10.80 0.00% 12/29/94 $0.0340 $10.80
1/95 $11.11 $11.11 0.00% 1/10/95 $0.02049 $10.86
2/95 $11.39 $11.39 0.00% 2/10/95 $0.05401 $11.23
3/95 $11.45 $11.45 0.00% 3/10/95 $0.05070 $11.35
4/95 $11.38 $11.38 0.00% 4/10/95 $0.05264 $11.52
5/95 $11.74 $11.74 0.00% 5/10/95 $0.05140 $11.58
6/95 $11.54 $11.54 0.00% 6/09/95 $0.05099 $11.74
6/95 $11.54 $11.54 0.00% 6/29/95 $0.03504 $11.54
7/95 $11.55 $11.55 0.00% 7/28/95 $0.04870 $11.54
8/95 $11.63 $11.63 0.00% 8/30/95 $0.05480 $11.58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
10-Year 5-Year PLOT POINTS
- ------ --------- ----------- ----------- -------- ----------- ----------- FOR
Month Dividend # of Shares Shares Dividend # of Shares Shares ANNUAL
Ended Received Reinv. Outstanding Received Reinv. Outstanding REPORTS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/2/87 100.000 10,000.000
0.000
9/87 $0.0000 0.000 100.000 9,840.000
10/87 $6.4900 0.687 100.687 9,917.670
11/87 $4.7726 0.471 101.158 10,186.611
12/87 $4.6027 0.456 101.614 10,405.274
1/88 $2.2762 0.222 101.836 10,865.901
2/88 $7.7090 0.720 102.556 10,994.003
3/88 $5.5790 0.525 103.081 10,720.424
4/88 $5.2674 0.508 103.589 10,731.820
5/88 $5.8839 0.571 104.160 10,665.984
6/88 $5.8225 0.564 104.724 10,912.241
7/88 $5.3200 0.513 105.237 10,934.124
8/88 $6.1774 0.590 105.827 10,963.677
9/88 $5.7782 0.550 106.377 11,222.774
10/88 $5.4891 0.516 106.893 11,512.376
11/88 $6.5205 0.608 107.501 11,330.605
12/88 $5.8158 0.552 108.053 11,583.282
1/89 $4.0952 0.382 108.435 11,819.415
2/89 $8.5989 0.798 109.233 11,687.931
3/89 $6.0406 0.564 109.797 11,693.381
4/89 $6.4341 0.602 110.399 12,000.371
5/89 $6.2707 0.578 110.977 12,229.665
6/89 $6.1703 0.554 111.531 12,335.329
7/89 $6.3907 0.576 112.107 12,488.720
8/89 $6.2668 0.567 112.674 12,315.268
9/89 $5.9943 0.547 113.221 12,273.156
10/89 $6.7253 0.614 113.835 12,408.015
11/89 $6.3975 0.585 114.420 12,620.526
12/89 $5.9041 0.536 114.956 12,679.647
1/90 $4.2879 0.389 115.345 12,491.864
2/90 $8.9046 0.814 116.159 12,684.563
3/90 $6.2377 0.573 116.732 12,677.095
4/90 $6.7705 0.622 117.354 12,498.201
5/90 $6.4897 0.601 117.955 12,857.095
6/90 $6.1690 0.564 118.519 12,965.979
7/90 $6.9334 0.634 119.153 13,190.237
8/90 $6.5177 0.595 119.748 93.284 12,836.986
9/90 $6.8376 0.636 120.384 $5.3265 0.495 93.779 12,796.819
10/90 $7.0665 0.665 121.049 $5.5048 0.518 94.297 13,121.712
11/90 $6.8272 0.625 121.674 $5.3184 0.487 94.784 13,384.140
12/90 $7.2883 0.660 122.334 $5.6776 0.514 95.298 13,432.273
1/91 $4.9790 0.453 122.787 $3.8786 0.353 95.651 13,604.800
2/91 $9.3809 0.838 123.625 $7.3077 0.653 96.304 13,685.288
3/91 $7.1084 0.644 124.269 $5.5375 0.502 96.806 13,682.017
4/91 $7.7792 0.703 124.972 $6.0601 0.548 97.354 13,909.384
5/91 $7.2359 0.648 125.620 $5.6368 0.505 97.859 14,044.316
6/91 $7.3488 0.666 126.286 $5.7248 0.519 98.378 13,992.489
7/91 $7.2362 0.652 126.938 $5.6371 0.508 98.886 14,191.668
8/91 $7.1593 0.639 127.577 $5.5772 0.498 99.384 14,365.170
9/91 $7.8460 0.698 128.275 $6.1121 0.544 99.928 14,572.040
10/91 $7.4913 0.657 128.932 $5.8358 0.512 100.440 14,698.248
11/91 $7.1428 0.626 129.558 $5.5644 0.488 100.928 14,691.877
12/91 $7.9289 0.700 130.258 $6.1768 0.545 101.473 14,966.644
/ $5.1973 0.452 130.710 $4.0488 0.352 101.825 15,018.579
1/92 $0.0000 0.000 130.710 $0.0000 0.000 101.825 14,914.011
2/92 $10.2738 0.902 131.612 $8.0034 0.703 102.528 15,003.768
3/92 $7.5545 0.664 132.276 $5.8851 0.518 103.046 15,026.554
4/92 $7.7646 0.679 132.955 $6.0488 0.529 103.575 15,143.575
5/92 $7.1264 0.623 133.578 $5.5516 0.485 104.060 15,321.397
6/92 $8.3887 0.731 134.309 $6.5350 0.570 104.630 15,593.275
7/92 $7.7899 0.662 134.971 $6.0685 0.516 105.146 16,088.543
8/92 $7.8958 0.666 135.637 $6.1510 0.519 105.665 15,842.402
9/92 $7.9348 0.675 136.312 $6.1814 0.526 106.191 15,907.610
10/92 $7.4972 0.645 136.957 $5.8405 0.503 106.694 15,599.402
11/92 $19.2698 1.710 138.667 $15.0118 1.332 108.026 15,918.972
11/92 $8.3200 0.732 139.399 $6.4816 0.570 108.596 16,003.005
12/92 $7.8760 0.683 140.082 $6.1357 0.532 109.128 16,221.496
/ $5.1130 0.442 140.524 $3.9832 0.344 109.472 16,272.679
1/93 $2.2765 0.198 140.722 $1.7734 0.154 109.626 16,272.679
2/93 $8.6544 0.737 141.459 $6.7420 0.574 110.200 17,074.101
3/93 $7.6388 0.634 142.093 $5.9508 0.494 110.694 16,852.230
4/93 $7.4457 0.625 142.718 $5.8004 0.487 111.181 17,069.073
5/93 $8.3062 0.690 143.408 $6.4707 0.538 111.719 17,208.960
6/93 $7.9305 0.660 144.068 $6.1781 0.514 112.233 17,518.669
7/93 $7.5203 0.618 144.686 $5.8586 0.481 112.714 17,463.600
8/93 $8.0590 0.662 145.348 $6.2782 0.516 113.230 17,965.013
9/93 $7.8924 0.631 145.979 $6.1484 0.492 113.722 18,159.788
10/93 $7.2260 0.579 146.558 $5.6292 0.451 114.173 18,202.504
11/93 $8.2952 0.679 147.237 $6.4622 0.529 114.702 17,933.467
12/93 $32.8368 2.734 149.971 $25.5808 2.130 116.832 18,236.474
12/93 $7.8345 0.644 150.615 $6.1033 0.502 117.334 18,314.784
12/93 $5.0456 0.415 151.030 $3.9307 0.323 117.657 18,365.248
1/94 $0.0000 0.000 151.030 $0.0000 0.000 117.657 18,516.278
2/94 $10.8243 0.893 151.923 $8.4325 0.696 118.353 18,139.606
3/94 $7.6569 0.658 152.581 $5.9650 0.512 118.865 17,256.911
4/94 $7.3391 0.653 153.234 $5.7174 0.509 119.374 17,223.502
5/94 $7.9682 0.715 153.949 $6.2074 0.557 119.931 17,442.422
6/94 $7.9992 0.696 154.645 $6.2316 0.542 120.473 17,366.633
7/94 $7.5219 0.670 155.315 $5.8598 0.522 120.995 17,690.379
8/94 $8.6697 0.769 156.084 $6.7539 0.599 121.594 17,762.359
9/94 $8.0836 0.717 156.801 $6.2974 0.559 122.153 17,483.312
10/94 $8.5221 0.772 157.573 $6.6390 0.601 122.754 17,222.729
11/94 $8.3347 0.784 158.357 $6.4930 0.611 123.365 16,849.185
12/94 $8.0493 0.752 159.109 $6.2706 0.585 123.950 17,183.772
12/94 $5.4081 0.501 159.610 $4.2131 0.390 124.340 17,237.880
1/95 $3.2704 0.301 159.911 $2.5477 0.235 124.575 17,766.112
2/95 $8.6368 0.769 160.680 $6.7283 0.599 125.174 18,301.452
3/95 $8.1465 0.718 161.398 $6.3463 0.559 125.733 18,480.071
4/95 $8.4960 0.738 162.136 $6.6186 0.575 126.308 18,451.077
5/95 $8.3338 0.720 162.856 $6.4922 0.561 126.869 19,119.294
6/95 $8.3040 0.707 163.563 $6.4691 0.551 127.420 18,875.170
6/95 $5.7312 0.497 164.060 $4.4648 0.387 127.807 18,932.524
7/95 $7.9897 0.692 164.752 $6.2242 0.539 128.346 19,028.856
8/95 $9.0284 0.780 165.532 $7.0334 0.607 128.953 19,253.919
</TABLE>
<PAGE>
JH TAX-EXEMPT SERIES FUND - CALIFORNIA PORTFOLIO
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at Period End
For $10,000 initial investment placed
Average Annual Total Return Rate Investment Value at End of Period CUMULATIVE into the Fund on inception date
<S> <C> <C> <C> <C> <C>
7.99 Year Return: 7.92%* 10 Year Value: $1,838.97 83.90% $18,389.70
5 Year Return: 7.44% 5 Year Value: $1,431.58 43.16%
3 Year Return: 5.09% 3 Year Value: $1,160.52
1 Year Return: 3.49% 1 Year Value: $1,034.86 3.49%
YTD Return: 6.66% YTD Value: $1,066.60
MTD Return: -3.38% MTD Value: $ 966.19
* Since Inception NOTE: YTD includes Ex-dividend
for the period
$0.00154 Monthly Declared
Constant Sales Charge: 0.00% $0.0513
<CAPTION>
Payment/
Month Option Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- -----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/2/87 $10.00 $10.47 4.50%
4.50%
9/87 $9.84 $10.30 4.50%
10/87 $9.85 $10.31 4.50% 10/20/87 $0.0649 $9.45
11/87 $10.07 $10.54 4.50% 11/20/87 $0.0474 $10.14
12/87 $10.24 $10.72 4.50% 12/18/87 $0.0455 $10.10
1/88 $10.67 $11.17 4.50% 01/08/88 $0.0224 $10.24
2/88 $10.72 $11.23 4.50% 02/10/88 $0.0757 $10.71
3/88 $10.40 $10.89 4.50% 03/10/88 $0.0544 $10.62
4/88 $10.36 $10.85 4.50% 04/08/88 $0.0511 $10.37
5/88 $10.24 $10.72 4.50% 05/10/88 $0.0568 $10.30
6/88 $10.42 $10.91 4.50% 06/10/88 $0.0559 $10.33
7/88 $10.39 $10.88 4.50% 07/08/88 $0.0508 $10.37
8/88 $10.36 $10.85 4.50% 08/10/88 $0.0587 $10.47
9/88 $10.55 $11.05 4.50% 09/09/88 $0.0546 $10.51
10/88 $10.77 $11.28 4.50% 10/07/88 $0.0516 $10.64
11/88 $10.54 $11.04 4.50% 11/10/88 $0.0610 $10.72
12/88 $10.72 $11.23 4.50% 12/09/88 $0.0541 $10.54
1/89 $10.90 $11.41 4.50% 01/09/89 $0.0379 $10.72
2/89 $10.70 $11.20 4.50% 02/10/89 $0.0793 $10.78
3/89 $10.65 $11.15 4.50% 03/10/89 $0.0553 $10.71
4/89 $10.87 $11.38 4.50% 04/10/89 $0.0586 $10.69
5/89 $11.02 $11.54 4.50% 05/10/89 $0.0568 $10.85
6/89 $11.06 $11.58 4.50% 06/09/89 $0.0556 $11.14
7/89 $11.14 $11.66 4.50% 07/10/89 $0.0573 $11.10
8/89 $10.93 $11.45 4.50% 08/10/89 $0.0559 $11.05
9/89 $10.84 $11.35 4.50% 09/08/89 $0.0532 $10.96
10/89 $10.90 $11.41 4.50% 10/10/89 $0.0594 $10.95
11/89 $11.03 $11.55 4.50% 11/10/89 $0.0562 $10.93
12/89 $11.03 $11.55 4.50% 12/08/89 $0.0516 $11.01
1/90 $10.83 $11.34 4.50% 01/10/90 $0.0373 $11.03
2/90 $10.92 $11.43 4.50% 02/09/90 $0.0772 $10.94
3/90 $10.86 $11.37 4.50% 03/09/90 $0.0537 $10.88
4/90 $10.65 $11.15 4.50% 04/10/90 $0.0580 $10.88
5/90 $10.90 $11.41 4.50% 05/10/90 $0.0553 $10.80
6/90 $10.94 $11.46 4.50% 06/08/90 $0.0523 $10.94
7/90 $11.07 $11.59 4.50% 07/10/90 $0.0585 $10.94
8/90 $10.72 $11.23 4.50% 08/10/90 $0.0547 $10.95
9/90 $10.63 $11.13 4.50% 09/10/90 $0.0571 $10.75
10/90 $10.84 $11.35 4.50% 10/10/90 $0.0587 $10.63
11/90 $11.00 $11.52 4.50% 11/09/90 $0.0564 $10.92
12/90 $10.98 $11.50 4.50% 12/10/90 $0.0599 $11.05
1/91 $11.08 $11.60 4.50% 01/10/91 $0.0407 $10.98
2/91 $11.07 $11.59 4.50% 02/08/91 $0.0764 $11.19
3/91 $11.01 $11.53 4.50% 03/08/91 $0.0575 $11.04
4/91 $11.13 $11.65 4.50% 04/10/91 $0.0626 $11.06
5/91 $11.18 $11.71 4.50% 05/10/91 $0.0579 $11.16
6/91 $11.08 $11.60 4.50% 06/10/91 $0.0585 $11.04
7/91 $11.18 $11.71 4.50% 07/10/91 $0.0573 $11.10
8/91 $11.26 $11.79 4.50% 08/09/91 $0.0564 $11.21
9/91 $11.36 $11.90 4.50% 09/10/91 $0.0615 $11.24
10/91 $11.40 $11.94 4.50% 10/10/91 $0.0584 $11.40
11/91 $11.34 $11.87 4.50% 11/08/91 $0.0554 $11.41
12/91 $11.49 $12.03 4.50% 12/10/91 $0.0612 $11.33
/ 4.50% 12/31/91 $0.0399 $11.49
1/92 $11.41 $11.95 4.50%
2/92 $11.40 $11.94 4.50% 02/10/92 $0.0786 $11.39
3/92 $11.36 $11.90 4.50% 03/10/92 $0.0574 $11.37
4/92 $11.39 $11.93 4.50% 04/10/92 $0.0587 $11.44
5/92 $11.47 $12.01 4.50% 05/08/92 $0.0536 $11.44
6/92 $11.61 $12.16 4.50% 06/10/92 $0.0628 $11.47
7/92 $11.92 $12.48 4.50% 07/10/92 $0.0580 $11.76
8/92 $11.68 $12.23 4.50% 08/10/92 $0.0585 $11.85
9/92 $11.67 $12.22 4.50% 09/10/92 $0.0585 $11.76
10/92 $11.39 $11.93 4.50% 10/09/92 $0.0550 $11.62
11/92 $11.48 $12.02 4.50% 11/03/92 $0.1407 $11.27 $0.1407 LT
11/92 $11.48 $12.02 4.50% 11/10/92 $0.0600 $11.37
12/92 $11.58 $12.13 4.50% 12/10/92 $0.0565 $11.53
/ 4.50% 12/30/92 $0.0365 $11.57
1/93 $11.65 $12.20 4.50% 01/08/93 $0.0162 $11.52
2/93 $12.07 $12.64 4.50% 02/10/93 $0.0615 $11.74
3/93 $11.86 $12.42 4.50% 03/10/93 $0.0540 $12.04
4/93 $11.96 $12.52 4.50% 04/08/93 $0.0524 $11.92
5/93 $12.00 $12.57 4.50% 05/10/93 $0.0582 $12.03
6/93 $12.16 $12.73 4.50% 06/10/93 $0.0553 $12.02
7/93 $12.07 $12.64 4.50% 07/09/93 $0.0522 $12.17
8/93 $12.36 $12.94 4.50% 08/10/93 $0.0557 $12.17
9/93 $12.44 $13.03 4.50% 09/10/93 $0.0543 $12.50
10/93 $12.42 $13.01 4.50% 10/08/93 $0.0495 $12.49
11/93 $12.18 $12.75 4.50% 11/10/93 $0.0566 $12.22
12/93 $12.16 $12.73 4.50% 12/03/93 $0.2230 $12.01 $0.22302 LT&ST
12/93 $12.16 $12.73 4.50% 12/10/93 $0.0522 $12.17
12/93 $12.16 $12.73 4.50% 12/30/93 $0.0335 $12.16
1/94 $12.26 $12.84 4.50%
2/94 $11.94 $12.50 4.50% 2/10/94 $0.0717 $12.12
3/94 $11.31 $11.84 4.50% 3/10/94 $0.0504 $11.64
4/94 $11.24 $11.77 4.50% 4/08/94 $0.0481 $11.24
5/94 $11.33 $11.86 4.50% 5/10/94 $0.0520 $11.14
6/94 $11.23 $11.76 4.50% 6/10/94 $0.0520 $11.49
7/94 $11.39 $11.93 4.50% 7/08/94 $0.0486 $11.22
8/94 $11.38 $11.92 4.50% 8/10/94 $0.0558 $11.28
9/94 $11.15 $11.68 4.50% 9/09/94 $0.0518 $11.27
10/94 $10.93 $11.45 4.50% 10/10/94 $0.0544 $11.04
11/94 $10.64 $11.14 4.50% 11/10/94 $0.0529 $10.63
12/94 $10.80 $11.31 4.50% 12/09/94 $0.0508 $10.71
12/94 $10.80 $11.31 4.50% 12/29/94 $0.0340 $10.80
1/95 $11.11 $11.63 4.50% 1/10/95 $0.02049 $10.86
2/95 $11.39 $11.93 4.50% 2/10/95 $0.05401 $11.23
3/95 $11.45 $11.99 4.50% 3/10/95 $0.05070 $11.35
4/95 $11.38 $11.92 4.50% 4/10/95 $0.05264 $11.52
5/95 $11.74 $12.29 4.50% 5/10/95 $0.05140 $11.58
6/95 $11.54 $12.08 4.50% 6/09/95 $0.05099 $11.74
6/95 $11.54 $12.08 4.50% 6/29/95 $0.03504 $11.54
7/95 $11.55 $12.09 4.50% 7/28/95 $0.04870 $11.54
8/95 $11.63 $12.18 4.50% 8/30/95 $0.05480 $11.58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
10-Year 5-Year PLOT POINTS
- ------ -------------------------------------------------------------------------- FOR
Month Dividend # of Shares Shares Dividend # of Shares Shares ANNUAL
Ended Received Reinv. Outstanding Received Reinv. Outstanding REPORTS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/2/87 95.511 10,000.002
0.000
9/87 $0.0000 0.000 95.511 9,398.282
10/87 $6.1987 0.656 96.167 9,472.450
11/87 $4.5583 0.450 96.617 9,729.332
12/87 $4.3961 0.435 97.052 9,938.125
1/88 $2.1740 0.212 97.264 10,378.069
2/88 $7.3629 0.687 97.951 10,500.347
3/88 $5.3285 0.502 98.453 10,239.112
4/88 $5.0309 0.485 98.938 10,249.977
5/88 $5.6197 0.546 99.484 10,187.162
6/88 $5.5612 0.538 100.022 10,422.292
7/88 $5.0811 0.490 100.512 10,443.197
8/88 $5.9001 0.564 101.076 10,471.474
9/88 $5.5187 0.525 101.601 10,718.906
10/88 $5.2426 0.493 102.094 10,995.524
11/88 $6.2277 0.581 102.675 10,821.945
12/88 $5.5547 0.527 103.202 11,063.254
1/89 $3.9114 0.365 103.567 11,288.803
2/89 $8.2129 0.762 104.329 11,163.203
3/89 $5.7694 0.539 104.868 11,168.442
4/89 $6.1453 0.575 105.443 11,461.654
5/89 $5.9892 0.552 105.995 11,680.649
6/89 $5.8933 0.529 106.524 11,781.554
7/89 $6.1038 0.550 107.074 11,928.044
8/89 $5.9854 0.542 107.616 11,762.429
9/89 $5.7252 0.522 108.138 11,722.159
10/89 $6.4234 0.587 108.725 11,851.025
11/89 $6.1103 0.559 109.284 12,054.025
12/89 $5.6391 0.512 109.796 12,110.499
1/90 $4.0954 0.371 110.167 11,931.086
2/90 $8.5049 0.777 110.944 12,115.085
3/90 $5.9577 0.548 111.492 12,108.031
4/90 $6.4665 0.594 112.086 11,937.159
5/90 $6.1984 0.574 112.660 12,279.940
6/90 $5.8921 0.539 113.199 12,383.971
7/90 $6.6221 0.605 113.804 12,598.103
8/90 $6.2251 0.569 114.373 89.047 12,260.786
9/90 $6.5307 0.608 114.981 $5.0846 0.473 89.520 12,222.480
10/90 $6.7494 0.635 115.616 $5.2548 0.494 90.014 12,532.774
11/90 $6.5207 0.597 116.213 $5.0768 0.465 90.479 12,783.430
12/90 $6.9612 0.630 116.843 $5.4197 0.490 90.969 12,829.361
1/91 $4.7555 0.433 117.276 $3.7024 0.337 91.306 12,994.181
2/91 $8.9599 0.801 118.077 $6.9758 0.623 91.929 13,071.124
3/91 $6.7894 0.615 118.692 $5.2859 0.479 92.408 13,067.989
4/91 $7.4301 0.672 119.364 $5.7847 0.523 92.931 13,285.213
5/91 $6.9112 0.619 119.983 $5.3807 0.482 93.413 13,414.099
6/91 $7.0190 0.636 120.619 $5.4647 0.495 93.908 13,364.585
7/91 $6.9115 0.623 121.242 $5.3809 0.485 94.393 13,554.856
8/91 $6.8380 0.610 121.852 $5.3238 0.475 94.868 13,720.535
9/91 $7.4939 0.667 122.519 $5.8344 0.519 95.387 13,918.158
10/91 $7.1551 0.628 123.147 $5.5706 0.489 95.876 14,038.758
11/91 $6.8223 0.598 123.745 $5.3115 0.466 96.342 14,032.683
12/91 $7.5732 0.668 124.413 $5.8961 0.520 96.862 14,295.054
/ $4.9641 0.432 124.845 $3.8648 0.336 97.198 14,344.691
1/92 $0.0000 0.000 124.845 $0.0000 0.000 97.198 14,244.815
2/92 $9.8128 0.862 125.707 $7.6398 0.671 97.869 14,330.598
3/92 $7.2156 0.635 126.342 $5.6177 0.494 98.363 14,352.451
4/92 $7.4163 0.648 126.990 $5.7739 0.505 98.868 14,464.161
5/92 $6.8067 0.595 127.585 $5.2993 0.463 99.331 14,634.000
6/92 $8.0123 0.699 128.284 $6.2380 0.544 99.875 14,893.772
7/92 $7.4405 0.633 128.917 $5.7928 0.493 100.368 15,366.906
8/92 $7.5416 0.636 129.553 $5.8715 0.495 100.863 15,131.790
9/92 $7.5789 0.644 130.197 $5.9005 0.502 101.365 15,193.990
10/92 $7.1608 0.616 130.813 $5.5751 0.480 101.845 14,899.601
11/92 $18.4054 1.633 132.446 $14.3296 1.271 103.116 15,204.801
11/92 $7.9468 0.699 133.145 $6.1870 0.544 103.660 15,285.046
12/92 $7.5227 0.652 133.797 $5.8568 0.508 104.168 15,493.693
/ $4.8836 0.422 134.219 $3.8021 0.329 104.497 15,542.560
1/93 $2.1743 0.189 134.408 $1.6929 0.147 104.644 15,658.532
2/93 $8.2661 0.704 135.112 $6.4356 0.548 105.192 16,308.018
3/93 $7.2960 0.606 135.718 $5.6804 0.472 105.664 16,096.155
4/93 $7.1116 0.597 136.315 $5.5368 0.464 106.128 16,303.274
5/93 $7.9335 0.659 136.974 $6.1766 0.513 106.641 16,436.880
6/93 $7.5747 0.630 137.604 $5.8972 0.491 107.132 16,732.646
7/93 $7.1829 0.590 138.194 $5.5923 0.460 107.592 16,680.016
8/93 $7.6974 0.632 138.826 $5.9929 0.492 108.084 17,158.894
9/93 $7.5383 0.603 139.429 $5.8690 0.470 108.554 17,344.968
10/93 $6.9017 0.553 139.982 $5.3734 0.430 108.984 17,385.764
11/93 $7.9230 0.648 140.630 $6.1685 0.505 109.489 17,128.734
12/93 $31.3633 2.611 143.241 $24.4182 2.033 111.522 17,418.106
12/93 $7.4829 0.615 143.856 $5.8259 0.479 112.001 17,492.890
12/93 $4.8192 0.396 144.252 $3.7520 0.309 112.310 17,541.043
1/94 $0.0000 0.000 144.252 $0.0000 0.000 112.310 17,685.295
2/94 $10.3385 0.853 145.105 $8.0493 0.664 112.974 17,325.537
3/94 $7.3133 0.628 145.733 $5.6939 0.489 113.463 16,482.402
4/94 $7.0098 0.624 146.357 $5.4576 0.486 113.949 16,450.527
5/94 $7.6106 0.683 147.040 $5.9253 0.532 114.481 16,659.632
6/94 $7.6402 0.665 147.705 $5.9484 0.518 114.999 16,587.272
7/94 $7.1844 0.640 148.345 $5.5936 0.499 115.498 16,896.496
8/94 $8.2806 0.734 149.079 $6.4471 0.572 116.070 16,965.190
9/94 $7.7208 0.685 149.764 $6.0113 0.533 116.603 16,698.686
10/94 $8.1397 0.737 150.501 $6.3374 0.574 117.177 16,449.759
11/94 $7.9607 0.749 151.250 $6.1980 0.583 117.760 16,093.000
12/94 $7.6880 0.718 151.968 $5.9857 0.559 118.319 16,412.544
12/94 $5.1654 0.478 152.446 $4.0217 0.372 118.691 16,464.168
1/95 $3.1236 0.288 152.734 $2.4320 0.224 118.915 16,968.747
2/95 $8.2492 0.735 153.469 $6.4226 0.572 119.487 17,480.119
3/95 $7.7809 0.686 154.155 $6.0580 0.534 120.021 17,650.748
4/95 $8.1147 0.704 154.859 $6.3179 0.548 120.569 17,622.954
5/95 $7.9598 0.687 155.546 $6.1972 0.535 121.104 18,261.100
6/95 $7.9313 0.676 156.222 $6.1751 0.526 121.630 18,028.019
6/95 $5.4740 0.474 156.696 $4.2619 0.369 121.999 18,082.718
7/95 $7.6311 0.661 157.357 $5.9414 0.515 122.514 18,174.734
8/95 $8.6232 0.745 158.102 $6.7138 0.580 123.094 18,389.696
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT SERIES FUND - MASSACHUSETTS PORTFOLIO
SEC TOTAL RETURN
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at
$10,000.00 Period End For $10,000
Initial initial investment placed into
Average Annual Total Return Rate Investment Value at End of Period Investment CUMULATIVE the Fund on inception date
<S> <C> <C> <C> <C> <C>
7.99 Year Return: 8.72%* 10 Year Value: $1,950.10 95.01% $19,500.95
5 Year Return: 8.73% 5 Year Value: $1,525.32 $19,501.00 52.53%
3 Year Return: 6.50% 3 Year Value: $1,212.06 Since Incept
1 Year Return: 7.66% 1 Year Value: $1,076.59 or 10 Years 8.00%
YTD Return: 10.73% YTD Value: $1,107.61
MTD Return: 1.064% MTD Value: $1,010.58
* Since Inception NOTE: YTD includes Ex-dividend
for the period
$0.0018 Monthly Declared
Constant Sales Charge: 0.00% $0.053659
<CAPTION>
Payment
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- ------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/3/87 $10.00 $10.00 0.00%
9/87 $9.87 $9.87 0.00%
10/87 $10.07 $10.07 0.00% 10/20/87 $0.07460 $9.56
11/87 $10.33 $10.33 0.00% 11/20/87 $0.05390 $10.30
12/87 $10.42 $10.42 0.00% 12/18/87 $0.04790 $10.31
1/88 $10.80 $10.80 0.00% 01/08/88 $0.02420 $10.42
2/88 $10.88 $10.88 0.00% 02/10/88 $0.07720 $10.88
3/88 $10.58 $10.58 0.00% 03/10/88 $0.05410 $10.76
4/88 $10.62 $10.62 0.00% 04/08/88 $0.05080 $10.59
5/88 $10.48 $10.48 0.00% 05/10/88 $0.05690 $10.57
6/88 $10.69 $10.69 0.00% 06/10/88 $0.05700 $10.54
7/88 $10.69 $10.69 0.00% 07/08/88 $0.05200 $10.67
8/88 $10.63 $10.63 0.00% 08/10/88 $0.06120 $10.71
9/88 $10.76 $10.76 0.00% 09/09/88 $0.05500 $10.71
10/88 $10.95 $10.95 0.00% 10/07/88 $0.05220 $10.84
11/88 $10.75 $10.75 0.00% 11/10/88 $0.06190 $10.90
12/88 $10.81 $10.81 0.00% 12/09/88 $0.05450 $10.71
1/89 $10.98 $10.98 0.00% 01/09/89 $0.03900 $10.81
2/89 $10.78 $10.78 0.00% 02/10/89 $0.08130 $10.91
3/89 $10.72 $10.72 0.00% 03/10/89 $0.05730 $10.76
4/89 $10.93 $10.93 0.00% 04/10/89 $0.05970 $10.77
5/89 $11.07 $11.07 0.00% 05/10/89 $0.05810 $10.90
6/89 $11.14 $11.14 0.00% 06/09/89 $0.05680 $11.16
7/89 $11.17 $11.17 0.00% 07/10/89 $0.05880 $11.15
8/89 $10.94 $10.94 0.00% 08/10/89 $0.05750 $11.09
9/89 $10.86 $10.86 0.00% 09/08/89 $0.05460 $10.97
10/89 $10.88 $10.88 0.00% 10/10/89 $0.06040 $10.96
11/89 $10.99 $10.99 0.00% 11/10/89 $0.05780 $10.89
12/89 $11.01 $11.01 0.00% 12/08/89 $0.05280 $10.98
1/90 $10.84 $10.84 0.00% 12/29/90 $0.03870 $11.01
2/90 $10.89 $10.89 0.00% 02/10/90 $0.07980 $10.90
3/90 $10.80 $10.80 0.00% 03/10/90 $0.05560 $10.85
4/90 $10.57 $10.57 0.00% 04/10/90 $0.05960 $10.80
5/90 $10.82 $10.82 0.00% 05/10/90 $0.05690 $10.73
6/90 $10.84 $10.84 0.00% 06/08/90 $0.05380 $10.87
7/90 $10.97 $10.97 0.00% 07/10/90 $0.06010 $10.86
8/90 $10.63 $10.63 0.00% 08/10/90 $0.05680 $10.83
9/90 $10.52 $10.52 0.00% 09/10/90 $0.05900 $10.66
10/90 $10.56 $10.56 0.00% 10/10/90 $0.06030 $10.47
11/90 $10.78 $10.78 0.00% 11/09/90 $0.05870 $10.66
12/90 $10.76 $10.76 0.00% 12/10/90 $0.06120 $10.83
$10.76 $10.76 0.00% 12/31/90 $0.04160 $10.76
$10.76 $10.76 0.00% 12/31/90 $0.01250 $10.75 $0.0125 Cap Gain
1/91 $10.88 $10.88 0.00%
2/91 $10.92 $10.92 0.00% 02/08/91 $0.07840 $11.01
3/91 $10.91 $10.91 0.00% 03/08/91 $0.05920 $10.90
4/91 $11.02 $11.02 0.00% 04/10/91 $0.06460 $10.96
5/91 $11.06 $11.06 0.00% 05/10/91 $0.05960 $11.03
6/91 $11.00 $11.00 0.00% 06/10/91 $0.05990 $10.96
7/91 $11.09 $11.09 0.00% 07/10/91 $0.06000 $11.01
8/91 $11.16 $11.16 0.00% 08/09/91 $0.05910 $11.12
9/91 $11.25 $11.25 0.00% 09/10/91 $0.06340 $11.16
10/91 $11.30 $11.30 0.00% 10/10/91 $0.05980 $11.29
11/91 $11.26 $11.26 0.00% 11/08/91 $0.05630 $11.31
12/91 $11.45 $11.45 0.00% 12/10/91 $0.06300 $11.28
12/91 $11.45 $11.45 0.00% 12/31/91 $0.04040 $11.45
1/92 $11.38 $11.38 0.00%
2/92 $11.35 $11.35 0.00% 02/10/92 $0.08050 $11.35
3/92 $11.31 $11.31 0.00% 03/10/92 $0.05810 $11.33
4/92 $11.36 $11.36 0.00% 04/10/92 $0.05850 $11.40
5/92 $11.47 $11.47 0.00% 05/08/92 $0.05430 $11.42
6/92 $11.63 $11.63 0.00% 06/10/92 $0.06300 $11.49
7/92 $11.98 $11.98 0.00% 07/10/92 $0.05810 $11.78
8/92 $11.75 $11.75 0.00% 08/10/92 $0.05900 $11.92
9/92 $11.73 $11.73 0.00% 09/10/92 $0.05880 $11.84
10/92 $11.44 $11.44 0.00% 10/09/92 $0.05420 $11.67
11/92 $11.56 $11.56 0.00% 11/03/92 $0.13950 $11.32 $0.1395 L.T. Cap Gain
$11.56 $11.56 0.00% 11/10/92 $0.06010 $11.43
12/92 $11.66 $11.66 0.00% 12/10/92 $0.05650 $11.64
$11.66 $11.66 0.00% 12/30/92 $0.03670 $11.66
1/93 $11.72 $11.72 0.00% 01/08/93 $0.01630 $11.60
2/93 $12.11 $12.11 0.00% 02/10/93 $0.06260 $11.83
3/93 $11.85 $11.85 0.00% 03/10/93 $0.05470 $12.06
4/93 $11.97 $11.97 0.00% 04/08/93 $0.05250 $11.93
5/93 $12.02 $12.02 0.00% 05/10/93 $0.05830 $12.03
6/93 $12.21 $12.21 0.00% 06/10/93 $0.05530 $12.06
7/93 $12.16 $12.16 0.00% 07/09/93 $0.05260 $12.23
8/93 $12.43 $12.43 0.00% 08/10/93 $0.05600 $12.25
9/93 $12.54 $12.54 0.00% 09/10/93 $0.05430 $12.58
10/93 $12.51 $12.51 0.00% 10/08/93 $0.04960 $12.59
11/93 $12.29 $12.29 0.00% 11/10/93 $0.05739 $12.32
12/93 $12.33 $12.33 0.00% 12/03/93 $0.12460 $12.22 0.12460 LT Cap Gains
12/93 $12.33 $12.33 0.00% 12/10/93 $0.05186 $12.34
12/93 $12.33 $12.33 0.00% 12/30/93 $0.03390 $12.33
1/94 $12.45 $12.45 0.00% 0.00 $0.00000 $0.00
2/94 $12.06 $12.06 0.00% 2/10/94 $0.07330 $12.32
3/94 $11.43 $11.43 0.00% 3/10/94 $0.05040 $11.78
4/94 $11.42 $11.42 0.00% 4/08/94 $0.04892 $11.38
5/94 $11.50 $11.50 0.00% 5/10/94 $0.05331 $11.34
6/94 $11.42 $11.42 0.00% 6/10/94 $0.05195 $11.66
7/94 $11.59 $11.59 0.00% 7/08/94 $0.04924 $11.41
8/94 $11.56 $11.56 0.00% 8/10/94 $0.05709 $11.47
9/94 $11.30 $11.30 0.00% 9/09/94 $0.05286 $11.43
10/94 $11.05 $11.05 0.00% 10/10/94 $0.05568 $11.20
11/94 $10.77 $10.77 0.00% 11/10/94 $0.05459 $10.74
12/94 $11.02 $11.02 0.00% 12/09/94 $0.05216 $10.90
12/94 $11.02 $11.02 0.00% 12/29/94 $0.03488 $11.01
1/95 $11.29 $11.29 0.00% 01/10/95 $0.02102 $11.07
2/95 $11.54 $11.54 0.00% 02/10/95 $0.05645 $11.42
3/95 $11.59 $11.59 0.00% 03/10/95 $0.05227 $11.51
4/95 $11.54 $11.54 0.00% 04/10/95 $0.05413 $11.65
5/95 $11.85 $11.85 0.00% 05/10/95 $0.05301 $11.71
6/95 $11.64 $11.64 0.00% 06/09/95 $0.05179 $11.81
6/95 $11.64 $11.64 0.00% 06/29/95 $0.03522 $11.64
7/95 $11.69 $11.69 0.00% 07/28/95 $0.05041 $11.67
8/95 $11.76 $11.76 0.00% 08/30/95 $0.05714 $11.72
</TABLE>
<TABLE>
<CAPTION>
10-Year 5-Year 3-Year Marketing
---------------------------------------------------------------------------------------------------- Plot Points
Shares Shares Shares $10,000.00
Month Dividend # of Share out- Dividend # of Share out- Dividend # of Share out- Initial
Ended Received Reinv. standing Received Reinv. standing Received Reinv. standing Investment
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/3/87 100.000 $10,000.00
$0.00
9/87 $0.0000 0.000 100.000 $9,870.00
10/87 $7.4600 0.780 100.780 $10,148.55
11/87 $5.4320 0.527 101.307 $10,465.01
12/87 $4.8526 0.471 101.778 $10,605.27
1/88 $2.4630 0.236 102.014 $11,017.51
2/88 $7.8755 0.724 102.738 $11,177.89
3/88 $5.5581 0.517 103.255 $10,924.38
4/88 $5.2454 0.495 103.750 $11,018.25
5/88 $5.9034 0.559 104.309 $10,931.58
6/88 $5.9456 0.564 104.873 $11,210.92
7/88 $5.4534 0.511 105.384 $11,265.55
8/88 $6.4495 0.602 105.986 $11,266.31
9/88 $5.8292 0.544 106.530 $11,462.63
10/88 $5.5609 0.513 107.043 $11,721.21
11/88 $6.6260 0.608 107.651 $11,572.48
12/88 $5.8670 0.548 108.199 $11,696.31
1/89 $4.2198 0.390 108.589 $11,923.07
2/89 $8.8283 0.809 109.398 $11,793.10
3/89 $6.2685 0.583 109.981 $11,789.96
4/89 $6.5659 0.610 110.591 $12,087.60
5/89 $6.4253 0.589 111.180 $12,307.63
6/89 $6.3150 0.566 111.746 $12,448.50
7/89 $6.5707 0.589 112.335 $12,547.82
8/89 $6.4593 0.582 112.917 $12,353.12
9/89 $6.1653 0.562 113.479 $12,323.82
10/89 $6.8541 0.625 114.104 $12,414.52
11/89 $6.5952 0.606 114.710 $12,606.63
12/89 $6.0567 0.552 115.262 $12,690.35
1/90 $4.4606 0.405 115.667 $12,538.30
2/90 $9.2302 0.847 116.514 $12,688.37
3/90 $6.4782 0.597 117.111 $12,647.99
4/90 $6.9798 0.646 117.757 $12,446.91
5/90 $6.7004 0.624 118.381 $12,808.82
6/90 $6.3689 0.586 118.967 $12,896.02
7/90 $7.1499 0.658 119.625 $13,122.86
8/90 $6.7947 0.627 120.252 94.073 $12,782.79
9/90 $7.0949 0.666 120.918 $5.5503 0.521 94.594 $12,720.57
10/90 $7.2914 0.696 121.614 $5.7040 0.545 95.139 $12,842.44
11/90 $7.1387 0.670 122.284 $5.5847 0.524 95.663 $13,182.22
12/90 $7.4838 0.691 122.975 $5.8546 0.541 96.204 $13,232.11
$5.1158 0.475 123.450 $4.0021 0.372 96.576 $13,283.22
$1.5431 0.144 123.594 $1.2072 0.112 96.688 $13,298.71
1/91 $0.0000 0.000 123.594 $0.0000 0.000 96.688 $13,447.03
2/91 $9.6898 0.880 124.474 $7.5803 0.688 97.376 $13,592.56
3/91 $7.3689 0.676 125.150 $5.7647 0.529 97.905 $13,653.87
4/91 $8.0847 0.738 125.888 $6.3247 0.577 98.482 $13,872.86
5/91 $7.5029 0.680 126.568 $5.8695 0.532 99.014 $13,998.42
6/91 $7.5814 0.692 127.260 $5.9309 0.541 99.555 $13,998.60
7/91 $7.6356 0.694 127.954 $5.9733 0.543 100.098 $14,190.10
8/91 $7.5621 0.680 128.634 $5.9158 0.532 100.630 $14,355.55
9/91 $8.1554 0.731 129.365 $6.3799 0.572 101.202 $14,553.56
10/91 $7.7360 0.685 130.050 $6.0519 0.536 101.738 $14,695.65
11/91 $7.3218 0.647 130.697 $5.7278 0.506 102.244 $14,716.48
12/91 $8.2339 0.730 131.427 $6.4414 0.571 102.815 $15,048.39
12/91 $5.3097 0.464 131.891 $4.1537 0.363 103.178 $15,101.52
1/92 $0.0000 0.000 131.891 $0.0000 0.000 103.178 $15,009.20
2/92 $10.6172 0.935 132.826 $8.3058 0.732 103.910 $15,075.75
3/92 $7.7172 0.681 133.507 $6.0372 0.533 104.443 $15,099.64
4/92 $7.8102 0.685 134.192 $6.1099 0.536 104.979 $15,244.21
5/92 $7.2866 0.638 134.830 $5.7004 0.499 105.478 $15,465.00
6/92 $8.4943 0.739 135.569 $6.6451 0.578 106.056 $15,766.67
7/92 $7.8766 0.669 136.238 $6.1619 0.523 106.579 $16,321.31
8/92 $8.0380 0.674 136.912 $6.2882 0.528 107.107 85.106 $16,087.16
9/92 $8.0504 0.680 137.592 $6.2979 0.532 107.639 $5.0042 0.423 85.529 $16,139.54
10/92 $7.4575 0.639 138.231 $5.8340 0.500 108.139 $4.6357 0.397 85.926 $15,813.63
11/92 $19.2832 1.703 139.934 $15.0854 1.333 109.472 $11.9867 1.059 86.985 $16,176.37
$8.4100 0.736 140.670 $6.5793 0.576 110.048 $5.2278 0.457 87.442 $16,261.45
12/92 $7.9479 0.683 141.353 $6.2177 0.534 110.582 $4.9405 0.424 87.866 $16,481.76
$5.1877 0.445 141.798 $4.0584 0.348 110.930 $3.2247 0.277 88.143 $16,533.65
1/93 $2.3113 0.199 141.997 $1.8082 0.156 111.086 $1.4367 0.124 88.267 $16,642.05
2/93 $8.8890 0.751 142.748 $6.9540 0.588 111.674 $5.5255 0.467 88.734 $17,286.78
3/93 $7.8083 0.647 143.395 $6.1086 0.507 112.181 $4.8537 0.402 89.136 $16,992.31
4/93 $7.5282 0.631 144.026 $5.8895 0.494 112.675 $4.6796 0.392 89.528 $17,239.91
5/93 $8.3967 0.698 144.724 $6.5690 0.546 113.221 $5.2195 0.434 89.962 $17,395.82
6/93 $8.0032 0.664 145.388 $6.2611 0.519 113.740 $4.9749 0.413 90.375 $17,751.87
7/93 $7.6474 0.625 146.013 $5.9827 0.489 114.229 $4.7537 0.389 90.764 $17,755.18
8/93 $8.1767 0.667 146.680 $6.3968 0.522 114.751 $5.0828 0.415 91.179 $18,232.32
9/93 $7.9647 0.633 147.313 $6.2310 0.495 115.246 $4.9510 0.394 91.573 $18,473.05
10/93 $7.3067 0.580 147.893 $5.7162 0.454 115.700 $4.5420 0.361 91.934 $18,501.41
11/93 $8.4876 0.689 148.582 $6.6400 0.539 116.239 $5.2761 0.428 92.362 $18,260.73
12/93 $18.5133 1.515 150.097 $14.4834 1.185 117.424 $11.5083 0.942 93.304 $18,506.96
12/93 $7.7840 0.631 150.728 $6.0896 0.493 117.917 $4.8387 0.392 93.696 $18,584.76
12/93 $5.1097 0.414 151.142 $3.9974 0.324 118.241 $3.1763 0.258 93.954 $18,635.81
1/94 $0.0000 0.000 151.142 $0.0000 0.000 118.241 $0.0000 0.000 93.954 $18,817.18
2/94 $11.0787 0.899 152.041 $8.6671 0.703 118.944 $6.8868 0.559 94.513 $18,336.14
3/94 $7.6629 0.651 152.692 $5.9948 0.509 119.453 $4.7635 0.404 94.917 $17,452.70
4/94 $7.4697 0.656 153.348 $5.8436 0.513 119.966 $4.6433 0.408 95.325 $17,512.34
5/94 $8.1750 0.721 154.069 $6.3954 0.564 120.530 $5.0818 0.448 95.773 $17,717.94
6/94 $8.0039 0.686 154.755 $6.2615 0.537 121.067 $4.9754 0.427 96.200 $17,673.02
7/94 $7.6201 0.668 155.423 $5.9613 0.522 121.589 $4.7369 0.415 96.615 $18,013.53
8/94 $8.8731 0.774 156.197 $6.9415 0.605 122.194 $5.5158 0.481 97.096 $18,056.37
9/94 $8.2566 0.722 156.919 $6.4592 0.565 122.759 $5.1325 0.449 97.545 $17,731.85
10/94 $8.7372 0.780 157.699 $6.8352 0.610 123.369 $5.4313 0.485 98.030 $17,425.74
11/94 $8.6088 0.802 158.501 $6.7347 0.627 123.996 $5.3515 0.498 98.528 $17,070.56
12/94 $8.2674 0.758 159.259 $6.4676 0.593 124.589 $5.1392 0.471 98.999 $17,550.34
12/94 $5.5550 0.505 159.764 $4.3457 0.395 124.984 $3.4531 0.314 99.313 $17,605.99
1/95 $3.3582 0.303 160.067 $2.6272 0.237 125.221 $2.0876 0.189 99.502 $18,071.56
2/95 $9.0358 0.791 160.858 $7.0687 0.619 125.840 $5.6169 0.492 99.994 $18,563.01
3/95 $8.4080 0.730 161.588 $6.5777 0.571 126.411 $5.2267 0.454 100.448 $18,728.05
4/95 $8.7468 0.751 162.339 $6.8426 0.587 126.998 $5.4373 0.467 100.915 $18,733.92
5/95 $8.6056 0.735 163.074 $6.7322 0.575 127.573 $5.3495 0.457 101.372 $19,324.27
6/95 $8.4456 0.715 163.789 $6.6070 0.559 128.132 $5.2501 0.445 101.817 $19,065.04
6/95 $5.7686 0.496 164.285 $4.5128 0.388 128.520 $3.5860 0.308 102.125 $19,122.77
7/95 $8.2816 0.710 164.995 $6.4787 0.555 129.075 $5.1481 0.441 102.566 $19,287.92
8/95 $9.4278 0.804 165.799 $7.3753 0.629 129.704 $5.8606 0.500 103.066 $19,500.95
</TABLE>
<PAGE>
JOHN HANCOCK TAX-EXEMPT SERIES FUND - MASSACHUSETTS PORTFOLIO
SEC TOTAL RETURN
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at Period End
$10,000.00 For $10,000 initial investment
Initial placed into the Fund
Average Annual Total Return Rate Investment Value at End of Period Investment CUMULATIVE on inception date
<S> <C> <C> <C> <C> <C> <C>
7.99 Year Return: 8.10%* 10 Year Value: $1,862.61 $18,626.10 86.26% $18,626.11
5 Year Return: 7.82% 5 Year Value: $1,456.81 Since 45.68%
3 Year Return: 5.01% 3 Year Value: $1,157.83 Inception
1 Year Return: 2.85% 1 Year Value: $1,028.51 or 10 Years 3.18%
YTD Return: 5.77% YTD Value: $1,057.73
MTD Return: -3.48% MTD Value: $ 965.16
* Since Inception NOTE: YTD includes Ex-dividend MTD
for the period 0.053659
$0.0018
Constant Sales Charge: 4.50%
<CAPTION>
Payment
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>
9/3/87 $10.00 $10.47 4.50%
9/87 $9.87 $10.34 4.50%
10/87 $10.07 $10.54 4.50% 10/20/87 $0.07460 $9.56
11/87 $10.33 $10.82 4.50% 11/20/87 $0.05390 $10.30
12/87 $10.42 $10.91 4.50% 12/18/87 $0.04790 $10.31
1/88 $10.80 $11.31 4.50% 01/08/88 $0.02420 $10.42
2/88 $10.88 $11.39 4.50% 02/10/88 $0.07720 $10.88
3/88 $10.58 $11.08 4.50% 03/10/88 $0.05410 $10.76
4/88 $10.62 $11.12 4.50% 04/08/88 $0.05080 $10.59
5/88 $10.48 $10.97 4.50% 05/10/88 $0.05690 $10.57
6/88 $10.69 $11.19 4.50% 06/10/88 $0.05700 $10.54
7/88 $10.69 $11.19 4.50% 07/08/88 $0.05200 $10.67
8/88 $10.63 $11.13 4.50% 08/10/88 $0.06120 $10.71
9/88 $10.76 $11.27 4.50% 09/09/88 $0.05500 $10.71
10/88 $10.95 $11.47 4.50% 10/07/88 $0.05220 $10.84
11/88 $10.75 $11.26 4.50% 11/10/88 $0.06190 $10.90
12/88 $10.81 $11.32 4.50% 12/09/88 $0.05450 $10.71
1/89 $10.98 $11.50 4.50% 01/09/89 $0.03900 $10.81
2/89 $10.78 $11.29 4.50% 02/10/89 $0.08130 $10.91
3/89 $10.72 $11.23 4.50% 03/10/89 $0.05730 $10.76
4/89 $10.93 $11.45 4.50% 04/10/89 $0.05970 $10.77
5/89 $11.07 $11.59 4.50% 05/10/89 $0.05810 $10.90
6/89 $11.14 $11.66 4.50% 06/09/89 $0.05680 $11.16
7/89 $11.17 $11.70 4.50% 07/10/89 $0.05880 $11.15
8/89 $10.94 $11.46 4.50% 08/10/89 $0.05750 $11.09
9/89 $10.86 $11.37 4.50% 09/08/89 $0.05460 $10.97
10/89 $10.88 $11.39 4.50% 10/10/89 $0.06040 $10.96
11/89 $10.99 $11.51 4.50% 11/10/89 $0.05780 $10.89
12/89 $11.01 $11.53 4.50% 12/08/89 $0.05280 $10.98
1/90 $10.84 $11.35 4.50% 12/29/90 $0.03870 $11.01
2/90 $10.89 $11.40 4.50% 02/10/90 $0.07980 $10.90
3/90 $10.80 $11.31 4.50% 03/10/90 $0.05560 $10.85
4/90 $10.57 $11.07 4.50% 04/10/90 $0.05960 $10.80
5/90 $10.82 $11.33 4.50% 05/10/90 $0.05690 $10.73
6/90 $10.84 $11.35 4.50% 06/08/90 $0.05380 $10.87
7/90 $10.97 $11.49 4.50% 07/10/90 $0.06010 $10.86
8/90 $10.63 $11.13 4.50% 08/10/90 $0.05680 $10.83
9/90 $10.52 $11.02 4.50% 09/10/90 $0.05900 $10.66
10/90 $10.56 $11.06 4.50% 10/10/90 $0.06030 $10.47
11/90 $10.78 $11.29 4.50% 11/09/90 $0.05870 $10.66
12/90 $10.76 $11.27 4.50% 12/10/90 $0.06120 $10.83
$10.76 $11.27 4.50% 12/31/90 $0.04160 $10.76
$10.76 $11.27 4.50% 12/31/90 $0.01250 $10.75 $0.0125 Cap Gain
1/91 $10.88 $11.39 4.50%
2/91 $10.92 $11.43 4.50% 02/08/91 $0.07840 $11.01
3/91 $10.91 $11.42 4.50% 03/08/91 $0.05920 $10.90
4/91 $11.02 $11.54 4.50% 04/10/91 $0.06460 $10.96
5/91 $11.06 $11.58 4.50% 05/10/91 $0.05960 $11.03
6/91 $11.00 $11.52 4.50% 06/10/91 $0.05990 $10.96
7/91 $11.09 $11.61 4.50% 07/10/91 $0.06000 $11.01
8/91 $11.16 $11.69 4.50% 08/09/91 $0.05910 $11.12
9/91 $11.25 $11.78 4.50% 09/10/91 $0.06340 $11.16
10/91 $11.30 $11.83 4.50% 10/10/91 $0.05980 $11.29
11/91 $11.26 $11.79 4.50% 11/08/91 $0.05630 $11.31
12/91 $11.45 $11.99 4.50% 12/10/91 $0.06300 $11.28
12/91 $11.45 $11.99 4.50% 12/31/91 $0.04040 $11.45
1/92 $11.38 $11.92 4.50%
2/92 $11.35 $11.88 4.50% 02/10/92 $0.08050 $11.35
3/92 $11.31 $11.84 4.50% 03/10/92 $0.05810 $11.33
4/92 $11.36 $11.90 4.50% 04/10/92 $0.05850 $11.40
5/92 $11.47 $12.01 4.50% 05/08/92 $0.05430 $11.42
6/92 $11.63 $12.18 4.50% 06/10/92 $0.06300 $11.49
7/92 $11.98 $12.54 4.50% 07/10/92 $0.05810 $11.78
8/92 $11.75 $12.30 4.50% 08/10/92 $0.05900 $11.92
9/92 $11.73 $12.28 4.50% 09/10/92 $0.05880 $11.84
10/92 $11.44 $11.98 4.50% 10/09/92 $0.05420 $11.67
11/92 $11.56 $12.10 4.50% 11/03/92 $0.13950 $11.32 $0.1395 L.T. Cap Gain
$11.56 $12.10 4.50% 11/10/92 $0.06010 $11.43
12/92 $11.66 $12.21 4.50% 12/10/92 $0.05650 $11.64
$11.66 $12.21 4.50% 12/30/92 $0.03670 $11.66
1/93 $11.72 $12.27 4.50% 01/08/93 $0.01630 $11.60
2/93 $12.11 $12.68 4.50% 02/10/93 $0.06260 $11.83
3/93 $11.85 $12.41 4.50% 03/10/93 $0.05470 $12.06
4/93 $11.97 $12.53 4.50% 04/08/93 $0.05250 $11.93
5/93 $12.02 $12.59 4.50% 05/10/93 $0.05830 $12.03
6/93 $12.21 $12.79 4.50% 06/10/93 $0.05530 $12.06
7/93 $12.16 $12.73 4.50% 07/09/93 $0.05260 $12.23
8/93 $12.43 $13.02 4.50% 08/10/93 $0.05600 $12.25
9/93 $12.54 $13.13 4.50% 09/10/93 $0.05430 $12.58
10/93 $12.51 $13.10 4.50% 10/08/93 $0.04960 $12.59
11/93 $12.29 $12.87 4.50% 11/10/93 $0.05739 $12.32
12/93 $12.33 $12.91 4.50% 12/03/93 $0.12460 $12.22 0.12460 LT Cap Gains
12/93 $12.33 $12.91 4.50% 12/10/93 $0.05186 $12.34
12/93 $12.33 $12.91 4.50% 12/30/93 $0.03390 $12.33
1/94 $12.45 $13.04 4.50% 0.00 $0.00000 $0.00
2/94 $12.06 $12.63 4.50% 2/10/94 $0.07330 $12.32
3/94 $11.43 $11.97 4.50% 3/10/94 $0.05040 $11.78
4/94 $11.42 $11.96 4.50% 4/08/94 $0.04892 $11.38
5/94 $11.50 $12.04 4.50% 5/10/94 $0.05331 $11.34
6/94 $11.42 $11.96 4.50% 6/10/94 $0.05195 $11.66
7/94 $11.59 $12.14 4.50% 7/08/94 $0.04924 $11.41
8/94 $11.56 $12.10 4.50% 8/10/94 $0.05709 $11.47
9/94 $11.30 $11.83 4.50% 9/09/94 $0.05286 $11.43
10/94 $11.05 $11.57 4.50% 10/10/94 $0.05568 $11.20
11/94 $10.77 $11.28 4.50% 11/10/94 $0.05459 $10.74
12/94 $11.02 $11.54 4.50% 12/09/94 $0.05216 $10.90
12/94 $11.02 $11.54 4.50% 12/29/94 $0.03488 $11.01
1/95 $11.29 $11.82 4.50% 01/10/95 $0.02102 $11.07
2/95 $11.54 $12.08 4.50% 02/10/95 $0.05645 $11.42
3/95 $11.59 $12.14 4.50% 03/10/95 $0.05227 $11.51
4/95 $11.54 $12.08 4.50% 04/10/95 $0.05413 $11.65
5/95 $11.85 $12.41 4.50% 05/10/95 $0.05301 $11.71
6/95 $11.64 $12.19 4.50% 06/09/95 $0.05179 $11.81
6/95 $11.64 $12.19 4.50% 06/29/95 $0.03522 $11.64
7/95 $11.69 $12.24 4.50% 07/28/95 $0.05041 $11.67
8/95 $11.76 $12.31 4.50% 08/30/95 $0.05714 $11.72
</TABLE>
<TABLE>
<CAPTION>
10-Year 5-Year 3-Year Marketing
---------------------------------------------------------------------------------------------------- Plot Points
Shares Shares Shares $10,000.00
Month Dividend # of Share out- Dividend # of Share out- Dividend # of Share out- Initial
Ended Received Reinv. standing Receive Reinv. standing Received Reinv. standing Investment
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/3/87 95.511 $9,551.10
$0.00
9/87 $0.0000 0.000 95.511 $9,426.94
10/87 $7.1251 0.745 96.256 $9,692.98
11/87 $5.1882 0.504 96.760 $9,995.31
12/87 $4.6348 0.450 97.210 $10,129.28
1/88 $2.3525 0.226 97.436 $10,523.09
2/88 $7.5221 0.691 98.127 $10,676.22
3/88 $5.3087 0.493 98.620 $10,434.00
4/88 $5.0099 0.473 99.093 $10,523.68
5/88 $5.6384 0.533 99.626 $10,440.80
6/88 $5.6787 0.539 100.165 $10,707.64
7/88 $5.2086 0.488 100.653 $10,759.81
8/88 $6.1600 0.575 101.228 $10,760.54
9/88 $5.5675 0.520 101.748 $10,948.08
10/88 $5.3112 0.490 102.238 $11,195.06
11/88 $6.3285 0.581 102.819 $11,053.04
12/88 $5.6036 0.523 103.342 $11,171.27
1/89 $4.0303 0.373 103.715 $11,387.91
2/89 $8.4320 0.773 104.488 $11,263.81
3/89 $5.9872 0.556 105.044 $11,260.72
4/89 $6.2711 0.582 105.626 $11,544.92
5/89 $6.1369 0.563 106.189 $11,755.12
6/89 $6.0315 0.540 106.729 $11,889.61
7/89 $6.2757 0.563 107.292 $11,984.52
8/89 $6.1693 0.556 107.848 $11,798.57
9/89 $5.8885 0.537 108.385 $11,770.61
10/89 $6.5465 0.597 108.982 $11,857.24
11/89 $6.2992 0.578 109.560 $12,040.64
12/89 $5.7848 0.527 110.087 $12,120.58
1/90 $4.2604 0.387 110.474 $11,975.38
2/90 $8.8158 0.809 111.283 $12,118.72
3/90 $6.1873 0.570 111.853 $12,080.12
4/90 $6.6664 0.617 112.470 $11,888.08
5/90 $6.3995 0.596 113.066 $12,233.74
6/90 $6.0830 0.560 113.626 $12,317.06
7/90 $6.8289 0.629 114.255 $12,533.77
8/90 $6.4897 0.599 114.854 89.847 $12,208.98
9/90 $6.7764 0.636 115.490 $5.3010 0.497 90.344 $12,149.55
10/90 $6.9640 0.665 116.155 $5.4477 0.520 90.864 $12,265.97
11/90 $6.8183 0.640 116.795 $5.3337 0.500 91.364 $12,590.50
12/90 $7.1479 0.660 117.455 $5.5915 0.516 91.880 $12,638.16
$4.8861 0.454 117.909 $3.8222 0.355 92.235 $12,687.01
$1.4739 0.137 118.046 $1.1529 0.107 92.342 $12,701.75
1/91 $0.0000 0.000 118.046 $0.0000 0.000 92.342 $12,843.40
2/91 $9.2548 0.841 118.887 $7.2396 0.658 93.000 $12,982.46
3/91 $7.0381 0.646 119.533 $5.5056 0.505 93.505 $13,041.05
4/91 $7.7218 0.705 120.238 $6.0404 0.551 94.056 $13,250.23
5/91 $7.1662 0.650 120.888 $5.6057 0.508 94.564 $13,370.21
6/91 $7.2412 0.661 121.549 $5.6644 0.517 95.081 $13,370.39
7/91 $7.2929 0.662 122.211 $5.7049 0.518 95.599 $13,553.20
8/91 $7.2227 0.650 122.861 $5.6499 0.508 96.107 $13,711.29
9/91 $7.7894 0.698 123.559 $6.0932 0.546 96.653 $13,900.39
10/91 $7.3888 0.654 124.213 $5.7798 0.512 97.165 $14,036.07
11/91 $6.9932 0.618 124.831 $5.4704 0.484 97.649 $14,055.97
12/91 $7.8644 0.697 125.528 $6.1519 0.545 98.194 $14,372.96
12/91 $5.0713 0.443 125.971 $3.9670 0.346 98.540 $14,423.68
1/92 $0.0000 0.000 125.971 $0.0000 0.000 98.540 $14,335.50
2/92 $10.1407 0.893 126.864 $7.9325 0.699 99.239 $14,399.06
3/92 $7.3708 0.651 127.515 $5.7658 0.509 99.748 $14,421.95
4/92 $7.4596 0.654 128.169 $5.8353 0.512 100.260 $14,560.00
5/92 $6.9596 0.609 128.778 $5.4441 0.477 100.737 $14,770.84
6/92 $8.1130 0.706 129.484 $6.3464 0.552 101.289 $15,058.99
7/92 $7.5230 0.639 130.123 $5.8849 0.500 101.789 $15,588.74
8/92 $7.6773 0.644 130.767 $6.0056 0.504 102.293 81.301 $15,365.12
9/92 $7.6891 0.649 131.416 $6.0148 0.508 102.801 $4.7805 0.404 81.705 $15,415.10
10/92 $7.1227 0.610 132.026 $5.5718 0.477 103.278 $4.4284 0.379 82.084 $15,103.77
11/92 $18.4176 1.627 133.653 $14.4073 1.273 104.551 $11.4507 1.012 83.096 $15,450.29
$8.0325 0.703 134.356 $6.2835 0.550 105.101 $4.9941 0.437 83.533 $15,531.55
12/92 $7.5911 0.652 135.008 $5.9382 0.510 105.611 $4.7196 0.405 83.938 $15,741.93
$4.9548 0.425 135.433 $3.8759 0.332 105.943 $3.0805 0.264 84.202 $15,791.49
1/93 $2.2076 0.190 135.623 $1.7269 0.149 106.092 $1.3725 0.118 84.320 $15,895.02
2/93 $8.4900 0.718 136.341 $6.6414 0.561 106.653 $5.2784 0.446 84.766 $16,510.90
3/93 $7.4579 0.618 136.959 $5.8339 0.484 107.137 $4.6367 0.384 85.150 $16,229.64
4/93 $7.1903 0.603 137.562 $5.6247 0.471 107.608 $4.4704 0.375 85.525 $16,466.17
5/93 $8.0199 0.667 138.229 $6.2735 0.521 108.129 $4.9861 0.414 85.939 $16,615.13
6/93 $7.6441 0.634 138.863 $5.9795 0.496 108.625 $4.7524 0.394 86.333 $16,955.17
7/93 $7.3042 0.597 139.460 $5.7137 0.467 109.092 $4.5411 0.371 86.704 $16,958.34
8/93 $7.8098 0.638 140.098 $6.1092 0.499 109.591 $4.8554 0.396 87.100 $17,414.18
9/93 $7.6073 0.605 140.703 $5.9508 0.473 110.064 $4.7295 0.376 87.476 $17,644.16
10/93 $6.9789 0.554 141.257 $5.4592 0.434 110.498 $4.3388 0.345 87.821 $17,671.25
11/93 $8.1067 0.658 141.915 $6.3415 0.515 111.013 $5.0400 0.409 88.230 $17,441.35
12/93 $17.6826 1.447 143.362 $13.8322 1.132 112.145 $10.9935 0.900 89.130 $17,676.53
12/93 $7.4348 0.602 143.964 $5.8158 0.471 112.616 $4.6223 0.375 89.505 $17,750.76
12/93 $4.8804 0.396 144.360 $3.8177 0.310 112.926 $3.0342 0.246 89.751 $17,799.59
1/94 $0.0000 0.000 144.360 $0.0000 0.000 112.926 $0.0000 0.000 89.751 $17,972.82
2/94 $10.5816 0.859 145.219 $8.2775 0.672 113.598 $6.5787 0.534 90.285 $17,513.41
3/94 $7.3190 0.621 145.840 $5.7253 0.486 114.084 $4.5504 0.386 90.671 $16,669.51
4/94 $7.1345 0.627 146.467 $5.5810 0.490 114.574 $4.4356 0.390 91.061 $16,726.53
5/94 $7.8082 0.689 147.156 $6.1079 0.539 115.113 $4.8545 0.428 91.489 $16,922.94
6/94 $7.6448 0.656 147.812 $5.9801 0.513 115.626 $4.7529 0.408 91.897 $16,880.13
7/94 $7.2783 0.638 148.450 $5.6934 0.499 116.125 $4.5250 0.397 92.294 $17,205.36
8/94 $8.4750 0.739 149.189 $6.6296 0.578 116.703 $5.2691 0.459 92.753 $17,246.25
9/94 $7.8861 0.690 149.879 $6.1689 0.540 117.243 $4.9029 0.429 93.182 $16,936.33
10/94 $8.3453 0.745 150.624 $6.5281 0.583 117.826 $5.1884 0.463 93.645 $16,643.95
11/94 $8.2226 0.766 151.390 $6.4321 0.599 118.425 $5.1121 0.476 94.121 $16,304.70
12/94 $7.8965 0.724 152.114 $6.1770 0.567 118.992 $4.9094 0.450 94.571 $16,762.96
12/94 $5.3057 0.482 152.596 $4.1504 0.377 119.369 $3.2986 0.300 94.871 $16,816.08
1/95 $3.2076 0.290 152.886 $2.5091 0.227 119.596 $1.9942 0.180 95.051 $17,260.83
2/95 $8.6304 0.756 153.642 $6.7512 0.591 120.187 $5.3656 0.470 95.521 $17,730.29
3/95 $8.0309 0.698 154.340 $6.2822 0.546 120.733 $4.9929 0.434 95.955 $17,888.01
4/95 $8.3544 0.717 155.057 $6.5353 0.561 121.294 $5.1940 0.446 96.401 $17,893.58
5/95 $8.2196 0.702 155.759 $6.4298 0.549 121.843 $5.1102 0.436 96.837 $18,457.44
6/95 $8.0668 0.683 156.442 $6.3102 0.534 122.377 $5.0152 0.425 97.262 $18,209.85
6/95 $5.5099 0.473 156.915 $4.3101 0.370 122.747 $3.4256 0.294 97.556 $18,264.91
7/95 $7.9101 0.678 157.593 $6.1877 0.530 123.277 $4.9178 0.421 97.977 $18,422.62
8/95 $9.0049 0.768 158.361 $7.0440 0.601 123.878 $5.5984 0.478 98.455 $18,626.11
</TABLE>
<PAGE>
TAX-EXEMPT NEW YORK
AUG-95
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at Period End
For $10,000 initial investment placed
Average Annual Total Return Rate Investment Value at End of Period CUMMULATIVE into the Fund on inception date
<S> <C> <C> <C> <C> <C>
7.96 Year Return: 8.87%* 7.88 Year Value:* $1,966.85 96.69% $19,668.48
5 Year Return: 8.82% 5 Year Value: $1,525.87 52.59%
3 Year Return: 6.56% 3 Year Value: $1,210.01
1 Year Return: 7.18% 1 Year Value: $1,071.83 7.18%
YTD Return: 11.09% YTD Value: $1,110.92
MTD Return: 1.31% MTD Value $1,013.13
* Since Inception NOTE: YTD includes Ex-dividend Monthly Declared
for the period $0.05464
$0.0018
Constant Sales Charge: 0.00%
<CAPTION>
Payment/
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- ------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/13/87 $10.00 $10.00 0.00%
9/87 $9.87 $9.87 0.00%
10/87 $9.98 $9.98 0.00% 10/20/87 $0.0561 $9.60
11/87 $10.14 $10.14 0.00% 11/20/87 $0.0517 $10.20
12/87 $10.34 $10.34 0.00% 12/18/87 $0.0440 $10.14
1/88 $10.76 $10.76 0.00% 01/08/88 $0.0222 $10.34
2/88 $10.81 $10.81 0.00% 02/10/88 $0.0738 $10.85
3/88 $10.44 $10.44 0.00% 03/10/88 $0.0515 $10.66
4/88 $10.44 $10.44 0.00% 04/08/88 $0.0485 $10.41
5/88 $10.34 $10.34 0.00% 05/10/88 $0.0562 $10.41
6/88 $10.50 $10.50 0.00% 06/10/88 $0.0577 $10.46
7/88 $10.51 $10.51 0.00% 07/08/88 $0.0500 $10.45
8/88 $10.48 $10.48 0.00% 08/10/88 $0.0579 $10.56
9/88 $10.66 $10.66 0.00% 09/09/88 $0.0548 $10.60
10/88 $10.91 $10.91 0.00% 10/07/88 $0.0513 $10.77
11/88 $10.65 $10.65 0.00% 11/10/88 $0.0623 $10.81
12/88 $10.80 $10.80 0.00% 12/09/88 $0.0542 $10.59
$10.80 $10.80 0.00% 12/30/88 $0.0376 $10.80
$10.80 $10.80 0.00% 12/29/88 $0.0200 $10.77 $0.02000 Cap Gain
1/89 $10.91 $10.91 0.00%
2/89 $10.73 $10.73 0.00% 02/10/89 $0.0807 $10.82
3/89 $10.64 $10.64 0.00% 03/10/89 $0.0556 $10.70
4/89 $10.93 $10.93 0.00% 04/10/89 $0.0583 $10.70
5/89 $11.07 $11.07 0.00% 05/10/89 $0.0571 $10.88
6/89 $11.16 $11.16 0.00% 06/09/89 $0.0565 $11.18
7/89 $11.21 $11.21 0.00% 07/10/89 $0.0584 $11.17
8/89 $11.01 $11.01 0.00% 08/10/89 $0.0563 $11.11
9/89 $10.88 $10.88 0.00% 09/08/89 $0.0540 $11.04
10/89 $10.91 $10.91 0.00% 10/10/89 $0.0604 $11.03
11/89 $11.04 $11.04 0.00% 11/10/89 $0.0575 $10.95
12/89 $11.05 $11.05 0.00% 12/08/89 $0.0522 $11.02
$11.05 $11.05 0.00% 12/29/89 $0.0150 $11.00 $0.01500 Cap Gain
$11.05 $11.05 0.00% 12/29/89 $0.0381 $11.05
1/90 $10.86 $10.86 0.00%
2/90 $10.88 $10.88 0.00% 02/09/90 $0.0778 $10.95
3/90 $10.78 $10.78 0.00% 03/09/90 $0.0538 $10.84
4/90 $10.56 $10.56 0.00% 04/10/90 $0.0583 $10.79
5/90 $10.82 $10.82 0.00% 05/10/90 $0.0553 $10.73
6/90 $10.90 $10.90 0.00% 06/08/90 $0.0517 $10.86
7/90 $11.07 $11.07 0.00% 07/10/90 $0.0593 $10.90
8/90 $10.74 $10.74 0.00% 08/10/90 $0.0553 $10.93
9/90 $10.62 $10.62 0.00% 09/10/90 $0.0577 $10.77
10/90 $10.70 $10.70 0.00% 10/10/90 $0.0596 $10.56
11/90 $10.91 $10.91 0.00% 11/09/90 $0.0571 $10.80
12/90 $10.87 $10.87 0.00% 12/03/90 $0.0607 $10.95
$10.87 $10.87 0.00% 12/31/90 $0.0418 $10.87
1/91 $10.97 $10.97 0.00%
2/91 $10.97 $10.97 0.00% 02/08/91 $0.0779 $11.11
3/91 $10.96 $10.96 0.00% 03/08/91 $0.0596 $10.96
4/91 $11.10 $11.10 0.00% 04/10/91 $0.0644 $11.03
5/91 $11.11 $11.11 0.00% 05/10/91 $0.0595 $11.10
6/91 $11.04 $11.04 0.00% 06/10/91 $0.0596 $11.00
7/91 $11.17 $11.17 0.00% 07/10/91 $0.0597 $11.07
8/91 $11.29 $11.29 0.00% 08/09/91 $0.0590 $11.22
9/91 $11.40 $11.40 0.00% 09/10/91 $0.0638 $11.29
10/91 $11.44 $11.44 0.00% 10/10/91 $0.0605 $11.42
11/91 $11.38 $11.38 0.00% 11/08/91 $0.0563 $11.45
12/91 $11.54 $11.54 0.00% 12/10/91 $0.0631 $11.35
$11.54 $11.54 0.00% 12/31/91 $0.0413 $11.54
$11.54 $11.54 0.00% 12/31/91 $0.01775 $11.56 $0.01775 Cap Gain
1/92 $11.40 $11.40 0.00%
2/92 $11.41 $11.41 0.00% 02/10/92 $0.0812 $11.37
3/92 $11.40 $11.40 0.00% 03/10/92 $0.0584 $11.39
4/92 $11.46 $11.46 0.00% 04/10/92 $0.0603 $11.50
5/92 $11.58 $11.58 0.00% 05/08/92 $0.0555 $11.52
6/92 $11.77 $11.77 0.00% 06/10/92 $0.0643 $11.60
7/92 $12.17 $12.17 0.00% 07/10/92 $0.0593 $11.92
8/92 $11.90 $11.90 0.00% 08/10/92 $0.0601 $12.09
9/92 $11.83 $11.83 0.00% 09/10/92 $0.0599 $11.97
10/92 $11.58 $11.58 0.00% 10/09/92 $0.0563 $11.79
11/92 $11.67 $11.67 0.00% 11/03/92 $0.1428 $11.46 $0.14280 Cap Gain
11/92 $11.67 $11.67 0.00% 11/10/92 $0.0611 $11.56
12/92 $11.76 $11.76 0.00% 12/10/92 $0.0571 $11.73
$11.76 $11.76 0.00% 12/30/92 $0.0375 $11.76
1/93 $11.83 $11.83 0.00% 01/08/93 $0.0166 $11.70
2/93 $12.27 $12.27 0.00% 02/10/93 $0.0632 $11.94
3/93 $12.11 $12.11 0.00% 03/10/93 $0.0556 $12.24
4/93 $12.20 $12.20 0.00% 04/08/93 $0.0539 $12.16
5/93 $12.26 $12.26 0.00% 05/10/93 $0.0595 $12.28
6/93 $12.41 $12.41 0.00% 06/10/93 $0.0565 $12.27
7/93 $12.37 $12.37 0.00% 07/09/93 $0.0528 $12.45
8/93 $12.63 $12.63 0.00% 08/10/93 $0.0564 $12.46
9/93 $12.72 $12.72 0.00% 09/10/93 $0.0552 $12.77
10/93 $12.71 $12.71 0.00% 10/08/93 $0.0504 $12.78
11/93 $12.47 $12.47 0.00% 11/10/93 $0.0573 $12.52
12/93 $12.55 $12.55 0.00% 12/03/93 $0.1319 $12.40 .13187 LT/ST gains
12/93 $12.55 $12.55 0.00% 12/10/93 $0.0528 $12.55
12/93 $12.55 $12.55 0.00% 12/30/93 $0.0340 $12.56
1/94 $12.65 $12.65 0.00% $0.00 $0.0000 $ 0.00
2/94 $12.29 $12.29 0.00% 2/10/94 $0.0745 $12.51
3/94 $11.70 $11.70 0.00% 3/10/94 $0.0514 $12.03
4/94 $11.65 $11.65 0.00% 4/08/94 $0.0499 $11.60
5/94 $11.71 $11.71 0.00% 5/10/94 $0.0551 $11.56
6/94 $11.61 $11.61 0.00% 6/10/94 $0.0532 $11.87
7/94 $11.75 $11.75 0.00% 7/08/94 $0.0502 $11.59
8/94 $11.73 $11.73 0.00% 8/10/94 $0.0580 $11.64
9/94 $11.46 $11.46 0.00% 9/09/94 $0.0537 $11.61
10/94 $11.18 $11.18 0.00% 10/10/94 $0.0564 $11.35
11/94 $10.87 $10.87 0.00% 11/10/94 $0.0551 $10.85
12/94 $11.10 $11.10 0.00% 12/09/94 $0.0527 $11.00
12/94 $11.10 $11.10 0.00% 12/29/94 $0.0351 $11.10
1/95 $11.32 $11.32 0.00% 1/10/95 $0.0209 $11.15
2/95 $11.63 $11.63 0.00% 2/10/95 $0.0562 $11.48
3/95 $11.67 $11.67 0.00% 3/10/95 $0.0530 $11.58
4/95 $11.65 $11.65 0.00% 4/10/95 $0.0545 $11.74
5/95 $11.97 $11.97 0.00% 5/10/95 $0.0535 $11.81
6/95 $11.75 $11.75 0.00% 6/9/95 $0.0527 $11.93
6/95 $11.75 $11.75 0.00% 6/29/95 $0.0358 $11.75
7/95 $11.78 $11.78 0.00% 7/28/95 $0.0510 $11.78
8/95 $11.88 $11.88 0.00% 8/30/95 $0.0581 $11.84
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
10-Year 5-Year Plot Points
------------------------------------------------------------ ---------- for $10,000
Month Dividend # of Shares Shares Dividend # of Shares Shares invested at
Ended Received Reinv. Outstanding Received Reinv. Outstanding inception date
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/13/87 100.000 $10,000.000
9/87 $0.0000 0.000 100.000 $9,870.000
10/87 $5.6100 0.584 100.584 $10,038.283
11/87 $5.2002 0.510 101.094 $10,250.932
12/87 $4.4481 0.439 101.533 $10,498.512
1/88 $2.2540 0.218 101.751 $10,948.408
2/88 $7.5092 0.692 102.443 $11,074.088
3/88 $5.2758 0.495 102.938 $10,746.727
4/88 $4.9925 0.480 103.418 $10,796.839
5/88 $5.8121 0.558 103.976 $10,751.118
6/88 $5.9994 0.574 104.550 $10,977.750
7/88 $5.2275 0.500 105.050 $11,040.755
8/88 $6.0824 0.576 105.626 $11,069.605
9/88 $5.7883 0.546 106.172 $11,317.935
10/88 $5.4466 0.506 106.678 $11,638.570
11/88 $6.6460 0.615 107.293 $11,426.705
12/88 $5.8153 0.549 107.842 $11,646.936
$4.0549 0.375 108.217 $11,687.436
$2.1643 0.201 108.418 $11,709.144
1/89 $0.0000 0.000 108.418 $11,828.404
2/89 $8.7493 0.809 109.227 $11,720.057
3/89 $6.0730 0.568 109.795 $11,682.188
4/89 $6.4010 0.598 110.393 $12,065.955
5/89 $6.3034 0.579 110.972 $12,284.600
6/89 $6.2699 0.561 111.533 $12,447.083
7/89 $6.5135 0.583 112.116 $12,568.204
8/89 $6.3121 0.568 112.684 $12,406.508
9/89 $6.0849 0.551 113.235 $12,319.968
10/89 $6.8394 0.620 113.855 $12,421.581
11/89 $6.5467 0.598 114.453 $12,635.611
12/89 $5.9744 0.542 114.995 $12,706.948
$1.7249 0.157 115.152 $12,724.296
$4.3873 0.397 115.549 $12,768.165
1/90 $0.0000 0.000 115.549 $12,548.621
2/90 $8.9897 0.821 116.370 $12,661.056
3/90 $6.2607 0.578 116.948 $12,606.994
4/90 $6.8181 0.632 117.580 $12,416.448
5/90 $6.5022 0.606 118.186 $12,787.725
6/90 $6.1102 0.563 118.749 $12,943.641
7/90 $7.0418 0.646 119.395 $13,217.027
8/90 $6.6025 0.604 119.999 93.110 $12,887.893
9/90 $6.9239 0.643 120.642 $5.3724 0.499 93.609 $12,812.180
10/90 $7.1903 0.681 121.323 $5.5791 0.528 94.137 $12,981.561
11/90 $6.9275 0.641 121.964 $5.3752 0.498 94.635 $13,306.272
12/90 $7.4032 0.676 122.640 $5.7443 0.525 95.160 $13,330.968
$5.1264 0.472 123.112 $3.9777 0.366 95.526 $13,382.274
1/91 $0.0000 0.000 123.112 $0.0000 0.000 95.526 $13,505.386
2/91 $9.5904 0.863 123.975 $7.4415 0.670 96.196 $13,600.058
3/91 $7.3889 0.674 124.649 $5.7333 0.523 96.719 $13,661.530
4/91 $8.0274 0.728 125.377 $6.2287 0.565 97.284 $13,916.847
5/91 $7.4599 0.672 126.049 $5.7884 0.521 97.805 $14,004.044
6/91 $7.5125 0.683 126.732 $5.8292 0.530 98.335 $13,991.213
7/91 $7.5659 0.683 127.415 $5.8706 0.530 98.865 $14,232.256
8/91 $7.5175 0.670 128.085 $5.8330 0.520 99.385 $14,460.797
9/91 $8.1718 0.724 128.809 $6.3408 0.562 99.947 $14,684.226
10/91 $7.7929 0.682 129.491 $6.0468 0.529 100.476 $14,813.770
11/91 $7.2903 0.637 130.128 $5.6568 0.494 100.970 $14,808.566
12/91 $8.2111 0.723 130.851 $6.3712 0.561 101.531 $15,100.205
$5.4041 0.468 131.319 $4.1932 0.363 101.894 $15,154.213
$2.3309 0.202 131.521 $1.8086 0.156 102.050 $15,177.523
1/92 $0.0000 0.000 131.521 $0.0000 0.000 102.050 $14,993.394
2/92 $10.6795 0.939 132.460 $8.2865 0.729 102.779 $15,113.686
3/92 $7.7357 0.679 133.139 $6.0023 0.527 103.306 $15,177.846
4/92 $8.0283 0.698 133.837 $6.2294 0.542 103.848 $15,337.720
5/92 $7.4280 0.645 134.482 $5.7636 0.500 104.348 $15,573.016
6/92 $8.6472 0.745 135.227 $6.7096 0.578 104.926 $15,916.218
7/92 $8.0190 0.673 135.900 $6.2221 0.522 105.448 $16,539.030
8/92 $8.1676 0.676 136.576 $6.3374 0.524 105.972 $16,252.544
9/92 $8.1809 0.683 137.259 $6.3477 0.530 106.502 $16,237.740
10/92 $7.7277 0.655 137.914 $5.9961 0.509 107.011 $15,970.441
11/92 $19.6941 1.719 139.633 $15.2812 1.333 108.344 $16,295.171
11/92 $8.5316 0.738 140.371 $6.6198 0.573 108.917 $16,381.296
12/92 $8.0152 0.683 141.054 $6.2192 0.530 109.447 $16,587.950
$5.2895 0.450 141.504 $4.1043 0.349 109.796 $16,640.870
1/93 $2.3490 0.201 141.705 $1.8226 0.156 109.952 $16,763.702
2/93 $8.9558 0.750 142.455 $6.9490 0.582 110.534 $17,479.229
3/93 $7.9205 0.647 143.102 $6.1457 0.502 111.036 $17,329.652
4/93 $7.7132 0.634 143.736 $5.9848 0.492 111.528 $17,535.792
5/93 $8.5523 0.696 144.432 $6.6359 0.540 112.068 $17,707.363
6/93 $8.1604 0.665 145.097 $6.3318 0.516 112.584 $18,006.538
7/93 $7.6611 0.615 145.712 $5.9444 0.477 113.061 $18,024.574
8/93 $8.2182 0.660 146.372 $6.3766 0.512 113.573 $18,486.784
9/93 $8.0797 0.633 147.005 $6.2692 0.491 114.064 $18,699.038
10/93 $7.4091 0.580 147.585 $5.7488 0.450 114.514 $18,758.054
11/93 $8.4566 0.675 148.260 $6.5617 0.524 115.038 $18,488.022
12/93 $19.5510 1.577 149.837 $15.1701 1.223 116.261 $18,804.544
12/93 $7.9084 0.630 150.467 $6.1363 0.489 116.750 $18,883.609
12/93 $5.1204 0.408 150.875 $3.9730 0.316 117.066 $18,934.813
1/94 $0.0000 0.000 150.875 $0.0000 0.000 117.066 $19,085.688
2/94 $11.2402 0.898 151.773 $8.7214 0.697 117.763 $18,652.902
3/94 $7.8011 0.648 152.421 $6.0530 0.503 118.266 $17,833.257
4/94 $7.6058 0.656 153.077 $5.9015 0.509 118.775 $17,833.471
5/94 $8.4345 0.730 153.807 $6.5445 0.566 119.341 $18,010.800
6/94 $8.1835 0.689 154.496 $6.3497 0.535 119.876 $17,936.986
7/94 $7.7515 0.669 155.165 $6.0145 0.519 120.395 $18,231.888
8/94 $9.0005 0.773 155.938 $6.9836 0.600 120.995 $18,291.527
9/94 $8.3776 0.722 156.660 $6.5003 0.560 121.555 $17,953.236
10/94 $8.8403 0.779 157.439 $6.8593 0.604 122.159 $17,601.680
11/94 $8.6820 0.800 158.239 $6.7365 0.621 122.780 $17,200.579
12/94 $8.3376 0.758 158.997 $6.4693 0.588 123.368 $17,648.667
12/94 $5.5728 0.502 159.499 $4.3240 0.390 123.758 $17,704.389
1/95 $3.3287 0.299 159.798 $2.5828 0.232 123.990 $18,089.134
2/95 $8.9839 0.783 160.581 $6.9708 0.607 124.597 $18,675.570
3/95 $8.5076 0.735 161.316 $6.6011 0.570 125.167 $18,825.577
4/95 $8.7901 0.749 162.065 $6.8203 0.581 125.748 $18,880.573
5/95 $8.6624 0.733 162.798 $6.7212 0.569 126.317 $19,486.921
6/95 $8.5778 0.719 163.517 $6.6556 0.558 126.875 $19,213.248
6/95 $5.8588 0.499 164.016 $4.5459 0.387 127.262 $19,271.880
7/95 $8.3714 0.711 164.727 $6.4955 0.551 127.813 $19,404.841
8/95 $9.5673 0.808 165.535 $7.4234 0.627 128.440 $19,668.480
</TABLE>
<TABLE>
<CAPTION>
3-Year 1-Year
----------------------------------------------------
Payment/ # of Shares # of Shares
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend Shares Out- Dividend Shares Out-
Ended NAV Price Charge Date Amount Price Information Received Reinv. standing Received Reinv. standing
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/92 $11.40 $11.40 0.00%
2/92 $11.41 $11.41 0.00% 02/10/92 $0.0812 $11.37
3/92 $11.40 $11.40 0.00% 03/10/92 $0.0584 $11.39
4/92 $11.46 $11.46 0.00% 04/10/92 $0.0603 $11.50
5/92 $11.58 $11.58 0.00% 05/08/92 $0.0555 $11.52
6/92 $11.77 $11.77 0.00% 06/10/92 $0.0643 $11.60
7/92 $12.17 $12.17 0.00% 07/10/92 $0.0593 $11.92
8/92 $11.90 $11.90 0.00% 08/10/92 $0.0601 $12.09 84.034
9/92 $11.83 $11.83 0.00% 09/10/92 $0.0599 $11.97 $5.0336 0.421 84.455
10/92 $11.58 $11.58 0.00% 10/09/92 $0.0563 $11.79 $4.7548 0.403 84.858
11/92 $11.67 $11.67 0.00% 11/03/92 $0.1428 $11.46 $0.14280 Cap Gain $12.1177 1.057 85.915
11/92 $11.67 $11.67 0.00% 11/10/92 $0.0611 $11.56 $5.2494 0.454 86.369
12/92 $11.76 $11.76 0.00% 12/10/92 $0.0571 $11.73 $4.9317 0.420 86.789
$11.76 $11.76 0.00% 12/30/92 $0.0375 $11.76 $3.2546 0.277 87.066
1/93 $11.83 $11.83 0.00% 01/08/93 $0.0166 $11.70 $1.4453 0.124 87.190
2/93 $12.27 $12.27 0.00% 02/10/93 $0.0632 $11.94 $5.5104 0.462 87.652
3/93 $12.11 $12.11 0.00% 03/10/93 $0.0556 $12.24 $4.8735 0.398 88.050
4/93 $12.20 $12.20 0.00% 04/08/93 $0.0539 $12.16 $4.7459 0.390 88.440
5/93 $12.26 $12.26 0.00% 05/10/93 $0.0595 $12.28 $5.2622 0.429 88.869
6/93 $12.41 $12.41 0.00% 06/10/93 $0.0565 $12.27 $5.0211 0.409 89.278
7/93 $12.37 $12.37 0.00% 07/09/93 $0.0528 $12.45 $4.7139 0.379 89.657
8/93 $12.63 $12.63 0.00% 08/10/93 $0.0564 $12.46 $5.0567 0.406 90.063
9/93 $12.72 $12.72 0.00% 09/10/93 $0.0552 $12.77 $4.9715 0.389 90.452
10/93 $12.71 $12.71 0.00% 10/08/93 $0.0504 $12.78 $4.5588 0.357 90.809
11/93 $12.47 $12.47 0.00% 11/10/93 $0.0573 $12.52 $5.2034 0.416 91.225
12/93 $12.55 $12.55 0.00% 12/03/93 $0.1319 $12.40 .13187 LT/ST gains $12.0298 0.970 92.195
12/93 $12.55 $12.55 0.00% 12/10/93 $0.0528 $12.55 $4.8661 0.388 92.583
12/93 $12.55 $12.55 0.00% 12/30/93 $0.0340 $12.56 $3.1506 0.251 92.834
1/94 $12.65 $12.65 0.00% $0.00 $0.0000 $0.00 $0.0000 0.000 92.834
2/94 $12.29 $12.29 0.00% 2/10/94 $0.0745 $12.51 $6.9161 0.553 93.387
3/94 $11.70 $11.70 0.00% 3/10/94 $0.0514 $12.03 $4.8001 0.399 93.786
4/94 $11.65 $11.65 0.00% 4/08/94 $0.0499 $11.60 $4.6799 0.403 94.189
5/94 $11.71 $11.71 0.00% 5/10/94 $0.0551 $11.56 $5.1898 0.449 94.638
6/94 $11.61 $11.61 0.00% 6/10/94 $0.0532 $11.87 $5.0353 0.424 95.062
7/94 $11.75 $11.75 0.00% 7/08/94 $0.0502 $11.59 $4.7695 0.412 95.474
8/94 $11.73 $11.73 0.00% 8/10/94 $0.0580 $11.64 $5.5380 0.476 95.950 85.251
9/94 $11.46 $11.46 0.00% 9/09/94 $0.0537 $11.61 $5.1548 0.444 96.394 $1.4132 0.122 85.373
10/94 $11.18 $11.18 0.00% 10/10/94 $0.0564 $11.35 $5.4395 0.479 96.873 $4.8176 0.424 85.373
11/94 $10.87 $10.87 0.00% 11/10/94 $0.0551 $10.85 $5.3421 0.492 97.365 $4.7313 0.436 86.233
12/94 $11.10 $11.10 0.00% 12/09/94 $0.0527 $11.00 $5.1302 0.466 97.831 $4.5436 0.413 86.646
12/94 $11.10 $11.10 0.00% 12/29/94 $0.0351 $11.10 $3.4290 0.309 98.140 $3.0369 0.274 86.920
1/95 $11.32 $11.32 0.00% 1/10/95 $0.0209 $11.15 $2.0482 0.184 98.324 $1.8140 0.163 87.083
2/95 $11.63 $11.63 0.00% 2/10/95 $0.0562 $11.48 $5.5278 0.482 98.806 $4.8958 0.426 87.509
3/95 $11.67 $11.67 0.00% 3/10/95 $0.0530 $11.58 $5.2347 0.452 99.258 $4.6362 0.400 87.909
4/95 $11.65 $11.65 0.00% 4/10/95 $0.0545 $11.74 $5.4086 0.461 99.719 $4.7902 0.408 88.317
5/95 $11.97 $11.97 0.00% 5/10/95 $0.0535 $11.81 $5.3300 0.451 100.170 $4.7205 0.400 88.717
6/95 $11.75 $11.75 0.00% 6/9/95 $0.0527 $11.93 $5.2780 0.442 100.612 $4.6745 0.392 88.109
6/95 $11.75 $11.75 0.00% 6/29/95 $0.0358 $11.75 $3.6049 0.307 100.919 $3.1928 0.272 89.381
7/95 $11.78 $11.78 0.00% 7/28/95 $0.0510 $11.78 $5.1509 0.437 101.356 $4.5620 0.387 89.768
8/95 $11.88 $11.88 0.00% 8/30/95 $0.0581 $11.84 $5.8868 0.497 101.853 $5.2137 0.440 90.208
</TABLE>
<TABLE>
<CAPTION>
YTD MTD
------------------------------------------------------------
Payment/ Shares Shares
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend of share Out- Dividend # of Shares Out-
Ended NAV Price Charge Date Amount Price Information Received Reinv. standing Received Reinv. standing
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/94 $11.70 $11.70 0.00% 3/10/94 $0.0514 $12.03
4/94 $11.65 $11.65 0.00% 4/08/94 $0.0499 $11.60
5/94 $11.71 $11.71 0.00% 5/10/94 $0.0551 $11.56
6/94 $11.61 $11.61 0.00% 6/10/94 $0.0532 $11.87
7/94 $11.75 $11.75 0.00% 7/08/94 $0.0502 $11.59
8/94 $11.73 $11.73 0.00% 8/10/94 $0.0580 $11.64
9/94 $11.46 $11.46 0.00% 9/09/94 $0.0537 $11.61
10/94 $11.18 $11.18 0.00% 10/10/94 $0.0564 $11.35
11/94 $10.87 $10.87 0.00% 11/10/94 $0.0551 $10.85
12/94 $11.10 $11.10 0.00% 12/09/94 $0.0527 $11.00
12/94 $11.10 $11.10 0.00% 12/29/94 $0.0351 $11.10 90.090
1/95 $11.32 $11.32 0.00% 1/10/95 $0.0209 $11.15 $1.8802 0.169 90.259 0.000
2/95 $11.63 $11.63 0.00% 2/10/95 $0.0562 $11.48 $5.0744 0.442 90.701 $0.0000 0.000
3/95 $11.67 $11.67 0.00% 3/10/95 $0.0530 $11.58 $4.8053 0.415 91.116 $0.0000 0.000
4/95 $11.65 $11.65 0.00% 4/10/95 $0.0545 $11.74 $4.9649 0.423 91.539 $0.0000 0.000
5/95 $11.97 $11.97 0.00% 5/10/95 $0.0535 $11.81 $4.8928 0.414 91.953 $0.0000 0.000
6/95 $11.75 $11.75 0.00% 6/9/95 $0.0527 $11.93 $4.8450 0.406 92.359 $0.0000 0.000
6/95 $11.75 $11.75 0.00% 6/29/95 $0.0358 $11.75 $3.3092 0.282 92.641 $0.0000 0.000
7/95 $11.78 $11.78 0.00% 7/28/95 $0.0510 $11.78 $4.7284 0.401 93.042 $0.0000 0.000
8/95 $11.88 $11.88 0.00% 8/30/95 $0.0581 $11.84 $5.4039 0.456 93.498 $4.9304 0.416 84.890
</TABLE>
<PAGE>
TAX-EXEMPT NEW YORK
AUG-95
Initial Investment: $1,000.00
<TABLE>
<CAPTION>
Investment Value at Period End
for $10,000 initial investment
Average Annual Total Return Rate Investment Value at End of Period CUMULATIVE invested at inception date
<S> <C> <C> <C> <C> <C>
7.96 Year Return: 8.24%* 7.88 Year Value:* $1,878.55 87.86% $18,785.55
5 Year Return: 7.81% 5 Year Value: $1,456.71 45.67%
3 Year Return: 4.94% 3 Year Value: $1,155.65
1 Year Return: 2.38% 1 Year Value: $1,023.83 2.38%
YTD Return: 6.12% YTD Value: $1,061.21
MTD Return: -3.29% MTD Value: $ 967.15
* Since Inception NOTE: YTD includes Ex-dividend
for the period
$0.0018 Monthly Declared Div
Constant Sales Charge: 4.50% $0.05464
<CAPTION>
Payment/
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains
Ended NAV Price Charge Date Amount Price Information
- ------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
9/13/87 $10.00 $10.47 4.50%
9/87 $9.87 $10.34 4.50%
10/87 $9.98 $10.45 4.50% 10/20/87 $0.0561 $9.60
11/87 $10.14 $10.62 4.50% 11/20/87 $0.0517 $10.20
12/87 $10.34 $10.83 4.50% 12/18/87 $0.0440 $10.14
1/88 $10.76 $11.27 4.50% 01/08/88 $0.0222 $10.34
2/88 $10.81 $11.32 4.50% 02/10/88 $0.0738 $10.85
3/88 $10.44 $10.93 4.50% 03/10/88 $0.0515 $10.66
4/88 $10.44 $10.93 4.50% 04/08/88 $0.0485 $10.41
5/88 $10.34 $10.83 4.50% 05/10/88 $0.0562 $10.41
6/88 $10.50 $10.99 4.50% 06/10/88 $0.0577 $10.46
7/88 $10.51 $11.01 4.50% 07/08/88 $0.0500 $10.45
8/88 $10.48 $10.97 4.50% 08/10/88 $0.0579 $10.56
9/88 $10.66 $11.16 4.50% 09/09/88 $0.0548 $10.60
10/88 $10.91 $11.42 4.50% 10/07/88 $0.0513 $10.77
11/88 $10.65 $11.15 4.50% 11/10/88 $0.0623 $10.81
12/88 $10.80 $11.31 4.50% 12/09/88 $0.0542 $10.59
$10.80 $11.31 4.50% 12/30/88 $0.0376 $10.80
$10.80 $11.31 4.50% 12/29/88 $0.0200 $10.77 $0.02000 Cap Gain
1/89 $10.91 $11.42 4.50%
2/89 $10.73 $11.24 4.50% 02/10/89 $0.0807 $10.82
3/89 $10.64 $11.14 4.50% 03/10/89 $0.0556 $10.70
4/89 $10.93 $11.45 4.50% 04/10/89 $0.0583 $10.70
5/89 $11.07 $11.59 4.50% 05/10/89 $0.0571 $10.88
6/89 $11.16 $11.69 4.50% 06/09/89 $0.0565 $11.18
7/89 $11.21 $11.74 4.50% 07/10/89 $0.0584 $11.17
8/89 $11.01 $11.53 4.50% 08/10/89 $0.0563 $11.11
9/89 $10.88 $11.39 4.50% 09/08/89 $0.0540 $11.04
10/89 $10.91 $11.42 4.50% 10/10/89 $0.0604 $11.03
11/89 $11.04 $11.56 4.50% 11/10/89 $0.0575 $10.95
12/89 $11.05 $11.57 4.50% 12/08/89 $0.0522 $11.02
$11.05 $11.57 4.50% 12/29/89 $0.0150 $11.00 $0.01500 Cap Gain
$11.05 $11.57 4.50% 12/29/89 $0.0381 $11.05
1/90 $10.86 $11.37 4.50%
2/90 $10.88 $11.39 4.50% 02/09/90 $0.0778 $10.95
3/90 $10.78 $11.29 4.50% 03/09/90 $0.0538 $10.84
4/90 $10.56 $11.06 4.50% 04/10/90 $0.0583 $10.79
5/90 $10.82 $11.33 4.50% 05/10/90 $0.0553 $10.73
6/90 $10.90 $11.41 4.50% 06/08/90 $0.0517 $10.86
7/90 $11.07 $11.59 4.50% 07/10/90 $0.0593 $10.90
8/90 $10.74 $11.25 4.50% 08/10/90 $0.0553 $10.93
9/90 $10.62 $11.12 4.50% 09/10/90 $0.0577 $10.77
10/90 $10.70 $11.20 4.50% 10/10/90 $0.0596 $10.56
11/90 $10.91 $11.42 4.50% 11/09/90 $0.0571 $10.80
12/90 $10.87 $11.38 4.50% 12/03/90 $0.0607 $10.95
$10.87 $11.38 4.50% 12/31/90 $0.0418 $10.87
1/91 $10.97 $11.49 4.50%
2/91 $10.97 $11.49 4.50% 02/08/91 $0.0779 $11.11
3/91 $10.96 $11.48 4.50% 03/08/91 $0.0596 $10.96
4/91 $11.10 $11.62 4.50% 04/10/91 $0.0644 $11.03
5/91 $11.11 $11.63 4.50% 05/10/91 $0.0595 $11.10
6/91 $11.04 $11.56 4.50% 06/10/91 $0.0596 $11.00
7/91 $11.17 $11.70 4.50% 07/10/91 $0.0597 $11.07
8/91 $11.29 $11.82 4.50% 08/09/91 $0.0590 $11.22
9/91 $11.40 $11.94 4.50% 09/10/91 $0.0638 $11.29
10/91 $11.44 $11.98 4.50% 10/10/91 $0.0605 $11.42
11/91 $11.38 $11.92 4.50% 11/08/91 $0.0563 $11.45
12/91 $11.54 $12.08 4.50% 12/10/91 $0.0631 $11.35
$11.54 $12.08 4.50% 12/31/91 $0.0413 $11.54
$11.54 $12.08 4.50% 12/31/91 $0.01775 $11.56 $0.01775 Cap Gain
1/92 $11.40 $11.94 4.50%
2/92 $11.41 $11.95 4.50% 02/10/92 $0.0812 $11.37
3/92 $11.40 $11.94 4.50% 03/10/92 $0.0584 $11.39
4/92 $11.46 $12.00 4.50% 04/10/92 $0.0603 $11.50
5/92 $11.58 $12.13 4.50% 05/08/92 $0.0555 $11.52
6/92 $11.77 $12.32 4.50% 06/10/92 $0.0643 $11.60
7/92 $12.17 $12.74 4.50% 07/10/92 $0.0593 $11.92
8/92 $11.90 $12.46 4.50% 08/10/92 $0.0601 $12.09
9/92 $11.83 $12.39 4.50% 09/10/92 $0.0599 $11.97
10/92 $11.58 $12.13 4.50% 10/09/92 $0.0563 $11.79
11/92 $11.67 $12.22 4.50% 11/03/92 $0.1428 $11.46 $0.14280 Cap Gain
11/92 $11.67 $12.22 4.50% 11/10/92 $0.0611 $11.56
12/92 $11.76 $12.31 4.50% 12/10/92 $0.0571 $11.73
$11.76 $12.31 4.50% 12/30/92 $0.0375 $11.76
1/93 $11.83 $12.39 4.50% 01/08/93 $0.0166 $11.70
2/93 $12.27 $12.85 4.50% 02/10/93 $0.0632 $11.94
3/93 $12.11 $12.68 4.50% 03/10/93 $0.0556 $12.24
4/93 $12.20 $12.77 4.50% 04/08/93 $0.0539 $12.16
5/93 $12.26 $12.84 4.50% 05/10/93 $0.0595 $12.28
6/93 $12.41 $12.99 4.50% 06/10/93 $0.0565 $12.27
7/93 $12.37 $12.95 4.50% 07/09/93 $0.0528 $12.45
8/93 $12.63 $13.23 4.50% 08/10/93 $0.0564 $12.46
9/93 $12.72 $13.32 4.50% 09/10/93 $0.0552 $12.77
10/93 $12.71 $13.31 4.50% 10/08/93 $0.0504 $12.78
11/93 $12.47 $13.06 4.50% 11/10/93 $0.0573 $12.52
12/93 $12.55 $13.14 4.50% 12/03/93 $0.1319 $12.40 .13187 LT/ST gains
12/93 $12.55 $13.14 4.50% 12/10/93 $0.0528 $12.55
12/93 $12.55 $13.14 4.50% 12/30/93 $0.0340 $12.56
1/94 $12.65 $13.25 4.50% $0.00 $0.0000 $0.00
2/94 $12.29 $12.87 4.50% 2/10/94 $0.0745 $12.51
3/94 $11.70 $12.25 4.50% 3/10/94 $0.0514 $12.03
4/94 $11.65 $12.20 4.50% 4/08/94 $0.0499 $11.60
5/94 $11.71 $12.26 4.50% 5/10/94 $0.0551 $11.56
6/94 $11.61 $12.16 4.50% 6/10/94 $0.0532 $11.87
7/94 $11.75 $12.30 4.50% 7/08/94 $0.0502 $11.59
8/94 $11.73 $12.28 4.50% 8/10/94 $0.0580 $11.64
9/94 $11.46 $12.00 4.50% 9/09/94 $0.0537 $11.61
10/94 $11.18 $11.71 4.50% 10/10/94 $0.0564 $11.35
11/94 $10.87 $11.38 4.50% 11/10/94 $0.0551 $10.85
12/94 $11.10 $11.62 4.50% 12/09/94 $0.0527 $11.00
12/94 $11.10 $11.62 4.50% 12/29/94 $0.0351 $11.10
1/95 $11.32 $11.85 4.50% 1/10/95 $0.0209 $11.15
2/95 $11.63 $12.18 4.50% 2/10/95 $0.0562 $11.48
3/95 $11.67 $12.22 4.50% 3/10/95 $0.0530 $11.58
4/95 $11.65 $12.20 4.50% 4/10/95 $0.0545 $11.74
5/95 $11.97 $12.53 4.50% 5/10/95 $0.0535 $11.81
6/95 $11.75 $12.30 4.50% 6/9/95 $0.0527 $11.93
6/95 $11.75 $12.30 4.50% 6/29/95 $0.0358 $11.75
7/95 $11.78 $12.34 4.50% 7/28/95 $0.0510 $11.78
8/95 $11.88 $12.44 4.50% 8/30/95 $0.0581 $11.84
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
10-Year 5-Year
- ------ --------- ----------- ----------- -------- ----------- ----------- Plot Points for
Month Dividend # of Shares Shares Dividend # of Shares Shares $10,000 invested
Ended Received Reinv. Outstanding Received Reinv. Outstanding at inception date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/13/87 95.511 $10,000.002
9/87 $0.0000 0.000 95.511 $9,426.936
10/87 $5.3582 0.558 96.069 $9,587.686
11/87 $4.9668 0.487 96.556 $9,790.778
12/87 $4.2485 0.419 96.975 $10,027.215
1/88 $2.1528 0.208 97.183 $10,456.891
2/88 $7.1721 0.661 97.844 $10,576.936
3/88 $5.0390 0.473 98.317 $10,264.295
4/88 $4.7684 0.458 98.775 $10,312.110
5/88 $5.5512 0.533 99.308 $10,268.447
6/88 $5.7301 0.548 99.856 $10,484.880
7/88 $4.9928 0.478 100.334 $10,545.103
8/88 $5.8093 0.550 100.884 $10,572.643
9/88 $5.5284 0.522 101.406 $10,809.880
10/88 $5.2021 0.483 101.889 $11,116.090
11/88 $6.3477 0.587 102.476 $10,913.694
12/88 $5.5542 0.524 103.000 $11,124.000
$3.8728 0.359 103.359 $11,162.772
$2.0672 0.192 103.551 $11,183.508
1/89 $0.0000 0.000 103.551 $11,297.414
2/89 $8.3566 0.772 104.323 $11,193.858
3/89 $5.8004 0.542 104.865 $11,157.636
4/89 $6.1136 0.571 105.436 $11,524.155
5/89 $6.0204 0.553 105.989 $11,732.982
6/89 $5.9884 0.536 106.525 $11,888.190
7/89 $6.2211 0.557 107.082 $12,003.892
8/89 $6.0287 0.543 107.625 $11,849.513
9/89 $5.8118 0.526 108.151 $11,766.829
10/89 $6.5323 0.592 108.743 $11,863.861
11/89 $6.2527 0.571 109.314 $12,068.266
12/89 $5.7062 0.518 109.832 $12,136.436
$1.6475 0.150 109.982 $12,153.011
$4.1903 0.379 110.361 $12,194.891
1/90 $0.0000 0.000 110.361 $11,985.205
2/90 $8.5861 0.784 111.145 $12,092.576
3/90 $5.9796 0.552 111.697 $12,040.937
4/90 $6.5119 0.604 112.301 $11,858.986
5/90 $6.2102 0.579 112.880 $12,213.616
6/90 $5.8359 0.537 113.417 $12,362.453
7/90 $6.7256 0.617 114.034 $12,623.564
8/90 $6.3061 0.577 114.611 88.889 $12,309.221
9/90 $6.6131 0.614 115.225 $5.1289 0.476 89.365 $12,236.895
10/90 $6.8674 0.650 115.875 $5.3262 0.504 89.869 $12,398.625
11/90 $6.6165 0.613 116.488 $5.1315 0.475 90.344 $12,708.841
12/90 $7.0708 0.646 117.134 $5.4839 0.501 90.845 $12,732.466
$4.8962 0.450 117.584 $3.7973 0.349 91.194 $12,781.381
1/91 $0.0000 0.000 117.584 $0.0000 0.000 91.194 $12,898.965
2/91 $9.1598 0.824 118.408 $7.1040 0.639 91.833 $12,989.358
3/91 $7.0571 0.644 119.052 $5.4732 0.499 92.332 $13,048.099
4/91 $7.6669 0.695 119.747 $5.9462 0.539 92.871 $13,291.917
5/91 $7.1249 0.642 120.389 $5.5258 0.498 93.369 $13,375.218
6/91 $7.1752 0.652 121.041 $5.5648 0.506 93.875 $13,362.926
7/91 $7.2261 0.653 121.694 $5.6043 0.506 94.381 $13,593.220
8/91 $7.1799 0.640 122.334 $5.5685 0.496 94.877 $13,811.509
9/91 $7.8049 0.691 123.025 $6.0532 0.536 95.413 $14,024.850
10/91 $7.4430 0.652 123.677 $5.7725 0.505 95.918 $14,148.649
11/91 $6.9630 0.608 124.285 $5.4002 0.472 96.390 $14,143.633
12/91 $7.8424 0.691 124.976 $6.0822 0.536 96.926 $14,422.230
$5.1615 0.447 125.423 $4.0030 0.347 97.273 $14,473.814
$2.2263 0.193 125.616 $1.7266 0.149 97.422 $14,496.086
1/92 $0.0000 0.000 125.616 $0.0000 0.000 97.422 $14,320.224
2/92 $10.2000 0.897 126.513 $7.9107 0.696 98.118 $14,435.133
3/92 $7.3884 0.649 127.162 $5.7301 0.503 98.621 $14,496.468
4/92 $7.6679 0.667 127.829 $5.9468 0.517 99.138 $14,649.203
5/92 $7.0945 0.616 128.445 $5.5022 0.478 99.616 $14,873.931
6/92 $8.2590 0.712 129.157 $6.4053 0.552 100.168 $15,201.779
7/92 $7.6590 0.643 129.800 $5.9400 0.498 100.666 $15,796.660
8/92 $7.8010 0.645 130.445 $6.0500 0.500 101.166 $15,522.955
9/92 $7.8137 0.653 131.098 $6.0598 0.506 101.672 $15,508.893
10/92 $7.3808 0.626 131.724 $5.7241 0.486 102.158 $15,253.639
11/92 $18.8102 1.641 133.365 $14.5882 1.273 103.431 $15,563.696
11/92 $8.1486 0.705 134.070 $6.3196 0.547 103.978 $15,645.969
12/92 $7.6554 0.653 134.723 $5.9371 0.506 104.484 $15,843.425
$5.0521 0.430 135.153 $3.9182 0.333 104.817 $15,893.993
1/93 $2.2435 0.192 135.345 $1.7400 0.149 104.966 $16,011.314
2/93 $8.5538 0.716 136.061 $6.6339 0.556 105.522 $16,694.685
3/93 $7.5650 0.618 136.679 $5.8670 0.479 106.001 $16,551.827
4/93 $7.3670 0.606 137.285 $5.7135 0.470 106.471 $16,748.770
5/93 $8.1685 0.665 137.950 $6.3350 0.516 106.987 $16,912.670
6/93 $7.7942 0.635 138.585 $6.0448 0.493 107.480 $17,198.399
7/93 $7.3173 0.588 139.173 $5.6749 0.456 107.936 $17,215.700
8/93 $7.8494 0.630 139.803 $6.0876 0.489 108.425 $17,657.119
9/93 $7.7171 0.604 140.407 $5.9851 0.469 108.894 $17,859.770
10/93 $7.0765 0.554 140.961 $5.4883 0.429 109.323 $17,916.143
11/93 $8.0771 0.645 141.606 $6.2642 0.500 109.823 $17,658.268
12/93 $18.6736 1.506 143.112 $14.4824 1.168 110.991 $17,960.556
12/93 $7.5535 0.602 143.714 $5.8581 0.467 111.458 $18,036.107
12/93 $4.8906 0.389 144.103 $3.7929 0.302 111.760 $18,084.927
1/94 $0.0000 0.000 144.103 $0.0000 0.000 111.760 $18,229.030
2/94 $10.7357 0.858 144.961 $8.3261 0.666 112.426 $17,815.707
3/94 $7.4510 0.619 145.580 $5.7787 0.480 112.906 $17,032.860
4/94 $7.2644 0.626 146.206 $5.6340 0.486 113.392 $17,032.999
5/94 $8.0560 0.697 146.903 $6.2479 0.540 113.932 $17,202.341
6/94 $7.8162 0.658 147.561 $6.0619 0.511 114.443 $17,131.832
7/94 $7.4036 0.639 148.200 $5.7419 0.495 114.938 $17,413.500
8/94 $8.5964 0.739 148.939 $6.6671 0.573 115.511 $17,470.545
9/94 $8.0016 0.689 149.628 $6.2057 0.535 116.046 $17,147.369
10/94 $8.4435 0.744 150.372 $6.5485 0.577 116.623 $16,811.590
11/94 $8.2923 0.764 151.136 $6.4312 0.593 117.216 $16,428.483
12/94 $7.9634 0.724 151.860 $6.1761 0.561 117.777 $16,856.460
12/94 $5.3227 0.480 152.340 $4.1281 0.372 118.149 $16,909.740
1/95 $3.1793 0.285 152.625 $2.4658 0.221 118.370 $17,277.150
2/95 $8.5806 0.747 153.372 $6.6548 0.580 118.950 $17,837.164
3/95 $8.1256 0.702 154.074 $6.3020 0.544 119.494 $17,980.436
4/95 $8.3955 0.715 154.789 $6.5112 0.555 120.049 $18,032.919
5/95 $8.2735 0.701 155.490 $6.4166 0.543 120.592 $18,612.153
6/95 $8.1928 0.687 156.177 $6.3540 0.533 121.125 $18,350.798
6/95 $5.5958 0.476 156.653 $4.3399 0.369 121.494 $18,406.728
7/95 $7.9956 0.679 157.332 $6.2011 0.526 122.020 $18,533.710
8/95 $9.1378 0.772 158.104 $7.0869 0.599 122.619 $18,785.546
</TABLE>
<TABLE>
<CAPTION>
3-Year 1-Year
----------------------------------------------------
Payment/ # of Shares # of Shares
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend Shares Out- Dividend Shares Out-
Ended NAV Price Charge Date Amount Price Information Received Reinv. standing Received Reinv. standing
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/92 $11.40 $11.94 4.50%
2/92 $11.41 $11.95 4.50% 02/10/92 $0.0812 $11.37
3/92 $11.40 $11.94 4.50% 03/10/92 $0.0584 $11.39
4/92 $11.46 $12.00 4.50% 04/10/92 $0.0603 $11.50
5/92 $11.58 $12.13 4.50% 05/08/92 $0.0555 $11.52
6/92 $11.77 $12.32 4.50% 06/10/92 $0.0643 $11.60
7/92 $12.17 $12.74 4.50% 07/10/92 $0.0593 $11.92
8/92 $11.90 $12.46 4.50% 08/10/92 $0.0601 $12.09 80.257
9/92 $11.83 $12.39 4.50% 09/10/92 $0.0599 $11.97 $4.8074 0.402 80.659
10/92 $11.58 $12.13 4.50% 10/09/92 $0.0563 $11.79 $4.5411 0.385 81.044
11/92 $11.67 $12.22 4.50% 11/03/92 $0.1428 $11.46 $0.14280 Cap Gel $11.5731 1.010 82.054
11/92 $11.67 $12.22 4.50% 11/10/92 $0.0611 $11.56 $5.0135 0.434 82.488
12/92 $11.76 $12.31 4.50% 12/10/92 $0.0571 $11.73 $4.7101 0.402 82.890
$11.76 $12.31 4.50% 12/30/92 $0.0375 $11.76 $3.1084 0.264 83.154
1/93 $11.83 $12.39 4.50% 01/08/93 $0.0166 $11.70 $1.3804 0.118 83.272
2/93 $12.27 $12.85 4.50% 02/10/93 $0.0632 $11.94 $5.2628 0.441 83.713
3/93 $12.11 $12.68 4.50% 03/10/93 $0.0556 $12.24 $4.6544 0.380 84.093
4/93 $12.20 $12.77 4.50% 04/08/93 $0.0539 $12.16 $4.5326 0.373 84.466
5/93 $12.26 $12.84 4.50% 05/10/93 $0.0595 $12.28 $5.0257 0.409 84.875
6/93 $12.41 $12.99 4.50% 06/10/93 $0.0565 $12.27 $4.7954 0.391 85.266
7/93 $12.37 $12.95 4.50% 07/09/93 $0.0528 $12.45 $4.5020 0.362 85.628
8/93 $12.63 $13.23 4.50% 08/10/93 $0.0564 $12.46 $4.8294 0.388 86.016
9/93 $12.72 $13.32 4.50% 09/10/93 $0.0552 $12.77 $4.7481 0.372 86.388
10/93 $12.71 $13.31 4.50% 10/08/93 $0.0504 $12.78 $4.3540 0.341 86.729
11/93 $12.47 $13.06 4.50% 11/10/93 $0.0573 $12.52 $4.9696 0.397 87.126
12/93 $12.55 $13.14 4.50% 12/03/93 $0.1319 $12.40 .13187 LT/ST gains $11.4893 0.927 88.053
12/93 $12.55 $13.14 4.50% 12/10/93 $0.0528 $12.55 $4.6474 0.370 88.423
12/93 $12.55 $13.14 4.50% 12/30/93 $0.0340 $12.56 $3.0090 0.240 88.663
1/94 $12.65 $13.25 4.50% $0.00 $0.0000 $0.00 $0.0000 0.000 88.663
2/94 $12.29 $12.87 4.50% 2/10/94 $0.0745 $12.51 $6.6054 0.528 89.191
3/94 $11.70 $12.25 4.50% 3/10/94 $0.0514 $12.03 $4.5844 0.381 89.572
4/94 $11.65 $12.20 4.50% 4/08/94 $0.0499 $11.60 $4.4696 0.385 89.957
5/94 $11.71 $12.26 4.50% 5/10/94 $0.0551 $11.56 $4.9566 0.429 90.386
6/94 $11.61 $12.16 4.50% 6/10/94 $0.0532 $11.87 $4.8091 0.405 90.791
7/94 $11.75 $12.30 4.50% 7/08/94 $0.0502 $11.59 $4.5552 0.393 91.184
8/94 $11.73 $12.28 4.50% 8/10/94 $0.0580 $11.64 $5.2892 0.454 91.638 81.433
9/94 $11.46 $12.00 4.50% 9/09/94 $0.0537 $11.61 $4.9231 0.424 92.062 $1.3499 0.116 81.549
10/94 $11.18 $11.71 4.50% 10/10/94 $0.0564 $11.35 $5.1951 0.458 92.520 $4.6018 0.405 81.954
11/94 $10.87 $11.38 4.50% 11/10/94 $0.0551 $10.85 $5.1020 0.470 92.990 $4.5194 0.417 82.371
12/94 $11.10 $11.62 4.50% 12/09/94 $0.0527 $11.00 $4.8996 0.445 93.435 $4.3401 0.395 82.766
12/94 $11.10 $11.62 4.50% 12/29/94 $0.0351 $11.10 $3.2749 0.295 93.730 $2.9009 0.261 83.027
1/95 $11.32 $11.85 4.50% 1/10/95 $0.0209 $11.15 $1.9561 0.175 93.905 $1.7328 0.155 83.182
2/95 $11.63 $12.18 4.50% 2/10/95 $0.0562 $11.48 $5.2794 0.460 94.365 $4.6765 0.407 83.589
3/95 $11.67 $12.22 4.50% 3/10/95 $0.0530 $11.58 $4.9995 0.432 94.797 $4.4285 0.382 83.971
4/95 $11.65 $12.20 4.50% 4/10/95 $0.0545 $11.74 $5.1655 0.440 95.237 $4.5756 0.390 84.361
5/95 $11.97 $12.53 4.50% 5/10/95 $0.0535 $11.81 $5.0904 0.431 95.668 $4.5091 0.382 84.743
6/95 $11.75 $12.30 4.50% 6/9/95 $0.0527 $11.93 $5.0407 0.423 96.091 $4.4651 0.374 85.117
6/95 $11.75 $12.30 4.50% 6/29/95 $0.0358 $11.75 $3.4429 0.293 96.384 $3.0497 0.260 85.377
7/95 $11.78 $12.34 4.50% 7/28/95 $0.0510 $11.78 $4.9194 0.418 96.802 $4.3576 0.370 85.747
8/95 $11.88 $12.44 4.50% 8/30/95 $0.0581 $11.84 $5.6223 0.475 97.277 $4.9802 0.421 86.168
</TABLE>
<TABLE>
<CAPTION>
YTD MTD
Payment/ ------------------------------------------------------------
Month Offering Sales Ex-Div Dividend Reinv. Capital Gains Dividend of share Shares Dividend # of Shares Shares
Ended NAV Price Charge Date Amount Price Information Received Reinv. Out- Received Reinv. Out-
standing standing
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/94 $11.70 $12.25 4.50% 3/10/94 $0.0514 $12.03
4/94 $11.65 $12.20 4.50% 4/08/94 $0.0499 $11.60
5/94 $11.71 $12.26 4.50% 5/10/94 $0.0551 $11.56
6/94 $11.61 $12.16 4.50% 6/10/94 $0.0532 $11.87
7/94 $11.75 $12.30 4.50% 7/08/94 $0.0502 $11.59
8/94 $11.73 $12.28 4.50% 8/10/94 $0.0580 $11.64
9/94 $11.46 $12.00 4.50% 9/09/94 $0.0537 $11.61
10/94 $11.18 $11.71 4.50% 10/10/94 $0.0564 $11.35
11/94 $10.87 $11.38 4.50% 11/10/94 $0.0551 $10.85
12/94 $11.10 $11.62 4.50% 12/09/94 $0.0527 $11.00
12/94 $11.10 $11.62 4.50% 12/29/94 $0.0351 $11.10 86.059
1/95 $11.32 $11.85 4.50% 1/10/95 $0.0209 $11.15 $1.7961 0.161 86.220 0.00
2/95 $11.63 $12.18 4.50% 2/10/95 $0.0562 $11.48 $4.8473 0.422 86.642 $0.0000 0.00
3/95 $11.67 $12.22 4.50% 3/10/95 $0.0530 $11.58 $4.5903 0.396 87.038 $0.0000 0.00
4/95 $11.65 $12.20 4.50% 4/10/95 $0.0545 $11.74 $4.7427 0.404 87.442 $0.0000 0.00
5/95 $11.97 $12.53 4.50% 5/10/95 $0.0535 $11.81 $4.6738 0.396 87.838 $0.0000 0.00
6/95 $11.75 $12.30 4.50% 6/9/95 $0.0527 $11.93 $4.6282 0.388 88.226 $0.0000 0.00
6/95 $11.75 $12.30 4.50% 6/29/95 $0.0358 $11.75 $3.1611 0.269 88.495 $0.0000 0.00
7/95 $11.78 $12.34 4.50% 7/28/95 $0.0510 $11.78 $4.5168 0.383 88.878 $0.0000 0.00 81.037
8/95 $11.88 $12.44 4.50% 8/30/95 $0.0581 $11.84 $5.1620 0.436 89.314 $4.7066 0.39
</TABLE>
<PAGE>
Exhibit 99.17
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned Trustee of John Hancock
Tax-Exempt Series 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/ James B. Little Treasurer, May 5, 1987
- --------------------------- Principal
James B. Little Accounting Officer
and Principal
Financial Officer
/s/ Thomas H. Drohan Senior Vice President May 5, 1987
- --------------------------- and Secretary
Thomas H. Drohan
/s/ Dennis S. Aronowitz Trustee May 5, 1987
- ---------------------------
Dennis S. Aronowitz
/s/ Richard P. Chapman Trustee May 5, 1987
- ---------------------------
Richard P. Chapman
/s/ Francis C. Cleary, Jr. Trustee June 21, 1988
- ---------------------------
Francis C. Cleary, 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 May 5, 1987
- ---------------------------
Bayard Henry
/s/ Richard S. Scipione Trustee May 5, 1987
- ----------------------------
Richard S. Scipione
/s/ Edward J. Spellman Trustee October 23, 1990
- ----------------------------
Edward J. Spellman
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> JOHN HANCOCK TAX-EXEMPT SERIES FUND - MASSACHUSETTS PORTFOLIO
<S> <C>
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<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 50,866,573
<INVESTMENTS-AT-VALUE> 52,827,111
<RECEIVABLES> 835,910
<ASSETS-OTHER> 815,155
<OTHER-ITEMS-ASSETS> 1,960,538
<TOTAL-ASSETS> 54,478,176
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,481
<TOTAL-LIABILITIES> 62,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,147,400
<SHARES-COMMON-STOCK> 4,683,213
<SHARES-COMMON-PRIOR> 4,627,583
<ACCUMULATED-NII-CURRENT> 1,994
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (694,237)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,960,538
<NET-ASSETS> 54,415,695
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,386,143
<OTHER-INCOME> 0
<EXPENSES-NET> 372,249
<NET-INVESTMENT-INCOME> 3,013,894
<REALIZED-GAINS-CURRENT> (434,124)
<APPREC-INCREASE-CURRENT> 1,302,047
<NET-CHANGE-FROM-OPS> 3,881,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,013,894
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 595,309
<NUMBER-OF-SHARES-REDEEMED> 836,966
<SHARES-REINVESTED> 186,027
<NET-CHANGE-IN-ASSETS> 293,258
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (258,119)
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<GROSS-ADVISORY-FEES> 265,892
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<GROSS-EXPENSE> 609,033
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<PER-SHARE-NAV-BEGIN> 11.56
<PER-SHARE-NII> 0.65
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<PER-SHARE-NAV-END> 11.76
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> JOHN HANCOCK TAX-EXEMPT SERIES FUND - NEW YORK PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 54,187,229
<INVESTMENTS-AT-VALUE> 56,235,237
<RECEIVABLES> 2,501,217
<ASSETS-OTHER> 660
<OTHER-ITEMS-ASSETS> 2,047,348
<TOTAL-ASSETS> 58,736,454
<PAYABLE-FOR-SECURITIES> 2,921,276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,211
<TOTAL-LIABILITIES> 2,983,487
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,062,322
<SHARES-COMMON-STOCK> 4,694,309
<SHARES-COMMON-PRIOR> 4,749,271
<ACCUMULATED-NII-CURRENT> 8,092
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (364,795)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,047,348
<NET-ASSETS> 55,752,967
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,447,241
<OTHER-INCOME> 0
<EXPENSES-NET> 378,583
<NET-INVESTMENT-INCOME> 3,068,658
<REALIZED-GAINS-CURRENT> (238,444)
<APPREC-INCREASE-CURRENT> 869,661
<NET-CHANGE-FROM-OPS> 3,699,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,068,658
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 628,844
<NUMBER-OF-SHARES-REDEEMED> 889,508
<SHARES-REINVESTED> 205,702
<NET-CHANGE-IN-ASSETS> 62,669
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (118,259)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 270,417
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 624,415
<AVERAGE-NET-ASSETS> 54,083,347
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 0.15
<PER-SHARE-DIVIDEND> 0.65
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.88
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
