File Nos. 333-00981 and 811-5968
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 1 [X]
(Check appropriate box or boxes)
JOHN HANCOCK TAX-FREE BOND FUND
(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199-7603
(Address of principal executive office, zip code)
(617) 375-1700
(Registrant's Telephone Number, including Area Code)
with a copy to:
Thomas H. Drohan Jeffrey N. Carp, Esq.
John Hancock Advisors, Inc. Hale and Dorr
101 Huntington Avenue 60 State Street
Boston, MA 02199 Boston, MA 02109
(Name and address of agent for service)
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
It is proposed that this filing will become effective immediately upon filing
pursuant to paragraph (b) of Rule 485.
<PAGE>
JOHN HANCOCK TAX-FREE BOND FUND
STATEMENT OF INCORPORATION BY REFERENCE
The Cross-Reference Sheet, Part A, Part B and Part C of the registrant's
registration statement on Form N-14, File Nos 333-00981 and 811-5968, dated
February 15, 1996, are incorporated by reference in their entirety herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
post-effective amendment No. 1 ("PEA No. 1") to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this PEA
No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston and The Commonwealth of Massachusetts on the 17th day of
June, 1996.
JOHN HANCOCK TAX-FREE BOND FUND
By: *
---------------------------
Edward J. Boudreau, Jr.
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the fillowing persons in the
capacities and on the dates indicated.
Signature Title Date
*
- ----------------------- Chairman and Chief Executive
Edward J. Boudreau, Jr. Officer (Principal Executive
Officer
/s/ James B. Little
- ----------------------- Senior Vice President and Chief June 17, 1996
James B. Little Financial Officer (Principal
Financial and Accounting Officer)
*
- ----------------------- Trustee
James F. Carlin
*
- ----------------------- Trustee
William H. Cunningham
*
- ----------------------- Trustee
Charles F. Fretz
<PAGE>
Signature Title Date
*
- ----------------------- Trustee
Harold R. Hiser, Jr.
- ----------------------- Trustee
Anne C. Hodsdon
*
- ----------------------- Trustee
Charles L. Ladner
*
- ----------------------- Trustee
Leo E. Linbeck, Jr.
*
- ----------------------- Trustee
Patricia P. McCarter
*
- ----------------------- Trustee
Steven R. Pruchansky
*
- ----------------------- Trustee
Richard S. Scipione
*
- ----------------------- Trustee
Norman H. Smith
*
- ----------------------- Trustee
John P. Toolan
*By: /s/ Thomas H. Drohan June 17, 1996
---------------------
Thomas H. Drohan,
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit 12
Opinion and consent of counsel supporting the tax matters and consequences
to shareholders.
May 3, 1996
Board of Trustees
John Hancock Tax-Exempt Income Fund
101 Huntington Avenue
Boston, Massachusetts 02199
Board of Trustees
John Hancock Tax-Free Bond Fund
101 Huntington Avenue
Boston, Massachusetts 02199
Dear Members of the Boards of Trustees:
You have requested our opinion regarding the federal income tax
consequences of the acquisition by John Hancock Tax-Free Bond Fund ("Acquiring
Fund") of all of the assets of John Hancock Tax-Exempt Income Fund ("Acquired
Fund") in exchange solely for (i) the assumption by Acquiring Fund of all of the
liabilities of Acquired Fund and (ii) the issuance of Class A and Class B voting
shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to
Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of
Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund
and the termination of Acquired Fund (the foregoing together constituting the
"reorganization" or the "transaction").
In rendering this opinion, we have examined and relied upon (i) the
prospectus for the Class A and Class B shares of Acquired Fund, dated May 1,
1995, as supplemented on December 11, 1995, (ii) the statement of additional
information for the Class A and Class B shares of Acquired Fund, dated May 1,
1995, (iii) the prospectus for the Class A and Class B shares of Acquiring Fund,
dated May 1, 1995, as supplemented January 15, 1996, (iv) the statement of
additional information for the Class A and Class B shares of Acquiring Fund,
dated May 1, 1995, (v) the registration statement on Form N-14 of Acquiring Fund
relating to the
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 2
transaction (the "Registration Statement") filed with the Securities and
Exchange Commission (the "SEC") on February 15, 1996, (vi) the proxy statement
and prospectus relating to the transaction dated March 18, 1996 (the "Proxy
Statement"), (vii) the Agreement and Plan of Reorganization, made as of March
18, 1996, between Acquiring Fund and Acquired Fund (the "Agreement"), (viii) the
representation letters on behalf of Acquiring Fund and Acquired Fund referred to
below and (ix) such other documents as we deemed appropriate. We have assumed
that the parties to the Agreement have acted and will act in accordance with the
terms of the Agreement and all other documents relating to the transaction.
The conclusions expressed herein represent our judgment regarding the
proper treatment of Acquiring Fund, Acquired Fund and the shareholders of
Acquired Fund on the basis of our analysis of the Internal Revenue Code of 1986,
as amended (the "Code"), case law, Treasury regulations and the rulings and
other pronouncements of the Internal Revenue Service (the "Service") which exist
at the time this opinion is rendered. Such authorities are subject to
prospective or retroactive change, and we do not undertake any responsibility to
advise you of any such change. Our opinion represents our best judgment
regarding the issues presented and is not binding upon the Service or any court.
Moreover, our opinion does not provide any assurance that a position taken in
reliance on such opinion will not be challenged by the Service and does not
constitute any representation or warranty that such position, if so challenged,
will not be rejected by a court.
FACTS
We understand the facts relating to the transaction to be as described
hereinafter. Acquiring Fund is a business trust established under the laws of
The Commonwealth of Massachusetts in 1989 and is registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
The investment objective of Acquiring Fund is to obtain as high a level of
interest income exempt from federal income taxes as is consistent with
preservation of capital. Acquiring Fund seeks to achieve its investment
objective by investing primarily in municipal bonds, notes and commercial paper,
the interest on which is exempt from federal income taxes. Acquiring Fund may
also enter into repurchase agreements and acquire certain taxable money market
securities, as described in its prospectus.
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 3
Acquired Fund is a business trust established under the laws of The
Commonwealth of Massachusetts in 1976 and is registered as an open-end
investment company under the 1940 Act.
The investment objective of Acquired Fund is to provide as high a level of
dividend income exempt from federal income tax as is consistent with
preservation of capital and Acquired Fund's requirements for liquidity. Acquired
Fund seeks to achieve its objective by investing in a diversified portfolio of
municipal bonds and other securities, the interest on which is, at the time of
issue, excludable from gross income for federal income tax purposes in the
opinion of bond counsel to the issuer. Acquired Fund may also enter into
repurchase agreements and acquire certain other short-term, taxable investments,
as described in its prospectus.
The steps comprising the reorganization, as set forth in the Agreement, are
as follows:
(i) Acquired Fund will transfer to Acquiring Fund all of its assets
(consisting, without limitation, of portfolio securities and instruments,
dividend and interest receivables, cash and other assets). In exchange for the
assets transferred to it, Acquiring Fund will (A) assume all of the liabilities
of Acquired Fund (comprising all of its known and unknown liabilities and
referred to hereinafter as the "Acquired Fund Liabilities") and (B) issue
Acquiring Fund Shares to Acquired Fund that have an aggregate net asset value
equal to the value of the assets transferred to Acquiring Fund by Acquired Fund,
less the value of the Acquired Fund Liabilities assumed by Acquiring Fund.
(ii) Promptly after the transfer of its assets to Acquiring Fund,
Acquired Fund will distribute in liquidation the Acquiring Fund Shares it
receives in the exchange to Acquired Fund shareholders pro rata in exchange for
their surrender of their shares of Acquired Fund ("Acquired Fund Shares"). In
these exchanges, holders of Acquired Fund Shares designated as Class A ("Class A
Acquired Fund Shares") will receive Acquiring Fund Shares designated as Class A
("Class A Acquiring Fund Shares"), and holders of Acquired Fund Shares
designated as Class B ("Class B Acquired Fund Shares") will receive Acquiring
Fund Shares designated as Class B ("Class B Acquiring Fund Shares").
(iii) After such exchanges, liquidation and distribution, the
existence of Acquired Fund will be promptly terminated in accordance with
Massachusetts law.
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 4
The Agreement and the transactions contemplated thereby were approved by
the Board of Trustees of Acquiring Fund at a meeting held on November 28, 1995.
Acquiring Fund shareholders are not required and were not asked to approve the
transaction. The Agreement and the transactions contemplated thereby were
approved by the Board of Trustees of Acquired Fund at a meeting held on December
11, 1995, subject to the approval of Acquired Fund shareholders. Acquired Fund
shareholders approved the transaction at a meeting held on May 2, 1996.
Massachusetts law does not provide dissenters' rights for Acquired Fund
shareholders in the transaction. Additionally, it is the position of the
Division of Investment Management of the SEC that appraisal rights, in contexts
such as the reorganization, are inconsistent with Rule 22c-1 under the 1940 Act
and are therefore preempted and invalidated by such rule. Consequently, Acquired
Fund shareholders will not have dissenters' or appraisal rights in the
transaction.
Our opinions set forth below are subject to the following factual
assumptions being true and correct (including statements relating to future
actions and facts represented to be to the best knowledge of management, whether
or not known). Authorized representatives of Acquiring Fund and Acquired Fund
have represented to us by letters of even date herewith that the following
assumptions are true and correct:
(a) Acquiring Fund has no plan or intention to redeem or otherwise
reacquire any of the Acquiring Fund Shares received by shareholders of Acquired
Fund in the transaction except in connection with its legal obligation under
Section 22(e) of the 1940 Act as a registered open-end investment company to
redeem its own shares.
(b) After the transaction, Acquiring Fund will continue the historic
business of Acquired Fund and will use all of the assets acquired from Acquired
Fund, which are Acquired Fund's historic business assets, i.e., assets not
acquired as part of or in contemplation of the transaction, in the ordinary
course of a business.
(c) Acquiring Fund has no plan or intention to sell or otherwise dispose of
any assets of Acquired Fund acquired in the transaction, except for dispositions
made in the ordinary course of its business (i.e., dispositions resulting from
investment decisions made after the reorganization on the basis of investment
considerations independent of the reorganization) or to maintain
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 5
its qualification as a regulated investment company under Subchapter M of the
Code.
(d) The shareholders of Acquiring Fund and the shareholders of Acquired
Fund will bear their respective expenses, if any, in connection with the
transaction.
(e) Acquiring Fund and Acquired Fund will each bear its own expenses
incurred in connection with the transaction. Any liabilities of Acquired Fund
attributable to such expenses that remain unpaid on the closing date of the
transaction and are assumed by Acquiring Fund in the transaction are
attributable to Acquired Fund's expenses that are solely and directly related to
the transaction in accordance with the guidelines established in Rev. Rul.
73-54, 1973-1 C.B. 187.
(f) There is no indebtedness between Acquiring Fund and Acquired Fund.
(g) Acquired Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since its inception, and qualifies as such for its
final taxable year ending on the closing date of the transaction.
(h) Acquiring Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since its inception, and qualifies as such as of
the date of the transaction.
(i) Neither Acquiring Fund nor Acquired Fund is under the jurisdiction of a
court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code.
(j) Acquiring Fund does not own and since its inception has not owned,
directly or indirectly, any shares of Acquired Fund.
(k) Acquiring Fund will not pay cash in lieu of fractional shares in
connection with the transaction.
(l) As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund is approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the value of the Acquired Fund
Liabilities assumed by Acquiring Fund.
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 6
(m) Acquired Fund shareholders will be in control (within the meaning of
Sections 368(a)(2)(H) and 304(c) of the Code, which provide that control means
the ownership of shares possessing at least 50% of the total combined voting
power of all classes of shares that are entitled to vote or at least 50% of the
total value of shares of all classes) of Acquiring Fund after the transaction,
and to the best knowledge of management of Acquired Fund, there is no intention
on the part of any shareholders of Acquired Fund to redeem, sell, exchange, or
otherwise dispose of a number of the shares of Acquiring Fund received in the
transaction that would affect the retention of control of Acquiring Fund by
former shareholders of Acquired Fund after consummation of the transaction.
(n) At the time of the transaction, Acquiring Fund does not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire shares of Acquiring Fund that,
if exercised or converted, would affect the acquisition or retention of control
(within the meaning of Sections 368(a)(2)(H) and 304(c) of the Code) of
Acquiring Fund by the shareholders of Acquired Fund.
(o) The principal business purposes of the transaction are to combine the
assets of Acquiring Fund and Acquired Fund in order to capitalize on economies
of scale in expenses such as the costs of accounting, legal, insurance,
custodial, and administrative services, to eliminate the potential adverse
effects on each fund's asset growth of competing with the other fund, and to
increase diversification.
(p) As of the date of the transaction, the fair market value of the Class A
Acquiring Fund Shares received by each holder of Class A Acquired Fund Shares is
approximately equal to the fair market value of the Class A Acquired Fund Shares
surrendered by such shareholder, and the fair market value of the Class B
Acquiring Fund Shares received by each holder of Class B Acquired Fund Shares is
approximately equal to the fair market value of the Class B Acquired Fund Shares
surrendered by such shareholder.
(q) There is no plan or intention on the part of any shareholder of
Acquired Fund that owns beneficially 5% or more of the Acquired Fund Shares and,
to the best knowledge of management of Acquired Fund, there is no plan or
intention on the part of the remaining shareholders of Acquired Fund to sell,
redeem, exchange or otherwise dispose of a number of the Acquiring Fund Shares
received in the transaction that would reduce the aggregate ownership of the
Acquiring Fund Shares by former Acquired Fund shareholders to a number of shares
having a value, as of the date
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 7
of the transaction, of less than fifty percent (50%) of the value of all of the
formerly outstanding Acquired Fund Shares as of the same date. Shares of
Acquired Fund and Acquiring Fund held by Acquired Fund shareholders and sold,
redeemed, exchanged or otherwise disposed of prior or subsequent to the
transaction as part of the plan of reorganization are taken into account for
purposes of this representation.
(r) Acquired Fund assets transferred to Acquiring Fund comprise at least
ninety percent (90%) of the fair market value of the net assets and at least
seventy percent (70%) of the fair market value of the gross assets held by
Acquired Fund immediately prior to the transaction. For purposes of this
representation, amounts used by Acquired Fund to pay its outstanding
liabilities, including reorganization expenses, and all redemptions and
distributions (except for redemptions in the ordinary course of business upon
demand of a shareholder that Acquired Fund is required to make as an open-end
investment company pursuant to Section 22(e) of the 1940 Act and regular, normal
dividends, which dividends include any final distribution of previously
undistributed investment company taxable income and net capital gain for
Acquired Fund's final taxable year ending on the closing date of the
transaction) made by Acquired Fund immediately preceding the transaction are
taken into account as assets of Acquired Fund held immediately prior to the
transaction.
(s) The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business or are expenses of the
transaction.
(t) The fair market value of the Acquired Fund assets transferred to
Acquiring Fund equals or exceeds the sum of the Acquired Fund Liabilities
assumed by Acquiring Fund and the amount of liabilities, if any, to which the
transferred assets are subject.
(u) The total adjusted basis of the Acquired Fund assets transferred to
Acquiring Fund equals or exceeds the sum of the Acquired Fund Liabilities
assumed by Acquiring Fund and the amount of liabilities, if any, to which the
transferred assets are subject.
(v) Acquired Fund does not pay compensation to any shareholder-employee.
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 8
OPINION
On the basis of and subject to the foregoing and in reliance upon the
representations described above, and provided that any statement of fact
represented to be made to the best knowledge of management of Acquired Fund or
Acquiring Fund is in fact true and correct (whether or not known), we are of the
opinion that
(a) The acquisition by Acquiring Fund of all of the assets of Acquired Fund
solely in exchange for the issuance of Acquiring Fund Shares to Acquired Fund
and the assumption of all of the Acquired Fund Liabilities by Acquiring Fund,
followed by the distribution by Acquired Fund, in liquidation of Acquired Fund,
of Acquiring Fund Shares to Acquired Fund shareholders in exchange for their
Acquired Fund Shares and the termination of Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1)(D) of the Code.
Acquiring Fund and Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by Acquired Fund upon (i) the
transfer of all of its assets to Acquiring Fund solely in exchange for the
issuance of Acquiring Fund Shares to Acquired Fund and the assumption of all of
the Acquired Fund Liabilities by Acquiring Fund and (ii) the distribution by
Acquired Fund of such Acquiring Fund Shares to the shareholders of Acquired Fund
(Sections 361(a) and 361(c) of the Code).
(c) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Acquired Fund solely in exchange for the issuance of Acquiring
Fund Shares to Acquired Fund and the assumption of all of the Acquired Fund
Liabilities by Acquiring Fund (Section 1032(a) of the Code).
(d) The basis of the assets of Acquired Fund acquired by Acquiring Fund
will be, in each instance, the same as the basis of such assets in the hands of
Acquired Fund immediately prior to the transfer (Section 362(b) of the Code).
(e) The tax holding period of the assets of Acquired Fund in the hands of
Acquiring Fund will, in each instance, include Acquired Fund's tax holding
period for those assets (Section 1223(2) of the Code).
(f) The shareholders of Acquired Fund will not recognize gain or loss upon
the exchange of all of their Acquired Fund Shares solely for Acquiring Fund
Shares as part of the transaction (Section 354(a)(l) of the Code).
<PAGE>
Boards of Trustees
John Hancock Tax-Exempt Income Fund
John Hancock Tax-Free Bond Fund
May 3, 1996
Page 9
(g) The basis of the Acquiring Fund Shares received by the Acquired Fund
shareholders in the transaction will be the same as the basis of the Acquired
Fund Shares surrendered in exchange therefor (Section 358(a)(1) of the Code).
(h) The tax holding period of the Acquiring Fund Shares received by
Acquired Fund shareholders will include, for each shareholder, the tax holding
period for the Acquired Fund Shares surrendered in exchange therefor, provided
the Acquired Fund Shares were held as capital assets on the date of the exchange
(Section 1223(1) of the Code).
No opinion is expressed or implied regarding the federal income tax
consequences to Acquiring Fund, Acquired Fund or Acquired Fund shareholders of
any conditions existing at the time of, effects resulting from, or other aspects
of the transaction except as expressly set forth above.
Very truly yours,
/s/ Hale and Dorr
Hale and Dorr
<PAGE>
May 3, 1996
Hale and Dorr
Sixty State Street
Boston, Massachusetts 02109
Re: Reorganization Between John Hancock Tax-Exempt Income Fund and John
Hancock Tax-Free Bond Fund
Gentlemen:
In connection with your issuance of an opinion regarding the federal income
tax consequences under the Internal Revenue Code of 1986, as amended (the
"Code"), of the acquisition by John Hancock Tax-Free Bond Fund ("Acquiring
Fund") of all of the assets of John Hancock Tax-Exempt Income Fund ("Acquired
Fund"), in exchange solely for (i) the assumption by Acquiring Fund of all of
the liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the
issuance of Class A and Class B voting shares of beneficial interest of
Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring
Fund Shares to the shareholders of Acquired Fund and the termination of Acquired
Fund (the foregoing together constituting the "reorganization" or the
"transaction"), it is hereby represented on behalf of Acquiring Fund that the
following statements are true and correct:
(1) Acquiring Fund has no plan or intention to redeem or otherwise
reacquire any of the Acquiring Fund Shares received by shareholders of Acquired
Fund in the transaction except in connection with its legal obligation under
Section 22(e) of the Investment Company Act of 1940, as amended (the "1940
Act"), as a registered open-end investment company to redeem its own shares.
<PAGE>
May 3, 1996
Page 2
(2) After the transaction, Acquiring Fund will continue the historic
business of Acquired Fund and will use all of the assets acquired from Acquired
Fund in the ordinary course of a business.
(3) Acquiring Fund has no plan or intention to sell or otherwise dispose of
any assets of Acquired Fund acquired in the transaction, except for dispositions
made in the ordinary course of its business (i.e., dispositions resulting from
investment decisions made after the reorganization on the basis of investment
considerations independent of the reorganization) or to maintain its
qualification as a regulated investment company under Subchapter M of the Code.
(4) The shareholders of Acquiring Fund will bear their expenses, if any, in
connection with the transaction.
(5) Acquiring Fund will bear its own expenses incurred in connection with
the transaction.
(6) There is no indebtedness between Acquiring Fund and Acquired Fund.
(7) Acquiring Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since its inception, and qualifies as such as of
the date of the transaction.
(8) Acquiring Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(9) Acquiring Fund does not own and since its inception has not owned,
directly or indirectly, any shares of Acquired Fund.
(10) Acquiring Fund will not pay cash in lieu of fractional shares in
connection with the transaction.
(11) As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund is approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the value of the Acquired Fund
Liabilities assumed by Acquiring Fund.
(12) Acquired Fund shareholders will be in control (within the meaning of
Sections 368(a)(2)(H) and 304(c) of the Code, which provide that control means
the ownership of shares possessing at least 50% of the total combined voting
<PAGE>
May 3, 1996
Page 3
power of all classes of shares that are entitled to vote or at least 50% of the
total value of shares of all classes) of Acquiring Fund after the transaction.
(13) At the time of the transaction, Acquiring Fund does not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire shares of Acquiring Fund that,
if exercised or converted, would affect the acquisition or retention of control
(within the meaning of Sections 368(a)(2)(H) and 304(c) of the Code) of
Acquiring Fund by the shareholders of Acquired Fund.
(14) The principal business purposes of the transaction are to combine the
assets of Acquiring Fund and Acquired Fund in order to capitalize on economies
of scale in expenses such as the costs of accounting, legal, insurance,
custodial, and administrative services, to eliminate the potential adverse
effects on each fund's asset growth of competing with the other fund, and to
increase diversification.
JOHN HANCOCK TAX-FREE BOND FUND
By: /s/ James B. Little
Title: Senior Vice President
<PAGE>
May 3, 1996
Hale and Dorr
Sixty State Street
Boston, Massachusetts 02109
Re: Reorganization Between John Hancock Tax-Exempt Income Fund and John
Hancock Tax-Free Bond Fund
Gentlemen:
In connection with your issuance of an opinion regarding the federal income
tax consequences under the Internal Revenue Code of 1986, as amended (the
"Code"), of the acquisition by John Hancock Tax-Free Bond Fund ("Acquiring
Fund") of all of the assets of John Hancock Tax-Exempt Income Fund ("Acquired
Fund"), in exchange solely for (i) the assumption by Acquiring Fund of all of
the liabilities of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the
issuance of Class A and Class B voting shares of beneficial interest of
Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring
Fund Shares to the shareholders of Acquired Fund and the termination of Acquired
Fund (the foregoing together constituting the "reorganization" or the
"transaction"), it is hereby represented on behalf of Acquired Fund that the
following statements are true and correct:
(1) As of the date of the transaction, the fair market value of the
Acquiring Fund Shares designated as Class A received by each holder of the
shares of Acquired Fund (the "Acquired Fund Shares") designated as Class A is
approximately equal to the fair market value of the Acquired Fund Shares
designated as Class A surrendered by such shareholder, and the fair market value
of the Acquiring Fund Shares designated as Class B received by each holder of
Acquired Fund Shares designated as Class B is
<PAGE>
May 3, 1996
Page 2
approximately equal to the fair market value of the Acquired Fund Shares
designated as Class B surrendered by such shareholder.
(2) There is no plan or intention on the part of any shareholder of
Acquired Fund that owns beneficially 5% or more of the Acquired Fund Shares and,
to the best knowledge of management of Acquired Fund, there is no plan or
intention on the part of the remaining shareholders of Acquired Fund to sell,
redeem, exchange or otherwise dispose of a number of the Acquiring Fund Shares
received in the transaction that would reduce the aggregate ownership of the
Acquiring Fund Shares by former Acquired Fund shareholders to a number of shares
having a value, as of the date of the transaction, of less than fifty percent
(50%) of the value of all of the formerly outstanding Acquired Fund Shares as of
the same date. Shares of Acquired Fund and Acquiring Fund held by Acquired Fund
shareholders and sold, redeemed, exchanged or otherwise disposed of prior or
subsequent to the transaction as part of the plan of reorganization are taken
into account for purposes of this representation.
(3) Acquired Fund assets transferred to Acquiring Fund comprise at least
ninety percent (90%) of the fair market value of the net assets and at least
seventy percent (70%) of the fair market value of the gross assets held by
Acquired Fund immediately prior to the transaction. For purposes of this
representation, amounts used by Acquired Fund to pay its outstanding
liabilities, including reorganization expenses, and all redemptions and
distributions (except for redemptions in the ordinary course of business upon
demand of a shareholder that Acquired Fund is required to make as an open-end
investment company pursuant to Section 22(e) of the Investment Company Act of
1940, as amended (the "1940 Act"), and regular, normal dividends, which
dividends include any final distribution of previously undistributed investment
company taxable income and net capital gain for Acquired Fund's final taxable
year ending on the closing date of the transaction) made by Acquired Fund
immediately preceding the transaction are taken into account as assets of
Acquired Fund held immediately prior to the transaction.
(4) As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund is approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the value of the Acquired Fund
Liabilities assumed by Acquiring Fund.
(5) The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were incurred
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May 3, 1996
Page 3
by Acquired Fund in the ordinary course of its business or are expenses of the
transaction.
(6) The fair market value of the Acquired Fund assets transferred to
Acquiring Fund equals or exceeds the sum of the Acquired Fund Liabilities
assumed by Acquiring Fund and the amount of liabilities, if any, to which the
transferred assets are subject.
(7) The total adjusted basis of the Acquired Fund assets transferred to
Acquiring Fund equals or exceeds the sum of the Acquired Fund Liabilities
assumed by Acquiring Fund and the amount of liabilities, if any, to which the
transferred assets are subject.
(8) All of the Acquired Fund assets transferred to Acquiring Fund are
Acquired Fund's historic business assets, i.e., assets not acquired as part of
or in contemplation of the transaction.
(9) The shareholders of Acquired Fund will bear their expenses, if any, in
connection with the transaction.
(10) Acquired Fund will bear its own expenses incurred in connection with
the transaction. Any liabilities of Acquired Fund attributable to such expenses
that remain unpaid on the closing date of the transaction and are assumed by
Acquiring Fund in the transaction are attributable to Acquired Fund's expenses
that are solely and directly related to the transaction in accordance with the
guidelines established in Rev. Rul. 73-54, 1973-1 C.B. 187.
(11) There is no indebtedness between Acquiring Fund and Acquired Fund.
(12) Acquired Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since its inception, and qualifies as such for its
final taxable year ending on the closing date of the transaction.
(13) Acquired Fund is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(14) Acquired Fund does not pay compensation to any shareholder-employee.
(15) Acquired Fund shareholders will be in control (within the meaning of
Sections 368(a)(2)(H) and 304(c) of the Code, which provide that control means
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May 3, 1996
Page 4
the ownership of shares possessing at least 50% of the total combined voting
power of all classes of shares that are entitled to vote or at least 50% of the
total value of shares of all classes) of Acquiring Fund after the transaction,
and to the best knowledge of management of Acquired Fund, there is no intention
on the part of any shareholders of Acquired Fund to redeem, sell, exchange or
otherwise dispose of a number of shares of Acquiring Fund received in the
transaction that would affect the retention of control of Acquiring Fund by
former shareholders of Acquired Fund after consummation of the transaction.
(16) The principal business purposes of the transaction are to combine the
assets of Acquiring Fund and Acquired Fund in order to capitalize on economies
of scale in expenses such as the costs of accounting, legal, insurance,
custodial and administrative services, to eliminate the potential adverse
effects on each fund's asset growth of competing with the other fund, and to
increase diversification.
JOHN HANCOCK TAX-EXEMPT INCOME FUND
By: /s/ James B. Little
Title: Senior Vice President
