497K 1 b84020a1e497k.htm JOHN HANCOCK CA TAX-FREE INCOME FUND e497k

JOHN HANCOCK LOGO

 
John Hancock
California Tax-Free Income Fund

     
 SUMMARY PROSPECTUS 10–1–10 (as revised 1–7–11)   PHOTO
 
Before you invest, you may want to review the fund’s prospectus, which contains more information about the fund and its risks. You can find the fund’s prospectus and other information about the fund, including the statement of additional information and most recent reports, online at www.jhfunds.com/Forms/Prospectuses.aspx. You can also get this information at no cost by calling 1-800-225-5291 or by sending an e-mail request to info@jhfunds.com. The fund’s prospectus and statement of additional information, both dated 10-1-10, and most recent financial highlights information included in the shareholder report, dated 5-31-10, are incorporated by reference into this Summary Prospectus.

 
 Class A: TACAX            Class B: TSCAX            Class C: TCCAX
 
 
Investment objective
 
To seek a high level of current income, consistent with preservation of capital, that is exempt from federal and California personal income taxes.
 
Fees and expenses
 
This table describes the fees and expenses you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts on Class A shares if you and your family invest, or agree to invest in the future, at least $50,000 in the John Hancock family of funds. More information about these and other discounts is available on pages 13 to 14 of the prospectus under “Sales charge reductions and waivers” or pages 55 to 58 of the fund’s statement of additional information under “Initial Sales Charge on Class A Shares.”
 
                             
 Shareholder fees (%) (fees paid directly from your investment)   Class A     Class B     Class C      
 
Maximum front-end sales charge (load) on purchases as a % of purchase price     4.50                  
Maximum deferred sales charge (load) as a % of purchase or sale price, whichever is less     1.00
(on purchases of
$1 million or more
)     5.00       1.00      
 
                             
 Annual fund operating expenses (%)
                     
 (expenses that you pay each year as a percentage of the value of your investment)   Class A     Class B     Class C      
 
Management fee     0.55       0.55       0.55      
Distribution and service (12b-1) fees     0.15       1.00       1.00      
Other expenses1     0.17       0.17       0.17      
Total annual fund operating expenses     0.87       1.72       1.72      
     
1
  “Other expenses” reflects a change in the contractual transfer agency and service agreement effective July 1, 2010.
 
Expense example
 
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. Please see below a hypothetical example showing the expenses of a $10,000 investment in the fund for the time period indicated (Kept column) and then a redemption of all of your shares at the end of those periods (Sold column). The example assumes a 5% average annual return. The example assumes fund expenses will not change over the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
 
                                                     
 Expenses ($)   Class A     Class B     Class C      
 
Shares     Sold       Kept       Sold       Kept       Sold       Kept      
1 Year     535       535       675       175       275       175      
3 Years     715       715       842       542       542       542      
5 Years     911       911       1,133       933       933       933      
10 Years     1,474       1,474       1,805       1,805       2,030       2,030      
 
Portfolio turnover
 
The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not

 
 
A Tax-Free Income Fund


 

 
 John Hancock California Tax-Free Income Fund
 

reflected in annual fund operating expenses or in the example, affect the fund’s performance. During its most recent fiscal year, the fund’s portfolio turnover rate was 9% of the average value of its portfolio.
 
Principal investment strategies
 
Under normal market conditions, the fund invests at least 80% of its net assets, plus amounts borrowed for investment purposes, in securities of any maturity exempt from federal and California personal income taxes. Most of these securities are investment grade when purchased, but the fund may invest up to 20% of its net assets in junk bonds rated BB by Standard & Poor’s Corporation (S&P) or Ba by Moody’s Investors Service, Inc. (Moody’s) or their unrated equivalents. Bonds that are rated at or below BB by S&P or BA by Moody’s are considered junk bonds.
 
The fund may buy bonds of any maturity. If a bond’s credit rating falls, the fund does not have to sell it unless the subadviser determines a sale is in the fund’s best interest. The fund is non-diversified and may invest more than 5% of its net assets in securities of any given issuer. The fund may engage in derivative transactions that include futures contracts on debt securities and debt securities indices; options on futures, debt securities and debt indices; and inverse floating rate securities, in each case, for the purposes of reducing risk and/or enhancing investment returns.
 
The subadviser looks for bonds that are undervalued, based on both broad and security-specific factors, such as issuer creditworthiness, bond structure, general credit trends and the relative attractiveness of different types of issuers. The subadviser uses detailed analysis of an appropriate index to model portfolio performance and composition, then blends the macro assessment with security analysis in a comprehensive and disciplined fashion. The fund does not intend to use frequent trading as part of its strategy.
 
In general, the subadviser favors bonds backed by revenue from a specific public project or facility, such as a power plant (revenue bonds), as they tend to offer higher yields than general obligation bonds. The subadviser also favors bonds that have limitations on being paid off early (call protection), as this can help minimize the effect that falling interest rates may have on the fund’s yield. To the extent that the fund invests in bonds that are subject to the alternative minimum tax (AMT), the income paid by the fund may not be entirely tax-free to all investors. Investments in bonds subject to the AMT will not be counted towards the fund’s 80% investment policy.
 
Principal risks
 
An investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s shares will go up and down in price, meaning that you could lose money by investing in the fund. Many factors influence a mutual fund’s performance.
 
Instability in the financial markets has led many governments, including the United States government, to take a number of unprecedented actions designed to support certain financial institutions and segments of the financial markets that have experienced extreme volatility and, in some cases, a lack of liquidity. Federal, state and other governments, and their regulatory agencies or self-regulatory organizations, may take actions that affect the regulation of the instruments in which the fund invests, or the issuers of such instruments, in ways that are unforeseeable. Legislation or regulation may also change the way in which the fund itself is regulated. Such legislation or regulation could limit or preclude the fund’s ability to achieve its investment objective.
 
Governments or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear, and such a program may have positive or negative effects on the liquidity, valuation and performance of the fund’s portfolio holdings. Furthermore, volatile financial markets can expose the fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by the fund.
 
The fund’s main risk factors are listed below in alphabetical order. Before investing, be sure to read the additional descriptions of these risks beginning on page 6 of the prospectus.
 
Active management risk The subadviser’s investment strategy may fail to produce the intended result.
 
Changing distribution levels risk The amount of the distributions paid by the fund generally depends on the amount of income and/or dividends received by the fund on the securities it holds.
 
Credit and counterparty risk The issuer or guarantor of a fixed-income security, the counterparty to an over-the-counter derivatives contract or a borrower of a fund’s securities, may be unable or unwilling to make timely principal, interest or settlement payments, or otherwise to honor its obligations.
 
Fixed-income securities risk Fixed-income securities are affected by changes in interest rates and credit quality. A rise in interest rates typically causes bond prices to fall. The longer the average maturity of the bonds held by the fund, the more sensitive the fund is likely to be to interest-rate changes. There is the possibility that the issuer of the security will not repay all or a portion of the principal borrowed and will not make all interest payments.
 
Hedging, derivatives and other strategic transactions risk Hedging and other strategic transactions may increase the volatility of a fund and, if the transaction is not successful, could result in a significant loss to a fund. Counterparty risk, liquidity risk (i.e., the inability to enter into closing transactions) and risk of disproportionate loss are the principal risks of engaging in transactions involving futures contracts, options and inverse floating rate securities. The use of derivative instruments could produce disproportionate gains or losses, more than the principal amount invested. Investing in derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and, in a down market, could become harder to value or sell at a fair price.
 
Lower-rated fixed-income securities risk and high-yield securities risk Lower-rated fixed-income securities and high-yield fixed-income securities (commonly know as junk bonds) are subject to greater credit quality risk and risk of default than higher-rated fixed-income securities. These securities

    


 

may be considered speculative and the value of these securities can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market or economic developments and can be difficult to resell.
 
Municipal bond risk Municipal bond prices can decline due to fiscal mismanagement or tax shortfalls. Revenue bond prices can decline if related projects become unprofitable.
 
The fund may hold bonds that are insured as to principal and interest payments. Because the value of an insured municipal bond depends in part on the claims-paying ability of the insurer, the fund would be subject to the risk that the insurer may be unable to pay claims filed pursuant to the coverage. The fund may hold several investments covered by one insurer, which would increase the fund’s exposure to the claims-paying ability of that insurer. In addition, insurance does not guarantee the market value of the insured obligation.
 
Non-diversified risk Overall risk can be reduced by investing in securities from a diversified pool of issuers, while overall risk is increased by investing in securities of a small number of issuers.
 
State-specific risk Because the fund invests mainly in bonds from a single state, its performance is affected by local, state and regional factors. These factors may include economic or political changes, tax base erosion, state constitutional limits on tax increases, budget deficits and other financial difficulties, and changes in the credit ratings assigned to the state’s municipal issuers. Historically, California’s economy has been more volatile than that of the nation as a whole. The State’s economy is relatively diverse, with key drivers being international trade, technology production, tourism, finance, defense and construction.
 
Past performance
 
Calendar year total returns These do not include sales charges and would have been lower if they did. The following performance information in the bar chart and table below illustrates the variability of the fund’s returns and provides some indication of the risks of investing in the fund by showing changes in the fund’s performance from year to year. However, past performance (before and after taxes) does not indicate future results. Performance for the fund is updated daily, monthly and quarterly and may be obtained at our Web site: www.jhfunds.com/FundPerformance, or by calling Signature Services at 1-800-225-5291 between 8:00 A.M. and 7:00 P.M., Eastern Time, on most business days.
 
Average annual total returns Performance of a broad-based market index is included for comparison.
 
After-tax returns They reflect the highest individual federal marginal income tax rates in effect as of the date provided and do not reflect any state or local taxes. Your actual after-tax returns may be different. After-tax returns are not relevant to shares held in an IRA, 401(k) or other tax-advantaged investment plan.
 
                                                       
 Calendar year total returns — Class A (%)
                                                       
                                                       
                                                       
2000
    2001     2002     2003     2004     2005     2006     2007     2008     2009
11.26
    3.87     7.99     3.94     4.46     4.12     5.03     1.38     −11.87     18.12
                                                       
 
(PERFORMANCE GRAPHIC)
 
 
Total return The fund’s total return for the year-to-date as of June 30, 2010 was 4.59%.
 
Best quarter: Q3 ’09, 11.25%
 
Worst quarter: Q4 ’08, −7.20%
 
                             
 Average annual total returns (%)   1 Year     5 Year     10 Year      
 
as of 12-31-09                            
Class A before tax     12.82       1.96       4.09      
After tax on distributions
    12.82       1.95       4.09      
After tax on distributions, with sale
    10.18       2.32       4.19      
Class B before tax     12.13       1.70       3.89      
Class C before tax     16.13       2.04       3.69      
Barclays Capital Municipal Bond Index     12.91       4.32       5.75      

    


 

 
 John Hancock California Tax-Free Income Fund
 

Investment management
 
Investment adviser John Hancock Advisers, LLC
Subadviser John Hancock Asset Management a division of Manulife Asset Management (US) LLC
 
Portfolio management
 
Frank A. Lucibella, CFA
Vice president
 
Served on fund team from 1988–2002 and rejoined in 2005
 
Dianne M. Sales, CFA
Vice president
 
Joined fund team in 1995
 
Purchase and sale of fund shares
 
The minimum initial investment requirement for Class A, B and C shares of the fund is $2,500, except for Coverdell ESAs it is $2,000 and group investments it is $250. There are no subsequent investment requirements. You may redeem shares of the fund on any business day through our Web site: www.jhfunds.com; by mail: Mutual Fund Operations, John Hancock Signature Services, Inc., P.O. Box 55913, Boston, Massachusetts 02205-5913; or by telephone: 1-800-225-5291.
 
Taxes
 
The fund intends to distribute tax-exempt income. A portion of the fund’s distributions may, however, be subject to federal income tax. The fund intends to meet certain federal tax requirements so that distributions of the tax-exempt interest it earns may be treated as “exempt-interest dividends.” A portion of the fund’s exempt-interest dividends is also expected to be exempt from California personal income taxation when received by individual shareholders of the fund who are subject to California personal income taxation.
 
Payments to broker-dealers and other financial intermediaries
 
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank, registered investment adviser, financial planner or retirement plan administrator), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s Web site for more information.
 
 
 
 
 
 
© 2010 John Hancock Funds, LLC    530SP 10–1–10 (as revised 1–7–11)    SEC file number: 811-05979