John Hancock California Tax-free Income Fund N-CSR Certified annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811- 5979

John Hancock California Tax-Free Income Fund
(Exact name of registrant as specified in charter)

601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)

Alfred P. Ouellette
Senior Attorney and Assistant Secretary

601 Congress Street

Boston, Massachusetts 02210

(Name and address of agent for service)

Registrant's telephone number, including area code: 617-663-4324

Date of fiscal year end:	August  31
Date of reporting period:	August  31, 2006

ITEM 1. REPORT TO SHAREHOLDERS.

CEO corner

TABLE OF CONTENTS 

Managers' report 

page 2 

A look at performance 

page 6 

Your expenses 

page 8 

Fund’s investments 

page 1 0 

Financial statements 

page 18 

Trustees & officers 

page 34 

For more information 

page 40 

To Our Shareholders,

The future has arrived at John Hancock Funds.

We have always been firm believers in the powerful role the Internet can play in providing fund information to our shareholders and prospective investors. Recently, we launched a redesigned, completely overhauled Web site that is more visually pleasing, easier to navigate and, most importantly, provides more fund information and learning tools without overwhelming the user.

Not long after we embarked on this major project, a study was released by the Investment Company Institute, the mutual fund industry’s main trade group, which found that an overwhelming majority of shareholders consider the Internet the “wave of the future” for accessing fund information.

Our new site sports fresher and faster ways to access account information. New innovations allow investors to view funds by risk level, track the performance of the John Hancock funds of their choice or sort funds by Morningstar, Inc.’s star ratings. Investors who own a John Hancock fund through a qualified retirement plan and don’t pay sales charges when making a purchase have the option of sorting by a “Load Waived” Morningstar Rating, thereby creating an apples-to-apples comparison with no-load funds that may also be available in their retirement plan.

The new site also has more educational tools and interactive modules to educate and assist investors with their financial goals, from college savings to retirement planning. A new “I want to…” feature allows investors to check performance, invest more money, update personal information or download prospectuses and forms quickly and easily.

In another of our ongoing efforts to provide our shareholders with top-notch service, we also redesigned our shareholder reports, as you may have noticed with this report. We hope the larger size, more colorful cover and redesigned presentation of the commentary and data tables will draw you in and make them easier to read.

After you’ve read your shareholder report, we encourage you to visit our new Web site — www.jhfunds.com — and take a tour. It’s easy, fast and fun and allows you to be in control of what you see and do. In short, it’s the wave of the future!

Sincerely,

Keith F. Hartstein,
President and Chief Executive Officer

This commentary reflects the CEO’s views as of August 31, 2006. They are subject to change at any time.

Your fund at a glance

The Fund seeks a high level of current income, consistent with preservation of capital, that is exempt from federal and California personal income taxes. In pursuing this goal, the Fund normally invests at least 80% of its assets in securities of any maturity exempt from federal and California personal income tax.

Over the last twelve months

* Municipal bonds gained ground and surpassed the performance of the broad taxable bond market.

* The Fund’s return outpaced its benchmark index.

* Special tax and health care bonds were the best performers in the portfolio, while higher-quality bonds lagged.

Top 10 holdings
Foothill/Eastern Transportation Corridor Agency, 1-1-34, 6.000%	4.5%
Santa Ana Financing Auth, 7-1-24, 6.250%	3.8%
San Bernardino, County of, 8-1-17, 5.500%	2.9%
Puerto Rico Aqueduct & Sewer Auth, 7-1-11, 7.720%	2.7%
California, State of, 3-1-16, 5.754%	2.2%
Puerto Rico, Commonwealth of, 7-1-15, 6.500%	2.2%
Santa Clara County Financing Auth, 5-15-17, 5.500%	2.0%
New Haven Unified School District, 8-1-22, Zero	1.9%
California, State of, 4-1-29, 4.750%	1.9%
Puerto Rico, Commonwealth of, 7-1-18, 6.360%	1.7%
As a percentage of net assets on August 31, 2006.

1

Managers’ report

John Hancock

California Tax-Free Income Fund

Continuing a three-year trend,municipal bonds posted positive results for the 12 months ended August 31, 2006, and outperformed the taxable bond market. The Lehman Brothers Municipal Bond Index returned 3.03%, compared with the 1.71% return of the Lehman Brothers U.S. Aggregate Bond Index, a broad measure of the taxable bond market.

In an ongoing effort to keep the economy and inflation from overheating, the Federal Reserve raised short-term interest rates seven times over the past 12 months, for a total of 17 rate hikes since June 2004. The Fed’s efforts boosted the federal funds rate to 5.25%, its highest level in more than five years. The Fed rate hikes, along with solid economic growth and inflation concerns driven largely by record-high energy and commodity prices, pushed interest rates higher across the board.

Although short-term municipal bond yields also rose during the period, long-term municipal yields held firm. As a result, the municipal yield curve flattened as short-term yields approached long-term yields. However, the convergence was less dramatic than in the U.S. Treasury bond market, where the yield curve “inverted” (shorter-term yields surpassed long-term yields).

Through the first eight months of 2006, new municipal bond issuance was down 20% compared with the same period in 2005. This reduction

SCORECARD

INVESTMENT		PERIOD’S PERFORMANCE AND WHAT’S BEHIND THE NUMBERS
Special tax bonds	▲	Benefited from outperformance of lower-quality credits
Education revenue bondsp	▲	Demand for yield lifts these high-coupon securities
Short-term bonds	▼	Prices declined as the Fed continued to raise short-term interest rates

2

Portfolio Managers, MFC Global Investment Management (U.S.) LLC
Dianne Sales, CFA, and Frank A. Lucibella, CFA

in supply contributed positively to municipal bond performance and it also dampened volatility in the municipal market compared with taxable bonds.

“Credit quality in California
remained healthy thanks to
favorable economic conditions.”

Credit environment in California

Credit quality in California remained healthy thanks to favorable economic conditions. Tax revenues continued to improve, allowing the state to make further progress on reducing its debt load and rebuilding its emergency fund. County and local governments, which saw some of their state funding disappear during the recession earlier in the decade, are now benefiting as the state’s fiscal health allows it to meet promised repayments to local governments. Although California still faces some future fiscal challenges, the state has made considerable strides toward closing its budget shortfall. Recognizing the state’s improved fiscal discipline and financial strength, all three major credit rating agencies upgraded California during the past year.

Fund performance

For the year ended August 31, 2006, John Hancock California Tax-Free Income Fund’s Class A, Class B and Class C shares posted total returns of 3.19%, 2.32% and 2.32%, respectively, at net asset value. This performance compared with the 2.80% average return of Morningstar’s Muni California Long fund category¹ and the 3.03% return of the Lehman Brothers Municipal Bond Index. Keep in mind that your net asset value return will be different from the Fund’s performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. See pages six and seven for historical performance information.

3   California Tax-Free Income Fund

Lower-rated, higher-yielding bonds outperformed

The primary reason for the Fund’s good performance versus its peer group average and benchmark index was a greater emphasis on lower-quality bonds, which typically offer the highest yields. Municipal bond yields remained relatively low by historical standards and, as a result, demand for yield continued to have a significant impact on municipal bond performance.

Special tax bonds, a significant weighting in the portfolio, posted the best returns during the one-year period. “Special tax” is a broad category, but it is primarily comprised of bonds backed by land development deals and other projects that are funded by a specific tax. Many of these bonds tend to be lower-rated credits. Rising mortgage rates and a weaker housing market have led us to be more cautious on new issues in this sector, but our seasoned holdings are already well built out. Our ongoing focus on strong demographic trends and proximity to employment centers should help us avoid potential land mines in this area.

Other strong performers included health care and education-related bonds, particularly those in the lower credit quality tier. The portfolio also benefited from its exposure to tobacco-related securities, which have relatively high yields. Tobacco bonds are backed by the proceeds from a legal settlement between the major tobacco companies and California (as well as 45 other states).

SECTOR DISTRIBUTION2
General obligation
bonds	18%
Revenue bonds
Transportation	15%
Special tax	9%
Correctional facilities	8%
Health	7%
Water & sewer	6%
Tobacco	6%
Leasing contracts	4%
Tax allocation	4%
Education	3%
Housing	2%
Economic
development	2%
Pollution	2%
All other
revenue bonds	13%

Focus on longer-term bonds

Although rising yields put downward pressure on bonds across all maturities, long-term municipal securities held up better than shorter-term bonds overall. As a result, our positioning at the long end of the maturity spectrum boosted performance relative to our peers. However, we began to trim our exposure to longer-maturity bonds in recent months as the risk premium for these securities narrowed.

High-quality securities lagged

With investor demand focused on the lower end of the credit quality spectrum, higher-rated securities were left behind, producing the weakest returns. General obligation bonds,

44 California Tax-Free Income Fund

which tend to have greater interest rate sensitivity than other municipal securities, were held in check by rising interest rates. Other higher-quality bonds, such as those backed by essential services such as water and sewer, have less sensitivity to the economic environment and therefore did not benefit significantly from the healthy economy.

“The primary reason for the Fund's
good performance versus its peer
group average and benchmark
index was a greater emphasis
on lower-quality bonds...”

Outlook

Although the economy has continued to grow at a solid rate, we have seen evidence of a modest, gradual slowing in economic activity. In addition, despite a few flare-ups, inflation has remained generally under control. As a result, the Fed chose not to raise short-term interest rates at its most recent interest rate policy meeting in August. The Fed’s decision not to act — for the first time in more than two years — provided a lift to the bond market over the past month, but it also sparked speculation about when the Fed’s rate-raising activity will come to an end. Economic data in coming months will determine whether the Fed is done or merely pausing before enacting further rate hikes.

In the municipal market, we expect new issuance to pick up during the remainder of 2006, though it will likely fall short of last year’s levels overall. Yield spreads between short- and long-term bonds, as well as between higher- and lower-quality securities, remain near historically narrow levels. We expect this to change going forward and have positioned the portfolio accordingly.

This commentary reflects the views of the portfolio managers through the end of the Fund’s period discussed in this report. The managers’ statements reflect their own opinions. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

¹ Figures from Morningstar, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower.

² As a percentage of net assets on August 31, 2006.

5   California Tax-Free Income Fund

A look at performance

For the periods ending August 31, 2006

		Average annual returns				Cumulative total returns				SEC 30-
		with maximum sales charge (POP)				with maximum sales charge (POP)				day yield
	Inception				Since				Since	as of
Class	date	1-year	5-year	10-year	inception	1-year	5-year	10-year	inception	8-31-06
A	12-29-89	–1.43%	3.47%	5.12%	—	–1.43%	18.62%	64.73%	—	4.02%
B	12-31-91	–2.61	3.21	4.95	—	–2.61	17.10	62.05	—	3.37
C	4-1-99	1.34	3.54	—	3.78%	1.34	19.02	—	31.69%	3.37

Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 4.5% and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The returns for Class C shares have been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. The Class B shares’ CDSC declines annually between years 1–6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the Fund’s current performance may be higher or lower than the performance shown. For performance data current to the most recent month-end, please call 1-800-225-5291 or visit the Fund’s Web site at www.jhfunds.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Please note that a portion of the Fund’s income may be subject to taxes, and some investors may be subject to the Alternative Minimum Tax (AMT). Also note that capital gains are taxable.

The Fund’s performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable.

6  California Tax-Free Income Fund

Growth of $10,000

This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we’ve shown the same investment in the Lehman Brothers Municipal Bond Index.

Class	Period beginning	Without sales charge	With maximum sales charge	Index
B1	8-31-96	$16,205	$16,205	$17,872
C1	4-1-99	13,169	13,169	14,653

Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund’s Class B and Class C shares, respectively, as of August 31, 2006. The Class C shares investment with maximum sales charge has been adjusted to reflect the elimination of the front-end sales charge effective July 15, 2004. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes.

Lehman Brothers Municipal Bond Index is an unmanaged index that includes municipal bonds and is commonly used as a measure of bond performance. It is not possible to invest directly in an index. Index figures do not reflect sales charges and which would have resulted in lower values if they did.

¹ No contingent deferred sales charge applicable.

7   California Tax-Free Income Fund

Your expenses

These examples are intended to help you understand your ongoing operating expenses.

Understanding fund expenses

As a shareholder of the Fund, you incur two types of costs:

■ Transaction costs which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc.

■ Ongoing operating expenses including management fees, distribution and service fees (if applicable) and other fund expenses.

We are going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about your fund’s actual ongoing operating expenses and is based on your fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2006, with the same investment held until August 31, 2006.

	Account value	Ending value	Expenses paid during period
	on 3-1-06	on 8-31-06	ended 8-31-061
Class A	$1,000.00	$1,020.40	$4.04
Class B	1,000.00	1,016.10	8.37
Class C	1,000.00	1,016.10	8.37

Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at August 31, 2006 by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

8 California Tax-Free Income Fund

Hypothetical example for comparison purposes

This table allows you to compare your fund’s ongoing operating expenses with those of any other fund. It provides an example of the Fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annual return before expenses (which is not your fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2006, with the same investment held until August 31, 2006. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses.

	Account value	Ending value	Expenses paid during period
	on 3-1-06	on 8-31-06	ended 8-31-061
Class A	$1,000.00	$1,021.20	$4.04
Class B	1,000.00	1,016.90	8.37
Class C	1,000.00	1,016.90	8.37

Remember, these examples do not include any transaction costs, such as sales charges; therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs.

¹ Expenses are equal to the Fund's annualized expense ratio of 0.80%, 1.64% and 1.64% for Class A, Class B and Class C, respectively, multiplied by the average account value over the period, multiplied by number of days in most recent fiscal half-year/365 or 366 (to reflect the one-half year period).

9   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Fund’s investments

Securities owned by the Fund on 8-31-06

This schedule is divided into two main categories: tax-exempt long-term bonds and short-term investments. Tax-exempt long-term bonds are broken down by state or territory. Under each state or territory is a list of securities owned by the Fund. Short-term investments, which represent the Fund’s cash position, are listed last.

Interest		Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
Tax-exempt long-term bonds 99.17%					$325,158,441
(Cost $298,634,079)
California 88.82%					291,235,878
ABAG Finance Authority for Nonprofit Corps,
Rev San Diego Hosp Assn Ser 2001A	6.125%	08-15-20	BBB+	$2,000	2,177,920
Anaheim Public Financing Auth,
Rev Lease Cap Apprec Sub Pub Imp
Proj Ser 1997C	Zero	09-01-18	AAA	3,000	1,800,540
Anaheim, City of,
Rev Ref Cert of Part Reg
Convention Ctr (P)	8.515	07-16-23	AAA	2,000	2,172,080
Antioch Public Financing Auth,
Rev Ref Reassessment Sub
Ser 1998B (G)	5.850	09-02-15	BB+	1,375	1,443,118
Belmont Community Facilities District,
Rev Special Tax Dist No. 2000 1
Library Proj Ser 2004A	5.750	08-01-24	Aaa	1,000	1,192,350
California County Tobacco
Securitization Agency,
Rev Asset Backed Bond
Fresno County Fdg Corp	6.000	06-01-35	BBB	1,765	1,856,321
Rev Asset Backed Bond Kern County
Corp Ser 2002A	6.125	06-01-43	BBB	5,000	5,290,400
Rev Asset Backed Bond Los Angeles
County (Step Coupon 5.250%,
12-01-10) (O)	Zero	06-01-21	Baa3	5,000	4,176,900
Rev Asset Backed Bond Stanislaus
Fdg Ser 2002A	5.500	06-01-33	Baa3	1,000	1,026,390
California Department of Water Resources,
Rev Pwr Supply Ser 2002A	5.375	05-01-21	A–	4,000	4,404,320
California Educational Facilities Auth,
Rev Ref Pooled College & Univ
Financing Ser 1993B	6.125	06-01-09	Baa2	15	15,038
Rev Ref Woodbury Univ	5.000	01-01-30	BBB–	2,000	2,018,860
Rev Univ of San Diego Ser 2002A	5.500	10-01-32	A2	1,435	1,531,403

See notes to financial statements

10   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

	Interest	Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
California Health Facilities Financing Auth,
Rev Catholic Healthcare West
Ser 2004G	5.250%	07-01-23	A–	$1,000	$1,054,390
Rev Kaiser Permanente Ser 2006A	5.250	04-01-39	A+	2,500	2,628,450
Rev Ref Cedars Sinai Med Ctr	5.000	11-15-34	A3	2,000	2,047,440
Rev Ref Insd Hlth Facil-Small Facil
Ser 1994B	7.500	04-01-22	A+	550	557,034
California Infrastructure & Economic
Development Bank,
Rev J David Gladstone Inst Proj	5.250	10-01-34	A–	1,000	1,037,060
Rev Kaiser Hosp Asst I LLC Ser 2001A	5.550	08-01-31	A+	3,000	3,173,640
California Municipal Finance Auth,
Rev Ref American Heritage
Education Foundation Proj Ser 2006A	5.250	06-01-26	BBB–	1,000	1,025,240
California Pollution Control Financing Auth,
Rev Poll Control Pacific Gas & Electric
Ser 1996A	5.350	12-01-16	AAA	1,000	1,069,660
Rev Solid Waste Disposal Keller
Canyon Landfill Co Proj	6.875	11-01-27	BB–	2,000	2,013,620
Rev Chemical Waste Mgmt Inc
Proj Ser 2005C	5.125	11-01-23	BBB	2,000	2,074,820
California Rural Home Mortgage
Finance Auth,
Rev Single Family Mtg Backed Sec’s
Prog Ser 1996A	7.750	05-01-27	AAA	10	10,206
Rev Single Family Mtg Backed Sec’s
Prog Ser 1996A	7.550	11-01-26	AAA	10	10,195
California State Economic Recovery Auth,
Gen Oblig Unltd Ser 2004B	5.000	07-01-23	AA–	2,000	2,054,880
Rev Ser 2004C-12 (P)	3.260	07-01-23	AAA	900	900,000
California State Public Works Board,
Rev Lease Dept of Corrections
Ser 2003C	5.500	06-01-18	A	5,000	5,515,950
Rev Ref Lease Dept of Corrections
State Prisons Ser 1993A	5.000	12-01-19	AAA	5,000	5,372,150
Rev Ref Lease Various Univ of Calif
Projs Ser 1993A	5.500	06-01-21	AA–	1,250	1,251,037
California State University,
Rev Ref Systemwide Ser 2005C	5.000	11-01-38	AAA	5,000	5,235,550
California Statewide Communities
Development Auth,
Rev Ref Cert of Part Univ Corp
Calif State Univ	6.000	04-01-26	AAA	1,620	1,639,116
California Statewide Financing Auth,
Rev Tobacco Settlement Asset
Backed Bond 2002A	6.000	05-01-37	Baa3	2,500	2,628,125
Rev Tobacco Settlement Asset
Backed Bond 2002B	6.000	05-01-37	Baa3	4,000	4,205,000

See notes to financial statements

11   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Interest		Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
California, State of,
Gen Oblig Unltd	5.125%	04-01-23	A+	$2,000	$2,131,040
Gen Oblig Unltd	5.125	11-01-24	A+	3,500	3,711,715
Gen Oblig Unltd Ref (P)	5.754	03-01-16	AAA	6,255	7,270,562
Gen Oblig Unltd Ref	5.000	06-01-34	A+	2,000	2,069,820
Gen Oblig Unltd Ref	4.750	04-01-29	AAA	6,000	6,064,740
Capistrano Unified School District,
Rev Spec Tax Cmty Facil Dist No. 90 2 (G)	6.000	09-01-33	BB	750	792,938
Rev Spec Tax Cmty Facil Dist No. 90 2 (G)	5.875	09-01-23	BB	500	532,250
Rev Spec Tax Cmty Facil Dist No. 92 1 (G)	7.100	09-01-21	AA	2,025	2,123,698
Rev Spec Tax Cmty Facil Dist No. 98 2 (G)	5.750	09-01-29	AA	2,470	2,671,256
Carson, City of,
Rev Spec Assessment Imp Bond Act
of 1915 Dist No. 2001 1 (G)	6.375	09-02-31	BB+	1,375	1,431,182
Center Unified School District,
Gen Oblig Unltd Ref Cap Apprec
Ser 1997C	Zero	09-01-16	AAA	2,145	1,424,838
Chula Vista Industrial Development Agency,
Rev San Diego Gas Ser 2005D	5.000	12-01-27	A+	1,500	1,552,125
Rev Ref Tax Alloc Bayfront Ser
2006B (G)	5.250	10-01-27	BB+	1,250	1,263,887
Contra Costa County Public Financing Auth,
Rev Ref Lease Various Cap Facil
Ser 1999A	5.000	06-01-28	AAA	3,000	3,082,770
Corona Community Facilities District,
Rev Special Tax Escrow 97 2 (G)	5.875	09-01-23	BB+	1,345	1,397,253
Eastern Municipal Water District,
Rev Cert of Part Wtr & Swr Ser 2006A	5.000	07-01-32	AAA	2,965	3,112,835
Foothill/Eastern Transportation
Corridor Agency,
Rev Ref Toll Rd Cap Apprec	Zero	01-15-25	BBB–	6,615	2,341,710
Rev Ref Toll Rd Cap Apprec	Zero	01-15-36	BBB–	30,000	5,386,200
Rev Ref Toll Rd Sr Lien Ser 1995A	6.500	01-01-32	AAA	1,665	1,681,750
Rev Ref Toll Rd Sr Lien Ser 1995A	6.000	01-01-34	AAA	14,775	14,899,406
Fresno Joint Powers Financing Auth,
Rev Ref Ser 1994A	6.550	09-02-12	BBB+	1,100	1,102,288
Fresno, City of,
Rev Swr Ser A 1	5.250	09-01-19	AAA	1,000	1,122,510
Fullerton Community Facilities District,
Rev Spec Tax Amerige Heights��
Dist No. 1 (G)	6.200	09-01-32	BB	1,000	1,062,290
Golden State Tobacco Securitization Corp,
Rev Asset Backed Bond Ser 2003A	6.250	06-01-33	BBB	3,000	3,290,550
Irvine, City of,
Rev Meadows Mobile Home Park
Ser 1998A (G)	5.700	03-01-28	BBB–	3,975	4,115,715

See notes to financial statements

12   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

	Interest	Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
Irwindale Community Redevelopment Agency,
Rev Ref Tax Alloc Sub Lien
Ind’l Dev Proj (G)	7.050%	06-01-26	BBB	$2,750	$2,832,143
Laguna Salada Union School District,
Gen Oblig Unltd Ser 2000C	Zero	08-01-26	AAA	1,000	420,280
Lancaster School District,
Rev Ref Cert of Part Cap Apprec	Zero	04-01-19	AAA	1,730	1,001,687
Rev Ref Cert of Part Cap Apprec	Zero	04-01-22	AAA	1,380	686,633
Lee Lake Water District,
Rev Spec Tax Cmty Facil Dist No. 2
Montecito Ranch (G)	6.125	09-01-27	BB	1,200	1,275,948
Long Beach, City of,
Rev Ref Harbor Ser 1998A	6.000	05-15-18	AAA	2,660	3,107,040
Rev Spec Tax Cmty Facil
Dist No. 6 Pike (G)	6.250	10-01-26	BB–	2,500	2,667,450
Los Angeles Community Facilities District,
Rev Spec Tax No. 3 Cascades
Business Park Proj (G)	6.400	09-01-22	BB+	1,000	1,034,440
Los Angeles Community Redevelopment
Financing Auth,
Rev MultiFamily Grand Central
Square Ser 1993A	5.850	12-01-26	BBB–	2,000	2,001,660
Los Angeles Unified School District,
Gen Oblig Unltd Election of 1997
Ser 2002E	5.500	07-01-17	AAA	1,500	1,652,820
Millbrae, City of,
Rev Magnolia of Millbrae Proj
Ser 1997A (G)	7.375	09-01-27	BB	2,500	2,607,350
Modesto, City of,
Rev Spec Tax Cmnty Facs
Dist No. 04-1 2 (G)	5.100	09-01-26	BB	2,000	2,029,740
New Haven Unified School District,
Gen Oblig Unltd Cap Apprec
Ser 1998B	Zero	08-01-22	AAA	14,200	6,156,836
Northern California Transmission Agency,
Rev Ref Calif-Oregon Transm Proj
Ser 1990A	7.000	05-01-13	AAA	100	116,193
Northstar Community Services District,
Rev Special Tax District No. 1 (G)	5.550	09-01-36	BB–	3,000	3,081,240
Orange Cove Irrigation District,
Rev Ref Cert of Part Rehab Proj	5.000	02-01-17	AAA	2,045	2,079,090
Orange, County of,
Rev Ref Spec Assessment Imp Bond
Act 1915 Ltd Oblig Dist No. 01-1 (G)	5.000	09-02-26	BB	500	507,475
Rev Spec Assessment Imp Bond Act
1915 Ltd Oblig (G)	5.750	09-02-33	BB	1,570	1,595,293
Rev Spec Tax Cmty Facil Dist No. 1
Ladera Ranch Ser 2000A (G)	6.250	08-15-30	AA	1,000	1,052,490

See notes to financial statements

13  California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Interest		Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
Oxnard, City of,
Rev Special Tax District No. 3 —
Seabridge (G)	5.000%	09-01-35	BB	$1,500	$1,486,395
Panama-Buena Vista Union School District,
Rev Cert of Part School Construction Proj	5.000	09-01-30	AAA	3,540	3,707,442
Paramount Unified School District,
Gen Oblig Unltd Cap Apprec Bonds
Ser 2001B	Zero	09-01-25	AAA	4,735	2,006,646
Pasadena, City of,
Cert of Part Ref Old Pasadena
Parking Facil Proj	6.250	01-01-18	AA–	1,045	1,182,752
Poway, City of,
Rev Ref Cmty Facil Dist No. 88 1
Pkwy Business Ctr (G)	6.750	08-15-15	BB	1,000	1,066,000
Rancho Santa Fe Community
Services District,
Rev Spec Tax Cmty Facil Dist No. 1 (G)	6.700	09-01-30	BB	1,000	1,062,510
Redondo Beach Public Financing Auth,
Rev South Bay Center Redevel Proj (G)	7.000	07-01-16	BBB+	950	970,700
Riverside County Asset Leasing Corp,
Rev Leasehold Linked Ctfs Riverside
County Ser 1993A	6.500	06-01-12	A+	1,000	1,126,220
Sacramento City Financing Auth,
Rev Convention Ctr Hotel Sr
Ser 1999A (G)	6.250	01-01-30	BB+	5,000	5,247,000
Sacramento Municipal Utility District,
Rev Ref Electric Ser 2001P	5.250	08-15-21	AAA	1,000	1,060,740
San Bernardino, County of,
Rev Cert of Part Cap Facil Proj
Ser 1992B	6.875	08-01-24	AAA	350	456,106
Rev Ref Cert of Part Med Ctr Fin Proj	5.500	08-01-17	AAA	8,750	9,624,562
San Bruno Park School District,
Gen Oblig Unltd Cap Apprec Ser 2000B	Zero	08-01-21	AAA	1,015	525,669
Gen Oblig Unltd Cap Apprec Ser 2000B	Zero	08-01-23	AAA	1,080	507,038
San Diego County Water Auth,
Rev Ref Cert of Part Inverse Floater (P)	5.945	04-23-08	AAA	1,000	1,067,420
Rev Ref Cert of Part Inverse Floater (P)	5.945	04-22-09	AAA	400	442,400
San Diego Redevelopment Agency,
Rev Ref Tax Alloc Cap Apprec
Ser 1999B (G)	Zero	09-01-17	BB	1,600	907,712
Rev Ref Tax Alloc Cap Apprec
Ser 1999B (G)	Zero	09-01-18	BB	1,700	902,989
Rev Ref Tax Alloc City Heights Proj
Ser 1999A (G)	5.800	09-01-28	BB	1,395	1,440,617
Rev Tax Alloc City Heights Proj
Ser 1999A (G)	5.750	09-01-23	BB	1,000	1,028,670

See notes to financial statements

14   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

	Interest	Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
San Diego Unified School District,
Gen Oblig Unltd Cap Apprec Ser 1999A	Zero	07-01-21	AAA	$2,500	$1,299,525
Gen Oblig Unltd Election of 1998
Ser 2000B	5.000%	07-01-25	AAA	2,450	2,567,208
San Francisco Bay Area Rapid Transit District,
Rev Sales Tax	5.000	07-01-31	AAA	3,000	3,140,280
San Francisco City & County
Redevelopment Agency,
Rev Cmty Facil Dist No. 6 Mission
Ser 2001A (G)	6.000	08-01-25	BB	2,500	2,619,275
Rev Spec Tax Cmnty Facil Dist No. 6
Ser 2005A (G)	5.150	08-01-35	BB	1,250	1,257,937
San Francisco State Building Auth,
Rev Ref Lease Dept of Gen Serv
Ser 1993A	5.000	10-01-13	A	2,145	2,300,706
San Joaquin Hills Transportation
Corridor Agency,
Rev Ref Toll Rd Conv Cap Apprec
Ser 1997A Step Coupon (5.750%,
01-15-07) (O)	Zero	01-15-21	B	5,000	4,923,950
Rev Toll Rd Sr Lien	Zero	01-01-14	AAA	5,000	3,755,850
Rev Toll Rd Sr Lien	Zero	01-01-22	AAA	6,500	3,315,000
San Marcos Public Facilities Auth,
Rev Sub Tax Increment Proj Area 3
Ser 1999A (G)	6.000	08-01-31	AA	1,305	1,406,633
San Mateo County Joint Power Auth,
Rev Ref Lease Cap Proj Prog	5.000	07-01-21	AAA	1,815	1,982,397
Santa Ana Financing Auth,
Rev Lease Police Admin & Hldg Facil
Ser 1994A	6.250	07-01-19	AAA	1,790	2,158,991
Rev Lease Police Admin & Hldg Facil
Ser 1994A	6.250	07-01-24	AAA	10,000	12,300,000
Rev Ref Mainplace Proj Ser 1998D (G)	5.600	09-01-19	BBB–	1,000	1,079,520
Santa Clara County Financing Auth,
Rev Ref Lease Multiple Facil Projs
Ser 2000B	5.500	05-15-17	AAA	6,000	6,432,060
Santa Clara, County Of,
General Obligation Unltd	5.250	09-01-24	AAA	2,500	2,829,225
Santa Margarita Water District,
Rev Spec Tax Cmty Facil
Dist No. 99 1 (G)	6.000	09-01-30	BB+	500	528,625
Santaluz Community Facilities District,
Rev Spec Tax Dist No. 2 Imp
Area No. 1 (G)	6.375	09-01-30	BB	1,495	1,526,485
Southern California Public Power Auth,
Rev Ref Southern Transm Proj	Zero	07-01-13	AAA	4,400	3,377,044

See notes to financial statements

15  California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

	Interest	Maturity	Credit	Par value
State, issuer, description	rate	date	rating (A)	(000)	Value
California (continued)
Tobacco Securitization Authority of
Northern California,
Rev Asset Backed Bond Ser 2001A	5.375%	06-01-41	AAA	$1,000	$1,079,070
Torrance, City of,
Rev Ref Hosp Torrance Mem Med
Ctr Ser 2001A	5.500	06-01-31	A+	2,000	2,099,160
Tustin Unified School District,
Rev Spec Tax Cmty Facil Dist No. 97 1	6.375	09-01-35	AAA	1,000	1,075,550
Vallejo Sanitation and Flood Control District,
Rev Ref Cert of Part	5.000	07-01-19	AAA	2,500	2,735,750
West Covina Redevelopment Agency,
Rev Ref Cmty Facil Dist Fashion
Plaza Proj	6.000	09-01-22	AA	3,000	3,475,710
Puerto Rico 10.35%					33,922,563
Puerto Rico Aqueduct & Sewer Auth,
Rev Ref Inverse Floater (Gtd)(P)	7.720	07-01-11	AAA	7,500	8,992,350
Puerto Rico Highway & Transportation Auth,
Rev Ref Ser 1996Z	6.250	07-01-14	AAA	3,250	3,794,473
Rev Ref Ser 1998A	5.000	07-01-38	AAA	5,000	5,137,350
Puerto Rico Ind’l, Tourist, Ed’l,
Med & Environmental Control Facilities
Financing Auth,
Rev Hosp de La Concepcion
Ser 2000A	6.500	11-15-20	AA	500	554,600
Puerto Rico Public Finance Corp,
Rev Commonwealth Approp
Ser 2002E	5.700	08-01-25	Aaa	2,500	2,668,100
Puerto Rico, Commonwealth of,
Gen Oblig Unltd	6.500	07-01-15	BBB	6,000	7,057,740
Gen Oblig Unltd Ser 975 (P)	6.360	07-01-18	Aaa	5,000	5,717,950

See notes to financial statements

16   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

	Interest	Par value
Issuer, description, maturity date	rate	(000)	Value
Short-term investments 0.04%			$132,000
(Cost $132,000)
Joint Repurchase Agreement 0.04%			132,000
Investment in a joint repurchase agreement
transaction with Barclays Capital, Inc. —
Dated 8-31-06 due 9-1-06 (secured
by U.S. Treasury Inflation Indexed
Note 2.000% due 1-15-16)	5.240%	$132	132,000
Total investments (cost $298,766,079) 99.21%			$325,290,441
Other assets and liabilities, net  0.79%			$2,583,994
Total net assets 100.00%			$327,874,435

(A) Credit ratings are unaudited and are rated by Moody's Investors Service or Fitch where Standard & Poor's ratings are not available unless indicated otherwise.

(G) Security rated internally by John Hancock Advisers, LLC.

(O) Cash interest will be paid on this obligation at the stated rate beginning on the stated date.

(P) Represents rate in effect on August 31, 2006.

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.

See notes to financial statements

17  California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-06

This Statement of Assets and Liabilities is the Fund’s balance sheet. It shows the value of what the Fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets
Investments at value (cost $298,766,079)	$325,290,441
Cash	12
Receivable for shares sold	92,453
Interest receivable	3,978,417
Other assets	94,666
Total assets	329,455,989
Liabilities
Payable for shares repurchased	1,201,906
Dividends payable	38,849
Payable to affiliates
Management fees	157,964
Distribution and service fees	12,464
Other	12,207
Other payables and accrued expenses	158,164
Total liabilities	1,581,554
Net assets
Capital paid-in	302,825,405
Accumulated net realized loss on investments	(1,514,211)
Net unrealized appreciation of investments	26,524,362
Accumulated net investment income	38,879
Net assets	$327,874,435
Net asset value per share
Based on net asset values and shares outstanding — the Fund has an
unlimited number of shares authorized with no par value
Class A ($296,480,511 ÷ 27,124,708 shares)	$10.93
Class B ($23,783,869 ÷ 2,175,916 shares)	$10.93
Class C ($7,610,055 ÷ 696,271 shares)	$10.93
Maximum offering price per share
Class A1 ($10.93 ÷ 95.5%)	$11.45

¹ On single retail sales of less than $100,000. On sales of $100,000 or more and on group sales the offering price is reduced.

See notes to financial statements

18   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Statement of operations For the year ended 8-31-06.

This Statement of Operations summarizes the Fund’s investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated.

Investment income
Interest	$17,802,436
Total investment income	17,802,436
Expenses
Investment management fees	1,827,595
Class A distribution and service fees	445,562
Class B distribution and service fees	282,021
Class C distribution and service fees	70,462
Transfer agent fees	139,457
Accounting and legal services fees	67,102
Trustees’ fees	17,451
Compliance fees	12,684
Custodian fees	81,392
Professional fees	40,933
Printing	30,371
Registration and filing fees	13,194
Interest	384
Miscellaneous	9,741
Total expenses	3,038,349
Less expense reductions	(2,153)
Net expenses	3,036,196
Net investment income	14,766,240
Realized and unrealized gain (loss)
Net realized gain on investments	2,994,563
Change in net unrealized appreciation (depreciation) of investments	(7,884,136)
Net realized and unrealized loss	(4,889,573)
Increase in net assets from operations	$9,876,667

See notes to financial statements

19  California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Statement of changes in net assets

These Statements of Changes in Net Assets show how the value of the Fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions.

	Year	Year
	ended	ended
	8-31-051	8-31-06
Increase (decrease) in net assets
From operations
Net investment income	$15,744,752	$14,766,240
Net realized gain (loss)	(604,637)	2,994,563
Change in net unrealized appreciation (depreciation)	6,043,149	(7,884,136)
Increase in net assets resulting from operations	21,183,264	9,876,667
Distributions to shareholders
From net investment income
Class A	(13,877,944)	(13,401,500)
Class B	(1,376,242)	(1,031,238)
Class C	(256,995)	(257,800)
	(15,511,181)	(14,690,538)
From Fund share transactions	(17,981,803)	(12,939,321)
Net assets
Beginning of period	357,937,347	345,627,627
End of period2	$345,627,627	$327,874,435

¹ Audited by previous auditor.

² Includes accumulated net investment income of $38,879 and $38,879, respectively.

See notes to financial statements

20   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Financial highlights

The Financial highlights show how the Fund’s net asset value for a share has changed since the end of the previous period.

CLASS A SHARES
Period ended	8-31-021,2	8-31-031	8-31-041	8-31-051	8-31-06
Per share operating performance
Net asset value, beginning of period	$11.11	$11.06	$10.60	$10.91	$11.08
Net investment income3	0.54	0.53	0.52	0.51	0.49
Net realized and unrealized
gain (loss) on investments	(0.06)	(0.47)	0.30	0.16	(0.15)
Total from investment operations	0.48	0.06	0.82	0.67	0.34
Less distributions
From net investment income	(0.53)	(0.52)	(0.51)	(0.50)	(0.49)
Net asset value, end of period	$11.06	$10.60	$10.91	$11.08	$10.93
Total return4 (%)	4.525	0.48	7.84	6.24	3.19
Ratios and supplemental data
Net assets, end of period
(in millions)	$347	$308	$308	$306	$296
Ratio of net expenses to average
net assets (%)	0.84	0.84	0.83	0.86	0.82
Ratio of gross expenses to average
net assets (%)	0.846	0.84	0.83	0.86	0.826
Ratio of net investment income
to average net assets (%)	4.95	4.79	4.72	4.59	4.53
Portfolio turnover (%)	15	18	21	13	33

See notes to financial statements

21  California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Financial highlights

CLASS B SHARES
Period ended	8-31-021,2	8-31-031	8-31-041	8-31-051	8-31-06
Per share operating performance
Net asset value, beginning of period	$11.11	$11.06	$10.60	$10.91	$11.08
Net investment income3	0.45	0.44	0.42	0.41	0.40
Net realized and unrealized
gain (loss) on investments	(0.06)	(0.47)	0.31	0.16	(0.15)
Total from investment operations	0.39	(0.03)	0.73	0.57	0.25
Less distributions
From net investment income	(0.44)	(0.43)	(0.42)	(0.40)	(0.40)
Net asset value, end of period	$11.06	$10.60	$10.91	$11.08	$10.93
Total return4 (%)	3.675	(0.37)	6.93	5.35	2.32
Ratios and supplemental data
Net assets, end of period
(in millions)	$65	$55	$43	$32	$24
Ratio of net expenses to average
net assets (%)	1.65	1.69	1.69	1.71	1.67
Ratio of gross expenses to average
net assets (%)	1.696	1.69	1.69	1.71	1.676
Ratio of net investment income
to average net assets (%)	4.14	3.95	3.87	3.75	3.68
Portfolio turnover (%)	15	18	21	13	33

See notes to financial statements

22   California Tax-Free Income Fund

F I N A N C I A L  S T A T E M E N T S

Financial highlights

CLASS C SHARES
Period ended	8-31-021,2	8-31-031	8-31-041	8-31-051	8-31-06
Per share operating performance
Net asset value, beginning of period	$11.11	$11.06	$10.60	$10.91	$11.08
Net investment income3	0.45	0.43	0.42	0.41	0.40
Net realized and unrealized
gain (loss) on investments	(0.06)	(0.47)	0.31	0.16	(0.15)
Total from investment operations	0.39	(0.04)	0.73	0.57	0.25
Less distributions
From net investment income	(0.44)	(0.42)	(0.42)	(0.40)	(0.40)
Net asset value, end of period	$11.06	$10.60	$10.91	$11.08	$10.93
Total return4 (%)	3.645	(0.37)	6.93	5.35	2.32
Ratios and supplemental data
Net assets, end of period
(in millions)	$8	$9	$7	$7	$8
Ratio of net expenses to average
net assets (%)	1.69	1.69	1.69	1.71	1.67
Ratio of gross expenses to average
net assets (%)	1.696	1.69	1.69	1.71	1.676
Ratio of net investment income
to average net assets (%)	4.10	3.93	3.87	3.74	3.68
Portfolio turnover (%)	15	18	21	13	33

¹ Audited by previous auditor.

² As required, effective 9-1-01, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies, as revised, relating to the amortization of premiums and accretion of discounts on debt securities. The effect of this change on per share amounts for the year ended 8-31-02 was to increase net investment income per share by $0.01, increase net realized and unrealized losses per share by $0.01 and, had the Fund not made these changes to amortization and accretion, the ratio of net investment income to average net assets would have been 4.88%, 4.07% and 4.03%, for Class A, Class B and Class C shares, respectively. Per share ratios and supplemental data for periods prior to 9-1-01 have not been restated to reflect this change in presentation.

³ Based on the average of the shares outstanding.

⁴ Assumes dividend reinvestment and does not reflect the effect of sales charges.

⁵ Total returns would have been lower had certain expenses not been reduced during the periods shown.

⁶ Does not take into consideration expense reductions during the period shown.

See notes to financial statements

23  California Tax-Free Income Fund

Notes to financial statements

Note A Accounting policies

John Hancock California Tax-Free Income Fund (the “Fund”) is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund seeks a high level of current income, consistent with the preservation of capital, that is exempt from federal and California personal income taxes. Since the Fund invests primarily in California issuers, the Fund may be affected by political, economic or regulatory developments in the state of California.

The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under the terms of a distribution plan have exclusive voting rights to that distribution plan.

Significant accounting policies of the Fund are as follows: Valuation of investments

Securities in the Fund’s portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments which have a remaining maturity of 60 days or less may be 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, LLC (the “Adviser”), a wholly owned subsidiary of John Hancock Financial Services, Inc., a subsidiary of Manulife Financial Corporation (“MFC”), may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large 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 accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Net realized gains and losses on sales of investments are determined on the identified cost basis.

Discount and premium on securities

The Fund accretes discount and amortizes premium from par value on securities from either the date of issue or the date of purchase over the life of the security.

Class allocations

Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net asset value of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class.

24   California Tax-Free Income Fund

Expenses

The majority of expenses are directly identifi-able to an individual fund. Expenses that are not readily identifiable to a specific fund 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 funds.

Bank borrowings

The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser, in an unsecured line of credit with banks, which permits borrowings of up to $150 million, collectively. Interest is charged to each fund based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the year ended August 31, 2006.

Federal income taxes

The Fund qualifies as a “regulated investment company” by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $1,072,410 of a capital loss car-ryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gains distributions will be made. The loss carryforward expires as follows: August 31, 2011 — $481,714 and August 31, 2012 — $590,696.

New accounting pronouncements

In June 2006, Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the “Interpretation”) was issued, and is effective for fiscal years beginning after December 15, 2006, and is to be applied to  all open tax years as of the effective date. The Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken, or expected to be taken, in a tax return and requires certain expanded disclosures. Management is currently evaluating the application of the Interpretation to the Fund and has not at this time quantified the impact, if any, resulting from the adoption of the Interpretation on the Fund’s financial statements.

In September 2006, FASB Standard No. 157, Fair Value Measurements (the “FAS 157”) was issued, and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishing a framework for measuring fair value and expands disclosure about fair value measurements. Management is currently evaluating the application of FAS 157 to the Fund, and its impact, if any, resulting from the adoption of FAS 157 on the Fund’s financial statements.

Interest and distributions

Interest income on investment securities is recorded on the accrual basis.

The Fund records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Fund’s net investment income is declared daily as dividends to shareholders of record as of the close of business on the preceding day and distributed monthly. During the year ended August 31, 2005, the tax character of distributions paid was as follows: ordinary income $22,959 and exempt income $15,488,222. During the year ended August 31, 2006, the tax character of distributions paid was as follows: ordinary income $94,280 and exempt income $14,596,258. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class.

As of August 31, 2006, the components of distributable earnings on a tax basis included $145,175 of undistributed exempt income.

25  California Tax-Free Income Fund

Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund’s financial statements as a return of capital.

Use of estimates

The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates.

Note B

Management fee and transactions with affiliates and others

The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.55% of the first $500,000,000 of the Fund's average daily net asset value and (b) 0.50% of the Fund's average daily net asset value in excess of $500,000,000.

Effective December 31, 2005, the investment management teams of the Adviser were reorganized into Sovereign Asset Management LLC (“Sovereign”), a wholly owned indirect subsidiary of John Hancock Life Insurance Company (“JHLICO”), a subsidiary of MFC. The Adviser remains the principal advisor on the Fund and Sovereign acts as subadviser under the supervision of the Adviser. The restructuring did not have an impact on the Fund, which continues to be managed using the same investment philosophy and process. The Fund is not responsible for payment of the subadvisory fees.

Effective October 1, 2006, Sovereign changed its name to MFC Global Investment Management (U.S.), LLC.

The Fund has an agreement with its custodian bank, under which custody fees are reduced by balance credits applied during the period.  Accordingly, the expense reductions related to custody fee offsets amounted to $2,153, which had no impact on the Fund’s ratio of expenses to average net assets, for the year ended August 31, 2006. If the Fund had not entered into this agreement, the assets not invested, on which these balance credits were earned, could have produced taxable income.

The Fund has a Distribution Agreement with John Hancock Funds, LLC (“JH Funds”), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C, pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.15% of Class A average daily net asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may be service fees, as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund’s 12b-1 payments could occur under certain circumstances.

Class A shares are assessed up-front sales charges. During the year ended August 31, 2006, JH Funds received net up-front sales charges of $236,269 with regard to sales of Class A shares. Of this amount, $31,219 was retained and used for printing prospectuses, advertising, sales literature and other purposes; $201,217 was paid as sales commissions to unrelated broker-dealers and $3,833 was paid as sales commissions to sales personnel of Signator Investors, Inc. (“Signator Investors”), a related broker-dealer. The Adviser’s indirect parent, JHLICO, is the indirect sole shareholder of Signator Investors.

Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge (“CDSC”) at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the

26   California Tax-Free Income Fund

lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used, in whole or in part, to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended August 31, 2006, CDSCs received by JH Funds amounted to $34,240 for Class B shares and $631 for Class C shares.

The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. (“Signature Services”), an indirect subsidiary of JHLICO. The Fund pays a monthly transfer agent fee at an annual rate of 0.01% of each class’s average daily net asset values, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses, aggregated and allocated to each class on the basis of its relative net asset value. Signature Services agreed to voluntarily reduce the Fund’s asset-based portion of the transfer agent fee if the total transfer agent fee exceeded the median transfer agency fee for comparable mutual funds by greater than 0.05% . There were no transfer agent fee reductions during the year ended August 31, 2006. Signature Services terminated this agreement June 30, 2006.

The Fund has an agreement with the Adviser and affiliates to perform necessary tax, accounting and legal services for the Fund. The compensation for the year amounted to $67,102. The Fund also paid the Adviser the amount of $1,518 for certain publishing services, included in the printing fees. The Fund reimbursed JHLICO for certain compliance costs, included in the Fund’s Statement of Operations.

Mr. James R. Boyle is Chairman of the Adviser, as well as affiliated Trustee of the Fund, and is compensated by the Adviser and/or its affiliates. The compensation of unaffiliated Trustees is borne by the Fund. The unaf-filiated Trustees may elect to defer, for tax purposes, their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund’s deferred compensation liability are recorded on the Fund’s books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments, as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund.

27  California Tax-Free Income Fund

Note C

Fund share transactions

This listing illustrates the number of Fund shares sold, reinvested and repurchased during the last two periods, along with the corresponding dollar value.

		Year ended 8-31-051		Year ended 8-31-06
	Shares	Amount	Shares	Amount
Class A shares
Sold	1,835,453	$20,153,842	2,004,815	$21,719,304
Distributions reinvested	689,490	7,582,188	679,611	7,377,136
Repurchased	(3,151,735)	(34,610,300)	(3,193,562)	(34,676,276)
Net decrease	(626,792)	($6,874,270)	(509,136)	($5,579,836)
Class B shares
Sold	85,824	$944,688	145,122	$1,582,348
Distributions reinvested	64,621	710,249	50,615	549,557
Repurchased	(1,131,286)	(12,430,218)	(947,874)	(10,292,087)
Net decrease	(980,841)	($10,775,281)	(752,137)	($8,160,182)
Class C shares
Sold	129,415	$1,420,917	156,607	$1,702,088
Distributions reinvested	12,434	136,593	12,137	131,707
Repurchased	(171,648)	(1,889,762)	(95,189)	(1,033,098)
Net increase (decrease)	(29,799)	($332,252)	73,555	$800,697
Net decrease	(1,637,432)	($17,981,803)	(1,187,718)	($12,939,321))

¹Audited by previous auditor.

Note D

Investment transactions

Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the year ended August 31, 2006, aggregated $109,726,698 and $123,624,432, respectively.

The cost of investments owned on August 31, 2006, including short-term investments, for federal income tax purposes was $297,399,663. Gross unrealized appreciation and depreciation of investments aggregated $27,914,444 and $23,666, respectively, resulting in net unrealized appreciation of $27,890,778. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to amortization of premiums and accretion of discounts on debt securities.

Note E

Reclassification of accounts

During the year ended August 31, 2006, the Fund reclassified amounts to reflect a decrease in accumulated net realized loss on investments of $51,303, a decrease in accumulated net investment income of $75,702 and an increase in capital paid-in of $24,399. This represents the amounts necessary to report these balances on a tax basis, excluding certain temporary differences, as of August 31, 2006. 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 accounting principles generally accepted in the United States of America, book and tax differences in accounting for amortization of premium on debt securities. The calculation of net investment income per share in the Fund’s Financial Highlights excludes these adjustments.

28   California Tax-Free Income Fund

Auditors’ report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of John Hancock California Tax-Free Income Fund,

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 John Hancock California Tax-Free Income Fund (the “Fund”) as of August 31, 2006, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities as of August 31, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The statement of changes in net assets of the Fund for the year ended August, 31 2005 and the financial highlights for each of the period ended on or before August 31, 2005 were audited by another independent registered public accounting firm, whose report dated October 7, 2005 expressed an unqualified opinion thereon.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 18, 2006

29

Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended August 31, 2006.

None of the 2006 income dividends qualify for the corporate dividends-received deduction. Shareholders who are not subject to the alternative minimum tax received income dividends that are 99.36% tax-exempt. The percentage of income dividends from the Fund subject to the alternative minimum tax is 4.41% . None of the income dividends were derived from U.S. Treasury Bills.

For specific information on exception provisions in your state, consult your local state tax officer or your tax adviser. Shareholders will be mailed a 2006 U.S. Treasury Department Form 1099-DIV in January 2007. This will reflect the total of all distributions that are taxable for calendar year 2006.

30

Board Consideration of and Continuation of Investment Advisory Agreement and Sub-Advisory Agreement: John Hancock California Tax-Free Income Fund

The Investment Company Act of 1940 (the “1940 Act”) requires the Board of Trustees (the “Board”) of John Hancock California Tax-Free Income Fund (the “Trust”), including a majority of the Trustees who have no direct or indirect interest in the investment advisory agreement and are not “interested persons” of the Trust, as defined in the 1940 Act (the “Independent Trustees”), annually to review and consider the continuation of: (i) the investment advisory agreement (the “Advisory Agreement”) with John Hancock Advisers, LLC (the “Adviser”) and (ii) the investment sub-advisory agreement (the “Sub-Advisory Agreement”) with Sovereign Asset Management LLC (the “Sub-Adviser”) for the John Hancock California Tax-Free Income Fund (the “Fund”). The Advisory Agreement and the Sub-Advisory Agreement are collectively referred to as the “Advisory Agreements.”

At meetings held on May 1-2 and June 5-6,¹ 2006, the Board considered the factors and reached the conclusions described below relating to the selection of the Adviser and Sub-Adviser and the continuation of the Advisory Agreements. During such meetings, the Board’s Contracts/Operations Committee and the Independent Trustees also met in executive sessions with their independent legal counsel.

In evaluating the Advisory Agreements, the Board, including the Contracts/Operations Committee and the Independent Trustees, reviewed a broad range of information requested for this purpose by the Independent Trustees, including: (i) the investment performance of the Fund relative to a category of relevant funds (the “Category”) and a peer group of comparable funds (the “Peer Group”) each selected by Morningstar Inc. (“Morningstar”), an independent provider of investment company data, for a range of periods ended December 31, 2005; (ii) advisory and other fees incurred by, and the expense ratios of, the Fund relative to a Category and a Peer Group; (iii) the advisory fees of  comparable portfolios of other clients of the Adviser and the Sub-Adviser; (iv) the Adviser’s financial results and condition, including its, and certain of its affiliates’, profitability from services performed for the Fund ; (v) breakpoints in the Fund’s and the Peer Group’s fees and information about economies of scale; (vi) the Adviser’s and Sub-Adviser’s record of compliance with applicable laws and regulations with the Fund’s investment policies and restrictions and with the applicable Code of Ethics, and the structure and responsibilities of the Adviser’s and Sub-Adviser’s compliance department; (vii) the background and experience of senior management and investment professionals and (viii) the nature, cost and character of advisory and non-investment management services provided by the Adviser and its affiliates and by the Sub-Adviser.

The Board’s review and conclusions were based on a comprehensive consideration of all information presented to the Board and not the result of any single controlling factor. It was based on performance and other information as of December 31, 2005; facts may have changed between that date and the date of this shareholders report. The key factors considered by the Board and the conclusions reached are described below.

Nature, extent and quality of services

The Board considered the ability of the Adviser and the Sub-Adviser, based on their resources, reputation and other attributes, to attract and retain qualified investment professionals, including research, advisory and supervisory personnel. The Board further considered the compliance programs and compliance records of the Adviser and Sub-Adviser. In addition, the Board took into account the administrative services provided to the Fund by the Adviser and its affiliates.

Based on the above factors, together with those referenced below, the Board concluded that, within the context of its full deliberations, the nature, extent and quality of the investment advisory services provided to the Fund by the Adviser and Sub-Adviser were sufficient to support renewal of the Advisory Agreements.

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Fund performance

The Board considered the performance results for the Fund over various time periods ended December 31, 2005. The Board also considered these results in comparison to the performance of the Category, as well as the Fund’s benchmark index. Morningstar determined the Category and Peer Group for the Fund. The Board reviewed with a representative of Morningstar the methodology used by Morningstar to select the funds in the Category and the Peer Group.

The Board noted that the Fund’s performance during the periods under review was generally competitive with the performance of the Peer Group and Category medians, and its benchmark index, the Lehman Brothers Municipal CA Index. The Board noted that, for the 3-, 5- and 10-year periods under review, the Fund’s performance was equal to or not appreciably lower than the performance of the Peer Group median, and was lower than the performance of the Category median and benchmark index. The Board viewed favorably that the more recent performance of the Fund for the 1-year period ended December 31, 2005 was higher than the performance of the Peer Group and Category medians and not appreciably lower than the benchmark index.

Investment advisory fee and sub-advisory fee rates and expenses

The Board reviewed and considered the contractual investment advisory fee rate payable by the Fund to the Adviser for investment advisory services (the “Advisory Agreement Rate”). The Board received and considered information comparing the Advisory Agreement Rate with the advisory fees for the Peer Group and Category. The Board noted that the Advisory Agreement Rate was not appreciably higher than the median rate of the Peer Group and Category.

The Board received and considered expense information regarding the Fund’s various components, including advisory fees, distribution and fees other than advisory and distribution fees, including transfer agent fees, custodian fees, and other miscellaneous fees (e.g., fees for accounting and legal services). The Board considered comparisons of these expenses  to the Peer Group median. The Board also received and considered expense information regarding the Fund’s total operating expense ratio (“Expense Ratio”). The Board received and considered information comparing the Expense Ratio of the Fund to that of the Category and Peer Group medians. The Board noted that the Fund’s Expense Ratio was equal to or not appreciably higher than the Category and Peer Group medians.

The Adviser also discussed the Morningstar data and rankings, and other relevant information, for the Fund. Based on the above-referenced considerations and other factors, the Board concluded that the Fund’s overall expense results and performance supported the re-approval of the Advisory Agreements.

The Board also received information about the investment sub-advisory fee rate (the “Sub-Advisory Agreement Rate”) payable by the Adviser to the Sub-Adviser for investment sub-advisory services. The Board concluded that the Sub-Advisory Agreement Rate was fair and equitable, based on its consideration of the factors described here.

Profitability

The Board received and considered a detailed profitability analysis of the Adviser based on the Advisory Agreements, as well as on other relationships between the Fund and the Adviser and its affiliates, including the Sub-Adviser. The Board concluded that, in light of the costs of providing investment management and other services to the Fund, the profits and other ancillary benefits reported by the Adviser were not unreasonable.

Economies of scale

The Board received and considered general information regarding economies of scale with respect to the management of the Fund, including the Fund’s ability to appropriately benefit from economies of scale under the Fund’s fee structure. The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of the Adviser’s costs are not specific to individual Funds, but rather are incurred across a variety of products and services.

32

To the extent the Board and the Adviser were able to identify actual or potential economies of scale from Fund-specific or allocated expenses, in order to ensure that any such economies continue to be reasonably shared with the Fund as its assets increase, the Adviser and the Board agreed to continue the existing breakpoints to the Advisory Agreement Rate.

Information about services to other clients

The Board also received information about the nature, extent and quality of services and fee rates offered by the Adviser and Sub-Adviser to their other clients, including other registered investment companies, institutional investors and separate accounts. The Board concluded that the Advisory Agreement Rate and the Sub-Advisory Agreement Rate were not unreasonable, taking into account fee rates offered to others by the Adviser and Sub-Adviser, respectively, after giving effect to differences in services.

Other benefits to the Adviser

The Board received information regarding potential “fall-out” or ancillary benefits received by the Adviser and its affiliates as a result of the Adviser’s relationship with the Fund. Such benefits could include, among others, benefits directly attributable to the relationship of the Adviser with the Fund and benefits potentially derived from an increase in the business of the Adviser as a result of its relationship with the Fund (such as the ability to market to shareholders other financial products offered by the Adviser and its affiliates).

The Board also considered the effectiveness of the Adviser’s, Sub-Adviser’s and Fund’s policies and procedures for complying with the requirements of the federal securities laws, including those relating to best execution of portfolio transactions and brokerage allocation.

Other factors and broader review

As discussed above, the Board reviewed detailed materials received from the Adviser and Sub-Adviser as part of the annual re-approval process. The Board also regularly reviews and assesses the quality of the services that the Fund receives throughout the year. In this regard, the Board reviews reports of the Adviser at least quarterly, which include, among other things, a detailed portfolio review, detailed fund performance reports and compliance reports. In addition, the Board meets with portfolio managers and senior investment officers at various times throughout the year.

After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board concluded that approval of the continuation of the Advisory Agreements for the Fund was in the best interest of the Fund and its shareholders. Accordingly, the Board unanimously approved the continuation of the Advisory Agreements.

1 The Board previously considered information about the Sub-Advisory Agreement at the September and December 2005 Board meetings in connection with the Adviser’s reorganization.

33

Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees.

Independent Trustees
Name, age		Number of
Position(s) held with Fund	Trustee	John Hancock
Principal occupation(s) and other	of Fund	funds overseen
directorships during past 5 years	since1	by Trustee
Ronald R. Dion , Born: 1946	1998	53
Independent Chairman (since 2005); Chairman and Chief Executive Officer,
R.M. Bradley & Co., Inc.; Director, The New England Council and Massachusetts
Roundtable; Trustee, North Shore Medical Center; Director, Boston Stock
Exchange; Director, BJ’s Wholesale Club, Inc. and a corporator of the Eastern
Bank; Trustee, Emmanuel College; Director, Boston Municipal Research Bureau;
Member of the Advisory Board, Carroll Graduate School of Management at
Boston College.
James F. Carlin, Born: 1940	1994	53
Director and Treasurer, Alpha Analytical Laboratories Inc. (chemical analysis)
(since 1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency,
Inc. (since 1995); Part Owner and Vice President, Mone Lawrence Carlin
Insurance Agency, Inc. (until 2005); Director and Treasurer, Rizzo Associates
(engineering) (until 2000); Chairman and CEO, Carlin Consolidated, Inc.
(management/investments) (since 1987); Director and Partner, Proctor Carlin
& Co., Inc. (until 1999); Trustee, Massachusetts Health and Education Tax
Exempt Trust (since 1993); Director of the following: Uno Restaurant Corp.
(until 2001), Arbella Mutual (insurance) (until 2000), HealthPlan Services, Inc.
(until 1999), Flagship Healthcare, Inc. (until 1999), Carlin Insurance Agency, Inc.
(until 1999); Chairman, Massachusetts Board of Higher Education (until 1999).
Richard P. Chapman, Jr.,2 Born: 1935	2005	53
President and Chief Executive Officer, Brookline Bancorp, Inc. (lending) (since
1972); Chairman and Director, Lumber Insurance Co. (insurance) (until 2000);
Chairman and Director, Northeast Retirement Services, Inc. (retirement
administration) (since 1998); Vice Chairman, Northeastern University Board
of Trustees (since 2004).
William H. Cunningham, Born: 1944	1989	160
Former Chancellor, University of Texas System and former President of the
University of Texas, Austin, Texas; Chairman and CEO, IBT Technologies (until
2001); Director of the following: Hire.com (until 2004), STC Broadcasting, Inc.
and Sunrise Television Corp. (until 2001), Symtx, Inc. (electronic manufacturing)
(since 2001), Adorno/Rogers Technology, Inc. (until 2004), Pinnacle Foods
Corporation (until 2003), rateGenius (until 2003), Lincoln National Corporation
(insurance) (since 2006), Jefferson-Pilot Corporation (diversified life insurance
company) (until 2006), New Century Equity Holdings (formerly Billing Concepts)

34

Independent Trustees (continued)
Name, age		Number of
Position(s) held with Fund	Trustee	John Hancock
Principal occupation(s) and other	of Fund	funds overseen
directorships during past 5 years	since1	by Trustee
William H. Cunningham, Born: 1944 (continued)	1989	160
(until 2001), eCertain (until 2001), ClassMap.com (until 2001), Agile Ventures
(until 2001), AskRed.com (until 2001), Southwest Airlines, Introgen and
Viasystems Group, Inc. (electronic manufacturer) (until 2003); Advisory
Director, Interactive Bridge, Inc. (college fundraising) (until 2001); Advisory
Director, Q Investments (until 2003); Advisory Director, JPMorgan Chase Bank
(formerly Texas Commerce Bank – Austin), LIN Television (since 2002), WilTel
Communications (until 2003) and Hayes Lemmerz International, Inc.
(diversified automotive parts supply company) (since 2003).
Charles L. Ladner,2 Born: 1938	1994	160
Chairman and Trustee, Dunwoody Village, Inc. (retirement services) (until 2003);
Senior Vice President and Chief Financial Officer, UGI Corporation (public utility
holding company) (retired 1998); Vice President and Director for AmeriGas, Inc.
(retired 1998); Director of AmeriGas Partners, L.P. (gas distribution) (until 1997);
Director, EnergyNorth, Inc. (until 1995); Director, Parks and History Association
(until 2007).
John A. Moore,2 Born: 1939	2005	53
President and Chief Executive Officer, Institute for Evaluating Health Risks,
(nonprofit institution) (until 2001); Senior Scientist, Sciences International
(health research) (until 2003); Former Assistant Administrator and Deputy
Administrator, Environmental Protection Agency; Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT Center for Health Science Research
(nonprofit research) (since 2002).
Patti McGill Peterson,2 Born: 1943	2005	53
Executive Director, Council for International Exchange of Scholars and Vice
President, Institute of International Education (since 1998); Senior Fellow, Cornell
Institute of Public Affairs, Cornell University (until 1998); Former President of
Wells College and St. Lawrence University; Director, Niagara Mohawk Power
Corporation (until 2003); Director, Ford Foundation, International Fellowships
Program (since 2002); Director, Lois Roth Endowment (since 2002); Director,
Council for International Educational Exchange (since 2003).
Steven R. Pruchansky, Born: 1944	1994	53��
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc.
(since 2000); Director and President, Greenscapes of Southwest Florida, Inc.
(until 2000); Managing Director, JonJames, LLC (real estate) (since 2001);
Director, First Signature Bank & Trust Company (until 1991); Director, Mast
Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991).

35

Non-Independent Trustee3
Name, age		Number of
Position(s) held with Fund	Trustee	John Hancock
Principal occupation(s) and other	of Fund	funds overseen
directorships during past 5 years	since1	by Trustee
James R. Boyle, Born: 1959	2005	262
President, John Hancock Annuities; Executive Vice President, John Hancock
Life Insurance Company (since June, 2004); Chairman and Director, John
Hancock Advisers, LLC (the “Adviser”), John Hancock Funds, LLC and The
Berkeley Financial Group, LLC (“The Berkeley Group”) (holding company) (since
2005); President, U.S. Annuities; Senior Vice President, The Manufacturers
Life Insurance Company (U.S.A.) (until 2004).
Principal officers who are not Trustees
Name, age
Position(s) held with Fund		Officer
Principal occupation(s) and		of Fund
directorships during past 5 years		since
Keith F. Hartstein, Born: 1956		2005
President and Chief Executive Officer
Senior Vice President, Manulife Financial Corporation (since 2004); Director,
President and Chief Executive Officer, the Adviser, The Berkeley Group, John
Hancock Funds, LLC (since 2005); Director, MFC Global Investment Management
(U.S.), LLC (“MFC Global (U.S.)”) (since 2005); Director, John Hancock Signature
Services, Inc. (since 2005); President and Chief Executive Officer, John Hancock
Investment Management Services, LLC (since 2006); President and Chief Executive
Officer, John Hancock Funds II, John Hancock Funds III and John Hancock Trust;
Director, Chairman and President, NM Capital Management, Inc. (since 2005);
Chairman, Investment Company Institute Sales Force Marketing Committee
(since 2003); Director, President and Chief Executive Officer, MFC Global (U.S.)
(2005–2006); Executive Vice President, John Hancock Funds, LLC (until 2005).
Thomas M. Kinzler, Born: 1955		2006
Secretary and Chief Legal Officer
Vice President and Counsel, John Hancock Life Insurance Company (U.S.A.)
(since 2006); Secretary and Chief Legal Officer, John Hancock Funds, John
Hancock Funds II, John Hancock Funds III and John Hancock Trust (since 2006);
Vice President and Associate General Counsel, Massachusetts Mutual Life
Insurance Company (1999–2006); Secretary and Chief Legal Counsel, MML
Series Investment Fund (2000–2006); Secretary and Chief Legal Counsel,
MassMutual Institutional Funds (2000–2004); Secretary and Chief Legal Counsel,
MassMutual Select Funds and MassMutual Premier Funds (2004–2006).
Francis V. Knox, Jr., Born: 1947		2005
Chief Compliance Officer
Vice President and Chief Compliance Officer, John Hancock Investment
Management Services, LLC, the Adviser and MFC Global (U.S.)
(since 2005); Vice President and Chief Compliance Officer, John Hancock
Funds II, John Hancock Funds III and John Hancock Trust (since 2005); Vice
President and Assistant Treasurer, Fidelity Group of Funds (until 2004); Vice
President and Ethics & Compliance Officer, Fidelity Investments (until 2001).

36

Principal officers who are not Trustees (continued)
Name, age
Position(s) held with Fund	Officer
Principal occupation(s) and	of Fund
directorships during past 5 years	since
Gordon M. Shone, Born: 1956	2006
Treasurer
Treasurer, John Hancock Funds (since 2006), John Hancock Funds II, John
Hancock Funds III and John Hancock Trust (since 2005); Vice President and
Chief Financial Officer, John Hancock Trust (2003–2005); Senior Vice President,
John Hancock Life Insurance Company (U.S.A.) (since 2001); Vice President,
John Hancock Investment Management Services, Inc., John Hancock Advisers,
LLC (since 2006) and The Manufacturers Life Insurance Company (U.S.A.)
(1998–2000).
John G. Vrysen, Born: 1955	2005
Chief Financial Officer
Director, Executive Vice President and Chief Financial Officer, the Adviser, The
Berkeley Group and John Hancock Funds, LLC (since 2005); Executive Vice
President and Chief Financial Officer, John Hancock Investment Management
Services, LLC (since 2005); Vice President and Chief Financial Officer, MFC Global
(U.S.) (since 2005); Director, John Hancock Signature Services, Inc. (since 2005);
Chief Financial Officer, John Hancock Funds II, John Hancock Funds III and John
Hancock Trust (since 2005); Vice President and General Manager, Fixed Annuities,
U.S. Wealth Management (until 2005); Vice President, Operations, Manulife
Wood Logan (2000–2004).

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805. The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available, without charge, upon request, by calling 1-800-225-5291.

¹Each Trustee serves until resignation, retirement age or until his or her successor is elected.

²Member of Audit Committee.

³Non-Independent Trustee holds positions with the Fund’s investment adviser, underwriter and certain other affiliates.

37

For more information

The Fund’s proxy voting policies, procedures and records are available without charge, upon request:

By phone	On the Fund’s Web site	On the SEC’s Web site
1-800-225-5291	www.jhfunds.com/proxy	www.sec.gov
Investment adviser	Custodian	Legal counsel
John Hancock Advisers, LLC	The Bank of New York	Kirkpatrick & Lockhart
601 Congress Street	One Wall Street	Nicholson Graham LLP
Boston, MA 02210-2805	New York, NY 10286	1 Lincoln Street
		Boston, MA 02111-2950
Subadviser	Transfer agent
MFC Global Investment	John Hancock Signature	Independent registered
Management (U.S.), LLC	Services, Inc.	public accounting firm
101 Huntington Avenue	1 John Hancock Way,	PricewaterhouseCoopers LLP
Boston, MA 02199	Suite 1000	125 High Street
	Boston, MA 02217-1000	Boston, MA 02110
Principal distributor
John Hancock Funds, LLC
601 Congress Street
Boston, MA 02210-2805

The Fund’s investment objective, risks, charges and expenses are included in the prospectus and should considered carefully before investing. For a prospectus, call your financial professional, call John Hancock Funds at 1-800-225-5291 or visit the Fund’s Web site at www.jhfunds.com. Please read the prospectus carefully before investing or sending money.

How to contact us
Internet	www.jhfunds.com
Mail	Regular mail:	Express mail:
	John Hancock	John Hancock
	Signature Services, Inc.	Signature Services, Inc.
	1 John Hancock Way, Suite 1000	Mutual Fund Image Operations
	Boston, MA 02217-1000	380 Stuart Street
		Boston, MA 02116
Phone	Customer service representatives	1-800-225-5291
	24-hour automated information	1-800-338-8080
	TDD line	1-800-554-6713

A listing of month-end portfolio holdings is available on our Web site, www.jhfunds.com. A more detailed portfolio holdings summary is available on a quarterly basis 60 days after the fiscal quarter on our Web site or upon request by calling 1-800-225-5291, or on the Securities and Exchange Commission’s Web site, www.sec.gov.

40

J O H N   H A N C O C K   F A M I L Y  O F  F U N D S

EQUITY	INTERNATIONAL
Balanced Fund	Greater China Opportunities Fund
Classic Value Fund	International Classic Value Fund
Classic Value Fund II	International Core Fund
Core Equity Fund	International Fund
Focused Equity Fund	International Growth Fund
Growth Fund
Growth Opportunities Fund	INCOME
Growth Trends Fund	Bond Fund
Intrinsic Value Fund	Government Income Fund
Large Cap Equity Fund	High Yield Fund
Large Cap Select Fund	Investment Grade Bond Fund
Mid Cap Equity Fund	Strategic Income Fund
Mid Cap Growth Fund
Multi Cap Growth Fund	TAX-FREE INCOME
Small Cap Equity Fund	California Tax-Free Income Fund
Small Cap Fund	High Yield Municipal Bond Fund
Small Cap Intrinsic Value Fund	Massachusetts Tax-Free Income Fund
Sovereign Investors Fund	New York Tax-Free Income Fund
U.S. Core Fund	Tax-Free Bond Fund
U.S. Global Leaders Growth Fund
Value Opportunities Fund	MONEY MARKET
	Money Market Fund
ASSET ALLOCATION & LIFESTYLE	U.S. Government Cash Reserve
Allocation Core Portfolio
Allocation Growth + Value Portfolio	CLOSED-END
Lifestyle Aggressive Portfolio	Bank & Thrift Opportunity
Lifestyle Balanced Portfolio	Financial Trends
Lifestyle Conservative Portfolio	Income Securities
Lifestyle Growth Portfolio	Investors Trust
Lifestyle Moderate Portfolio	Patriot Global Dividend
	Patriot Preferred Dividend
SECTOR	Patriot Premium Dividend I
Financial Industries Fund	Patriot Premium Dividend II
Health Sciences Fund	Patriot Select Dividend
Real Estate Fund	Preferred Income
Regional Bank Fund	Preferred Income II
Technology Fund	Preferred Income III
Technology Leaders Fund	Tax-Advantaged Dividend

For more complete information on any John Hancock Fund and a prospectus, which includes charges and expenses, call your financial professional, or John Hancock Funds at 1-800-225-5291. Please read the prospectus carefully before investing or sending money.

1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line

www.jhfunds.com

Now available:electronicdelivery
www.jhfunds.com/edelivery

This report is for the information of the shareholders of John Hancock California Tax-Free Income Fund.

5300A 8/06
10/06

ITEM 2. CODE OF ETHICS.

As of the end of the period, August 31, 2006, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the “Senior Financial Officers”). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Charles L. Ladner is the audit committee financial expert and is “independent”, pursuant to general instructions on Form N-CSR Item 3.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees

The aggregate fees billed for professional services rendered by the principal accountant(s) for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant(s) in connection with statutory and regulatory filings or engagements amounted to $35,000 for the fiscal year ended August 31, 2005 and $26,850 for the fiscal year ended August 31, 2006. These fees were billed to the registrant and were approved by the registrant’s audit committee.

(b) Audit-Related Services

There were no audit-related fees during the fiscal year ended August 31, 2005 and fiscal year ended August 31, 2006 billed to the registrant or to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant ("control affiliates").

(c) Tax Fees

The aggregate fees billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning (“tax fees”) amounted to $2,400 for the fiscal year ended August 31, 2005 and $3,400 for the fiscal year ended August 31, 2006. The nature of the services comprising the tax fees was the review of the registrant’s income tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant’s audit committee. There were no tax fees billed to the control affiliates.

(d) All Other Fees

There were no other fees during the fiscal year ended August 31, 2005 and fiscal year ended August 31, 2006 billed to the registrant or to the control affiliates.

(e)(1) See attachment "Approval of Audit, Audit-related, Tax and Other Services", with the audit committee pre-approval policies and procedures.

(e)(2) There were no fees that were approved by the audit committee pursuant to the de minimis exception for the fiscal years ended August 31, 2005 and August 31, 2006 on behalf of the registrant or on behalf of the control affiliates that relate directly to the operations and financial reporting of the registrant.

(f) According to the registrant’s principal accountant, for the fiscal year ended August 31, 2006, the percentage of hours spent on the audit of the registrant's financial statements for the most

recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.

(g) The aggregate non-audit fees billed by the registrant's accountant(s) for services rendered to the registrant and rendered to the registrant's control affiliates for each of the last two fiscal years of the registrant were $67,400 for the fiscal year ended August 31, 2005, and $438,491 for the fiscal year ended August 31, 2006.

(h) The audit committee of the registrant has considered the non-audit services provided by the registrant’s principal accountant(s) to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant(s)' independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:

Charles L. Ladner - Chairman
Richard P. Chapman, Jr.
Dr. John A. Moore
Patti McGill Peterson

ITEM 6. SCHEDULE OF INVESTMENTS.

Not applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The registrant has adopted procedures by which shareholders August recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached “John Hancock Funds – Governance Committee Charter”.

ITEM 11. CONTROLS AND PROCEDURES.

(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed

by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Code of Ethics for Senior Financial Officers is attached.

(a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.

(b) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.

(c)(1) Approval of Audit, Audit-related, Tax and Other Services is attached.

(c)(2) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Governance Committee Charter”.

(c)(3) Proxy Voting Policies and Procedures are attached.

(c)(4) Contact person at the registrant.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

John Hancock California Tax-Free Income Fund

By: /s/ Keith F. Hartstein
-------------------------------------
Keith F. Hartstein
President and Chief Executive Officer

Date: October 27, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Keith F. Hartstein
-------------------------------------
Keith F. Hartstein
President and Chief Executive Officer

Date: October 27, 2006

By: /s/ John G. Vrysen
-------------------------------------
John G. Vrysen
Executive Vice President and Chief Financial Officer

Date: October 27, 2006