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 Counsel 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, 2008

ITEM 1. REPORT TO SHAREHOLDERS.

Discussion of Fund performance

By MFC Global Investment Management (U.S.), LLC

Municipal bonds weathered a difficult environment to post positive results for the year ended August 31, 2008. Mortgage-related losses led to credit rating downgrades for municipal bond insurers. The ensuing credit concerns, along with an exodus of non-traditional municipal investors such as hedge funds, led to a sell-off in the municipal market in early 2008. However, municipal bonds enjoyed a recovery during the last six months of the period. California has been hit particularly hard by the U.S. economic slowdown, leading to a sizable budget deficit. The state is currently operating without a budget as the governor and legislature struggle to resolve the deficit problem.

Fund performance

For the year ended August 31, 2008, John Hancock California Tax-Free Income Fund’s Class A, Class B and Class C shares posted total returns of 2.18%, 1.31% and 1.31%, respectively, at net asset value. By comparison, Morningstar’s muni California long fund category produced an average return of 1.33%, while the Lehman Brothers Municipal Bond Index returned 4.48%.

“Municipal bonds weathered a
difficult environment to post
positive results for the year ended
August 31, 2008.”

The key behind the Fund’s outperformance of its Morningstar peer group average was its higher credit quality. With credit spreads — the difference between the yields of higher-and lower-quality bonds — widening significantly during the period, the portfolio’s emphasis on higher-quality securities enhanced results relative to its peer group. Another favorable factor was individual security selection, particularly among lower-quality bonds. Our focus on fundamental credit research and comprehensive analysis was rewarded as our lower-quality holdings held up well in a difficult environment for lower-rated investments.

Bonds that finance essential services, such as water and sewer, were among the better performers in the portfolio for the 12-month period, along with education and general obligation bonds. The weakest performers were tobacco bonds, which suffered the most from the hedge-fund selling.

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.

Past performance is no guarantee of future results.

Sector investing is subject to greater risks than the market as a whole. Because the Fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors.

6  California Tax-Free Income Fund | Annual report 

A look at performance

For the periods ended August 31, 2008

		Average annual returns (%)				Cumulative total returns (%)
		with maximum sales charge (POP)				with maximum sales charge (POP)				SEC 30-
										day yield
	Inception				Since				Since	(%) as of
Class	date	1-year	5-year	10-year	inception	1-year	5-year	10-year	inception	8-31-08
A	12-29-89	–2.42	3.17	3.59	—	–2.42	16.91	42.25	—	4.66
B	12-31-91	–3.57	2.90	3.40	—	–3.57	15.39	39.68	—	4.13
C	4-1-99	0.33	3.25	—	3.16	0.33	17.34	—	34.06	4.12

Performance figures assume all distributions are reinvested. Public offering price (POP) figures reflect maximum sales charges 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 to 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 expense ratios of the Fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the Fund and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class A — 0.81%, Class B — 1.66%, Class C — 1.66%.

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 current to the most recent month end performance data, 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.

Annual report | California Tax-Free Income Fund  7 

A look at performance

Growth of $10,000

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

			With maximum
Class	Period beginning	Without sales charge	sales charge	Index
B2	8-31-98	$13,968	$13,968	$16,094
C2	4-1-99	13,406	13,406	15,662

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, 2008. 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, which would have resulted in lower values if they did.

¹ NAV represents net asset value and POP represents public offering price.

² No contingent deferred sales charge applicable.

8  California Tax-Free Income Fund | Annual report 

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, 2008 with the same investment held until August 31, 2008.

	Account value	Ending value	Expenses paid during
	on 3-1-08	on 8-31-08	period ended 8-31-081
Class A	$1,000.00	$1,052.20	$4.23
Class B	1,000.00	$1,047.70	8.60
Class C	1,000.00	$1,047.70	8.60

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, 2008, 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:

Annual report | California Tax-Free Income Fund  9 

Your expenses

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% annualized return before expenses (which is not your fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2008, with the same investment held until August 31, 2008. 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
	on 3-1-08	on 8-31-08	period ended 8-31-081
Class A	$1,000.00	$1,021.00	$4.17
Class B	1,000.00	1,016.70	8.47
Class C	1,000.00	1,016.70	8.47

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 0.82%, 1.67% and 1.67% 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/366 (to reflect the one-half year period).

10  California Tax-Free Income Fund | Annual report 

Portfolio summary

Top 10 holdings1
Santa Ana Financing Auth., 7-1-24, 6.250%	3.6%
San Bernardino, County of, 8-1-17, 5.500%	3.0%
Golden State Tobacco Securitization Corp., 6-1-35, 5.000%	2.9%
Puerto Rico Aqueduct & Sewer Auth., 7-1-11, 7.470%	2.8%
California, State of, 3-1-16, 6.615%	2.2%
New Haven Unified School District, 8-1-22, Zero	2.1%
Puerto Rico, Commonwealth of, 7-1-15, 6.500%	2.1%
Santa Clara County Financing Auth., 5-15-17, 5.500%	2.0%
California, State of, 4-1-29, 4.750%	1.9%
Puerto Rico Ind’l., Tourist, Ed’l. Med. &
Environmental Control Facilities Financing Auth., 7-1-18, 7.920%	1.8%

Sector distribution1,2
General Obligation Bonds	16%	Leasing Contracts	3%
Revenue Bonds		Education	2%
Transportation	8%	Electric	2%
Correctional Facilities	8%	Economic Development	2%
Health	8%	Pollution	1%
Special Tax	7%	Other Revenue bonds	27%
Water and Sewer	6%	Short-term investments
		& other	1%
Tobacco	5%
Tax Allocation	4%

¹ As a percentage of net assets on August 31, 2008.

² Sector investing is subject to greater risks than the market as a whole. Because the Fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors.

Annual report | California Tax-Free Income Fund  11 

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 8-31-08

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 99.00%					$314,317,122
(Cost $306,901,838)
California 89.60%					284,475,627
ABAG Finance Auth. for Nonprofit Corps
Health Fac Rev Inst. on Aging	5.650%	08-15-38	A+	$1,000	997,110
Rev San Diego Hosp Assn Ser 2001A	6.125	08-15-20	A–	2,000	2,055,320
Anaheim, City of,
Rev Ref Cert of Part Reg
Convention Ctr (D)(P)	6.133	07-16-23	AA	2,000	2,050,160
Anaheim Public Financing Auth.,
Rev Lease Cap Apprec Sub Pub Imp
Proj Ser 1997C (D)	Zero	09-01-18	AAA	3,000	1,915,020
Antioch Pub. Financing Auth.
Reassmt. Rev., Sub. Ser. B (G)	5.850	09-02-15	BB+	1,375	1,406,487
Antioch Public Financing Auth.,
Rev Ref Reassessment Sub
Ser 1998B (G)	5.500	04-01-43	AA	5,000	5,218,550
Bay Area Toll Auth.,
Rev Ref Toll Bridge Ser 2007F	5.000	04-01-31	AA	5,000	5,062,450
Belmont Community Facilities District,
Rev Special Tax Dist No. 2000-1
Library Proj Ser 2004A (D)	5.750	08-01-24	Aa3	1,000	1,126,350
California Statewide Communities
Develop Auth.,
CHF Irvine LLC UCI East Campus	5.750	05-15-32	BAA2	1,230	1,212,657
Rev Ref Sr Living Presbyterian
Homes Ser 2006A	4.875	11-15-36	BBB+	2,000	1,648,740
California County Tobacco Securitization
Agency, Rev Asset Backed Bond Fresno
County Fdg Corp	6.000	06-01-35	BBB	1,765	1,588,835
Rev Asset Backed Bond Kern County
Corp Ser 2002A	6.125	06-01-43	BBB	5,000	4,542,400
Rev Asset Backed Bond Stanislaus
Fdg Ser 2002A	5.500	06-01-33	Baa3	1,000	890,530
Rev Asset Backed Bond Los Angeles
County (Zero to 12-1-10
then 5.250%)	Zero	06-01-21	Baa3	5,000	3,816,900

See notes to financial statements

12  California Tax-Free Income Fund | Annual report 

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 Department of Water Resources,
Rev Pwr Supply Ser 2002A	5.375%	05-01-21	A	$4,000	$4,447,920
Rev Pwr Supply Ser 2008H (D)	5.000	05-01-22	AAA	5,000	5,250,050
California Educational Facilities Auth.,
Rev College & Univ Proj	5.000	02-01-26	Baa3	4,525	4,076,075
Rev Ref Pooled College & Univ
Financing Ser 1993B	6.125	06-01-09	Baa2	5	5,018
Rev Univ of San Diego Ser 2002A	5.500	10-01-32	A2	1,435	1,475,582
Rev Ref Woodbury Univ	5.000	01-01-25	BBB–	1,800	1,638,504
Rev Ref Woodbury Univ	5.000	01-01-30	BBB–	2,000	1,732,800
California Statewide Financing Auth.,
Rev Tobacco Settlement Asset
Backed Bond 2002A	6.000	05-01-37	Baa3	2,500	2,244,500
Rev Tobacco Settlement Asset
Backed Bond 2002B	6.000	05-01-37	Baa3	4,000	3,591,200
California, State of,
GO Ref Daily Kindergarten
Univ. Ser A–4 (V)	2.240	05-01-34	AA	810	810,000
GO Unltd (D)	4.750	04-01-29	AAA	6,000	5,999,760
GO Unltd (D)(G)	6.615	03-01-16	AA	6,255	7,061,269
GO Unltd	5.125	04-01-23	A+	2,000	2,044,220
GO Unltd	5.125	11-01-24	A+	3,500	3,560,935
California Health Facilities Financing Auth.,
Rev Catholic Health Care West
Ser 2004G	5.250	07-01-23	A	1,000	996,360
Rev Kaiser Permanente Ser. A	5.250	04-01-39	A+	2,500	2,444,025
California Infrastructure &
Economic Development
Rev J David Gladstone Inst Proj	5.250	10-01-34	A–	1,000	1,000,310
Rev Kaiser Hosp Asst I LLC
Ser 2001A	5.550	08-01-31	A+	3,000	3,016,260
Rev Performing Arts Center	5.000	12-01-27	A	500	508,115
California Municipal Finance Auth.,
Rev Ref American Heritage Education
Foundation Proj 2006A	5.250	06-01-26	BBB–	1,000	912,550
California Pollution Control Financing
Auth.,
Rev Poll Control Pacific Gas & Electric
Ser 1996A (D)	5.350	12-01-16	AA	1,000	1,010,350
Rev Solid Waste Disposal Keller
Canyon Landfill Co Proj	6.875	11-01-27	BB–	2,000	1,973,360
Rev Solid Waste Disp Mgmt Inc
Proj Ser 2005C	5.125	11-01-23	BBB	2,000	1,720,580
California State Public Works Board,
Rev Lease Dept of Corrections
Ser 2003C	5.500	06-01-18	A	5,000	5,346,850
Rev Ref Lease Dept of Corrections
State Prisons Ser 1993A (D)	5.000	12-01-19	AA	5,000	5,208,450
California Statewide Cmmtys. Dev.
Auth. Rev.,
Thomas Jefferson Sch. Law Ser. A	7.250	10-01-38	BB+	2,000	1,938,100

See notes to financial statements

Annual report | California Tax-Free Income Fund  13 

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 University,
Rev Ref Systemwide Ser 2005C (D)	5.000%	11-01-38	AA	$5,000	$4,961,150
Capistrano Unified School District,
Rev Spec Tax Cmty Facil Dist No.
90 2 (G)	6.000	09-01-33	BB	750	752,888
Rev Spec Tax Cmty Facil Dist No.
90 2 (G)	5.875	09-01-23	BB	500	502,900
Rev Spec Tax Cmty Facil Dist No.
98 2 (G)	5.750	09-01-29	AA	2,470	2,616,397
Center Unified School District,
GO Unltd Ref Cap Apprec
Ser 1997C (D)	Zero	09-01-16	AA	2,145	1,519,883
Chula Vista Industrial Development Auth.,
Rev Ref Tax Alloc Bayfront
Ser 2006B (G)	5.250	10-01-27	BB+	1,250	1,142,900
Cloverdale Community
Development Agency,
Rev Tax Allocation Redev Proj (G)	5.500	09-01-38	BB+	3,000	2,641,830
Contra Costa County Public
Financing Auth.,
Rev Ref Lease Various Cap Facil
Ser 1999 A (D)	5.000	06-01-28	AA	1,770	1,831,649
Rev Ref Lease Various Cap Facil
Ser 1999 A (D)	5.000	06-01-28	AA	1,230	1,231,156
Corona Community Facilities District,
Rev Special Tax Escrow 97-2 (G)	5.875	09-01-23	BB+	1,255	1,256,983
East Side Unified High School District,
Santa Clara County,
GO Ultd Ref 2012 (D)	5.250	09-01-24	AAA	2,500	2,769,700
Folsom Public Financing Auth.,
Rev Ref Sub Bond Ser 2007B (G)	5.125	09-01-26	BB	1,000	870,640
Foothill/Eastern Transportation Corridor
Agency,
Rev Ref Toll Rd Cap Apprec	Zero	01-15-25	BBB–	6,615	2,316,639
Rev Ref Toll Rd Cap Apprec	Zero	01-15-36	BBB–	30,000	4,885,800
Fresno Joint Powers Financing Auth.,
Rev Ref Ser 1994A (G)	6.550	09-02-12	A+	200	200,396
Fresno, City of,
Rev Swr Ser A 1 (D)	5.250	09-01-19	AA	1,000	1,066,970
Fullerton Community Facilities District,
Rev Spec Tax Amerige Heights Dist
No. 1 (G)	6.200	09-01-32	BB	1,000	1,011,980
Golden State Tobacco Securitization Corp,
Rev Asset Backed Bond Ser 2003A	6.250	06-01-33	AAA	2,760	3,007,627
Rev Asset Backed Bond Ser 2005A (D)	5.000	06-01-35	A	10,000	9,133,500
Imperial Irrigation Dist,
Elec Rev Ref Sys	5.000	11-01-33	A+	2,500	2,468,100
Inglewood Unified School District Facilities
Financing Auth.,
Rev Ref Bond (D)	5.250	10-15-26	AAA	5,000	5,383,050

See notes to financial statements

14  California Tax-Free Income Fund | Annual report 

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)
Irvine, City of,
Rev Meadows Mobile Home Park
Ser 1998A (G)	5.700%	03-01-28	BBB–	$3,975	$3,976,113
Laguna Salada Union School District,
GO Unltd Ser 2000C (D)	Zero	08-01-26	A	1,000	394,350
Lancaster School District,
Rev Ref Cert of Part Cap Apprec (D)	Zero	04-01-19	AAA	1,730	1,073,032
Rev Ref Cert of Part Cap Apprec (D)	Zero	04-01-22	AAA	1,380	709,141
Lee Lake Water District,
Rev Spec Tax Cmty Facil Dist No.
2 Montecito Ranch (G)	6.125	09-01-27	BB	1,200	1,146,888
Long Beach, City of,
Rev Ref Harbor Ser 1998A (D)	6.000	05-15-18	AA	2,660	2,888,654
Rev Spec Tax Cmty Facil Dist No.
6 Pike (G)	6.250	10-01-26	BB–	2,500	2,519,500
Los Angeles Community
Facilities District,
Rev Spec Tax No. 3 Cascades
Business Park Proj (G)	6.400	09-01-22	BB+	655	658,223
Los Angeles Unified School District,
GO Unltd Elecfion of 1997
Ser 2002E (D)	5.500	07-01-17	AA	1,500	1,666,590
Millbrae, City of,
Rev Magnolia of Millbrae Proj
Ser 1997A (G)	7.375	09-01-27	BB	2,500	2,522,800
Modesto, City of,
Rev Spec Tax Cmnty Facs Dist No.
04-1 2 (G)	5.100	09-01-26	BB	3,000	2,603,940
New Haven Unified School District,
GO Unltd Cap Apprec
Ser 1998B (D)	Zero	08-01-22	A+	14,200	6,744,290
Northern California Transmission Agency,
Rev Ref Calif-Oregon Transm Proj
Ser 1990A (D)	7.000	05-01-13	AA	100	111,038
Orange, County of,
Rev Spec Assessment Imp Bond Act
1915 Ltd Oblig (G)	5.750	09-02-33	BB	1,570	1,537,391
Orange Cove Irrigation District,
Rev Ref Cert of Part Rehab Proj (D)	5.000	02-01-17	AA	2,045	2,048,620
Oxnard, City of,
Rev Special Tax District No. 3-
Seabridge (G)	5.000	09-01-35	BB	1,500	1,309,665
Paramount Unified School District,
GO Unltd Cap Apprec Bonds
Ser 2001B (D)	Zero	09-01-25	AAA	4,735	2,017,536
Pasadena, City of,
Cert of Part Ref Old Pasadena
Parking Facil Proj	6.250	01-01-18	AA+	920	1,047,402
Poway, City of,
Rev Ref Cmty Facil Dist No. 88 1
Pkwy Business Ctr (G)	6.750	08-15-15	BB	1,000	1,021,280

See notes to financial statements

Annual report | California Tax-Free Income Fund  15 

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)
Rancho Santa Fe Community
Services District,
Rev Spec Tax Cmty Facil
Dist No. 1 (G)	6.700%	09-01-30	BB	$1,000	$1,014,020
Ripon Redevelopment Agency,
Rev Ref Community Redevelopment
Proj (D)	4.750	11-01-36	A2	1,700	1,568,539
Riverside County Asset Leasing Corp,
Rev Leasehold Linked Ctfs
Riverside County Ser 1993A	6.500	06-01-12	AA–	1,000	1,086,200
Sacramento City Financing Auth,
Rev Convention Ctr Hotel Sr
Ser 1999A (G)	6.250	01-01-30	AA	4,975	5,220,566
San Bernardino, County of,
Rev Cert of Part Cap Facil Proj
Ser 1992B	6.875	08-01-24	AAA	350	440,300
Rev Ref Cert of Part Med Ctr Fin Proj (D)	5.500	08-01-17	AA	8,750	9,543,712
San Bruno Park School District,
GO Unltd Cap Apprec
Ser 2000B (D)	Zero	08-01-21	A+	1,015	526,805
GO Unltd Cap Apprec
Ser 2000B (D)	Zero	08-01-23	A+	1,080	494,791
San Diego County Water Auth.,
Rev Ref Cert (D)(M)(P)	9.006	04-22-09	AAA	400	419,080
San Diego Redevelopment Agency,
Rev Ref Tax Alloc Cap Apprec
Ser 1999B (G)	Zero	09-01-17	BB	1,600	952,768
Rev Ref Tax Alloc Cap Apprec
Ser 1999B (G)	Zero	09-01-18	BB	1,700	933,742
Rev Ref Tax Alloc City Heights
Proj Ser 1999A (G)	5.800	09-01-28	BB	1,395	1,310,268
Rev Ref Tax Alloc City Heights
Proj Ser 1999A (G)	5.750	09-01-23	BB	1,000	976,450
San Diego Unified School District,
GO Unltd Cap Apprec
Ser 1999A (D)	Zero	07-01-21	AA	2,500	1,322,775
GO Unltd Election of 1998
Ser 2000B (D)	5.000	07-01-25	AA	2,450	2,563,851
San Francisco State Building Auth.,
Rev Ref Lease Dept of Gen Serv
Ser 1993A	5.000	10-01-13	A	2,145	2,282,452
San Francisco City & County
Redevelopment Agency,
Rev Spec Tax Cmnty Facil Dist No.
6 Ser 2005A (G)	5.150	08-01-35	BB	1,250	1,064,713
Rev Cmty Facil Dist No. 6 Mission
Ser 2001A (G)	6.000	08-01-25	BB	2,500	2,453,025
San Joaquin, County of,
Cert of Part Ref County Admin
Building (D)	5.000	11-15-29	AA	2,965	2,971,286

See notes to financial statements

16  California Tax-Free Income Fund | Annual report 

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 Joaquin Hills Transportation
Corridor Agency,
Rev Ref Toll Rd Conv Cap Apprec
Ser 1997A	5.750%	01-15-21	BB–	$5,000	$4,715,650
Rev Toll Rd Sr Lien	Zero	01-01-22	AAA	6,500	3,506,880
Rev Toll Rd Sr Lien	Zero	01-01-14	AAA	5,000	4,174,150
San Marcos Public Facilities Auth.,
Rev Sub Tax Increment Proj Area 3
Ser 1999A (G)	6.000	08-01-31	AA	1,305	1,377,884
San Mateo County Joint Power Auth.,
Rev Ref Lease Cap Proj Prog (D)	5.000	07-01-21	AA	1,815	1,924,517
Santa Ana Financing Auth.,
Rev Lease Police Admin & Hldg
Facil Ser 1994A (D)	6.250	07-01-19	AA	1,790	2,107,618
Rev Lease Police Admin & Hldg
Facil Ser 1994A (D)	6.250	07-01-24	AA	10,000	11,529,000
Rev Ref Mainplace Proj Ser 1998D (G)	5.600	09-01-19	BBB–	1,000	1,012,950
Santa Clara County Financing Auth.,
Rev Ref Lease Multiple Facil
Proj Ser 2000B (D)	5.500	05-15-17	AA	6,000	6,329,520
Santa Fe Springs Community
Development Commission,
Rev Tax Alloc Cap Apprec Cons
Redev Proj Ser 2006A (D)	Zero	09-01-20	AA	1,275	704,144
Santa Margarita Water District,
Rev Spec Tax Cmty Facil Dist
No. 99 1 (G)	6.000	09-01-30	AA	500	574,070
Santaluz Community Facilities District,
Rev Spec Tax Dist No. 2 Imp Area
No. 1 (G)	6.375	09-01-30	BB	1,495	1,497,960
Southern California Public Power Auth.,
Rev Natural Gas Proj No. 1 Ser 2007A	5.250	11-01-26	AA–	1,000	989,540
Rev Ref Southern Transm Proj (D)	Zero	07-01-13	Aa3	4,400	3,753,728
Tobacco Securitization Auth. of
Northern California,
Rev Asset Backed Bond Ser 2001A	5.375	06-01-41	AAA	1,000	1,082,170
Torrance, City of,
Rev Ref Hosp Torrance Mem Med Ctr
Ser 2001A	5.500	06-01-31	A+	2,000	2,001,560
Turlock Health Facilities,
Rev Emanuel Med Ctr Ser 2007B	5.125	10-15-37	BBB+	2,500	2,113,025
Tustin Unified School District,
Rev Spec Tax Cmty Facil Dis
No. 97 1	6.375	09-01-35	AAA	1,000	1,020,250
Vallejo Sanitation and Flood
Control District,
Rev Ref Cert of Part (D)(G)	5.000	07-01-19	A	2,500	2,474,075
West Covina Redevelopment Agency,
Rev Ref Cmty Facil Dist Fashion
Plaza Proj	6.000	09-01-22	AA	3,000	3,328,350

See notes to financial statements

Annual report | California Tax-Free Income Fund  17 

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
Puerto Rico 9.40%					$29,841,495
Puerto Rico, Commonwealth of,
GO Unltd (P)	6.500%	07-01-15	BBB–	$6,000	6,632,340
Puerto Rico Highway &
Transportation Auth.,
Rev Ref Ser 1996Z (D)	6.250	07-01-14	AA	3,250	3,590,730
Rev Ref Ser 1998A (D)	5.000	07-01-38	AA	190	182,865
Puerto Rico Ind’l, Tourist, Ed’l, Med &
Environmental Control Facilities
Financing Auth.,
GO Unltd Ser 975 (D)	7.920	07-01-18	Aaa	5,000	5,716,900
Puerto Rico Aqueduct & Sewer Auth.,
Rev Inverse Floater (Gtd) (D)(M)(P)	7.470	07-01-11	AAA	7,500	9,016,200
Rev Sr Lien Ser 2008A (Zero to
7-1-11 then 6.125%)	Zero	07-01-24	BBB–	1,750	1,547,770
Rev Hosp de la Concepcion
Ser 2000A	6.500	11-15-20	AA	500	531,840
Puerto Rico Public Financing Corp,
Rev Commonwealth Appropriation
Ser 2002E	5.700	08-01-25	Aaa	2,500	2,622,850
State, issuer, description					Value
Short-term investments 0.03%					$103,000
(Cost $103,000)
Joint Repurchase Agreement 0.03%					103,000
Joint Repurchase Agreement with Barclays PLC dated 8-29-08
at 2.02% to be repurchased at $103,023 on 9-02-08,
collateralized by $90,070 U.S. Treasury Inflation Indexed
Note, 2.50%, due 7-15-16 (valued at $105,060, including interest).
				$103	103,000
Total investments (Cost $307,004,838)† 99.03%					$314,420,122
Other assets and liabilities, net 0.97%					$3,092,788
Total net assets 100.00%					$317,512,910

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

See notes to financial statements

18  California Tax-Free Income Fund | Annual report 

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

Notes to Schedule of Investments

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

(D) Bond is insured by one of these companies:

Insurance coverage	As a % of total investments
Ambac Financial Group, Inc.	5.02
Financial Guaranty Insurance Company	8.95
Financial Security Assurance, Inc.	9.81
Municipal Bond Insurance Association	21.35

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

(M) Inverse floater bond purchased on secondary market.

(P) Variable rate obligation. The coupon rate shown represents the rate at period end.

(V) Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are often payable on demand and are shown at their current rates as of August 31, 2008.

† At August 31, 2008, the aggregate cost of investment securities for federal income tax purposes was $305,646,171. Net unrealized appreciation aggregated $8,773,951, of which $16,260,700 related to appreciated investment securities and $7,486,749 related to depreciated investment securities.

See notes to financial statements

Annual report | California Tax-Free Income Fund  19 

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 8-31-08

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 $307,004,838)	$314,420,122
Receivable for shares sold	201,060
Interest receivable	4,184,958
Receivable from affiliates	28,922
Other assets	36,901
Total assets	318,871,963
Liabilities
Due to custodian	555,983
Payable for shares repurchased	414,666
Dividends payable	227
Payable to affiliates
Management fees	143,088
Distribution and service fees	55,754
Other	67,983
Other payables and accrued expenses	121,352
Total liabilities	1,359,053
Net assets
Capital paid-in	308,631,449
Accumulated net realized gain on investments	1,427,298
Net unrealized appreciation of investments	7,415,284
Accumulated net investment income	38,879
Net assets	$317,512,910
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 ($293,560,255 ÷ 28,332,591 shares)	$10.36
Class B ($10,381,415 ÷ 1,001,909 shares)1	$10.36
Class C ($13,571,240 ÷ 1,309,848 shares)1	$10.36
Maximum offering price per share
Class A ($10.36 ÷ 95.5%)2	$10.85

¹ Redemption price is equal to net asset value less any applicable contingent deferred sales charge.

² 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

20  California Tax-Free Income Fund | Annual report 

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 8-31-08

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	$17,119,477
Total investment income	17,119,477
Expenses
Investment management fees (Note 4)	1,790,496
Distribution and service fees (Note 4)	699,727
Transfer agent fees (Note 4)	129,294
Accounting and legal services fees (Note 4)	37,228
Custodian fees	83,930
Professional fees	40,637
Printing fees	29,186
Trustees’ fees	19,336
Blue sky fees	16,835
Miscellaneous	9,870
Total expenses	2,856,539
Less expense reductions (Note 4)	(1,988)
Net expenses	2,854,551
Net investment income	14,264,926
Realized and unrealized gain (loss)
Net realized gain (loss) on investments	219,561
Change in net unrealized appreciation (depreciation) of investments	(7,654,523)
Net realized and unrealized loss	(7,434,962)
Increase in net assets from operations	$6,829,964

See notes to financial statements

Annual report | California Tax-Free Income Fund  21 

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

Statements 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
	8-31-07	8-31-08
Increase (decrease) in net assets
From operations
Net investment income	$14,124,386	$14,264,926
Net realized gain	1,521,490	219,561
Change in net unrealized appreciation (depreciation)	(11,454,555)	(7,654,523)
Increase in net assets resulting from operations	4,191,321	6,829,964
Distributions to shareholders
From net investment income
Class A	(13,058,903)	(13,221,127)
Class B	(664,098)	(437,796)
Class C	(323,845)	(443,676)
From net realized gain
Class A	—	(374,572)
Class B	—	(16,486)
Class C	—	(14,767)
	(14,046,846)	(14,508,424)
From Fund share transactions (Note 5)	10,655,928	(3,483,468)
Total increase (decrease)	800,403	(11,161,928)
Net assets
Beginning of year	327,874,435	328,674,838
End of year1	$328,674,838	$317,512,910

¹ Includes accumulated net investment income of $38,879 and $38,879, respectively.

See notes to financial statements

22  California Tax-Free Income Fund | Annual report 

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	8-31-041	8-31-051	8-31-06	8-31-07	8-31-08
Per share operating performance
Net asset value, beginning of year	$10.60	$10.91	$11.08	$10.93	$10.61
Net investment income2	0.52	0.51	0.49	0.47	0.47
Net realized and unrealized gain
(loss) on investments	0.30	0.16	(0.15)	(0.32)	(0.25)
Total from investment operations	0.82	0.67	0.34	0.15	0.22
Less distributions
From net investment income	(0.51)	(0.50)	(0.49)	(0.47)	(0.46)
From net realized gain	—	—	—	—	(0.01)
Total distributions	(0.51)	(0.50)	(0.49)	(0.47)	(0.47)
Net asset value, end of year	$10.91	$11.08	$10.93	$10.61	$10.36
Total return (%)3	7.84	6.24	3.194	1.344	2.184
Ratios and supplemental data
Net assets, end of year (in millions)	$308	$306	$296	$304	$294
Ratios (as a percentage of average net assets):
Expenses before reductions	0.83	0.86	0.82	0.81	0.81
Expenses net of all fee waivers	0.83	0.86	0.82	0.81	0.81
Expenses net of all fee waivers
and credits	0.83	0.86	0.82	0.81	0.81
Net investment income	4.72	4.59	4.53	4.33	4.45
Portfolio turnover (%)	21	13	33	41	22

¹ Audited by previous Independent Registered Public Accounting Firm.

² Based on the average of the shares outstanding.

³ Assumes dividend reinvestment and does not reflect the effect of sales charges.

⁴ Total returns would have been lower had certain expenses not been reduced during the periods shown.

See notes to financial statements

Annual report | California Tax-Free Income Fund  23 

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	8-31-041	8-31-051	8-31-06	8-31-07	8-31-08
Per share operating performance
Net asset value, beginning of year	$10.60	$10.91	$11.08	$10.93	$10.61
Net investment income2	0.42	0.41	0.40	0.38	0.38
Net realized and unrealized gain
(loss) on investments	0.31	0.16	(0.15)	(0.32)	(0.25)
Total from investment operations	0.73	0.57	0.25	0.06	0.13
Less distributions
From net investment income	(0.42)	(0.40)	(0.40)	(0.38)	(0.37)
From net realized gain	—	—	—	—	(0.01)
Total distributions	(0.42)	(0.40)	(0.40)	(0.38)	(0.38)
Net asset value, end of year	$10.91	$11.08	$10.93	$10.61	$10.36
Total return (%)3	6.93	5.35	2.324	0.484	1.314
Ratios and supplemental data
Net assets, end of year (in millions)	$43	$32	$24	$15	$10
Ratios (as a percentage of average net assets):
Expenses before reductions	1.69	1.71	1.67	1.66	1.66
Expenses net of all fee waivers	1.69	1.71	1.67	1.66	1.66
Expenses net of all fee waivers
and credits	1.69	1.71	1.67	1.66	1.66
Net investment income	3.87	3.75	3.68	3.47	3.59
Portfolio turnover (%)	21	13	33	41	22

¹ Audited by previous Independent Registered Public Accounting Firm.

² Based on the average of the shares outstanding.

³ Assumes dividend reinvestment and does not reflect the effect of sales charges.

⁴ Total returns would have been lower had certain expenses not been reduced during the periods shown.

See notes to financial statements

24  California Tax-Free Income Fund | Annual report 

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	8-31-041	8-31-051	8-31-06	8-31-07	8-31-08
Per share operating performance
Net asset value, beginning of year	$10.60	$10.91	$11.08	$10.93	$10.61
Net investment income2	0.42	0.41	0.40	0.37	0.38
Net realized and unrealized gain
(loss) on investments	0.31	0.16	(0.15)	(0.31)	(0.25)
Total from investment operations	0.73	0.57	0.25	0.06	0.13
Less distributions
From net investment income	(0.42)	(0.40)	(0.40)	(0.38)	(0.37)
From net realized gain	—	—	—	—	(0.01)
Total distributions	(0.42)	(0.40)	(0.40)	(0.38)	(0.38)
Net asset value, end of year	$10.91	$11.08	$10.93	$10.61	$10.36
Total return (%)3	6.93	5.35	2.324	0.484	1.314
Ratios and supplemental data
Net assets, end of year (in millions)	$7	$7	$8	$10	$14
Ratios (as a percentage of average net assets):
Expenses before reductions	1.69	1.71	1.67	1.66	1.66
Expenses net of all fee waivers	1.69	1.71	1.67	1.66	1.66
Expenses net of all fee waivers
and credits	1.69	1.71	1.67	1.66	1.66
Net investment income	3.87	3.74	3.68	3.47	3.60
Portfolio turnover (%)	21	13	33	41	22

¹ Audited by previous Independent Registered Public Accounting Firm.

² Based on the average of the shares outstanding.

³ Assumes dividend reinvestment and does not reflect the effect of sales charges.

⁴ Total returns would have been lower had certain expenses not been reduced during the periods shown.

See notes to financial statements

Annual report | California Tax-Free Income Fund  25 

Notes to financial statements

Note 1
Organization

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 1940 Act). 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 (SEC) 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. Class B shares will convert to Class A shares eight years after purchase.

Note 2
Significant accounting policies

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security valuation

The net asset value of Class A, Class B and Class C shares of the Fund is determined daily as of the close of the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. Short-term debt investments that have a remaining maturity of 60 days or less are valued at amortized cost, and thereafter assume a constant amortization to maturity of any discount or premium, which approximates market value. All other securities held by the Fund are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) as of the close of business on the principal securities exchange (domestic or foreign) on which they trade or, lacking any sales, at the closing bid price. Securities traded only in the over-the-counter market are valued at the last bid price quoted by b rokers making markets in the securities at the close of trading. Securities for which there are no such quotations, principally debt securities, are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied and electronic data processing techniques, which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Fixed income securities are subject to credit and interest rate risk and involve some risk of default in connection with principal and interest payments.

Other assets and securities for which no such quotations are readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees.

26  California Tax-Free Income Fund | Annual report 

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity.

Joint repurchase agreement

Pursuant to an exemptive order issued by the SEC, 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. When a Fund enters into a repurchase agreement, it receives delivery of collateral, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is generally 102% of the repurchase amount.

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 security transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Discounts/premiums are accreted/amortized for financial reporting purposes. Realized gains and losses from investment transactions are recorded on an identified cost basis.

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, and transer agent fees for Class A, Class B and Class C shares 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.

Guarantees and indemnifications

Under the Fund’s organizational documents, its Officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

Expenses

The majority of expenses are directly identifiable to an individual fund. Trust 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 size 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 line of credit agreement with The Bank of New York Mellon (BNYM), the Swing Line Lender and Administrative Agent. This agreement enables the Fund to participate, with other funds managed by the Adviser, in an unsecured line of credit with BNYM, 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, 2008.

Pursuant to the custodian agreement, the Custodian may, in its discretion, advance funds to the Fund to make properly authorized payments. When such payments result in an overdraft, the Fund is obligated to repay the Custodian for any overdraft together with interest due thereon. The Custodian has a lien, security interest or security

Annual report | California Tax-Free Income Fund  27 

entitlement in any Fund property, to the maximum extent permitted by law to the extent of any overdraft.

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.

The Fund has adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (FIN 48), at the beginning of the Fund’s fiscal year. FIN 48 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. The implementation of FIN 48 did not have a material impact on the Fund’s financial statements. Each of the Fund’s federal tax returns for the prior three years remain subject to examination by the Internal Revenue Service.

New accounting pronouncements

In September 2006, FASB Standard No. 157, Fair Value Measurements (FAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. As of July 31, 2008, management does not believe the adoption of FAS 157 will have a material impact on the amounts reported in the financial statements.

In March 2008, FASB No. 161 (FAS 161), Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (FAS 133), was issued and is effective for fiscal years and interim reporting periods beginning after November 15, 2008. FAS 161 amends and expands the disclosure requirements of FAS 133 in order to provide financial statement users an understanding of a company’s use of derivative instruments, how derivative instruments are accounted for under FAS 133 and related interpretations and how these instruments affect a company’s financial position, performance, and cash flows. FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company, and any credit risk-related contingent features of the agreements. M anagement is currently evaluating the adoption of FAS 161 on the Fund’s financial statement disclosures.

Distribution of income and gains

The Fund records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Fund generally declares dividends daily and pays them monthly. Capital gains, if any, are distributed annually. During the year ended August 31, 2007, the tax character of distributions paid was as follows: ordinary income $48,591 and exempt income $13,998,255. During the year ended August 31, 2008, the tax character of distributions paid was as follows: ordinary income $20,361, exempt income $14,082,238, and long-term capital gains $405,825. 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, 2008, the components of distributable earnings on a tax basis included $60,375 of undistributed exempt income and $183,171 of undistributed long-term gain.

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.

Capital accounts within financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Permanent book-tax differences are primarily

28  California Tax-Free Income Fund | Annual report 

attributable to amortization and accretion on debt securities.

Note 3
Risks and uncertainties

State concentration risk

The Fund invests mainly in bonds from a single state and its performance is affected by local, state and regional factors. The risks may include economic or policy changes, erosion of the tax base, and state legislative changes (especially those regarding budgeting and taxes). Although the Fund invests mainly in investment-grade bonds, which generally have a relatively low level of credit risk, any factors that might lead to a credit decline statewide would be likely to cause widespread decline in the credit quality of the Fund’s holdings.

Insurance concentration risk

The Fund may hold insured municipal obligations which are insured as to their scheduled payment of principal and interest under an insurance policy obtained by the issuer or underwriter of the obligation at the time of its original issuance. Since there are a limited number of municipal obligation insurers, a Fund may have a concentration of investments covered by one insurer. Accordingly, the concentration may make the Fund’s value more volatile and investment values may rise and fall more rapidly. In addition, the credit quality of companies which provide the insurance may affect the value of those securities and insurance does not guarantee the market value of the insured obligation.

Municipal bond risk

The Fund generally invests in general obligation or revenue municipal bonds. The bonds are backed by the municipal issuer and have the risk that the issuer’s credit quality will decline. General obligation bonds are backed by the municipal issuer’s ability to levy taxes. In extreme cases, a municipal issuer could declare bankruptcy or otherwise become unable to honor its commitments to bondholders which may be caused by many reasons, including fiscal mismanagement and erosion of the tax base. Revenue bonds are backed only by income associated with a specific facility. Any circumstance that reduces or threatens the economic viability of that particular facility can affect the bond’s credit quality.

Note 4
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. The effective rate for the year ended August 31, 2008 is 0.55% of the Fund’s average daily net asset value. The Fund has a subadvisory agreement with MFC Global Investment Management (U.S.), LLC, a subsidiary of John Hancock Financial Services, Inc. The Fund is not responsible for payment of subadvisory fees.

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 1940 Act, to pay 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%, 1.00% and 1.00% of average daily net asset value of Class A, Class B and Class C, respectively. A maximum of 0.25% of such payments may be service fees, as defined by the Conduct Rules of the Financial Industry Regulatory Authority (formerly 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.

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 $116.

Class A shares are assessed up-front sales charges. During the year ended August 31, 2008, JH Funds received net up-front sales charges

Annual report | California Tax-Free Income Fund  29 

of $258,776 with regard to sales of Class A shares. Of this amount, $30,701 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $219,826 was paid as sales commissions to unrelated broker-dealers and $5,249 was paid as sales commissions to sales personnel of Signator Investors, Inc. (Signator Investors), a related broker-dealer. The Adviser’s indirect parent, John Hancock Life Insurance Company (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 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 year ended August 31, 2008, CDSCs received by JH Funds amounted to $7,584 for Class B shares and $1,327 for Class C shares.

The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an indirect subsidiary of JHLICO. For Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.01% of each class’s average daily net asset value, 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. For the period from September 1, 2007 to May 31, 2008, the Fund paid a monthly fee which is based on an annual rate of $16 for each Class A shareholder account, $18.50 for each Class B shareholder account and $17.50 for each Class C shareholder account. Effective June 1, 2008, the Fund pays a monthly fee which is based on an annual rate of $17.50 for each Class A, Class B and Class C shareholder account.

The Fund receives earnings credits from its transfer agent as a result of uninvested cash balances. These credits are used to reduce a portion of the Fund’s transfer agent fees and out-of-pocket expenses. During the year ended August 31, 2008, the Fund’s transfer agent fees and out-of-pocket expenses were reduced by $1,872 for transfer agent credits earned.

Class level expenses for the year ended August 31, 2008 were as follows:

	Distribution and
Share class	service fees
Class A	$451,009
Class B	123,691
Class C	125,027
Total	$699,727

The Fund has an agreement with the Adviser and affiliates to perform necessary tax, accounting, compliance, legal and other administrative services for the Fund. The compensation for the year amounted to $37,228 with an effective rate of 0.01% of the Fund’s average daily net asset value.

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 unaffiliated Trustees may elect to defer, for tax purposes, their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund 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.

30  California Tax-Free Income Fund | Annual report 

Note 5
Fund share transactions

This listing illustrates the number of Fund shares sold, reinvested and repurchased during the years ended August 31, 2007, and August 31, 2008, along with the corresponding dollar value.

		Year ended 8-31-07	Year ended 8-31-08
	Shares	Amount	Shares	Amount
Class A shares
Sold	3,792,506	$41,272,167	4,992,318	$52,426,707
Distributions reinvested	657,865	7,156,422	734,057	7,695,093
Repurchased	(2,952,305)	(32,110,845)	(6,016,558)	(63,195,548)
Net increase (decrease)	1,498,066	$16,317,744	(290,183)	($3,073,748)
Class B shares
Sold	71,439	$777,087	51,446	$549,219
Distributions reinvested	32,893	358,311	24,616	258,404
Repurchased	(895,152)	(9,748,798)	(459,249)	(4,853,916)
Net decrease	(790,820)	($8,613,400)	(383,187)	($4,046,293)
Class C shares
Sold	444,131	$4,844,342	546,964	$5,771,432
Distributions reinvested	14,852	161,580	23,635	247,277
Repurchased	(188,913)	(2,054,338)	(227,092)	(2,382,136)
Net increase	270,070	$2,951,584	343,507	$3,636,573
Net increase (decrease)	977,316	$10,655,928	(329,863)	($3,483,468)

Note 6
Purchase and sale of securities

Purchases and proceeds from sales or maturities of securities, including purchase and sales of variable rate demand notes of $43,535,000 and $47,725,000, respectively, during the year ended August 31, 2008, aggregated $69,022,465 and $77,966,760 respectively. Short-term securities are excluded from these amounts.

Annual report | California Tax-Free Income Fund  31 

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) at August 31, 2008, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, 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 audits. We conducted our audits 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2008 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased had not been received, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before August 31, 2005 were audited by other auditors whose report expressed an unqualified opinion thereon.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 23, 2008

32  California Tax-Free Income Fund | Annual report 

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, 2008.

The Fund has designated distributions to shareholders of $405,825 as a long-term capital gain dividend.

None of the 2008 income dividends qualify for the corporate dividends-received deduction. Shareholders who are not subject to the alternative minimum tax received income dividends that are 99.86% tax-exempt. The percentage of income dividends from the Fund subject to the alternative minimum tax is 3.16%. 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 2008 U.S. Treasury Department Form 1099-DIV in January 2009. This will reflect the total of all distributions that are taxable for calendar year 2008.

Annual report | California Tax-Free Income Fund  33 

Board Consideration of and
Continuation of Investment Advisory
Agreement and Subadvisory
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 Tax-Exempt Series 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 meet in person 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 subadvisory agreement (the Subadvisory Agreement) with MFC Global Investment Management (U.S.), LLC (the Subadviser) for the John Hancock California Tax-Free Income Fund (the Fund). The Advisory Agreement and the Subadvisory Agreement are collectively referred to as the Advisory Agreements.

At meetings held on May 5–6 and June 9–10, 2008, the Board considered the factors and reached the conclusions described below relating to the selection of the Adviser and Subadviser 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 its Independent Trustees, reviewed a broad range of information requested for this purpose. This information included: (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). The funds within each Category and Peer Group were selected by Morningstar Inc. (Morningstar), an independent provider of investment company data. Data covered a range of periods ended December 31, 2007, (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 Subadviser, (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 Subadviser’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 Subadviser’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 Subadviser.

The Independent Trustees considered the legal advice of independent legal counsel and relied on their own business judgment in determining the factors to be considered in evaluating the materials that were presented to them and the weight to be given to each such factor. 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. The Board principally considered data on performance and other information provided by Morningstar as of December 31, 2007. The Board also considered updated performance information provided to it by the Adviser or Subadviser at its May and June 2008 meetings. Performance and other information may be quite different as of 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 Subadviser, based on their resources, reputation and other attributes, to attract and retain qualified investment professionals, including research, advisory, and supervisory personnel. The Board considered the investment philosophy, research and

34  California Tax-Free Income Fund | Annual report 

investment decision-making processes of the Adviser and Subadviser. The Board considered the Adviser’s execution of its oversight responsibilities. The Board further considered the culture of compliance, resources dedicated to compliance, compliance programs and compliance records of the Adviser and Subadviser. In addition, the Board took into account the administrative and other non-advisory 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 Subadviser supported renewal of the Advisory Agreements.

Fund performance

The Board considered the performance results for the Fund over various time periods ended December 31, 2007. The Board also considered these results in comparison to the performance of the Category, as well as the Fund’s Peer Group and benchmark index. The Board reviewed with representatives 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 for the 1-year period was lower than the performance of the median of the Category and its benchmark index, the Lehman Brothers Municipal Bond Index. The Board also noted that the Fund’s performance was generally in line with the median performance of the Category for the 3-, 5- and 10-year periods. The Board viewed favorably that the Fund’s performance was generally in line with the performance of the Peer Group median for the 5-year period and was higher than the performance of the Peer Group median for the 1-, 3- and 5-year periods.

Investment advisory fee and subadvisory
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 higher than the Peer Group median and not appreciably higher than the Category median.

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 Peer Group and Category medians before the application of fee waivers and reimbursements (Gross Expense Ratio) and after the application of such waivers and reimbursement (Net Expense Ratio). The Board also noted the differences in the funds included in the Peer Group and Category, including differences in the employment of fee waivers. The Board noted that the Fund’s Gross Expense Ratio was lower than the Peer Group and Category medians. The Board also noted that the Fund’s Net Expense Ratio was lower than the Peer Group median and equal to the Category median.

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 expenses results and performance supported the re-approval of the Advisory Agreements.

The Board also received information about the investment subadvisory fee rate (the Subadvisory Agreement Rate) payable by the Adviser to the Subadviser for investment subadvisory services. The Board concluded that the Subadvisory Agreement Rate was fair and equitable, based on its consideration of the factors described here.

Annual report | California Tax-Free Income Fund  35 

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 Subadviser. The Board also considered a comparison of the Adviser’s profitability to that of other similar investment advisers whose profitability information is publicly available. 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.

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 Subadviser to their other clients, including other registered investment companies, institutional investors and separate accounts. The Board concluded that the Advisory Agreement Rate and the Subadvisory Agreement Rate were not unreasonable, taking into account fee rates offered to others by the Adviser and Subadviser, 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, including the Subadvisor, as a result of their relationship with the Fund. Such benefits could include, among others, benefits directly attributable to the relationship of the Adviser and Subadviser with the Fund and benefits potentially derived from an increase in business as a result of their 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, Subadviser’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 Subadviser 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, 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.

36  California Tax-Free Income Fund | Annual report 

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, Year of Birth		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 F. Carlin, Born: 1940	1994	50
Chairman (since December 2007); 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); Chairman
and Chief Executive Officer, Carlin Consolidated, Inc. (management/investments) (since 1987); Trustee,
Massachusetts Health and Education Tax Exempt Trust (1993–2003).
William H. Cunningham, Born: 1944	1989	50
Professor, University of Texas at Austin (since 1971); former Chancellor, University of Texas System and
former President, University of Texas at Austin (until 2001); Chairman and Chief Executive Officer, IBT
Technologies (until 2001); Director of the following: Hicks Acquisition Company I, Inc. (since 2007),
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) (until 2001), eCertain (until 2001), ClassMap.com (until
2001), Agile Ventures (until 2001), AskRed.com (until 2001), Southwest Airlines (since 2000), Introgen
(manufacturer of biopharmaceuticals) (since 2000) 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 (until 2008), WilTel Communications (until 2003) and Hayes Lemmerz
International, Inc. (diversified automotive parts supply company) (since 2003).
Deborah C. Jackson,4 Born: 1952	2008	50
Chief Executive Officer, American Red Cross of Massachusetts Bay (since 2002); Board of Directors of
Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since
2001); Board of Directors of American Student Association Corp. (since 1996); Board of Directors of
Boston Stock Exchange (2002–2008); Board of Directors of Harvard Pilgrim Healthcare (since 2007).
Charles L. Ladner,2 Born: 1938	1994	50
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, AmeriGas, Inc. (retired 1998); Director, AmeriGas Partners, L.P. (gas distribution)
(until 1997); Director, EnergyNorth, Inc. (until 1997); Director, Parks and History Association (until 2005).

Annual report | California Tax-Free Income Fund  37 

Independent Trustees (continued)
Name, Year of Birth		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
Stanley Martin,2,4 Born: 1947	2008	50
Senior Vice President/Audit Executive, Federal Home Loan Mortgage Corporation (2004–2006);
Executive Vice President/Consultant, HSBC Bank USA (2000–2003); Chief Financial Officer/Executive
Vice President, Republic New York Corporation and Republic National Bank of New York (1998–2000);
Partner, KPMG LLP (1971–1998).
Dr. John A. Moore,2 Born: 1939	2005	50
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) (until 2007).
Patti McGill Peterson,2 Born: 1943	2005	50
Principal, PMP Globalinc (consulting) (since 2007); Senior Associate, Institute for Higher Education Policy
(since 2007); Executive Director, CIES (international education agency) (until 2007); Vice President,
Institute of International Education (until 2007); Senior Fellow, Cornell University Institute of Public
Affairs, Cornell University (1997–1998); Former President Wells College, St. Lawrence University and
the Association of Colleges and Universities of the State of New York. Director of the following: Niagara
Mohawk Power Corporation (until 2003); Security Mutual Life (insurance) (until 1997); ONBANK (until
1993). Trustee of the following: Board of Visitors, The University of Wisconsin, Madison (since 2007);
Ford Foundation, International Fellowships Program (until 2007); UNCF, International Development
Partnerships (until 2005); Roth Endowment (since 2002); Council for International Educational Exchange
(since 2003).
Steven R. Pruchansky, Born: 1944	1994	50
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First
American Bank (since 2008); Managing Director, JonJames, LLC (real estate) (since 2000); Director, First
Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
Non-Independent Trustees3
Name, Year of Birth		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	267
Executive Vice President, Manulife Financial Corporation (since 1999); Director and President, John
Hancock Variable Life Insurance Company (since 2007); Director and Executive Vice President, John
Hancock Life Insurance Company (since 2004); Chairman and Director, John Hancock Advisers, LLC (the
Adviser), John Hancock Funds, LLC (John Hancock Funds) and The Berkeley Financial Group, LLC (The
Berkeley Group) (holding company) (since 2005); Chairman and Director, John Hancock Investment
Management Services, LLC (since 2006); Senior Vice President, The Manufacturers Life Insurance
Company (U.S.A.) (until 2004).

38  California Tax-Free Income Fund | Annual report 

Principal officers who are not Trustees
Name, Year of Birth
Position(s) held with Fund	Officer
Principal occupation(s) and other	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 and John Hancock Funds, LLC (since 2005); Director,
MFC Global Investment Management (U.S.), LLC (MFC Global (U.S.)) (since 2005); Chairman and
Director, John Hancock Signature Services, Inc. (since 2005); Director, President and Chief Executive
Officer, John Hancock Investment Management Services, LLC (since 2006); President and Chief Executive
Officer, John Hancock Funds, John Hancock Funds II, John Hancock Funds III and John Hancock Trust
(since 2005); Director, Chairman and President, NM Capital Management, Inc. (since 2005); Member
and former 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 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); Chief Compliance Officer, John Hancock Funds, 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).
Charles A. Rizzo, Born: 1957	2007
Chief Financial Officer
Chief Financial Officer, John Hancock Funds, John Hancock Funds II, John Hancock Funds III and John
Hancock Trust (since 2007); Assistant Treasurer, Goldman Sachs Mutual Fund Complex (registered
investment companies) (2005–2007); Vice President, Goldman Sachs (2005–2007); Managing Director
and Treasurer of Scudder Funds, Deutsche Asset Management (2003–2005); Director, Tax and Financial
Reporting, Deutsche Asset Management (2002–2003); Vice President and Treasurer, Deutsche Global
Fund Services (1999–2002).

Annual report | California Tax-Free Income Fund  39 

Principal officers who are not Trustees (continued)
Name, Year of Birth
Position(s) held with Fund	Officer
Principal occupation(s) and other	of Fund
directorships during past 5 years	since
Gordon M. Shone, Born: 1956	2006
Treasurer
Senior Vice President, John Hancock Life Insurance Company (U.S.A.) (since 2001); 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); Vice President,
John Hancock Investment Management Services, LLC, John Hancock Advisers, LLC (since 2006) and The
Manufacturers Life Insurance Company (U.S.A.) (1998–2000).
John G. Vrysen, Born: 1955	2005
Chief Operating Officer
Senior Vice President, Manulife Financial Corporation (since 2006); Senior Vice President, John Hancock
Life Insurance Company (since 2004); Director, Executive Vice President and Chief Operating Officer,
the Adviser, The Berkeley Group and John Hancock Funds, LLC (since 2007); Director, Executive Vice
President and Chief Operating Officer, John Hancock Investment Management Services, LLC (since
2007); Chief Operating Officer, John Hancock Funds, John Hancock Funds II, John Hancock Funds III
and John Hancock Trust (since 2007); Director, Executive Vice President and Chief Financial Officer,
the Adviser, The Berkeley Group and John Hancock Funds, LLC (2005–2007); Director, Executive Vice
President and Chief Financial Officer, John Hancock Investment Management Services, LLC (2005–2007);
Executive Vice President and Chief Financial Officer, MFC Global (U.S.) (2005–2007); Director, John
Hancock Signature Services, Inc. (since 2005); Chief Financial Officer, John Hancock Funds, John Hancock
Funds II, John Hancock Funds III and John Hancock Trust (2005–2007); Vice President and General
Manager, John Hancock Fixed Annuities, U.S. Wealth Management (2004–2005); 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.

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

² Member of Audit and Compliance Committee.

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

⁴ Mr. Martin was appointed by the Board as a Trustee on September 8, 2008 and Ms. Jackson was appointed effective October 1, 2008.

40  California Tax-Free Income Fund | Annual report 

More information

Trustees	Investment adviser
James F. Carlin, Chairman	John Hancock Advisers, LLC
James R. Boyle†
William H. Cunningham	Subadviser
Deborah C. Jackson	MFC Global Investment
Charles L. Ladner*	Management (U.S.), LLC
Stanley Martin*
Dr. John A. Moore*	Principal distributor
Patti McGill Peterson*	John Hancock Funds, LLC
Steven R. Pruchansky
*Members of the Audit Committee	Custodian
†Non-Independent Trustee	The Bank of New York Mellon
Officers	Transfer agent
Keith F. Hartstein	John Hancock Signature Services, Inc.
President and Chief Executive Officer
	Legal counsel
Thomas M. Kinzler	K&L Gates LLP
Secretary and Chief Legal Officer
	Independent registered
Francis V. Knox, Jr.	public accounting firm
Chief Compliance Officer	PricewaterhouseCoopers LLP
Charles A. Rizzo
Chief Financial Officer
Gordon M. Shone
Treasurer
John G. Vrysen
Chief Operating Officer

Additional information about your fund is available without charge in several ways. As required by the SEC, you can access proxy voting information and quarterly portfolio information on your fund. The proxy voting information includes a description of proxy voting policies, procedures and information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30. The quarterly portfolio information that includes a complete list of the fund’s holdings for the first and third quarters of the fund’s fiscal period is filed on Form N-Q. You have access to this information:

By phone	On the fund’s Website	At the SEC
1-800-225-5291	www.jhfunds.com	www.sec.gov
		1-800-SEC-0330
		SEC Public Reference Room

You can also contact us:
Regular mail	Express mail
John Hancock Signature Services, Inc.	John Hancock Signature Services, Inc.
P.O. Box 9510	Mutual Fund Image Operations
Portsmouth, NH 03802-9510	164 Corporate Drive
	Portsmouth, NH 03801

Month-end portfolio holdings are available at www.jhfunds.com.

Annual report | California Tax-Free Income Fund  41 

1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com

Now available: electronic delivery
www.jhfunds.com/edelivery

This report is for the information of the shareholders of John Hancock California Tax-Free Income Fund.	5300A 8/08
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.	10/08

ITEM 2. CODE OF ETHICS.

As of the end of the period, August 31, 2008, 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 $26,850 for the fiscal year ended August 31, 2008 and $26,850 for the fiscal year ended August 31, 2007. 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, 2008 and fiscal year ended August 31, 2007 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 $3,400 for the fiscal year ended August 31, 2008 and $3,400 for the fiscal year ended August 31, 2007. 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, 2008 and fiscal year ended August 31, 2007 billed to the registrant or to the control affiliates.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the “Auditor”) relating to the operations or financial

reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.

The trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.

All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.

(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:

Audit-Related Fees, Tax Fees and All Other Fees:

There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.

(f) According to the registrant’s principal accountant, for the fiscal year ended August 31, 2008, 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 $865,845 for the fiscal year ended August 31, 2008, and $1,684,235 for the fiscal year ended August 31, 2007.

(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:

Dr. John A. Moore - Chairman

Charles L. Ladner
Patti McGill Peterson
Stanley Martin

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

(c)(2) 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 30, 2008

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 30, 2008

By: /s/ Charles A. Rizzo
-------------------------------------
Charles A. Rizzo
Chief Financial Officer

Date: October 30, 2008