<PAGE> 1
As filed with the Securities and Exchange Commission on September, 1995.
Registration Nos. 2-50931
811-02485
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 50
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 28
(Check appropriate box or boxes)
John Hancock Current Interest
(Exact Name of Registrant as Specified in Charter)
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code
(617) 375-1700
THOMAS H. DROHAN
Vice President and Secretary
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
( ) immediately upon filing pursuant to paragraph (b)
(X) on October 1, 1995 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) on (date) pursuant to paragraph (a) of Rule 485
Calculation of Registration Fees Under the Securities Act of 1933
<TABLE>
Proposed Maximum Proposed Aggregate
Title of Securities Amount of Shares Offering Price Maximum Amount of
Being Registered Being Registered Per Share Offering Price Registration Fee
<S> <C> <C> <C> <C>
Shares of Beneficial Interest Indefinite* N/A N/A N/A
Shares of Beneficial Interest 98,388,034 $1.00 $290,000 $100
<FN>
*Registrant continues its election to register an indefinite number of shares
of beneficial interest pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended.
**Registrant elects to calculate the maximum aggregate offering price pursuant
to Rule 24e-2. 283,477,739 shares were redeemed during the fiscal year ended May
31, 1995. 215,745,531 shares were used for reductions pursuant to Paragraph (c)
of Rule 24f-2 during the current fiscal year. 98,388,034 shares is the amount of
redeemed shares used for reduction in this Amendment. Pursuant to Rule 457(c)
under the Securities Act of 1933, the maximum public offering price of $1.00 per
share on September 20, 1995 is the price used as the basis for calculating the
registration fee. While no fee is required for the 98,098,034 shares, the
Registrant has elected to register, for $100, an additional of 290,000 shares
(approximately 290,000 shares at $1.00 per share).
</TABLE>
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
The Registrant filed the notice required by Rule 24f-2 for its most recent
fiscal year on or about May 31, 1995.
<PAGE> 2
JOHN HANCOCK CURRENT INTEREST
CROSS REFERENCE SHEET
<TABLE>
Cross Reference Sheet
---------------------
Pursuant to Rule 495(a) under the Securities Act of 1933
<CAPTION>
ITEM NUMBER FORM N-1A, PROSPECTUS CAPTION STATEMENT OF ADDITIONAL
PART A INFORMATION CAPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
1 Front Cover Page *
2 Expense Information; The *
Fund's Expenses; Share Price
3 The Fund's Financial *
Highlights; Performance
4 Investment Objectives and *
Policies; Organization and
Management of the Fund
5 Organization and Management *
of the Fund; The Fund's
Expenses; Back Cover Page
6 Organization and Management *
of the Fund; Dividends and
Taxes; How to Buy Shares; How
to Redeem Shares; Additional
Services and Programs
7 How to Buy Shares; Shares *
Price; Additional Services
and Programs; Alternative
Purchase Arrangements; The
Fund's Expenses; Back Cover
Page
8 How to Redeem Shares *
9 Not Applicable *
10 * Front Cover Page
11 * Table of Contents
12 * Organization of the Fund
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
13 * Investment Objectives
and Policies; Certain
Investment Practices;
Investment Restrictions
14 * Those Responsible for
Management
15 * Those Responsible for
Management
16 * Investment Advisory and
Other Services;
Distribution Contract;
Transfer Agent Services;
Custody of Portfolio;
Independent Auditors
17 * Brokerage Allocation
18 * Description of Fund's
Shares
19 * Net Asset Value;
Additional Services and
Programs
20 * Tax Status
21 * Distribution Contract
22 * Calculation of
Performance
23 * Financial Statements
</TABLE>
<PAGE> 4
JOHN HANCOCK
U.S. GOVERNMENT
CASH RESERVE
PROSPECTUS
OCTOBER 1, 1995
<TABLE>
- ---------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Expense Information................................................................... 2
The Fund's Financial Highlights....................................................... 3
Investment Objective and Policies..................................................... 4
Organization and Management of the Fund............................................... 5
The Fund's Expenses................................................................... 5
Dividends and Taxes................................................................... 6
How to Buy Shares..................................................................... 7
Share Price........................................................................... 8
How to Redeem Shares.................................................................. 9
Additional Services and Programs...................................................... 11
Investments, Techniques and Risk Factors.............................................. 13
</TABLE>
This Prospectus sets forth the information about John Hancock U.S. Government
Cash Reserve (the "Fund"), a diversified series of John Hancock Current Interest
(the "Trust"), that you should know before investing. Please read and retain it
for future reference.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Additional information about the Fund and the Trust has been filed with the
Securities and Exchange Commission (the "SEC"). You can obtain a copy of the
Fund's Statement of Additional Information, dated October 1, 1995 and
incorporated by reference into this Prospectus, free of charge by writing or
telephoning: John Hancock Investor Services Corporation, P.O. Box 9116, Boston,
Massachusetts 02205-9116, 1-800-225-5291 (1-800-554-6713 TDD).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 5
<TABLE>
EXPENSE INFORMATION
The purpose of the following information is to help you to understand the
various fees and expenses you will bear, directly or indirectly, when you
purchase Fund shares. The operating expenses included in the table and
hypothetical example below are based on fees and expenses for the Fund's fiscal
year ended May 31, 1995 adjusted to reflect certain current expenses. Actual
fees and expenses of Fund shares in the future may be greater or less than those
indicated.
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of offering price)..................................... None
Maximum sales charge imposed on reinvested dividends.............................................................. None
Maximum deferred sales charge..................................................................................... None
Redemption fee+................................................................................................... None
Exchange fee...................................................................................................... None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fee (after expense limitation)......................................................................... 0.12%
12b-1 fee (net of limitation)..................................................................................... 0.00%
Other expenses*................................................................................................... 0.23%
Total Fund operating expenses**................................................................................... 0.35%
<FN>
* Other Expenses include transfer agent, legal, audit, custody and other
expenses.
** Total Fund operating expenses in the table reflect voluntary and temporary
limitations by the Fund's investment adviser and distributor. Without such
limitations, the management fee, 12b-1 fee and total fund operating expenses
of the Fund would have been estimated as 0.50%, 0.15% and 0.88%,
respectively.
+ Redemption by wire fee (currently $4.00) not included.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- -------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses for the indicated period of years on
a hypothetical $1,000 investment, assuming 5% annual return............ $ 4 $ 11 $ 20 $44
(This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.)
The management and 12b-1 fees referred to above are more fully explained in
this Prospectus under the caption "The Fund's Expenses" and in the Statement of
Additional Information under the captions "Investment Advisory and Other
Services" and "Distribution Contract."
</TABLE>
2
<PAGE> 6
<TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS
The information in the following table of financial highlights for each of the
ten years in the period ended May 31, 1995 has been audited by Ernst & Young
LLP, the Fund's independent auditors, whose unqualified report is included in
the Statement of Additional Information. Further information about the
performance of the Fund is contained in the Fund's Annual and Semi-Annual
Reports to shareholders which may be obtained free of charge by writing or
telephoning John Hancock Investor Services Corporation ("Investor Services"), at
the address or telephone number listed on the front page of this Prospectus.
Selected data for each share outstanding throughout each period is as follows:
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income.... 0.05 0.03 0.03 0.05 0.07 0.08 0.08 0.05 0.05 0.07
Less Distributions:
Dividends from net
investment income...... (0.05) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.05) (0.05) (0.07)
------- ------- -------- -------- -------- -------- ------- ------- ------- -------
Net asset value, end of
period................. 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======== ======== ======== ======== ======= ======= ======= =======
Total investment return
at net
asset value............ 5.07% 3.04% 3.25% 4.95% 7.42% 8.66% 8.02% 5.50% 5.25% 7.03%
Total adjusted investment
return at net asset
value(a)............... 4.69% 2.74% 2.93% 4.62% 7.11% 8.35% 7.78% 5.50% 5.25% 7.03%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period
(000's omitted)........ $29,131 $94,408 $123,106 $109,358 $200,092 $164,509 $69,346 $48,774 $73,048 $85,790
Ratio of expenses to
average
net assets............. 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.55% 1.05% 0.91% 0.89%
Ratio of adjusted
expenses to average net
assets(a).............. 0.73% 0.65% 0.67% 0.68% 0.66% 0.66% 0.79% 1.05% 0.91% 0.89%
Ratio of net investment
income to average net
assets................. 4.79% 2.96% 3.19% 4.86% 7.21% 8.27% 8.29% 5.42% 5.13% 6.66%
Ratio of adjusted net
investment income to
average net
assets(a).............. 4.41% 2.66% 2.87% 4.53% 6.90% 7.96% 8.05% 5.42% 5.13% 6.66%
</TABLE>
YIELD INFORMATION
For the seven days ended May 31, 1995, the Fund's annualized yield and
effective yield were 5.81% and 5.98% respectively (with expense limitations),
and 5.43% and 5.60% (without expense limitations). On May 31, 1995, the Fund's
average portfolio maturity was 49 days.
Current information on the Fund's annualized yield during a recent seven-day
period may be obtained by calling the Easi-Line at 1-800-338-8080 or a customer
service representative, 1-800-225-5291.
For information on how the Fund calculates its annualized yield see the
Statement of Additional Information.
(a) Net of any fee reduction.
3
<PAGE> 7
INVESTMENT OBJECTIVE AND POLICIES
The Fund invests only in U.S. Government securities maturing within 13 months
from the date of purchase and repurchase agreements with respect to these
securities with an average portfolio maturity of 90 days or less. The Fund seeks
to obtain maximum current income from these short-term investments to the extent
consistent with maintaining liquidity and preserving capital. For a description
of the types of U.S. Government securities and other money market instruments in
which the Fund may invest, see "Investments, Techniques and Risk Factors."
- -------------------------------------------------------------------------------
THE FUND SEEKS TO OBTAIN MAXIMUM CURRENT
INCOME CONSISTENT WITH MAINTAINING
LIQUIDITY AND PRESERVING CAPITAL.
- -------------------------------------------------------------------------------
Securities in which the Fund invests may not earn as high a level of current
income as longer-term or lower quality securities, which generally have less
liquidity, greater market risk and more fluctuation in market value.
The return on an investment in the Fund will depend on the interest earned by
the Fund's investments after expenses of the Fund are deducted. The return is
paid to shareholders in the form of dividends.
The Fund seeks to maintain a net asset value of $1.00 per share at all times.
There can be no assurance that the Fund will be able to maintain a constant
$1.00 share price. However, because the Fund purchases high quality U.S.
Government securities with short maturities, this policy helps to minimize any
price decreases or increases that could result from changes in interest rates or
an issuer's creditworthiness.
- -------------------------------------------------------------------------------
THE FUND SEEKS TO MAINTAIN A CONSTANT
$1.00 SHARE PRICE.
- -------------------------------------------------------------------------------
The Fund has adopted certain investment restrictions which are enumerated in
detail in the Statement of Additional Information, where they are classified as
fundamental or nonfundamental. Those restrictions designated as fundamental may
not be changed without shareholder approval. The Fund's investment objective,
policies and restrictions (including a restriction on borrowing money and
pledging assets), except as noted, are fundamental and may not be changed
without the approval of the Fund's shareholders. Notwithstanding the Fund's
fundamental investment restriction prohibiting investments in other investment
companies, the Fund may, pursuant to an order granted by the SEC, invest in
other investment companies in connection with a deferred compensation plan for
the noninterested trustees of the John Hancock funds. There can be no assurance
that the Fund will achieve its investment objective.
- -------------------------------------------------------------------------------
THE FUND FOLLOWS CERTAIN POLICIES WHICH
MAY HELP TO REDUCE INVESTMENT RISK.
- -------------------------------------------------------------------------------
RISK FACTORS. The Fund is intended for investors, both individual and
institutional, who seek income at current money market rates at a relatively low
cost while participating in the convenience, liquidity and higher yields offered
by large denomination instruments available to investors such as the Fund.
However, you should be aware that a Fund investment is not without risk. By
itself, the Fund does not constitute a complete or balanced investment plan. It
is important to note that unlike the U.S. Government securities in which the
Fund may invest, shares of the Fund are neither insured nor guaranteed. For
additional information about risks associated with an investment in the Fund,
see "Investments, Techniques and Risk Factors."
4
<PAGE> 8
The primary consideration in choosing brokerage firms to carry out the Fund's
transactions is execution at the most favorable prices, taking into account the
broker's professional ability and quality of service. Consideration may also be
given to the broker's sales of Fund shares. Pursuant to procedures determined by
the Trustees, John Hancock Advisers, Inc. (the "Adviser") may place securities
transactions with brokers affiliated with the Adviser. The brokers include
Tucker Anthony Incorporated, Sutro & Company, Inc. and John Hancock
Distributors, Inc., which are indirectly owned by the John Hancock Mutual Life
Insurance Company (the "Life Company"), which in turn indirectly owns the
Adviser.
- -------------------------------------------------------------------------------
BROKERS ARE CHOSEN ON BEST PRICE AND
EXECUTION.
- -------------------------------------------------------------------------------
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund is organized as a separate, diversified portfolio of the Trust, which
is an open-end management investment company incorporated as a Texas corporation
in 1974 and reorganized as a Massachusetts business trust in 1991. The Trust
reserves the right to create and issue a number of series of shares, or funds or
classes thereof, which are separately managed and have different investment
objectives. The Trust is not required to and does not intend to hold annual
meetings of shareholders, although special meetings may be held for such
purposes as electing or removing Trustees, changing fundamental policies or
approving a management contract. The Fund, under certain circumstances, will
assist in shareholder communications with other shareholders.
- -------------------------------------------------------------------------------
THE TRUSTEES ELECT OFFICERS AND RETAIN THE
INVESTMENT ADVISER WHO IS RESPONSIBLE FOR
THE DAY-TO-DAY OPERATIONS OF THE FUND,
SUBJECT TO THE TRUSTEES' POLICIES AND
SUPERVISION.
- -------------------------------------------------------------------------------
The Adviser was organized in 1968 and is a wholly owned indirect subsidiary of
the Life Company, a financial services company. The Adviser provides the Fund,
and other investment companies in the John Hancock group of funds, with
investment research and portfolio management services. John Hancock Funds, Inc.
("John Hancock Funds") distributes shares for all of the John Hancock mutual
funds through brokers with agreements with John Hancock Funds ("Selling
Brokers"). Certain Fund officers are also officers of the Adviser and John
Hancock Funds.
- -------------------------------------------------------------------------------
JOHN HANCOCK ADVISERS, INC. ADVISES
INVESTMENT COMPANIES HAVING A TOTAL ASSET
VALUE OF MORE THAN $13 BILLION.
- -------------------------------------------------------------------------------
To avoid any conflict with portfolio trades for the Fund, the Adviser and the
Fund have adopted extensive restrictions on personal securities trading by
personnel of the Adviser and its affiliates. Some of these restrictions are:
preclearance for all personal trades and a ban on the purchase of initial public
offerings, as well as contributions to specified charities of profits on
securities held for less than 91 days. These restrictions are a continuation of
the basic principle that the interests of the Fund and its shareholders come
first.
<TABLE>
THE FUND'S EXPENSES
For managing its investment and business affairs, the Fund pays a monthly fee to
the Adviser which is based on a stated percentage of the Fund's average daily
net assets as follows:
<CAPTION>
ANNUAL
NET ASSET VALUE RATE
--------------- ------
<S> <C>
First $500 million....................................................... 0.500%
Next $250 million........................................................ 0.425%
Next $250 million........................................................ 0.375%
Next $500 million........................................................ 0.350%
Next $500 million........................................................ 0.325%
Next $500 million........................................................ 0.300%
Amount Over $2.5 billion................................................. 0.275%
</TABLE>
5
<PAGE> 9
For the fiscal year ended May 31, 1995, the Fund paid an advisory fee of 0.12%
of the Fund's average daily net assets to the Fund's former and current
investment adviser. The Adviser has voluntarily and temporarily agreed to
continue to limit the Fund's operating expenses and not to impose its management
fee to the extent necessary to limit the total of the Fund's management fees and
operating expenses to 0.35% of the average net assets attributable to Fund
shares.
The shareholders have adopted a distribution plan (a "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. Under the Plan, the Fund may pay
distribution and service fees at an aggregate annual rate of up to 0.15% of the
Fund's average daily net assets. Payment of these fees has been indefinitely
suspended.
Information on the Fund's total expenses is in the Financial Highlights section
of this Prospectus.
DIVIDENDS AND TAXES
DIVIDENDS. The Fund generally declares dividends daily and distributes
dividends monthly, representing all or substantially all of its net investment
income. The Fund will distribute net realized capital gains, if any, annually.
- -------------------------------------------------------------------------------
THE FUND GENERALLY DECLARES DIVIDENDS
DAILY AND DISTRIBUTES THEM MONTHLY.
- -------------------------------------------------------------------------------
Purchase orders which are received together with Federal funds by wire before
12:00 noon New York time will receive the dividend declared that day and other
purchase orders, including any order with payment other than by Federal funds,
will begin receiving dividends the following business day. Redemption orders
received prior to 12:00 noon New York time will not receive that day's
dividends.
Dividends are reinvested in additional shares of the Fund unless you elect the
option to receive them in cash. If you elect the cash option and the U.S. Postal
Service cannot deliver your checks, your election will be converted to the
reinvestment option.
TAXATION. Dividends from the Fund's net investment income and net short-term
capital gains are taxable to you for Federal income tax purposes as ordinary
income. Dividends from the Fund's net long-term capital gains, if any, are
taxable as long-term capital gain. The Fund does not anticipate that it will
generally realize any long-term capital gains. Dividends are taxable, whether
received in cash or reinvested in additional shares. Certain dividends may be
paid by the Fund in January of a given year but may be treated as if you
received them the previous December. The Fund will send you a statement by
January 31 showing the federal tax status of the dividends you received for the
prior year.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund will not be
subject to Federal income tax on any net investment income or net realized
capital gains distributed to its shareholders within the time period prescribed
by the Code.
On the account application, you must certify that the social security or other
taxpayer identification number you provide is your correct number and that you
are not subject to backup withholding of Federal income tax. If you do not
provide this information or are otherwise subject to this withholding, the Fund
may be required to withhold 31% of your dividends.
6
<PAGE> 10
In addition to Federal taxes, you may be subject to state and local or foreign
taxes with respect to your investment in and distributions from the Fund. A
state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the Fund's distributions are
derived from interest on (or, in the case of intangibles taxes, the value of its
assets is attributable to) certain U.S. Government obligations, provided in some
states that certain thresholds for holdings of such obligations and/or reporting
requirements are satisfied. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax rules not described herein. You should consult your
tax adviser for specific advice.
<TABLE>
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The minimum initial investment is $20,000 ($250 for group investments and
retirement plans). Complete the Account Application attached to this Prospectus.
- -------------------------------------------------------------------------------
OPENING AN ACCOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
BY CHECK 1. Make your check payable to John Hancock Investor Services
Corporation, P.O. Box 9115, Boston, MA, 02205-9115.
2. Deliver the completed application and check to your registered
representative or Selling Broker or mail it directly to
Investor Services.
- ---------------------------------------------------------------------------------
BY WIRE 1. Obtain an account number by contacting your registered
representative or Selling Broker, or by calling 1-800-225-5291.
2. Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock U.S. Government Cash Reserve
Your Account Number
Name(s) under which account is registered
3. Deliver the completed application to your registered
representative, Selling Broker or mail it directly to Investor
Services.
4. SAME DAY. To receive the dividend declared on the same day you
wire funds, you must telephone your order to Investor Services
toll free 1-800-225-5291 by 12:00 noon New York time that day.
See "Dividends and Taxation."
- -------------------------------------------------------------------------------
BUYING ADDITIONAL SHARES
- ---------------------------------------------------------------------------------
MONTHLY 1. Complete the "Automatic Investing" and "Bank Information"
AUTOMATIC sections on the Account Privileges Application, designating a
ACCUMULATION bank account from which funds may be drawn.
PROGRAM 2. The amount you elect to invest will be automatically withdrawn
(MAAP) from your bank or credit union account.
- ---------------------------------------------------------------------------------
BY TELEPHONE 1. Complete the "Invest-By-Phone" and "Bank Information" sections
on the Account Privileges Application, designating a bank
account from which your funds may be drawn. Note that, in order
to invest by phone, your account must be in a bank or credit
union that is a member of the Automated Clearing House system
(ACH).
2. After your authorization form has been processed, you may
purchase additional shares by calling Investor Services
toll-free 1-800-225-5291.
3. Give the Investor Services representative the name(s) in which
your account is registered, the Fund name, your account number,
and the amount you wish to invest.
4. Your investment normally will be credited to your account the
business day following your phone request.
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE> 11
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------
BY CHECK 1. Either complete the detachable stub included on your account
statement or include a note with your investment listing the
name of the Fund, your account number and the name(s) in which
the account is registered.
2. Make your check payable to John Hancock Investor Services
Corporation.
3. Mail the account information and check to:
John Hancock Investor Services Corporation
P.O. Box 9115
Boston, MA 02205-9115
or deliver it to your registered representative or Selling
Broker.
- ---------------------------------------------------------------------------------
BY WIRE Instruct your bank to wire funds to:
First Signature Bank & Trust
John Hancock Deposit Account No. 900000260
ABA Routing No. 211475000
For credit to: John Hancock U.S. Government Cash Reserve
Your Account Number
Name(s) under which account is registered
SAME DAY. To receive the dividend declared on the same day you wire
funds, you must telephone your order to Investor Services toll free
1-800-225-5291 by 12:00 noon New York time that day. See "Dividends
and Taxation."
- ---------------------------------------------------------------------------------
Other Requirements: All purchases must be made in U.S. dollars. Checks written on
foreign banks will delay purchases until U.S. funds are received, and a collection
charge may be imposed. Shares of the Fund are priced at the offering price based
on the net asset value computed after Investor Services receives notification of
the dollar equivalent from the Fund's custodian bank. Wire purchases normally take
two or more hours to complete and, to be accepted the same day, must be received
by 4:00 P.M., New York time. Your bank may charge a fee to wire funds. Telephone
transactions are recorded to verify information. Certificates are not issued.
- ---------------------------------------------------------------------------------
</TABLE>
You will receive a statement of your account after any transaction that affects
your share balance or registration (statements related to reinvestment of
dividends and automatic investment/withdrawal plans will be sent to you
quarterly). A tax information statement will be mailed to you by January 31 of
each year.
- -------------------------------------------------------------------------------
YOU WILL RECEIVE ACCOUNT STATEMENTS THAT
YOU SHOULD KEEP TO HELP WITH YOUR PERSONAL
RECORDKEEPING.
- -------------------------------------------------------------------------------
SHARE PRICE
The net asset value per share ("NAV") is the value of one share. The NAV is
calculated by dividing the Fund's net assets by the number of outstanding shares
of the Fund. Securities in the Fund's portfolio are valued at amortized cost
which the Board has determined approximates market value. Under the amortized
cost pricing method, a portfolio investment is valued at its cost and thereafter
any discount or premium is amortized to maturity, regardless of the impact of
fluctuating interest rates on the market value of the investment. Amortized cost
pricing facilitates the maintenance of a $1.00 constant net asset value per
share, but, of course, this cannot be guaranteed.
- -------------------------------------------------------------------------------
THE PRICE OF YOUR SHARES IS THEIR NET
ASSET VALUE, WHICH WILL NORMALLY BE
CONSTANT AT $1.00.
- -------------------------------------------------------------------------------
The NAV is calculated twice each day on which the New York Stock Exchange is
open (the "Exchange") (i.e., at 12:00 noon and as of the close of regular
trading on the Exchange, generally at 4:00 P.M., New York time) on each day that
the Exchange is open.
Shares of the Fund are sold at the NAV computed after your investment request is
received in good order by John Hancock Funds, which will normally be constant at
$1.00 per share. There is no sales charge. If you buy shares of the Fund through
a
8
<PAGE> 12
Selling Broker, the Selling Broker must receive your investment before the close
of regular trading on the Exchange and transmit it to John Hancock Funds before
its close of business to receive that day's price.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request is
received in good order by Investor Services. The Fund may hold payment until it
is reasonably satisfied that investments recently made by check or
Invest-by-Phone have been collected (which may take up to 10 calendar days).
- -------------------------------------------------------------------------------
TO ASSURE ACCEPTANCE OF YOUR REDEMPTION
REQUEST, PLEASE FOLLOW THESE PROCEDURES.
- -------------------------------------------------------------------------------
Once your shares are redeemed, the Fund generally sends you payment on the next
business day. Under unusual circumstances, the Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities laws.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY CHECK You may elect the checkwriting privilege which allows you
to write checks in amounts from a minimum of $100. Checks
may not be written against shares in your account which
have been purchased within the last 10 days, except for
shares purchased by wire transfer (which are immediately
available).
- ---------------------------------------------------------------------------------
BY TELEPHONE All Fund shareholders are automatically eligible for the
telephone redemption privilege. Call 1-800-225-5291, from
8:00 A.M. to 4:00 P.M. (New York time), Monday through
Friday, excluding days on which the Exchange is closed.
Investor Services employs the following procedures to
confirm that instructions received by telephone are
genuine. Your name, the account number, taxpayer
identification number applicable to the account and other
relevant information may be requested. In addition,
telephone instructions are recorded.
You may redeem up to $100,000 by telephone, but the address
on the account must not have changed for the last thirty
days. A check will be mailed to the exact name(s) shown on
the account.
If reasonable procedures, such as those described above,
are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent telephone instructions. In
all other cases, neither the Fund nor Investor Services
will be liable for any loss or expense for acting upon
telephone instructions made in accordance with the
telephone transaction procedures mentioned above.
Telephone redemption is not available for IRAs or other
tax-qualified retirement plans or shares of the Fund that
are in certificated form.
During periods of extreme economic conditions or market
changes, telephone requests may be difficult to implement
due to a large volume of calls. During these times, you
should consider placing redemption requests in writing or
use EASI-Line. EASI-Line's telephone number is
1-800-338-8080.
- ---------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------
BY WIRE If you have a telephone redemption form on file with the
Fund, redemption proceeds of $1,000 or more can be wired to
your designated bank account, and a fee (currently $4.00)
will be deducted.
SAME DAY. To receive redemption proceeds the same day, you
must telephone Investor Services at 1-800-225-5291 before
12:00 noon New York time. Dividends will not be received
for that day.
NEXT DAY. If same day wiring is not so requested,
redemption proceeds will be wired on the next business day.
You may also use electronic funds transfer to your assigned
bank account, and the funds are usually collectible after
two business days. Your bank may or may not charge a fee
for this service. Redemptions of less than $1,000 will be
sent by check or electronic funds transfer.
This feature may be elected by completing the "Telephone
Redemption" section on the Account Privileges Application
included with this Prospectus.
- ---------------------------------------------------------------------------------
IN WRITING Send a stock power or "letter of instruction" specifying
the name of the Fund, the dollar amount or the number of
shares to be redeemed, your name, your account number and
the additional requirements listed below that apply to your
particular account.
- ---------------------------------------------------------------------------------
TYPE OF REGISTRATION REQUIREMENTS
---------------------------------- --------------------------------------------
Individual, Joint Tenants, Sole A letter of instruction signed (with titles
Proprietorship, Custodial where applicable) by all persons authorized
(Uniform Gifts or Transfer to to sign for the account, exactly as it is
Minors Act), General Partners registered with the signature(s) guaran-
teed.
Corporation, Association A letter of instruction and a corporate
resolution, signed by person(s) authorized
to act on the account with the signature(s)
guaranteed.
Trusts A letter of instruction signed by the
trustee(s) with the signature(s) guaranteed.
(If the trustee's name is not registered on
your account, also provide a copy of the
trust document, certified within the last 60
days.)
If you do not fall into any of these registration categories, please call
1-800-225-5291 for further instructions.
- ---------------------------------------------------------------------------------
A signature guarantee is a widely accepted way to protect you and the Fund by
verifying the signature on your request. It may not be provided by a notary
public. If the net asset value of the shares redeemed is $100,000 or less, John
Hancock Funds may guarantee the signature. The following institutions may
provide you with a signature guarantee, provided that the institution meets
credit standards established by Investor Services: (i) a bank; (ii) a securities
broker or dealer, including a government or municipal securities broker or
dealer, that is a member of a clearing corporation or meets certain net capital
requirements; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency.
</TABLE>
- -------------------------------------------------------------------------------
WHO MAY GUARANTEE YOUR SIGNATURE.
- -------------------------------------------------------------------------------
10
<PAGE> 14
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT REDEMPTIONS.
- --------------------------------------------------------------------------------
THROUGH YOUR BROKER. Your broker may be able to initiate the redemption.
Contact your broker for instructions.
- --------------------------------------------------------------------------------
If you have certificates for your shares, you must submit them with your
stock power or a letter of instructions. You may not redeem certificated
shares by telephone.
Due to the proportionately high cost of maintaining small accounts, the Fund
reserves the right to redeem at net asset value all shares in an account
which holds less than $500 (except accounts under retirement plans) and to
mail the proceeds to the shareholder, or the transfer agent may impose an
annual fee of $10.00. No account will be involuntarily redeemed or
additional fee imposed, if the value of the account is in excess of the
Fund's minimum initial investment or if the value of the account falls below
the required minimum as a result of market action.
Shareholders will be notified before these redemptions are to be made or
this fee is imposed, and will have 30 days to purchase additional shares to
bring their account balance up to the required minimum. Unless the number of
shares acquired by further purchases and dividend reinvestments, if any,
exceeds the number of shares redeemed, repeated redemptions from a smaller
account may eventually trigger this policy.
- --------------------------------------------------------------------------------
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE
If your investment objective changes, or if you wish to achieve further
diversification, John Hancock offers other funds with a wide range of investment
goals. Contact your registered representative or Selling Broker and request a
prospectus for the John Hancock funds that interest you. Please read the
prospectus carefully before exchanging your shares. You can exchange shares of
the Fund for shares of another John Hancock fund. For this purpose, John Hancock
funds with only one class of shares will be treated as Class A, whether or not
they have been so designated.
- -------------------------------------------------------------------------------
YOU MAY EXCHANGE SHARES OF THE FUND FOR
SHARES OF ANOTHER JOHN HANCOCK FUND.
- -------------------------------------------------------------------------------
Exchanges between funds that carry a front end sales charge will be subject to
the sales charge described in the other fund's Prospectus (generally, 4.5% or
5.0%). Shares of the Fund acquired by exchange of shares of another fund on
which a front end sales charge was previously paid are exchanged at net asset
value.
The Fund reserves the right to require you to keep previously exchanged shares
(and reinvested dividends) in the Fund for 90 days before you are permitted to
execute a new exchange. The Fund may also terminate or alter the terms of the
exchange privilege, upon 60 days' notice to shareholders.
When you make an exchange, your account registration in both the existing and
new account must be identical. The exchange privilege is available only in
states where the exchange can be made legally.
Under exchange agreements with John Hancock Funds, certain dealers, brokers and
investment advisers may exchange their clients' Fund shares, subject to the
terms of those agreements and John Hancock Funds' right to reject or suspend
those exchanges at any time. Because of the restrictions and procedures under
those agreements, the exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders directly,
as described above.
11
<PAGE> 15
Because Fund performance and shareholders can be hurt by excessive trading, the
Fund reserves the right to terminate the exchange privilege for any person or
group that, in John Hancock Funds' judgment, is involved in a pattern of
exchanges that coincide with a "market timing" strategy that may disrupt the
Fund's ability to invest effectively according to its investment objective and
policies, or might otherwise affect the Fund and its shareholders adversely. The
Fund may also temporarily or permanently terminate the exchange privilege for
any person who makes seven or more exchanges out of the Fund per calendar year.
Accounts under common control or ownership will be aggregated for this purpose.
Although the Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time.
BY TELEPHONE
1. When you complete the application for your initial purchase of Fund shares,
you automatically authorize exchanges by telephone unless you check the box
indicating that you do not wish to authorize telephone exchanges.
2. Call 1-800-225-5291. Have the account number of your current fund and the
exact name in which it is registered available to give to the telephone
representative.
3. Investor Services employs the following procedures to confirm that
instructions received by telephone are genuine. Your name, the account
number, taxpayer identification number applicable to the account and other
relevant information may be requested. In addition, telephone instructions
are recorded.
IN WRITING
1. In a letter, request an exchange and list the following:
-- the name of the Fund whose shares you currently own
-- your account number
-- the name(s) in which the account is registered
-- the name of the fund in which you wish your exchange to be invested
-- the number of shares, all shares or dollar amount you wish to exchange
Sign your request exactly as the account is registered.
2. Mail the request and information to:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
SYSTEMATIC WITHDRAWAL PLAN
1. You can elect the Systematic Withdrawal Plan at any time by completing the
Account Privileges Application that is attached to this Prospectus. You can
also obtain this application by calling your registered representative or by
calling 1-800-225-5291.
2. To be eligible, you must have at least $5,000 in your account.
3. Payments from your account can be made monthly, quarterly, semi-annually or
annually or on a selected monthly basis to yourself or any other designated
payee.
- -------------------------------------------------------------------------------
YOU CAN PAY ROUTINE BILLS FROM YOUR
ACCOUNT, OR MAKE PERIODIC DISBURSEMENTS OF
FUNDS FROM YOUR RETIREMENT ACCOUNT TO
COMPLY WITH IRS REGULATIONS.
- -------------------------------------------------------------------------------
12
<PAGE> 16
4. There is no limit on the number of payees you may authorize, but all payments
must be made at the same time or intervals.
5. Redemptions will be discontinued if the U.S. Postal Service cannot deliver
your checks or if deposits to a bank account are returned for any reason.
MONTHLY AUTOMATIC ACCUMULATION PROGRAM (MAAP)
1. You can authorize an investment to be automatically withdrawn each month from
your bank for investment in Fund shares under the "Automatic Investing" and
"Bank Information" sections of the Account Privileges Application.
- -------------------------------------------------------------------------------
YOU CAN MAKE AUTOMATIC INVESTMENTS AND
SIMPLIFY YOUR INVESTING.
- -------------------------------------------------------------------------------
2. You can also authorize automatic investment through payroll deduction by
completing the "Direct Deposit Investing" section of the Account Privileges
Application.
3. You can terminate your Monthly Automatic Accumulation Program plan at any
time.
RETIREMENT PLANS
1. You may use the Fund as a funding medium for various types of qualified
retirement plans, including Individual Retirement Accounts, Keogh Plans (H.R.
10), Pension and Profit Sharing Plans (including 401(k) Plans), Tax-Sheltered
Annuity Retirement Plans (403(b) Plans) and 457 Plans.
2. The initial investment minimum or aggregate minimum for any of these plans is
$250. However, accounts being established as Group IRA, SEP, SARSEP, TSA,
401(k) and 457 Plans will be accepted without an initial minimum investment.
INVESTMENTS, TECHNIQUES AND RISK FACTORS
GOVERNMENT SECURITIES. U.S. Government securities are issued or guaranteed as
to principal and interest by the U.S. Government or one of its agencies or
instrumentalities. Treasury bills, bonds and notes and certain obligations of
government agencies and instrumentalities, such as Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury (the "Treasury"). Other obligations such as
securities of the Federal Home Loan Bank are supported by the right of the
issuer to borrow from the Treasury; while others, such as bonds issued by the
Federal National Mortgage Association, which is a private corporation, are
supported only by the credit of the issuing instrumentality. Obligations not
backed by the full faith and credit of the U.S. Government may be secured, in
whole or in part, by a line of credit with the Treasury or collateral consisting
of cash or other securities which are backed by the full faith and credit of the
U.S. Government. In the case of other obligations, the agency issuing or
guaranteeing the obligation must be looked to for ultimate repayment. Variable
Amount Demand Master Notes are obligations that permit the investment by the
Fund of fluctuating amounts as determined by the Fund at varying rates of
interest pursuant to direct arrangements between the
13
<PAGE> 17
Fund and the issuing government agency. Although callable on demand by the Fund,
these obligations are not marketable to third parties.
REPURCHASE AGREEMENTS. Repurchase agreements collateralized by U.S. Government
securities may be entered into with selected member banks of the Federal Reserve
System or U.S. securities dealers. In a repurchase agreement, the Fund buys a
security subject to the right and obligation to sell it back to the issuer at
the same price plus accrued interest. These transactions must be fully
collateralized at all times. The Fund may reinvest any cash collateral in
short-term highly liquid debt securities. However, these transactions may
involve some credit risk to the Fund if the other party should default on its
obligation and the Fund is delayed in or prevented from recovering the
collateral. The Fund will not enter into repurchase agreements of more than one
week's duration if more than 10% of its net assets would then be so
invested -- considering only the remaining days to maturity of existing
repurchase agreements. In addition, the securities underlying repurchase
agreements are not subject to the restrictions applicable to maturity of the
portfolio or its securities.
MONEY MARKET INSTRUMENTS. Because interest rates on money market instruments
fluctuate in response to economic factors, the rates on short-term investments
made by the Fund and the daily dividend paid to investors will vary, rising or
falling with short-term rates generally. All of these obligations in which the
Fund invests are guaranteed by the U.S. government or one of its agencies or
instrumentalities.
SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. Short-term trading may have the effect of
increasing portfolio turnover and may increase net short-term capital gains,
distributions from which would be taxable to shareholders as ordinary income.
The Fund does not intend to invest for the purpose of seeking short-term
profits. The Fund's portfolio securities may be changed, however, without regard
to the holding period of these securities (subject to certain tax restrictions),
when the Adviser deems that this action will help achieve the Fund's objective
given a change in an issuer's operations or changes in general market
conditions. The Fund's portfolio turnover rate is set forth in the table under
the caption "Financial Highlights."
14
<PAGE> 18
(NOTES)
<PAGE> 19
JOHN HANCOCK U.S. GOVERNMENT
CASH RESERVE
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services
Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
HOW TO OBTAIN INFORMATION
ABOUT THE FUND
For Service Information
For Telephone Exchange call 1-800-225-5291
For Investment-by-Phone
For Telephone Redemption
For TDD call 1-800-554-6713
4300P 10/95 [LOGO] Printed on Recycled Paper
JOHN HANCOCK
U.S. GOVERNMENT
CASH RESERVE
PROSPECTUS
OCTOBER 1, 1995
A MONEY MARKET FUND
SEEKING TO OBTAIN MAXIMUM
CURRENT INCOME CONSISTENT
WITH MAINTAINING LIQUIDITY
AND PRESERVING CAPITAL.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
TELEPHONE 1-800-225-5291
<PAGE> 20
JOHN HANCOCK U.S. GOVERNMENT CASH RESERVE
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 1, 1995
This Statement of Additional Information ("SAI") provides information about
John Hancock U.S. Government Cash Reserve (the "Fund"), a diversified series of
John Hancock Current Interest (the "Trust"), in addition to the information
that is contained in the Fund's Prospectus, dated October 1, 1995.
This SAI is not a prospectus. It should be read in conjunction with the
Prospectus, a copy of which can be obtained free of charge by writing or
telephoning:
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-5291
1-800-225-5291
<TABLE>
<CAPTION>
Statement of Cross
Additional Referenced
Information to Prospectus
Table of Contents
Page Page
---- ----
<S> <C> <C>
Organization of the Trust................ 2............ 5
Investment Objective and Policies........ 2............ 4
Certain Investment Practices............. 2............ 4
Investment Restrictions.................. 3............ 4
Those Responsible for Management......... 6............ 5
Investment Advisory and Other Services... 14............ 5
Distribution Contract.................... 18............ 6
Amortized Cost Method of Portfolio
Valuation........................... 20............ 8
Purchase of Shares....................... 21............ 7
Special Redemptions...................... 21............ 9
Additional Services and Programs......... 21............ 11
Description of the Fund's Shares......... 22............ 5
Tax Status............................... 24............ 6
Calculation of Performance............... 25............ 2
Brokerage Allocation..................... 27............ 4
Transfer Agent Services.................. 29 Back Cover
Custody of Portfolio..................... 29 Back Cover
Independent Auditors..................... 30 Back Cover
Financial Statements..................... 30............ 3
</TABLE>
<PAGE> 21
ORGANIZATION OF THE TRUST
John Hancock Current Interest (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1991. The Trust currently has only one
series designated as: John Hancock U.S. Government Cash Reserve (the "Fund").
Prior to December 22, 1994, the Fund was called Transamerica U.S. Government
Cash Reserve.
The Fund is managed by John Hancock Advisers, Inc. (the "Adviser"), a
wholly-owned indirect subsidiary of John Hancock Mutual Life Insurance Company
(the "Life Company") chartered in 1862 with national headquarters at John
Hancock Place, Boston, Massachusetts. John Hancock Funds, Inc. ("John Hancock
Funds") acts as principal distributor of the shares of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
See "Investment Objective and Policies" in the Prospectus. There can be
no assurance that the Fund's investment objective will be realized.
As discussed under "Investment Objective and Policies" and "Investments,
Techniques and Risk Factors" in the Prospectus, the Fund may invest only in
securities issued or guaranteed by the U.S. Government. Such securities differ
only in their interest rates, maturities and dates of issuance. Treasury bills
have a maturity of one year or less. Treasury notes have maturities of 1-10
years and Treasury bonds have maturities of greater than 10 years at the date
of issuance. Investments in Treasury bonds or treasury notes will be limited
to those having remaining maturities of less than 13 months.
CERTAIN INVESTMENT PRACTICES
GOVERNMENT SECURITIES. Certain U.S. Government securities, including U.S.
Treasury bills, notes and bonds, and Government National Mortgage Association
certificates ("Ginnie Maes"), are supported by the full faith and credit of the
United States. Certain other U.S. Government securities, issued or guaranteed
by Federal agencies or government sponsored enterprises, are not supported by
the full faith and credit of the United States, but may be supported by the
right of the issuer to borrow from the U.S. Treasury. These securities include
obligations of the Federal Home Loan Mortgage Corporation ("Freddie Macs"), and
obligations supported by the credit of the instrumentality, such as Federal
National Mortgage Association Bonds ("Fannie Maes"). No assurance can be given
that the U.S. Government will provide financial support to such Federal
agencies, authorities, instrumentalities and government sponsored enterprises
in the future.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
collateralized by U.S. Government securities. A repurchase agreement is a
contract under which the Fund would acquire a security for a relatively short
period (generally not more than 7 days) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). The Fund will enter into
repurchase agreements only with member banks of the Federal Reserve System and
with securities dealers. The Adviser will continuously monitor the
creditworthiness of the parties with whom the Fund enters into repurchase
agreements. The Fund has established a procedure providing that the securities
serving as collateral for each repurchase agreement must be delivered to the
Fund's custodian either physically or in book-entry form and that the
collateral must be marked to market daily to
2
<PAGE> 22
ensure that each repurchase agreement is fully collateralized at all times. In
the event of bankruptcy or other default by a seller of a repurchase
agreement, the Fund could experience delays in liquidating the underlying
securities and could experience losses, including the possible decline in the
value of the underlying securities during the period in which the Fund seeks to
enforce its rights thereto, possible subnormal levels of income and lack of
access to income during this period, and the expense of enforcing its rights.
INVESTMENT RESTRICTIONS
The Fund has adopted certain fundamental investment restrictions upon its
investments as set forth below which may not be changed without the approval of
the holders of a majority of the outstanding shares of the Fund. A majority
for this purpose means: (a) more than 50% of the outstanding shares of the Fund
or (b) 67% or more of the shares represented at a meeting where more than 50%
of the outstanding shares of the Fund are represented, whichever is less.
Under these restrictions, the Fund may not:
1. Purchase common stocks, preferred stocks, warrants, other equity
securities, private placements, corporate bonds or debentures maturing beyond
one year from the date of purchase, state bonds, or industrial revenue bonds,
except through the purchase of debt obligations referred to under "Investment
Objective and Policies" in the Prospectus.
2. Sell securities short;
3. Write or purchase put or call options;
4. Underwrite the securities of another issuer, purchase securities
subject to restrictions on disposition under the Securities Act of 1933 (so-
called "restricted securities") or purchase securities which are not readily
marketable;
5. Purchase or sell real estate, real estate investment trust
securities, commodities, or oil and gas interests;
6. Make loans to other persons, except the Fund may enter into
repurchase agreements as provided in the investment practices. The purchase of
an issue of publicly distributed bonds, debentures or other securities, whether
or not the purchase was made upon the original issuance of securities, is not
considered to be the making of a loan;
7. Purchase any securities which would cause more than 25% of the value
of the Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that this limitation does not apply
to investments in bank obligations of domestic branches of U.S. banks including
deposits with and obligation of savings institutions, obligations of foreign
branches of domestic banks when the Adviser believes that the domestic parent
will be ultimately responsible for payment if the issuing bank should fail to
do so, U.S. Treasury Bills or other obligations issued or guaranteed by the
U.S. Government, or one of its agencies or instrumentalities;
8. Invest in companies for the purpose of exercising control;
9. Invest in securities of other investment companies, except pursuant
to a merger, consolidation or acquisition of assets;
3
<PAGE> 23
10. Invest more than 5% of the value of the Fund's assets in the
securities of any one issuer (other than securities issued or guaranteed as to
principal and interest by the U.S. Government, or one of its agencies or
instrumentalities).
11. Borrow money except from banks for temporary or emergency purposes
(but not to purchase investment securities) in an amount up to 1/3 of the value
of the Fund's total assets. The borrowing restriction set forth above does not
prohibit the use of reverse repurchase agreements, in an amount (including any
borrowings) not to exceed 33 1/3% of net assets; or
12. Pledge its assets except in amounts not in excess of the lesser of
the dollar amount borrowed or 15% of the value of the Fund's total assets at
the time of borrowing and only to secure borrowings for temporary or emergency
purposes.
In order to comply with certain state regulatory policies, the Fund will
not, as a matter of non-fundamental policy, pledge, mortgage or hypothecate its
assets in amounts that would exceed 10% of its net assets at market value. The
Fund's Board of Trustees has approved the following non-fundamental investment
policy pursuant to an order of the SEC: Notwithstanding any investment
restriction to the contrary, the Fund may, in connection with the John Hancock
Group of Funds Deferred Compensation Plan for Independent Trustees/Directors,
purchase securities of other investment companies within the John Hancock Group
of Funds provided that, as a result, (i) no more than 10% of the Fund's assets
would be invested in securities of all other investment companies, (ii) such
purchase would not result in more than 3% of the total outstanding voting
securities of any one such investment company being held by the Fund and
(iii) no more than 5% of the Fund's assets would be invested in any one such
investment company.
THOSE RESPONSIBLE FOR MANAGEMENT
The business of the Fund is managed by its Trustees who elect officers who
are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Trustees. Several of the officers and Trustees of
the Fund are also officers and directors of the Adviser or officers and
directors of John Hancock Funds.
Set forth below is the principal occupation or employment of the Trustees
and principal officers of the Fund during the past five years.
All of the officers listed are officers or employees of the Adviser or
affiliated companies. Some of the Trustees and officers may also be officers
and/or Directors and/or Trustees of one or more of the other funds for which
the Adviser serves as investment adviser.
4
<PAGE> 24
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Edward J. Boudreau, Jr,* Trustee, Chairman and Chairman and Chief Executive
101 Huntington Avenue Chief Executive Officer, the Investment Adviser
Boston, MA 02199 Officer(1)(2) and The Berkeley Financial
Group("The Berkeley
Group");Chairman,
NM Capital Management, Inc.
("NM Capital"); John
Hancock Advisers
International Limited
("Advisers International");
John Hancock Funds, Inc.;
John Hancock Investor
Services Corporation
("Investor Services");
and Sovereign Asset
Management Corporation
("SAMCorp");
(hereinafter the Adviser,
The Berkeley Group, NM
Capital, Advisers
International, John Hancock
Funds, Investor Services and
SAMCorp are collectively referred
to as the "Affiliated Companies");
Chairman, First Signature Bank &
Trust; Director, John Hancock
Freedom Securities
Corporation, John Hancock
Capital Corporation,
New England/Canada
Business Council; Member,
Investment Company Institute
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
5
<PAGE> 25
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Board of Governors: Trustee, Museum
of Science; President, the Adviser
(until July 1992); Trustee or
Director of other investment
companies managed by the Adviser;
and Chairman, John Hancock
Distributors, Inc. (until April,
1994).
James F. Carlin Trustee (3) Chairman and CEO, Carlin
233 West Central Street Consolidated, Inc. (insurance);
Natick, MA 01760 Director, Arbella Mutual
Insurance Company
insurance),Consolidated
Group Trust(group health
plan),Carlin Insurance
Agency, Inc. and
West Insurance Agency, Inc.;
Receiver, the City of Chelsea
(until August 1992); and
Trustee or Director of other
investment companies
managed by the Adviser.
William H. Cunningham Trustee (3) Chancellor, University of
601 Colorado Street Texas System and former
O'Henry Hall President of the University of
Austin, TX 78701 Texas, Austin, Texas; Regents
Chair in Higher Education
Leadership; James L. Bayless
Chair for Free Enterprise;
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
6
<PAGE> 26
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Director, LaQuinta Motor
Inns, Inc. (hotel management
company); Director, Jefferson-Pilot
Corporation (diversified
life insurance company);
Director, Freeport-
McMoran Inc. (oil and
gas company); Director,
Barton Creek Properties, Inc.
(1988-1990) (real estate
development) and LBJ
Foundation Board
(education foundation);
and Advisory Director,
Texas Commerce Bank
-Austin.
Charles F. Fretz Director (3) Consultant, self employed; Vice
RD #5, Box 300B President and Director, Towers,
Clothier Springs Road Perrin, Forster & Crosby, Inc.
Malvern, PA 19355 (international management
consultants) (until 1985).
Harold R. Hiser, Jr. Director (3) Executive Vice President, Schering-
Schering-Plough Plough Corporation
Corporation (pharmaceuticals); Director,
One Giralda Farms ReCapital Corporation
Madison, NJ 07940-1000 (reinsurance).
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
7
<PAGE> 27
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Charles L. Ladner Trustee(3) Director, Energy North, Inc.
UGI Corporation (public utility holding company);
460 North Gulph Road Senior Vice
King of Prussia, PA President, Finance UGI
19406 Corp. (public utility
holding company)
(until 1992); and Trustee
or Director of other
investment companies
managed by the Adviser.
Leo E. Linbeck, Jr. Trustee (3) Chairman, President, Chief
3810 W. Alabama Executive Officer and Director,
Houston, TX 77027 Linbeck Corporation
(a holding company engaged in
various phases of the
construction industry and
warehousing interests); Chairman
of the Board and Chief Executive
Officer, Linbeck Construction
Corporation; Director, Panhandle
Eastern Corporation (a
diversified energy
company);Director,
Daniel Industries, Inc.
(manufacturer of gas measuring
products and energy related
equipment); director, GeoQuest
International Holdings, Inc. (a
geophysical consulting firm): and
Director, Greater Houston
Partnership
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
8
<PAGE> 28
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Patricia P. McCarter Trustee(3) Director and Secretary, the
Swedesford Road McCarter Corp. (machine
RD #3, Box 121 manufacturer); and Trustee
Malvern, PA 19355 or Director of other investment
companies managed by
the Adviser.
Steven R. Pruchansky Trustee(1)(3) Director and President, Mast
360 Horse Creek Drive, Holdings, Inc.; Director,
#208 First Signature Bank & Trust
Naples, FL 33942 Company (until August 1991);
General Partner, Mast Realty
Trust (until 1994); President,
Maxwell Building Corp. (until
1991);and Trustee or Director
of other investment companies
managed by the Adviser.
Norman H. Smith Trustee(3) Lieutenant General, USMC,
243 Mt. Oriole Lane Deputy Chief of Staff for
Linden, VA 22642 Manpower and Reserve
Affairs, Headquarters Marine
Corps; Commanding General III
Marine Expeditionary Force/3rd
Marine Division (retired 1991);
and Trustee or Director of other
investment companies managed by
the Adviser.
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
9
<PAGE> 29
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
John P. Toolan Trustee(3) Director, The Smith Barney
13 Chadwell Place Muni Bond Funds, The Smith
Morristown, NJ Barney Tax-Free Money Fund,
07960 Inc., Vantage Money Market
Funds (mutual funds),
The Inefficient-Market
Fund, Inc. (closed-end
investment company)
and Smith Barney Trust
Company of Florida; Chairman, Smith
Barney Trust Company (retired
December, 1991); Director, Smith
Barney, Inc., Mutual Management
Company and Smith, BarneyAdvisers,
Inc. (investment advisers) (retired
1991); and
Senior Executive Vice President,
Director and member of the Executive
Committee, Smith Barney,
Harris Upham & Co., Incorporated
(investment bankers) (until 1991).
Robert G. Freedman* Vice Chairman and Vice Chairman and Chief
101 Huntington Avenue Chief Investment Investment Officer, the
Boston, MA 02199 Officer(2) Adviser.
Anne C. Hodsdon * President(2) President and Chief Operating
101 Huntington Avenue Officer, the Adviser.
Boston, MA 02199
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration.
</TABLE>
10
<PAGE> 30
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
James B. Little* Senior Vice Senior Vice President,
101 Huntington Avenue President and the Adviser.
Boston, MA 02199 Chief Financial
Officer
Thomas H. Drohan* Senior Vice Senior Vice President and
101 Huntington Avenue President and Secretary, the Adviser.
Boston, MA 02199 Secretary
Michael P. DiCarlo* Senior Vice Executive Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
Lawrence Daley Senior Vice Senior Vice President; Senior
101 Huntington Avenue President (2) Vice President, Putnam
Boston, MA 02199 Investment Management, Inc.
James K. Ho * Senior Vice Executive Vice President, the
101 Huntington Avenue President (2) Adviser.
Boston, MA 02199
James J. Stokowski* Vice President and Vice President, the Investment
101 Huntington Avenue Treasurer Adviser.
Boston, MA 02199
Susan S. Newton* Vice President and Vice President and Assistant
101 Huntington Avenue Compliance Officer Secretary, the Investment
Boston, MA 02199 Adviser.
John A. Morin* Vice President Vice President, the Investment
101 Huntington Avenue Adviser.
Boston, MA 02199
<FN>
- ------------------
* An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration
</TABLE>
11
<PAGE> 31
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ---------------- -------------- -----------------------
<S> <C> <C>
Barry Evans * Vice President (2) Vice President the Adviser.
101 Huntington Avenue
Boston, MA 02199
Anne McDonley * Vice President (2) Vice President the Adviser.
101 Huntington Avenue
Boston, MA 02199
<FN>
- ------------------
*An "interested person" of the Fund, as such term is defined in the 1940 Act.
(1) Member of the Executive Committee. Under the Trust's Declaration of
Trust, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) A Member of the Investment Committee of the Adviser.
(3) Member of the Audit Committee and the Committee on Administration
</TABLE>
All of the officers listed are officers or employees of the Adviser of
affiliated coompanies. Some of the Trustees and officers may also be officers
and/or Directors and/or Trustees of one or more of the other funds for which
the Adviser serves as investment adviser.
As of September 12, 1995, there were 19,455,205 shares of the Fund outstanding
and officers and trustees of the Fund as a group beneficially owned less than
1% of these outstanding shares. At such date, Thomas R. Powers and Pat G.
Powers JTWROS, Houston, Texas held of record 3,531,223 shares representing
approximately 18% of the shares outstanding; John R. Pipkin, 414 Tecumseh Lane,
Houston, Texas held of record 3,111,360 shares representing approximately
15.99% of the shares outstanding;; Bachem Inc., c/o Naomi Glaser, 3132 Kashiwa
steet, Torrance, California held of record 1,309,531 shares representing
approximately 6.73% of the shares outstanding. Such ownership represents an
interest of more than 25% of the outstanding shares of the Fund resulting in
the presumption of "control" as defined under the 1940 Act and has the likely
result that such shareholder can materially affect a positive or negative vote
on any matters which require the vote of all shareholders of the Fund. At such
date, no other person owned of record or beneficially as much as 5% of the
outstanding shares of the Fund.
As of December 22, 1994, the Trustees have established an Advisory Board which
acts to facilitate a smooth transition of management over a two-year period
(between Transamerica Fund Management Company ("TFMC"), the prior investment
adviser, and the Adviser). The members of the Advisory Board are distinct from
the Board of Trustees, do not serve the Fund in any other capacity and are
persons who have no power to determine what securities are purchased or sold on
behalf of the Fund. Each member of the Advisory Board may be contacted at 101
Huntington Avenue, Boston, Massachusetts 02199.
Members of the Advisory Board and their respective principal occupations during
the past five years are as follows:
R. Trent Campbell, President, FMS, Inc. (financial and management services);
former Chairman of the Board, Mosher Steel Company.
12
<PAGE> 32
Mrs. Lloyd Bentsen, Formerly National Democratic Committeewoman from Texas; co-
founder, Houston Parents' League; former board member of various civic and
cultural organizations in Houston, including the Houston Symphony, Museum
of Fine Arts and YWCA. Mrs. Bentsen is presently active in various civic
and cultural activities in the Washington, D.C. area, including membership
on the Area Board for The March of Dimes and is a National Trustee for the
Botanic Gardens of Washington, D.C.
Thomas R. Powers, Formerly Chairman of the Board, President and Chief Executive
Officer, TFMC; Director, West Central Advisory Board, Texas Commerce Bank;
Trustee, Memorial Hospital System; Chairman of the Board of Regents of
Baylor University; Member, Board of Governors, National Association of
Securities Dealers, Inc.; Formerly, Chairman, Investment Company
Institute; formerly, President, Houston Chapter of Financial Executive
Institute.
Thomas B. McDade, Chairman and Director, TransTexas Gas Company; Director,
Houston Industries and Houston Lighting and Power Company; Director,
TransAmerican Companies (natural gas producer and transportation); Member,
Board of Managers, Harris County Hospital District; Advisory Director,
Commercial State Bank, El Campo; Advisory Director, First National Bank of
Bryan; Advisory Director, Sterling Bancshares; Former Director and Vice
Chairman, Texas Commerce Bancshares; and Vice Chairman, Texas Commerce
Bank.
<TABLE>
COMPENSATION OF THE BOARD OF TRUSTEES AND ADVISORY BOARD. The following table
provides information regarding the compensation paid by the Fund and the other
investment companies in the John Hancock Fund Complex to the Independent
Trustees and the Advisory Board members for their services. Mr. Boudreau, a
non-Independent Trustee, and each of the officers of the Funds who are
interested persons of the Adviser, are compensated by the Adviser and received
no compensation from the Funds for their services.
<CAPTION>
Pension or Total Compensation
Retirement from all Funds in
Aggregate Benefits Accrued John Hancock
Compensation as Part of the Fund Complex to
Trustees from the Fund Fund's Expenses Trustees**
- -------- ------------- ---------------- ----------
<S> <C> <C> <C>
James F. Carlin $ 803 $0 $ 60,450
William H. Cunningham 3,837 0 0
Charles F. Fretz 0 0 60,350
Harold R. Hiser, Jr. 0 0 56,000
Charles L. Ladner 873 0 60,450
Leo E. Linbeck, Jr. 4,516 0 0
Patricia P. McCarter 880 0 60,200
Steven R. Pruchansky 909 0 62,450
Norman H. Smith 909 0 62,450
John P. Toolan 873 0 60,450
------- --------
$13,600 $482,800
<FN>
**The total compensation paid by the John Hancock Fund Complex to the
Independent Trustees is $482,800 as of the calendar year ended December 31,
1994. All Trustees/Directors, except Messrs. Cunningham and Linbeck, are
Trustees/Directors of 33 funds in The John Hancock Fund Complex. Messrs.
Cunningham and Linbeck are Trustee/Directors of 31 funds.(The Fund was not part
of the John Hancock Fund Complex until December 22, 1994 and Messrs.
</TABLE>
13
<PAGE> 33
Cunningham and Linbeck were not trustees or directors of any funds in the John
Hancock Fund Complex prior to December 22, 1994.)
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement from all Funds in
Aggregate Benefits Accrued John Hancock
Compensation as Part of the Fund Complex to
Advisory Board*** from the Fund Fund's Expenses Advisory Board***
- -------------- ------------- --------------- -----------------
<S> <C> <C> <C>
R. Trent Campbell $1,624 $0 $ 47,000
Mrs. Lloyd Bentsen 1,624 0 47,000
Thomas R. Powers 1,624 0 47,000
Thomas B. McDade 1,624 0 47,000
------ --------
TOTAL $6,496 $0 $188,000
<FN>
***For the period of December 22,1994 to the Fund's fiscal year ended May 31, 1995.
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, the Fund receives its investment advice
from the Adviser. Investors should refer to the Prospectus for a description
of certain information concerning the investment management contract. Each of
the Trustees and principal officers affiliated with the Fund who is also an
affiliated person of the Adviser is named above, together with the capacity in
which such person is affiliated with the Fund, the Adviser or TFMC (the Fund's
prior investment adviser).
The Adviser, located at 101 Huntington Avenue, Boston, Massachusetts
02199-7603, was organized in 1968 and currently has more than $13 billion in
assets under management in its capacity as investment adviser to the Fund and
the other mutual funds and publicly traded investment companies in the John
Hancock group of funds having a combined total of over 1,060,000 shareholders.
The Adviser is a wholly-owned subsidiary of The Berkeley Financial Group, which
is in turn a wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which
is in turn a wholly-owned subsidiary of the Life Company, one of the most
recognized and respected financial institutions in the nation. With total
assets under management of $80 billion, the Life Company is one of the ten
largest life insurance companies in the United States and carries Standard &
Poor's and A.M. Best's high ratings. Founded in 1862, the Life Company has
been serving clients for over 130 years.
As described in the Prospectus under the caption "Organization and
Management of the Fund," the Fund has entered into an investment management
contract with the Adviser. Under the investment management contract, the
Adviser provides the Fund with (i) a continuous investment program, consistent
with the Fund's stated investment objective and policies, (ii) supervision of
all aspects of the Fund's operations except those that are delegated to a
custodian, transfer agent or other agent and (iii) such executive,
administrative and clerical personnel, officers and equipment as are necessary
for the conduct of its business. The Adviser is responsible for the day-to-day
management of the Fund's portfolio assets.
No person other than the Adviser and its directors and employees regularly
furnishes advice to the Fund with respect to the desirability of the Fund
investing in, purchasing or selling
14
<PAGE> 34
securities. The Adviser may from time to time receive statistical or other
similar factual information, and information regarding general economic
factors and trends, from the Life Company and its affiliates.
Under the terms of the investment management contract with the Fund,
the Adviser provides the Fund with office space, equipment and supplies and
other facilities and personnel required for the business of the Fund. The
Adviser pays the compensation of all officers and employees of the Fund and
pays the expenses of clerical services relating to the administration of the
Fund. All expenses which are not specifically paid by the Adviser and which
are incurred in the operation of the Fund including, but not limited to, (i)
the fees of the Trustees of the Fund who are not "interested persons," as such
term is defined in the 1940 Act (the "Independent Trustees"), (ii) the fees of
the members of the Fund's Advisory Board (described above) and (iii) the
continuous public offering of the shares of the Fund are borne by the Fund.
Subject to the conditions set forth in a private letter ruling that the Fund
has received from the Internal Revenue Service relating to its multiple-class
structure, class expenses properly allocable to any Class A or Class B shares
will be borne exclusively by such class of shares.
<TABLE>
As provided by the investment management contract, the Fund pays the
Adviser an investment management fee, which is accrued daily and paid monthly
in arrears, equal on an annual basis to a percentage of the Fund's average
daily net asset value as follows:
<CAPTION>
Fee
Average Daily Net Assets of the Fund (annual rate)
- ------------------------------------ -------------
<S> <C>
First $500 million.......................... 0.500%
Next $250 million........................... 0.425%
Next $250 million........................... 0.375%
Next $500 million........................... 0.350%
Next $500 million........................... 0.325%
Next $500 million........................... 0.300%
Amount Over $2.5 billion.................... 0.275%
</TABLE>
The Adviser may voluntarily and temporarily reduce its advisory fee or
make other arrangements to limit the Fund's expenses to a specified percentage
of average daily net assets. The Adviser retains the right to re-impose the
advisory fee and recover any other payments to the extent that, at the end of
any fiscal year, the Fund's annual expenses fall below this limit.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of any state limit where the
Fund is registered to sell shares of beneficial interest, the fee payable to
the Adviser will be reduced to the extent of such excess and the Adviser will
make any additional arrangements necessary to eliminate any remaining excess
expenses. Currently, the most restrictive limit applicable to the Fund is 2.5%
of the first $30,000,000 of the Fund's average daily net asset value, 2% of the
next $70,000,000 and 1.5% of the remaining average daily net asset value.
Pursuant to the investment management contract, the Adviser is not liable
to the Fund or its shareholders for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which the
contract relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Adviser in the performance of its duties
or from its reckless disregard of the obligations and duties under the
applicable contract.
15
<PAGE> 35
The investment management contract initially expires on December 22, 1996
and will continue in effect from year to year thereafter if approved annually
by a vote of a majority of the Independent Trustees of the Fund, cast in person
at a meeting called for the purpose of voting on such approval, and by either a
majority of the Trustees or the holders of a majority of the Fund's outstanding
voting securities. The management contract may, on 60 days' written notice, be
terminated at any time without the payment of any penalty to the Fund by vote
of a majority of the outstanding voting securities of the Fund, by the Trustees
or by the Adviser. The management contract terminates automatically in the
event of its assignment.
Securities held by the Fund may also be held by other funds or investment
advisory clients for which the Adviser or its affiliates provide investment
advice. Because of different investment objectives or other factors, a
particular security may be bought for one or more funds or clients when one or
more are selling the same security. If opportunities for purchase or sale of
securities by the Adviser or for other funds or clients for which the Adviser
renders investment advice arise for consideration at or about the same time,
transactions in such securities will be made, insofar as feasible, for the
respective funds or clients in a manner deemed equitable to all of them. To
the extent that transactions on behalf of more than one client of the Adviser
or its respective affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse
effect on price.
Under the investment management contract, the Fund may use the name "John
Hancock" or any name derived from or similar to it only for so long as the
investment management contract or any extension, renewal or amendment thereof
remains in effect. If the Fund's investment management contract is no longer
in effect, the Fund (to the extent that it lawfully can) will cease to use such
name or any other name indicating that it is advised by or otherwise connected
with the Adviser. In addition, the Adviser or the Life Company may grant the
non-exclusive right to use the name "John Hancock" or any similar name to any
other corporation or entity, including but not limited to any investment
company of which the Life Company or any subsidiary or affiliate thereof or any
successor to the business of any subsidiary or affiliate thereof shall be the
investment adviser.
For the fiscal years ended May 31, 1993 and 1994 advisory fees by the Fund
to TFMC, the Fund's former investment adviser, amounted to $626,241 and
$690,268, respectively. For the fiscal year ended May 31, 1995, advisory fees
paid by the Fund to TFMC, the Fund's former investment adviser and the Adviser
amounted to $310,040 and $130,358, respectively. However, a portion of such
fees were not imposed pursuant to the voluntary fee and expense limitation
arrangements then in effect (see "The Fund's Expenses" in the Prospectus).
ADMINISTRATIVE SERVICES AGREEMENT. The Fund was a party to an
administrative services agreement with TFMC (the "Services Agreement"),
pursuant to which TFMC performed bookkeeping and accounting services and
functions, including preparing and maintaining various accounting books,
records and other documents and keeping such general ledgers and portfolio
accounts as are reasonably necessary for the operation of the Fund. Other
administrative services included communications in response to shareholder
inquiries and certain printing expenses of various financial reports. In
addition, such staff and office space, facilities and equipment was provided as
necessary to provide administrative services to the Fund. The Services
Agreement was amended in connection with the appointment of the Adviser as
adviser to the Fund to permit services under the Agreement to be provided to
the Fund by the Adviser and its affiliates. The Services Agreement was
terminated during the last fiscal year.
16
<PAGE> 36
For the fiscal years ended May 31, 1993, 1994 and 1995, the Fund paid to
TFMC (pursuant to the Services Agreement) $53,577, $48,703 and $27,466
respectively, of which $39,721, $35,000 and $19,884, respectively, was paid to
TFMC and $13,856, $13,703 and $7,582, respectively, were paid for certain data
processing and pricing information services.
DISTRIBUTION CONTRACT
DISTRIBUTION CONTRACT. As discussed in the Prospectus, the Fund's shares
are sold on a continuous basis at the public offering price. John Hancock
Funds, a wholly-owned subsidiary of the Adviser, has the exclusive right,
pursuant to the Distribution Contract dated December 22, 1994 (the
"Distribution Contract"), to purchase shares from the Fund at net asset value
for resale to the public or to broker-dealers at the public offering price.
Upon notice to all broker-dealers ("Selling Brokers") with whom it has sales
agreements, John Hancock Funds may allow such Selling Brokers up to the full
applicable sales charge during periods specified in such notice. During these
periods, such Selling Brokers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933.
The Distribution Contract was initially adopted by the affirmative vote of
the Fund's Board of Trustees including the vote a majority of Independent
Trustees, cast in person at a meeting called for such purpose. The
Distribution Contract shall continue in effect until December 22, 1996 and from
year to year thereafter if approved by either the vote of the Fund's
shareholders or the Board of Trustees including the vote of a majority of
Independent Trustees, cast in person at a meeting called for such purpose. The
Distribution Contract may be terminated at any time, without penalty, by either
party upon sixty (60) days' written notice or by a vote of a majority of the
outstanding voting securities of the Fund and terminates automatically in the
case of an assignment by John Hancock Funds.
DISTRIBUTION PLAN. The Board of Trustees, including the Independent
Trustees of the Fund, approved a new distribution plan pursuant to Rule 12b-1
under the 1940 Act for shares of the Fund (the "Plan"). The Plan was approved
by a majority of the outstanding shares of the Fund on December 16, 1994 and
became effective on December 22, 1994.
Under the Plan, the distribution or service fee will not exceed an annual
rate of 0.15% of the average daily net asset value of the Fund (determined in
accordance with the Fund's Prospectus as from time to time in effect). Any
expenses under the Plan not reimbursed within 12 months of being presented to
the Fund for repayment are forfeited and not carried over to future years. The
Fund incurred no expenses under the Plan for the fiscal year ended May 31,
1995.
Under the Plan, expenditures shall be calculated and accrued daily and
paid monthly or at such other intervals as the Trustees shall determine. The
fee may be spent by John Hancock Funds on Distribution Expenses or Service
Expenses. "Distribution Expenses" include any activities or expenses primarily
intended to result in the sale of shares of the Fund, including, but not
limited to: (i) initial and ongoing sales compensation payable out of such fee
as such compensation is received by John Hancock Funds or by Selling Brokers,
(ii) direct out-of-pocket expenses incurred in connection with the distribution
of shares, including expenses related to printing of prospectuses and reports;
(iii) preparation, printing and distribution of sales literature and
advertising material; (iv) an allocation of overhead and other branch office
expenses of John Hancock Funds related to the distribution of Fund Shares
(v) distribution expenses that were incurred by the Fund's former distributor
and not recovered through payments under the former plan; and (vi) in the event
that any other investment company (the "Acquired Fund") sells all or
substantially all of its assets to, merges with or otherwise engages in a
combination with the Fund, distribution expenses originally incurred in
connection with the distribution of the Acquired Fund's
17
<PAGE> 37
shares. Service Expenses under the Plan include payments made to, or on
account of, account executives of selected broker-dealers (including
affiliates of John Hancock Funds) and others who furnish personal and
shareholder account maintenance services to shareholders of the Fund.
The Plan provides that it will continue in effect only as long as its
continuance is approved at least annually by a majority of both the Trustees
and the Independent Trustees. The Plan provides that it may be terminated
(a) at any time by vote of a majority of the Trustees, a majority of the
Independent Trustees, or a majority of the Fund's outstanding voting securities
or (b) by John Hancock Funds on 60 days' notice in writing to the Fund. The
Plan further provides that it may not be amended to increase the maximum amount
of the fees for the services described therein without the approval of a
majority of the outstanding shares of the Fund. The Plan provides that no
material amendment to the Plan will, in any event, be effective unless it is
approved by a majority vote of the Trustees and the Independent Trustees of the
Fund. In adopting the Plans, the Board of Trustees has determined that, in
their judgment, there is a reasonable likelihood that the Plan will benefit the
holders of the shares of the Fund.
Information regarding the services rendered under the Plan and the
Distribution Contract and the amounts paid therefor by the Fund is provided to,
and reviewed by, the Board of Trustees on a quarterly basis. In its quarterly
review, the Board of Trustees considers the continued appropriateness of the
Plan and the Distribution Contract and the level of compensation provided
therein.
When the Fund seeks an Independent Trustee to fill a vacancy or as a
nominee for election by shareholders, the selection or nomination of the
Independent Trustee is, under resolutions adopted by the Trustees
contemporaneously with their adoption of the Plans, committed to the discretion
of the Committee on Administration of the Trustees. The members of the
Committee on Administration are all Independent Trustees and identified in this
Statement of Additional Information under the heading "Those Responsible for
Management."
AMORTIZED COST METHOD OF PORTFOLIO VALUATION
The Fund utilizes the amortized cost valuation method of valuing portfolio
instruments in the absence of extraordinary or unusual circumstances. Under
the amortized cost method, assets are valued by constantly amortizing over the
remaining life of an instrument the difference between the principal amount due
at maturity and the cost of the instrument to the Fund. The Trustees will from
time to time review the extent of any deviation of the net asset value, as
determined on the basis of the amortized cost method, from net asset value as
it would be determined on the basis of available market quotations. If any
deviation occurs which may result in unfairness either to new investors or
existing shareholders, the Trustees will take such actions as they deem
appropriate to eliminate or reduce such unfairness to the extent reasonably
practicable. These actions may include selling portfolio instruments prior to
maturity to realize gains or losses or to shorten the Fund's average portfolio
maturity, withholding dividends, splitting, combining or otherwise
recapitalizing outstanding shares or utilizing available market quotations to
determine net asset value per share.
Since a dividend is declared to shareholders each time net asset value is
determined, the net asset value per share of the Fund will normally remain
constant at $1.00 per share. There is no assurance that the Fund can maintain
the $1.00 per share value. Monthly, any increase in the value of a
shareholder's investment from dividends is reflected as an increase in the
number of shares in the shareholder's account or is distributed as cash if a
shareholder has so elected.
18
<PAGE> 38
It is expected that the Fund's net income will be positive each time it is
determined. However, if because of a sudden rise in interest rates or for any
other reason the net income of the Fund determined at any time is a negative
amount, the Fund will offset the negative amount against income accrued during
the month for each shareholder account. If at the time of payment of a
distribution such negative amount exceeds a shareholder's portion of accrued
income, the Fund may reduce the number of its outstanding shares by treating
the shareholder as having contributed to the capital of the Fund that number of
full or fractional shares which represents the amount of excess. By investing
in the Fund, shareholders are deemed to have agreed to make such a
contribution. This procedure is intended to permit the Fund to maintain its
net asset value at $1.00 per share.
If in the view of the Trustees it is inadvisable to continue the practice
of maintaining net asset value at $1.00 per share, the Trustees reserve the
right to alter the procedures for determining net asset value. The Fund will
notify shareholders of any such alteration.
PURCHASE OF SHARES
Shares of the Fund are offered at a price equal to their net asset value
per share which will normally be constant at $1.00. Share certificates will
not be issued unless requested by the shareholder in writing, and then only
will be issued for full shares.
SPECIAL REDEMPTIONS
Although it would not normally do so, the Fund has the right to pay the
redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed the Trustees. When the shareholder sells portfolio
securities received in this fashion, he would incur a brokerage charge. Any
such securities would be valued for the purposes of making such payment at the
same value as used in determining net asset value. The Fund has elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund during any 90 day period for any one account.
ADDITIONAL SERVICES AND PROGRAMS
EXCHANGE PRIVILEGE. As described more fully in the Prospectus, the Fund
permits exchanges of Fund shares for shares of other funds and portfolios
managed by the Adviser.
SYSTEMATIC WITHDRAWAL PLAN. As described briefly in the Prospectus, the
Fund permits the establishment of a Systematic Withdrawal Plan. Payments under
this plan represent proceeds arising from the redemption of Fund shares. The
Fund reserves the right to modify or discontinue the Systematic Withdrawal Plan
of any shareholder on 30 days' prior written notice to such shareholder, or to
discontinue the availability of such plan in the future. The shareholder may
terminate the plan at any time by giving proper notice to Fund Services.
MONTHLY AUTOMATIC ACCUMULATION PROGRAM ("MAAP"). This program is
explained fully in the Fund's Prospectus and the Account Privileges
Application. The program, as it relates to automatic investment checks, is
subject to the following conditions:
The investments will be drawn on or about the day of the month indicated.
The privilege of making investments through the Monthly Automatic
Accumulation Program may be revoked by Investor Services without prior notice
if any investment is not
19
<PAGE> 39
honored by the shareholder's bank. The bank shall be under no obligation to
notify the shareholder as to the non-payment of any check.
The program may be discontinued by the shareholder either by calling
Investor Services or upon written notice to Investor Services which is received
at least five (5) business days prior to the due date of any investment.
DESCRIPTION OF THE FUND'S SHARES
Ownership of the Fund is represented by transferable shares of beneficial
interest. The Declaration of Trust permits the Trustees to create an unlimited
number of series and classes of shares of the Fund and, with respect to each
series and class, to issue an unlimited number of full or fractional shares and
to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests of the Fund.
As of the date of this Statement of Additional Information, the Trustees have
only authorized the shares of the Fund. Each share of the Fund represents an
equal proportionate interest with each other share. Shares of the Fund have a
par value of $0.01 per share.
Pursuant to the Declaration of Trust, the Trustees may authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional classes
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future
regulations or other unforeseen circumstances). As of the date of this
Statement of Additional Information, the Trustees have authorized the issuance
of only one class of shares of the Fund.
VOTING RIGHTS. Shareholders are entitled to a full vote for each full
share held. The Trustees themselves have the power to alter the number and the
terms of office of Trustees, and they may at any time lengthen their own terms
or make their terms of unlimited duration (subject to certain removal
procedures) and appoint their own successors, provided that at all times at
least a majority of the Trustees have been elected by shareholders. The voting
rights of shareholders are not cumulative, so that holders of more than 50
percent of the shares voting can, if they choose, elect all Trustees being
selected, while the holders of the remaining shares would be unable to elect
any Trustees. Although the Fund need not hold annual meetings of shareholders,
the Trustees may call special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Declaration of
Trust. Also, a shareholders' meeting must be called if so requested in writing
by the holders of record of 10% or more of the outstanding shares of the Fund.
In addition, the Trustees may be removed by the action of the holders of record
of two-thirds or more of the outstanding shares.
SHAREHOLDER LIABILITY. The Declaration of Trust provides that no Trustee,
officer, employee or agent of the Fund is liable to the Fund or to a
shareholder, nor is any Trustee, officer, employee or agent liable to any third
persons in connection with the affairs of the Fund, except as such liability
may arise from his or its own bad faith, willful misfeasance, gross negligence
or reckless disregard of his duties. It also provides that all third persons
shall look solely to the Fund's property for satisfaction of claims arising in
connection with the affairs of the Fund. With the exceptions stated, the
Declaration of Trust provides that a Trustee, officer, employee or agent is
entitled to be indemnified against all liability in connection with the affairs
of the Fund.
Under Massachusetts law, shareholders of a Massachusetts business trust
could, under certain circumstances, be held personally liable for acts or
obligations of the trust. However, the Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts, obligations and affairs
of the Fund. The Declaration of Trust also provides for indemnification
20
<PAGE> 40
out of the Fund's assets for all losses and expenses of any shareholder held
personally liable by reason of being or having been a shareholder. Liability
is therefore limited to circumstances in which the Fund itself would be unable
to meet its obligations, and the possibility of this occurrence is remote.
As a Massachusetts business trust, the Fund is not required to issue share
certificates. The Fund shall continue without limitation of time subject to
the provisions in the Declaration of Trust concerning termination by action of
the shareholders.
TAX STATUS
The Fund has qualified and has elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and intends to continue to so qualify in the future. As
such and by complying with the applicable provisions of the Code regarding the
sources of its income, the timing of its distributions, and the diversification
of its assets, the Fund will not be subject to Federal income tax on taxable
income (including net realized capital gains, if any) which is distributed to
shareholders at least annually in accordance with the timing requirements of
the Code.
The Fund will be subject to a four percent nondeductible federal excise
tax on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability
for such tax by satisfying such distribution requirements.
Distributions of net investment income (which include original issue
discount and accrued, recognized market discount) and any net realized short-
term capital gains, as computed for Federal income tax purposes, will be
taxable as described in the Prospectus whether taken in shares or in cash.
Although the Fund does not expect to realize any net long-term capital gains,
distributions from such gains, if any, would be taxable as long-term capital
gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in
each share so received equal to the amount of cash they would have received had
they taken the distribution in cash, divided by the number of shares received.
Upon a redemption of shares (including by exercise of the exchange
privilege) a shareholder ordinarily will not realize a taxable gain or loss if,
as anticipated, the Fund maintains a constant net asset value per share. If
the Fund is not successful in maintaining a constant net asset value per share,
a redemption may produce a taxable gain or loss.
Distributions from the Fund will not qualify for the dividends-received
deduction for corporate shareholders.
For Federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset net capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent net
capital gains are offset by such losses, they would not result in Federal
income tax liability to the Fund and would not be distributed as such to
shareholders.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their
tax advisers for more information.
21
<PAGE> 41
The Fund is not subject to Massachusetts corporate excise or franchise
taxes. Provided that the Fund qualifies as a regulated investment company
under the Code, the Fund will also not be required to pay any Massachusetts
income tax.
The foregoing discussion relates solely to U.S. Federal income tax laws
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts or estates) subject to tax under such law.
The discussion does not address special tax rules applicable to certain classes
of investors, such as tax-exempt entities, insurance companies and financial
institutions. Dividends, capital gain distributions (if any), and ownership of
or gains realized (if any) on the redemption (including an exchange) of shares
of the Fund may also be subject to state and local taxes. Shareholders should
consult their own tax advisers as to the federal, state or local tax
consequences of ownership of shares of, and receipt of distributions from, the
Fund in their particular circumstances.
Non-U.S. investors not engaged in U.S. trade or business with which their
Fund investment is effectively connected will be subject to U.S. Federal income
tax treatment that is different from that described above. These investors may
be subject to nonresident alien withholding tax at the rate of 30% (or a lower
rate under an applicable tax treaty) on amounts treated as ordinary dividends
from the Fund. Non-U.S. investors should consult their tax advisers regarding
such treatment and the application of foreign taxes to an investment in the
Fund.
CALCULATION OF PERFORMANCE
For the purposes of calculating yield, daily income per share consists of
interest and discount earned on the Fund's investments less provision for
amortization of premiums and applicable expenses, divided by the number of
shares outstanding, but does not include realized or unrealized appreciation or
depreciation.
In any case in which the Fund reports its annualized yield, it will also
furnish information as to the average portfolio maturities of the Fund. It
will also report any material effect of realized gains or losses or unrealized
appreciation on dividends which have been excluded from the computation of
yield.
Yield calculations are based on the value of a hypothetical preexisting
account with exactly one share at the beginning of the seven day period. Yield
is computed by determining the net change in the value of the account during
the base period and dividing the net change by the value of the account at the
beginning of the base period to obtain the base period return. Base period is
multiplied by 365/7 and the resulting figure is carried to the nearest 100th of
a percent. Net change in account value during the base period includes
dividends declared on the original share, dividends declared on any shares
purchased with dividends of that share and any account or sales charges that
would affect an account of average size, but excludes any capital changes.
Effective yield is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical preexisting account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula:
22
<PAGE> 42
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1
The yield of the Fund is not fixed or guaranteed. Yield quotations should
not be considered to be representations of yield of the Fund for any period in
the future. The yield of the Fund is a function of available interest rates on
money market instruments, which can be expected to fluctuate, as well as of
the quality, maturity and types of portfolio instruments held by the Fund and
of changes in operating expenses. The Fund's yield may be affected if, through
net sales of its shares, there is a net investment of new money in the Fund
which the Fund invests at interest rates different from that being earned on
current portfolio instruments. Yield could also vary if the Fund experiences
net redemptions, which may require the disposition of some of the Fund's
current portfolio instruments.
From time to time, in reports and promotional literature, the Fund's yield
and total return will be ranked or compared to indices of mutual funds and bank
deposit vehicles such as Lipper Analytical Services, Inc. "Lipper-Fixed Income
Fund Performance Analysis," a monthly publication which tracks net assets,
total return, and yield on approximately 1,000 fixed income mutual funds in the
United States or "IBC/Donahue's Money Fund Report," a similar publication.
Comparisons may also be made to bank Certificates of Deposit, which differ from
mutual funds, like the Fund, in several ways. The interest rate established by
the sponsoring bank is fixed for the term of a CD, there are penalties for
early withdrawal from CD's and the principal on a CD is insured. Unlike CD's,
which are insured as to principal, an investment in the Fund is not insured or
guaranteed.
Performance rankings and ratings, reported periodically in national
financial publications such as MONEY MAGAZINE, FORBES, BUSINESS WEEK, THE WALL
STREET JOURNAL, MICROPAL, INC., MORNINGSTAR, STANGER'S and BARRONS, will also
be utilized. The Fund's promotional and sales literature may make reference to
the Fund's "beta." Beta is a reflection of the market-related risk of the Fund
by showing how responsive the Fund is to the market.
BROKERAGE ALLOCATION
Decisions concerning the purchase and sale of portfolio securities are
made by the Adviser pursuant to recommendations made by its investment
committee, which consists of officers and directors of the Adviser and
affiliates and officers and Trustees who are interested persons of the Fund.
Orders for purchases and sales of securities are placed in a manner which, in
the opinion of the Investment Advisor will offer the best price and market for
the execution of each such transaction. Purchases from underwriters of
portfolio securities may include a commission or commissions paid by the issuer
and transactions with dealers serving as market makers reflect a "spread."
Investments in debt securities are generally traded on a net basis through
dealers acting for their own account as principals and not as brokers; no
brokerage commissions are payable on such transactions.
The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Consistent with the foregoing
primary policy, the Rules of Fair Practice of the NASD and other policies that
the Trustees may determine, the Adviser may consider sales of shares of the
Fund as a factor in the selection of broker-dealers to execute the Fund's
portfolio transactions.
23
<PAGE> 43
To the extent consistent with the foregoing, the Fund will be governed in
the selection of brokers and dealers, and the negotiation of brokerage
commission rates and dealer spreads, by the reliability and quality of the
services, including primarily the availability and value of research
information and to a lesser extent statistical assistance furnished to the
Adviser of the Fund, and their value and expected contribution to the
performance of the Fund. It is not possible to place a dollar value on
information and services to be received from brokers and dealers, since it is
only supplementary to the research efforts of the Adviser. The receipt of
research information is not expected to reduce significantly the expenses of
the Adviser. The research information and statistical assistance furnished by
brokers and dealers may benefit the Life Company or other advisory clients of
the Adviser, and conversely, brokerage commissions and spreads paid by other
advisory clients of the Adviser may result in research information and
statistical assistance beneficial to the Fund. The Fund will make no
commitments to allocate portfolio transactions upon any prescribed basis.
While the Fund's officers will be primarily responsible for the allocation of
the Fund's brokerage business, their policies and practices in this regard must
be consistent with the foregoing and will at all times be subject to review by
the Trustees. For the fiscal years ended May 31, 1995, 1994 and 1993, no
negotiated brokerage commissions were paid on portfolio transactions.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Fund may pay to a broker which provides brokerage and research services to the
Fund an amount of disclosed commission in excess of the commission which
another broker would have charged for effecting that transaction. This
practice is subject to a good faith determination by the Trustees that the
price is reasonable in light of the services provided and to policies that the
Trustees may adopt from time to time. During the fiscal year ended May 31,
1995, the Fund did not pay commissions as compensation to any brokers for
research services such as industry, economic and company reviews and
evaluations of securities.
The Adviser's indirect parent, the Life Company, is the indirect sole
shareholder of John Hancock Distributors, Inc. ("Distributors"), a broker-
dealer and John Hancock Freedom Securities Corporation and its two broker-
dealer subsidiaries, Tucker Anthony Incorporated ("Tucker Anthony") and Sutro &
Company, Inc. ("Sutro") all affiliated brokers. Pursuant to procedures
determined by the Trustees and consistent with the above policy of obtaining
best net results, the Fund may execute portfolio transactions with or through
Tucker Anthony, Sutro or John Hancock Distributors. During the year ended
May 31, 1995, the Fund did not execute any portfolio transactions with then
affiliated brokers.
Any of the Affiliated Brokers may act as broker for the Fund on exchange
transactions, subject, however, to the general policy of the Fund set forth
above and the procedures adopted by the Trustees pursuant to the 1940 Act.
Commissions paid to an Affiliated Broker must be at least as favorable as those
which the Trustees believe to be contemporaneously charged by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold. A transaction would not be placed with an Affiliated Broker
if the Fund would have to pay a commission rate less favorable than the
Affiliated Broker's contemporaneous charges for comparable transactions for its
other most favored, but unaffiliated, customers, except for accounts for which
the Affiliated Broker acts as a clearing broker for another brokerage firm, and
any customers of the Affiliated Broker not comparable to the Fund as determined
by a majority of the Trustees who are not interested persons (as defined in the
1940 Act) of the Fund, the Adviser or the Affiliated Brokers. Because the
Adviser, which is affiliated with the Affiliated Brokers, has, as an investment
adviser to the Fund, the obligation to provide investment management services,
which includes elements of research and related investment skills, such
research and related skills will not be used by the Affiliated Brokers as a
basis for negotiating commissions at a rate higher than that determined in
accordance with the above criteria. The Fund will not effect principal
transactions with Affiliated Brokers. The Fund may, however, purchase
securities from
24
<PAGE> 44
other members of underwriting syndicates of which Tucker Anthony, Sutro
and John Hancock Distributors are members, but only in accordance with the
policy set forth above and procedures adopted and reviewed periodically by the
Trustees.
TRANSFER AGENT SERVICES
John Hancock Investor Services Corporation, P.O. Box 9116, Boston, MA
02205-9116, a wholly owned indirect subsidiary of the Life Company, is the
transfer and dividend paying agent for the Fund. The Fund pays Investor
Services an annual fee of $25.00 per account plus out-of-pocket expenses.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts. Under the custodian agreement, State
Street Bank performs custody, portfolio and fund accounting services.
INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116, has
been selected as the independent auditors of the Fund. The financial
statements of the Fund included in the Prospectus and this Statement of
Additional Information have been audited by Ernst & Young LLP for the periods
indicated in their report thereon appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
FINANCIAL STATEMENTS
25
<PAGE> 45
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON MAY 31, 1995. YOU'LL ALSO
FIND THE NET ASSET VALUE PER SHARE AS OF THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, in money market instruments, at value - Note C:
U.S. government obligations (cost - $26,195,597)............... $26,195,597
Joint repurchase agreement (cost - $2,640,000)................. 2,640,000
-----------
28,835,597
Interest receivable.............................................. 385,458
Receivable from John Hancock Advisers, Inc. - Note B............. 126,751
Other assets..................................................... 26,208
-----------
Total Assets.............................. 29,374,014
-------------------------------------------------------
LIABILITIES:
Temporary overdraft of cash...................................... 54,110
Dividend payable................................................. 77,788
Payable to John Hancock Advisers, Inc. and affiliates - Note B... 77,964
Accounts payable and accrued expenses ........................... 33,437
-----------
Total Liabilities......................... 243,299
-------------------------------------------------------
NET ASSETS:
Capital paid-in.................................................. 29,130,715
-----------
Net Assets................................ $29,130,715
=======================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
(based on 29,130,715 shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 per share par value).................................. $ 1.00
=======================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND FOR THE PERIOD STATED.
<TABLE>
STATEMENT OF OPERATIONS
Year ended May 31, 1995
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest......................................................... $4,523,480
----------
Expenses:
Investment management fee - Note B............................. 440,398
Custodian fee.................................................. 68,961
Auditing fee................................................... 47,932
Registration and filing fees................................... 23,970
Trustees' fees................................................. 17,697
Transfer agent fee - Note B.................................... 16,874
Miscellaneous.................................................. 9,832
Printing....................................................... 9,538
Legal fees..................................................... 6,567
Advisory board fee............................................. 3,349
----------
Total Expenses............................ 645,118
Less Expenses Reimburseable by John
Hancock Advisers, Inc. - Note B........... (336,846)
-------------------------------------------------------
Net Expenses.............................. 308,272
-------------------------------------------------------
Net Investment Income..................... 4,215,208
-------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations........................... $4,215,208
=======================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 46
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MAY 31,
---------------------------
1995 1994
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income............................................................... $ 4,215,208 $ 4,087,425
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0495 and $0.0300 per share, respectively).. (4,215,208) (4,087,425)
------------ ------------
FROM FUND SHARE TRANSACTIONS -- NET*.................................................. (65,276,832) (28,698,933)
------------ ------------
NET ASSETS:
Beginning of period................................................................. 94,407,547 123,106,480
------------ ------------
End of period....................................................................... $ 29,130,715 $ 94,407,547
============ ============
* ANALYSIS OF FUND SHARE TRANSACTIONS:
Shares sold......................................................................... $215,745,531 $447,900,058
Shares issued to shareholders in reinvestment of distributions...................... 2,455,376 1,376,895
------------ ------------
218,200,907 449,276,953
Less shares repurchased............................................................. (283,477,739) (477,975,886)
------------ ------------
Net decrease........................................................................ $(65,276,832) $(28,698,933)
============ ============
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, DISTRIBUTIONS PAID TO SHAREHOLDERS, AND ANY INCREASE OR
DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES
THE FUND SHARES SOLD, REINVESTED AND REDEEMED DURING THE LAST TWO PERIODS, ALONG
WITH THE CORRESPONDING DOLLAR VALUES.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 47
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- --------
Net Investment Income.............................................. 0.05 0.03 0.03 0.05 0.07
------- ------- ------- -------- --------
Less Distributions:
Dividends from Net Investment Income............................... (0.05) (0.03) (0.03) (0.05) (0.07)
------- ------- ------- -------- --------
Net Asset Value, End of Period .................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== ======== ========
Total Investment Return at Net Asset Value......................... 5.07% 3.04% 3.25% 4.95% 7.42%
Total Adjusted Investment Return at Net Asset Value (a)............ 4.69% 2.74% 2.93% 4.62% 7.11%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted).......................... $29,131 $94,408 $123,106 $109,358 $200,092
Ratio of Expenses to Average Net Assets ........................... 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of Adjusted Expenses to Average Net Assets (a)............... 0.73% 0.65% 0.67% 0.68% 0.66%
Ratio of Net Investment Income to Average Net Assets............... 4.79% 2.96% 3.19% 4.86% 7.21%
Ratio of Adjusted Net Investment Income to Average Net Assets (a).. 4.41% 2.66% 2.87% 4.53% 6.90%
<FN>
(a) Net of any fee reductions.
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZE THE IMPACT OF NET INVESTMENT INCOME AND
DIVIDENDS ON A SINGLE SHARE FOR THE PERIOD INDICATED. ADDITIONALLY, IMPORTANT
RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE FINANCIAL STATEMENTS ARE
EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 48
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON MAY 31, 1995. IT'S DIVIDED INTO TWO TYPES OF SHORT-TERM INVESTMENTS.
<TABLE>
SCHEDULE OF INVESTMENTS
May 31, 1995
- -------------------------------------------------------------------------------------------------
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- -------- --------------- ------
<S> <C> <C> <C>
U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (89.93%)
Federal Farm Credit Bank, 07-05-95................ 6.670% $1,000 $ 1,000,321
Federal Farm Credit Bank, 08-01-95................ 6.650 1,000 1,000,080
Federal Home Loan Bank, 06-02-95.................. 10.344 300 285,174
Federal Home Loan Bank, 06-12-95.................. 7.521 300 288,593
Federal Home Loan Bank, 06-13-95.................. 5.190 1,000 999,665
Federal Home Loan Bank, 07-21-95.................. 7.070 2,000 1,913,198
Federal Home Loan Bank, 08-08-95.................. 7.500 250 250,560
Federal Home Loan Bank, 09-22-95.................. 4.370 515 511,698
Federal Home Loan Bank, 09-25-95.................. 4.500 135 134,310
Federal Home Loan Bank, 10-25-95.................. 5.000 215 214,080
Federal Home Loan Bank, 11-20-95.................. 5.130 1,000 992,514
Federal Home Loan Bank, 01-19-96.................. 7.305 455 456,500
Federal Home Loan Bank, 01-26-96.................. 5.030 500 496,765
Federal Home Loan Mortgage Corp., 06-01-95........ 6.000 290 287,148
Federal Home Loan Mortgage Corp., 06-01-95........ 6.050 160 157,849
Federal Home Loan Mortgage Corp., 06-01-95........ 6.100 1,000 999,831
Federal Home Loan Mortgage Corp., 06-02-95........ 5.900 7,000 6,996,558
Federal Home Loan Mortgage Corp., 06-02-95........ 6.000 453 448,470
Federal Home Loan Mortgage Corp., 07-06-95........ 8.700 250 250,554
Federal Home Loan Mortgage Corp., 02-28-96........ 6.840 1,000 1,001,733
Federal National Mortgage Association, 06-09-95... 5.200% $1,000 $ 999,732
Federal National Mortgage Association, 06-15-95... 6.050 160 157,472
Federal National Mortgage Association, 06-16-95... 6.050 305 300,131
Federal National Mortgage Association, 08-07-95... 6.100 275 268,197
Federal National Mortgage Association, 11-10-95... 10.600 100 101,910
Federal National Mortgage Association, 02-28-96... 6.720 1,000 999,901
Federal National Mortgage Association, 03-10-97... 7.050 4,050 4,050,433
Financing Corp., 06-30-95......................... 8.908 480 456,246
Financing Corp., 07-24-95......................... 6.100 180 175,974
-----------
26,195,597
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $26,195,597) (89.93%) 26,195,597
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 49
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------- -------- --------------- ------
<S> <C> <C> <C>
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase agreement
transaction with BT Securities Corp. -- Dated
05-31-95, Due 06-01-95 (secured by U.S.
Treasury Bonds, 13.25% due 05-15-14, 11.25% due
02-15-15, 9.125% due 05-15-09, and U.S.
Treasury Note 6.75% due 05-31-97).................. 6.150% $2,640 $ 2,640,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $2,640,000) ( 9.06%) 2,640,000
------ -----------
TOTAL INVESTMENTS (98.99%) $28,835,597
====== ===========
</TABLE>
The percentage shown for each investment category is the total value of that
category expressed as a percentage of total net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
NOTE A --
ACCOUNTING POLICIES
John Hancock Current Interest Trust (the "Trust") is a diversified, open-end
management investment company, registered under the Investment Company Act of
1940, as amended. John Hancock U.S. Government Cash Reserve (the "Fund") is the
only series in the Trust presently issuing shares. The Trustees may authorize
the creation of additional Funds from time to time to satisfy various investment
objectives. Effective December 22, 1994 (see Note B), the Trust and Fund changed
names by replacing the word Transamerica with John Hancock.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Trustees have determined appropriate methods for
valuing portfolio securities. Accordingly, portfolio securities are valued at
amortized cost, in accordance with Rule 2a-7 of the Investment Company Act of
1940, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the security to the Fund. Interest income on
certain portfolio securities such as negotiable bank certificates of deposit and
interest bearing notes is accrued daily and included in interest receivable.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc., a wholly-owned subsidiary of The Berkeley Financial Group, may participate
in a joint repurchase agreement transaction. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis for both financial
reporting and federal income tax purposes.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies. It
will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders.
DIVIDENDS The Fund's net investment income is declared daily as dividends to
shareholders of record as of the close of business on the preceding day and
distributed monthly.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
On December 22, 1994, John Hancock Advisers, Inc. (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, became the investment adviser
for the Fund with approval of the Trustees and shareholders of the Fund. The
Fund's former investment manager was Transamerica Fund Management Company
("TFMC").
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of (a) 0.500% of the first $500,000,000 of the
Fund's average daily net asset value, (b) 0.425% of the next $250,000,000, (c)
0.375% of the next $250,000,000, (d) 0.350% of the next $500,000,000, (e) 0.325%
of the next $500,000,000, (f) 0.300% of the next $500,000,000 and (g) 0.275% in
excess of $2,500,000,000. This fee structure is consistent with the former
agreement with TFMC. For the period ended May 31, 1995, the advisory fee earned
by the Adviser and TFMC amounted to $130,358 and $310,040, respectively,
resulting in a total fee of $440,398.
The Adviser and TFMC, for their respective periods, provided administrative
services to the Fund pursuant to an administrative service agreement through
January 16, 1995 on which day the agreement was terminated.
10
<PAGE> 51
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.
The Adviser and TFMC, for their respective periods, agreed to limit the
Fund's expenses further to the extent required to prevent the aggregate expenses
of the Fund from exceeding on an annual basis 0.35% of the Fund's average daily
net asset value. Accordingly, for the period ended May 31, 1995, the reduction
to the Adviser's and TFMC's fees, collectively with any amounts not borne by the
Fund by virtue of the most restrictive state expense limit, amounted to $128,744
and $208,102, respectively. The limit may be discontinued at any time.
On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a
wholly owned subsidiary of the Adviser, became the principal underwriter of the
Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD") served
as the principal underwriter and distributor of the Fund.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Accordingly,
the Fund will make payments for distribution and service expenses which in total
will not exceed on an annual basis 0.15% of the Fund's average daily net assets.
Under the amended Rules of Fair Practice of the National Association of
Securities Dealers, curtailment of a portion of the Fund's 12b-1 payments could
occur under certain circumstances. This fee structure and plan is similar to the
former arrangements with TFD. Payments of fees under the Distribution Plan has
been suspended until further notice is given to the shareholders.
The Board of Trustees approved a shareholder servicing agreement between the
Fund and John Hancock Investor Services Corporation ("Investor Services"), a
wholly owned subsidiary of The Berkeley Financial Group, for the period between
December 22, 1994 and May 12, 1995, inclusive under which Investor Services
processed telephone transactions on behalf of the Fund. As of May 15, 1995, the
Fund entered into a full service transfer agent agreement with Investor
Services. Prior to this date The Shareholder Services Group was the transfer
agent. The Fund will pay Investor Services a fee based on transaction volume and
number of shareholder accounts.
A partner with Baker & Botts was an officer of the Trust until December 22,
1994. During the period ended May 31, 1995, legal fees paid to Baker & Botts
amounted to $4,552.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser and its
affiliates as well as Trustee of the Fund. The compensation of unaffiliated
Trustees is borne by the Fund. Effective with the fees paid for 1995, the
unaffiliated Trustees may elect to defer their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund will
make investments into other John Hancock Funds, as applicable, to cover its
liability with regard to the deferred compensation. Investments to cover the
Fund's deferred compensation liability will be recorded on the Fund's books as
other assets. The deferred compensation liability will be marked to market on a
periodic basis and income earned by the investment will be recorded on the
Fund's books.
The Fund has an independent advisory board composed of certain members of
the former Transamerica Board of Trustees who provide advice to the current
Trustees in order to facilitate a smooth management transition for which the
Fund pays the advisory board and its counsel a fee.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, including discount earned on
investment securities, during the period ended May 31, 1995 aggregated
$4,311,269,484 and $4,378,139,990, respectively.
The cost of investments owned at May 31, 1995 for Federal income tax
purposes was $28,835,597.
11
<PAGE> 52
John Hancock Funds - U.S. Government Cash Reserve
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Current Interest Trust --
John Hancock U.S. Government Cash Reserve
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock U.S. Government Cash Reserve
(formerly the Transamerica U.S. Government Cash Reserve) (the "Fund"), as of May
31, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
John Hancock U.S. Government Cash Reserve at May 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
five years in the period then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Boston, Massachusetts
July 10, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund during its fiscal year ended May 31, 1995.
All of the dividends paid for the fiscal year are taxable as ordinary income.
None of the 1995 dividends qualify for the dividends received deduction
available to corporations.
Shareholders will be mailed a 1995 U.S. Treasury Department Form 1099-DIV in
January of 1996. This will reflect the total of all distributions which are
taxable for calendar year 1995.
12
<PAGE> 53
JOHN HANCOCK CURRENT INTEREST
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in the Registration Statement:
John Hancock U.S. Government Cash Reserve
Statement of Assets and Liabilities as of May 31, 1995.
Statement of Operations of the year ended May 31, 1995.
Statement of changes in Net Asset for each of the two years ended
May 31.
Notes to Financial Statements.
Financial Highlights for each of the 10 years ended May 31, 1995.
Auditors' Report Schedule of Investments as of May 31, 1995.
(b) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibit
Index hereto and are incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is directly or indirectly controlled by or under common
control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of September 12, 1995, the number of record holders of shares of
Registrant was as follows:
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
<S> <C>
U.S. Government Cash Reserve 428
</TABLE>
ITEM 27. INDEMNIFICATION
(a) Indemnification provisions relating to the Registrant's Trustees,
officers, employees and agents is set forth in Article VII of the Registrant's
By Laws included as Exhibit 2 herein.
C-1
<PAGE> 54
(b) Under Section 12 of the Distribution Agreement, John Hancock Funds,
Inc. ("John Hancock Funds" ) has agreed to indemnify the Registrant and its
Trustees, officers and controlling persons against claims arising out of certain
acts and statements of John Hancock Funds.
Section 9(a) of the By-Laws of John Hancock Mutual Life Insurance Company
("Insurance Company") provides, in effect, that the Insurance Company will,
subject to limitations of law, indemnify each present and former director,
officer and employee of the Insurance Company who serves as a Trustee or
officer of the Registrant at the direction or request of the Insurance Company
against litigation expenses and liabilities incurred while acting as such,
except that such indemnification does not cover any expense or liability
incurred or imposed in connection with any matter as to which such person shall
be finally adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interests of the Insurance Company. In addition,
no such person will be indemnified by the Insurance Company in respect of any
liability or expense incurred in connection with any matter settled without
final adjudication unless such settlement shall have been approved as in the
best interests of the Insurance Company either by vote of the Board of Directors
at a meeting composed of directors who have no interest in the outcome of such
vote, or by vote of the policyholders. The Insurance Company may pay expenses
incurred in defending an action or claim in advance of its final disposition,
but only upon receipt of an undertaking by the person indemnified to repay such
payment if he should be determined not to be entitled to indemnification.
Article IX of the respective By-Laws of John Hancock Funds and John
Hancock Advisers, Inc. ("the Adviser") provide as follows:
"Section 9.01. Indemnity: Any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time since the
inception of the Corporation a director, officer, employee or agent of the
Corporation, or is or was at any time since the inception of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified by the Corporation against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and the liability was not incurred by reason of gross
negligence or reckless disregard of the duties involved in the conduct of his
office, and expenses in connection therewith may be advanced by the Corporation,
all to the full extent authorized by the law."
"Section 9.02. Not Exclusive; Survival of Rights: The indemnification provided
by Section 9.01 shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
Insofar as indemnification for liabilities under the Securities Act of 1933 (the
"Act") may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the Registrant's Declaration of Trust and By-Laws of John
Hancock Funds, the Adviser, or the Insurance Company or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against policy as expressed in the
C-2
<PAGE> 55
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and Directors of the Adviser,
reference is made to Forms ADV (801-8124) filed under the Investment Advisers
Act of 1940, which is incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) John Hancock Funds acts as principal underwriter for the Registrant and also
serves as principal underwriter or distributor of shares for John Hancock Cash
Reserve, Inc., John Hancock Bond Fund, John Hancock Current Interest, John
Hancock Series, Inc., John Hancock Tax-Free Bond Fund, John Hancock California
Tax-Free Income Fund, John Hancock Capital Series, John Hancock Limited Term
Government Fund, John Hancock Tax-Exempt Income Fund, John Hancock Sovereign
Investors Fund, Inc., John Hancock Cash Management Fund, John Hancock Special
Equities Fund, John Hancock Sovereign Bond Fund, John Hancock Tax-Exempt Series,
John Hancock Strategic Series, John Hancock Technology Series, Inc., John
Hancock World Fund, John Hancock Investment Trust, John Hancock Institutional
Series Trust, Freedom Investment Trust, Freedom Investment Trust II and Freedom
Investment Trust III.
(b) The following table lists, for each director and officer of John Hancock
Funds, the information indicated.
C-3
<PAGE> 56
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
------------------ --------------------- ---------------------
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Edward J. Boudreau, Jr. Chairman Chairman
101 Huntington Avenue
Boston, Massachusetts
Robert H. Watts Director and Senior None
John Hancock Place Vice President
P.O. Box 111
Boston, Massachusetts
C. Troy Shaver, Jr. President, Chief None
101 Huntington Avenue Executive Officer and
Boston, Massachusetts Director
Robert G. Freedman Director Vice President, Chief
101 Huntington Avenue Investment Officer
Boston, Massachusetts
Stephen M. Blair Executive Vice President- None
101 Huntington Avenue Sales
Boston, Massachusetts
Thomas H. Drohan Senior Vice President Senior Vice President and
101 Huntington Avenue Secretary
Boston, Massachusetts
James W. McLaughlin Senior Vice President None
101 Huntington Avenue and
Boston, Massachusetts Chief Financial Officer
David A. King Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
James B. Little Senior Vice President Senior Vice President and
101 Huntington Avenue Chief Financial Officer
Boston, Massachusetts
</TABLE>
C-4
<PAGE> 57
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
------------------ --------------------- ---------------------
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
William S. Nichols Senior Vice President None
101 Huntington Avenue
Boston, Massachusetts
John A. Morin Vice President Vice President
101 Huntington Avenue
Boston, Massachusetts
Susan S. Newton Vice President and Secretary Vice President,
101 Huntington Avenue Assistant Secretary
Boston, Massachusetts and Compliance Officer
Christopher M. Meyer Treasurer None
101 Huntington Avenue
Boston, Massachusetts
Stephen L. Brown Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Thomas E. Moloney Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Jeanne M. Livermore Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Richard S. Scipione Director Trustee
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John Goldsmith Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
</TABLE>
C-5
<PAGE> 58
<TABLE>
<S> <C> <C>
Richard O. Hansen Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
John M. DeCiccio Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Foster Aborn Director None
John Hancock Place
P.O. Box 111
Boston, Massachusetts
Michael T. Carpenter Senior Vice President None
1000 Louisiana Steet
Houston, Texas
William C. Fletcher Director None
53 State Street
Boston, Massachusetts
James V. Bowhers Executive Vice President None
101 Huntington Avenue
Boston, Massachusetts
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records required to be maintained by it under
Rules 31a-1 (a), 31a-1(b), and 31a-2(a) under the Investment Company
Act of 1940 at its principal executive offices at 101 Huntington
Avenue, Boston Massachusetts 02199-7603. Certain records, including
records relating to the Registrant's shareholders and the physical
possession of its securities, may be maintained pursuant to Rule 31a-3
at the main offices of the Registrant's Transfer Agent and Custodian.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable
C-6
<PAGE> 59
(b) Not applicable
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus with respect to a series of the Registrant is delivered with
a copy of the latest annual report to shareholders with respect to that
series upon request and without charge.
C-7
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and The Commonwealth of Massachusetts on the
26th day of September, 1995.
JOHN HANCOCK CURRENT INTEREST
By: *
----------------------------
Edward J. Boudreau, Jr.
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman and Chief Executive
- -----------------------------
Edward J. Boudreau, Jr. Officer (Principal Executive
Officer)
/s/James B. Little
- -----------------------------
James B. Little Senior Vice President and Chief September 26, 1995
Financial Officer (Principal
Financial and Accounting Officer)
* Trustee
- -----------------------------
James F. Carlin
* Trustee
- -----------------------------
William H. Cunningham
* Trustee
- -----------------------------
Charles F. Fretz
</TABLE>
C-8
<PAGE> 61
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Trustee
- -----------------------------
Harold R. Hiser, Jr.
* Trustee
- -----------------------------
Charles L. Ladner
* Trustee
- -----------------------------
Leo E. Linbeck, Jr.
* Trustee
- -----------------------------
Patricia P. McCarter
* Trustee
- -----------------------------
Steven R. Pruchansky
* Trustee
- -----------------------------
Norman H. Smith
* Trustee
- -----------------------------
John P. Toolan
*By: /s/Thomas H. Drohan September 26, 1995
-------------------
Thomas H. Drohan,
Attorney-in-Fact
</TABLE>
C-9
<PAGE> 62
JOHN HANCOCK CURRENT INTEREST
(File No. 2-50931)
INDEX TO EXHIBITS
(1) (a) Declaration of Trust.*
(b) Amendment to Declaration of Trust.*
(c) Amendment to Declaration of Trust dated December 16,
1994.*
(2) Amended Bylaws.*
(3) Not Applicable.
(4) Specimen Share Certificates for Class A Shares and Class B
Shares.**
(5) (a) Investment Advisory Agreement between John Hancock
Advisers, Inc. and the Registrant on behalf of U.S.
Government Cash Reserve Fund.*
(b) Amended and Restated Administrative Services Agreement
among Transamerica Funds Management Company,
Transamerica Funds Distributor, Inc. and the Registrant
on behalf of U.S. Government Cash Reserve Fund.*
(6) (a) Distribution Agreement between John Hancock Broker
Distribution Services, Inc. and the Registrant.
(b) Form of Soliciting Dealer Agreement between John Hancock
Funds, Inc. and the John Hancock funds.
(c) Form of Financial Institution Sales and Service
Agreement between John Hancock Funds, Inc. and the John
Hancock funds.*
(7) Not Applicable.
(8) Master Custodian Agreement between the John Hancock funds and
Investors Bank & Trust Company.*
(9) Transfer Agency Agreement between John Hancock Investor
Services Corporation and the John Hancock funds.*
(10) 24e2 Opinion.+
(11) Consent of Independent Auditors.+
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
<PAGE> 63
(15) Rule 12b-1 Plan for Class A Shares.*
(i) U.S. Government Cash Reserves Fund
(16) Schedule for computation of each performance quotation
provided in the Registration Statement in response to
Item 22.*
(17) Powers of Attorney+
(27) Financial Data Schedule.+
_______________________
* Previously filed with Registration Statement and/or post-
effective amendments and incorporated by reference herein.
** To be filed by post-effective amendment.
+ Filed herewith.
<PAGE> 1
Exhibit 10
[JOHN HANCOCK LETTERHEAD]
September 25, 1995
John Hancock Current Interest
101 Huntington Avenue
Boston, MA 02199
RE: John Hancock Current Interest
(File Nos. 2-50931; 811-2485) (0000026262)
Ladies and Gentlemen:
In connection with the filing of Post-Effective Amendment No. 28 pursuant to
Rule 24e-2 under the Investment Company Act of 1940, as amended, registering by
Post-Effective Amendment No. 50 under the Securities Act of 1933, as amended,
290,000 shares of John Hancock Current Interest (the "Fund") sold in reliance
upon Rule 24e-2 during the fiscal year ending May 31, 1995, it is the opinion
of the undersigned that such shares will be legally issued, fully paid and
nonassessable.
In connection with this opinion it should be noted that the Fund is an entity
of the type generally known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of a Massachusetts business trust may be held
personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for obligations of the
Fund and indemnifies any shareholder of the Fund, with this indemnification to
be paid solely out of the assets of the Fund. Therefore, the shareholder's risk
is limited to circumstances in which the assets of the Fund are insufficient to
meet the obligations asserted against Fund assets.
Sincerely,
/S/ Alfred P. Ouellette
Alfred P. Ouellette
Assistant Secretary
Member of Massachusetts Bar
<PAGE> 1
Exhibit 11
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "The Fund's
Financial Highlights" in the Prospectus and "Independent Auditors" in the
Statement of Additional Information and to the use, in this Post-Effective
Amendment Number 50 to Registration Statement (Form N-1A No. 2-50931), of our
report on the financial statements and financial highlights of the John Hancock
U.S. Government Cash Reserve portfolio of John Hancock Current Interest
dated July 10, 1995.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
September 26, 1995
<PAGE> 1
POWER OF ATTORNEY
The undersigned Trustee/Director of John Hancock California Tax-Free
Income Fund, John Hancock Capital Growth Fund, John Hancock Cash Reserve, Inc.,
John Hancock Tax-Free Bond Fund, John Hancock Current Interest, John Hancock
Investment Trust, John Hancock Bond Fund, and John Hancock Series, Inc. does
hereby severally constitute and appoint Edward J. Boudreau, Jr., Thomas H.
Drohan, Robert G. Freedman and James B. Little, and each acting singly, to be my
true, sufficient and lawful attorneys, with full power to each of them, and each
acting singly, to sign for me, in my name and in the capacity indicated below,
any Registration Statement on Form N-1A and any Registration Statement on Form
N-14 to be filed by the Trusts/Corporations under the Investment Company Act of
1940, as amended ( the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of shares and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the
Trusts/Corporations to comply with the 1940 Act and the 1933 Act, and all
requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming my signature as it may be signed by said attorneys or
each of them to any such Registration Statements and any and all amendments
thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the 11th day of September, 1995.
/s/ Harold R. Hiser, Jr
-------------------------------------
Harold R. Hiser, Jr. Trustee/Director
<PAGE> 2
POWER OF ATTORNEY
The undersigned Trustee/Director of John Hancock California Tax-Free
Income Fund, John Hancock Capital Growth Fund, John Hancock Cash Reserve, Inc.,
John Hancock Tax-Free Bond Fund, John Hancock Current Interest, John Hancock
Investment Trust, John Hancock Bond Fund, and John Hancock Series, Inc. does
hereby severally constitute and appoint Edward J. Boudreau, Jr., Thomas H.
Drohan, Robert G. Freedman and James B. Little, and each acting singly, to be my
true, sufficient and lawful attorneys, with full power to each of them, and each
acting singly, to sign for me, in my name and in the capacity indicated below,
any Registration Statement on Form N-1A and any Registration Statement on Form
N-14 to be filed by the Trusts/Corporations under the Investment Company Act of
1940, as amended ( the "1940 Act"), and under the Securities Act of 1933, as
amended (the "1933 Act"), and any and all amendments to said Registration
Statements, with respect to the offering of shares and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the
Trusts/Corporations to comply with the 1940 Act and the 1933 Act, and all
requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming my signature as it may be signed by said attorneys or
each of them to any such Registration Statements and any and all amendments
thereto.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the 11th day of September, 1995.
/s/Chares F. Fretz
----------------------------------
Charles F. Fretz, Trustee/Director
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<PERIOD-START> JUN-01-1994
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