<PAGE> 1
JOHN HANCOCK FUNDS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
U.S.
GOVERNMENT
CASH
RESERVE
SEMI-ANNUAL REPORT
NOVEMBER 30, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer
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
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
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Investors around the world have been watching Wall Street in awe for the better
part of 1995. Through November, the Standard & Poor's 500-Stock Index, a
widely-used barometer of stock performance, had grown by 32%. Investors who
stayed in the market after a disappointing 1994 have been rewarded.
On another street, Pennsylvania Avenue, one of the hot topics many
people are watching is Medicare reform. While there's no clear-cut solution on
the horizon, today's Medicare debate should serve as another wake-up call to
all Americans about the need to have a financial plan and to save for
retirement. Whether or not the government changes the way health-care benefits
are allotted to senior citizens, the message is clear: your future security and
well-being lies in your own hands -- not Uncle Sam's.
We know you've heard it a hundred times. Pick up almost any financial
periodical today, and you'll see cover stories on retirement. Many of them will
perhaps scare you or make you think that the task of saving for retirement is
just too daunting. But take heart. We don't believe that and neither do many
financial experts.
Yet retirement planning is not to be taken lightly. To live the way you
want to -- the way you deserve to after all those years of hard work -- you
need to plan and save now, on a regular basis, no matter what your other costs,
no matter how small the amount, no matter what your current age. It may be
easier if you start earlier, but it's never too late.
Building a secure nest egg is indeed doable. Talk to your financial
adviser about establishing your retirement planning roadmap, if you haven't
already. And educate yourself by reading some of the many articles about how to
save for retirement. Take control of your future by saving today. That way,
when it comes time for retirement, you shouldn't have to think about any street
but Easy Street.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY DAWN BAILLIE, PORTFOLIO MANAGER
JOHN HANCOCK
U.S. GOVERNMENT
CASH RESERVE
Money market yields approach highest level in four years
--------------------------------------------------------
Money market yields remained fairly steady between June and November, hovering
close to their highest levels in almost four years despite a small decrease in
short-term rates by the Federal Reserve in July. At the end of November, the
federal funds rate -- the interest rate banks charge each other for overnight
loans and which serves as the benchmark for pricing most money market
securities -- stood at 5.75%. With yields between 5% and 6%, money market
investors are earning a real rate of return -- that is, the return after
inflation -- of 2.5% to 3%. As a result, many investors returned to money
market funds in 1995, recognizing that while these funds present a "safe
haven," they also provide a nice rate of return for the low level of risk.
[A 2 1/2" x 2 1/4" photo of Dawn Baillie, bottom center. Caption reads: "DAWN
BAILLIE, PORTFOLIO MANAGER."]
On November 30, 1995, John Hancock U.S. Government Cash Reserve Fund
had a 7-day average yield of 5.72%. [1] The Fund outperformed the average U.S.
government/agency money market fund, which had a 7-day average yield of 5.09%,
according to IBC/Donoghue's Money Fund Report.
LONGER THAN AVERAGE MATURITY
As the Fed reversed course in July and lowered short-term rates by one quarter
of a percentage point - after more than a year of interest rate increases - the
Fund continued to extend its average maturity and kept it slightly longer than
the Donoghue's average for government/agency funds. As of November 30, the
average maturity of the Fund was 68 days, up from an average of nearly 53 days
at the start of the semi-annual period and higher than the Donoghue's average
50 days. Average maturity is commonly used as a way to gage a money market
[CAPTION]
"MONEY MARKET YIELDS HAVE REMAINED FAIRLY STEADY OVER THE
LAST SIX MONTHS."
3
<PAGE> 4
John Hancock Funds - U.S. Government Cash Reserve
[Bar chart with heading "7-DAY YIELD" at top of left hand column. Under the
heading is the footnote "As of November 30, 1995." The chart is scaled in
increments of 2% from top to bottom with 6% at the top and 0% at the bottom.
Within the chart, there are two solid bars. The first represents the 5.72%
7-day yield for John Hancock U.S. Government Cash Reserve Fund. The second
represents the 5.09% 7-day yield for the average US government/agency money
market fund. Footnote below reads: "The average U.S. government/agency money
market fund is tracked by IBC/Donoghue's Money Fund Report."]
fund's approach to seeking yield. Typically, a longer average maturity
signifies a more aggressive approach. It also serves as protection against
further interest rate declines that are anticipated because of an inflation
picture that looks under control and economic growth that remains slow to
slightly moderate.
FED WATCH
The Federal Open Market Committee (FOMC), the group that determines Fed
monetary policy, has shown its willingness to respond to signs of economic
slowdown. As expected, they did not lower interest rates again in November,
because there were enough signs that the economy had enough momentum on its
own. But shortly after the Fund's period ended, the Fed lowered the federal
funds rate another one-quarter point, to 5.5%, on news of lower-than-expected
inflation. What's more, they're still waiting to see what progress Congress
makes on the federal budget deficit. The Fed could reward Congress or credible
budget deficit action, if it occurs, with another quarter-point reduction at
the January FOMC meeting. So it appears likely that interest rates could be
going down again.
LOOKING AHEAD
As for now, we plan to stick to our current strategy of maintaining an average
maturity in the 60-day range, with the bulk of the portfolio invested in
interest-bearing government agency securities. We will keep a close eye on the
economy as we expect growth to remain mild and inflation to remain in check. If
growth remains too sluggish and it looks like a deficit reduction plan may be
put in place, the Fund may begin to lengthen its maturity by a few more days as
an additional protection against an interest rate decline. However, year end
always presents interesting opportunities for money market funds. There is
usually a strong demand for financing around this time of year, which often
drives short-term yields up. With this in mind, we will watch carefully for the
best time to lock in higher yields.
[CAPTION]
"...IT APPEARS LIKELY THAT INTEREST RATES COULD BE GOING DOWN AGAIN."
- ------------------------------------------------------------------------------
[1]During the period of this report, the Adviser voluntarily agreed to limit the
Fund's expenses to 0.35% of its daily net asset value. Without the subsidy, the
7-day average yield as of 5/31/95 would have been 4.90%.
The Fund is neither insured nor guaranteed by the U.S. government. There can be
no assurance that the Fund will be able to maintain a net asset value of $1.00
per share.
This commentary reflects the views of the portfolio manager through the end of
the Fund's period discussed in this report. Of course, the manager's views are
subject to change as market and other conditions warrant.
4
<PAGE> 5
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, in money market instruments,
at value - Note C:
U.S. government obligations (cost - $17,690,375)....... $17,690,375
Joint repurchase agreement (cost - $4,191,000)......... 4,191,000
-----------
21,881,375
Cash..................................................... 127,637
Interest receivable...................................... 383,444
Receivable from John Hancock Advisers, Inc. - Note B..... 1,357
Other assets............................................. 17,292
-----------
Total Assets 22,411,105
-------------------------------------------
LIABILITIES:
Dividend payable......................................... 3,499
Payable to John Hancock Advisers, Inc. and
affiliates - Note B...................................... 9,773
-----------
Total Liabilities 13,272
-------------------------------------------
NET ASSETS:
Capital paid-in.......................................... 22,397,833
-----------
Net Assets $22,397,833
===========================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
(based on 22,397,833 shares of
beneficial interest outstanding -
unlimited number of shares
authorized with $0.01
par value) $ 1.00
===========================================
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 NOVEMBER 30, 1995.
YOU'LL ALSO FIND THE NET ASSET VALUE PER SHARE AS OF THAT DATE.
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
Six months ended November 30, 1995 (Unaudited)
- ----------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................. $743,592
-----------
Expenses:
Investment management fee - Note B 61,258
Auditing fee........................................... 16,138
Custodian fee.......................................... 13,827
Registration and filing fees........................... 13,161
Printing............................................... 12,609
Legal fees............................................. 10,821
Transfer agent fee - Note B............................ 6,069
Trustees' fees......................................... 4,378
Advisory board fee..................................... 3,485
Miscellaneous.......................................... 2,000
-----------
Total Expenses................. 143,746
Less Expenses Reimbursable by
John Hancock Advisers, Inc. -
Note B......................... (100,864)
-------------------------------------------
Net Expenses................... 42,882
-------------------------------------------
Net Investment Income.......... 700,710
-------------------------------------------
Net Increase in Net Assets
Resulting from Operations...... $700,710
===========================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1995 MAY 31,
(UNAUDITED) 1995
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income......................................................... $ 700,710 $ 4,215,208
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0287 and $0.0495 per share,
respectively)................................................................. (700,710) (4,215,208)
----------- ------------
FROM FUND SHARE TRANSACTIONS -- NET*............................................. (6,732,882) (65,276,832)
----------- ------------
NET ASSETS:
Beginning of period........................................................... 29,130,715 94,407,547
----------- ------------
End of period................................................................. $22,397,833 $ 29,130,715
=========== ============
* ANALYSIS OF FUND SHARE TRANSACTIONS AT $1 PER SHARE:
Shares sold................................................................... $91,541,288 $215,745,531
Shares issued to shareholders in reinvestment of distributions................ 523,595 2,455,376
----------- ------------
92,064,883 218,200,907
Less shares repurchased....................................................... (98,797,765) (283,477,739)
----------- ------------
Net decrease.................................................................. $(6,732,882) $(65,276,832)
=========== ============
</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.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
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>
SIX MONTHS ENDED
NOVEMBER 30, 1995 YEAR ENDED MAY 31,
-----------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ------- ------- -------- --------- ---------
<S> <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
------- ------- ------- -------- -------- ---------
Net Investment Income............................... 0.03 0.05 0.03 0.03 0.05 0.07
------- ------- ------- -------- -------- ---------
Less Distributions:
Dividends from Net Investment Income................ (0.03) (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 $ 1.00
======= ======= ======= ======== ======== ========
Total Investment Return at Net Asset Value.......... 2.92% 5.07% 3.04% 3.25% 4.95% 7.42%
Total Adjusted Investment Return at Net
Asset Value (b).................................... 2.10% 4.69% 2.74% 2.93% 4.62% 7.11%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)........... $22,398 $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% 0.35%
Ratio of Adjusted Expenses to Average Net
Assets (a)......................................... 1.17%* 0.73% 0.65% 0.67% 0.68% 0.66%
Ratio of Net Investment Income to Average Net
Assets............................................. 5.70%* 4.79% 2.96% 3.19% 4.86% 7.21%
Ratio of Adjusted Net Investment Income
to Average Net Assets (a)........................ 4.88%* 4.41% 2.66% 2.87% 4.53% 6.90%
<FN>
(a) On an unreimbursed basis without expense reduction.
(b) An estimated total return calculation which takes into consideration fees
and expenses borne by the Adviser during the periods shown.
* On an annualized basis.
</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> 8
FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
SCHEDULE OF INVESTMENTS
November 30, 1995 (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------------------------ -------- --------------- ----------
<S> <C> <C> <C>
U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (78.98%)
Federal Home Loan Bank,
12-08-95......................... 7.150% $ 500 $ 500,109
Federal Home Loan Bank,
01-19-96......................... 7.305 455 455,317
Federal Home Loan Bank,
01-26-96......................... 5.030 500 499,242
Federal Home Loan Bank,
03-18-96......................... 5.020 1,050 1,047,184
Federal Home Loan Bank,
04-24-96......................... 6.420 300 300,666
Federal Home Loan Bank,
04-25-96......................... 7.750 500 503,694
Federal Home Loan Bank,
09-26-96......................... 5.925 600 600,044
Federal Home Loan Bank,
10-30-96......................... 5.900 2,000 2,000,000
Federal Home Loan Mortgage
Corp., 02-08-96.................. 5.800 275 271,943
Federal Home Loan Mortgage
Corp., 02-28-96.................. 6.840 1,000 1,000,567
Federal National Mortgage
Association, 12-11-95............ 6.300 9,150 9,150,871
Federal National Mortgage
Association, 02-28-96............ 6.720 1,000 999,968
Federal National Mortgage
Association, 04-18-96............ 6.430 360 360,770
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $17,690,375) (78.98%) 17,690,375
------ ----------
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON NOVEMBER 30, 1995. IT'S DIVIDED INTO TWO TYPES OF SHORT-TERM
INVESTMENTS.
<TABLE>
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------------------------ -------- --------------- ----------
<S> <C> <C> <C>
JOINT REPURCHASE AGREEMENT (18.71%)
Investment in a joint repurchase
agreement transaction with SBC
Capital Markets, Inc. -
Dated 11-30-95, Due 12-01-95
(secured by U.S. Treasury Bond,
8.875% due 08-15-17) -
Note A........................... 5.910% $4,191 $ 4,191,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $4,191,000) (18.71%) 4,191,000
------ -----------
TOTAL INVESTMENTS (97.69%) $21,881,375
====== ===========
</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.
8
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
(UNAUDITED)
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. 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. (the "Adviser"), 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
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program quivalent, 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.
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 agreed to limit the Fund's expenses further to the extent
required to prevent expenses from exceeding 0.35% of the Fund's average daily
net assets. Accordingly, for the period ended November 30, 1995, the reduction
to the Adviser's fee amounted to $100,864. The Adviser reserves the right to
terminate this limitation in the future.
9
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - U.S. Government Cash Reserve
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly owned subsidiary of the Adviser. To reimburse 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 to JH Funds for
distribution and service expenses, at an annual rate not to exceed 0.15% of the
Fund's average daily net assets. Under the amended Rules of Fair Practice,
curtailment of a portion of the Fund's 12b-1 payments could occur under certain
circumstances. There were no payments under the Distribution Plan during the
period ended November 30, 1995. Payment of fees under the Distribution Plan
were suspended during this period.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. The Fund pays transfer agent fees based on
transaction volume and the number of shareholder accounts.
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.
On December 22, 1994, John Hancock Advisers, Inc. 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. 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 November 30, 1995 aggregated
$1,513,755,915 and $1,521,003,426, respectively.
The cost of investments owned at November 30, 1995 for Federal income
tax purposes was $21,881,375.
10
<PAGE> 11
NOTES
John Hancock Funds - U.S. Government Cash Reserve
11
<PAGE> 12
[LOGO] John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue Boston, MA 02199-7603
[A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below reads
"A Global Investment Management Firm."]
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This report is for the information of shareholders of the John Hancock
U.S. Government Cash Reserve. It may be used as sales literature when preceded
or accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
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