---------------------------
The latest report from your
Fund's management team
---------------------------
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
U.S.
Government
Cash Reserve
SEPTEMBER 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
-----------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
Steven R. Pruchansky*
Richard S. Scipione
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
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
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 LLP
60 State Street
Boston, Massachusetts 02109-1803
-------------------------------------------
===============================CHAIRMAN'S MESSAGE===============================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements for all mission-critical systems are done
and successfully compliance tested. The rest of 1999 will be spent completing
the few remaining non-mission-critical systems, testing with our business
partners and continuing to participate in industry testing. We have also
established additional contingency plans beyond our regular ones to prepare for
any challenges that the Year 2000 might present. In the end, John Hancock will
spend approximately $90-$95 million to ensure we make a successful transition to
the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning. No one knows how the
dawning of the new millennium will unfold. Although we cannot make any ironclad
assurances, we are confident that the steps we have taken will provide
shareholders with as smooth a transition as possible. Once that occurs, we will
happily raise our glasses to toast the New Year, future prosperity and our hopes
to serve you well into the 2000s.
Sincerely,
/s/Edward J. Boudreau, Jr.
- --------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Dawn Baillie for the Portfolio Management Team
John Hancock U.S.
Government Cash Reserve
Strengthening global economies prompt inflation fears
-----------------------------------------------------
and two rate hikes by the Federal Reserve
-----------------------------------------
Money-market yields reversed course and rose over the last six months, the
result of several important changes in the economic environment. Overseas
markets began to stabilize, Asian economies in particular started showing signs
of life and the U.S. economy remained surprisingly robust. These developments
contributed to growing concerns that inflation dreaded for its corrosive effect
on investors' fixed income streams and on the health of the economy - was on the
rise. As a result, the ever-vigilant Federal Reserve Board switched gears and
raised short-term interest rates twice - in June and again in August. The Fed's
moves brought the federal funds rate - that which banks charge each other for
overnight loans - up to 5.25% from 4.75% at the beginning of the period.
Although an inflation spike has yet to materialize, the Fed's actions
were meant as pre-emptive strikes to gradually cool down the economy and nip any
hint of inflation in the bud. Money-market yields also moved up in response,
since the federal funds rate is a key pricing benchmark for money-market
securities. It was the first time the Fed had raised rates in two years, and the
hikes marked a partial reversal of its three previous rate cuts made between
last September and November when economic turmoil reigned overseas and fears
were mounting of an impending global recession.
- --------------------------------------------------------------------------------
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock U.S.
Government Cash Reserve. Caption below reads "U.S. Government Cash Reserve
management team members: Barry Evans and Dawn Baillie."]
- --------------------------------------------------------------------------------
"Money-market yields reversed course and rose over the last six months..."
3
<PAGE>
================================================================================
John Hancock Funds - U.S. Government Cash Reserve
"...we intend to keep the Fund's maturity slightly shorter than average until it
is clear that the Fed is done raising rates."
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "7-Day Effective Yield".
Under the heading is a note that reads "As of September 30, 1999." The chart is
scaled in increments of 1% with 0% at the bottom and 6% at the top. The first
bar represents the 4.99% total return for John Hancock U.S. Government Cash
Reserve. The second bar represents the 4.62% total return for Average U.S.
government money-market fund. A note below the chart reads "The average U.S.
government money-market fund is tracked by Lipper, Inc. Past performance is no
guarantee of future results."]
- --------------------------------------------------------------------------------
7-day effective yield
On September 30, 1999, John Hancock U.S. Government Cash Reserve had a 7-day
effective yield of 4.99%. By comparison, the average U.S. government
money-market fund had a 7-day effective yield of 4.62%, according to Lipper,
Inc.
Timely maturity moves
We shifted the Fund's maturity several times during the period to adapt to the
changing environment. At the beginning of the semi-annual period in April, the
Fund's maturity was slightly longer than average. That was based on our belief
that the Fed, which had adopted a neutral bias after its three rate cuts last
year, was not prepared to raise interest rates, since the potential for an
economic slowdown remained real.
In April, however, as signs of economic strength grew and the market
became increasingly jittery in anticipation of a rate hike, we took a more
conservative stance, scaling back our average maturity to between five and ten
days shorter than average. We maintained our defensive posture throughout the
summer, given the strength of the economic data, and were therefore well
prepared for the Fed's second move in August. This meant we had more money
maturing earlier that we could reinvest in higher-yielding securities following
the rate hike.
Fourth quarter defensive
Along with the August rate hike, the Fed moved back to a neutral stance on
further interest-rate moves and we lengthened our maturity slightly to get
better yields. But at the beginning of September, with further signs of renewed
vigor in Asian economies, we grew more defensive again and moved back to a more
average maturity by the end of September.
Cautious approach ahead
Between now and year end, we intend to keep the Fund's maturity slightly shorter
than average until it is clear that the Fed is done raising rates. For now, the
Fed remains solidly in the picture, keeping a watchful eye on levels of U.S.
unemployment and wages and the ongoing strength of both consumer demand and the
financial markets. A shorter maturity will also help the Fund accommodate
potential increased liquidity demands as a result of the approaching changeover
to the year 2000. As always, we will continue to stay focused on providing the
Fund with a competitive level of current income, while preserving stability of
principal.
- --------------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team through the
end of the Fund's period discussed in this report. Of course, the team's views
are subject to change as market and other conditions warrant.
The Fund is neither insured nor guaranteed by the U.S. government. Although the
Fund seeks to maintain a net asset value of $1.00 per share, it is possible to
lose money by investing in the Fund.
4
<PAGE>
=============================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 September 30, 1999. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments, in money market instruments,
at value - Note C:
U.S. government obligations (cost - $104,636,733)............. $104,636,733
Joint repurchase agreement (cost - $22,471,000) .............. 22,471,000
--------------
127,107,733
Cash .......................................................... 554
Receivable for shares sold .................................... 60,000
Interest receivable ........................................... 1,887,066
Other assets .................................................. 19,406
--------------
Total Assets ...................... 129,074,759
--------------------------------------------------
Liabilities:
Payable for shares repurchased ................................ 296,003
Dividend payable .............................................. 15,520
Payable to John Hancock Advisers, Inc. and affiliates -
Note B ....................................................... 32,753
Accounts payable and accrued expenses ......................... 36,831
--------------
Total Liabilities ................. 381,107
--------------------------------------------------
Net Assets:
Capital paid-in ............................................... 128,693,652
--------------
Net Assets ........................ $128,693,652
==================================================
Net Asset Value, Offering Price and Redemption Price Per Share:
(Based on 128,693,652 shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 par value) ........................................ $1.00
=============================================================================
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund for the period stated.
Statement of Operations
Six months ended September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest ...................................................... $2,769,845
--------------
Expenses:
Investment management fee - Note B ........................... 275,651
Distribution and service fee - Note B ........................ 82,922
Transfer agent fee - Note B .................................. 44,716
Custodian fee ................................................ 21,021
Registration and filing fees ................................. 19,915
Auditing fee ................................................. 10,082
Accounting and legal services fee - Note B ................... 9,850
Trustees' fees ............................................... 3,852
Printing ..................................................... 3,480
Legal fees ................................................... 1,509
Miscellaneous ................................................ 597
--------------
Total Expenses .................... 473,595
--------------------------------------------------
Less Expense Reductions -
Note B ............................ (280,189)
--------------------------------------------------
Net Expenses ...................... 193,406
--------------------------------------------------
Net Investment Income ............. 2,576,439
--------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ......... $2,576,439
==================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, 1999
MARCH 31, 1999 (UNAUDITED)
------------------- --------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ............................................................ $4,759,013 $2,576,439
---------------- ----------------
Distributions to Shareholders:
Dividends from net investment income ($0.0497 and $0.0233 per share, respectively) (4,759,013) (2,576,439)
---------------- ----------------
From Fund Share Transactions - Net: * ............................................. 33,768,548 20,477,627
---------------- ----------------
Net Assets:
Beginning of period .............................................................. 74,447,477 108,216,025
---------------- ----------------
End of period .................................................................... $108,216,025 $128,693,652
================ ================
*Analysis of Fund Share Transactions at $1 Per Share:
Shares sold ...................................................................... $236,419,609 $131,808,307
Shares issued to shareholders in reinvestment of distributions ................... 4,405,830 2,354,475
---------------- ----------------
.................................................................................. 240,825,439 134,162,782
Less shares repurchased .......................................................... (207,056,891) (113,685,155)
---------------- ----------------
Net increase ..................................................................... $33,768,548 $20,477,627
================ ================
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 number of Fund shares sold, reinvested and repurchased during the last two
periods.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
YEAR ENDED MAY 31, PERIOD FROM YEAR ENDED MARCH 31, SIX MONTHS ENDED
----------------------------- JUNE 1, 1996 TO ------------------- SEPTEMBER 30, 1999
1994 1995(1) 1996 MARCH 31, 1997(5) 1998 1999 (UNAUDITED)
-------- -------- -------- ---------------- -------- -------- ------------------
Per Share Operating Performance
Net Asset Value, Beginning of Period...... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- -------- -------- -------- -------- -------- --------
Net Investment Income .................... 0.03 0.05 0.05 0.04 0.05 0.05 0.02
------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income ..... (0.03) (0.05) (0.05) (0.04) (0.05) (0.05) (0.02)
------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(2) ...................... 3.04% 5.07% 5.59% 4.37%(6) 5.43% 5.08% 2.35%(6)
Total Adjusted Investment Return at
Net Asset Value(2,3) .................... 2.59% 4.54% 4.69% 3.78%(6) 4.87% 4.55% 2.10%(6)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) . $94,408 $29,131 $28,907 $55,321 $74,447 $108,216 $128,694
Ratio of Expenses to Average Net Assets .. 0.35% 0.35% 0.35% 0.35%(7) 0.35% 0.35% 0.35%(7)
Ratio of Adjusted Expenses to
Average Net Assets(4) ................... 0.80% 0.88% 1.25% 1.03%(7) 0.91% 0.88% 0.86%(7)
Ratio of Net Investment Income to
Average Net Assets ...................... 2.96% 4.79% 5.41% 5.15%(7) 5.30% 4.94% 4.66%(7)
Ratio of Adjusted Net Investment Income
to Average Net Assets(4) ................ 2.51% 4.26% 4.51% 4.47%(7) 4.74% 4.41% 4.15%(7)
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(2) Total investment return assumes dividend reinvestment.
(3) An estimated total return calculation that does not take into consideration
fee reductions by the Adviser during the periods shown.
(4) Unreimbursed, without fee reduction.
(5) Effective March 31, 1997, the fiscal period end changed from May 31 to March 31.
(6) Not annualized.
(7) Annualized.
The Financial Highlights summarizes the impact of net investment income and
dividends on a single share for each 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>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
Schedule of Investments
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Fund on September 30, 1999. It's divided into two types of short-term
investments.
PAR VALUE
INTEREST (000s MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- ------- ------
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (81.31%)
Federal Farm Credit Bank,
10-01-99 ............................... 8.650% $3,200 $3,200,000
Federal Farm Credit Bank,
12-01-99 ............................... 5.220 4,500 4,498,454
Federal Home Loan Bank,
10-25-99 ............................... 8.375 1,215 1,217,616
Federal Home Loan Bank,
10-28-99 ............................... 7.650 1,050 1,052,055
Federal Home Loan Bank,
10-29-99 ............................... 5.030 10,000 9,999,730
Federal Home Loan Bank,
11-05-99 ............................... 5.910 1,000 1,000,420
Federal Home Loan Bank,
11-26-99 # ............................. 5.050 20,000 20,000,000
Federal Home Loan Bank,
12-01-99 ............................... 4.775 500 499,855
Federal Home Loan Bank,
12-08-99 # ............................. 5.140 10,000 10,000,000
Federal Home Loan Bank,
12-21-99 ............................... 7.885 1,000 1,006,302
Federal Home Loan Mortgage Corp.,
01-20-00 ............................... 5.200 22,000 21,647,267
Federal National Mortgage Association,
10-01-99 ............................... 5.810 1,500 1,500,000
Federal National Mortgage Association,
10-12-99 ............................... 5.200 20,000 19,968,222
Federal National Mortgage Association,
11-05-99 ............................... 5.950 1,000 1,000,948
Federal National Mortgage Association,
11-12-99 ............................... 5.810 2,000 2,001,717
Federal National Mortgage Association,
11-30-99 ............................... 4.780 5,000 4,994,147
Tennessee Valley Authority,
10-01-99 ............................... 8.375 1,050 1,050,000
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $104,636,733) (81.31%) 104,636,733
-------- -----------
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
PAR VALUE
INTEREST (000s MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- ------- ------
JOINT REPURCHASE AGREEMENT (17.46%)
Investment in a joint repurchase
agreement transaction with
Barclay's, Inc. - Dated 09-30-99,
due 10-01-99 (Secured by U.S.
Treasury Bond, 8.000% due 11-15-21
and U.S. Treasury Notes, 5.750%
due 06-30-01 and 6.125% due
12-31-01) - Note A 5.200% $22,471 $22,471,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $22,471,000) (17.46%) 22,471,000
------- ----------
TOTAL INVESTMENTS (98.77%) 127,107,733
------- -----------
OTHER ASSETS AND LIABILITIES, NET (1.23%) 1,585,919
------- -----------
TOTAL NET ASSETS (100.00%) $128,693,652
======== ============
</TABLE>
# Call date.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - U.S. Government Cash Reserve
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Current Interest (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940. The
Trust consists of two series: John Hancock U.S. Government Cash Reserve (the
"Fund") and John Hancock Money Market Fund (collectively, the "Funds"). The
other series of the Trust is reported in separate financial statements. The
investment objective of the Fund is to obtain maximum current income to the
extent consistent with maintaining liquidity and preserving capital.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Board of Trustees has 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.
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,
Inc., may participate in a joint repurchase agreement. 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.
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.
Accordingly, the Fund will not be subject to federal income tax on taxable
earnings which are distributed to shareholders. Therefore, no federal income tax
provision is required.
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.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues
and expenses of the Fund. Actual results could differ from these estimates.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
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% of
the average daily net asset value in excess of $2,500,000,000.
The Adviser has agreed to limit Fund expenses further to the extent
required to prevent expenses from exceeding 0.35% of the Fund's average daily
net asset value at least until August 1, 2000. The Adviser reserves the right to
terminate this limitation in the future. Accordingly, for the period ended
September 30, 1999, the reduction in the Fund's expenses collectively with any
additional amounts not borne by the Fund by virtue of the expense limit amounted
to $197,267.
10
<PAGE>
=========================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. Payments of fees under the Distribution Plan has been suspended
at least until August 1, 2000. For the period ended Septmber 30, 1999, the fee
reduction amounted to $82,922.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of John Hancock
Mutual Life Insurance Company. The Fund pays transfer agent fees based on the
number of shareholder accounts and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the period was
at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione are directors and/or officers of the Adviser and/or
its affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect
to defer, for tax purposes, their receipt of this compensation under the John
Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments
into other John Hancock funds, as applicable, to cover its liability for the
deferred compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The deferred
compensation liability and the related other asset are always equal and are
marked to market on a periodic basis to reflect any income earned by the
investment as well as any unrealized gains or losses.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, including discount earned on
investment securities, during the period ended September 30, 1999 aggregated
$2,647,660,537 and $2,627,957,000, respectively.
The cost of investments owned at September 30, 1999 (including the
joint repurchase agreement) for federal income tax purposes was $127,107,733.
11
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS ------------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhfunds.com Permit No. 75
------------------
- --------------------------------------------------------------------------------
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.
[LOGO] Printed on Recycled Paper 430SA 9/99
11/99
<PAGE>
---------------------------
The latest report from your
Fund's management team
---------------------------
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Money Market
Fund
SEPTEMBER 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
------------------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
Steven R. Pruchansky*
Richard S. Scipione
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
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
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 LLP
60 State Street
Boston, Massachusetts 02109-1803
-----------------------------------------------
===============================CHAIRMAN'S MESSAGE===============================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements for all mission-critical systems are done
and successfully compliance tested. The rest of 1999 will be spent completing
the few remaining non-mission-critical systems, testing with our business
partners and continuing to participate in industry testing. We have also
established additional contingency plans beyond our regular ones to prepare for
any challenges that the Year 2000 might present. In the end, John Hancock will
spend approximately $90-$95 million to ensure we make a successful transition to
the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000s.
Sincerely,
/s/Edward J. Boudreau, Jr.
- --------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Dawn Baillie for the Portfolio Management Team
John Hancock
Money Market Fund
Strengthening global economies prompt inflation fears
-----------------------------------------------------
and two rate hikes by the Federal Reserve
-----------------------------------------
Money-market yields reversed course and rose over the last six months, the
result of several important changes in the economic environment. Overseas
markets began to stabilize, Asian economies in particular started showing signs
of life and the U.S. economy remained surprisingly robust. These developments
contributed to growing concerns that inflation dreaded for its corrosive effect
on investors' fixed income streams and on the health of the economy - was on the
rise. As a result, the ever-vigilant Federal Reserve Board switched gears and
raised short-term interest rates twice - in June and again in August. The Fed's
moves brought the federal funds rate - that which banks charge each other for
overnight loans - up to 5.25% from 4.75% at the beginning of the period.
Although an inflation spike has yet to materialize, the Fed's actions
were meant as pre-emptive strikes to gradually cool down the economy and nip any
hint of inflation in the bud. Money-market yields also moved up in response,
since the federal funds rate is a key pricing benchmark for money-market
securities. It was the first time the Fed had raised rates in two years, and the
hikes marked a partial reversal of its three previous rate cuts made between
last September and November when economic turmoil reigned overseas and fears
were mounting of an impending global recession.
- --------------------------------------------------------------------------------
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Money
Market Fund. Caption below reads "Money Market Fund management team members:
Barry Evans and Dawn Baillie."]
- --------------------------------------------------------------------------------
"Money-market yields reversed course and rose over the last six months..."
3
<PAGE>
================================================================================
John Hancock Funds - Money Market Fund
"...we intend to keep the Fund's maturity slightly shorter than average until it
is clear that the Fed is done raising rates."
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "7-Day Effective Yield".
Under the heading is a note that reads "As of September 30, 1999." The chart is
scaled in increments of 2% with 0% at the bottom and 6% at the top. The first
bar represents the 4.41% 7-day effective yield for John Hancock Money Market
Fund Class A. The second bar represents the 3.53% 7-day effective yield for John
Hancock Money Market Fund Class B. The third bar represents the 3.53% 7-day
effective yield for John Hancock Money Market Fund Class C. The fourth bar
represents the 4.68% 7-day effective yield for Average taxable money-market
fund. A note below the chart reads "The average taxable money-market fund is
tracked by Lipper, Inc. Past performance is no guarantee of future results."]
- --------------------------------------------------------------------------------
7-day effective yield
On September 30, 1999, John Hancock Money Market Fund's Class A, Class B and
Class C shares had 7-day effective yields of 4.41%, 3.53% and 3.53%,
respectively. By comparison, the average taxable money-market fund had a 7-day
effective yield of 4.68%, according to Lipper, Inc.
Timely maturity moves
We shifted the Fund's maturity several times during the period to adapt to the
changing environment. At the beginning of the semiannual period in April, the
Fund's maturity was slightly longer than average. That was based on our belief
that the Fed, which had adopted a neutral bias after its three rate cuts last
year, was not prepared to raise interest rates since the potential for an
economic slowdown remained real.
In April, however, as signs of economic strength grew and the market
became increasingly jittery in anticipation of a rate hike, we took a more
conservative stance, scaling back our average maturity to between five and ten
days shorter than average. We maintained our defensive posture throughout the
summer, given the strength of the economic data, and were therefore well
prepared for the Fed's second move in August. This meant we had more money
maturing earlier that we could reinvest in higher-yielding securities following
the rate hike.
Fourth quarter defensive
Along with the August rate hike, the Fed moved back to a neutral stance on
further interest-rate moves and we lengthened our maturity slightly to get
better yields. But at the beginning of September, with further signs of renewed
vigor in Asian economies, we grew more defensive again and moved back to a more
average maturity by the end of September.
Cautious approach ahead
Between now and year end, we intend to keep the Fund's maturity slightly shorter
than average until it is clear that the Fed is done raising rates. For now, the
Fed remains solidly in the picture, keeping a watchful eye on levels of U.S.
unemployment and wages and the ongoing strength of both consumer demand and the
financial markets. A shorter maturity will also help the Fund accommodate
potential increased liquidity demands as a result of the approaching changeover
to the year 2000. As always, we will continue to stay focused on providing the
Fund with a competitive level of current income, while preserving stability of
principal.
- --------------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team through the
end of the Fund's period discussed in this report. Of course, the team's views
are subject to change as market and other conditions warrant.
The Fund is neither insured nor guaranteed by the U.S. government. Although the
Fund seeks to maintain a net asset value of $1.00 per share, it is possible to
lose money by investing in the Fund.
4
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
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 September 30, 1999. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $135,603,797)....................... $135,603,797
Corporate interest-bearing obligations
(cost - $54,584,737) ....................................... 54,584,737
U.S. government obligations (cost - $246,997,619) ........... 246,997,619
Joint repurchase agreement (cost - $125,466,000) ............ 125,466,000
---------------
562,652,153
Cash ......................................................... 77,358
Receivable for shares sold ................................... 298,584
Interest receivable .......................................... 8,366,785
Other assets ................................................. 67,225
---------------
Total Assets ....................... 571,462,105
----------------------------------------------------
Liabilities:
Payable for shares repurchased ............................... 525,288
Dividend payable ............................................. 77,857
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ..................................... 255,861
Accounts payable and accrued expenses ........................ 174,704
---------------
Total Liabilities .................. 1,033,710
----------------------------------------------------
Net Assets:
Capital paid-in .............................................. 570,428,395
---------------
Net Assets ......................... $570,428,395
====================================================
Net Asset Value Per Share:
(Based on net asset values and shares of beneficial
interest outstanding - 3,500,000,000 shares
authorized with $0.01 per share par value)
Class A - $345,288,117/345,367,292 ........................... $1.00
==============================================================================
Class B - $221,252,874/221,271,386 ........................... $1.00
==============================================================================
Class C - $3,887,404/3,887,404 ............................... $1.00
==============================================================================
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund.
Statement of Operations
Six months ended September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest ..................................................... $13,316,686
---------------
Expenses:
Investment management fee - Note B .......................... 1,323,699
Distribution and service fee - Note B
Class A .................................................... 424,058
Class B .................................................... 940,805
Class C .................................................... 10,361
Transfer agent fee - Note B ................................. 651,601
Registration and filing fees ................................ 122,335
Custodian fee ............................................... 63,201
Accounting and legal services fee - Note B .................. 47,491
Trustees' fees .............................................. 16,563
Auditing fee ................................................ 17,841
Printing .................................................... 12,725
Miscellaneous ............................................... 6,542
Legal fees .................................................. 2,879
---------------
Total Expenses ..................... 3,640,101
----------------------------------------------------
Less Expense Reductions -
Note B ............................. (434,363)
----------------------------------------------------
Net Expenses ....................... 3,205,738
----------------------------------------------------
Net Investment Income .............. 10,110,948
----------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .......... $10,110,948
====================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, 1999
MARCH 31, 1999 (UNAUDITED)
--------------------- ---------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ................................................... $20,592,253 $10,110,948
---------------- ----------------
Distributions to Shareholders:
Distributions from net investment income
Class A - ($0.0445 and $0.0205 per share, respectively) ................ (15,252,899) (7,002,940)
Class B - ($0.0360 and $0.0163 per share, respectively) ................ (5,321,711) (3,073,824)
Class C** - ($0.0323 and $0.0163 per share, respectively) .............. (17,643) (34,184)
---------------- ----------------
Total Distributions to Shareholders .................................... (20,592,253) (10,110,948)
---------------- ----------------
From Fund Share Transactions - Net: * .................................... 163,253,446 13,386,170
---------------- ----------------
Net Assets:
Beginning of period ..................................................... 393,788,779 557,042,225
---------------- ----------------
End of period ........................................................... $557,042,225 $570,428,395
================ ================
* Analysis of Fund Share Transactions at $1 Per Share:
CLASS A
Shares sold ............................................................. $4,384,953,074 $1,166,556,019
Shares issued to shareholders in reinvestment of distributions .......... 12,884,455 6,120,884
---------------- ----------------
4,397,837,529 1,172,676,903
Less shares repurchased ................................................. (4,336,966,087) (1,201,022,494)
---------------- ----------------
Net increase (decrease) ................................................. $60,871,442 ($28,345,591)
================ ================
CLASS B
Shares sold ............................................................. $577,227,808 $239,548,097
Shares issued to shareholders in reinvestment of distributions .......... 4,300,006 2,588,603
---------------- ----------------
581,527,814 242,136,700
Less shares repurchased ................................................. (480,492,795) (202,945,358)
---------------- ----------------
Net increase ............................................................ $101,035,019 $39,191,342
================ ================
CLASS C**
Shares sold ............................................................. $3,247,356 $5,335,141
Shares issued to shareholders in reinvestment of distributions .......... 12,504 29,989
---------------- ----------------
3,259,860 5,365,130
Less shares repurchased ................................................. (1,912,875) (2,824,711)
---------------- ----------------
Net increase ............................................................ $1,346,985 $2,540,419
================ ================
** Class C shares commenced operations on May 1, 1998.
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 number of Fund shares sold, reinvested and repurchased during the last two
periods.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 12, 1995 SIX MONTHS
(COMMENCEMENT OF YEAR ENDED ENDED
OPERATIONS) TO YEAR ENDED PERIOD FROM MARCH 31, SEPTEMBER 30,
OCTOBER 31, OCTOBER 31, NOVEMBER 1, 1996 TO ------------------ 1999
1995 1996 MARCH 31, 1997(5) 1998 1999 (UNAUDITED)
------------------ ----------- ------------------- -------- -------- ------------
CLASS A
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 ........................ 0.01 0.05 0.02 0.05 0.04 0.02
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ......... (0.01) (0.05) (0.02) (0.05) (0.04) (0.02)
---------- ---------- ---------- ---------- ---------- ----------
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) 0.64%(3) 4.56% 1.80%(3) 4.92% 4.54% 2.07%(3)
Total Adjusted Investment Return at
Net Asset Value (2,6) ....................... 0.54%(3) 4.36% 1.60%(3) 4.72% 4.34% 1.97%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ..... $20,942 $262,475 $359,453 $312,762 $373,634 $345,288
Ratio of Expenses to Average Net Assets ...... 1.07%(4) 1.17% 1.10%(4) 0.89% 0.91% 0.90%(4)
Ratio of Adjusted Expenses to
Average Net Assets (7) ...................... 1.17%(4) 1.37% 1.30%(4) 1.09% 1.11% 1.10%(4)
Ratio of Net Investment Income to
Average Net Assets ......................... 4.94%(4) 4.41% 4.44%(4) 4.82% 4.44% 4.12%(4)
Ratio of Adjusted Net Investment Income to
Average Net Assets (7) ...................... 4.84%(4) 4.21% 4.24%(4) 4.62% 4.24% 3.92%(4)
SIX MONTHS
YEAR ENDED ENDED
YEAR ENDED OCTOBER 31, PERIOD FROM MARCH 31, SEPTEMBER 30,
----------------------------- NOVEMBER 1, 1996 TO ----------------- 1999
1994 1995(1) 1996 MARCH 31, 1997(5) 1998 1999 (UNAUDITED)
-------- ---------- -------- ------------------- -------- -------- -------------
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- ------- --------- ---------- -------- --------- --------
Net Investment Income .................. 0.02 0.04 0.04 0.01 0.04 0.04 0.02
--------- ------- --------- ---------- -------- --------- --------
Less Distributions:
Dividends from Net Investment Income ... (0.02) (0.04) (0.04) (0.01) (0.04) (0.04) (0.02)
--------- ------- --------- ---------- -------- --------- --------
Net Asset Value, End of Period ......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========= ======= ========= ========== ======== ========= ========
Total Investment Return a
Net Asset Value (2) ................... 1.87% 4.07% 3.71% 1.45%(3) 4.04% 3.66% 1.64%(3)
Total Adjusted Investment Return at
Net Asset Value (2,6) ................. - - 3.61% 1.35%(3) 3.94% 3.56% 1.59%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $58,366 $54,313 $108,162 $130,056 $81,027 $182,062 $221,253
Ratio of Expenses to Average Net Assets 2.06% 1.92% 2.00% 1.96%(4) 1.74% 1.76% 1.75%(4)
Ratio of Adjusted Expenses to
Average Net Assets (7) ................ - - 2.10% 2.06%(4) 1.84% 1.86% 1.85%(4)
Ratio of Net Investment Income to
Average Net Assets .................... 1.97% 3.96% 3.58% 3.60%(4) 3.97% 3.54% 3.26%(4)
Ratio of Adjusted Net Investment Income
to Average Net Assets (7) ............. - - 3.48% 3.50%(4) 3.87% 3.44% 3.16%(4)
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
PERIOD
FROM MAY 1, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO SEPTEMBER 30, 1999
MARCH 31, 1999 (UNAUDITED)
---------------- ------------------
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period...................................... $1.00 $1.00
---------- ----------
Net Investment Income .................................................... 0.03 0.02
---------- ----------
Less Distributions:
Dividends from Net Investment Income ..................................... (0.03) (0.02)
---------- ----------
Net Asset Value, End of Period ........................................... $1.00 $1.00
========== ==========
Total Investment Return at Net Asset Value (2) ............................ 3.29%(3) 1.64%(3)
Total Adjusted Investment Return at Net Asset Value (2,6) ................. 3.19%(3) 1.59%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................................. $1,347 $3,887
Ratio of Expenses to Average Net Assets .................................. 1.75%(4) 1.75%(4)
Ratio of Adjusted Expenses to Average Net Assets (7) ..................... 1.85%(4) 1.85%(4)
Ratio of Net Investment Income to Average Net Assets ..................... 3.46%(4) 3.29%(4)
Ratio of Adjusted Net Investment Income to Average Net Assets (7) ........ 3.36%(4) 3.19%(4)
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.
(2) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(3) Not annualized.
(4) Annualized.
(5) Effective March 31, 1997, the fiscal period end changed from October 31 to March 31.
(6) An estimated total return calculation that does not take into consideration fee
reductions by the Adviser during the periods shown.
(7) Unreimbursed, without fee reduction.
The Financial Highlights summarizes the impact of net investment income and
dividends on a single share for each period indicated. Additionally, important
relationships between some items presented in the financial statements are
expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
Schedule of Investments
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by Money
Market Fund on September 30, 1999. It's divided into four types of short-term
investments. The categories of short-term investments are further broken down by
industry group.
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- ---------- ------
COMMERCIAL PAPER
Automobile/Trucks (3.85%)
Ford Motor Credit Co.,
10-18-99 ............................ 5.130% Tier 1 $22,000 $21,946,705
-----------
Banks-Foreign (3.48%)
Deutsche Bank Financial,
11-22-99 ............................ 5.300 Tier 1 20,000 19,846,889
-----------
Beverages (4.31%)
Coca-Cola Co.,
01-20-00 ............................ 5.550 Tier 1 25,000 24,572,187
-----------
Diversified Operations (1.73%)
General Electric Co.,
12-23-99 ............................ 5.260 Tier 1 10,000 9,878,728
-----------
Finance (4.24%)
CIT Group Holdings, Inc.,
10-29-99 ............................ 5.270 Tier 1 14,300 14,241,386
CIT Group Holdings, Inc.,
11-23-99 ............................ 4.950 Tier 1 10,000 9,927,125
-----------
24,168,511
-----------
Metal (1.72%)
Cargill, Inc.,
01-13-00 ............................ 5.720 Tier 1 10,000 9,834,756
-----------
Utilities (4.44%)
American Telephone & Telegraph Co.,
10-29-99 ............................ 5.290 Tier 1 20,000 19,917,711
BellSouth Telecommunications, Inc.,
01-27-00 ............................ 5.600 Tier 1 5,540 5,438,310
-----------
25,356,021
-----------
TOTAL COMMERCIAL PAPER
(Cost $135,603,797) (23.77%) 135,603,797
-------- -----------
CORPORATE INTEREST-BEARING OBLIGATIONS
Automotive (1.62%)
Chrysler Financial Corp.,
10-15-99 ............................ 13.250 Tier 1 7,129 7,150,683
Ford Motor Credit Co.,
10-01-99 ............................ 7.750 Tier 1 1,000 1,000,000
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- ---------- ------
Automotive (continued)
Ford Motor Credit Co.,
11-19-99 ........................... 7.500% Tier 1 $1,100 $1,103,428
----------
9,254,111
----------
Banking (0.86%)
KeyCorp,
04-05-00 ........................... 7.450 Tier 1 3,850 3,877,122
Wachovia Corp.,
12-15-99 ........................... 7.000 Tier 1 1,000 1,003,632
----------
4,880,754
----------
Beverages (0.53%)
Coca-Cola Enterprises,
11-15-99 ........................... 7.000 Tier 1 3,000 3,006,587
----------
Broker Services (0.88%)
Merrill Lynch & Co.,
11-15-99 ........................... 8.250 Tier 1 5,000 5,018,541
----------
Chemicals (0.49%)
DuPont (E.I.) de Nemours & Co.,
11-15-99 ........................... 6.880 Tier 1 2,800 2,806,274
----------
Finance (0.79%)
Associates Corp.,
10-15-99 ........................... 6.750 Tier 1 2,000 2,001,167
Associates Corp.,
12-16-99 ........................... 7.220 Tier 1 1,000 1,004,150
International Business Machines
Credit Corp.,
03-20-00 .......................... 5.790 Tier 1 1,500 1,504,206
----------
4,509,523
----------
Food (1.05%)
Heinz (H.J.) Co.,
10-15-99 ........................... 6.750 Tier 1 6,005 6,008,765
----------
Mortgage Banking (0.53%)
Countrywide Home Loan,
01-13-00 ........................... 5.250 Tier 1 3,000 2,990,813
----------
Tobacco (2.28%)
Philip Morris Co.,
02-15-00 ........................... 9.250 Tier 1 12,889 13,030,377
----------
Utilities (0.54%)
Southern California Edison,
01-15-00 ........................... 6.750 Tier 1 3,065 3,078,992
----------
TOTAL CORPORATE INTEREST-BEARING OBLIGATIONS
(Cost $54,584,737) (9.57%) 54,584,737
------- ----------
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- -------- -------- ---------- ------
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (43.30%)
Federal Farm Credit Bank,
11-01-99 ............................ 4.770% Tier 1 $6,000 $5,998,956
Federal Farm Credit Bank,
12-01-99 ............................ 4.850 Tier 1 10,000 10,000,000
Federal Home Loan Bank,
10-08-99 ............................ 5.070 Tier 1 17,000 16,999,898
Federal Home Loan Bank,
10-27-99 ............................ 4.920 Tier 1 30,000 30,000,000
Federal Home Loan Bank,
10-29-99 ............................ 5.030 Tier 1 20,000 19,996,329
Federal Home Loan Bank,
11-26-99 # .......................... 5.025 Tier 1 10,000 9,999,038
Federal Home Loan Bank,
11-26-99 # .......................... 5.050 Tier 1 25,000 25,000,000
Federal Home Loan Bank,
11-26-99 # .......................... 5.200 Tier 1 20,000 20,000,000
Federal Home Loan Bank,
12-01-99 # .......................... 5.050 Tier 1 20,000 20,000,000
Federal Home Loan Bank,
12-06-99 ............................ 5.805 Tier 1 3,000 3,004,630
Federal Home Loan Bank,
12-08-99 # .......................... 5.140 Tier 1 20,000 20,000,000
Federal Home Loan Bank,
12-17-99 # .......................... 5.230 Tier 1 12,180 12,175,527
Federal Home Loan Bank,
12-20-99 ............................ 5.750 Tier 1 2,800 2,805,105
Federal Home Loan Bank,
12-29-99 ............................ 5.830 Tier 1 3,000 3,002,641
Federal Home Loan Bank,
05-10-00 ............................ 5.150 Tier 1 10,000 10,000,000
Federal Home Loan Bank,
07-14-00 ............................ 5.705 Tier 1 10,000 10,000,000
Federal National Mortgage Association,
11-03-99 ............................ 5.880 Tier 1 12,000 12,008,667
Student Loan Marketing Association,
12-10-99 ............................ 5.506** Tier 1 10,000 10,006,828
Student Loan Marketing Association,
01-19-00 ............................ 5.051 Tier 1 6,000 6,000,000
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $246,997,619) (43.30%) 246,997,619
-------- -------------
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Money Market Fund
PAR VALUE
INTEREST (000s MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- -------- ---------- ------
JOINT REPURCHASE AGREEMENT (22.00%)
Investment in a joint repurchase
agreement transaction with
Barclay's, Inc. - Dated 09-30-99,
due 10-01-99 (Secured by U.S.
Treasury Bond 8.000% due 11-15-21
and U.S. Treasury Notes 5.750%
due 06-30-01 and 6.125% due
12-31-01) - Note A ............................... 5.200% $125,466 $125,466,000
--------------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $125,466,000) (22.00%) 125,466,000
-------- --------------
TOTAL INVESTMENTS (98.64%) 562,652,153
-------- --------------
OTHER ASSETS AND LIABILITIES, NET (1.36%) 7,776,242
-------- --------------
TOTAL NET ASSETS (100.00%) $570,428,395
======== ==============
</TABLE>
* Quality ratings indicate the categories of eligible securities, as defined by
Rule 2a-7 of the Investment Company Act of 1940, owned by the Fund.
** Floating rate note. Stated interest rate in effect as of September 30, 1999.
# Call date.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Money Market Fund
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Current Interest (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940. The
Trust consists of two series: John Hancock Money Market Fund (the "Fund") and
the John Hancock U.S. Government Cash Reserve (collectively, the "Funds"). The
other series of the Trust is reported in separate financial statements. The
investment objective of the Fund is to provide maximum current income consistent
with capital preservation and liquidity.
The Board of Trustees has authorized the issuance of multiple classes
of shares of the Fund, designated as Class A, Class B and Class C shares. The
shares of each class represent an interest in the same portfolio of investments
of the Fund and have equal rights as to voting, redemptions, dividends and
liquidation, except that certain expenses, subject to the approval of the Board
of Trustees, may be applied differently to each class of shares in accordance
with current regulations of the Securities and Exchange Commission and the
Internal Revenue Service. Shareholders of a class which bears distribution and
service expenses under terms of a distribution plan have exclusive voting rights
to that distribution plan.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Board of Trustees has 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,
Inc., may participate in a joint repurchase agreement. 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.
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.
Accordingly, the Fund will not be subject to federal income tax on taxable
earnings which are distributed to shareholders. Therefore, no federal income tax
provision is required.
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. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and will be in
the same amount, except for the effect of expenses that may be applied
differently to each class.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative size of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class level
based on the appropriate net assets of each class and the specific expense
rate(s) applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates
13
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Money Market Fund
estimates made by management in determining the reported amounts of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
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) 0.50% 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) 0.35% of the next $500,000,000, (e) 0.325% of the
next $500,000,000, (f) 0.30% of the next $500,000,000 and (g) 0.275% of the
average daily net asset value in excess of $2,500,000,000. Effective November
22, 1995, the maximum fee of the first $750,000,000 of the Fund's average daily
net assets has been reduced to 0.40% of the Fund's average daily net assets, at
least until August 1, 2000, and cannot be reinstated to the original contracted
amounts without the Trustees' consent. Accordingly, for the period ended
September 30, 1999, the reduction in the Fund's management fee amounted to
$264,740.
John Hancock Funds, Inc. ("JH Funds"), a wholly owned subsidiary of the
Adviser, is the principal underwriter of the Fund.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge (CDSC) at declining rates
beginning at 5.00% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses for providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended September 30,
1999, contingent deferred sales charges paid to JH Funds amounted to $762,387.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market value
at the time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from the CDSC are paid to JH Funds and are used in whole or
in part to defray its expenses for providing distribution related services to
the Fund in connection with the sale of Class C shares. For the period ended
September 30, 1999, contingent deferred sales charges paid to JH Funds amounted
to $1,731.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds for distribution and service expenses, at an annual rate not to exceed
0.25% of Class A average daily net assets and 1.00% of Class B and Class C
average daily net assets, to reimburse JH Funds for its distribution and service
costs. Presently the 12b-1 expense rate on Class A has been reduced to 0.15% of
the average daily net assets, at least until August 1, 2000, and cannot be
reinstated to 0.25% without the Trustees' consent. Accordingly, for the period
ended September 30, 1999, the reduction in the Class A shares' 12b-1 expense
amounted to $169,623. Up to a maximum of 0.25% of such payments may be service
fees as defined by the amended Rules of Fair Practice of the National
Association of Securities Dealers. Under the amended Rules of Fair Practice,
curtailment of a portion of the Fund's 12b-1 payments could occur under certain
circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of John Hancock
Mutual Life Insurance Co. The Fund pays transfer agent fees based on the number
of shareholder accounts and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the fiscal year
was at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione are directors and/or officers of the Adviser and/or
its affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect
to defer, for tax purposes, their receipt of this
14
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Money Market Fund
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund makes investments into other John Hancock funds, as applicable, to
cover its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other asset are
always equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities including discount earned on
investment securities, other than obligations of the U.S. government and its
agencies, during the period ended September 30, 1999, aggregated $20,805,843,604
and $20,706,667,285, respectively. Purchases and proceeds from maturities of
obligations of the U.S. government and its agencies aggregated $57,043,350 and
$150,000,000, respectively, during the period ended September 30, 1999.
The cost of investments owned at September 30, 1999 (including the
joint repurchase agreement) for federal income tax purposes was $562,652,153.
15
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS --------------------
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[LOGO] Printed on Recycled Paper 440SA 9/99
11/99
