---------------------------
The latest report from your
Fund's management team
---------------------------
SEMIANNUAL REPORT
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
U.S.
Government
Cash Reserve
SEPTEMBER 30, 2000
John Hancock
------------------
JOHN HANCOCK FUNDS
<PAGE>
------------------------------------------
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment 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 02109-180
------------------------------------------------
===================================CEO CORNER===================================
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years, the
financial markets have brought investors back down to earth in 2000. Rising
interest rates and oil prices, the prospects of a slowing economy and earnings
fears caught up with pricey growth stocks - technology in particular. A dramatic
plunge in the spring and again in early fall caused the major indexes to end
September in negative territory for the year. The tech-heavy NASDAQ Composite
Index was hardest hit, returning -9.63% year to date.
--------------------------------------------------------------------------------
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and Chief
Executive Officer, flush right next to second paragraph.]
--------------------------------------------------------------------------------
But there is a silver lining. Investors have finally turned their attention to
broader swaths of the market, including both blue chip and old economy stocks in
sectors like financials, health care and energy, that combined both strong
fundamentals and less frothy valuation levels. Bonds also began to make a
comeback as the year progressed and investors grew more confident that the
series of Fed rate hikes might be coming to an end. Pockets of strength have
emerged there, including municipal bonds and longer-maturity Treasury bonds. The
30-year bond, for instance, has returned 11.53% since January.
Between now and year end, we expect the market's focus to be on Washington, as
it usually is in an election year. While the presidential election is important,
what warrants more attention is the Federal Reserve Board. The November election
will generate more ink, but won't have anywhere near the impact on financial
markets that further Fed action could. So we'll be watching the economic data to
see whether the Fed has truly wound down its string of interest-rate hikes.
The market's shifts in leadership so far this year highlight one of the key
investment tenets that we can't emphasize enough: investing should be a
marathon, not a sprint. If your portfolio is diversified and you have an
up-to-date financial plan crafted with an investment professional to meet your
goals, it becomes easier to ride out the market's short-term ups and downs. It
could also provide you with a greater chance of success over time.
Sincerely,
/s/Maureen R. Ford
------------------
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Dawn Baillie for the Portfolio Management Team
John Hancock U.S.
Government Cash Reserve
Strong economy and inflation fears
----------------------------------
push interest rates higher
--------------------------
Money-market yields continued to rise over the last six months, as the
persistently strong U.S. economy caused the Federal Reserve to intensify its
inflation-fighting campaign. The period began just after the Fed had raised
short-term interest rates in March for the fifth time since it first took action
last June to slow down the economy and prevent inflation. But after five rate
hikes of a quarter percentage point each, the economy still showed no signs of
cooling off, so the Fed took even more decisive action. In May, it raised rates
again, this time by one-half a percentage point, bringing the federal funds rate
that banks charge each other for overnight loans to 6.5%. The federal funds rate
is also a key pricing benchmark for money-market securities, so their yields
rose as well during the period.
Shortly after the May rate hike, the economy began to show signs of
slowing, while inflation remained relatively benign. As a result, the Fed has
taken no action since May. However, it remains intent on preventing inflation
from spiking and has maintained its tightening bias, meaning it's prepared to
raise rates further if continued low unemployment and high oil prices lead to a
jump in inflation.
7-day effective yield
On September 30, 2000, John Hancock U.S. Government Cash Reserve had a 7-day
effective yield of 6.02%. By comparison, the average U.S. government
money-market fund had a 7-day effective yield of 5.94%, according to Lipper,
Inc.
--------------------------------------------------------------------------------
[A 3" x 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 continued to rise over the last six months..."
3
<PAGE>
================================================================================
John Hancock Funds - U.S. Government Cash Reserve
"...it appears that the Fed may have successfully ushered in the prover-bial
soft landing..."
--------------------------------------------------------------------------------
[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, 2000." The chart is
scaled in increments of 1% with 0% at the bottom and 7% at the top. The first
bar represents the 6.02% total return for John Hancock U.S. Government Cash
Reserve. The second bar represents the 5.94% 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."]
--------------------------------------------------------------------------------
Short maturity provides flexibility
For the first two months of the period, we kept the Fund's maturity shorter than
average, since it was clear that the Fed was going to continue to push rates up
in response to the steaming economy. By maintaining this more defensive stance,
we didn't have our money locked up for as long, and were able to reinvest in
higher-yielding securities after the May hike.
Believing that the Fed was winding down its tightening cycle with its
May move, we began to bring the Fund's maturity back closer to the average after
the Fed's May meeting. Even though the potential for further rate increases
remains real, we believe the Fed won't make any further moves until next year.
Even so, we'll most likely stay slightly shorter than average to take advantage
of the bargains that generally occur in the fourth quarter of the year, as
traders clear out their inventory of money-market securities before year end.
A look ahead
With the economy showing signs of slowing, and inflation still contained, it
appears that the Fed may have successfully ushered in the proverbial soft
landing - a sufficient slowing of the economy to squelch inflationary tendencies
without endangering the economic expansion. What remains uncertain is whether
the Fed's yearlong series of tightenings will stick, or whether economic growth
will surge again. One key element we're watching is the stock market. If there
is a fourth-quarter tech-stock rally, as there was in 1999, we expect the Fed to
step in again, since the market's wealth effect has been a major contributor to
the economy's strength. We'll also be watching the economic data, including
third-quarter Gross Domestic Product growth and the all-important employment
cost index - the most accurate measure of wage inflation. Until it's clear that
the Fed is done raising rates, we will keep the Fund's maturity at, or slightly
shorter than, the average. As always, we will continue to focus not only on
providing the Fund with a competitive yield, but also on 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, 2000. 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, 2000 (Unaudited)
--------------------------------------------------------------------------------
Assets:
Investments, in money market instruments,
at value - Note C:
U.S. government obligations (cost - $88,214,392)............... $88,214,392
Joint repurchase agreement (cost - $15,543,000) ............... 15,543,000
-------------
103,757,392
Cash ........................................................... 315,942
Interest receivable ............................................ 1,450,945
Other assets ................................................... 26,551
-------------
Total Assets ....................... 105,550,830
--------------------------------------------------
Liabilities:
Payable for shares repurchased ................................. 40,446
Dividend payable ............................................... 32,575
Accounts payable and accrued expenses .......................... 49,626
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ....................................... 100,704
-------------
Total Liabilities .................. 223,351
--------------------------------------------------
Net Assets:
Capital paid-in ................................................ 105,327,479
-------------
Net Assets ......................... $105,327,479
==================================================
Net Asset Value, Offering Price and
Redemption Price Per Share:
(Based on 105,327,479 shares of beneficial interest
outstanding - unlimited number of shares authorized
with $0.01 par value) ........................................ $1.00
============================================================================
Financial Statements Financial Statements John Hancock Funds - U.S. Government
Cash Reserve 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, 2000 (Unaudited)
--------------------------------------------------------------------------------
Investment Income:
Interest ....................................................... $3,184,123
-------------
Expenses:
Investment management fee - Note B ............................ 247,687
Distribution and service fee - Note B ......................... 74,306
Transfer agent fee - Note B ................................... 56,086
Registration and filing fees .................................. 28,348
Custodian fee ................................................. 20,204
Auditing fee .................................................. 10,546
Accounting and legal services fee - Note B .................... 9,321
Printing ...................................................... 4,031
Trustees' fees ................................................ 3,455
Legal fees .................................................... 641
Miscellaneous ................................................. 1,997
-------------
Total Expenses ..................... 456,622
--------------------------------------------------
Less: Management Fee Reduction
- Note B ..................... (133,095)
Distribution and Service Fee
Reduction - Note B ........... (74,306)
--------------------------------------------------
Net Expenses ....................... 249,221
--------------------------------------------------
Net Investment Income .............. 2,934,902
--------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .......... $2,934,902
==================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, 2000
MARCH 31, 2000 (UNAUDITED)
------------------- --------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ............................................... $5,555,674 $2,934,902
---------------- ----------------
Distributions to Shareholders:
Dividends from net investment income
($0.0490 and $0.0299 per share, respectively) ...................... (5,555,674) (2,934,902)
---------------- ----------------
From Fund Share Transactions - Net: * ................................ (2,350,094) (538,452)
---------------- ----------------
Net Assets:
Beginning of period ................................................. 108,216,025 105,865,931
---------------- ----------------
End of period ....................................................... $105,865,931 $105,327,479
================ ================
* Analysis of Fund Share Transactions at $1 Per Share:
Shares sold ........................................................ $220,727,725 $88,834,268
Shares issued to shareholders in reinvestment of distributions ..... 5,063,071 2,699,144
---------------- ----------------
225,790,796 91,533,412
Less shares repurchased ............................................ (228,140,890) (92,071,864)
---------------- ----------------
Net decrease ....................................................... ($2,350,094) ($538,452)
================ ================
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:
--------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEAR ENDED MAY 31, PERIOD ENDED YEAR ENDED MARCH 31, SEPTEMBER
-------------------- MARCH 31, ------------------------- 30, 2000
1995(1) 1996 1997(2) 1998 1999 2000 (UNAUDITED)
-------- -------- ------------ ------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- -------- --------
Net Investment Income .................................... 0.05 0.05 0.04 0.05 0.05 0.05 0.03
-------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income ..................... (0.05) (0.05) (0.04) (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------- -------- -------- --------
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(3) ............ 5.07% 5.59% 4.37%(4) 5.43% 5.08% 4.98% 2.99%(4)
Total Adjusted Investment Return at Net Asset Value(3,5) . 4.54% 4.69% 3.78%(4) 4.87% 4.55% 4.47% 2.78%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $29,131 $28,907 $55,321 $74,447 $108,216 $105,866 $105,327
Ratio of Expenses to Average Net Assets .................. 0.35% 0.35% 0.35%(6) 0.35% 0.35% 0.35% 0.50%(6)
Ratio of Adjusted Expenses to Average Net Assets(7) ...... 0.88% 1.25% 1.03%(6) 0.91% 0.88% 0.86% 0.92%(6)
Ratio of Net Investment Income to Average Net Assets ..... 4.79% 5.41% 5.15%(6) 5.30% 4.94% 4.90% 5.92%(6)
Ratio of Adjusted Net Investment Income
to Average Net Assets(7) ................................ 4.26% 4.51% 4.47%(6) 4.74% 4.41% 4.39% 5.50%(6)
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(2) Effective March 31, 1997, the fiscal period end changed from May 31 to March 31.
(3) Total investment return assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation that does not take into consideration
fee reductions by the Adviser during the periods shown.
(6) Annualized.
(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.
7
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - U.S. Government Cash Reserve
Schedule of Investments
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Fund on September 30, 2000. It's divided into two types of short-term
investments.
PAR VALUE
INTEREST (000s MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
------------------- -------- ---------- --------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (83.75%)
Federal Farm Credit Bank,
10-02-00 .................................... 5.800% $3,000 $2,999,921
Federal Home Loan Bank,
10-06-00 .................................... 4.640 5,400 5,398,416
Federal Home Loan Bank,
10-16-00 .................................... 4.685 3,000 2,997,545
Federal Home Loan Bank,
10-25-00 .................................... 6.015 3,170 3,167,817
Federal Home Loan Bank,
10-26-00 .................................... 5.050 1,500 1,498,296
Federal Home Loan Bank,
11-03-00 .................................... 6.050 2,000 1,998,515
Federal Home Loan Bank,
11-10-00 .................................... 5.970 2,000 1,997,798
Federal Home Loan Bank,
01-26-01 .................................... 4.875 1,200 1,192,988
Federal Home Loan Bank,
03-15-01 .................................... 6.750 10,000 9,992,432
Federal Home Loan Bank,
03-27-01 .................................... 5.595 630 626,054
Federal Home Loan Bank,
04-17-01 .................................... 5.125 2,000 1,980,084
Federal Home Loan Mortgage Corp.,
10-03-00 .................................... 6.410 8,000 7,997,151
Federal Home Loan Mortgage Corp.,
10-03-00 .................................... 6.430 5,601 5,598,999
Federal Home Loan Mortgage Corp.,
10-26-00 .................................... 6.390 5,000 4,977,813
Federal Home Loan Mortgage Corp.,
11-28-00 .................................... 6.875 5,000 4,998,424
Federal Home Loan Mortgage Corp.,
02-15-01 .................................... 5.000 2,800 2,781,287
Federal National Mortgage Association,
10-02-00 .................................... 5.970 5,000 4,999,895
Federal National Mortgage Association,
10-04-00 .................................... 6.290 2,080 2,079,923
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
------------------- -------- ---------- --------
<S> <C> <C> <C>
Governmental - U.S. Agencies (continued)
Federal National Mortgage Association,
10-26-00 ................................... 6.425% $5,000 $4,977,691
Federal National Mortgage Association,
12-18-00 ................................... 8.250 5,000 5,015,347
Federal National Mortgage Association,
12-21-00 ................................... 6.420 3,000 2,956,665
Federal National Mortgage Association,
03-15-01 ................................... 5.625 4,000 3,982,401
Federal National Mortgage Association,
03-20-01 ................................... 6.550 2,000 1,999,250
Student Loan Marketing Association,
12-01-00 ................................... 5.900 2,000 1,999,680
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $88,214,392) (83.75%) 88,214,392
--------- -----------
JOINT REPURCHASE AGREEMENT (14.76%)
Investment in a joint repurchase agreement
transaction with UBS Warburg, Inc. - Dated
09-29-00, due 10-02-00 (Secured by U.S.
Treasury Bonds 5.250% thru 11.750%,
due 11-15-14 thru 02-15-29) - Note A ....... 6.520 15,543 15,543,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $15,543,000) (14.76%) 15,543,000
--------- ------------
TOTAL INVESTMENTS (98.51%) 103,757,392
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (1.49%) 1,570,087
--------- ------------
TOTAL NET ASSETS (100.00%) $105,327,479
========= ============
</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 U.S. Government Cash Reserve (the "Fund") is a diversified series
of John Hancock Current Interest (the "Trust"), an open-end management
investment company registered under the Investment Company Act of 1940. The
investment objective of the Fund is to obtain maximum current income to the
extent consistent with maintaining li-quidity 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, which approximates market value, in accordance with
Rule 2a-7 of the Investment Company Act of 1940. 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Service Code
and will not be subject to federal income tax on taxable income which is
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 had 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. Accordingly, for the period ended September 30, 2000, 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 $133,095. This
limitation was terminated on August 1, 2000.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly owned subsidiary of the Adviser. To reimburse
10
<PAGE>
===========================NOTES TO FINANCIAL STATEMENTS========================
John Hancock Funds - U.S. Government Cash Reserve
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. Payment of fees under the Distribution Plan has
been suspended at least until July 31, 2001. For the period ended September 30,
2000, the fee reduction amounted to $74,306.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of John Hancock
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. Stephen L. Brown, Ms. Maureen R. Ford 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 investments as well as any unrealized gains or
losses. The Deferred Compensation Plan investments had no impact on the
operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, including discount earned on
investment securities, during the period ended September 30, 2000, aggregated
$2,366,301,559 and $2,370,309,000, respectively.
The cost of investments owned at September 30, 2000 (including the
joint repurchase agreement) for federal income tax purposes was $103,757,392.
11
<PAGE>
================================================================================
-----------------
John Hancock Bulk Rate
U.S. Postage
John Hancock Funds, Inc. PAID
MEMBER NASD Randolph, MA
101 Huntington Avenue Permit No. 75
Boston, MA 02199-7603 -----------------
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
--------------------------------------------------------------------------------
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 9/00
11/00
<PAGE>
---------------------------
The latest report from your
Fund's management team
---------------------------
SEMIANNUAL REPORT
--------------------------------------------------------------------------------
[GRAPHIC]
Money Market Fund
SEPTEMBER 30, 2000
[JOHN HANCOCK LOGO](R)
------------------------
JOHN HANCOCK FUNDS
<PAGE>
--------------------------------------------------------------------------------
TRUSTEES
STEPHEN L. BROWN
JAMES F. CARLIN*
WILLIAM H. CUNNINGHAM
RONALD R. DION*
MAUREEN R. FORD
CHARLES L. LADNER
STEVEN R. PRUCHANSKY*
RICHARD S. SCIPIONE
LT. GEN. NORMAN H. SMITH, USMC (RET.)
JOHN P. TOOLAN
*Members of the Audit Committee
OFFICERS
STEPHEN L. BROWN
Chairman
MAUREEN R. FORD
Vice Chairman, President and
Chief Executive Officer
WILLIAM L. BRAMAN
Executive Vice President and
Chief Investment 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
===================================CEO CORNER===================================
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years, the
financial markets have brought investors back down to earth in 2000. Rising
interest rates and oil prices, the prospects of a slowing economy and earnings
fears caught up with pricey growth stocks -- technology in particular. A
dramatic plunge in the spring and again in early fall caused the major indexes
to end September in negative territory for the year. The tech-heavy NASDAQ
Composite Index was hardest hit, returning -9.63% year to date.
--------------------------------------------------------------------------------
A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and Chief
Executive Officer, flush right next to second paragraph.]
--------------------------------------------------------------------------------
But there is a silver lining. Investors have finally turned their attention to
broader swaths of the market, including both blue chip and old economy stocks in
sectors like financials, health care and energy, that combined both strong
fundamentals and less frothy valuation levels. Bonds also began to make a
comeback as the year progressed and investors grew more confident that the
series of Fed rate hikes might be coming to an end. Pockets of strength have
emerged there, including municipal bonds and longer-maturity Treasury bonds. The
30-year bond, for instance, has returned 11.53% since January.
Between now and year end, we expect the market's focus to be on Washington, as
it usually is in an election year. While the presidential election is important,
what warrants more attention is the Federal Reserve Board. The November election
will generate more ink, but won't have anywhere near the impact on financial
markets that further Fed action could. So we'll be watching the economic data to
see whether the Fed has truly wound down its string of interest-rate hikes.
The market's shifts in leadership so far this year highlight one of the key
investment tenets that we can't emphasize enough: investing should be a
marathon, not a sprint. If your portfolio is diversified and you have an
up-to-date financial plan crafted with an investment professional to meet your
goals, it becomes easier to ride out the market's short-term ups and downs. It
could also provide you with a greater chance of success over time.
Sincerely,
/s/ Maureen R. Ford
-------------------
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
BY DAWN BAILLIE FOR THE PORTFOLIO MANAGEMENT TEAM
John Hancock
Money Market Fund
Strong economy and inflation fears push
interest rates higher
Money-market yields continued to rise over the last six months, as the
persistently strong U.S. economy caused the Federal Reserve to intensify its
inflation-fighting campaign. The period began just after the Fed had raised
short-term interest rates in March for the fifth time since it first took action
last June to slow down the economy and prevent inflation. But after five rate
hikes of a quarter percentage point each, the economy still showed no signs of
cooling off, so the Fed took even more decisive action. In May it raised rates
again, this time by one-half a percentage point, bringing the federal funds rate
that banks charge each other for overnight loans to 6.5%. The federal funds rate
is also a key pricing benchmark for money-market securities, so their yields
rose as well during the period.
Shortly after the May rate hike, the economy began to show signs of slowing,
while inflation remained relatively benign. As a result, the Fed has taken no
action since May. However, it remains intent on preventing inflation from
spiking and has maintained its tightening bias, meaning it's prepared to raise
rates further if continued low unemployment and high oil prices lead to a jump
in inflation.
--------------------------------------------------------------------------------
[A 3" x 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 continued to rise over the last six months..."
3
<PAGE>
================================================================================
John Hancock Funds - Money Market Fund
"...it appears that the Fed may have successfully ushered in the proverbial soft
landing..."
--------------------------------------------------------------------------------
[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, 2000." The chart is
scaled in increments of 1% with 0% at the bottom and 7% at the top. The first
bar represents the 5.86% total return for John Hancock Money Market Fund Class
A. The second bar represents the 4.96% total return for John Hancock Money
Market Fund Class B. The third bar represents the 4.96% total return for John
Hancock Money Market Fund Class C. The fourth bar represents the 5.93% total
return 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."]
--------------------------------------------------------------------------------
Short maturity provides flexibility
For the first two months of the period, we kept the Fund's maturity shorter than
average, since it was clear that the Fed was going to continue to push rates up
in response to the steaming economy. By maintaining this more defensive stance,
we didn't have our money locked up for as long, and were able to reinvest in
higher-yielding securities after the May hike.
Believing that the Fed was winding down its tightening cycle with its May
move, we began to bring the Fund's maturity back closer to the average after the
Fed's May meeting. Even though the potential for further rate increases remains
real, we believe the Fed won't make any further moves until next year. Even so,
we'll most likely stay slightly shorter than average to take advantage of the
bargains that generally occur in the fourth quarter of the year as traders clear
out their inventory of money-market securities before year end.
A look ahead
With the economy showing signs of slowing, and inflation still contained, it
appears that the Fed may have successfully ushered in the proverbial soft
landing -- a sufficient slowing of the economy to squelch inflationary
tendencies without endangering the economic expansion. What remains uncertain is
whether the Fed's yearlong series of tightenings will stick, or whether economic
growth will surge again. One key element we're watching is the stock market. If
there is a fourth-quarter tech-stock rally, as there was in 1999, we expect the
Fed to step in again, since the market's wealth effect has been a major
contributor to the economy's strength. We'll also be watching the economic data,
including third-quarter Gross Domestic Product growth and the all-important
employment cost index -- the most accurate measure of wage inflation. Until it's
clear that the Fed is done raising rates, we will keep the Fund's maturity at,
or slightly shorter than, the average. As always, we will continue to focus not
only on providing the Fund with a competitive yield, but also on 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, 2000. You'll
also find the net asset value per share as of that date.
Statement of Assets and Liabilities
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Assets:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $336,839,979) ....................... $336,839,979
Corporate interest-bearing obligations
(cost - $29,633,874) ....................................... 29,633,874
U.S. government obligations
(cost - $23,311,777) ....................................... 23,311,777
Joint repurchase agreement (cost - $32,283,000) .............. 32,283,000
------------
422,068,630
Cash .......................................................... 653
Interest receivable ........................................... 1,748,350
Other assets .................................................. 94,288
------------
Total Assets ................................ 423,911,921
-----------------------------------------------------------
Liabilities:
Payable for shares repurchased ................................ 4,626,067
Dividend payable .............................................. 118,606
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ...................................... 267,150
Accounts payable and accrued expenses ......................... 186,564
------------
Total Liabilities ........................... 5,198,387
-----------------------------------------------------------
Net Assets:
Capital paid-in ............................................... 418,713,534
------------
Net Assets .................................. $418,713,534
===========================================================
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 - $279,879,168/279,958,342 ............................ $1.00
=============================================================================
Class B - $128,447,409/128,465,922 ............................ $1.00
=============================================================================
Class C - $10,386,957/10,386,957 .............................. $1.00
=============================================================================
Maximum Offering Price Per Share:
Class C - ($1.00/0.99) ........................................ $1.01
=============================================================================
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, 2000 (Unaudited)
--------------------------------------------------------------------------------
Investment Income:
Interest .................................................. $15,336,306
-----------
Expenses:
Investment management fee - Note B ....................... 1,189,604
Distribution and service fee - Note B
Class A ................................................ 412,705
Class B ................................................ 694,800
Class C ................................................ 31,782
Transfer agent fee - Note B .............................. 695,321
Registration and filing fees ............................. 122,422
Custodian fee ............................................ 56,734
Accounting and legal services fee - Note B ............... 44,664
Auditing fee ............................................. 17,271
Trustees' fees ........................................... 12,982
Printing ................................................. 12,454
Miscellaneous ............................................ 10,358
Legal fees ............................................... 3,592
-----------
Total Expenses .......................... 3,304,689
-----------------------------------------------------------
Less Management Fee Reduction -
Note B ............................... (237,921)
Distribution and Service
Fee Reduction (Class A) -
Note B ............................... (164,811)
-----------------------------------------------------------
Net Expenses ............................ 2,901,957
-----------------------------------------------------------
Net Investment Income ................... 12,434,349
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ............... $12,434,349
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Money Market Fund
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, 2000
MARCH 31, 2000 (UNAUDITED)
-------------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ............................................. $21,788,268 $12,434,349
-------------- --------------
Distributions to Shareholders:
Distributions from net investment income
Class A - ($0.0439 and $0.0274 per share, respectively) ......... (14,872,789) (9,083,731)
Class B - ($0.0356 and $0.0233 per share, respectively) ......... (6,803,676) (3,202,495)
Class C - ($0.0354 and $0.0233 per share, respectively) ......... (111,803) (148,123)
-------------- --------------
Total Distributions to Shareholders ............................. (21,788,268) (12,434,349)
-------------- --------------
From Fund Share Transactions - Net: * ................................ (31,402,664) (106,926,027)
-------------- --------------
Net Assets:
Beginning of period ............................................... 557,042,225 525,639,561
-------------- --------------
End of period ..................................................... $525,639,561 $418,713,534
============== ==============
* Analysis of Fund Share Transactions at $1 Per Share:
CLASS A
Shares sold ....................................................... $2,453,254,071 $2,140,801,803
Shares issued to shareholders in reinvestment of distributions .... 12,993,336 6,756,684
-------------- --------------
2,466,247,407 2,147,558,487
Less shares repurchased ........................................... (2,478,127,263) (2,229,433,172)
-------------- --------------
Net decrease ...................................................... ($11,879,856) ($81,874,685)
============== ==============
CLASS B
Shares sold ....................................................... $486,293,263 $156,094,873
Shares issued to shareholders in reinvestment of distributions .... 5,606,652 2,581,779
-------------- --------------
491,899,915 158,676,652
Less shares repurchased ........................................... (516,052,506) (188,138,183)
-------------- --------------
Net decrease ...................................................... ($24,152,591) ($29,461,531)
============== ==============
CLASS C
Shares sold ....................................................... $16,161,146 $38,636,578
Shares issued to shareholders in reinvestment of distributions .... 81,573 96,701
-------------- --------------
16,242,719 38,733,279
Less shares repurchased ........................................... (11,612,936) (34,323,090)
-------------- --------------
Net increase ...................................................... $4,629,783 $4,410,189
============== ==============
</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 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:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, PERIOD ENDED
1995(1) 1996 MARCH 31, 1997(2)
------------ ----------- -----------------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................ $1.00 $1.00 $1.00
----- ----- -----
Net Investment Income ....................................... 0.01 0.05 0.02
----- ----- -----
Less Distributions:
Dividends from Net Investment Income ........................ (0.01) (0.05) (0.02)
----- ----- -----
Net Asset Value, End of Period .............................. $1.00 $1.00 $1.00
===== ===== =====
Total Investment Return at Net Asset Value (3) .............. 0.64%(4) 4.56% 1.80%(4)
Total Adjusted Investment Return at Net Asset Value (3,5) ... 0.54%(4) 4.36% 1.60%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .................... $20,942 $262,475 $359,453
Ratio of Expenses to Average Net Assets ..................... 1.07%(6) 1.17% 1.10%(6)
Ratio of Adjusted Expenses to Average Net Assets (7) ........ 1.17%(6) 1.37% 1.30%(6)
Ratio of Net Investment Income to Average Net Assets ........ 4.94%(6) 4.41% 4.44%(6)
Ratio of Adjusted Net Investment Income
to Average Net Assets (7) ................................. 4.84%(6) 4.21% 4.24%(6)
<CAPTION>
YEAR ENDED MARCH 31, SIX MONTHS ENDED
SEPTEMBER 30, 2000
1998 1999 2000 (UNAUDITED)
---- ---- ---- ------------------
<S> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................ $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Net Investment Income ....................................... 0.05 0.04 0.04 0.03
----- ----- ----- -----
Less Distributions:
Dividends from Net Investment Income ........................ (0.05) (0.04) (0.04) (0.03)
----- ----- ----- -----
Net Asset Value, End of Period .............................. $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
Total Investment Return at Net Asset Value (3) .............. 4.92% 4.54% 4.45% 2.76%(4)
Total Adjusted Investment Return at Net Asset Value (3,5) ... 4.72% 4.34% 4.25% 2.66%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .................... $312,762 $373,634 $361,754 $279,879
Ratio of Expenses to Average Net Assets ..................... 0.89% 0.91% 0.91% 0.96%(6)
Ratio of Adjusted Expenses to Average Net Assets (7) ........ 1.09% 1.11% 1.11% 1.16%(6)
Ratio of Net Investment Income to Average Net Assets ........ 4.82% 4.44% 4.40% 5.50%(6)
Ratio of Adjusted Net Investment Income
to Average Net Assets (7) ................................. 4.62% 4.24% 4.20% 5.30%(6)
<CAPTION>
YEAR ENDED OCTOBER 31,
PERIOD ENDED
1995(8) 1996 MARCH 31, 1997(2)
------- ---- -----------------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................ $1.00 $1.00 $1.00
----- ----- -----
Net Investment Income ....................................... 0.04 0.04 0.01
----- ----- -----
Less Distributions:
Dividends from Net Investment Income ........................ (0.04) (0.04) (0.01)
----- ----- -----
Net Asset Value, End of Period .............................. $1.00 $1.00 $1.00
===== ===== =====
Total Investment Return at Net Asset Value (3) .............. 4.07% 3.71% 1.45%(4)
Total Adjusted Investment Return at Net Asset Value (3,5) ... -- 3.61% 1.35%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................... $54,313 $108,162 $130,056
Ratio of Expenses to Average Net Assets ..................... 1.92% 2.00% 1.96%(6)
Ratio of Adjusted Expenses to Average Net Assets (7) ........ -- 2.10% 2.06%(6)
Ratio of Net Investment Income to Average Net Assets ........ 3.96% 3.58% 3.60%(6)
Ratio of Adjusted Net Investment Income
to Average Net Assets (7) ................................. -- 3.48% 3.50%(6)
<CAPTION>
YEAR ENDED MARCH 31, SIX MONTHS ENDED
SEPTEMBER 30, 2000
1998 1999 2000 (UNAUDITED)
---------- ---- ---- ------------------
<S> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................ $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Net Investment Income ....................................... 0.04 0.04 0.04 0.02
----- ----- ----- -----
Less Distributions:
Dividends from Net Investment Income ........................ (0.04) (0.04) (0.04) (0.02)
----- ----- ----- -----
Net Asset Value, End of Period .............................. $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
Total Investment Return at Net Asset Value (3) .............. 4.04% 3.66% 3.59% 2.33%(4)
Total Adjusted Investment Return at Net Asset Value (3,5) ... 3.94% 3.56% 3.49% 2.28%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................... $81,027 $182,062 $157,909 $128,447
Ratio of Expenses to Average Net Assets ..................... 1.74% 1.76% 1.74% 1.81%(6)
Ratio of Adjusted Expenses to Average Net Assets (7) ........ 1.84% 1.86% 1.84% 1.91%(6)
Ratio of Net Investment Income to Average Net Assets ........ 3.97% 3.54% 3.56% 4.61%(6)
Ratio of Adjusted Net Investment Income
to Average Net Assets (7) ................................. 3.87% 3.44% 3.46% 4.51%(6)
</TABLE>
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 - Money Market Fund
Financial Highlights (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2000
MARCH 31, 1999(1) MARCH 31, 2000 (UNAUDITED)
----------------- -------------- -----------
<S> <C> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................ $1.00 $1.00 $1.00
----- ----- -----
Net Investment Income ............................................... 0.03 0.04 0.02
----- ----- -----
Less Distributions:
Dividends from Net Investment Income ................................ (0.03) (0.04) (0.02)
----- ----- -----
Net Asset Value, End of Period ...................................... $1.00 $1.00 $1.00
===== ===== =====
Total Investment Return at Net Asset Value (3) ...................... 3.29%(4) 3.58% 2.33%(4)
Total Adjusted Investment Return at Net Asset Value (3,5) ........... 3.19%(4) 3.48% 2.28%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............................ $1,347 $5,977 $10,387
Ratio of Expenses to Average Net Assets ............................. 1.75%(6) 1.76% 1.81%(6)
Ratio of Adjusted Expenses to Average Net Assets (7) ................ 1.85%(6) 1.86% 1.91%(6)
Ratio of Net Investment Income to Average Net Assets ................ 3.46%(6) 3.67% 4.64%(6)
Ratio of Adjusted Net Investment Income to Average Net Assets (7) ... 3.36%(6) 3.57% 4.54%(6)
</TABLE>
(1) Class A and Class C shares began operations on September 12, 1995 and May
1, 1998, respectively.
(2) Effective March 31, 1997, the fiscal period end changed from October 31 to
March 31.
(3) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Money Market Fund
Schedule of Investments
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Money Market Fund on September 30, 2000. It's divided into four types of
short-term investments. The categories of short-term investments are further
broken down by industry group.
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
------------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
Automobile/Trucks (11.57%)
DaimlerChrysler North America Holding Corp.,
10-27-00......................................................... 6.600% Tier 1 $12,000 $11,942,800
Ford Motor Credit Co.,
10-30-00......................................................... 6.490 Tier 1 17,000 16,911,123
General Motors Acceptance Corp.,
01-19-01......................................................... 6.530 Tier 1 11,000 10,780,520
General Motors Acceptance Corp.,
01-22-01......................................................... 6.480 Tier 1 9,000 8,816,940
------------
48,451,383
------------
Banks (7.13%)
Barclays U.S. Funding Corp.,
10-27-00......................................................... 6.490 Tier 1 15,000 14,929,692
Morgan (J.P.) & Co., Inc.,
10-16-00......................................................... 6.480 Tier 1 10,000 9,973,000
Morgan (J.P.) & Co., Inc.,
11-07-00......................................................... 6.480 Tier 1 5,000 4,966,700
------------
29,869,392
------------
Banks - Foreign (22.42%)
Abbey National North America Corp.,
10-23-00......................................................... 6.510 Tier 1 20,000 19,920,433
Deutsche Bank Financial,
12-07-00......................................................... 6.450 Tier 1 15,000 14,819,938
Deutsche Bank Financial,
01-22-01......................................................... 6.480 Tier 1 5,000 4,898,300
Societe Generale New York,
01-25-01......................................................... 6.500 Tier 1 20,000 19,581,111
Toronto Dominion Holdings,
01-18-01......................................................... 6.490 Tier 1 15,000 14,705,246
Union Bank of Switzerland,
10-04-00......................................................... 6.570 Tier 1 10,000 9,994,525
Union Bank of Switzerland,
11-06-00......................................................... 6.460 Tier 1 10,000 9,935,400
------------
93,854,953
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Money Market Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
------------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C>
Beverages (4.04%)
Coca-Cola Co.,
10-31-00......................................................... 6.480% Tier 1 $17,000 $16,908,200
------------
Broker Services (8.03%)
Goldman Sachs Group, L.P.,
11-13-00......................................................... 6.530 Tier 1 10,000 9,922,003
Goldman Sachs Group, L.P.,
02-05-01......................................................... 6.510 Tier 1 8,000 7,816,273
Merrill Lynch & Co.,
10-10-00......................................................... 6.530 Tier 1 11,000 10,982,043
Merrill Lynch & Co.,
01-10-01......................................................... 6.510 Tier 1 5,000 4,908,679
------------
33,628,998
------------
Finance (20.86%)
American Express Credit Corp.,
10-13-00......................................................... 6.490 Tier 1 15,000 14,967,550
American Express Credit Corp.,
10-23-00......................................................... 6.480 Tier 1 5,000 4,980,200
American Honda Finance Corp.,
10-17-00......................................................... 6.490 Tier 1 9,000 8,974,040
Associates Corp. NA,
10-27-00......................................................... 6.470 Tier 1 10,000 9,953,272
Associates Corp. NA,
01-12-01......................................................... 6.520 Tier 1 10,000 9,813,456
General Electric Capital Corp.,
10-16-00......................................................... 6.480 Tier 1 17,000 16,954,100
International Lease Finance Corp.,
11-27-00......................................................... 6.560 Tier 1 12,000 11,875,360
International Lease Finance Corp.,
01-09-01......................................................... 6.470 Tier 1 10,000 9,820,278
------------
87,338,256
------------
Insurance (2.35%)
American General Corp.,
12-20-00......................................................... 6.470 Tier 1 10,000 9,856,222
------------
Utilities (4.05%)
American Telephone & Telegraph Co.,
10-23-00......................................................... 6.490 Tier 1 17,000 16,932,575
------------
TOTAL COMMERCIAL PAPER
(Cost $336,839,979) (80.45%) 336,839,979
------- ------------
CORPORATE INTEREST-BEARING OBLIGATIONS
Telecommunciations (5.75%)
GTE Corp.,
12-01-00......................................................... 9.375 Tier 1 24,000 24,088,835
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Money Market Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
------------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C>
Utilities (1.32%)
Hydro Quebec,
03-07-01......................................................... 9.000% Tier 1 $5,500 $5,545,039
------------
TOTAL CORPORATE INTEREST-BEARING OBLIGATIONS
(Cost $29,633,874) (7.07%) 29,633,874
------- ------------
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (5.57%)
Federal Farm Credit Bank,
10-02-00......................................................... 5.800 Tier 1 11,000 10,999,710
Federal Home Loan Bank,
01-29-01......................................................... 5.340 Tier 1 2,330 2,319,382
Federal Home Loan Bank,
03-15-01......................................................... 6.750 Tier 1 10,000 9,992,685
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $23,311,777) (5.57%) 23,311,777
------- ------------
JOINT REPURCHASE AGREEMENT (7.71%)
Investment in a joint repurchase agreement
transaction with UBS Warburg, Inc. - Dated
09-29-00, due 10-02-00 (Secured by U.S.
Treasury Bonds 5.250% thru 11.750%,
due 11-15-14 thru 02-15-29) - Note A............................. 6.520 32,283 32,283,000
------------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $32,283,000) (7.71%) 32,283,000
------- ------------
TOTAL INVESTMENTS (100.80%) 422,068,630
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.80%) (3,355,096)
------- ------------
TOTAL NET ASSETS (100.00%) $418,713,534
======= ============
</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.
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.
11
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Money Market Fund
(UNAUDITED)
NOTE A-
ACCOUNTING POLICIES
John Hancock Money Market Fund (the "Fund") is a diversified series of John
Hancock Current Interest (the "Trust"), an open-end management investment
company, registered under the Investment Company Act of 1940. 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 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, which approximates market value, in accordance with
Rule 2a-7 of the Investment Company Act of 1940. 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is 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 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.
12
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Money Market Fund
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. The Adviser has
reduced the maximum fee on the first $750,000,000 of the Fund's average daily
net assets to 0.40%, at least until July 31, 2001. The maximum fee cannot be
reinstated to the original contracted amounts without the Trustees' consent.
Accordingly, for the period ended September 30, 2000, the reduction in the
Fund's management fee amounted to $237,921.
John Hancock Funds, Inc. ("JH Funds"), a wholly owned subsidiary of the
Adviser, is the principal underwriter of the Fund. Effective May 1, 2000, all
Class C shares retail purchases are assessed a 1.00% up-front sales charge.
During the period ended September 30, 2000, JH Funds received net up-front sales
charges of $18,075 with regard to sales of Class C shares. Of this amount,
$14,596 was paid as sales commissions to unrelated broker-dealers and $3,479 was
paid as sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer. The Adviser's indirect parent,
John Hancock Life Insurance Company, is the indirect sole shareholder of
Signator Investors.
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,
2000, CDSCs amounted to $611,076.
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,
2000, CDSCs amounted to $12,458.
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 July 31, 2001, and cannot be
reinstated to 0.25% without the Trustees' consent. Accordingly, for the period
ended September 30, 2000, the reduction in the Fund's 12b-1 expense amounted to
$164,811. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc. ("Signature Services"), an indirect subsidiary of John Hancock 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 period was
at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Stephen L. Brown, Ms. Maureen R. Ford 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
13
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Money Market Fund
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. The Deferred Compensation Plan investments had
no impact on the operations of the Fund.
NOTE C-
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities, other
than obligations of the U.S. government and its agencies, during the period
ended September 30, 2000, aggregated $12,694,882,852 and $31,626,305,785,
respectively.
The cost of investments owned at September 30, 2000 (including the joint
repurchase agreement) for federal income tax purposes was $422,068,630.
14
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Money Market Fund
15
<PAGE>
================================================================================
---------------
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www.jhfunds.com
--------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock Money
Market Fund. It may be used as sales literature when preceded or accompanied by
the current prospectus, which details charges, investment objectives and
operating policies.
[RECYCLE LOGO] Printed on Recycled Paper 440SA 9/00
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