<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
CASH
MANAGEMENT
FUND
ANNUAL REPORT
September 30, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Gail D. Fosler*
Bayard Henry*
Richard S. Scipione
Edward J. Spellman*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President, Assistant Secretary and Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENTAUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 0216-5023
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Investors around the world have been watching Wall Street in awe for the better
part of 1995. Through September, the Dow Jones Industrial Average had reached
record highs and had grown, along with the Standard & Poor's 500-Stock Index, by
more than 20%. Investors who stayed in the market after a disappointing 1994
have been rewarded.
On another street, Pennsylvania Avenue, one of the hot topics many
people are watching is Medicare reform. While the Congressional rhetoric is just
beginning to heat up, today's Medicare debate should serve as another wake-up
call to all Americans about the need to have a financial plan and to save for
retirement. Whether or not the government changes the way health-care benefits
are allotted to senior citizens, the message is clear: your future security and
well-being lies in your own hands -- not Uncle Sam's.
We know you've heard it a hundred times. Pick up almost any financial
periodical today, and you'll see cover stories on retirement. Many of them will
perhaps scare you or make you think that the task of saving for retirement is
just too daunting. But take heart. We don't believe that and neither do many
financial experts.
Yet retirement planning is not to be taken lightly. To live the way you
want to -- the way you deserve to after all those years of hard work -- you need
to plan and save now, on a regular basis, no matter what your other costs, no
matter how small the amount, no matter what your current age. It may be easier
if you start earlier, but it's never too late.
Building a secure nest egg is indeed doable. Talk to your financial
adviser about establishing your retirement planning roadmap, if you haven't
already. And educate yourself by reading some of the many articles about how to
save for retirement. Take control of your future by saving today. That way, when
it comes time for retirement, you shouldn't have to think about any street but
Easy Street.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY DAWN BAILLIE, PORTFOLIO MANAGER
JOHN HANCOCK
CASH MANAGEMENT FUND
RISING YIELDS BENEFIT MONEY MARKET FUNDS IN 1995
Throughout John Hancock Cash Management Fund's fiscal year, money market yields
have approached their highest levels in almost four years as a result of the
Federal Reserve's seven interest rate increases in 1994 and early 1995.
Currently the Federal Funds rate -- the interest rate banks charge each other
for overnight loans and which serves as the benchmark for pricing most money
market securities -- stands at 5.75%. With yields between 5% and 6%, money
market investors are earning a real rate of return -- that is, the return after
inflation -- of 2.5% to 3%. As a result, many investors have returned to money
market funds in 1995. They recognize that these funds present not only a "safe
haven" for stock and bond investors, but also an attractive and competitive
alternative to more risky stock and bond funds.
On September 30, 1995, John Hancock Cash Management Fund had a 7-day
average yield of 5.08%, up substantially from its 3.94% average 7-day yield on
September 30, 1994. By comparison, the average taxable money fund had a 7-day
average yield of 5.21% on September 30, 1995 and 4.20% on September 30, 1994,
according to IBC/Donoghue's Money Fund Report.
[A 2 1/2" x 2 1/2" photo of Dawn Baillie, bottom center. Caption reads: "Dawn
Baillie, portfolio manager."]
MATURITY LENGTHENS
After the last interest-rate hike in early February 1995, the market began to
anticipate that the Fed would soon be done raising rates. That expectation,
coupled with signs of a slowing economy and positive technical factors in the
market, caused short-term rates to drop off slightly. In response, money fund
managers began to take a slightly more aggressive approach by lengthening their
average maturities.
We did this gradually throughout the year, extending from an average 25-
to 30-day range in the last quarter of 1994 to 59 days by the end of September
1995. That was slightly longer than the 54-day maturity for the average taxable
money market fund, mostly
[CAPTION]
"...MONEY MARKET YIELDS HAVE APPROACHED
THEIR HIGHEST LEVELS IN ALMOST FOUR YEARS..."
3
<PAGE> 4
John Hancock Funds - Cash Management Fund
[Bar chart with heading "7-Day Yield" at top of left hand column. Under the
heading is the footnote "As of September 30, 1995." The chart is scaled in
increments of 2% from top to bottom with 6% at the top and 0% at the bottom.
Within the chart, there are two solid bars. The first represents the 5.08% 7-day
yield for John Hancock Cash Management Fund. The second represents the 5.21%
7-day yield for the average taxable money fund. Footnote below reads: "The
average money market fund is tracked by IBC/Donoghue's Money Fund Report.]
because we locked in some high-yielding securities before the Federal Reserve
lowered the Federal Funds rate to 5.75% in July in response to a slowing
economy.
HIGHER QUALITY ISSUES
The Fund actively manages its investments to assure that all its money market
securities are high quality. In that regard, we have temporarily stopped buying
Japanese bank obligations until the Japanese government completes its bank
bailout package. Once we're comfortable that Japan's banking crisis has been
resolved, we'll resume investing in those banks that have the best loan quality
and offer the Fund additional yield. Until then, we've increased our holdings in
higher-quality domestic bank obligations, corporate obligations and commercial
paper -- short-term IOUs issued by borrowers to investors with temporary idle
cash -to keep our yield competitive.
OUTLOOK
We don't expect short-term rates to stray much from their current levels in the
months ahead. While it's possible that the Fed could lower rates again, it
probably wouldn't be by much more than a quarter of a percentage point. And
recent economic data, such as the August jobs report, did little to alter
forecasts for mild growth and dwindling inflation.
On the fiscal front, we're keeping our eyes on Washington and efforts to
tackle the budget deficit. We're also following the great theoretical debate
about whether the Federal Reserve should begin to ease credit now in
anticipation of Congressional budget cuts. In theory, if the Fed believes that
Congress will implement sizable budget cuts by year-end, it should begin
lowering interest rates in advance. That would give the economy time to speed up
enough to offset any slowdown such cuts in spending would cause. But therein
lies the problem: it's just not clear what Congress will do.
For now, we plan to stick to our current strategy of buying high-quality
securities and maintaining an average maturity of 55-65 days. We will keep a
close eye on the economy as we expect growth to remain mild and inflation to
remain in check. If growth remains too sluggish and it looks like a deficit
reduction plan may be put in place, the Fund may begin to lengthen its average
maturity to protect against a rate decline. However, the Fund will have some
interesting technical opportunities at the end of the year, when there is
usually a strong demand for financing, which in turn drives short-term yields
up. With this in mind, we will watch carefully for the best time to lock in
higher yields.
- --------------------------------------------------------------------------------
The Fund is neither insured nor guaranteed by the U.S. government. There can be
no assurance that the Fund will be able to maintain a net asset value of $1.00
per share.
[CAPTION]
"...WE EXPECT GROWTH TO REMAIN MILD AND INFLATION TO REMAIN IN CHECK."
4
<PAGE> 5
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $147,577,455)................. $147,577,455
Negotiable bank certificates of deposit
(cost - $8,008,044).................................. 8,008,044
Corporate interest-bearing obligations
(cost - $83,626,218)................................. 83,626,218
Joint repurchase agreement (cost - $2,229,000) 2,229,000
------------
241,440,717
Cash.................................................... 158,873
Interest receivable..................................... 1,968,466
------------
Total Assets.......................... 243,568,056
------------------------------------------------------------
LIABILITIES:
Payable for investments purchased....................... 5,000,000
Dividend payable........................................ 25,173
Payable to John Hancock Advisers, Inc. and affiliates -
Note B................................................. 346,960
Accounts payable and accrued expenses................... 65,037
------------
Total Liabilities..................... 5,437,170
------------------------------------------------------------
NET ASSETS:
Capital paid-in......................................... 238,130,886
------------
Net Assets............................ $238,130,886
============================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE:
(based on 238,130,886 shares of beneficial interest
outstanding - unlimited number of shares authorized
with no par value)...................................... $ 1.00
================================================================================
</TABLE>
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, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE PER SHARE AS OF THAT DATE.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND FOR THE PERIOD.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended September 30, 1995
- --------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest................................................ $14,582,831
-----------
Expenses:
Investment management fee - Note B..................... 984,764
Transfer agent fee - Note B............................ 965,009
Custodian fee.......................................... 81,518
Registration and filing fees........................... 62,566
Auditing fee........................................... 35,231
Printing............................................... 34,060
Trustees' fees......................................... 22,787
Miscellaneous.......................................... 9,703
Legal fees............................................. 6,732
-----------
Total Expenses........................ 2,202,370
------------------------------------------------------------
Net Investment Income................. 12,380,461
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations............. $12,380,461
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment Income....................................................................... $ 12,380,461 $ 6,001,558
------------ ------------
Net Increase in Net Assets Resulting from Operations....................................... 12,380,461 6,001,558
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0501 and $0.0291 per share, respectively).......... (12,380,461) (6,001,558)
------------ ------------
FROM FUND SHARE TRANSACTIONS-- NET*........................................................... 14,231,512 40,190,579
------------ ------------
NET ASSETS:
Beginning of year........................................................................... 223,899,374 183,708,795
------------ ------------
End of year................................................................................. $238,130,886 $223,899,374
============ ============
* ANALYSIS OF FUND SHARE TRANSACTIONS AT $1 PER SHARE:
Shares sold................................................................................. $859,281,131 $674,344,812
------------ ------------
Shares issued to shareholders in reinvestment of distributions.............................. 11,155,429 5,410,901
------------ ------------
870,436,560 679,755,713
Less shares repurchased..................................................................... (856,205,048) (639,565,134)
------------ ------------
Net increase................................................................................ $ 14,231,512 $ 40,190,579
============ ============
</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 REDEEMED DURING THE LAST TWO
PERIODS.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------
1995 1994 1993 1992 1991
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- --------
Net Investment Income............................................... 0.05 0.03 0.02 0.04 0.06
------ ------- ------- ------- --------
Less Distributions:
Dividends from Net Investment Income................................ (0.05) (0.03) (0.02) (0.04) (0.06)
------ ------- ------- ------- --------
Net Asset Value, End of Period...................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======= ======= ======= ========
Total Investment Return at Net Asset Value.......................... 5.33% 2.95% 2.47% 3.77% 6.23%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)........................... $238,131 $223,899 $183,709 $201,900 $250,847
Ratio of Expenses to Average Net Assets............................. 0.89% 0.95% 0.98% 0.95% 0.90%
Ratio of Net Investment Income to Average Net Assets................ 5.03% 2.94% 2.45% 3.75% 6.08%
</TABLE>
The Financial Highlights summarize the impact of net investment income and
dividends on a single share for the period indicated. Additionally, important
relationships between some items presented in the financial statements are
expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
<CAPTION>
Schedule of Investments
September 30, 1995
- --------------------------------------------------------------------------------
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- ---- -------- --------- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
AUTOMOTIVE (1.68%)
Ford Motor Credit Co.,
10-03-95................................................................. 5.740% Tier 1 $4,000 $3,998,087
----------
BANKING (2.10%)
Norwest Corp.,
10-03-95................................................................. 5.770 Tier 1 5,000 4,997,596
----------
BANKING - FOREIGN (1.68%)
Deutsche Bank
Financial, Inc.
10-13-95................................................................. 5.730 Tier 1 4,000 3,991,723
----------
BROKER SERVICES (11.57%)
Bear Stearns Cos., Inc.,
10-02-95................................................................. 5.750 Tier 1 4,800 4,798,467
Bear Stearns Cos., Inc.,
10-18-95................................................................. 5.740 Tier 1 3,000 2,991,390
Bear Stearns Cos., Inc.,
10-19-95................................................................. 5.750 Tier 1 4,500 4,486,344
Goldman Sachs Group.,
L.P. 10-06-95............................................................ 5.770 Tier 1 5,000 4,995,192
Merrill Lynch & Co., Inc.,
10-05-95................................................................. 5.750 Tier 1 6,000 5,995,208
Merrill Lynch & Co., Inc.,
10-06-95................................................................. 5.750 Tier 1 2,800 2,797,317
Merrill Lynch & Co., Inc.,
10-18-95................................................................. 5.750 Tier 1 1,500 1,495,687
----------
27,559,605
----------
FINANCE (8.19%)
American Honda Finance
Corp., 10-16-95.......................................................... 5.770 Tier 1 4,000 3,989,742
American Honda Finance
Corp., 11-01-95.......................................................... 5.750 Tier 1 3,000 2,984,667
General Electric Capital
Corp., 10-26-95.......................................................... 6.460 Tier 1 2,055 2,045,412
IBM Credit Corp.,
10-02-95................................................................. 5.730 Tier 1 5,500 5,498,249
IBM Credit Corp.,
10-03-95................................................................. 5.730 Tier 1 5,000 4,997,613
----------
19,515,683
----------
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON SEPTEMBER 30, 1995. IT'S DIVIDED INTO FIVE TYPES OF SHORT-TERM
INVESTMENTS. MOST CATEGORIES OF SHORT-TERM INVESTMENTS ARE FURTHER BROKEN DOWN
BY INDUSTRY GROUP.
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- ---- -------- --------- -----
<S> <C> <C> <C> <C>
MORTGAGE BANKING (5.45%)
Countrywide Funding Corp.,
10-12-95................................................................. 5.780% Tier 1 $9,100 $9,082,467
Countrywide Funding Corp.,
10-20-95................................................................. 5.800 Tier 1 2,800 2,790,978
Countrywide Funding Corp.,
10-24-95................................................................. 5.770 Tier 1 1,100 1,095,769
----------
12,969,214
----------
RETAIL STORES (4.61%)
Sears Roebuck Acceptance
Corp., 10-04-95.......................................................... 5.750 Tier 1 7,000 6,995,528
Sears Roebuck Acceptance
Corp., 10-12-95.......................................................... 5.750 Tier 1 4,000 3,992,333
----------
10,987,861
----------
TOBACCO (0.96%)
Philip Morris Cos., Inc.,
10-02-95................................................................. 5.770 Tier 1 2,277 2,276,270
----------
UTILITIES - ELECTRIC (16.35%)
Oklahoma Gas & Electric
Co., 10-02-95............................................................ 6.550 Tier 1 13,000 12,995,269
Pennsylvania Power &
Light Co., 10-04-95 ..................................................... 5.800 Tier 1 1,000 999,355
Pennsylvania Power &
Light Co., 10-05-95 ..................................................... 5.900 Tier 1 1,000 999,180
Pennsylvania Power &
Light Co., 10-06-95 ..................................................... 5.800 Tier 1 4,500 4,495,650
Pennsylvania Power &
Light Co., 10-10-95 ..................................................... 5.850 Tier 1 3,400 3,394,475
Pennsylvania Power &
Light Co., 10-12-95 ..................................................... 5.850 Tier 1 3,000 2,994,150
Public Service Electric and
Gas Co., 10-11-95 ....................................................... 5.760 Tier 1 1,300 1,297,712
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
UTILITIES - ELECTRIC (CONTINUED)
Public Service Electric and
Gas Co., 10-13-95 ....................................................... 5.770% Tier 1 $ 900 $ 898,125
Public Service Electric and
Gas Co., 10-13-95 ....................................................... 5.780 Tier 1 2,000 1,995,826
Public Service Electric and
Gas Co., 10-17-95 ....................................................... 5.770 Tier 1 2,000 1,994,550
Public Service Electric and
Gas Co., 10-23-95 ....................................................... 5.760 Tier 1 6,900 6,874,608
-----------
38,938,900
-----------
UTILITIES - TELEPHONE (9.38%)
Bell Atlantic Financial
Services, 10-10-95 ...................................................... 5.730 Tier 1 13,000 12,979,309
Bell Atlantic Network
Funding Corp.,
10-05-95................................................................. 5.710 Tier 1 2,800 2,797,779
GTE Corp.,
10-30-95................................................................. 5.820 Tier 1 1,600 1,592,240
GTE Corp.,
11-02-95................................................................. 5.850 Tier 1 5,000 4,973,188
-----------
22,342,516
-----------
TOTAL COMMERCIAL PAPER
(Cost $147,577,455) (61.97%) 147,577,455
----- -----------
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
U.S BRANCHES OF FOREIGN BANKS (2.52%)
Deutsche Bank., AG
07-25-96................................................................. 6.050 Tier 1 3,000 3,000,000
Societe Generale N.A.,
Inc., 01-08-96........................................................... 7.650 Tier 1 3,000 3,004,739
-----------
6,004,739
-----------
U.S. DOLLAR EURO CERTIFICATES (0.84%)
Union Bank of Switzerland.,
12-29-95................................................................. 7.510 Tier 1 2,000 2,003,305
-----------
TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $8,008,044) ( 3.36%) 8,008,044
---- -----------
</TABLE>
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
CORPORATE INTEREST BEARING OBLIGATIONS
AEROSPACE (0.85%)
Martin Marietta Corp.,
03-01-96................................................................. 8.500% Tier 1 $2,000 $2,019,884
----------
AUTOMOTIVE (8.02%)
Ford Motor Credit Co.,
12-01-95................................................................. 6.125 Tier 1 3,000 2,996,975
Ford Motor Credit Co.,
12-15-95................................................................. 9.125 Tier 1 1,850 1,858,441
Ford Motor Credit Co.,
05-15-96................................................................. 8.250 Tier 1 1,000 1,012,617
General Motors Acceptance
Corp., 02-01-96.......................................................... 8.750 Tier 1 4,600 4,627,314
General Motors Acceptance
Corp., 03-13-96.......................................................... 8.900 Tier 1 1,000 1,011,773
General Motors Acceptance
Corp., 03-13-96.......................................................... 9.125 Tier 1 5,000 5,050,539
General Motors Acceptance
Corp., 03-20-96.......................................................... 8.800 Tier 1 1,500 1,510,642
General Motors Acceptance
Corp., 07-17-96.......................................................... 9.000 Tier 1 1,000 1,021,461
----------
19,089,762
----------
BANKING (14.69%)
Bank of America,
NT & SA 10-23-95......................................................... 5.740 Tier 1 7,000 6,999,592
First Chicago Corp.
National Bank,
11-08-95**............................................................... 6.020 Tier 1 5,000 4,999,445
Key Corp,
12-04-95................................................................. 5.400 Tier 1 3,000 2,996,486
Morgan Guaranty Trust
Co., NY 10-03-96......................................................... 6.070 Tier 1 5,000 5,000,000
National Bank of Detroit,
10-19-95................................................................. 5.730 Tier 1 5,000 4,999,993
NationsBank Corp.,
12-01-95................................................................. 5.375 Tier 1 1,000 998,677
NationsBank of Texas,
08-28-96................................................................. 6.150 Tier 1 7,000 7,000,000
U.S.National Bank of
Oregon, 10-30-95......................................................... 5.400 Tier 1 2,000 1,997,595
----------
34,991,788
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS* OMITTED) VALUE
- ------------------- ---- -------- -------- -----
<S> <C> <C> <C> <C>
CHEMICAL (1.68%)
Dow Chemical Co.,
10-15-95......... ....................................................... 4.625% Tier 1 $1,000 $ 999,331
Monsanto Corp.,
12-21-95................................................................. 8.750 Tier 1 3,000 3,012,489
----------
4,011,820
----------
FINANCE (4.20%)
Household Finance Corp.,
12-01-95................................................................. 5.900 Tier 1 10,000 9,998,606
----------
INSURANCE (0.85%)
American General
Finance Corp.,
01-31-96................................................................. 9.230 Tier 1 2,000 2,020,795
----------
RETAIL STORES (0.42%)
Sears Roebuck
Acceptance Corp.,
12-15-95................................................................. 6.590 Tier 1 1,000 999,283
----------
TOBACCO (4.41%)
Philip Morris Cos., Inc.,
03-07-96................................................................. 8.450 Tier 1 3,950 3,990,181
Philip Morris Cos., Inc.,
07-01-96................................................................. 8.875 Tier 1 6,380 6,504,099
----------
10,494,280
----------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $83,626,218) (35.12%) 83,626,218
----- ----------
</TABLE>
<TABLE>
<CAPTION>
PAR VALUE
INTEREST (000'S MARKET
ISSUER, DESCRIPTION RATE OMITTED) VALUE
- ------------------- ---- -------- -----
<S> <C> <C> <C>
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase
agreement transaction with UBS
Securities, Inc., Dated 09-29-95,
due 10-02-95 (Secured by
U.S. Treasury Bond 10.375%
due 11-15-12)........... ................................................ 6.45% $2,229 $ 2,229,000
------------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $2,229,000) (0.94%) 2,229,000
---- ------------
TOTAL INVESTMENTS (101.39%) $241,440,717
====== ============
</TABLE>
*Quality ratings indicate the categories of eligible securities, as defined by
Rule 2a-7 of the U.S. Securities and Exchange Commission, owned by the Fund.
Tier 1 securities are those that have received the highest rating from at least
two rating organizations, or one if only one has rated the security.
**Floating rate note, interest rate effective September 30, 1995.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of total net assets of the Fund.
See notes to financial statements.
10
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NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Cash Management Fund (the "Fund") is an open-end investment
management company, registered under the Investment Company Act of 1940.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Trustees have determined appropriate methods for
valuing portfolio securities. Accordingly, portfolio securities are valued at
amortized cost, in accordance with Rule 2a-7 of the Investment Company Act of
1940, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the security to the Fund. Interest income on
certain portfolio securities such as negotiable bank certificates of deposit and
interest bearing notes is accrued daily and included in interest receivable.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAX The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies. It
will not be subject to federal income tax on taxable earnings which are
distributed to shareholders.
DIVIDENDS The Fund's net investment income is
declared daily as dividends to shareholders of record as of the close of
business on the preceding day and distributed monthly.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE
SERVICES AND TRANSACTIONS WITH AFFILIATES
AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of (a) 0.40% of the first $250,000,000 of the Fund's
average daily net asset value, (b) 0.35% of the next $250,000,000, (c) 0.30% of
the next $250,000,000 and (d) 0.25% of the Fund's average daily net asset value
in excess of $750,000,000.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. Prior to January 1, 1995, JH
Funds was known as John Hancock Broker Distribution Services, Inc. In addition,
to compensate JH Funds for the services it provides as distributor 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 may make payments to JH
Funds for distribution and service expenses at an annual rate not to exceed
0.10% of the Fund's daily net assets to reimburse
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Cash Management Fund
JH Funds for its distribution/service costs. Up to a maximum of 0.05% 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 Trustees have voted to suspend both the service fee and the
sales fee of the Plan indefinitely.
The Fund has a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, Investor Services was known as John
Hancock Fund Services, Inc. Effective January 1, 1995, the Fund pays transfer
agent fees based on transaction volume and the number of shareholder accounts.
Prior to January 1, 1995, the Fund paid Investor Services a monthly transfer
agent fee equivalent, on an annual basis, to 0.45% of the Fund's average daily
net asset value, plus out of pocket expenses incurred by Investor Services on
behalf of the Fund for proxy mailings.
Messrs. Edward J. Boudreau, Jr. and 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. Effective with
the fees paid for 1995, 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 will make 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
will be recorded on the Fund's books as an other asset. The deferred
compensation liability will be marked to market on a periodic basis and income
earned by the investment will be recorded on the Fund's books.
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, for the period ended September 30, 1995, aggregated $4,690,670,961 and
$4,678,056,477, respectively. Purchases and proceeds from maturities of
obligations of the U.S. government and its agencies for the period ended
September 30, 1995, aggregated $20,914,541 and $23,151,000, respectively.
The cost of investments owned at September 30, 1995, for Federal income tax
purposes was $241,440,717.
NOTE D --
PLAN OF REORGANIZATION
On August 28, 1995, the Trustees of the Fund voted to approve a plan of
reorganization and merger with John Hancock Money Market Fund. The merger is
expected to occur on November 17, 1995 upon shareholder approval.
12
<PAGE> 13
John Hancock Funds - Cash Management Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of John Hancock Cash Management Fund
We have audited the accompanying statement of assets and liabilities of John
Hancock Cash Management Fund (the "Fund'), including the schedule of
investments, as of September 30, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers and other
appropriate auditing procedures where replys from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of John
Hancock Cash Management Fund at September 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
/s/Ernst & Young LLP
Ernst & Young LLP
Boston, Massachusetts
November 1, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund during its fiscal year ended September 30,
1995. All of the dividends paid for the fiscal year are taxable as ordinary
income. None of the 1995 dividends qualify for the dividends received deduction
available to corporations.
Shareholders will be mailed a 1995 U.S. Treasury Department Form 1099-DIV in
January of 1996. This will reflect the total of all distributions which are
taxable for calendar year 1995.
13
<PAGE> 14
NOTES
John Hancock Funds - Cash Management Fund
14
<PAGE> 15
NOTES
John Hancock Funds - Cash Management Fund
15
<PAGE> 16
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
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This report is for the information of shareholders of the John Hancock Cash
Management Fund. It may be used as sales literature when preceded or accompanied
by the current prospectus, which details charges, investment objectives and
operating policies.
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JHD 2400A 9/95
