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John Hancock Funds
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Cash
Reserve,
Inc.
SEMIANNUAL REPORT
June 30, 1997
<PAGE>
================================================================================
DIRECTORS
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles F. Fretz*
Harold R. Hiser, Jr.*
Anne C. Hodsdon
Charles L. Ladner*
Leo E. Linbeck, Jr.*
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02205-9116
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
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market has certainly put on a show since the start of the year. Stocks
began 1997 on the high wires, bolstered by a near-perfect "Goldilocks"
economy-not too hot, not too cold. In almost a straight shot, the Dow Jones
Industrial Average soared through the 7000 level for the first time in early
March. Just days later, stocks lost their footing and staged a month-long
free-fall in a nervous reaction to rising interest rates and economic data that
showed the economy was picking up steam. Stocks gave back all of their year's
gain and suffered their worst decline since 1990 during this period. No sooner
had real fears begun to beset investors then they were gone, erased in a
euphoric rally caused by strong earnings and no signs of inflation. By the end
of June, both the Dow and the broader Standard & Poor's 500 Stock Index had
risen by 20%-a level not many thought the market would reach all year, let alone
in six months. Bondholders have not enjoyed the same bounty, as the bond market
has mostly stayed worried about the strength of the economy, the direction of
interest rates, and the Federal Reserve's next moves to pre-empt inflation.
But the stock market's latest advance has amazed many analysts and left
them pondering their valuation models, since the market is now more expensive
than it has been in decades. It's impossible to know what will happen next in
the markets. But whether it's another strong move forward or a retreat, we
recommend keeping a long-term perspective, rather than over-focusing on the
market's daily twists and turns. While the economic backdrop seems to remain
near perfect, the one thing we believe investors should be prepared for is more
market volatility. It also makes sense to do something we've always advocated:
set realistic expectations, since, as we've also seen this year, markets can
move down as fast as they go up.
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A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.
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Use this time of heightened volatility as an opportunity to review your
portfolio's asset allocations with your investment professional. After such a
strong advance in equities over the last two and a half years, it could be time
to rebalance your portfolio, if you haven't already, to maintain your desired
targets of diversification. As part of that process, make sure that your
investment strategies still reflect your individual time horizons, objectives
and risk tolerance. Despite turbulence, one thing remains constant. A
well-constructed plan and a cool head can be the best tools for reaching your
financial goals.
Sincerely,
/s/ Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
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By Dawn Baillie, for the Portfolio Management Team
John Hancock
Cash Reserve, Inc.
Federal Reserve raises short-term rates
amid signs of strong economic growth
When the Fund's semiannual period began in January, money market yields were
relatively stable, reflecting the interest-rate environment. But early in March,
money market yields began to rise along with interest rates, in response to
economic data that showed the economy growing at a pace considered uncomfortably
fast and poised to spark inflation. The market had begun to anticipate a
much-promised move by the Federal Reserve to hold the economy down to a moderate
growth path and pre-empt inflation. That's exactly what happened in March, when
the Fed raised the federal funds rate-which banks charge each other for
overnight loans-by one quarter percentage point to 5.50%. The federal funds rate
is not only a key short-term interest rate, but is also a benchmark for pricing
money market securities.
"...we
became more
cautious in
expectation
of rising
rates."
In raising rates for the first time in two years, the Fed also left the
door open to further rate hikes to prevent an inflation outbreak. But shortly
after its March move, interest rates and money market yields stabilized after
signs emerged in May and June that inflation remained tame and that the
economy's pace was slowing.
On June 30, 1997, John Hancock Cash Reserve, Inc. had a 7-day effective
yield of 5.24%. By comparison, the average taxable money fund had a seven-day
effective yield of 4.96%, according to Lipper Analytical Services, Inc.
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A 2 1/4" x 3 1/2" photo of the fund management team. Caption reads: "Members of
the Fund management team (l - r): Barry Evans, Jamie Kellogg, Bruce Pickett and
Dawn Baillie."
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3
<PAGE>
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John Hancock Funds - Cash Reserve, Inc.
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A bar chart with heading "7-Day Yield" at top of left hand column. Under the
heading is the footnote: "As of June 30, 1997." The chart has plot points of 0%,
2%, 4% and 6%. Within the chart there are two solid bars. The first represents
the 5.11% total return for John Hancock Cash Reserve, Inc. The second represents
the 4.97% for the average taxable money market fund. A footnote below states
"Past performance is not guarantee of future results."
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Managing maturity
At the beginning of the year, we took advantage of the relatively stable
environment to search for yield by extending the Fund's maturity out to the high
50-day range, which was longer than average. But by the end of February, we
became more cautious in expectation of rising rates. We shortened the Fund's
maturity to the low 40-day range. That gave us a good degree of flexibility in
March after the Fed raised rates.
"We'll be
watching
the monthly
economic
and inflation
data for
guidance."
By late April, even though rates had fallen and stabilized, we continued to
keep the Fund's maturity at around 40 days, which was about 10 days shorter than
the average, because of our growing focus on liquidity. As we mentioned in the
Fund's annual report six months ago, the closure of Cash Reserve, Inc. to new
investors has created a heightened amount of shareholder activity, as momentum
has built around switching to John Hancock Money Market Fund. As a result, in
order to accommodate shareholders' liquidity needs, we kept the Fund invested in
shorter-term money market securities. At the same time, we have continued our
efforts to maintain a competitive yield by increasing the Fund's exposure to
higher-yielding short-term money market securities.
Outlook
Given the current near-perfect economic environment-steady growth and tame
inflation-in our view it appears likely that the Federal Reserve will not feel
compelled to raise interest rates in the very near term. But because the Fed
remains hyper-vigilant for the first hint of inflation, we believe there will be
another pre-emptive interest rate move to rein in the economy before the year
ends. We'll be watching the monthly economic and inflation data for guidance. As
always, we'll keep focused on maintaining liquidity and stability of principal,
while seeking to enhance the Fund's yield.
- --------------------------------------------------------------------------------
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. There can be
no assurance that the Fund will be able to maintain a net asset value of $1.00
per share.
4
<PAGE>
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FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
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 June 30, 1997. You'll also
find the net asset value per share as of that date.
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
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Assets:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $17,370,467) ...................... $ 17,370,467
Corporate interest bearing obligations
(cost - $14,217,715) ..................................... 14,217,715
U.S. government obligations (cost - $15,999,725) ........... 15,999,725
Joint repurchase agreement (cost - $1,259,000) ............. 1,259,000
-------------
48,846,907
Cash ....................................................... 21,622
Interest receivable ........................................ 553,205
Other assets ............................................... 36,725
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Total Assets ................... 49,458,459
-------------------------------------------------
Liabilities:
Payable for investments purchased .......................... 1,027,809
Dividend payable ........................................... 6,437
Payable to John Hancock Advisers, Inc.
and affiliates - Note B .................................. 48,086
Accounts payable and accrued expenses ...................... 28,882
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Total Liabilities .............. 1,111,214
-------------------------------------------------
Net Assets:
Capital paid-in ............................................ 48,347,245
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Net Assets ..................... $ 48,347,245
=================================================
Net Asset Value, Offering Price and Redemption Price Per Share:
(based on 48,347,245 shares of beneficial interest
outstanding - 4,000,000,000 shares authorized
of one cent per share par value) ........................... $ 1.00
=============================================================================
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund.
Statement of Operations
Six months ended June 30, 1997 (Unaudited)
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Investment Income:
Interest ................................................... $ 1,542,234
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Expenses:
Investment management fee - Note B ....................... 95,217
Transfer agent fee - Note B .............................. 36,509
Custodian fee ............................................ 19,232
Auditing fee ............................................. 11,684
Financial services fee - Note B .......................... 5,101
Trustees' fees ........................................... 3,115
Printing ................................................. 1,913
Legal fees ............................................... 440
Registration and filing fees ............................. 179
Miscellaneous ............................................ 65
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Total Expenses ................. 173,455
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Net Investment Income .......... 1,368,779
-------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ...... $ 1,368,779
=================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
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FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1997
1996 (UNAUDITED)
------------ -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ..................................................................... $ 5,037,521 $ 1,368,779
------------ ------------
Net Increase in Net Assets Resulting from Operations ...................................... 5,037,521 1,368,779
------------ ------------
Distributions to Shareholders:
Dividends from net investment income ($0.0489 and $0.0249 per share, respectively) ........ ( 5,037,521) ( 1,368,779)
------------ ------------
From Fund Share Transactions - Net*: ........................................................ ( 52,760,079) ( 18,655,654)
------------ ------------
Net Assets:
Beginning of period ....................................................................... 119,762,978 67,002,899
------------ ------------
End of period ............................................................................. $ 67,002,899 $ 48,347,245
============ ============
* Analysis of Fund Share Transactions at $1 Per Share:
Shares sold ............................................................................... $714,206,543 -
Shares issued to shareholders in reinvestment of distributions ............................ 4,480,168 $ 1,300,930
------------ ------------
............................................................................................ 718,686,711 1,300,930
Less shares repurchased ................................................................... ( 771,446,790) ( 19,956,584)
------------ ------------
Net decrease .............................................................................. ($ 52,760,079) ($ 18,655,654)
============ ============
</TABLE>
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference reflects
earnings less expenses, distributions paid to shareholders, and any increase or
decrease in money shareholders invested in the Fund. The footnote illustrates
the Fund shares, reinvested and repurchased during the last two periods.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
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FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
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:
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
---------------------------------------------------- JUNE 30, 1997
1992 1993 1994(1) 1995 1996 (UNAUDITED)
-------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net Investment Income ................................... 0.03 0.03 0.04 0.05 0.05 0.02
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income .................... ( 0.03) ( 0.03) ( 0.04) ( 0.05) ( 0.05) ( 0.02)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period .......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (2) .......... 3.33% 2.60% 3.74% 5.38% 5.00% 2.52%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................ $266,349 $130,405 $142,301 $119,763 $ 67,003 $ 48,347
Ratio of Expenses to Average Net Assets ................. 0.63% 0.66% 0.62% 0.73% 0.65% 0.64%(3)
Ratio of Net Investment Income to Average Net Assets .... 3.34% 2.58% 3.72% 5.30% 4.85% 5.03%(3)
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.
(2) Total investment return assumes dividend reinvestment.
(3) Annualized.
(4) Not annualized.
</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>
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FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by Cash
Reserve, Inc. on June 30, 1997. It's divided into four types of short-term
investments. Most categories of short-term investments are further broken down
by industry group.
<TABLE>
<CAPTION>
INTEREST QUALITY PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATINGS* (000s OMITTED) VALUE
- ------------------- ---- -------- -------------- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
Brokerage Services (13.64%)
Bear Stearns Cos., Inc.
07-16-97 ......................... 5.550% Tier 1 $ 2,400 $ 2,394,450
Goldman Sachs Group, L.P.
07-07-97 ......................... 5.550 Tier 1 2,000 1,998,150
Merrill Lynch & Co., Inc.
07-02-97 ......................... 5.550 Tier 1 2,200 2,199,661
-----------
6,592,261
-----------
Finance (8.25%)
American Honda Finance Corp.
07-23-97 ......................... 5.580 Tier 1 2,000 1,993,180
Heller Financial Corp.
07-14-97 ......................... 5.550 Tier 1 2,000 1,995,992
-----------
3,989,172
-----------
Mortgage Banking (4.13%)
Countrywide Home Loan
07-09-97 ......................... 5.570 Tier 1 2,000 1,997,524
-----------
Retail (4.96%)
Sears Roebuck Acceptance Corp.
07-11-97 ......................... 5.520 Tier 1 2,400 2,396,320
-----------
Utilities (4.95%)
Nynex Corp.
07-14-97 ......................... 5.550 Tier 1 2,400 2,395,190
-----------
TOTAL COMMERCIAL PAPER
(Cost $17,370,467 ) ( 35.93%) 17,370,467
-------- -----------
CORPORATE INTEREST BEARING OBLIGATIONS
Automotive (7.56%)
Ford Motor Credit Co.
02-26-98 ......................... 6.250 Tier 1 1,250 1,251,948
General Motors Acceptance Corp.
07-07-97 ......................... 7.000 Tier 1 1,400 1,400,188
General Motors Acceptance Corp.
08-15-97 ......................... 7.000 Tier 1 1,000 1,001,170
-----------
3,653,306
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
INTEREST QUALITY PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATINGS* (000s OMITTED) VALUE
- ------------------- ---- -------- -------------- -----
Banking (4.97%)
Wachovia Corp.
07-21-97 ......................... 6.700% Tier 1 $ 2,40 $ 2,401,474
-----------
Beverage (1.77%)
PepsiCo Inc.,
01-15-98 ......................... 6.125 Tier 1 855 855,838
-----------
Finance (5.17%)
Household Finance Corp.
10-15-97 ......................... 6.250 Tier 1 1,500 1,501,012
International Lease Finance
02-02-98 ......................... 5.920 Tier 1 1,000 999,772
-----------
2,500,784
-----------
Food (2.66%)
Heinz (H.J.) Company
01-05-98 ......................... 8.000 Tier 1 1,275 1,287,295
-----------
Tobacco (3.14%)
Philip Morris Cos., Inc.,
12-01-97 ......................... 9.250 Tier 1 1,500 1,518,566
-----------
Utilities (4.14%)
Southern California Edison Co.
07-15-97 ......................... 6.125 Tier 1 2,000 2,000,452
-----------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $14,217,715) ( 29.41%) 14,217,715
-------- -----------
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (33.09%)
Federal Home Loan Bank,
08-05-97 # ....................... 5.765 Tier 1 2,000 2,000,196
Federal Home Loan Bank,
01-30-98 ......................... 5.810 Tier 1 5,000 5,000,000
Federal Home Loan Bank,
07-10-97 # ....................... 6.000 Tier 1 4,000 3,999,960
Federal National Mortgage
Association, 08-22-97 ** ......... 5.270 Tier 1 5,000 4,999,569
-----------
15,999,725
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $15,999,725) ( 33.09%) 15,999,725
-------- -----------
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
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FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
INTEREST QUALITY PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATINGS* (000s OMITTED) VALUE
- ------------------- ---- -------- -------------- -----
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase agreement
transaction with Toronto Dominion Securities
USA, Inc. - Dated 06-30-97, Due 07-01-97
(Secured by U.S. Treasury Notes, 5.625%
thru 6.375% Due 04-30-99 thru 06-30-02) - Note A 5.97% - $ 1,259 $ 1,259,000
------------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $1,259,000) ( 2.60%) 1,259,000
-------- ------------
TOTAL INVESTMENTS ( 101.03%) $ 48,846,907
======== ============
</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.
** Floating rate note, interest rate effective June 30, 1997.
# Call date.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the total net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Cash Reserve, Inc. (the "Fund") is a diversified, 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. Effective October 1, 1996,
the Fund is closed to all sales other than dividend reinvestments.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Board of Directors 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. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies.
Accordingly, the Fund will not be subject to federal income tax on taxable
earnings which are distributed to shareholders.
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.
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 0.35% of the Fund's average daily net assets.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of John Hancock
Mutual Life Insurance Company. The Fund pays transfer agent fees based on the
number of shareholder accounts and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Funds. The compensation for the period was
at an annual rate of 0.01875% of the average net assets of each Fund.
Mr. Edward J. Boudreau, Jr., Ms. Anne C. Hodsdon and Mr. Richard S.
Scipione are directors and/or officers of the Adviser and/or its affiliates, as
well as Directors of the Fund. The compensation of unaffiliated Directors is
borne by the Fund. The unaffiliated Directors may elect to defer for tax
purposes their receipt of this com-
11
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Cash Reserve, Inc.
pensation 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
investment has 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, other than obligations of the U.S. government and its
agencies, during the period ended June 30, 1997, aggregated $668,146,472 and
$694,337,011, respectively. Purchases and proceeds from maturities of
obligations of the U.S. government and its agencies aggregated $25,786,995 and
$16,780,469, respectively, during the period ended June 30, 1997.
The cost of investments owned at June 30, 1997 for federal income tax
purposes was $48,846,907.
12
<PAGE>
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NOTES
John Hancock Funds - Cash Reserve, Inc.
13
<PAGE>
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NOTES
John Hancock Funds - Cash Reserve, Inc.
14
<PAGE>
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NOTES
John Hancock Funds - Cash Reserve, Inc.
15
<PAGE>
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[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A Global Investment Management Firm U.S. Postage
PAID
101 Huntington Avenue, Boston, MA 02199-7603 Randolph, MA
1-800-225-5291 1-800-554-6713 (TDD) Permit No. 75
Internet: www.jhancock.com/funds
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock Cash
Reserve, Inc. 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 420SA 6/97
8/97
