---------------------------
The latest report from your
Fund's management team
---------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
Cash
Reserve,
Inc.
DECEMBER 31, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
--------------------------------------------
DIRECTORS
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Maureen R. Ford
Anne C. Hodsdon
Charles L. Ladner
Steven R. Pruchansky*
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 and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank & 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 02109-1803
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116-5072
-------------------------------------------
===================================CEO CORNER===================================
DEAR FELLOW SHAREHOLDERS:
As "The American Century" drew to a close this past year, the U.S. economy ended
the era on a high note. With robust growth continuing in 1999, our economy stood
poised to enter the history books for producing the longest expansion on record.
The stock market also rang out the century in style. For an unprecedented fifth
straight year, both the Dow Jones Industrial Average and the Standard & Poor's
500 Index produced 20%-plus returns. However, the market's advances were
restricted to a very select group of stocks, primarily in the technology sector.
Many others, including some of the household blue-chip names, languished or lost
ground as the result of investors' seemingly insatiable appetite for tech
stocks.
Bonds struggled through their second-worst year in more than two decades, as the
strength of the U.S. economy and the rebound of many others around the world
provoked inflation fears. Though their outlook from here looks brighter, in many
instances, bond mutual fund investors actually lost a little ground or made only
slight advances in 1999.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive Officer,
flush right next to third paragraph.]
- --------------------------------------------------------------------------------
While we expect the market to broaden eventually, we also expect more
volatility. More than ever, this type of environment calls for investment
diversification. Since not all parts of your portfolio will perform equally well
all the time, we believe it is important to allocate your assets among different
types of investments and funds that target a variety of market segments. This
strategy, executed under the guidance of a seasoned investment professional,
could provide you with a better chance of both realizing results and weathering
the market's changing conditions.
The market's disappointingly narrow focus has created a widening gap in
investment performance. Keep that in mind as you read the report from your
fund's portfolio management team on the following pages. It's all too easy to
get caught up in the headlines and miss what lies underneath.
Sincerely,
/s/Maureen R. Ford
- ------------------
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Dawn Baillie for the Portfolio Management Team
John Hancock
Cash Reserve, Inc.
Robust economy provokes Federal Reserve
---------------------------------------
to raise rates three times in 1999
----------------------------------
Money-market yields rose in 1999 as the result of several important changes in
the economic environment. Global economies began to stabilize from the turmoil
in 1998 that had caused the U.S. Federal Reserve Board and governments around
the world to lower rates to prevent global recession. At the same time, the U.S.
economy continued to grow at an amazingly strong rate.
Fed stays active
When the year began, signs of strength were not so pronounced, and with global
uncertainties remaining, the Fed stayed on the sidelines during the first three
months. Although inflation remained tame, U.S. growth began to pick up steam,
aided in part by the booming stock market and the "wealth effect" it created. In
the spring, investors grew more nervous and pushed interest rates higher,
anticipating that the economy's strength, coupled with the lowest unemployment
level in years, would lead to Fed action. Even the market's moves were not
enough to slow the roaring U.S. economy, and the Fed wound up raising short-term
rates three times between June and November as pre-emptive strikes aimed at
gradually cooling down the economy and nipping any hint of inflation in the bud.
As a result, the federal funds rate - that which banks charge each other for
overnight loans - rose from 4.75% at the beginning of the year to 5.50% at the
end of December. Money-market yields also moved up in response,
- --------------------------------------------------------------------------------
[A 3" x 2" photo at bottom right side of page of John Hancock Cash Reserve, Inc.
Caption below reads "Fund management team members (l-r): Barry Evans and Dawn
Baillie."]
- --------------------------------------------------------------------------------
"Money-market yields rose in 1999..."
3
<PAGE>
================================================================================
John Hancock Funds - Cash Reserve, Inc.
"...we expect growth to slow, but possibly not until the second half of 2000."
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "7-Day Effective Yield".
Under the heading is a note that reads "As of December 31, 1999." The chart is
scaled in increments of 2% with 0% at the bottom and 6% at the top. The first
bar represents the 4.79% total return for John Hancock Cash Reserve, Inc. The
second bar represents the 5.13% 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."]
- --------------------------------------------------------------------------------
since the federal funds rate is a key pricing benchmark for money-market
securities.
7-day effective yield
On December 31, 1999, John Hancock Cash Reserve, Inc. had a 7-day effective
yield of 4.79%. By comparison, the average taxable money-market fund had a 7-day
effective yield of 5.13%, according to Lipper, Inc.
Maturity moves
For the first three months of 1999, we kept the Fund's maturity slightly longer
than average, because with the global economies still in turmoil, we expected
the Fed to stand aside, which it did. Our more aggressive approach allowed us to
lock in some higher yields early on. But with each passing month, as evidence
grew that the U.S. economy was gaining steam, the Fed's attention turned away
from the global scene toward the home front. Anticipating rate hikes, we scaled
back the Fund's maturity to be right in line with the average money market
fund's by the end of June, and we stayed on average for the rest of the year.
This way, we didn't have our money locked up for as long, and were ready to
reinvest in higher-yielding securities after the Fed's rate hikes in June,
August and November. The only exception came as we approached year end and
shortened briefly to enable the Fund to accommodate potential increased
liquidity demands as a result of the approaching changeover to the year 2000.
A look ahead
With three interest rate hikes now working their way through the economy, we
expect growth to slow, but possibly not until the second half of 2000. In the
meantime, inflation will remain a concern, and the ever-vigilant Fed will likely
stay in the middle of the action, with the real possibility of raising rates
some more to keep inflation in check. By how much, and when, depends largely on
the important monthly and quarterly economic data. Several key reports include
the fourth-quarter gross domestic product (GDP) numbers and those dealing with
employment figures, especially the employment cost index. It is the most
accurate way to measure wage inflation, and since it is a quarterly, rather than
a monthly, report, it also is very useful in determining if new trends are
emerging. Given the prevailing uncertainty, we will keep the Fund's maturity
close to the average until it is clear that the Fed is done raising rates. As
always, we will also stay focused on providing the Fund with a competitive level
of current income, while preserving stability of capital.
- --------------------------------------------------------------------------------
An investment in the Fund is not insured or guaranteed by the FDIC or any other
government agency. 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.
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.
4
<PAGE>
=============================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 December 31, 1999. You'll
also find the net asset value per share as of that date.
Statement of Assets and Liabilities
December 31, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, in money market instruments,
at value - Note C:
Commercial paper (cost - $4,184,812) ........................... $4,184,812
Corporate interest-bearing obligations
(cost - $6,810,600) ........................................... 6,810,600
U.S. government obligations (cost - $8,636,292) ................ 8,636,292
Joint repurchase agreement (cost - $4,480,000) ................. 4,480,000
-----------
24,111,704
Cash ............................................................ 982
Interest receivable ............................................. 218,623
Other assets .................................................... 42,459
-----------
Total Assets ....................... 24,373,768
------------------------------------------------
Liabilities:
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ........................................ 26,270
Accounts payable and accrued expenses ........................... 27,648
-----------
Total Liabilities .................. 53,918
------------------------------------------------
Net Assets:
Capital paid-in ................................................. 24,319,850
-----------
Net Assets ......................... $24,319,850
================================================
Net Asset Value, Offering Price and
Redemption Price Per Share:
(Based on 24,319,850 shares of beneficial interest
outstanding - 4,000,000,000 shares authorized with
$0.01 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
Year ended December 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Interest ........................................................ $1,376,338
-----------
Expenses:
Investment management fee - Note B ............................. 93,356
Transfer agent fee - Note B .................................... 45,223
Custodian fee .................................................. 34,061
Auditing fee ................................................... 20,164
Printing ....................................................... 7,035
Accounting and legal services fee - Note B ..................... 4,673
Directors' fees ................................................ 1,683
Registration and filing fees ................................... 1,339
Miscellaneous .................................................. 1,033
Legal fees ..................................................... 224
-----------
Total Expenses ..................... 208,791
------------------------------------------------
Net Investment Income .............. 1,167,547
------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .......... $1,167,547
================================================
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Cash Reserve, Inc.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1999
----------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ..................................................................... $1,587,704 $1,167,547
------------ ------------
Distributions to Shareholders:
Dividends from net investment income ($0.0481 and $0.0438 per share, respectively) ........ (1,587,704) (1,167,547)
------------ ------------
From Fund Share Transactions - Net: * ...................................................... (8,113,134) (5,388,618)
------------ ------------
Net Assets:
Beginning of period ....................................................................... 37,821,602 29,708,468
------------ ------------
End of period ............................................................................. $29,708,468 $24,319,850
============ ============
* Analysis of Fund Share Transactions at $1 Per Share:
Shares issued to shareholders in reinvestment of distributions ........................... $1,521,795 $1,110,480
Less shares repurchased .................................................................. (9,634,929) (6,499,098)
------------ ------------
Net decrease ............................................................................. ($8,113,134) ($5,388,618)
============ ============
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference reflects
earnings less expenses, distributions paid to shareholders, and any increase or
decrease in money shareholders invested in the Fund. The footnote illustrates
the Fund shares sold, reinvested and repurchased during the last two periods.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Cash Reserve, Inc.
Financial Highlights
Selected data for each share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- ------- -------- --------
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 0.05 0.05 0.05 0.04
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income ................ (0.05) (0.05) (0.05) (0.05) (0.04)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ...................... $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(1) ....... 5.38% 5.00% 5.20% 4.91% 4.47%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............ $119,763 $67,003 $37,822 $29,708 $24,320
Ratio of Expenses to Average Net Assets ............. 0.73% 0.65% 0.61% 0.75% 0.78%
Ratio of Net Investment Income to Average Net Assets 5.30% 4.85% 5.07% 4.81% 4.38%
(1) Total investment return assumes dividend reinvestment.
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 - Cash Reserve, Inc.
Schedule of Investments
December 31, 1999
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by Cash
Reserve, Inc. on December 31, 1999. It's divided into four types of short-term
investments. Most categories of short-term investments are further broken down
by industry group.
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- ------------- ------------- -------------- ----------
COMMERCIAL PAPER
Automobile/Trucks (4.92%)
General Motors Acceptance Corp.,
01-19-2000 ................................. 5.660% Tier 1 $1,200 $1,196,604
----------
Diversified Operations (4.10%)
General Electric Co.,
01-12-2000 ................................ 6.470 Tier 1 1,000 998,023
----------
Finance (8.19%)
International Business Machines Credit Corp.,
01-21-2000 ................................ 5.900 Tier 1 1,000 996,722
International Lease Finance,
02-11-2000 ................................ 5.740 Tier 1 1,000 993,463
----------
1,990,185
----------
TOTAL COMMERCIAL PAPER
(Cost $4,184,812) (17.21%) 4,184,812
--------- -----------
CORPORATE INTEREST-BEARING OBLIGATIONS
Automotive (8.23%)
Chrysler Financial Corp.,
03-06-2000 ................................ 6.250 Tier 1 1,000 1,000,078
Ford Motor Credit Corp.,
04-15-2000 ................................ 6.375 Tier 1 1,000 1,000,720
----------
2,000,798
----------
Broker Services (2.68%)
Merrill Lynch & Co.,
06-13-2000 ................................ 6.620 Tier 1 650 651,452
----------
Finance (8.21%)
CIT Group Holdings, Inc.,
01-28-2000 ................................ 6.400 Tier 1 1,000 1,000,084
Norwest Financial, Inc.,
10-01-2000 ................................ 6.100 Tier 1 1,000 999,565
----------
1,999,649
----------
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Cash Reserve, Inc.
PAR VALUE
INTEREST QUALITY (000s MARKET
ISSUER, DESCRIPTION RATE RATING* OMITTED) VALUE
- ------------------- ------------- ------------- -------------- ----------
Insurance (4.77%)
American General Corp.,
02-15-2000 ................................ 8.000% Tier 1 $750 $751,673
American General Corp.,
07-15-2000 ................................ 9.625 Tier 1 400 407,381
----------
1,159,054
----------
Mortgage Banking (4.11%)
Countrywide Home Loan,
01-13-2000 ................................ 5.250 Tier 1 1,000 999,647
----------
TOTAL CORPORATE INTEREST-BEARING OBLIGATIONS
(Cost $6,810,600) (28.00%) 6,810,600
--------- -----------
U.S. GOVERNMENT OBLIGATIONS
Governmental - U.S. Agencies (35.51%)
Federal Home Loan Mortgage Corp.,
01-20-2000 ................................ 5.200 Tier 1 4,000 3,989,022
Federal Home Loan Mortgage Corp.,
01-31-2000 ................................ 4.750 Tier 1 2,500 2,490,104
Federal Home Loan Mortgage Corp.,
06-30-2000 ................................ 5.600 Tier 1 681 661,826
Federal National Mortgage Association,
04-26-2000 ................................ 5.020 Tier 1 1,500 1,495,340
----------
8,636,292
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $8,636,292) (35.51%) 8,636,292
--------- ----------
JOINT REPURCHASE AGREEMENT (18.42%)
Investment in a joint repurchase agreement
transaction with Barclay's, Inc. -
Dated 12-31-99, due 01-03-00
(Secured by U.S. Treasury Bond,
7.625% due 11-15-22 and
U.S. Treasury Note 4.000%
due 10-31-00) - Note A .................... 2.490 4,480 4,480,000
----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $4,480,000) (18.42%) 4,480,000
--------- ----------
TOTAL INVESTMENTS (99.14%) 24,111,704
--------- ----------
OTHER ASSETS AND LIABILITIES, NET (0.86%) 208,146
--------- ----------
TOTAL NET ASSETS (100.00%) $24,319,850
========= ===========
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Cash Reserve, Inc.
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. On September 10, 1996, the
Directors voted to close the Fund to new purchases, except shares purchased with
reinvested Fund dividends, effective October 1, 1996.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS The Board of Directors has determined appropriate
methods for valuing portfolio securities. Accordingly, portfolio securities are
valued at amortized cost, in accordance with Rule 2a-7 of the Investment Company
Act of 1940, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the security to the Fund. Interest income on
certain portfolio securities such as negotiable bank certificates of deposit and
interest-bearing notes is accrued daily and included in interest receivable.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
Inc., may participate in a joint repurchase agreement. Aggregate cash balances
are invested in one or more repurchase agreements, whose underlying securities
are obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund 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.
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,
accounting and legal services for the Fund. The compensation for the year 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 Ms. Anne C. Hodsdon 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 compensation under the John Hancock Group of Funds Deferred
Compensation Plan. The Fund
10
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Cash Reserve, Inc.
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 had no impact on the operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities, other than obligations of the
U.S. government and its agencies, during the year ended December 31, 1999,
aggregated $2,115,135,315 and $2,114,140,000, respectively. Purchases and
proceeds from maturities of obligations of the U.S. government and its agencies
aggregated $43,041,844 and $49,469,911, respectively, during the year ended
December 31, 1999.
The cost of investments owned at December 31, 1999 for federal income
tax purposes was $24,111,704.
11
<PAGE>
================================================================================
John Hancock Funds - Cash Reserve, Inc.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Cash Reserve, Inc.
We have audited the accompanying statement of assets and liabilities of John
Hancock Cash Reserve, Inc. (the "Fund"), including the schedule of investments,
as of December 31, 1999, 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 auditing standards generally
accepted in the United States. 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 December 31, 1999, by correspondence with the custodian. 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 Reserve, Inc. at December 31, 1999, 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 accounting
principles generally accepted in the United States.
/s/Ernst & Young LLP
- --------------------
Boston, Massachusetts
February 10, 2000
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended December 31,
1999.
All of the dividends paid for the fiscal year are taxable as ordinary
income. None of the 1999 dividends qualify for the dividends received deduction
available to corporations.
12
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Cash Reserve, Inc.
13
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Cash Reserve, Inc.
14
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Cash Reserve, Inc.
15
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS -----------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhfunds.com Permit No. 75
-----------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
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.
[LOGO] Printed on Recycled Paper 4200A 12/99
2/00
