<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
MONEY
MARKET
FUND
ANNUAL REPORT
October 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
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
Thomas H. Drohan
Senior Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
State Street Bank & 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 02116
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[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 October, the Standard & Poor's 500-Stock Index, a
widely-used barometer of stock performance, had grown by more than 25%.
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 there's no clear-cut solution on the
horizon, 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
MONEY MARKET FUND
Rising yields benefit money market funds in 1995
In November 1995, shareholders of John Hancock Cash Management Fund approved the
merger of their fund with the John Hancock Money Market Fund. The merger was
effective November 17, 1995.
Throughout John Hancock Money Market Fund's fiscal year, money market
yields have approached their highest levels in almost four years. This is 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, recognizing that these funds present more than just a
"safe haven," but also are an attractive alternative to more risky stock and
bond funds.
On October 31, 1995, John Hancock Money Market Fund had a 7-day average
yield of 4.78% for Class A shares and 4.03% for Class B shares. By comparison,
the average taxable money fund had a 7-day average yield of 5.18%, 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.
[CAPTION]
"...money market yields have approached their highest levels
in almost four years..."
3
<PAGE> 4
JOHN HANCOCK FUNDS - MONEY MARKET FUND
[Bar chart with heading "7-Day Yield" at top of left hand column. Under the
heading is the footnote "As of October 31, 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 three solid bars. The first represents the 4.78%
7-day yield for John Hancock Money Management Fund, Class A. The second
represents the 4.03% 7-day yield for John Hancock Money Management Fund, Class
B. The third represents the 5.18% yield for the average taxable money fund.
Footnote below reads: "The average money market fund is tracked by
IBC/Donoghue's Money Fund Report."]
We did this gradually throughout the year, extending from an average 25- to
30-day range in the last quarter of 1994 to 58 days by the end of October 1995.
That was slightly longer than the 54-day maturity for the average taxable money
market fund, mostly because we locked in some high-yielding securities before
the Federal Reserve responded to a slower economy by lowering the Federal Funds
rate to 5.75% in July.
HIGHER QUALITY ISSUES
The Fund actively manages its investments to assure that all of 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 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.
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 to give the economy time to generate enough
activity to offset any slowdown that spending cuts 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 55-60 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 up short-term
yields. 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 - MONEY MARKET FUND
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON OCTOBER 31, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE AS OF THAT DATE.
<TABLE>
Statement of Assets and Liabilities
October 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments, in money market instruments, at value - Note C:
Commercial paper (cost - $46,988,126) ....................... $46,988,126
Negotiable bank certificates of deposit
(cost - $3,000,000) ....................................... 3,000,000
Corporate interest-bearing obligations
(cost - $14,107,087) ...................................... 14,107,087
U.S. government obligations (cost - $10,000,000) ............ 10,000,000
Joint repurchase agreement (cost - $653,000) ................ 653,000
-----------
74,748,213
Cash ......................................................... 590,823
Interest receivable .......................................... 397,572
Miscellaneous assets ......................................... 4,721
Prepaid expenses ............................................. 125,479
-----------
Total Assets ............................... 75,866,808
------------------------------------------------------------
LIABILITIES:
Payable for fund shares repurchased .......................... 550,000
Dividend payable ............................................. 8,764
Payable to John Hancock Advisers, Inc. and
affiliates - Note B ....................................... 36,704
Accounts payable and accrued expenses ........................ 16,333
-----------
Total Liabilities .......................... 611,801
------------------------------------------------------------
NET ASSETS:
Capital paid-in .............................................. 75,255,007
-----------
Net Assets ................................. $75,255,007
============================================================
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - 3,500,000,000 shares
authorized with $0.01 per share par value)
Class A** - $20,942,062/20,942,062 ........................... $ 1.00
==============================================================================
Class B - $54,312,945/54,312,945 ............................. $ 1.00
==============================================================================
</TABLE>
** Class A shares commenced operations on September 12, 1995.
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND.
<TABLE>
STATEMENT OF OPERATIONS
Year ended October 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
INVESTMENT INCOME:
Interest .................................................. $3,223,760
----------
Expenses:
Distribution/service fee - Note B
Class A ** ............................................. 2,145
Class B ................................................ 516,163
Investment management fee - Note B ....................... 271,782
Transfer agent fee - Note B .............................. 95,135
Custodian fee ............................................ 45,512
Registration and filing fees ............................. 44,811
Auditing fee ............................................. 23,210
Printing ................................................. 12,729
Trustees' fees ........................................... 10,078
Shareholder service fee .................................. 7,461
Advisory board fee ....................................... 4,250
Legal fees ............................................... 3,262
Miscellaneous ............................................ 3,121
----------
Total Expenses .......................... 1,039,659
------------------------------------------------------------
Net Investment Income ................... 2,184,101
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ............... $2,184,101
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 6
FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ..................................... $ 2,184,101 $ 842,207
------------ ------------
Distributions to Shareholders:
Dividends from net investment income
Class A** - ($0.0066 and none per share, respectively) ... (71,384) --
Class B - ($0.0401 and $0.0180 per share, respectively) .. (2,112,717) (842,207)
------------ ------------
Total Distributions to Shareholders .................... (2,184,101) (842,207)
------------ ------------
FROM FUND SHARE TRANSACTIONS-- NET* ......................... 16,889,418 26,819,423
------------ ------------
NET ASSETS:
Beginning of year ......................................... 58,365,589 31,546,166
------------ ------------
End of year ............................................... $ 75,255,007 $ 58,365,589
============ ============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------
1995 1994
------------- -------------
<S> <C> <C>
CLASS A **
Shares sold....................................................... $ 47,205,231 --
Shares issued to shareholders in reinvestment of distributions.... 55,602 --
------------- -------------
47,260,833 --
Less shares repurchased........................................... (26,318,771) --
------------- -------------
Net increase...................................................... 20,942,062 --
============= =============
CLASS B
Shares sold....................................................... 223,741,024 $237,416,247
Shares issued to shareholders in reinvestment of distributions.... 1,684,942 683,416
------------- -------------
225,425,966 238,099,663
Less shares repurchased........................................... (229,478,610) (211,280,240)
------------- -------------
Net increase (decrease)........................................... $ (4,052,644) $26,819,423
============= =============
</TABLE>
** Class A shares commenced operations on September 12, 1995.
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 - MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are as
follows:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 12, 1995
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1995
------------------
<S> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............................. $ 1.00
--------
Net Investment Income............................................ 0.01
--------
Less Distributions:
Dividends from Net Investment Income............................. (0.01)
--------
Net Asset Value, End of Period................................... $ 1.00
========
Total Investment Return at Net Asset Value (d)................... 0.64%(e)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)........................ $ 20,942
Ratio of Expenses to Average Net Assets.......................... 1.07%(*)
Ratio of Net Investment Income to Average Net Assets............. 4.94%(*)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------
1995(b) 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Net Investment Income ........................................... 0.04 0.02 0.01 0.02 0.05
------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income ............................ (0.04) (0.02) (0.01) (0.02) (0.05)
------- ------- ------- ------- -------
Net Asset Value, End of Period .................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Investment Return at Net Asset Value (d) .................. 4.07% 1.87% 0.85% 1.73% 4.61%
Total Adjusted Investment Return at Net Asset Value (a) (c) ..... -- -- -- -- 4.49%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ....................... $54,313 $58,366 $31,546 $31,480 $20,763
Ratio of Expenses to Average Net Assets ......................... 1.92% 2.06% 2.44% 2.47% 2.11%
Ratio of Adjusted Expenses to Average Net Assets (a) ............ -- -- -- -- 2.23%(a)
Ratio of Net Investment Income to Average Net Assets ............ 3.96% 1.97% 0.85% 1.69% 4.57%
Ratio of Adjusted Net Investment Income to Average Net Assets (a) -- -- -- -- 4.45%(a)
<FN>
* On an annualized basis
(a) On an unreimbursed basis without expense reduction.
(b) On December 22, 1994 John Hancock Advisers, Inc. became the Investment
Adviser of the Fund.
(c) An estimated total return calculation takes into consideration fees and
expenses waived or borne by the adviser during the periods shown.
(d) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(e) Not annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY MONEY
MARKET FUND ON OCTOBER 31, 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>
COMMERCIAL PAPER
AUTOMOTIVE (2.92%)
Ford Motor Credit Co.,
11-03-95 ......................... 5.730% Tier 1 $1,000 $ 999,682
General Motors Acceptance Corp.,
11-03-95 ......................... 5.800 Tier 1 1,200 1,199,613
----------
2,199,295
----------
BANKING - FOREIGN (2.64%)
Swedish Export Credit Corp.,
12-05-95 ......................... 5.750 Tier 1 2,000 1,989,139
----------
BROKER SERVICES (11.92%)
Bear Stearns Cos., Inc.,
11-02-95 ......................... 5.760 Tier 1 400 399,936
Bear Stearns Cos., Inc.,
11-22-95 ......................... 5.750 Tier 1 1,700 1,694,298
Goldman Sachs Group, L.P.,
11-02-95 ......................... 5.720 Tier 1 2,000 1,999,682
Goldman Sachs Group, L.P.,
11-20-95 ......................... 5.730 Tier 1 1,300 1,296,069
Merrill Lynch & Co., Inc.,
11-06-95 ......................... 5.730 Tier 1 800 799,363
Merrill Lynch & Co., Inc.,
11-15-95 ......................... 5.750 Tier 1 485 483,916
Merrill Lynch & Co., Inc.,
11-20-95 ......................... 5.750 Tier 1 2,300 2,293,020
----------
8,966,284
----------
BUILDING SUPPLIES (0.66%)
Halifax Building Society,
11-06-95 ......................... 5.750 Tier 1 500 499,601
----------
FINANCE (8.58%)
American Honda Finance Corp.,
11-01-95 ......................... 5.800 Tier 1 900 900,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS(*) OMITTED) VALUE
- ------------------- -------- ---------- --------- -----
<S> <C> <C> <C> <C>
FINANCE (CONTINUED)
American Honda Finance Corp.,
11-06-95 ............................. 5.800% Tier 1 $ 700 $ 699,436
American Honda Finance Corp.,
11-15-95 ............................. 5.800 Tier 1 1,300 1,297,068
American Honda Finance Corp.,
12-08-95 ............................. 5.780 Tier 1 1,600 1,590,495
General Electric Capital Corp.,
11-14-95 ............................. 5.730 Tier 1 1,500 1,496,896
International Business Machines,
11-13-95 ............................. 5.730 Tier 1 470 469,102
----------
6,452,997
----------
MORTGAGE BANKING (5.57%)
Countrywide Funding Corp.,
11-01-95 ............................. 5.770 Tier 1 1,000 1,000,000
Countrywide Funding Corp.,
11-10-95 ............................. 5.780 Tier 1 1,300 1,298,122
Countrywide Funding Corp.,
11-17-95 ............................. 5.800 Tier 1 1,900 1,895,102
----------
4,193,224
----------
RETAIL STORES (11.54%)
Melville Corp.,
11-13-95 ............................. 5.740 Tier 1 3,000 2,994,260
Melville Corp.,
11-13-95 ............................. 5.750 Tier 1 500 499,042
Melville Corp.,
11-16-95 ............................. 5.770 Tier 1 700 698,317
Sears Roebuck Acceptance Corp.,
11-06-95 ............................. 5.760 Tier 1 1,200 1,199,040
Sears Roebuck Acceptance Corp.,
11-10-95 ............................. 5.750 Tier 1 2,700 2,696,119
Sears Roebuck Acceptance Corp.,
12-06-95 ............................. 5.750 Tier 1 600 596,646
----------
8,683,424
----------
UTILITIES - ELECTRIC (10.61%)
Pacific Gas and Electric Co.,
11-07-95 ............................. 5.720 Tier 1 500 499,523
Pennsylvania Power & Light Co.,
11-07-95 ............................. 5.850 Tier 1 1,000 999,025
Pennsylvania Power & Light Co.,
11-08-95 ............................. 5.850 Tier 1 2,000 1,997,725
Public Service Electric and Gas Co.,
11-09-95 ............................. 5.770 Tier 1 2,200 2,197,179
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
<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.,
11-15-95.............................. 5.750% Tier 1 $ 1,400 $ 1,396,870
Public Service Electric and Gas Co.,
11-28-95.............................. 5.760 Tier 1 900 896,112
-----------
7,986,434
-----------
UTILITIES - TELEPHONE (8.00%)
American Telephone & Telegraph Co.,
11-01-95.............................. 5.860 Tier 1 220 220,000
American Telephone & Telegraph Co.,
11-13-95.............................. 5.720 Tier 1 3,000 2,994,280
GTE Northwest Inc.,
11-15-95.............................. 5.720 Tier 1 1,010 1,007,753
GTE Northwest Inc.,
11-16-95.............................. 5.740 Tier 1 1,800 1,795,695
-----------
6,017,728
-----------
TOTAL COMMERCIAL PAPER
(Cost $46,988,126) (62.44%) 46,988,126
------- -----------
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
BANKING (3.98%)
Morgan Guaranty Trust Co., NY
10-30-96.............................. 6.000 Tier 1 3,000 3,000,000
-----------
TOTAL NEGOTIABLE BANK
CERTIFICATES OF DEPOSIT
(Cost $3,000,000) (3.98%) 3,000,000
------- -----------
CORPORATE INTEREST BEARING OBLIGATIONS
AUTOMOTIVE (2.95%)
General Motors Acceptance Corp.,
04-04-96.............................. 8.800 Tier 1 1,200 1,212,102
General Motors Acceptance Corp.,
04-10-96.............................. 8.700 Tier 1 1,000 1,010,235
-----------
2,222,337
-----------
BANKING (6.84%)
NationsBank of Texas,
08-28-96.............................. 6.150 Tier 1 2,300 2,300,000
NBD Bancorp, Inc.,
06-03-96.............................. 6.125 Tier 1 250 250,115
PNC Bank NA,
09-18-96.............................. 5.650 Tier 1 2,600 2,595,663
-----------
5,145,778
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
<TABLE>
<CAPTION>
PAR VALUE
INTEREST QUALITY (000'S
ISSUER, DESCRIPTION RATE RATINGS(*) OMITTED) VALUE
- ------------------- -------- ---------- --------- -----
<S> <C> <C> <C> <C>
CHEMICAL (2.67%)
duPont (E.I.) de Nemours & Co.,
12-15-95.................................... 8.480% Tier 1 $ 2,000 $ 2,005,493
-----------
DIVERSIFIED (1.34%)
General Electric Co.,
05-01-96.................................... 7.875 Tier 1 1,000 1,009,754
-----------
FINANCE (4.95%)
Associates Corp. of North America,
03-01-96.................................... 8.800 Tier 1 2,700 2,724,233
General Electric Capital Corp.,
11-15-95.................................... 5.250 Tier 1 1,000 999,492
-----------
3,723,725
-----------
TOTAL CORPORATE INTEREST
BEARING OBLIGATIONS
(Cost $14,107,087) (18.75%) 14,107,087
------- -----------
U. S. GOVERNMENT OBLIGATIONS
GOVERNMENTAL - U. S. AGENCIES (13.29%)
Federal Farm Credit Bank,
11-01-95.................................... 5.730 Tier 1 10,000 10,000,000
-----------
TOTAL U. S. GOVERNMENT OBLIGATIONS
(Cost $10,000,000) (13.29%) 10,000,000
------- -----------
JOINT REPURCHASE AGREEMENT
Investment in a joint repurchase agreement
transaction with SBC Capital Markets -
Dated 10-31-95, Due 11-01-95 (secured
by U.S. Treasury Bond, 8.750%
Due 05-15-17, and by U.S. Treasury
Note, 5.750% Due 09-30-97) Note A........... 5.890 653 653,000
-----------
TOTAL JOINT REPURCHASE AGREEMENT
(Cost $653,000) (0.87%) 653,000
------- -----------
TOTAL INVESTMENTS (99.33%) $74,748,213
======= ===========
</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.
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.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - MONEY MARKET FUND
NOTE A --
ACCOUNTING POLICIES
John Hancock Series, Inc. (Corporation) is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940, as
amended. The Corporation consists of six series portfolios: John Hancock Money
Market Fund (the "Fund"), John Hancock Emerging Growth Fund, John Hancock Global
Resources Fund, John Hancock High Yield Tax Free Fund, John Hancock High Yield
Bond Fund and John Hancock Government Income Fund (collectively, the "Funds").
The Board of Directors may authorize the creation of additional Funds from time
to time to satisfy various investment objectives. Effective December 22, 1994
(see Note B), the Corporation and Funds changed names by replacing the word
Transamerica with John Hancock. Prior to September 12, 1995, the Fund was known
as John Hancock Money Market Fund B.
The Board of Directors have authorized the issuance of multiple classes of
shares of the Fund, designated as Class A, Class B and Class S shares. The
shares of each class represent an interest in the same portfolio of investments
of the Fund and have equal rights to voting, redemptions, dividends, and
liquidation, except that certain expenses subject to the approval of the Board
of Directors, may be applied differently to each class of shares in accordance
with current regulations of the Securities and Exchange Commission. Shareholders
of a class which bears distribution/service expenses under terms of a
distribution plan have exclusive voting rights to such distribution plan. No
Class S shares had been issued as of October 31, 1995. 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 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 for both financial
reporting and federal income tax purposes.
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. It
will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders.
DIVIDENDS The Fund records all distributions to shareholders from net investment
income on the ex-dividend date. Such distributions are determined in conformity
with income tax regulations, which may differ from generally accepted accounting
principles. Dividends paid by the Fund with respect to each class of shares will
be calculated in the same manner, at the same time and will be in the same
amount, except for the effect of expenses that may be applied differently to
each class as explained previously.
EXPENSES The majority of the expenses of the Corporation are directly
identifiable to an individual Fund. Expenses which are not readily identifiable
to a specific Fund are allocated in such a manner as deemed equitable, taking
into consideration, among other things, the nature and type of expense and the
relative sizes of the Fund.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - MONEY MARKET FUND
to each class of shares based on the appropriate net assets of the respective
classes. Distribution/service fees, if any, are calculated daily at the class
level based on the appropriate net assets of each class and the specific expense
rate(s) applicable to each class.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES AND
OTHERS
On December 22, 1994, the Adviser became the investment adviser for the Fund
with approval of the Board of Directors and shareholders of the Fund. The Fund's
former investment manager was Transamerica Fund Management Company ("TFMC").
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, on
an annual basis, to the sum of (a) 0.50% of the first $500,000,000 of the Fund's
average daily net asset value, (b) 0.425% of the next $250,000,000 and (c)
0.375% of the Fund's average daily net asset value in excess of $750,000,000.
This fee structure is consistent with the former agreement with TFMC. For the
period ended October 31, 1995, the advisory fee earned by the Adviser and TFMC
amounted to $221,171 and $50,611, respectively, resulting in a total fee of
$271,782.
TFMC, for its respective period, provided administrative services to the
Fund pursuant to an administrative service agreement through January 16, 1995 on
which day the agreement was terminated.
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.
On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a wholly-owned
subsidiary of the Adviser, became the principal underwriter of the Fund. Prior
to this date, Transamerica Fund Distributors, Inc. ("TFD") served as the
principal underwriter and distributor of the Fund.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds, formerly TFD, and are used in whole or in
part to defray its expenses related to providing distribution related services
to the Fund in connection with the sale of Class B shares. For the period ended
October 31,1995, contingent deferred sales charges amounted to $969,561.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A and Class B shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds for distribution and service expenses at an annual rate not to exceed
0.15% of Class A average daily net assets and 1.00% of Class B average daily net
assets. As of October 27, 1995, the Fund has temporarily limited the
distribution and service fees attributable to Class B shares to 0.90% of average
daily net assets. Under the amended Rules of Fair Practice, curtailment of a
portion of the Fund's 12b-1 payments could occur under certain circumstances.
This fee structure and plan is similar to the former arrangement with TFD.
The Board of Directors approved a shareholder servicing agreement between
the Fund and John Hancock Investor Services Corporation ("Investor Services"), a
wholly owned subsidiary of The Berkeley Financial Group, for the period between
December 22, 1994 and May 12, 1995, inclusive under which Investor Services
processed telephone transactions on behalf of the Fund. As of May 15, 1995, the
Fund entered into a full service transfer agent agreement with Investor
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK FUNDS - MONEY MARKET FUND
Services. Prior to this date The Shareholder Services Group was the transfer
agent. The Fund will pay Investor Services a fee based on transaction volume and
number of shareholder accounts.
A partner with Baker & Botts was an officer of the Trust until December 22,
1994. During the period ended October 31, 1995, legal fees paid to Baker & Botts
amounted to $688.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser and
its affiliates as well as Director of the Fund. The compensation of unaffiliated
Directors is borne by the Fund. Effective with the fees paid for 1995, the
unaffiliated Directors may elect to defer 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 with regard to the deferred compensation. Investments to cover the
Fund's deferred compensation liability will be recorded on the Fund's books in
other assets. 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.
The Fund has an independent advisory board composed of certain retired
Directors who provide advice to the current Board of Directors in order to
facilitate a smooth management transition. The Fund pays the advisory board and
its counsel a fee.
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 October 31, 1995 aggregated $2,620,334,872 and
$2,536,962,220, respectively. Purchases and proceeds from maturities of
obligations of the U.S. government and its agencies for the period ended October
31, 1995, aggregated $80,835,727 and $90,184,471, respectively. The cost of
investments owned at October 31, 1995 for Federal income tax purposes was
$74,748,213.
NOTE D --
PLAN OF REORGANIZATION
On November 15, 1995, the shareholders of John Hancock Cash Management Fund
("CMF") approved a plan of reorganization between CMF and the Fund providing for
the transfer of substantially all of the assets and liabilities of CMF to the
Fund in exchange solely for Class A shares of the Fund to be distributed to
CMF's Class A shareholders, receptively.
14
<PAGE> 15
JOHN HANCOCK FUNDS - MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
John Hancock Series, Inc. --
John Hancock Money Market Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Money Market Fund (the "Fund"),
(formerly the Transamerica Money Market Fund B), one of the portfolios
constituting John Hancock Series, Inc. (formerly Transamerica Series, Inc.) as
of October 31, 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 periods
indicated therein. 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
October 31, 1995, 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 the
John Hancock Money Market Fund portfolio of John Hancock Series, Inc., at
October 31, 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 indicated periods, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
December 15, 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 October 31,
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.
15
<PAGE> 16
ADDITIONAL INFORMATION
JOHN HANCOCK FUNDS - MONEY MARKET FUND
On December 16, 1994 , a special meeting of John Hancock (formerly Transamerica)
Series, Inc. (the "Trust") in respect of John Hancock (formerly Transamerica)
Money Market Fund (the "Fund") was held involving the election of trustees and
certain other matters concerning the Fund.
Specifically, shareholder's first approved a new investment management
agreement between the Trust on behalf of the Fund and John Hancock Advisers,
Inc. on substantially similar terms of the prior investment management
agreement, to take effect on December 22, 1994, the date of the consummation of
Transamerica Fund Management Company by The Berkeley Financial Group. The
shareholder votes tallied were 28,010,195 FOR, 429,634 AGAINST and 1,543,584
ABSTAINING.
The shareholders next approved new Plans of Distribution for the Fund, also
effective on December 22, 1994, and also on substantially the same terms as the
prior Plans of Distribution. The shareholder votes tallied were 27,864,397 FOR,
324,983 AGAINST and 1,794,033 ABSTAINING
The shareholders also voted to ratify the selection of Ernst & Young, LLP
as independent auditors for the Fund for the fiscal year ending October 31,
1995, and the votes tallied were 38,745,493 FOR, 65,395 AGAINST and 1,428,713
ABSTAINING.
Lastly, the following trustees were elected to serve until their respective
successors shall become duly elected and qualified, with the votes tabulated as
indicated:
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHOLD
- --------------------------------------------------------------------------------
<S> <C> <C>
Edward J. Boudreau, Jr ................. 26,514,487 3,468,927
James F. Carlin ........................ 26,515,928 3,467,485
William H. Cunningham .................. 26,510,272 3,473,142
Charles L. Ladner ...................... 26,510,272 3,473,142
Leo E. Linbeck, Jr ..................... 26,497,012 3,486,401
Patricia P. McCarter ................... 26,510,272 3,473,142
Steven R. Pruchansky ................... 26,510,272 3,473,142
Norman H. Smith ........................ 26,507,782 3,475,632
John P. Toolan ......................... 26,510,272 3,473,142
</TABLE>
16
<PAGE> 17
NOTES
JOHN HANCOCK FUNDS - MONEY MARKET FUND
17
<PAGE> 18
NOTES
JOHN HANCOCK FUNDS - MONEY MARKET FUND
18
<PAGE> 19
NOTES
JOHN HANCOCK FUNDS - MONEY MARKET FUND
19
<PAGE> 20
Bulk Rate
[LOGO] JOHN HANCOCK FUNDS U.S. Postage
A GLOBAL INVESTMENT MANAGEMENT FIRM PAID
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 Brockton, MA
Permit No. 582
[A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below reads
"A Global Investment Management Firm."]
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock Money
Market Fund. It may be used as sales literature when preceded or accompanied by
the current prospectus, which details charges, investment objectives and
operating policies.
[A recycled logo in lower left hand corner with caption "Printed on Recycled
Paper."]
JHD 4400A 10/95
