| UNITED STATES | |
| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| FORM N-CSR | |
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED | |
| MANAGEMENT INVESTMENT COMPANIES | |
| Investment Company Act file number 811- 22303 | |
| John Hancock Collateral Investment Trust | |
| (Exact name of registrant as specified in charter) | |
| 601 Congress Street, Boston, Massachusetts 02210 | |
| (Address of principal executive offices) (Zip code) | |
| Michael J. Leary | |
| Treasurer | |
| 601 Congress Street | |
| Boston, Massachusetts 02210 | |
| (Name and address of agent for service) | |
| Registrant's telephone number, including area code: 617-663-4490 | |
| Date of fiscal year end: | December 31 |
| Date of reporting period: | June 30, 2010 |
ITEM 1. SCHEDULE OF INVESTMENTS
| John Hancock | |
| Collateral Investment Trust | |
| |
| Semiannual Report | |
| 6.30.10 | |
| John Hancock Collateral Investment Trust | |
| Table of Contents | |
| Your expenses | Page 2 |
| Portfolio summary | Page 3 |
| Portfolio of investments | Page 4 |
| Financial statements | Page 9 |
| Financial highlights | Page 12 |
| Notes to financial statements | Page 13 |
| More information | Page 16 |
| 1 |
Your expenses
These examples are intended to help you understand your ongoing operating expenses.
Understanding your fund expenses
As a shareholder of the Fund, you incur two types of costs:
• Transaction costs which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc.
• Ongoing operating expenses including management fees, distribution and service fees (if applicable), and other fund expenses.
We are going to present only your ongoing operating expenses here.
Actual expenses/actual returns
This example is intended to provide information about your fund’s actual ongoing operating expenses, and is based on your fund’s actual return. It assumes an account value of $1,000.00 on January 1, 2010 with with the same investment held until June 30, 2010.
| Account value | Ending value | Expenses paid during | |
| on 1-1-10 | on 6-30-10 | period ended 6-30-101 | |
| Common | |||
| Shares | $1,000.00 | $1,001.10 | $0.30 |
Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at June 30, 2010, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Example
[ My account value $8,600.00 / $1,000.00 = 8.6 ] x $[ “expenses paid” from table ] = My actual expenses
Hypothetical example for comparison purposes
This table allows you to compare your fund’s ongoing operating expenses with those of any other fund. It provides an example of the Fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not your fund’s actual return). It assumes an account value of $1,000.00 on January 1, 2010, with the same investment held until June 30, 2010. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses.
| Account value | Ending value | Expenses paid during | |
| on 1-1-10 | on 6-30-10 | period ended 6-30-101 | |
| Common | |||
| Shares | $1,000.00 | $1,024.50 | $0.30 |
Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs.
1 Expenses are equal to the Fund's annualized expense ratio of 0.06%, for the Fund's shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
| 2 |
| Portfolio Summary | |||
| Percentage of Net | |||
| Top 10 Issuers 1 | Yield* | Assets | |
| Govco LLC | |||
| 07/07/2010 to 09/22/10 | 0.280 to 0.540% | 5.2% | |
| Bank of Nova Scotia | |||
| 07/01/2010 to 08/20/10 | 0.060 to 0.270% | 4.8% | |
| Societe Generale North America, Inc. | |||
| 07/06/10 to 08/27/10 | 0.240 to 0.420% | 4.8% | |
| UBS Finance (Delaware) LLC | |||
| 07/01/10 to 08/13/10 | 0.140 to 0.295% | 4.8% | |
| Wells Fargo & Company | |||
| 08/20/10 to 01/24/11 | 0.628 to 3.980% | 4.7% | |
| Nestle Capital Corp. | |||
| 07/01/10 to 09/24/10 | 0.010 to 0.300% | 4.5% | |
| General Electric Capital Corp. | |||
| 08/20/10 to 02/01/11 | 0.366 to 4.875% | 4.4% | |
| Jupiter Securitization Company LLC | |||
| 07/12/10 to 09/16/10 | 0.320 to 0.430% | 4.0% | |
| Falcon Asset Securitization Company LLC | |||
| 07/08/10 to 09/17/10 | 0.300 to 0.430% | 3.9% | |
| Bank of America Corp. | |||
| 08/01/10 to 08/13/10 | 0.444 to 0.593% | 3.8% | |
| Sector Composition 1,2 | ||
| Financials | 75% | |
| Temporary Liquidity Guarantee Program | 7% | |
| Information Technology | 6% | |
| Consumer Staples | 5% | |
| U.S. Government & Agency Obligations | 4% | |
| Consumer Discretionary | 1% | |
| Health Care | 1% | |
| Industrials | 1% | |
| Portfolio Composition 1,2 | ||
| Commercial Paper | 61% | |
| Corporate Interest-Bearing Obligations | 24% | |
| Temporary Liquidity Guarantee Program | 7% | |
| Asset Backed Securities | 4% | |
| U.S. Government & Agency Obligations | 4% | |
1 As a percentage of net assets on June 30, 2010.
2 Sector investing is subject to greater risks than the market as a whole. Because the Fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors.
* Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end.
| 3 |
John Hancock Collateral Investment Trust
As of June 30, 2010 (Unaudited)
| Maturity Date | Yield* | Par value | Value | |
| Asset Backed Securities 3.77% | $244,619,729 | |||
| (Cost $244,666,646) | ||||
| Bank of America Auto Trust (S) | ||||
| 02/15/11 | 0.262% | $15,806,260 | 15,801,048 | |
| Bank of America Auto Trust, Series 2010-2, Class A1 | ||||
| 07/15/11 | 0.619 | 22,000,000 | 22,001,188 | |
| CNH Equipment Trust | ||||
| 12/03/10 to 04/15/11 | 0.354 to 0.421 | 39,294,188 | 39,287,945 | |
| Ford Credit Auto Lease Trust (S) | ||||
| 02/15/11 | 0.283 | 18,108,586 | 18,104,984 | |
| Ford Credit Auto Owner Trust (S) | ||||
| 12/15/10 | 0.295 | 4,476,315 | 4,475,947 | |
| Hyundai Auto Receivables Trust, Series 2010-A, Class A1 | ||||
| 05/16/11 | 0.398 | 21,393,786 | 21,387,584 | |
| John Deere Owner Trust, Series 2010-A, Class A1 | ||||
| 05/16/11 | 0.344 | 74,408,830 | 74,397,416 | |
| Mercedes-Benz Auto Receivables Trust, Series 2010-1, | ||||
| Class A1 | ||||
| 05/13/11 | 0.309 | 36,499,040 | 36,484,663 | |
| Nissan Auto Lease Trust, Series 2010-A, Class A1 | ||||
| 06/15/11 | 0.561 | 12,679,641 | 12,678,954 | |
| Commercial Paper 61.18% | $3,968,882,653 | |||
| (Cost $3,968,821,168) | ||||
| American Honda Finance Corp. | ||||
| 07/07/10 to 09/21/10 | 0.270 to 0.390% | $184,500,000 | 184,446,725 | |
| AT&T, Inc. | ||||
| 07/01/10 | 0.060 | 28,000,000 | 28,000,000 | |
| Bank of Nova Scotia | ||||
| 07/01/10 to 08/20/10 | 0.060 to 0.270 | 314,600,000 | 314,584,388 | |
| Barclays US Funding Corp. | ||||
| 07/01/10 | 0.150 | 50,000,000 | 50,000,000 | |
| Barclays US Funding LLC | ||||
| 07/12/10 to 08/25/10 | 0.350 to 0.400 | 215,000,000 | 214,925,300 | |
| BNP Paribas Finance, Inc. | ||||
| 07/06/10 | 0.240 | 30,000,000 | 29,999,100 | |
| CAFCO LLC (S) | ||||
| 07/01/10 to 09/15/10 | 0.230 to 0.520 | 130,000,000 | 129,959,950 | |
| CAFCO LLC | ||||
| 07/14/10 | 0.290 | 50,000,000 | 49,995,000 | |
| Deutsche Bank Financial LLC | ||||
| 07/01/10 | 0.010 | 178,000,000 | 178,000,000 | |
| Falcon Asset Securitization Company LLC (S) | ||||
| 07/08/10 to 09/17/10 | 0.300 to 0.430 | 218,830,000 | 218,781,437 | |
| Falcon Asset Securitization Company LLC | ||||
| 07/14/10 to 07/15/10 | 0.320 to 0.380 | 35,000,000 | 34,998,250 | |
| General Electric Capital Corp. | ||||
| 07/12/10 | 0.270 | 45,000,000 | 44,998,650 | |
| 4 |
John Hancock Collateral Investment Trust
As of June 30, 2010 (Unaudited)
| Maturity Date | Yield* | Par value | Value | |
| Commercial Paper (continued) | ||||
| Govco LLC (S) | ||||
| 07/07/10 to 09/22/10 | 0.280 to 0.540% | $340,534,000 | $340,276,673 | |
| International Business Machines Corp. | ||||
| 07/08/10 | 0.110 | 11,900,000 | 11,899,286 | |
| John Deere Bank S.A. (S) | ||||
| 07/21/10 | 0.170 | 36,000,000 | 35,996,600 | |
| John Deere Credit Ltd. (S) | ||||
| 07/23/10 | 0.160 | 17,000,000 | 16,998,338 | |
| JPMorgan Chase & Company | ||||
| 07/01/10 to 07/06/10 | 0.000 to 0.150 | 25,700,000 | 25,699,829 | |
| Jupiter Securitization Company LLC (S) | ||||
| 07/19/10 to 09/16/10 | 0.320 to 0.430 | 101,000,000 | 100,956,360 | |
| Jupiter Securitization Company LLC | ||||
| 07/12/10 to 07/15/10 | 0.320 to 0.320 | 157,684,000 | 157,664,424 | |
| Nestle Capital Corp. (S) | ||||
| 08/02/10 to 09/24/10 | 0.240 to 0.300 | 290,000,000 | 289,858,600 | |
| Nestle Capital Corp. | ||||
| 07/01/10 | 0.010 | 3,000,000 | 3,000,000 | |
| Old Line Funding LLC | ||||
| 07/07/10 to 07/14/10 | 0.320 to 0.320 | 127,118,000 | 127,114,477 | |
| Old Line Funding LLC (S) | ||||
| 07/08/10 to 07/08/10 | 0.270 to 0.280 | 60,000,000 | 59,998,800 | |
| Pfizer, Inc. (S) | ||||
| 07/14/10 | 0.800 | 65,000,000 | 64,994,800 | |
| Rabobank Capital Funding Trust | ||||
| 07/06/10 to 09/14/10 | 0.210 to 0.460 | 186,490,000 | 186,464,160 | |
| Ranger Funding Company LLC (S) | ||||
| 07/19/10 to 07/26/10 | 0.320 to 0.330 | 26,837,000 | 26,832,493 | |
| Ranger Funding Company LLC | ||||
| 07/07/10 to 07/13/10 | 0.300 to 0.310 | 125,000,000 | 124,991,250 | |
| Societe Generale North America, Inc. | ||||
| 07/06/10 to 08/27/10 | 0.240 to 0.420 | 312,100,000 | 312,041,801 | |
| State Street Corp. | ||||
| 08/10/10 to 09/09/10 | 0.380 to 0.480 | 85,000,000 | 84,947,100 | |
| UBS Finance (Delaware) LLC | ||||
| 07/01/10 to 08/13/10 | 0.140 to 0.295 | 309,005,000 | 308,963,750 | |
| United Technologies | ||||
| 07/01/10 | 0.050 to 0.070 | 118,000,000 | 118,000,000 | |
| Westpac Banking Corp. | ||||
| 09/28/10 | 0.380 | 45,000,000 | 44,950,500 | |
| Westpac Securities NZ, Ltd. | ||||
| 01/21/11 | 0.428 | 46,000,000 | 45,989,880 | |
| Yorktown Capital LLC | ||||
| 07/15/10 | 0.270 | 2,555,000 | 2,554,732 | |
| 5 |
John Hancock Collateral Investment Trust
As of June 30, 2010 (Unaudited)
| Maturity Date | Yield* | Par value | Value | |
| Corporate Interest-Bearing Obligations 24.48% | $1,588,000,754 | |||
| (Cost $1,588,698,352) | ||||
| Abbey National Treasury Services PLC (P) | ||||
| 12/10/10 | 0.390% | $23,000,000 | 22,994,710 | |
| American Honda Finance Corp. (S) | ||||
| 12/15/10 | 5.125 | 16,500,000 | 16,794,872 | |
| Bank of America Corp. | ||||
| 08/01/10 | 4.500 | 60,611,000 | 60,735,675 | |
| Bank of America Corp.(P) | ||||
| 08/02/10 to 08/13/10 | 0.444 to 0.593 | 188,105,000 | 188,118,570 | |
| Bank of America NA (P) | ||||
| 01/27/11 | 0.447 | 70,000,000 | 70,014,770 | |
| Bank of Nova Scotia (P) | ||||
| 07/15/10 | 0.303 | 15,000,000 | 15,000,300 | |
| BNP Paribas Finance, Inc. | ||||
| 07/01/10 | 0.030 | 129,300,000 | 129,300,000 | |
| Credit Suisse USA, Inc. (P) | ||||
| 08/16/10 | 0.636 | 39,100,000 | 39,104,809 | |
| General Electric Capital Corp. | ||||
| 10/21/10 | 4.875 | 10,000,000 | 10,116,940 | |
| General Electric Capital Corp. (P) | ||||
| 08/20/10 to 02/01/11 | 0.366 to 0.794 | 276,704,000 | 276,894,007 | |
| JPMorgan Chase & Company (P) | ||||
| 01/17/11 | 0.474 | 132,828,000 | 132,911,814 | |
| The Bank of New York Mellon Corp. | ||||
| 01/14/11 | 4.950 | 7,385,000 | 7,537,308 | |
| Toronto-Dominion Bank (P) | ||||
| 07/13/10 | 0.298 | 50,000,000 | 49,998,000 | |
| US Bancorp | ||||
| 07/29/10 | 4.500 | 45,740,000 | 45,838,341 | |
| US Central Federal Credit Union (P) | ||||
| 10/19/11 | 0.304 | 23,000,000 | 22,984,601 | |
| Wachovia Corp. (P) | ||||
| 07/26/10 | 0.386 | 25,000,000 | 25,003,475 | |
| Wal-Mart Stores, Inc. | ||||
| 07/01/10 to 08/15/10 | 4.125 to 4.750 | 27,851,000 | 27,878,217 | |
| Wells Fargo & Company | ||||
| 10/29/10 | 3.980 | 51,282,000 | 51,702,256 | |
| Wells Fargo & Company (P) | ||||
| 08/20/10 to 01/24/11 | 0.628 to 0.766 | 252,900,000 | 253,089,715 | |
| Westpac Banking Corp. (P)(S) | ||||
| 08/13/10 to 12/11/10 | 0.387 to 0.423 | 142,000,000 | 141,982,374 | |
| Temporary Liquidity Guarantee Program (X) 6.90% | $447,671,298 | |||
| (Cost $446,032,807) | ||||
| Bank of America Corp. (P) | ||||
| 06/22/12 | 0.738% | $41,000,000 | 41,283,392 | |
| Bank of America NA (P) | ||||
| 09/13/10 | 0.566 | 19,000,000 | 19,012,692 | |
| 6 |
John Hancock Collateral Investment Trust
As of June 30, 2010 (Unaudited)
| Maturity Date | Yield* | Par value | Value | |
| Temporary Liquidity Guarantee Program (X) (continued) | ||||
| Citibank NA(P) | ||||
| 07/12/11 to 11/15/12 | 0.391 to 0.528% | $86,000,000 | $86,216,403 | |
| Citigroup Funding, Inc. (P) | ||||
| 07/30/10 to 03/30/12 | 0.438 to 0.833 | 29,000,000 | 28,996,461 | |
| Citigroup, Inc. (P) | ||||
| 12/09/11 | 1.150 | 22,340,000 | 22,591,057 | |
| General Electric Capital Corp. (P) | ||||
| 03/11/11 to 03/12/12 | 0.617 to 0.736 | 18,000,000 | 18,079,844 | |
| JPMorgan Chase & Company | ||||
| 12/01/10 | 2.625 | 25,000,000 | 25,230,225 | |
| JPMorgan Chase & Company (P) | ||||
| 02/23/11 to 12/26/12 | 0.564 to 0.787 | 60,000,000 | 60,339,529 | |
| Morgan Stanley (P) | ||||
| 02/10/12 to 06/20/12 | 0.654 to 0.889 | 55,000,000 | 55,396,613 | |
| PNC Funding Corp. (P) | ||||
| 04/01/12 | 0.733 | 10,000,000 | 10,058,890 | |
| State Street Bank & Trust Company (P) | ||||
| 09/15/11 | 0.737 | 10,000,000 | 10,039,690 | |
| The Goldman Sachs Group, Inc. (P) | ||||
| 11/09/11 to 03/15/12 | 0.624 to 0.737 | 36,000,000 | 36,149,052 | |
| The Huntington National Bank (P) | ||||
| 06/01/12 | 0.938 | 18,000,000 | 18,182,664 | |
| Union Bank NA (P) | ||||
| 03/16/12 | 0.737 | 6,000,000 | 6,031,656 | |
| Wells Fargo & Company (P) | ||||
| 06/15/12 | 0.757 | 10,000,000 | 10,063,130 | |
| U.S. Government & Agency Obligations 3.62% | $235,094,160 | |||
| (Cost $235,000,000) | ||||
| Federal Home Loan Bank | ||||
| 04/13/11 to 06/24/11 | 0.570 to 0.750% | $235,000,000 | 235,094,160 | |
| Total investments (Cost $6,483,218,973)† 99.95% | $6,484,268,594 | |||
| Other assets and liabilities, net 0.05% | $2,985,547 | |||
| Total net assets 100.00% | $6,487,254,141 | |||
The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
(P) Variable rate obligation. The coupon rate shown represents the rate at period end.
(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $1,481,813,276 or 22.85% of the Fund's net assets as of June 30, 2010.
(X) These securities are issued under the Temporary Liquidity Guarantee and are insured by the Federal Deposit Insurance Corporation.
* Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end.
| 7 |
John Hancock Collateral Investment Trust
As of June 30, 2010 (Unaudited)
† At June 30, 2010, the aggregate cost of investment securities for federal income tax purposes was $6,483,218,973. Net unrealized appreciation aggregated $1,049,621, of which $1,893,421 related to appreciated investment securities and $843,800 related to depreciated investment securities.
| 8 |
John Hancock Collateral Investment Trust
Statement of Assets and Liabilities — June 30, 2010 (Unaudited)
| Assets | |
| Investments, at value (Cost $6,483,218,973) | $6,484,268,594 |
| Cash | 3,707 |
| Interest receivable | 4,746,484 |
| Total assets | 6,489,018,785 |
| Liabilities | |
| Distributions payable | 1,579,102 |
| Payable to affiliates | |
| Chief compliance officer fees | 2,877 |
| Transfer agent fees | 8,217 |
| Trustees' fees | 14,259 |
| Other liabilities and accrued expenses | 160,189 |
| Total liabilities | 1,764,644 |
| Net assets | |
| Capital paid-in | $6,486,210,547 |
| Accumulated net realized loss on investments | (6,027) |
| Net unrealized appreciation on investments | 1,049,621 |
| Net assets | $6,487,254,141 |
| Net asset value per share | |
| Based on 648,140,506 shares of beneficial | |
| interest outstanding — unlimited number of | |
| shares authorized with no par value | $10.01 |
The accompanying notes are an integral part of the financial statements.
| 9 |
John Hancock Collateral Investment Trust
Statement of Operations — June 30, 2010 (Unaudited)
| Investment income | |
| Interest | $8,733,409 |
| Expenses | |
| Investment management fees (Note 4) | 1,048,772 |
| Accounting and legal services fees (Note 4) | 198,557 |
| Transfer agent fees (Note 4) | 49,589 |
| Trustees' fees (Note 4) | 25,790 |
| Professional fees | 75,231 |
| Custodian fees | 208,331 |
| Registration and filing fees | 8,719 |
| Chief compliance officer fees (Note 4) | 17,356 |
| Other | 63,741 |
| Total expenses | 1,696,086 |
| Net investment income | 7,037,323 |
| Realized and unrealized gain (loss) | |
| Net realized loss on investments | (6,027) |
| Change in net unrealized appreciation | |
| (depreciation) on investments | (515,241) |
| Net realized and unrealized loss | (521,268) |
| Increase in net assets from operations | $6,516,055 |
The accompanying notes are an integral part of the financial statements.
| 10 |
John Hancock Collateral Investment Trust
Statements of Changes in Net Assets
| For the six- | ||||
| month period | ||||
| ended | Period ended | |||
| 6/30/10 | 12/31/091 | |||
| (Unaudited) | ||||
| Increase (decrease) in net assets | ||||
| From operations | ||||
| Net investment income | $7,037,323 | $6,319,754 | ||
| Net realized loss | (6,027) | — | ||
| Change in net unrealized appreciation | ||||
| (depreciation) | (515,241) | 1,564,862 | ||
| Increase in net assets resulting from | ||||
| operations | 6,516,055 | 7,884,616 | ||
| Distributions to shareholders | ||||
| From net investment income | (6,892,502) | (6,464,575) | ||
| From Fund share transactions (Note 5) | 1,586,716,675 | 4,899,493,872 | ||
| Total increase | 1,586,340,228 | 4,900,913,913 | ||
| Net assets | ||||
| Beginning of period | 4,900,913,913 | — | ||
| End of period | $6,487,254,141 | $4,900,913,913 | ||
| Accumulated distributions in excess of net | ||||
| investment income | — | ($144,821) | ||
1 Period from 6-1-09 (inception date) to 12-31-09.
The accompanying notes are an integral part of the financial statements.
| 11 |
John Hancock Collateral Investment Trust
Financial Highlights (For a share outstanding throughout the period)
| Period ended | 6/30/101 | 12/31/092 |
| Per share operating performance | ||
| Net asset value, beginning of period | $10.01 | $10.00 |
| Net investment income3 | 0.01 | 0.02 |
| Net realized and unrealized gain on investments | — | 0.01 |
| Total from investment operations | 0.01 | 0.03 |
| Less distributions | ||
| Net investment income | (0.01) | (0.02) |
| Net asset value, end of period | $10.01 | $10.01 |
| Total Return (%)4,5 | 0.11 | 0.29 |
| Ratios and supplemental data | ||
| Net Assets, end of period (in millions) | $6,487 | $4,901 |
| Ratios (as a percentage of average net assets) | ||
| Expenses | 0.066 | 0.097 |
| Net investment income | 0.236 | 0.297 |
| Portfolio Turnover Rate (%) | 57 | 9 |
1 Semiannual period from 1-1-10 to 6-30-10. Unaudited.
2 Period from 6-1-09 (inception date) to 12-31-09.
3 Based on the average daily shares outstanding.
4 Assumes dividend reinvestment (if applicable).
5 Not annualized.
6 Annualized.
7 All expenses have been annualized except organizational fees, which were 0.01% of average net assets and are non-recurring. This expense decreased the net investment income by less than $0.005 and the net investment income ratio by 0.01%.
The accompanying notes are an integral part of the financial statements.
| 12 |
John Hancock Collateral Investment Trust (unaudited)
Notes to financial statements
Note 1 - Organization
John Hancock Collateral Investment Trust (the Fund) is a Massachusetts business trust organized on May 19, 2009. The Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act). The Fund is the successor to John Hancock Cash Investment Trust (CIT). The Fund acquired all the assets and liabilities of CIT in a non-taxable exchange for shares of the Fund. The Fund commenced operations on June 1, 2009 upon the completion of this transaction. The current investors in the Fund are affiliated funds of Jo hn Hancock Mutual Funds family of funds. The Fund serves as an investment vehicle for cash collateral received by the affiliated funds for securities lending.
The investment objective of the Fund is to maximize income, while maintaining adequate liquidity, safeguarding the return of principal and minimizing risk of default. The Fund invests only in U.S. dollar denominated securities rated within the two highest short-term credit categories and their unrated equivalents. The Fund is a floating net asset value (NAV) fund and its NAV may fluctuate.
Note 2 - Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. The Fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these techniques are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes significant unobservable inputs when mar ket prices are not readily available or reliable, including the Fund’s own assumptions in determining the fair value of investments. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. All investments as listed in the Portfolio of Investments at June 30, 2010, are Level 2 under the hierarchy discussed above. Debt obligations, including short term debt investments, are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied quotes and electronic data processing techniques, which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data as well as broker quotes. Securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Debt obligations, for which there are no prices available from an independent pricing service, are valued based on broker quotes or fair valued as determined in good faith by the Fund’s pricing committee in accordance with procedures adopted by the Board of Trustees.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be
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placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful.
Expenses. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The Fund intends to qualify 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 that is distributed to shareholders. Therefore, no federal income tax provision is required.
As of December 31, 2009, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund’s federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. The Fund records distributions to affiliated fund shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Fund generally declares dividends daily and pays them monthly. Capital gain distributions net of fee paid to the affiliated fund security lending agent, if any, are distributed annually.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Material distributions in excess of tax basis earnings and profits, if any, are reported in the Fund’s financial statements as a return of capital.
Capital accounts within financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period.
Note 3 - Guarantees and indemnifications
Under the Fund’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 - Fees and transactions with affiliates
MFC Global Investment Management (U.S.), LLC (the Adviser) serves as investment adviser for the Fund. John Hancock Funds, LLC (the Placement Agent) performs services related to the offering and sale of shares of the Fund. The Adviser, and affiliate of the Fund, and the Placement Agent are indirect wholly owned subsidiary of Manulife Financial Corporation.
Management fee. The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a daily management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.05% of the first $1,500,000,000 of the Fund’s average daily net assets and (b) 0.03% of the Fund’s average daily net assets in excess of $1,500,000,000.
The investment management fees incurred for the six months ended June 30, 2010, were equivalent to an annual effective rate of 0.035% of the Fund’s average daily net assets.
Placement Agent fee. The Fund has an agreement with the Placement Agent. Under the agreement the Fund pays a fee of $100 per year as compensation for the services to be rendered by the Placement Agent, plus any expenses.
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Accounting and legal services. The Fund has an agreement with the affiliates of the Adviser to perform necessary tax, accounting, compliance, legal and other administrative services of the Fund. The Fund pays the affiliates, monthly in arrears for these services at a rate of 0.02% of the Fund’s average daily net assets, up to a maximum of $400,000 annually. The accounting and legal service fees incurred for the six month period ended June 30, 2010, were equivalent to an annual effective rate of 0.01% of the Fund’s average daily net assets.
Chief Compliance Officer services. The Fund has contracted with the Adviser’s Chief Compliance Office (CCO) to provide certain services, including on-going evaluation of the Fund’s Federal Security Law policies and procedures. In addition, the CCO will provide annual reporting to the Board of Trustees detailing the results of this review. The Fund pays an annual flat rate of $35,000 to the Adviser, paid monthly in arrears, for these services.
Trustee expenses. The Fund compensates each Trustee who is not an employee of the Adviser or its affiliates.
Transfer agent fees. The Fund has a transfer agent agreement with the Adviser and John Hancock Signature Services, Inc. (Transfer Agent), an affiliate of the Adviser. The Fund pays the Transfer Agent monthly a fee which is based on an annual rate of $100,000. The Fund also pays certain out-of-pocket expenses.
Note 5 - Fund share transactions
Transactions in Fund shares for the periods ended June 30, 2010 and December 31, 2009, along with the corresponding dollar value:
| For the six-month period ended | Period ended | ||||
| 6/30/10 | 12/31/091 | ||||
| Shares | Amount | Shares | Amount | ||
| Common shares | |||||
| Sold | 1,723,322,284 | $17,248,173,912 | 1,617,448,284 | $16,190,461,263 | |
| Issued in acquisition of CIT | — | — | 175,181,953 | 1,751,819,527 | |
| Repurchased | (1,564,808,666) | (15,661,457,237) | (1,303,003,349) | (13,042,786,918) | |
| Net increase | 158,513,618 | $1,586,716,675 | 489,626,888 | $4,899,493,872 | |
1 Period from 6-1-09 (inception date) to 12-31-09.
Note 6 - Purchase and sale of securities
Purchases and proceeds from sales or maturities of securities, other than short-term securities, during the six month period ended June 30, 2010, aggregated $784,350,000 and $641,667,020, respectively.
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| More information | |||
| Trustees | Investment adviser | ||
| Harlan D. Platt* | MFC Global Investment Management (U.S.), LLC | ||
| John A. Frabotta* | |||
| Frank Saeli† | Placement agent | ||
| *Member of the Audit Committee | John Hancock Funds, LLC | ||
| †Non-Independent Trustee | |||
| Custodian | |||
| Officers | State Street Bank and Trust Company | ||
| Barry H. Evans | |||
| President and Chief Executive Officer | Transfer agent | ||
| Carolyn M. Flanagan | John Hancock Signature Services, Inc. | ||
| Secretary and Chief Legal Officer | |||
| Thomas M. Kinzler | Legal counsel | ||
| Assistant Secretary | K&L Gates LLP | ||
| William E. Corson | |||
| Chief Compliance Officer | |||
| Francis V. Knox, Jr. | The report is certified under the Sarbanes-Oxley Act, which | ||
| Assistant Chief Compliance Officer | requires mutual funds and other public companies to affirm | ||
| Charles A. Rizzo | that, to the best of their knowledge, the information in their | ||
| Chief Financial Officer | financial reports is fairly and accurately stated in all material | ||
| Diane Landers | respects. | ||
| Chief Administrative Officer | |||
| Michael J. Leary | |||
| Treasurer | |||
| Ismail Gunes | |||
| Assistant Treasurer | |||
The Fund’s complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q.
The Fund’s Form N-Q is available on the SEC’s Web site, www.sec.gov, and can be reviewed and copied (for a fee)
at the SEC’s Public Reference Room in Washington, DC. Call 1-800-SEC-0330 to receive information on the operation of
the SEC's Public Reference Room.
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ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Not applicable.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c) Contact person at the registrant.
| SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| John Hancock Collateral Investment Trust | |
| By: | /s/ Barry H. Evans |
| ------------------------------ | |
| Barry H. Evans | |
| President and Chief Executive Officer | |
| Date: | August 23, 2010 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Barry H. Evans |
| ------------------------------- | |
| Barry H. Evans | |
| President and Chief Executive Officer | |
| Date: | August 23, 2010 |
| By: | /s/ Charles A. Rizzo |
| ------------------------------- | |
| Charles A. Rizzo | |
| Chief Financial Officer | |
| Date: | August 23, 2010 |