May 17, 2004
EDGAR
United States Securities and
Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form N-CSR
John Hancock Current Interest (the "Registrant") on behalf of:
John Hancock Money Market Fund
John Hancock U.S. Government Cash Reserve
File Nos. 2-50931; 811-2485
Ladies and Gentlemen:
Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and
the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for
the period ending March 31, 2004.
If you have any questions or comments regarding this filing, please contact the
undersigned at (617) 375-1513.
Sincerely,
/s/Alfred P. Ouellette
Alfred P. Ouellette
Senior Attorney and
Assistant Secretary
ITEM 1. REPORT TO STOCKHOLDERS.
JOHN HANCOCK
Money Market Fund
3.31.2004
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of James A. Shepherdson, Chief Executive Officer, flush left next
to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
Fund's investments
page 5
Financial statements
page 8
Trustees & officers
page 21
For your information
page 25
To Our Shareholders,
I am pleased to be writing to you as Chairman, President and Chief
Executive Officer of John Hancock Funds.
As you may know, John Hancock Financial Services, Inc. -- the parent
company of John Hancock Funds -- was acquired by Manulife Financial
Corporation on April 28, 2004. The merger combines two exceptionally strong
companies into a single, integrated, global market leader whose scale and
capital will create an industry pacesetter strengthening our company's
leadership in markets around the world.
Although this change has no impact on the mutual funds you have invested
in, it did bring with it some changes in the executive-level management of
John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step
down as chairman, president and chief executive officer in order to pursue
personal interests. Since her appointment in January 2000, Maureen has
provided John Hancock Funds with strong leadership and steady guidance
through several years of extremely turbulent market and industry
conditions.
Effective May 12, 2004, I have been appointed by your Board of Trustees to
the roles of Trustee, President and Chief Executive Officer of your fund. I
have been in the investment business for over 25 years, most recently as
President of Retirement Services at John Hancock Financial Services. In
that role, my responsibilities included developing and directing the sale
of John Hancock's variable and fixed annuity businesses through a diverse
distribution network of banks and broker/dealers -- including wirehouses,
regional brokerage houses and financial planners.
Prior to joining John Hancock, I served as Co-Chief Executive Officer of
MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my
responsibilities included the design, manufacture and distribution of
MetLife's annuity and life insurance products sold through third-party
channels.
Although there has been a change in executive-level management, the one
thing that never waivers is John Hancock Funds' commitment to placing the
needs of our shareholders above all else. We are all dedicated to the task
of working with you and your financial advisors to help you reach your
long-term financial goals. It is the foundation of our relationship with
you.
Sincerely,
/S/ JAMES A. SHEPHERDSON
James A. Shepherdson,
Chief Executive Officer
This commentary reflects the CEO's views as of March 31, 2004. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
the maximum
current income
that is consistent
with maintaining
liquidity and
preserving capital.
The Fund intends
to maintain a
stable $1 share
price.
Over the last twelve months
* Money market yields continued to fall to 46-year lows as the Federal
Reserve cut rates again last June when concerns about the economy's
strength and the Iraq war prevailed.
* Slack demand also depressed money market yields when investors shifted to
longer-term securities and the rebounding stock market in 2003.
* The Fund sought higher yields by extending its maturity and investing in
callable and floating-rate securities.
[Bar chart with heading "John Hancock Money Market Fund." Under the heading
is a note that reads "Fund performance for the year ended March 31, 2004."
The chart is scaled in increments of 0.25% with 0.00% at the bottom and
0.50% at the top. The first bar represents the 0.21% total return for Class
A shares. The second bar represents the 0.12% total return for Class B
shares. The third bar represents the 0.12% total return for Class C shares.
A note below the chart reads "The total returns for the Fund are at net
asset value with all distributions reinvested. Past performance is no
guarantee of future results."]
[Bar chart with heading "7-day effective yield." Under the heading is a
note that reads "As of March 31, 2004." The chart is scaled in increments
of 0.25% with 0.00% at the bottom and 0.50% at the top. The first bar
represents the 0.18% total return for Class A shares. The second bar
represents the 0.13% total return for Class B shares. The third bar
represents the 0.13% total return for Class C shares."]
1
BY DAVID A. BEES FOR THE PORTFOLIO MANAGEMENT TEAM
MANAGERS'
REPORT
JOHN HANCOCK
Money Market Fund
During the 12 months ended March 31, 2004, money market yields continued to
fall and reached 46-year lows, despite a reviving economy. The period began
with lingering concerns about whether the U.S. economy was on a sustainable
path to recovery and about the beginning of the Iraq war. This uncertainty
prompted the Federal Reserve Board to cut the federal funds rate banks
charge each other for overnight loans from 1.25% to 1% at its June 2003
meeting. Yields on money market securities followed suit.
As the summer progressed, the economy began to show signs of a turnaround,
highlighted by its 8% average annual growth in the third quarter of 2003
and its 4% annual growth in the fourth quarter. The economy was sparked by
continued low interest rates, the U.S. jobless rate falling from a
nine-year high of 6.4% in July 2003 to 5.6% in March 2004, increased
capital spending by corporate America and government tax cuts. In October,
these positive developments prompted the Federal Reserve to adopt a more
positive stance on the economy, shifting from a greater concern about
deflation to a balanced view of the risks between deflation and inflation.
"...money market
yields continued to
fall and reached
46-year lows, despite
a reviving economy."
Despite the improving economy, which initially prompted expectations that
the next Fed move would be to raise rates, the Fed took no further action
through the end of the period in March 2004. It remained concerned about
the weak labor market, even with the drop in unemployment, because this
lack of job growth cast some doubt on the sustainability of the economic
recovery. This, combined with low inflation, caused the Federal Reserve to
hold short-term rates steady and suggest it was not inclined to raise rates
until the labor picture improved. The combination of a "jobless recovery"
and stable Fed policy caused investors to push interest rates lower,
especially in the second half of the period.
2
Short-term money market yields also experienced downward pressure from
falling demand, as investors grew more confident about the economy in 2003
and moved into longer-term investments and the stock market, which
flourished in 2003.
[Photo of David Bees, flush right at top of page.]
FUND YIELD AND PERFORMANCE
On March 31, 2004, John Hancock Money Market Fund's Class A, Class B and
Class C shares had 7-day effective yields of 0.18%, 0.13% and 0.13%,
respectively. By comparison, the average taxable money market fund had a
7-day effective yield of 0.35%, according to Lipper, Inc.
For the year ended March 31, 2004, the Fund's Class A, Class B and Class C
shares posted total returns of 0.21%, 0.12% and 0.12%, respectively, at net
asset value, compared with the 0.38% return of the average taxable money
market fund, according to Lipper, Inc.1 Keep in mind that your net asset
value return will be different from the Fund's performance if you were not
invested in the Fund for the entire period and did not reinvest all
distributions.
FUND MOVES
As the period began amid economic and war uncertainties 12 months ago, the
money market yield curve was essentially flat, meaning investors received
no extra benefit in the form of higher yields for locking up their money
for longer periods. As the year progressed and the economic picture
brightened, short-term rates fell more than longer-term rates, causing the
yield curve to steepen and providing investors with higher yielding
opportunities by investing for a longer term. In anticipation of this
trend, we began to extend the Fund's maturity to slightly longer than
average at the beginning of the fiscal year and maintained this posture
over the course of the year.
"...we expect money
market rates to stay
low in the near term,
although we do believe
they will eventually rise
given the economy's
recent strength."
We also focused more on securities that would provide extra yield in this
low-rate environment, including asset-backed commercial paper and tier 2
securities for the shorter term, and top tier callable government
securities with maturities of one year
3
for the longer term. We also continued to invest in floating-rate
securities that have the advantage of resetting their interest rates on a
monthly or quarterly basis, providing the Fund with the flexibility to
capture the benefits of a rise in rates.
[Table at top left-hand side of page entitled "Top five industry groups."
The first listing is Finance 23%, the second is U.S. government agencies
16%, the third is Banks--United States 15%, the fourth is Broker services
10% and the fifth is Banks--foreign 9%.]
OUTLOOK
With the Federal Reserve maintaining its accommodative stance toward
interest rates, we expect money market rates to stay low in the near term,
although we do believe they will eventually rise given the economy's recent
strength. The timing of this uptick, however, remains unclear. It will
depend on key economic data, especially jobs creation -- particularly in
the manufacturing area -- and on the impact of other potential pitfalls,
such as rising oil prices and other geopolitical concerns, that could
weaken the pace of economic recovery. In this environment, we'll keep a
close eye on the economic data and the Fed. For now, we will maintain our
investments in floating-rate securities to allow us to benefit from an
eventual climb in rates, while at the same time maintaining liquidity and
striving to preserve capital.
[Pie chart in middle of page with heading "Portfolio diversification As a
percentage of net assets on 3-31-04." The chart is divided into four
segments (from top to left): Corporate interest-bearing obligations 56%,
Commercial paper 16%, U.S. government obligations 16% and Joint repurchase
agreement and other 12%.]
This commentary reflects the views of the portfolio management team through
the end of the Fund's period discussed in this report. The team's
statements reflect their own opinions. As such, they are in no way
guarantees of future events, and are not intended to be used as investment
advice or a recommendation regarding any specific security. They are also
subject to change at any time as market and other conditions warrant.
The Fund is neither insured nor guaranteed by U.S. government. 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.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
4
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
March 31, 2004
This schedule is divided into four types of short-term investments,
which are further broken down by industry group.
ISSUER, DESCRIPTION, INTEREST QUALITY PAR VALUE
MATURITY DATE RATE RATING* (000s OMITTED) VALUE
COMMERCIAL PAPER 15.68% $48,983,639
(Cost $48,983,639)
Automobiles/Trucks 0.96% 2,998,800
Daimlerchrysler NA, 04-13-04 1.200% Tier 2 $3,000 2,998,800
Finance 6.40% 19,994,812
Galleon Capital Corp., 04-21-04 (r) 1.030 Tier 1 8,000 7,995,422
General Motors Acceptance Corp., 04-07-04 1.220 Tier 2 3,000 2,999,390
Principal Financial Services, Inc., 04-01-04 (R) 1.030 Tier 1 9,000 9,000,000
Other 3.52% 10,994,702
Yorktown Capital, LLC, 04-12-04 (r) 1.020 Tier 1 5,000 4,998,442
Yorktown Capital, LLC, 04-23-04 (r) 1.020 Tier 1 6,000 5,996,260
Trade Receivables 4.80% 14,995,325
Barton Capital Corp., 04-12-04 (r) 1.020 Tier 1 15,000 14,995,325
CORPORATE INTEREST-BEARING OBLIGATIONS 55.92% $174,605,280
(Cost $174,605,280)
Aerospace 0.23% 723,116
United Technologies Corp., 11-15-04 6.625 Tier 1 700 723,116
Banks -- Foreign 8.71% 27,203,359
Abbey National Treasury Services Plc, 11-19-04 1.015# Tier 1 6,000 5,999,460
Barclays Bank Plc, 09-07-04 1.110 Tier 1 4,000 4,000,515
Barclays Bank Plc, 11-08-04 1.030# Tier 1 2,200 2,199,604
Credit Suisse First Boston (USA), Inc., 09-07-04 1.420# Tier 1 2,500 2,503,784
Deutsche Bank AG, 04-08-04 1.070 Tier 1 8,000 8,000,029
Societe Generale (New York Branch), 11-01-04 1.036# Tier 1 4,500 4,499,967
Banks -- United States 14.87% 46,431,004
Bank of America Corp., 10-22-04 1.400# Tier 1 15,300 15,329,705
Bank One National Assn., 04-30-04 1.310# Tier 1 8,000 8,001,780
First Union Corp., 06-15-04 6.625 Tier 1 1,000 1,011,138
J.P. Morgan Chase & Co., 05-20-04 1.290# Tier 1 1,000 1,000,290
J.P. Morgan Chase & Co., 07-07-04 1.060# Tier 1 450 450,000
J.P. Morgan Chase & Co., 09-15-04 7.625 Tier 1 1,200 1,234,538
See notes to
financial statements.
5
FINANCIAL STATEMENTS
ISSUER, DESCRIPTION, INTEREST QUALITY PAR VALUE
MATURITY DATE RATE RATING* (000s OMITTED) VALUE
Banks -- United States (continued)
KeyCorp, 07-01-04 8.000% Tier 1 $3,300 $3,353,893
U.S. Bancorp, 05-15-04 6.000 Tier 1 1,000 1,005,854
U.S. Bancorp, 06-15-04 6.500 Tier 1 1,000 1,010,982
Wachovia Corp., 06-21-04 6.700 Tier 1 1,020 1,032,331
Wells Fargo & Co., 05-10-04 1.217# Tier 1 5,000 5,001,002
Wells Fargo & Co., 06-17-04 1.040# Tier 1 8,000 7,999,491
Broker Services 9.61% 29,988,778
Bear Stearns Cos., Inc. (The), 06-01-04 1.540# Tier 1 450 450,289
Bear Stearns Cos., Inc. (The), 09-21-04 1.500# Tier 1 4,500 4,509,188
Bear Stearns Cos., Inc. (The), 10-22-04 1.570# Tier 1 5,000 5,013,704
Goldman Sachs Group, Inc. (The), 05-28-04 1.370# Tier 1 4,500 4,502,147
Goldman Sachs Group, Inc. (The), 01-28-05 7.500 Tier 1 1,800 1,888,471
Merrill Lynch & Co., Inc., 05-21-04 1.420# Tier 1 1,000 1,000,498
Merrill Lynch & Co., Inc., 06-15-04 5.350 Tier 1 8,770 8,843,951
Merrill Lynch & Co., Inc., 01-13-05 1.460# Tier 1 3,000 3,008,875
Merrill Lynch & Co., Inc., 02-03-05 1.380# Tier 1 770 771,655
Chemicals 0.33% 1,029,598
duPont (E.I.) de Nemours & Co., 10-15-04 6.750 Tier 1 1,000 1,029,598
Consumer Products Misc. 0.33% 1,034,361
Fortune Brands, Inc., 11-01-04 (R) 7.125 Tier 1 1,000 1,034,361
Finance 16.66% 52,025,884
American General Finance Corp., 08-06-04 1.300# Tier 1 3,250 3,252,582
American Honda Finance Corp., 07-09-04 1.090# Tier 1 18,500 18,500,000
Associates Corp. of North America, 04-20-04 5.800 Tier 1 10,400 10,424,916
CIT Group Inc. (The), 10-15-04 7.125 Tier 1 3,161 3,260,536
General Electric Capital Corp., 06-11-04 1.230# Tier 1 10,000 10,004,070
Household Finance Corp., 05-01-04 6.000 Tier 1 2,500 2,509,916
International Lease Finance Corp., 06-07-04 5.500 Tier 1 1,500 1,512,122
Principal Financial Services, Inc., 08-15-04 (R) 7.950 Tier 1 2,500 2,561,742
Insurance 0.32% 1,000,974
AIG SunAmerica Financing VIII, 11-15-04 (R) 1.215# Tier 1 1,000 1,000,974
Mortgage Banking 4.86% 15,168,206
Countrywide Home Loans, Inc., 06-15-04 6.850 Tier 1 15,000 15,168,206
U.S. GOVERNMENT OBLIGATIONS 15.70% $49,007,900
(Cost $49,007,900)
Government -- U.S. Agencies 15.70% 49,007,900
Federal Home Loan Bank, 03-11-05 1.440 Tier 1 5,000 5,000,000
Federal Home Loan Bank, 03-25-05 1.370 Tier 1 3,000 3,000,000
Federal Home Loan Bank, 04-11-05 1.300 Tier 1 5,000 5,000,000
Federal Home Loan Bank, 04-15-05 1.350 Tier 1 4,000 4,000,000
Federal Home Loan Bank, 04-27-05 1.300 Tier 1 2,000 2,000,000
See notes to
financial statements.
6
FINANCIAL STATEMENTS
ISSUER, DESCRIPTION, INTEREST QUALITY PAR VALUE
MATURITY DATE RATE RATING* (000s OMITTED) VALUE
Government -- U.S. Agencies (continued)
Federal Home Loan Mortgage Corp., 04-15-04 3.750% Tier 1 $8,000 $8,007,900
Federal Home Loan Mortgage Corp., 02-14-05 1.190# Tier 1 5,000 5,000,000
Federal National Mortgage Assn., 02-18-05 1.375 Tier 1 10,000 10,000,000
Federal National Mortgage Assn., 03-04-05 1.340 Tier 1 5,000 5,000,000
Federal National Mortgage Assn., 03-29-05 1.400 Tier 1 2,000 2,000,000
JOINT REPURCHASE AGREEMENT 13.07% $40,798,000
(Cost $40,798,000)
Investment in a joint repurchase agreement
transaction with Barclays Capital, Inc. --
Dated 03-31-04, due 04-01-04 (secured by
U.S. Treasury Inflation Indexed Bond, 3.675%,
due 04-15-28) 1.020 40,798 40,798,000
TOTAL INVESTMENTS 100.37% $313,394,819
OTHER ASSETS AND LIABILITIES, NET (0.37%) ($1,149,118)
TOTAL NET ASSETS 100.00% $312,245,701
* Quality ratings are unaudited and indicate the categories of eligible
securities, as defined by Rule 2a-7 of the Investment Company Act of 1940,
owned by the Fund.
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such security may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. Rule 144A
securities amounted to $13,597,077 or 4.35% of the Fund's net assets as of
March 31, 2004.
# Represents rate in effect on March 31, 2004.
(r) Direct placement securities are restricted to resale. The Fund has
limited rights to registration under the Securities Act of 1933 with
respect to these restricted securities.
Additional information on each restricted security is as follows:
VALUE AS A
PERCENTAGE
MATURITY ACQUISITION ACQUISITION OF FUND'S VALUE AS OF
ISSUER, DESCRIPTION DATE DATE COST NET ASSETS MARCH 31,2004
- -------------------------------------------------------------------------------------------------------------------
Barton Capital Corp.,
Commercial Paper 04-12-04 03-10-04 and 03-18-04 $14,988,242 4.80% $14,995,325
Galleon Capital Corp.,
Commercial Paper 04-21-04 03-29-04 7,994,736 2.56 7,995,422
Yorktown Capital, LLC,
Commercial Paper 04-12-04 03-11-04 4,995,467 1.60 4,998,442
Yorktown Capital, LLC,
Commercial Paper 04-23-04 03-19-04 5,994,050 1.92 5,996,260
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.
See notes to
financial statements.
7
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
March 31, 2004
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $272,596,819) $272,596,819
Joint repurchase agreement (cost $40,798,000) 40,798,000
Cash 444
Receivable for shares sold 4,846
Interest receivable 1,577,752
Other assets 97,322
Total assets 315,075,183
LIABILITIES
Payable for investments purchased 2,000,000
Payable for shares repurchased 335,165
Dividends payable 3,854
Payable to affiliates
Management fee 125,120
Distribution and service fee 8,171
Other 165,947
Other payables and accrued expenses 191,225
Total liabilities 2,829,482
NET ASSETS
Capital paid-in 312,241,216
Accumulated net realized loss on investments (1,191)
Accumulated net investment income 5,676
Net assets $312,245,701
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($211,407,130 [DIV] 211,489,291 shares) $1.00
Class B ($89,089,346 [DIV] 89,109,635 shares) $1.00
Class C ($11,749,225 [DIV] 11,749,485 shares) $1.00
MAXIMUM OFFERING PRICE PER SHARE
Class C ($1.00 [DIV] 99%) $1.01
See notes to
financial statements.
8
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
March 31, 2004
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in oper-
ating the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Interest $4,367,715
Total investment income 4,367,715
EXPENSES
Investment management fee 1,886,030
Class A distribution and service fee 602,012
Class B distribution and service fee 1,228,883
Class C distribution and service fee 135,131
Transfer agent fee 1,100,525
Accounting and legal services fee 113,162
Custodian fee 78,938
Registration and filing fee 65,494
Printing 42,076
Auditing fee 31,950
Miscellaneous 22,606
Trustees' fee 17,806
Legal fee 8,630
Federal excise tax 5,676
Interest 1,489
Total expenses 5,340,408
Less expense reductions (1,649,589)
Net expenses 3,690,819
Net investment income 676,896
REALIZED LOSS
Net realized loss on investments (1,191)
Increase in net assets from operations $675,705
See notes to
financial statements.
9
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
These Statements
of Changes in
Net Assets show
how the value
of the Fund's
net assets has
changed during
the last two
periods. The dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions
paid to share-
holders and any
increase or
decrease in
money share-
holders invested
in the Fund.
YEAR YEAR
ENDED ENDED
3-31-03 3-31-04
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income $2,216,154 $676,896
Net realized loss -- (1,191)
Increase in net assets
resulting from operations 2,216,154 675,705
Distributions to shareholders
From net investment income
Class A (2,038,032) (511,116)
Class B (156,964) (152,835)
Class C (21,158) (16,770)
(2,216,154) (680,721)
From Fund share transactions 33,902,188 (142,604,705)
NET ASSETS
Beginning of period 420,953,234 454,855,422
End of period 1 $454,855,422 $312,245,701
1 Includes accumulated net investment income of $3,825 and $5,676, respectively.
See notes to
financial statements.
10
FINANCIAL HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 3-31-00 1 3-31-01 1 3-31-02 1 3-31-03 3-31-04
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income 2 0.04 0.05 0.02 0.01 -- 3
Less distributions
From net investment income (0.04) (0.05) (0.02) (0.01) -- 3
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4,5 (%) 4.45 5.51 2.41 0.75 0.21
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $362 $295 $264 $271 $211
Ratio of expenses
to average net assets (%) 0.91 0.95 0.90 0.94 0.94
Ratio of adjusted expenses
to average net assets 6 (%) 1.11 1.15 1.10 1.14 1.14
Ratio of net investment income
to average net assets (%) 4.40 5.43 2.40 0.75 0.21
See notes to
financial statements.
11
FINANCIAL HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 3-31-00 1 3-31-01 1 3-31-02 1 3-31-03 3-31-04
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income 2 0.04 0.05 0.02 -- 3 -- 3
Less distributions
From net investment income (0.04) (0.05) (0.02) -- 3 -- 3
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4,5 (%) 3.59 4.63 1.55 0.10 0.12
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $158 $162 $142 $166 $89
Ratio of expenses
to average net assets (%) 1.74 1.79 1.75 1.59 1.04
Ratio of adjusted expenses
to average net assets 6 (%) 1.84 1.89 1.85 1.89 1.89
Ratio of net investment income
to average net assets (%) 3.56 4.54 1.52 0.10 0.12
See notes to
financial statements.
12
FINANCIAL HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 3-31-00 1 3-31-01 1 3-31-02 1 3-31-03 3-31-04
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income 2 0.04 0.05 0.02 -- 3 -- 3
Less distributions
From net investment income (0.04) (0.05) (0.02) -- 3 -- 3
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4,5 (%) 3.58 4.63 1.55 0.11 0.12
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $6 $13 $16 $18 $12
Ratio of expenses
to average net assets (%) 1.76 1.79 1.75 1.61 1.04
Ratio of adjusted expenses
to average net assets 6 (%) 1.86 1.89 1.85 1.88 1.89
Ratio of net investment income
to average net assets (%) 3.67 4.59 1.46 0.10 0.12
1 Audited by previous auditor.
2 Based on the average of the shares outstanding.
3 Less than $0.01 per share.
4 Assumes dividend reinvestment and does not reflect the effect of the
sales charges.
5 Total returns would have been lower had certain expenses not been reduced
during the periods shown.
6 Does not take into consideration expense reductions during the periods
shown.
See notes to
financial statements.
13
NOTES TO
STATEMENTS
NOTE A
Accounting policies
John Hancock Money Market Fund (the "Fund") is a diversified series of John
Hancock Current Interest, an open-end management investment company
registered under the Investment Company Act of 1940. The investment
objective of the Fund is to seek the maximum current income that is
consistent with maintaining liquidity and preserving capital.
The Trustees have authorized the issuance of multiple classes of shares of
the Fund, designated as Class A, Class B and Class C shares. The shares of
each class represent an interest in the same portfolio of investments of
the Fund and have equal rights as to voting, redemptions, dividends and
liquidation, except that certain expenses, subject to the approval of the
Trustees, may be applied differently to each class of shares, in accordance
with current regulations of the Securities and Exchange Commission and the
Internal Revenue Service. Shareholders of a class that bears distribution
and service expenses under the terms of a distribution plan have exclusive
voting rights to that distribution plan.
Significant accounting policies
of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio 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, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley
Financial Group, LLC, may participate in a joint repurchase agreement
transaction. Aggregate cash balances are invested in one or more large
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.
14
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net asset value of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net asset value of each class and the
specific expense rate(s) applicable to each class.
Expenses
The majority of expenses are directly identifiable to an individual fund.
Expenses that 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
funds.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $1,191 of a capital loss
carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. To the extent that such carryforward is
used by the Fund, no capital gain distributions will be made. The entire
loss carryforward expires on March 31, 2012.
Distributions
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. During the year ended March 31, 2004, the tax
character of distributions paid was as follows: ordinary income, $680,721.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time and are in the same amount,
except for the effect of expenses that may be applied differently to each
class.
As of March 31, 2004, the components of distributable earnings, on a tax
basis, included $68,888 of undistributed ordinary income.
Such distributions and distributable earnings, 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.
Distributions in excess of tax basis earnings and profits, if any, are
reported in the Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of America,
incorporates estimates made by management in determining the reported
amount 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
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to
the Adviser 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, (c) 0.375% of the next $250,000,000, (d) 0.35% of
the next $500,000,000, (e) 0.325% of the next $500,000,000, (f) 0.30% of
the next $500,000,000 and (g) 0.275% of the Fund's average daily net asset
value in excess of $2,500,000,000.
The Adviser has agreed to limit the management fee to 0.40% of the Fund's
first $750,000,000 average daily net asset value, at least until July 31,
2004. The management fee cannot be reinstated to the original contracted
amounts without the Trustees' consent. Accordingly, the expense reductions
15
related to the management fee limitation amounted to $377,206 for the year
ended March 31, 2004.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"),
a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution
Plans with respect to Class A, Class B and Class C, pursuant to Rule 12b-1
under the Investment Company Act of 1940, to reimburse JH Funds for the
services it provides as distributor of shares of the Fund. Accordingly, the
Fund makes monthly payments to JH Funds at an annual rate not to exceed
0.25% of Class A average daily net asset value and 1.00% of Class B and
Class C average daily net asset value. JH Funds has agreed to limit the
distribution and service ("12b-1") fee for Class A to 0.15% of the Class A
average daily net asset value, at least until July 31, 2004. JH Funds has
also agreed to limit the 12b-1 fees for Class B and Class C as follows: to
0.35% of the Class B and Class C average daily net assets, effective from
January 14, 2003, to June 26, 2003; and to 0.20% of the Class B and Class C
average daily net assets, effective June 26, 2003. The 12b-1 fee
limitations for Class B and Class C may be discontinued at any time.
Accordingly, the expense reductions related to the 12b-1 fee limitations
amounted to $240,805 for Class A, $929,679 for Class B and $101,899 for
Class C, for the year ended March 31, 2004. A maximum of 0.25% of 12b-1
payments may be service fees, as defined by the Conduct Rules of the
National Association of Securities Dealers. Under the Conduct Rules,
curtailment of a portion of the Fund's 12b-1 payments could occur under
certain circumstances.
Class C shares are assessed up-front sales charges. During the year ended
March 31, 2004, JH Funds received net up-front sales charges of $25,544
with regard to sales of Class C shares. Of this amount, $21,238 was paid as
sales commissions to unrelated broker-dealers and $4,306 was paid as sales
commissions to sales personnel of Signator Investors ("Signator
Investors"), a related broker-dealer. The Adviser's indirect parent, John
Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder
of Signator Investors.
Class B shares that are redeemed within six years of purchase are subject
to a contingent deferred sales charge ("CDSC") at declining rates,
beginning at 5.00% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Class C shares that are redeemed within one year of purchase are subject to
a CDSC at a rate of 1.00% 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 CDSCs are paid to JH Funds and are used, in
whole or in part, to defray its expenses for providing distribution-related
services to the Fund in connection with the sale of Class B and Class C
shares. During the year ended March 31, 2004, CDSCs received by JH Funds
amounted to $665,495 for Class B shares and $17,001 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly
transfer agent fee at an annual rate of 0.015% of the Fund's average daily
net asset value, plus a fee based on the number of shareholder accounts and
reimbursement for certain out-of-pocket expenses, aggregated and allocated
to each class on the basis of its relative net asset value.
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 approximately 0.03% of the average daily net asset
value of the Fund. The Fund also paid the Adviser the amount of $1,162 for
certain publishing services, included in the printing fees.
16
Mr. James A. Shepherdson is the director and/or officer of the Adviser
and/or its affiliates, as well as Trustee of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may
elect to defer, for tax purposes, their receipt of this compensation under
the John Hancock Group of Funds Deferred Compen sation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its
liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other
asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investments, as well as any unrealized
gains or losses. The Deferred Compensation Plan investments had no impact
on the operations of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value. Analysis of Fund share transactions is reported at $1 per
share. The Fund has an unlimited number of shares authorized with no par
value.
YEAR ENDED YEAR ENDED
3-31-03 3-31-04
CLASS A SHARES
Sold $309,350,628 $216,281,496
Distributions reinvested 1,957,626 488,688
Repurchased (304,129,513) (276,136,062)
Net increase (decrease) $7,178,741 ($59,365,878)
CLASS B SHARES
Sold $187,011,944 $69,155,795
Distributions reinvested 141,507 137,586
Repurchased (162,960,444) (145,961,565)
Net increase (decrease) $24,193,007 ($76,668,184)
CLASS C SHARES
Sold $34,073,192 $34,199,078
Distributions reinvested 19,983 15,441
Repurchased (31,562,735) (40,785,162)
Net increase (decrease) $2,530,440 ($6,570,643)
NET INCREASE (DECREASE) $33,902,188 ($142,604,705)
NOTE D
Investment
transactions
Purchases and proceeds from sales or maturities of securities, including
discount earned on investment securities other than short-term securities,
and obligations of the U.S. government, during the year ended March 31,
2004, aggregated $444,305,052 and $502,394,868, respectively.
The cost of investments owned on March 31, 2004, for federal income tax
purposes, was $313,394,819.
NOTE E
Reclassification
of accounts
During the year ended March 31, 2004, the Fund reclassified amounts to
reflect an increase in accumulated net investment income of $5,676 and a
17
decrease in capital paid-in of $5,676. This represents the amounts
necessary to report these balances on a tax basis, excluding certain
temporary differences, as of March 31, 2004. Additional adjustments may be
needed in subsequent reporting periods. These reclassifications, which have
no impact on the net asset value of the Fund, are primarily attributable to
certain differences in the computation of distributable income and capital
gains under federal tax rules versus accounting principles generally
accepted in the United States of America, and book and tax differences in
accounting for federal excise tax. The calculation of net investment income
(loss) per share in the Fund's Financial Highlights excludes these
adjustments.
18
AUDITORS'
REPORT
Report of
Deloitte & Touche
LLP, Independent
Auditors
To The Board of Trustees and Shareholders of
John Hancock Money Market Fund,
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of John Hancock Money Market Fund
(the "Fund") as of March 31, 2004, and the related state ment of operations
for the year then ended, the statement of changes in net assets for each of
the years in this two-year period ended March 31, 2004 and 2003,
respectively, and the financial highlights for each of the years in the
five-year period ended March 31, 2004. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
respon sibility 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 of America. 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 at March 31, 2004, 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Fund as of
March 31, 2004, the results of its operations, the changes in its net
assets and its financial highlights for the respective stated periods, in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 13, 2004
19
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund, if any, paid during its
taxable year ended March 31, 2004.
The Fund hereby designates the maximum amount allowable of its net taxable
income as qualified dividend income, as provided in the Jobs and Growth Tax
Relief Reconciliation Act of 2003. This amount will be reflected on Form
1099-DIV for the calendar year 2004.
Shareholders will be mailed a 2004 U.S. Treasury Department Form 1099-DIV
in January 2005. This will reflect the total of all distributions that are
taxable for calendar year 2004.
20
TRUSTEES & OFFICERS
This chart provides information about the Trustees and Officers who oversee
your John Hancock fund. Officers elected by the Trustees manage the
day-to-day operations of the Fund and execute policies formulated by the
Trustees.
INDEPENDENT TRUSTEES
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
James F. Carlin, Born: 1940 1994 31
Director and Treasurer, Alpha Analytical Inc. (analytical laboratory) (since
1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency, Inc. (since
1995); Part Owner and Vice President, Mone Lawrence Carlin Insurance
Agency, Inc. (since 1996); Director and Treasurer, Rizzo Associates (until 2000);
Chairman and CEO, Carlin Consolidated, Inc. (management/investments)
(since 1987); Director and Partner, Proctor Carlin & Co., Inc. (until 1999); Trustee,
Massachusetts Health and Education Tax Exempt Trust (since 1993); Director
of the following: Uno Restaurant Corp. (until 2001), Arbella Mutual (insurance)
(until 2000), HealthPlan Services, Inc. (until 1999), Flagship Healthcare, Inc.
(until 1999), Carlin Insurance Agency, Inc. (until 1999); Chairman,
Massachusetts Board of Higher Education (until 1999).
William H. Cunningham, Born: 1944 1994 31
Former Chancellor, University of Texas System and former President of the
University of Texas, Austin, Texas; Chairman and CEO, IBT Technologies
(until 2001); Director of the following: The University of Texas Investment
Management Company (until 2000), Hire.com (since 2000), STC Broadcasting,
Inc. and Sunrise Television Corp. (until 2001), Symtx, Inc. (since 2001), Adorno/
Rogers Technology, Inc. (since 2001), Pinnacle Foods Corporation (since 2001),
rateGenius (since 2001), Jefferson-Pilot Corporation (diversified life insurance company)
(since 1985), New Century Equity Holdings (formerly Billing Concepts) (until 2001),
eCertain (until 2001), ClassMap.com (until 2001), Agile Ventures (until 2001),
LBJ Foundation (until 2000), Golfsmith International, Inc. (until 2000), Metamor
Worldwide (until 2000), AskRed.com (until 2001), Southwest Airlines (since 2000)
and Introgen (since 2000); Advisory Director, Q Investments (since 2000); Advisory
Director, Chase Bank (formerly Texas Commerce Bank -- Austin) (since 1988),
LIN Television (since 2002) and WilTel Communications (since 2002).
Ronald R. Dion, Born: 1946 1998 31
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College.
21
INDEPENDENT TRUSTEES (continued)
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
Charles L. Ladner, 2 Born: 1938 1994 31
Chairman and Trustee, Dunwoody Village, Inc. (retirement services);
Senior Vice President and Chief Financial Officer, UGI Corporation
(Public Utility Holding Company) (retired 1998); Vice President and
Director for AmeriGas, Inc. (retired 1998); Director of AmeriGas
Partners, L.P. (until 1997) (gas distribution); Director, EnergyNorth, Inc.
(until 1995); Director, Parks and History Association (since 2001).
Steven Pruchansky, Born: 1944 1994 31
Chairman and Chief Executive Officer, Greenscapes of Southwest
Florida, Inc. (since 2000); Director and President, Greenscapes of
Southwest Florida, Inc. (until 2000); Managing Director, JonJames, LLC
(real estate) (since 2001); Director, First Signature Bank & Trust Company
(until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
Norman H. Smith, Born: 1933 1994 31
Lieutenant General, United States Marine Corps; Deputy Chief of Staff for
Manpower and Reserve Affairs, Headquarters Marine Corps; Commanding
General III Marine Expeditionary Force/3rd Marine Division (retired 1991).
John P. Toolan, 2 Born: 1930 1994 31
Director, The Smith Barney Muni Bond Funds, The Smith Barney Tax-Free
Money Funds, Inc., Vantage Money Market Funds (mutual funds), The
Inefficient-Market Fund, Inc. (closed-end investment company); Chairman,
Smith Barney Trust Company of Florida (retired 1991); Director, Smith
Barney, Inc., Mutual Management Company and Smith Barney Advisers, Inc.
(investment advisers) (retired 1991); Senior Executive Vice President, Director
and member of the Executive Committee, Smith Barney, Harris Upham & Co.,
Incorporated (investment bankers) (until 1991).
INTERESTED TRUSTEE 3
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
James A. Shepherdson, Born: 1952 2004 51
Trustee, President and Chief Executive Officer
Executive Vice President, Manulife Financial Corporation; Chairman,
Director, President and Chief Executive Officer, John Hancock Advisers,
LLC and The Berkeley Group; Chairman, Director, President and Chief
Executive Officer, John Hancock Funds, LLC; Chairman, President,
Director and Chief Executive Officer, Sovereign Asset Management
Corporation ("SAMCorp"); President, John Hancock Retirement
Services, John Hancock Life Insurance Company (until 2004); Chairman,
Essex Corporation (until 2004); Co-Chief Executive Officer, MetLife
Investors Group (until 2003); Senior Vice President, AXA/Equitable
Insurance Company (until 2000).
22
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE
POSITION(S) HELD WITH FUND OFFICER
PRINCIPAL OCCUPATION(S) AND OF FUND
DIRECTORSHIPS DURING PAST 5 YEARS SINCE
Richard A. Brown, Born: 1949 2000
Senior Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock
Funds and The Berkeley Group; Second Vice President and Senior Associate Controller,
Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001).
William H. King, Born: 1952 1994
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each
of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001).
Susan S. Newton, Born: 1950 1994
Senior Vice President, Secretary and Chief Legal Officer
Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each
of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President,
Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital.
The business address for all Trustees and Officers is 101 Huntington
Avenue, Boston, Massachusetts 02199.
The Statement of Additional Information of the Fund includes additional
information about members of the Board of Trustees of the Fund and is
available, without charge, upon request, by calling 1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his or her
successor is elected.
2 Member of Audit Committee.
3 Interested Trustees hold positions with the Fund's investment adviser,
underwriter and certain other affiliates.
23
OUR FAMILY
OF FUNDS
- ----------------------------------------------------------------
Equity Balanced Fund
Classic Value Fund
Core Equity Fund
Focused Equity Fund
Growth Trends Fund
International Fund
Large Cap Equity Fund
Large Cap Growth Fund
Large Cap Select Fund
Mid Cap Growth Fund
Multi Cap Growth Fund
Small Cap Equity Fund
Small Cap Growth Fund
Sovereign Investors Fund
U.S. Global Leaders Growth Fund
- ----------------------------------------------------------------
Sector Biotechnology Fund
Financial Industries Fund
Health Sciences Fund
Real Estate Fund
Regional Bank Fund
Technology Fund
- ----------------------------------------------------------------
Income Bond Fund
Government Income Fund
High Income Fund
High Yield Fund
Investment Grade Bond Fund
Strategic Income Fund
- ----------------------------------------------------------------
Tax-Free Income California Tax-Free Income Fund
High Yield Municipal Bond Fund
Massachusetts Tax-Free Income Fund
New York Tax-Free Income Fund
Tax-Free Bond Fund
- ----------------------------------------------------------------
Money Market Money Market Fund
U.S. Government Cash Reserve
For more complete information on any John Hancock fund and a prospectus,
which includes charges and expenses, call your financial professional, or
John Hancock Funds at 1-800-225-5291. Please read the prospectus carefully
before investing or sending money.
24
FOR YOUR
INFORMATION
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service
representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
The Fund's voting policies and procedures are available without
charge, upon request:
By phone 1-800-225-5291
On the Fund's Web site www.jhfunds.com/proxy
On the SEC's Web site www.sec.gov
25
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
Money Market Fund.
4400A 3/04
5/04
JOHN HANCOCK
U.S. Government
Cash Reserve
3.31.2004
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of James A. Shepherdson, Chief Executive Officer, flush left next
to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
Fund's investments
page 5
Financial statements
page 8
Trustees & officers
page 17
For your information
page 21
To Our Shareholders,
I am pleased to be writing to you as Chairman, President and Chief
Executive Officer of John Hancock Funds.
As you may know, John Hancock Financial Services, Inc. -- the parent
company of John Hancock Funds -- was acquired by Manulife Financial
Corporation on April 28, 2004. The merger combines two exceptionally strong
companies into a single, integrated, global market leader whose scale and
capital will create an industry pacesetter strengthening our company's
leadership in markets around the world.
Although this change has no impact on the mutual funds you have invested
in, it did bring with it some changes in the executive-level management of
John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step
down as chairman, president and chief executive officer in order to pursue
personal interests. Since her appointment in January 2000, Maureen has
provided John Hancock Funds with strong leadership and steady guidance
through several years of extremely turbulent market and industry
conditions.
Effective May 12, 2004, I have been appointed by your Board of Trustees to
the roles of Trustee, President and Chief Executive Officer of your fund. I
have been in the investment business for over 25 years, most recently as
President of Retirement Services at John Hancock Financial Services. In
that role, my responsibilities included developing and directing the sale
of John Hancock's variable and fixed annuity businesses through a diverse
distribution network of banks and broker/dealers -- including wirehouses,
regional brokerage houses and financial planners.
Prior to joining John Hancock, I served as Co-Chief Executive Officer of
MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my
responsibilities included the design, manufacture and distribution of
MetLife's annuity and life insurance products sold through third-party
channels.
Although there has been a change in executive-level management, the one
thing that never waivers is John Hancock Funds' commitment to placing the
needs of our shareholders above all else. We are all dedicated to the task
of working with you and your financial advisors to help you reach your
long-term financial goals. It is the foundation of our relationship with
you.
Sincerely,
/S/ JAMES A. SHEPHERDSON
James A. Shepherdson,
Chief Executive Officer
This commentary reflects the CEO's views as of March 31, 2004. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
the maximum
current income
that is consistent
with maintaining
liquidity and
preserving capital.
The Fund intends
to maintain a
stable $1 share
price.
Over the last twelve months
* Money market yields continued to fall to 46-year lows as the Federal
Reserve cut rates again last June when concerns about the economy's
strength and the Iraq war prevailed.
* Slack demand also depressed money market yields when investors shifted to
longer-term securities and the rebounding stock market in 2003.
* The Fund sought higher yields by extending its maturity and investing in
callable and floating-rate securities.
[Bar chart with heading "John Hancock U.S. Government Cash Reserve." Under
the heading is a note that reads "Fund performance for the year ended March
31, 2004." The chart is scaled in increments of 0.25% with 0.00% at the
bottom and 0.50% at the top. The bar represents the 0.34% total return for
John Hancock U.S. Government Cash Reserve. A note below the chart reads
"The total returns for the Fund are at net asset value with all
distributions reinvested. Past performance is no guarantee of future
results."]
[Bar chart with heading "7-day effective yield." Under the heading is a note
that reads "As of March 31, 2004." The chart is scaled in increments of
0.25% with 0.00% at the bottom and 0.50% at the top. The bar represents the
0.36% total return for John Hancock U.S. Government Cash Reserve."]
1
BY DAVID A. BEES FOR THE PORTFOLIO MANAGEMENT TEAM
MANAGERS'
REPORT
JOHN HANCOCK
U.S. Government Cash Reserve
During the 12 months ended March 31, 2004, money market yields continued to
fall and reached 46-year lows, despite a reviving economy. The period began
with lingering concerns about whether the U.S. economy was on a sustainable
path to recovery and about the beginning of the Iraq war. This uncertainty
prompted the Federal Reserve Board to cut the federal funds rate banks
charge each other for overnight loans from 1.25% to 1% at its June 2003
meeting. Yields on money market securities followed suit.
As the summer progressed, the economy began to show signs of a turnaround,
highlighted by its 8% annual growth rate in the third quarter of 2003 and
its 4% annual growth in the fourth quarter. The economy was sparked by
continued low interest rates, the U.S. jobless rate falling from a
nine-year high of 6.4% in July 2003 to 5.6% in March 2004, increased
capital spending by corporate America and government tax cuts. In October,
these positive developments prompted the Federal Reserve to adopt a more
positive stance on the economy, shifting from a greater concern about
deflation to a balanced view of the risks between deflation and inflation.
"...money market
yields continued to
fall and reached 46-
year lows, despite a
reviving economy."
Despite the improving economy, which initially prompted expectations that
the next Fed move would be to raise rates, the Fed took no further action
through the end of the period in March 2004. It remained concerned about
the weak labor market, even with the drop in unemployment, because this
lack of job growth cast some doubt on the sustainability of the economic
recovery. This, combined with low inflation, caused the Federal Reserve to
hold short-term rates steady and suggest it was not inclined to raise rates
until the labor picture improved. The combination of a "jobless recovery"
and stable Fed policy
2
caused investors to push interest rates lower, especially in the second
half of the period.
[Photo of David Bees, flush right at top of page.]
Short-term money market yields also experienced downward pressure from
falling demand, as investors grew more confident about the economy in 2003
and moved into longer-term investments and the stock market, which
flourished in 2003.
FUND YIELD AND PERFORMANCE
On March 31, 2004, John Hancock U.S. Government Cash Reserve had a 7-day
effective yield of 0.36%. By comparison, the average U.S. government money
market fund had a 7-day effective yield of 0.34%, according to Lipper, Inc.
For the year ended March 31, 2004, the Fund posted a total return of 0.34%
at net asset value, compared with the 0.40% return of the average U.S.
government money market fund, according to Lipper, Inc. Keep in mind that
your net asset value return will be different from the Fund's performance
if you were not invested in the Fund for the entire period and did not
reinvest all distributions.
FUND MOVES
As the period began amid economic and war uncertainties 12 months ago, the
money market yield curve was essentially flat, meaning investors received
no extra benefit in the form of higher yields for locking up their money
for longer periods. As the year progressed and the economic picture
brightened, short-term rates fell more than longer-term rates, causing the
yield curve to steepen and providing investors with higher yielding
opportunities by investing for a longer term. In anticipation of this
trend, we began to extend the Fund's maturity to slightly longer than
average at the beginning of the fiscal year and maintained this posture
over the course of the year.
"...we expect money
market rates to stay
low in the near term,
although we do believe
they will eventually rise
given the economy's
recent strength."
We also focused more on securities that would provide extra yield in this
low-rate environment, including top-tier callable government securities
with maturities of one year for the longer
3
term. We also continued to invest in floating-rate securities that have the
advantage of resetting their interest rates on a monthly or quarterly
basis, providing the Fund with the flexibility to capture the benefits of a
rise in rates.
OUTLOOK
With the Federal Reserve maintaining its accommodative stance toward
interest rates, we expect money market rates to stay low in the near term,
although we do believe they will eventually rise given the economy's recent
strength. The timing of this uptick, however, remains unclear. It will
depend on key economic data -- especially jobs creation -- particularly in
the manufacturing area, and on the impact of other potential pitfalls, such
as rising oil prices and other geopolitical concerns, that could weaken the
pace of economic recovery. In this environment, we'll keep a close eye on
the economic data and the Fed. For now, we will maintain our investments in
floating-rate securities to allow us to benefit from an eventual climb in
rates, while at the same time maintaining liquidity and striving to
preserve capital.
[Pie chart in middle of page with heading "Portfolio diversification As a
percentage of net assets on 3-31-04." The chart is divided into two
segments (from top to left): U.S. government obligations 89% and Joint
repurchase agreement and other 11%. ]
This commentary reflects the view of the portfolio management team through
the end of the Fund's period discussed in this report. The team's
statements reflect their own opinions. As such, they are in no way
quarantees of future events, and are not inteded to be used as investment
advice or a recommendation regarding any specific security. They are also
subject to change at any time as market and other conditions warrant.
The fund is neither insured nor guaranteed by the U.S. government.
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.
4
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
March 31, 2004
This schedule is a complete list of all securities owned by the Fund. It's
divided into two types of short-term investments: U.S. government
obligations and joint repurchase agreement.
INTEREST PAR VALUE
ISSUER, MATURITY DATE RATE (000s OMITTED) VALUE
U.S. GOVERNMENT OBLIGATIONS 88.89% $50,786,279
(Cost $50,786,279)
Governmental -- U.S. Agencies 88.89% 50,786,279
Federal Farm Credit Bank,
05-05-04 0.995%# $5,000 5,000,000
Federal Home Loan Bank,
04-07-04 0.990 2,000 1,999,670
Federal Home Loan Bank,
04-15-04 3.750 3,510 3,513,644
Federal Home Loan Bank,
04-16-04 4.875 1,605 1,607,549
Federal Home Loan Bank,
05-14-04 4.875 1,820 1,828,044
Federal Home Loan Bank,
05-24-04 6.000 675 679,819
Federal Home Loan Bank,
06-15-04 3.375 500 502,366
Federal Home Loan Bank,
07-30-04 1.170 1,000 1,000,042
Federal Home Loan Bank,
09-09-04 7.460 500 513,833
Federal Home Loan Bank,
09-20-04 0.975# 725 724,773
Federal Home Loan Bank,
10-18-04 4.030 300 304,781
Federal Home Loan Bank,
12-02-04 1.030# 4,000 4,000,267
Federal Home Loan Bank,
03-11-05 1.440 500 500,000
Federal Home Loan Bank,
03-25-05 1.370 1,000 1,000,000
Federal Home Loan Bank,
04-11-05 1.300 2,000 2,000,000
Federal Home Loan Bank,
04-15-05 1.350 1,000 1,000,000
See notes to
financial statements.
5
FINANCIAL STATEMENTS
INTEREST PAR VALUE
ISSUER, MATURITY DATE RATE (000s OMITTED) VALUE
Governmental -- U.S. Agencies (continued)
Federal Home Loan Bank,
04-27-05 1.300% $2,000 $2,000,000
Federal Home Loan Mortgage Corp.,
04-15-04 3.750 2,000 2,001,975
Federal Home Loan Mortgage Corp.,
07-15-04 6.250 2,335 2,369,762
Federal Home Loan Mortgage Corp.,
02-14-05 1.190# 1,000 1,000,000
Federal National Mortgage Assn.,
04-07-04 1.010 2,000 1,999,663
Federal National Mortgage Assn.,
04-15-04 3.625 4,000 4,003,816
Federal National Mortgage Assn.,
05-14-04 5.625 2,700 2,714,752
Federal National Mortgage Assn.,
05-20-04 6.000 500 503,313
Federal National Mortgage Assn.,
07-26-04 6.570 500 508,681
Federal National Mortgage Assn.,
07-27-04 1.180 1,000 999,998
Federal National Mortgage Assn.,
02-11-05 1.040# 2,000 1,999,885
Federal National Mortgage Assn.,
02-18-05 1.375 1,500 1,500,000
Federal National Mortgage Assn.,
03-04-05 1.340 1,000 1,000,000
Federal National Mortgage Assn.,
03-29-05 1.400 1,000 1,000,000
Student Loan Marketing Assn.,
06-30-04 5.000 1,000 1,009,646
See notes to
financial statements.
6
FINANCIAL STATEMENTS
INTEREST PAR VALUE
ISSUER, MATURITY DATE RATE (000s OMITTED) VALUE
JOINT REPURCHASE AGREEMENT 13.92% $7,955,000
(Cost $7,955,000)
Investment in a joint repurchase agreement
transaction with Barclays Capital, Inc. --
Dated 03-31-04, due 04-01-04 (secured by
U.S. Treasury Inflation Indexed Bond, 3.625%,
due 04-15-28) 1.020% $7,955 7,955,000
TOTAL INVESTMENTS 102.81% $58,741,279
OTHER ASSETS AND LIABILITIES, NET (2.81%) ($1,606,300)
TOTAL NET ASSETS 100.00% $57,134,979
# Represents floating rate in effect as of March 31, 2004.
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.
See notes to
financial statements.
7
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
March 31, 2004
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value for
each share.
ASSETS
Investments at value (cost $50,786,279) $50,786,279
Joint repurchase agreement (cost $7,955,000) 7,955,000
Cash 758
Interest receivable 424,987
Other assets 64,717
Total assets 59,231,741
LIABILITIES
Payable for investments purchased 2,000,000
Payable for shares repurchased 155
Dividends payable 674
Payable to affiliates
Management fee 28,274
Other 8,818
Other payables and accrued expenses 58,841
Total liabilities 2,096,762
NET ASSETS
Capital paid-in 57,134,496
Accumulated net investment income 483
Net assets $57,134,979
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
($57,134,979 [DIV] 57,153,023 shares) $1.00
See notes to
financial statements.
8
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
March 31, 2004
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in oper-
ating the Fund for
the period stated.
INVESTMENT INCOME
Interest $711,727
Total investment income 711,727
EXPENSES
Investment management fee 319,033
Distribution and service fee 95,710
Transfer agent fee 72,077
Registration and filing fee 23,026
Custodian fee 22,349
Auditing fee 20,000
Accounting and legal services fee 19,142
Printing 10,517
Trustees' fee 3,034
Miscellaneous 2,517
Legal fee 1,151
Federal excise tax 483
Interest 139
Total expenses 589,178
Less expense reductions (95,710)
Net expenses 493,468
Net investment income 218,259
Increase in net assets from operations $218,259
See notes to
financial statements.
9
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
These Statements
of Changes in
Net Assets show
how the value
of the Fund's
net assets has
changed during
the last two
periods. The dif-
ference reflects
earnings less
expenses, distrib-
utions, if any,
paid to share-
holders and any
increase or
decrease in
money share-
holders invested
in the Fund.
YEAR YEAR
ENDED ENDED
3-31-03 3-31-04
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income $730,476 $218,259
Distributions to shareholders
From net investment income (730,476) (218,259)
From Fund share transactions (21,082,762) (16,330,808)
NET ASSETS
Beginning of period 94,548,549 73,465,787
End of period 1 $73,465,787 $57,134,979
1 Includes accumulated net investment income of none and $483, respectively.
See notes to
financial statements.
10
FINANCIAL HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
COMMON SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 3-31-00 1 3-31-01 1 3-31-02 1 3-31-03 3-31-04
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income 2 0.05 0.06 0.03 0.01 -- 3
Less distributions
From net investment income (0.05) (0.06) (0.03) (0.01) -- 3
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4,5 (%) 4.98 5.82 2.60 0.91 0.34
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $106 $92 $95 $73 $57
Ratio of expenses
to average net assets (%) 0.35 0.64 0.72 0.73 0.77
Ratio of adjusted expenses
to average net assets 6 (%) 0.86 0.91 0.87 0.88 0.92
Ratio of net investment
income to average
net assets (%) 4.90 5.71 2.55 0.92 0.34
1 Audited by previous auditor.
2 Based on the average of the shares outstanding.
3 Less than $0.01 per share.
4 Assumes dividend reinvestment.
5 Total returns would have been lower had certain expenses not been reduced
during the periods shown.
6 Does not take into consideration expense reductions during the periods shown.
See notes to
financial statements.
11
NOTES TO STATEMENTS
NOTE A
Accounting policies
John Hancock U.S. Government Cash Reserve (the "Fund") is a diversified
series of John Hancock Current Interest, an 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
maintaining liquidity and preserving capital.
Significant accounting policies
of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio 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.
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, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more large 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.
Expenses
The majority of expenses are directly identifiable to an individual fund.
Expenses that 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
funds.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required.
Distributions
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
12
monthly. During the year ended March 31, 2004, the tax character of
distributions paid was as follows: ordinary income $218,259.
As of March 31, 2004, the components of distributable earnings on a tax
basis included $16,644 of undistributed ordinary income.
Such distributions and distributable earnings, 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.
Distributions in excess of tax basis earnings and profits, if any, are
reported in the Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of America,
incorporates estimates made by management in determining the reported
amount 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
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to
the Adviser 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, (c) 0.375% of the next $250,000,000, (d) 0.35% of
the next $500,000,000, (e) 0.325% of the next $500,000,000, (f) 0.30% of
the next $500,000,000 and (g) 0.275% of the average daily net asset value
in excess of $2,500,000,000.
The Fund has a Distribution Plan with John Hancock Funds, LLC ("JH Funds"),
a wholly owned subsidiary of the Adviser. The Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940 to reimburse JH Funds for the services it provides as distributor
of shares of the Fund at an annual rate not to exceed 0.15% of the Fund's
average daily net asset value. JH Funds has agreed to suspend the
distribution and service ("12b-1") fee, at least until July 31, 2004.
Accordingly, the reduction in the 12b-1 fee amounted to $95,710 for the
year ended March 31, 2004. JH Funds reserves the right to terminate this
limitation in the future.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of John Hancock Life Insurance
Company. The Fund pays a monthly transfer agent fee at an annual rate of
0.015% of the average daily net asset value, plus a fee based on the number
of shareholder accounts and reimbursement for 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 approximately 0.03% of the average daily net asset
value of the Fund. The Fund also paid the Adviser the amount of $642 for
certain publishing services, included in the printing fees.
Mr. James A. Shepherdson is a director and/or officer of the Adviser and/or
its affiliates, as well as Trustee of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may
elect to defer, for tax purposes, their receipt of this compensation under
the John Hancock Group of Funds Deferred Compen sation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its
liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability are recorded on the Fund's books as an
other asset.
13
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 investments, as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations of
the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value. The Fund has an unlimited number of shares authorized with no
par value.
YEAR ENDED 3-31-03 YEAR ENDED 3-31-04
SHARES AMOUNT SHARES AMOUNT
Shares sold 59,539,540 $59,557,490 32,085,777 $32,085,802
Distributions reinvested 699,319 699,319 208,581 208,581
Shares repurchased (81,339,571) (81,339,571) (48,625,191) (48,625,191)
Net decrease (21,100,712) ($21,082,762) (16,330,833) ($16,330,808)
NOTE D
Investment
transactions
Purchases and proceeds from sales or maturities of securities, including
discount earned on investment securities, during the year ended March 31,
2004, aggregated $2,306,158,206 and $2,320,951,628, respectively.
The cost of investments owned on March 31, 2004, including short-term
investments, for federal income tax purposes, was $58,741,279.
NOTE E
Reclassification
of accounts
During the year ended March 31, 2004, the Fund reclassified amounts to
reflect an increase in accumulated net investment income of $483 and a
decrease in capital paid-in of $483. This represents the amount necessary
to report these balances on a tax basis, excluding certain temporary
differences, as of March 31, 2004. Additional adjustments may be needed in
subsequent reporting periods. These reclassifications, which have no impact
on the net asset value of the Fund, are primarily attributable to certain
differences in the computation of distributable income and capital gains
under federal tax rules versus accounting principles generally accepted in
the United States of America, and book and tax differences in accounting
for federal excise tax. The calculation of net investment income per share
in the Fund's Financial Highlights excludes these adjustments.
14
AUDITORS'
REPORT
Report of
Deloitte & Touche
LLP, Independent
Auditors
To the Board of Trustees and Shareholders of John Hancock U.S. Government
Cash Reserve,
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of John Hancock U.S. Government Cash
Reserve (the "Fund"), one of the portfolios constituting John Hancock
Current Interest, as of March 31, 2004, and the related statement of
operations, the statement of changes in net assets for each of the years in
this two-year period ended March 31, 2004 and 2003, respectively, and the
financial highlights for each of the years in the five-year period ended
March 31, 2004. 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 audit in accordance with auditing standards generally
accepted in the United States of America. 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 at March 31, 2004, 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 audit provides 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 Fund as of March 31, 2004, the results of its operations, the
changes in its net assets, and its financial highlights for each of the two
years in the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 13, 2004
15
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund, if any, paid during its
taxable year ended March 31, 2004.
The Fund hereby designates the maximum amount allowable of its net taxable
income as qualified dividend income as provided in the Jobs and Growth Tax
Relief Reconciliation Act of 2003. This amount will be reflected on Form
1099-DIV for the calendar year 2004.
Shareholders will be mailed a 2004 U.S. Treasury Department Form 1099-DIV
in January 2005. This will reflect the total of all distributions that are
taxable for calendar year 2004.
16
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who oversee
your John Hancock fund. Officers elected by the Trustees manage the
day-to-day operations of the Fund and execute policies formulated by the
Trustees.
INDEPENDENT TRUSTEES
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
James F. Carlin, Born: 1940 1994 31
Director and Treasurer, Alpha Analytical Inc. (analytical laboratory) (since
1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency, Inc. (since
1995); Part Owner and Vice President, Mone Lawrence Carlin Insurance
Agency, Inc. (since 1996); Director and Treasurer, Rizzo Associates (until 2000);
Chairman and CEO, Carlin Consolidated, Inc. (management/investments)
(since 1987); Director and Partner, Proctor Carlin & Co., Inc. (until 1999); Trustee,
Massachusetts Health and Education Tax Exempt Trust (since 1993); Director
of the following: Uno Restaurant Corp. (until 2001), Arbella Mutual (insurance)
(until 2000), HealthPlan Services, Inc. (until 1999), Flagship Healthcare, Inc.
(until 1999), Carlin Insurance Agency, Inc. (until 1999); Chairman,
Massachusetts Board of Higher Education (until 1999).
William H. Cunningham, Born: 1944 1994 31
Former Chancellor, University of Texas System and former President of the
University of Texas, Austin, Texas; Chairman and CEO, IBT Technologies
(until 2001); Director of the following: The University of Texas Investment
Management Company (until 2000), Hire.com (since 2000), STC Broadcasting,
Inc. and Sunrise Television Corp. (until 2001), Symtx, Inc. (since 2001), Adorno/
Rogers Technology, Inc. (since 2001), Pinnacle Foods Corporation (since 2001),
rateGenius (since 2001), Jefferson-Pilot Corporation (diversified life insurance company)
(since 1985), New Century Equity Holdings (formerly Billing Concepts) (until 2001),
eCertain (until 2001), ClassMap.com (until 2001), Agile Ventures (until 2001),
LBJ Foundation (until 2000), Golfsmith International, Inc. (until 2000), Metamor
Worldwide (until 2000), AskRed.com (until 2001), Southwest Airlines (since 2000)
and Introgen (since 2000); Advisory Director, Q Investments (since 2000); Advisory
Director, Chase Bank (formerly Texas Commerce Bank -- Austin) (since 1988),
LIN Television (since 2002) and WilTel Communications (since 2002).
Ronald R. Dion, Born: 1946 1998 31
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College.
17
INDEPENDENT TRUSTEES (continued)
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
Charles L. Ladner, 2 Born: 1938 1994 31
Chairman and Trustee, Dunwoody Village, Inc. (retirement services);
Senior Vice President and Chief Financial Officer, UGI Corporation
(Public Utility Holding Company) (retired 1998); Vice President and
Director for AmeriGas, Inc. (retired 1998); Director of AmeriGas
Partners, L.P. (until 1997) (gas distribution); Director, EnergyNorth, Inc.
(until 1995); Director, Parks and History Association (since 2001).
Steven Pruchansky, Born: 1944 1994 31
Chairman and Chief Executive Officer, Greenscapes of Southwest
Florida, Inc. (since 2000); Director and President, Greenscapes of
Southwest Florida, Inc. (until 2000); Managing Director, JonJames, LLC
(real estate) (since 2001); Director, First Signature Bank & Trust Company
(until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
Norman H. Smith, Born: 1933 1994 31
Lieutenant General, United States Marine Corps; Deputy Chief of Staff for
Manpower and Reserve Affairs, Headquarters Marine Corps; Commanding
General III Marine Expeditionary Force/3rd Marine Division (retired 1991).
John P. Toolan, 2 Born: 1930 1994 31
Director, The Smith Barney Muni Bond Funds, The Smith Barney Tax-Free
Money Funds, Inc., Vantage Money Market Funds (mutual funds), The
Inefficient-Market Fund, Inc. (closed-end investment company); Chairman,
Smith Barney Trust Company of Florida (retired 1991); Director, Smith
Barney, Inc., Mutual Management Company and Smith Barney Advisers, Inc.
(investment advisers) (retired 1991); Senior Executive Vice President, Director
and member of the Executive Committee, Smith Barney, Harris Upham & Co.,
Incorporated (investment bankers) (until 1991).
INTERESTED TRUSTEE 3
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
James A. Shepherdson, Born: 1952 2004 51
Trustee, President and Chief Executive Officer
Executive Vice President, Manulife Financial Corporation; Chairman,
Director, President and Chief Executive Officer, John Hancock Advisers,
LLC and The Berkeley Group; Chairman, Director, President and Chief
Executive Officer, John Hancock Funds, LLC; Chairman, President,
Director and Chief Executive Officer, Sovereign Asset Management
Corporation ("SAMCorp"); President, John Hancock Retirement
Services, John Hancock Life Insurance Company (until 2004); Chairman,
Essex Corporation (until 2004); Co-Chief Executive Officer, MetLife
Investors Group (until 2003); Senior Vice President, AXA/Equitable
Insurance Company (until 2000).
18
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE
POSITION(S) HELD WITH FUND OFFICER
PRINCIPAL OCCUPATION(S) AND OF FUND
DIRECTORSHIPS DURING PAST 5 YEARS SINCE
Richard A. Brown, Born: 1949 2000
Senior Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock
Funds and The Berkeley Group; Second Vice President and Senior Associate Controller,
Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001).
William H. King, Born: 1952 1994
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each
of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001).
Susan S. Newton, Born: 1950 1994
Senior Vice President, Secretary and Chief Legal Officer
Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each
of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President,
Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital.
The business address for all Trustees and Officers is 101 Huntington
Avenue, Boston, Massachusetts 02199.
The Statement of Additional Information of the Fund includes additional
information about members of the Board of Trustees of the Fund and is
available, without charge, upon request, by calling 1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his or her
successor is elected.
2 Member of Audit Committee.
3 Interested Trustees hold positions with the Fund's investment adviser,
underwriter and certain other affiliates.
19
OUR FAMILY
OF FUNDS
- -------------------------------------------------------
Equity Balanced Fund
Classic Value Fund
Core Equity Fund
Focused Equity Fund
Growth Trends Fund
International Fund
Large Cap Equity Fund
Large Cap Growth Fund
Large Cap Select Fund
Mid Cap Growth Fund
Multi Cap Growth Fund
Small Cap Equity Fund
Small Cap Growth Fund
Sovereign Investors Fund
U.S. Global Leaders Growth Fund
- -------------------------------------------------------
Sector Biotechnology Fund
Financial Industries Fund
Health Sciences Fund
Real Estate Fund
Regional Bank Fund
Technology Fund
- -------------------------------------------------------
Income Bond Fund
Government Income Fund
High Income Fund
High Yield Fund
Investment Grade Bond Fund
Strategic Income Fund
- -------------------------------------------------------
Tax-Free Income California Tax-Free Income Fund
High Yield Municipal Bond Fund
Massachusetts Tax-Free Income Fund
New York Tax-Free Income Fund
Tax-Free Bond Fund
- -------------------------------------------------------
Money Market Money Market Fund
U.S. Government Cash Reserve
For more complete information on any John Hancock fund and a prospectus,
which includes charges and expenses, call your financial professional, or
John Hancock Funds at 1-800-225-5291. Please read the prospectus carefully
before investing or sending money.
20
FOR YOUR
INFORMATION
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service
representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
The Fund's voting policies and procedures are available without
charge, upon request:
By phone 1-800-225-5291
On the Fund's Web site www.jhfunds.com/proxy
On the SEC's Web site www.sec.gov
21
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
U.S. Government Cash Reserve.
4300A 3/04
5/04
ITEM 2. CODE OF ETHICS.
As of the end of the period, March 31, 2004, the registrant has adopted a code
of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief
Executive Officer, Chief Financial Officer and Treasurer (respectively, the
principal executive officer, the principal financial officer and the principal
accounting officer, the "Senior Financial Officers"). A copy of the code of
ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Charles L. Ladner is the audit committee financial expert and is "independent",
pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the principal
accountant(s) for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant(s) in connection with
statutory and regulatory filings or engagements amounted to $45,200 for the
fiscal year ended March 31, 2003 (broken out as follows: John Hancock Money
Market Fund - $28,300 and John Hancock U.S. Government Cash Reserve Fund -
$16,900) and $47,450 for the fiscal year ended March 31, 2004 (broken out as
follows: John Hancock Money Market Fund - $29,700 and John Hancock U.S.
Government Cash Reserve Fund - $17,750). These fees were billed to the
registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
There were no audit-related fees during the fiscal year ended March 31, 2003 and
fiscal year ended March 31, 2004 billed to the registrant or to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant ("control
affiliates").
(c) Tax Fees
The aggregate fees billed for professional services rendered by the principal
accountant(s) for the tax compliance, tax advice and tax planning ("tax fees")
amounted to $4,200 for the fiscal year ended March 31, 2003 (broken out as
follows: John Hancock Money Market Fund - $2,100 and John Hancock U.S.
Government Cash Reserve Fund - $2,100) and $4,500 for the fiscal year ended
March 31, 2004 (broken out as follows: John Hancock Money Market Fund - $2,250
and John Hancock U.S. Government Cash Reserve Fund - $2,250). The nature of the
services comprising the tax fees was the review of the registrant's income tax
returns and tax distribution requirements. These fees were billed to the
registrant and were approved by the registrant's audit committee. There were no
tax fees billed to the control affiliates.
(d) All Other Fees
There were no other fees during the fiscal year ended March 31, 2003 and fiscal
year ended March 31, 2004 billed to the registrant or to the control affiliates.
(e) (1) See attachment "Approval of Audit, Audit-related, Tax and Other
Services", with the audit committee pre-approval policies and procedures.
(e)(2) There were no fees that were approved by the audit committee pursuant to
the de minimis exception for the fiscal years ended March 31, 2003 and March 31,
2004 on behalf of the registrant or on behalf of the control affiliates that
relate directly to the operations and financial reporting of the registrant.
(f) According to the registrant's principal accountant, for the fiscal year
ended March 31, 2004, the percentage of hours spent on the audit of the
registrant's financial statements for the most recent fiscal year that were
attributed to work performed by persons who were not full-time, permanent
employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant(s) for
services rendered to the registrant and rendered to the registrant's control
affiliates for each of the last two fiscal years of the registrant were $149,138
for the fiscal year ended March 31, 2003, and $67,575 for the fiscal year ended
March 31, 2004.
(h) The audit committee of the registrant has considered the non-audit services
provided by the registrant's principal accountant(s) to the control affiliates
and has determined that the services that were not pre-approved are compatible
with maintaining the principal accountant(s)' independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The registrant has adopted procedures by which shareholders may recommend
nominees to the registrant's Board of Trustees. A copy of the procedures is
filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds -
Administration Committee Charter".
ITEM 10. 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 11. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) 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)(1) 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)(1) Submission of Matters to a Vote of Security Holders is attached. See
attached "John Hancock Funds - Administration Committee Charter".
(c)(2) Approval of Audit, Audit-related, Tax and Other Services is attached.
(c)(3) 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 Current Interest
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: May 17, 2004
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:
-------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: May 17, 2004
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: May 17, 2004