The latest report from your
Fund's management team
SEMIANNUAL REPORT
Large Cap
Value Fund
(formerly Growth and Income Fund)
JUNE 30, 1999
TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
CHAIRMAN'S MESSAGE
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief
Executive Officer, flush right next to second paragraph.]
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting
ready to celebrate this historic transition to a new millennium. At John
Hancock Funds, we share the excitement, but we aren't popping the champagne
corks just yet. Rather, we are staying on the course that we set more than two
years ago to ensure that the transition to a new millennium is a smooth
one for our shareholders.
As many already know, the Year 2000 has created more than the prospect of
New Year's festivities of epic proportions. It has also presented the
world with a challenge: making sure that older computers, and any
equipment powered by computer chips, can properly read and process the
date "00" as 2000, not 1900. Much has been written about how the world
will weather the change. Some view it as a non-event, while others see the
potential for disruptions. How much disruption, and for how long, depends
on whom you talk to.
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an
important issue to be dealt with and we have made it a top priority. Two
years ago, John Hancock Funds put a full-time team of experts on the case
and established a company-wide program to evaluate all computer
applications and to modify or replace those that needed changing.
These modifications and replacements for all mission-critical systems are
done and successfully compliance tested. The rest of 1999 will be spent
completing the few remaining non mission-critical systems, testing with
our business partners and continuing to participate in industry testing.
We have also established additional contingency plans beyond our regular
ones to prepare for any challenges that the Year 2000 might present. In
the end, John Hancock will spend approximately $90-$95 million to ensure
we make a successful transition to the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is
featuring articles with more detailed information on Y2K matters of
importance to our shareholders. I encourage you to read them, or contact
one of our Customer Service Representatives at 1-800-225-5291 for another
copy. For your own peace of mind, we also recommend that you save your
1999 statements, especially those you receive between October and
December, so that you are able to check them against the first one you
receive in 2000. It's a measure of prudence, not panic. Good record
keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although
we cannot make any ironclad assurances, we are confident that the steps we
have taken will provide shareholders with as smooth a transition as
possible. Once that occurs, we will happily raise our glasses to toast the
New Year, future prosperity and our hopes to serve you well into the
2000's.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY TIMOTHY E. KEEFE, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND TIMOTHY E.
QUINLISK, CFA, PORTFOLIO MANAGER
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Large
Cap Value Fund. Caption below reads "Fund management team members (l-r):
"Tim Keefe, Tim Quinlisk and Lisa Welch."]
John Hancock Large Cap Value Fund
Out-of-favor sectors bounce back as investor confidence grows
Effective May 1, 1999, John Hancock Growth and Income Fund was renamed
John Hancock Large Cap Value Fund to better describe how the Fund invests.
The U.S. stock market remained volatile, but pressed forward during the
first half of 1999. As the year began, a small group of large-company
growth stocks continued to dominate the market's returns. Early in the
second quarter, however, market sentiment changed as investors regained
confidence in U.S. economic growth and overseas economies showed signs of
bottoming. Rising interest rates combined with high valuations on the top
100 names in the Standard & Poor's 500 Index made long-overlooked sectors
increasingly attractive. Small and medium-sized company stocks, cyclical
stocks that move in tandem with the economy and value stocks with
beaten-down prices all benefited. The S&P 500 Index ended the first half
with a 12.38% return.
Fund beats competition
Our strategy is to invest in good businesses selling at cheap prices where
there is a catalyst that could unlock the stock's full value -- such as a
spin-off, new product release or business reorganization. As market
sentiment shifted, many of the stocks we owned took off. For the six
months ended June 30, 1999, John Hancock Large Cap Value Fund's Class A,
Class B and Class C shares returned 13.84%, 13.44% and 13.43%,
respectively, at net asset value. By comparison, the average growth and
income fund returned 10.93% during the same period, according to Lipper,
Inc.1 Keep in mind that your net asset value will differ from these
results if you were not invested in the Fund for the entire period and did
not reinvest all distributions. For historical performance information,
please see pages six and seven.
[Table at top left hand column entitled "Top Five Holdings." The first
listing is Qualcomm 5.7%, the second is Fuji JGB 4.7%, the third Computer
Associates Int'l 4.7%, the fourth MediaOne Group 4.7% and the fifth Ace,
Ltd. 4.6%. A note below the table reads "As a percentage of net assets on
June 30, 1999."]
"The U.S.
stock market
remained
volatile,
but pressed
forward..."
Technology drives performance
Our willingness to own less well-known technology names helped
considerably. In the second quarter, we built a stake in Qualcomm, a
semiconductor company that develops and makes advanced communication
systems based on digital wireless technology. Between the time we bought
it and the end of June, the stock roughly doubled. Another new addition
and top performer was Conexant Systems, a leading provider of broadband
and wireless semiconductors that was recently spun off.
"Our willingness
to own less
well-known
technology
names helped
considerably."
In the software sector, we increased our stake in Computer Associates
International as fears mounted that its business would suffer with the end
of Y2K problems. When it became apparent that these concerns were
overblown, the stock rebounded nicely. We also had sizable stakes in
top-performing telecommunications companies. Among them were MediaOne
Group, one of the fastest-growing cable companies in the country, which
will soon be acquired by AT&T, and AT&T's Liberty Media Group, a holding
company with interests in numerous globally branded entertainment
networks, video distribution businesses, wireless plants and equipment
manufacturers. In addition, MCI WorldCom's stock continued to benefit from
the explosion in data traffic.
[Table at bottom of left hand column entitled "Scorecard". The header for
the left column is "Investment" and the header for the right column is
"Recent Performance...and What's Behind the Numbers". The first listing is
Qualcomm followed by an up arrow with the phrase "Owns key technology for
wirless communication." The second listing is MediaOne Group followed by an
up arrow with the phrase "Gains synergies from AT&T takeover." The third
listing is Baxter followed by a down arrow with the phrase "Faces internal
execution problems." A note below the table reads "See 'Schedule of
Investments.' Investment holdings are subject to change."]
Finance results are mixed
The Fund did well owning banks whose outlooks depend on economic
improvements overseas. We continued to collect a high dividend yield from
the preferred stock of Fuji Bank, while also watching the stock's share
price appreciate nicely as the bank began taking steps to become a major
financial player in Japan's restructured financial system. And Citigroup,
with its worldwide franchise, began making a comeback after being hit hard
by the Asian debacle last fall.
By contrast, our investment in mortgage company and insurance stocks hurt
performance. Rising interest rates derailed mortgage companies like Fannie
Mae and Freddie Mac, which also faced unfavorable political winds. We are
holding on, believing these problems will fade. In the insurance sector,
pricing pressure and industry consolidation continued to undermine stock
prices. Investors even penalized the stock of companies like Ace, Ltd., a
property and casualty insurer that has consistently grown earnings. We
took the opportunity to add to our stake because we believe Ace's recent
merger with Cigna is an excellent move, and that insurance pricing will
soon improve.
[Bar chart at top of left hand column with heading "Fund Performance".
Under the heading is a note that reads "For the six months ended June 30,
1999." The chart is scaled in increments of 3% with 0% at the bottom and
15% at the top. The first bar represents the 13.84% total return for John
Hancock Large Cap Value Fund Class A. The second bar represents the 13.44%
total return for John Hancock Large Cap Value Fund Class B. The third bar
represents the 13.43% total return for John Hancock Large Cap Value Fund
Class C. The fourth bar represents the 10.93% total return for Average
growth and income fund. A note below the chart reads "Total returns for
John Hancock Large Cap Value Fund are at net asset value with all
distributions reinvested. The average growth and income fund is tracked by
Lipper, Inc.1 See the following two pages for historical performance
information."]
Health care disappoints
Most health-care stocks continued to stumble. Drug companies, whose stock
prices were already inflated, suffered from mounting regulatory pressure
in Washington. During a time when the overall market was producing
double-digit returns, many drug stocks -- including American Home
Products, Baxter and Monsanto -- fell. With the exception of Baxter, we
held on, expecting regulatory threats to subside. We looked for buying
opportunities in the health-care services area -- a sector which has done
poorly for the past three years -- and found Total Renal Care Holdings, a
leading provider of kidney dialysis treatment. Between the time we bought
it and June 30, the stock returned roughly 40%.
Optimism ahead
Many factors seem to be working in our favor. First, the U.S. economy
remains strong and overseas economies seem poised to improve. Second,
continued market volatility spells opportunity for bargain-hunting funds
like ours. Third, the broadening of the market that began in the second
quarter seems likely to continue. If it does, investors like us will be
rewarded for looking at businesses that represent good value. Potential
risks are the overall high valuation levels of the market and a possible
rise in inflation, both of which we will watch closely. In the meantime,
we believe the Fund's strategy of buying good businesses at a discount
should reward shareholders over the long term.
"...continued
market
volatility
spells
opportunity for
bargain-hunting
funds like ours."
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. Of course, the
managers' views are subject to change as market and other conditions
warrant.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average
annual total returns for the John Hancock Large Cap Value Fund. Total
return measures the change in value of an investment from the beginning to
the end of a period, assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable
sales charge of 5%. Class B performance reflects a maximum contingent
deferred sales charge (maximum 5% and declining to 0% over six years).
Class C performance includes a contingent deferred sales charge (1%
declining to 0% after one year).
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the Fund's
investments will fluctuate. As a result, your Fund's shares may be worth
more or less than their original cost, depending on when you sell them.
Please read your prospectus carefully before you invest or send money.
CLASS A
For the period ended June 30, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Cumulative Total Returns 9.90% 186.67% 355.07%
Average Annual Total
Returns(1) 9.90% 23.45% 16.36%
CLASS B
For the period ended June 30, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------- ------- -------
Cumulative Total Returns 9.85% 189.05% 235.38%
Average Annual Total
Returns(1) 9.85% 23.65% 16.65%
CLASS C
For the period ended June 30, 1999
SINCE
ONE INCEPTION
YEAR (5/1/98)
------- -------
Cumulative Total Returns 13.84% 14.37%
Average Annual Total
Returns(1) 13.84% 12.22%
Notes to Performance
(1) The Adviser agreed to a one-time reduction of its management fee of
$150,000 for the fiscal year 1998 only. Without the limitation of
expenses, the average annualized return for the one year period would
have been 9.89%, 9.84% and 13.83% for Class A, Class B and Class C
shares, respectively. The effect on the average annualized returns of the
Fund's five, ten and since inception periods was less than 0.01%.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock Large Cap Value Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Stock Index -- an
unmanaged index that includes 500 widely traded common stocks and is often
used as a measure of stock market performance. Past performance is not
indicative of future results.
Line chart with the heading John Hancock Large Cap Value Fund Class A,
representing the growth of a hypothetical $10,000 investment over the life
of the fund. Within the chart are three lines. The first line represents
the Standard & Poor's 500 Stock Index and is equal to $65,027 as of June
30, 1999. The second line represents the value of the hypothetical $10,000
investment made in the John Hancock Large Cap Value Fund on December 31,
1988, before sales charge, and is equal to $51,777 as of June 30, 1999. The
third line represents the value of the same hypothetical investment made in
the John Hancock Large Cap Value Fund, after sales charge, and is equal to
$49,205 as of June 30, 1999.
Line chart with the heading John Hancock Large Cap Value Fund Class B*,
representing the growth of a hypothetical $10,000 investment over the life
of the fund. Within the chart are two lines. The first line represents the
Standard & Poor's 500 Stock Index and is equal to $42,648 as of June 30,
1999. The second line represents the value of the hypothetical $10,000
investment made in the John Hancock Large Cap Value Fund on August 22,
1991, before sales charge, and is equal to $33,538 as of June 30, 1999.
Line chart with the heading John Hancock Large Cap Value Fund Class C*,
representing the growth of a hypothetical $10,000 investment over the life
of the fund. Within the chart are two lines. The first line represents the
Standard & Poor's 500 Stock Index and is equal to $12,555 as of June 30,
1999. The second line represents the value of the hypothetical $10,000
investment made in the John Hancock Large Cap Value Fund on May 1, 1998,
before sales charge, and is equal to $11,437 as of June 30, 1999.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on June 30, 1999.
You'll also find the net asset value and the maximum offering price per
share as of that date.
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
- -----------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $749,587,676) $1,046,040,405
Preferred stocks (cost - $39,215,691) 53,859,094
Bonds (cost - $2,872,144) 2,980,000
--------------
1,102,879,499
Receivable for investments sold 19,093,980
Receivable for shares sold 335,913
Receivable for forward foreign currency contracts
sold - Note A 70,560
Dividends receivable 1,109,729
Interest receivable 3,023,185
Other assets 81,452
--------------
Total Assets 1,126,594,318
- -----------------------------------------------------------------------
Liabilities:
Due to custodian 2,422,018
Payable for investments purchased 7,910,817
Payable for shares repurchased 424,140
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 852,031
Accounts payable and accrued expenses 32,375
--------------
Total Liabilities 11,641,381
- -----------------------------------------------------------------------
Net Assets:
Capital paid-in 756,691,665
Accumulated net realized gain on investments,
financial futures contracts and
foreign currency transactions 46,631,490
Net unrealized appreciation of investments and
foreign currency transactions 311,273,900
Undistributed net investment income 355,882
--------------
Net Assets $1,114,952,937
=======================================================================
Net Asset Value Per Share:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value)
Class A - $478,496,036/19,816,767 $24.15
=======================================================================
Class B - $628,259,551/26,130,168 $24.04
=======================================================================
Class C - $8,197,350/340,958 $24.04
=======================================================================
Maximum Offering Price Per Share*
Class A - ($24.15 x 105.26%) $25.42
=======================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains
(losses) for the period stated.
Statement of Operations
Six months ended June 30, 1999 (Unaudited)
- -----------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding
taxes of $34,055) $5,865,448
Interest 3,345,160
--------------
9,210,608
--------------
Expenses:
Investment management fee - Note B 3,136,316
Distribution and service fee - Note B
Class A 542,309
Class B 2,623,797
Class C 31,570
Transfer agent fee - Note B 1,058,250
Custodian fee 115,464
Registration and filing fees 76,207
Accounting and legal services fee - Note B
72,311
Trustees' fees 28,570
Printing 20,708
Auditing fee 19,401
Miscellaneous 14,633
Legal fees 5,001
--------------
Total Expenses 7,744,537
- -----------------------------------------------------------------------
Net Investment Income 1,466,071
- -----------------------------------------------------------------------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 36,287,075
Net realized gain on foreign currency
transactions 83,039
Change in net unrealized
appreciation/depreciation
of investments 94,243,351
Change in net unrealized
appreciation/depreciation
of foreign currency transactions 140,619
--------------
Net Realized and Unrealized
Gain on Investments
and Foreign Currency
Transactions 130,754,084
- -----------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $132,220,155
=======================================================================
See notes to financial statements.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1999
1998 (UNAUDITED)
-------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $3,221,938 $1,466,071
Net realized gain on
investments sold, financial
futures contracts and foreign
currency transactions 44,851,665 36,370,114
Change in net unrealized
appreciation/depreciation of
investments 64,038,473 94,383,970
-------------- --------------
Net Increase in Net Assets
Resulting from Operations 112,112,076 132,220,155
-------------- --------------
Distributions to Shareholders:
Dividends from net investment income
Class A - ($0.1410 and $0.0461
per share, respectively) (2,610,127) (910,825)
Class B - ($0.0250 and $0.0079
per share, respectively) (602,073) (203,950)
Class C** - ($0.0224 and
$0.0063 per share,
respectively) (4,251) (1,897)
Distributions from net realized
gain on investments sold
Class A - ($0.9336 and none per
share, respectively) (17,816,814) --
Class B - ($0.9336 and none per
share, respectively) (23,024,612) --
Class C** - ($0.9336 and none
per share, respectively) (192,691) --
-------------- --------------
Total Distributions to
Shareholders (44,250,568) (1,116,672)
-------------- --------------
From Fund Share Transactions -
Net: * 262,365,255 9,975,581
-------------- --------------
Net Assets:
Beginning of period 643,647,110 973,873,873
-------------- --------------
End of period (including
undistributed net investment
income of $6,483 and $355,882,
respectively) $973,873,873 $1,114,952,937
============== ==============
* Analysis of Fund Share Transactions:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, 1999
DECEMBER 31, 1998 (UNAUDITED)
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 10,256,114 $212,230,572 3,067,794 $67,536,206
Shares issued to shareholders
in reinvestment of
distributions 912,189 18,363,770 63,773 1,369,662
-------------- -------------- -------------- --------------
11,168,303 230,594,342 3,131,567 68,905,868
Less shares repurchased (7,052,875) (144,843,808) (3,127,985) (68,671,715)
-------------- -------------- -------------- --------------
Net increase 4,115,428 $85,750,534 3,582 $234,153
============== ============== ============== ==============
CLASS B
Shares sold 13,511,072 $280,419,339 4,630,476 $101,851,601
Shares issued to shareholders
in reinvestment of
distributions 1,027,830 20,598,337 8,437 177,394
-------------- -------------- -------------- --------------
14,538,902 301,017,676 4,638,913 102,028,995
Less shares repurchased (6,320,416) (129,060,866) (4,352,818) (94,882,539)
-------------- -------------- -------------- --------------
Net increase 8,218,486 $171,956,810 286,095 $7,146,456
============== ============== ============== ==============
CLASS C**
Shares sold 234,157 4,901,912 153,355 $3,354,198
Shares issued to shareholders
in reinvestment of
distributions 8,695 174,231 79 1,667
-------------- -------------- -------------- --------------
242,852 5,076,143 153,434 3,355,865
Less shares repurchased (20,674) (418,232) (34,654) (760,893)
-------------- -------------- -------------- --------------
Net increase 222,178 4,657,911 118,780 $2,594,972
============== ============== ============== ==============
** Class C shares commenced operations on May 1, 1998.
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment and foreign
currency gains and losses, distributions paid to shareholders, and any
increase or decrease in money shareholders invested in the Fund. The
footnote illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
- --------------------------------------------------------------------------------------------------------------------
PERIOD FROM SIX MONTHS
SEPTEMBER 1, YEAR ENDED ENDED
YEAR ENDED AUGUST 31, 1996 TO DECEMBER 31, JUNE 30,
-------------------------------- DECEMBER 31, ------------------- 1999
1994 1995(3) 1996 1996(6) 1997 1998 (UNAUDITED)
------- ------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $12.08 $11.42 $13.38 $15.07 $15.62 $19.32 $21.26
------- ------- ------- ------- ------- ------- -------
Net Investment Income(1) 0.32 0.21 0.19 0.05 0.12 0.16 0.07
Net Realized and Unrealized
Gain (Loss) on
Investments, Financial
Futures Contracts and
Foreign Currency
Transactions (0.61) 1.95 1.84 2.15 5.57 2.85 2.87
------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations (0.29) 2.16 2.03 2.20 5.69 3.01 2.94
------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income (0.37) (0.20) (0.19) (0.08) (0.07) (0.14) (0.05)
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.15) (1.57) (1.92) (0.93) --
------- ------- ------- ------- ------- ------- -------
Total Distributions (0.37) (0.20) (0.34) (1.65) (1.99) (1.07) (0.05)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period $11.42 $13.38 $15.07 $15.62 $19.32 $21.26 $24.15
======= ======= ======= ======= ======= ======= =======
Total Investment Return at
Net Asset Value(2) (2.39%) 19.22% 15.33% 14.53%(4) 36.71% 15.94% 13.84%(4)
Total Adjusted Investment
Return at Net Asset
Value(2,10) -- -- -- -- -- 15.92% --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $121,160 $130,183 $139,548 $163,154 $303,313 $421,218 $478,496
Ratio of Expenses to Average
Net Assets 1.31% 1.30% 1.17% 1.22%(5) 1.12% 1.16%(8) 1.16%(5)
Ratio of Net Investment
Income to Average Net
Assets 2.82% 1.82% 1.28% 0.85%(5) 0.65% 0.79%(8) 0.68%(5)
Portfolio Turnover Rate 195% 99% 74% 26% 102%(7) 64% 52%
Financial Highlights (continued)
- --------------------------------------------------------------------------------------------------------------------
PERIOD FROM SIX MONTHS
SEPTEMBER 1, YEAR ENDED ENDED
YEAR ENDED AUGUST 31, 1996 TO DECEMBER 31, JUNE 30,
-------------------------------- DECEMBER 31, ------------------- 1999
1994 1995(3) 1996 1996(6) 1997 1998 (UNAUDITED)
------- ------- ------- ------- ------- ------- -------
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $12.10 $11.44 $13.41 $15.10 $15.66 $19.31 $21.20
------- ------- ------- ------- ------- ------- -------
Net Investment Income
(Loss)(1) 0.24 0.13 0.08 0.01 (0.02) 0.01 (0.00)(9)
Net Realized and Unrealized
Gain (Loss) on
Investments, Financial
Futures Contracts and
Foreign Currency
Transactions (0.61) 1.96 1.85 2.14 5.60 2.84 2.85
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations (0.37) 2.09 1.93 2.15 5.58 2.85 2.85
------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income (0.29) (0.12) (0.09) (0.02) (0.01) (0.03) (0.01)
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.15) (1.57) (1.92) (0.93) --
------- ------- ------- ------- ------- ------- -------
Total Distributions (0.29) (0.12) (0.24) (1.59) (1.93) (0.96) (0.01)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period $11.44 $13.41 $15.10 $15.66 $19.31 $21.20 $24.04
======= ======= ======= ======= ======= ======= =======
Total Investment Return at
Net Asset Value(2) (3.11%) 18.41% 14.49% 14.15%(4) 35.80% 15.05% 13.44%(4)
Total Adjusted Investment
Return at Net Asset
Value(2,10) -- -- -- -- -- 15.03% --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $114,025 $114,723 $125,781 $146,399 $340,334 $547,945 $628,260
Ratio of Expenses to Average
Net Assets 2.06% 2.03% 1.90% 1.98%(5) 1.87% 1.91%(8) 1.84%(5)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 2.07% 1.09% 0.55% 0.10%(5) (0.10%) 0.05%(8) (0.00%)(5)
Portfolio Turnover Rate 195% 99% 74% 26% 102%(7) 64% 52%
Financial Highlights (continued)
- --------------------------------------------------------
PERIOD
FROM MAY 1, 1998 SIX MONTHS
(COMMENCEMENT OF ENDED JUNE
OPERATIONS) TO 30, 1999
DECEMBER 31, 1998 (UNAUDITED)
------- -------
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $22.03 $21.20
------- -------
Net Investment Income
(Loss)(1) 0.03 (0.01)
Net Realized and Unrealized
Gain on Investments,
Financial Futures Contracts
and Foreign Currency
Transactions 0.09 2.86
------- -------
Total from Investment Operations 0.12 2.85
------- -------
Less Distributions:
Dividends from Net
Investment Income (0.02) (0.01)
Distributions from Net
Realized Gain on
Investments Sold (0.93) --
------- -------
Total Distributions (0.95) (0.01)
------- -------
Net Asset Value, End of
Period $21.20 $24.04
======= =======
Total Investment Return at
Net Asset Value(2) 0.83%(4) 13.43%(4)
Total Adjusted Investment
Return at Net Asset
Value(2,10) 0.82%(4) --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $4,711 $8,197
Ratio of Expenses to Average
Net Assets 1.92%(5,8) 1.91%(5)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.28%(5,8) (0.08%)(5)
Portfolio Turnover Rate 64% 52%
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(3) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser
of the Fund.
(4) Not annualized.
(5) Annualized.
(6) Effective December 31, 1996, the fiscal period end changed from August 31 to
December 31.
(7) Portfolio turnover rate excludes merger activity.
(8) Reflects voluntary management fee reduction in effect during the
year ended December 31, 1998. As a result of such fee reductions, expenses
of Class A, Class B and Class C shares of the Fund reflect reductions of
less than $0.01 per share. Absent such reductions the ratio of expenses to
average net assets would have been 1.18%, 1.93% and 1.94% for Class A,
Class B and Class C shares, respectively and the ratio of net investment
income to average net assets would have been 0.77%, 0.03% and 0.26% for
Class A, Class B and Class C shares, respectively.
(9) Less than $0.01 per share.
(10) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
The Financial Highlights summarizes the impact of the following factors on
a single share for each period indicated: net investment income, gains
(losses), distributions and total investment return of the Fund. It shows
how the Fund's net asset value for a share has changed since the end of
the previous period. Additionally, important relationships between some
items presented in the financial statements are expressed in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
June 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Large Cap Value Fund on June 30, 1999. It's divided into three
main categories: common stocks, preferred stocks and bonds. The common
and preferred stocks are further broken down by industry groups.
three main categories: common stocks, preferred stocks and bonds. The
common and preferred stocks are further broken down by industry groups.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- --------------
<S> <C> <C>
COMMON STOCKS
Aerospace (1.03%)
United Technologies Corp. 160,000 $11,470,000
--------------
Banks - United States (7.28%)
Bank One Corp. 179,548 10,694,328
Citigroup, Inc. 761,250 36,159,375
TCF Financial Corp. 1,000,000 27,875,000
Wells Fargo Co. 150,000 6,412,500
--------------
81,141,203
--------------
Beverages (1.14%)
Anheuser-Busch Cos., Inc. 125,000 8,867,187
PepsiCo, Inc. 100,000 3,868,750
--------------
12,735,937
--------------
Broker Services (1.57%)
Bear Stearns Cos., Inc. 210,000 9,817,500
Morgan Stanley Dean Witter & Co. 75,000 7,687,500
--------------
17,505,000
--------------
Business Services - Misc. (2.20%)
ACNielsen Corp.* 290,791 8,796,428
Dun & Bradstreet Corp. 90,000 3,189,375
H & R Block, Inc. 250,000 12,500,000
--------------
24,485,803
--------------
Computers (10.36%)
Automatic Data Processing, Inc. 135,000 5,940,000
Cadence Design Systems, Inc.* 200,000 2,550,000
Comdisco, Inc. 360,000 9,225,000
Computer Associates International, Inc. 951,100 52,310,500
IMRglobal Corp.* 29,000 558,250
International Business Machines Corp. 100,000 12,925,000
Oracle Corp.* 60,000 2,227,500
Pathways Group, Inc. (The)* 80,000 530,000
Synopsys, Inc.* 238,250 13,148,422
Wind River Systems, Inc.* 1,000,000 16,062,500
--------------
115,477,172
--------------
Cosmetics & Personal Care (0.05%)
Nu Skin Enterprises, Inc. (Class A)* 25,000 498,437
--------------
Diversified Operations (1.93%)
Du Pont (E.I.) De Nemours & Co. 142,000 9,700,375
Monsanto Co. 300,000 11,831,250
--------------
21,531,625
--------------
Electronics (3.70%)
Conexant Systems, Inc.* 343,000 19,915,437
Novellus Systems, Inc.* 33,600 2,293,200
SCI Systems, Inc.* 400,000 19,000,000
--------------
41,208,637
--------------
Finance (2.80%)
Ambac Financial Group, Inc. 409,100 23,369,837
American Express Co. 60,000 7,807,500
--------------
31,177,337
--------------
Food (0.35%)
Nabisco Group Holdings Corp. 200,000 3,912,500
--------------
Instruments - Scientific (1.27%)
Millipore Corp. 350,000 14,196,875
--------------
Insurance (10.46%)
Ace, Ltd. (Bermuda) 1,831,000 51,725,750
Financial Security Assurance Holdings, Ltd. 345,250 17,953,000
Mitsui Marine and Fire Insurance Co.,
Ltd. (Japan) 450,500 2,214,613
Progressive Corp. 160,105 23,215,225
Radian Group, Inc. 40,000 1,952,500
UNUM Corp. 64,500 3,531,375
XL Capital, Ltd. (Class A) 284,368 16,066,792
--------------
116,659,255
--------------
Leisure (3.22%)
Disney (Walt) Co. (The) 200,000 6,162,500
Galileo International, Inc. 300,000 16,031,250
Hasbro, Inc. 489,550 13,676,803
--------------
35,870,553
--------------
Media (7.11%)
AT & T Corp. - Liberty Media Group
(Class A)* 1,087,328 39,959,304
CBS Corp.* 174,000 7,558,125
Central Newspapers, Inc. (Class A) 350,000 13,168,750
Harcourt General, Inc. 224,000 11,550,000
News Corp., Ltd., American Depositary
Receipt (ADR) (Australia) 200,000 7,062,500
--------------
79,298,679
--------------
Medical (8.99%)
American Home Products Corp. 379,500 21,821,250
DENTSPLY International, Inc. 163,000 4,564,000
Johnson & Johnson 45,000 4,410,000
Lilly (Eli) & Co. 128,000 9,168,000
Pharmacia & Upjohn, Inc. 185,000 10,510,312
Schering-Plough Corp. 96,000 5,088,000
Total Renal Care Holdings, Inc.* 1,500,000 23,343,750
Warner-Lambert Co. 159,900 11,093,062
Wellpoint Health Networks, Inc.* 120,700 10,244,412
--------------
100,242,786
--------------
Mortgage Banking (5.82%)
Fannie Mae 515,000 35,213,125
Freddie Mac 512,000 29,696,000
--------------
64,909,125
--------------
Oil & Gas (2.92%)
Alberta Energy Co. Ltd. (Canada) # 461,711 14,755,545
Alberta Energy Co. Ltd. (Canada) 130,108 4,204,115
Coastal Corp. (The) 34,000 1,360,000
Columbia Energy Group 16,500 1,034,344
Phillips Petroleum Co. 150,000 7,546,875
Triton Energy, Ltd.* 341,200 3,667,900
--------------
32,568,779
--------------
Retail (1.30%)
SYSCO Corp. 300,000 8,943,750
Wal-Mart Stores, Inc. 116,000 5,597,000
--------------
14,540,750
--------------
Telecommunications (14.86%)
Bell Atlantic Corp. 60,220 3,936,882
Commonwealth Telephone Enterprises, Inc.` 77,420 3,130,671
Frontier Corp. 100,000 5,900,000
Intermedia Communications, Inc.* 42,850 1,285,500
MCI WorldCom, Inc.* 298,536 25,692,755
MediaOne Group, Inc.* 697,100 51,846,813
Qualcomm, Inc.* 440,000 63,140,000
Time Warner Telecom, Inc. (Class A)* 115,550 3,350,950
U S WEST, Inc. 8,247 484,511
Vodafone Airtouch Plc (ADR)
(United Kingdom) 35,150 6,924,550
--------------
165,692,632
--------------
Tobacco (1.14%)
Philip Morris Cos., Inc. 264,800 10,641,650
R.J. Reynolds Tobacco Holdings, Inc.* 66,666 2,099,979
--------------
12,741,629
--------------
Transport (1.18%)
CNF Transportation, Inc. 342,200 13,131,925
--------------
Utilities (3.14%)
ALLTEL Corp. 153,328 10,962,952
Cincinnati Bell, Inc. 85,000 2,119,688
KeySpan Corp. 134,140 3,537,943
MidAmerican Energy Holdings Co. * 278,980 9,659,683
SBC Communications, Inc. 110,000 6,380,000
Williams Cos., Inc. 56,000 2,383,500
--------------
35,043,766
--------------
TOTAL COMMON STOCKS
(Cost $749,587,676) (93.82%) 1,046,040,405
-------------- --------------
PREFERRED STOCKS
Banks - Foreign (4.71%)
Fuji JGB Investment LLC, 9.87%, Ser A
(Japan) (R) 59,910 52,571,025
--------------
Banks - United States (0.12%)
Chase Manhattan Corp., 10.84%, Ser C 44,900 1,288,069
--------------
TOTAL PREFERRED STOCKS
(Cost $39,215,691) (4.83%) 53,859,094
-------------- --------------
INTEREST CREDIT PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING** (000s OMITTED) VALUE
- ------------------- ----------- ----------- ---------------- --------------
BONDS
Government - Foreign (0.27%)
Brazil, Republic of,
Bond (Brazil)
05-15-27 10.125% B+ $4,000 $2,980,000
--------------
TOTAL BONDS
(Cost $2,872,144) (0.27%) 2,980,000
--------- --------------
TOTAL INVESTMENTS (98.92%) 1,102,879,499
--------- --------------
OTHER ASSETS AND LIABILITIES, NET (1.08%) 12,073,438
--------- --------------
TOTAL NET ASSETS (100.00%) $1,114,952,937
========= ==============
* Non-income producing security.
** Credit ratings are unaudited and rated by Standard & Poor's where available, or Moody's Investors
Service or John Hancock Advisers, Inc. where Standard & Poor's ratings are not available.
# Shares outstanding of common stock is expressed in local currency, as shown parenthetically
in security description.
(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 $52,571,025 or 4.71% of net assets as of June 30, 1999.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer; however, security is U.S. dollar
denominated.
The percentage shown for each investment category is the total of that
category as a percentage of net assets of the Fund.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -
ACCOUNTING POLICIES
John Hancock Investment Trust (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940.
The Trust consists of four series portfolios: John Hancock Large Cap Value
Fund (the "Fund"), John Hancock Balanced Fund, John Hancock Real Estate
Fund and John Hancock Sovereign Investors Fund. The other three series of
the Trust are reported in separate financial statements. Prior to May 1,
1999, the Fund was known as John Hancock Growth and Income Fund and John
Hancock Balanced Fund was known as John Hancock Sovereign Balanced Fund.
The investment objective of the Fund is to obtain the highest total
return, a combination of capital appreciation and current income,
consistent with reasonable safety of 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 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 which bears distribution
and service expenses under the terms of a distribution plan have exclusive
voting rights regarding such distribution plan.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on
the basis of market quotations, valuations provided by independent
pricing services or at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock
Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley
Financial Group, Inc., may participate in a joint repurchase agreement.
Aggregate cash balances are invested in one or more repurchase agreements,
whose underlying securities are obligations of the U.S. government and/or
its agencies. The Fund's custodian bank receives delivery of the
underlying securities for the joint account on the Fund's behalf. The
Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the
date of purchase, sale or maturity. Net realized gains and losses on sales
of investments are determined on the identified cost basis.
FEDERAL INCOME TAX The Fund qualifies as a "regulated investment company"
by complying with the applicable provisions of the Internal Revenue Code
and will not be subject to federal income tax on taxable income which is
distributed to shareholders. Therefore, no federal income tax provision is
required.
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment
securities is recorded on the ex-dividend date. Interest income on
investment securities is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ
from generally accepted accounting principles. Dividends paid by the Fund
with respect to each class of shares will be calculated in the same
manner, at the same time and will be in the same amount, except for the
effect of expenses that may be applied differently to each class.
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 assets of the respective
classes. Distribution and service fees, if any, are calculated daily at
the class level based on the appropriate net assets of each class and the
specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not readily
identifiable to a specific fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and
type of expense and the relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues and expenses of the Fund. Actual results
could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for
temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of
securities. Effective March 12, 1999, the Fund entered into a syndicated
line of credit agreement with various banks, and the agreements previously
in effect were terminated. This agreement enables the Fund to participate
with other funds managed by the Adviser in an unsecured line of credit
with banks which permit borrowings up to $500 million, collectively.
Interest is charged to each fund, based on its borrowing. In addition, a
commitment fee based on the average daily unused portion of the line of
credit is allocated among the participating funds. The Fund had no
borrowing activity for the period ended June 30, 1999.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially expressed
in terms of foreign currencies are translated into U.S. dollars based on
London currency exchange quotations as of 5:00 p.m., London time, on the
date of any determination of the net asset value of the Fund. Transactions
affecting statement of operations accounts and net realized gain/(loss) on
investments are translated at the rates prevailing at the dates of the
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities, other than
investments in securities at fiscal year end, resulting from changes in
the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the effect
of fluctuations in currency exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date at a set price. The aggregate principal amounts
of the contracts are marked to market daily at the applicable foreign
currency exchange rates. Any resulting unrealized gains and losses are
included in the determination of the Fund's daily net assets. The Fund
records realized gains and losses at the time the forward foreign currency
contract is closed out or offset by a matching contract. Risks may arise
upon entering these contracts from potential inability of counterparties
to meet the terms of the contract and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar.
These contracts involve market or credit risk in excess of the unrealized
gain or loss reflected in the Fund's Statement of Assets and Liabilities.
The Fund may also purchase and sell forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under
which it intends to take delivery of the foreign currency. Such contracts
normally involve no market risk if they are offset by the currency amount
of the underlying transaction.
Open forward foreign currency contracts sold at June 30, 1999, were as
follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT MONTH APPRECIATION
- -------- ------------------- ---------- ------------
Japenese Yen 258,827,182 SEP 99 $70,560
=======
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates
and other market conditions. Buying futures tends to increase the Fund's
exposure to the underlying instrument. Selling futures tends to decrease
the Fund's exposure to the underlying instrument or hedge other Fund
instruments. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified amount
of cash or U.S. government securities, known as "initial margin," equal to
a certain percentage of the value of the financial futures contract being
traded. Each day, the futures contract is valued at the official
settlement price of the board of trade or U.S. commodities exchange on
which it trades. Subsequent payments, known as "variation margin," to and
from the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market," are recorded by the Fund
as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there may
be an illiquid market and/or that a change in the value of the contract
may not correlate with changes in the value of the underlying securities.
In addition, the Fund could be prevented from opening or realizing the
benefits of closing out futures positions because of position limits or
limits on daily price fluctuations imposed by an exchange.
For federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At June 30, 1999, there were no open positions in financial futures
contracts.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program
equivalent, on an annual basis, to 0.625% of the Fund's average daily net
asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the period ended
June 30, 1999, net sales charges received with regard to sales of Class A
shares amounted to $649,683. Out of this amount, $88,426 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, $351,858 was paid as sales commissions to unrelated
broker-dealers and $209,399 was paid as sales commissions to sales
personnel of Signator Investors, Inc. ("Signator Investors"), a related
broker-dealer. The Adviser's indirect parent, John Hancock Mutual Life
Insurance Company ("JHMLICo"), is the indirect sole shareholder of
Signator Investors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in
part to defray its expenses related to providing distribution related
services to the Fund in connection with the sale of Class B shares. For
the period ended June 30, 1999, contingent deferred sales charges amounted
to $765,820.
Class C shares which are redeemed within one year of purchase will be
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 CDSC are paid to JH Funds and
are used in whole or in part to defray its expenses related to providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended June 30, 1999, contingent deferred
sales charges amounted to $4,780.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under
the Investment Company Act of 1940. Accordingly, the Fund will make
payments to JH Funds for distribution and service expenses at an annual
rate not to exceed 0.25% of Class A average daily net assets and 1.00% of
Class B and Class C average daily net assets to reimburse JH Funds for its
distribution and service costs. Up to a maximum of 0.25% of such payments
may be service fees as defined by the amended Rules of Fair Practice of
the National Association of Securities Dealers. Under the amended Rules
of Fair Practice, curtailment of a portion of the Fund's 12b-1 payments
could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo.
The Fund pays transfer agent fees based on the number of shareholder
accounts and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
period was at an annual rate of less than 0.02% of the average net assets
of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon and
Mr. Richard S. Scipione are trustees and/or officers of the Adviser and/or
its affiliates, as well as Trustees 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 Compensation Plan. The Fund
makes investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability are recorded on the Fund's books as
an other asset. The deferred compensation liability and the related other
asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investment as well as any unrealized
gains or losses. The investment had no impact on the operations of the
Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during
the period ended June 30, 1999, aggregated $534,606,672 and $523,700,997,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the period ended June 30, 1999.
The cost of investments owned at June 30, 1999 for federal income tax
purposes was $793,837,877. Gross unrealized appreciation and depreciation
of investments aggregated $337,335,766 and $28,294,144, respectively,
resulting in net unrealized appreciation of $309,041,622.
[THIS PAGE INTENTIONALLY LEFT BLANK]
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101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
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Permit No. 75
This report is for the information of shareholders of the John Hancock
Large Cap Value Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
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500SA 6/99
8/99
