ANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Global
Technology Fund
OCTOBER 31, 1997
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
------------------
CHAIRMAN'S MESSAGE
------------------
TRUSTEES
EDWARD J. BOUDREAU, JR.
JAMES F. CARLIN*
WILLIAM H. CUNNINGHAM*
CHARLES F. FRETZ*
HAROLD R. HISER, JR.*
ANNE C. HODSDON
CHARLES L. LADNER*
LEO E. LINBECK, JR.*
PATRICIA P. MCCARTER*
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
ROBERT G. FREEDMAN
Vice Chairman and Chief Investment Officer
ANNE C. HODSDON
Executive President
BARRY J. GORDON
President
JAMES B. LITTLE
Senior Vice President and Chief Financial Officer
SUSAN S. NEWTON
Vice President and Secretary
JAMES J. STOKOWSKI
Vice President and Treasurer
THOMAS H. CONNORS
Second Vice President and Compliance Officer
CUSTODIAN
INVESTORS BANK AND TRUST COMPANY
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
TRANSFER AGENT
JOHN HANCOCK SIGNATURE SERVICES, INC.
1 JOHN HANCOCK WAY, SUITE 1000
BOSTON, MASSACHUSETTS 02217-1000
INVESTMENT ADVISER
JOHN HANCOCK ADVISERS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
PRINCIPAL DISTRIBUTOR
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
LEGAL COUNSEL
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109-1803
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
DEAR FELLOW SHAREHOLDERS:
The stock market in 1997 has been anything but dull. Investors have been
treated to record-breaking performance by the Dow Jones Industrial Average, but
with record-breaking volatility. After two years of strong advances amid
relatively little volatility, the market's recent sharp drops and enormous
rebounds have caused a fair share of investor concern.
The latest round came in October and was largely due to uncertainty in
foreign markets. Southeast Asia sneezed and the rest of the world caught a cold.
On October 27, the Dow experienced its largest one-day point decline, dropping
554 points. In percentage terms, however, that roughly 7% decline didn't even
register on the list of 10 largest drops. The next day, the market bounced right
back, as the Dow had a record one-day vault of 337 points. In short order, the
U.S. market had stabilized, yet many markets remained edgy as investors sorted
out the Asian turmoil and its implications on economic growth, interest rates
and corporate earnings.
- --------------------------------------------------------------------------------
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to first paragraph.
- --------------------------------------------------------------------------------
In the face of such uncertainty, a trusted investment professional can be
your best ally. Now, more than ever, your investment professional can help you
take the emotion out of investment decisions. At a time when your instincts
might have you react to the heat of the market's moment, your investment
professional can serve as an objective voice to put current events in a
longer-term perspective. He or she can also help you evaluate your investments
in any market environment to ensure that they fit your risk tolerance and time
horizons. On an ongoing basis, your investment professional is there for you to
check out new investment ideas or to get an informed opinion about current
economic and market conditions.
We encourage you to take advantage of this important resource. Working
together, you can draw up a detailed road map to help reach your financial
destination regardless of the conditions along the way.
Sincerely,
/s/ Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
BY BARRY GORDON AND MARC KLEE, CO-PORTFOLIO MANAGERS
John Hancock
Global Technology Fund
Technology stocks rebound during the last 12 months
Technology stocks turned in a strong performance for the year that ended on
October 31, 1997, although the vast majority of their gains came in the latter
half of the period. Decidedly out of favor from November 1996 through March
1997, many technology stocks suffered losses while the rest of the market
performed well. The lone exceptions were large technology companies -- such as
Cisco Systems, Intel and Microsoft -- which benefited from investors'
near-insatiable appetite for large-capitalization stocks. However, the average
tech stock's progress was impeded by a number of factors, including the strong
U.S. dollar and questions about the strength of the U.S. economy. A strong
dollar can spell double trouble for U.S.-based technology companies that derive
a large portion of their earnings from overseas. First, it makes U.S. products
more expensive for overseas buyers. Second, it causes a slowdown in U.S. company
profit growth when foreign-denominated earnings are converted back into dollars.
Back on the home front, investors worried that if the U.S. economy slowed --
which it appeared to be doing at several different points -- tech company
earnings were also in danger of slowing.
But tech stocks' fortunes started to improve in April, which marked the
beginning of a rally that lasted through mid-October. In our view, the reasons
for the rally were two-fold. For one, the average tech stock's price to earnings
ratio (a measure of how much you're paying for a company's growth) was not just
attractive, it was downright compelling compared not only to many other
industries, but also to their own his-
"...tech stocks' fortunes started to improve in April..."
- --------------------------------------------------------------------------------
A 2 1/2" x 3 3/4" photo of the fund's portfolio management team. Caption reads:
"Global Technology Fund management team (l-r) Barry Gordon, Marc Klee and Alan
Lowenstein".
- --------------------------------------------------------------------------------
3
<PAGE>
John Hancock Funds - Global Technology Fund
Internet-related stocks were some of the Fund's biggest winners.
- --------------------------------------------------------------------------------
Chart entitled "Top Five Common Stock Holdings" at top left hand column. The
chart has five listings: 1) Computer Associates International 5.2%; 2) Microsoft
4.2%; 3) Cisco Systems 4.0%; 4) Intel 3.5% ; 5)UAL Corp. 3.5 %. A footnote below
states "As a percentage of net assets on October 31, 1997."
- --------------------------------------------------------------------------------
torical levels. At the same time, tech stocks were still exhibiting superior
earnings growth well in excess of other sectors. The upshot was that investors
essentially could buy above-average earnings growth rates for below-average
valuations. Once investors started to acknowledge the bargains that could be
had, smaller and mid-sized tech companies joined the party and began to outpace
some larger tech stocks. The tech sector's rally was interrupted in mid-October
when Intel announced lower-than-expected earnings. That cast a pall over the
entire tech sector as investors worried that demand for products was slowing.
Compounding the trouble were currency and economic problems in Southeast Asia,
prompting investors to call into question whether tech companies could continue
to post superior earnings growth.
Performance and strategy review
For the 12 months ended October 31, 1997, John Hancock Global Technology Fund's
Class A and Class B shares posted total returns of 21.90% and 21.04%,
respectively, at net asset value. That was in line with the 22.84% return for
the average science and technology fund, according to Lipper Analytical
Services, Inc.1 Please see pages six and seven for longer-term performance
information.
During roughly the first half of the period, we focused on high-quality,
larger stocks, such as Microsoft, Intel, Compaq Computers, and United
Technologies. That strategy proved to be appropriate because those types of
stocks were the clear winners during that time. In fact, some -- including
Microsoft and Intel -- continued their climb through the second half of the
period. But as some of our large-company holdings rose to prices that we no
longer felt were reasonable given their growth rates, we shifted out of some and
began to look for opportunities among more attractively priced small- and
mid-sized companies. That shift was rewarded when small and medium-sized
companies outperformed their larger counterparts.
Leaders and laggards
Some of our biggest gainers were companies that benefited from the rising
popularity of the Internet as a means of buying and selling goods and services.
America Online, for example, rose more than 60% since the beginning of May as it
added new subscribers and increased its advertising revenues. E*TRADE, the
on-line securities trading group, rose more than 70%, as it continued to grab a
larger share of brokerage activity. Restricted securities, as allowed by the
Fund's prospectus, also enhanced our performance. These are investments in
private companies including Globecom Systems (a satellite systems company) and
N2K (an on-line distrib-
- --------------------------------------------------------------------------------
Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance ... and what's behind the numbers." The first listing is E*TRADE
followed by an up arrow and the phrase "Rising market share of securities
trading." The second listing is N2K followed by an up arrow and the phrase "Goes
public." The third listing is McAfee Associates followed by a down arrow and the
phrase "Wall Street frowns on acquisition." Footnote below reads: "See "Schedule
of Investments." Investment holdings are subject to change."
- --------------------------------------------------------------------------------
4
<PAGE>
John Hancock Funds - Global Technology Fund
- --------------------------------------------------------------------------------
Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended October 31, 1997." The chart is
scaled in increments of 5% from bottom to top, with 25% at the top and 0% at the
bottom. Within the chart there are three solid bars. The first represents the
21.90% total return for John Hancock Global Technology Fund: Class A. The second
represents the 21.04% total return for John Hancock Global Technology Fund:
Class B. The third represents the 22.84% total return for the Average science
and technology fund. A footnote below states "Total returns for John Hancock
Global Technology Fund are at net asset value with all distributions reinvested.
The average science and technology fund is tracked by Lipper Analytical
Services, Inc. (1). See the following two pages for historical performance
information."
- --------------------------------------------------------------------------------
utor of compact discs), which had not yet gone public when we bought them. But
during the period, both went public at handsome profits for the Fund.
In addition to Intel, most of our semiconductor-related stocks -- which
made up roughly 22% of the Fund's investments at the end of the period --
performed well as demand for their products remained solid throughout most of
the period. Big gainers included ASM Lithography, which makes semiconductor
capital equipment, chip producer VLSI Technology, and chip testing company
Credence Systems. Many of our software holdings -- which represented about 23%
of the Fund's investments and included Computer Associates International,
Microsoft, and Electronics for Imaging -- also posted double-digit gains for the
year, although they lagged some other segments of the tech sector.
Even in the most favorable of conditions, the technology sector usually
delivers some disappointments. Fortunately, our disappointments were limited.
Computer virus software maker McAfee Associates suffered when Wall Street
frowned on the news of the company's acquisition of a complementary company, and
Ascend Communications fell on the news that it was losing market share to its
competitors.
Outlook
It's important to remember that the fortunes of technology stocks are tied
closely to the strength of economies worldwide. In our view, the economic and
currency woes that plague Southeast Asia aren't that much of an immediate or
direct concern for U.S. technology companies. Granted, prolonged problems with
continued currency instability in the region could negatively affect those
countries' largest trading partner Japan, which is important to U.S. tech
companies' continued growth. We'll continue to monitor developments closely. But
on a brighter note, other areas of the world -- namely western Europe -- look to
be poised for better economic times. If the European economies do improve and
the U.S. economy remains stable, it could offset any slowdown in Japan and be
viewed as a positive for technology stocks. But as investors continue to sort
through the issues surrounding the Asian troubles and their long-term effect on
the U.S., we believe that technology stocks are likely to be volatile.
"...the fortunes of technology stocks are tied closely to the strength of
economies worldwide."
- --------------------------------------------------------------------------------
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.
International investing involves special risks such as political and currency
risks and differences in accounting standards and financial reporting. Sector
investing is subject to greater risks than the market as a whole.
(1) Figures from Lipper Analytical Services, Inc. include reinvested dividends
and do not take into account sales charges. Actual load-adjusted performance is
lower.
5
<PAGE>
John Hancock Funds - Global Technology Fund
- --------------------------------------------------------------------------------
A LOOK AT PERFORMANCE
- --------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock Global Technology 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.
Class A share total return figures include the maximum applicable sales charge
of 5%.
Class B share total return figures reflect the maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years).
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 September 30, 1997
ONE FIVE TEN
YEAR YEARS YEARS
----- ------ ------
Cumulative Total Returns 25.18% 229.76% 213.76%
Average Annual Total Returns 25.18% 26.95% 12.11%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended September 30, 1997
SINCE
ONE INCEPTION
YEAR (1/3/94)
----- ---------
Cumulative Total Returns 25.81% 118.02%
Average Annual Total Returns 25.81% 23.17%
6
<PAGE>
John Hancock Funds - Global Technology Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
- --------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
Global Technology 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 used often as a
measure of stock market performance. Past performance is not indicative of
future results.
Global Technology Fund
Class A shares
Line chart with the heading Global Technology 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 value of a $10,000
hypothetical investment made in the Standard & Poors 500 Stock Index on October
31, 1987, and is equal to $48,661 as of October 31, 1997. The second line
represents the value of the Global Technology Fund, before sales charge, and is
equal to $40,437as of October 31, 1997. The third line represents the Global
Technology Fund, after sales charge, and is equal to $38,415 as of October 31,
1997.
Global Technology Fund
Class B shares
Line chart with the heading Global Technology Fund: Class B, 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 value of the $10,000
hypothetical investment made in the Standard & Poors 500 Stock Index on January
3, 1994 and is equal to $21,466 as of October 31, 1997. The second line
represents the value of the Global Technology Fund, before sales charge, and is
equal to $20,265 as of October 31, 1997. The third line represents the value of
the Global Technology Fund, after sales charge, and is equal to $19,965 as of
October 31, 1997.
7
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on October 31, 1997. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
October 31, 1997
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common Stocks (cost - $147,962,559) ..................... $ 231,378,028
Bonds (cost - $1,509,054) ............................... 1,549,437
Joint repurchase agreement (cost - $16,248,000) ......... 16,248,000
Corporate savings account ............................... 20,110
-------------
249,195,575
Receivable for investments sold ........................... 2,406,251
Receivable for shares sold ................................ 458,313
Dividends receivable ...................................... 3,450
Interest receivable ....................................... 15,771
Other assets .............................................. 13,826
-------------
Total Assets ...................... 252,093,186
-----------------------------------------------------
Liabilities:
Payable for investments purchased ......................... 1,800,315
Payable for shares repurchased ............................ 74,804
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................. 255,884
Accounts payable and accrued expenses ..................... 62,661
-------------
Total Liabilities ................. 2,193,664
-----------------------------------------------------
Net Assets:
Capital paid-in ........................................... 146,481,991
Accumulated net realized gain on investments .............. 19,978,775
Net unrealized appreciation of investments ................ 83,457,539
Accumulated net investment loss ........................... (18,783)
-------------
Net Assets ........................ $ 249,899,522
=====================================================
Net Asset Value Per Share:
(Based on net assets and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value)
Class A - $184,048,468/6,123,935 .......................... $ 30.05
==============================================================================
Class B - $65,851,054/2,261,450 ........................... $ 29.12
==============================================================================
Maximum Offering Price Per Share*
Class A - ($30.05 x 105.26%) .............................. $ 31.63
==============================================================================
* 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
Year ended October 31, 1997
- --------------------------------------------------------------------------------
Investment Income:
Interest ................................................... $ 1,159,374
Dividends .................................................. 180,425
------------
1,339,799
------------
Expenses:
Investment management fee - Note B ....................... 1,890,727
Distribution and service fee - Note B
Class A ................................................ 536,171
Class B ................................................ 597,255
Transfer agent fee - Note B .............................. 685,236
Administrative fee - Note B .............................. 100,000
Registration and filing fees ............................. 59,234
Custodian fee ............................................ 59,110
Auditing fee ............................................. 28,000
Miscellaneous ............................................ 26,163
Trustees' fees ........................................... 21,894
Printing ................................................. 20,185
Legal fees ............................................... 5,078
------------
Total Expenses ..................... 4,029,053
-----------------------------------------------------
Net Investment Loss ................ (2,689,254)
-----------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold ...................... 33,306,242
Change in net unrealized appreciation/depreciation
of investments ........................................... 14,690,362
------------
Net Realized and Unrealized
Gain on Investments ................ 47,996,604
-----------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .......... $ 45,307,350
=====================================================
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1996 TO YEAR ENDED
DECEMBER 31, 1995 OCTOBER 31, 1996(1) OCTOBER 31, 1997
----------------- ------------------- ----------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ............................................. ($ 1,309,629) ($ 1,438,749) ($ 2,689,254)
Net realized gain on investments sold ........................... 13,461,306 10,184,343 33,306,242
Change in net unrealized appreciation/depreciation of investments 13,067,131 2,282,873 14,690,362
------------- ------------- -------------
Net Increase in Net Assets Resulting from Operations .......... 25,218,808 11,028,467 45,307,350
------------- ------------- -------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($1.6414, none and $1.2268 per share, respectively) . (9,890,377) -- (7,748,777)
Class B - ($1.6414, none and $1.2268 per share, respectively) . (2,261,154) -- (2,500,738)
------------- ------------- -------------
Total Distributions to Shareholders ......................... (12,151,531) -- (10,249,515)
------------- ------------- -------------
From Fund Share Transactions - Net: * ............................. 116,170,259 15,175,733 (2,117,351)
------------- ------------- -------------
Net Assets:
Beginning of period ............................................. 61,517,302 190,754,838 216,959,038
------------- ------------- -------------
End of period (including accumulated net investment loss
of none, $11,949 and $18,783, respectively) ................... $ 190,754,838 $ 216,959,038 $ 249,899,522
============= ============= =============
</TABLE>
* Analysis of Fund Share Transactions:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1996 TO YEAR ENDED
DECEMBER 31, 1995 OCTOBER 31, 1996 (1) OCTOBER 31, 1997
-------------------------- ---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold ............................ 3,475,266 $ 84,847,624 5,635,772 $ 142,521,461 8,298,098 $ 225,310,630
Shares issued in reorganization - Note E 2,736,868 75,930,600 -- -- -- --
Shares issued to shareholders in
reinvestment of distributions ........ 326,658 8,057,488 -- -- 234,834 6,232,474
---------- ------------- ------------ ------------- ------------ -------------
6,538,792 168,835,712 5,635,772 142,521,461 8,532,932 231,543,104
Less shares repurchased ................ (3,139,612) (76,326,307) (5,524,587) (140,513,358) (240,557,015)
---------- ------------- ------------ ------------- ------------ -------------
Net increase (decrease) ................ 3,399,180 $ 92,509,405 111,185 $ 2,008,103 (311,914) ($ 9,013,911)
========== ============= ============ ============= ============ =============
CLASS B
Shares sold ............................ 2,136,672 $ 52,751,817 1,386,160 $ 33,871,394 1,368,919 $ 37,796,650
Shares issued in reorganization - Note E 21,055 576,404 -- -- -- --
Shares issued to shareholders in
reinvestment of distributions ........ 83,607 2,026,634 -- -- 84,278 2,180,266
---------- ------------- ------------ ------------- ------------ -------------
2,241,334 55,354,855 1,386,160 33,871,394 1,453,197 39,976,916
Less shares repurchased ................ (1,283,970) (31,694,001) (849,036) (20,703,764) (1,213,498) (33,080,356)
---------- ------------- ------------ ------------- ------------ -------------
Net increase ........................... 957,364 $ 23,660,854 537,124 $ 13,167,630 239,699 $ 6,896,560
========== ============= ============ ============= ============ =============
</TABLE>
(1) Effective October 31, 1996, the fiscal period end changed from December 31
to October 31.
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 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 three periods, along with the corresponding dollar
value.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED
------------------------------------------ JANUARY 1, 1996 TO OCTOBER 31,
1992 1993 1994 1995 OCTOBER 31, 1996(7) 1997
------- ------- ------- -------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ................... $ 15.60 $ 14.94 $ 17.45 $ 17.84 $ 24.51 $ 25.79
------- ------- ------- -------- -------- --------
Net Investment Loss .................................... (0.15)(2) (0.21) (0.22)(1) (0.22)(1,2) (0.14)(1) (0.27)(1)
Net Realized and Unrealized Gain on Investments,
Options and Foreign Currency Transactions ............ 1.00 4.92 1.87 8.53 1.42 5.76
------- ------- ------- -------- -------- --------
Total from Investment Operations ................... 0.85 4.71 1.65 8.31 1.28 5.49
------- ------- ------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments
Sold, Options and Foreign Currency Transactions ...... (1.51) (2.20) (1.26) (1.64) -- (1.23)
------- ------- ------- -------- -------- --------
Total Distributions ................................ (1.51) (2.20) (1.26) (1.64) -- (1.23)
------- ------- ------- -------- -------- --------
Net Asset Value, End of Period ......................... $ 14.94 $ 17.45 $ 17.84 $ 24.51 $ 25.79 $ 30.05
======= ======= ======= ======== ======== ========
Total Investment Return at Net Asset Value (6) ......... 5.70% 32.06% 9.62% 46.53% 5.22%(9) 21.90%
Total Adjusted Investment Return at Net Asset Value (6). 5.53%(3) -- -- 46.41%(3) -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............... $32,094 $41,749 $52,193 $155,001 $166,010 $184,048
Ratio of Expenses to Average Net Assets ................ 2.05%(2) 2.10% 2.16% 1.67%(2) 1.57%(8) 1.51%
Ratio of Net Investment Loss to Average Net Assets .... (0.88%)(2) (1.49%) (1.25%) (0.89%)(2) (0.68%)(8) (0.95%)
Portfolio Turnover Rate ................................ 76% 86% 67% 70% 64% 104%
Average Brokerage Commission Rate (10) ................. N/A N/A N/A N/A $ 0.0685 $ 0.0628
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indi cated: net investment income, gains (losses),
dividends 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 rela tionships between some items presented in the
financial statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED
-------------------- JANUARY 1, 1996 TO OCTOBER 31,
1994 1995 OCTOBER 31, 1996(7) 1997
------ ------- ------------------- -----------
<S> <C> <C> <C> <C>
CLASS B(4)
Per Share Operating Performance
Net Asset Value, Beginning of Period ............................... $17.24(5) $ 17.68 $ 24.08 $ 25.20
------ ------- ------- -------
Net Investment Loss (1) ............................................ (0.35) (0.39)(2) (0.28) (0.45)
Net Realized and Unrealized Gain on Investments and Options ........ 2.05 8.43 1.40 5.60
------ ------- ------- -------
Total from Investment Operations ................................. 1.70 8.04 1.12 5.15
------ ------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options (1.26) (1.64) -- (1.23)
------ ------- ------- -------
Net Asset Value, End of Period ..................................... $17.68 $ 24.08 $ 25.20 $ 29.12
====== ======= ======= =======
Total Investment Return at Net Asset Value (6) ..................... 10.02%(9) 45.42% 4.65%(9) 21.04%
Total Adjusted Investment Return at Net Asset Value (6) ............ -- 45.30%(3) -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ........................... $9,324 $35,754 $50,949 $65,851
Ratio of Expenses to Average Net Assets ............................ 2.90%(8) 2.41%(2) 2.27%(8) 2.21%
Ratio of Net Investment Loss to Average Net Assets ................. (1.98%)(8) (1.62%)(2) (1.38%)(8) (1.65%)
Portfolio Turnover Rate ............................................ 67% 70% 64% 104%
Average Brokerage Commission Rate (10) ............................. N/A N/A $0.0685 $0.0628
</TABLE>
(1) Based on the average of the shares outstanding at the end of each month.
(2) Reflects voluntary fee reductions and expense limitations in effect during
the years ended December 31, 1995, and 1992. As a result of such fee
reductions, expenses of Class A and Class B shares of the Fund for 1995
reflect reductions of $0.02 and $0.03 per share, respectively. Absent such
reductions, for 1995, the ratio of expenses to average net assets would
have been 1.79% and 2.53% for Class A and Class B shares, respectively and
the ratio of net investment loss to average net assets would have been
(1.01%) and (1.74%) for Class A and Class B shares, respectively. As a
result of such limitations, expenses of the Fund for Class A shares of the
Fund for 1992 reflect reductions of $0.03 per share. Absent such
limitations for 1992, the ratio of expenses to average net assets would
have been 2.22% and the ratio of net investment loss to average net assets
would have been (1.05%).
(3) An estimated total return calculation which takes into consideration fees
and expenses waived or borne by the Adviser during the periods shown.
(4) Class B shares commenced operations on January 3, 1994.
(5) Initial price to commence operations.
(6) Assumes dividend reinvestment and does not reflect the effect of sales
charge.
(7) Effective October 31, 1996 the fiscal period changed from December 31 to
October 31.
(8) On an annualized basis.
(9) Not annualized.
(10) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
Schedule of Investments
October 31, 1997
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Technology Fund on October 31, 1997. It's divided into three main
categories: common stocks, bonds and short-term investments. The stocks and
bonds are further broken down by industry group. Short-term investments, which
represent the Fund's "cash" position, are listed last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
COMMON STOCK
Aerospace / Aircraft Equipment (2.10%)
United Technologies Corp. .......................... 75,000 $ 5,250,000
-------------
Business Services - Misc (0.03%)
Securacom, Inc.* ................................... 9,200 86,250
-------------
Computer - Graphics (3.07%)
Cadence Design Systems, Inc.* ...................... 140,000 7,455,000
Viisage Technology, Inc.* .......................... 27,000 226,125
-------------
7,681,125
-------------
Computer - Integrated Systems (1.84%)
Oracle Corp.* ...................................... 129,000 4,615,775
-------------
Computer - Local Networks (5.58%)
Ascend Communications, Inc.* ....................... 99,000 2,673,000
Cisco Systems, Inc.* ............................... 120,000 9,843,744
Netcom On-Line Communication Services, Inc.* ...... 75,000 1,425,000
-------------
13,941,744
-------------
Computer - Memory Devices (4.34%)
EMC Corp.* ......................................... 150,000 8,400,000
Network Appliance, Inc.* ........................... 48,700 2,447,175
-------------
10,847,175
-------------
Computer - Mini / Macro (3.49%)
Compaq Computer Corp.* ............................. 90,000 5,737,500
Dell Computer Corp.* ............................... 10,900 873,362
Quantum Corp. * .................................... 66,500 2,103,062
-------------
8,713,924
-------------
Computer - Peripheral Equipment (2.91%)
Adaptec, Inc.* ..................................... 150,000 7,265,625
-------------
Computer - Services (7.73%)
America Online, Inc.* .............................. 75,000 5,775,000
Data Dimensions, Inc.* ............................. 108,000 2,916,000
E*TRADE Group, Inc.* ............................... 130,000 4,013,750
Mercury Interactive Corp. * ........................ 105,000 2,362,500
N2K, Inc.* (r) ..................................... 167,965 3,977,621
N2K, Inc.* ......................................... 10,000 263,125
-------------
19,307,996
-------------
Computer - Software (23.23%)
BEA Systems, Inc.* ................................. 161,500 2,180,250
Best Software, Inc.* ............................... 14,000 145,250
Computer Associates International, Inc. ............ 175,000 13,048,437
Electronics for Imaging, Inc.* ..................... 120,000 5,610,000
HNC Software, Inc.* ................................ 75,000 2,775,000
Information Management Associates, Inc.* ........... 130,000 1,592,500
Keane, Inc.* ....................................... 100,000 2,962,500
McAfee Associates, Inc.* ........................... 115,000 5,721,250
Microsoft Corp.* ................................... 80,000 10,400,000
Novadigm, Inc. * ................................... 65,000 341,250
Parametric Technology Corp.* ....................... 125,000 5,515,625
QAD, Inc. .......................................... 12,700 179,388
Saville Systems Ireland PLC* American
Depositary Receipts (ADR) (Ireland) .............. 55,000 3,286,250
Sybase, Inc.* ...................................... 100,000 1,631,250
Viasoft, Inc.* ..................................... 65,000 2,665,000
-------------
58,053,950
-------------
Electronics - Components Misc. (0.98%)
International Manufacturing Services, Inc.* ....... 12,000 130,500
Sawtek, Inc.* ...................................... 68,100 2,315,400
-------------
2,445,900
-------------
Electronics - Measuring Instruments (0.31%)
Faro Technologies, Inc.* ........................... 56,300 767,088
-------------
Electronics - Products Misc. (0.47%)
Faroudja, Inc. ..................................... 50,000 450,000
Microwave Power Devices, Inc.* ..................... 100,000 725,000
-------------
1,175,000
-------------
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Electronics - Semiconductor Components (19.32%)
Altera Corp.* ...................................... 120,000 $ 5,325,000
Analog Devices, Inc.* .............................. 176,666 5,399,355
Applied Materials, Inc.* ........................... 190,000 6,341,250
ASM Lithography Holding N.V.*
(Netherlands) ..................................... 35,100 2,571,075
Credence Systems Corp.* ............................ 100,000 2,950,000
Galileo Technology Ltd.* (Israel) .................. 1,400 48,125
Intel Corp. ........................................ 115,000 8,855,000
KLA-Tencor Corp.* .................................. 80,000 3,515,000
National Semiconductor Corp.* ...................... 61,500 2,214,000
PRI Automation, Inc.* .............................. 95,000 3,633,750
Ramtron International Corp.* ....................... 175,000 1,159,375
Veeco Instruments Inc.* ............................ 60,000 2,377,500
VLSI Technology, Inc.* ............................. 120,000 3,555,000
Xilinx, Inc.* ...................................... 10,000 341,250
-------------
48,285,680
-------------
Instruments - Scientific (0.75%)
Thermo Electron Corp.* ............................. 50,000 1,865,625
-------------
Retail / Wholesale - Computers (0.28%)
Southern Electronics Corp.* ........................ 42,100 694,650
-------------
Telecommunications (2.28%)
China Telecom Ltd.* (ADR) (China) .................. 10,200 330,225
Nextel Communications, Inc. (Class A)* ............. 100,000 2,625,000
Primus Telecommunications Group, Inc.*(r) ......... 236,670 2,754,247
-------------
5,709,472
-------------
Telecom - Equipment (8.04%)
DSC Communications Corp. ........................... 80,000 1,950,000
Globecomm Systems Inc. (r) ......................... 208,706 3,216,674
Intelect Communications System* (Bermuda) ......... 250,000 2,437,500
Newbridge Networks Corp.* (Canada) ................. 75,000 3,975,000
PairGain Technologies, Inc.* ....................... 110,000 3,107,500
Tellabs, Inc.* ..................................... 100,000 5,400,000
-------------
20,086,674
-------------
Transport - Airline (5.84%)
AMR Corp.* ......................................... 50,000 5,821,875
UAL Corp.* ......................................... 100,000 8,762,500
-------------
14,584,375
-------------
TOTAL COMMON STOCKS
(Cost $147,962,559) (92.59%) 231,378,028
------- -------------
PAR VALUE
INTEREST S&P (000s MARKET
ISSUER, DESCRIPTION RATE RATING** OMITTED) VALUE
- ------------------- ---- -------- -------- -----
BONDS
Aerospace / Aircraft (0.08%)
Aeronca, Inc., (r)
Conv Sub Deb 01-31-00 ........... 12.50% NR $252 $189,000
------------
<PAGE>
Computer - Software (0.30%)
Pretty Good Privacy, Inc., (r)
Promissory Note 9-11-25 ......... 12.00 NR 750 750,000
------------
Transport - Airline (0.24%)
Northwest Airlines, Inc.,
Sr Note 12-31-00 ................ 12.09 BB- 40 40,637
Piedmont Aviation Inc.,
Equip Tr Cert 1988 Ser F
03-28-09 ....................... 10.35 B+ 500 569,800
------------
610,437
------------
TOTAL BONDS
(Cost $1,509,054) (0.62%) 1,549,437
------ ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (6.50%)
Investment in a joint repurchase
agreement transaction with
Aubrey G. Lanston & Co. -
Dated 10-31-97, Due
11-03-97 (Secured by U.S.
Treasury Notes, 5.00% thru
9.25% Due 02-28-98 thru
04-30-02) - Note A .............. 5.68% 16,248 16,248,000
------------
Corporate Savings Account (0.01%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.95% 20,110
------------
TOTAL SHORT-TERM INVESTMENTS (6.50%) 16,268,110
------ ------------
TOTAL INVESTMENTS (99.72%) $249,195,575
====== ============
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
John Hancock Funds - Global Technology Fund
NOTES TO SCHEDULE OF INVESTMENTS
(r) Direct placement securities which are restricted to resale. They have been
valued at fair value by the Trustees after considerations of restrictions
as to resale, financial condition and prospects of the issuer, general
market conditions and pertinent information in accordance with the Fund's
By-Laws and the Investment Company Act of 1940, as amended. 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:
<TABLE>
<CAPTION>
MARKET
VALUE AS A MARKET
PERCENTAGE VALUE AT
ACQUISITION ACQUISITION OF FUND'S OCTOBER 31,
SECURITY DATE COST NET ASSETS 1997
- -------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Aeronca, Inc. -
Bonds .............................. 02-01-96 $ 240,000 0.08% $ 189,000
Globecomm Systems, Inc. -
Common Stock ....................... 03-30-95 500,000
12-17-96 1,000,000 1.29 3,216,674
N2K, Inc. -
Common Stock ....................... 11-14-91 940,604 1.59 3,977,621
Primus Telecommunications
Group, Inc. -
Common Stock ....................... 10-30-95 500,000
01-23-96 240,000 1.10 2,754,247
Pretty Good Privacy, Inc. -
Note ............................... 09-11-97 750,000 0.30 750,000
---- -----------
TOTAL 4.36% $10,887,542
==== ===========
</TABLE>
* Non-income producing security.
** Credit ratings are unaudited.
NR Not Rated by either Standard & Poor's or Moody's Investors Services.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is U.S. dollar
denominated.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the fund.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
John Hancock Funds - Global Technology Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of two series: John Hancock Global Technology Fund (the "Fund")
and John Hancock Emerging Growth Fund. The other series of the Trust is reported
in separate financial statements. The investment objective of the Fund is to
achieve long-term capital growth by investing principally in equity securities
of foreign and U.S. companies that rely extensively on technology in their
product development or operations.
The Trustees have authorized the issuance of multiple classes of shares of
the Fund, designated as Class A and Class B 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
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 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. All portfolio
transactions initially expressed in terms of foreign currencies have been
translated into U.S. dollars as described in "Foreign Currency Translation"
below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement. 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. Capital gains realized
on some foreign securities are subject to foreign taxes and are accrued, as
applicable.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its 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.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
purchased from either the date of issue or the date of purchase over the life of
the security, as required by the Internal Revenue Code.
<PAGE>
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated 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 identifiable to a
15
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
John Hancock Funds - Global Technology Fund
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.
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. These agreements enable
the Fund to participate with other Funds managed by the Advisor in an unsecured
line of credit with banks which permit borrowings up to $600 million,
collectively. Interest is charged to each Fund, based on its borrowing, at a
rate equal to 0.50% over the Fed Funds Rate. In addition, a commitment fee, at a
rate of 0.075% per annum 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 year ended October 31, 1997.
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.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked" prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked-to-market to reflect the current market
value of the written option.
The Fund may use option contracts to manage its exposure to the stock
market. Writing puts and buying calls will tend to increase the Fund's exposure
to the underlying instrument and buying puts and writing calls will tend to
decrease the Fund's exposure to the underlying instrument, or hedge other Fund
investments.
The maximum exposure to loss for any purchased options will be limited to
the premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the contract's
terms, or if the Fund is unable to offset a contract with a counterparty on a
timely basis ("liquidity risk"). Exchange-traded options have minimal credit
risk as the exchanges act as counterparties to each transaction, and only
present liquidity risk in highly unusual market conditions. To minimize credit
and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
16
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
John Hancock Funds - Global Technology Fund
Written options transactions for the year ended October 31, 1997 were as
follows:
OUTSTANDING, BEGINNING OF PERIOD - $ -
---- -------
OPTIONS WRITTEN 300 78,750
OPTIONS EXCERCISED (300) (78,750)
---- -------
OUTSTANDING, END OF PERIOD - $ -
==== =======
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Adviser is responsible for managing the Fund's investment business affairs
and overseeing the investment activities of the sub-adviser. The Adviser has a
sub-investment management contract with American Fund Advisors, Inc. (the
"Sub-Adviser"), under which the Sub-Adviser, subject to the review of the
Trustees and the overall supervision of the Adviser, provides the Fund with
investment services and advice with respect to investment transactions. Under
the present investment management contract, the Fund pays a monthly management
fee to the Adviser, equivalent on an annual basis, to the sum of (a) 0.85% of
the first $100,000,000 of the Fund's average daily net asset value and (b) 0.75%
of the Fund's average daily net asset value in excess of $100,000,000. The
Adviser pays the Sub-Adviser a monthly management fee, equivalent on an annual
basis, to the sum of (a) 0.35% of the first $100,000,000 of the Fund's average
daily net asset value and (b) 40% of the investment advisory fee received by the
Adviser on amounts over $100,000,000. The Fund pays a monthly administrative fee
at the rate of $100,000 per annum to the Adviser for performance of
administrative services to the Fund.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the year ended October
31, 1997, net sales charges received with regard to sales of Class A shares
amounted to $244,784. Out of this amount, $38,371 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$136,344 was paid as sales commissions to unrelated broker-dealers and $70,069
was paid as sales commissions to sales personnel of John Hancock Distributors,
Inc. ("Distributors") Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro
& Co., Inc. ("Sutro"), all of which are broker-dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect
sole shareholder of Distributors and was the indirect sole shareholder until
November 29, 1996 of John Hancock Freedom Securities Corporation and its
subsidiaries, which include Tucker Anthony and Sutro.
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 year ended October 31, 1997,
contingent deferred sales charges paid to JH Funds amounted to $235,888.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B 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 0.30% of
Class A average daily net assets and 1.00% of Class B 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 The Berkeley
Financial Group. The Fund pays the transfer agent fee based on the number of
shareholder accounts and certain out-of-pocket expenses.
Mr. Edward J. Boudreau, Jr., Ms. Anne C. Hodsdon, and Mr. Richard S.
Scipione are trustees and/or officers of the Adviser, and Mr. Barry J. Gordon is
a director and officer of the Sub-Adviser. The compensation of unaffiliated
Directors 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 applic-
17
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
John Hancock Funds - Global Technology Fund
able, 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. At
October 31, 1997, the Fund's investments to cover the deferred compensation
liability had unrealized appreciation of $1,687.
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 year
ended October 31, 1997, aggregated $225,811,878 and $239,011,274, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the year ended October 31, 1997.
The cost of investments owned at October 31, 1997 (including the joint
repurchase agreement), for federal income tax purposes was $166,163,216. Gross
unrealized appreciation and depreciation of investments aggregated $95,456,345
and $12,444,096, respectively, resulting in net unrealized appreciation of
$83,012,249.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 1997, the Fund has reclassified amounts to
reflect a decrease in accumulated net realized gain on investments of
$13,262,295, a decrease in accumulated net investment loss of $2,682,420 and an
increase in capital paid-in of $10,579,875. This represents the amount necessary
to report these balances on a tax basis, excluding certain temporary
differences, as of October 31, 1997. 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 the treatment of
net operating losses in the computation of distributable income and capital
gains under federal tax rules versus generally accepted accounting principles
and the use of tax equalization. The calculation of net investment income per
share in the financial highlights excludes these adjustments.
NOTE E ---
REORGANIZATION
On July 19, 1995, the shareholders of the John Hancock National Aviation and
Technology Fund (JHNA&T) approved of a plan of reorganization between JHNA&T and
the Fund providing for the transfer of substantially all of the assets and
liabilities of JHNA&T to the Fund in exchange solely for Class A and Class B
shares of the Fund. The acquisition was accounted for a tax free exchange of
2,736,868 Class A shares, and 21,055 Class B shares of John Hancock Global
Technology Fund for the net assets of JHNA&T,which amounted to $75,930,600 and
$576,404 for Class A and Class B shares, respectively, including $41,806,567 of
unrealized appreciation, after the close of business at July 28, 1995. The
aggregate net assets of the Fund and JHNA&T immediately before the acquisition
were $117,123,530 and $75,507,004 for Class A and Class B, respectively. The
aggregate net assets of the Fund and JHNA&T immediately after the merger were
$193,630,533.
18
<PAGE>
John Hancock Funds - Global Technology Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Series Trust --
John Hancock Global Technology Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Global Technology Fund (the
"Fund"), one of the portfolios constituting John Hancock Series Trust, as of
October 31, 1997, and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets and financial highlights for each of the indicated
periods prior to the year ended October 31, 1997 were audited by other auditors
whose report dated December 12, 1996 expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers, and other
appropriate auditing procedures when replies from brokers were not received. 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
John Hancock Global Technology Fund portfolio of John Hancock Series Trust at
October 31, 1997, the results of its operations, the changes in its net assets
and the financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 15, 1997
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund during its taxable year ended October
31, 1997.
The Fund has designated distributions to shareholders of $18,102,032 as a
capital gain dividend. All of this amount is subject to a 28% tax rate.
Shareholders will be mailed a 1997 U.S. Treasury Department Form 1099-DIV
in January 1998 representing their proportionate share.
19
<PAGE>
John Hancock Funds - Global Technology Fund
CHANGE IN INDEPENDENT AUDITOR (UNAUDITED)
On November 1,1996, Price Waterhouse LLP ("Price Waterhouse") resigned as the
independent accountant of the John Hancock Global Technology Fund (the "Fund")
and Ernst & Young LLP ("Ernst & Young") was then selected as the Fund's
independent auditor. The Fund's selection of Ernst & Young as its independent
auditor was recommended by the Fund's audit committee and was approved by the
Fund's Board of Trustees.
The reports on the financial statements prepared by Price Waterhouse for
the fiscal year ended December 31, 1995 and for the period from January 1, 1996
to October 31, 1996 for the Fund did not contain an adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles. During the Fund's two most recent fiscal
periods and up to and including November 1, 1996, there were no disagreements
between the Company and Price Waterhouse on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope of procedure,
which disagreement(s), if not resolved to the satisfaction of Price Waterhouse
would have caused it to make reference to the subject matter of the
disagreement(s) in connection with its report.
20
<PAGE>
-----
NOTES
-----
John Hancock Funds - Global Technology Fund
21
<PAGE>
-----
NOTES
-----
John Hancock Funds - Global Technology Fund
22
<PAGE>
-----
NOTES
-----
John Hancock Funds - Global Technology Fund
23
<PAGE>
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
-------------
Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
-------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Global Technology Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[Recycle Logo] 8300A 10/97
12/97
<PAGE>
ANNUAL REPORT
- --------------------------------------------------------------------------------
Emerging
Growth Fund
OCTOBER 31, 1997
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
================================================================================
TRUSTEES
EDWARD J. BOUDREAU, JR.
JAMES F. CARLIN*
WILLIAM H. CUNNINGHAM*
CHARLES F. FRETZ*
HAROLD R. HISER, JR.*
ANNE C. HODSDON
CHARLES L. LADNER*
LEO E. LINBECK, JR.*
PATRICIA P. MCCARTER*
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
ROBERT G. FREEDMAN
Vice Chairman and
Chief Investment Officer
ANNE C. HODSDON
President
JAMES B. LITTLE
Senior Vice President and
Chief Financial Officer
SUSAN S. NEWTON
Vice President and Secretary
JAMES J. STOKOWSKI
Vice President and Treasurer
THOMAS H. CONNORS
Second Vice President and Compliance Officer
CUSTODIAN
INVESTORS BANK AND TRUST COMPANY
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
TRANSFER AGENT
JOHN HANCOCK SIGNATURE SERVICES, INC.
1 JOHN HANCOCK WAY, SUITE 1000
BOSTON, MASSACHUSETTS 02217-1000
INVESTMENT ADVISER
JOHN HANCOCK ADVISERS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
PRINCIPAL DISTRIBUTOR
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
LEGAL COUNSEL
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109-1803
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
- --------------------------------------------------------------------------------
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
The stock market in 1997 has been anything but dull. Investors have been
treated to record-breaking performance by the Dow Jones Industrial Average, but
with record-breaking volatility. After two years of strong advances amid
relatively little volatility, the market's recent sharp drops and enormous
rebounds have caused a fair share of investor concern.
The latest round came in October and was largely due to uncertainty in
foreign markets. Southeast Asia sneezed and the rest of the world caught a cold.
On October 27, the Dow experienced its largest one-day point decline, dropping
554 points. In percentage terms, however, that roughly 7% decline didn't even
register on the list of 10 largest drops. The next day, the market bounced right
back, as the Dow had a record one-day vault of 337 points. In short order, the
U.S. market had stabilized, yet many markets remained edgy as investors sorted
out the Asian turmoil and its implications on economic growth, interest rates
and corporate earnings.
- --------------------------------------------------------------------------------
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.
- --------------------------------------------------------------------------------
In the face of such uncertainty, a trusted investment professional can be
your best ally. Now, more than ever, your investment professional can help you
take the emotion out of investment decisions. At a time when your instincts
might have you react to the heat of the market's moment, your investment
professional can serve as an objective voice to put current events in a
longer-term perspective. He or she can also help you evaluate your investments
in any market environment to ensure that they fit your risk tolerance and time
horizons. On an ongoing basis, your investment professional is there for you to
check out new investment ideas or to get an informed opinion about current
economic and market conditions.
We encourage you to take advantage of this important resource. Working
together, you can draw up a detailed road map to help reach your financial
destination regardless of the conditions along the way.
Sincerely,
/s/ Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
BY BERNICE S. BEHAR, CFA, PORTFOLIO MANAGER
John Hancock
Emerging Growth Fund
Small-company stocks emerge as market's leaders
Small-company growth stocks staged an impressive comeback over the last 12
months, with the second half of the fiscal year proving to be far more rewarding
than the first. As the extended bull market galloped ahead from October 1996 to
roughly March 1997, it rushed right past most small-company growth stocks.
During that period, large-company stock prices moved ever higher, thanks in
large part to a strong global economy and growing corporate earnings.
But the onset of spring marked a turning point for small-company stocks, and
they slowly began to elbow larger-company stocks off the leader board. Small
caps' fortunes were bolstered by a number of developments. First, many observers
began to view large company stocks as expensive given several years of record
gains. Second, the strong U.S. dollar took a toll on many large, multi-national
companies whose overseas earnings were curtailed. Furthermore, the reduction in
the capital gains tax made small caps -- which create most of their value
through capital gains -- more appealing in the eyes of many investors. Small
stocks continued their climb right until the last weeks of October, when trouble
in many Southeastern Asian markets spilled over into the U.S. That set off a
wave of selling of small- and large-company stocks alike.
A year of adjustments
During the past fiscal year, we made a number of strategic moves in order to
assure that John Hancock Emerging Growth Fund was adhering to its small-company
focus, and to make the portfolio's size more manageable. First, we sold stocks
"Small-
company
growth
stocks
staged an
impressive
comeback..."
- --------------------------------------------------------------------------------
A 2 1/2" x 3 3/4" photo of the portfolio management team at bottom right.
Caption reads "Bernice S. Behar (center) and Fund management team members Ben
Hock (l) and Andrew Slabin (r)".
- --------------------------------------------------------------------------------
3
<PAGE>
================================================================================
John Hancock Funds - Emerging Growth Fund
- --------------------------------------------------------------------------------
Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1)Philip Services 1.2 % 2) National Oilwell 1.1%
3) Level One Communications 1.1% 4) Network Appliance 1.1% 5) Heftel
Broadcasting 1.0%. A footnote below reads "As a percentage of net assets on
October 31, 1997"
- --------------------------------------------------------------------------------
"During the
past fiscal
year, we
made a
number of
strategic
moves..."
that had, thanks to the stock market's unprecedented bull run, reached market
capitalizations where they could no longer be considered small companies. Not
only did we lock in profits by selling our larger and mid-cap holdings at a time
when their stock prices were strong, but we also benefited from reinvesting the
proceeds from those sales into small-company stocks, which, as we pointed out
earlier, did quite well during the summer and fall.
Many of the larger positions we sold fell into the data networking category.
In addition to their big capitalizations, our stake in them had grown quite
large. Furthermore, we expected weakening demand and lower prices for their
networking products and services. That's exactly what happened by summer, so we
dodged the sell-off.
Part of our strategy also involved eliminating a number of our smallest
holdings that we felt were too insignificant to add to the Fund's performance in
a meaningful way. The end result of the restructuring work is that the Fund now
has a more manageable number of holdings that are in line with its stated
investment objective. Despite the cutback in holdings, the Fund not only remains
diversified, but in fact is now better diversified than before. That's because
the Fund has far greater balance and is less vulnerable to adverse developments
among its top holdings.
Performance
The combination of the Fund's restructuring and the small-company stock rebound
in the second half of the period had a decidedly positive effect on performance.
Indeed, we achieved all of our 12-month gains in the second half of the fiscal
year alone, when the Fund's Class A and Class B shares returned 38.44% and
37.96%, respectively, at net asset value. Those returns outpaced the average
small-company growth fund's return of 36.60% for the same six-month period ended
October 31, 1997, according to Lipper Analytical Services, Inc.1 In that time,
the Russell 2000 Index, a broad measure of small-company stock performance,
returned 26.31%. That strong advancement allowed us to overcome our first half
losses and post strong results for the year. For the 12 months ended October 31,
1997, the Fund's Class A and Class B shares had total returns of 23.35% and
22.44%, respectively, at net asset value, compared to the 26.45% return of the
average small-company growth fund, according to Lipper. For the same period, the
Russell 2000 Index return of 27.22%. Please see pages six and seven for
longer-term performance information.
Winners and losers
Our best performers during the year were spread across a broad range of industry
sectors. A strong global demand for energy boosted Maverick Tube
4
<PAGE>
- --------------------------------------------------------------------------------
Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investments"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is Heftel
Broadcasting followed by an up arrow and the phrase "Rising advertising
revenues." The second listing is Stage Stores followed by an up arrow and the
phrase "Healthy consumer spending." The third listing is Zoran followed by a
down arrow and the phrase "Disappointing earnings report." Footnote below reads:
"See "Schedule of Investments." Investment holdings are subject to change."
- --------------------------------------------------------------------------------
John Hancock Funds - Emerging Growth Fund
- --------------------------------------------------------------------------------
Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended October 31, 1997." The chart is
scaled in increments of 10% from bottom to top, with 30% at the top and 0% at
the bottom. Within the chart there are three solid bars. The first represents
the 23.35% total return for the John Hancock Emerging Growth Fund: Class A. The
second represents the 22.44% total return for the John Hancock Emerging Growth
Fund: Class B. The third represents the 26.45% total return for the average
small company growth fund. A footnote below reads: "The total returns for John
Hancock Emerging Growth Fund are at net asset value with all distributions
reinvested. The average small company growth fund is tracked by Lipper
Analytical Services, Inc. (1) See following two pages for historical performance
information."
- --------------------------------------------------------------------------------
Total returns for John Hancock Emerging Growth Fund are at net asset value with
all distributions reinvested. The average small-company growth fund is tracked
by Lipper Analytical Services, Inc.(1) See the following two pages for
historical performance information.
and National Oil, which manufactures equipment used in the petroleum industry.
Another winner was Spanish-language radio broadcaster Heftel Broadcasting, which
benefited from higher advertising revenues. Our retail holdings, which are
focused on companies that serve small-town America, also performed quite well.
Sporting-goods retailer Hibbett's and department store company Stage Stores
benefited from healthy consumer spending and the low cost of its store leases.
We also saw our share of winners in industries that typically aren't thought of
as high-growth sectors. Two examples were Philip Services, which recycles waste
products for resale to industry, and ITEQ, which manufactures air pollution
control systems. Finally, E*TRADE Group continued to post strong earnings as its
share of the on-line security trading business grew.
Our technology holdings, which were focused in the software and semiconductor
industries in the second half of the period, proved to be a mixed bag. Aspect
Development, which makes client server-based enterprise software used in the
manufacturing process; and semiconductor chip maker Semtech showed nice gains
for the year, although they faltered a bit with the Asian "flu." But Zoran,
which develops integrated circuits for digital video and audio, was a
disappointment when it stumbled on news of lower-than-expected earnings.
Outlook and strategy
Despite their recent gains, we think that small-company stock prices remain
attractive. Historically speaking, small-company stock prices peak when they
sell for roughly twice that of larger companies. At the end of the period,
small-company stocks were selling at roughly 1.2 times that of larger companies.
In our view, that suggests that the smaller names still have room to post
further gains. Of course, the overall global economic picture, and its impact on
the U.S. economy, will likely play a large role in the fortunes of all stocks.
At present, it appears that investors are still trying to grapple with what the
currency and economic uncertainty in Asia will mean for the U.S. economy and
stock prices. Some observers believe that the trouble in Southeast Asia may be a
positive for small-company stocks, since they tend to do most of their business
in the United States rather than overseas. But until these issues are sorted
through, we believe it's likely that the market will be volatile.
"...small-
company
stock prices
remain
attractive."
5
<PAGE>
- --------------------------------------------------------------------------------
This commentary reflects the views of the portfolio manager through the end of
the Fund's period discussed in this report. Of course, the manager's views are
subject to change as market and other conditions warrant.
(1)Figures from Lipper Analytical Services, Inc. include reinvested dividends
and do not take into account sales charges. Actual load-adjusted performance is
lower.
================================================================================
John Hancock Funds - Emerging Growth Fund
- --------------------------------------------------------------------------------
A LOOK AT PERFORMANCE
- --------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock Emerging Growth 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.
Class A share total return figures include the maximum applicable sales charge
of 5%.
Class B share total return figures reflect the maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years).
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 September 30, 1997
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
---- ----- ---------
Cumulative Total Returns 20.49% 166.84% 185.63%
Average Annual Total Returns 20.49% 21.69% 18.75%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended September 30, 1997
ONE FIVE TEN
YEAR YEARS YEARS
---- ----- -----
Cumulative Total Returns 20.92% 168.31% 602.92%
Average Annual Total Returns 20.92% 21.82% 21.70%
6
<PAGE>
================================================================================
John Hancock Funds - Emerging Growth Fund
The charts on the right show how much a $10,000 investment in the John Hancock
Emerging Growth 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 used to measure stock market
performance. In addition, the Fund is compared to both the Russell 2000 Index
and the Russell 2000 Growth Index. The Russell 2000 Index is an unmanaged
small-cap index that is comprised of 2,000 U.S. stocks. The Russell 2000 Growth
Index is an unmanaged index that contains Russell 2000 Index stocks with a
greater-than-average growth orientation. For future reports the Adviser has
chosen to remove the Standard & Poor's 500 Stock Index, but will continue to
compare the Fund's performance to the broad-based Russell 2000 Index as well as
the Russell 2000 Growth Index, which more closely represents the investment
strategy of the Fund.
Emerging Growth Fund
Class A shares
Line chart with the heading Emerging Growth Fund: Class A, representing the
growth of a hypothetical $10,000 investment over the life of the fund. Within
the chart are five lines. The first line represents the value of the Emerging
Growth Fund, before sales charge, and is equal to $27,924 as of October 31,
1997. The second line represents the value of the hypothetical $10,000
investment made in the Standard & Poor's 500 Stock Index on August 22, 1991, and
is equal to $27,730 as of October 31, 1997. The third line represents the value
of the hypothetical $10,000 investment made in the Russell 2000 Index on August
22, 1991, and is equal to $27,662 as of October 31, 1997. The fourth line
represents the value of the Emerging Growth Fund, after sales charge, and is
equal to $26,528 as of October 31, 1997. The fifth line represents the value of
the hypothetical $10,000 investment made in the Russell 2000 Growth Index on
August 22, 1991, and is equal to $23,046 as of October 31, 1997.
Emerging Growth Fund
Class B shares
Line chart with the heading Emerging Growth Fund: Class B, representing the
growth of a hypothetical $10,000 investment over the life of the fund. Within
the chart are four lines. The first line represents the value of the Emerging
Growth Fund, before sales charge, and is equal to $65,229 as of October 31,
1997. The second line represents the value of the hypothetical $10,000
investment made in the Standard & Poor's 500 Stock Index on October 29, 1987,
and is equal to $38,182 as of October 31, 1997. The third line represents the
value of the hypothetical $10,000 investment made in the Russell 2000 Index on
October 31, 1987, and is equal to $30,354 as of October 31, 1997. The fourth
line represents the value of the hypothetical $10,000 investment made in the
Russell 2000 Growth Index on October 31, 1987, and is equal to $25,074 as of
October 31, 1997.
* No contingent deferred sales charge applicable.
7
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on October 31, 1997. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
October 31, 1997
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks, preferred stocks and units
(cost - $440,755,073) ..................................... $673,227,258
Joint repurchase agreement (cost - $8,368,000) .............. 8,368,000
Corporate savings account ................................... 316
-------------
681,595,574
Receivable for investments sold .............................. 7,341,887
Receivable for shares sold ................................... 397,463
Dividends receivable ......................................... 226,330
Interest receivable .......................................... 1,833
Other assets ................................................. 81,249
-------------
Total Assets ............................... 689,644,336
-----------------------------------------------------------
Liabilities:
Payable for investments purchased ............................ 5,822,067
Payable for shares repurchased ............................... 1,042,197
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ..................................... 692,315
Accounts payable and accrued expenses ........................ 109,910
-------------
Total Liabilities .......................... 7,666,489
-----------------------------------------------------------
Net Assets:
Capital paid-in .............................................. 305,204,846
Accumulated realized gain on investments and
foreign currency transactions ............................... 144,354,025
Net unrealized appreciation of investments and
foreign currency transactions ............................... 232,475,148
Accumulated net investment loss .............................. (56,172)
-------------
Net Assets ................................. $681,977,847
===========================================================
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 - $209,383,978/4,238,791 ............................. $49.40
=============================================================================
Class B - $472,593,869/10,078,256 ............................ $46.89
=============================================================================
Maximum Offering Price Per Share*
Class A - ($49.40 x 105.26%) ................................. $52.00
=============================================================================
* 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
Year ended October 31, 1997
- --------------------------------------------------------------------------------
<PAGE>
Investment Income:
Dividends .................................................... $2,941,630
Interest ..................................................... 1,967,488
-------------
4,909,118
-------------
Expenses:
Investment management fee - Note B .......................... 5,110,454
Distribution and service fee - Note B
Class A ................................................... 570,784
Class B ................................................... 4,429,224
Transfer agent fee - Note B ................................. 1,416,204
Custodian fee ............................................... 203,897
Financial services fee - Note B ............................. 125,076
Registration and filing fees ................................ 75,104
Trustees' fees .............................................. 63,258
Auditing fee ................................................ 42,450
Miscellaneous ............................................... 27,513
Interest expense - Note A ................................... 22,389
Printing .................................................... 18,470
Legal fees .................................................. 14,046
-------------
Total Expenses ............................. 12,118,869
-----------------------------------------------------------
Net Investment Loss ........................ (7,209,751)
-----------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold and foreign
currency transactions ....................................... 228,690,007
Change in net unrealized appreciation/depreciation
of investments .............................................. (79,544,986)
Change in net unrealized appreciation/depreciation
on foreign currency transactions ............................ (1,103)
-------------
Net Realized and Unrealized
Gain on Investments ........................ 149,143,918
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .................. $141,934,167
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ................................................... ($8,693,751) ($7,209,751)
Net realized gain on investments sold and foreign currency transactions 20,303,665 228,690,007
Change in net unrealized appreciation/depreciation of investments ..... 66,455,826 (79,546,089)
------------- -------------
Net Increase in Net Assets Resulting from Operations ................ 78,065,740 141,934,167
------------- -------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - (none and $0.8455 per share, respectively) ................ -- (4,419,042)
Class B - (none and $0.8455 per share, respectively) ................ -- (9,530,032)
------------- -------------
Total Distributions to Shareholders ................................. -- (13,949,074)
------------- -------------
From Fund Share Transactions - Net: * .................................... 18,740,400 (115,772,143)
------------- -------------
Net Assets:
Beginning of period ................................................... 572,958,757 669,764,897
------------- -------------
End of period (including accumulated net investment loss
of $36,404 and $56,172, respectively) ............................... $669,764,897 $681,977,847
============= =============
*Analysis of Fund Share Transactions:
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1996 1997
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ...................................................... 10,344,259 $405,197,459 12,607,009 $533,787,513
Shares issued to shareholders in reinvestment of distributions ... -- -- 91,549 3,727,865
------------ ------------- ------------ -------------
10,344,259 405,197,459 12,698,558 537,515,378
Less shares repurchased .......................................... (9,972,552) (391,886,133) (13,805,154) (590,533,419)
------------ ------------- ------------ -------------
Net increase (decrease) .......................................... 371,707 $13,311,326 (1,106,596) ($53,018,041)
============ ============= ============ =============
CLASS B
Shares sold ...................................................... 8,954,690 $337,367,675 6,905,565 $276,160,925
Shares issued to shareholders in reinvestment of distributions ... -- -- 171,328 6,664,519
------------ ------------- ------------ -------------
8,954,690 337,367,675 7,076,893 282,825,444
Less shares repurchased .......................................... (8,730,155) (331,938,601) (8,532,585)
------------ ------------- ------------ -------------
Net increase (decrease) .......................................... 224,535 $5,429,074 (1,455,692) ($62,754,102)
============ ============= ============ =============
</TABLE>
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 year. The difference reflects
earnings less expenses, any investment gains and losses, and any increase or
decrease in money shareholders invested in the Fund. The footnote illustrates
the number of Fund shares sold and repurchased during the last two periods,
along with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1993 1994 1995(1) 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ...................... $20.60 $25.89 $26.82 $36.09 $40.88
-------- -------- -------- -------- --------
Net Investment Loss(2) .................................... (0.16) (0.18) (0.25) (0.34) (0.25)
Net Realized and Unrealized Gain on Investments ........... 5.45 1.11 9.52 5.13 9.62
-------- -------- -------- -------- --------
Total from Investment Operations ......................... 5.29 0.93 9.27 4.79 9.37
-------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold .. -- -- -- -- (0.85)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $25.89 $26.82 $36.09 $40.88 $49.40
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) ............. 25.68% 3.59% 34.56% 13.27% 23.35%
Ratios and Supplemental Data
Net Assets, End of Period (000s Omitted) .................. $81,263 $131,053 $179,481 $218,497 $209,384
Ratio of Expenses to Average Net Assets ................... 1.40% 1.44% 1.38% 1.32% 1.29%(5)
Ratio of Net Investment Loss to Average Net Assets ........ (0.70%) (0.71%) (0.83%) (0.86%) (0.57%)
Portfolio Turnover Rate ................................... 29% 25% 23% 44% 96%
Average Broker Commission Rate(4) ......................... N/A N/A N/A $0.0669 $0.0694
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indi cated: income, expenses, distributions and
gains (losses) 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.
10
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1993 1994 1995(1) 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ...................... $20.34 $25.33 $26.04 $34.79 $39.13
-------- -------- -------- -------- --------
Net Investment Loss(2) .................................... (0.36) (0.36) (0.45) (0.60) (0.54)
Net Realized and Unrealized Gain on Investments ........... 5.35 1.07 9.20 4.94 9.15
-------- -------- -------- -------- --------
Total from Investment Operations ......................... 4.99 0.71 8.75 4.34 8.61
-------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold .. -- -- -- -- (0.85)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $25.33 $26.04 $34.79 $39.13 $46.89
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) ............. 24.53% 2.80% 33.60% 12.48% 22.44%
Ratios and Supplemental Data
Net Assets, End of Period (000s Omitted) .................. $219,484 $283,435 $393,478 $451,268 $472,594
Ratio of Expenses to Average Net Assets ................... 2.28% 2.19% 2.11% 2.05% 2.02%(5)
Ratio of Net Investment Loss to Average Net Assets ........ (1.58%) (1.46%) (1.55%) (1.59%) (1.30%)
Portfolio Turnover Rate ................................... 29% 25% 23% 44% 96%
Average Broker Commission Rate(4) ......................... N/A N/A N/A $0.0669 $0.0694
</TABLE>
(1) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charge.
(4) Per portfolio share traded. Required for fiscal years that began September
1, 1995 or later.
(5) Expense ratios do not include interest expense due to bank loans which
amounted to less than $0.01 cents per share.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
Schedule of Investments
October 31, 1997
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Emerging Growth Fund on October 31, 1997. It's divided into four main
categories: common stocks, preferred stock, unit and short-term investments.
Common stocks, preferred stocks and units are further broken down by industry
group. Short-term investments, which represent the Fund's "cash" position, are
listed last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
COMMON STOCKS
Advertising (1.45%)
CKS Group, Inc.* .............................. 37,800 $1,370,250
Lamar Advertising Co.* ........................ 137,000 4,640,875
Universal Outdoor Holdings, Inc.* ............. 92,100 3,891,225
-----------
9,902,350
-----------
Aerospace (0.47%)
AAR Corp. ..................................... 89,800 3,215,962
-----------
Automobile / Trucks (0.49%)
Budget Group, Inc. (Class A)* ................ 94,900 3,321,500
-----------
Beverages (1.39%)
Beringer Wine Estates Holdings, Inc.
(Class B)* .................................. 34,900 1,081,900
Mondavi (Robert) Corp. (Class A)* ............. 105,400 5,355,637
Scheid Vineyards Inc. (Class A)* .............. 290,400 3,049,200
-----------
9,486,737
-----------
Broker Services (0.92%)
Donaldson, Lufkin & Jenrette, Inc. ............ 18,900 1,327,725
Interra Financial, Inc. ....................... 30,000 1,653,750
Raymond James Financial, Inc. ................. 110,725 3,321,750
-----------
6,303,225
-----------
Building (0.68%)
Royal Group Technologies Ltd.
(Canada)* ................................... 160,600 4,075,225
UNIFAB International, Inc.* ................... 17,200 550,400
-----------
4,625,625
-----------
Business Services - Misc (3.88%)
Abacus Direct Corp.* .......................... 56,700 2,083,725
Billing Information Concepts Corp.* ........... 60,000 2,355,000
Caribiner International, Inc.* ................ 85,000 3,787,812
Business Services - Misc (continued)
Coinstar, Inc.* ............................... 351,500 $3,536,969
Hagler Bailly, Inc.* .......................... 101,300 2,051,325
Mac-Gray Corp.* ............................... 15,700 231,575
Market Facts, Inc. ............................ 117,500 2,379,375
MAXIMUS, Inc.* ................................ 51,700 1,447,600
On Assignment, Inc.* .......................... 194,500 4,740,937
ProBusiness Services, Inc.* ................... 72,100 1,442,000
Registry, Inc. (The)* ......................... 31,200 1,294,800
Securacom, Inc.* .............................. 115,600 1,083,750
-----------
26,434,868
-----------
Computers (11.67%)
ACE COMM Corp.* ............................... 138,000 2,466,750
Adaptec, Inc.* ................................ 56,700 2,746,406
Advent Software, Inc.* ........................ 40,900 1,042,950
Aris Corp.* ................................... 9,900 233,888
Aspect Development, Inc.* ..................... 111,200 5,198,600
Baan Co., N.V. (Netherlands)* ................ 40,600 2,847,075
BMC Software, Inc.* ........................... 50,000 3,018,750
Box Hill Systems Corp.* ....................... 28,000 434,000
<PAGE>
CBT Group PLC, American Depositary
Receipts (ADR) (Ireland)* ................... 42,600 3,269,550
Concord Communications, Inc.* ................ 26,000 461,500
Dell Computer Corp.* .......................... 30,000 2,403,750
Discreet Logic, Inc.* ......................... 212,700 4,160,944
E*TRADE Group, Inc.* .......................... 196,100 6,054,587
Hyperion Software Corp.* ...................... 75,600 2,882,250
JDA Software Group, Inc.* ..................... 23,600 737,500
Logility, Inc.* ............................... 7,300 106,763
National Computer Systems, Inc. ............... 37,500 1,425,000
National Instruments Corp.* ................... 90,700 4,126,850
Network Appliance, Inc.* ...................... 142,400 7,155,600
PeopleSoft, Inc.* ............................. 53,500 3,363,812
RADCOM Ltd.* .................................. 54,600 505,050
SCM Microsystems, Inc.* ....................... 44,200 1,027,650
SEI Investments Co. ........................... 17,000 723,563
SPR Inc.* ..................................... 48,900 843,525
Sterling Commerce, Inc.* ...................... 101,323 3,362,657
Sterling Software, Inc.* ...................... 99,200 3,385,200
Symantec Corp.* ............................... 25,000 546,875
Transaction Systems Architects, Inc.
(Class A)* .................................. 61,400 2,402,275
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Computers (continued)
Vantive Corp. (The)* .......................... 47,200 $1,191,800
Visio Corp.* .................................. 160,600 5,972,312
Whittman-Hart, Inc.* .......................... 129,500 3,755,500
Xionics Document Technologies, Inc.* .......... 113,400 1,729,350
-----------
79,582,282
-----------
Consumer Products Misc. (0.62%)
Samsonite Corp.* .............................. 90,800 4,210,850
-----------
Containers (0.26%)
Ivex Packaging Corp.* ......................... 83,900 1,772,388
-----------
Electronics (9.78%)
Aavid Thermal Technologies, Inc.* ............. 76,800 2,284,800
Aehr Test Systems* ............................ 32,700 441,450
Aeroflex, Inc.* ............................... 283,500 2,923,594
ANADIGICS, Inc.* .............................. 54,800 2,027,600
Aseco Corp * .................................. 47,300 626,725
Atmel Corp.* .................................. 60,600 1,568,025
ATMI, Inc.* ................................... 160,600 4,316,125
Berg Electronics Corp.* ....................... 160,700 3,756,362
Credence Systems Corp.* ....................... 47,000 1,386,500
Electroglas, Inc.* ............................ 200,000 3,800,000
FARO Technologies, Inc.* ...................... 151,200 2,060,100
Integrated Circuit Systems, Inc.* ............. 92,200 3,157,850
KLA-Tencor Corp.* ............................. 50,000 2,196,875
Lam Research Corp.* ........................... 40,000 1,445,000
Level One Communications, Inc.* ............... 160,150 7,206,750
Maxim Intergrated Products, Inc.* ............. 44,800 2,968,000
Metromedia Fiber Network, Inc.
(Class A)* .................................. 27,000 648,000
Micrel, Inc.* ................................. 70,900 2,543,538
PRI Automation, Inc.* ......................... 85,800 3,281,850
Sawtek, Inc.* ................................. 124,500 4,233,000
SeaMED Corp.* ................................. 142,500 2,333,438
Semtech Corp.* ................................ 106,800 4,972,875
Teradyne, Inc.* ............................... 65,456 2,450,509
Unitrode Corp.* ............................... 151,200 4,054,050
-----------
66,683,016
-----------
<PAGE>
Energy (0.05%)
TransCoastal Marine Services, Inc.* ........... 14,800 368,150
-----------
Finance (2.77%)
Franklin Resources, Inc. ...................... 48,000 4,314,000
Medallion Financial Corp. ..................... 288,200 6,052,200
Pre-Paid Legal Services, Inc.* ................ 153,800 4,652,450
Price (T. Rowe) Associates, Inc. .............. 58,600 3,882,250
-----------
18,900,900
-----------
Food (1.57%)
American Italian Pasta Co. (Class A)* ......... 11,900 $249,900
Fine Host Corp.* .............................. 151,200 4,233,600
Morningstar Group, Inc.* ...................... 146,400 6,258,600
-----------
10,742,100
-----------
Funeral Services & Related (0.19%)
Rock of Ages Corp. (Class A)* ................ 66,900 1,271,100
-----------
Insurance (5.23%)
Ace, Ltd. (Bermuda) ........................... 37,800 3,513,037
Capital Re Corp. .............................. 75,600 4,455,675
CMAC Investment Corp. ......................... 94,500 5,167,969
Everest Reinsurance Holdings, Inc. ............ 30,700 1,155,088
EXEL Ltd. (Bermuda) ........................... 48,200 2,913,088
Healthcare Recoveries, Inc.* .................. 176,700 3,268,950
Horace Mann Educators Corp. ................... 70,900 3,988,125
Mid Ocean Ltd. (Bermuda) ...................... 3,800 246,525
Philadelphia Consolidated
Holding Corp.* .............................. 99,200 3,658,000
RenaissanceRe Holdings Ltd.
(Bermuda) ................................... 3,589 156,122
Transatlantic Holdings, Inc. .................. 24,100 1,667,419
Vesta Insurance Group, Inc. ................... 23,600 1,371,750
Western National Corp. ........................ 141,700 4,082,731
-----------
35,644,479
-----------
Lasers - Systems / Components (0.26%)
General Scanning, Inc.* ....................... 68,900 1,778,481
-----------
Leasing Companies (0.54%)
Rollins Truck Leasing Corp. ................... 219,700 3,652,512
-----------
Leisure (3.49%)
Ballantyne of Omaha, Inc.* .................... 281,200 4,710,100
Cinar Films, Inc. (Class B) (Canada)* ......... 127,900 4,972,112
Premier Parks, Inc.* .......................... 104,900 4,196,000
Silicon Gaming, Inc.* ......................... 178,700 2,993,225
Silverleaf Resorts, Inc.* ..................... 165,300 3,595,275
Travel Services International, Inc.* .......... 112,000 2,506,000
Vari-Lite International, Inc.* ................ 67,500 805,781
-----------
23,778,493
-----------
Machinery (0.87%)
Gardner Denver Machinery, Inc.* ............... 156,000 5,596,500
Innovative Valve Technologies, Inc.* .......... 20,300 355,250
-----------
5,951,750
-----------
Manufacturing (0.58%)
Aztec Manufacturing Co. ....................... 217,400 3,926,787
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Media (4.65%)
American Radio Systems Corp.* ................ 72,720 $3,545,100
Central Newspapers, Inc. (Class A) ............ 52,800 3,468,300
Clear Channel Communications, Inc.* ........... 47,600 3,141,600
CMP Media, Inc. (Class A)* .................... 175,300 3,243,050
Cox Radio, Inc. (Class A)* .................... 113,400 3,862,687
Harte-Hanks Communications, Inc. .............. 70,900 2,463,775
Heftel Broadcasting Corp. (Class A)* .......... 100,500 6,683,250
Network Event Theater, Inc.* .................. 685,200 3,511,650
Petersen Cos., Inc. (The) (Class A)* .......... 10,400 205,400
Univision Communications, Inc. ................
(Class A)* .................................. 26,100 1,618,200
-----------
31,743,012
-----------
Medical (7.36%)
Affymetrix, Inc.* ............................. 28,300 1,036,488
American Healthcorp, Inc.* .................... 38,100 400,050
AmeriPath, Inc.* .............................. 14,900 245,850
Andrx Corp.* .................................. 38,300 1,474,550
ESC Medical Systems Ltd. (Israel)* ............ 66,100 2,594,425
Health Care & Retirement Corp.* ............... 80,950 3,060,922
Health Management Associates, Inc. ............
(Class A)* .................................. 54,952 1,339,455
IDEC Pharmaceuticals Corp.* ................... 43,300 1,650,813
Incyte Pharmaceuticals, Inc.* ................ 47,300 3,807,650
Integrated Health Services, Inc. .............. 30,191 958,571
Kos Pharmaceuticals, Inc.* .................... 111,000 3,968,250
Mentor Corp. .................................. 38,800 1,413,775
MiniMed, Inc.* ................................ 104,000 4,056,000
Monarch Dental Corp.* ......................... 91,500 1,658,438
Ocular Sciences, Inc.* ........................ 75,600 1,663,200
PAREXEL International Corp.* .................. 33,600 1,213,800
PathoGenesis Corp.* ........................... 96,500 3,474,000
Perclose, Inc.* ............................... 147,000 3,601,500
Protein Design Labs, Inc.* .................... 104,200 5,196,975
SONUS Pharmaceuticals, Inc.* .................. 108,700 4,137,394
Wesley Jessen VisionCare, Inc.* ............... 110,000 3,217,500
-----------
50,169,606
-----------
Metal (1.44%)
Maverick Tube Corp.* .......................... 179,500 6,327,375
NCI Building Systems, Inc.* ................... 14,200 517,413
Prudential Steel Ltd. (Canada) ................ 70,900 2,968,902
-----------
9,813,690
-----------
Office (0.66%)
Shelby Williams Industries, Inc. .............. 274,400 4,510,450
-----------
Oil & Gas (8.13%)
Brown (Tom) Inc.* ............................. 141,000 $3,489,750
Camco International, Inc. ..................... 18,900 1,365,525
Cross Timbers Oil Co. ......................... 38,400 1,024,800
Dawson Production Services, Inc.* ............. 165,400 4,010,950
Dril-Quip, Inc.* .............................. 3,900 139,913
Eagle Geophysical, Inc.* ...................... 49,200 861,000
ENSCO International, Inc.* .................... 41,600 1,749,800
EVI, Inc.* .................................... 85,000 5,455,937
Falcon Drilling Co., Inc.* .................... 167,200 6,081,900
J. Ray McDermott, S.A.* ....................... 56,700 2,345,963
Key Energy Group, Inc.* ....................... 147,000 4,612,125
National-Oilwell, Inc.* ....................... 94,500 7,235,156
Oceaneering International, Inc.* .............. 21,700 538,431
Precision Drilling Corp. (Canada)* ............ 141,700 4,357,275
Smith International, Inc.* .................... 47,200 3,599,000
Snyder Oil Corp. .............................. 18,000 398,250
Stone Energy Corp.* ........................... 108,700 3,627,862
Tuboscope Inc.* ............................... 94,500 3,000,375
Vintage Petroleum, Inc. ....................... 67,100 1,534,913
-----------
55,428,925
-----------
<PAGE>
Pollution Control (4.94%)
American Disposal Services, Inc.* ............. 126,400 4,455,600
Eastern Environmental Services, Inc.* ......... 164,000 4,182,000
ITEQ, Inc.* ................................... 415,800 5,197,500
Newpark Resources, Inc.* ...................... 160,600 6,664,900
Philip Services Corp. (Canada)* ............... 466,400 8,162,000
Superior Services, Inc.* ...................... 151,200 4,044,600
US Filter Corp.* .............................. 24,750 993,094
-----------
33,699,694
-----------
Printing - Commercial (0.75%)
Mail-Well, Inc.* .............................. 148,800 5,152,200
-----------
Real Estate Investment Trust (3.53%)
Arden Realty Group, Inc. ...................... 120,400 3,672,200
Beacon Properties Corp. ....................... 99,300 4,183,012
Cali Realty Corp. ............................. 85,100 3,446,550
Crescent Real Estate Equities Co. ............. 114,000 4,104,000
Glenborough Realty Trust, Inc. ................ 195,100 4,999,437
Starwood Lodging Trust ........................ 61,400 3,672,487
-----------
24,077,686
-----------
Retail (12.18%)
99 Cents Only Stores* ......................... 137,000 5,146,062
Arbor Drugs, Inc. ............................. 187,500 5,015,625
Big Dog Holdings, Inc.* ....................... 48,000 678,000
Borders Group, Inc.* .......................... 94,500 2,451,094
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Retail (continued)
CKE Restaurants, Inc. ......................... 115,800 $4,624,762
Concepts Direct, Inc.* ........................ 178,500 3,123,750
Consolidated Stores Corp.* .................... 35,500 1,415,563
Cost Plus, Inc.* .............................. 144,800 3,927,700
CVS Corp. ..................................... 46,662 2,860,964
Dominick's Supermarkets, Inc.* ................ 146,500 5,347,250
Ethan Allen Interiors, Inc. ................... 77,500 2,746,406
Famous Dave's of America, Inc.* ............... 189,000 3,283,875
Furniture Brands International, Inc.* ......... 174,800 2,927,900
Hibbett Sporting Goods, Inc.* ................ 166,300 4,614,825
Il Fornaio (America) Corp.* ................... 58,900 784,106
Linens `N Things, Inc.* ....................... 127,500 4,582,031
Peapod, Inc.* ................................. 172,400 1,637,800
Proffitt's, Inc.* ............................. 155,600 4,463,775
Quality Food Centers, Inc.* ................... 76,100 3,624,262
Rainforest Cafe, Inc.* ........................ 112,200 3,828,825
Stage Stores, Inc.* ........................... 160,700 5,865,550
Staples, Inc.* ................................ 76,500 2,008,125
Starbucks Corp.* .............................. 80,300 2,649,900
Supersol Ltd. (ADR) (Israel)* ................ 106,400 1,569,400
Tiffany & Co. ................................. 68,000 2,686,000
Track `n Trail Inc.* .......................... 49,000 490,000
U.S.A. Floral Products, Inc.* ................ 32,300 565,250
White Cap Industries, Inc.* ................... 7,800 148,200
-----------
83,067,000
-----------
Schools / Education (0.64%)
EduTrek International, Inc. (Class A)* ........ 25,200 617,400
ITI Education Corp. (Canada)* ................ 300,000 2,118,570
Strayer Education, Inc. ....................... 34,500 1,647,375
-----------
4,383,345
-----------
Steel (0.74%)
Lone Star Technologies, Inc.* ................ 132,300 5,052,206
-----------
Telecommunications (3.72%)
Comverse Technology, Inc.* .................... 99,800 4,116,750
Innova Corp.* ................................. 61,500 1,322,250
ITC DeltaCom, Inc.* ........................... 5,200 100,100
MRV Communications, Inc.* ..................... 167,600 4,902,300
NEXTLINK Communications, Inc. .................
(Class A)* .................................. 16,100 364,263
PairGain Technologies, Inc.* .................. 68,600 1,937,950
REMEC, Inc.* .................................. 186,600 4,734,975
Tel-Save Holdings, Inc.* ...................... 189,000 4,063,500
Telecommunications (continued)
Tellabs, Inc.* ................................ 50,000 $2,700,000
USLD Communications Corp.* .................... 56,700 1,123,369
-----------
25,365,457
-----------
Textile (1.22%)
Culp, Inc. .................................... 179,000 3,401,000
Cutter & Buck, Inc.* .......................... 185,200 3,310,450
Tefron Ltd. (Israel)* ......................... 85,100 1,632,856
-----------
8,344,306
-----------
Transport (1.08%)
ASA Holdings, Inc. ............................ 61,500 1,714,313
C.H. Robinson Worldwide, Inc.* ................ 13,100 288,200
Carey International, Inc.* .................... 71,600 1,074,000
Eagle USA Airfreight, Inc.* ................... 75,600 2,286,900
Jevic Transportation, Inc.* ................... 99,600 1,767,900
Simon Transportation Services Inc.* ........... 10,400 231,400
-----------
7,362,713
-----------
TOTAL COMMON STOCKS
(Cost $438,219,561) (98.20%) 669,723,845
------- -----------
PREFERRED STOCK
Oil & Gas (0.19%)
Cross Timbers Oil Co., Ser A .................. 34,400 1,337,300
-----------
TOTAL PREFERRED STOCK
(Cost $605,740) (0.19%) 1,337,300
------- -----------
UNIT
Real Estate Investment Trust (0.32%)
Hanover Capital Mortgage
Holdings, Inc.* ............................. 122,900 2,166,113
-----------
TOTAL UNIT
(Cost $1,929,772) (0.32%) 2,166,113
------- -----------
TOTAL COMMON STOCKS,
PREFERRED STOCK AND UNIT
(Cost $440,755,073) (98.71%) $673,227,258
------- ------------
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
================================================================================
FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.23%)
Investment in a joint repurchase
agreement transaction with
Aubrey Lanston & Co. -
Dated 10-31-97, Due 11-03-97
(Secured by U.S. Treasury Notes,
5.00% thru 9.25% Due 02-28-98
thru 04-30-02) - Note A ............ 5.68% $8,368 $8,368,000
------------
Corporate Savings Account (0.00%)
Investors Bank and Trust Company
Daily Interest Savings Account
Current Rate 4.95% .......................... 316
------------
TOTAL SHORT-TERM INVESTMENTS (1.23%) 8,368,316
------- ------------
TOTAL INVESTMENTS (99.94%) $681,595,574
======= ============
* Non-income producing security
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer; however, security is U.S. dollar
denominated.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified, open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of two series portfolios: John Hancock Emerging Growth Fund (the
"Fund") and John Hancock Global Technology Fund. The other series of the Trust
is reported in separate financial statements. The investment objective of the
Fund is to seek long-term growth of capital through investing in emerging
companies (market capitalization of less than $1 billion).
The Trustees have authorized the issuance of multiple classes of shares of
the Fund, designated as Class A and Class B 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
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 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. All portfolio
transactions initially expressed in terms of foreign currencies have been
translated into U.S. dollars as described in "Foreign Currency Translation"
below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date or in the case of some foreign securities,
on the date thereafter when the Fund is made aware of the dividend. Interest
income on investment securities is recorded on the accrual basis. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
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 calculated 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 sizes of the funds.
17
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
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. These agreements enable
the Fund to participate with other Funds managed by the Advisor in an unsecured
line of credit with banks which permit borrowings up to $600 million,
collectively. Interest is charged to each Fund, based on its borrowing, at a
rate equal to 0.50% over the Fed Funds Rate. In addition, a commitment fee, at a
rate of 0.075% per annum based on the average daily unused portion of the line
of credit, is allocated among the participating Funds. The maximum loan balance
during the period outstanding amounted to $45,265,000. The interest rate was in
the range of 5.97% thru 6.19%. At October 31,1997, there were no outstanding
borrowings.
FOREIGN CURRENCY TRANSLATION All assets and 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 or 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.
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 the sum of 0.75% of 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 year ended October
31, 1997, net sales charges received with regard to sales of Class A shares
amounted to $403,208. Out of this amount, $62,078 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$272,460 was paid as sales commissions to unrelated broker-dealers and $68,670
was paid as sales commissions to sales personnel of John Hancock Distributors,
Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro
& Co., Inc. ("Sutro"), all of which are broker-dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect
sole shareholder of Distributors and was the indirect sole shareholder until
November 29, 1996 of John Hancock Freedom Securities Corporation and its
subsidairies, which include Tucker Anthony and Sutro.
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 year ended October 31, 1997,
contingent deferred sales charges paid to JH Funds amounted to $1,012,775.
18
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Emerging Growth Fund
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 and Class B 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 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 and
financial management services for the Funds. The compensation for the year was
at an annual rate of less than 0.02% of the average net assets of each Fund.
Mr. Edward J. Boudreau, Jr., 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. At October 31, 1997, the Fund's deferred compensation had an unrealized
appreciation of $4,066.
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 year
ended October 31, 1997, aggregated $620,207,302 and $764,685,074, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the year ended October 31, 1997.
The cost of investments owned at October 31, 1997 (including the joint
repurchase agreement) for federal income tax purposes was $449,007,453. Gross
unrealized appreciation and depreciation of investments aggregated $245,615,035
and $13,027,230, respectively, resulting in net unrealized appreciation of
$232,587,805.
NOTE D -
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 1997, the Fund has reclassified amounts to
reflect a decrease in accumulated net realized gain on investments of
$84,220,435, a decrease in accumulated net investment loss of $7,189,983 and an
increase in capital paid-in of $77,030,452. This represents the amount necessary
to report these balances on a tax basis, excluding certain temporary
differences, as of October 31, 1997. 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 the treatment of
net operating losses and capital gains in the computation of distributable
income under federal tax rules versus generally accepted accounting principles
and the use of tax equalization. The calculation of net investment income per
share in the financial highlights excludes these adjustments.
19
<PAGE>
================================================================================
John Hancock Funds - Emerging Growth Fund
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Board of Trustees and
Shareholders of John Hancock Series Trust -- John Hancock Emerging Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the John Hancock Emerging Growth Fund (the
"Fund"), one of the portfolios constituting John Hancock Series Trust, as of
October 31, 1997, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers, and other
appropriate auditing procedures when replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
John Hancock Emerging Growth Fund portfolio of John Hancock Series Trust at
October 31, 1997, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 12, 1997
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund during its fiscal year ended October
31, 1997.
The Fund designated $98,169,498 as a capital gain dividend. All of this
amount is subject to the 28% tax rate. Shareholders will receive a 1997 U.S.
Treasury Department Form 1099-DIV in January of 1998 representing their
proportionate share.
None of the distributions qualify for the dividends received deduction
available to corporations.
20
<PAGE>
================================================================================
NOTES
John Hancock Funds - Emerging Growth Fund
21
<PAGE>
================================================================================
NOTES
John Hancock Funds - Emerging Growth Fund
22
<PAGE>
================================================================================
NOTES
John Hancock Funds - Emerging Growth Fund
23
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS
-----------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
-----------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Emerging Growth Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[RECYCLE LOGO] Printed on Recycled Paper. 6000A 10/97
12/97
