SEMIANNUAL REPORT
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[GRAPHIC OMITTED]
Emerging Growth Fund
APRIL 30, 1998
[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 and Chief Operating Officer
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
===============================CHAIRMAN'S MESSAGE===============================
DEAR FELLOW SHAREHOLDERS:
During the last decade, investors have become used to seeing stock market
returns averaging 15% or so each year. In the past three years, the stock market
has treated us to a record run, producing annual returns in excess of 20%.
After such a long and remarkable performance, many began this year wondering
what the market would do for an encore in 1998. The answer so far has been more
of the same. This achievement continues to bolster many investors' convictions
that the market will produce these results forever, or, in the worst case, that
market declines will always be short-lived. While the economy remains solid and
the environment favorable, history and reason tell us it's a highly unlikely
scenario.
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to third paragraph.]
This doesn't mean we know what the market will do next, or that it's riding
for a fall. But after such a run, even in this "new era" of strong economic
growth with low inflation, we believe it would be wise for investors to set more
realistic expectations. As we've said before, markets do indeed move in two
directions, even though we've seen "up" much more than "down" recently. Over the
long term, the market's historical results have been more in the 10% per year
range, which is still a solid result, considering it has been produced despite
wars, depressions and other social upheavals along the way.
In addition to adjusting, or at least re-examining, expectations, now could
also be a good time to review with your investment professional how your assets
are diversified, perhaps with an eye toward a more conservative approach.
Stocks, especially with their outsized gains of the last three years, might have
grown to represent a larger piece of your portfolio than you had originally
intended, given your objectives, time horizon and risk level.
At John Hancock Funds, our goal is to help you reach your financial
objectives and maintain wealth. One way we can do that is by helping you keep
your feet on the ground as you pursue your dreams.
Sincerely,
/s/ Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
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BY BERNICE S. BEHAR, CFA, PORTFOLIO MANAGER
John Hancock
Emerging Growth Fund
Small-company growth stocks ride out a rocky market
---------------------------------------------------
Small-company growth stocks posted decent gains over the past six months,
propelled by a combination of continued healthy, non-inflationary U.S. economic
growth, relatively low and stable interest rates, strong consumer confidence and
an unemployment rate plummeting to a low not seen in nearly three decades. Small
stocks got off to a weak start, however, because financial turmoil in Southeast
Asia and Japan incited fears that the U.S. economy, and ultimately corporate
earnings, would slow in response. The prices of small-company growth stocks --
defined as those with above-average increases in revenues and earnings --
suffered the most. When the market hit the rough patch, investors headed for the
relative safety of the larger, well-known, more liquid companies.
As a result, small-company stocks lagged their large-company cousins during the
last six months.
Later in the period, when the Asian turmoil proved to be less of a chink in
the U.S. economy's armor than first feared, small-company growth stocks -- which
are the Fund's focus -- began to gain ground on their value counterparts. That
was due largely to the fact that small-company growth stock valuations had
become inexpensive compared to value stocks. Even though small-cap stocks never
caught up to their large counterparts, they made headway later in the period
because investors began to realize that their earnings growth was more
attractive.
Performance and strategy review
For the six-month period ended April 30, 1998, the Fund's Class A and Class B
shares posted
"...small-company stocks as a group lagged their large-company cousins..."
[A 2 1/4" x 3 3/4" photo at bottom of page of Fund management team members
(l - r): Anurag Pandit, Bernice Behar and Laura Allen.]
3
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John Hancock Funds - Emerging Growth Fund
"...many of our capital goods-related stocks performed well."
[Chart at the top of left hand column with the heading "Top Five Common Stock
Holdings". The chart lists five holdings: 1.) Network Appliance 1.2%; 2.)
Newpark Resources 1.1%; 3.) Medallion Financial 1.0%; 4.) Metromedia Fiber
Network 0.9% and 5.) Stage Stores 0.9%. A note below the chart reads "As a
percentage of net assets on April 30, 1998".]
total returns of 7.53% and 7.10%, respectively, at net asset value. Keep in mind
that your net asset value return will be different from this performance if you
were not invested in the Fund for the entire period and did not reinvest all
distributions. For the same six-month period, the average small-cap fund
returned 11.04%, according to Lipper Analytical Services, Inc.1, and the Russell
2000 Index, a measure of small-company stock performance, returned 11.88%.
Please see pages six and seven for longer-term performance information.
The bulk of the Fund's lag came in the first three months of the period, when
technology stocks, typically a volatile sector of the market, came under
pressure. Our computer hardware holdings were hit hard by concerns that the
Asian financial turmoil would ultimately conspire to curtail the global demand
for computers. Our semiconductor stocks suffered the most, and their losses
accounted for much of our underperformance.
Beginning in January, we reduced our stake in computer hardware stocks,
maintaining positions in only those market leaders with proprietary products and
services that provide them a distinct advantage over their competitors. We feel
that companies like Semtech, for instance, will be better equipped to ride out
the storm that presently plagues the hardware sector. But given the uncertain
outlook for computer demand going forward, we switched our focus away from
hardware names to software and service companies. That strategy helped our
performance as we gained ground in February, March and April. While a slower
global economy may dampen computer sales, we project that the demand for
software will continue to grow as companies across the globe continue to
emphasize productivity gains. Among our largest and best-performing holdings in
the group were Advent Software, which makes programs for financial analysis and
other applications, and CBT Group which provides training software for
businesses. Another strong technology performer was hardware/software hybrid
Network Appliance, which designs and manufacturers high-performance storage
devices that provide file service for data-intensive network environments. At
the end of the period, the Fund's stake in technology stocks was 28% of net
assets. Although we're driven by company fundamentals, not sector calls, we
continue to find many attractive fast-growing companies within the technology
universe.
Capital goods companies, retailers strong
Thanks to the U.S. economy continuing on an unusually long growth spurt, many of
our
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Medallion
Financial followed by an up arrow with the phrase "Niche lender". The second
listing is American Italian Pasta followed by an up arrow with the phrase "Pasta
maker gains market share". The third listing is Avis Rental followed by a down
arrow with the phrase "Rental car pricing environment weaker than expected". A
note below the table reads "See "Schedule of Investments." Investment holdings
are subject to change."]
4
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John Hancock Funds - Emerging Growth Fund
[Bar chart at top of left hand column with the heading "Fund Performance". Under
the heading is a note that reads "For the six months ended April 30, 1998". The
chart is scaled in increments of 2% with 0% at the bottom and 12% at the top.
The first bar represents the 7.53% total return for John Hancock Emerging Growth
Fund Class A. The second bar represents the 7.10% total return for John Hancock
Emerging Growth Fund Class B. The third bar represents the 11.04% total return
for the average small-cap fund. A note below the chart reads "Total returns for
John Hancock Emerging Growth Fund are at net asset value with all distributions
reinvested. The average small-cap fund is tracked by Lipper Analytical Services,
Inc. (1). See the following two pages for historical performance information."]
capital goods-related stocks performed well. New additions Terex, a dominant
crane manufacturer, and MotivePower Industries, the largest rail supply company,
were strong contributors to performance. And with jobs plentiful, strong
consumer spending continued to boost our holdings in department store chain
Stage Stores and sporting goods retailer Hibbett Sporting Goods. Americans also
increased their spending on leisure, which benefited our holding in Steiner
Leisure, a provider of spa services on cruise ships.
Other winners spanned a number of market sectors, including pasta maker
American Italian Pasta, which grew rapidly and gained market share, and
Medallion Financial, which lends cab drivers money to purchase the taxi
medallions required to operate in some large cities like New York and Chicago.
Outlook
We remain optimistic about the prospects for small-company stocks. All the
factors that have propelled the stock market over the past several years appear
to remain in place -- economic growth is healthy, inflation is tame, there are
plenty of jobs and consumer confidence is strong. There's been much recent talk
that the Federal Reserve Board will raise interest rates to stave off inflation.
Our view is that interest rates may rise and fall in fits and starts, but that
the longer-term trend is for them to go lower. Interest rates are a critical
factor for small companies because these companies tend to borrow to fund their
growth; therefore, lower interest costs can translate into better profitability.
As for small-company growth stocks, we think that they are attractively priced
and offer superior earnings growth rates relative to their small-company value
and large-company growth counterparts. In our view, it's only a question of
when, not if, the market ultimately recognizes the appeal of this more
aggressive sector of the small-company market.
With a number of uncertainties spanning the investment horizon, the market is
likely to remain volatile, and managing risk has become even more important. We
plan to stay well diversified, which helps mitigate volatility. And we'll keep
the size of individual holdings generally under 1.3% of the Fund's net assets.
That way, our performance won't be overly reliant on the fortunes of a handful
of stocks.
- --------------------------------------------------------------------------------
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.
"Interest rates are a critical factor for small companies..."
5
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John Hancock Funds - Emerging Growth Fund
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A LOOK AT PERFORMANCE
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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.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. (Prior to May 15, 1995, the maximum applicable sales charge for
Class A shares was 5.75%.) Class B performance reflects a 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 before you invest or send money.
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CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1998
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------ ------- ----------
Cumulative Total Returns 34.51% 123.52% 184.44%
Average Annual Total Returns 34.51% 17.45% 17.14%
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CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1998
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- ----------
Cumulative Total Returns 35.50% 124.67% 454.49%
Average Annual Total Returns 35.50% 17.57% 18.68%
6
<PAGE>
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John Hancock Funds - Emerging Growth Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
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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 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
stocks of U.S.- domiciled companies whose common stock trades in the U.S. on the
New York Stock Exchange, American Stock Exchange and NASDAQ. The Russell 2000
Growth Index is an unmanaged index that contains those securities from the
Russell 2000 Index with a greater-than-average growth orientation. Past
performance is not indicative of future results.
[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 four lines. The first line represents the value of the Russell
2000 Index and is equal to $30,947 as of April 30, 1998. The second line
represents the value of the hypothetical $10,000 investment made in the Emerging
Growth Fund on August 22, 1991, before sales charge, and is equal to $30,027 as
of April 30, 1998. The third line represents the value of the Emerging Growth
Fund, after sales charge, and is equal to $28,525 as of April 30, 1998. The
fouth line represents the value of the Russell 2000 Growth Index, and is equal
to $25,358 as of on April 30, 1998.]
[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 three lines. The first line represents the value of the
hypothetical $10,000 investment made in the Emerging Growth Fund, before sales
charge on October 31, 1987, and is equal to $69,858 as of April 30, 1998. The
second line represents the value of the Russell 2000 Index and is equal to
$33,959 as of April 30, 1998. The third line represents the value of the
hypothetical $10,000 investment made in the Russell 2000 Growth Index, and is
equal to $27,589 as of April 30, 1998.]
*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 April 30, 1998. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common and preferred stocks
(cost - $456,918,058) .................................. $698,261,660
Joint repurchase agreement (cost - $4,901,000) .......... 4,901,000
Corporate savings account ............................... 7,393
-------------
703,170,053
Cash ..................................................... 23,451
Receivable for investments sold .......................... 6,475,872
Receivable for shares sold ............................... 122,411
Dividends receivable ..................................... 95,022
Interest receivable ...................................... 897
Other assets ............................................. 81,249
-------------
Total Assets ........................... 709,968,955
-----------------------------------------------------------
Liabilities:
Payable for investments purchased ........................ 6,959,720
Payable for shares repurchased ........................... 265,013
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................. 633,976
Accounts payable and accrued expenses .................... 59,584
-------------
Total Liabilities ...................... 7,918,293
-----------------------------------------------------------
Net Assets:
Capital paid-in .......................................... 421,950,660
Accumulated realized gain on investments and
foreign currency transactions ........................... 43,548,905
Net unrealized appreciation of investments ............... 241,348,578
Accumulated net investment loss .......................... (4,797,481)
-------------
Net Assets ............................. $702,050,662
===========================================================
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) - Note D
Class A - $222,416,171/21,118,956 ....................... $10.53
=============================================================================
Class B - $479,634,491/48,859,768 ........................ $9.82
=============================================================================
Maximum Offering Price Per Share*
Class A - ($10.53 x 105.26%) ............................. $11.09
=============================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
Statement of Operations
Six months ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding tax of $3,117) ........ $1,138,062
Interest .................................................... 188,991
-------------
1,327,053
-------------
Expenses:
Investment management fee - Note B ......................... 2,462,600
Distribution and service fee - Note B
Class A .................................................. 254,906
Class B .................................................. 2,226,513
Transfer agent fee - Note B ................................ 738,795
Custodian fee .............................................. 130,839
Financial services fee - Note B ............................ 58,019
Registration and filing fees ............................... 57,781
Interest expense ........................................... 55,824
Printing ................................................... 26,818
Trustees' fees ............................................. 22,835
Auditing fee ............................................... 20,320
Miscellaneous .............................................. 6,818
Legal fees ................................................. 6,294
-------------
Total Expenses ............................ 6,068,362
-----------------------------------------------------------
Net Investment Loss ....................... (4,741,309)
-----------------------------------------------------------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold
and foreign currency transactions .......................... 44,382,633
Change in net unrealized appreciation/depreciation
of investments ............................................. 8,873,430
-------------
Net Realized and Unrealized
Gain on Investments ....................... 53,256,063
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ................. $48,514,754
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Emerging Growth Fund
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1998
OCTOBER 31, 1997 (UNAUDITED)
---------------- ---------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss................................................................. ($7,209,751) ($4,741,309)
Net realized gain on investments sold and foreign currency transactions............. 228,690,007 44,382,633
Change in net unrealized appreciation/depreciation of investments................... (79,546,089) 8,873,430
------------ ------------
Net Increase in Net Assets Resulting from Operations.............................. 141,934,167 48,514,754
------------ ------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($0.2114 and $2.5153 per share, respectively)........................... (4,419,042) (43,296,619)
Class B - ($0.2114 and $2.5153 per share, respectively)........................... (9,530,032) (101,891,134)
------------ ------------
Total Distributions to Shareholders............................................... (13,949,074) (145,187,753)
------------ ------------
From Fund Share Transactions - Net: * ................................................. (115,772,143) 116,745,814
------------ ------------
Net Assets:
Beginning of period................................................................. 669,764,897 681,977,847
------------ ------------
End of period (including accumulated net investment loss
of $56,172 and $4,797,481, respectively).......................................... $681,977,847 $702,050,662
============ ============
* Analysis of Fund Share Transactions - Note D:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1998
OCTOBER 31, 1997 (UNAUDITED)
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................... 50,428,036 $533,787,513 22,037,028 $218,996,978
Shares issued to shareholders in reinvestment of distributions.. 366,196 3,727,865 3,791,740 36,566,712
----------- ------------ ----------- ------------
50,794,232 537,515,378 25,828,768 255,563,690
Less shares repurchased ........................................ (55,220,616) (590,533,419) (21,664,976) (215,738,214)
----------- ------------ ----------- ------------
Net increase (decrease) ........................................ (4,426,384) ($53,018,041) 4,163,792 $39,825,476
=========== ============ =========== ============
CLASS B
Shares sold .................................................... 27,622,260 $276,160,925 8,954,656 $83,015,111
Shares issued to shareholders in reinvestment of distributions.. 685,312 6,664,519 8,006,416 72,237,780
----------- ------------ ----------- ------------
28,307,572 282,825,444 16,961,072 155,252,891
Less shares repurchased ........................................ (34,130,340) (345,579,546) (8,414,328) (78,332,553)
----------- ------------ ----------- ------------
Net increase (decrease) ........................................ (5,822,768) ($62,754,102) 8,546,744 $76,920,338
=========== ============ =========== ============
</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 and foreign currency gains and losses and
any increase or decrease in money shareholders invested in the Fund. The
footnote illustrates the number of Fund shares sold, reinvested and repurchased
during the last two periods, along with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS.
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)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance - Note D
Net Asset Value, Beginning of Period ..................... $5.15 $6.47 $6.71
----------- ----------- -----------
Net Investment Loss(2) ................................... (0.04) (0.04) (0.07)
Net Realized and Unrealized Gain on Investments .......... 1.36 0.28 2.38
----------- ----------- -----------
Total from Investment Operations ........................ 1.32 0.24 2.31
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold.. -- -- --
----------- ----------- -----------
Net Asset Value, End of Period ........................... $6.47 $6.71 $9.02
=========== =========== ===========
Total Investment Return at Net Asset Value(3) ............ 25.68% 3.59% 34.56%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $81,263 $131,053 $179,481
Ratio of Expenses to Average Net Assets .................. 1.40% 1.44% 1.38%
Ratio of Net Investment Loss to Average Net Assets ....... (0.70%) (0.71%) (0.83%)
Portfolio Turnover Rate .................................. 29% 25% 23%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------- APRIL 30, 1998
1996 1997 (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance - Note D
Net Asset Value, Beginning of Period ..................... $9.02 $10.22 $12.35
----------- ----------- -----------
Net Investment Loss(2) ................................... (0.09) (0.07) (0.05)
Net Realized and Unrealized Gain on Investments .......... 1.29 2.41 0.75
----------- ----------- -----------
Total from Investment Operations ........................ 1.20 2.34 0.70
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold.. -- (0.21) (2.52)
----------- ----------- -----------
Net Asset Value, End of Period ........................... $10.22 $12.35 $10.53
=========== =========== ===========
Total Investment Return at Net Asset Value(3) ............ 13.27% 23.35% 7.53%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $218,497 $209,384 $222,416
Ratio of Expenses to Average Net Assets .................. 1.32% 1.29%(4) 1.33%(4,6)
Ratio of Net Investment Loss to Average Net Assets ....... (0.86%) (0.57%) (0.94%)(6)
Portfolio Turnover Rate .................................. 44% 96% 63%
</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 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 - Emerging Growth Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------
1993 1994 1995(1)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance - Note D
Net Asset Value, Beginning of Period ..................... $5.09 $6.33 $6.51
----------- ----------- -----------
Net Investment Loss(2) ................................... (0.09) (0.09) (0.11)
Net Realized and Unrealized Gain on Investments .......... 1.33 0.27 2.30
----------- ----------- -----------
Total from Investment Operations ........................ 1.24 0.18 2.19
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold.. -- -- --
----------- ----------- -----------
Net Asset Value, End of Period ........................... $6.33 $6.51 $8.70
=========== =========== ===========
Total Investment Return at Net Asset Value(3) ............ 24.53% 2.80% 33.60%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $219,484 $283,435 $393,478
Ratio of Expenses to Average Net Assets .................. 2.28% 2.19% 2.11%
Ratio of Net Investment Loss to Average Net Assets ....... (1.58%) (1.46%) (1.55%)
Portfolio Turnover Rate .................................. 29% 25% 23%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------- APRIL 30, 1998
1996 1997 (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance - Note D
Net Asset Value, Beginning of Period ..................... $8.70 $9.78 $11.72
----------- ----------- -----------
Net Investment Loss(2) ................................... (0.15) (0.14) (0.08)
Net Realized and Unrealized Gain on Investments .......... 1.23 2.29 0.70
----------- ----------- -----------
Total from Investment Operations ........................ 1.08 2.15 0.62
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold.. -- (0.21) (2.52)
----------- ----------- -----------
Net Asset Value, End of Period ........................... $9.78 $11.72 $9.82
=========== =========== ===========
Total Investment Return at Net Asset Value(3) ............ 12.48% 22.44% 7.10%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $451,268 $472,594 $479,634
Ratio of Expenses to Average Net Assets .................. 2.05% 2.02%(4) 2.07%(4,6)
Ratio of Net Investment Loss to Average Net Assets ....... (1.59%) (1.30%) (1.67%)(6)
Portfolio Turnover Rate .................................. 44% 96% 63%
</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 charges.
(4) Expense ratios do not include interest expense due to bank loans, which
amounted to less than $0.01 per share.
(5) Not annualized.
(6) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Emerging Growth Fund
Schedule of Investments
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Emerging Growth Fund on April 30, 1998. It's divided into three main categories:
common stocks, preferred stock and short-term investments. Common stocks and
preferred stocks 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 (0.79%)
Getty Images, Inc.* ......................... 212,300 $4,856,363
Princeton Video Image, Inc.* ................ 118,000 708,000
-----------
5,564,363
-----------
Aerospace (1.00%)
AAR Corp. ................................... 119,700 3,134,644
Kellstrom Industries, Inc.* ................. 150,700 3,899,362
-----------
7,034,006
-----------
Automobile/Trucks (1.70%)
Budget Group, Inc. (Class A)* .............. 135,800 4,549,300
Gentex Corp.* ............................... 57,400 1,937,250
United Rentals, Inc. * ...................... 159,000 5,475,563
-----------
11,962,113
-----------
Beverages (0.64%)
Beringer Wine Estates Holdings, Inc.
(Class B)* ................................. 36,500 1,697,250
Scheid Vineyards, Inc. (Class A)* ........... 286,200 2,790,450
-----------
4,487,700
-----------
Broker Services (1.24%)
Dain Rauscher Corp. ......................... 54,600 3,286,238
Raymond James Financial, Inc. ............... 166,087 5,408,208
-----------
8,694,446
-----------
Building (1.30%)
Crossmann Communities, Inc.* ................ 117,300 3,196,425
D. R. Horton, Inc. .......................... 145,800 2,697,300
SMED International, Inc.* (Canada) .......... 93,100 1,757,263
Vari-Lite International, Inc.* .............. 183,900 1,471,200
-----------
9,122,188
-----------
Business Services - Misc (8.28%)
Abacus Direct Corp.* ........................ 102,500 $5,829,687
Alrenco, Inc.* .............................. 134,100 2,380,275
Charles River Associates, Inc.* ............. 22,600 542,400
Coinstar, Inc.* ............................. 351,500 3,471,063
Forrester Research, Inc.* ................... 63,500 2,381,250
Hagler Bailly, Inc.* ........................ 176,800 4,685,200
Innovative Valve Technologies, Inc.* ........ 217,400 3,614,275
INSpire Insurance Solutions, Inc.* .......... 71,000 2,387,375
Interim Services, Inc. * .................... 138,700 4,525,087
Lason, Inc.* ................................ 59,900 2,336,100
Mac-Gray Corp.* ............................. 158,800 2,620,200
MAXIMUS, Inc.* .............................. 51,700 1,628,550
META Group, Inc. * .......................... 157,200 5,443,050
Metamor Worldwide, Inc.* .................... 95,000 3,633,750
Metzler Group, Inc. (The)* .................. 121,350 4,201,744
On Assignment, Inc.* ........................ 145,900 4,705,275
ProBusiness Services, Inc.* ................. 135,800 3,768,450
-----------
58,153,731
-----------
Computers (16.93%)
Advent Software, Inc.* ...................... 110,000 4,688,750
Aris Corp.* ................................. 189,300 5,773,650
Aspec Technology, Inc.* ..................... 20,800 288,600
Aspect Development, Inc.* ................... 66,200 4,191,287
BARRA, Inc.* ................................ 144,000 3,456,000
BMC Software, Inc.* ......................... 35,000 3,274,687
CBT Group PLC, American Depositary
Receipts (ADR) (Ireland)* .................. 112,800 5,738,700
CCC Information Services Group, Inc. * ...... 163,800 3,931,200
Concord Communications, Inc.* .............. 26,000 643,500
Dell Computer Corp.* ........................ 30,000 2,422,500
Dendrite International, Inc.* .............. 161,500 5,157,906
E*TRADE Group, Inc.* ........................ 180,000 4,488,750
Exodus Communications, Inc.* ................ 19,500 741,000
First Virtual Corp.* ........................ 6,300 99,225
Fundtech Ltd. * ............................. 227,800 4,812,275
Hyperion Software Corp.* .................... 95,600 4,146,650
IDX Systems Corp.* .......................... 75,400 3,284,612
International Network Services* ............. 128,700 4,327,538
Manhattan Associates, Inc. * ................ 5,100 115,388
Micromuse, Inc. * ........................... 194,200 4,320,950
Mobius Management Systems, Inc.* ............ 9,500 175,750
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Computers (continued)
National Computer Systems, Inc. ............. 228,000 $5,700,000
National Instruments Corp.* ................. 126,050 4,474,775
Network Appliance, Inc.* .................... 234,800 8,467,475
PeopleSoft, Inc.* ........................... 72,000 3,348,000
SCM Microsystems, Inc.* ..................... 74,100 5,057,325
SEI Investments Co. ......................... 17,000 1,255,875
Sterling Commerce, Inc.* .................... 86,323 3,674,123
Symantec Corp.* ............................. 170,700 4,950,300
THINK New Ideas, Inc.* ...................... 9,000 256,500
VeriSign, Inc.* ............................. 85,200 3,269,550
Visio Corp.* ................................ 115,900 5,737,050
Whittman-Hart, Inc.* ........................ 119,500 5,243,063
Wind River Systems, Inc.* ................... 38,000 1,315,750
------------
118,828,704
------------
Containers (0.38%)
Ivex Packaging Corp.* ....................... 109,600 2,657,800
------------
Electronics (4.16%)
Aavid Thermal Technologies, Inc.* ........... 124,800 4,360,200
Aeroflex, Inc.* ............................. 218,500 2,977,063
ATMI, Inc.* ................................. 145,900 4,066,962
EFTC Corp.* ................................. 129,200 2,212,550
FARO Technologies, Inc.* .................... 37,000 407,000
Flextronics International Ltd. * ............ 97,500 4,631,250
KLA-Tencor Corp.* ........................... 50,000 2,015,625
Level One Communications, Inc.* ............. 195,225 6,076,378
Semtech Corp.* .............................. 103,600 2,473,450
------------
29,220,478
------------
Finance (3.48%)
AmeriCredit Corp.* .......................... 147,600 4,898,475
Financial Federal Corp.* .................... 141,000 3,260,625
Franklin Resources, Inc. .................... 76,000 4,066,000
Medallion Financial Corp. ................... 238,200 7,116,225
Price (T. Rowe) Associates, Inc. ............ 58,600 4,424,300
Waddell & Reed Financial, Inc. (Class A) .... 27,000 668,250
------------
24,433,875
------------
Food (1.32%)
American Italian Pasta Co. (Class A)* ....... 123,100 3,816,100
Dreyer's Grand Ice Cream, Inc. .............. 30,800 777,700
Suiza Foods Corp.* .......................... 79,000 4,680,750
------------
9,274,550
------------
Funeral Services & Related (0.31%)
Rock of Ages Corp. (Class A)* .............. 133,300 2,149,463
------------
Insurance (4.48%)
Ace, Ltd. (Bermuda) ........................... 82,800 $3,136,050
American General Corp. ........................ 36,105 2,405,496
Annuity and Life Re (Holdings), Ltd.* ......... 63,200 1,508,900
Capital Re Corp. .............................. 75,600 5,580,225
CMAC Investment Corp. ......................... 76,500 4,939,031
ESG Re Ltd. (Bermuda) ......................... 46,000 1,184,500
Hartford Life, Inc. (Class A) ................ 96,400 4,765,775
Healthcare Recoveries, Inc.* .................. 156,700 3,741,212
Horace Mann Educators Corp. ................... 121,800 4,186,875
------------
31,448,064
------------
Leasing Companies (1.25%)
LINC Capital, Inc.* ........................... 205,900 4,002,181
Rollins Truck Leasing Corp. ................... 357,750 4,740,187
------------
8,742,368
------------
Leisure (4.23%)
Ballantyne of Omaha, Inc.* .................... 211,200 4,290,000
Championship Auto Racing Teams, Inc.* ......... 95,900 1,810,112
Cinar Films, Inc. (Class B)* (Canada) ......... 288,800 5,559,400
Premier Parks, Inc.* .......................... 94,900 5,278,813
Silverleaf Resorts, Inc.* ..................... 151,800 4,791,188
Travel Services International, Inc.* .......... 117,000 4,314,375
------------
29,732,263
------------
Machinery (2.00%)
Applied Power, Inc. (Class A) ................ 126,800 4,739,150
Gardner Denver Machinery, Inc.* ............... 167,300 4,715,769
Terex Corp.* .................................. 149,800 4,587,625
------------
14,042,544
------------
Media (3.90%)
Adelphia Communications Corp. (Class A)* ...... 174,400 4,905,000
American Radio Systems Corp.* ................ 37,720 2,501,308
Clear Channel Communications, Inc.* ........... 49,607 4,675,460
Harte-Hanks Communications, Inc. .............. 141,800 3,217,088
Heftel Broadcasting Corp. (Class A)* .......... 91,000 3,992,625
Network Event Theater, Inc.* .................. 685,200 2,869,275
Petersen Cos., Inc. (The) (Class A)* .......... 139,200 3,619,200
Univision Communications, Inc. (Class A)* ..... 42,200 1,616,788
------------
27,396,744
------------
Medical (6.86%)
American Healthcorp, Inc.* .................... 88,100 886,506
Cyberonics, Inc.* ............................. 127,500 3,060,000
Elan Corp., PLC * (ADR) (Ireland) ............. 35,000 2,174,375
Hanger Orthopedic Group, Inc.* ................ 77,400 1,446,413
Health Care & Retirement Corp.* ............... 80,950 3,298,712
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Medical (continued)
Health Management Associates, Inc.
(Class A)* ................................. 54,952 $1,730,988
IDEC Pharmaceuticals Corp.* ................. 30,000 1,080,000
IMPATH, Inc. * .............................. 71,100 2,648,475
Incyte Pharmaceuticals, Inc.* ............... 94,600 4,257,000
MiniMed, Inc.* .............................. 104,000 5,200,000
Ocular Sciences, Inc.* ...................... 100,400 2,811,200
PathoGenesis Corp.* ......................... 96,500 3,823,812
Res-Care, Inc.* ............................. 107,700 4,213,762
Sunrise Assisted Living, Inc.* .............. 90,000 4,033,125
Symphonix Devices, Inc.* .................... 212,800 3,138,800
Ventana Medical Systems, Inc.* .............. 159,400 4,363,575
-----------
48,166,743
-----------
Metal (0.53%)
CompX International, Inc.* .................. 119,600 3,004,950
NCI Building Systems, Inc.* ................. 14,200 738,400
-----------
3,743,350
-----------
Oil & Gas (5.10%)
Brown (Tom) Inc.* ........................... 141,000 2,908,125
Core Laboratories N.V.* (Netherlands) ....... 211,800 6,009,825
Cross Timbers Oil Co. ....................... 57,600 1,101,600
Dril-Quip, Inc.* ............................ 119,900 4,308,906
J. Ray McDermott, S.A. * .................... 46,700 2,072,313
National-Oilwell, Inc.* ..................... 144,500 5,481,969
Newfield Exploration Co.* ................... 74,300 1,801,775
R&B Falcon Corp.* ........................... 60,000 1,923,750
Smith International, Inc.* .................. 39,200 2,303,000
Stone Energy Corp.* ......................... 108,700 4,164,569
Tuboscope, Inc.* ............................ 156,200 3,699,987
-----------
35,775,819
-----------
Pollution Control (3.84%)
American Disposal Services, Inc.* ........... 126,400 5,067,844
Eastern Environmental Services, Inc.* ....... 164,000 4,284,500
ITEQ, Inc.* ................................. 370,800 4,727,700
Newpark Resources, Inc.* .................... 331,200 7,969,500
Superior Services, Inc.* .................... 151,200 4,914,000
-----------
26,963,544
-----------
Printing - Commercial (0.59%)
Mail-Well, Inc.* ............................ 86,100 4,165,088
-----------
Real Estate Operations (0.31%)
Central Parking Corp. ....................... 46,000 2,156,250
-----------
Real Estate Investment Trust (1.54%)
Crescent Real Estate Equities Co. ........... 84,000 2,866,500
Real Estate Investment Trust (continued)
Glenborough Realty Trust, Inc. ................ 129,500 $3,472,219
Hanover Capital Mortgage Holdings, Inc. ....... 122,900 2,120,025
Starwood Hotels & Resorts ..................... 46,400 2,328,700
-----------
10,787,444
-----------
Retail (11.73%)
99 Cents Only Stores* ......................... 141,250 5,385,156
Abercrombie & Fitch Co. (Class A)* ............ 139,900 6,225,550
Borders Group, Inc. * ......................... 94,500 3,035,812
Brylane, Inc.* ................................ 60,000 3,525,000
CDnow, Inc.* .................................. 136,600 4,371,200
CSK Auto Corp.* ............................... 123,000 3,321,000
CVS Corp. ..................................... 56,722 4,183,266
Dominick's Supermarkets, Inc.* ................ 116,500 4,667,281
Duane Reade, Inc.* ............................ 130,000 3,087,500
Ethan Allen Interiors, Inc. ................... 77,500 3,947,656
Furniture Brands International, Inc.* ......... 144,800 4,253,500
Genovese Drug Stores, Inc. (Class A) .......... 125,280 2,983,230
Hibbett Sporting Goods, Inc.* ................ 156,300 5,236,050
Linens `N Things, Inc.* ....................... 77,500 4,669,375
Meadowcraft, Inc. * ........................... 132,900 2,076,562
Fred Meyer, Inc. * ............................ 80,090 3,594,039
Proffitt's, Inc.* ............................. 125,600 4,992,600
Stage Stores, Inc.* ........................... 123,700 6,362,819
Starbucks Corp.* .............................. 60,300 2,901,937
White Cap Industries, Inc.* ................... 125,700 2,733,975
Wild Oats Markets, Inc.* ...................... 25,000 789,062
-----------
82,342,570
-----------
Schools / Education (1.11%)
EduTrek International, Inc. (Class A)* ........ 92,200 2,558,550
ITI Education Corp.* (Canada) ................ 388,000 2,576,902
Strayer Education, Inc. ....................... 71,750 2,636,813
-----------
7,772,265
-----------
Telecommunications (6.89%)
Concentric Network Corp. * .................... 114,400 2,473,900
Global TeleSystems Group, Inc.* ............... 116,100 5,456,700
ICG Communications, Inc.* ..................... 95,200 3,332,000
Intermedia Communications, Inc.* .............. 75,700 5,524,911
LCI International, Inc.* ...................... 42,955 1,707,461
Metromedia Fiber Network, Inc. (Class A)* ..... 213,700 6,597,987
Primus Telecommunications Group, Inc. * ....... 173,300 4,137,537
REMEC, Inc.* .................................. 130,000 3,233,750
SmarTalk TeleServices, Inc.* .................. 84,800 1,685,400
STAR Telecommunications, Inc. * ............... 151,835 4,109,035
Tel-Save Holdings, Inc.* ...................... 122,200 2,787,687
Tellabs, Inc.* ................................ 50,000 3,543,750
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Emerging Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Telecommunications (continued)
WinStar Communications, Inc.* ........ 97,800 $3,801,975
------------
48,392,093
------------
Textile (1.93%)
Ashworth, Inc.* ....................... 221,300 3,706,775
Cutter & Buck, Inc.* .................. 170,200 4,510,300
Interface, Inc. ....................... 53,000 2,249,188
Tefron Ltd.* (Israel) ................. 115,100 3,086,119
------------
13,552,382
------------
Transport (1.42%)
ASA Holdings, Inc. .................... 61,500 2,337,000
Carey International, Inc.* ............ 71,600 1,628,900
MotivePower Industries, Inc.* ........ 176,200 4,537,150
Westinghouse Air Brake Co. ............ 52,200 1,464,862
------------
9,967,912
------------
TOTAL COMMON STOCK
(Cost $456,312,318) ........ (99.24%) 696,730,860
-------- ------------
PREFERRED STOCK
Oil & Gas (0.22%)
Cross Timbers Oil Co., Ser A .......... 34,400 1,530,800
-------- ------------
TOTAL PREFERRED STOCK
(Cost $605,740) ...... (0.22%) 1,530,800
-------- ------------
TOTAL COMMON STOCKS
AND PREFERRED STOCK
(Cost $456,918,058) ........ (99.46%) 698,261,660
-------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (0.70%)
Investment in a joint repurchase
agreement transaction with
Toronto Dominion Securities
USA, Inc. - Dated 04-30-98,
Due 05-01-98 (Secured by
U.S. Treasury Bills, Due
06-18-98 thru 12-10-98,
and U.S. Treasury Notes,
4.75% thru 9.25%, Due
07-31-98 thru 05-15-06, and
U.S. Treasury Bonds, 6.00%
thru 13.25%, Due 05-15-14
thru 02-15-27) - Note A .......... 5.50% $4,901 4,901,000
------------
MARKET
ISSUER, DESCRIPTION VALUE
- ------------------- -----
Corporate Savings Account (0.00%)
Investors Bank and Trust Company
Daily Interest Savings Account
Current Rate 4.95% ......................... $7,393
-------------
TOTAL SHORT-TERM INVESTMENTS ............... (0.70%) 4,908,393
--------- -------------
TOTAL INVESTMENTS ............... (100.16%) 703,170,053
--------- -------------
OTHER ASSETS AND LIABILITIES, NET ............... (0.16%) (1,119,391)
--------- -------------
TOTAL NET ASSETS ............... (100.00%) $702,050,662
========= =============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is U.S. dollar
denominated.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Emerging Growth Fund
(UNAUDITED)
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 (collectively, the "Funds"). 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 Trustees have authorized
the issuance of Class C shares effective June 1, 1998. 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,
Inc., may participate in a joint repurchase agreement. Aggregate cash balances
are invested in one or more repurchase agreements, whose underlying securities
are obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME 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
16
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Emerging Growth Fund
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.
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 Adviser in unsecured
lines of credit with banks which permit borrowings up to $800 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
rates ranging from 0.070% to 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 $23,451,606. The
interest rate was in the range of 5.94% thru 6.25%. At April 30, 1998, 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 period ended April
30, 1998, net sales charges received with regard to sales of Class A shares
amounted to $203,967. Out of this amount, $31,643 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$121,246 was paid as sales commissions to unrelated broker-dealers and $51,078
was paid as sales commissions to sales personnel of John Hancock Distributors,
Inc. ("Distributors"), a related broker-dealer. The Adviser's indirect parent,
John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect sole
shareholder of Distributors.
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 5.00% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 1998,
contingent deferred sales charges paid to JH Funds amounted to $441,230.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans
17
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Emerging Growth Fund
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 period 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 April 30, 1998, the Fund's deferred compensation liability had
unrealized appreciation of $4,976.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended April 30, 1998, aggregated $418,647,271 and $446,918,304, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended April 30, 1998.
The cost of investments owned at April 30, 1998 (including the joint
repurchase agreement) for federal income tax purposes was $461,984,554. Gross
unrealized appreciation and depreciation of investments aggregated $247,663,788
and $6,485,682, respectively, resulting in net unrealized appreciation of
$241,178,106.
NOTE D -
SUBSEQUENT EVENT
On March 10, 1998 the Board of Trustees declared a four (4) for one (1) stock
split to be distributed on May 1, 1998. The record date and ex-date are both May
1, 1998. The shares of beneficial interest and the per share data reflected in
these financial statements have been restated to give effect to the four for one
split.
18
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Emerging Growth Fund
19
<PAGE>
================================================================================
-----------------
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A Global Investment Management Firm U.S. Postage
PAID
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 Randolph, MA
1-800-225-5291 1-800-554-6713 (TDD) Permit No. 75
INTERNET: www.jhancock.com/funds -----------------
- --------------------------------------------------------------------------------
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 600SA 4/98
6/98
<PAGE>
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[Graphic Omitted]
Global
Technology Fund
APRIL 30, 1998
[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
Executive President and Chief Operating Officer
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
SUB-INVESTMENT ADVISER
AMERICAN FUND ADVISORS, INC.
1415 KELLUM PLACE
GARDEN CITY, NY 11530
PRINCIPAL DISTRIBUTOR
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
LEGAL COUNSEL
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109-1803
===============================CHAIRMAN'S MESSAGE===============================
DEAR FELLOW SHAREHOLDERS:
During the last decade, investors have become used to seeing stock market
returns averaging 15% or so each year. In the past three years, the stock market
has treated us to a record run, producing annual returns in excess of 20%.
After such a long and remarkable performance, many began this year wondering
what the market would do for an encore in 1998. The answer so far has been more
of the same. This achievement continues to bolster many investors' convictions
that the market will produce these results forever, or, in the worst case, that
market declines will always be short-lived. While the economy remains solid and
the environment favorable, history and reason tell us it's a highly unlikely
scenario.
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to third paragraph.]
This doesn't mean we know what the market will do next, or that it's riding
for a fall. But after such a run, even in this "new era" of strong economic
growth with low inflation, we believe it would be wise for investors to set more
realistic expectations. As we've said before, markets do indeed move in two
directions, even though we've seen "up" much more than "down" recently. Over the
long term, the market's historical results have been more in the 10% per year
range, which is still a solid result, considering it has been produced despite
wars, depressions and other social upheavals along the way.
In addition to adjusting, or at least re-examining, expectations, now could
also be a good time to review with your investment professional how your assets
are diversified, perhaps with an eye toward a more conservative approach.
Stocks, especially with their outsized gains of the last three years, might have
grown to represent a larger piece of your portfolio than you had originally
intended, given your objectives, time horizon and risk level.
At John Hancock Funds, our goal is to help you reach your financial
objectives and maintain wealth. One way we can do that is by helping you keep
your feet on the ground as you pursue your dreams.
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 gain ground despite Asian
-------------------------------------------
economic crisis, inventory surpluses
------------------------------------
Technology stocks charted a fairly bumpy course over the past six months, but
still managed to pump out decent gains. Economic and currency instability in
Southeast Asia prompted a dramatic stock market sell-off just a week before the
period began. Technology companies tend to generate a fair amount of business
from Asia and are highly sensitive to the global economy's ebbs and flows. As a
result, they were among the hardest hit by the market decline and its aftermath,
which reverberated from late last fall to the end of the period. While the Asian
crisis hasn't yet generated the catastrophic worldwide slowdown that some first
feared, it took a toll on the sales, revenues and earnings of many technology
companies that do business in Asia. What's more, the Asian "contagion" and fears
of its duration and severity prompted many companies across the globe to scale
back their spending on technology, adding further insult to already injured
technology stocks.
Strong crosscurrents in the technology sector led to widely varying results.
Semiconductor companies were rocked by surplus inventories and slowing demand,
while software and Internet-related companies benefited from strong and/or
growing demand. As personal computer orders slowed, PC makers brimmed with too
much inventory and the prices of semiconductor stocks slid precipitously in
response to slowing demand. On a brighter note, Internet-related
"Strong crosscurrents in the technology sector led to widely varying results."
[A 2 1/4" x 3 3/4" photo at bottom of page of the Global Technology Fund
management team (l-r) Barry Gordon, Marc Klee and Alan Loewenstein.]
3
<PAGE>
================================================================================
John Hancock Funds - Global Technology Fund
"Internet-related stocks became the darlings of the stock market..."
[Chart at the top of left hand column with the heading "Top Five Common Stock
Holdings". The chart lists five holdings: 1.) Computer Associates 5.2%; 2.)
Microsoft 4.7%; 3.) Cisco Systems 4.1%; 4.) America Online 3.7% and 5.) EMC
Corp. 3.6%. A note below the chart reads "As a percentage of net assets on April
30, 1998".]
stocks skyrocketed with the booming use of on-line services and growing
advertising revenues. Additionally, many software companies were buoyed by the
world's continued need for productivity enhancers.
Performance review
For the six-month period that ended April 30, 1998, John Hancock Global
Technology Fund's Class A and Class B shares posted total returns of 13.85% and
13.48%, respectively at net asset value. Keep in mind that your net asset value
return will be different from this performance if you were not invested in the
Fund for the entire period and did not reinvest all distributions. While the
Fund's performance was strong on an absolute basis, it lagged the 15.93% return
of the average science and technology fund, according to Lipper Analytical
Services, Inc.1 Please see pages six and seven for longer-term performance
information.
The majority of the Fund's underperformance can be attributed to its larger
stake in poor-performing semiconductor stocks in the final months of 1997. As we
mentioned earlier, these stocks experienced an inventory correction that began
when PC makers were caught carrying an ample inventory of chips just as the
Asian crisis hit and PC demand weakened. The resulting imbalance sent
semiconductor chip prices plummeting, along with stock prices of the companies
that make them, including Intel and VLSI Technology. In response, we trimmed our
holdings in the semiconductor sector by about half during the period. However,
we've maintained some holdings in industry leaders Intel, Analog Devices and
Cypress Semiconductor. We think these companies have a clear and defining edge
over their competitors and will benefit when the semiconductor surplus abates.
Leaders and laggards
Over the past six months we saw solid performance from many of our software
holdings. Many of these stocks posted significant gains in a difficult
environment, because demand remained firm as corporations across the globe
continued to buy software to help improve their productivity. Computer
Associates -- our largest holding--was up more than 15%, while Microsoft posted
gains of more than 40% despite continued problems stemming from the antitrust
investigation out of the U.S. Justice Department. Manugistics Group, which
develops business-operations software and services that help companies manage
the flow of products, from raw materials through the manufacturing and
distribution process to delivery as finished goods, also did well during the
period. We were also served well by our stakes in Keane, a software-services
organization that delivers information-systems
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is America
Online followed by an up arrow with the phrase "Membership, ad revenues climb".
The second listing is Dell Computers followed by an up arrow with the phrase
"Gains PC market share". The third listing is Iomega followed by a down arrow
with the phrase "Slowing demand, rising ad spending". A note below the table
reads "See "Schedule of Investments." Investment holdings are subject to
change."]
4
<PAGE>
================================================================================
John Hancock Funds - Global Technology Fund
[Bar chart at top of left hand column with the heading "Fund Performance". Under
the heading is a note that reads "For the six months ended April 30, 1998". The
chart is scaled in increments of 5% with 0% at the bottom and 20% at the top.
The first bar represents the 13.85% total return for John Hancock Global
Technology Fund Class A. The second bar represents the 13.48% total return for
John Hancock Global Technology Fund Class B. The third bar represents the 15.93%
total return for the average science and technology fund. A note below the chart
reads "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."]
strategies and implementation, and BEA Systems, a producer of "middleware" used
to help facilitate communications among various types of computers, systems and
software.
Internet-related stocks became the darlings of the stock market in recent
months, pushed higher and higher by enthusiasm over the burgeoning use of the
Internet. Our largest holding in that sector was also one of our brightest
stars. The stock price of America Online (AOL) more than doubled over the past
six months as it marked the subscription of its 12 millionth member and
increased its advertising revenues.
While many personal computer and hardware makers, including Compaq,
struggled, some companies handily bucked the trend and posted impressive gains.
Cisco Systems, maker of network equipment and software, sported gains of more
than 20%, while Dell Computer surged more than 80% in the period.
In addition to our semiconductor holdings, drive maker Iomega was a
disappointment and we sold it during the period. The stock faltered on news that
its earnings were lower than expected, which the company attributed to weaker
Japanese demand for its popular storage products and increased marketing
expenditures.
Outlook
Our outlook for technology stocks is cautiously optimistic. The U.S. economy
keeps chugging along at a fairly healthy pace, while inflation remains tame.
Furthermore, we think that Southeast Asia's recent challenges and their impact
on the U.S. will turn out to be less problematic than originally predicted. With
continued economic growth, the technology sector should benefit from stabilized
or increased demand. That said, meaningful and sustained economic problems in
Japan could throw a wrench into the progress of technology stocks. As for
earnings, we think that technology stocks as a group will exhibit faster growth
rates than the stock market as a whole. Given that, we believe that the
technology sector is attractively priced relative to other industries. After
lagging over the past couple of years, we believe technology stocks are poised
to outpace other industries as they play catch up. However, we do expect the
technology sector to remain volatile, as investors come to grips with the
various challenges facing it in the year to come.
- --------------------------------------------------------------------------------
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, economic 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.
"...the technology sector is attractively priced relative to other industries."
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.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. Class B performance reflects a maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years).
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 before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1998
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- ----------
Cumulative Total Returns 32.69% 170.26% 313.21%
Average Annual Total Returns 32.69% 22.00% 15.24%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1998
SINCE
ONE INCEPTION
YEAR (1/3/94)
------ ----------
Cumulative Total Returns 33.74% 121.99%
Average Annual Total Returns 33.74% 20.70%
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.
[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 & Poor's 500 Stock Index on October
31, 1987, and is equal to $59,608 as of April 30, 1998. The second line
represents the value of the Global Technology Fund, before sales charge, and is
equal to $46,039as of April 30, 1998. The third line represents the Global
Technology Fund, after sales charge, and is equal to $43,737 as of April 30,
1998.]
[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 & Poor's 500 Stock Index on January
3, 1994 and is equal to $22,296 as of April 30, 1998. The second line represents
the value of the Global Technology Fund, before sales charge, and is equal to
$22,997 as of April 30, 1998. The third line represents the value of the Global
Technology Fund, after sales charge, and is equal to $22,797 as of April 30,
1998.]
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 April 30, 1998. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks and units (cost - $154,336,719) ........... $268,593,328
Preferred stock (cost - $500,000) ....................... 500,000
Bonds (cost - $800,953) ................................. 842,504
Joint repurchase agreement (cost - $16,841,000) ......... 16,841,000
Corporate savings account ............................... 1,743
-------------
286,778,575
Receivable for investments sold .......................... 2,452,068
Receivable for shares sold ............................... 252,097
Dividends receivable ..................................... 1,200
Interest receivable ...................................... 35,837
Other assets ............................................. 13,826
-------------
Total Assets ........................... 289,533,603
-----------------------------------------------------------
Liabilities:
Payable for investments purchased ........................ 4,000,309
Payable for shares repurchased ........................... 94,836
Payable to John Hancock Advisers, Inc. ...................
and affiliates - Note B ................................. 252,124
Accounts payable and accrued expenses .................... 50,669
-------------
Total Liabilities ...................... 4,397,938
-----------------------------------------------------------
Net Assets:
Capital paid-in .......................................... 168,396,936
Accumulated net realized gain on investments ............. 3,880,976
Net unrealized appreciation of investments ............... 114,299,847
Accumulated net investment loss .......................... (1,442,094)
-------------
Net Assets ............................. $285,135,665
===========================================================
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 - $206,004,391/6,608,007.......................... $31.17
=============================================================================
Class B - $79,131,274/2,637,192........................... $30.01
=============================================================================
Maximum Offering Price Per Share*
Class A - ($31.17 x 105.26%).............................. $32.81
=============================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
Statement of Operations
Six months ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest .................................................. $596,461
Dividends ................................................. 69,300
------------
665,761
------------
Expenses:
Investment management fee - Note B ....................... 976,758
Distribution and service fee - Note B
Class A ................................................ 272,089
Class B ................................................ 324,025
Transfer agent fee - Note B .............................. 363,581
Administrative fee - Note B .............................. 49,440
Registration and filing fees ............................. 29,699
Custodian fee ............................................ 29,088
Auditing fee ............................................. 16,562
Printing ................................................. 13,626
Trustees' fees ........................................... 8,262
Miscellaneous ............................................ 3,941
Legal fees ............................................... 2,001
------------
Total Expenses .......................... 2,089,072
-----------------------------------------------------------
Net Investment Loss ..................... (1,423,311)
-----------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold ..................... 4,322,893
Change in net unrealized appreciation/depreciation
of investments ........................................... 30,842,308
------------
Net Realized and Unrealized
Gain on Investments ..................... 35,165,201
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ............... $33,741,890
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Technology Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1998
OCTOBER 31, 1997 (UNAUDITED)
---------------- ---------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss................................................................. ($2,689,254) ($1,423,311)
Net realized gain on investments sold............................................... 33,306,242 4,322,893
Change in net unrealized appreciation/depreciation of investments................... 14,690,362 30,842,308
------------ ------------
Net Increase in Net Assets Resulting from Operations.............................. 45,307,350 33,741,890
------------ ------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($1.2268 and $2.4026 per share, respectively)........................... (7,748,777) (15,029,298)
Class B - ($1.2268 and $2.4026 per share, respectively)........................... (2,500,738) (5,391,394)
------------ ------------
Total Distributions to Shareholders............................................... (10,249,515) (20,420,692)
------------ ------------
From Fund Share Transactions - Net: *.................................................. (2,117,351) 21,914,945
------------ ------------
Net Assets:
Beginning of period................................................................. 216,959,038 249,899,522
------------ ------------
End of period (including accumulated net investment loss of
$18,783 and $1,442,094, respectively)............................................. $249,899,522 $285,135,665
============ ============
* Analysis of Fund Share Transactions:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1998
OCTOBER 31, 1997 (UNAUDITED)
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................... 8,298,098 $225,310,630 2,881,294 $80,111,840
Shares issued to shareholders in reinvestment of distributions.. 234,834 6,232,474 496,539 12,219,820
------------- ------------- ------------- -------------
8,532,932 231,543,104 3,377,833 92,331,660
Less shares repurchased ........................................ (8,844,846) (240,557,015) (2,893,761) (80,347,112)
------------- ------------- ------------- -------------
Net increase (decrease) ........................................ (311,914) ($9,013,911) 484,072 $11,984,548
============= ============= ============= =============
CLASS B
Shares sold .................................................... 1,368,919 $37,796,650 981,946 $26,861,635
Shares issued to shareholders in reinvestment of distributions.. 84,278 2,180,266 197,814 4,698,055
------------- ------------- ------------- -------------
1,453,197 39,976,916 1,179,760 31,559,690
Less shares repurchased ........................................ (1,213,498) (33,080,356) (804,018) (21,629,293)
------------- ------------- ------------- -------------
Net increase ................................................... 239,699 $6,896,560 375,742 $9,930,397
============= ============= ============= =============
</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 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 two 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,
----------------------------------------------------------------
1992 1993 1994 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period .................... $15.60 $14.94 $17.45 $17.84
----------- ----------- ----------- -----------
Net Investment Loss ..................................... (0.15)(2) (0.21) (0.22)(1) (0.22)(1,2)
Net Realized and Unrealized Gain on Investments,
Options and Foreign Currency Transactions .............. 1.00 4.92 1.87 8.53
----------- ----------- ----------- -----------
Total from Investment Operations ..................... 0.85 4.71 1.65 8.31
----------- ----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold,
Options and Foreign Currency Transactions .............. (1.51) (2.20) (1.26) (1.64)
----------- ----------- ----------- -----------
Net Asset Value, End of Period .......................... $14.94 $17.45 $17.84 $24.51
=========== =========== =========== ===========
Total Investment Return at Net Asset Value (6) .......... 5.70% 32.06% 9.62% 46.53%
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
Ratio of Expenses to Average Net Assets ................. 2.05%(2) 2.10% 2.16% 1.67%(2)
Ratio of Net Investment Loss to Average Net Assets ...... (0.88%)(2) (1.49%) (1.25%) (0.89%)(2)
Portfolio Turnover Rate ................................. 76% 86% 67% 70%
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED SIX MONTHS ENDED
JANUARY 1, 1996 TO OCTOBER 31, APRIL 30, 1998
OCTOBER 31, 1996(7) 1997 (UNAUDITED)
------------------- ----------- -----------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period .................... $24.51 $25.79 $30.05
----------- ----------- -----------
Net Investment Loss ..................................... (0.14)(1) (0.27)(1) (0.14)(1)
Net Realized and Unrealized Gain on Investments,
Options and Foreign Currency Transactions .............. 1.42 5.76 3.66
----------- ----------- -----------
Total from Investment Operations ..................... 1.28 5.49 3.52
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold,
Options and Foreign Currency Transactions .............. -- (1.23) (2.40)
----------- ----------- -----------
Net Asset Value, End of Period .......................... $25.79 $30.05 $31.17
=========== =========== ===========
Total Investment Return at Net Asset Value (6) .......... 5.22%(9) 21.90% 13.85%(9)
Total Adjusted Investment Return at Net Asset Value (6).. -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................ $166,010 $184,048 $206,004
Ratio of Expenses to Average Net Assets ................. 1.57%(8) 1.51% 1.51%(8)
Ratio of Net Investment Loss to Average Net Assets ...... (0.68%)(8) (0.95%) (0.97%)(8)
Portfolio Turnover Rate ................................. 64% 104% 39%
</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
---------------------------- JANUARY 1, 1996 TO
1994 1995 OCTOBER 31, 1996(7)
---------- ---------- -------------------
<S> <C> <C> <C>
CLASS B(4)
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................. $17.24(5) $17.68 $24.08
---------- ---------- ----------
Net Investment Loss (1) .............................................. (0.35) (0.39)(2) (0.28)
Net Realized and Unrealized Gain on Investments and Options .......... 2.05 8.43 1.40
---------- ---------- ----------
Total from Investment Operations .................................... 1.70 8.04 1.12
---------- ---------- ----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options.. (1.26) (1.64) --
---------- ---------- ----------
Net Asset Value, End of Period ....................................... $17.68 $24.08 $25.20
========== ========== ==========
Total Investment Return at Net Asset Value (6) ....................... 10.02%(9) 45.42% 4.65%(9)
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
Ratio of Expenses to Average Net Assets .............................. 2.90%(8) 2.41%(2) 2.27%(8)
Ratio of Net Investment Loss to Average Net Assets ................... (1.98%)(8) (1.62%)(2) (1.38%)(8)
Portfolio Turnover Rate .............................................. 67% 70% 64%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30, 1998
1997 (UNAUDITED)
---------- ----------
<S> <C> <C>
CLASS B(4)
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................. $25.20 $29.12
---------- ----------
Net Investment Loss (1) .............................................. (0.45) (0.22)
Net Realized and Unrealized Gain on Investments and Options .......... 5.60 3.51
---------- ----------
Total from Investment Operations .................................... 5.15 3.29
---------- ----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and Options.. (1.23) (2.40)
---------- ----------
Net Asset Value, End of Period ....................................... $29.12 $30.01
========== ==========
Total Investment Return at Net Asset Value (6) ....................... 21.04% 13.48%(9)
Total Adjusted Investment Return at Net Asset Value (6) .............. -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............................. $65,851 $79,131
Ratio of Expenses to Average Net Assets .............................. 2.21% 2.19%(8)
Ratio of Net Investment Loss to Average Net Assets ................... (1.65%) (1.65%)(8)
Portfolio Turnover Rate .............................................. 104% 39%
</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 end changed from December 31
to October 31.
(8)Annualized.
(9)Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Technology Fund
Schedule of Investments
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Technology Fund on April 30, 1998. It's divided into four main
categories: common stocks and units, preferred 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 STOCKS AND UNIT
Aerospace/Aircraft Equipment (2.59%)
United Technologies Corp. ....................... 75,000 $7,382,812
-----------
Computer - Graphics (7.55%)
Autodesk, Inc. .................................. 100,000 4,700,000
Cadence Design Systems, Inc.* ................... 270,000 9,804,375
Parametric Technology Corp.* .................... 220,000 7,033,114
-----------
21,537,489
-----------
Computer - Local Networks (6.40%)
Ascend Communications, Inc.* .................... 150,000 6,534,375
Cisco Systems, Inc.* ............................ 160,000 11,720,000
-----------
18,254,375
-----------
Computer - Mainframe (1.18%)
Unisys Corp.* ................................... 150,000 3,365,625
-----------
Computer - Memory Devices (5.71%)
EMC Corp.* ...................................... 220,000 10,147,500
Network Appliance, Inc.* ........................ 50,000 1,803,125
Quantam Corp.* .................................. 126,000 2,961,000
Seagate Technology, Inc.* ....................... 50,000 1,334,375
SyQuest Technology Inc.* ........................ 15,000 39,375
-----------
16,285,375
-----------
Computer - Mini/Macro (1.86%)
Dell Computer Corp.* ............................ 65,800 5,313,350
-----------
Computer - Peripheral Equipment (1.25%)
Adaptec, Inc.* .................................. 150,000 3,553,125
-----------
Computer - Products Misc (0.19%)
First Virtual Corp.* ............................ 34,000 535,500
-----------
Computer - Services (8.67%)
America Online, Inc.* ........................... 130,000 10,400,000
Computer - Services (continued)
E*TRADE Group, Inc.* ............................ 130,000 $3,241,875
Fundtech Ltd. * ................................. 103,000 2,175,875
Mercury Interactive Corp. * ..................... 105,000 4,252,500
N2K Inc.* ....................................... 100,000 2,512,500
Sportsline USA Inc.* ............................ 60,000 2,115,000
-----------
24,697,750
-----------
Computer - Software (28.32%)
BEA Systems, Inc.* .............................. 150,000 3,337,500
BMC Software, Inc.* ............................. 65,500 6,128,344
Computer Associates International, Inc. ......... 252,500 14,787,031
Compuware Corp.* ................................ 90,000 4,398,750
Crystal Systems Solutions* (Israel) ............. 85,000 1,551,250
HNC Software, Inc.* ............................. 110,000 4,290,000
Information Management Associates,
Inc.* ......................................... 130,500 1,761,750
Keane, Inc.* .................................... 100,000 5,025,000
Manhattan Associates, Inc. * .................... 2,000 45,250
Manugistics Group Inc.* ......................... 50,000 3,000,000
Microsoft Corp.* ................................ 150,000 13,518,750
Mobius Management Systems, Inc.* ................ 3,600 66,600
Networks Associates, Inc.* ...................... 115,000 7,877,500
PeopleSoft, Inc.* ............................... 50,000 2,325,000
RealNetworks Inc.* .............................. 62,300 2,114,306
Saville Systems Ireland PLC* American
Depositary Receipts (ADR) (Ireland) .......... 110,000 5,486,250
Security Dynamics Technologies, Inc.* ........... 102,000 2,460,750
Synopsys, Inc.* ................................. 60,000 2,580,000
-----------
80,754,031
-----------
Electronics - Components Misc. (0.76%)
Computer Products, Inc.* ........................ 4,600 101,200
Sawtek, Inc.* ................................... 68,100 2,068,537
-----------
2,169,737
-----------
Electronics - Measuring Instruments (0.38%)
FARO Technologies, Inc.* ........................ 100,000 1,100,000
-----------
Electronics - Products Misc. (0.27%)
Microwave Power Devices, Inc.* .................. 100,000 762,500
-----------
Electronics - Semiconductor Components (13.73%)
Altera Corp.* ................................... 75,000 3,037,500
Analog Devices, Inc.* ........................... 176,666 6,878,932
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 (continued)
Applied Materials, Inc.* .................... 120,000 $4,335,000
ARM Holdings PLC (ADR) (United Kingdom) .... 1,700 68,638
Credence Systems Corp.* ..................... 125,000 3,445,313
Cypress Semiconductor Corp.* ................ 160,000 1,600,000
Genesis Microchip, Inc.* .................... 68,800 920,200
Intel Corp. ................................. 40,000 3,232,500
KLA-Tencor Corp.* ........................... 60,000 2,418,750
Level One Communications, Inc.* ............. 100,000 3,112,500
Novellus Systems, Inc.* ..................... 75,000 3,590,625
PRI Automation, Inc.* ....................... 60,000 1,605,000
Veeco Intruments Inc.* ...................... 60,000 2,422,500
VLSI Technology, Inc.* ...................... 120,000 2,475,000
------------
39,142,458
------------
Medical - Home & Outpatient (0.00%)
Laser Medical Corporation *(r) .............. 491,800 50
------------
Retail - Misc./Diversified (0.05%)
CDnow, Inc.* ................................ 4,200 134,400
------------
Telecommunications - Equipment (5.49%)
C-Grams Unlimited Inc. *(r) ................. 160,000 480,000
Globecomm Systems Inc.* ..................... 131,904 1,648,794
Globecomm Systems Inc.* (R) ................. 101,802 1,145,273
Intelect Communications Inc.* .............. 250,000 1,625,000
Metromedia Fiber Network, Inc. (Class A)* ... 52,500 1,620,938
PairGain Technologies, Inc.* ................ 110,000 2,028,125
Tellabs, Inc.* .............................. 100,000 7,087,500
------------
15,635,630
------------
Telecommunications - Services (5.05%)
Advanced Communications Group, Inc.* ........ 100,000 1,387,500
China Telecom Ltd.* (ADR) (Hong Kong) ....... 10,200 393,975
Esat Telecom Group PLC *(ADR) (Ireland) ..... 18,700 598,400
ICG Communications, Inc. .................... 100,000 3,500,000
Nextel Communications, Inc. (Class A)* ...... 100,000 2,868,750
Primus Telecommunications Group, Inc. * ..... 236,670 5,650,496
------------
14,399,121
------------
Transport - Airline (4.58%)
AMR Corp.* .................................. 40,000 6,095,000
UAL Corp.* .................................. 80,000 6,975,000
------------
13,070,000
------------
UNIT
Computer - Software (0.17%)
Digital LAVA, Inc.*(r) ...................... 50 500,000
------------
TOTAL COMMON STOCKS AND UNIT
(Cost $154,336,719) ............... (94.20%) 268,593,328
------- ------------
PREFERRED STOCK
Medical - Home & Outpatient (0.17%)
Laser Medical Corporation *(r) .............. 500,000 $500,000
------- ------------
TOTAL PREFERRED STOCK
(Cost $500,000) ............. (0.17%) 500,000
------- ------------
PAR VALUE
INTEREST S&P (000s
RATE RATING** OMITTED)
-------- -------- ---------
BONDS
Aerospace/Aircraft (0.07%)
Aeronca, Inc.,(r)
Conv Sub Deb 01-31-00.......... 12.50% NR $252 189,000
------------
Transport - Air Freight (0.20%)
Piedmont Aviation Inc.,
Equip Tr Cert 1988
Ser F 03-28-09................. 10.35 B+ 500 574,205
------------
Transport - Airline (0.03%)
Northwest Airlines, Inc., Sr Note
12-31-00....................... 12.09 BB 78 79,299
------------
TOTAL BONDS
(Cost $800,953) (0.30%) 842,504
------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (5.91%)
Investment in a joint repurchase
agreement transaction with
Toronto Dominion Securities
USA, Inc. - Dated 04-30-98,
Due 05-01-98 (Secured by
U.S. Treasury Bills, 4.86%
and 5.27%, Due 06-18-98
and 12-10-98, U.S. Treasury
Bonds, 6.00% thru 13.25%,
Due 05-15-14 thru 02-15-27
and U.S. Treasury Notes,
4.75% thru 9.25%, Due
07-31-98 thru 05-15-06)
- Note A....................... 5.50 16,841 16,841,000
------------
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Technology Fund
MARKET
ISSUER, DESCRIPTION VALUE
- ------------------- -----
SHORT-TERM INVESTMENTS (continued)
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.95% ......................... $1,743
-------------
TOTAL SHORT-TERM INVESTMENTS ............. (5.91%) 16,842,743
--------- -------------
TOTAL INVESTMENTS ............. (100.58%) 286,778,575
--------- -------------
OTHER ASSETS AND LIABILITIES, NET ............. (0.58%) (1,642,910)
--------- -------------
TOTAL NET ASSETS ............. (100.00%) $285,135,665
========= =============
* Non-income producing security.
** Credit ratings are unaudited.
NR = Not rated by either Standard & Poor's or Moody's Investors Services.
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from registration.
Rule 144A securities amounted to $1,145,273 as of April 30, 1998.
(r) The securities listed below are direct placement securities and are
restricted as to resale. The Fund has limited rights to registration under
the Securities Act of 1933 with respect to restricted securities (not
including Rule 144A securities). In certain circumstances the Fund may
bear a portion of the cost of such registrations; otherwise, such costs
would be borne by the issuer. Additional information on these restricted
securities are as follows:
<TABLE>
<CAPTION>
MARKET
VALUE AS A MARKET
PERCENTAGE VALUE AT
ACQUISITION ACQUISITION OF FUND'S APRIL 30,
SECURITY DATE COST NET ASSETS 1998
- -------------------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Aeronca, Inc. - Bonds ......... 02-01-96 $240,000 0.07% $189,000
C-Grams Unlimited Inc. -
Common Stock ................ 03-24-98 480,000 0.17 480,000
Digital LAVA Inc. - Unit ...... 02-11-98 500,000 0.17 500,000
Laser Medical Corp.
Common Stock ................ 01-12-98 50 0.00 50
Preferred Stock ............. 01-12-98 500,000 0.17 500,000
---------- ----------
TOTAL ......... 0.58% $1,669,050
========== ==========
</TABLE>
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
(UNAUDITED)
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."
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
Inc., may participate in a joint repurchase agreement. Aggregate cash balances
are invested in one or more repurchase agreements, whose underlying securities
are obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis. 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. For federal income tax purposes, net currency exchange gains and
losses from sales of foreign debt securities must be treated as ordinary income
even though such items are gains and losses for accounting purposes.
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.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated
15
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Global Technology Fund
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 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 unsecured
lines of credit with banks which permit borrowings up to $800 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
rates ranging from 0.070% to 0.075% per annum based on the average daily unused
portion of the lines of credit, is allocated among the participating funds. The
Fund had no borrowing activity for the period ended April 30, 1998.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exhange 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 ("credit risk"), or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk").
16
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Global Technology Fund
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.
There were no written option transactions for the period ended April 30,
1998.
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 period ended April
30, 1998, net sales charges received with regard to sales of Class A shares
amounted to $187,002. Out of this amount, $29,597 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$123,290 was paid as sales commissions to unrelated broker dealers and $34,115
was paid as sales commissions to sales personnel of John Hancock Distributors,
Inc. ("Distributors"), a related broker-dealer. The Adviser's indirect parent,
John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect sole
shareholder of Distributors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 1998,
contingent deferred sales charges paid to JH Funds amounted to $103,487.
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 JHMLICo. 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
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.
17
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Global Technology Fund
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 April 30,
1998, 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 period
ended April 30, 1998, aggregated $94,980,445 and $93,107,845, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended April 30, 1998.
The cost of investments owned at April 30, 1998 (including the joint
repurchase agreement), for federal income tax purposes was $172,891,578. Gross
unrealized appreciation and depreciation of investments aggregated $121,064,359
and $7,179,105, respectively, resulting in net unrealized appreciation of
$113,885,254.
18
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======================================NOTES=====================================
John Hancock Funds - Global Technology Fund
19
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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.
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