The latest report from your
Fund's management team
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Small Cap
Growth Fund
(formerly Emerging Growth Fund)
APRIL 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
-----------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02116-5072
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
------------------------------------------
================================================================================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements are nearly done, and the tests of all our
systems are on schedule for completion by the end of July. The rest of 1999 will
be spent testing with our business partners and continuing to participate in
industry testing. We have also established additional contingency plans beyond
our regular ones to prepare for any challenges that the Year 2000 might present.
In the end, John Hancock will spend approximately $90-$95 million to ensure we
make a successful transition to the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- -------------------------------------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Bernice S. Behar, CFA, Portfolio Management Team Leader, and
Laura Allen, CFA, and Anurag Pandit, CFA, Portfolio Managers
John Hancock
Small Cap Growth Fund
Fund handily outpaces peers amid changing
-----------------------------------------
environment for small-cap stocks
--------------------------------
Effective June 1, 1999, John Hancock Emerging Growth Fund's name was changed to
John Hancock Small Cap Growth Fund to better describe how the Fund invests.
John Hancock Small Cap Growth Fund posted very strong returns over the last six
months during an up-and-down period for small-company stocks. After lagging
their larger-company counterparts throughout most of 1998, small-cap stocks
caught fire just weeks before the period began, thanks largely to interest-rate
cuts by the Federal Reserve Board. Because they tend to fund their growth by
borrowing money, small-cap companies benefit more than larger companies from
lower rates. The Fed's actions also helped restore investor confidence and
pumped liquidity into the global financial system. A third rate cut in November
helped extend the small-cap rally through the remainder of 1998 by attracting
investors looking for inexpensive alternatives to high-flying large-cap names.
The small-cap market's advance was limited almost exclusively to growth stocks -
those that exhibit fast rates of earnings and other growth, leaving behind
small-cap value stocks - those that seem bargain-priced based on price/earnings
ratios and other measures.
By early 1999, however, sentiment turned against small-cap stocks of
both the growth and value variety. Inflationary fears re-emerged on news that
the economy had expanded at a much
- --------------------------------------------------------------------------------
[A 3 1/2" x 2" photo at bottom right side of page of John Hancock Small Cap
Growth Fund. Caption below reads "Fund management team members (l-r): "Scott
Mayo, Laura Allen, Anurag Pandit and Bernice Behar."]
- --------------------------------------------------------------------------------
"...an up-anddown period for small-company stocks."
3
<PAGE>
================================================================================
John Hancock Funds - Small Cap Growth Fund
"By far the strongest sector in both the market and the Fund... was technology."
- --------------------------------------------------------------------------------
[Table at top left hand column entitled "Top Five Stock Holdings." The first
listing is NEXTLINK Communications 1.4%, the second is Verio 1.2%, the third
Adelphia Communications 1.2%, the fourth Metromedia Fiber Network 1.2% and the
fifth Allegiance Telecom 1.2%. A note below the table reads "As a percentage of
net assets on April 30, 1999."]
- --------------------------------------------------------------------------------
quicker-than-expected pace in the final three months of 1998 and put pressure on
small-company stock prices. Practically the only exceptions to this rule were
red-hot technology stocks - particularly those related to the Internet.
Investors seemingly couldn't get enough of these stocks, many of which posted
triple-digit gains in the first four months of this year.
Given the gyrating environment for small-company growth stocks, we're
gratified that the Fund handily outpaced its benchmark and its peers. For the
six-month period ended April 30, 1999, John Hancock Small Cap Growth Fund's
Class A, Class B and Class C shares posted total returns of 33.54%, 33.16% and
33.03%, respectively, at net asset value. By contrast, the average small-cap
fund returned 14.68%, according to Lipper, Inc.1, and the Russell 2000 Growth
Index returned 25.74%. Keep in mind that your net asset value return will be
different from the Fund's performance if you were not invested in the Fund for
the entire period and did
- --------------------------------------------------------------------------------
[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 AboveNet
Communications followed by an up arrow with the phrase "Sparked by growth in
Internet infrastructure." The second listing is Pacific Sunwear of California
followed by an up arrow with the phrase "Increased spending on teen clothing."
The third listing is Whittman-Hart followed by a down arrow with the phrase
"Tainted by technology sevice sector's downturn." A note below the table reads
"See `Schedule of Investments.' Investment holdings are subject to change."]
- --------------------------------------------------------------------------------
not reinvest all distributions. Please see pages six and seven for historical
performance information.
Internet hot...
By far the strongest sector in both the market and the Fund during this period
was technology. A number of strategic moves that we made among various
technology sub-sectors going into the period held the keys to our recent
outperformance. Last November, we were focused on semiconductor manufacturers
and semiconductor capital equipment makers such as Novellus Systems, PMC-Sierra,
Semtech and Level One Communications. We had purchased these stocks last summer
after they experienced a rather severe correction when investors feared that
protracted problems in the Far East would translate into a slowdown in
semiconductor chip and equipment orders. At the time, we believed the market
overreacted and that the group was therefore attractively priced. As we
expected, orders from Asia firmed up and boosted our holdings. More recently,
we've tilted our semiconductor holdings more toward companies that make chips or
equipment for the fast-growing telecommunications industry, such as RF Micro
Devices.
Perhaps our strongest performers during the period were our Internet
holdings, especially given investors' near-mania for the group in 1999. We had
also added to our Internet stocks last summer, after they, too, fell victim to
negative investor sentiment. That strategy proved beneficial when companies like
RealNetworks, which provides audio and video technology for the Internet, and
networking company AboveNet Communications posted double-digit gains by the end
of the period.
4
<PAGE>
================================================================================
John Hancock Funds - Small Cap Growth Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 1999." The
chart is scaled in increments of 5% with 0% at the bottom and 35% at the top.
The first bar represents the 33.54% total return for John Hancock Small Cap
Growth Fund Class A. The second bar represents the 33.16% total return for John
Hancock Small Cap Growth Fund Class B. The third bar represents the 33.03 %
total return for John Hancock Small Cap Growth Fund Class C. The fourth bar
represents the 14.68% total return for Average small-cap fund. A note below the
chart reads "Total returns for John Hancock Small Cap Growth Fund are at net
asset value with all distributions reinvested. The average small-cap fund is
tracked by Lipper, Inc. See the following two pages for historical performance
information."]
- --------------------------------------------------------------------------------
Another strong performer was Multex.com, which transmits brokerage research via
the Internet.
...software, health services not
By contrast, our technology holdings in the software and service sectors
performed poorly and detracted from performance. Investors became increasingly
fearful that the approach of the Year 2000 would stymie demand for software and
services, since few companies would want to implement new software while Y2K
issues remained. Even companies that continued to post good earnings and meet
expectations suffered from the negative sentiment, such as Whittman-Hart, which
provides technology services such as web design and software installation for
medium-sized businesses.
Health-care service companies also performed poorly during the period.
Changes in Medicare reimbursement levels continued to weigh heavily on this
group of nursing homes and assisted-living centers, many of which we sold before
the period ended.
New additions
Our search for companies with strong and sustainable revenue and earnings
growth, dominant market share and proven and effective management led us to a
number of new ideas, including retailers who serve the teenage market such as
bebe stores, Pacific Sunwear of California and Wet Seal. The U.S. teen
population is growing twice as fast as almost any other American age group.
What's more, they have money and they spend it.
We also added to the Fund's stake in so-called "clecs," which are
telephone companies that serve small and mid-sized business. Many of these
companies, such as NEXTLINK Communications, have enjoyed consistent and strong
earnings growth as they grab market share away from more traditional telephone
companies.
Outlook
Our outlook for stocks in general is upbeat. Continued healthy economic growth
coupled with low inflation, low interest rates and low unemployment should
continue to favor stocks. Based on that view, we believe that the outlook for
earnings is quite good. As for small-company stocks, even with their recent
uptick, their valuations remain compelling and their earnings growth rates
attractive, meaning small caps remain overdue for a more sustained rally. The
Fund's diversified approach has helped sustain it during ups and downs of the
small-cap market over the last few years, and should continue to serve the Fund
well.
- --------------------------------------------------------------------------------
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
1Figures from Lipper, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
"Our outlook for stocks in general is upbeat."
5
<PAGE>
================================================================================
John Hancock Funds - Small Cap Growth Fund
- --------------------------------------------------------------------------------
A LOOK AT PERFORMANCE
- --------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock Small Cap 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). Class C
performance includes a contingent deferred sales charge (1% declining to 0%
after one year).
All figures represent past performance and are no guarantee of future results.
Keep in mind that the total return and share price of the Fund's investments
will fluctuate. As a result, your Fund's shares may be worth more or less than
their original cost, depending on when you sell them. Please read your
prospectus before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------- ------- --------
Cumulative Total Returns (2.40%) 109.36% 192.26%
Average Annual Total Returns (2.40%) 15.93% 15.14%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- --------
Cumulative Total Returns 0.81% 111.72% 391.20%
Average Annual Total Returns 0.81% 16.19% 17.25%
- --------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(6/1/98)
--------
Cumulative Total Return 10.48%
Average Annual Total Return 10.48%(1)
Notes to Performance
(1) Not annualized.
6
<PAGE>
================================================================================
John Hancock Funds - Small Cap Growth Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
- --------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
Small Cap 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 stocks trade in the United
States 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.
*No contingent deferred sales charge applicable.
- --------------------------------------------------------------------------------
Line chart with the heading John Hancock Small Cap 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 hypothetical $10,000 investment made in the John Hancock Small Cap Growth
Fund on August 22, 1991, before sales charge, and is equal to $32,017 as of
April 30, 1999. The second line represents the value of the same hypothetical
investment made in the John Hancock Small Cap Growth fund, after sales charge,
and is equal to $30,422 as of April 30, 1999. The third line represents the
Russell 2000 Index and is equal to $28,083. The fourth line represents the
Russell 2000 Growth Index and is equal to $24,401.
Line chart with the heading John Hancock Small Cap 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 John Hancock Small Cap Growth
Fund on October 31, 1988, before sales charge, and is equal to $55,396 as of
April 30, 1999. The second line represents the Russell 2000 Index and is equal
to $34,912. The third line represents the Russell 2000 Growth Index and is equal
to $32,159.
Line chart with the heading John Hancock Small Cap Growth Fund Class C,
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 hypothetical $10,000 investment made in the John Hancock Small Cap Growth
Fund on June 1, 1998, before sales charge, and is equal to $11,596 as of April
30, 1999. The second line represents the value of the same hypothetical
investment made in the John Hancock Small Cap Growth fund, after sales charge,
and is equal to $11,496 as of April 30, 1999. The third line represents the
Russell 2000 Growth Index and is equal to $10,376. The fourth line represents
the Russell 2000 Index and is equal to $9,591.
- --------------------------------------------------------------------------------
7
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap 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, 1999. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $411,181,952)....................... $632,989,690
Joint repurchase agreement (cost - $13,571,000) .......... 13,571,000
Corporate savings account ................................ 217
---------------
646,560,907
Receivable for investments sold ........................... 6,163,975
Receivable for shares sold ................................ 257,711
Dividends receivable ...................................... 4,157
Interest receivable ....................................... 1,847
Other assets .............................................. 109,789
---------------
Total Assets ..................... 653,098,386
---------------------------------------------------
Liabilities:
Payable for investments purchased ......................... 12,278,809
Payable for shares repurchased ............................ 357,676
Payable to John Hancock Advisers, Inc.
and affiliates - Note B .................................. 620,393
Accounts payable and accrued expenses ..................... 113,336
---------------
Total Liabilities ................ 13,370,214
---------------------------------------------------
Net Assets:
Capital paid-in ........................................... 359,095,874
Accumulated realized gain on investments and foreign
currency transactions .................................... 63,740,164
Net unrealized appreciation of investments ................ 221,812,714
Accumulated net investment loss ........................... (4,920,580)
---------------
Net Assets ....................... $639,728,172
===================================================
Net Asset Value Per Share:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value)
Class A - $212,739,382/19,439,594 ......................... $10.94
============================================================================
Class B - $426,084,058/42,139,173 ......................... $10.11
============================================================================
Class C - $904,732/89,564 ................................. $10.10
============================================================================
Maximum Offering Price Per Share*
Class A - ($10.94 x 105.26%) .............................. $11.52
============================================================================
* 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 for the period
stated.
Statement of Operations
Six months ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends ................................................. $339,732
Interest .................................................. 186,381
---------------
526,113
---------------
Expenses:
Investment management fee - Note B ....................... 2,284,306
Distribution and service fee - Note B
Class A ................................................. 251,329
Class B ................................................. 1,833,253
Class C ................................................. 3,477
Transfer agent fee - Note B .............................. 791,961
Custodian fee ............................................ 92,073
Financial services fee - Note B .......................... 43,889
Registration and filing fees ............................. 21,603
Auditing fee ............................................. 19,750
Trustees' fees ........................................... 17,893
Printing ................................................. 14,719
Miscellaneous ............................................ 10,659
Interest expense - Note A ................................ 8,909
Legal fees ............................................... 2,942
---------------
Total Expenses ................... 5,396,763
---------------------------------------------------
Net Investment Loss .............. (4,870,650)
---------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold ..................... 64,068,978
Change in net unrealized appreciation/depreciation
of investments ........................................... 113,496,267
-------------
Net Realized and Unrealized
Gain on Investments .............. 177,565,245
---------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ........ $172,694,595
===================================================
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss .......................................................... ($9,523,637) ($4,870,650)
Net realized gain on investments sold and foreign currency transactions ...... 39,776,156 64,068,978
Change in net unrealized appreciation/depreciation of investments ............ (124,158,701) 113,496,267
------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............. (93,906,182) 172,694,595
------------- --------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($2.5153 and $0.2300 per share, respectively) ..................... (43,296,619) (4,781,633)
Class B - ($2.5153 and $0.2300 per share, respectively) ..................... (101,891,134) (10,631,104)
Class C** - (none and $0.2300 per share, respectively) ...................... -- (14,101)
------------- --------------
Total Distributions to Shareholders ........................................ (145,187,753) (15,426,838)
------------- --------------
From Fund Share Transactions - Net: * ......................................... 99,275,929 (59,699,426)
------------- --------------
Net Assets:
Beginning of period .......................................................... 681,977,847 542,159,841
------------- --------------
End of period (including accumulated net investment loss
of $49,930 and $4,920,580, respectively) .................................... $542,159,841 $639,728,172
============= ==============
</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 period. The difference reflects
earnings less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders and any increase or decrease in money
shareholders invested in the Fund. The footnote illustrates the number of Fund
shares sold, reinvested and repurchased during the last two periods, along with
the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
* Analysis of Fund Share Transactions*
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ........................................................ 43,183,651 $418,398,045 22,264,679 $218,132,026
Shares issued to shareholders in reinvestment of distributions ..... 947,975 36,568,238 476,108 4,123,439
------------ -------------- ------------ --------------
.................................................................... 44,131,626 454,966,283 22,740,787 222,255,465
Less shares repurchased ............................................ (26,992,214) (414,680,052) (24,679,396) (242,713,589)
------------ -------------- ------------ --------------
Net increase (decrease) ............................................ 17,139,412 $40,286,231 (1,938,609) ($20,458,124)
============ ============== ============ ==============
CLASS B
Shares sold ........................................................ 57,762,132 $618,597,893 5,151,385 $48,155,738
Shares issued to shareholders in reinvestment of distributions ..... 2,001,611 72,238,099 983,244 7,885,311
------------ -------------- ------------ --------------
.................................................................... 59,763,743 690,835,992 6,134,629 56,041,049
Less shares repurchased ............................................ (23,478,705) (632,351,276) (10,358,750) (95,570,714)
------------ -------------- ------------ --------------
Net increase (decrease) ............................................ 36,285,038 $58,484,716 (4,224,121) ($39,529,665)
============ ============== ============ ==============
CLASS C**
Shares sold ........................................................ 60,595 $510,679 61,461 $574,996
Shares issued to shareholders in reinvestment of distributions ..... -- -- 1,687 13,527
------------ -------------- ------------ --------------
60,595 510,679 63,148 588,523
Less shares repurchased ............................................ (700) (5,697) (33,479) (300,160)
------------ -------------- ------------ --------------
Net increase ....................................................... 59,895 $504,982 29,669 $288,363
============ ============== ============ ==============
** Class C shares commenced operations on June 1, 1998.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap 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, SIX MONTHS ENDED
---------------------------------------------------- APRIL 30, 1999
1994 1995(1) 1996 1997 1998 (UNAUDITED)
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A(7)
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $6.47 $6.71 $9.02 $10.22 $12.35 $8.41
-------- -------- -------- -------- -------- --------
Net Investment Loss(2) ................................... (0.04) (0.07) (0.09) (0.07) (0.08) (0.06)
Net Realized and Unrealized Gain (Loss) on Investments ... 0.28 2.38 1.29 2.41 (1.34) 2.82
-------- -------- -------- -------- -------- --------
Total from Investment Operations ........................ 0.24 2.31 1.20 2.34 (1.42) 2.76
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold . -- -- -- (0.21) (2.52) (0.23)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ........................... $6.71 $9.02 $10.22 $12.35 $8.41 $10.94
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) ............ 3.59% 34.56% 13.27% 23.35% (14.14%) 33.54%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $131,053 $179,481 $218,497 $209,384 $179,700 $212,739
Ratio of Expenses to Average Net Assets .................. 1.44% 1.38% 1.32% 1.29%(4) 1.36%(4) 1.34%(4,6)
Ratio of Net Investment Loss to Average Net Assets ....... (0.71%) (0.83%) (0.86%) (0.57%) (1.02%) (1.16%)(6)
Portfolio Turnover Rate .................................. 25% 23% 44% 96% 103% 52%
CLASS B(7)
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $6.33 $6.51 $8.70 $9.78 $11.72 $7.81
-------- -------- -------- -------- -------- --------
Net Investment Loss(2) ................................... (0.09) (0.11) (0.15) (0.14) (0.15) (0.08)
Net Realized and Unrealized Gain (Loss) on Investments ... 0.27 2.30 1.23 2.29 (1.24) 2.61
.......................................................... -------- -------- -------- -------- -------- --------
Total from Investment Operations ........................ 0.18 2.19 1.08 2.15 (1.39) 2.53
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold . -- -- -- (0.21) (2.52) (0.23)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ........................... $6.51 $8.70 $9.78 $11.72 $7.81 $10.11
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) ............ 2.80% 33.60% 12.48% 22.44% (14.80%) 33.16%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................. $283,435 $393,478 $451,268 $472,594 $361,992 $426,084
Ratio of Expenses to Average Net Assets .................. 2.19% 2.11% 2.05% 2.02%(4) 2.07%(4) 1.99%(4,6)
Ratio of Net Investment Loss to Average Net Assets ....... (1.46%) (1.55%) (1.59%) (1.30%) (1.73%) (1.81%)(6)
Portfolio Turnover Rate .................................. 25% 23% 44% 96% 103% 52%
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: income, expenses, distributions and
gains (losses) of the Fund. It shows how the Fund's net asset value for a share
has changed since the end of the previous period. Additionally, important
relationships between some items presented in the financial statements are
expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
JUNE 1, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period................................. $8.96 $7.81
-------- --------
Net Investment Loss(2) .............................................. (0.03) (0.09)
Net Realized and Unrealized Gain (Loss) on Investments .............. (1.12) 2.61
-------- --------
Total from Investment Operations ................................... (1.15) 2.52
-------- --------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold ............ -- (0.23)
-------- --------
Net Asset Value, End of Period ...................................... $7.81 $10.10
======== ========
Total Investment Return at Net Asset Value(3) ....................... (12.83%)(5) 33.03%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............................ $468 $905
Ratio of Expenses to Average Net Assets ............................. 2.11%(4,6) 2.09%(4,6)
Ratio of Net Investment Loss to Average Net Assets .................. (1.86%)(6) (1.93%)(6)
Portfolio Turnover Rate ............................................. 103% 52%
</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.
(7) All per share amounts and net asset values have been restated to reflect the
four-for-one stock split effective May 1, 1998.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
Schedule of Investments
April 30, 1999
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Small Cap Growth Fund on April 30, 1999. It's divided into two main categories:
common stocks and short-term investments. Common 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 (1.78%)
Catalina Marketing Corp.* ..................... 65,400 $5,587,613
Getty Images, Inc.* ........................... 222,300 5,779,800
----------
11,367,413
----------
Automobile/Trucks (1.60%)
Gentex Corp.* ................................. 183,400 5,513,463
United Rentals, Inc. * ........................ 159,000 4,740,188
----------
10,253,651
----------
Beverages (0.49%)
Beringer Wine Estates Holdings, Inc.
(Class B)* ................................... 79,500 3,130,313
----------
Broker Services (0.43%)
Raymond James Financial, Inc. ................. 126,087 2,718,751
----------
Building (0.30%)
Crossmann Communities, Inc.* .................. 72,300 1,897,875
----------
Business Services - Misc. (11.32%)
Abacus Direct Corp.* .......................... 83,500 6,179,000
Charles River Associates, Inc.* ............... 138,000 3,036,000
Coinstar, Inc.* ............................... 260,800 6,128,800
Corporate Executive Board Co. (The)* .......... 68,200 1,918,125
Forrester Research, Inc.* ..................... 168,200 5,718,800
INSpire Insurance Solutions, Inc.* ............ 255,300 5,552,775
MedQuist, Inc.* ............................... 143,000 4,897,750
META Group, Inc. * ............................ 135,200 1,233,700
Metro Networks, Inc.* ......................... 101,596 4,571,820
Metzler Group, Inc. (The)* .................... 121,550 3,388,206
Modem Media Poppe Tyson, Inc.* ................ 75,500 2,661,375
Nielsen Media Research, Inc.* ................. 185,000 5,064,375
On Assignment, Inc.* .......................... 145,900 4,422,594
ProBusiness Services, Inc.* ................... 139,650 5,009,944
Professional Detailing, Inc.* ................. 109,000 3,133,750
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Business Services - Misc. (continued)
Profit Recovery Group International, Inc.
(The)* ....................................... 129,200 $4,715,800
Quanta Services, Inc.* ........................ 151,800 4,373,737
topjobs.net Plc, American Depositary
Receipts (United Kingdom)* .................... 29,700 421,369
----------
72,427,920
----------
Computers (21.30%)
AboveNet Communications, Inc.* ................ 63,100 5,402,937
Advent Software, Inc.* ........................ 72,000 4,437,000
AnswerThink Consulting Group, Inc.* ........... 155,500 3,450,156
Apex PC Solutions, Inc.* ...................... 219,750 3,653,344
AppliedTheory Corp.* .......................... 4,600 94,300
Aspect Development, Inc.* ..................... 174,700 1,910,781
autobytel.com, Inc.* .......................... 38,700 1,161,000
BARRA, Inc.* .................................. 42,650 834,341
BindView Development Corp.* ................... 153,900 3,308,850
BMC Software, Inc.* ........................... 39,000 1,679,437
Bottomline Technologies, Inc.* ................ 26,500 1,550,250
Cognizant Technology Solutions Corp.* ......... 155,800 3,495,762
Concentric Network Corp. * .................... 71,500 5,970,250
Critical Path, Inc.* .......................... 8,100 805,950
Dendrite International, Inc.* ................. 103,100 2,667,713
Exodus Communications, Inc.* .................. 61,800 5,569,725
Extreme Networks, Inc.* ....................... 7,300 404,694
Fundtech Ltd. (Israel)* ....................... 210,000 7,231,875
IMRglobal Corp.* .............................. 155,700 2,685,825
Informatica Corp.* ............................ 4,800 135,600
International Network Services, Inc.* ......... 93,550 3,554,900
Intraware, Inc.* .............................. 46,000 1,408,750
iVillage, Inc.* ............................... 4,600 363,400
Marimba, Inc.* ................................ 2,200 133,650
Micromuse, Inc. * ............................. 126,800 4,366,675
MiningCo.com, Inc.* ........................... 3,900 255,450
Mpath Interactive, Inc.* ...................... 30,600 1,204,875
Multex.com, Inc.* ............................. 116,700 5,018,100
National Computer Systems, Inc. ............... 167,700 4,695,600
National Instruments Corp.* ................... 86,050 2,925,700
NEON Systems, Inc.* ........................... 7,450 312,900
Net Perceptions, Inc.* ........................ 4,300 113,412
Network Appliance, Inc.* ...................... 125,600 6,319,250
ONYX Software Corp.* .......................... 7,000 163,625
pcOrder.com, Inc.* ............................ 47,100 2,911,369
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Computers (continued)
Prodigy Communications Corp.* ................. 86,800 $2,332,750
Proxicom, Inc.* ............................... 12,400 278,225
PSINet, Inc.* ................................. 79,100 3,994,550
Razorfish, Inc.* .............................. 1,400 60,900
RealNetworks, Inc.* ........................... 17,900 3,964,850
Rhythms NetConnections, Inc.* ................. 17,300 1,427,250
Sagent Technology, Inc.* ...................... 81,700 776,150
SCM Microsystems, Inc.* ....................... 66,900 4,407,037
SEI Investments Co. ........................... 17,000 1,615,000
SOFTWORKS, Inc.* .............................. 70,000 870,625
SportsLine USA, Inc.* ......................... 87,100 3,484,000
Sterling Commerce, Inc.* ...................... 46,323 1,450,489
USinternetworking, Inc.* ...................... 4,300 219,838
Value America, Inc.* .......................... 6,900 272,119
Verio, Inc.* .................................. 110,800 7,866,800
VerticalNet, Inc.* ............................ 22,100 2,508,350
Vignette Corp.* ............................... 12,500 1,187,500
WebTrends Corp.* .............................. 5,400 286,875
Whittman-Hart, Inc.* .......................... 255,200 7,209,400
Wind River Systems, Inc.* ..................... 123,700 1,855,500
----------
136,265,654
-----------
Consumer Products Misc. (0.21%)
Select Comfort Corp.* ......................... 84,000 1,359,750
----------
Containers (0.15%)
Ivex Packaging Corp.* ......................... 50,000 984,375
----------
Electronics (8.52%)
ATMI, Inc.* ................................... 160,900 3,700,700
Credence Systems Corp.* ....................... 154,300 3,963,581
DuPont Photomasks, Inc.* ...................... 80,000 3,500,000
Flextronics International Ltd.* ............... 104,000 4,855,500
KLA-Tencor Corp.* ............................. 40,000 1,985,000
L-3 Communications Holdings, Inc.* ............ 21,400 1,044,588
Level One Communications, Inc.* ............... 78,925 4,054,772
Micrel, Inc.* ................................. 71,200 4,191,900
Microwave Power Devices, Inc.* ................ 240,000 3,075,000
Novellus Systems, Inc.* ....................... 50,400 2,381,400
PLX Technology, Inc.* ......................... 140,100 2,714,437
PMC-Sierra, Inc. (Canada)* .................... 27,200 2,607,800
Powerwave Technologies, Inc. * ................ 151,300 4,595,737
PRI Automation, Inc.* ......................... 111,100 2,756,669
QLogic Corp. * ................................ 81,800 5,720,888
Semtech Corp.* ................................ 103,600 3,379,950
----------
54,527,922
----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Finance (3.33%)
Affiliated Managers Group, Inc.* .............. 118,400 $3,441,000
AmeriCredit Corp.* ............................ 217,700 3,605,656
Medallion Financial Corp. ..................... 270,800 4,569,750
Metris Cos., Inc. ............................. 62,400 3,814,200
Price (T. Rowe) Associates, Inc. .............. 39,500 1,488,656
TeleBanc Financial Corp.* ..................... 42,200 4,372,975
----------
21,292,237
----------
Food (0.89%)
American Italian Pasta Co. (Class A)* ......... 212,300 5,705,562
----------
Insurance (0.70%)
Executive Risk, Inc. .......................... 24,200 1,736,350
Horace Mann Educators Corp. ................... 86,800 1,974,700
Medical Assurance, Inc.* ...................... 28,750 790,625
----------
4,501,675
----------
Leisure (3.24%)
Cinar Films, Inc. (Class B) (Canada)* ......... 235,000 4,905,625
Imax Corp. (Canada)* .......................... 160,000 3,030,000
Premier Parks, Inc.* .......................... 189,800 6,559,962
Steiner Leisure Ltd.* ......................... 195,500 6,207,125
----------
20,702,712
----------
Linen Supply & Related (0.59%)
G & K Services, Inc. (Class A) ................ 81,000 3,786,750
----------
Machinery (0.53%)
Applied Power, Inc. (Class A) ................. 106,800 3,370,875
----------
Media (6.40%)
Adelphia Communications Corp.
(Class A)* ................................... 114,000 7,780,500
Citadel Communications Corp.* ................. 155,800 4,362,400
Clear Channel Communications, Inc.* ........... 56,414 3,920,773
Cumulus Media, Inc. (Class A) * ............... 150,000 2,428,125
Entercom Communications Corp.* ................ 30,600 1,136,025
Harte-Hanks, Inc. ............................. 141,800 3,580,450
Heftel Broadcasting Corp. (Class A)* .......... 73,000 3,969,375
Network Event Theater, Inc.* .................. 369,800 5,431,437
Pegasus Communications Corp.* ................. 143,500 5,883,500
Wiley (John) & Sons, Inc. (Class A) ........... 59,700 2,414,119
----------
40,906,704
----------
Medical (6.59%)
Alkermes, Inc.* ............................... 156,900 4,197,075
CLOSURE Medical Corp.* ........................ 59,600 1,922,100
Gilead Sciences, Inc.* ........................ 80,600 3,712,637
HCR Manor Care, Inc.* ......................... 40,950 1,136,363
Human Genome Sciences, Inc.* .................. 51,000 1,887,000
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Medical (continued)
IDEC Pharmaceuticals Corp.* ................... 106,700 $5,415,025
Inhale Therapeutic Systems, Inc.* ............. 148,900 4,280,875
Millennium Pharmaceuticals, Inc.* ............. 55,000 2,045,313
MiniMed, Inc.* ................................ 87,600 5,475,000
Perclose, Inc.* ............................... 109,600 4,164,800
Pharmacyclics, Inc.* .......................... 151,900 2,164,575
Renal Care Group, Inc.* ....................... 175,900 3,671,912
Res-Care, Inc.* ............................... 114,050 2,109,925
----------
42,182,600
----------
Metal (0.11%)
NCI Building Systems, Inc.* ................... 28,400 683,375
----------
Oil & Gas (1.02%)
Dril-Quip, Inc.* .............................. 89,900 2,191,313
J. Ray McDermott, S.A.* ....................... 46,700 1,471,050
Newfield Exploration Co.* ..................... 90,200 2,424,125
Veritas DGC, Inc.* ............................ 22,350 452,588
----------
6,539,076
----------
Pollution Control (0.80%)
Newpark Resources, Inc.* ...................... 201,200 1,848,525
Tetra Tech, Inc.* ............................. 133,900 3,238,706
----------
5,087,231
----------
Printing - Commercial (0.77%)
Consolidated Graphics, Inc.* .................. 60,400 2,574,550
Mail-Well, Inc.* .............................. 178,800 2,335,575
----------
4,910,125
----------
Retail (12.23%)
99 Cents Only Stores* ......................... 95,062 4,479,797
Abercrombie & Fitch Co. (Class A)* ............ 56,600 5,384,075
Applebee's International, Inc. ................ 147,050 3,795,728
bebe stores, Inc.* ............................ 128,200 4,871,600
Buca, Inc.* ................................... 42,500 770,313
CSK Auto Corp.* ............................... 189,500 4,737,500
CVS Corp.* .................................... 43,000 2,047,875
Duane Reade, Inc.* ............................ 93,000 2,493,562
Ethan Allen Interiors, Inc. ................... 77,500 3,928,281
Garden Fresh Restaurant Corp.* ................ 145,500 2,364,375
Insight Enterprises, Inc.* .................... 124,400 3,358,800
Linens ON Things, Inc.* ....................... 135,000 6,176,250
Lowe's Cos., Inc. ............................. 56,136 2,961,174
Noodle Kidoodle, Inc.* ........................ 277,200 1,975,050
O'Reilly Automotive, Inc.* .................... 98,000 4,483,500
P.F. Chang's China Bistro, Inc.* .............. 96,200 2,429,050
Pacific Sunwear of California, Inc.* .......... 144,800 5,371,182
Starbucks Corp.* .............................. 106,600 3,937,538
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Retail (continued)
Wet Seal, Inc. (The) (Class A)* ............... 105,600 $4,303,200
Whole Foods Market, Inc.* ..................... 98,900 3,857,100
Wild Oats Markets, Inc.* ...................... 163,700 4,532,444
----------
78,258,394
----------
Schools/Education (1.77%)
Education Management Corp.* ................... 170,400 3,397,350
ITT Educational Services, Inc.* ............... 172,150 4,228,434
Strayer Education, Inc. ....................... 106,750 3,696,219
----------
11,322,003
----------
Telecommunications (10.07%)
Allegiance Telecom, Inc.* ..................... 160,000 7,360,000
Com21, Inc.* .................................. 139,400 4,338,825
Crown Castle International Corp.* ............. 282,300 5,398,987
Global TeleSystems Group, Inc.* ............... 57,200 3,782,350
Intermedia Communications, Inc.* .............. 207,200 6,669,250
Launch Media, Inc.* ........................... 152,700 3,855,675
Metromedia Fiber Network, Inc.
(Class A)* ................................... 90,000 7,582,500
NEXTLINK Communications, Inc.
(Class A)* ................................... 119,000 8,716,750
Qwest Communications International,
Inc.* ......................................... 40,089 3,425,104
RF Micro Devices, Inc.* ....................... 128,300 7,168,762
Tellabs, Inc.* ................................ 30,000 3,282,187
WinStar Communications, Inc.* ................. 58,500 2,844,562
----------
64,424,952
----------
Textile (0.63%)
Cutter & Buck, Inc.* .......................... 155,300 4,018,388
----------
Transport (2.40%)
Eagle USA Airfreight, Inc.* ................... 124,900 4,558,850
Expeditors International of Washington,
Inc. .......................................... 90,000 5,456,250
Forward Air Corp.* ............................ 99,450 2,212,763
MotivePower Industries, Inc.* ................. 184,500 3,148,031
----------
15,375,894
----------
Waste Disposal Service & Equip. (0.78%)
Waste Connections, Inc.* ...................... 189,100 4,987,513
----------
TOTAL COMMON STOCKS
(Cost $411,181,952) (98.95%) 632,989,690
-------- -----------
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
===============================FINANCIAL STATEMENTS=============================
John Hancock Funds - Small Cap Growth Fund
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
- ------------------- ---- -------------- -----
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.12%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-30-99, due 05-03-99
(Secured by U.S. Treasury Bonds,
6.625% thru 9.25%, due
02-15-16 thru 02-15-27 and
U.S. Treasury Note, 5.625%
due 04-30-00) - Note A ........... 4.89% $13,571 $13,571,000
-----------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.00% ......................... 217
-----------
TOTAL SHORT-TERM INVESTMENTS (2.12%) 13,571,217
-------- -----------
TOTAL INVESTMENTS (101.07%) 646,560,907
-------- -----------
OTHER ASSETS AND LIABILITIES, NET (1.07%) (6,832,735)
-------- -----------
TOTAL NET ASSETS (100.00%) $639,728,172
======== ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer; however, security is U.S. dollar
denominated.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
============================NOTES TO FINANCIAL STATEMENTS=======================
John Hancock Funds - Small Cap 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 Small Cap Growth Fund (the
"Fund") and John Hancock Global Technology Fund. Prior to June 1, 1999, the Fund
was known as 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 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, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights to voting, redemptions, dividends and liquidation, except that
certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class which bears distribution and service expenses under
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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required.
DIVIDENDS, 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
17
<PAGE>
============================NOTES TO FINANCIAL STATEMENTS=======================
John Hancock Funds - Small Cap Growth Fund
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. Effective March 12, 1999,
the Fund entered into a syndicated line of credit agreement with various banks,
and the agreements previously in effect were terminated. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings. In
addition, a commitment fee is charged based on the average daily unused portion
of the line of credit and is allocated among the participating funds. The
maximum loan balance during the period amounted to $11,740,817. The annualized
interest rate charged during the period ranged from 5.2500% thru 5.8125%. At
April 30, 1999, 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, 1999, net sales charges received with regard to sales of Class A
shares amounted to $232,063. Out of this amount, $32,359 was retained and used
for printing prospectuses, advertising, sales literature and other purposes,
$165,016 was paid as sales commissions to unrelated broker-dealers and $34,688
was paid as sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer, formerly known as John Hancock
Distributors, Inc. The Adviser's indirect parent, John Hancock Mutual Life
Insurance Company ("JHMLICo"), is the indirect sole shareholder of Signator
Investors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of
18
<PAGE>
============================NOTES TO FINANCIAL STATEMENTS=======================
John Hancock Funds - Small Cap Growth Fund
Class B shares. For the period ended April 30, 1999, contingent deferred sales
charges paid to JH Funds amounted to $521,472.
Class C shares which are redeemed within one year of purchase will be
subject to a contingent deferred sales charge ("CDSC") at a rate of 1.0% 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 C shares. For the period ended April 30, 1999, contingent deferred
sales charges paid to JH Funds amounted to $225.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds for distribution and service expenses, at an annual rate not to exceed
0.25% of Class A average daily net assets and 1.00% of Class B and Class C
average daily net assets, to reimburse JH Funds for its distribution and service
costs. Up to a maximum of 0.25% of such payments may be service fees as defined
by the amended Rules of Fair Practice of the National Association of Securities
Dealers. Under the amended Rules of Fair Practice, curtailment of a portion of
the Fund's 12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The
Fund pays transfer agent fees based on the number of shareholder accounts and
certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Fund. The compensation for the period was
at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione are trustees and/or officers of the Adviser and/or
its affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect
to defer for tax purposes their receipt of this compensation under the John
Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments
into other John Hancock funds, as applicable, to cover its liability for the
deferred compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The deferred
compensation liability and the related other asset are always equal and are
marked to market on a periodic basis to reflect any income earned by the
investment as well as any unrealized gains or losses. At April 30, 1999, the
Fund's investment to cover the 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, 1999, aggregated $313,147,186 and $379,249,453, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 (excluding the
corporate savings account) for federal income tax purposes was $424,813,613.
Gross unrealized appreciation and depreciation of investments aggregated
$238,255,950 and $16,508,873, respectively, resulting in net unrealized
appreciation of $221,747,077.
19
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS --------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
--------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Small Cap 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.
[LOGO] Printed on Recycled Paper 600SA 4/99
6/99
<PAGE>
The latest report from your
Fund's management team
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Global
Technology Fund
APRIL 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
--------------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Barry J. Gordon
President
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02116-5072
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
---------------------------------------
================================================================================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing. These modifications and replacements are
nearly done, and the tests of all our systems are on schedule for completion by
the end of July. The rest of 1999 will be spent testing with our business
partners and continuing to participate in industry testing. We have also
established additional contingency plans beyond our regular ones to prepare for
any challenges that the Year 2000 might present. In the end, John Hancock will
spend approximately $90-$95 million to ensure we make a successful transition to
the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- -------------------------------------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Barry J. Gordon and Marc H. Klee, CFA, Portfolio Managers
John Hancock
Global Technology Fund
Technology stocks lead market's advance in last six months
----------------------------------------------------------
After two months of severely underperforming the stock market as a whole,
technology stocks came roaring back to life in the past six months. A large part
of their success stemmed from their cheap valuations compared to other industry
sectors. Investors had severely punished technology stocks in the summer of 1998
when it appeared that the world was on the brink of an economic crisis. By
January 1999, however, the U.S. economy continued to grow at a healthy, yet
non-inflationary pace, and the global economy was perceived to be on the mend.
Another powerful source behind the surge in tech stocks was the
continuing Internet explosion. Selling goods to the public over the Internet is
already an $8 billion business. Given the enormous growth potential of this
industry, investors seemingly couldn't get enough of Internet and related
companies, sending their share prices skyrocketing.
Internet connects
For the six months ended April 30, 1999, John Hancock Global Technology Fund's
Class A and Class B shares posted total returns of 70.05% and 69.53%,
respectively, at net asset value. Those returns were well ahead of the average
science and technology fund's 60.35% return, according to Lipper, Inc.1 The
Fund's Class C shares, which were launched on March 1, 1999, returned 19.02% for
the first two months of operations. Keep in mind that your net asset value
return will be different from the Fund's performance if you were not invested in
the Fund for the entire period and did not reinvest all distributions. Please
see pages six and seven for longer-term performance information.
- --------------------------------------------------------------------------------
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Global
Technology Fund. Caption below reads "Global Technology Fund management team
members (l-r): "Barry Gordan, Marc Klee and Alan Loewenstein."]
- --------------------------------------------------------------------------------
"...technology stocks came roaring back to life in the past six months."
3
<PAGE>
================================================================================
John Hancock Funds - Global Technology Fund
"Not surprisingly, our Internet-related holdings were among our best
performers..."
- --------------------------------------------------------------------------------
[Table at top left hand column entitled "Top Five Stock Holdings." The first
listing is America Online 7.2%, the second is EMC Corp. 4.0%, the third
Cisco Systems 3.8%, the fourth Microsoft 3.4% and the fifth Dell Computer 3.0%.
A note below the table reads "As a percentage of net assets on April 30, 1999."]
- --------------------------------------------------------------------------------
Not surprisingly, our Internet-related holdings were among our best
performers during the period. America Online (AOL), which was also our largest
position throughout the period, continued to prosper. As the country's largest
Internet service provider, AOL dominated its competitors by signing up millions
of new customers and making deals with many advertisers and users. As AOL's
share price doubled, and then tripled, we pared back our holdings. Even though
we believe it has a great franchise and will continue to enjoy tremendous
growth, we don't want the portfolio's performance to be overly reliant on the
performance of any one or even a handful of stocks. Our holding in networking
company Cisco Systems was also quite rewarding. Its stock nearly doubled during
the period, a reflection of the tremendous benefits bestowed on companies that
provide goods and services needed to accommodate the rise of the Internet. Other
strong performers were Metromedia Fiber Network and Global Crossing,
- --------------------------------------------------------------------------------
[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 "Growth in subscriber/advertising
revenues." The second listing is Microsoft followed by an up arrow with the
phrase "Continued dominance of PC software industry." The third listing is
Network Associates followed by a down arrow with the phrase "Regulatory
scrutiny/disappointing earnings." A note below the table reads "See `Schedule of
Investments.' Investment holdings are subject to change."]
- --------------------------------------------------------------------------------
both of which more than tripled in price during the past six months. These
companies offer bandwidth, which refers to the data transmission capacity of a
network. Finally, we saw gains in excess of 200% each from RealNetworks, which
provides software and services enabling PC users to send and receive "real-time"
media; DoubleClick, which provides services for Internet advertisers and
Inktomi, developer and marketer of Internet software.
Beyond Internet-related companies, there were significant gains from
other segments of the technology group as well. Software giant Microsoft enjoyed
solid returns as it dominated the world's software market. Adjusting for a
two-for-one stock split, Microsoft shares gained more than 70%. Our holdings in
information storage companies EMC Corp. and Network Appliance also did quite
well, in part because of the realization that there is a rapidly growing need
for storage, in part due to the Internet.
The rising technology tide didn't lift all boats, however. Our holdings
in software security company Network Associates proved to be very disappointing.
Its shares plummeted when it came under scrutiny for accounting policies,
followed by news that its first quarter 1999 earnings were much lower than
expected. Enterprise software companies were particularly poor performers during
this time frame, due to fears that Y2K would dampen software spending for the
balance of 1999. Because we believe those fears were overblown and that
enterprise stocks were oversold for the most part, we added to our holdings in
BMC Software and Compuware at what we viewed as very attractive prices. That
said, we reduced our holdings in Computer Associates International because of
company-specific problems.
4
<PAGE>
================================================================================
John Hancock Funds - Global Technology Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 1999." The
chart is scaled in increments of 10% with 0% at the bottom and 80% at the top.
The first bar represents the 70.05% total return for John Hancock Global
Technology Fund Class A. The second bar represents the 69.53% total return for
John Hancock Global Technology Fund Class B. The third bar represents the
19.02%* total return for John Hancock Global Technology Fund Class C. The fouth
bar represents the 60.35% total return for 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, Inc. See the following two
pages for historical performance information. *From inception March 1, 1999
through April 30, 1999."]
- --------------------------------------------------------------------------------
Broadening out
We've recently added to our stake in small and mid-sized technology companies.
That's where we found some of the better bargains, with many small and
medium-sized stocks offering significantly more attractive valuations than their
larger-company counterparts. In addition, we think that the good performance
enjoyed by larger tech companies will spill over to the small and mid-sized
companies in the not-so-distant future. During the past six months we added
several small semiconductor equipment companies, including Applied Science &
Technology, ASM Lithography Holding and Veeco Instruments, to the portfolio. In
the computer services area we added to positions in Mercury Interactive and
Fundtech.
Outlook
The faster and the higher it climbed, the more volatile the technology sector
became during the past six months. We wouldn't be surprised if that trend
continued for a while, punctuated by periods when technology stocks fall back
for short periods of time. However, we believe that technology stocks will
continue to outperform the overall stock market during the next six to 12
months. That said, we think the magnitude of that outperformance will be much
more moderate than we've witnessed over the past six months. Much of the
valuation discrepancy that existed prior to the beginning of the period has been
erased by the huge gains technology stocks recently have enjoyed. Looking ahead,
technology stocks will need to post continued earnings and profit growth in
order to stay ahead of the overall market. And on those counts, we remain quite
optimistic. First-quarter earnings for the technology group were significantly
stronger than earnings posted by other sectors. With no signs that the demand
for technology will diminish, we think earnings growth will remain strong.
- --------------------------------------------------------------------------------
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.
1Figures from Lipper, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
"...we believe that technology stocks will continue to outperform the overall
stock market..."
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%. Different sales charge schedules for Class A shares were in effect
prior to March 1987 and are not reflected in the performance information. Class
B performance reflects a maximum contingent deferred sales charge (maximum 5%
and declining to 0% over six years). Class C performance includes a contingent
deferred sales charge (1% declining to 0% after one year).
All figures represent past performance and are no guarantee of future results.
Keep in mind that the total return and share price of the Fund's investments
will fluctuate. As a result, your Fund's shares may be worth more or less than
their original cost, depending on when you sell them. Please read your
prospectus for a discussion of the risks associated with international
investing, including currency and political risks and differences in accounting
standards and financial reporting, before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- --------
Cumulative Total Returns 43.61% 221.53% 472.06%
Average Annual Total Returns 43.61% 26.31% 19.05%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
------- ------- --------
Cumulative Total Returns 45.13% 224.43% 235.28%
Average Annual Total Returns 45.13% 26.54% 25.98%
- --------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(3/1/99)
---------
Cumulative Total Return 11.90%
Average Annual Total Return 11.90%(1)
Notes to Performance
(1) Not annualized.
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 John Hancock 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 the hypothetical $10,000 investment made in the John Hancock Global
Technology Fund on October 31, 1988, before sales charge, and is equal to
$66,236 as of April 30, 1999. The second line represents the Standard & Poor's
500 Stock Index and is equal to $62,918. The third line represents the value of
the same hypothetical investment made in the John Hancock Global Technology
Fund, after sales charge, and is equal to $63,281 as of April 30, 1999.
Line chart with the heading John Hancock 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 hypothetical $10,000 investment made in the John Hancock Global
Technology Fund on January 3, 1994, after sales charge, and is equal to $35,452
as of April 30, 1999. The second line represents the value of the same
hypothetical investment made in the John Hancock Global Technology Fund on
January 3, 1994, before sales charge, and is equal to $35,352 as of April 30,
1999. The third line represents the Standard & Poor's 500 Stock Index and is
equal to $32,035.
Line chart with the heading John Hancock Global Technology Fund Class C,
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 John Hancock Global
Technology Fund on March 1, 1999, before sales charge, and is equal to $11,902
as of April 30, 1999. The second line represents the value of the same
hypothetical investment made in the John Hancock Global Technology Fund, after
sales charge, and is equal to $11,802 as of April 30, 1999. The third line
represents the Standard & Poor's 500 Stock Index and is equal to $10,803.
- --------------------------------------------------------------------------------
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, 1999. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $317,722,726).................... $563,549,681
Preferred stocks (cost - $1,499,999) .................. 1,499,999
Bonds (cost - $478,773) ............................... 557,670
Joint repurchase agreement (cost - $67,814,000) ....... 67,814,000
Corporate savings account ............................. 148,324
---------------
633,569,674
Receivable for investments sold ........................ 6,473,551
Receivable for shares sold ............................. 2,083,390
Dividends receivable ................................... 244
Receivable for option premiums - Note A ................ 188,450
Interest receivable .................................... 14,004
Other assets ........................................... 24,436
---------------
Total Assets ............. 642,353,749
----------------------------------------------
Liabilities:
Payable for investments purchased ..................... 15,449,014
Written options outstanding, at value
(proceeds $795,308) - Note A ........................ 404,063
Payable for shares repurchased ...................... 794,586
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ............................... 24,435
Accounts payable and accrued expenses .................. 452,990
---------------
Total Liabilities ........ 17,125,088
----------------------------------------------
Net Assets:
Capital paid-in ........................................ 332,153,119
Accumulated net realized gain on investments and
written options ....................................... 48,947,143
Net unrealized appreciation of investments and
written options ....................................... 246,298,784
Accumulated net investment loss ........................ (2,170,385)
---------------
Net Assets ............... $625,228,661
==============================================
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 - $357,695,412/7,451,402 ....................... $48.00
============================================================================
Class B - $266,120,210/5,801,638 ....................... $45.87
============================================================================
Class C* - $1,413,039/30,806 ........................... $45.87
============================================================================
Maximum Offering Price Per Share**
Class A - ($48.00 x 105.26%) ........................... $50.53
============================================================================
* Class C shares commenced operations on March 1, 1999.
** 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 for the period
stated.
Statement of Operations
Six months ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest ............................................... $1,045,248
Dividends .............................................. 137,438
---------------
1,182,686
---------------
Expenses:
Investment management fee - Note B .................... 1,653,037
Distribution and service fee - Note B
Class A .............................................. 408,397
Class B .............................................. 757,242
Class C .............................................. 796
Transfer agent fee - Note B ........................... 374,115
Custodian fee ......................................... 36,860
Administrative fee - Note B ........................... 36,813
Registration and filing fees .......................... 34,104
Auditing fee .......................................... 12,460
Printing .............................................. 8,665
Trustees' fees ........................................ 7,139
Miscellaneous ......................................... 4,056
Legal fees ............................................ 1,638
---------------
Total Expenses ........... 3,335,322
----------------------------------------------
Net Investment Loss ...... (2,152,636)
----------------------------------------------
Realized and Unrealized Gain on Investments and
Written Options:
Net realized gain on investments sold ................. 48,550,219
Net realized gain on written options .................. 818,046
Change in net unrealized appreciation/depreciation
of investments ....................................... 154,666,808
Change in net unrealized appreciation/depreciation
of written options ................................... 381,381
---------------
Net Realized and Unrealized
Gain on Investments and
written options .......... 204,416,454
----------------------------------------------
Net Increase in Net Assets
Resulting from Operations $202,263,818
==============================================
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, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------ ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ..................................................................... ($2,968,152) ($2,152,636)
Net realized gain on investments sold and written options ............................... 3,694,984 49,368,265
Change in net unrealized appreciation/depreciation of investments and written options ... 7,793,056 155,048,189
-------------- ---------------
Net Increase in Net Assets Resulting from Operations ................................... 8,519,888 202,263,818
-------------- ---------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($2.4026 and $0.2470 per share, respectively) ................................ (15,029,298) (1,583,167)
Class B - ($2.4026 and $0.2470 per share, respectively) ................................ (5,391,394) (708,599)
-------------- ---------------
Total Distributions to Shareholders .................................................... (20,420,692) (2,291,766)
-------------- ---------------
From Fund Share Transactions - Net: * .................................................... 26,258,682 160,999,209
-------------- ---------------
Net Assets:
Beginning of period ..................................................................... 249,899,522 264,257,400
-------------- ---------------
End of period (including accumulated net investment loss of $17,749 and
$2,170,385, respectively) ............................................................. $264,257,400 $625,228,661
============== ===============
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ------------ ----------
CLASS A
Shares sold ................................................... 6,227,786 $173,844,000 7,472,479 $310,338,699
Shares issued to shareholders in reinvestment of distributions 496,541 12,219,872 51,369 1,621,615
----------- ------------- ------------ --------------
6,724,327 186,063,872 7,523,848 311,960,314
Less shares repurchased ....................................... (6,302,628) (176,502,102) (6,618,080) (273,384,554)
----------- ------------- ------------ --------------
Net increase .................................................. 421,699 $9,561,770 905,768 $38,575,760
=========== ============= ============ ==============
CLASS B
Shares sold ................................................... 2,014,046 $55,031,614 4,112,128 $166,623,644
Shares issued to shareholders in reinvestment of distributions 197,814 4,698,077 21,790 627,109
----------- ------------- ------------ -------------
2,211,860 59,729,691 4,133,918 167,250,753
Less shares repurchased ....................................... (1,615,363) (43,032,779) (1,190,227) (46,223,126)
----------- ------------- ------------ -------------
Net increase .................................................. 596,497 $16,696,912 2,943,691 $121,027,627
=========== ============= ============ =============
CLASS C**
Shares sold ................................................... -- -- 31,514 $1,427,730
Less shares repurchased ....................................... -- -- (708) (31,908)
----------- ------------- ------------ -------------
Net increase .................................................. -- -- 30,806 $1,395,822
=========== ============= ============ =============
</TABLE>
** Class C shares commenced operations on March 1, 1999.
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
YEAR ENDED DECEMBER 31, PERIOD FROM OCTOBER 31, SIX MONTHS ENDED
-------------------------- JANUARY 1, 1996 TO ------------- APRIL 30, 1999
1993 1994 1995 OCTOBER 31, 1996(7) 1997 1998 (UNAUDITED)
------ ------- -------- ------------------- ----- ----- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ............... $14.94 $17.45 $17.84 $24.51 $25.79 $30.05 $28.46
------- ------- -------- -------- -------- -------- --------
Net Investment Loss ................................ (0.21) (0.22)(1) (0.22)(1,2) (0.14)(1) (0.27)(1) (0.28)(1) (0.16)(1)
Net Realized and Unrealized Gain on Investments
and Written Options ............................... 4.92 1.87 8.53 1.42 5.76 1.09 19.95
------- ------- -------- -------- -------- -------- --------
Total from Investment Operations .................. 4.71 1.65 8.31 1.28 5.49 0.81 19.79
------- ------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold
and Written Options ............................... (2.20) (1.26) (1.64) -- (1.23) (2.40) (0.25)
------- ------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ..................... $17.45 $17.84 $24.51 $25.79 $30.05 $28.46 $48.00
======= ======= ======== ========= ======== ======== ========
Total Investment Return at Net Asset Value(5) ...... 32.06% 9.62% 46.53% 5.22%(7) 21.90% 3.95% 70.05%(7)
Total Adjusted Investment Return at Net Asset Value(5) -- -- 46.41%(3) -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ........... $41,749 $52,193 $155,001 $166,010 $184,048 $186,259 $357,695
Ratio of Expenses to Average Net Assets ............ 2.10% 2.16% 1.67%(2) 1.57%(8) 1.51% 1.50% 1.33%(8)
Ratio of Net Investment Loss to Average Net Assets . (1.49%) (1.25%) (0.89%)(2) (0.68%)(8) (0.95%) (0.97%) (0.77%)(8)
Portfolio Turnover Rate .......................... 86% 67% 70% 64% 104% 86% 36%
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: 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 relationships between some items presented in the
financial statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Global Technology Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED DECEMBER 31, PERIOD FROM OCTOBER 31, SIX MONTHS ENDED
-------------------------- JANUARY 1, 1996 TO ------------- APRIL 30, 1999
1994 (4) 1995 OCTOBER 31, 1996(6) 1997 1998 (UNAUDITED)
------ -------- ------------------- ----- ----- ----------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period .............. $17.24 $17.68 $24.08 $25.20 $29.12 $27.29
---------- ---------- ---------- ---------- --------- ----------
Net Investment Loss(1) ............................ (0.35) (0.39)(2) (0.28) (0.45) (0.45) (0.27)
Net Realized and Unrealized Gain on Investments and
Written Options .................................. 2.05 8.43 1.40 5.60 1.02 19.10
---------- ---------- ---------- ---------- --------- ----------
Total from Investment Operations ................. 1.70 8.04 1.12 5.15 0.57 18.83
---------- ---------- ---------- ---------- --------- ----------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Written Options ............. (1.26) (1.64) -- (1.23) (2.40) (0.25)
---------- ---------- ---------- ---------- --------- ----------
Net Asset Value, End of Period .................... $17.68 $24.08 $25.20 $29.12 $27.29 $45.87
========== ========== ========== ========== ========= ==========
Total Investment Return at Net Asset Value(5) ..... 10.02%(7) 45.42% 4.65%(7) 21.04% 3.20% 69.53%(7)
Total Adjusted Investment Return at Net Asset Value(5) -- 45.30%(3) -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .......... $9,324 $35,754 $50,949 $65,851 $77,999 $266,120
Ratio of Expenses to Average Net Assets ........... 2.90%(8) 2.41%(2) 2.27%(8) 2.21% 2.20% 1.99%(8)
Ratio of Net Investment Loss to Average Net Assets (1.98%)(8) (1.62%)(2) (1.38%)(8) (1.65%) (1.67%) (1.42%)(8)
Portfolio Turnover Rate ........................... 67% 70% 64% 104% 86% 36%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Global Technology Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 1999
(UNAUDITED)
-----------------
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period ....................... $38.54
----------
Net Investment Loss(1) ..................................... (0.09)
Net Realized and Unrealized Gain on Investments and
Written Options ........................................... 7.42
----------
Total from Investment Operations .......................... 7.33
----------
Net Asset Value, End of Period ............................. $45.87
==========
Total Investment Return at Net Asset Value(5) .............. 19.02%(7)
Total Adjusted Investment Return at Net Asset Value(5) ..... --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................... $1,413
Ratio of Expenses to Average Net Assets .................... 2.03%(8)
Ratio of Net Investment Loss to Average Net Assets ......... (1.37%)(8)
Portfolio Turnover Rate .................................... 36%
(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 year ended December 31, 1995. As a result of such fee
reductions, expenses of Class A and Class B shares of the Fund reflect
reductions of $0.02 and $0.03 per share, respectively. Absent such
reductions 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.
(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) Assumes dividend reinvestment and does not reflect the effect of sales
charge.
(6) Effective October 31, 1996 the fiscal period end changed from December 31 to
October 31.
(7) Not annualized.
(8) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Global Technology Fund
Schedule of Investments
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Technology Fund on April 30, 1999. It's divided into four main
categories: common stocks, preferred stocks, bonds and short-term investments.
The common and preferred 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
Aerospace/Aircraft Equipment (1.74%)
United Technologies Corp. ................... 75,000 $10,865,625
-----------
Business Services - Misc. (0.15%)
Modem Media Poppe Tyson, Inc.* .............. 14,650 516,412
topjobs.net Plc, American Depositary Receipt
(ADR) (United Kingdom)* .................... 29,400 417,113
-----------
933,525
-----------
Computer - Graphics (1.10%)
Cadence Design Systems, Inc.* ............... 300,000 4,068,750
Synopsys, Inc.* ............................. 60,000 2,827,500
-----------
6,896,250
-----------
Computer - Internet Services (21.39%)
AboveNet Communications, Inc.* .............. 75,000 6,421,875
America Online, Inc.*(w) .................... 315,000 44,966,250
DoubleClick, Inc.*(w) ....................... 70,000 9,786,875
EarthLink Network, Inc.* .................... 125,000 8,617,187
Exodus Communications, Inc.*(w) ............. 150,000 13,518,750
Inktomi Corp.* .............................. 80,000 9,580,000
iVillage, Inc.* ............................. 4,100 323,900
Launch Media, Inc.* ......................... 45,000 1,136,250
MindSpring Enterprises, Inc.*(w) ............ 71,300 6,911,644
Multex.com, Inc.* ........................... 50,000 2,150,000
NetGravity, Inc.* ........................... 80,000 3,235,000
pcOrder.com, Inc.* .......................... 2,550 157,622
Proxicom, Inc. .............................. 25,050 562,059
RealNetworks, Inc.*(w) ...................... 60,000 13,290,000
Yahoo! Inc.*(w) ............................. 75,000 13,101,563
-----------
133,758,975
-----------
Computer - Mainframe (1.17%)
International Business Machines Corp. ....... 35,000 7,321,562
-----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Computer - Memory Devices (6.58%)
EMC Corp.* .................................. 230,000 $25,055,625
Network Appliance, Inc.* .................... 120,000 6,037,500
Quantum Corp.* .............................. 250,000 4,468,750
Seagate Technology, Inc.* ................... 200,000 5,575,000
-----------
41,136,875
-----------
Computer - Mini/Micro (3.86%)
Compaq Computer Corp. ....................... 250,000 5,578,125
Dell Computer Corp.* ........................ 451,000 18,575,562
-----------
24,153,687
-----------
Computer - Services (3.10%)
AppliedTheory Corp.* ........................ 4,500 92,250
Fundtech Ltd. (Israel)* ..................... 150,000 5,165,625
Intraware, Inc.* ............................ 12,250 375,156
Marimba, Inc.* .............................. 2,300 139,725
Mercury Interactive Corp. * ................. 275,000 7,751,562
NEON Systems, Inc.* ......................... 5,700 239,400
Novell, Inc.* ............................... 250,000 5,562,500
Razorfish, Inc.* ............................ 1,100 47,850
-----------
19,374,068
-----------
Computer - Software (14.00%)
BEA Systems, Inc.* .......................... 175,000 2,646,875
BMC Software, Inc.* ......................... 200,000 8,612,500
CBT Group Plc (ADR) (Ireland)* .............. 150,000 2,325,000
Computer Associates International, Inc. ..... 150,000 6,403,125
Compuware Corp.* ............................ 300,000 7,312,500
Citrix Systems, Inc.* ....................... 100,000 4,250,000
Digital Lava, Inc.* (r) ..................... 16,667 136,357
i2 Technologies, Inc.* ...................... 275,000 9,315,625
Keane, Inc.* ................................ 150,000 3,721,875
Microsoft Corp.* ............................ 260,000 21,141,250
Mpath Interactive, Inc.* .................... 8,650 340,594
Network Associates, Inc.* ................... 180,000 2,385,000
Oracle Corp.* ............................... 150,000 4,059,375
Parametric Technology Corp.* ................ 175,000 2,285,938
Sagent Technology, Inc.* .................... 100,000 950,000
Unisys Corp.* ............................... 250,000 7,859,375
Wang Laboratories, Inc.* .................... 150,000 3,759,375
-----------
87,504,764
-----------
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Global Technology Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Electronics - Components Misc. (2.24%)
SCI Systems, Inc.* .......................... 150,000 $5,709,375
Sanmina Corp.* .............................. 125,000 8,296,875
-----------
14,006,250
-----------
Electronics - Semiconductor Components (13.66%)
ASM Lithography Holding N.V.
(Netherlands)* ............................. 200,000 7,800,000
Altera Corp.* ............................... 140,000 10,115,000
Analog Devices, Inc.* ....................... 200,000 7,025,000
Applied Materials, Inc.* .................... 180,000 9,652,500
Applied Science & Technology, Inc.* ......... 300,000 4,256,250
Cypress Semiconductor Corp.* ................ 250,000 2,562,500
Intel Corp. ................................. 100,000 6,118,750
KLA-Tencor Corp.* ........................... 125,000 6,203,125
Novellus Systems, Inc.* ..................... 125,000 5,906,250
PLX Technology, Inc.* ....................... 30,000 581,250
PRI Automation, Inc.* ....................... 120,000 2,977,500
Taiwan Semiconductor Manufacturing Co.,
Ltd. (ADR) (Taiwan)* ....................... 300,000 7,200,000
Veeco Instruments, Inc.* .................... 150,000 5,775,000
Vitesse Semiconductor Corp.* ................ 200,000 9,262,500
-----------
85,435,625
-----------
Media - Radio/TV (0.98%)
Antenna TV S.A. (ADR) (Greece)* ............. 10,000 117,500
Infinity Broadcasting Corp. (Class A)* ...... 200,000 5,537,500
Westwind Media.com, Inc.* (r) ............... 166,667 500,000
-----------
6,155,000
-----------
Medical - Home & Outpatient (0.00%)
Laser Medical Corp.* (r) .................... 491,800 50
-----------
Telecommunications - Equipment (14.33%)
Advanced Fibre Communications, Inc.* ........ 200,000 1,525,000
CIENA Corp.* ................................ 270,000 6,345,000
Cisco Systems, Inc.* ........................ 210,000 23,953,125
Equant N.V.* (Netherlands) .................. 50,000 4,462,500
Global Crossing Ltd.* (Bermuda) ............. 200,000 10,800,000
Globecomm Systems, Inc.* .................... 233,705 2,307,837
Metromedia Fiber Network, Inc. (Class A)* ... 190,000 16,007,500
Microwave Power Devices, Inc.* .............. 100,000 1,281,250
Newpoint Technologies, Inc. (r) ............. 160,000 480,000
Nokia Corp. (ADR) (Finland) ................. 175,000 12,982,813
Qwest Communications International, Inc.* ... 75,000 6,407,813
Rhythms NetConnections, Inc.* ............... 36,750 3,031,875
-----------
89,584,713
-----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Telecommunications - Services (4.40%)
Allegiance Telecom, Inc.* ................... 100,000 $4,600,000
China Telecom, Ltd. (ADR) (Hong Kong)* ...... 50,000 2,287,500
Esat Telecom Group Plc (ADR) (Ireland)* ..... 18,700 913,962
MCI WorldCom, Inc.* ......................... 90,000 7,396,875
Primus Telecommunications Group, Inc. * ..... 300,000 5,006,250
WinStar Communications, Inc.* ............... 150,000 7,293,750
----------
27,498,337
----------
Transport - Airline (1.43%)
AMR Corp.* .................................. 70,000 4,886,875
UAL Corp.* .................................. 50,000 4,037,500
----------
8,924,375
----------
TOTAL COMMON STOCKS
(Cost $317,722,726) (90.13%) 563,549,681
-------- -----------
PREFERRED STOCKS
Computer - Software (0.16%)
Verisity Ltd. (Israel)* (r) ................. 135,768 999,999
----------
Medical - Home & Outpatient (0.08%)
Laser Medical Corp.* (r) .................... 500,000 500,000
----------
TOTAL PREFERRED STOCKS
(Cost $1,499,999) (0.24%) 1,499,999
------- -----------
PAR VALUE
INTEREST CREDIT (000s
RATE RATING** OMITTED)
---- -------- --------
BONDS
Transport - Air Freight (0.09%)
Piedmont Aviation, Inc.,
Equip Tr Cert 1988
Ser F 03-28-09............... 10.35% B+ $500 557,670
----------
TOTAL BONDS
(Cost $478,773) (0.09%) 557,670
------- ----------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (10.85%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-30-99, due 05-03-99
(Secured by U.S. Treasury Bonds,
6.625% thru 9.250%, due
02-15-16 thru 02-15-27 and
U.S. Treasury Note, 5.625%
due 04-30-00) - Note A ...... 4.89 67,814 67,814,000
----------
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Global Technology Fund
MARKET
ISSUER, DESCRIPTION VALUE
- ------------------- -----------
Corporate Savings Account (0.02%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.00%................... $148,324
----------
TOTAL SHORT-TERM INVESTMENTS (10.87%) 67,962,324
-------- ------------
TOTAL INVESTMENTS (101.33%) 633,569,674
-------- ------------
OTHER ASSETS AND LIABILITIES, NET (1.33%) (8,341,013)
-------- ------------
TOTAL NET ASSETS (100.00%) $625,228,661
======== ============
* Non-income producing security.
** Credit ratings are unaudited and rated by Standard & Poor's where available,
or Moody's Investors Service or John Hancock Advisers, Inc. where Standard &
Poor's ratings are not available.
(w) Written call options outstanding. See Note A.
(r) Direct placement securities are restricted as to resale. They have
been valued in accordance with procedures approved by the Trustees
after consideration of restrictions as to resale, financial condition
and prospects of the issuer, general market conditions and pertinent
information in accordance with the Fund's By-Laws and the Investment
Company Act of 1940, as amended. The Fund has limited rights to
registration under the Securities Act of 1933 with respect to these
restricted securities. Additional information on these securities is as
follows:
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S APRIL 30,
Issuer, Description DATE COST NET ASSETS 1999
- ------------------- ----------- ----------- ---------- ---------
Digital Lava, Inc. -
Common Stock.............. 02-18-99 $100,000 0.02% $136,357
Laser Medical Corp. -
Common Stock.............. 01-12-98 50 0.00 50
Preferred Stock .......... 01-12-98 500,000 0.08 500,000
Newpoint Technologies, Inc. -
Common Stock ............. 03-24-98 480,000 0.08 480,000
Verisity Ltd. - Common Stock 03-01-99 999,999 0.16 999,999
Westwind Media.com, Inc. -
Common Stock.............. 12-14-98 500,000 0.08 500,000
---- ---------
0.42% $2,616,406
==== ==========
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.
Portfolio Concentration (Unaudited)
- --------------------------------------------------------------------------------
The Global Technology Fund invests primarily in equity securities of technology
companies in the United States and abroad. The concentration of investments by
industry category for individual securities held by the Fund is shown in the
schedule of investments. In addition, concentration of investments can be
aggregated by various countries. The table below shows the percentage of the
Fund's investments at April 30, 1999 assigned to the various country categories.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION FUND'S NET ASSETS
- ----------------------- ------------------
Bermuda ................................................ 1.73%
Finland ................................................ 2.08
Greece ................................................. 0.02
Hong Kong .............................................. 0.37
Ireland ................................................ 0.52
Israel ................................................. 0.99
Netherlands ............................................ 1.96
Taiwan ................................................. 1.15
United Kingdom ......................................... 0.07
United States .......................................... 92.44
-------
TOTAL INVESTMENTS 101.33%
=======
SEE NOTES TO FINANCIAL STATEMENTS
15
<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 Small Cap Growth Fund. Prior to June 1, 1999, John Hancock
Small Cap Growth Fund was known as 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 companies that rely extensively on
technology in their product development or operations. Income is a secondary
objective.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The Trustees
authorized the issuance of Class C shares effective March 1, 1999. 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,
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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required.
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities is
recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions are
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principles. Dividends paid by the Fund with
respect to each class of shares will be calculated in the same manner, at the
same time and will be in the same amount, except for the effect of expenses that
may be applied differently to each class.
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.
16
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Global Technology Fund
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class level
based on the appropriate net assets of each class and the specific expense
rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual fund. Expenses which are not identifiable to a specific fund are
allocated in such a manner as deemed equitable, taking into consideration, among
other things, the nature and type of expense and the relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues
and expenses of the Fund. Actual results could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Effective March 12, 1999,
the Fund entered into a syndicated line of credit agreement with various banks
and the agreements previously in effect were terminated. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings. In
addition, a commitment fee is charged based on the average daily unused portion
of the line of credit and is allocated among the participating funds. The Fund
had no borrowing activity for the period ended April 30, 1999.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/(loss) on investments are
translated at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities, other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Over-the-counter options are valued
at the mean between the last bid and asked prices. 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"). Exchange-
17
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Global Technology Fund
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 Statement of
Assets and Liabilities.
Written option transactions for the period ended April 30, 1999 were as
follows:
CONTRACTS AMOUNTS
--------- -------
OUTSTANDING, BEGINNING OF PERIOD 150 $18,300
------ ---------
OPTIONS WRITTEN 2,905 1,595,054
OPTIONS CLOSED (1,955) (818,046)
------ ---------
OUTSTANDING, END OF PERIOD 1,100 $795,308
====== =========
Covered written call options outstanding at April 30, 1999, were as follows:
EXPIRATION DATE/ CURRENT
WRITTEN CALL OPTION CONTRACTS STRIKE PRICE PREMIUMS VALUE
- ------------------- --------- ------------ -------- -----
America Online, Inc. 100 MAY 99/180 $100,948 $20,000
America Online, Inc. 150 MAY 99/200 82,047 12,188
DoubleClick, Inc. 200 MAY 99/180 86,273 70,000
Exodus Communications, Inc. 200 MAY 99/120 123,146 57,500
MindSpring Enterprises, Inc. 150 MAY 99/120 61,423 39,375
RealNetworks, Inc. 100 MAY 99/270 188,450 185,000
Yahoo! Inc. 200 MAY 99/250 153,021 20,000
------ ---------- ---------
1,100 $795,308 $404,063
====== ========== =========
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, 1999, net sales charges received with regard to sales of Class A
shares amounted to $596,691. Out of this amount, $91,713 was retained and used
for printing prospectuses, advertising, sales literature and other purposes,
$405,359 was paid as sales commissions to unrelated broker-dealers and $99,619
was paid as sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer, formerly known as John Hancock
Distributors, Inc. The Adviser's indirect parent, John Hancock Mutual Life
Insurance Company ("JHMLICo"), is the indirect sole shareholder of Signator
Investors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the
18
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Global Technology Fund
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, 1999, contingent deferred sales charges paid to JH Funds amounted to
$216,418.
Class C shares which are redeemed within one year of purchase will be
subject to a contingent deferred sales charge ("CDSC") at a rate of 1.00% of the
lesser of the current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSC are paid to
JH Funds and are used in whole or in part to defray its expenses related to
providing distribution related services to the Fund in connection with the sale
of Class C shares. For the period ended April 30, 1999, contingent deferred
sales charges paid to JH Funds amounted to $5.
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, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds for distribution and service expenses, at an annual rate not to exceed
0.30% of Class A average daily net assets and 1.00% of Class B and Class C
average daily net assets, to reimburse JH Funds for its distribution and service
costs. Up to a maximum of 0.25% of such payments may be service fees as defined
by the amended Rules of Fair Practice of the National Association of Securities
Dealers. Under the amended Rules of Fair Practice, curtailment of a portion of
the Fund's 12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The
Fund pays the transfer agent fee based on the number of shareholder accounts and
certain out-of-pocket expenses.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione are Trustees and/or officers of the Adviser and/or
its affiliates, as well as Trustees of the Fund 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. 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, 1999, 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, 1999, aggregated $266,902,218 and $144,543,368, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 (excluding the
corporate savings account) for federal income tax purposes was $387,523,714.
Gross unrealized appreciation and depreciation of investments aggregated
$267,202,246 and $21,304,610, respectively, resulting in net unrealized
appreciation of $245,897,636.
19
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS -----------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
-----------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Global Technology Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[LOGO] Printed on Recycled Paper 830SA 4/99
6/99
