The latest report from your
Fund's management team
ANNUAL REPORT
500 Index
Fund
OCTOBER 31, 1999
TRUSTEES
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Maureen R. Ford
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Executive 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
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
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
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive
Officer, flush right next to fourth paragraph.]
DEAR FELLOW SHAREHOLDERS:
I am delighted that one of my first official duties at John Hancock Funds is
to welcome you to the New Millennium! I wish you all the best for a century
filled with momentous occasions.
Every New Year, of course, provides us with a built-in opportunity to make
new resolutions, or re-commit to old ones. It seems fitting, therefore, that
this special New Year 2000 coincides with a very important, although
certainly less exotic, event.
Starting last October, personalized Social Security statements are being sent
to 125 million workers over age 25, showing estimates of the retirement,
disability and survivor benefits that they and their families are eligible to
receive now and in the future.
The statements, to be sent out annually, will provide people with a glimpse
of what they can expect from the government when they retire. This should be
comforting to those who feared that Social Security wouldn't be there for
them at all. But many people also already know that government benefits will
only fulfill a small piece of their retirement needs.
The best thing about this massive mailing is that it can serve as a wake-up
call to encourage families to focus more on planning for their financial
future.
When you receive your statement, expected to be within three months of your
next birthday, we urge you to read it carefully for accuracy, making sure
your annual earnings history and amounts you have contributed over the years
are correct. Keep in mind that the estimated benefits are precisely that, and
that rules and regulations may change by the time you retire. Also remember
that they are not inflation adjusted, so it would be unrealistic to expect
them to have the same purchasing power in the future as they would today.
We also encourage you to use this mailing as a reason to contact your
investment professional, or to select one if you are not working with
somebody. He or she can help you focus on establishing and maintaining a
sound plan to achieve a comfortable retirement. Together, you should make
sure to maximize your participation in tax-advantaged programs like IRAs and
401(k)s.
The stakes are too high to leave your retirement lifestyle to chance.
Congress' awareness-raising effort is commendable. The next step is yours.
Mark the beginning of the New Millennium by taking it.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY ROGER HAMILTON, PORTFOLIO MANAGER
John Hancock
500 Index Fund
Interest-rate jitters mute S&P 500 returns
in the last two months
[A 3-1/2" x 2" photo at bottom right side of page of John Hancock 500
Index Fund. Caption below reads "Fund management team members: Barry
Evans (l) and Roger Hamilton (r)."]
Although some stocks -- namely technology issues -- posted big gains from
mid-August through the end of October, most others wilted under the
pressure of inflation concerns and interest-rate worries. When the Fund
began operations August 18, 1999, investors were hunkered down due to
those jitters, which persisted through the end of the September. By the
end of that month, the Standard & Poor's 500 Index had officially
slipped into "correction" territory, declining more than 10% from its
July peak. In contrast, shining hopes for their future helped technology
stocks easily overcome interest-rate and Y2K fears.
October started off rather ghoulishly, with investors fearing that the
Federal Reserve would raise interest rates at its October 5 meeting. The
Fed didn't raise rates on that occasion, although it did threaten to
raise them later. In response, the market experienced one of its worst
one-week selloffs in nearly a decade, falling 5.9% for the week ended
October 15. However, news of moderate third-quarter inflation gains set
off a wave of optimism and the market staged a strong rally in the final
weeks of October. Stocks recovered all of their losses from that
terrible week and more. Despite that late-period surge, the S&P 500
Index ended the period only posting a small gain of 2.49% between
August 18 and October 31, 1999.
"...the market
staged a
strong rally
in the final
weeks of
October."
Performance and strategy review
Since its inception on August 18 through October 31, 1999, John Hancock
500 Index Fund Class R shares had a total return of 2.40% at net asset
value. The average S&P 500 Index objective fund had a total return of
3.08% from August 19, 1999 through October 31, 1999, the closest
comparable period, according to Lipper, Inc.1
[Table at top left hand column entitled "Top Five Holdings." The first
listing is Microsoft 4.1%, the second is General Electric 3.9%, the
third Intel 2.2%, the fourth Wal-Mart Stores 2.2% and the fifth Cisco
Systems 2.1%. A note below the table reads "As a percentage of net
assets on October 31, 1999."]
"Many
telecom-
munications
stocks
posted
strong
gains..."
Our goal is to have the Fund's holdings closely track those of the S&P 500
Index, while minimizing the costs associated with buying and selling shares
of stocks. Although there are frequent changes in the composition of the
Index, we re-balance the Fund's holdings less frequently to keep our
transaction costs at a minimum.
Tech stocks lead pack
The promise of the Internet together with a revitalized world economy
helped set technology stocks ablaze. Software company Adobe Systems led
the pack, gaining roughly 47% over the last two and a half months. The
company reported that its Photoshop and Illustrator software are
increasingly being used to make Web pages. Computer makers Sun
Microsystems and Gateway 2000 each surged about 45% as they rode the
wave of the Internet. Personal computer maker Tandy, owner of the Radio
Shack chain, gained about 40% thanks to strong sales of digital
satellite-TV systems, wireless phones, video players, computer
connectors and electronics parts. Strong subscriber growth and increases
in advertising and e-commerce revenue boosted America Online (AOL)
shares more than 30%. EMC Corp., which makes data storage hardware and
software, was a prime beneficiary of the growing need for space to store
information.
[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 Adobe Systems followed by an up arrow with the phrase "Strong
demand for web-page software." The second listing is Nextel
Communications followed by an up arrow with the phrase "Consumers clamor
for wireless communications." The third listing is Raytheon followed by
a down arrow with the phrase "Stuns investors with disappointing
earnings." A note below the table reads "See 'Schedule of Investments.'
Investment holdings are subject to change."]
Many telecommunications stocks posted strong gains in response to the growing
demand for wireless communications and data transmission. The stock of Nextel
Communications, which markets a digital cell phone with a unique "walkie-
talkie" feature, was up more than 50%. Financial performance at Sprint Corp.
- -- up 45% -- and its wireless unit, Sprint PCS Group -- up 41% -- fell short
of analysts' expectations in their quarter, but investors cheered the fact
that basic trends in both businesses were on target.
Drug stocks recover
After languishing throughout most of period, some drug companies staged
a recovery in October. The stock price of drug maker Warner-Lambert rose
just over 23% as sales of its blockbuster cholesterol-lowering drug
Lipitor continued rapid growth. Likewise, Merck rose 23% as sales of key
established drugs for hypertension, osteoporosis and cholesterol rose.
The rapid growth of several key prescription drugs fueled Bristol-Myers
Squibb and Pfizer, which were each up about 14%.
[Bar chart at top of left hand column with heading "Fund Performance".
Under the heading is a note that reads "From inception August 18, 1999
through October 31, 1999." The chart is scaled in increments of 0.5%
with 0% at the bottom and 3.5% at the top. The first bar represents the
2.40% total return for John Hancock 500 Index Fund Class R. The second
bar represents the 3.08% total return for Average S&P 500 Index
objective fund. A note below the chart reads "The total return for John
Hancock 500 Index Fund is at net asset value with all distributions
reinvested. The average S&P 500 Index objective fund is tracked by
Lipper, Inc.1"]
Some financial stocks also rebounded in October in anticipation of the
imminent repeal of Depression-era regulations, which paves the way for
financial-company consolidation and helped boost banks, brokers and insurers.
Among the best performers were Citigroup and Wells Fargo, each up 16%, and
American Express, up 14%.
Wal-Mart Stores and Home Depot each gained more than 20%, benefiting from one
of the longest periods of sustained consumer spending.
Laggards
From a sector standpoint, energy companies were among the S&P 500
Index's biggest laggards between mid-August and the end of October. A
host of potential concerns was behind their struggle, including
uncertain earnings outlooks and continued worries about compliance by
OPEC with production limits. Sunoco, Halliburton and Baker Hughes all
posted losses in excess of 18%.
U.S. defense and aerospace firm Raytheon fell more than 57%, posting earnings
that were much lower than expected. In the wake of accounting problems and a
likely Securities and Exchange Commission investigation, drugstore chain
Rite Aid fell nearly 52%. Financial uncertainties and looming debt payments
felled apparel maker Fruit of the Loom, which we sold.
The rising technology tide didn't lift all boats, nor was the financial
services sector recovery enjoyed by all. IBM was off more than 20% on
indications that the company had seen a sales slowdown related to Y2K. Shares
of Xerox fell more than 43% after reporting that its third-quarter revenue
growth wouldn't meet Wall Street's expectations. One of the worst performers
in the financial sector was Bank One, which was down more than 30% after
posting an unexpected revenue shortfall in its First USA credit-card unit.
"S&P index
funds aren't
immune to
market
downdrafts..."
Outlook
The Fund's returns, as always, will be dictated by the performance of
the S&P 500 Index. It's important for shareholders to realize that the
S&P 500 Index's performance has been extremely strong over the past
several years, especially when viewed from a historical basis. S&P index
funds aren't immune to market downdrafts, and they will rise and fall in
concert with the underlying index. But no matter what the market
environment, our goal will be to closely track the performance of the
S&P 500 Index.
- ---------------------------------------------------------------------------
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. Of course, the
managers' views are subject to change as market and other conditions
warrant.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is
lower.
A LOOK AT PERFORMANCE
The table on the right shows the cumulative total return and the average
annual total return for the John Hancock 500 Index Fund. Total return
measures the change in value of an investment from the beginning to the end
of a period, assuming that all distributions were reinvested.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the Fund's
investments will fluctuate. As a result, your Fund's shares may be worth more
or less than their original cost, depending on when you sell them. Please
read your prospectus carefully before you invest or send money.
CLASS R
For the period ended September 30, 1999
SINCE
INCEPTION
(8/18/99)
--------
Cumulative Total Return (3.70%)
Average Annual Total Return (1,2) (3.70%)
Notes to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.40% of the
Fund's daily average net assets. Without the limitation of expenses,
the average annual total return for the since inception period would have
been (3.76%).
(2) Not annualized.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock 500 Index 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 Index. The Standard & Poor's
500 Index is an unmanaged index that includes 500 widely traded common stocks
and is often used as a measure of stock market performance. It is not
possible to invest in an index. Past performance is not indicative of future
results.
Line chart with the heading John Hancock 500 Index Fund Class R,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are two lines. The first line
represents the Standard & Poor's 500 Index and is equal to $10,290 as of
October 31, 1999. The second line represents the value of the
hypothetical $10,000 investment made in the John Hancock 500 Index fund
on August 18, 1999, before sales charge and is equal to $10,240 as of
October 31, 1999.
FINANCIAL STATEMENTS
John Hancock Funds - 500 Index Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on October 31,
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
October 31, 1999
- ------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $34,829,528) $35,601,529
Joint repurchase agreement
(cost - $697,000) 697,000
-----------
36,298,529
Cash 99
Receivable for futures variation margin 19,500
Receivable for shares sold 132
Receivable from John Hancock
Advisers, Inc. - Note B 41,508
Dividends receivable 29,759
Interest receivable 304
Cash held for futures 56,250
-----------
Total Assets 36,446,081
-----------
Liabilities:
Accounts payable and accrued expenses 35,582
-----------
Total Liabilities 35,582
-----------
Net Assets:
Capital paid-in 35,546,627
Accumulated net realized loss on
investments and financial futures contracts (10,141)
Net unrealized appreciation of
investments and financial futures contracts 801,255
Accumulated net investment income 72,758
-----------
Net Assets $36,410,499
===========
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 R* - $36,410,499/3,555,454 $10.24
============================================================
* The Fund commenced operations on August 18, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains
(losses) for the period stated.
Statement of Operations
For the period from August 18, 1999 (commencement of operations)
to October 31, 1999
- ------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign
withholding taxes of $64) $76,611
Interest 24,490
-----------
101,101
-----------
Expenses:
Investment management fee - Note B 24,801
Custodian fee 22,480
Auditing fee 20,000
Distribution and service fee - Note B 17,715
Registration and filing fees 10,967
Miscellaneous 10,140
Printing 1,964
Accounting and legal services fee - Note B 1,475
Transfer agent fee - Note B 10
Trustees' fees 2
-----------
Total Expenses 109,554
-----------
Less Expense Reductions - Note B (81,211)
-----------
Net Expenses 28,343
-----------
Net Investment Income 72,758
-----------
Realized and Unrealized Gain (Loss)
on Investments and Financial Futures
Contracts:
Net realized loss on investments sold (14,335)
Net realized gain on financial
futures contracts 4,194
Change in net unrealized
appreciation/depreciation of investments 772,001
Change in net unrealized
appreciation/depreciation on
financial futures contracts 29,254
-----------
Net Realized and Unrealized Gain
on Investments and Financial
Futures Contracts 791,114
-----------
Net Increase in Net Assets
Resulting from Operations $863,872
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------
FOR THE
PERIOD FROM
AUGUST 18, 1999
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1999
-------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $72,758
Net realized loss on investments
sold and financial futures contracts (10,141)
Change in net unrealized
appreciation/depreciation of
investments and financial futures contracts 801,255
-----------
Net Increase in Net Assets
Resulting from Operations 863,872
-----------
From Fund Share Transactions - Net: * 35,546,627
-----------
Net Assets:
Beginning of period --
-----------
End of period (including
accumulated net investment income
of $72,758) $36,410,499
===========
* Analysis of Fund Share Transactions:
<CAPTION>
FOR THE
PERIOD FROM
AUGUST 18, 1999
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1999
------------------------
SHARES AMOUNT
----------- -----------
<S> <C> <C>
CLASS R
Shares sold 3,662,239 $36,603,448
Less shares repurchased (106,785) (1,056,821)
----------- -----------
Net increase 3,555,454 $35,546,627
=========== ===========
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed for the period. The difference reflects earnings
less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders, if any, and any increase or decrease
in money shareholders invested in the Fund. The footnote illustrates the
number of Fund shares sold, reinvested and redeemed during the period,
along with the corresponding dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
the period indicated, investment returns, key ratios and supplemental
data are listed as follows:
- -----------------------------------------------------------------------
FOR THE PERIOD FROM
AUGUST 18, 1999
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1999
-------------------
<S> <C>
CLASS R
Per Share Operating Performance
Net Asset Value, Beginning of Period $10.00
-------
Net Investment Income(1) 0.02
Net Realized and Unrealized Gain on
Investments and Financial Futures Contracts 0.22
-------
Total from Investment Operations 0.24
-------
Net Asset Value, End of Period $10.24
=======
Total Investment Return at Net
Asset Value (2) 2.40%(3)
Total Adjusted Investment Return at Net
Asset Value (2,4) 2.17%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $36,410
Ratio of Expenses to Average Net Assets 0.40%(5)
Ratio of Adjusted Expenses to Average
Net Assets (6) 1.55%(5)
Ratio of Net Investment Income to
Average Net Assets 1.03%(5)
Ratio of Adjusted Net Investment Loss
to Average Net Assets (6) (0.12%)(5)
Portfolio Turnover Rate 1%
Fee Reduction Per Share (1) $0.02
(1) Based on the average of the shares outstanding at the end of
each month.
(2) Assumes dividend reinvestment and does not reflect the effect
of sales charges.
(3) Not annualized.
(4) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the period
shown.
(5) Annualized.
(6) Unreimbursed, without fee reduction.
The Financial Highlights summarizes the impact of the following factors on
a single share for the 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 for the period.
Additionally, important relationships between some items presented in the
financial statements are expressed in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
October 31, 1999
- -------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by
the 500 Index Fund on October 31, 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.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- -------------------------------------- ---------- -------------
<S> <C> <C> <C>
COMMON STOCKS
Advertising (0.24%)
Interpublic Group of Companies, Inc. (The) 892 $36,237
Omnicom Group, Inc. 562 49,456
------------
85,693
------------
Aerospace (0.94%)
Boeing Co. (The) 3,039 139,984
General Dynamics Corp. 630 34,926
Goodrich (B.F.) Co. (The) 347 8,220
Lockheed Martin Corp. 1,250 25,000
Northrop Grumman Corp. 220 12,072
Raytheon Co. (Class B) 1,068 31,106
United Technologies Corp. 1,524 92,202
------------
343,510
------------
Automobile/Trucks (1.20%)
Cummins Engine Co., Inc. 133 6,741
Dana Corp. 524 15,491
Delphi Automotive Systems Corp. 1,788 29,390
Eaton Corp. 228 17,157
Ford Motor Co. 3,828 210,062
General Motors Corp. 2,038 143,170
PACCAR, Inc. 248 11,687
Ryder System, Inc. 221 4,724
------------
438,422
------------
Banks - United States (6.31%)
AmSouth Bancorp. 1,245 32,059
Bank of America Corp. 5,465 351,809
Bank of New York Co., Inc. 2,326 97,401
Bank One Corp. 3,711 139,394
BB&T Corp. 1,011 36,775
Chase Manhattan Corp. 2,634 230,146
Comerica, Inc. 495 29,422
Fifth Third Bancorp. 859 63,405
First Union Corp. 3,027 129,215
Firstar Corp. 3,116 91,532
Fleet Boston Corp. 2,916 127,211
Huntington Bancshares, Inc. 729 21,597
KeyCorp. 1,420 39,671
Mellon Financial Corp. 1,627 60,097
Morgan (J.P.) & Co., Inc. 555 72,636
National City Corp. 1,956 57,702
Northern Trust Corp. 353 34,087
PNC Bank Corp. 962 57,359
Regions Financial Corp. 708 21,284
Republic New York Corp. 332 20,977
SouthTrust Corp. 530 21,200
State Street Corp. 510 38,824
Summit Bancorp. 560 19,390
SunTrust Banks, Inc. 1,018 74,505
Synovus Financial Corp. 858 18,392
Union Planters Corp. 452 20,114
U.S. Bancorp. 2,315 85,800
Wachovia Corp. 640 55,200
Wells Fargo Co. 5,218 249,812
------------
2,297,016
------------
Beverages (2.34%)
Anheuser-Busch Cos., Inc. 1,479 106,211
Brown-Forman Corp. 217 14,647
Coca-Cola Co. (The) 7,812 460,907
Coca-Cola Enterprises, Inc. 1,345 34,382
Coors (Adolph) Co. (Class B) 116 6,437
PepsiCo, Inc. 4,627 160,499
Seagram Co. Ltd. (The) (Canada) 1,368 67,545
------------
850,628
------------
Broker Services (0.70%)
Bear Stearns Cos., Inc. 368 15,686
Lehman Brothers Holdings, Inc. 379 27,927
Merrill Lynch & Co., Inc. 1,169 91,767
Paine Webber Group, Inc. 461 18,786
Schwab (Charles) Corp. 2,588 100,770
------------
254,936
------------
Building (0.62%)
Armstrong World Industries, Inc. 127 4,747
Black & Decker Corp. 275 11,825
Centex Corp. 189 5,067
Danaher Corp. 450 21,741
Fleetwood Enterprises, Inc. 105 2,290
Fluor Corp. 240 9,570
Georgia-Pacific Corp. 543 21,550
Kaufman & Broad Home Corp. 152 3,050
Louisiana-Pacific Corp. 340 4,314
Masco Corp. 1,401 42,731
Owens Corning 173 3,547
Pulte Corp. 137 2,757
Sherwin-Williams Co. 536 11,993
Snap-on, Inc. 208 6,317
Stanley Works (The) 281 7,797
Vulcan Materials Co. 317 13,096
Weyerhauser Co. 636 37,961
Willamette Industries, Inc. 353 14,672
------------
225,025
------------
Business Services - Misc. (0.30%)
Block, H & R, Inc. 309 13,152
Cendant Corp. * 2,279 37,604
Dun & Bradstreet Corp. 509 14,952
Equifax, Inc. 455 12,285
Paychex, Inc. 778 30,634
------------
108,627
------------
Chemicals (0.71%)
Air Products & Chemicals, Inc. 726 19,965
Dow Chemical Co. 696 82,302
Eastman Chemical Co. 247 9,525
Engelhard Corp. 398 7,015
FMC Corp.* 101 4,109
Grace (W. R.) & Co.* 225 3,361
Great Lakes Chemical Corp. 185 6,567
Hercules, Inc. 336 8,085
PPG Industries, Inc. 549 33,282
Praxair, Inc. 504 23,562
Rohm & Haas Co. 689 26,354
Sigma-Aldrich Corp. 319 9,092
Union Carbide Corp. 421 25,681
------------
258,900
------------
Computers (15.07%)
3Com Corp.* 1,131 32,799
Adaptec, Inc.* 327 14,715
Adobe Systems, Inc. 386 26,996
America Online, Inc.* 3,506 454,684
Apple Computer, Inc.* 509 40,784
Autodesk, Inc. 186 3,487
Automatic Data Processing, Inc. 1,958 94,351
BMC Software, Inc.* 757 48,590
Cabletron Systems, Inc.* 551 9,126
Ceridian Corp.* 458 10,047
Cisco Systems, Inc.* 10,286 761,164
Compaq Computer Corp. 5,379 102,201
Computer Associates International, Inc. 1,701 96,107
Computer Sciences Corp.* 506 34,756
Compuware Corp.* 1,130 31,427
Dell Computer Corp.* 8,039 322,565
Electronic Data Systems Corp. 1,560 91,260
EMC Corp.* 3,206 234,037
First Data Corp. 1,357 61,997
Gateway 2000, Inc.* 991 65,467
Hewlett-Packard Co. 3,205 237,370
IMS Health, Inc. 990 28,710
International Business Machines Corp. 5,724 563,099
Lexmark International Group, Inc.
(Class A)* 408 31,850
Microsoft Corp.* 16,148 1,494,699
Network Appliance, Inc.* 233 17,242
Novell, Inc.* 1,060 21,266
Oracle Corp.* 4,554 216,600
Parametric Technology Corp.* 852 16,241
PeopleSoft, Inc.* 770 11,550
Seagate Technology, Inc.* 705 20,752
Shared Medical System Corp. 85 3,209
Silicon Graphics, Inc.* 597 4,627
Sun Microsystems, Inc.* 2,448 259,029
Unisys Corp.* 968 23,474
------------
5,486,278
------------
Consumer Products - Misc. (0.02%)
American Greetings Corp. (Class A) 213 5,511
Jostens, Inc. 107 2,260
------------
7,771
------------
Containers (0.12%)
Ball Corp. 96 3,870
Bemis Co., Inc. 166 5,800
Crown Cork & Seal Co., Inc. 387 9,264
Owens-Illinois, Inc.* 493 11,801
Sealed Air Corp.* 265 14,674
------------
45,409
------------
Cosmetics & Personal Care (0.46%)
Alberto Culver Co. (Class B) 177 4,171
Avon Products, Inc. 825 26,606
Gillette Co. 3,433 124,232
International Flavors & Fragrances, Inc. 336 12,852
------------
167,861
------------
Diversified Operations (2.39%)
AlliedSignal, Inc. 1,741 99,127
Crane Co. 214 4,374
Du Pont (E.I.) De Nemours & Co. 3,300 212,644
Fortune Brands, Inc. 526 18,640
IKON Office Solutions, Inc. 472 3,245
ITT Industries, Inc. 278 9,504
Johnson Controls, Inc. 270 16,402
Laidlaw, Inc. (Canada) 1,045 6,401
Loews Corp. 340 24,097
Minnesota Mining & Manufacturing Co. 1,274 121,110
Monsanto Co. 2,005 77,192
NACCO Industries, Inc. (Class A) 26 1,206
National Service Industries, Inc. 128 4,127
Tenneco, Inc. 539 8,624
Textron, Inc. 475 36,664
TRW, Inc. 384 16,464
Tyco International Ltd. 5,294 211,429
------------
871,250
------------
Electronics (8.73%)
Advanced Micro Devices, Inc.* 466 9,232
Analog Devices, Inc.* 547 29,059
Applied Materials, Inc.* 1,188 106,697
Emerson Electric Co. 1,375 82,586
General Electric Co. 10,378 1,406,867
Grainger (W.W.), Inc. 295 12,501
Honeywell, Inc. 403 42,491
Intel Corp. 10,466 810,461
KLA-Tencor Corp.* 279 22,092
LSI Logic Corp.* 466 24,785
Micron Technology, Inc.* 792 56,480
Motorola, Inc. 1,921 187,177
National Semiconductor Corp.* 531 15,897
Parker-Hannifin Corp. 343 15,714
PE Corp.-PE Biosystems Group 323 20,955
PerkinElmer, Inc. 145 5,917
Rockwell International Corp. 605 29,305
Solectron Corp.* 854 64,264
Tektronix, Inc. 148 4,995
Texas Instruments, Inc. 2,486 223,119
Thomas & Betts Corp. 180 8,077
------------
3,178,671
------------
Finance (4.03%)
American Express Co. 1,422 218,987
Associates First Capital Corp.
(Class A) 2,304 84,096
Capital One Financial Corp. 625 33,125
Citigroup, Inc. 10,686 578,380
Franklin Resources, Inc. 798 27,930
Golden West Financial Corp. 174 19,445
Household International, Inc. 1,514 67,562
Kansas City Southern Industries, Inc. 350 16,602
MBNA Corp. 2,537 70,085
Morgan Stanley Dean Witter & Co. 1,805 199,114
Price (T. Rowe) Associates, Inc. 384 13,632
Providian Financial Corp. 449 48,941
SLM Holding Corp. 509 24,909
Washington Mutual, Inc. 1,832 65,837
------------
1,468,645
------------
Food (1.79%)
Archer-Daniels-Midland Co. 1,954 24,059
Bestfoods 883 51,876
Campbell Soup Co. 1,374 61,830
ConAgra, Inc. 1,545 40,267
General Mills, Inc. 484 42,199
Heinz (H.J.) Co. 1,134 54,149
Hershey Foods Corp. 441 22,271
Kellogg Co. 1,282 51,040
Nabisco Group Holdings Corp. 1,032 13,222
Quaker Oats Co. 423 29,610
Ralston Purina Group 1,023 32,161
Sara Lee Corp. 2,859 77,372
Unilever NV, American Depositary
Receipts (ADR) (Netherlands) 1,808 120,571
Wrigley (W.M.) Jr. Co. 368 29,417
------------
650,044
------------
Funeral Services & Related (0.02%)
Service Corp. International 861 8,232
------------
Household (0.18%)
Maytag Corp. 276 11,057
Newell Rubbermaid, Inc. 892 30,886
Springs Industries, Inc. 57 2,269
Tupperware Corp. 182 3,606
Whirlpool Corp. 239 16,655
------------
64,473
------------
Instruments - Scientific (0.03%)
Millipore Corp. 142 4,526
Thermo Electron Corp.* 500 6,750
------------
11,276
------------
Insurance (3.13%)
Aetna, Inc. 446 22,412
AFLAC, Inc. 841 42,996
Allstate Corp. (The) 2,526 72,623
American General Corp. 788 58,460
American International Group, Inc. 4,898 504,188
Aon Corp. 811 28,791
Chubb Corp. (The) 557 30,565
CIGNA Corp. 630 47,093
Cincinnati Financial Corp. 522 18,694
Conseco, Inc. 1,035 25,163
Hartford Financial Services Group, Inc. (The) 715 37,046
Jefferson Pilot Corp. 334 25,071
Lincoln National Corp. 629 29,013
Marsh & McLennan Cos., Inc. 835 66,017
MBIA, Inc. 316 18,032
MGIC Investment Corp. 345 20,614
Progressive Corp. 231 21,382
SAFECO Corp. 416 11,440
St. Paul Cos., Inc. 717 22,944
Torchmark Corp. 421 13,130
UNUM Corp. 756 24,901
------------
1,140,575
------------
Leisure (1.18%)
Brunswick Corp. 291 6,584
Carnival Corp. (Class A) 1,941 86,375
Disney (Walt) Co. (The) 6,525 172,097
Eastman Kodak Co. 1,001 69,006
Harrah's Entertainment, Inc.* 406 11,749
Hasbro, Inc. 616 12,705
Hilton Hotels Corp. 807 7,465
King World Productions, Inc.* 225 8,719
Marriott International, Inc. (Class A) 787 26,512
Mattel, Inc. 1,330 17,789
Mirage Resorts, Inc.* 629 9,160
Polaroid Corp. 140 3,124
------------
431,285
------------
Machinery (0.49%)
Briggs & Stratton Corp. 74 4,324
Case Corp. 246 13,037
Caterpillar Tractor, Inc. 1,125 62,156
Cooper Industries, Inc. 299 12,876
Deere & Co. 739 26,789
Dover Corp. 659 28,049
Foster Wheeler Corp. 129 1,451
Ingersoll-Rand Co. 522 27,275
Milacron, Inc. 117 1,922
------------
177,879
------------
Media (2.51%)
CBS Corp.* 2,230 108,852
Clear Channel Communications, Inc.* 1,068 85,841
Comcast Corp.* 2,371 99,877
Dow Jones & Co., Inc. 287 17,651
Gannett Co., Inc. 885 68,256
Harcourt General, Inc. 225 8,662
Knight-Ridder, Inc. 256 16,256
McGraw-Hill Cos., Inc. (The) 623 37,146
Meredith Corp. 164 5,852
New York Times Co. (Class A) 551 22,177
Time Warner, Inc. 4,092 285,161
Times Mirror Co. (Class A) 189 13,632
Tribune Co. 750 45,000
Viacom, Inc. (Class B)* 2,204 98,629
------------
912,992
------------
Medical (10.62%)
Abbott Laboratories 4,813 194,325
Allergan, Inc. 209 22,441
ALZA Corp.* 321 13,743
American Home Products Corp. 4,134 216,002
Amgen, Inc.* 1,613 128,637
Bard (C.R.), Inc. 162 8,738
Bausch & Lomb, Inc. 182 9,828
Baxter International, Inc. 921 59,750
Becton, Dickinson & Co. 792 20,097
Biomet, Inc. 356 10,725
Boston Scientific Corp.* 1,309 26,344
Bristol-Myers Squibb Co. 6,284 482,690
Cardinal Health, Inc. 862 37,174
Columbia/HCA Healthcare Corp. 1,785 43,063
Guidant Corp.* 956 47,203
HEALTHSOUTH Corp.* 1,313 7,550
Humana, Inc.* 530 3,644
Johnson & Johnson 4,254 445,607
Lilly (Eli) & Co. 3,458 238,170
Mallinckrodt, Inc. 225 7,636
Manor Care, Inc.* 339 5,339
McKesson HBOC, Inc. 890 17,856
Medtronic, Inc. 3,713 128,563
Merck & Co., Inc. 7,421 590,433
Pall Corp. 393 8,621
Pfizer, Inc. 12,260 484,270
Pharmacia & Upjohn, Inc. 1,603 86,462
Schering-Plough Corp. 4,646 229,977
St. Jude Medical, Inc.* 268 7,337
Tenet Healthcare Corp.* 983 19,107
United Healthcare Corp. 548 28,325
Warner-Lambert Co. 2,704 215,813
Watson Pharmaceutical, Inc.* 303 9,620
Wellpoint Health Networks, Inc.* 208 12,064
------------
3,867,154
------------
Metal (0.74%)
Alcan Aluminium Ltd. (Canada) 715 23,550
Alcoa, Inc. 1,160 70,470
ASARCO, Inc. 126 3,717
Barrick Gold Corp. (Canada) 1,234 22,597
Bethlehem Steel Corp.* 414 2,872
Cyprus Amax Minerals Co. 286 5,541
Freeport-McMoran Copper & Gold, Inc.* 517 8,627
Homestake Mining Co. 823 6,892
Illinois Tool Works, Inc. 793 58,087
Inco, Ltd. (Canada)* 607 12,292
Newmont Mining Corp. 530 11,627
Phelps Dodge Corp. 183 10,317
Placer Dome, Inc. (Canada) 1,030 12,489
Reynolds Metals Co. 199 12,027
Timken Co. (The) 196 3,516
Worthington Industries, Inc. 291 4,837
------------
269,458
------------
Mortgage Banking (0.99%)
Countrywide Credit Industries, Inc. 357 12,116
Fannie Mae 3,243 229,442
Freddie Mac 2,200 118,937
------------
360,495
------------
Office (0.35%)
Avery Dennison Corp. 359 22,438
Deluxe Corp. 240 6,780
Pitney Bowes, Inc. 847 38,591
Xerox Corp. 2,098 58,744
------------
126,553
------------
Oil & Gas (6.15%)
Amerada Hess Corp. 287 16,467
Anadarko Petroleum Corp. 403 12,417
Apache Corp. 360 14,040
Ashland, Inc. 228 7,524
Atlantic Richfield Co. 1,020 95,051
Baker Hughes, Inc. 1,040 29,055
Burlington Resources, Inc. 562 19,600
Chevron Corp. 2,076 189,565
Coastal Corp. (The) 675 28,434
Columbia Energy Group 259 16,835
Conoco, Inc. (Class B) 1,984 53,816
El Paso Energy Corp. 348 14,268
Enron Corp. 2,259 90,219
Exxon Corp. 7,681 568,874
Halliburton Co. 1,396 52,612
Helmerich & Payne, Inc. 157 3,739
Kerr-McGee Corp. 273 14,674
McDermott International, Inc. 188 3,408
Mobil Corp. 2,478 239,127
Occidental Petroleum Corp. 1,103 25,162
Phillips Petroleum Co. 801 37,247
Rowan Cos., Inc.* 263 4,093
Royal Dutch Petroleum Co.
(ADR) (Netherlands) 6,785 406,676
Schlumberger, Ltd. 1,733 104,955
Sunoco, Inc. 286 6,900
Texaco, Inc. 1,749 107,345
Tosco Corp. 482 12,201
Union Pacific Resources Group 797 11,557
Unocal Corp. 767 26,462
USX - Marathon Group 977 28,455
------------
2,240,778
------------
Paper & Paper Products (0.70%)
Boise Cascade Corp. 181 6,448
Champion International Corp. 304 17,575
Fort James Corp. 699 18,392
International Paper Co. 1,309 68,886
Kimberly-Clark Corp. 1,686 106,429
Mead Corp. (The) 324 11,664
Potlatch Corp. 92 3,881
Temple-Inland, Inc. 177 10,288
Westvaco Corp. 317 9,411
------------
252,974
------------
Pollution Control (0.12%)
Allied Waste Industries, Inc.* 596 6,258
Waste Management, Inc. 1,959 35,997
------------
42,255
------------
Printing - Commercial (0.03%)
Donnelley (R.R.) & Sons 404 9,797
------------
Retail (6.94%)
Albertson's, Inc. 1,330 48,296
AutoZone, Inc.* 471 12,511
Bed Bath & Beyond, Inc.* 442 14,724
Best Buy Co., Inc.* 645 35,838
Circuit City Stores, Inc. 636 27,149
Consolidated Stores Corp.* 348 6,373
Costco Cos., Inc.* 699 56,138
CVS Corp. 1,239 53,819
Darden Restaurants, Inc. 418 7,968
Dayton Hudson Corp. 1,399 90,410
Dillards, Inc. 338 6,380
Dollar General Corp. 711 18,753
Federated Department Stores, Inc. * 660 28,174
Gap, Inc. (The) 2,713 100,720
Genuine Parts Co. 566 14,751
Great Atlantic & Pacific Tea Co., Inc. 121 3,456
Home Depot, Inc. (The) 4,692 354,246
Kmart Corp.* 1,562 15,718
Kohl's Corp.* 515 38,528
Kroger Co.* 2,624 54,612
Limited, Inc. (The) 677 27,842
Longs Drug Stores Corp. 124 3,379
Lowe's Cos., Inc. 1,207 66,385
May Department Stores 1,057 36,665
McDonald's Corp. 4,286 176,798
Neiman Marcus Group, Inc. (The)
(Class B)* 67 1,436
Nordstrom, Inc. 444 11,072
Office Depot, Inc.* 1,186 14,751
Penney (J. C.) Co., Inc. 834 21,163
Pep Boys - Manny, Moe & Jack (The) 166 2,075
Reebok International Ltd. * 178 1,747
Rite Aid Corp. 819 7,166
Safeway, Inc.* 1,615 57,030
Sears, Roebuck & Co. 1,204 33,938
Staples, Inc.* 1,471 32,638
SUPERVALU Stores, Inc. 439 9,219
Sysco Corp. 1,047 40,244
Tandy Corp. 611 38,455
TJX Cos., Inc. 1,005 27,261
Toys R Us, Inc.* 783 11,060
Tricon Global Restaurants, Inc. * 486 19,531
Walgreen Co. 3,175 79,970
Wal-Mart Stores, Inc. 14,080 798,160
Wendy's International, Inc. 384 9,168
Winn-Dixie Stores, Inc. 470 12,719
------------
2,528,436
------------
Rubber - Tires & Misc. (0.07%)
Cooper Tire & Rubber Co. 240 4,035
Goodyear Tire & Rubber Co. (The) 494 20,408
------------
24,443
------------
Shoes & Related Apparel (0.14%)
Nike, Inc. (Class B) 890 50,229
------------
Soap & Cleaning Preparations (1.64%)
Clorox Co. 747 30,580
Colgate-Palmolive Co. 1,845 111,623
Ecolab, Inc. 410 13,863
Procter & Gamble Co. (The) 4,203 440,790
------------
596,856
------------
Steel (0.08%)
Allegheny Teledyne, Inc. 603 9,158
Nucor Corp. 276 14,318
USX-U.S. Steel Group, Inc. 280 7,158
------------
30,634
------------
Telecommunications (8.94%)
ADC Telecommunications, Inc.* 473 22,556
Andrew Corp.* 260 3,348
AT&T Corp. 10,111 472,689
Bell Atlantic Corp. 4,913 319,038
CenturyTel, Inc. 441 17,833
Corning, Inc. 774 60,856
General Instrument Corp.* 549 29,543
Global Crossing Ltd.* 2,431 84,173
Harris Corp. 252 5,654
Lucent Technologies, Inc. 9,694 622,840
MCI WorldCom, Inc.* 5,926 508,525
MediaOne Group, Inc.* 1,919 136,369
Nextel Communications, Inc. (Class A)* 1,049 90,411
Nortel Networks Corp. (Canada) 4,199 260,076
QUALCOMM, Inc.* 508 113,157
Scientific-Atlanta, Inc. 242 13,855
Sprint Corp. 2,745 203,988
Sprint PCS* 1,392 115,449
Tellabs, Inc.* 1,239 78,367
US WEST, Inc. 1,597 97,517
------------
3,256,244
------------
Textile (0.06%)
Liz Claiborne, Inc. 194 7,760
Russell Corp. 106 1,610
VF Corp. 376 11,304
------------
20,674
------------
Tobacco (0.57%)
Philip Morris Cos., Inc. 7,562 190,468
UST, Inc. 551 15,256
------------
205,724
------------
Transport (0.78%)
AMR Corp.* 476 30,226
Burlington Northern Santa Fe Corp. 1,471 46,888
CSX Corp. 689 28,249
Delta Air Lines, Inc. 444 24,170
FDX Corp.* 941 40,522
Navistar International Corp.* 209 8,713
Norfolk Southern Corp. 1,204 29,423
Southwest Airlines Co. 1,595 26,816
Union Pacific Corp. 784 43,708
US Airways Group, Inc.* 226 6,328
------------
285,043
------------
Utilities (5.35%)
AES Corp.* 652 36,797
ALLTEL Corp. 966 80,420
Ameren Corp. 434 16,411
American Electric Power Co., Inc. 612 21,114
BellSouth Corp. 5,965 268,425
Carolina Power & Light Co. 505 17,423
Central & South West Corp. 673 14,932
Cinergy Corp. 503 14,210
CMS Energy Corp. 374 13,791
Consolidated Edison, Inc. 699 26,693
Consolidated Natural Gas Co. 304 19,456
Constellation Energy Group, Inc. 473 14,515
Dominion Resources, Inc. 607 29,212
DTE Energy Co. 459 15,233
Duke Energy Corp. 1,155 65,258
Eastern Enterprises 85 4,346
Edison International 1,099 32,558
Entergy Corp. 781 23,381
FirstEnergy Corp. 740 19,286
Florida Progress Corp. 311 14,248
FPL Group, Inc. 567 28,527
GPU, Inc. 397 13,473
GTE Corp. 3,104 232,800
New Century Energies, Inc. 365 11,885
Niagara Mohawk Power Corp.* 593 9,414
NICOR, Inc. 149 5,774
Northern States Power Co. 488 10,492
ONEOK, Inc. 100 2,919
PacifiCorp 941 19,408
PECO Energy Co. 590 22,531
People's Energy Corp. 112 4,256
PG&E Corp. 1,215 27,869
Pinnacle West Capital Corp. 268 9,883
PP&L Resources, Inc. 499 13,504
Public Service Enterprise Group, Inc. 694 27,456
Reliant Energy, Inc. 936 25,506
SBC Communications, Inc. 10,802 550,227
Sempra Energy 760 15,533
Southern Co. 2,162 57,428
Texas Utilities Co. 875 33,906
Unicom Corp. 688 26,359
Williams Cos., Inc. 1,374 51,525
------------
1,948,384
------------
TOTAL COMMON STOCKS
(Cost $34,829,528) (97.78%) 35,601,529
------------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
- ------------------------ -------- ------------ ------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.91%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
10-29-99, due 11-01-99
(Secured by U.S. Treasury
Bonds, 8.125% thru 9.875%,
due 11-15-15 thru 08-15-21)
- -- Note A 5.23% $697 $697,000
------- ------------
TOTAL SHORT-TERM INVESTMENTS (1.91%) 697,000
------- ------------
TOTAL INVESTMENTS (99.69%) 36,298,529
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.31%) 111,970
------- ------------
TOTAL NET ASSETS (100.00%) $36,410,499
======= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description represents country of
foreign issuer; however, security is U.S. dollar denominated.
The percentage shown for each investment category is the total value of that category as a
percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - 500 Index Fund
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940. The
Trust consists of three series portfolios: John Hancock 500 Index Fund (the
"Fund"), John Hancock Small Cap Growth Fund and John Hancock Global
Technology Fund. The other series of the Trust are reported in separate
financial statements. The investment objective of the Fund is to provide
investment results that correspond to the total return performance of the
Standard & Poor's 500 Stock Price Index (the "S&P 500 Index").
The Trustees have authorized the issuance of multiple classes of shares of
the Fund, designated as Class A, Class B, Class C and Class R shares. No
Class A, B and C shares were issued as of October 31, 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, 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 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. The Fund has
entered into a syndicated line of credit agreement with various banks. 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
October 31, 1999.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. These fees are included in
interest income. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear the
risk of delay of the loaned securities in recovery or even loss of rights in
the collateral should the borrower of the securities fail financially. There
was no securities lending for the period ended October 31, 1999.
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.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects of
fluctuations in interest rates, currency exchange rates and other market
conditions. Buying futures tends to increase the Fund's exposure to the
underlying instrument. Selling futures tends to decrease the Fund's exposure
to the underlying instrument or hedge other Fund instruments. At the time the
Fund enters into a financial futures contract, it will be required to deposit
with its custodian a specified amount of cash or U.S. government securities,
known as "initial margin," equal to a certain percentage of the value of the
financial futures contract being traded. Each day, the futures contract is
valued at the official settlement price on the board of trade or U.S.
commodities exchange on which it trades. Subsequent payments, known as
"variation margin," to and from the broker are made on a daily basis as the
market price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market," will be recorded by
the Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks of
entering into futures contracts include the possibility that there may be an
illiquid market and/or that a change in the value of the contracts may not
correlate with changes in the value of the underlying securities. In
addition, the Fund could be prevented from opening or realizing the benefits
of closing out futures positions because of position limits or limits on
daily price fluctuation imposed by an exchange.
For federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures contracts.
At October 31, 1999, open positions in financial futures contracts were as
follows:
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- ---------- -------------- -------- ------------
DEC 99 3 U.S. TREASURY BONDS LONG $29,254
=======
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-traded options
have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter option
contracts, the Fund will continuously monitor the creditworthiness of all its
counterparties.
At any particular time, except for purchased options, market or credit risk
may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
At October 31, 1999, there were no open written option transactions.
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 0.35% of Fund's average daily net asset
value. The Adviser has agreed to limit the management fee to 0.10% of the
Fund's average daily net asset value. Accordingly, the reduction in the
management fee amounted to $17,715 for the period ended October 31, 1999. The
Adviser has also agreed to limit other expenses (excluding the management fee
and the 12b-1 fee), to 0.20% of the Fund's average daily net assets.
Accordingly, the reduction in other fund expenses amounted to $52,867 for the
period ended October 31, 1999. These limitations may not be discontinued
until at least August 17, 2000.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. There were no net sales
charges received during the period ended October 31, 1999.
To reimburse JH Funds for the services it provides as distributor of shares
of the Fund, the Fund has adopted a Distribution Plan for Class R shares,
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
for Class R shares, at an annual rate not to exceed 0.25% of the average
daily net assets to reimburse JH Funds for its distribution and service
costs. JH Funds has agreed to limit the distribution and service fee pursuant
to Class R to 0.10% of the average daily net assets. Accordingly, the
reduction in the distribution and service fee amounted to $10,629. This
limitation may not be discontinued until at least August 17, 2000. A maximum
of 0.25% of such payments may be service fees as defined by the Conduct Rules
of the National Association of Securities Dealers. Under the Conduct Rules,
curtailment of a portion of the Fund's 12b-1 payments could occur under
certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The Fund pays
transfer agent fees based on the number of shareholder accounts and certain
out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the period
was at an annual rate of less than 0.02% of the average net assets of the
Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Maureen R. Ford, 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 through
December 31, 1999. 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.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
year ended October 31, 1999, aggregated $35,057,865 and $214,003,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the year ended October 31, 1999.
The cost of investments owned at October 31, 1999 (including short-term
investments) for federal income tax purposes was $35,535,200. Gross
unrealized appreciation and depreciation of investments aggregated $2,568,009
and $1,804,680 respectively, resulting in net unrealized appreciation of
$763,329.
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
John Hancock Series Trust -
John Hancock 500 Index Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of John Hancock 500
Index Fund (the "Fund") (a series of John Hancock Series Trust), at October
31, 1999, and the results of its operations, the changes in its net assets
and the financial highlights for the period from August 18, 1999
(commencement of operations) to October 31, 1999, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and the significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit, which included confirmation of securities owned at
October 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1999
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund during its fiscal year ended October
31, 1999.
Shareholders will be mailed a 1999 U.S. Treasury Department Form 1099-DIV in
January of 2000. This will reflect the tax character of all distributions for
calendar year 1999.
[THIS PAGE INTENTIONALLY LEFT BLANK]
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A 500 Index Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
500 Index Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
1100A 10/99
12/99
The latest report from your
Fund's management team
ANNUAL REPORT
Small Cap
Growth Fund
OCTOBER 31, 1999
TRUSTEES
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Maureen R. Ford
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Executive 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
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116-5072
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive
Officer, flush right next to fourth paragraph.]
DEAR FELLOW SHAREHOLDERS:
I am delighted that one of my first official duties at John Hancock Funds is
to welcome you to the New Millennium! I wish you all the best for a century
filled with momentous occasions.
Every New Year, of course, provides us with a built-in opportunity to make
new resolutions, or re-commit to old ones. It seems fitting, therefore, that
this special New Year 2000 coincides with a very important, although
certainly less exotic, event.
Starting last October, personalized Social Security statements are being sent
to 125 million workers over age 25, showing estimates of the retirement,
disability and survivor benefits that they and their families are eligible to
receive now and in the future.
The statements, to be sent out annually, will provide people with a glimpse
of what they can expect from the government when they retire. This should be
comforting to those who feared that Social Security wouldn't be there for
them at all. But many people also already know that government benefits will
only fulfill a small piece of their retirement needs.
The best thing about this massive mailing is that it can serve as a wake-up
call to encourage families to focus more on planning for their financial
future.
When you receive your statement, expected to be within three months of your
next birthday, we urge you to read it carefully for accuracy, making sure
your annual earnings history and amounts you have contributed over the years
are correct. Keep in mind that the estimated benefits are precisely that, and
that rules and regulations may change by the time you retire. Also remember
that they are not inflation adjusted, so it would be unrealistic to expect
them to have the same purchasing power in the future as they would today.
We also encourage you to use this mailing as a reason to contact your
investment professional, or to select one if you are not working with
somebody. He or she can help you focus on establishing and maintaining a
sound plan to achieve a comfortable retirement. Together, you should make
sure to maximize your participation in tax-advantaged programs like IRAs and
401(k)s.
The stakes are too high to leave your retirement lifestyle to chance.
Congress' awareness-raising effort is commendable. The next step is yours.
Mark the beginning of the New Millennium by taking it.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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 significantly outdistances its peers in the last year
[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."]
Good stock picking, particularly among technology names, provided John
Hancock Small Cap Growth Fund with outstanding results well in excess of both
our peers and benchmark this past fiscal year. For the 12 months ended
October 31, 1999, the Fund's Class A, Class B and Class C shares posted total
returns of 54.29%, 53.31% and 53.05%, respectively, at net asset value. That
was better than the 25.06% return of the average small-cap fund, according to
Lipper, Inc.1 Keep in mind that your net asset value return will differ from
the Fund's if you were not invested in the Fund for the entire period and did
not reinvest all distributions. Historical performance information can be
found on pages six and seven.
Small-company growth rebounds
The Fund achieved these results over a period when small-company growth
stocks came into their own, the beneficiaries of a stronger-than- expected
U.S. economy, earnings growth and stabilizing global economies that sparked a
sharp rally as the fiscal year began last November. Growing confidence in
economic conditions sent investors on a search for bargains and they finally
rediscovered small-cap stocks, which had become historically cheap after
lagging the broader market for several years.
"Good stock
picking,
particularly
among
technology
names..."
As 1999 progressed, however, conditions grew more difficult for small caps
and the market as a whole, amid fears that the strong economy would cause an
inflation outbreak. Interest rates rose and the Federal Reserve stepped in to
put on the brakes, raising short-term rates in June and August. Even the
small band of large-company growth stocks that had dominated the market fell
prey to the volatility in the fall.
[Table at top left hand column entitled "Top Five Stock Holdings." The
first listing is Micromuse 1.2%, the second is Accrue Software 1.2%, the
third Forrester Research 1.1%, the fourth Citadel Communications 1.1%
and the fifth Powerwave Technologies 1.1%. A note below the table reads
"As a percentage of net assets on October 31, 1999."]
The technology sector, however, stayed strong for most of the year for
companies of all sizes. This technology blitz enabled the Fund's benchmark,
the Russell 2000 Growth Index, to beat the overall market, returning 29.28%
for the year ending October 31, 1999, compared to the 25.67% return of the
Standard & Poor's 500 Index.
"...we
shifted our
semiconductor
emphasis...
toward
companies
focused on
telecommunications."
Technology rules; telecom grows
Even though we build the portfolio stock-by-stock, our search for fast-
growing, well-managed market leaders often leads us to the broad technology
sector. It was a particularly fruitful period.
[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 Media Metrix followed by an up arrow with the phrase "Market
leader in Internet data gathering." The second listing is Citadel
Communications followed by an up arrow with the phrase "Aggressive
acquirer of radio stations in small markets." The third listing is Renal
Care Group followed by a down arrow with the phrase "Reimbursement
concerns surround health-services sector." A note below the table reads
"See 'Schedule of Investments.' Investment holdings are subject to
change."]
During the year, we shifted our semiconductor emphasis away from companies
that service the computer industry toward companies focused on
telecommunications, so we could take better advantage of the explosion in the
worldwide development of telecommunications infrastructure and services. This
area provided us with some of the Fund's top performers, including RF Micro
Devices and Alpha Industries, which supply chip sets for Nokia and Motorola
cell phones. Telecom service providers like NEXTLINK Communications and
Allegiance Telecom continue to experience huge growth as they have beaten the
more traditional Bell operating companies at developing and providing
sophisticated voice, data and Internet transmission services to mid- and
small-sized companies. Another winner was electronic component manufacturer
Powerwave Technologies, which makes power amplifiers for digital signals.
Internet plays
Internet companies remained a fertile source of new names, as well as stellar
performance, for the Fund, and our stake there ranged from 3% to 14% of the
Fund's assets at various times in the year. A few of our Internet companies
did so well that they grew too big for the Fund's small-cap focus and we took
profits, including Exodus Communications, RealNetworks, Verisign and E*Trade.
For now, our Internet focus is on infrastructure companies that support the
growth of the Internet and help companies understand and take advantage of
it. That includes companies such as Web Trends, Media Metrix and Accrue
Software, all of which provide different types of software or data to measure
and analyze Internet traffic and website usage.
Takeovers abound
The Fund also benefited from owning stakes in a number of companies that were
taken over by larger companies at significant premiums, something we believe
was a result of small-cap stocks' having fallen to historically low relative
valuations. This activity validates our belief in the value of these
companies - value that will inevitably be recognized, if not in the capital
markets, then in the private equity markets. Since the beginning of 1999,
approximately 10% of the Fund's net assets - almost 20 companies - have
announced acquisitions by such blue-chip names as Lucent, Microsoft and
Intel. Companies taken over included International Network Services, Above
Net, Level One, Nielsen Media Research, Executive Risk and Hambrecht & Quist.
[Bar chart at top of left hand column with heading "Fund Performance".
Under the heading is a note that reads "For the year ended October 31,
1999." The chart is scaled in increments of 10% with 0% at the bottom
and 60% at the top. The first bar represents the 54.29% total return for
John Hancock Small Cap Growth Fund Class A. The second bar represents
the 53.31% total return for John Hancock Small Cap Growth Fund Class B.
The third bar represents the 53.05% total return for John Hancock Small
Cap Growth Fund Class C. The fourth bar represents the 25.06% 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.1 See the following two pages for historical performance
information."]
Radio consolidation
Consolidation was a theme we pursued to good advantage all year with our
investments in radio companies. The radio industry has been in a state of
consolidation and we've benefited from owning the top consolidation players
in mid- and small-sized cities, including Cumulus Media and Citadel
Communications. Further helping radio companies, advertising revenues have
grown with the strength in the economy. Radio broadcasters have received a
disproportionate share, since radio remains a targeted, inexpensive way
especially for new companies to advertise. This has happened with a growing
list of Internet companies. We have also focused on niche players, including
Hispanic Broadcasting and Radio One, which dominate in urban markets.
Health care: main disappointment
Even with the outstanding results, there were some disappointments, primarily
in the health-care sector. In particular, the health-care services group
struggled in a tough environment of uncertainty surrounding Medicare
reimbursements. Early on, we reduced our health-care services stake and by
the end of the year we had eliminated it entirely.
"The small-cap
group
remains
compellingly
attractive..."
A look ahead
We are keeping our outlook cautiously optimistic for small-company growth
stocks going forward. The small-cap group remains compellingly attractive,
and that bodes well for both a further market rally and more takeover
activity in the private market, especially among the high- quality companies
the Fund targets. We will continue to maintain a diversified, risk-managed
portfolio of companies that produce strong earnings growth and live up to
their earnings expectations. In any market, but especially a rising interest-
rate and volatile one, we believe these are the companies to own.
- ---------------------------------------------------------------------------
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.
See the prospectus for the risks of investing in small-cap stocks.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is
lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average
annual total returns for the John Hancock 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 September 30, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------- ------- ---------
Cumulative Total Returns 44.84% 128.64% 230.36%
Average Annual Total Returns 44.84% 17.99% 15.88%
CLASS B
For the period ended September 30, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- --------
Cumulative Total Returns 46.26% 130.01% 353.47%
Average Annual Total Returns 46.26% 18.13% 16.32%
CLASS C
For the period ended September 30, 1999
SINCE
ONE INCEPTION
YEAR (6/1/98)
------- ---------
Cumulative Total Returns 50.12% 25.48%
Average Annual Total Returns 50.12% 18.59%
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. It is not possible to invest in an index. Past
performance is not indicative of future results.
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 $36,992 as of October 31, 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
$35,142 as of October 31, 1999. The third line represents the Russell
2000 Index and is equal to $28,011 as of October 31, 1999. The fourth
line represents the Russell 2000 Growth Index and is equal to $25,089 as
of October 31, 1999.
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, 1989, before sales
charge, and is equal to $50,064 as of October 31, 1999. The second line
represents the Russell 2000 Index and is equal to $30,123 as of October
31, 1999. The third line represents the Russell 2000 Growth Index and is
equal to $27,851 as of October 31, 1999.
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 three 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 $13,341 as of October 31, 1999. The second line
represents the Russell 2000 Growth Index and is equal to $10,669 as of
October 31, 1999. The third line represents the Russell 2000 Index and
is equal to $9,567 as of October 31, 1999.
* No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds - Small Cap Growth Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on October 31,
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
October 31, 1999
- -----------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $476,285,201) $730,748,990
Joint repurchase agreement (cost - $21,589,000) 21,589,000
Corporate savings account 674
-----------
752,338,664
Receivable for investments sold 32,965,230
Receivable for shares sold 786,236
Dividends receivable 2,372
Interest receivable 9,461
Other assets 129,708
-----------
Total Assets 786,231,671
-----------
Liabilities:
Payable for investments purchased 35,764,405
Payable for shares repurchased 398,163
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 624,169
Accounts payable and accrued expenses 224,737
-----------
Total Liabilities 37,011,474
-----------
Net Assets:
Capital paid-in 399,586,546
Accumulated realized gain on investments 95,231,367
Net unrealized appreciation of investments 254,463,789
Accumulated net investment loss (61,505)
-----------
Net Assets $749,220,197
============
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 - $266,886,115/21,105,255 $12.65
=================================================================
Class B - $478,467,850/41,103,279 $11.64
=================================================================
Class C - $3,866,232/332,589 $11.62
=================================================================
Maximum Offering Price Per Share*
Class A - ($12.65 x 105.26%) $13.31
=================================================================
* 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.
</TABLE>
<TABLE>
<CAPTION>
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
Year ended October 31, 1999
- ----------------------------------------------------------------
<S> <C>
Investment Income:
Dividends $635,358
Interest 423,823
-----------
1,059,181
-----------
Expenses:
Investment management fee - Note B 4,819,897
Distribution and service fee - Note B
Class A 541,091
Class B 4,009,012
Class C 13,728
Transfer agent fee - Note B 1,631,106
Custodian fee 170,027
Accounting and legal services fee - Note B 107,503
Registration and filing fees 113,129
Auditing fee 39,991
Trustees' fees 39,074
Printing 32,611
Miscellaneous 28,465
Interest expense - Note A 9,410
Legal fees 5,132
-----------
Total Expenses 11,560,176
-----------
Net Investment Loss (10,500,995)
-----------
Realized and Unrealized Gain on
Investments:
Net realized gain on investments sold 134,645,854
Change in net unrealized
appreciation/depreciation of investments 146,147,342
-----------
Net Realized and Unrealized Gain
on Investments 280,793,196
-----------
Net Increase in Net Assets
Resulting from Operations $270,292,201
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($9,523,637) ($10,500,995)
Net realized gain on investments sold 39,776,156 134,645,854
Change in net unrealized
appreciation/depreciation of investments (124,158,701) 146,147,342
----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Operations (93,906,182) 270,292,201
----------- -----------
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 (47,805,007)
----------- -----------
Net Assets:
Beginning of period 681,977,847 542,159,841
----------- -----------
End of period (including
accumulated net investment loss of
$49,930 and $61,505, respectively) $542,159,841 $749,220,197
=========== ===========
<CAPTION>
Statement of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------------
*Analysis of Fund Share Transactions:
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1998 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 43,183,651 $418,398,045 32,716,360 $340,101,947
Shares issued to shareholders in
reinvestment of distributions 947,975 36,568,238 476,257 4,124,555
----------- ----------- ----------- -----------
44,131,626 454,966,283 33,192,617 344,226,502
Less shares repurchased (26,992,214) (414,680,052) (33,465,565) (344,860,133)
----------- ----------- ----------- -----------
Net increase (decrease) 17,139,412 $40,286,231 (272,948) ($633,631)
CLASS B
Shares sold 57,762,132 $618,597,893 10,349,917 $103,998,949
Shares issued to shareholders in
reinvestment of distributions 2,001,611 72,238,099 983,372 7,887,044
----------- ----------- ----------- -----------
59,763,743 690,835,992 11,333,289 111,885,993
Less shares repurchased (23,478,705) (632,351,276) (16,593,304) (161,959,740)
----------- ----------- ----------- -----------
Net increase (decrease) 36,285,038 $58,484,716 (5,260,015) ($50,073,747)
CLASS C**
Shares sold 60,595 $510,679 358,485 $3,764,658
Shares issued to shareholders in
reinvestment of distributions -- -- 1,722 13,917
----------- ----------- ----------- -----------
60,595 510,679 360,207 3,778,575
Less shares repurchased (700) (5,697) (87,513) (876,204)
----------- ----------- ----------- -----------
Net increase 59,895 $504,982 272,694 $2,902,371
=========== =========== =========== ===========
** Class C commenced operations on June 1, 1998.
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment gains and
losses, distributions paid to shareholders and any increase or decrease in
money shareholders invested in the Fund. The footnote illustrates the
number of Fund shares sold, reinvested and repurchased during the last two
periods, along with the corresponding dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------
1995(1) 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A(7)
Per Share Operating Performance
Net Asset Value, Beginning of Period $6.71 $9.02 $10.22 $12.35 $8.41
-------- -------- -------- -------- --------
Net Investment Loss(2) (0.07) (0.09) (0.07) (0.08) (0.12)
Net Realized and Unrealized Gain (Loss)
on Investments 2.38 1.29 2.41 (1.34) 4.59
-------- -------- -------- -------- --------
Total from Investment Operations 2.31 1.20 2.34 (1.42) 4.47
-------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain
on Investments Sold -- -- (0.21) (2.52) (0.23)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $9.02 $10.22 $12.35 $8.41 $12.65
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) 34.56% 13.27% 23.35% (14.14%) 54.41%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $179,481 $218,497 $209,384 $179,700 $266,886
Ratio of Expenses to Average Net Assets 1.38% 1.32% 1.29%(4) 1.36%(4) 1.34%(4)
Ratio of Net Investment Loss
to Average Net Assets (0.83%) (0.86%) (0.57%) (1.02%) (1.17%)
Portfolio Turnover Rate 23% 44% 96% 103% 104%
CLASS B(7)
Per Share Operating Performance
Net Asset Value, Beginning of Period $6.51 $8.70 $9.78 $11.72 $7.81
-------- -------- -------- -------- --------
Net Investment Loss(2) (0.11) (0.15) (0.14) (0.15) (0.18)
Net Realized and Unrealized Gain (Loss)
on Investments 2.30 1.23 2.29 (1.24) 4.24
-------- -------- -------- -------- --------
Total from Investment Operations 2.19 1.08 2.15 (1.39) 4.06
-------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold -- -- (0.21) (2.52) (0.23)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $8.70 $9.78 $11.72 $7.81 $11.64
======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(3) 33.60% 12.48% 22.44% (14.80%) 53.31%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $393,478 $451,268 $472,594 $361,992 $478,468
Ratio of Expenses to Average Net Assets 2.11% 2.05% 2.02%(4) 2.07%(4) 2.03%(4)
Ratio of Net Investment Loss
to Average Net Assets (1.55%) (1.59%) (1.30%) (1.73%) (1.87%)
Portfolio Turnover Rate 23% 44% 96% 103% 104%
<CAPTION>
Financial Highlights (continued)
- -------------------------------------------------------------------------------------------
PERIOD FROM
JUNE 1, 1998
(COMMENCEMENT OF
OPERATIONS) TO YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1999
---------------- ----------------
<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) (0.19)
Net Realized and Unrealized Gain (Loss)
on Investments (1.12) 4.23
-------- --------
Total from Investment Operations (1.15) 4.04
-------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold -- (0.23)
-------- --------
Net Asset Value, End of Period $7.81 $11.62
======== ========
Total Investment Return at Net Asset Value(3) (12.83%)(5) 53.05%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $468 $3,866
Ratio of Expenses to Average Net Assets 2.11%(4,6) 2.09%(4)
Ratio of Net Investment Loss
to Average Net Assets (1.86%)(6) (1.94%)
Portfolio Turnover Rate 103% 104%
(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
0.01% for the year ended October 31, 1998 and less than $0.01 for the years ended
October 31, 1997 and 1999.
(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.
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.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
October 31, 1999
- -------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by
the Small Cap Growth Fund on October 31, 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.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- ------------------------------------ ---------- ------------
<S> <C> <C> <C>
COMMON STOCKS
Advertising (1.96%)
Catalina Marketing Corp.* 55,200 $5,168,100
Getty Images, Inc.* 215,300 6,633,931
GoTo.com, Inc.* 14,900 849,300
Harte-Hanks, Inc. 101,800 2,016,913
------------
14,668,244
------------
Automobile/Trucks (1.02%)
Dollar Thrifty Automotive Group, Inc.* 24,400 411,751
Gentex Corp.* 173,400 2,980,313
Monaco Coach Corp. * 180,000 4,230,000
------------
7,622,064
------------
Beverages (0.39%)
Beringer Wine Estates Holdings, Inc. (Class B)* 74,500 2,961,375
------------
Broker Services (0.94%)
Hambrecht & Quist Group* 91,000 4,493,125
Raymond James Financial, Inc. 126,087 2,553,262
------------
7,046,387
------------
Business Services - Misc. (9.68%)
Abacus Direct Corp.* 38,200 5,596,300
Charles River Associates, Inc.* 67,500 1,704,375
Chemdex Corp.* 137,000 5,223,125
Coinstar, Inc.* 285,100 2,173,887
Corporate Executive Board Co. (The)* 118,200 4,462,050
FactSet Research Systems, Inc. 17,250 1,146,047
Forrester Research, Inc.* 178,200 8,486,775
InsWeb Corp. * 183,000 3,294,000
Interim Services, Inc.* 179,200 2,945,600
Jupiter Communications, Inc.* 57,350 1,971,406
MedQuist, Inc.* 102,800 3,289,600
Modem Media.Poppe Tyson, Inc.* 114,000 7,866,000
Navigant Consulting, Inc.* 98,250 2,806,266
NCO Group, Inc.* 73,400 3,110,325
On Assignment, Inc.* 135,900 3,907,125
Professional Detailing, Inc.* 59,000 1,475,000
Profit Recovery Group International, Inc. (The)* 177,300 7,302,544
Quanta Services, Inc.* 151,800 4,231,425
Viant Corp.* 15,700 1,562,150
------------
72,554,000
------------
Chemicals (0.44%)
OM Group, Inc. 88,200 3,307,500
------------
Computers (24.84%)
Accrue Software, Inc.* 169,600 9,116,000
Advantage Learning Systems, Inc.* 206,850 5,714,231
Advent Software, Inc.* 82,300 4,948,287
Aether Systems, Inc.* 9,700 674,756
Agile Software Corp.* 4,000 392,000
Alteon Websystems, Inc.* 5,000 358,750
Apex, Inc.* 202,750 3,446,750
Aspect Development, Inc.* 224,700 7,948,762
Aspen Technology, Inc.* 384,200 4,754,475
BindView Development Corp.* 226,100 6,783,000
BMC Software, Inc.* 39,000 2,503,312
Breakaway Solutions, Inc.* 5,500 292,531
Broadbase Software, Inc.* 121,000 5,505,500
BSQUARE Corp.* 15,500 613,219
Cognizant Technology Solutions Corp.* 164,500 7,556,719
Commtouch Software, Ltd. (Israel)* 96,200 2,777,775
Cysive, Inc.* 11,500 661,969
Data Return Corp.* 83,800 1,262,237
DBT Online, Inc.* 7,200 168,300
Dendrite International, Inc.* 154,650 4,852,144
Digex, Inc.* 156,000 4,465,500
E.piphany, Inc.* 17,300 1,487,800
eGain Communications Corp.* 1,800 52,425
Fundtech Ltd. (Israel)* 120,000 1,605,000
Insight Enterprises, Inc.* 151,800 5,673,525
Internap Network Services Corp.* 27,800 2,568,025
Intertrust Technologies Corp.* 16,950 923,775
Interwoven, Inc.* 50,350 3,946,181
JNI Corp.* 9,000 480,938
Keynote Systems, Inc.* 1,800 81,675
Maxtor Corp. * 564,300 3,103,650
Media Metrix, Inc.* 108,000 5,062,500
Medscape, Inc.* 170,100 1,467,113
Micromuse, Inc.* 87,300 9,330,188
National Computer Systems, Inc. 172,900 6,537,781
National Instruments Corp.* 139,875 4,204,992
NaviSite, Inc.* 9,050 425,350
Network Appliance, Inc.* 60,800 4,499,200
Network Solutions, Inc.* 65,800 7,512,900
Orckit Communications Ltd.
(Israel)* 204,800 5,644,800
Packeteer, Inc.* 32,950 1,120,300
Paradyne Networks, Inc.* 161,600 4,908,600
pcOrder.com, Inc.* 49,100 2,430,450
Predictive Systems, Inc.* 14,600 635,100
Prodigy Communications Corp.* 258,300 6,554,362
Quantum Corp. Hard Disk Drive Group* 503,200 3,082,100
Quest Software, Inc.* 14,500 1,069,375
RADWARE Ltd. (Israel)* 11,350 583,816
ScanSource, Inc.* 30,000 1,016,250
SilverStream Software, Inc.* 4,200 218,925
SmartDisk Corp.* 1,150 63,034
Software.com, Inc.* 52,500 3,533,906
SportsLine USA, Inc.* 48,650 1,748,359
Verio, Inc.* 107,900 4,026,019
VerticalNet, Inc.* 65,900 3,690,400
Vitria Technology, Inc.* 2,850 187,922
WebTrends Corp.* 72,800 4,495,400
Whittman-Hart, Inc.* 191,000 7,341,562
------------
186,109,915
------------
Electronics (10.29%)
Alpha Industries, Inc. 76,900 4,248,725
ATMI, Inc.* 95,400 2,569,837
Credence Systems Corp.* 123,100 5,616,437
DSP Communications, Inc.* 95,500 3,360,406
DuPont Photomasks, Inc.* 104,100 5,152,950
Flextronics International Ltd.* 104,000 7,384,000
GlobeSpan, Inc.* 2,900 210,975
KLA-Tencor Corp.* 35,000 2,771,563
Micrel, Inc.* 127,400 6,927,375
Novellus Systems, Inc.* 45,400 3,518,500
PLX Technology, Inc.* 195,850 3,133,600
PMC-Sierra, Inc. (Canada)* 30,800 2,902,900
Powerwave Technologies, Inc.* 125,200 8,145,825
PRI Automation, Inc.* 121,100 4,859,137
Qlogic Corp.* 63,100 6,570,288
QuickLogic Corp.* 3,250 59,719
Semtech Corp.* 171,800 6,582,088
Silicon Image, Inc.* 1,750 77,328
Vicor Corp.* 108,000 2,997,000
------------
77,088,653
------------
Finance (2.43%)
Affiliated Managers Group, Inc.* 146,000 3,905,500
Medallion Financial Corp. 246,300 5,033,756
Metris Cos., Inc. 112,100 3,860,444
NextCard, Inc.* 128,700 4,013,831
Price (T. Rowe) Associates, Inc. 39,500 1,402,250
------------
18,215,781
------------
Food (0.49%)
American Italian Pasta Co. (Class A)* 146,800 3,688,350
------------
Insurance (0.41%)
Horace Mann Educators Corp. 86,800 2,446,675
Medical Assurance, Inc.* 25,350 592,556
------------
3,039,231
------------
Leisure (2.06%)
Cinar Films, Inc. (Class B)
(Canada)* 225,300 3,914,587
Imax Corp. (Canada)* 320,000 6,640,000
Premier Parks, Inc.* 169,800 4,913,588
------------
15,468,175
------------
Machinery (0.45%)
Terex Corp.* 127,800 3,378,713
------------
Media (10.78%)
Acme Communications, Inc.* 157,450 5,668,200
Adelphia Communications Corp. (Class A)* 67,800 3,703,575
Citadel Communications Corp.* 171,600 8,290,425
Clear Channel Communications, Inc.* 36,414 2,926,775
Cumulus Media, Inc. (Class A)* 183,200 6,572,300
Entercom Communications Corp.* 30,600 1,524,263
Hispanic Broadcasting Corp.* 60,000 4,860,000
Martha Stewart Living Omnimedia, Inc. (Class A)* 64,600 2,382,125
Network Event Theater, Inc.* 274,600 6,315,800
Pegasus Communications Corp.* 144,000 6,372,000
Radio One, Inc.* 105,600 5,266,800
Radio Unica Corp.* 136,550 3,908,744
TiVo, Inc.* 96,750 4,148,156
Westwood One, Inc.* 152,394 7,029,173
Wiley (John) & Sons, Inc. (Class A) 119,400 2,014,875
Wink Communications, Inc.* 166,200 5,837,775
XM Satellite Radio Holdings, Inc.* 205,350 3,978,656
------------
80,799,642
------------
Medical (6.86%)
Alkermes, Inc.* 156,900 5,540,531
Alpharma, Inc. (Class A) 114,500 4,028,969
CV Therapeutics, Inc.* 37,900 464,275
Cytyc Corp.* 131,700 5,235,075
Gilead Sciences, Inc.* 52,400 3,311,025
Human Genome Sciences, Inc.* 46,100 4,027,987
IDEC Pharmaceuticals Corp.* 38,400 4,461,600
Interpore International, Inc.* 490,700 3,005,537
King Pharmaceuticals, Inc.* 125,800 3,805,450
Millennium Pharmaceuticals, Inc.* 25,700 1,802,213
MiniMed, Inc.* 37,600 2,850,550
Pharmacyclics, Inc.* 141,900 5,019,712
Triangle Pharmaceuticals, Inc.* 202,000 3,282,500
Xomed Surgical Products, Inc.* 74,700 4,542,694
------------
51,378,118
------------
Metal (0.83%)
Maverick Tube Corp.* 336,900 6,232,650
------------
Oil & Gas (2.63%)
Core Laboratories N.V.
(Netherlands)* 180,000 3,307,500
Dril-Quip, Inc.* 131,400 3,071,475
Marine Drilling Cos., Inc.* 142,600 2,308,338
Newfield Exploration Co.* 135,900 4,000,556
Pride International, Inc.* 240,000 3,300,000
Stone Energy Corp.* 75,800 3,685,775
------------
19,673,644
------------
Pollution Control (0.09%)
Newpark Resources, Inc.* 101,200 651,475
------------
Retail (7.47%)
99 Cents Only Stores* 132,462 3,957,302
Applebee's International, Inc. 133,500 3,846,469
Brightpoint, Inc.* 300,000 2,353,140
Cost Plus, Inc.* 142,800 5,212,200
CSK Auto Corp.* 189,500 3,387,312
CVS Corp. 23,000 999,063
Duane Reade, Inc.* 93,000 2,499,375
Ethan Allen Interiors, Inc. 116,250 4,134,141
Linens 'N Things, Inc.* 104,000 4,134,000
O'Reilly Automotive, Inc.* 114,200 4,981,975
P.F. Chang's China Bistro, Inc.* 46,200 993,300
Pacific Sunwear of California, Inc.* 202,500 6,112,969
PlanetRx.com, Inc.* 8,600 202,100
RARE Hospitality International, Inc.* 184,600 3,680,463
Whole Foods Market, Inc.* 108,000 3,672,000
Wild Oats Markets, Inc.* 163,700 5,770,425
------------
55,936,234
------------
Steel (0.53%)
Lone Star Technologies, Inc.* 188,400 3,944,625
------------
Telecommunications (9.79%)
AirGate PCS, Inc.* 87,400 4,370,000
Allegiance Telecom, Inc.* 81,200 5,602,800
Allied Riser Communications Corp.* 3,550 64,122
CoreComm Ltd.* 106,200 4,181,625
Crown Castle International Corp.* 311,600 5,998,300
Efficient Networks, Inc.* 94,800 4,029,000
Global TeleSystems Group, Inc.* 84,400 2,020,325
Illuminet Holdings, Inc.* 94,550 4,396,575
Intermedia Communications, Inc.* 104,600 2,719,600
Latitude Communications, Inc.* 94,600 3,027,200
NEXTLINK Communications, Inc. (Class A)* 58,300 3,487,069
Powertel, Inc.* 110,200 6,488,025
Qwest Communications International, Inc.* 70,178 2,526,408
RF Micro Devices, Inc.* 101,500 5,239,937
Rural Cellular Corp. (Class A)* 97,000 5,838,188
Tellabs, Inc.* 50,000 3,162,500
Terayon Communication Systems, Inc.* 102,500 4,484,375
US LEC Corp. (Class A)* 123,600 3,422,175
WinStar Communications, Inc.* 58,500 2,270,531
------------
73,328,755
------------
Textile (0.40%)
Cutter & Buck, Inc.* 180,750 2,971,078
------------
Transport (2.37%)
Circle International Group, Inc. 133,700 2,941,400
Eagle USA Airfreight, Inc.* 109,200 3,221,400
Expeditors International of Washington, Inc. 180,000 6,727,500
Forward Air Corp.* 165,600 4,874,850
------------
17,765,150
------------
Waste Disposal Service & Equip (0.39%)
Waste Connections, Inc.* 189,100 2,919,231
------------
TOTAL COMMON STOCKS
(Cost $476,285,201) (97.54%) 730,748,990
------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.88%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
10-29-99, due 11-01-99
(Secured by U.S. Treasury
Bonds, 7.125% thru 13.375%,
due 08-15-01 thru 02-15-23)
- -- Note A 5.23% $21,589 21,589,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.30% 674
------------
TOTAL SHORT-TERM INVESTMENTS (2.88%) 21,589,674
------- ------------
TOTAL INVESTMENTS (100.42%) 752,338,664
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.42%) (3,118,467)
------- ------------
TOTAL NET ASSETS (100.00%) $749,220,197
======= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description represents country of
foreign issuer; however, security is U.S. dollar denominated.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Small Cap Growth Fund
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940. The
Trust consists of three series portfolios: John Hancock Small Cap Growth Fund
(the "Fund"), John Hancock Global Technology Fund and John Hancock 500 Index
Fund (which commenced operations on August 18, 1999). The other series of the
Trust are 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."
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 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 maximum loan balance during the year amounted to
$11,740,817. The interest rate was in the range of 5.2500% through 5.8125%.
At October 31, 1999, there were no outstanding borrowings.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. These fees are included in
interest income. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear the
risk of delay of the loaned securities in recovery or even loss of rights in
the collateral should the borrower of the securities fail financially. At
October 31, 1999, the Fund loaned securities having a market value of
$123,415,467 collateralized by securities in the amount of $128,445,649.
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.
On July 19, 1999, the trustees approved an amendment to the Fund's investment
management contract. After December 10, 1999, the Fund will pay a monthly
management fee to the Adviser for a continuous investment program, equivalent
on an annual basis, to the sum of (a) 0.75% of the first $1,500,000,000 of
the Fund's average daily net asset value and (b) 0.70% of the Fund's average
daily net asset value in excess of $1,500,000,000.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the year ended October
31, 1999, net sales charges received with regard to sales of Class A shares
amounted to $404,803. Out of this amount, $21,889 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$292,764 was paid as sales commissions to unrelated broker-dealers and
$90,150 was paid as sales commissions to sales personnel of Signator
Investors, Inc. ("Signator Investors"), a related broker-dealer. The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company
("JHMLICo"), is the indirect sole shareholder of Signator Investors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in part
to defray its expenses related to providing distribution related services to
the Fund in connection with the sale of Class B shares. For the year ended
October 31, 1999, contingent deferred sales charges paid to JH Funds amounted
to $774,888.
Class C shares which are redeemed within one year of purchase will be subject
to a 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
year ended October 31, 1999, contingent deferred sales charges paid to JH
Funds amounted to $1,652.
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. A maximum of 0.25% of such payments may be service fees as
defined by the Conduct Rules of the National Association of Securities
Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-
1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo.
The Fund pays transfer agent fees based on the number of shareholder accounts
and certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the period
was at an annual rate of less than 0.02% of the average net assets of the
Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Maureen R. Ford, 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 through
December 31, 1999. 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.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
year ended October 31, 1999, aggregated $661,482,647 and $729,356,953,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the year ended October 31, 1999.
The cost of investments owned at October 31, 1999 (excluding the corporate
savings account) for federal income tax purposes was $498,384,115. Gross
unrealized appreciation and depreciation of investments aggregated
$274,608,303 and $20,654,428, respectively, resulting in net unrealized
appreciation of $253,953,875.
NOTE D -
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the period ended October 31, 1999, the Fund has reclassified amounts
to reflect a decrease in accumulated net realized gain on investments of
$39,085,673, a decrease in accumulated net investment loss of $10,489,420,
and an increase in capital paid-in of $28,596,253. This represents the amount
necessary to report these balances on a tax basis, excluding certain
temporary differences, as of October 31, 1999. Additional adjustments may be
needed in subsequent reporting periods. These reclassifications, which have
no impact on the net asset value of the Fund, are primarily attributable to
the treatment of net operating losses in the computation of distributable
income and capital gains under federal tax rules versus generally accepted
accounting principles, and the Fund's use of the tax accounting practice
known as equalization. The calculation of net investment income per share in
the financial highlights excludes these adjustments.
NOTE E -
SUBSEQUENT EVENT
On December 6, 1999, the shareholders of the John Hancock Special Equities
Fund ("Special Equities Fund") approved a vote on a proposed merger between
the Fund and the Special Equities Fund. The merger provides for a transfer of
substantially all the assets and liabilities of Special Equities Fund to the
Fund on December 10, 1999. After the close of business on December 10, 1999,
the Special Equities Fund will be terminated.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Series Trust -
John Hancock Small Cap Growth Fund
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the John Hancock Small Cap Growth
Fund (the "Fund"), one of the portfolios constituting John Hancock Series
Trust, as of October 31, 1999, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers, and other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
John Hancock Small Cap Growth Fund portfolio of John Hancock Series Trust at
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
December 3, 1999
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund during its fiscal year ended October
31, 1999.
The Fund has designated distributions to shareholders of $16,243,899 as a
capital gain dividend.
Shareholders will be mailed a 1999 U.S. Treasury Department Form 1099-DIV in
January of 2000. This will reflect the total of all distributions which are
taxable for calendar year 1999.
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Small Cap Growth Investment Management
Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
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.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
6000A 10/99
12/99
The latest report from your
Fund's management team
ANNUAL REPORT
Global
Technology Fund
OCTOBER 31, 1999
TRUSTEES
Stephen L. Brown
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Maureen R. Ford
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Executive 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
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116-5072
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive
Officer, flush right next to fourth paragraph.]
DEAR FELLOW SHAREHOLDERS:
I am delighted that one of my first official duties at John Hancock Funds is
to welcome you to the New Millennium! I wish you all the best for a century
filled with momentous occasions.
Every New Year, of course, provides us with a built-in opportunity to make
new resolutions, or re-commit to old ones. It seems fitting, therefore, that
this special New Year 2000 coincides with a very important, although
certainly less exotic, event.
Starting last October, personalized Social Security statements are being sent
to 125 million workers over age 25, showing estimates of the retirement,
disability and survivor benefits that they and their families are eligible to
receive now and in the future.
The statements, to be sent out annually, will provide people with a glimpse
of what they can expect from the government when they retire. This should be
comforting to those who feared that Social Security wouldn't be there for
them at all. But many people also already know that government benefits will
only fulfill a small piece of their retirement needs.
The best thing about this massive mailing is that it can serve as a wake-up
call to encourage families to focus more on planning for their financial
future.
When you receive your statement, expected to be within three months of your
next birthday, we urge you to read it carefully for accuracy, making sure
your annual earnings history and amounts you have contributed over the years
are correct. Keep in mind that the estimated benefits are precisely that, and
that rules and regulations may change by the time you retire. Also remember
that they are not inflation adjusted, so it would be unrealistic to expect
them to have the same purchasing power in the future as they would today.
We also encourage you to use this mailing as a reason to contact your
investment professional, or to select one if you are not working with
somebody. He or she can help you focus on establishing and maintaining a
sound plan to achieve a comfortable retirement. Together, you should make
sure to maximize your participation in tax-advantaged programs like IRAs and
401(k)s.
The stakes are too high to leave your retirement lifestyle to chance.
Congress' awareness-raising effort is commendable. The next step is yours.
Mark the beginning of the New Millennium by taking it.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY BARRY J. GORDON AND MARC H. KLEE, CFA, PORTFOLIO MANAGERS
John Hancock
Global Technology Fund
Tech stocks dazzle; Fund outpaces its peers
[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 (l-r): Barry Gordon, Marc Klee and Alan Loewenstein."]
The explosion of the Internet and a recovering world economy helped set
technology stocks ablaze during the past 12 months. The sector's incredible
rise perhaps wasn't that surprising considering that the sector had been
severely beaten down in response to fears of a global recession throughout
the fall of 1998. When those worries abated in October 1998, investors
increasingly sought out tech companies for their attractive valuations and
tremendous growth opportunities. Later in the fiscal year, hopes for the
sector's bright future were able to overshadow Y2K worries, profit concerns
and interest rate increases that weighed on most other industry groups.
For the 12 months ended October 31, 1999, John Hancock Global Technology
Fund's Class A and Class B shares posted total returns of 113.09% and
111.70%, respectively, at net asset value. Those returns were significantly
better than the average science and technology fund's 105.66% return,
according to Lipper, Inc.1 The Fund's Class C shares, which were launched on
March 1, 1999, returned 48.62% for the eight months since inception. 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.
"The shining
stars of the
past year's
tech stock
boom...were
Internet
companies."
Internet keeps rocking
The shining stars of the past year's tech stock boom -- and many of the
largest contributors to the Fund's performance -- were Internet
companies. Strong subscriber growth and increases in advertising and e-
commerce revenue boosted America Online (AOL), the nation's largest Internet
service provider. The shares of RealNetworks, which provides software and
services that enable personal computers to send and receive multimedia
content over the Internet, were up more than four-fold. Other big winners
still in the portfolio included Web-hosting company Exodus Communications and
backbone technology company Inktomi. Large gains were recorded in other
Internet stocks which were sold, including DoubleClick, E*TRADE Group and
SportsLine.
[Table at top left hand column entitled "Top Five Holdings." The first
listing is America Online 4.2%, the second is EMC Corp. 3.1%, the third
Cisco Systems 2.9%, the fourth Microsoft 2.8% and the fifth Nokia 2.4%.
A note below the table reads "As a percentage of net assets on October
31, 1999."]
"...one of our
chief areas
of focus
became
semiconductor
and related
companies."
In our report to shareholders six months ago, we explained that we had
recently pared back our stake in some Internet holdings in response to their
rapid rise. Those sales helped the Fund's performance when the Internet
sector saw a dramatic spring pullback caused by bouts of profit-taking and
increased scrutiny of the sector's potential. After their drop, we were able
to beef up some of our favorites -- such as AOL and RealNetworks -- at
dramatically reduced prices. When Internet stocks resumed their climb in the
summer, these additions generally worked out in the Fund's favor.
[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 RealNetworks followed by an up arrow with the phrase "Wide
acceptance as industry media standard." The second listing is AOL
followed by an up arrow with the phrase "Subscriber base growth, ad
revenues accelerate." The third listing is Cadence followed by a down
arrow with the phrase "Dim view of changing sales practices." A note
below the table reads "See 'Schedule of Investments.' Investment
holdings are subject to change."]
Other tech stocks have their day, too
While Internet companies may have grabbed the biggest headlines, some more
established, well-known hardware and software companies also made impressive
marks. Despite facing an antitrust suit by the Department of Justice, the
Microsoft juggernaut kept on rolling. Cisco Systems, the pre-eminent maker of
equipment that steers data between computers, also performed exceedingly
well. EMC Corp., which makes data storage hardware and software, was a prime
beneficiary of the growing need for space to store information. Enterprise
software provider Mercury Interactive also posted large gains as it further
emerged as a leading provider of testing software for e-commerce.
Even a period as strong as the past year dishes up the occasional
disappointment. Network Associates stumbled when earnings failed to meet
expectations, although the stock has recently regained some of the lost
ground. Cadence Design Systems, a leader in the electronic-design automation
software used to create the circuits and electronics in telephones, computers
and other devices, fell hard when it changed how it sells software in order
to make its revenue more predictable.
Semiconductor additions
By the end of the period, one of our chief areas of focus became
semiconductor and related companies. We built that position based on our view
that a supply/demand imbalance of semiconductor chips is about to transpire.
The amount of money spent expanding chip-making capacity has been relatively
small during the past several years. Meanwhile, the demand for chips has
mushroomed in tandem with their growing use in hand-held and personal
computing devices and other electronics. Given that projected imbalance,
chipmakers should benefit from rising prices while semiconductor equipment
manufacturers will be aided by the chipmakers' need to expand capacity.
That's why we've added to existing or initiated positions in chip makers such
as Intel, Micron Technology, Cypress Semiconductor, Integrated Device
Technology and Integrated Silicon Solution and equipment makers Applied
Science & Technology, Applied Materials, KLA-Tencor, PRI Automation and ASM
Lithography Holding.
[Bar chart at top of left hand column with heading "Fund Performance".
Under the heading is a note that reads "For the year ended October 31,
1999." The chart is scaled in increments of 20% with 0% at the bottom
and 120% at the top. The first bar represents the 113.09% total return
for John Hancock Global Technology Fund Class A. The second bar
represents the 111.70% total return for Global Technology Fund Class B.
The third line represents the 48.62%* total return for John Hancock
Global Technology Fund Class C. The fourth bar represents the 105.66%
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.1 See the
following two pages for historical performance information.
*From inception March 1, 1999 through October 31, 1999."]
Outlook
We remain optimistic about the prospects for technology stocks, although we
believe that volatility will remain a fact of life. Today's ever-shorter
product life cycle quickly renders products obsolete, and a company's ability
to maintain a competitive lead keeps shrinking. The cyclical nature of
technology spending means that tech stocks will respond to the economy's ups
and downs. With current concerns about an economic slowdown, volatility may
be enhanced over the short term. That's why we'll continue to focus on
valuation and take a balanced approach, keeping a broad portfolio of small-,
medium- and large-company stocks spread over a variety of technology
segments.
"...a balanced
approach,
keeping
a broad
portfolio of
small-,
medium-
and large-
company stocks..."
While we believe in the tremendous opportunity that technology stocks
represent for the long term, we believe investors should set realistic
expectations, and not necessarily count on a repeat of this year's
outstanding Fund performance. Rather, we urge shareholders to keep a long-
term approach to investing in this volatile, cutting-edge sector of the
market.
From a valuation standpoint, our calculations indicate that even with their
substantial gains, technology stocks are priced attractively and are
currently in line with historic levels. In our view, picking companies with
reasonable valuations and good earnings gains potential should
continue to be a recipe for success.
- --------------------------------------------------------------------------
This commentary reflects the views of the portfolio managers through the end
of the Fund's period discussed in this report. Of course, the managers' views
are subject to change as market and other conditions warrant.
International investing involves special risks such as political, economic
and currency risks and differences in accounting standards and financial
reporting. Sector investing is subject to greater risks than the market as
a whole.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is
lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average
annual total returns for the John Hancock Global Technology Fund. Total
return measures the change in value of an investment from the beginning to
the end of a period, assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. Class B performance reflects a maximum contingent deferred
sales charge (maximum 5% and declining to 0% over six years). 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 September 30, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- --------
Cumulative Total Returns 96.70% 272.42% 492.50%
Average Annual Total Returns 96.70% 30.08% 19.47%
CLASS B
For the period ended September 30, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
------- ------- --------
Cumulative Total Returns 100.69% 276.45% 303.14%
Average Annual Total Returns 100.69% 30.36% 27.49%
CLASS C
For the period ended September 30, 1999
SINCE
INCEPTION
(3/1/99)
---------
Cumulative Total Return 34.68%
Average Annual Total Return 34.68%(1)
Note to Performance
(1) Not annualized.
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 Index -- an unmanaged
index that includes 500 widely traded common stocks and is used often as a
measure of stock market performance. It is not possible to invest in an
index. 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, 1989, before sales
charge, and is equal to $70,755 as of October 31, 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
$67,218 as of October 31, 1999. The third line represents the Standard &
Poor's 500 Index and is equal to $51,454 as of October 31, 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, before sales
charge, and is equal to $44,271 as of October 31, 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
$44,171 as of October 31, 1999. The third line represents the Standard &
Poor's 500 Index and is equal to $32,913 as of October 31, 1999.
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 $14,862 as of October 31, 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
$14,762 as of October 31, 1999. The third line represents the Standard &
Poor's 500 Index and is equal to $11,099 as of October 31, 1999.
FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on October 31,
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
October 31, 1999
- ------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $596,495,795) $990,220,471
Preferred stocks (cost - $2,949,999) 6,721,554
Bonds (cost - $479,852) 533,180
Joint repurchase agreement
(cost - $121,635,000) 121,635,000
Corporate savings account 415
--------------
1,119,110,620
Receivable for investments sold 10,748,628
Receivable for shares sold 3,119,747
Interest receivable 57,996
Other assets 31,460
--------------
Total Assets 1,133,068,451
--------------
Liabilities:
Payable for investments purchased 41,248,492
Payable for shares repurchased 257,893
Payable to John Hancock Advisers,
Inc. and affiliates - Note B 870,922
Accounts payable and accrued expenses 104,999
--------------
Total Liabilities 42,482,306
--------------
Net Assets:
Capital paid-in 635,167,420
Accumulated net realized gain on
investments and written options 57,890,693
Net unrealized appreciation of
investments 397,549,559
Accumulated net investment loss (21,527)
==============
Net Assets $1,090,586,145
==============
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 - $523,012,580/8,694,555 $60.15
============================================================
Class B - $553,358,826/9,660,662 $57.28
============================================================
Class C* - $14,214,739/248,162 $57.28
============================================================
Maximum Offering Price Per Share**
Class A - ($60.15 x 105.26%) $63.32
============================================================
* 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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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
Year ended October 31, 1999
- ------------------------------------------------------------
<S> <C>
Investment Income:
Interest $3,281,389
Dividends (net of foreign
withholding taxes of $17,796) 217,693
------------
3,499,082
------------
Expenses:
Investment management fee - Note B 4,678,237
Distribution and service fee - Note B
Class A 1,039,060
Class B 2,599,243
Class C 28,931
Transfer agent fee - Note B 1,297,102
Registration and filing fees 135,289
Custodian fee 120,466
Administrative fee - Note B 100,000
Auditing fee 34,010
Printing 31,128
Miscellaneous 23,336
Trustees' fees 23,005
Legal fees 5,405
------------
Total Expenses 10,115,212
------------
Net Investment Loss (6,616,130)
------------
Realized and Unrealized Gain on
Investments and Written Options:
Net realized gain on investments sold 90,688,499
Net realized gain on written options 1,872,946
Change in net unrealized
appreciation/depreciation of investments 306,298,964
------------
Net Realized and Unrealized Gain
on Investments and Written Options 398,860,409
------------
Net Increase in Net Assets
Resulting from Operations $392,244,279
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------
1998 1999
------------ --------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($2,968,152) ($6,616,130)
Net realized gain on investments
sold and written options 3,694,984 92,561,445
Change in net unrealized
appreciation/depreciation of investments 7,793,056 306,298,964
------------ --------------
Net Increase in Net Assets
Resulting from Operations 8,519,888 392,244,279
------------ --------------
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: * 26,258,682 436,376,232
------------ --------------
Net Assets:
Beginning of period 249,899,522 264,257,400
------------ --------------
End of period (including accumulated
net investment loss of
$17,749 and $21,527, respectively) $264,257,400 $1,090,586,145
============ ==============
<CAPTION>
Statement of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------------
*Analysis of Fund Share Transactions:
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1998 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 6,227,786 $173,844,000 12,955,560 $596,764,933
Shares issued to shareholders in
reinvestment of distributions 496,541 12,219,872 51,384 1,622,378
----------- ----------- ----------- -----------
6,724,327 186,063,872 13,006,944 598,387,311
Less shares repurchased (6,302,628) (176,502,102) (10,858,023) (492,728,878)
----------- ----------- ----------- -----------
Net increase 421,699 $9,561,770 2,148,921 $105,658,433
=========== =========== =========== ===========
CLASS B
Shares sold 2,014,046 $55,031,614 9,077,145 $418,467,599
Shares issued to shareholders in
reinvestment of distributions 197,814 4,698,077 21,803 627,794
----------- ----------- ----------- -----------
2,211,860 59,729,691 9,098,948 419,095,393
Less shares repurchased (1,615,363) (43,032,779) (2,296,233) (100,920,508)
----------- ----------- ----------- -----------
Net increase 596,497 $16,696,912 6,802,715 $318,174,885
=========== =========== =========== ===========
CLASS C
Shares sold -- -- 263,969 $13,356,375
Less shares repurchased -- -- (15,807) (813,461)
----------- ----------- ----------- -----------
Net increase -- -- 248,162 $12,542,914
=========== =========== =========== ===========
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.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED OCTOBER 31,
------------------------ JANUARY 1, 1996 TO ----------------------------------
1994 1995 OCTOBER 31, 1996(6) 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $17.45 $17.84 $24.51 $25.79 $30.05 $28.46
-------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.22) (0.22)(2) (0.14) (0.27) (0.28) (0.36)
Net Realized and Unrealized Gain on
Investments and Written Options 1.87 8.53 1.42 5.76 1.09 32.30
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.65 8.31 1.28 5.49 0.81 31.94
-------- -------- -------- -------- -------- --------
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 $17.84 $24.51 $25.79 $30.05 $28.46 $60.15
======== ======== ======== ======== ======== ========
Total Investment Return
at Net Asset Value(5) 9.62% 46.53% 5.22%(7) 21.90% 3.95% 113.09%
Total Adjusted Investment Return
at Net Asset Value(5) -- 46.41%(3) -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $52,193 $155,001 $166,010 $184,048 $186,259 $523,013
Ratio of Expenses to Average Net Assets 2.16% 1.67%(2) 1.57%(8) 1.51% 1.50% 1.35%
Ratio of Net Investment Loss
to Average Net Assets (1.25%) (0.89%)(2) (0.68%)(8) (0.95%) (0.97%) (0.78%)
Portfolio Turnover Rate 67% 70% 64% 104% 86% 61%
<CAPTION>
Financial Highlights (continued)
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED OCTOBER 31,
------------------------ JANUARY 1, 1996 TO ----------------------------------
1994(4) 1995 OCTOBER 31, 1996(6) 1997 1998 1999
-------- -------- -------- -------- -------- --------
<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) (0.68)
Net Realized and Unrealized Gain on
Investments and Written Options 2.05 8.43 1.40 5.60 1.02 30.92
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.70 8.04 1.12 5.15 0.57 30.24
-------- -------- -------- -------- -------- --------
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 $57.28
======== ======== ======== ======== ======== ========
Total Investment Return
at Net Asset Value(5) 10.02%(7) 45.42% 4.65%(7) 21.04% 3.20% 111.70%
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 $553,359
Ratio of Expenses to Average Net Assets 2.90%(8) 2.41%(2) 2.27%(8) 2.21% 2.20% 2.05%
Ratio of Net Investment Loss
to Average Net Assets (1.98%)(8) (1.62%)(2) (1.38%)(8) (1.65%) (1.67%) (1.47%)
Portfolio Turnover Rate 67% 70% 64% 104% 86% 61%
<CAPTION>
Financial Highlights (continued)
- --------------------------------------------------------------------
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF
OPERATIONS) TO
OCTOBER 31, 1999
----------------
<S> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period $38.54
--------
Net Investment Loss(1) (0.51)
Net Realized and Unrealized Gain on
Investments and Written Options 19.25
--------
Total from Investment Operations 18.74
--------
Net Asset Value, End of Period $57.28
========
Total Investment Return at Net Asset
Value(5) 48.62%(7)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $14,215
Ratio of Expenses to Average Net Assets 2.16%(8)
Ratio of Net Investment Loss to Average Net
Assets (1.57%)(8)
Portfolio Turnover Rate 61%
(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.
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.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
October 31, 1999
- -------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by
the Global Technology Fund on October 31, 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.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- ------------------- ---------- --------------
<S> <C> <C> <C>
COMMON STOCKS
Aerospace/Aircraft Equipment (0.83%)
United Technologies Corp. 150,000 $9,075,000
--------------
Business Services - Misc. (0.03%)
Jupiter Communications, Inc.* 10,250 352,344
--------------
Computer - Graphics (1.28%)
Cadence Design Systems, Inc.* 300,000 4,556,250
Synopsys, Inc.* 150,000 9,346,875
--------------
13,903,125
--------------
Computer - Integrated Systems (0.32%)
Vixel Corp.* 109,000 3,488,000
--------------
Computer - Internet Services (15.43%)
Akamai Technologies, Inc.* 15,600 2,264,925
America Online, Inc.* 350,000 45,390,625
Art Technology Group, Inc.* 100,000 5,400,000
Audible, Inc.* 50,300 433,838
Data Return Corp.* 75,000 1,129,687
eBay, Inc.* 100,000 13,512,500
Exodus Communications, Inc.* 250,000 21,500,000
Inktomi Corp.* 119,300 12,101,494
Internap Network Services Corp.* 38,350 3,542,581
Interwoven, Inc.* 15,450 1,210,894
MP3.com, Inc.* 25,150 1,219,775
NaviSite, Inc.* 12,950 608,650
Net Perceptions, Inc.* 150,000 2,400,000
PlanetRx.com, Inc.* 11,950 280,825
RADWARE Ltd.* (Israel) 15,400 792,138
RealNetworks, Inc.* 150,000 16,453,125
Telemate.Net Software, Inc.* 350,000 4,462,500
uBid, Inc.* 150,000 5,493,750
VerticalNet, Inc.* 250,000 14,000,000
Yahoo! Inc.* 90,000 16,115,625
--------------
168,312,932
--------------
Computer - Mainframe (0.72%)
International Business Machines Corp. 80,000 7,870,000
--------------
Computer - Memory Devices (3.97%)
EMC Corp.* 460,000 33,580,000
Quantum Corp. - DLT & Storage Systems Group* 250,000 3,859,375
Seagate Technology, Inc.* 200,000 5,887,500
--------------
43,326,875
--------------
Computer - Mini/Macro (3.41%)
Compaq Computer Corp. 250,000 4,750,000
Dell Computer Corp.* 560,000 22,470,000
Gateway, Inc.* 150,000 9,909,375
--------------
37,129,375
--------------
Computer - Peripheral Equipment (0.79%)
JNI Corp.* 15,500 828,281
Lexmark International Group, Inc.
(Class A)* 100,000 7,806,250
--------------
8,634,531
--------------
Computer - Services (5.07%)
Active Software, Inc.* 300,000 10,856,250
Breakaway Solutions, Inc.* 7,750 412,203
IMRglobal Corp.* 332,500 3,408,125
Mercury Interactive Corp.* 275,000 22,309,375
Novell, Inc.* 300,000 6,018,750
Predictive Systems, Inc.* 21,050 915,675
Red Hat, Inc.* 3,400 301,325
Screaming Media.Net, Inc. (r) 155,300 1,739,360
Unisys Corp.* 300,000 7,275,000
Williams Communications Group, Inc. * 64,550 2,057,531
--------------
55,293,594
--------------
Computer - Software (17.13%)
BEA Systems, Inc.* 250,000 11,406,250
Bluestone Software, Inc.* 133,410 4,919,494
BMC Software, Inc.* 325,000 20,860,937
BSQUARE Corp.* 7,750 306,609
Buildnet, Inc. (r) 454,454 1,999,598
CBT Group Plc,* American Depositary
Receipt (ADR) (Ireland) 300,000 6,187,500
Citrix Systems, Inc.* 100,000 6,412,500
Commercialware, Inc. (r) 1,000,000 1,000,000
Computer Associates International, Inc. 300,000 16,950,000
Digital Lava, Inc.* (r) 16,667 46,876
Diversinet Corp.* (Canada) 729,000 8,702,438
Electronics for Imaging, Inc.* 350,000 14,109,375
i2 Technologies, Inc.* 200,000 15,787,500
Intertrust Technologies Corp.* 13,500 735,750
Kana Communications, Inc.* 8,850 744,506
Microsoft Corp.* 325,000 30,082,813
Network Associates, Inc.* 200,000 3,662,500
Oracle Corp.* 300,000 14,268,750
Parametric Technology Corp.* 400,000 7,625,000
Research in Motion Ltd.* (Canada) 311,000 9,563,250
Rhythms Net Connections, Inc.* 150,000 4,378,125
TenFold Corp.* 300,000 7,050,000
--------------
186,799,771
--------------
Electronics - Components Misc. (2.48%)
Sanmina Corp.* 175,000 15,760,937
Solectron Corp.* 150,000 11,287,500
--------------
27,048,437
--------------
Electronics - Products Misc. (0.14%)
Aeroflex, Inc.* 275,000 1,529,687
--------------
Electronics - Semiconductor Components (20.58%)
Altera Corp.* 300,000 14,587,500
Amkor Technology, Inc.* 250,000 5,046,875
Analog Devices, Inc.* 300,000 15,937,500
Applied Materials, Inc.* 180,000 16,166,250
Applied Science & Technology, Inc.* 375,000 9,187,500
ASM Lithography Holding NV*
(Netherlands) 225,000 16,340,625
Atmel Corp.* 325,000 12,553,125
Cypress Semiconductor Corp.* 500,000 12,781,250
Integrated Device Technology, Inc.* 650,000 13,365,625
Integrated Silicon Solution, Inc.* 400,000 2,800,000
Intel Corp. 225,000 17,423,438
KLA-Tencor Corp.* 200,000 15,837,500
Micron Technology, Inc. 225,000 16,045,313
Novellus Systems, Inc.* 125,000 9,687,500
PRI Automation, Inc.* 275,000 11,034,375
Taiwan Semiconductor Manufacturing
Co., Ltd.* (ADR) (Taiwan) 400,000 13,850,000
Tower Semiconductor Ltd.* (Israel) 350,000 2,985,955
Veeco Intruments, Inc.* 150,000 5,090,625
Vitesse Semiconductor Corp.* 300,000 13,762,500
--------------
224,483,456
--------------
Fiber Optics (1.60%)
CIENA Corp.* 400,000 14,100,000
Sycamore Networks, Inc.* 15,665 3,367,975
--------------
17,467,975
--------------
Media - Radio/TV (0.79%)
Infinity Broadcasting Corp. (Class A)* 200,000 6,912,500
Westwind Media.com, Inc.* (r) 500,000 1,250,000
Wink Communications, Inc.* 12,000 421,500
--------------
8,584,000
--------------
Medical - Home & Outpatient (0.00%)
Laser Medical Corp.* (r) 491,800 50
--------------
Telecom - Cellular (0.12%)
AirGate PCS, Inc.* 18,850 942,500
Triton PCS Holdings, Inc.* 8,675 305,794
--------------
1,248,294
--------------
Telecom - Equipment (10.85%)
Advanced Fibre Communications, Inc. * 350,000 7,656,250
Cisco Systems, Inc.* 420,000 31,080,000
Equant N.V.* (Netherlands) 100,000 9,700,000
Newpoint Technologies, Inc. (r) 160,000 480,000
Global Crossing Ltd.* 200,000 6,925,000
Globecomm Systems, Inc.* 233,705 3,534,788
Metromedia Fiber Network, Inc.
(Class A)* 400,000 13,225,000
Microwave Power Devices, Inc.* 100,000 1,231,250
Nokia Corp. (ADR) (Finland) 225,000 26,001,562
RF Micro Devices, Inc.* 100,000 5,162,500
Tut Systems, Inc.* 400,000 13,350,000
--------------
118,346,350
--------------
Telecom - Services (5.26%)
Allegiance Telecom, Inc.* 89,200 6,154,800
China Telecom Ltd.* (ADR) (Hong
Kong) 50,000 3,375,000
MCI WorldCom, Inc.* 100,000 8,581,250
Net2Phone, Inc.* 25,000 1,356,250
Nortel Networks Corp. (Canada) 200,000 12,387,500
Primus Telecommunications
Group, Inc.* 400,000 8,850,000
Qwest Communications
International, Inc.* 300,000 10,800,000
WinStar Communications, Inc.* 150,000 5,821,875
--------------
57,326,675
--------------
TOTAL COMMON STOCKS
(Cost $596,495,795) (90.80%) 990,220,471
------- --------------
PREFERRED STOCKS
Computer - Software (0.57%)
Bluestone Software, Inc.* (r) 166,590 $5,221,555
Verisity Ltd.* (Israel) (r) 135,768 999,999
--------------
6,221,554
--------------
Medical - Home & Outpatient (0.05%)
Laser Medical Corp.* (r) 500,000 500,000
--------------
TOTAL PREFERRED STOCKS
(Cost $2,949,999) (0.62%) 6,721,554
------- --------------
INTEREST CREDIT PAR VALUE
RATE RATING** (000s OMITTED)
-------- -------- ------------
BONDS
Transport - Air Freight (0.05%)
Piedmont Aviation, Inc.,
Equip Tr Cert 1988 Ser F
03-28-09 10.35% B+ $500 533,180
--------------
TOTAL BONDS
(Cost $479,852) (0.05%) 533,180
------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (11.15%)
Investment in a joint
repurchase agreement
transaction with SBC
Warburg, Inc. - Dated
10-29-99, due 11-01-99
(Secured by U.S. Treasury
Bonds, 7.125% thru
13.375%, due 08-15-01
thru 02-15-23) -- Note A 5.23 121,635 121,635,000
--------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.30% 415
--------------
TOTAL SHORT-TERM INVESTMENTS (11.15%) 121,635,415
------- --------------
TOTAL INVESTMENTS (102.62%) 1,119,110,620
------- --------------
OTHER ASSETS AND LIABILITIES, NET (2.62%) (28,524,475)
------- --------------
TOTAL NET ASSETS (100.00%) $1,090,586,145
======= ==============
NOTES TO SCHEDULE OF INVESTMENTS
* 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.
(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:
<CAPTION>
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S OCTOBER 31,
Issuer, Description DATE COST NET ASSETS 1999
- ------------------------------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Bluestone Software, Inc. -
Preferred Stock 09-24-99 $1,449,999 0.49% $5,221,555
Buildnet, Inc. -
Common Stock 10-25-99 2,000,000 0.18 1,999,598
Commercialware, Inc. -
Common Stock 08-06-99 1,000,000 0.09 1,000,000
Digital Lava, Inc. -
Common Stock 02-18-99 100,000 0.00 46,876
Newpoint Technologies, Inc.-
Common Stock 03-24-98 480,000 0.04 480,000
Screaming Media.Net, Inc. -
Common Stock 10-05-99 1,739,360 0.16 1,739,360
Verisity Ltd. -
Preferred Stock 03-01-99 999,999 0.09 999,999
Westwind Media.com, Inc. -
Common Stock 12-14-98 500,000 0.11 1,250,000
Laser Medical Corp. -
Common Stock 01-12-98 50 0.00 50
Preferred Stock 01-12-98 500,000 0.05 500,000
----- -----------
1.21% $13,237,438
===== ===========
Parenthetical disclosure of a foreign country in the security description represents country of foreign issuer;
however, security is U.S. dollar denominated.
The percentage shown for each investment category is the total value of that category as a percentage
of the net assets of the Fund.
See notes to financial statements.
</TABLE>
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 October 31, 1999 assigned to the various country categories.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION FUND'S NET ASSETS
- ----------------------- -----------------
Canada 2.81%
Finland 2.38
Hong Kong 0.31
Ireland 0.57
Israel 0.44
Netherlands 2.39
Taiwan 1.27
United States 92.45
------
TOTAL INVESTMENTS 102.62%
======
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Technology Fund
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end
management investment company, registered under the Investment Company Act
of 1940. The Trust consists of four series: John Hancock Global Technology
Fund (the "Fund"), John Hancock Small Cap Growth Fund, John Hancock
Millennium Growth Fund and John Hancock 500 Index Fund. The other series of
the Trust are 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" 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. 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.
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 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 Fund had no borrowing activity
for the year ended October 31, 1999.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. These fees are included in
interest income. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear
the risk of delay of the loaned securities in recovery or even loss of
rights in the collateral should the borrower of the securities fail
financially. At October 31, 1999, the Fund loaned securities having a
market value of $153,170,088 collateralized by securities in the amount of
$159,695,736.
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-traded options
have minimal credit risk as the exchanges act as counterparties to each
transaction, and only present liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter
option contracts, the Fund will continuously monitor the creditworthiness
of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
Written option transactions for the year ended October 31, 1999 were as
follows:
CONTRACTS AMOUNT
--------- ---------
OUTSTANDING, BEGINNING OF PERIOD 150 $18,300
--------- ---------
OPTIONS WRITTEN 5,055 2,318,347
OPTIONS EXERCISED (5,205) (2,336,647)
--------- ---------
OUTSTANDING, END OF PERIOD -- $--
========= =========
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Adviser is responsible for managing the Fund's investment business
affairs and overseeing the investment activities of the sub-adviser. The
Adviser has a sub-investment management contract with American Fund
Advisors, Inc. (the "Sub-Adviser"), under which the Sub-Adviser, subject to
the review of the Trustees and the overall supervision of the Adviser,
provides the Fund with investment services and advice with respect to
investment transactions. Under the present investment management contract,
the Fund pays a monthly management fee to the Adviser, equivalent on an
annual basis, to the sum of (a) 0.85% of the first $100,000,000 of the
Fund's average daily net asset value; (b) 0.75% of the Fund's next
$700,000,000 of average daily net assets; and (c) 0.70% of the average
daily net asset value of the Fund in excess of $800,000,000. 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; (b) 40% of the investment advisory fee
received by the Adviser for the next $700,000,000 of average daily net
assets; and (c) 0.10% of the average daily net asset value of the Fund in
excess of $800,000,000. This breakpoint was added as of the close of
business on June 30, 1999. The Fund pays a monthly administrative fee at
the rate of $100,000 per annum to the Adviser for performance of
administrative services to the Fund.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the year ended
October 31, 1999, net sales charges received with regard to sales of Class
A shares amounted to $1,176,091. Out of this amount, $232,459 was retained
and used for printing prospectuses, advertising, sales literature and other
purposes, $689,551 was paid as sales commissions to unrelated broker-
dealers and $254,081 was paid as sales commissions to sales personnel of
Signator Investors, Inc. ("Signator Investors"), a related broker-dealer.
The Adviser's indirect parent, John Hancock Mutual Life Insurance Company
("JHMLICo"), is the indirect sole shareholder of Signator Investors.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.00% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in
part to defray its expenses related to providing distribution related
services to the Fund in connection with the sale of Class B shares. For the
year ended October 31, 1999 contingent deferred sales charges paid to JH
Funds amounted to $488,539.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market
value at the time of redemption or the original purchase cost of the shares
being redeemed. Proceeds from 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 year ended October 31, 1999, contingent deferred sales charges paid
to JH Funds amounted to $2,389.
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 0.30% 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. A maximum of 0.25% of such payments may be
service fees as defined by the Conduct Rules of the National Association of
Securities Dealers. Under the Conduct Rules, curtailment of a portion of
the Fund's 12b-1 payments could occur under certain circumstances.
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. Maureen R. Ford, Ms.
Anne C. Hodsdon and Mr. Richard S. Scipione are Trustees and/or officers of
the Adviser, and Mr. Barry J. Gordon is a director and officer of the Sub-
Adviser through December 31, 1999. The compensation of unaffiliated
Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer
for tax purposes their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Fund makes investments into
other John Hancock funds, as applicable, to cover its liability for the
deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset.
The deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. The
investment had no impact on the operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
period ended October 31, 1999, aggregated $702,001,305 and $341,487,910,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the year ended October 31, 1999.
The cost of investments owned at October 31, 1999 (excluding the corporate
savings account) for federal income tax purposes was $722,060,743. Gross
unrealized appreciation and depreciation of investments aggregated
$430,781,698 and $33,732,236, respectively, resulting in net unrealized
appreciation of $397,049,462.
NOTE D -
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 1999, the Fund has reclassified amounts
to reflect a decrease in accumulated net realized gain on investments of
$34,249,630, a decrease in accumulated net investment loss of $6,612,352
and an increase in capital paid-in of $27,637,278. This represents the
amount necessary to report these balances on a tax basis, excluding certain
temporary differences, as of October 31, 1999. Additional adjustments may
be needed in subsequent reporting periods. These reclassifications, which
have no impact on the net asset value of the Fund, are primarily
attributable to the treatment of net operating losses in the computation of
distributable income and capital gains under federal tax rules versus
generally accepted accounting principles, and the Fund's use of the tax
accounting practice known as equalization. The calculation of net
investment income per share in the financial highlights excludes these
adjustments.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Series Trust -
John Hancock Global Technology Fund
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the John Hancock Global
Technology Fund (the "Fund"), one of the portfolios constituting John
Hancock Series Trust, as of October 31, 1999, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the periods then ended and the
financial highlights for each of the three years in the period then ended.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audit. The
financial highlights for each of the indicated periods prior to the year
ended October 31, 1997 were audited by other auditors whose report dated
December 12, 1996 expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the
custodian and brokers, and other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial
position of the John Hancock Global Technology Fund portfolio of John
Hancock Series Trust at October 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two
years in the periods then ended and the financial highlights for each of
the three years in the period then ended, in conformity with generally
accepted accounting principles.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
December 3, 1999
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund during its taxable year ended
October 31, 1999.
The Fund has designated distributions to shareholders of $2,291,766 as
capital gain dividends.
With respect to the Fund's ordinary taxable income for the fiscal
year ended October 31, 1999, 0.28% of the distributions qualify for the
dividends received deduction available to corporations.
Shareholders will be mailed a 1999 U.S. Treasury Department
Form 1099-DIV in January 2000. This will reflect the tax character of
distributions for calendar year 1999.
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
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.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
8300A 10/99
12/99
