The latest report from your
Fund's management team
ANNUAL REPORT
Real Estate
Fund
OCTOBER 31, 2000
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS".]
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
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, President and
Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
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
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and Chief
Executive Officer, flush right next to second paragraph.]
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years,
the financial markets have brought investors back down to earth in 2000.
Rising interest rates and oil prices, the prospects of a slowing economy
and earnings fears all caught up with pricey growth stocks -- technology
in particular. A dramatic plunge in the spring and again in the fall
caused the major indexes to end October in negative territory for the
year to date. The tech-heavy NASDAQ Composite Index was hardest hit,
returning -17.19% year to date through October.
But there is a silver lining. Investors have finally turned their
attention to broader swaths of the market, including old economy stocks
in sectors like financials, health care and energy, that combined both
strong fundamentals and more attractive valuation levels. Since April,
less expensive value stocks have outperformed growth stocks.
Bonds also began to make a comeback as the year progressed and investors
grew more confident that the series of Fed rate hikes might be coming to
an end. Pockets of strength have emerged there, including municipal
bonds and longer-maturity Treasury bonds. The 30-year bond, for
instance, returned 13.53% year to date through October.
The market's shifts in leadership so far this year highlight one of the
key investment tenets that we can't emphasize enough: investing should
be a marathon, not a sprint. If your portfolio is diversified and you
have an up-to-date financial plan crafted with an investment
professional to meet your goals, it becomes easier to ride out the
market's short-term ups and downs. It could also provide you with a
greater chance of success over time.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY JAMES K. SCHMIDT, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
JAMES J. MCKELVEY, THOMAS FINUCANE AND THOMAS GOGGINS,
PORTFOLIO MANAGERS
[A 2" x 3" photo bottom right side of page of John Hancock Real Estate
Fund. Caption below reads "Fund management team members. Standing (l-r):
Jay McKelvey, Lisa Welch and Tom Finucane. Seated (l-r): Jim Schmidt and
Tom Goggins."]
John Hancock
Real Estate Fund
REITs boast strong performance despite market volatility
Technology stocks dominated most of 1999, their prices climbing into the
stratosphere and leaving almost all other stocks in their dust. But the
story changed in the spring, on fears that tech stocks had gotten too
expensive in view of a potential slowdown in earnings. Investors finally
pulled the rug out from under technology stocks and fled to
long-ignored, more attractively valued segments of the market that
looked like safer bets, including real estate. Technology stocks
remained decidedly out of favor and the market continued its bumpy ride
as signs grew that the economy was slowing in response to interest-rate
hikes in the first half of the period.
In spite of these turbulent market conditions, real estate investment
trusts (REITs), the Fund's primary focus, produced solid returns this
period. Not only did REITs benefit from anti-technology sentiment, but
real estate investments also carried attractive yields compared to the
broader market. Excellent fundamentals, such as strong rent growth and
balanced supply/demand ratios, also enhanced REIT performance.
"In spite of
these turbu-
lent market
conditions,
real estate
investment
trusts...
produced
solid
returns..."
Fund performance
For the year ended October 31, 2000, the John Hancock Real Estate Fund's
Class A shares posted a total return of 20.40% at net asset value,
compared with the 19.22% return of the average real estate fund,
according to Lipper, Inc.1 The Fund's Class B and Class C shares, which
were introduced on March 1, 2000, returned 18.19% and 18.19%,
respectively, at net asset value. 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. See pages six and seven for historical performance
information.
[Table at top left-hand column entitled "Top Five Holdings." The first
listing is Equity Office Properties Trust 6.5%, the second is Equity
Residential Properties Trust 5.3%, the third Simon Property Group 3.4%,
the fourth ProLogis Trust 3.2% and the fifth Apartment Investment &
Management Co. 3.1%. A note below the table reads "As a percentage of
net assets on October 31, 2000."]
"...office
REITs did
well and our
overweighting
...enhanced
Fund perfor-
mance."
Ongoing industry consolidation continued to help the Fund's performance.
Announced takeovers included Urban Shopping Centers and First Washington
Realty Trust, both of which we sold for a profit when their stocks got
close to their takeover prices. In the non-REIT category, lending
company Associates First Capital was acquired by Citigroup during the
period.
Strategy review
The Fund seeks long-term growth of capital with income as a secondary
goal by investing in securities of real estate and real-estate-related
companies, with REITs as a primary focus. REITs are companies that own,
operate and develop real estate and are specifically structured to pass
the income from property operations through to shareholders. We own a
diversified portfolio of REITs with a broad spectrum of specialties,
including office, hotel, apartment and retail REITs. We target companies
whose prices are undervalued compared to their growth prospects, that
can benefit from merger activity and that are located in areas of the
country with strong supply/demand characteristics. In addition, the
Fund usually retains a 5% to 10% stake in non-REITs, which gives us
exposure to the higher growth rates of companies mostly involved with
the single-family residential market.
[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 Avalonbay Communities followed by an up arrow with the phrase "Good
East Coast/West Coast apartment franchises." The second listing is
Equity Office Properties followed by an up arrow with phrase "Largest
office REIT has strong fundamentals." The third listing is Pinnacle
Holdings followed by a down arrow with the phrase "Stock hurt by telecom
sector downturn." A note below the table reads "See 'Schedule of
Investments,' Investment holdings are subject to change."]
On the rise: Apartment, office and retail REITs
Once again, office REITs did well and our overweighting in this segment
enhanced Fund performance. All the variables were in place: occupancy
remained high, new development was relatively modest, while demand
remained strong and rent growth continued. Growth was particularly
strong in booming markets like Boston, New York and California. As one
example, Spieker Properties, whose focus is West Coast office markets,
had a phenomenal year, and we began taking profits as its stock price
soared.
Apartment and retail REITs also did well this period; the same
fundamentals that helped office REITs also helped other REITs,
especially in the big-city hot spots. Apartment REITs continued to
benefit from soaring home prices and higher interest rates, which tend
to discourage new home buying and keep renters in place. California
apartment REIT Essex Property Trust boosted Fund performance, while on
the retail front, Pan Pacific Retail Properties was one of our better
performers.
[Bar chart at top of left hand column with the heading "Fund
Performance." Under the heading is a note that reads "For the year ended
October 31, 2000." The chart is scaled in increments of 5% with 0% at
the bottom and 25% at the top. The first bar represents the 20.40% total
return for John Hancock Real Estate Fund Class A. The second bar
represents the 18.19%* total return for John Hancock Real Estate Fund
Class B. The third bar represents the 18.19%* total return for John
Hancock Real Estate Fund Class C. The fourth bar represents the 19.22%
total return for Average real estate fund. A note below the chart reads
"Total returns for John Hancock Real Estate Fund are at net asset value
with all distributions reinvested. The average real estate fund is
tracked by Lipper, Inc.1 See the following two pages for historical
performance information. *From inception March 1, 2000 through October 31,
2000."]
Scaling back: Hotel REITs
Hotel REITs benefited from the strong economy, which allowed plenty of
discretionary income for travel and recreation. Urban hotels performed
particularly well this period, because development in many cities has
been highly restricted. However, because we believe that the economy
will continue to slow, we significantly scaled back the Fund's holdings
in these REITs during the period, taking a more defensive position.
While our underweighting in hotels held back our performance this year,
we believe our more cautious approach will prove prudent. The Fund's
only two hotel REITs by the end of the period were Starwood Hotels &
Resorts Worldwide and Host Marriott Corp., both of which focus on
top-quality properties.
Trouble with telecom
While overall Fund performance was very strong, we did have a few
disappointments. Most were from companies connected to the
telecommunications sector, which, like technology, fell out of favor in
the second half of the period. This hurt our stake in CAIS Internet,
which provides broadband Internet access to hotels and multi-family
properties; Allied Riser Communications, which does the same for
offices; and Pinnacle Holdings, which owns communications towers on
which it rents space to providers of wireless services.
"...we believe
the overall
environment
remains
favorable for
real estate
stocks."
Outlook
While we're optimistic about real estate's potential going forward, we
believe the economy's growth will continue to cool down, which could
have an impact in the near term. With that in mind, we plan to stay
underweighted in more economically sensitive areas such as hotels and
entertainment, and in companies whose stock prices appear overvalued.
We'll also be watching the trend in rent growth. REITs have two main
ways to increase their profits: raising rents and maximizing occupancy.
Since occupancy rates are already quite high, a slowdown in the economy
could translate to slower growth in revenues.
That said, we believe the overall environment remains favorable for real
estate stocks. Fundamentals are sound; supply continues to match demand,
and occupancy and rental levels are still favorable. We will continue to
search for good, attractively priced companies with capable management
teams. Rigorous company selection will always be our most important
strategy.
------------------------------------------------------------------------
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.
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 Real Estate 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 an up-front 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 an up-front sales charge of 1%
and a contingent deferred sales charge (maximum 1% declining to 0% after
one year).
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them. Please read your prospectus carefully for risks associated
with industry-segment investing, before you invest or send money.
CLASS A
For the period ended October 31, 2000
SINCE
ONE INCEPTION
YEAR (9/30/98)
--------- ---------
Cumulative Total Returns 14.37% 13.62%
Average Annual Total Returns(1) 14.37% 6.32%
CLASS B
For the period ended October 31, 2000
SINCE
INCEPTION
(3/1/00)
---------
Cumulative Total Return 13.19%
Average Annual Total Return(1, 2) 13.19%
CLASS C
For the period ended October 31, 2000
SINCE
INCEPTION
(3/1/00)
---------
Cumulative Total Return 16.01%
Average Annual Total Return(1, 2) 16.01%
Notes to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 1.35% (not
including 12b-1 fee) of the Fund's daily average net assets. Without the
limitation of expenses, the average annualized returns for the one-year
and since inception period for Class A shares would have been 7.13% and
(2.14%), respectively. Without the limitations of expenses the returns
since inception for Class B and Class C shares would have been 8.33% and
11.15%, respectively.
(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 Real Estate 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 and the
Morgan Stanley Real Estate Investment Trust (REIT) 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. The Morgan Stanley REIT Index is an unmanaged index
consisting of the most actively traded real estate investment trusts. It
is not possible to invest in an index. Past performance is not
indicative of future results.
Line chart with the heading John Hancock Real Estate 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 Standard & Poor's 500 Index and is equal to $14,413 as of
October 31, 2000. The second line represents the value of the
hypothetical $10,000 investment made in the John Hancock Real Estate
Fund on September 30, 1998, before sales charge, and is equal to $11,959
as of October 31, 2000. The third line represents the value of the same
hypothetical investment made in the John Hancock Real Estate Fund, after
sales charge, and is equal to $11,357 as of October 31, 2000. The fourth
line represents the Morgan Stanley REIT Index and is equal to $10,870 as
of October 31, 2000.
Line chart with the heading John Hancock Real Estate Fund Class B,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are four lines. The first line
represents the value of the hypothetical $10,000 investment made in the
John Hancock Real Estate Fund on March 1, 2000, before sales charge, and
is equal to $11,819 as of October 31, 2000. The second line represents
the Morgan Stanley REIT Index and is equal to $11,750 as of October 31,
2000. The third line represents the value of the same hypothetical
investment made in the John Hancock Real Estate Fund, after sales
charge, and is equal to $11,319 as of October 31, 2000. The fourth line
represents the Standard & Poor's 500 Index and is equal to $10,538 as of
October 31, 2000.
Line chart with the heading John Hancock Real Estate Fund Class C,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are four lines. The first line
represents the value of the hypothetical $10,000 investment made in the
John Hancock Real Estate Fund on March 1, 2000, before sales charge, and
is equal to $11,819 as of October 31, 2000. The second line represents
the Morgan Stanley REIT Index and is equal to $11,750 as of October 31,
2000. The third line represents the value of the same hypothetical
investment made in the John Hancock Real Estate Fund, after sales
charge, and is equal to $11,600 as of October 31, 2000. The fourth line
represents the Standard & Poor's 500 Index and is equal to $10,538 as of
October 31, 2000.
FINANCIAL STATEMENTS
John Hancock Funds -- Real Estate 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,
2000. 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, 2000
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $4,764,907) $4,693,341
Preferred stocks (cost - $60,258) 68,062
Corporate savings account 41,529
-----------------
4,802,932
Receivable for investments sold 214,360
Receivable for shares sold 72,105
Dividends receivable 7,414
Other assets 18
-----------------
Total Assets 5,096,829
-----------------
Liabilities:
Payable for investments purchased 145,420
Payable for shares repurchased 10,880
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 8,936
Accounts payable and accrued expenses 40,643
-----------------
Total Liabilities 205,879
-----------------
Net Assets:
Capital paid-in 4,835,117
Accumulated net realized gain on
investments 115,240
Net unrealized depreciation of
investments (63,762)
Undistributed net investment income 4,355
-----------------
Net Assets $4,890,950
=================
Net Asset Value Per Share:
(Based on net asset value and shares of beneficial interest outstanding
- unlimited number of shares authorized with no par value)
Class A - $3,251,746/318,359 $10.21
==============================================================
Class B - $1,342,140/131,507 $10.21
==============================================================
Class C - $297,064/29,107 $10.21
==============================================================
Maximum Offering Price Per Share
Class A* - ($10.21/95%) $10.75
==============================================================
Class C - ($10.21/99%) $10.31
==============================================================
* 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.
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
Year ended October 31, 2000
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $109) $183,648
Interest 7,639
-----------------
191,287
-----------------
Expenses:
Investment management fee - Note B 23,054
Distribution and service fee - Note B
Class A 6,059
Class B 7,216
Class C 1,408
Registration and filing fees 95,775
Custodian fee 89,316
Auditing fee 12,150
Printing 10,169
Transfer agent fee - Note B 9,420
Legal fees 6,073
Miscellaneous 997
Accounting and legal service fee - Note B 551
-----------------
Total Expenses 262,188
-----------------
Less Expense Reductions - Note B (208,596)
-----------------
Net Expenses 53,592
-----------------
Net Investment Income 137,695
-----------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 185,056
Change in net unrealized
appreciation/depreciation of
investments 19,550
-----------------
Net Realized and Unrealized Gain on
Investments 204,606
-----------------
Net Increase in Net Assets Resulting
from Operations $342,301
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, 1998(1) OCTOBER 31, 1999(2) OCTOBER 31, 2000
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $14,369 $37,831 $137,695
Net realized gain (loss) on
investments sold (6,163) 31,251 185,056
Change in net unrealized
appreciation/depreciation of
investments (3,823) (79,489) 19,550
----------------- ----------------- -----------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 4,383 (10,407) 342,301
----------------- ----------------- -----------------
Distributions to Shareholders:
Distributions from net investment income
Class A - ($0.1173, $0.3441 and
$0.7852, per share, respectively) (11,800) (34,900) (93,688)
Class B** - (none, none and
$0.2192, per share, respectively) -- -- (25,733)
Class C** - (none, none and
$0.2192, per share, respectively) -- -- (4,603)
Distributions from net realized gain
on investments sold
Class A - (none, none and
$0.5413, per share, respectively) -- -- (54,785)
----------------- ----------------- -----------------
Total Distributions to
Shareholders (11,800) (34,900) (178,809)
----------------- ----------------- -----------------
From Fund Share Transactions - Net: * 1,013,211 (221) 3,767,272
----------------- ----------------- -----------------
Net Assets:
Beginning of period -- 1,005,714 960,186
----------------- ----------------- -----------------
End of period (including
undistributed net investment
income of $2,489, $5,725 and
$4,355, respectively) $1,005,794 $960,186 $4,890,950
================= ================= =================
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment and foreign
currency gains, distributions paid to shareholders and any increase or
decrease in money shareholders invested in the Fund. The footnote
illustrates the number of Fund shares sold, reinvested and repurchased
during the last three periods, along with the corresponding dollar
value.
<CAPTION>
Statement of Changes in Net Assets (continued)
----------------------------------------------------------------------------------------------------------
*Analysis of Fund Share Transactions:
PERIOD ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, 1998(1) OCTOBER 31, 1999(2) OCTOBER 31, 2000
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 102,524 $1,025,004 484 $4,726 254,172 $2,539,407
Shares issued to shareholders in
reinvestment of distributions -- -- 50 494 3,514 36,708
-------- ---------- -------- ---------- -------- ----------
102,524 1,025,004 534 5,220 257,686 2,576,115
Less shares repurchased (1,199) (11,793) (522) (5,441) (40,664) (428,094)
-------- ---------- -------- ---------- -------- ----------
Net increase (decrease) 101,325 $1,013,211 12 ($221) 217,022 $2,148,021
======== ========== ======== ========== ======== ==========
CLASS B**
Shares sold -- -- -- -- 277,811 $2,844,947
Shares issued to shareholders in
reinvestment of distributions -- -- -- -- 2,110 22,193
-------- ---------- -------- ---------- -------- ----------
279,921 2,867,140
Less shares repurchased -- -- -- -- 148,414) (1,543,910)
-------- ---------- -------- ---------- -------- ----------
Net increase (decrease) -- -- -- -- 131,507 $1,323,230
======== ========== ======== ========== ======== ==========
CLASS C**
Shares sold -- -- -- -- 38,224 $389,361
Shares issued to shareholders in
reinvestment of distributions -- -- -- -- 429 4,510
-------- ---------- -------- ---------- -------- ----------
38,653 393,871
Less shares repurchased -- -- -- -- (9,546) (97,850)
-------- ---------- -------- ---------- -------- ----------
Net increase -- -- -- -- 29,107 $296,021
======== ========== ======== ========== ======== ==========
** Class B shares and Class C shares began operations on March 1, 2000.
(1) Class A shares began operations on September 30, 1998.
(2) Effective October 31, 1999, the fiscal period end changed from
December 31 to October 31.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, OCTOBER 31, OCTOBER 31,
1998(1) 1999(2) 2000
------------- ------------- -------------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $9.93 $9.48
------------- ------------- -------------
Net Investment Income(3) 0.14 0.37 0.52
Net Realized and Unrealized
Gain (Loss) on Investments (0.09) (0.48) 1.54
------------- ------------- -------------
Total From Investment
Operations 0.05 (0.11) 2.06
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.12) (0.34) (0.79)
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.54)
------------- ------------- -------------
Total Distributions to
Shareholders (0.12) (0.34) (1.33)
------------- ------------- -------------
Net Asset Value, End of
Period $9.93 $9.48 $10.21
============= ============= =============
Total Investment Return at
Net Asset Value(4) 0.47%(5) (1.11%)(5) 20.40%
Total Adjusted Investment
Return at Net Asset
Value(4,6) (1.60%)(5) (9.49%)(5) 13.16%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,006 $960 $3,252
Ratio of Expenses to Average
Net Assets 1.65%(7) 1.65%(7) 1.65%
Ratio of Adjusted Expenses
to Average Net Assets(8) 9.85%(7) 11.71%(7) 8.89%
Ratio of Net Investment
Income to Average Net
Assets 5.72%(7) 4.49%(7) 5.11%
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (2.48%)(7) (5.57%)(7) (2.13%)
Portfolio Turnover Rate 109% 345% 482%
Fee Reduction Per Share(3) $0.20 $0.83 $0.66
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indicated: net investment income,
gains (losses), distributions and total investment return of each class.
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.
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------
PERIOD ENDED
OCTOBER 31,
2000(1)
-------------
<S> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00
-------------
Net Investment Income(3) 0.30
Net Realized and Unrealized
Gain on Investments 0.13
-------------
Total From Investment
Operations 0.43
-------------
Less Distributions:
Dividends from Net
Investment Income (0.22)
-------------
Net Asset Value, End of
Period $10.21
=============
Total Investment Return at
Net Asset Value(4) 18.19%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 10.95%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,342
Ratio of Expenses to Average
Net Assets 2.35%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 9.59%(7)
Ratio of Net Investment
Income to Average Net
Assets 4.13%(7)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (3.11%)(7)
Portfolio Turnover Rate 482%
Fee Reduction Per Share(3) $0.66
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------
PERIOD ENDED
OCTOBER 31,
2000(1)
-------------
<S> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00
-------------
Net Investment Income(3) 0.24
Net Realized and Unrealized
Gain on Investments 0.19
-------------
Total From Investment
Operations 0.43
-------------
Less Distributions:
Dividends from Net
Investment Income (0.22)
-------------
Net Asset Value, End of
Period $10.21
=============
Total Investment Return at
Net Asset Value(4) 18.19%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 10.95%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $297
Ratio of Expenses to Average
Net Assets 2.35%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 9.59%(7)
Ratio of Net Investment
Income to Average Net
Assets 3.40%(7)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (3.84%)(7)
Portfolio Turnover Rate 482%
Fee Reduction Per Share(3) $0.66
(1) Class A shares, Class B shares and Class C shares began operations
on September 30, 1998, March 1, 2000 and March 1, 2000, respectively.
(2) Effective October 31, 1999, the fiscal year end changed from
December 31 to October 31.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Assumes dividend reinvestment and does not reflect the effect of
sales charges.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
October 31, 2000
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Real Estate Fund on October 31, 2000. It's divided into three
main categories: common stocks, preferred 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
Banks - Super Regional (0.93%)
FleetBoston Financial Corp. 1,200 $45,600
------------
Business Services - Misc. (0.75%)
Cendant Corp.* 2,000 24,000
Frontline Capital Group* 900 12,825
------------
36,825
------------
Computer - Services (0.73%)
CAIS Internet, Inc.* 2,500 10,547
CoStar Group, Inc.* 800 25,000
------------
35,547
------------
Finance - Consumer Loans (0.31%)
Household International, Inc. 300 15,094
------------
Finance - Services Misc. (3.45%)
CompuCredit Corp.* 300 9,263
Countrywide Credit Industries, Inc. 300 11,231
FINOVA Group, Inc. (The) 1,600 4,100
GreenPoint Financial Corp. 500 14,875
Metris Cos., Inc. 700 22,663
NextCard, Inc.* 4,400 33,550
Providian Financial Corp. 700 72,800
------------
168,482
------------
Mortgage Banking (1.72%)
Fannie Mae 700 53,900
Freddie Mac 500 30,000
------------
83,900
------------
Real Estate - Operations (1.90%)
Brookfield Properties Corp. (Canada) 500 7,656
CB Richard Ellis Services Inc.* 1,500 18,750
Insignia Financial Group, Inc.* 3,600 34,875
Security Capital Group, Inc. (Class B)* 400 7,625
St. Joe Co. (The) 1,200 24,225
------------
93,131
------------
REIT Equity - Apartments (15.24%)
Apartment Investment & Management Co. (Class A) 3,300 150,769
Archstone Communities Trust 5,700 134,306
Avalonbay Communities, Inc. 1,200 55,125
BRE Properties, Inc. (Class A) 1,000 31,625
Camden Property Trust 1,200 34,350
Cornerstone Realty Income Trust, Inc. 1,550 16,275
Equity Residential Properties Trust 5,500 258,844
Essex Property Trust, Inc. 600 31,200
Home Properties of New York, Inc. 700 19,031
United Dominion Realty Trust, Inc. 1,300 13,650
------------
745,175
------------
REIT Equity - Diversified (6.75%)
Bedford Property Investors, Inc. 1,100 21,656
Catellus Development Corp. 1,100 20,006
Colonial Properties Trust 1,400 34,387
Entertainment Properties Trust 3,000 33,188
National Golf Properties, Inc . 1,400 27,825
Trizec Hahn Corp. (Canada) 3,600 53,775
Vornado Realty Trust 4,000 139,250
------------
330,087
------------
REIT Equity - Hotels/Restaurants (3.95%)
Host Marriott Corp. 5,100 54,187
Starwood Hotels & Resorts Worldwide, Inc. 4,700 139,237
------------
193,424
------------
REIT Equity - Manufactured Home (0.56%)
Sun Communities, Inc. 900 27,338
------------
REIT Equity - Office Property (29.35%)
Alexandria Real Estate Equities, Inc. 800 27,100
Arden Realty, Inc. 2,700 64,800
Boston Properties Corp. 2,700 109,350
Brandywine Realty Trust 3,500 66,937
CarrAmerica Realty Corp. 1,500 44,344
Cousins Properties, Inc. 2,400 62,400
Crescent Real Estate Equities Co. 5,000 100,625
Duke-Weeks Realty Investment, Inc. 5,300 125,544
Equity Office Properties Trust 10,600 319,325
Great Lakes REIT, Inc. 1,400 23,713
Highwood Properties, Inc. 2,800 60,550
Koger Equity Inc. 800 12,750
Mack-Cali Realty Corp. 2,600 70,525
Parkway Properties Inc. 1,200 34,350
Prentiss Properties Trust 1,600 40,600
Prime Group Realty Trust 2,900 43,137
Reckson Associates Realty Corp. 3,000 67,875
Reckson Associates Realty Corp. (Class B) 900 20,756
SL Green Realty Corp. 1,330 35,661
Spieker Properties, Inc. 1,900 105,213
------------
1,435,555
------------
REIT Equity - Regional Mall (9.86%)
CBL & Associates Properties, Inc. 2,000 46,250
General Growth Properties, Inc. 2,800 82,600
Macerich Co. (The) 2,500 49,062
Mills Corp. 900 15,356
Rouse Co. (The) 3,500 86,406
Simon Property Group, Inc. 7,000 156,187
Taubman Centers, Inc. 1,700 18,594
Westfield America Inc. 2,000 28,000
------------
482,455
------------
REIT Equity - Shopping Centers (5.24%)
Chelsea GCA Realty, Inc. 800 25,800
Developers Diversified Realty Corp. 4,300 51,331
Federal Realty Investment Trust 890 17,133
Kimco Realty Corp. 2,200 88,550
New Plan Excel Realty Trust 1,200 14,775
Pan Pacific Retail Properties, Inc. 1,300 26,569
Realty Income Corp. 1,400 32,200
------------
256,358
------------
REIT Equity - Storage (4.38%)
PS Business Parkes, Inc. 1,680 44,100
Public Storage, Inc. 4,700 105,750
Shurgard Storage Centers, Inc. 1,100 24,956
Sovran Self Storage, Inc. 2,100 39,638
------------
214,444
------------
REIT Equity - Warehouse/Industries (9.73%)
AMB Property Corp. 2,700 63,450
Cabot Industrial Trust 600 11,325
CenterPoint Properties Corp. 1,900 84,431
EastGroup Properties, Inc. 1,200 24,450
First Industrial Realty Trust, Inc. 1,600 49,400
Liberty Property Trust 3,300 87,244
ProLogis Trust 7,400 155,400
------------
475,700
------------
Retail/Wholesale - Building Products (0.35%)
Georgia Pacific Corp. 600 16,988
------------
Telecommunication - Services (0.76%)
Allied Riser Communications Corp.* 1,800 5,738
Pinnacle Holdings, Inc.* 2,000 31,500
------------
37,238
------------
TOTAL COMMON STOCKS
(Cost $4,764,907) (95.96%) 4,693,341
--------- ------------
PREFERRED STOCK
REIT Equity - Storage (1.39%)
Public Storage, Inc. 3,000 68,062
------------
TOTAL PREFERRED STOCK
(Cost $60,258) (1.39%) 68,062
--------- ------------
SHORT-TERM INVESTMENTS
Corporate Savings Account
Brown Brothers Harriman Trust Co., Ltd.
Daily Interest Savings Account Current
Rate 6.06% 41,529
------------
TOTAL SHORT-TERM INVESTMENTS (0.85%) 41,529
--------- ------------
TOTAL INVESTMENTS (98.20%) 4,802,932
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (1.80%) 88,018
--------- ------------
TOTAL NET ASSETS (100.00%) $4,890,950
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
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 -- Real Estate Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Real Estate Fund (the "Fund") is a diversified series of
John Hancock Series Trust (the "Trust"), an open-end management
investment company, registered under the Investment Company Act of 1940.
The investment objective is to seek long-term growth of capital through
investing in equity securities of real estate companies.
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.
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, resulting from changes in the
exchange rate.
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,which are accrued, as applicable.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are determined at the fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution and service fees 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 are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a
specific fund will be 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.
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 borrowing.
In addition, a commitment fee is charged to each fund 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 under
the line of credit during the year ended October 31, 2000.
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 or, in the case of some
foreign securities, on the date thereafter when the Fund identifies 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 dividends and 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with accounting principles generally accepted in the United
States of America incorporates estimates made by management in
determining the reported amount of assets, liabilities, revenues and
expenses of the Fund. Actual results could differ from these estimates.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a monthly management
fee to the Adviser equivalent, on an annual basis, to the sum of of
0.80% of the Fund's average daily net asset value.
The Adviser has agreed to limit the Fund's expenses (excluding 12b-1
fees) to 1.35% of the Fund's average daily net assets, at least until
February 28, 2001. Accordingly, the expense reduction amounted to
$208,596 for the year ended October 31, 2000. The Adviser reserves the
right to terminate this limitation in the future.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. To reimburse JH Funds
for the services it provides as distributor of shares of the Fund, the
Fund has adopted a Distribution Plan with respect to Class A, Class B
and Class C pursuant to Rule 12b-1 under the Investment Company Act of
1940. Accordingly, the Fund makes payments to JH Funds, 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.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $6,681 with regard to sales of Class A shares. Of this
amount, $138 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $135 was paid as sales
commissions to unrelated broker-dealers and $6,408 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 Life Insurance Company ("JHLICo"), is the indirect sole
shareholder of Signator Investors. Effective May 1, 2000, all Class C
shares retail purchases are assessed a 1.00% up-front sales charge.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $2,722 with regard to sales of Class C shares. Of this
amount, $2,722 was paid as sales commissions to unrelated
broker-dealers.
Class B shares which are redeemed within six years of purchase are
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. Class C shares which are redeemed within one year of purchase
will be subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original purchase
cost of the shares being redeemed. Proceeds from the CDSC are paid to JH
Funds and are used in whole or in part to defray its expenses for
providing distribution related services to the Fund in connection with
the sale of Class B and Class C shares. For the year ended October 31,
2000, CDSCs received by JH Funds amounted to $1,914 for Class B sales
and none for Class C sales.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo.
The Fund pays monthly 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
year was at an annual rate of less than 0.02% of the average net assets
of the Fund.
The Adviser owns 100,000 shares of beneficial interest of the Fund. Mr.
Stephen L. Brown and Ms. Maureen R. Ford are directors and/or officers
of the Adviser and/or its affiliates, as well as Trustees of the Fund.
The compensation of unaffiliated Trustees is borne by the Fund. The
unaffiliated Trustees may elect to defer for tax purposes their receipt
of this compensation under the John Hancock Group of Funds Deferred
Compensation Plan. The Fund makes investments into other John Hancock
funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. The
Deferred Compensation Plan investments 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 year ended October 31, 2000, aggregated $17,030,475 and
$13,390,406, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the year
ended October 31, 2000.
The cost of investments owned at October 31, 2000 (including short-term
investments) for federal income tax purposes was $4,921,870. Gross
unrealized appreciation and depreciation of investments aggregated
$167,848 and $328,315, respectively, resulting in net unrealized
depreciation of $160,467.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 2000, the Fund has reclassified
amounts to reflect a decrease in accumulated net realized gain on
investments of $39,888, a decrease in accumulated net investment income
of $15,041 and an increase in capital paid-in of $54,929. This
represents the amount necessary to report these balances on a tax basis,
excluding certain temporary difference, as of October 31, 2000.
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 Real Estate
Investment Trusts in 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 (loss) per share
in the financial highlights excludes these adjustments.
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
John Hancock Series Trust
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the John Hancock Real Estate
Fund (the "Fund") (a series of John Hancock Series Trust) as of October
31, 2000, the related statements of operations for the year then ended,
the statements of changes in net assets for the periods ended December
31, 1998, October 31, 1999 and October 31, 2000, and the financial
highlights for each of the periods ended December 31, 1998, October 31,
1999 and October 31, 2000. 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 auditing standards. Those
standards generally accepted in the United States of America. 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 at October 31, 2000 by correspondence
with the custodian and brokers; where replies were not received from
brokers, we performed other auditing procedures. 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the
Fund at October 31, 2000, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated
periods, in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
December 12, 2000
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund for its fiscal period
ended October 31, 2000.
The Fund has designated distributions to shareholders of $3,383 as
capital gain dividends.
With respect to dividends paid by the Fund for the fiscal year ended
October 31, 2000, 41.26% of the distributions qualify for the
dividends-received deduction available to corporations.
Shareholders will be mailed a 2000 U.S. Treasury Department Form
1099-DIV in January of 2001. This will reflect the tax character of all
distributions for calendar year 2000.
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.]
John Hancock Funds, Inc.
Member NASD
101 Huntington Avenue
Boston, MA 02199-7603
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of the shareholders of the John Hancock
Real Estate Fund. It is not authorized for distribution to prospective
investors unless it is preceded or accompanied by the current prospectus,
which details charges, investment objectives and operating policies.
[A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper."]
0500A 10/00
12/00
The latest report from your
Fund's management team
ANNUAL REPORT
500 Index
Fund
OCTOBER 31, 2000
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS".]
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
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, President and
Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment 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, President and Chief
Executive Officer, flush right next to second paragraph.]
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years,
the financial markets have brought investors back down to earth in 2000.
Rising interest rates and oil prices, the prospects of a slowing economy
and earnings fears all caught up with pricey growth stocks -- technology
in particular. A dramatic plunge in the spring and again in the fall
caused the major indexes to end October in negative territory for the
year to date. The tech-heavy NASDAQ Composite Index was hardest hit,
returning -17.19% year to date through October.
But there is a silver lining. Investors have finally turned their
attention to broader swaths of the market, including old economy stocks
in sectors like financials, health care and energy, that combined both
strong fundamentals and more attractive valuation levels. Since April,
less expensive value stocks have outperformed growth stocks.
Bonds also began to make a comeback as the year progressed and investors
grew more confident that the series of Fed rate hikes might be coming to
an end. Pockets of strength have emerged there, including municipal
bonds and longer-maturity Treasury bonds. The 30-year bond, for
instance, returned 13.53% year to date through October.
The market's shifts in leadership so far this year highlight one of the
key investment tenets that we can't emphasize enough: investing should
be a marathon, not a sprint. If your portfolio is diversified and you
have an up-to-date financial plan crafted with an investment
professional to meet your goals, it becomes easier to ride out the
market's short-term ups and downs. It could also provide you with a
greater chance of success over time.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY ROGER HAMILTON, PORTFOLIO MANAGER
[A 2" x 3" photo bottom middle of page of John Hancock 500 Index Fund.
Caption below reads "Roger Hamilton."]
John Hancock
500 Index Fund
Muted results disguise sea change within large-cap market
On the surface, results for the large-company Standard & Poor's 500
Index suggested a sea of calm during the past year, with a small gain of
6.08%. But even this seemingly placid 12-month performance couldn't mask
the churning going on beneath the surface as early-year favorites turned
into late-period disappointments and vice versa. In the parlance of Wall
Street, the period marked a significant "sector rotation," in which the
darlings of the "New Economy" were routinely dismissed in favor of more
defensive "Old Economy" companies. From mid-March through the end of the
period, waves of investors stampeded out of the rapidly growing
technology and telecommunications stocks and gravitated toward companies
with a reputation for providing predictable and stable earnings growth.
What prompted the change in course? Rising interest rates and more
subdued economic growth, which in turn muted corporate profitability and
earnings growth. Adding to that list of worries were the sagging
European currency and skyrocketing oil prices, both of which were
expected to be a drag on corporate profitability.
"Nowhere was
the market's
volatility
more evident
than in the
technology
sector..."
Performance and strategy review
For the year ended October 31, 2000, John Hancock 500 Index Fund Class R
shares had a total return of 5.77% at net asset value. The average S&P
500 Index objective fund had a total return 5.48%, according to Lipper,
Inc. Historical performance information can be found on pages six and
seven.
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 aid, hamper index
Nowhere was the market's volatility more evident than in the technology
sector, which soared to record heights early in 2000 only to come
tumbling back to earth by the end of the period. Despite that, some
high-profile technology stocks made the biggest contribution to the S&P
500 Index's performance on a capitalization-weighted basis during the
year, even though most had given back part of their early-year gains by
the end of October 2000. Networking giant Oracle was the single largest
contributor to the Index's performance, with a gain of more than 150%
for the year. Immediately behind that were EMC, the leading maker of
computer data-storage devices for large systems, and Internet-switching
gear maker Cisco Systems, which posted gains of more than 140% and 45%,
respectively. On an absolute basis, two of the Index's best performers
were software applications companies Network Appliance (up 543%) and
Siebel Systems (up 282%).
[Table at top left-hand column entitled "Top Five Holdings." The first
listing is General Electric 4.2%, the second is Cisco Systems 2.9%, the
third Microsoft 2.8%, the fourth Exxon Mobil 2.4% and the fifth Intel
2.3%. A note below the table reads "As a percentage of net assets on
October 31, 2000."]
"...groups
that bounced
back during
the course
of the year
were
financials
and health
care."
[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 Oracle followed by an up arrow with the phrase "E-commerce explosion
lifts demand for software." The second listing is Duke Energy followed
by an up arrow with phrase "Surging energy prices drive profit growth."
The third listing is Sprint Corp. followed by a down arrow with the
phrase "Pricing and competitive pressures take toll." A note below the
table reads "See 'Schedule of Investments,' Investment holdings are
subject to change."]
Ironically, the technology sector also played the role of "spoiler" for
the S&P 500 Index with a few of the group's best-known companies ending
the period as bottom dwellers. Microsoft, for example, swooned amid
industry-wide fears about lackluster demand for personal computers --
for which the company provides the software -- and the company's
continuing antitrust battle with the government. Lucent Technologies
faced a widening menu of woes during the year, including
lower-than-expected earnings and falling market share in some business
lines.
Communications stocks also posted large losses as a group during the
year. Pricing pressures and stiffening competition continued to dog the
nation's largest long-distance companies, forcing them to cut costs and
increasingly rely on new revenue sources. These competitive pressures
clearly hurt Sprint Corp., which was down roughly 65%. The company also
faced doubts about its ability to go it alone after its attempt to merge
with WorldCom was abandoned in early summer. WorldCom itself, plus
industry bellwether and market leader AT&T and "baby bell" GTE all were
major detractors from the Index's performance.
Other leaders and laggards
Higher oil and natural gas prices, coupled with a search for stable
investments in a turbulent stock market, helped make the utility sector
the S&P 500 Index's top-performing sector during the period. Duke
Energy, for example, was up more than 58% during the year. Energy stocks
-- such as Exxon Mobil, Schlumberger and Anadarko Petroleum -- made
significant contributions to performance.
Two other groups that bounced back during the course of the year were
financials and health care. American International Group, Citigroup and
Morgan Stanley Dean Witter represented the best performers in the
financial group. They were buoyed by expectations that interest rates
had stopped rising and by a wave of merger and acquisition activity.
Within health care, a growing demand for stocks with predictable and
stable earnings helped boost the price of drug companies Warner-Lambert,
Merck, Eli Lilly and others.
[Bar chart at top of left hand column with the heading "Fund
Performance." Under the heading is a note that reads "For the year ended
October 31, 2000." The chart is scaled in increments of 2% with 0% at
the bottom and 6% at the top. The first bar represents the 5.77% total
return for John Hancock 500 Index Fund Class R. The second bar
represents the 5.48% 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
See the following two pages for historical performance information."]
The Index's laggards were a mixed bunch. Armstrong Holdings, maker of
interior finishing products such as floor and ceiling materials, was the
worst absolute performer during the year, falling 92% during the year.
The company suffered from a significant shortfall in sales and earnings
growth versus expectations. Insulator maker Owens-Illinois filed for
bankruptcy in October in response to a flood of asbestos lawsuits filed
against the company. Legal trouble also tormented electrical connector
and component maker Thomas & Betts Corp., which was flattened by
deteriorating financial results and by the rating agency Standard &
Poor's decision to put the company on credit watch.
"...the market
appears to
have adjusted
to the slow-
ing earnings
growth..."
Outlook
In our view, the market appears to have adjusted to the slowing earnings
growth that typically accompanies a slowing economy. As long as the
economy avoids a recession, which we believe it will over the near term,
we think that corporate earnings and stock prices have room to move
higher, although perhaps at a reduced rate than we've enjoyed over the
past several years. But no matter what the direction of the market, 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, as the
past year has illustrated, S&P 500 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 manager through the
end of the Fund's period discussed in this report. Of course, the manager's
views are subject to change as market and other conditions warrant.
A LOOK AT PERFORMANCE
The table on the right shows the cumulative total returns and the
average annual total returns 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 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 October 31, 2000
SINCE
ONE INCEPTION
YEAR (8/18/99)
---------- ----------
Cumulative Total Returns 5.77% 8.31%
Average Annual Total Returns(1) 5.77% 6.86%
Note to Performance
(1) The Adviser has agreed to limit the management fee to 0.10% of the
Fund's average daily net assets and John Hancock Funds agreed to limit
the distribution fees to 0.10% of the Fund's average daily net assets.
In addition, the Adviser agreed to limit other Fund's expenses to 0.20%
of the Fund's daily average net assets. Without the limitation of
expenses, the average annual total return for the one-year period and
since inception would have been 5.03% and 6.04%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The chart on the right shows 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 -- 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 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 $10,970 as of October 31, 2000. The second line represents
the Standard & Poor's 500 Index and is equal to $10,831 as of October
31, 2000.
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,
2000. 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, 2000
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $46,298,017) $50,047,801
Joint repurchase agreement
(cost - $1,668,000) 1,668,000
-----------------
51,715,801
Cash 231
Receivable for futures variation margin 36,250
Cash segregated for futures contracts 93,750
Dividends receivable 32,838
Receivable from John Hancock Advisers,
Inc. and affiliates - Note B 12,327
Interest receivable 305
Other assets 370
-----------------
Total Assets 51,891,872
-----------------
Liabilities:
Payable for shares repurchased 3,454
Accounts payable and accrued expenses 55,912
-----------------
Total Liabilities 59,366
-----------------
Net Assets:
Capital paid-in 48,969,223
Accumulated net realized loss on
investments and financial futures
contracts (1,280,848)
Net unrealized appreciation of
investments and financial futures
contracts 3,809,599
Undistributed net investment income 334,532
-----------------
Net Assets $51,832,506
=================
Net Asset Value and
Maximum Offering Price Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - unlimited
number of shares authorized with no par value)
Class R -- $51,832,506/4,806,987 $10.78
==============================================================
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 year ended October 31, 2000
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $2,450) $505,750
Interest 86,893
-----------------
592,643
-----------------
Expenses:
Investment management fee - Note B 160,104
Distribution and service fee - Note B 114,360
Custodian fee 134,494
Registration and filing fees 52,654
Auditing fee 20,000
Miscellaneous 12,314
Printing 9,323
Accounting and legal services fee - Note B 8,693
Legal fees 2,715
Trustees' fees 1,798
Transfer agent fee - Note B 1,619
Interest expense 1,556
-----------------
Total Expenses 519,630
-----------------
Less: Expense reductions - Note B (336,308)
-----------------
Net Expenses 183,322
-----------------
Net Investment Income 409,321
-----------------
Realized and Unrealized Gain (Loss)
on Investments
and Financial Futures Contracts:
Net realized loss on investments sold (860,743)
Net realized loss on financial futures
contracts (382,170)
Change in net unrealized appreciation
(depreciation) of investments 2,977,783
Change in net unrealized appreciation
(depreciation) of financial futures
contracts 30,561
-----------------
Net Realized and Unrealized Gain on
Investments and Financial Futures
Contracts 1,765,431
-----------------
Net Increase in Net Assets Resulting
from Operations $2,174,752
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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 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 repurchased during the last two periods, along with
the corresponding dollar value.
Statement of Changes in Net Assets
-------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
OCTOBER 31, 1999(1) OCTOBER 31, 2000
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $72,758 $409,321
Net realized loss on investments sold (10,141) (1,242,913)
Change in net unrealized
appreciation (depreciation) of
investments 801,255 3,008,344
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 863,872 2,174,752
----------------- -----------------
Distributions to Shareholders:
Distributions from net investment income
Class R - (none and $0.0415 per
share, respectively) -- (147,547)
Distributions from net realized gain on
investments sold and financial
futures contracts
Class R - (none and $0.0078 per
share, respectively) -- (27,794)
----------------- -----------------
Total Distributions to
Shareholders -- (175,341)
----------------- -----------------
From Fund Share Transactions - Net: * 35,546,627 13,422,596
----------------- -----------------
Net Assets:
Beginning of period -- 36,410,499
----------------- -----------------
End of period (including
accumulated net investment income
of $72,758 and $334,532,
respectively) $36,410,499 $51,832,506
================= =================
* Analysis of Fund Share Transactions:
PERIOD ENDED YEAR ENDED
OCTOBER 31, 1999(1) OCTOBER 31, 2000
--------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------- ----------------- ----------------- -----------------
CLASS R
Shares sold 3,662,239 $36,603,448 4,177,032 $45,326,903
Shares issued to shareholders in
reinvestment of distributions -- -- 5,943 62,406
----------------- ----------------- ----------------- -----------------
3,662,239 36,603,448 4,182,975 45,389,309
Less shares repurchased (106,785) (1,056,821) (2,931,442) (31,966,713)
----------------- ----------------- ----------------- -----------------
Net increase 3,555,454 $35,546,627 1,251,533 $13,422,596
================= ================= ================= =================
(1) The Fund commenced operations on August 18, 1999.
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:
--------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
OCTOBER 31, 1999(1) OCTOBER 31, 2000
----------------- ----------------
<S> <C> <C>
CLASS R
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.24
----------------- ----------------
Net Investment Income(2) 0.02 0.10
Net Realized and Unrealized
Gain on Investments and
Financial Futures Contracts 0.22 0.49
----------------- ----------------
Total from Investment Operations 0.24 0.59
----------------- ----------------
Less Distributions:
Dividends from Net
Investment Income -- (0.04)
Distributions from Net Realized
Gain on Investments Sold and
Financial Futures Contracts -- (0.01)
----------------- ----------------
Total Distributions -- (0.05)
----------------- ----------------
Net Asset Value, End of
Period $10.24 $10.78
================= ================
Total Investment Return at
Net Asset Value(3) 2.40%(4) 5.77%
Total Adjusted Investment
Return at Net Asset Value(3,5) 2.17%(4) 5.03%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $36,410 $51,833
Ratio of Expenses to Average
Net Assets 0.40%(6) 0.40%
Ratio of Adjusted Expenses
to Average Net Assets(7) 1.55%(6) 1.14%
Ratio of Net Investment
Income to Average Net
Assets 1.03%(6) 0.89%
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(7) (0.12%)(6) 0.15%
Portfolio Turnover Rate 1% 17%
Fee Reduction Per Share(2) $0.02 $0.08
(1) The Fund began operations on August 18, 1999.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of
sales charges.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the period shown.
(6) Annualized.
(7) 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, 2000
-----------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the 500 Index Fund on October 31, 2000. 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 (0.23%)
Interpublic Group of Companies, Inc. (The) 1,225 $52,598
Omnicom Group, Inc. 707 65,221
------------
117,819
------------
Aerospace (1.11%)
Boeing Co. (The) 3,571 242,158
General Dynamics Corp. 790 56,534
Goodrich (B.F.) Co. (The) 404 16,539
Lockheed Martin Corp. 1,699 60,909
Northrop Grumman Corp. 285 23,940
Raytheon Co. (Class B) 1,353 46,256
United Technologies Corp. 1,863 130,061
------------
576,397
------------
Automobile/Trucks (0.83%)
Cummins Engine Co., Inc. 165 5,610
Dana Corp. 594 13,179
Delphi Automotive Systems Corp. 2,228 34,952
Eaton Corp. 290 19,738
Ford Motor Co. 7,533 196,800
General Motors Corp. 2,135 132,637
PACCAR, Inc. 305 12,829
Ryder System, Inc. 237 4,681
Visteon Corp. 520 9,197
------------
429,623
------------
Banks - United States (4.95%)
AmSouth Bancorp. 1,499 20,892
Bank of America Corp. 6,537 314,185
Bank of New York Co., Inc. 2,938 169,119
Bank One Corp. 4,599 167,863
BB&T Corp. 1,591 50,713
Chase Manhattan Corp. 5,208 236,964
Comerica, Inc. 623 37,575
Fifth Third Bancorp 1,850 95,044
First Union Corp. 3,919 118,795
Firstar Corp. 3,813 75,068
FleetBoston Financial Corp. 3,591 136,458
Huntington Bancshares, Inc. 1,000 14,375
KeyCorp 1,713 42,290
Mellon Financial Corp. 1,943 93,750
Morgan (J.P.) & Co., Inc. 633 104,761
National City Corp. 2,417 51,663
Northern Trust Corp. 883 75,386
Old Kent Financial Corp. 545 15,090
PNC Bank Corp. 1,150 76,906
Regions Financial Corp. 871 20,523
SouthTrust Corp. 669 21,659
State Street Corp. 642 80,083
Summit Bancorp. 692 25,950
SunTrust Banks, Inc. 1,186 57,892
Synovus Financial Corp. 1,131 24,387
U.S. Bancorp 2,968 71,789
Union Planters Corp. 536 18,124
Wachovia Corp. 809 43,686
Wells Fargo Co. 6,551 303,393
------------
2,564,383
------------
Beverages (2.30%)
Anheuser-Busch Cos., Inc. 3,605 164,929
Brown-Forman Corp. 273 16,619
Coca-Cola Co. (The) 9,857 595,116
Coca-Cola Enterprises, Inc. 1,665 30,594
Coors (Adolph) Co. (Class B) 147 9,362
PepsiCo, Inc. 5,743 278,177
Seagram Co. Ltd. (The) (Canada) 1,737 99,226
------------
1,194,023
------------
Broker Services (1.05%)
Bear Stearns Cos., Inc. 428 25,947
Lehman Brothers Holdings, Inc. 966 62,307
Merrill Lynch & Co., Inc. 3,197 223,790
Paine Webber Group, Inc. 588 41,895
Schwab (Charles) Corp. 5,494 192,977
------------
546,916
------------
Building (0.46%)
Armstrong Holdings, Inc.* 161 463
Black & Decker Corp. 331 12,454
Centex Corp. 234 8,658
Danaher Corp. 564 35,602
Fluor Corp. 301 10,535
Georgia-Pacific Group 679 18,248
Kaufman & Broad Home Corp. 192 5,712
Louisiana-Pacific Corp. 415 3,527
Masco Corp. 1,819 33,993
Pulte Corp. 161 5,363
Sherwin-Williams Co. 647 14,032
Snap-on, Inc. 234 5,982
Stanley Works (The) 343 9,132
Vulcan Materials Co. 402 16,884
Weyerhauser Co. 876 41,117
Willamette Industries, Inc. 435 15,796
------------
237,498
------------
Business Services - Misc. (0.38%)
Block, H&R, Inc. 390 13,918
Cendant Corp.* 2,890 34,680
Convergys Corp.* 612 26,660
Dun & Bradstreet Corp. 645 16,972
Equifax, Inc. 562 19,389
Paychex, Inc. 1,481 83,954
------------
195,573
------------
Chemicals (0.54%)
Air Products & Chemicals, Inc. 912 34,029
Dow Chemical Co. 2,699 82,657
Eastman Chemical Co. 306 13,120
Engelhard Corp. 508 10,604
FMC Corp.* 121 9,196
Grace (W. R.) & Co.* 267 1,018
Great Lakes Chemical Corp. 208 6,942
Hercules, Inc. 428 7,838
PPG Industries, Inc. 692 30,880
Praxair, Inc. 629 23,430
Rohm & Haas Co. 862 25,914
Sigma-Aldrich Corp. 321 11,476
Union Carbide Corp. 537 23,091
------------
280,195
------------
Computers (17.35%)
Adaptec, Inc.* 395 6,246
Adobe Systems, Inc. 952 72,411
America Online, Inc.* 9,188 463,351
Apple Computer, Inc.* 1,293 25,294
Autodesk, Inc. 229 5,052
Automatic Data Processing, Inc. 2,496 163,020
BMC Software, Inc.* 982 19,947
Cabletron Systems, Inc.* 733 19,883
Ceridian Corp.* 578 14,450
Cisco Systems, Inc.* 28,239 1,521,376
Citrix Systems, Inc.* 739 16,350
Compaq Computer Corp. 6,765 205,724
Computer Associates International, Inc. 2,352 74,970
Computer Sciences Corp.* 669 42,147
Compuware Corp.* 1,452 11,434
Dell Computer Corp.* 10,295 303,702
Electronic Data Systems Corp. 1,856 87,116
EMC Corp.* 8,677 772,795
First Data Corp. 1,613 80,852
Gateway, Inc.* 1,282 66,164
Hewlett-Packard Co. 7,936 368,528
IMS Health, Inc. 1,183 27,948
International Business Machines Corp. 7,007 690,189
Lexmark International Group, Inc. (Class A)* 507 20,787
Mercury Interactive Corp.* 318 35,298
Microsoft Corp.* 20,941 1,442,311
NCR Corp.* 382 16,474
Network Appliance, Inc.* 1,243 147,917
Novell, Inc.* 1,292 11,628
Oracle Corp.* 22,403 739,299
Palm, Inc.* 2,248 120,409
Parametric Technology Corp.* 1,083 13,334
PeopleSoft, Inc.* 1,113 48,572
Sabre Holdings Corp. 514 17,187
Sapient Corp.* 472 16,786
Seagate Technology, Inc.* 911 63,656
Siebel Systems, Inc.* 1,658 173,986
Sun Microsystems, Inc.* 6,313 699,954
SYNAVANT, Inc.* 61 278
Unisys Corp.* 1,246 15,886
VERITAS Software Corp.* 1,600 225,625
Yahoo! Inc.* 2,186 128,154
------------
8,996,490
------------
Consumer Products - Misc. (0.01%)
American Greetings Corp. (Class A) 256 4,656
------------
Containers (0.08%)
Ball Corp. 116 4,074
Bemis Co., Inc. 211 5,460
Crown Cork & Seal Co., Inc. 501 4,572
Owens-Illinois, Inc.* 581 3,450
Pactiv Corp.* 674 7,077
Sealed Air Corp.* 333 16,026
------------
40,659
------------
Cosmetics & Personal Care (0.40%)
Alberto Culver Co. (Class B) 222 7,451
Avon Products, Inc. 945 45,832
Gillette Co. 4,189 146,091
International Flavors & Fragrances, Inc. 398 6,666
------------
206,040
------------
Diversified Operations (2.15%)
Crane Co. 242 6,337
Du Pont (E.I.) De Nemours & Co. 4,149 188,261
Fortune Brands, Inc. 624 18,369
Honeywell International, Inc. 3,188 171,554
Illinois Tool Works, Inc. 1,201 66,731
ITT Industries, Inc. 350 11,397
Johnson Controls, Inc. 342 20,392
Loews Corp. 392 35,647
Minnesota Mining & Manufacturing Co. 1,573 151,991
National Service Industries, Inc. 162 3,311
Textron, Inc. 571 28,800
TRW, Inc. 494 20,748
Tyco International Ltd. 6,941 393,468
------------
1,117,006
------------
Electronics (10.58%)
Advanced Micro Devices, Inc.* 1,240 28,055
Agilent Technologies, Inc.* 1,803 83,501
Altera Corp.* 1,588 65,009
American Power Conversion Corp.* 774 10,014
Analog Devices, Inc.* 1,414 91,910
Applied Materials, Inc.* 3,228 171,487
Broadcom Corp. (Class A)* 884 196,579
Conexant Systems, Inc.* 907 23,865
Emerson Electric Co. 1,700 124,844
General Electric Co. 39,415 2,160,435
Grainger (W.W.), Inc. 374 11,945
Intel Corp. 26,718 1,202,310
KLA-Tencor Corp.* 740 25,021
Linear Technology Corp. 1,238 79,928
LSI Logic Corp.* 1,234 40,568
Maxim Integrated Products, Inc.* 1,125 74,602
Micron Technology, Inc. 2,247 78,083
Molex, Inc. 781 42,174
Motorola, Inc. 8,677 216,383
National Semiconductor Corp.* 707 18,382
Novellus Systems, Inc.* 522 21,369
Parker-Hannifin Corp. 446 18,453
PerkinElmer, Inc. 196 23,422
Rockwell International Corp. 737 28,973
Sanmina Corp.* 602 68,816
Solectron Corp.* 2,394 105,336
Tektronix, Inc. 191 13,609
Teradyne, Inc.* 690 21,562
Texas Instruments, Inc. 6,878 337,452
Thomas & Betts Corp. 231 3,494
Xilinx, Inc.* 1,308 94,748
------------
5,482,329
------------
Fiber Optics (0.58%)
JDS Uniphase Corp.* 3,724 303,273
------------
Finance (4.56%)
American Express Co. 5,300 318,000
Associates First Capital Corp. (Class A) 2,899 107,625
Capital One Financial Corp. 781 49,301
Charter One Financial, Inc. 836 19,176
CIT Group, Inc. (The) (Class A) 1,044 18,205
Citigroup, Inc. 17,902 942,093
Franklin Resources, Inc. 969 41,512
Golden West Financial Corp. 629 35,263
Household International, Inc. 1,880 94,587
MBNA Corp. 3,390 127,337
Morgan Stanley Dean Witter & Co. 4,477 359,559
Price (T. Rowe) Associates, Inc. 483 22,610
Providian Financial Corp. 568 59,072
Stilwell Financial, Inc. 894 40,062
USA Education, Inc. 618 34,531
Washington Mutual, Inc. 2,144 94,336
------------
2,363,269
------------
Food (1.22%)
Archer-Daniels-Midland Co. 2,516 27,676
Campbell Soup Co. 1,676 49,023
ConAgra, Inc. 2,121 45,336
General Mills, Inc. 1,136 47,428
Heinz (H.J.) Co. 1,383 58,000
Hershey Foods Corp. 544 29,546
Kellogg Co. 1,614 40,955
Nabisco Group Holdings Corp. 1,299 37,509
Quaker Oats Co. 528 43,065
Ralston Purina Group 1,222 29,633
Sara Lee Corp. 3,460 74,606
Unilever NV, American Depositary Receipts (ADR)
(Netherlands) 2,275 115,598
Wrigley (W.M.) Jr. Co. 452 35,793
------------
634,168
------------
Furniture (0.02%)
Leggett & Platt, Inc. 782 12,805
------------
Household (0.09%)
Maytag Corp. 309 8,845
Newell Rubbermaid, Inc. 1,061 20,358
Springs Industries, Inc. 71 1,673
Tupperware Corp. 230 3,939
Whirlpool Corp. 284 12,354
------------
47,169
------------
Instruments - Scientific (0.24%)
Millipore Corp. 184 9,660
PE Corp.-PE Biosystems Group 829 96,993
Thermo Electron Corp.* 690 20,010
------------
126,663
------------
Insurance (3.63%)
Aetna, Inc. 562 32,491
AFLAC, Inc. 1,055 77,081
Allstate Corp. (The) 2,922 117,610
American General Corp. 1,005 80,902
American International Group, Inc. 9,208 902,384
Aon Corp. 1,015 42,059
Chubb Corp. (The) 695 58,684
CIGNA Corp. 627 76,463
Cincinnati Financial Corp. 641 23,557
Conseco, Inc. 1,294 8,977
Hartford Financial Services Group, Inc. (The) 893 66,473
Jefferson Pilot Corp 410 28,187
Lincoln National Corp. 759 36,717
Marsh & McLennan Cos., Inc. 1,080 141,210
MBIA, Inc. 391 28,421
MGIC Investment Corp. 423 28,817
Progressive Corp. 292 28,689
SAFECO Corp. 508 12,287
St. Paul Cos., Inc. 889 45,561
Torchmark Corp. 508 16,923
UnumProvident Corp. 958 27,064
------------
1,880,557
------------
Leisure (1.10%)
Brunswick Corp. 347 6,745
Carnival Corp. (Class A) 2,345 58,185
Disney (Walt) Co. (The) 8,295 297,065
Eastman Kodak Co. 1,225 54,972
Harley-Davidson, Inc. 1,204 58,018
Harrah's Entertainment, Inc.* 464 13,282
Hasbro, Inc. 686 7,374
Hilton Hotels Corp. 1,466 13,927
Marriott International, Inc. (Class A) 955 38,678
Mattel, Inc. 1,697 21,955
Polaroid Corp. 179 1,801
------------
572,002
------------
Machinery (0.31%)
Briggs & Stratton Corp. 86 3,069
Caterpiller Tractor, Inc. 1,376 48,246
Cooper Industries, Inc. 371 14,191
Deere & Co. 934 34,383
Dover Corp. 808 34,289
Ingersoll-Rand Co. 641 24,198
------------
158,376
------------
Media (2.45%)
Clear Channel Communications, Inc.* 2,330 139,946
Comcast Corp.* 3,600 146,700
Dow Jones & Co., Inc. 348 20,488
Gannett Co., Inc. 1,049 60,842
Harcourt General, Inc. 291 16,311
Knight-Ridder, Inc. 301 15,125
McGraw-Hill Cos., Inc. (The) 775 49,745
Meredith Corp. 202 6,413
New York Times Co. (Class A) 664 24,402
Time Warner, Inc. 5,266 399,742
Tribune Co. 1,226 45,439
Viacom, Inc. (Class B)* 6,035 343,241
------------
1,268,394
------------
Medical (11.51%)
Abbott Laboratories 6,168 325,747
Allergan, Inc. 523 43,965
ALZA Corp.* 460 37,231
American Home Products Corp. 5,188 329,438
Amgen, Inc.* 4,092 237,080
Bard (C.R.), Inc. 202 8,459
Bausch & Lomb, Inc. 212 8,175
Baxter International, Inc. 1,163 95,584
Becton, Dickinson & Co. 1,008 33,768
Biogen, Inc.* 589 35,450
Biomet, Inc. 707 25,585
Boston Scientific Corp.* 1,617 25,771
Bristol-Myers Squibb Co. 7,821 476,592
Cardinal Health, Inc. 1,106 104,793
Guidant Corp.* 1,221 64,637
HCA-The Healthcare Co. 2,221 88,701
HEALTHSOUTH Corp.* 1,535 18,420
Humana, Inc.* 660 8,002
Johnson & Johnson 5,533 509,728
King Pharmaceuticals, Inc.* 660 29,576
Lilly (Eli) & Co. 4,495 401,741
Manor Care, Inc.* 407 6,792
McKesson HBOC, Inc. 1,131 31,739
MedImmune, Inc.* 835 54,588
Medtronic, Inc. 4,767 258,908
Merck & Co., Inc. 9,155 823,378
Pall Corp. 491 10,587
Pfizer, Inc. 25,125 1,085,086
Pharmacia Corp. 5,164 284,020
Quintiles Transnational Corp.* 460 6,411
Schering-Plough Corp. 5,830 301,338
St. Jude Medical, Inc. * 335 18,425
Tenet Healthcare Corp.* 1,253 49,259
UnitedHealth Group, Inc. 639 69,891
Watson Pharmaceutical, Inc.* 407 25,463
Wellpoint Health Networks, Inc.* 250 29,234
------------
5,963,562
------------
Metal (0.43%)
Alcan Aluminium Ltd. (Canada) 1,331 42,010
Alcoa, Inc. 3,446 98,857
Barrick Gold Corp. (Canada) 1,575 21,066
Bethlehem Steel Corp.* 527 1,515
Freeport-McMoran Copper & Gold, Inc.* 608 4,826
Homestake Mining Co. 1,047 4,319
Inco, Ltd. (Canada)* 723 11,161
Newmont Mining Corp. 669 9,073
Phelps Dodge Corp. 313 14,633
Placer Dome, Inc. (Canada) 1,303 10,587
Timken Co. (The) 241 3,389
Worthington Industries, Inc. 341 3,261
------------
224,697
------------
Mortgage Banking (0.95%)
Countrywide Credit Industries, Inc. 454 16,997
Fannie Mae 4,009 308,693
Freddie Mac 2,766 165,960
------------
491,650
------------
Office (0.16%)
Avery Dennison Corp. 444 22,422
Deluxe Corp. 288 6,498
Pitney Bowes, Inc. 1,016 30,162
Xerox Corp. 2,653 22,385
------------
81,467
------------
Oil & Gas (6.36%)
Amerada Hess Corp. 358 22,196
Anadarko Petroleum Corp. 967 61,936
Apache Corp. 486 26,882
Ashland, Inc. 278 9,104
Baker Hughes, Inc. 1,316 45,237
Burlington Resources, Inc. 858 30,888
Chevron Corp. 2,597 213,279
Coastal Corp. (The) 853 64,348
Columbia Energy Group 316 22,732
Conoco, Inc. (Class B) 2,478 67,371
Devon Energy Corp. 508 25,603
El Paso Energy Corp. 924 57,923
Enron Corp. 2,940 241,264
Exxon Mobil Corp. 13,864 1,236,496
Halliburton Co. 1,773 65,712
Kerr-McGee Corp. 375 24,492
McDermott International, Inc. 240 2,325
Nabors Industries, Inc.* 581 29,573
Occidental Petroleum Corp. 1,468 29,177
Phillips Petroleum Co. 1,014 62,615
Rowan Cos., Inc.* 375 9,445
Royal Dutch Petroleum Co. (ADR) (Netherlands) 8,533 506,647
Schlumberger, Ltd. 2,268 172,652
Sunoco, Inc. 347 10,388
Texaco, Inc. 2,194 129,583
Tosco Corp. 575 16,459
Transocean Sedco Forex, Inc. 838 44,414
Unocal Corp. 966 32,965
USX - Marathon Group 1,242 33,767
------------
3,295,473
------------
Paper & Paper Products (0.54%)
Boise Cascade Corp. 228 6,541
Fort James Corp. 815 26,844
International Paper Co. 1,924 70,466
Kimberly-Clark Corp. 2,142 141,372
Mead Corp. (The) 408 11,806
Potlatch Corp. 113 3,786
Temple-Inland, Inc. 203 9,084
Westvaco Corp. 401 11,429
------------
281,328
------------
Pollution Control (0.11%)
Allied Waste Industries, Inc.* 783 7,243
Waste Management, Inc. 2,474 49,480
------------
56,723
------------
Printing - Commercial (0.02%)
Donnelley (R.R.) & Sons 485 10,428
------------
Retail (5.56%)
Albertson's, Inc. 1,684 39,890
AutoZone, Inc.* 507 13,594
Bed Bath & Beyond, Inc.* 1,125 29,039
Best Buy Co., Inc.* 823 41,304
Circuit City Stores-Circuit City Group 817 10,825
Consolidated Stores Corp.* 443 5,261
Costco Wholesale Corp.* 1,779 65,156
CVS Corp. 1,555 82,318
Darden Restaurants, Inc. 486 10,935
Dillard's, Inc. 372 3,906
Dollar General Corp. 1,308 20,274
Federated Department Stores, Inc.* 827 26,929
Gap, Inc. (The) 3,383 87,324
Genuine Parts Co. 696 14,834
Home Depot, Inc. (The) 9,216 396,288
Kmart Corp.* 1,910 11,341
Kohl's Corp.* 1,312 71,094
Kroger Co.* 3,286 74,140
Limited, Inc. (The) 1,717 43,354
Longs Drug Stores Corp. 150 3,281
Lowe's Cos., Inc. 1,523 69,582
May Department Stores 1,265 33,206
McDonald's Corp. 5,256 162,936
Nordstrom, Inc. 518 8,515
Office Depot, Inc.* 1,216 10,108
Penney (J. C.) Co., Inc. 1,041 12,167
RadioShack Corp. 739 44,063
Reebok International Ltd.* 226 4,873
Safeway, Inc.* 1,978 108,172
Sears, Roebuck & Co. 1,364 40,552
Staples, Inc.* 1,807 25,750
Starbucks Corp.* 744 33,248
SUPERVALU, Inc. 527 8,103
SYSCO Corp. 1,326 69,201
Target Corp. 3,621 100,030
Tiffany & Co. 578 24,673
TJX Cos., Inc. 1,164 31,719
Toys R Us, Inc.* 860 14,781
Tricon Global Restaurants, Inc.* 580 17,400
Walgreen Co. 4,019 183,367
Wal-Mart Stores, Inc. 17,773 806,450
Wendy's International, Inc. 452 9,831
Winn-Dixie Stores, Inc. 560 10,780
------------
2,880,594
------------
Rubber - Tires & Misc. (0.03%)
Cooper Tire & Rubber Co. 289 3,161
Goodyear Tire & Rubber Co. (The) 622 11,507
------------
14,668
------------
Shoes & Related Apparel (0.08%)
Nike, Inc. (Class B) 1,073 42,853
------------
Soap & Cleaning Preparations (1.10%)
Clorox Co. 934 41,680
Colgate-Palmolive Co. 2,286 134,325
Ecolab, Inc. 510 19,986
Procter & Gamble Co. (The) 5,205 371,832
------------
567,823
------------
Steel (0.05%)
Allegheny Technologies, Inc. 324 6,561
Nucor Corp. 323 11,204
USX-U.S. Steel Group, Inc. 353 5,626
------------
23,391
------------
Telecommunications (6.97%)
ADC Telecommunications, Inc.* 3,072 65,664
Andrew Corp.* 323 8,499
AT&T Corp. 14,947 346,584
Avaya, Inc.* 1,107 14,875
CenturyTel, Inc. 559 21,521
Comverse Technology, Inc.* 621 69,397
Corning, Inc. 3,510 268,515
Global Crossing Ltd. (Bermuda)* 3,504 82,782
Lucent Technologies, Inc. 13,289 309,800
Nextel Communications, Inc. (Class A)* 3,030 116,466
Nortel Networks Corp. (Canada) 11,887 540,859
QUALCOMM, Inc.* 2,965 193,049
Qwest Communications International, Inc.* 6,609 321,363
Scientific-Atlanta, Inc. 634 43,389
Sprint Corp. 3,520 89,760
Sprint PCS* 3,694 140,834
Tellabs, Inc.* 1,632 81,498
Verizon Communications 10,816 625,300
WorldCom, Inc.* 11,432 271,510
------------
3,611,665
------------
Textile (0.05%)
Liz Claiborne, Inc. 212 9,010
Russell Corp. 130 2,080
VF Corp. 456 12,454
------------
23,544
------------
Tobacco (0.66%)
Philip Morris Cos., Inc. 8,962 328,233
UST, Inc. 646 16,312
------------
344,545
------------
Transport (0.58%)
AMR Corp.* 597 19,552
Burlington Northern Santa Fe Corp. 1,609 42,739
CSX Corp. 871 22,047
Delta Air Lines, Inc. 487 23,011
FedEx Corp.* 1,134 53,139
Navistar International Corp.* 236 7,803
Norfolk Southern Corp. 1,526 21,555
Southwest Airlines Co. 1,984 56,544
Union Pacific Corp. 986 46,219
US Airways Group, Inc.* 267 10,079
------------
302,688
------------
Utilities (4.77%)
AES Corp.* 1,818 102,717
ALLTEL Corp. 1,256 80,933
Ameren Corp. 546 21,704
American Electric Power Co., Inc. 1,281 53,162
BellSouth Corp. 7,458 360,315
Cinergy Corp. 632 19,355
CMS Energy Corp. 482 13,014
Consolidated Edison, Inc. 844 29,698
Constellation Energy Group, Inc. 596 24,846
CP&L, Energy, Inc. 635 25,598
Dominion Resources, Inc. 947 56,406
DTE Energy Co. 568 20,519
Duke Energy Corp. 1,465 126,631
Dynegy, Inc. (Class A) 1,232 57,057
Eastern Enterprises 108 6,952
Edison International 1,297 30,966
Entergy Corp. 887 33,983
Exelon Corp. 1,287 77,381
FirstEnergy Corp. 910 23,546
Florida Progress Corp. 392 20,849
FPL Group, Inc. 707 46,662
GPU, Inc. 483 15,969
KeySpan Corp. 534 18,790
Niagara Mohawk Holdings, Inc.* 638 10,208
NICOR, Inc. 183 6,462
ONEOK, Inc. 116 4,596
Peoples Energy Corp. 140 4,813
PG&E Corp. 1,535 41,349
Pinnacle West Capital Corp. 337 14,638
PPL Corp. 576 23,724
Public Service Enterprise Group, Inc. 853 35,400
Reliant Energy, Inc. 1,170 48,336
SBC Communications, Inc. 13,488 778,089
Sempra Energy 812 16,798
Southern Co. 2,581 75,817
TXU Corp. 1,051 38,953
Williams Cos., Inc. 1,762 73,674
Xcel Energy, Inc. 1,350 34,509
------------
2,474,419
------------
TOTAL COMMON STOCKS
(Cost $46,298,017) (96.56%) 50,047,801
------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.22%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. -- Dated 10-31-00, due
11-01-00 (Secured by U.S. Treasury
Bonds, 6.000% due 02-15-26 and 9.125%
due 05-15-18) -- Note A 6.56% $1,668 $1,668,000
------------
TOTAL SHORT-TERM INVESTMENTS (3.22%) 1,668,000
--------- ------------
TOTAL INVESTMENTS (99.77%) 51,715,801
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.23%) 116,705
--------- ------------
TOTAL NET ASSETS (100.00%) $51,832,506
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
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 500 Index Fund (the "Fund") is a diversified series of John
Hancock Series Trust, an open-end management investment company
registered under the Investment Company Act of 1940. The investment
objective of the Fund is to provide investment results that correspond
to the total return performance of the Standard & Poor's 500 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, 2000. 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.
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 transaction. Aggregate cash balances are invested in one or
more large 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.
EXPENSES The majority of the expenses are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a
specific fund will be 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.
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 borrowing.
In addition, a commitment fee is charged to each fund based on the
average daily unused portion of the line of credit and is allocated
among the participating funds. The average daily loan balance during the
period for which loans were outstanding amounted to $4,050,500. The
weighted average interest rate was 7.03%. Interest expense paid under
the line of credit amounted to $1,556. There was no outstanding
borrowing under the line of credit on October 31, 2000.
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 were no securities loaned as of October 31, 2000.
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 is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin,"
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange on which it trades. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market
price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market," are recorded by
the Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities.
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.
The Fund had the following open financial futures contracts at October 31, 2000:
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
---------- -------------- -------- ------------
DEC 00 5 S&P 500 LONG $59,815
===========
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.
For federal income tax purposes, the Fund has $892,139 of capital loss
carryforwards available, to the extent provided by regulations, to
offset future net realized capital gains. To the extent such
carryforwards are used by the Fund, no capital gain distributions will
be made. The carryforwards expire as follows: October 31, 2008 --
$892,139.
DIVIDENDS, INTEREST AND DISTRIBUTIONS 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 identifies 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 dividends and 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with accounting principles generally accepted in the United
States of America incorporates estimates made by management in
determining the reported amount of assets, liabilities, revenues and
expenses of the Fund. Actual results could differ from these estimates.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a monthly management
fee to the Adviser 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 assets, at least until February 28, 2001.
Accordingly, the reduction in the management fee amounted to $114,360
for the year ended October 31, 2000. The Adviser has also agreed to
limit other Fund's expenses (excluding the management fee and 12b-1fee),
to 0.20% of the Fund's average daily net assets, at least until February
28, 2001. Accordingly, the expense reduction amounted to $153,332 for
the year ended October 31, 2000.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. To reimburse JH Funds
for the services it provides as distributor of shares of the Fund, the
Fund has adopted a Distribution Plan with respect to Class R pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Accordingly, the
Fund makes payments to JH Funds at an annual rate not to exceed 0.25% of
Class R average daily net assets, to reimburse JH Funds for its
distribution and service costs. JH Funds has agreed to limit the
distribution (12b-1) fee to 0.10% of the Fund's average daily net
assets, at least until February 28, 2001. Accordingly, the reduction in
the distribution and service fee amounted to $68,616 for the year ended
October 31, 2000. Up to 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 JHLICo.
The Fund pays monthly 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
year was at an annual rate of less than 0.02% of the average net assets
of the Fund.
The Adviser owns 1,331,524 shares of beneficial interest of the Fund.
Mr. Stephen L. Brown and Ms. Maureen R. Ford are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the
Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. The
Deferred Compensation Plan investments 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 year ended October 31, 2000, aggregated $19,812,357 and
$7,303,662, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the year
ended October 31, 2000.
The cost of investments owned at October 31, 2000 (including short-term
investments) for federal income tax purposes was $48,294,903. Gross
unrealized appreciation and depreciation of investments aggregated
$8,516,823 and $5,095,925, respectively, resulting in net unrealized
appreciation of $3,420,898.
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, 2000, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted
in the United States of America. 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
auditing standards generally accepted in the United States of America
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, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 8, 2000
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, 2000.
100.00% of the distributions qualify for the dividends received
deduction available to corporations.
The Fund has designated distributions to shareholders of $20,068 as
capital gain dividend.
Shareholders will be mailed a 2000 U.S. Treasury Department Form
1099-DIV in January of 2001. This will reflect the tax character of all
distributions for calendar year 2000.
NOTES
John Hancock Funds -- 500 Index Fund
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.]
John Hancock Funds, Inc.
Member NASD
101 Huntington Avenue
Boston, MA 02199-7603
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
Bulk Rate
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investors unless it is preceded or accompanied by the current prospectus,
which details charges, investment objectives and operating policies.
[A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper."]
1100A 10/00
12/00
The latest report from your
Fund's management team
ANNUAL REPORT
Small Cap
Growth Fund
OCTOBER 31, 2000
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS".]
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
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, President and Chief Executive Officer
William L. Braman
Executive Vice President and Chief Investment 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, President and Chief
Executive Officer, flush right next to second paragraph.]
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years,
the financial markets have brought investors back down to earth in 2000.
Rising interest rates and oil prices, the prospects of a slowing economy
and earnings fears all caught up with pricey growth stocks -- technology
in particular. A dramatic plunge in the spring and again in the fall
caused the major indexes to end October in negative territory for the
year to date. The tech-heavy NASDAQ Composite Index was hardest hit,
returning -17.19% year to date through October.
But there is a silver lining. Investors have finally turned their
attention to broader swaths of the market, including old economy stocks
in sectors like financials, health care and energy, that combined both
strong fundamentals and more attractive valuation levels. Since April,
less expensive value stocks have outperformed growth stocks.
Bonds also began to make a comeback as the year progressed and investors
grew more confident that the series of Fed rate hikes might be coming to
an end. Pockets of strength have emerged there, including municipal
bonds and longer-maturity Treasury bonds. The 30-year bond, for
instance, returned 13.53% year to date through October.
The market's shifts in leadership so far this year highlight one of the
key investment tenets that we can't emphasize enough: investing should
be a marathon, not a sprint. If your portfolio is diversified and you
have an up-to-date financial plan crafted with an investment
professional to meet your goals, it becomes easier to ride out the
market's short-term ups and downs. It could also provide you with a
greater chance of success over time.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY BERNICE S. BEHAR, CFA, PORTFOLIO MANAGEMENT TEAM LEADER,
AND ANURAG PANDIT, CFA, PORTFOLIO MANAGER
[A 2" x 3" photo bottom middle of page of John Hancock Small Cap Growth
Fund. Caption below reads "Fund management team leader Bernice Behar."]
John Hancock
Small Cap Growth Fund
Growth stocks start strong but fall from favor
as technology stumbles
Small-cap growth stocks started the fiscal year last November in a blaze
of glory. Driven by high-growth technology and telecom stocks that held
investors' undivided attention, the tech-heavy NASDAQ Composite Index
soared to new highs. But by March, rising interest rates and earnings
concerns sparked a sharp correction and an about-face in market
sentiment. Internet and related companies were the first to fall.
Another blow came in the early fall when bellwether telecom company
Nokia announced disappointing earnings due to a slowdown in wireless
handset sales, dashing investors' overly optimistic projections for
2000. This sent the telecom sector swooning as the ripple effect on
related companies became clear. As a result of the tech downturn,
investors focused more on market segments such as health care, financial
and energy stocks, and value stocks replaced growth stocks as the place
to be. But the broad market was still volatile as the economy slowed and
companies of all stripes reported earnings disappointments. Even with
the distress in the second half of the fiscal year, the Fund's benchmark
index, the Russell 2000 Growth Index, still returned 16.16% for the year
ended October 31, 2000, well ahead of the 6.08% return of the Standard &
Poor's 500 Index.
"...tech and
telecom
stocks still
provided us
with some of
our best
results."
Fund performance
Strong first-half performance helped John Hancock Small Cap Growth Fund
outperform its benchmark and produce good absolute results. For the year
ended October 31, 2000, the Fund's Class A, Class B and Class C shares
posted total returns of 21.69%, 20.79% and 20.83%, respectively, at net
asset value. That compared with the 38.47% return of the average
small-cap growth fund, according to Lipper, Inc.1 Class I shares, which
were introduced on December 7, 1999, returned 1.48%. 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. Historical performance
information can be found on pages six and seven.
[Table at top left-hand column entitled "Top Five Stock Holdings." The
first listing is LifePoint Hospitals 1.4%, the second is Province
Healthcare 1.3%, the third Avocent 1.3%, the fourth Corporate Executive
Board 1.3% and the fifth Elantec Semiconductor 1.3%. A note below
the table reads "As a percentage of net assets on October 31, 2000."]
"...we pared
our technol-
ogy stake."
We suspect that our relative underperformance was because a number of
our peers held on to more of the stocks that had recently graduated from
small-cap to mid-cap status on their strong performance. In contrast, we
typically sell companies once they grow too big for our small-cap focus.
Mid-cap companies did the best overall during this period, producing
some of the best relative earnings growth.
[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 Avocent followed by an up arrow with the phrase "Switch equipment
company benefits from strong server market." The second listing is
Corporate Executive Board followed by an up arrow with phrase "Strong,
steady performer." The third listing is Radio One followed by a down
arrow with the phrase "Market-share leader struggles in depressed
sector." A note below the table reads "See 'Schedule of Investments,'
Investment holdings are subject to change."]
Technology helps
Despite the group's downturn, tech and telecom stocks still provided us
with some of our best results. This was due in part to the sector's
strong first-half results, and in part from good individual stock
picking. For instance, even though many Internet software companies were
hit hard by a slowdown in demand for Internet services, we found
opportunities in other areas of software development. These included
Micromuse, Interwoven and Advent Software -- all software companies
with very specific niches. Telecommunications semiconductor companies
Elantec and Exar also bucked the trend and continued to do very well
throughout the telecom sector's correction. Several of our
top-performing tech stocks also were boosted by acquisitions or mergers
during the year, including Aspect Development, which was bought by i2;
National Computer, which was bought by Pearson Plc; Apex, which merged
with Cybex to become Avocent; and Network Solutions, which was purchased
by VeriSign.
Advertising-related companies hit hard
With the Internet advertising model proving not to work and dot-coms
starting to fail, our worst-performing stocks were Internet companies
whose business models depended on advertising spending, and Internet
infrastructure or advertising-related companies. We sold many of these
during the year. Some big detractors were Jupiter Media Metrix, Accrue
Software, 24/7 and Viant. This tougher environment also impacted many of
our media and broadcast companies whose advertising revenue from
struggling Internet companies shrank. One example was Citadel
Communications, a radio broadcaster in mid-sized cities. Within these
groups, we've narrowed our focus to companies we believe have the best
prospects, like broadcaster Radio One, and wireless communications
tower company SBA Communications.
[Bar chart at top of left hand column with the heading "Fund
Performance." Under the heading is a note that reads "For the year ended
October 31, 2000." The chart is scaled in increments of 10% with 0% at
the bottom and 40% at the top. The first bar represents the 21.69% total
return for John Hancock Small Cap Growth Fund Class A. The second bar
represents the 20.79% total return for John Hancock Small Cap Growth
Fund Class B. The third bar represents the 20.83% total return for John
Hancock Small Cap Growth Fund Class C. The fourth bar represents the
1.40%* total return for John Hancock Small Cap Growth Fund Class I. The
fifth bar represents the 38.47% total return for Average small-cap
growth 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 growth fund is tracked
by Lipper, Inc.1 See the following two pages for historical performance
information. *From inception December 7, 1999 through October 31,
2000."]
Health care and energy help
As the period progressed and questions arose about the strength of user
demand across all technology and telecom subsectors in the face of a
slowing global economy, we pared our technology stake. We put the
proceeds to work in other sectors where we felt the relative earnings
growth potential appears more certain for now. These included health
care, which grew to an overweighted 24% of the Fund. A big piece of our
stake is in biotechnology companies, where a string of good news -- from
the completion of the Human Genome Project, to a flood of new products,
increased spending and a favorable capital markets environment -- bodes
well for the group. Our biotech companies served us well on balance in
this period, including CV Therapeutics, COR Therapeutics, NPS
Pharmaceuticals and Alkermes, all of whose stocks rose so much that
we've taken some profits.
In addition to biotech, we have built out our weighting across a number
of health-care industries, including medical device companies such as
Wilson Greatbatch Technologies; distributors such as AmeriSource which
are benefiting from firm drug pricing; and rural hospital companies such
as LifePoint Hospitals and Province Healthcare. Their results have
improved, and their stock prices too, through a combination of
aggressive management of the hospitals they run and positive pricing
trends.
With rising oil prices and a pickup in exploration, our 10% stake in
energy stocks also served us well, including Lone Star Technologies and
Pride International.
"...we are
open to
mining ideas
from any
segment of
the econ-
omy..."
A look ahead
After the above-average returns of the last several years, we have not
been surprised to see the markets -- and especially technology stocks --
come back to earth. Even though the economy appears to be slowing to a
more moderate pace of growth, we remain confident in our ability to find
good small companies with accelerating and sustainable earnings growth,
dominant positions and strong, competent management. While many of those
candidates will continue to come from the broad technology category, we
are open to mining ideas from any segment of the economy, as long as the
companies meet our strict investment criteria.
-------------------------------------------------------------------------
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 a discussion of 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 an up-front 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 an
up-front sales charge of 1% and a contingent deferred sales charge
(maximum 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 October 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------ ------- ---------
Cumulative Total Returns 15.57% 114.14% 328.05%
Average Annual Total Returns 15.57% 16.45% 17.14%
CLASS B
For the period ended October 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- -------
Cumulative Total Returns 15.79% 115.28% 585.80%
Average Annual Total Returns 15.79% 16.57% 21.23%
CLASS C
For the period ended October 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
------ ---------
Cumulative Total Returns 18.61% 59.59%
Average Annual Total Returns 18.61% 21.34%
CLASS I(1)
For the period ended October 31, 2000
SINCE
INCEPTION
(12/7/99)
---------
Cumulative Total Return 1.48%
Average Annual Total Return 1.48%(2)
Notes to Performance
(1) After the close of business on December 10, 1999, John Hancock
Special Equities Fund Class Y shares merged into John Hancock
Small Cap Growth Fund Class I shares. Class I shares are available
for certain institutional investors.
(2) Not annualized.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The chart on the right shows 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 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, 1990, before sales
charge, and is equal to $68,580 as of October 31, 2000. The second line
represents the Russell 2000 Index and is equal to $48,632 as of October
31, 2000. The third line represents the Russell 2000 Growth Index and is
equal to $43,922 as of October 31, 2000.
Assuming all distributions were reinvested for the period indicated, the
chart below shows the value of a $10,000 investment in the Fund's Class
A and Class C shares, and the value of a $250,000 investment in the
Fund's Class I shares, as of October 31, 2000. Performance of the
classes will vary based on the difference in sales charges paid by
shareholders investing in the different classes and the fee structure of
those classes. Past performance is not indicative of future results.
Class A Class C* Class I+
at $10,000 at $10,000 at $250,000
----------------------------------------------------------------------------
Inception Date 8/22/91 6/1/98 12/7/99
----------------------------------------------------------------------------
Without Sales Charge $45,050 $16,120 $253,690
----------------------------------------------------------------------------
With Maximum Sales Charge $42,805 $15,959 N/A
----------------------------------------------------------------------------
Russell 2000 Growth Index $27,912 $12,393 $262,640
----------------------------------------------------------------------------
Russell 2000 Index $31,713 $11,232 $276,979
----------------------------------------------------------------------------
* No contingent deferred sales charge applicable.
+ After the close of business on December 10, 1999, John Hancock Special
Equities Fund Class Y shares merged into John Hancock Small Cap Growth
Fund Class I shares.
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,
2000. 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, 2000
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $1,509,021,588) $1,907,893,147
Joint repurchase agreement
(cost - $73,654,000) 73,654,000
Corporate savings account 167
-----------------
1,981,547,314
Receivable for investments sold 43,477,487
Receivable for shares sold 1,850,316
Dividends receivable 63,801
Interest receivable 13,475
Other assets 282,823
-----------------
Total Assets 2,027,235,216
-----------------
Liabilities:
Payable for investments purchased 25,102,476
Payable for shares repurchased 593,621
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 1,861,633
Accounts payable and accrued expenses 598,923
-----------------
Total Liabilities 28,156,653
-----------------
Net Assets:
Capital paid-in 1,514,396,050
Accumulated realized gain on
investments 85,890,065
Net unrealized appreciation of
investments 398,871,559
Accumulated net investment loss (79,111)
-----------------
Net Assets $1,999,078,563
=================
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 - $1,000,217,901/73,034,375 $13.70
==============================================================
Class B - $948,701,361/76,636,947 $12.38
==============================================================
Class C - $32,831,908/2,656,137 $12.36
==============================================================
Class I - $17,327,393/1,260,565 $13.75
==============================================================
Maximum Offering Price Per Share
Class A * - ($13.70/95%) $14.42
==============================================================
Class C - ($12.36/99%) $12.48
==============================================================
* 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 (losses) for the period stated.
Statement of Operations
Year ended October 31, 2000
--------------------------------------------------------------
<S> <C>
Investment Income:
Securities lending income - Note A $4,593,561
Interest 2,410,233
Dividends 983,620
-----------------
7,987,414
-----------------
Expenses:
Investment management fee - Note B 14,558,990
Distribution and service fee - Note B
Class A 2,235,032
Class B 10,455,965
Class C 219,616
Transfer agent fee - Note B 4,407,355
Accounting and legal services fee - Note B 372,719
Custodian fee 350,678
Registration and filing fees 287,037
Miscellaneous 101,875
Printing 97,611
Trustees' fees 70,667
Auditing fee 44,500
Legal fees 23,703
Interest expense 20,595
-----------------
Total Expenses 33,246,343
-----------------
Net Investment Loss (25,258,929)
-----------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold
(including $183,436 net realized loss
on sales of investments in affiliated
issuers) 199,154,814
Change in net unrealized appreciation
(depreciation) of investments (87,855,658)
-----------------
Net Realized and Unrealized Gain on
Investments 111,299,156
-----------------
Net Increase in Net Assets Resulting
from Operations $86,040,227
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
-------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------
1999 2000
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($10,500,995) ($25,258,929)
Net realized gain on investments sold 134,645,854 199,154,814
Change in net unrealized
appreciation (depreciation) of
investments 146,147,342 (87,855,658)
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 270,292,201 86,040,227
----------------- -----------------
Distributions to Shareholders:
Distributions from net realized
gain on investments sold
Class A - ($0.2300 and $1.5080
per share, respectively) (4,781,633) (32,103,982)
Class B - ($0.2300 and $1.5080
per share, respectively) (10,631,104) (63,068,753)
Class C - ($0.2300 and $1.5080
per share, respectively) (14,101) (568,546)
----------------- -----------------
Total Distributions to
Shareholders (15,426,838) (95,741,281)
----------------- -----------------
From Fund Share Transactions - Net: * (47,805,007) 1,259,559,420
----------------- -----------------
Net Assets:
Beginning of period 542,159,841 749,220,197
----------------- -----------------
End of period (including
accumulated net investment loss
of $61,505 and $79,111,
respectively) $749,220,197 $1,999,078,563
================= =================
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.
<CAPTION>
Statement of Changes in Net Assets (continued)
---------------------------------------------------------------------------------------------------------------------------
*Analysis of Fund Share Transactions:
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1999 2000
--------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 32,716,360 $340,101,947 91,863,488 $1,410,281,655
Shares issued in reorganization -
Note E -- -- 26,966,047 373,954,348
Shares issued to shareholders in
reinvestment of distributions 476,257 4,124,555 2,268,848 27,677,181
----------------- ----------------- ----------------- -----------------
33,192,617 344,226,502 121,098,383 1,811,913,184
Less shares repurchased (33,465,565) (344,860,133) (69,169,263) (1,057,175,885)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (272,948) ($633,631) 51,929,120 $754,737,299
================= ================= ================= =================
CLASS B
Shares sold 10,349,917 $103,998,949 21,852,179 $308,707,360
Shares issued in reorganization -
Note E -- -- 30,814,945 388,850,706
Shares issued to shareholders in
reinvestment of distributions 983,372 7,887,044 4,146,928 46,072,985
----------------- ----------------- ----------------- -----------------
11,333,289 111,885,993 56,814,052 743,631,051
Less shares repurchased (16,593,304) (161,959,740) (21,280,384) (289,797,788)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (5,260,015) ($50,073,747) 35,533,668 $453,833,263
================= ================= ================= =================
CLASS C
Shares sold 358,485 $3,764,658 5,004,317 $70,375,734
Shares issued in reorganization -
Note E -- -- 7,213 90,874
Shares issued to shareholders in
reinvestment of distributions 1,722 13,917 33,026 366,480
----------------- ----------------- ----------------- -----------------
360,207 3,778,575 5,044,556 70,833,088
Less shares repurchased (87,513) (876,204) (2,721,008) (38,224,105)
----------------- ----------------- ----------------- -----------------
Net increase 272,694 $2,902,371 2,323,548 $32,608,983
================= ================= ================= =================
CLASS I **
Shares sold -- -- 812,790 $13,266,371
Shares issued in reorganization -
Note E -- -- 1,184,187 16,420,653
Shares issued to shareholders in
reinvestment of distributions -- -- -- --
----------------- ----------------- ----------------- -----------------
-- -- 1,996,977 29,687,024
Less shares repurchased -- -- (736,412) (11,307,149)
----------------- ----------------- ----------------- -----------------
Net increase -- -- 1,260,565 $18,379,875
================= ================= ================= =================
** Class I shares began operations on December 7, 1999.
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,
-------------------------------------------------------------------------------------
1996(1) 1997(1) 1998(1) 1999 2000
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $9.02 $10.22 $12.35 $8.41 $12.65
------------- ------------- ------------- ------------- -------------
Net Investment Loss(2) (0.09) (0.07) (0.08) (0.12) (0.14)
Net Realized and Unrealized
Gain (Loss) on Investments 1.29 2.41 (1.34) 4.59 2.70
------------- ------------- ------------- ------------- -------------
Total from Investment Operations 1.20 2.34 (1.42) 4.47 2.56
------------- ------------- ------------- ------------- -------------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (0.21) (2.52) (0.23) (1.51)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $10.22 $12.35 $8.41 $12.65 $13.70
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 13.27% 23.35% (14.14%) 54.41% 21.69%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $218,497 $209,384 $179,700 $266,886 $1,000,218
Ratio of Expenses to Average
Net Assets 1.32% 1.29% 1.37% 1.34% 1.28%
Ratio of Net Investment Loss
to Average Net Assets (0.86%) (0.57%) (1.02%) (1.17%) (0.88%)
Portfolio Turnover Rate 44% 96% 103% 104% 104%(6)
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.70 $9.78 $11.72 $7.81 $11.64
------------- ------------- ------------- ------------- -------------
Net Investment Loss(2) (0.15) (0.14) (0.15) (0.18) (0.23)
Net Realized and Unrealized
Gain (Loss) on Investments 1.23 2.29 (1.24) 4.24 2.48
------------- ------------- ------------- ------------- -------------
Total from Investment Operations 1.08 2.15 (1.39) 4.06 2.25
------------- ------------- ------------- ------------- -------------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (0.21) (2.52) (0.23) (1.51)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $9.78 $11.72 $7.81 $11.64 $12.38
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 12.48% 22.44% (14.80%) 53.31% 20.79%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $451,268 $472,594 $361,992 $478,468 $948,701
Ratio of Expenses to Average
Net Assets 2.05% 2.02% 2.08% 2.03% 2.03%
Ratio of Net Investment Loss
to Average Net Assets (1.59%) (1.30%) (1.73%) (1.87%) (1.62%)
Portfolio Turnover Rate 44% 96% 103% 104% 104%(6)
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 each class. 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.
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, -------------------------------
1998(7) 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.96 $7.81 $11.62
------------- ------------- -------------
Net Investment Loss(2) (0.03) (0.19) (0.22)
Net Realized and Unrealized
Gain (Loss) on Investments (1.12) 4.23 2.47
------------- ------------- -------------
Total from Investment Operations (1.15) 4.04 2.25
------------- ------------- -------------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (0.23) (1.51)
------------- ------------- -------------
Net Asset Value, End of
Period $7.81 $11.62 $12.36
============= ============= =============
Total Investment Return at
Net Asset Value(3) (12.83%)(4) 53.05% 20.83%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $468 $3,866 $32,832
Ratio of Expenses to Average
Net Assets 2.12%(5) 2.09% 2.02%
Ratio of Net Investment Loss
to Average Net Assets (1.86%)(5) (1.94%) (1.62%)
Portfolio Turnover Rate 103% 104% 104%(6)
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------
PERIOD ENDED
OCTOBER 31,
2000(7)
-------------
<S> <C>
CLASS I
Per Share Operating Performance
Net Asset Value, Beginning
of Period $13.55
-------------
Net Investment Loss(2) (0.07)
Net Realized and Unrealized
Gain on Investments 0.27
-------------
Total from Investment Operations 0.20
-------------
Net Asset Value, End of
Period $13.75
=============
Total Investment Return at
Net Asset Value(3) 1.48%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $17,328
Ratio of Expenses to Average
Net Assets 0.86%(5)
Ratio of Net Investment Loss
to Average Net Assets (0.47%)(5)
Portfolio Turnover Rate 104%(6)
(1) All per share amounts and net asset values have been restated to
reflect the four-for-one stock split effective May 1, 1998.
(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) Not annualized.
(5) Annualized.
(6) Portfolio turnover rate excludes merger activity.
(7) Class C shares began operations on June 1, 1998. Class I shares
began operations on December 7, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
October 31, 2000
-------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Small Cap Growth Fund on October 31, 2000. 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 (0.68%)
Getty Images, Inc.* 429,800 $13,646,150
------------
Banks - United States (2.38%)
Greater Bay Bancorp. 451,000 14,685,687
Investors Financial Services Corp. 245,400 17,592,113
Southwest Bancorp. of Texas, Inc.* 267,800 9,774,700
Sterling Bancshares, Inc. 321,000 5,517,188
------------
47,569,688
------------
Business Services - Misc. (5.65%)
Corporate Executive Board Co. (The)* 555,200 25,608,600
Forrester Research, Inc.* 326,100 13,390,481
Heidrick & Struggles International, Inc.* 270,000 16,689,375
Jupiter Media Metrix, Inc.* 369,192 5,030,241
Management Network Group, Inc. (The)* 737,550 9,726,441
On Assignment, Inc.* 609,100 15,341,706
ProBusiness Services, Inc.* 596,700 19,504,631
Quanta Services, Inc.* 249,100 7,737,669
------------
113,029,144
------------
Computers (15.28%)
Advent Software, Inc.* 374,700 22,411,744
Advest Group, Inc. 126,650 4,100,294
Aspen Technology, Inc.* 336,800 13,914,050
AvantGo, Inc.* 51,200 504,003
Avocent Corp.* 376,650 26,718,609
Broadbase Software, Inc.* 334,000 3,590,500
Cerner Corp.* 154,000 9,538,375
Cognizant Technology Solutions Corp.* 248,100 10,172,100
CoorsTek, Inc.* 162,300 4,747,275
Data Return Corp.* 615,900 7,082,850
DigitalThink, Inc.* 319,400 11,253,867
Embarcadero Technologies, Inc.* 277,700 16,783,494
Genomica Corp.* 175,750 2,207,859
IDX Systems Corp.* 324,300 10,377,600
Interwoven, Inc.* 140,200 14,125,150
IntraNet Solutions, Inc.* 356,900 16,595,850
Manugistics Group, Inc.* 204,300 23,277,431
Maxtor Corp.* 473,900 3,702,344
Micromuse, Inc.* 83,200 14,118,000
M-Systems Flash Disk Pioneers Ltd.* (Israel) 555,000 13,805,625
Multex.com, Inc.* 189,750 2,454,891
National Instruments Corp.* 245,675 11,469,952
NetRatings, Inc.* 454,600 8,182,800
Pivotal Corp.* 65,900 4,028,138
Quantum Corp. Hard Disk Drive Group* 780,000 8,921,250
Secure Computing Corp.* 931,000 21,413,000
SportsLine.com, Inc.* 26,400 226,050
Synplicity, Inc.* 76,400 964,550
TeleCommunication Systems, Inc. (Class A)* 207,150 3,262,613
Watchguard Technologies, Inc.* 309,300 15,465,000
------------
305,415,264
------------
Electronics (15.72%)
Aeroflex, Inc.* 285,200 16,969,400
ATMI, Inc.* 445,200 8,403,150
Brooks Automation, Inc.* 196,900 5,217,850
Credence Systems Corp.* 256,400 4,807,500
DDi Corp.* 459,100 18,335,306
DuPont Photomasks, Inc.* 282,600 15,860,925
Elantec Semiconductor, Inc.* 229,400 25,520,750
Electro Scientific Industries, Inc.* 279,600 9,768,525
Exar Corp.* 355,900 15,904,281
Kent Electronics Corp.* 424,300 7,902,587
Merix Corp.* 395,100 18,452,395
Micrel, Inc.* 342,000 15,475,500
Microsemi Corp.* 458,800 18,352,000
Nanometrics, Inc.* 348,450 8,014,350
Novellus Systems, Inc.* 126,200 5,166,313
Nu Horizons Electronics Corp.* 760,200 12,258,225
Pixelworks, Inc.* 236,500 7,878,406
Plexus Corp.* 279,800 17,644,888
PLX Technology, Inc.* 742,950 17,830,800
Powerwave Technologies, Inc.* 233,300 11,227,563
PRI Automation, Inc.* 212,400 4,805,550
QLogic Corp.* 81,600 7,894,800
Repeater Technologies, Inc.* 770,400 2,696,400
Rudolph Technologies, Inc.* 268,050 10,453,950
Semtech Corp.* 441,600 14,241,600
Stratos Lightwave, Inc.* 499,050 13,193,634
------------
314,276,648
------------
Finance (2.73%)
Actrade Financial Technologies, Ltd.* 411,350 9,615,306
Affiliated Managers Group, Inc.* 339,600 20,418,450
Medallion Financial Corp. 400,800 6,162,300
Metris Cos., Inc. 565,500 18,308,062
------------
54,504,118
------------
Instruments - Scientific (0.41%)
Varian, Inc.* 266,400 8,208,450
------------
Leisure (0.24%)
Six Flags, Inc.* 309,600 4,837,500
------------
Machinery (0.48%)
Hydril Co.* 545,600 9,548,000
------------
Media (2.51%)
Pegasus Communications Corp.* 126,200 4,487,988
Radio One, Inc. (Class A)* 257,450 2,043,509
Radio One, Inc. (Class D)* 470,500 3,771,340
Regent Communications, Inc.* 1,144,600 6,867,600
Scholastic Corp.* 137,400 10,992,000
Sinclair Broadcast Group, Inc. (Class A)* 1,011,500 9,324,816
Westwood One, Inc.* 438,188 8,298,185
Wink Communications, Inc.* 431,900 4,426,975
------------
50,212,413
------------
Medical (23.81%)
Accredo Health, Inc.* 306,000 13,234,500
Alexion Pharmaceuticals, Inc.* 190,900 19,734,287
Alkermes, Inc.* 573,200 21,244,225
Alpharma, Inc. (Class A) 329,200 12,777,075
AmeriSource Health Corp. (Class A)* 457,700 19,881,344
Arena Pharmaceuticals, Inc.* 23,700 828,019
Aurora Biosciences Corp.* 276,900 16,873,594
Bindley Western Industries, Inc. 542,100 19,481,719
Bruker Daltonics, Inc.* 18,950 649,037
Cell Therapeutics, Inc.* 229,100 15,324,636
COR Therapeutics, Inc.* 415,300 23,464,450
Corvas International, Inc.* 571,500 12,144,375
CV Therapeutics, Inc.* 274,800 21,640,500
Cytyc Corp.* 264,800 15,718,361
Exelixis, Inc.* 439,300 9,692,056
Genome Therapeutics Corp.* 472,800 7,062,450
Human Genome Sciences, Inc.* 138,800 12,268,615
Illumina, Inc.* 23,550 765,375
Inhale Therapeutic Systems, Inc.* 335,500 16,691,125
Inspire Pharmaceuticals, Inc.* 359,300 7,051,262
Interpore International, Inc.* 1,100,000 5,912,500
Invitrogen Corp.* 217,050 16,509,366
LifePoint Hospitals, Inc.* 726,300 28,144,125
Lincare Holdings, Inc.* 290,600 12,223,363
NPS Pharmaceuticals, Inc.* 484,600 20,777,225
Physiometrix, Inc.* 522,400 12,374,350
POZEN, Inc.* 38,150 610,400
Priority Healthcare Corp.* 167,900 9,024,625
Province Healthcare Co.* 639,500 26,938,938
Renal Care Group, Inc.* 339,000 7,966,500
Techne Corp.* 143,200 16,145,800
Titan Pharmaceuticals, Inc.* 327,500 13,781,200
Transgenomic, Inc.* 266,000 3,990,000
Vascular Solutions, Inc.* 240,150 4,893,056
Virologic, Inc.* 538,850 5,994,706
Visible Genetics, Inc.* (Canada) 357,400 10,811,350
Wilson Greatbatch Technologies, Inc.* 557,100 13,370,400
------------
475,994,909
------------
Metal (0.28%)
Maverick Tube Corp.* 359,300 5,591,606
------------
Oil & Gas (6.89%)
Dril-Quip, Inc.* 276,800 9,134,400
Hanover Compressor Co.* 433,441 14,141,013
Marine Drilling Cos., Inc.* 712,400 17,008,550
NATCO Group, Inc. (Class A)* 716,921 4,659,986
Newfield Exploration Co.* 420,600 15,877,650
Patterson Energy, Inc.* 449,100 12,630,938
Pride International, Inc.* 811,300 20,536,031
Stone Energy Corp.* 326,800 16,732,160
Universal Compression Holdings, Inc.* 417,050 12,042,319
Veritas DGC, Inc.* 498,700 14,961,000
------------
137,724,047
------------
Printing - Commercial (0.60%)
Houghton Mifflin Co. 327,200 12,045,050
------------
Retail (8.86%)
99 Cents Only Stores* 446,649 10,021,687
AnnTaylor Stores Corp.* 341,100 10,233,000
Applebee's International, Inc. 344,500 10,404,968
Brightpoint, Inc.* 1,374,100 9,146,422
Columbia Sportswear Co.* 302,500 12,931,875
Cost Plus, Inc.* 377,400 10,567,200
Duane Reade, Inc.* 270,800 7,903,975
Insight Enterprises, Inc.* 460,200 14,956,500
P.F. Chang's China Bistro, Inc.* 131,200 5,379,200
RARE Hospitality International, Inc.* 570,650 13,267,613
ScanSource, Inc.* 358,800 17,132,700
Tech Data Corp.* 544,300 22,656,488
Too, Inc.* 477,900 10,961,831
Tweeter Home Entertainment Group, Inc.* 424,400 10,212,125
Whole Foods Market, Inc.* 247,500 11,446,875
------------
177,222,459
------------
Schools / Education (1.44%)
Corinthian Colleges, Inc.* 184,700 12,767,387
Education Management Corp.* 152,100 4,715,100
ProsoftTraining.com* 582,900 4,080,300
University of Phoenix Online* 272,550 7,154,437
------------
28,717,224
------------
Steel (0.96%)
Lone Star Technologies, Inc.* 475,800 19,103,370
------------
Telecommunications (4.99%)
Advanced Radio Telecom Corp.* 472,850 1,861,847
AirGate PCS, Inc.* 377,300 14,667,537
I-Link, Inc.* 171,000 416,812
Intermedia Communications, Inc.* 728,200 16,111,425
o2wireless Solutions, Inc.* 106,250 1,235,156
Peco II, Inc.* 8,800 346,500
Powertel, Inc.* 161,300 14,073,425
Rural Cellular Corp. (Class A)* 167,700 9,013,875
SBA Communications Corp.* 459,000 23,007,375
UbiquiTel, Inc.* 1,004,900 6,971,494
WJ Communications, Inc.* 372,800 5,592,000
XM Satellite Radio Holdings, Inc. (Class A)* 222,650 6,456,850
------------
99,754,296
------------
Textile (0.03%)
Coach, Inc.* 22,750 531,781
------------
Transport (1.50%)
Expeditors International of Washington, Inc. 310,636 16,114,242
Forward Air Corp.* 336,700 13,846,788
------------
29,961,030
------------
TOTAL COMMON STOCKS
(Cost $1,509,021,588) (95.44%) 1,907,893,147
--------- --------------
INTEREST PAR VALUE
RATE (000s OMITTED)
---- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.68%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. -- Dated 10-31-00, due
11-01-00 (Secured by U.S. Treasury
Bonds, 7.125% thru 13.250%, due
05-15-14 thru 02-15-23) -- Note A 6.56% $73,654 73,654,000
--------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company Daily
Interest Savings Account Current Rate
5.20% 167
--------- --------------
TOTAL SHORT-TERM INVESTMENTS (3.68%) 73,654,167
--------- --------------
TOTAL INVESTMENTS (99.12%) 1,981,547,314
--------- --------------
OTHER ASSETS AND LIABILITIES, NET (0.88%) 17,531,249
--------- --------------
TOTAL NET ASSETS (100.00%) $1,999,078,563
========= ==============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
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 -- Small Cap Growth Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock Small Cap Growth Fund (the "Fund") is a diversified series
of John Hancock Series Trust, an open-end management investment company
registered under the Investment Company Act of 1940. The investment
objective of the Fund is to seek long-term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B, Class C and Class I shares.
The Trustees authorized the issuance of Class I shares, effective
December 7, 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.
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 transaction. Aggregate cash balances are invested in one or
more large 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.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are determined at the fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution and service fees, if any, are
calculated daily at the class level based on the appropriate net assets
of each class and the specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a
specific fund will be 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.
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 borrowing.
In addition, a commitment fee is charged to each fund based on the
average daily unused portion of the line of credit and is allocated
among the participating funds. The average daily loan balance during the
periods for which loans were outstanding amounted to $9,415,000. The
weighted average interest rate was 6.45%. Interest expense includes
$18,253 paid under the line of credit. At October 31, 2000, there were
no outstanding borrowings under the line of credit.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. 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,
2000, the Fund loaned securities having a market value of $163,638,612
collateralized by securities in the amount of $165,633,866.
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 or, in the case of some
foreign securities, on the date thereafter when the Fund identifies 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 dividends and 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with accounting principles generally accepted in the United
States of America incorporates estimates made by management in
determining the reported amount of assets, liabilities, revenues and
expenses of the Fund. Actual results could differ from these estimates.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a monthly management
fee to the Adviser equivalent, on an annual basis, to the sum of 0.75%
of the first $1,500,000,000 of the Fund's average daily net asset value,
(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. To reimburse JH Funds
for the services it provides as distributor of shares of the Fund, the
Fund has adopted a Distribution Plan with respect to Class A, Class B
and Class C pursuant to Rule 12b-1 under the Investment Company Act of
1940. Accordingly, the Fund makes payments to JH Funds 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.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $1,330,608 with regard to sales of Class A shares. Of
this amount, $172,985 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $830,921 was paid as
sales commissions to unrelated broker-dealers and $326,702 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 Life Insurance Company ("JHLICo"), is the indirect
sole shareholder of Signator Investors. Effective May 1, 2000, all Class
C shares retail purchases are assessed a 1.00% up-front sales charge.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $155,733 with regard to sales of Class C shares. Of
this amount, $150,250 was paid as sales commissions to unrelated
broker-dealers and $5,483 was paid as sales commissions to sales
personnel of Signator Investors.
Class B shares which are redeemed within six years of purchase are
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. Class C shares which are redeemed within one year of purchase
will be subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original purchase
cost of the shares being redeemed. Proceeds from the CDSC are paid to JH
Funds and are used in whole or in part to defray its expenses for
providing distribution related services to the Fund in connection with
the sale of Class B and Class C shares. For the year ended October 31,
2000, CDSCs received by JH Funds amounted to $1,265,367 for Class B
shares and $19,233 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo.
The Fund pays monthly 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
year was at an annual rate of less than 0.02% of the average net assets
of the Fund.
Mr. Stephen L. Brown and Ms. Maureen R. Ford are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the
Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. The
Deferred Compensation Plan investments 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 year ended October 31, 2000, aggregated $2,328,262,290 and
$1,970,532,551, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the year
ended October 31, 2000.
The cost of investments owned at October 31, 2000 (excluding corporate
savings account) for federal income tax purposes was $1,583,300,221.
Gross unrealized appreciation and depreciation of investments aggregated
$589,526,455 and $191,284,585, respectively, resulting in net unrealized
appreciation of $398,246,926.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 2000, the Fund has reclassified
amounts to reflect a decrease in net realized gain on investments of
$112,754,835, a decrease in accumulated net investment loss of
$25,241,323 and an increase in capital paid-in of $87,513,512. This
represents the amount necessary to report these balances on a tax basis,
excluding certain temporary difference, as of October 31, 2000.
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 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 (loss) per share in the financial
highlights excludes these adjustments.
NOTE E --
REORGANIZATION
On December 6, 1999, the shareholders of John Hancock Special Equities
Fund ("Special Equities Fund") approved a plan of reorganization between
Special Equities Fund and the Fund providing for the transfer of
substantially all of the assets and liabilities of the Special Equities
Fund to the Fund in exchange solely for Class A, Class B, Class C and
Class I shares of the Fund. The acquisition was accounted for as a
tax-free exchange of 26,966,047 Class A shares, 30,814,945 Class B
shares, 7,213 Class C shares and 1,184,187 Class I shares of the Fund
for the net assets of Special Equities Fund, which amounted to
$373,954,348, $388,850,706, $90,874 and $16,420,653 for Class A, Class
B, Class C and Class Y shares, respectively, including $232,263,428 of
unrealized appreciation, after the close of business on December 10,
1999.
NOTE F --
TRANSACTIONS IN SECURITIES OF AFFILIATED ISSUERS
Affiliated issuers, as defined by the Investment Company Act of 1940,
are those in which the Fund's holdings of an issuer represent 5% or more
of the outstanding voting securities of the issuer. A summary of the
Fund's transactions in the securities of these issuers during the year
ended October 31, 2000 is set forth below.
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
BEGINNING ----------------------------------------- ENDING
SHARE SHARE SHARE SHARE REALIZED DIVIDEND ENDING
AFFILIATE AMOUNT AMOUNT COST AMOUNT COST AMOUNT GAIN (LOSS) INCOME VALUE
--------- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hydril Co. -- 545,600 $10,219,011 -- -- 545,600 -- -- 9,548,000
Interpore
International, Inc. 490,700 631,000 6,382,547 21,700 $297,357 1,100,000 ($183,436) -- 5,912,500
Nu Horizons
Electronics Corp. -- 506,800 13,921,716 -- -- 760,200(1) -- -- 2,258,225
Physiometrix, Inc. -- 522,400 13,918,363 -- -- 522,400 -- -- 2,374,350
ScanSource, Inc. 30,000 328,800 12,950,367 -- -- 358,800 -- -- 7,132,700
----------- -------- -------- ------ -----------
$57,392,004 $297,357 ($183,436) -- $57,225,775
=========== ======== ======== ====== ===========
(1) Reflects 5% stock dividend payments as of November 2, 1999 and also
reflects 3-for-2 stock split effective October 24, 2000.
</TABLE>
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, 2000, 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 auditing standards generally
accepted in the United States of America. 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, 2000, 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, 2000, 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
accounting principles generally accepted in the United States of
America.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
December 4, 2000
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, 2000.
The Fund has designated distributions to shareholders of $208,504,316 as
a capital gain dividend.
Shareholders will be mailed a 2000 U.S. Treasury Department Form
1099-DIV in January of 2001. This will reflect the total of all
distributions which are taxable for calendar year 2000.
NOTES
John Hancock Funds -- Small Cap Growth Fund
NOTES
John Hancock Funds -- Small Cap Growth Fund
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.]
John Hancock Funds, Inc.
Member NASD
101 Huntington Avenue
Boston, MA 02199-7603
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of the shareholders of the John Hancock
Small Cap Growth Fund. It is not authorized for distribution to prospective
investors unless it is preceded or accompanied by the current prospectus,
which details charges, investment objectives and operating policies.
[A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper."]
6000A 10/00
12/00
The latest report from your
Fund's management team
ANNUAL REPORT
Technology
Fund
(formerly Global Technology Fund)
OCTOBER 31, 2000
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS".]
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
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
Barry J. Gordon
President
William L. Braman
Executive Vice President
and Chief Investment 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 second paragraph.]
DEAR FELLOW SHAREHOLDERS:
After providing investors with sky-high returns for the last five years,
the financial markets have brought investors back down to earth in 2000.
Rising interest rates and oil prices, the prospects of a slowing economy
and earnings fears all caught up with pricey growth stocks -- technology
in particular. A dramatic plunge in the spring and again in the fall
caused the major indexes to end October in negative territory for the
year to date. The tech-heavy NASDAQ Composite Index was hardest hit,
returning -17.19% year to date through October.
But there is a silver lining. Investors have finally turned their
attention to broader swaths of the market, including old economy stocks
in sectors like financials, health care and energy, that combined both
strong fundamentals and more attractive valuation levels. Since April,
less expensive value stocks have outperformed growth stocks.
Bonds also began to make a comeback as the year progressed and investors
grew more confident that the series of Fed rate hikes might be coming to
an end. Pockets of strength have emerged there, including municipal
bonds and longer-maturity Treasury bonds. The 30-year bond, for
instance, returned 13.53% year to date through October.
The market's shifts in leadership so far this year highlight one of the
key investment tenets that we can't emphasize enough: investing should
be a marathon, not a sprint. If your portfolio is diversified and you
have an up-to-date financial plan crafted with an investment
professional to meet your goals, it becomes easier to ride out the
market's short-term ups and downs. It could also provide you with a
greater chance of success over time.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY BARRY J. GORDON, MARC H. KLEE, CFA, AND
ALAN LOEWENSTEIN, CFA, PORTFOLIO MANAGERS
[A 3" x 2" photo bottom right side page of John Hancock Technology Fund.
Caption below reads "Technology Fund management team members (l-r):
Barry Gordon, Marc Klee and Alan Loewenstein."]
John Hancock
Technology Fund
Tech stocks peak, then plunge over the last 12 months
Technology stocks reached for the stars from November 1999 through mid-
March 2000 and then came back down to earth through the end of October
2000. On their winter ride up, tech stocks benefited from a combination
of the explosion of the Internet, very favorable economic conditions and
virtually unprecedented strong demand as investors increasingly sought
out tech stocks for their seemingly unrivaled growth opportunities. From
that peak, however, tech stocks spent the remaining months of the period
retracing their earlier gains. The downtrend was prompted by a number of
hurdles, including the prospects for a slowing economy brought on by
higher interest rates, weaker corporate profitability and investors'
newfound dislike of Internet-related stocks. From its peak on March 10
through October 31, the technology-laden NASDAQ Composite Index fell
33.19%. Despite all the ups and downs over the year, however, the sector
ended the 12-month period with respectable gains.
"Chip makers
...were hit
fairly hard."
Fund performance
For the year ended October 31, 2000, John Hancock Technology Fund's
Class A, Class B and Class C shares posted total returns of 25.37%,
24.49% and 24.49%, respectively, at net asset value. Although those were
solid absolute returns, they fell short of the average science and
technology fund's 34.30% return, according to Lipper, Inc.1 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.
"Our best
performers
during the
year were a
varied
group."
[Table at top left-hand column entitled "Top Five Stock Holdings." The
first listing is EMC 3.6%, the second is Mercury Interactive 3.3%, the
third Seagate Technology 2.8%, the fourth CIENA 2.7% and the fifth BEA
Systems 2.6%. A note below the table reads "As a percentage of net
assets on October 31, 2000."]
Semiconductor stocks disappoint
The main reason for the Fund's shortfall relative to its peers was its
comparatively large stake in semiconductor and related companies. These
groups were exceedingly strong in the first half but have suffered a
major retrenchment more recently. We had begun to build our weighting in
the group more than a year ago when we were very optimistic that
conditions would favor a prolonged period of good performance. Our view
was that the demand for chips -- driven primarily by the strength in the
personal computer and telecommunications sectors -- would remain strong
and outstrip the supply of them. That scenario proved to be the case
early in 2000 when chip makers and semiconductor equipment manufacturers
posted strong profit gains and were among the Fund's best performers.
[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 CIENA followed by an up arrow with the phrase "Demand for high-speed
bandwidth explodes." The second listing is BEA Systems followed by an up
arrow with phrase "Leading provider of "middleware" for application
servers." The third listing is LSI Logic followed by a down arrow with
the phrase "Demand for semiconductor chips weakens." A note below the
table reads "See 'Schedule of Investments,' Investment holdings are
subject to change."]
Beginning in late summer, however, demand contracted -- at least
temporarily -- in response to worries over slower economic growth. Chip
makers -- such as LSI Logic, National Semiconductor and Micron Technology
- were hit fairly hard. One major exception was Analog Devices, which
was up more than 173% during the past 12 months. It was able to buck the
trend because of its focus on communications. The stocks of companies
that make the machines and tools needed to make a chip, including KLA-
Tencor, Novellus Systems and PRI Automation, also were a disappointment.
Although we've sold some of our semiconductor holdings in response to
recent developments, we still have a significant weighting in them. In
our view, it's too early to tell if our original premise was incorrect
and demand will remain weaker over a prolonged period, or whether we
were right and the demand for chips and semiconductor stocks will firm
up over the long term.
Diverse list posts sizable gains
Our best performers during the year were a varied group. Among the
leaders for the year was fiber-optical networking company CIENA Corp. It
was buoyed by rapidly expanding demand for long-haul, high-speed
bandwidth. Fiber optics, which transfer information down glass fibers at
the speed of light, are now the most efficient way to move large volumes
of communication traffic. As a result, companies within this industry
are benefiting from a quick shift to broadband-centric networks by the
world's largest telecommunications carriers. That's the main reason why
we own other optical stocks such as Nortel Networks, JDS Uniphase and
Corning. Telecom-switching gear maker Cisco Systems is another way we
play the growth in fiber optics. At the very end of October, however,
these companies -- which were stalwarts during the tech sector's earlier
selloff -- had their stocks hit after Nortel Networks announced
disappointing third-quarter earnings.
[Bar chart at top of left hand column with the heading "Fund
Performance." Under the heading is a note that reads "For the year ended
October 31, 2000." The chart is scaled in increments of 10% with 0% at
the bottom and 40% at the top. The first bar represents the 25.37% total
return for John Hancock Technology Fund Class A. The second bar
represents the 24.49% total return for John Hancock Technology Fund
Class B. The third bar represents the 24.49% total return for John
Hancock Technology Fund Class C. The fourth bar represents the 34.30%
total return for Average science and technology fund. A note below the
chart reads "Total returns for John Hancock 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."]
BEA Systems was another big contributor to our performance. The company
is the leader in an industry known as application servers, a provider of
a middle layer of software that corporations use to develop Web-based
programs that work with many types of hardware and software. Also strong
were the stocks of business software maker i2 Technologies, which
tripled in price during the period, and Web performance management
program maker Mercury Interactive, which more than doubled. EMC, the
leading maker of computer data-storage devices for large systems, also
posted triple-digit returns, thanks to accelerating sales as more large
companies push to develop Internet capabilities. It ended the year as
our largest holding. Business software company Oracle also rose
significantly, aided by both cost-cutting and Internet-driven demand for
its software.
"We're
much more
optimistic
about tech
stocks'
prospects
than we were
six months
ago."
Outlook
We're much more optimistic about tech stocks' prospects than we were six
months ago. Although the initial impact of a slowing economy on tech
stocks was negative, we believe its ultimate effect will be positive.
History suggests that during periods of slow, but positive, economic
growth, tech stocks fare well because investors look to them for better-
than-average earnings growth. In 1994, for example, the Federal Reserve
had successfully engineered a "soft landing" through a series of
interest-rate hikes and the technology group was the third-best-
performing sector in the market the following year. Now that a lot of
the excessive valuation that existed in the tech sector earlier this
year has been wrung out, tech stocks are priced more attractively. Lower
valuations, per se, aren't a reason to own tech stocks. But coupled with
relatively strong earnings gains, they give us reason for optimism.
Also, because many tech companies provide productivity enhancements, we
think they are poised to benefit from the need by companies to be leaner
in a slower economy.
------------------------------------------------------------------------
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.
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 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 an up-front 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 an up-front sales charge of 1%
and a contingent deferred sales charge (maximum 1% declining to 0% after
one year).
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them. Please read your prospectus carefully for a discussion
of the risks associated with industry-segment investing, before you
invest or send money.
CLASS A
For the period ended October 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- ---------
Cumulative Total Returns 19.10% 228.01% 1,015.67%
Average Annual Total Returns 19.10% 26.82% 27.28%
CLASS B
For the period ended October 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
------ ------- ---------
Cumulative Total Returns 19.49% 231.46% 451.13%
Average Annual Total Returns 19.49% 27.08% 28.41%
CLASS C
For the period ended October 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
------- ---------
Cumulative Total Returns 22.25% 83.17%
Average Annual Total Returns 22.25% 43.73%
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock 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 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 Technology Fund on October 31, 1990, before sales charge,
and is equal to $117,444 as of October 31, 2000. The second line
represents the value of the same hypothetical investment made in the
John Hancock Technology Fund, after sales charge, and is equal to
$111,572 as of October 31, 2000. The third line represents the Standard
& Poor's 500 Index and is equal to $58,993 as of October 31, 2000.
Line chart with the heading John Hancock Technology Fund Class B*,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are two lines. The first line
represents the value of the hypothetical $10,000 investment made in the
John Hancock Technology Fund on January 3, 1994, before sales charge,
and is equal to $55,113 as of October 31, 2000. The second line
represents the Standard & Poor's 500 Index and is equal to $34,913 as of
October 31, 2000.
Line chart with the heading John Hancock 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 Technology Fund on March 1, 1999, before sales charge, and
is equal to $18,503 as of October 31, 2000. The second line represents
the value of the same hypothetical investment made in the John Hancock
Technology Fund, after sales charge, and is equal to $18,318 as of
October 31, 2000. The third line represents the Standard & Poor's 500
Index and is equal to $11,773 as of October 31, 2000.
* No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- 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,
2000. 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, 2000
----------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $1,798,717,297) $2,167,618,702
Preferred stocks (cost - $17,329,788) 19,503,161
Bonds (cost - $1,524,507) 1,488,590
Joint repurchase agreement (cost - $172,550,000) 172,550,000
Corporate savings account 133
--------------
2,361,160,586
Cash for investments sold 1,623
Receivable for investments sold 1,441,842
Receivable for shares sold 3,880,469
Dividends receivable 16,000
Interest receivable 79,940
Other assets 76,857
--------------
Total Assets 2,366,657,317
--------------
Liabilities:
Payable for shares repurchased 1,015,443
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 2,168,966
Accounts payable and accrued expenses 623,783
--------------
Total Liabilities 3,808,192
--------------
Net Assets:
Capital paid-in 1,948,296,895
Accumulated net realized gain on investments,
foreign currency transactions and written options 43,539,264
Net unrealized appreciation of investments 371,038,861
Accumulated net investment loss (25,895)
--------------
Net Assets $2,362,849,125
==============
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 - $970,926,835/80,776,284 $12.02
======================================================================
Class B - $1,290,661,281/113,807,639 $11.34
======================================================================
Class C - $101,261,009/8,928,293 $11.34
======================================================================
Maximum Offering Price Per Share
Class A* - ($12.02/0.95) $12.65
======================================================================
Class C - ($11.34/0.99) $11.45
======================================================================
* 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, 2000
----------------------------------------------------------------------
<S> <C>
Investment Income:
Interest $10,765,521
Securities lending income 3,310,837
Dividends (net of foreign withholding taxes of $62,844) 453,482
------------
14,529,840
------------
Expenses:
Investment management fee - Note B 17,730,784
Distribution and service fee - Note B
Class A 3,093,520
Class B 13,477,233
Class C 826,441
Transfer agent fee - Note B 4,790,347
Registration and filing fees 712,728
Custodian fee 386,393
Miscellaneous 130,414
Printing 113,614
Administrative fee - Note B 100,000
Trustees' fees 84,025
Auditing fee 42,500
Legal fees 32,132
------------
Total Expenses 41,520,131
------------
Net Investment Loss (26,990,291
------------
Realized and Unrealized Gain (Loss) on Investments,
Foreign Currency Transactions and Written Options:
Net realized gain on investments sold 115,888,408
Net realized gain on written options 3,565,607
Net realized loss on foreign currency transactions (6,609)
Change in net unrealized appreciation (depreciation)
of investments (26,510,698)
------------
Net Realized and Unrealized
Gain on Investments,
Foreign Currency Transactions
and Written Options 92,936,708
------------
Net Increase in Net Assets
Resulting from Operations $65,946,417
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
-------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------
1999 2000
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($6,616,130) ($26,990,291)
Net realized gain on investments sold,
foreign currency transactions and written options 92,561,445 119,447,406
Change in net unrealized appreciation (depreciation)
of investments 306,298,964 (26,510,698)
-------------- --------------
Net Increase in Net Assets Resulting from Operations 392,244,279 65,946,417
-------------- --------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A - ($0.2470 and $3.0279 per share, respectively) (1,583,167) (26,930,555)
Class B - ($0.2470 and $3.0279 per share, respectively) (708,599) (30,585,937)
Class C** - (none and $3.0279 per share, respectively) -- (874,349)
-------------- --------------
Total Distributions to Shareholders (2,291,766) (58,390,841)
-------------- --------------
From Fund Share Transactions - Net: * 436,376,232 1,264,707,404
-------------- --------------
Net Assets:
Beginning of period 264,257,400 1,090,586,145
-------------- --------------
End of period (including accumulated net investment loss of
$21,527 and $25,895, respectively) $1,090,586,145 $2,362,849,125
============== ==============
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed
since the end of the previous period. The difference reflects earnings less expenses, any investment
and foreign currency gains and losses, distributions paid to shareholders and any increase or decrease
in money shareholders invested in the Fund. The footnote illustrates the number of Fund shares sold,
reinvested and repurchased during the last two periods, along with the corresponding dollar value.
<CAPTION>
Statement of Changes in Net Assets (continued)
---------------------------------------------------------------------------------------------------------------------------------
*Analysis of Fund Share Transactions:
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1999 2000
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 77,733,360 $596,764,933 103,379,872 $1,615,513,443
Shares issued to shareholders in reinvestment
of distributions 308,304 1,622,378 2,094,241 23,169,504
-------------- -------------- -------------- --------------
78,041,664 598,387,311 105,404,113 1,638,682,947
Less shares repurchased (65,148,138) (492,728,878) (76,795,159) (1,235,445,468)
-------------- -------------- -------------- --------------
Net increase 12,893,526 105,658,433 28,608,954 403,237,479
============== ============== ============== ==============
CLASS B
Shares sold 54,462,870 418,467,599 77,174,329 1,072,667,616
Shares issued to shareholders in reinvestment
of distributions 130,818 627,794 2,341,859 24,607,243
-------------- -------------- -------------- --------------
54,593,688 419,095,393 79,516,188 1,097,274,859
Less shares repurchased (13,777,398) (100,920,508) (23,672,521) (337,626,257)
-------------- -------------- -------------- --------------
Net increase 40,816,290 318,174,885 55,843,667 759,648,602
============== ============== ============== ==============
CLASS C**
Shares sold 1,583,814 13,356,375 13,205,600 182,849,992
Shares issued to shareholders in reinvestment
of distributions -- -- 62,166 653,157
-------------- -------------- -------------- --------------
1,583,814 13,356,375 13,267,766 183,503,149
Less shares repurchased (94,842) (813,461) (5,828,445) (81,681,826)
-------------- -------------- -------------- --------------
Net increase 1,488,972 $12,542,914 7,439,321 $101,821,323
============== ============== ============== ==============
** Class C shares began operations on March 1, 1999.
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 PERIOD ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, OCTOBER 31, ----------------------------------------------
1995(1) 1996(1, 2) 1997(1) 1998(1) 1999(1) 2000
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $2.97 $4.09 $4.30 $5.01 $4.74 $10.03
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss(3) (0.04)(4) (0.02) (0.05) (0.05) (0.06) (0.10)
Net Realized and Unrealized Gain on Investments
and Written Options 1.43 0.23 0.97 0.18 5.39 5.12
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations 1.39 0.21 0.92 0.13 5.33 5.02
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from Net Realized Gain
on Investments Sold and Written Options (0.27) -- (0.21) (0.40) (0.04) (3.03)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $4.09 $4.30 $5.01 $4.74 $10.03 $12.02
========== ========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value(5) 46.53% 5.22%(6) 21.90% 3.95% 113.09% 25.37%
Total Adjusted Investment Return at Net Asset Value(5) 46.41%(7) -- -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $155,001 $166,010 $184,048 $186,259 $523,013 $970,927
Ratio of Expenses to Average Net Assets 1.67%(4) 1.57%(8) 1.51% 1.50% 1.35% 1.28%
Ratio of Net Investment Loss to Average Net Assets (0.89%)(4) (0.68%)(8) (0.95%) (0.97%) (0.78%) (0.69%)
Portfolio Turnover Rate 70% 64% 104% 86% 61% 41%
<CAPTION>
Financial Highlights (continued)
--------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, OCTOBER 31, ----------------------------------------------
1995(1) 1996(1, 2) 1997(1) 1998(1) 1999(1) 2000
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $2.95 $4.01 $4.20 $4.85 $4.55 $9.55
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss(3) (0.07)(4) (0.05) (0.08) (0.08) (0.11) (0.19)
Net Realized and Unrealized Gain
on Investments and Written Options 1.40 0.24 0.94 0.18 5.15 5.01
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations 1.33 0.19 0.86 0.10 5.04 4.82
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from Net Realized Gain
on Investments Sold and Written Options (0.27) -- (0.21) (0.40) (0.04) (3.03)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $4.01 $4.20 $4.85 $4.55 $9.55 $11.34
========== ========== ========== ========== ========== ==========
Total Investment Return at Net Asset Value(5) 45.42% 4.65%(6) 21.04% 3.20% 111.70% 24.49%
Total Adjusted Investment Return at Net Asset Value(5) 45.30%(7) -- -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $35,754 $50,949 $65,851 $77,999 $553,359 $1,290,661
Ratio of Expenses to Average Net Assets 2.41%(4) 2.27%(8) 2.21% 2.20% 2.05% 1.98%
Ratio of Net Investment Loss to Average Net Assets (1.62%)(4) (1.38%)(8) (1.65%) (1.67%) (1.47%) (1.39%)
Portfolio Turnover Rate 70% 64% 104% 86% 61% 41%
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1999(1) 2000
---------- ----------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period $7.71 $9.55
---------- ----------
Net Investment Loss(3) (0.09) (0.19)
Net Realized and Unrealized Gain
on Investments and Written Options 1.93 5.01
---------- ----------
Total from Investment Operations 1.84 4.82
---------- ----------
Less Distributions:
Distributions from Net Realized Gain
on Investments Sold and Written Options -- (3.03)
---------- ----------
Net Asset Value, End of Period $9.55 $11.34
========== ==========
Total Investment Return at Net Asset Value(5) 48.62%(6) 24.49%
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $14,215 $101,261
Ratio of Expenses to Average Net Assets 2.16%(8) 1.99%
Ratio of Net Investment Loss to Average Net Assets (1.57%)(8) (1.40%)
Portfolio Turnover Rate 61% 41%
(1) Per share amounts have been restated to reflect the 6-for-1 stock split effective August 11, 2000.
(2) Effective October 31, 1996 the fiscal period end changed from December 31 to October 31.
(3) Based on the average of the shares outstanding at the end of each month.
(4) 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.
(5) Assumes dividend reinvestment and does not reflect the effect of sales charge.
(6) Not annualized.
(7) An estimated total return calculation which takes into consideration fees and expenses waived or borne by
the Adviser during the periods shown.
(8) Annualized.
(9) Class C shares began operations on March 1, 1999.
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 each class. 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, 2000
------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the Technology Fund on
October 31, 2000. It's divided into four main categories: common stocks, preferred stocks, bonds
and short-term investments. 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
Banks (0.04%)
First Internet Bank of Indiana (r) 14,369 $999,939
---------------
Computer - Graphics (0.82%)
Cadence Design Systems, Inc.* 750,000 19,265,625
---------------
Computer - Integrated Systems (0.39%)
Equant N.V.* (Netherlands) 250,000 8,484,375
McDATA Corp. (Class B)* 8,040 670,210
---------------
9,154,585
---------------
Computer - Internet Services (13.11%)
America Online, Inc.* 1,100,000 55,473,000
Art Technology Group, Inc.* 368,000 23,092,000
Ask Jeeves, Inc.* 500,000 6,500,000
Calico Commerce, Inc.* 500,000 1,531,250
DoubleClick, Inc.* 280,000 4,550,000
Exodus Communications, Inc.* 950,000 31,884,375
Exult, Inc.* 599,650 8,994,750
Genuity, Inc.* 999,000 5,494,500
InfoSpace, Inc.* 800,000 16,100,000
Inktomi Corp.* 238,600 15,136,187
NBC Internet, Inc. (Class A)* 500,000 3,093,750
Net2Phone, Inc.* 300,000 5,568,750
Phone.com, Inc.* 200,000 18,512,500
Portal Software, Inc.* 300,000 10,556,250
RealNetworks, Inc.* 500,000 10,304,700
Rhythms NetConnections, Inc.* 450,000 984,375
ScreamingMedia, Inc.* 201,850 883,094
ScreamingMedia, Inc. (r) 535,270 2,107,626
Software Technologies Corp.* 375,000 6,375,000
TIBCO Software, Inc.* 269,400 16,972,200
VeriSign, Inc.* 100,000 13,200,000
VerticalNet, Inc.* 400,000 11,156,240
Viant Corp.* 700,000 4,156,250
Vignette Corp.* 800,000 23,850,000
webMethods, Inc.* 150,000 13,331,250
---------------
309,808,047
---------------
Computer - Local Networks (6.70%)
Cisco Systems, Inc.* 950,000 51,181,250
Cobalt Networks, Inc.* 350,000 19,293,750
Ixia* 11,440 268,125
JNI Corp.* 460,121 40,979,527
Lucent Technologies, Inc. 800,000 18,650,000
Network Appliance, Inc.* 200,000 23,800,000
Turnstone Systems, Inc.* 199,700 4,243,625
---------------
158,416,277
---------------
Computer - Memory Devices (8.99%)
EMC Corp.* 960,000 85,500,000
Emulex Corp.* 250,000 36,718,750
Inrange Technologies Corp. (Class B)* 41,980 1,537,517
Seagate Technology, Inc.* 950,000 66,381,250
Western Digital Corp.* 3,700,000 22,200,000
---------------
212,337,517
---------------
Computer - Micro/Macro (2.45%)
Dell Computer Corp.* 1,000,000 29,500,000
Gateway, Inc.* 550,000 28,385,500
---------------
57,885,500
---------------
Computer - Services (0.57%)
LetsBuyit.com N.V.* (Netherlands) (r) 576,539 768,667
Unisys Corp.* 1,000,000 12,750,000
---------------
13,518,667
---------------
Computer - Software (18.95%)
BEA Systems, Inc.* 870,000 62,422,500
Bluestone Software, Inc.* 183,410 3,943,315
Citrix Systems, Inc.* 550,000 12,168,750
Commercialware, Inc. (r) 1,000,000 1,000,000
Computer Associates International, Inc. 700,000 22,312,500
Diversinet Corp.* (Canada) 1,000,000 6,125,000
Electronics for Imaging, Inc.* 500,000 7,750,000
i2 Technologies, Inc.* 350,000 59,500,000
IMRglobal Corp.* 167,100 1,378,575
Mercury Interactive Corp.* 700,000 77,700,000
Microsoft Corp.* 400,000 27,550,000
Networks Associates, Inc.* 790,600 15,219,050
Oracle Corp.* 1,500,000 49,500,000
Parametric Technology Corp.* 1,500,000 18,468,750
Rational Software Corp.* 1,000,000 59,687,500
SmartForce Plc,* American Depositary
Receipt (ADR) (Ireland) 400,000 20,131,240
SuSE Linux AG (Netherlands) (r) 2,458 1,102,280
TenFold Corp.* 425,000 1,832,813
---------------
447,792,273
---------------
Electronics - Components Misc. (4.54%)
Sanmina Corp.* 400,000 45,725,000
Solectron Corp.* 1,400,000 61,600,000
---------------
107,325,000
---------------
Electronics - Products Misc. (2.78%)
Aeroflex, Inc.* 817,437 48,637,501
Jabil Circuit, Inc.* 300,000 17,118,750
---------------
65,756,251
---------------
Electronics - Semiconductor Components (16.18%)
Altera Corp.* 475,000 19,445,312
Amkor Technology, Inc.* 800,000 18,000,000
Analog Devices, Inc.* 650,000 42,250,000
Applied Materials, Inc.* 550,000 29,218,750
Applied Science & Technology, Inc.* 575,000 8,265,625
ASM Lithography Holding N.V.*
(Netherlands) 900,000 25,031,250
Atmel Corp.* 2,200,000 32,862,500
Cypress Semiconductor Corp.* 900,000 33,693,750
Integrated Device Technology, Inc.* 850,000 47,865,625
Intel Corp. 400,000 18,000,000
KLA-Tencor Corp.* 700,000 23,668,750
Micron Technology, Inc. 1,300,000 45,175,000
PMC-Sierra, Inc.* 75,000 12,712,500
PRI Automation, Inc.* 450,000 10,181,250
Taiwan Semiconductor Manufacturing Co.
Ltd.* (ADR) (Taiwan) 699,430 15,868,318
---------------
382,238,630
---------------
Fiber Optics (7.15%)
CIENA Corp.* 600,400 63,117,050
Corning, Inc. 700,000 53,550,000
Finisar Corp.* 873,300 25,161,956
JDS Uniphase Corp.* 100,000 8,143,750
Sycamore Networks, Inc.* 200,000 12,650,000
TyCom, Ltd.* (Bermuda) 188,880 6,327,480
---------------
168,950,236
---------------
Media - Radio/TV (0.62%)
Infinity Broadcasting Corp. (Class A)* 400,000 13,300,000
Westwind Media.com, Inc.* (r) 500,000 1,250,000
---------------
14,550,000
---------------
Medical - Home & Outpatient (0.00%)
Laser Medical Corp.* (r) 491,800 50
---------------
Telecom - Equipment (6.13%)
Advanced Fibre Communications, Inc.* 550,000 17,909,375
Advanced Switching Communications,
Inc.* 14,280 145,478
ANTEC Corp.* 450,000 5,484,375
Globecomm Systems Inc.* 300,000 2,925,000
Newpoint Technologies, Inc.* (r) 160,000 480,000
Nokia Corp. (ADR) (Finland) 1,000,000 42,750,000
Nortel Networks Corp. (Canada) 500,000 22,750,000
QUALCOMM, Inc.* 550,000 35,810,170
Tut Systems, Inc.* 500,000 16,625,000
---------------
144,879,398
---------------
Telecom - Services (2.32%)
Global Crossing Ltd.* (Bermuda) 1,000,000 23,625,000
Global Light Telecommunications, Inc.*
(Canada) 500,000 3,750,000
Metromedia Fiber Network, Inc.
(Class A)* 800,000 15,200,000
Primus Telecommunications Group,
Inc. * 675,000 3,417,188
Telocity, Inc.* 669,050 1,923,519
WinStar Communications, Inc.* 350,000 6,825,000
---------------
54,740,707
---------------
TOTAL COMMON STOCKS
(Cost $1,798,717,297) (91.74%) 2,167,618,702
---------- ---------------
PREFERRED STOCKS
Computer - Services (0.16%)
Gomez Advisors, Inc., Ser C, Conv* (r) 294,118 1,500,000
Gomez Advisors, Inc., Ser D, Conv* (r) 64,337 328,119
Micro-ASI, Inc., Ser A* (r) 2,072,825 2,000,000
---------------
3,828,119
---------------
Computer - Software (0.36%)
Bluestone Software, Inc.* (r) 168,529 3,623,373
BuildNet, Inc., Ser C, Conv* (r) 681,817 3,000,000
Open Port Technology, Inc., Ser E* (r) 527,950 849,999
Verisity Ltd.* (Israel) (r) 135,768 999,999
---------------
8,473,371
---------------
Electronics (0.13%)
Silicon Genesis Corp., Ser C, Conv* (r) 431,035 3,000,004
---------------
Medical - Home & Outpatient (0.05%)
Laser Medical Corp., Ser A* (r) 500,000 500,000
Laser Medical Corp., Ser B, Conv* (r) 500,000 666,667
---------------
1,166,667
---------------
Telecom - Cellular (0.06%)
Transcept, Inc., Ser C, Conv* (r) 1,000,000 1,400,000
---------------
Telecom - Services (0.07%)
Convergent Networks, Inc., Ser D,
Conv* (r) 100,000 1,635,000
---------- ---------------
TOTAL PREFERRED STOCKS
(Cost $17,329,788) (0.83%) 19,503,161
---------- ---------------
INTEREST CREDIT PAR VALUE
RATE RATING** (000s OMITTED)
---------- ---------- ------------
BONDS
Computer - Services (0.04%)
Candescent Technologies
Corp., Conv Sr Sub Deb
05-01-03 (R) 7.00% CCC $1,250 1,000,000
---------------
Transport - Air Freight (0.02%)
Piedmont Aviation, Inc.,
Equip Tr Cert 1988 Ser F
03-28-09 10.35 B+ 500 488,590
---------------
TOTAL BONDS
(Cost $1,524,507) (0.06%) 1,488,590
---------- ---------------
INTEREST
RATE
----------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (7.30%)
Investment in a joint repurchase
agreement transaction with
UBS Warburg, Inc. - Dated
10-31-00, due 11-01-00
(Secured by U.S. Treasury
Bonds, 7.125% thru 13.250%,
due 05-15-14 thru 02-15-23)
- Note A 6.56% 172,550 $172,550,000
---------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 133
---------------
TOTAL SHORT-TERM INVESTMENTS (7.30%) 172,550,133
---------- ---------------
TOTAL INVESTMENTS (99.93%) 2,361,160,586
---------- ---------------
OTHER ASSETS AND LIABILITIES, NET (0.07%) 1,688,539
---------- ---------------
TOTAL NET ASSETS (100.00%) $2,362,849,125
========== ===============
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:
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S OCTOBER 31,
ISSUER, DESCRIPTION DATE COST NET ASSETS 2000
------------------- -------- ---------- ---------- ----------
Bluestone Software, Inc. -
Preferred Stock 09-24-99 $1,449,999 0.15% $3,623,373
BuildNet, Inc. -
Preferred Stock 10-25-99 3,000,000 0.13 3,000,000
Commercialware, Inc. -
Common Stock 08-06-99 1,000,000 0.04 1,000,000
Convergent Networks, Inc. -
Preferred Stock 09-22-00 1,635,000 0.07 1,635,000
First Internet Bank
of Indiana -
Common Stock 02-07-00 999,939 0.04 999,939
Gomez Advisors, Inc. -
Preferred Stock 11-01-99 1,500,000 0.06 1,500,000
Preferred Stock 10-19-00 328,119 0.01 328,119
Laser Medical Corp. -
Common Stock 01-12-98 50 0.00 50
Preferred Stock 01-12-98 500,000 0.02 500,000
Preferred Stock 04-05-00 666,667 0.03 666,667
LetsBuyit.com N.V. -
Common Stock 12-03-99 2,000,000 0.03 768,667
Micro-ASI, Inc. -
Preferred Stock 04-11-00 2,000,000 0.09 2,000,000
Newpoint Technologies, Inc. -
Common Stock 03-24-98 480,000 0.02 480,000
Open Port Technology, Inc. -
Preferred Stock 01-25-00 850,000 0.04 849,999
ScreamingMedia, Inc. -
Common Stock 08-03-00 2,414,523 0.09 2,107,626
Silicon Genesis Corp. -
Preferred Stock 09-05-00 3,000,004 0.13 3,000,004
SuSE Linux AG -
Common Stock 07-06-00 1,238,724 0.05 1,102,280
Transcept, Inc. -
Preferred Stock 12-09-99 1,400,000 0.06 1,400,000
Verisity Ltd. -
Preferred Stock 03-01-99 999,999 0.04 999,999
Westwind Media.com, Inc. -
Common Stock 12-14-98 500,000 0.05 1,250,000
---- ------------
1.15% $27,211,723
==== ============
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A security amounted to $1,000,000 or 0.04% of net
assets as of October 31, 2000.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
</TABLE>
<TABLE>
<CAPTION>
Portfolio Concentration
------------------------------------------------------------------------
The 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, 2000 assigned to the various countries.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION FUND'S NET ASSETS
----------------------- -----------------
<S> <C>
Bermuda 1.27%
Canada 1.38
Finland 1.81
Ireland 0.85
Israel 0.04
Netherlands 1.50
Taiwan 0.67
United States
Long-Term 85.11
Short-Term 7.30
-------
TOTAL INVESTMENTS 99.93%
=======
See notes to financial statements.
</TABLE>
NOTE A--
ACCOUNTING POLICIES
John Hancock Technology Fund (the "Fund") is a diversified series of
John Hancock Series Trust, an open-end management investment company,
registered under the Investment Company Act of 1940. Prior to March 1,
2000, the Fund was known as John Hancock Global Technology Fund. 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.
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.
On June 6, 2000, the Board of Trustees of the Fund voted to split the
shares six for one, effective August 11, 2000. All per share amounts
and net asset values have been restated to reflect the stock split.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing services or at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in a joint repurchase
agreement transaction. Aggregate cash balances are invested in one or
more large 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.
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, resulting from changes in the
exchange rate.
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.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities 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 determined at the fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution and service fees, if any, are
calculated daily at the class level based on the appropriate net assets
of each class and the specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a
specific fund will be 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.
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 borrowing.
In addition, a commitment fee is charged to each fund 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 under
the line of credit during the year ended October 31, 2000.
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, 2000, the Fund loaned securities having a
market value of $126,522,064 collateralized by securities in the amount
of $128,012,902.
OPTIONS The Fund may enter into option contracts. 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 price
volatility of financial instruments. 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
contracts' 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
year-end Statements of Assets and Liabilities.
Written option transactions for the year ended October 31, 2000 were as
follows:
CONTRACTS AMOUNTS
--------- ---------
Outstanding, beginning of period -- $--
Options written 6,299 3,641,857
Options exercised (6,049) (3,267,619)
Options expired (250) (374,238)
--------- ---------
Outstanding, end of period -- $--
========= =========
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 or, in the case of some
foreign securities, on the date thereafter when the Fund identifies 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 dividends and 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with accounting principles generally accepted in the United
States of America incorporates estimates made by management in
determining the reported amount of assets, liabilities, revenues and
expenses of the Fund. Actual results could differ from these estimates.
NOTE B--
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Fund has an investment management contract with the Adviser. Under
the 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 average daily net asset value of the Fund
for the 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 is responsible for managing the Fund's
investment business affairs and overseeing the investment activities of
the subadviser. The Adviser has subadvisory agreements with American
Fund Advisors, Inc. The Fund is not responsible for the payment of the
subadviser's fees. 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. To reimburse JH Funds
for the services it provides as distributor of shares of the Fund, the
Fund has adopted a Distribution Plan with respect to Class A, Class B
and Class C pursuant to Rule 12b-1 under the Investment Company Act of
1940. Accordingly, the Fund makes payments to JH Funds, 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.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $2,307,961 with regard to sales of Class A shares. Of
this amount, $336,205 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $1,389,500 was paid as
sales commissions to unrelated broker-dealers and $582,256 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 Life Insurance Company ("JHLICo"), is the indirect
sole shareholder of Signator Investors. Effective May 1, 2000, all Class
C shares retail purchases are assessed a 1.00% up-front sales charge.
During the year ended October 31, 2000, JH Funds received net up-front
sales charges of $394,097 with regard to sales of Class C shares. Of
this amount, $379,427 was paid as sales commissions to unrelated broker-
dealers and $14,670 was paid as sales commissions to sales personnel of
Signator Investors.
Class B shares which are redeemed within six years of purchase are
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. Class C shares which are redeemed within one year of purchase
will be subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original purchase
cost of the shares being redeemed. Proceeds from the CDSC are paid to JH
Funds and are used in whole or in part to defray its expenses for
providing distribution related services to the Fund in connection with
the sale of Class B and Class C shares. For the year ended October 31,
2000, CDSCs received by JH Funds amounted to $2,437,613 for Class B
shares and $84,484 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo.
The Fund pays monthly transfer agent fees based on the number of
shareholder accounts and certain out-of-pocket expenses.
Mr. Stephen L. Brown and Ms. Maureen R. Ford are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the
Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. The
Deferred Compensation Plan investments 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 year ended October 31, 2000, aggregated $2,005,902,633 and
$904,145,079, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the year
ended October 31, 2000.
The cost of investments owned at October 31, 2000 (excluding corporate
savings account) for federal income tax purposes was $1,990,993,090.
Gross unrealized appreciation and depreciation of investments aggregated
$906,155,931 and $535,988,568, respectively, resulting in net unrealized
appreciation of $370,167,363.
NOTE D--
RECLASSIFICATION OF ACCOUNTS
During the year ended October 31, 2000, the Fund has reclassified
amounts to reflect a decrease in accumulated net realized gain on
investments of $75,407,994, a decrease in accumulated net investment
loss of $26,985,923 and an increase in capital paid-in of $48,422,071.
This represents the amount necessary to report these balances on a tax
basis, excluding certain temporary difference, as of October 31, 2000.
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 certain differences in
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 (loss) per share in the financial highlights
excludes these adjustments.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
John Hancock Series Trust -
John Hancock Technology Fund
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the John Hancock Technology
Fund (formerly Global Technology Fund) (the Fund), one of the portfolios
constituting John Hancock Series Trust, as of October 31, 2000, 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 four 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
two periods in the period ended October 31, 1996 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 auditing standards generally
accepted in the United States of America. 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, 2000, 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 Technology Fund portfolio
of John Hancock Series Trust at October 31, 2000, 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 four years in the
period then ended, in conformity with accounting principles generally
accepted in the United States of America.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
December 4, 2000
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, 2000.
The Fund has designated distributions to shareholders of $79,738,092 as
capital gain dividends.
With respect to the Fund's ordinary taxable income for the fiscal
year ended October 31, 2000, none of the distributions qualify for the
dividends received deduction available to corporations.
Shareholders will be mailed a 2000 U.S. Treasury Department Form
1099-DIV in January 2001. This will reflect the tax character of
distributions for calendar year 2000.
NOTES
John Hancock Funds -- Technology Fund
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.]
John Hancock Funds, Inc.
Member NASD
101 Huntington Avenue
Boston, MA 02199-7603
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of the shareholders of the John Hancock
Technology Fund. It is not authorized for distribution to prospective
investors unless it is preceded or accompanied by the current prospectus,
which details charges, investment objectives and operating policies.
[A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper."]
8300A 10/00
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