------------------------------
The latest report from your
Fund's management team
------------------------------
SEMIANNUAL REPORT
--------------------------------------------------------------------------------
[GRAPHIC]
Technology
Fund
(formerly Global Technology Fund)
APRIL 30, 2000
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
----------------------------------------
TRUSTEES
STEPHEN L. BROWN
JAMES F. CARLIN*
WILLIAM H. CUNNINGHAM
RONALD R. DION*
MAUREEN R. FORD
CHARLES L. LADNER
STEVEN R. PRUCHANSKY*
RICHARD S. SCIPIONE
LT. GEN. NORMAN H. SMITH, USMC (RET.)
JOHN P. TOOLAN
*Members of the Audit Committee
OFFICERS
STEPHEN L. BROWN
Chairman
MAUREEN R. FORD
Vice Chairman and Chief Executive Officer
BARRY J. GORDON
President
OSBERT M. HOOD
Executive Vice President and
Chief Financial Officer
SUSAN S. NEWTON
Vice President and Secretary
JAMES J. STOKOWSKI
Vice President and Treasurer
THOMAS H. CONNORS
Vice President and Compliance Officer
CUSTODIAN
INVESTORS BANK AND TRUST COMPANY
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116-5072
TRANSFER AGENT
JOHN HANCOCK SIGNATURE SERVICES, INC.
1 JOHN HANCOCK WAY, SUITE 1000
BOSTON, MASSACHUSETTS 02217-1000
INVESTMENT ADVISER
JOHN HANCOCK ADVISERS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
SUB-INVESTMENT ADVISER
AMERICAN FUND ADVISORS, INC.
1415 KELLUM PLACE
GARDEN CITY, NY 11530
PRINCIPAL DISTRIBUTOR
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
LEGAL COUNSEL
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109-1803
----------------------------------------
===================================CEO CORNER===================================
DEAR FELLOW SHAREHOLDERS:
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech stocks
pushed the NASDAQ Composite Index to the stratosphere, as investors
single-mindedly pursued anything technology related. But after setting a new
high on March 10 amid significantly heightened volatility, the tables started to
turn rapidly. Concerns about Microsoft's antitrust ruling and out-of-sight
valuation levels finally triggered waves of selling that sent the index down
nearly 25% from its high by the end of April.
--------------------------------------------------------------------------------
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and Chief
Executive Officer, flush right next to second paragraph.]
--------------------------------------------------------------------------------
In this same period, fixed-income securities of all types, including bonds and
preferred stocks, struggled as interest rates rose on fears that the roaring
U.S. economy and the rebound of many others around the world would spark an
inflation outbreak.
While the battle between old and new rages on, several things are clear: More
than ever, diversification and a long-term investment perspective are two of an
investor's best allies. Since not all parts of your portfolio will perform
equally well all the time, we believe it is important to allocate your assets
among different types of investments and funds that target a variety of stock-
and bond-market segments. This strategy, executed under the guidance of a
seasoned investment professional, could provide you with a better chance of both
realizing longer-term results and weathering the market's changing conditions.
Sincerely,
/s/ MAUREEN R. FORD
-------------------
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
BY BARRY J. GORDON AND MARC H. KLEE, CFA, PORTFOLIO MANAGERS
John Hancock
Technology Fund
Meteoric tech-stock rise mutes effects of sharp pullback
at end of six-month period
John Hancock Global Technology Fund changed its name to John Hancock Technology
Fund effective March 1, 2000.
Technology stocks continued to post incredibly strong gains during the past six
months, but it was an extremely volatile investment period. In the final two
months of 1999, investors prolonged their almost year-long love affair with tech
stocks, pushing them to record gains. But tech stocks woke up on the first
trading day of the new year with a hangover. Tax-related selling, profit-taking,
valuation concerns and interest-rate and inflation worries prompted investors to
hand the tech-laden NASDAQ Composite Index a one-day loss of 5.5%. But then tech
stocks climbed higher for the remainder of January through March, as investors
shrugged off many of their earlier concerns. However, the tech sector took a
headlong plunge in early April, posting one of its largest one-day losses ever,
partially in response to the collapse of efforts to settle the government's
anti-trust suit against Microsoft. By the end of the month, the NASDAQ Index was
down 23.51% from its March 10 peak and 5.13% for the year. Even with that
about-face, the remarkable showing earlier in the period still enabled the index
to return 30.14% for the six months ended April 30, 2000.
Fund performance
For the six months ended April 30, 2000, John Hancock Technology Fund's Class A,
Class B and Class C shares posted total returns of 55.15%,
--------------------------------------------------------------------------------
[A 3" x 2" photo at bottom right side of page of John Hancock Technology Fund.
Caption below reads "Technology Fund management team members (l-r): Barry
Gordon, Marc Klee and Alan Loewenstein."]
--------------------------------------------------------------------------------
"We believe the key to investing in technology is to keep our eyes on the
basics."
3
<PAGE>
================================================================================
John Hancock Funds - Technology Fund
"Among our best performers were semiconductor and related companies..."
--------------------------------------------------------------------------------
[Table at top left hand column entitled "Top Five Stock Holdings". The first
listing is Micron Technology 3.0%, the second is EMC Corp. 2.4%, the third
Mercury Interactive 2.3%, the fourth Cisco Systems 2.2% and the fifth Oracle
2.2%. A note below the table reads "As a percentage of net assets on April 30,
2000."]
--------------------------------------------------------------------------------
54.61% and 54.61%, respectively, at net asset value. Those returns were better
than the average science and technology fund's 51.91% 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.
Strategy explained
Ever since we began managing the Fund at its inception in 1983, we have
maintained the same disciplined investment strategy. We're bottom-up investors,
focusing on individual stock selection, looking at companies across the broad
technology group, including hardware, software, the Internet and
telecommunications. Even if there are periods when it appears as if all tech
stocks have the Midas touch, we know that over the long term all tech companies
are not created equal, and their stocks do not always behave alike. We believe
the key to investing in technology is to keep our eyes on the basics. We take a
diversified approach, holding stocks from a wide range of technology subsectors
to better manage risk.
This is a relatively conservative approach for a technology fund, but it's
always the way we've operated and we believe it's especially prudent in these
times. We avoid falling under the spell of technology as a phenomenon, or
swooning over each new idea, such as the Internet. Instead, we draw on our
decades of industry and investment experience, using in-depth research and
fundamental analysis to understand a company and the environment in which it
operates. We then determine its true value and what we're willing to pay for it.
This includes realistically assessing a company's long-term business prospects
and its potential for profit growth.
Semiconductor stocks lead
Among our best performers were semiconductor and related companies -- a group in
which we had increased our stake just prior to the beginning of the period. They
did exceedingly well as the demand for chips outstripped supply, driving prices
higher. In addition to strong growth in personal computers, many chip makers
benefited from increasing demand for a whole range of products -- including
various telecommunications products, cable television, radios, medical devices,
cars, stereos, Internet-access devices and a variety of consumer products. Some
of the Fund's best performers were chipmakers Analog Devices, Cypress
Semiconductor, Intel, Integrated Device Technology and Micron Technology. Stock
prices for semiconductor equipment manufacturers also zoomed higher. These
companies make the machines and tools needed to make a chip -- etching,
cleaning, cutting, polishing, slicing and dicing. Among our
--------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Micron
Technology followed by an up arrow with the phrase "Improving demand, pricing
for semiconductor chips." The second listing is Oracle followed by an up arrow
with the phrase "Dominant player in fast-growing Internet infrastructure
segment." The third listing is Microsoft followed by a down arrow with the
phrase "Anti-trust actions cool enthusiasm." A note below the table reads "See
`Schedule of Investments.' Investment holdings are subject to change."]
--------------------------------------------------------------------------------
4
<PAGE>
================================================================================
John Hancock Funds - Technology Fund
--------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 2000 ". The
chart is scaled in increments of 10% with 0% at the bottom and 60% at the top.
The first bar represents the 55.15% total return for John Hancock Technology
Fund Class A. The second bar represents the 54.61% total return for John Hancock
Technology Fund Class B. The third bar represents the 54.61% total return for
John Hancock Technology Fund Class C. The fourth bar represents the 51.91% 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".]
--------------------------------------------------------------------------------
big winners in this category were Applied Materials, ASM Lithography,
KLA-Tencor, Novellus Systems and PRI Automation.
Internet-related companies mixed
While dot-com stocks tumbled during the period, many of the companies that form
the infrastructure of the Internet enjoyed tremendous gains. The ongoing
explosion in Internet usage helped propel Oracle, which makes the software that
has become the foundation for Web sites, e-commerce and corporate networks, to
triple-digit gains. Cisco Systems, which provides the backbone to the Internet,
followed close behind. Two other holdings, storage company EMC and telephone
handset maker Nokia, both benefited from the explosion in data transmission that
has been aided by the growth of the Internet.
Many of our disappointments were limited to dot-com companies. Although we
had dramatically reduced our holdings in this group going into the period, we
weren't immune to the April sell-off that wiped away much of their value. One of
our biggest disappointments was Internet search service Ask Jeeves. We continue
to maintain our stake in the company because we believe that it has plenty to
gain with its entry into business-to-business applications. Outside those
Internet companies, Microsoft was also a disappointment in response to a move by
the Justice Department to break up the company into two parts.
Outlook
We remain optimistic about the prospects for technology stocks, although after
their recent out-of-the-ordinary performance investors should not expect returns
to approach the levels we enjoyed over the past six months. While no longer
cheap, many technology stocks remain reasonably valued. Furthermore, with
fundamentals increasingly solid at many tech companies, we believe an even
broader range of technology stocks can continue to outperform the market, albeit
on a more modest basis. That said, we also expect that heightened volatility
will remain a fact of life, especially while the prospects for further
interest-rate hikes remain real. In this type of environment, selectivity --
choosing individual companies based on good valuations and fundamentals --
becomes more important than ever. In addition, we encourage investors to keep a
long-term perspective and set appropriate expectations when investing in this
more volatile, cutting-edge sector of the market.
"...we also expect that heightened volatility will remain a fact of life..."
--------------------------------------------------------------------------------
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.
5
<PAGE>
================================================================================
John Hancock Funds - Technology Fund
--------------------------------------------------------------------------------
A LOOK AT PERFORMANCE
--------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock 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 (1% declining to 0% after one year).
All figures represent past performance and are no guarantee of future results.
Keep in mind that the total return and share price of the Fund's investments
will fluctuate. As a result, your Fund's shares may be worth more or less than
their original cost, depending on when you sell them. Please read your
prospectus for a discussion of the risks associated with industry segment
investing, before you invest or send money.
--------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------
For the period ended March 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
---------- ------- ---------
Cumulative Total Returns 118.71%(1) 520.28% 1,077.16%
Average Annual Total Returns 118.71%(1) 44.05% 27.96%
--------------------------------------------------------------------------------
CLASS B
--------------------------------------------------------------------------------
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
---------- ------- ----------
Cumulative Total Returns 123.66%(1) 528.46% 668.95%
Average Annual Total Returns 123.66%(1) 44.43% 38.68%
--------------------------------------------------------------------------------
CLASS C
--------------------------------------------------------------------------------
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
---------- ----------
Cumulative Total Returns 125.38%(1) 155.56%
Average Annual Total Returns 125.38%(1) 137.99%
Note to Performance
(1) The Fund's recent returns occurred during an unusual period of performance
in certain areas of the market in which the Fund invests.
6
<PAGE>
================================================================================
John Hancock Funds - Technology Fund
--------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
--------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
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, 1989, before sales charge, and is equal to $109,777 as of April 30,
2000. The second line represents the same investment made in the John Hancock
Technology Fund, after sales charge, and is equal to $104,288 as of April 30,
2000. The third line represents the Standard & Poor's 500 Index and is equal to
$55,150 as of April 30, 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 $68,446 as of April 30,
2000. The second line represents the Standard & Poor's 500 Index and is equal to
$35,278 as of April 30, 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 $22,979 as of April 30,
2000. The second line represents the same investment made in the John Hancock
Technology Fund, after sales charge, and is equal to $22,749 as of April 30,
2000. The third line represents the Standard & Poor's 500 Index and is equal to
$11,896 as of April 30, 2000.
*No contingent deferred sales charge applicable.
--------------------------------------------------------------------------------
7
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on April 30, 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
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $1,716,951,606) .................... $2,589,096,180
Preferred stocks (cost - $14,106,026) .................... 16,205,668
Bonds (cost - $1,490,188) ................................. 1,475,725
Joint repurchase agreement (cost - $180,739,000) .......... 180,739,000
Corporate savings account ................................. 575
--------------
2,787,517,148
Receivable for shares sold ................................. 6,513,792
Interest receivable ........................................ 105,597
Other assets ............................................... 31,461
--------------
Total Assets ............................. 2,794,167,998
-----------------------------------------------------------
Liabilities:
Payable for investments purchased .......................... 11,217,177
Payable for shares repurchased ............................. 1,993,135
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................... 1,275,728
--------------
Total Liabilities ........................ 14,486,040
-----------------------------------------------------------
Net Assets:
Capital paid-in ............................................ 1,760,454,592
Accumulated net realized gain on investments,
foreign currency transactions and written options ......... 155,748,038
Net unrealized appreciation of investments ................. 874,229,753
Accumulated net investment loss ............................ (10,750,425)
--------------
Net Assets ............................... $2,779,681,958
===========================================================
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 - $1,141,079,963/12,785,239 ........................ $89.25
=============================================================================
Class B - $1,540,131,873/18,226,890 ........................ $84.50
=============================================================================
Class C - $98,470,122/1,165,356 - Note A ................... $84.50
=============================================================================
Maximum Offering Price Per Share*
Class A - ($89.25/0.95) .................................... $93.95
=============================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Investment Income:
Interest .................................................. $4,573,488
Securities lending income - Note A ........................ 1,690,032
Dividends (net of foreign withholding taxes
of $28,121) .............................................. 319,055
------------
6,582,575
------------
Expenses:
Investment management fee - Note B ....................... 8,058,992
Distribution and service fee - Note B
Class A ................................................ 1,439,346
Class B ................................................ 6,059,779
Class C ................................................ 300,056
Transfer agent fee - Note B .............................. 1,149,231
Registration and filing fees ............................. 128,276
Custodian fee ............................................ 79,768
Administrative fee - Note B .............................. 28,885
Trustees' fees ........................................... 20,003
Miscellaneous ............................................ 15,987
Printing ................................................. 15,260
Auditing fee ............................................. 9,243
Legal fees ............................................... 6,647
------------
Total Expenses .......................... 17,311,473
-----------------------------------------------------------
Net Investment Loss ..................... (10,728,898)
-----------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments,
Foreign Currency Transactions and Written Options:
Net realized gain on investments sold ..................... 154,430,978
Net realized gain on written options ...................... 1,818,841
Net realized loss on foreign currency transactions ........ (1,633)
Change in net unrealized appreciation/depreciation
of investments ........................................... 476,680,194
------------
Net Realized and Unrealized
Gain on Investments,
Foreign Currency Transactions
and Written Options ..................... 632,928,380
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ............... $622,199,482
===========================================================
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ............................................................. ($6,616,130) ($10,728,898)
Net realized gain on investments sold, foreign currency transactions and
written options ............................................................... 92,561,445 156,248,186
Change in net unrealized appreciation/depreciation of investments ............... 306,298,964 476,680,194
--------------- ---------------
Net Increase in Net Assets Resulting from Operations .......................... 392,244,279 622,199,482
--------------- ---------------
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 1,125,287,172
--------------- ---------------
Net Assets:
Beginning of period ............................................................. 264,257,400 1,090,586,145
--------------- ---------------
End of period (including accumulated net investment loss
$21,527 and $10,750,425, respectively) ........................................ $1,090,586,145 $2,779,681,958
=============== ===============
</TABLE>
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference reflects
earnings less expenses, any investment gains and losses, distributions paid to
shareholders and any increase or decrease in money shareholders invested in the
Fund. The footnote illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding dollar
value.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Statement of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
* Analysis of Fund Share Transactions:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................. 12,955,560 $596,764,933 8,873,976 $771,810,774
Shares issued to shareholders in reinvestment of
distributions .............................................. 51,384 1,622,378 348,729 23,145,687
----------- ------------- ---------- -------------
13,006,944 598,387,311 9,222,705 794,956,461
Less shares repurchased ...................................... (10,858,023) (492,728,878) (5,132,021) (446,232,495)
----------- ------------- ---------- -------------
Net increase ................................................. 2,148,921 $105,658,433 4,090,684 $348,723,966
=========== ============= ========== =============
CLASS B
Shares sold .................................................. 9,077,145 $418,467,599 10,380,141 $857,787,848
Shares issued to shareholders in reinvestment of
distributions .............................................. 21,803 627,794 390,287 24,596,349
----------- ------------- ---------- -------------
9,098,948 419,095,393 10,770,428 882,384,197
Less shares repurchased ...................................... (2,296,233) (100,920,508) (2,204,200) (182,194,169)
----------- ------------- ---------- -------------
Net increase ................................................. 6,802,715 $318,174,885 8,566,228 $700,190,028
=========== ============= ========== =============
CLASS C**
Shares sold .................................................. 263,969 $13,356,375 1,325,033 $111,501,906
Shares issued to shareholders in reinvestment of
distributions .............................................. -- -- 10,361 653,157
----------- ------------- ---------- -------------
263,969 13,356,375 1,335,394 112,155,063
Less shares repurchased ...................................... (15,807) (813,461) (418,200) (35,781,885)
----------- ------------- ---------- -------------
Net increase ................................................. 248,162 $12,542,914 917,194 $76,373,178
=========== ============= ========== =============
</TABLE>
** Class C shares commenced operations on March 1, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD FROM
------------------------------- JANUARY 1, 1996 TO
1994 1995 OCTOBER 31, 1996(6)
------------- ------------- -------------------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................ $17.45 $17.84 $24.51
------------- ------------- -------------
Net Investment Loss(1) ...................................... (0.22) (0.22)(2) (0.14)
Net Realized and Unrealized Gain on Investments
and Written Options ....................................... 1.87 8.53 1.42
------------- ------------- -------------
Total from Investment Operations .......................... 1.65 8.31 1.28
------------- ------------- -------------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Written Options ....................................... (1.26) (1.64) --
------------- ------------- -------------
Net Asset Value, End of Period .............................. $17.84 $24.51 $25.79
============= ============= =============
Total Investment Return at Net Asset Value(5) ............... 9.62% 46.53% 5.22%(7)
Total Adjusted Investment Return at Net Asset Value(5) ...... -- 46.41%(3) --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .................... $52,193 $155,001 $166,010
Ratio of Expenses to Average Net Assets ..................... 2.16% 1.67%(2) 1.57%(8)
Ratio of Net Investment Loss to Average Net Assets .......... (1.25%) (0.89%)(2) (0.68%)(8)
Portfolio Turnover Rate ..................................... 67% 70% 64%
<CAPTION>
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
------------------------------------------------ APRIL 30, 2000
1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period .................... $25.79 $30.05 $28.46 $60.15
------------- ------------- ------------- -------------
Net Investment Loss(1) .................................. (0.27) (0.28) (0.36) (0.25)
Net Realized and Unrealized Gain on Investments
and Written Options ................................... 5.76 1.09 32.30 32.38
------------- ------------- ------------- -------------
Total from Investment Operations ...................... 5.49 0.81 31.94 32.13
------------- ------------- ------------- -------------
Less Distributions:
Distributions from Net Realized Gain on Investments
Sold and Written Options .............................. (1.23) (2.40) (0.25) (3.03)
------------- ------------- ------------- -------------
Net Asset Value, End of Period .......................... $30.05 $28.46 $60.15 $89.25
============= ============= ============= =============
Total Investment Return at Net Asset Value(5) ........... 21.90% 3.95% 113.09% 55.15%(7)
Total Adjusted Investment Return at Net Asset Value(5) .. -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................ $184,048 $186,259 $523,013 $1,141,080
Ratio of Expenses to Average Net Assets ................. 1.51% 1.50% 1.35% 1.15%(8)
Ratio of Net Investment Loss to Average Net Assets ...... (0.95%) (0.97%) (0.78%) (0.56%)(8)
Portfolio Turnover Rate ................................. 104% 86% 61% 18%
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: net investment income, gains (losses),
dividends and total investment return of the Fund. It shows how the Fund's net
asset value for a share has changed since the end of the previous period.
Additionally, important relationships between some items presented in the
financial statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Financial Highlights (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD FROM
------------------------------ JANUARY 1, 1996 TO
1994(4) 1995 OCTOBER 31, 1996(6)
----------- ----------- -------------------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ................... $17.24 $17.68 $24.08
----------- ----------- -----------
Net Investment Loss(1) ................................. (0.35) (0.39)(2) (0.28)
Net Realized and Unrealized Gain on Investments and
Written Options ...................................... 2.05 8.43 1.40
----------- ----------- -----------
Total from Investment Operations ...................... 1.70 8.04 1.12
----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Written Options .................................. (1.26) (1.64) --
----------- ----------- -----------
Net Asset Value, End of Period ......................... $17.68 $24.08 $25.20
=========== =========== ===========
Total Investment Return at Net Asset Value(5) .......... 10.02%(7) 45.42% 4.65%(7)
Total Adjusted Investment Return at Net Asset Value(5) . -- 45.30%(3) --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............... $9,324 $35,754 $50,949
Ratio of Expenses to Average Net Assets ................ 2.90%(8) 2.41%(2) 2.27%(8)
Ratio of Net Investment Loss to Average Net Assets ..... (1.98%)(8) (1.62%)(2) (1.38%)(8)
Portfolio Turnover Rate ................................ 67% 70% 64%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
------------------------------------------- APRIL 30, 2000
1997 1998 1999 (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period ................... $25.20 $29.12 $27.29 $57.28
----------- ----------- ----------- -----------
Net Investment Loss(1) ................................. (0.45) (0.45) (0.68) (0.53)
Net Realized and Unrealized Gain on Investments and
Written Options ...................................... 5.60 1.02 30.92 30.78
----------- ----------- ----------- -----------
Total from Investment Operations ...................... 5.15 0.57 30.24 30.25
----------- ----------- ----------- -----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Written Options .................................. (1.23) (2.40) (0.25) (3.03)
----------- ----------- ----------- -----------
Net Asset Value, End of Period ......................... $29.12 $27.29 $57.28 $84.50
=========== =========== =========== ===========
Total Investment Return at Net Asset Value(5) .......... 21.04% 3.20% 111.70% 54.61%(7)
Total Adjusted Investment Return at Net Asset Value(5) . -- -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............... $65,851 $77,999 $553,359 $1,540,132
Ratio of Expenses to Average Net Assets ................ 2.21% 2.20% 2.05% 1.85%(8)
Ratio of Net Investment Loss to Average Net Assets ..... (1.65%) (1.67%) (1.47%) (1.27%)(8)
Portfolio Turnover Rate ................................ 104% 86% 61% 18%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Financial Highlights (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
----------------- ----------------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................... $38.54 $57.28
---------- ----------
Net Investment Loss(1) ................................................. (0.51) (0.55)
Net Realized and Unrealized Gain on Investments and Written Options .... 19.25 30.80
---------- ----------
Total from Investment Operations ...................................... 18.74 30.25
---------- ----------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold
and Written Options .................................................. -- (3.03)
---------- ----------
Net Asset Value, End of Period ......................................... $57.28 $84.50
========== ==========
Total Investment Return at Net Asset Value(5) .......................... 48.62%(7) 54.61%(7)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ............................... $14,215 $98,470
Ratio of Expenses to Average Net Assets ................................ 2.16%(8) 1.85%(8)
Ratio of Net Investment Loss to Average Net Assets ..................... (1.57%)(8) (1.27%)(8)
Portfolio Turnover Rate ................................................ 61% 18%
</TABLE>
(1) Based on the average of the shares outstanding at the end of each month.
(2) Reflects voluntary fee reductions and expense limitations in effect during
the year ended December 31, 1995. As a result of such fee reductions,
expenses of Class A and Class B shares of the Fund reflect reductions of
$0.02 and $0.03 per share, respectively. Absent such reductions the ratio
of expenses to average net assets would have been 1.79% and 2.53% for
Class A and Class B shares, respectively, and the ratio of net investment
loss to average net assets would have been (1.01%) and (1.74%) for Class A
and Class B shares, respectively.
(3) An estimated total return calculation which takes into consideration fees
and expenses waived or borne by the Adviser during the periods shown.
(4) Class B shares commenced operations on January 3, 1994.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charge.
(6) Effective October 31, 1996 the fiscal period end changed from December 31
to October 31.
(7) Not annualized.
(8) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
Schedule of Investments
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Technology Fund on April 30, 2000. It's divided into four main categories:
common stocks, preferred stocks, bonds and short-term investments. The common
and preferred stocks and bonds are further broken down by industry group.
Short-term investments, which represent the Fund's "cash" position, are listed
last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
COMMON STOCKS
Aerospace/Aircraft Equipment (0.34%)
United Technologies Corp. ................. 150,000 $9,328,125
--------------
Banks (0.04%)
First Internet Bank of Indiana (r) ........ 14,369 1,000,008
--------------
Computer - Graphics (0.45%)
Cadence Design Systems, Inc.* ............ 750,000 12,609,375
--------------
Computer - Integrated Systems (0.13%)
eOn Communications Corp.* ................. 200,000 1,975,000
Vixel Corp.* .............................. 250,000 1,750,000
--------------
3,725,000
--------------
Computer - Internet Services (15.08%)
Akamai Technologies, Inc.* ................ 15,600 1,542,450
America Online, Inc.* ..................... 950,000 56,821,875
Art Technology Group, Inc.* ............... 368,000 22,356,000
Ask Jeeves, Inc.* ......................... 450,000 13,668,750
Audible, Inc.* ............................ 300,000 1,818,750
Calico Commerce, Inc.* .................... 500,000 8,414,050
China.com Corp. (Class A)*
(Hong Kong) ............................. 41,970 2,040,791
E*TRADE Group, Inc.* ...................... 350,000 7,525,000
El Sitio, Inc.* (Argentina) ............... 250,000 2,687,500
DoubleClick, Inc.* ........................ 280,000 21,245,000
Exodus Communications, Inc.* .............. 450,000 39,796,875
Infospace, Inc.* .......................... 320,000 22,980,000
Inktomi Corp.* ............................ 238,600 36,729,487
Internap Network Services Corp.* .......... 76,700 2,952,950
Keynote Systems, Inc.* .................... 200,000 8,975,000
NBC Internet, Inc. (Class A)* ............ 500,000 11,562,500
Net Perceptions, Inc.* .................... 550,000 10,656,250
Netpliance, Inc.* ......................... 180,700 1,626,300
Niku Corp.* ............................... 34,730 692,429
Onvia.com, Inc.* .......................... 29,680 257,845
Pacific Century CyberWorks Ltd.*
(Hong Kong) ............................. 10,000,000 18,600,000
PartsBase.com, Inc.* ...................... 225,000 1,139,063
Phone.com, Inc.* .......................... 200,000 16,800,000
Portal Software, Inc.* .................... 300,000 13,762,500
RADVision Ltd.* (Israel) .................. 4,800 183,600
RADWARE Ltd.* (Israel) .................... 125,400 3,385,800
RealNetworks, Inc.* ....................... 450,000 21,431,250
Register.com, Inc.* ....................... 12,600 642,600
Saba Software, Inc.* ...................... 38,000 1,080,625
Software Technologies Corp.* .............. 375,000 6,703,125
Telemate.Net Software, Inc.* .............. 210,000 866,250
TIBCO Software, Inc.* ..................... 269,400 23,993,438
VerticalNet, Inc.* ........................ 350,000 18,900,000
Viant Corp.* .............................. 608,200 13,988,600
Webvan Group, Inc.* ....................... 500,000 3,296,900
--------------
419,123,553
--------------
Computer - Memory Devices (4.42%)
EMC Corp.* ................................ 480,000 66,690,000
Seagate Technology, Inc.* ................. 600,000 30,487,500
Western Digital Corp.* .................... 3,700,000 25,668,750
--------------
122,846,250
--------------
Computer - Mini/Macro (3.40%)
Cobalt Networks, Inc.* .................... 350,000 11,068,750
Compaq Computer Corp. ..................... 700,000 20,475,000
Dell Computer Corp.* ...................... 950,000 47,618,750
Emulex Corp.* ............................. 125,000 5,671,875
Gateway, Inc.* ............................ 175,000 9,668,750
--------------
94,503,125
--------------
Computer - Peripheral Equipment (1.14%)
JNI Corp.* ................................ 350,000 13,978,125
Lexmark International Group, Inc.
(Class A)* .............................. 150,400 17,747,200
--------------
31,725,325
--------------
Computer - Services (4.25%)
Active Software, Inc.* .................... 300,000 12,093,750
IMRglobal Corp.* .......................... 650,000 8,368,750
LetsBuyIt.com N.V.* (Netherlands) (r) ..... 576,539 1,806,961
Mercury Interactive Corp.* ................ 700,000 63,000,000
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
Computer - Services (continued)
Novell, Inc.* ............................. 500,000 $9,812,500
Unisys Corp.* ............................. 1,000,000 23,187,500
--------------
118,269,461
--------------
Computer - Software (14.89%)
BEA Systems, Inc.* ........................ 870,000 41,977,500
Bluestone Software, Inc.* ................. 183,410 3,863,073
BMC Software, Inc.* ....................... 325,000 15,214,062
Commercialware, Inc. (r) .................. 1,000,000 1,000,000
Computer Associates International, Inc. ... 700,000 39,068,750
Diversinet Corp.* (Canada) ................ 1,000,000 8,562,500
Electronics for Imaging, Inc.* ............ 500,000 26,125,000
i2 Technologies, Inc.* .................... 400,000 51,700,000
Inprise Corp.* ............................ 1,000,000 5,250,000
Microsoft Corp.* .......................... 500,000 34,875,000
Networks Associates, Inc.* ................ 523,600 13,319,075
Nuance Communications, Inc.* .............. 40,550 1,224,103
Oracle Corp.* ............................. 750,000 59,953,125
Parametric Technology Corp.* .............. 1,500,000 12,234,450
Rational Software Corp.* .................. 500,000 42,562,500
Research in Motion Ltd.* (Canada) ......... 417,900 17,760,750
Rhythms Net Connections, Inc.* ............ 450,000 9,309,375
SmartForce Plc,* American Depositary
Receipt (ADR) (Ireland) ................. 400,000 19,100,000
TenFold Corp.* ............................ 425,000 10,864,062
--------------
413,963,325
--------------
Electronics - Components Misc. (2.89%)
Sanmina Corp.* ............................ 400,000 24,025,000
Solectron Corp.* .......................... 1,200,000 56,175,000
--------------
80,200,000
--------------
Electronics - Measuring Instruments (1.04%)
Agilent Technologies, Inc.* ............... 325,000 28,803,125
--------------
Electronics - Products Misc. (0.54%)
Aeroflex, Inc.* ........................... 400,000 14,900,000
--------------
Electronics - Semiconductor Components (25.50%)
Altera Corp.* ............................. 425,000 43,456,250
Amkor Technology, Inc.* ................... 850,000 52,009,375
Analog Devices, Inc.* ..................... 600,000 46,087,500
Applied Materials, Inc.* .................. 400,000 40,725,000
Applied Science & Technology, Inc.* ....... 550,000 14,953,125
ASM Lithography Holding N.V.*
(Netherlands) ........................... 681,000 27,240,000
Atmel Corp.* .............................. 800,000 39,150,000
Bookham Technology Plc (ADR)*
(United Kingdom) ........................ 22,370 1,163,240
Conexant Systems, Inc.* ................... 235,900 14,124,512
Cypress Semiconductor Corp.* .............. 850,000 44,146,875
Integrated Device Technology, Inc.* ....... 1,100,000 52,868,750
Intel Corp. ............................... 350,000 44,384,375
KLA-Tencor Corp.* ......................... 400,000 29,950,000
LSI Logic Corp.* .......................... 400,000 25,000,000
Micron Technology, Inc. ................... 600,000 83,550,000
National Semiconductor Corp.* ............ 550,000 33,412,500
Novellus Systems, Inc.* ................... 600,000 40,012,500
PRI Automation, Inc.* ..................... 325,000 25,959,375
Taiwan Semiconductor Manufacturing Co.,
Ltd. (ADR)*(Taiwan) ..................... 400,000 20,925,000
Veeco Intruments, Inc.* ................... 150,000 9,318,750
Vitesse Semiconductor Corp.* .............. 300,000 20,418,750
--------------
708,855,877
--------------
Fiber Optics (4.06%)
Avanex Corp.* ............................. 33,300 4,058,437
CIENA Corp.* .............................. 430,000 53,158,750
Corning, Inc. ............................. 150,000 29,625,000
Finisar Corp.* ............................ 600,000 22,387,500
Sycamore Networks, Inc.* .................. 46,995 3,689,108
--------------
112,918,795
--------------
Media - Cable TV (0.38%)
Charter Communications, Inc.
(Class A)* .............................. 600,000 8,812,500
Classic Communications, Inc.
(Class A)* .............................. 150,000 1,818,750
--------------
10,631,250
--------------
Media - Radio/TV (0.29%)
Infinity Broadcasting Corp. (Class A)* .... 200,000 6,787,500
Westwind Media.com, Inc.* (r) ............ 500,000 1,250,000
--------------
8,037,500
--------------
Medical - Home & Outpatient (0.00%)
Laser Medical Corp.* (r) .................. 491,800 50
--------------
Telecom - Equipment (9.75%)
Advanced Fibre Communications, Inc.* ...... 350,000 15,990,625
ANTEC Corp.* .............................. 450,000 24,187,500
Cisco Systems, Inc.* ...................... 900,000 62,395,290
Equant N.V.* (Netherlands) ................ 250,000 19,500,000
Global Crossing Ltd.* (Bermuda) ........... 475,000 14,962,500
Globecomm Systems, Inc.* .................. 233,705 4,411,182
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
Telecom - Equipment (continued)
Illinois Superconductor Corp.* ............ 493,500 $2,097,375
Metromedia Fiber Network, Inc.
(Class A)* .............................. 800,000 24,700,000
Microwave Power Devices, Inc.* ............ 47,500 308,750
Newpoint Technologies, Inc. (r) ........... 160,000 480,000
Nokia Corp. (ADR) (Finland) ............... 900,000 51,187,500
QUALCOMM, Inc.* ........................... 225,000 24,398,437
Tut Systems, Inc.* ........................ 550,000 26,400,000
--------------
271,019,159
--------------
Telecom - Services (4.56%)
China Telecom Ltd. (ADR)* (Hong Kong) ..... 50,000 7,334,375
Global Light Telecommunications, Inc.*
(Canada) ................................ 500,000 6,750,000
IMPSAT Fiber Networks, Inc.* .............. 10,500 166,031
MCI WorldCom, Inc.* ....................... 275,000 12,495,312
Net2Phone, Inc.* .......................... 300,000 13,237,500
Nortel Networks Corp. (Canada) ............ 230,000 26,047,500
Primus Telecommunications Group,
Inc.* ................................... 675,000 22,148,437
Qwest Communications International,
Inc.* ................................... 450,000 19,518,750
SAVVIS Communications Corp.* .............. 200,000 2,825,000
Telocity, Inc.* ........................... 507,050 4,151,472
WinStar Communications, Inc.* ............ 300,000 11,962,500
--------------
126,636,877
--------------
TOTAL COMMON STOCKS
(Cost $1,716,951,606) (93.15%) 2,589,096,180
-------- --------------
PREFERRED STOCKS
Computer - Services (0.19%)
Gomez Advisors, Inc., Ser C, Conv* (r) .... 294,118 1,500,000
Micro-ASI, Inc., Ser A* (r) ............... 2,000,000 2,000,000
Screaming Media.Net, Inc., Ser B,
Conv* (r) ............................... 155,300 1,739,360
--------------
5,239,360
--------------
Computer - Software (0.30%)
Bluestone Software, Inc.* (r) ............ 168,529 3,549,642
BuildNet, Inc., Ser C, Conv* (r) .......... 681,817 3,000,000
Open Port Technology, Inc., Ser E* (r) .... 527,950 850,000
Verisity Ltd.* (Israel) (r) ............... 135,768 999,999
--------------
8,399,641
--------------
Medical - Home & Outpatient (0.04%)
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 (0.05%)
Transcept, Inc., Ser C, Conv* (r) ......... 1,000,000 1,400,000
--------------
TOTAL PREFERRED STOCKS
(Cost $14,106,026) ............ (0.58%) 16,205,668
-------- --------------
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 (0.01%)
Piedmont Aviation, Inc.,
Equip Tr Cert 1988 Ser F
03-28-09................ 10.35 B+ 500 475,725
--------------
TOTAL BONDS
(Cost $1,490,188) (0.05%) 1,475,725
--------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (6.50%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-28-00, due 05-01-00
(Secured by U.S. Treasury
Bonds, 5.50% thru
9.25%, due 02-15-16 thru
08-15-28)-- Note A ..... 5.73 180,739 180,739,000
--------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.85% ........ 575
--------------
TOTAL SHORT-TERM INVESTMENTS (6.50%) 180,739,575
--------- --------------
TOTAL INVESTMENTS (100.28%) 2,787,517,148
--------- --------------
OTHER ASSETS AND LIABILITIES, NET (0.28%) (7,835,190)
--------- --------------
TOTAL NET ASSETS (100.00%) $2,779,681,958
========= ==============
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Technology Fund
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:
<TABLE>
<CAPTION>
MARKET MARKET
VALUE AS A VALUE
PERCENTAGE AS OF
ACQUISITION ACQUISITION OF FUND'S APRIL 30,
ISSUER, DESCRIPTION DATE COST NET ASSETS 2000
------------------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Bluestone Software, Inc. -
Preferred Stock ........... 09-24-99 $1,449,999 0.12% $3,549,642
BuildNet, Inc. -
Preferred Stock ........... 10-25-99 3,000,000 0.11 3,000,000
Commercialware, Inc. -
Common Stock .............. 08-06-99 1,000,000 0.04 1,000,000
First Internet Bank
of Indiana -
Common Stock .............. 02-07-00 1,000,008 0.04 1,000,008
Gomez Advisors, Inc. -
Preferred Stock ........... 11-01-99 1,500,000 0.06 1,500,000
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 Conv ...... 04-05-00 666,667 0.02 666,667
LetsBuyIt.com N.V. -
Common Stock .............. 12-03-99 2,000,000 0.06 1,806,961
Micro-ASI, Inc. -
Preferred Stock ........... 04-11-00 2,000,000 0.07 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 0.03 850,000
Screaming Media.Net, Inc. -
Preferred Stock ........... 10-05-99 1,739,360 0.06 1,739,360
Transcept, Inc. -
Preferred Stock ........... 12-09-99 1,400,000 0.05 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 0.04 1,250,000
---- -----------
0.78% $21,742,687
==== ===========
</TABLE>
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from registration.
Rule 144A securities amounted to $1,000,000 or 0.04% of net assets as of
April 30, 2000.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is U.S. dollar
denominated.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
Portfolio Concentration (Unaudited)
--------------------------------------------------------------------------------
The Technology Fund invests primarily in equity securities of technology
companies in the United States and abroad. The concentration of investments by
industry category for individual securities held by the Fund is shown in the
schedule of investments.
In addition, concentration of investments can be aggregated by various
countries. The table below shows the percentage of the Fund's investments at
April 30, 2000 assigned to the various countries.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION FUND'S NET ASSETS
----------------------- ------------------
Argentina................................... 0.10%
Bermuda..................................... 0.54
Canada...................................... 2.13
Finland..................................... 1.84
Hong Kong................................... 1.01
Ireland..................................... 0.69
Israel...................................... 0.16
Netherlands................................. 1.75
Taiwan...................................... 0.75
United Kingdom.............................. 0.04
United States
Long Term................................. 84.77
Short Term................................ 6.50
-------
TOTAL INVESTMENTS 100.28%
=======
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Technology Fund
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end management
investment company, registered under the Investment Company Act of 1940. The
Trust consists of five series: John Hancock Technology Fund (the "Fund"), John
Hancock Small Cap Growth Fund, John Hancock Millennium Growth Fund, John Hancock
500 Index Fund, and John Hancock Real Estate Fund. Prior to March 1, 2000, the
Fund was known as John Hancock Global Technology Fund. The other four series of
the Trust are reported in separate financial statements. The investment
objective of the Fund is to achieve long-term capital growth by investing
principally in equity securities of companies that rely extensively on
technology in their product development or operations. Income is a secondary
objective.
The Trustees have authorized the issuance of multiple classes of shares of
the Fund, designated as Class A, Class B and Class C shares. The 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. Beginning May 1, 2000, all retail purchases of Class C shares will be
assessed a 1.00% up-front sales charge.
Significant policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost, which approximates market value. All portfolio
transactions initially expressed in terms of foreign currencies have been
translated into U.S. dollars as described in "Foreign Currency Translation"
below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
Inc., may participate in a joint repurchase agreement. Aggregate cash balances
are invested in one or more repurchase agreements, whose underlying securities
are obligations of the U.S. government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis. Capital gains realized
on some foreign securities are subject to foreign taxes and are accrued, as
applicable.
FEDERAL INCOME TAXES The Fund qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required.
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities is
recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting principles. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and will be in
the same amount, except for the effect of expenses that may be applied
differently to each class.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
purchased from either the date of issue or the date of purchase over the life of
the security, as required by the Internal Revenue Code.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated
18
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Technology Fund
daily to each class of shares based on the appropriate net assets of the
respective classes. Distribution and service fees, if any, are calculated daily
at the class level based on the appropriate net assets of each class and the
specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual fund. Expenses which are not identifiable to a specific fund are
allocated in such a manner as deemed equitable, taking into consideration, among
other things, the nature and type of expense and the relative sizes of the
funds.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues
and expenses of the Fund. Actual results could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. The Fund 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 for the period ended April 30, 2000.
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 April 30, 2000, the Fund loaned securities having a market value of
$152,074,878 collateralized by securities in the amount of $155,116,376.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 P.M., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/(loss) on investments are
translated at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities, other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Over-the-counter options are valued
at the mean between the last bid and asked prices. Upon the writing of a call or
put option, an amount equal to the premium received by the Fund will be included
in the Statement of Assets and Liabilities as an asset and corresponding
liability. The amount of the liability will be subsequently marked to market to
reflect the current market value of the written option.
The Fund may use option contracts to manage its exposure to the stock market.
Writing puts and buying calls will tend to increase the Fund's exposure to the
underlying instrument and buying puts and writing calls will tend to decrease
the Fund's exposure to the underlying instrument, or hedge other Fund
investments.
The maximum exposure to loss for any purchased options will be limited to the
premium initially paid for the option. In all other cases,
19
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Technology Fund
the face (or "notional") amount of each contract at value will reflect the
maximum exposure of the Fund in these contracts, but the actual exposure will be
limited to the change in value of the contract over the period the contract
remains open.
Risks may also arise if counterparties do not perform under the contract's
terms ("credit risk"), or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options have
minimal credit risk as the exchanges act as counterparties to each transaction,
and only present liquidity risk in highly unusual market conditions. To minimize
credit and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit risk
may involve amounts in excess of those reflected in the Fund's year-end
Statement of Assets and Liabilities.
Written option transactions for the period ended April 30, 2000 were as
follows:
CONTRACTS AMOUNTS
----------- -----------
Outstanding, beginning of period -- $ --
Options written 2,300 1,895,091
Options exercised (2,050) (1,520,853)
Options expired (250) (374,238)
------ -----------
Outstanding, end of period -- $ --
====== ===========
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Adviser is responsible for managing the Fund's investment business affairs
and overseeing the investment activities of the sub-adviser. The Adviser has a
sub-investment management contract with American Fund Advisors, Inc. (the
"Sub-Adviser"), under which the Sub-Adviser, subject to the review of the
Trustees and the overall supervision of the Adviser, provides the Fund with
investment services and advice with respect to investment transactions. Under
the present investment management contract, the Fund pays a monthly management
fee to the Adviser equivalent, on an annual basis, to the sum of (a) 0.85% of
the first $100,000,000 of the Fund's average daily net asset value; (b) 0.75% of
the Fund's 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 pays the Sub-Adviser a
monthly management fee equivalent, on an annual basis, to the sum of (a) 0.35%
of the first $100,000,000 of the Fund's average daily net asset value; (b)40% of
the investment advisory fee received by the Adviser for the next $700,000,000 of
average daily net assets; and (c) 0.10% of the average daily net asset value of
the Fund in excess of $800,000,000. The Fund pays a monthly administrative fee
at the rate of $100,000 per annum to the Adviser for performance of
administrative services to the Fund.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the period ended April
30, 2000, net sales charges received with regard to sales of Class A shares
amounted to $1,736,738. Out of this amount, $560,187 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$802,766 was paid as sales commissions to unrelated broker-dealers and $373,785
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.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.00% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds and are used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 2000
contingent deferred sales charges paid to JH Funds amounted to $974,810.
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
20
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Technology Fund
and are used in whole or in part to defray its expenses related to providing
distribution related services to the Fund in connection with the sale of Class C
shares. For the period ended April 30, 2000, contingent deferred sales charges
paid to JH Funds amounted to $40,105.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to JH
Funds for distribution and service expenses, at an annual rate not to exceed
0.30% of Class A average daily net assets and 1.00% of Class B and Class C
average daily net assets to reimburse JH Funds for its distribution and service
costs. A maximum of 0.25% of such payments may be service fees as defined by the
Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc. ("Signature Services"), an indirect subsidiary of JHLICo. The Fund pays the
transfer agent fee based on the number of shareholder accounts and certain
out-of-pocket expenses.
Mr. Stephen L. Brown, Ms. Maureen R. Ford and Mr. Richard S. Scipione are
Trustees and/or officers of the Adviser, and Mr. Barry J. Gordon is a director
and officer of the Sub-Adviser. The compensation of unaffiliated Trustees is
borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John Hancock
funds, as applicable, to cover its liability for the deferred compensation.
Investments to cover the Fund's deferred compensation liability are recorded on
the Fund's books as an other asset. The deferred compensation liability and the
related other asset are always equal and are marked to market on a periodic
basis to reflect any income earned by the investment as well as any unrealized
gains or losses. The investment had no impact on the operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended April 30, 2000, aggregated $1,335,335,258 and $357,126,923, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended April 30, 2000.
The cost of investments owned at April 30, 2000 (excluding the corporate
savings account) for federal income tax purposes was $1,913,536,370. Gross
unrealized appreciation and depreciation of investments aggregated
$1,155,614,447 and $281,634,244, respectively, resulting in net unrealized
appreciation of $873,980,203.
21
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Technology Fund
22
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Technology Fund
23
<PAGE>
================================================================================
---------------
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A Global Investment Management Firm U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhfunds.com Permit No. 75
---------------
--------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Technology Fund. It may be used as sales literature when preceded or accompanied
by the current prospectus, which details charges, investment objectives and
operating policies.
[RECYCLE LOGO] Printed on Recycled Paper 830SA 4/00
6/00
<PAGE>
The latest report from your
Fund's management team
SEMIANNUAL REPORT
Real Estate
Fund
APRIL 30, 2000
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
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
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:
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech
stocks pushed the NASDAQ Composite Index to the stratosphere, as
investors single-mindedly pursued anything technology related. But after
setting a new high on March 10 amid significantly heightened volatility,
the tables started to turn rapidly. Concerns about Microsoft's antitrust
ruling and out-of-sight valuation levels finally triggered waves of
selling that sent the index down nearly 25% from its high by the end of
April.
In this same period, fixed-income securities of all types, including
bonds and preferred stocks, struggled as interest rates rose on fears
that the roaring U.S. economy and the rebound of many others around the
world would spark an inflation outbreak.
While the battle between old and new rages on, several things are clear:
More than ever, diversification and a long-term investment perspective
are two of an investor's best allies. Since not all parts of your
portfolio will perform equally well all the time, we believe it is
important to allocate your assets among different types of investments
and funds that target a variety of stock- and bond-market segments. This
strategy, executed under the guidance of a seasoned investment
professional, could provide you with a better chance of both realizing
longer-term results and weathering the market's changing conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY JAMES K. SCHMIDT, CFA, JAY MCKELVEY, THOMAS FINUCANE AND THOMAS
GOGGINS, PORTFOLIO MANAGERS
[A 3" x 2" photo at bottom right side of page of John Hancock
Real Estate Fund. Caption below reads "Fund management team
members. Standing (l-r): Jay McKelvey, Tom Goggins and Tom
Finucane. Seated (l-r): Lisa Welch, Jim Schmidt and Patricia
Ouimet."]
John Hancock
Real Estate Fund
REITs gain ground as investors seek shelter from volatility
Real estate stocks came back into favor and produced solid returns over
the last six months. For much of 1999, technology stocks and their
impressive returns overshadowed many other fundamentally sound
companies, including real estate investment trusts (REITs), which are
the Fund's prime focus. But with tech stocks sporting sky-high
valuations by the new year, the atmosphere grew more charged, and the
tables finally turned in March and April as tech stocks plunged. The
bumpy ride caused many institutional and individual investors to seek
safer havens and diversify their portfolios with investments such as
real estate. Legendary value investor Warren Buffett also boosted real
estate's image by continuing to take significant positions in a number
of REITs. Even rising interest rates did not curb investor interest.
Consolidations help
John Hancock Real Estate Fund's Class A shares returned 13.32% at net
asset value for the six months ended April 30, 2000. In comparison, the
average real estate fund returned 9.69% at net asset value for the same
period, according to Lipper, Inc.1 The Fund's Class B and Class C
shares, which were launched on March 1, 2000, returned 11.50% and
11.50%, respectively, from inception through April 30, 2000. 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.
"Even rising
interest rates
did not curb
investor
interest."
[Table at top left hand column entitled "Top Five Holdings."
The first listing is Equity Office Properties Trust 5.8%, the
second is Equity Residential Properties Trust 4.2%, the third
Simon Property Group 3.3%, the fourth Apartment Investment &
Management 2.7% and the fifth ProLogis Trust 2.6%. A note
below the table reads "As a percentage of net assets on April
30, 2000."]
"Office REITs
were our
best
performers
in the
period..."
One reason for our outperformance was ongoing industry consolidation.
This worked to our advantage since we held stakes in a number of the
companies that were merged or bought out at attractive prices. These
included Walden Residential Properties, Cadillac Fairview and the
soon-to-be-completed acquisition of Cornerstone Properties, Inc.
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. The Fund's primary focus is REITs, which are companies that
own, operate and develop real estate and are specifically structured to
pass the income from property operations through to shareholders. 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.
[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 Equity Office
Properties followed by an up arrow with the phrase "Low
vacancy rates, strong demand push up office rents." The
second listing is Avalonbay Communities followed by an up
arrow with the phrase "Strong East and West Coast apartment
markets." The third listing is Crescent Real Estate followed
by a down arrow with the phrase "Concern over health-care and
cold storage units." A note below the table reads "See
'Schedule of Investments.' Investment holdings are subject to
change."]
Office REITs strong; retail rebounds
Office REITs were our best performers in the period, and our
overweighting in this category boosted our return. A significant factor
was strong demand for office space in such technology hot spots as
Washington, D.C., Boston and San Francisco, which drove rents ever
upward, to the benefit of Equity Office Properties and Spieker
Properties, whose focus is West-Coast office markets. In addition, urban
development has not overwhelmed demand, as was the problem during the
economic boom of the 1980s. Lastly, fears that telecommuting would
diffuse offices and reduce the demand for space began to subside. Even
with the good office environment, we are keeping an eye on our office
REITs to make sure they do not have too many potentially shaky Internet
companies in their space.
As the vulnerability of dot-com companies became more evident during
this period, our retail REITs rebounded because investors became less
concerned that e-tailers would cut into the sales and profits at
traditional storefront companies. Fourth-quarter earnings for retailers
were even better than expected, which was also a plus.
Apartments, hotels, non-REITs
Apartment REITs also continued to do well. In a climate of rising
interest rates, many people who want to buy homes bide their time in
apartments, awaiting lower rates for financing home mortgages. Two of
the Fund's best performers in this group were Apartment Investment &
Management Co. and Equity Residential Properties Trust. As the largest
of the residential REITs, they benefited most in a market that seemed to
prefer the more liquid, larger companies over the smaller ones.
[Bar chart at top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended April 30, 2000." The chart is scaled in
increments of 5% with 0% at the bottom and 15% at the top.
The first bar represents the 13.32% total return for John
Hancock Real Estate Fund Class A. The second bar represents
the 11.50%* total return for John Hancock Real Estate Fund
Class B. The third bar represents the 11.50%* total return
for John Hancock Real Estate Fund Class C. The fourth bar
represents the 9.69% 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 April 30, 2000."]
Hotel REITs rebounded nicely from earlier struggles over rising interest
rates and fears of overbuilding. This was especially true for upscale
hotels in urban areas, the Fund's primary targets. Such hotels often do
not suffer the same oversupply problems as mid-scale hotels, mostly
because development in cities is more restricted. Starwood Hotels &
Resorts Worldwide was a strong contender in this arena.
A significant boost to performance came from our non-REIT companies
involved in real estate financing, including lenders Fannie Mae and
Associates First Capital Corp. The Fund usually retains a 5% to 10%
stake in non-REIT stocks, and our overweighting relative to our peers
this period gave us a performance edge. These companies provide us with
an added measure of diversity, higher growth rates and exposure to the
thriving single-family residential market.
Minor disappointments
Given its strong performance, the Fund experienced only minor letdowns.
Small, specialty REITs, such as Entertainment Properties Trust and
Prison Realty Trust, had lackluster results compared to the larger-cap
names that we held.
New development bodes well for REITs
We are optimistic about the Fund's outlook, especially considering the
promising legislation that was enacted last December. The REIT
Modernization Act allows REITs to have taxable subsidiaries that can
perform services beyond leasing activity. This gives REITs access to
additional sources of revenue. For example, some REITs have begun to
form arrangements with advertising companies to run ads inside
office-building elevators. Others are forming alliances with
communications companies to provide advanced telecommunications and
wiring needs to tenants. The REITs then share in the revenue generated
from these tenant services. This REIT Modernization Act is a major
development in the REIT world, and we're excited about its potential for
ongoing revenue growth. Beyond this legislation, company fundamentals
also remain sound. Vacancy rates are low, and supply/demand ratios are
in balance. Also, even though REIT stock prices have rebounded, they
still remain attractive. In the months ahead, we will continue to focus
on management quality, one of the best gauges, in our view, of a REIT's
true potential in any kind of market.
"This REIT
Modernization
Act is a
major
development
in the REIT
world..."
-------------------------------------------------------------------------
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 (1% declining to 0% after one
year).
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them. Please read your prospectus for risks associated with
industry segment investing before you invest or send money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (9/30/98)
---------- ----------
Cumulative Total Returns 3.34% 0.94%
Average Annual Total Returns(1) 3.34% 0.63%
CLASS B
For the period ended March 31, 2000
SINCE
INCEPTION
(3/1/00)
----------
Cumulative Total Return 0.36%
Average Annual Total Return(1, 2) 0.36%
CLASS C
For the period ended March 31, 2000
SINCE
INCEPTION
(3/1/00)
----------
Cumulative Total Return 3.31%
Average Annual Total Return(1, 2) 3.31%
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 (6.40%) and (8.89%), respectively. Without the limitations of
expenses the cumulative return since inception for Class B shares
would have been (0.42%). Without the limitations of expenses the
cumulative return since inception for Class C shares would have been
2.53%.
(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 Real Estate Investment Trust Index is an
unmanaged index consisting of the most actively traded real estate
investment trusts. It is designed to be a measure of real estate equity
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 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 $14,563 as of April 30, 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
$11,255 as of April 30, 2000. The third line represents the
same hypothetical investment made in the John Hancock Real
Estate Fund, after sales charge, and is equal to $10,689 as
of April 30, 2000. The fourth line represents the Morgan
Stanley REIT Index and is equal to $10,235 as of April 30,
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 $11,150 as of April 30, 2000. The second line
represents the Morgan Stanley REIT Index and is equal to
$11,063 as of April 30, 2000. The third line represents the
same hypothetical investment made in the John Hancock Real
Estate Fund, after sales charge, and is equal to $10,650 as
of April 30, 2000. The fourth line represents the Standard &
Poor's 500 Index and is equal to $10,648 as of April 30,
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 $11,150 as of April 30, 2000. The second line
represents the Morgan Stanley REIT Index and is equal to
$11,063 as of April 30, 2000. The third line represents the
same hypothetical investment made in the John Hancock Real
Estate Fund, after sales charge, and is equal to $10,939 as
of April 30, 2000. The fourth line represents the Standard &
Poor's 500 Index and is equal to $10,648 as of April 30,
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 April 30,
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
April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common stocks (cost -- $2,425,540) $2,467,229
Corporate savings account 434,250
-----------------
2,901,479
Receivable for investments sold 86,288
Receivable for shares sold 35,446
Receivable from John Hancock Advisors,
Inc. and affiliates -- Note B 166,072
Dividends receivable 3,113
-----------------
Total Assets 3,192,398
-----------------
Liabilities:
Payable for shares repurchased 341
Payable for investments purchased 413,987
Accounts payable and accrued expenses 192,757
-----------------
Total Liabilities 607,085
-----------------
Net Assets:
Capital paid-in 2,566,417
Accumulated net realized loss on
investments (29,850)
Net unrealized appreciation of
investments 41,689
Undistributed net investment income 7,057
-----------------
Net Assets $2,585,313
=================
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 -- $1,870,108/190,674 $9.81
==============================================================
Class B* -- $648,920/66,189 $9.80
==============================================================
Class C* -- $66,285/6,761 -- Note A $9.80
==============================================================
Maximum Offering Price Per Share**
($9.81/0.95) $10.33
==============================================================
* Class B and Class C shares commenced operations on March 1, 2000.
** 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 (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends $35,521
Interest 1,267
-----------------
36,788
-----------------
Expenses:
Investment management fee -- Note B 4,114
Distribution and service fee -- Note B
Class A 1,478
Class B 190
Class C 26
Registration and filing fees 35,036
Custodian fee 32,820
Auditing fee 9,945
Legal fees 2,486
Printing 873
Transfer agent fee -- Note B 597
Miscellaneous 134
Accounting and legal service fee --
Note B 97
Trustees' fees 37
-----------------
Total Expenses 87,833
-----------------
Less Expense Reductions -- Note B (79,196)
-----------------
Net Expenses 8,637
-----------------
Net Investment Income 28,151
-----------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 78
Change in net unrealized
appreciation/depreciation of
investments 125,001
-----------------
Net Realized and Unrealized Gain on
Investments 125,079
-----------------
Net Increase in Net Assets Resulting
from Operations $153,230
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
-------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD FROM
SEPTEMBER 30, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO PERIOD ENDED APRIL 30, 2000
DECEMBER 31, 1998 OCTOBER 31, 1999(1) (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $14,369 $37,831 $28,151
Net realized gain (loss) on
investments sold (6,163) 31,251 78
Change in net unrealized
appreciation/depreciation of
investments (3,823) (79,489) 125,001
------------ ------------ ------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 4,383 (10,407) 153,230
------------ ------------ ------------
Distributions to Shareholders:
Distributions from net investment income
Class A -- ($0.1173, $0.3441 and $0.2580, per share, respectively) (11,880) (34,900) (26,471)
Class B** -- (none, none and $0.0734 per share, respectively) -- -- (308)
Class C** -- (none, none and $0.0734 per share, respectively) -- -- (40)
Distributions from net realized gain on investments sold
Class A -- (none, none and $0.2464 per share, respectively) -- -- (24,935)
Distributions in excess of net realized gain on investments sold
Class A -- (none, none and $0.2949 per share, respectively) -- -- (29,850)
------------ ------------ ------------
Total Distributions to Shareholders (11,880) (34,900) (81,604)
------------ ------------ ------------
From Fund Share Transactions -- Net: * 1,013,211 (221) 1,553,501
------------ ------------ ------------
Net Assets:
Beginning of period -- 1,005,714 960,186
------------ ------------ ------------
End of period (including
undistributed net investment
income of $2,489, $5,725 and
$7,057, respectively) $1,005,714 $960,186 $2,585,313
============ ============ ============
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment gains and
losses, distributions paid to shareholders and any increase or decrease
in money shareholders invested in the Fund. The footnote illustrates the
number of Fund shares sold, reinvested and repurchased during the last
three periods, along with the corresponding dollar value.
See notes to financial statements.
<CAPTION>
Statement of Changes in Net Assets (continued)
--------------------------------------------------------------------------------------------------------------------------------
* Analysis of Fund Share Transactions:
FOR THE PERIOD FROM
SEPTEMBER 30, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO PERIOD ENDED APRIL 30, 2000
DECEMBER 31, 1998 OCTOBER 31, 1999(1) (UNAUDITED)
----------------------------------- --------------------------------- ---------------------------
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 91,129 $869,017
Shares reinvested -- -- 50 494 145 1,458
------------ ------------ ------------ ------------ ------------ ------------
102,524 1,025,004 534 5,220 91,274 870,475
Less shares repurchased (1,199) (11,793) (522) (5,441) (1,937) (18,280)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 101,325 $1,013,211 12 ($221) 89,337 $852,195
============ ============ ============ ============ ============ ============
CLASS B**
Shares sold -- -- -- -- 67,304 $646,988
Shares reinvested -- -- -- -- 10 102
------------ ------------ ------------ ------------ ------------ ------------
-- -- -- -- 67,314 647,090
Less shares repurchased -- -- -- -- (1,125) (10,736)
------------ ------------ ------------ ------------ ------------ ------------
Net increase -- -- -- -- 66,189 $636,354
============ ============ ============ ============ ============ ============
CLASS C**
Shares sold -- -- -- -- 7,353 $70,417
Shares reinvested -- -- -- -- 4 44
------------ ------------ ------------ ------------ ------------ ------------
-- -- -- -- 7,357 70,461
Less shares repurchased -- -- -- -- (596) (5,509)
------------ ------------ ------------ ------------ ------------ ------------
Net increase -- -- -- -- 6,761 $64,952
============ ============ ============ ============ ============ ============
**Class B and Class C commenced operations on March 1, 2000.
(1) 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:
------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD FROM
SEPTEMBER 30, 1998 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) PERIOD ENDED APRIL 30, 2000
TO DECEMBER 31, 1998 OCTOBER 31, 1999(7) (UNAUDITED)
-------------------- ------------------- ------------------
CLASS A
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $9.93 $9.48
------------- ------------- -------------
Net Investment Income(1) 0.14 0.37 0.24
Net Realized and Unrealized
Gain (Loss) on Investments (0.09) (0.48) 0.89
------------- ------------- -------------
Total From Investment Operations 0.05 (0.11) 1.13
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.12) (0.34) (0.26)
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.25)
Distributions in Excess of
Net Realized Gain on
Investments Sold -- -- (0.29)
------------- ------------- -------------
Total Distributions (0.12) (0.34) (0.80)
------------- ------------- -------------
Net Asset Value, End of
Period $9.93 $9.48 $9.81
============= ============= =============
Total Investment Return at
Net Asset Value (2) 0.47%(5) (1.11%)(5) 13.32%(5)
Total Adjusted Investment
Return at Net Asset Value (2,3) (1.60%)(5) (9.49%)(5) 5.66%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,006 $960,186 $1,870
Ratio of Expenses to Average
Net Assets 1.65%(6) 1.65%(6) 1.65%(6)
Ratio of Adjusted Expenses
to Average Net Assets (4) 9.85%(6) 11.71%(6) 17.05%(6)
Ratio of Net Investment
Income to Average Net
Assets 5.72%(6) 4.49%(6) 5.57%(6)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (4) (2.48%)(6) (5.57%)(6) (9.83%)(6)
Portfolio Turnover Rate 109% 345% 410%
Fee Reduction Per Share (1) $0.20 $0.83 $1.17
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 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.
<CAPTION>
Financial Highlights (continued)
--------------------------------------------------------------
FOR THE
PERIOD FROM
MARCH 1, 2000
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 2000
(UNAUDITED)
-------------
<S> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.86
-------------
Net Investment Income(1) 0.03
Net Realized and Unrealized
Gain on Investments 0.98
-------------
Total From Investment Operations 1.01
-------------
Less Distributions:
Dividends from Net
Investment Income (0.07)
-------------
Net Asset Value, End of
Period $9.80
=============
Total Investment Return at
Net Asset Value (2) 11.50%(5)
Total Adjusted Investment
Return at Net Asset Value (2,3) 3.84%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $649
Ratio of Expenses to Average
Net Assets 2.35%(6)
Ratio of Adjusted Expenses
to Average Net Assets (4) 17.75%(6)
Ratio of Net Investment
Income to Average Net
Assets 3.37%(6)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (4) (12.03%)(6)
Portfolio Turnover Rate 410%
Fee Reduction Per Share (1) $1.17
See notes to financial statements.
<CAPTION>
Financial Highlights (continued)
--------------------------------------------------------------
FOR THE
PERIOD FROM
MARCH 1, 2000
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 2000
(UNAUDITED)
-------------
<S> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.86
-------------
Net Investment Income(1) 0.03
Net Realized and Unrealized
Gain on Investments 0.98
-------------
Total From Investment Operations 1.01
-------------
Less Distributions:
Dividends from Net
Investment Income (0.07)
-------------
Net Asset Value, End of
Period $9.80
=============
Total Investment Return at
Net Asset Value (2) 11.50%(5)
Total Adjusted Investment
Return at Net Asset Value (2,3) 3.84%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $66
Ratio of Expenses to Average
Net Assets 2.35%(6)
Ratio of Adjusted Expenses
to Average Net Assets (4) 17.75%(6)
Ratio of Net Investment
Income to Average Net
Assets 2.19%(6)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (4) (13.21%)(6)
Portfolio Turnover Rate 410%
Fee Reduction Per Share (1) $1.17
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of
sales charges.
(3) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(4) Unreimbursed, without fee reduction.
(5) Not annualized.
(6) Annualized.
(7) Effective October 31, 1999, the fiscal year end changed from December 31 to October 31.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
----------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Real Estate Fund on April 30, 2000. It's divided into two main
categories: common stocks and short-term investments. The stocks are
further broken down by industry groups. Short-term investments, which
represent the Fund's "cash" position, are listed last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------------------------------ ---------------- ------------
<S> <C> <C>
COMMON STOCKS
Business Services -- Misc. (0.60%)
Cendant Corp. * 1,000 $15,438
------------
Finance (3.14%)
Allied Capital Corp. 600 11,213
Associates First Capital Corp. (Class A) 500 11,094
Capital One Financial Corp. 400 17,500
CIT Group, Inc. (The) (Class A) 400 6,775
iStar Financial, Inc. 470 8,254
Providian Financial Corp. 300 26,419
------------
81,255
------------
Finance -- Savings & Loan (1.45%)
Charter One Financial, Inc. 800 16,250
Dime Bancorp., Inc. 500 9,375
Richmond County Financial Corp. 700 11,988
------------
37,613
------------
Mortgage Banking (2.41%)
Fannie Mae 500 30,156
Freddie Mac 700 32,156
------------
62,312
------------
Real Estate -- Operations (0.50%)
CB Richard Ellis Services, Inc.* 690 6,814
Trammell Crow Co.* 470 6,110
------------
12,924
------------
REIT Equity -- Apartments (15.38%)
Apartment Investment & Management Co. (Class A) 1,780 70,755
Archstone Communities Trust 2,840 61,415
Avalonbay Communities, Inc. 670 26,214
BRE Properties, Inc. (Class A) 430 12,013
Equity Residential Properties Trust 2,390 108,745
Essex Property Trust, Inc. 730 28,196
Home Properties of New York, Inc. 990 27,720
Post Properties, Inc. 690 28,980
Smith (Charles E.) Residential Realty, Inc. 890 33,542
------------
397,580
------------
REIT Equity -- Diversified (5.30%)
American Industrial Properties 890 11,125
Capital Automotive 350 4,878
Catellus Development Corp.* 690 8,970
Colonial Properties Trust 690 17,207
Entertainment Properties Trust 1,680 22,890
Franchise Finance Corp. of America 890 21,137
Glenborough Realty Trust, Inc. 990 14,603
Insignia Financial Group, Inc.* 1,670 17,431
National Golf Properties, Inc. 600 11,475
Prison Realty Trust, Inc. 2,370 7,258
------------
136,974
------------
REIT Equity -- Hotels/Restaurants (3.87%)
Host Marriott Corp. 2,970 31,742
LaSalle Hotel Properties 350 5,294
Marriott International, Inc. (Class A) 230 7,360
Starwood Hotels & Resorts Worldwide, Inc. 1,600 45,500
Wyndham International (Class A)* 4,890 10,086
------------
99,982
------------
REIT Equity -- Office Property (28.73%)
Alexandria Real Estate Equities, Inc. 430 13,760
Arden Realty, Inc. 1,680 37,380
Bedford Property Investors, Inc. 430 7,579
Boston Properties Corp. 1,450 50,569
Brandywine Realty Trust 2,220 38,572
CarrAmerica Realty Corp. 1,080 25,650
Cornerstone Properties, Inc. 2,120 38,690
Cornerstone Realty Income Trust, Inc. 1,050 10,697
Corporate Office Properties Trust, Inc. 1,270 10,954
Cousins Properties, Inc. 500 19,625
Crescent Real Estate Equities Co. 1,980 33,907
Duke-Weeks Realty Corp. 2,330 50,532
Equity Office Properties Trust 5,490 149,259
Great Lakes REIT, Inc. 690 10,436
Highwood Properties, Inc. 1,480 33,577
Koger Equity, Inc. 690 12,075
Mack-Cali Realty Corp. 1,450 37,337
Prentiss Properties Trust 1,440 34,200
Prime Group Realty Trust 1,270 18,812
Reckson Associates Realty Corp. 1,780 35,711
SL Green Realty Corp. 200 5,138
Spieker Properties, Inc. 1,070 47,414
Trizec Hahn Corp. (Canada) 1,280 20,800
------------
742,674
------------
REIT Equity -- Regional Mall (10.16%)
CBL & Associates Properties, Inc. 1,080 25,312
General Growth Properties, Inc. 1,680 55,230
Macerich Co. (The) 990 22,956
Mills Corp. 890 16,020
Rouse Co. (The) 1,300 30,469
Simon Property Group, Inc. 3,390 86,021
Taubman Centers, Inc. 1,080 12,893
Urban Shopping Centers, Inc. 430 13,868
------------
262,769
------------
REIT Equity -- Shopping Centers (10.67%)
Burnham Pacific Properties, Inc. 610 4,499
Chelsea GCA Realty, Inc. 470 15,334
Developers Diversified Realty Corp. 3,190 48,448
Federal Realty Investment Trust 690 14,663
First Washington Realty Trust, Inc. 1,080 22,477
Kimco Realty Corp. 1,350 53,747
New Plan Excel Realty Trust 830 11,931
Pan Pacific Retail Properties, Inc. 690 13,110
Realty Income Corp. 950 20,722
Vornado Realty Trust 1,860 64,170
Weingarten Realty Investors 170 6,885
------------
275,986
------------
REIT Equity -- Storage (5.78%)
PS Business Parkes, Inc. (Class A) 1,080 24,030
Public Storage, Inc. 1,890 42,289
Public Storage, Inc. (Depositary Shares Series A) 2,430 49,056
Shurgard Storage Centers, Inc. 370 9,689
Storage USA, Inc. 830 24,277
------------
149,341
------------
REIT Equity -- Warehouse/Industries (7.44%)
AMB Property Corp. 1,480 32,652
Cabot Industrial Trust 890 17,132
Centerpoint Properties Corp. 630 22,601
First Industrial Realty Trust, Inc. 690 20,743
Liberty Property Trust 1,250 30,937
ProLogis Trust 3,470 68,316
------------
192,381
------------
TOTAL COMMON STOCKS
(Cost $2,425,540) (95.43%) 2,467,229
------------
SHORT-TERM INVESTMENTS
Corporate Savings Account
Brown Brothers Harriman Trust Co., Ltd.
Daily Interest Savings Account Current
Rate 5.44% 434,250
------------
TOTAL SHORT-TERM INVESTMENTS (16.80%) 434,250
--------- ------------
TOTAL INVESTMENTS (112.23%) 2,901,479
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (12.23%) (316,166)
--------- ------------
TOTAL NET ASSETS (100.00%) $2,585,313
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer; however, security is
U.S. dollar denominated.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- Real Estate Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of 1940.
The Trust consists of five series portfolios: John Hancock Real Estate
Fund (the "Fund"), John Hancock Small Cap Growth Fund, John Hancock
Technology Fund, John Hancock Millennium Growth Fund and John Hancock
500 Index Fund. Prior to March 1, 2000, John Hancock Technology Fund was
known as John Hancock Global Technology Fund. The other four series of
the Trust are reported in separate financial statements. The investment
objective of the Fund is to seek long-term growth of capital through
investing in equity securities of real estate companies. On September
14, 1999, the Trustees voted to approve a change in the fiscal period
end from December 31 to October 31. This change was effective October
31, 1999. On October 13, 1999 the shareholders voted to approve an
agreement and plan of reorganization providing for the reorganization of
the Fund from a series of John Hancock Investment Trust into a series of
John Hancock Series Trust. This change was effective November 1, 1999.
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. Beginning May 1, 2000, all retail purchases of Class C shares will
be assessed a 1% up-front sales charge.
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 sources 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 or less are valued at amortized
cost, which approximates market value. All portfolio transactions
initially expressed in terms of foreign currencies have been translated
into U.S. dollars as described in "Foreign Currency Translation."
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in a joint repurchase
agreement 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.
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 distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principles. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are calculated at the Fund level and allocated daily to
each class of shares based on the relative net assets of the respective
classes. Distribution and service fees, if any, are calculated daily at
the class level based on the appropriate net assets of each class and
the specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not identifiable
to a specific fund are allocated in such a manner as deemed equitable,
taking into consideration, among other things, the nature and type of
expense and the relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues and expenses of the Fund. Actual results
could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for
temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of
securities. The Fund has entered into a syndicated line of credit
agreement with various banks. This agreement enables the Fund to
participate with other funds managed by the Adviser in an unsecured line
of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings.
In addition, a commitment fee is charged based on the average daily
unused portion of the line of credit and is allocated among the
participating funds. The Fund had no borrowing activity for the period
ended April 30, 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 was no securities lending for the period ended April
30, 2000.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Fund. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities,
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate
principal amounts of the contracts are marked to market daily at the
applicable foreign currency exchange rates. Any resulting unrealized
gains and losses are included in the determination of the Fund's daily
net assets. The Fund records realized gains and losses at the time the
forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign
currency. Such contracts normally involve no market risk other than that
not offset by the currency amount of the underlying transaction.
There were no open forward foreign currency contracts at April 30, 2000.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest 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. In addition, the Fund could be prevented from opening or
realizing the benefits of closing out futures positions because of
position limits or limits on daily price fluctuation imposed by an
exchange.
For federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At April 30, 2000, there were no open positions in financial futures contracts.
OPTIONS Listed options are 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 is included in the Statement of Assets and Liabilities as an
asset and corresponding liability. The amount of the liability is
subsequently marked to market to reflect the current market value of the
written option.
The Fund may use options contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls
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 reflects 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 risk and liquidity
risks in over-the-counter option contracts, the Fund will continuously
monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
There were no written option transactions for the period ended April 30, 2000.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of 0.80% of the
Fund's average daily net asset value.
The Adviser has agreed to limit the Fund's expenses on Class A, Class B
and Class C shares to 1.35% (not including the 12b-1 fees) of the Fund's
daily average net assets. Accordingly, the reduction in the Adviser's
fee amounted to $79,196 for the period ended April 30, 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. For the period ended
April 30, 2000, JH Funds received net sales charges of $4,644 with
regard to sales of Class A shares. Out of this amount, $833 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $3,783 was paid as sales commissions to unrelated
broker-dealers, and $28 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.
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. 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
shares. For the period ended April 30, 2000, there were no contingent
deferred sales charges paid to JH Funds.
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 related to providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended April 30, 2000, there were no
contingent deferred sales charges paid to JH Funds.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plan with respect to Class A, Class B and Class C pursuant to Rule 12b-1
under the Investment Company Act of 1940. Accordingly, the Fund will
make payments to JH Funds, at an annual rate not to exceed 0.30% of
Class A average daily net assets and 1.00% of Class B and Class C
average daily net assets, to reimburse JH Funds for its distribution and
service costs. Up to a maximum of 0.25% of these 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 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, Ms. Maureen R. Ford and Mr. Richard S.
Scipione 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 investment had no impact on the
operations of the Fund.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 2000, aggregated
$6,148,911 and $4,729,679, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended April 30, 2000.
The cost of investments owned at April 30, 2000 (excluding the corporate
savings account) for federal income tax purposes was $2,429,566. Gross
unrealized appreciation and depreciation of investments aggregated
$65,780 and $28,117, respectively, resulting in net unrealized
appreciation of $37,663.
[THIS PAGE INTENTIONALLY LEFT BLANK]
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right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
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PAID
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Permit No. 75
This report is for the information of shareholders of the John Hancock
Real Estate Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
050SA 4/00
6/00
<PAGE>
The latest report from your
Fund's management team
SEMIANNUAL REPORT
500 Index
Fund
APRIL 30, 2000
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and Chief Executive Officer
Osbert M. Hood
Executive Vice President and Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
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:
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech
stocks pushed the NASDAQ Composite Index to the stratosphere, as
investors single-mindedly pursued anything technology related. But after
setting a new high on March 10 amid significantly heightened volatility,
the tables started to turn rapidly. Concerns about Microsoft's antitrust
ruling and out-of-sight valuation levels finally triggered waves of
selling that sent the index down nearly 25% from its high by the end of
April.
In this same period, fixed-income securities of all types, including
bonds and preferred stocks, struggled as interest rates rose on fears
that the roaring U.S. economy and the rebound of many others around the
world would spark an inflation outbreak.
While the battle between old and new rages on, several things are clear:
More than ever, diversification and a long-term investment perspective
are two of an investor's best allies. Since not all parts of your
portfolio will perform equally well all the time, we believe it is
important to allocate your assets among different types of investments
and funds that target a variety of stock- and bond-market segments. This
strategy, executed under the guidance of a seasoned investment
professional, could provide you with a better chance of both realizing
longer-term results and weathering the market's changing conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY ROGER HAMILTON, PORTFOLIO MANAGER
[A 3" x 2" photo at bottom right side of page of John Hancock
500 Index Fund. Caption below reads "Fund management team
members: Barry Evans (l) and Roger Hamilton (r)."]
John Hancock
500 Index Fund
Fueled by tech stocks, S&P 500 Index scores gains
amid increased volatility
The ongoing rise of technology stocks powered the Standard & Poor's 500
Index to a gain of 7.18% for the six months ended April 30, 2000.
Technology stocks continued their nearly year-long climb in the final
two months of 1999, shrugging off interest-rate worries and Y2K-related
fears. The promise of the Internet coupled with a revitalized world
economy provided the fuel for strong tech-stock performance. Although
the next several months were punctuated by increasing volatility, tech
stocks edged steadily higher through mid-March.
Meanwhile, interest-rate worries and rising oil prices afflicted most
other non-tech stocks. So-called Old Economy stocks seemed to fear
further interest-rate hikes, while tech stocks shrugged off those
worries. As a result, the gap between the two markets -- tech and
everything else -- became almost a canyon by the end of February.
Mid-March signaled a turning point for the market, with tech stocks
posting sizable losses from that point through the end of April and Old
Economy shares rallying at the expense of the tech sector. Fueled by the
collapse of efforts to settle the government's anti-trust suit against
Microsoft, investors accelerated their escape from tech stocks in favor
of less volatile Old Economy stocks. Just days later, investors funneled
money back into tech stocks, helping the sector to step back from the
abyss. That rally helped to calm jagged nerves somewhat, although
volatility remained in the final two weeks of the month. As an example
of the increasingly violent daily swings, the tech-heavy NASDAQ
Composite Index had its biggest-ever one-day point loss and
second-biggest one-day percentage loss in the third week of April. The
next day, it had its biggest point gain ever, and the following day it
surpassed that record.
"Mid-March
signaled a
turning point
for the
market..."
[Table at top left hand column entitled "Top Five Stock
Holdings." The first listing is General Electric 4.1%, the
second is Cisco Systems 3.7%, the third Intel 3.3%, the
fourth Microsoft 2.9% and the fifth Exxon Mobil 2.1%. A note
below the table reads "As a percentage of net assets on April
30, 2000."]
"...tech
stocks
dominated
the Index's
best-
performers
list..."
Performance and strategy review
During the six-month period ended April 30, 2000, John Hancock 500 Index
Fund's Class R shares had a total return of 7.05% at net asset value,
compared to the 6.83% return of the average S&P 500 Index objective
fund, according to Lipper, Inc.1 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. That said, the volatility over the
past six months required us to re-balance a bit more often than normal.
Occasionally, we bought S&P Index futures, since they allow us to
participate in the Index's performance without incurring the transaction
costs of buying stocks.
[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 Analog Devices
followed by an up arrow with the phrase "Better demand and
pricing for chips." The second listing is Cisco Systems
followed by an up arrow with the phrase "Explosion of
Internet drives strong profit growth." The third listing is
Conseco followed by a down arrow with the phrase "Profit drop
at troubled insurer." A note below the table reads "See
'Schedule of Investments.' Investment holdings are subject to
change."]
Within S&P 500, tech stocks dominate
After suffering through a three-year depression, semiconductor stocks
were due for an upturn. But few could have predicted how fast and far
those stocks would climb. Pushing their prices higher was the fact that
demand began to outstrip supply, causing chip prices to rise. One of the
biggest winners was chip-maker Analog Devices, which was up more than
50% during the period. In fact, companies that make chips and those that
supply equipment for the manufacture and testing of chips made up the
vast majority of the Index's 30 top performers. In addition to Analog,
Teradyne, LSI Logic, Applied Materials, among others, were up more than
100% during the period.
The ongoing explosion in Internet usage helped make Oracle, which makes
the software that has become the foundation for Web sites, e-commerce
and corporate networks, the Index's best performer during the period.
Cisco Systems, which makes the networking devices that have become the
backbone of the Internet, followed close behind, also posting
triple-digit gains during the period.
Broad group disappoints
While tech stocks dominated the Index's best-performers list, a much
broader group made up its largest losers. Troubled life and health
insurer Conseco posted the biggest losses, stemming from a sharp decline
in first-quarter profits, senior management departures and lower ratings
on its debt. Parametric Technology, which makes software that aids
manufacturing processes, spooked investors with a first-quarter profit
warning. CSX Corp., which owns and operates the largest railroad in the
eastern half of the U.S., slumped amid earnings shortfalls and
track-related accidents.
[Bar chart at top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended April 30, 2000." The chart is scaled in
increments of 2% with 0% at the bottom and 10% at the top.
The first bar represents the 7.05% total return for John
Hancock 500 Index Fund Class R. The second bar represents the
6.83% 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."]
Outlook
The past six months have served as a useful reminder of just how
volatile the stock market can be. We don't expect volatility to let up
soon -- at least until investors reach a consensus about the direction
of the economy, inflation and interest rates. That said, we're
encouraged by the fact that first-quarter 2000 earnings reports were
solid, since stock prices typically follow earnings.
The Fund's returns, as always, will be dictated by the performance of
the S&P 500 Index. It's important for shareholders to realize that the
S&P Index's performance has been extremely strong over the past five
years, especially when viewed from a historical basis. Index funds are
not riskless investments. They aren't immune to market down drafts, and
they will rise and fall in concert with their underlying index.
But no matter what the market environment, our goal will be to closely
track the performance to the S&P 500 Index. We encourage you to take a
long-term perspective, setting appropriate expectations when investing
in stocks.
"We don't
expect
volatility to
let up
soon..."
-------------------------------------------------------------------------
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. Of course, the
manager's views are subject to change as market and other conditions
warrant.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The table on the right shows the cumulative total return and the average
annual total return for the John Hancock 500 Index Fund. Total return
measures the change in value of an investment from the beginning to the
end of a period, assuming 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 March 31, 2000
SINCE
INCEPTION
(8/18/99)
----------
Cumulative Total Return 13.03%
Average Annual Total Return(1, 2) 13.03%
Notes to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.40% of the
Fund's daily average net assets. Without the limitation of expenses,
the average annual total return for the since inception period would
have been 12.54%.
(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 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 Standard & Poor's
500 Index and is equal to $11,030 as of April 30, 2000. The
second line represents the value of the hypothetical $10,000
investment made in the John Hancock 500 Index Fund on August
18, 1999, before sales charge, and is equal to $10,961 as of
April 30, 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 April 30,
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
April 30, 2000 (Unaudited)
---------------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common stocks (cost -- $40,372,569) $43,883,763
Joint repurchase agreement (cost -- $1,015,000) 1,015,000
-----------------
44,898,763
Cash 238
Cash segregated for futures contracts 56,250
Dividends receivable 34,597
Interest receivable 485
-----------------
Total Assets 44,990,333
-----------------
Liabilities:
Payable for shares repurchased 1,190
Payable for futures variation margin --
Note A 5,475
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 35,325
Accounts payable and accrued expenses 30,441
-----------------
Total Liabilities 72,431
-----------------
Net Assets:
Capital paid-in 41,511,207
Accumulated net realized loss on
investments and financial futures
contracts (172,077)
Net unrealized appreciation of
investments and financial futures
contracts 3,467,549
Accumulated net investment income 111,223
-----------------
Net Assets $44,917,902
=================
Net Asset Value Per Share:
(Based on net asset values and shares of beneficial
interest outstanding -- unlimited number of shares
authorized with no par value)
Class R -- $44,917,902/4,115,732 $10.91
=====================================================================
</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
Six months ended April 30, 2000 (Unaudited)
---------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $295) $234,956
Interest 33,823
-----------------
268,779
-----------------
Expenses:
Investment management fee -- Note B 72,421
Distribution and service fee -- Note B
Class R 51,729
Custodian fee 72,241
Registration and filing fees 10,234
Auditing fee 9,946
Miscellaneous 5,453
Accounting and legal services fee --
Note B 3,907
Printing 2,304
Legal fees 1,514
Transfer agent fee -- Note B 773
Trustees' fees 140
-----------------
Total Expenses 230,662
-----------------
Less Expense Reductions -- Note B (147,895)
-----------------
Net Expenses 82,767
-----------------
Net Investment Income 186,012
-----------------
Realized and Unrealized Gain (Loss) on Investments
and Financial Futures Contracts:
Net realized loss on investments sold (154,860)
Net realized gain on financial future
transactions 20,718
Change in net unrealized
appreciation/depreciation of
investments 2,739,193
Change in net unrealized
appreciation/depreciation of financial
futures contracts (72,899)
-----------------
Net Realized and Unrealized Gain on
Investments and Financial Futures
Contracts 2,532,152
-----------------
Net Increase in Net Assets Resulting
from Operations $2,718,164
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
---------------------------------------------------------------------------------------------------------------
FOR THE
PERIOD FROM
AUGUST 18, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $72,758 $186,012
Net realized loss on investments
sold and foreign currency
transactions (10,141) (134,142)
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 801,255 2,666,294
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 863,872 2,718,164
----------------- -----------------
Distributions to Shareholders:
Dividends from net investment income and financial futures contracts
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 5,964,580
----------------- -----------------
Net Assets:
Beginning of period -- 36,410,499
----------------- -----------------
End of period (including
accumulated net investment income
of $72,758 and $111,223,
respectively) $36,410,499 $44,917,902
================= =================
<CAPTION>
* Analysis of Fund Share Transactions:
FOR THE PERIOD FROM
AUGUST 18, 1999 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) APRIL 30, 2000
TO OCTOBER 31, 1999 (UNAUDITED)
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS R
Shares sold 3,662,239 $36,603,448 1,633,935 $17,333,098
Shares issued to shareholders in
reinvestment of distributions -- -- 5,943 62,406
----------- ----------- ----------- -----------
3,662,239 36,603,448 1,639,878 17,395,504
Less shares repurchased (106,785) (1,056,821) (1,079,600) (11,430,924)
----------- ----------- ----------- -----------
Net increase 3,555,454 $35,546,627 560,278 $5,964,580
=========== =========== =========== ===========
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed for the period. The difference reflects earnings
less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders, if any, and any increase or decrease
in money shareholders invested in the Fund. The footnote illustrates the
number of Fund shares sold, reinvested and redeemed during the period,
along with the corresponding dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
the period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------
FOR THE
PERIOD FROM
AUGUST 18, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
------------- -------------
<S> <C> <C>
CLASS R
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.24
------------- -------------
Net Investment Income(1) 0.02 0.05
Net Realized and Unrealized
Gain on Investments and
Financial Futures Contracts 0.22 0.67
------------- -------------
Total from Investment
Operations 0.24 0.72
------------- -------------
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 $10.91
============= =============
Total Investment Return at
Net Asset Value(2) 2.40%(3) 7.05%(3)
Total Adjusted Investment
Return at Net Asset Value
(2,4) 2.17%(3) 6.70%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $36,410 $44,918
Ratio of Expenses to Average
Net Assets 0.40%(5) 0.40%(5)
Ratio of Adjusted Expenses
to Average Net Assets(6) 1.55%(5) 1.11%(5)
Ratio of Net Investment
Income to Average Net
Assets 1.03%(5) 0.90%(5)
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(6) (0.12%)(5) 0.18%(5)
Portfolio Turnover Rate 1% 347%
Fee Reduction Per Share(1) $0.02 $0.04
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(3) Not annualized.
(4) An estimated total return calculation which does not take into consideration
fee reductions by the Adviser during the period shown.
(5) Annualized.
(6) Unreimbursed, without fee reduction.
The Financial Highlights summarizes the impact of the following factors
on a single share for the period indicated: net investment income, gains
(losses), dividends and total investment return of the Fund. It shows
how the Fund's net asset value for a share has changed for the period.
Additionally, important relationships between some items presented in
the financial statements are expressed in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
-----------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the 500 Index Fund on April 30, 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.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
Advertising (0.25%)
Interpublic Group of Companies, Inc. (The) 996 $40,836
Omnicom Group, Inc. 630 57,369
Young & Rubicam, Inc. 247 13,755
------------
111,960
------------
Aerospace (0.80%)
Boeing Co. (The) 3,084 122,396
General Dynamics Corp. 713 41,710
Goodrich (B.F.) Co. (The) 391 12,463
Lockheed Martin Corp. 1,406 34,974
Northrop Grumman Corp. 247 17,506
Raytheon Co. (Class B) 1,201 26,647
United Technologies Corp. 1,686 104,848
------------
360,544
------------
Agricultural Operations (0.49%)
Pharmacia Corp. 4,407 220,075
------------
Automobile/Trucks (1.22%)
Cummins Engine Co., Inc. 147 5,228
Dana Corp. 584 17,739
Delphi Automotive Systems Corp. 2,006 38,365
Eaton Corp. 261 21,924
Ford Motor Co. 4,288 234,500
General Motors Corp. 2,273 212,810
PACCAR, Inc. 278 13,222
Ryder System, Inc. 228 5,059
------------
548,847
------------
Banks -- United States (4.58%)
AmSouth Bancorp. 1,388 20,213
Bank of America Corp. 6,060 296,940
Bank of New York Co., Inc. 2,614 107,337
Bank One Corp. 4,071 124,165
BB&T Corp. 1,233 32,829
Chase Manhattan Corp. 2,928 210,999
Comerica, Inc. 555 23,518
Fifth Third Bancorp 1,096 69,185
First Union Corp. 3,506 111,754
Firstar Corp. 3,479 86,540
FleetBoston Financial Corp. 3,250 115,172
Huntington Bancshares, Inc. 812 14,819
KeyCorp 1,588 29,378
Mellon Financial Corp. 1,806 58,017
Morgan (J.P.) & Co., Inc. 615 78,951
National City Corp. 2,189 37,213
Northern Trust Corp. 790 50,659
Old Kent Financial Corp. 433 13,044
PNC Bank Corp. 1,044 45,544
Regions Financial Corp. 776 15,860
SouthTrust Corp. 596 14,230
State Street Corp. 568 55,025
Summit Bancorp. 620 15,733
SunTrust Banks, Inc. 1,136 57,652
Synovus Financial Corp. 993 18,433
U.S. Bancorp 2,674 54,316
Union Planters Corp. 501 14,185
Wachovia Corp. 720 45,135
Wells Fargo Co. 5,860 240,626
------------
2,057,472
------------
Beverages (1.90%)
Anheuser-Busch Cos., Inc. 1,652 116,569
Brown-Forman Corp. 243 13,259
Coca-Cola Co. (The) 8,768 412,644
Coca-Cola Enterprises, Inc. 1,510 32,182
Coors (Adolph) Co. (Class B) 131 6,681
PepsiCo, Inc. 5,167 189,564
Seagram Co. Ltd. (The) (Canada) 1,539 83,106
------------
854,005
------------
Broker Services (0.75%)
Bear Stearns Cos., Inc. 403 17,279
Lehman Brothers Holdings, Inc. 426 34,959
Merrill Lynch & Co., Inc. 1,316 134,150
Paine Webber Group, Inc. 507 22,245
Schwab (Charles) Corp. 2,911 129,540
------------
338,173
------------
Building (0.53%)
Armstrong World Industries, Inc. 142 2,778
Black & Decker Corp. 308 12,955
Centex Corp. 211 5,090
Danaher Corp. 505 28,848
Fluor Corp. 270 9,062
Georgia-Pacific Group 607 22,307
Kaufman & Broad Home Corp. 169 3,253
Louisiana-Pacific Corp. 378 5,056
Masco Corp. 1,587 35,608
Owens Corning 195 3,547
Pulte Corp. 154 3,311
Sherwin-Williams Co. 589 14,651
Snap-on, Inc. 208 5,499
Stanley Works (The) 317 9,352
Vulcan Materials Co. 355 15,553
Weyerhauser Co. 834 44,567
Willamette Industries, Inc. 396 15,122
------------
236,559
------------
Business Services -- Misc. (0.29%)
Block, H&R, Inc. 349 14,593
Cendant Corp.* 2,506 38,686
Dun & Bradstreet Corp. 571 17,201
Equifax, Inc. 502 12,268
Paychex, Inc. 877 46,152
------------
128,900
------------
Chemicals (0.63%)
Air Products & Chemicals, Inc. 814 25,285
Dow Chemical Co. 778 87,914
Eastman Chemical Co. 278 14,543
Engelhard Corp. 447 7,850
FMC Corp.* 109 6,342
Grace (W. R.) & Co.* 255 3,315
Great Lakes Chemical Corp. 204 5,495
Hercules, Inc. 377 5,867
PPG Industries, Inc. 617 33,549
Praxair, Inc. 564 25,063
Rohm & Haas Co. 777 27,681
Sigma-Aldrich Corp. 358 10,516
Union Carbide Corp. 475 28,025
------------
281,445
------------
Computers (19.23%)
3Com Corp.* 1,215 47,917
Adaptec, Inc.* 369 9,963
Adobe Systems, Inc. 421 50,915
America Online, Inc.* 8,100 484,481
Apple Computer, Inc.* 574 71,212
Autodesk, Inc. 219 8,404
Automatic Data Processing, Inc. 2,237 120,379
BMC Software, Inc.* 867 40,586
Cabletron Systems, Inc.* 647 14,800
Ceridian Corp.* 513 11,126
Cisco Systems, Inc.* 24,289 1,683,911
Citrix Systems, Inc.* 636 38,836
Compaq Computer Corp. 6,013 175,880
Computer Associates International, Inc. 2,089 116,592
Computer Sciences Corp.* 594 48,448
Compuware Corp.* 1,280 16,080
Dell Computer Corp.* 9,106 456,438
Electronic Data Systems Corp. 1,671 114,881
EMC Corp.* 3,612 501,842
First Data Corp. 1,488 72,447
Gateway, Inc.* 1,124 62,101
Hewlett-Packard Co. 3,567 481,545
IMS Health, Inc. 1,093 18,649
International Business Machines Corp. 6,399 714,288
Lexmark International Group, Inc. (Class A)* 453 53,454
Microsoft Corp.* 18,476 1,288,701
NCR Corp. 343 13,248
Network Appliance, Inc.* 1,081 79,926
Novell, Inc.* 1,159 22,745
Oracle Corp.* 10,016 800,654
Parametric Technology Corp.* 976 7,960
PeopleSoft, Inc.* 953 13,282
Sabre Holdings Corp. 460 16,071
Seagate Technology, Inc.* 766 38,922
Shared Medical System Corp. 95 3,937
Silicon Graphics, Inc.* 654 4,701
Sun Microsystems, Inc.* 5,603 515,126
Unisys Corp.* 1,103 25,576
VERITAS Software Corp.* 1,380 148,027
Yahoo! Inc.* 1,869 243,437
------------
8,637,488
------------
Consumer Products -- Misc. (0.03%)
American Greetings Corp. (Class A) 229 4,151
Energizer Holdings, Inc.* 357 6,091
Jostens, Inc. 118 2,913
------------
13,155
------------
Containers (0.10%)
Ball Corp. 107 3,370
Bemis Co., Inc. 186 6,847
Crown Cork & Seal Co., Inc. 459 7,459
Owens-Illinois, Inc.* 533 7,196
Pactiv Corp.* 608 4,978
Sealed Air Corp.* 296 16,465
------------
46,315
------------
Cosmetics & Personal Care (0.43%)
Alberto Culver Co. (Class B) 198 4,678
Avon Products, Inc. 860 35,690
Gillette Co. 3,808 140,896
International Flavors & Fragrances, Inc. 373 12,845
------------
194,109
------------
Diversified Operations (1.93%)
Crane Co. 234 6,289
Du Pont (E.I.) De Nemours & Co. 3,708 175,898
Fortune Brands, Inc. 582 14,550
Honeywell International, Inc. 2,810 157,360
IKON Office Solutions, Inc. 532 3,125
ITT Industries, Inc. 312 9,847
Johnson Controls, Inc. 303 19,184
Loews Corp. 376 20,726
Minnesota Mining & Manufacturing Co. 1,416 122,484
NACCO Industries, Inc. (Class A) 29 1,301
National Service Industries, Inc. 144 3,096
Textron, Inc. 528 32,703
TRW, Inc. 432 25,272
Tyco International Ltd. 6,003 275,763
------------
867,598
------------
Electronics (12.06%)
Advanced Micro Devices, Inc.* 523 45,893
Analog Devices, Inc.* 1,242 95,401
Applied Materials, Inc.* 2,717 276,625
Conexant Systems, Inc.* 762 45,625
Emerson Electric Co. 1,530 83,959
General Electric Co. 11,647 1,831,491
Grainger (W.W.), Inc. 331 14,357
Intel Corp. 11,860 1,503,996
KLA-Tencor Corp.* 652 48,818
Linear Technology Corp. 1,104 63,066
LSI Logic Corp.* 1,056 66,000
Micron Technology, Inc. 959 133,541
Molex, Inc. 696 38,236
Motorola, Inc. 2,517 299,680
National Semiconductor Corp.* 609 36,997
Parker-Hannifin Corp. 398 18,507
PE Corp.-PE Biosystems Group 732 43,920
PerkinElmer, Inc. 170 9,308
Rockwell International Corp. 674 26,539
Solectron Corp.* 2,104 98,494
Tektronix, Inc. 168 9,723
Teradyne, Inc.* 607 66,770
Texas Instruments, Inc. 2,886 470,057
Thomas & Betts Corp. 205 6,317
Xilinx, Inc.* 1,141 83,578
------------
5,416,898
------------
Finance (3.79%)
American Express Co. 1,589 238,449
Associates First Capital Corp. (Class A) 2,585 57,355
Capital One Financial Corp. 700 30,625
Citigroup, Inc. 11,968 711,348
Franklin Resources, Inc. 883 28,477
Golden West Financial Corp. 574 19,588
Household International, Inc. 1,669 69,681
Kansas City Southern Industries, Inc. 392 28,175
MBNA Corp. 2,846 75,597
Morgan Stanley Dean Witter & Co. 4,044 310,377
Price (T. Rowe) Associates, Inc. 425 16,203
Providian Financial Corp. 504 44,384
SLM Holding Corp. 565 17,692
Washington Mutual, Inc. 2,049 52,378
------------
1,700,329
------------
Food (1.15%)
Archer-Daniels-Midland Co. 2,155 21,415
Bestfoods 990 49,747
Campbell Soup Co. 1,514 39,364
ConAgra, Inc. 1,748 32,993
General Mills, Inc. 1,069 38,885
Heinz (H.J.) Co. 1,259 42,806
Hershey Foods Corp. 491 22,279
Kellogg Co. 1,439 35,166
Nabisco Group Holdings Corp. 1,158 14,909
Quaker Oats Co. 475 30,964
Ralston Purina Group 1,071 18,943
Sara Lee Corp. 3,226 48,390
Unilever NV, American Depositary Receipts (ADR)
(Netherlands) 2,029 92,446
Wrigley (W.M.) Jr. Co. 411 29,746
------------
518,053
------------
Furniture (0.03%)
Leggett & Platt, Inc. 697 14,898
------------
Household (0.13%)
Maytag Corp. 300 10,331
Newell Rubbermaid, Inc. 1,001 25,213
Springs Industries, Inc. 64 2,628
Tupperware Corp. 205 3,869
Whirlpool Corp. 264 17,193
------------
59,234
------------
Instruments -- Scientific (0.05%)
Millipore Corp. 161 11,542
Thermo Electron Corp.* 562 10,889
------------
22,431
------------
Insurance (2.76%)
Aetna, Inc. 508 29,400
AFLAC, Inc. 945 46,128
Allstate Corp. (The) 2,859 67,544
American General Corp. 877 49,112
American International Group, Inc. 5,496 602,842
Aon Corp. 911 24,654
Chubb Corp. (The) 625 39,766
CIGNA Corp. 598 47,690
Cincinnati Financial Corp. 583 23,502
Conseco, Inc. 1,161 6,313
Hartford Financial Services Group, Inc. (The) 787 41,072
Jefferson Pilot Corp. 372 24,761
Lincoln National Corp. 694 24,160
Marsh & McLennan Cos., Inc. 947 93,339
MBIA, Inc. 353 17,451
MGIC Investment Corp. 375 17,930
Progressive Corp. 260 17,014
SAFECO Corp. 462 10,222
St. Paul Cos., Inc. 807 28,749
Torchmark Corp. 467 11,704
UnumProvident Corp. 852 14,484
------------
1,237,837
------------
Leisure (1.29%)
Brunswick Corp. 326 6,255
Carnival Corp. (Class A) 2,190 54,476
Disney (Walt) Co. (The) 7,348 318,260
Eastman Kodak Co. 1,120 62,650
Harley-Davidson, Inc. 1,074 42,759
Harrah's Entertainment, Inc.* 456 9,376
Hasbro, Inc. 624 9,945
Hilton Hotels Corp. 1,309 11,126
Marriott International, Inc. (Class A) 883 28,256
Mattel, Inc. 1,494 18,301
Mirage Resorts, Inc.* 686 13,977
Polaroid Corp. 158 3,190
------------
578,571
------------
Machinery (0.37%)
Briggs & Stratton Corp. 82 3,147
Caterpiller Tractor, Inc. 1,262 49,770
Cooper Industries, Inc. 334 11,460
Deere & Co. 831 33,552
Dover Corp. 723 36,737
Ingersoll-Rand Co. 581 27,271
Milacron, Inc. 131 2,391
------------
164,328
------------
Media (2.56%)
CBS Corp.* 2,706 158,977
Clear Channel Communications, Inc.* 1,202 86,544
Comcast Corp.* 3,289 131,766
Dow Jones & Co., Inc. 319 20,695
Gannett Co., Inc. 990 63,236
Harcourt General, Inc. 253 9,456
Knight-Ridder, Inc. 298 14,621
McGraw-Hill Cos., Inc. (The) 696 36,540
Meredith Corp. 183 5,090
New York Times Co. (Class A) 608 25,042
Time Warner, Inc. 4,567 410,745
Times Mirror Co. (Class A) 213 20,781
Tribune Co. 844 32,811
Viacom, Inc. (Class B)* 2,474 134,524
------------
1,150,828
------------
Medical (9.50%)
Abbott Laboratories 5,457 209,753
Allergan, Inc. 467 27,495
ALZA Corp.* 363 15,995
American Home Products Corp. 4,635 260,429
Amgen Inc.* 3,626 203,056
Bard (C.R.), Inc. 182 7,928
Bausch & Lomb, Inc. 205 12,377
Baxter International, Inc. 1,033 67,274
Becton, Dickinson & Co. 893 22,883
Biogen, Inc.* 533 31,347
Biomet, Inc. 401 14,311
Boston Scientific Corp.* 1,472 39,008
Bristol-Myers Squibb Co. 7,042 369,265
Cardinal Health, Inc. 999 55,007
Columbia/HCA Healthcare Corp. 1,999 56,847
Edwards Lifesciences Corp.* 204 3,060
Guidant Corp.* 1,091 62,596
HEALTHSOUTH Corp.* 1,371 11,054
Humana, Inc.* 595 4,574
Johnson & Johnson 4,939 407,467
Lilly (Eli) & Co. 3,871 299,277
Mallinckrodt, Inc. 243 6,531
Manor Care, Inc.* 366 4,369
McKesson HBOC, Inc. 1,000 16,875
Medtronic, Inc. 4,240 220,215
Merck & Co., Inc. 8,297 576,641
Pall Corp. 440 9,818
Pfizer, Inc. 13,742 578,882
Quintiles Transnational Corp.* 408 5,840
Schering-Plough Corp. 5,215 210,230
St. Jude Medical, Inc.* 299 9,325
Tenet Healthcare Corp.* 1,107 28,229
UnitedHealth Group, Inc. 603 40,213
Warner-Lambert Co. 3,048 346,901
Watson Pharmaceutical, Inc.* 341 15,324
Wellpoint Health Networks, Inc.* 226 16,668
------------
4,267,064
------------
Metal (0.64%)
Alcan Aluminium Ltd. (Canada) 778 25,480
Alcoa, Inc. 1,306 84,727
Barrick Gold Corp. (Canada) 1,400 23,537
Bethlehem Steel Corp.* 466 2,505
Freeport-McMoran Copper & Gold, Inc.* 580 5,582
Homestake Mining Co. 924 5,544
Illinois Tool Works, Inc. 1,067 68,355
Inco, Ltd.* (Canada) 681 10,641
Newmont Mining Corp. 595 13,945
Phelps Dodge Corp. 287 13,274
Placer Dome, Inc. (Canada) 1,156 9,393
Reynolds Metals Co. 224 14,896
Timken Co. (The) 220 4,070
Worthington Industries, Inc. 317 3,923
------------
285,872
------------
Mortgage Banking (0.77%)
Countrywide Credit Industries, Inc. 402 11,105
Fannie Mae 3,638 219,417
Freddie Mac 2,468 113,374
------------
343,896
------------
Office (0.30%)
Avery Dennison Corp. 400 26,250
Deluxe Corp. 261 6,574
Pitney Bowes, Inc. 942 38,504
Xerox Corp. 2,358 62,340
------------
133,668
------------
Oil & Gas (5.99%)
Amerada Hess Corp. 322 20,487
Anadarko Petroleum Corp. 453 19,677
Apache Corp. 405 19,617
Ashland, Inc. 252 8,599
Baker Hughes, Inc. 1,169 37,189
BP Amoco PLC (ADR) (United Kingdom) 1,879 95,829
Burlington Resources, Inc. 772 30,349
Chevron Corp. 2,330 198,341
Coastal Corp. (The) 758 38,042
Columbia Energy Group 288 18,072
Conoco, Inc. (Class B) 2,223 55,297
El Paso Energy Corp. 810 34,425
Enron Corp. 2,540 177,006
Exxon Mobil Corp. 12,259 952,371
Halliburton Co. 1,568 69,286
Kerr-McGee Corp. 339 17,543
McDermott International, Inc. 211 1,714
Occidental Petroleum Corp. 1,305 27,976
Phillips Petroleum Co. 899 42,646
Rowan Cos., Inc.* 328 9,164
Royal Dutch Petroleum Co. (ADR) (Netherlands) 7,612 436,739
Schlumberger, Ltd. 1,952 149,450
Sunoco, Inc. 320 9,700
Texaco, Inc. 1,963 97,169
Tosco Corp. 511 16,384
Transocean Sedco Forex, Inc. 742 34,874
Union Pacific Resources Group 895 17,173
Unocal Corp. 861 27,821
USX -- Marathon Group 1,103 25,714
------------
2,688,654
------------
Paper & Paper Products (0.56%)
Boise Cascade Corp. 203 6,610
Champion International Corp. 341 22,421
Fort James Corp. 768 18,384
International Paper Co. 1,470 54,022
Kimberly-Clark Corp. 1,972 114,499
Mead Corp. (The) 364 12,672
Potlatch Corp. 103 4,062
Temple-Inland, Inc. 198 9,925
Westvaco Corp. 356 10,992
------------
253,587
------------
Pollution Control (0.09%)
Allied Waste Industries, Inc.* 670 4,104
Waste Management, Inc. 2,200 34,925
------------
39,029
------------
Printing -- Commercial (0.02%)
Donnelley (R.R.) & Sons 449 9,541
------------
Retail (6.40%)
Albertson's, Inc. 1,504 48,974
AutoZone, Inc.* 491 11,262
Bed Bath & Beyond, Inc.* 498 18,270
Best Buy Co., Inc.* 726 58,624
Circuit City Stores-Circuit City Group 722 42,463
Consolidated Stores Corp.* 393 4,888
Costco Wholesale Corp.* 1,578 85,311
CVS Corp. 1,391 60,508
Darden Restaurants, Inc. 455 8,389
Dillard's, Inc. 372 5,185
Dollar General Corp. 938 21,457
Federated Department Stores, Inc.* 745 25,330
Gap, Inc. (The) 3,020 110,985
Genuine Parts Co. 631 16,564
Great Atlantic & Pacific Tea Co., Inc. 136 2,490
Home Depot, Inc. (The) 8,173 458,199
Kmart Corp.* 1,728 14,040
Kohl's Corp.* 1,158 55,584
Kroger Co.* 2,962 54,982
Limited, Inc. (The) 763 34,478
Longs Drug Stores Corp. 140 3,255
Lowe's Cos., Inc. 1,357 67,172
May Department Stores 1,180 32,450
McDonald's Corp. 4,806 183,229
Nordstrom, Inc. 478 13,294
Office Depot, Inc.* 1,168 12,337
Penney (J. C.) Co., Inc. 924 12,763
Reebok International Ltd.* 200 3,400
Rite Aid Corp. 919 4,595
Safeway, Inc.* 1,806 79,690
Sears, Roebuck & Co. 1,342 49,151
Staples, Inc.* 1,668 31,796
SUPERVALU, Inc. 496 10,261
SYSCO Corp. 1,171 44,059
Tandy Corp. 686 39,102
Target Corp. 1,555 103,505
TJX Cos., Inc. 1,101 21,125
Toys R Us, Inc.* 852 12,993
Tricon Global Restaurants, Inc.* 536 18,291
Walgreen Co. 3,572 100,463
Wal-Mart Stores, Inc. 15,810 875,479
Wendy's International, Inc. 424 9,487
Winn-Dixie Stores, Inc. 519 8,596
------------
2,874,476
------------
Rubber -- Tires & Misc. (0.04%)
Cooper Tire & Rubber Co. 269 3,631
Goodyear Tire & Rubber Co. (The) 555 15,332
------------
18,963
------------
Shoes & Related Apparel (0.09%)
Nike, Inc. (Class B) 980 42,569
------------
Soap & Cleaning Preparations (0.99%)
Clorox Co. 840 30,870
Colgate-Palmolive Co. 2,068 118,134
Ecolab, Inc. 460 17,969
Procter & Gamble Co. (The) 4,670 278,449
------------
445,422
------------
Steel (0.06%)
Allegheny Technologies, Inc. 332 8,030
Nucor Corp. 310 13,330
USX-U.S. Steel Group, Inc. 314 7,870
------------
29,230
------------
Telecommunications (9.36%)
ADC Telecommunications, Inc.* 1,066 64,759
Andrew Corp.* 286 8,419
AT&T Corp. 11,343 529,576
Bell Atlantic Corp. 5,512 326,586
CenturyTel, Inc. 496 12,152
Comverse Technology, Inc.* 542 48,340
Corning, Inc. 979 193,352
Global Crossing Ltd.* (Bermuda) 2,768 87,192
Lucent Technologies, Inc. 11,315 703,652
MCI WorldCom, Inc.* 10,075 457,783
MediaOne Group, Inc.* 2,172 164,257
Nextel Communications, Inc. (Class A)* 1,294 141,612
Nortel Networks Corp. (Canada) 5,125 580,406
QUALCOMM, Inc.* 2,620 284,106
Scientific-Atlanta, Inc. 561 36,500
Sprint Corp. 3,093 190,220
Sprint PCS* 3,059 168,245
Tellabs, Inc.* 1,428 78,272
U S WEST, Inc. 1,794 127,710
------------
4,203,139
------------
Textile (0.05%)
Liz Claiborne, Inc. 210 9,726
Russell Corp. 117 2,296
VF Corp. 419 11,837
------------
23,859
------------
Tobacco (0.43%)
Philip Morris Cos., Inc. 8,399 183,728
UST, Inc. 607 9,105
------------
192,833
------------
Transport (0.56%)
AMR Corp.* 526 17,917
Burlington Northern Santa Fe Corp. 1,622 39,131
CSX Corp. 775 16,227
Delta Air Lines, Inc. 458 24,159
FedEx Corp.* 1,029 38,780
Navistar International Corp.* 224 7,840
Norfolk Southern Corp. 1,356 23,899
Southwest Airlines Co. 1,791 38,842
Union Pacific Corp. 882 37,154
US Airways Group, Inc.* 254 7,064
------------
251,013
------------
Utilities (4.50%)
AES Corp.* 733 65,924
ALLTEL Corp. 1,114 74,220
Ameren Corp. 487 17,867
American Electric Power Co., Inc. 689 25,235
BellSouth Corp. 6,682 325,330
Carolina Power & Light Co. 567 20,731
Central & South West Corp. 755 16,374
Cinergy Corp. 564 15,087
CMS Energy Corp. 411 7,809
Consolidated Edison, Inc. 785 27,622
Constellation Energy Group, Inc. 531 17,556
Dominion Resources, Inc. 845 38,025
DTE Energy Co. 515 16,802
Duke Energy Corp. 1,298 74,635
Eastern Enterprises 96 5,844
Edison International 1,232 23,485
Entergy Corp. 876 22,283
FirstEnergy Corp. 827 21,037
Florida Progress Corp. 349 17,101
FPL Group, Inc. 636 28,739
GPU, Inc. 438 12,291
GTE Corp. 3,450 233,737
New Century Energies, Inc. 410 13,376
Niagara Mohawk Holdings, Inc.* 665 9,227
NICOR, Inc. 167 5,657
Northern States Power Co. 549 11,975
ONEOK, Inc. 110 2,777
PECO Energy Co. 659 27,472
Peoples Energy Corp. 126 3,914
PG&E Corp. 1,363 35,353
Pinnacle West Capital Corp. 301 10,573
PPL Corp. 510 12,176
Public Service Enterprise Group, Inc. 776 27,839
Reliant Energy, Inc. 1,050 27,956
SBC Communications, Inc. 12,109 530,526
Sempra Energy 725 13,458
Southern Co. 2,389 59,576
Texas Utilities Co. 981 33,047
Unicom Corp. 772 30,687
Williams Cos., Inc. 1,543 57,573
------------
2,020,896
------------
TOTAL COMMON STOCKS
(Cost $40,372,569) (97.70%) 43,883,763
------------ ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
--------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.26%)
Investment in a joint repurchase
agreement transaction with SBC
Warburg, Inc. -- Dated 04-28-00, due
05-01-00 (Secured by U.S. Treasury
Bonds, 8.875% due 08-15-17 and 7.875%
due 02-15-21) -- Note A 5.73% $1,015 1,015,000
------------
TOTAL SHORT-TERM INVESTMENTS (2.26%) 1,015,000
--------- ------------
TOTAL INVESTMENTS (99.96%) 44,898,763
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.04%) 19,139
--------- ------------
TOTAL NET ASSETS (100.00%) $44,917,902
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer; however, security is
U.S. dollar denominated.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- 500 Index Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company
Act of 1940. The Trust consists of five series portfolios: John Hancock
500 Index Fund (the "Fund"), John Hancock Small Cap Growth Fund, John
Hancock Technology Fund, John Hancock Millennium Growth Fund and John
Hancock Real Estate Fund. Prior to March 1, 2000, the John Hancock
Technology Fund was known as John Hancock Global Technology Fund. The
other series of the Trust are reported in separate financial statements.
The investment objective of the Fund is to provide investment results
that correspond to the total return performance of the Standard & Poor's
500 Stock Price Index (the "S&P 500 Index").
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B, Class C and Class R shares.
No Class A, B and C shares were issued as of April 30, 2000.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing services or at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value. All portfolio transactions initially
expressed in terms of foreign currencies have been translated into U.S.
dollars as described in "Foreign Currency Translation."
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in a joint repurchase
agreement. Aggregate cash balances are invested in one or more
repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's custodian bank
receives delivery of the underlying securities for the joint account on
the Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the
date of purchase, sale or maturity. Net realized gains and losses on
sales of investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund qualifies as a "regulated investment
company" by complying with the applicable provisions of the Internal
Revenue Code and will not be subject to federal income tax on taxable
income which is distributed to shareholders. Therefore, no federal
income tax provision is required.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date or in the case of some
foreign securities, on the date thereafter when the Fund is made aware
of the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding
taxes, which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principles. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses, which are not readily
identifiable to a specific fund, are allocated in such a manner as
deemed equitable, taking into consideration, among other things, the
nature and type of expense and the relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues and expenses of the Fund. Actual results
could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for
temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of
securities. The Fund entered into a syndicated line of credit agreement
with various banks. This agreement enables the Fund to participate with
other funds managed by the Adviser in an unsecured line of credit with
banks which permit borrowings up to $500 million, collectively. Interest
is charged to each fund, based on its borrowings. In addition, a
commitment fee is charged based on the average daily unused portion of
the line of credit and is allocated among the participating funds. The
Fund had no borrowing activity for the period ended April 30, 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 was no securities lending for the period ended April
30, 2000.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Fund. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
or losses arise from changes in the value of assets and liabilities
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. Buying futures tends to increase the Fund's exposure
to the underlying instrument. Selling futures tends to decrease the
Fund's exposure to the underlying instrument or hedge other Fund
instruments. At the time the Fund enters into a financial futures
contract, it will be required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin,"
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price on the board of trade or U.S. commodities
exchange on which it trades. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market
price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market," will be recorded
by the Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities. In addition, the Fund could be prevented from opening or
realizing the benefits of closing out futures positions because of
position limits or limits on daily price fluctuation imposed by an
exchange.
For federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At April 30, 2000, open positions in financial futures contracts were as
follows:
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
---------- -------------- -------- ------------
June 00 3 U.S. Treasury Bonds LONG $43,645
===========
OPTIONS Listed options will be valued at the last quoted sales price on
the exchange on which they are primarily traded. Over-the-counter
options are valued at the mean between the last bid and asked prices.
Upon the writing of a call or put option, an amount equal to the premium
received by the Fund will be included in the Statement of Assets and
Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked to market to reflect the current
market value of the written option.
The Fund may use option contracts to manage its exposure to the stock
market. Writing puts and buying calls will tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls
will tend to decrease the Fund's exposure to the underlying instrument,
or hedge other Fund investments.
The maximum exposure to loss for any purchased options will be limited
to the premium initially paid for the option. In all other cases, the
face (or "notional") amount of each contract at value will reflect the
maximum exposure of the Fund in these contracts, but the actual exposure
will be limited to the change in value of the contract over the period
the contract remains open.
Risks may also arise if counterparties do not perform under the
contract's terms ("credit risk"), or if the Fund is unable to offset a
contract with a counterparty on a timely basis ("liquidity risk").
Exchange-traded options have minimal credit risk as the exchanges act as
counterparties to each transaction, and only present liquidity risk in
highly unusual market conditions. To minimize credit and liquidity risks
in over-the-counter option contracts, the Fund will continuously monitor
the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
At April 30, 2000, there were no open written option transactions.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of 0.35% of Fund's
average daily net asset value. The Adviser has agreed to limit the Funds
expenses, including the management fee, to 0.10% of the Fund's average
daily net assets. Accordingly, the reduction in the Adviser's fee
amounted to $51,729 for the period ended April 30, 2000. The Adviser has
also agreed to limit other expenses (excluding the management fee and
the 12b-1 fee), to 0.20% of the Fund's average daily net assets.
Accordingly, the reduction in other fund expenses amounted to $65,128
for the period ended April 30, 2000. These limitations may not be
discontinued until at least February 28, 2001.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. There were no net
sales charges received with regard to sales of Class A shares for the
period ended April 30, 2000.
To reimburse JH Funds for the services it provides as distributor of
shares of the Fund, the Fund has adopted Distribution Plans with respect
to Class R shares, pursuant to Rule 12b-1 under the Investment Company
Act of 1940. Accordingly, the Fund will make payments to
JH Funds for distribution and service expenses for Class R shares, at an
annual rate not to exceed 0.25% of the average daily net assets, to
reimburse JH Funds for its distribution and service costs. JH Funds has
agreed to limit the distribution and service fee pursuant to Class R to
0.10% of the average daily net assets. Accordingly, the reduction in the
distribution and service fee amounted to $31,038 for the period ended
April 30, 2000. This limitation may not be discontinued until at least
February 28, 2001. 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 Practice, curtailment of a
portion of the Fund's 12b-1 payments could occur under certain
circumstances.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of John
Hancock Life Insurance Company. The Fund pays transfer agent fees based
on the number of shareholder accounts and certain out-of-pocket
expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
period was at an annual rate of less than 0.02% of the average net
assets of the Fund.
Mr. Stephen L. Brown, Mr. Maureen R. Ford and Mr. Richard S. Scipione
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.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations
of the U.S. government and its agencies and short-term securities,
during the period ended April 30, 2000, aggregated $145,993,914 and
$139,978,013, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the period
ended April 30, 2000.
The cost of investments owned at April 30, 2000 (excluding the corporate
savings account) for federal income tax purposes was $41,395,795. Gross
unrealized appreciation and depreciation of investments aggregated
$7,361,975 and $3,859,007, respectively, resulting in net unrealized
appreciation of $3,502,968.
[THIS PAGE INTENTIONALLY LEFT BLANK.]
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
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U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
Regional Bank Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
110SA 4/00
6/00
<PAGE>
The latest report from your
Fund's management team
SEMIANNUAL REPORT
Small Cap
Growth Fund
APRIL 30, 2000
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02116-5072
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
CEO CORNER
DEAR FELLOW SHAREHOLDERS:
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President
and Chief Executive Officer, flush right next to second
paragraph.]
Over the last six months, New Economy technology stocks dominated
the business-news headlines and the stock market's performance.
Red-hot tech stocks pushed the NASDAQ Composite Index to the
stratosphere, as investors single-mindedly pursued anything
technology related. But after setting a new high on March 10 amid
significantly heightened volatility, the tables started to turn
rapidly. Concerns about Microsoft's antitrust ruling and out-of-
sight valuation levels finally triggered waves of selling that
sent the index down nearly 25% from its high by the end of April.
In this same period, fixed-income securities of all types,
including bonds and preferred stocks, struggled as interest rates
rose on fears that the roaring U.S. economy and the rebound of
many others around the world would spark an inflation outbreak.
While the battle between old and new rages on, several things are
clear: More than ever, diversification and a long-term investment
perspective are two of an investor's best allies. Since not all
parts of your portfolio will perform equally well all the time, we
believe it is important to allocate your assets among different
types of investments and funds that target a variety of stock- and
bond-market segments. This strategy, executed under the guidance
of a seasoned investment professional, could provide you with a
better chance of both realizing longer-term results and weathering
the market's changing conditions.
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
LAURA ALLEN, CFA, AND ANURAG PANDIT, CFA, PORTFOLIO MANAGERS
[A 3" x 2" photo at bottom right side of page of John Hancock
Small Cap Growth Fund. Caption below reads "Fund management
team members (l-r): Anurag Pandit, Bernice Behar and Laura
Allen."]
John Hancock
Small Cap Growth Fund
Small-cap growth stocks bolstered by roaring technology sector
After the close of business on December 10, 1999 John Hancock
Special Equities Fund merged into John Hancock Small Cap Growth Fund.
Small-company growth stocks produced outstanding results over the
last six months, although it was a period of increasingly sharp
ups and downs. Several factors were at work, including a red-hot
technology sector that had everyone's attention and rose to the
stratosphere in the last months of 1999. But volatility also rose
in the new year, and tech stocks plunged almost to bear-market
territory in April on fears about sky-high valuations and the
future of Microsoft. Even with the downturn, the tech-heavy NASDAQ
Composite Index still advanced by 30% in the last six months. Many
small-cap companies also reported strong earnings results, due in
part to the robust economy, pushing stock prices up despite fears
about rising interest rates. Overall, the Russell 2000 Growth
Index -- the Fund's benchmark -- returned 27.78% for the six
months ended April 30, 2000.
"...a period of
increasingly
sharp ups
and downs."
Fund performance
John Hancock Small Cap Growth Fund also had a very good period.
For the six months ended April 30, 2000, the Fund's Class A, Class
B and Class C shares returned 31.38%, 30.84% and 30.90%,
respectively, at net asset value. Class I shares, which commenced
on December 7, 1999, returned 9.22% from inception through April
30, 2000. By comparison, the average small-cap growth fund
returned 37.55% in the same six-month period, according to Lipper,
Inc.1 (Lipper recently introduced new competitive categories that
more accurately reflect the average portfolio holdings of the
funds they track.) Keep in mind that your net asset value return
will differ from the Fund's if you were not invested in the Fund
for the entire period and did not reinvest all distributions.
Historical performance information can be found on pages six and
seven.
[Table at top left hand column entitled "Top Five Stock
Holdings." The first listing is Tech Data Corp. 1.4%, the
second is Exar Corp. 1.3%, the third Virata Corp. 1.3%, the
fourth Quanta Services 1.3% and the fifth COR Therapeutics
1.2%. A note below the table reads "As a percentage of net
assets on April 30, 2000."]
"Within the
technology
group,
semiconductor
companies
were the
standouts..."
Technology still rules
We are bottom-up investors, choosing individual companies that
meet our criteria of generating strong and sustainable earnings
growth and being market leaders with great management teams. As a
result, we don't make large sector bets; nonetheless, the
technology sector is a place where we continue to find companies
that fit our growth bill. That helped us produce our strong
absolute performance this period, since the Fund's technology
weighting was in line with our benchmark index's. Some of the
peers in our new Lipper group, however, held significant
overweightings in technology and that gave them a performance edge
this period. We purposely manage the Fund in a more diversified
fashion, holding a large and varied portfolio of stocks across a
broad range of sectors as a way of managing the Fund's risk level.
[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 Powerwave
Technologies followed by an up arrow with the phrase "Cell-
phone amplifier maker boosted by strong subscriber growth."
The second listing is Tech Data followed by an up arrow with
the phrase "Top survivor as a wholesale distributor of
computer parts and services." The third listing is BindView
Development followed by a down arrow with the phrase
"Software company has difficulties digesting recent
acquisition." A note below the table reads "See 'Schedule of
Investments.' Investment holdings are subject to change."]
Semiconductors, telecom
Within the technology group, semiconductor companies were the
standouts throughout the period. In particular, semiconductor
companies focused on the telecommunications industry provided us
with the best results, as they continued to benefit from the
ongoing build-out of the broadband network. Some of our best names
were Terayon Communication Systems, Virata, Exar and PLX
Technology. Several others, such as RF Micro Devices, PMC-Sierra,
Novellus Systems and Micrel had such a good run that we took
profits and pared or sold our stakes. Telecom-related companies
such as Powerwave Technologies, which makes power amplifiers for
wireless handsets, and Quanta Services, which provides maintenance
and line installation services to telecom companies, were two
other top performers.
Software, Internet
Software companies like Cognizant Technology Solutions and many
Internet companies had a huge run at the end of 1999. We were well
served by increasing our Internet stake last October, focusing on
Web application software companies like Broadbase Software, Accrue
Software and WebTrends. Web-hosting company Digex was one of our
best performers. Even though many software and Internet stocks
fell hard in 2000, they had risen so much earlier in the period
that they were still solid contributors to our overall
performance. Our top performer was Ventro Corp., formerly known as
Chemdex. We sold this business-to-business Internet company and
locked in enormous profits before the stock fell back down to
earth.
[Bar chart at top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended April 30, 2000." The chart is scaled in
increments of 5% with 0% at the bottom and 40% at the top.
The first bar represents the 31.38% total return for John
Hancock Small Cap Growth Fund Class A. The second bar
represents the 30.84% total return for John Hancock Small Cap
Growth Fund Class B. The third bar represents the 30.90%
total return for John Hancock Small Cap Growth Fund Class C.
The fourth bar represents the 9.22%* total return for John
Hancock Small Cap Growth Fund Class I. The fifth bar
represents the 37.55% 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 fund
is tracked by Lipper, Inc. See the following two pages for
historical performance information. *From December 7, 1999 to
April 30, 2000."]
Biotech moves
Biotechnology companies staged an enormous rally in January and
although the stocks we held did well, including Alkermes, we were
underweighted versus our index when the run-up began. We built our
stake in February, but the stocks crested shortly after and gave
back their gains in March, so we were hurt on the downside as
well. We remain positive on the sector, though, since many
exciting products are winding their way through clinical trials
and the FDA approval process. We have a dual focus on companies
that have products in later stages of development and also on
those that are benefiting from the increased spending in the
industry. We took advantage of the market correction to add a few
more names, including Invitrogen, which provides kits and supplies
to laboratories.
Radio: Opportunity in downturn
Radio stocks have been a main theme of ours for at least a year,
and they remained very strong through the end of 1999 before
pulling back in 2000. Late last year, we began to sell or cut back
some of our holdings because we felt there was a lot of good news
already priced into the sector. Some of our sales included Cumulus
Media and Hispanic Broadcasting. The latter's success caused it to
graduate out of our small-cap arena. We still like the earnings
prospects for the radio group, however, and later in the period
when the stock prices turned south and became more attractively
valued, we added to some positions, like Radio One.
"We are very
pleased with
the level of
earnings
that our
companies
are
reporting..."
A look ahead
We expect that the heightened volatility will remain with us while
the market continues to contend with rising interest rates and the
threat of inflation. At the same time, we are maintaining our
cautiously optimistic outlook for small-cap growth stocks. We are
very pleased with the level of earnings that our companies are
reporting, and it gives us renewed confidence in the companies we
have chosen to own. We will continue to use the market's
volatility to upgrade the portfolio with high-quality companies
whose falling stock prices have brought them back within our
small-cap reach.
-------------------------------------------------------------------------
This commentary reflects the views of the portfolio managers
through the end of the Fund's period discussed in this report. Of
course, the managers' views are subject to change as market and
other conditions warrant.
1 Figures from Lipper, Inc. include reinvested dividends and do not
take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The 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 (1% declining to 0% after one
year).
All figures represent past performance and are no guarantee of
future results. Keep in mind that the total return and share price
of the Fund's investments will fluctuate. As a result, your Fund's
shares may be worth more or less than their original cost,
depending on when you sell them. Please read your prospectus
before you invest or send money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (8/22/91)
------ ------- ---------
Cumulative Total Returns 76.46%(1) 246.59% 442.72%
Average Annual Total Returns 76.46%(1) 28.22% 21.71%
CLASS B
For the period ended March 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- ---------
Cumulative Total Returns 79.26%(1) 249.81% 630.86%
Average Annual Total Returns 79.26%(1) 28.46% 22.01%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
------- ---------
Cumulative Total Returns 81.39%(1) 103.37%
Average Annual Total Returns 81.39%(1) 47.38%
CLASS I(2)
For the period ended March 31, 2000
SINCE
INCEPTION
(12/7/99)
---------
Cumulative Total Return 28.24%
Average Annual Total Return 28.24%(3)
Notes to Performance
(1) The Fund's recent returns occurred during an unusual period
of performance in certain areas of the market in which the Fund
invests.
(2) 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.
(3) 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, 1989, before sales
charge, and is equal to $65,505 as of April 30, 2000. The
second line represents the Russell 2000 Index and is equal to
$35,763 as of April 30, 2000. The third line represents the
Russell 2000 Growth Index and is equal to $35,589 as of April
30, 2000.
*No contingent deferred sales charge applicable.
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 April 30,
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 $48,601 $17,461 $273,046
--------------------------------------------------------------------------
With Maximum Sales Charge $46,171 $17,286 N/A
--------------------------------------------------------------------------
Russell 2000 Growth Index $32,059 $13,633 $263,615
--------------------------------------------------------------------------
Russell 2000 Index $33,255 $11,358 $263,758
* 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 April 30, 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
April 30, 2000 (Unaudited)
-------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $1,633,349,308) $2,032,524,870
Joint repurchase agreement (cost - $35,857,000) 35,857,000
Corporate savings account 850
--------------
2,068,382,720
Receivable for investments sold 37,132,522
Receivable for shares sold 2,707,570
Dividends receivable 13,847
Interest receivable 17,124
Other assets 216,884
--------------
Total Assets 2,108,470,667
-------------------------------------------------------------------
Liabilities:
Payable for investments purchased 35,918,263
Payable for shares repurchased 1,239,167
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 2,113,469
Accounts payable and accrued expenses 436,504
--------------
Total Liabilities 39,707,403
-------------------------------------------------------------------
Net Assets:
Capital paid-in 1,332,494,388
Accumulated realized gain on investments 349,478,170
Net unrealized appreciation of investments 399,175,562
Accumulated net investment loss (12,384,856)
--------------
Net Assets $2,068,763,264
===================================================================
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 - $950,932,334/64,318,100 $14.78
===================================================================
Class B - $1,077,279,007/80,305,698 $13.41
===================================================================
Class C - $24,031,262/1,794,081 - Note A $13.39
===================================================================
Class I* - $16,520,661/1,115,672 $14.81
===================================================================
Maximum Offering Price Per Share**
Class A - ($14.78 / 0.95) $15.56
===================================================================
* Class I shares commenced operations on December 7, 1999.
** On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
</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
Six months ended April 30, 2000 (Unaudited)
-------------------------------------------------------------------
<S> <C>
Investment Income:
Securities lending income - Note A $2,417,637
Interest 564,526
Dividends 463,154
--------------
3,445,317
--------------
Expenses:
Investment management fee - Note B 6,785,250
Distribution and service fee - Note B
Class A 988,947
Class B 5,123,477
Class C 69,684
Transfer agent fee - Note B 2,234,251
Accounting and legal services fee - Note B 178,852
Custodian fee 172,139
Registration and filing fees 98,926
Trustees' fees 27,904
Miscellaneous 22,984
Auditing fee 20,139
Printing 19,721
Interest expense - Note A 18,253
Legal fees 8,141
--------------
Total Expenses 15,768,668
-------------------------------------------------------------------
Net Investment Loss (12,323,351)
-------------------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 349,988,084
Change in net unrealized appreciation/depreciation
of investments (87,551,655)
--------------
Net Realized and Unrealized
Gain on Investments 262,436,429
-------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $250,113,078
===================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($10,500,995) ($12,323,351)
Net realized gain on investments sold 134,645,854 349,988,084
Change in net unrealized appreciation/depreciation of investments
146,147,342 (87,551,655)
------------ --------------
Net Increase in Net Assets Resulting from Operations
270,292,201 250,113,078
------------ --------------
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) 1,165,171,270
------------ --------------
Net Assets:
Beginning of period 542,159,841 749,220,197
------------ --------------
End of period (including accumulated net investment loss
of $61,505 and $12,384,856, respectively) $749,220,197 $2,068,763,264
============ ==============
The Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference
reflects earnings less expenses, any investment gains and losses,
distributions paid to shareholders and any increase or decrease in money
shareholders invested in the Fund. The footnote illustrates the number of
Fund shares sold, reinvested and repurchased during the last two periods,
along with the corresponding dollar value.
See notes to financial statements.
<CAPTION>
Statement of Changes in Net Assets (continued)
---------------------------------------------------------------------------------------------------------
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 32,716,360 340,101,947 38,909,630 625,151,001
Shares issued in reorganization - Note D -- -- 26,966,047 373,930,478
Shares issued to shareholders in
reinvestment of distributions
476,257 4,124,555 2,267,406 27,661,109
----------- ------------ ----------- -------------
33,192,617 344,226,502 68,143,083 1,026,742,588
Less shares repurchased (33,465,565) (344,860,133) (24,930,238) (400,716,461)
----------- ------------ ----------- -------------
Net increase (decrease) (272,948) (633,631) 43,212,845 626,026,127
=========== ============ =========== =============
CLASS B
Shares sold 10,349,917 103,998,949 15,397,356 221,480,933
Shares issued in reorganization - Note D -- -- 30,814,945 388,808,070
Shares issued to shareholders in
reinvestment of distributions
983,372 7,887,044 4,148,399 46,088,659
----------- ------------ ----------- -------------
11,333,289 111,885,993 50,360,700 656,377,662
Less shares repurchased (16,593,304) (161,959,740) (1,158,281) (154,810,621)
----------- ------------ ----------- -------------
Net increase (decrease) (5,260,015) (50,073,747) 39,202,419 501,567,041
=========== ============ =========== =============
CLASS C
Shares sold 358,485 3,764,658 2,581,899 38,128,260
Shares issued in reorganization - Note D -- -- 7,213 90,380
Shares issued to shareholders in
reinvestment of distributions 1,722 13,917 33,026 366,480
----------- ------------ ----------- -------------
360,207 3,778,575 2,622,138 38,585,120
Less shares repurchased (87,513) (876,204) (1,160,646) (17,429,874)
----------- ------------ ----------- -------------
Net increase 272,694 2,902,371 1,461,492 21,155,246
=========== ============ =========== =============
CLASS I **
Shares sold -- -- 511,684 8,962,792
Shares issued in reorganization - Note D -- -- 1,184,187 16,420,653
----------- ------------ ----------- -------------
-- -- 1,695,871 25,383,445
Less shares repurchased -- -- (580,199) (8,960,589)
----------- ------------ ----------- -------------
Net increase -- -- 1,115,672 16,422,856
=========== ============ =========== =============
** Class I shares commenced 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, SIX MONTHS ENDED
-------------------------------------------------------- APRIL 30, 2000
1995(1) 1996 1997 1998 1999 (UNAUDITED)
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A(2)
Per Share Operating Performance
Net Asset Value, Beginning
of Period $6.71 $9.02 $10.22 $12.35 $8.41 $12.65
-------- -------- -------- -------- -------- --------
Net Investment Loss(3) (0.07) (0.09) (0.07) (0.08) (0.12) (0.08)
Net Realized and Unrealized
Gain (Loss) on Investments 2.38 1.29 2.41 (1.34) 4.59 3.72
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 2.31 1.20 2.34 (1.42) 4.47 3.64
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.21) (2.52) (0.23) (1.51)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period $9.02 $10.22 $12.35 $8.41 $12.65 $14.78
======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(4) 34.56% 13.27% 23.35% (14.14%) 54.41% 31.38%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $179,481 $218,497 $209,384 $179,700 $266,886 $950,932
Ratio of Expenses to Average
Net Assets 1.38% 1.32% 1.29%(6) 1.36%(6) 1.34%(6) 1.29%(6,7)
Ratio of Net Investment Loss
to Average Net Assets (0.83%) (0.86%) (0.57%) (1.02%) (1.17%) (0.93%)(7)
Portfolio Turnover Rate 23% 44% 96% 103% 104% 64%(8)
CLASS B(2)
Per Share Operating Performance
Net Asset Value, Beginning
of Period $6.51 $8.70 $9.78 $11.72 $7.81 $11.64
-------- -------- -------- -------- -------- --------
Net Investment Loss(3) (0.11) (0.15) (0.14) (0.15) (0.18) (0.12)
Net Realized and Unrealized
Gain (Loss) on Investments 2.30 1.23 2.29 (1.24) 4.24 3.40
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 2.19 1.08 2.15 (1.39) 4.06 3.28
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.21) (2.52) (0.23) (1.51)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period $8.70 $9.78 $11.72 $7.81 $11.64 $13.41
======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(4) 33.60% 12.48% 22.44% (14.80%) 53.31% 30.84%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $393,478 $451,268 $472,594 $361,992 $478,468 $1,077,279
Ratio of Expenses to Average
Net Assets 2.11% 2.05% 2.02%(6) 2.07%(6) 2.03%(6) 2.04%(6,7)
Ratio of Net Investment Loss
to Average Net Assets (1.55%) (1.59%) (1.30%) (1.73%) (1.87%) (1.66%)(7)
Portfolio Turnover Rate 23% 44% 96% 103% 104% 64%(8)
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: income, expenses,
distributions and gains (losses) of the Fund. It shows how the Fund's net
asset value for a share has changed since the end of the previous period.
Additionally, important relationships between some items presented in the
financial statements are expressed in ratio form.
See notes to financial statements.
<CAPTION>
Financial Highlights (continued)
----------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM
JUNE 1, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1998 OCTOBER 31, 1999 (UNAUDITED)
---------------- ---------------- ---------
<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(3) (0.03) (0.19) (0.12)
Net Realized and Unrealized
Gain (Loss) on Investments (1.12) 4.23 3.40
-------- -------- --------
Total from Investment Operations (1.15) 4.04 3.28
-------- -------- --------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (0.23) (1.51)
-------- -------- --------
Net Asset Value, End of
Period $7.81 $11.62 $13.39
======== ======== ========
Total Investment Return at
Net Asset Value(4) (12.83%)(5) 53.05% 30.90%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $468 $3,866 $24,030
Ratio of Expenses to Average
Net Assets(6) 2.11%(7) 2.09% 2.04%(7)
Ratio of Net Investment Loss
to Average Net Assets (1.86%)(7) (1.94%) (1.69%)(7)
Portfolio Turnover Rate 103% 104% 64%(8)
See notes to financial statements.
<CAPTION>
Financial Highlights (continued)
-------------------------------------------------------
PERIOD FROM
DECEMBER 7, 1999
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 2000
(UNAUDITED)
----------------
<S> <C>
CLASS I
Per Share Operating Performance
Net Asset Value, Beginning
of Period $13.55
--------
Net Investment Loss(3) (0.04)
Net Realized and Unrealized
Gain on Investments 1.30
--------
Total from Investment Operations 1.26
--------
Net Asset Value, End of
Period $14.81
========
Total Investment Return at
Net Asset Value(4) 9.22%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $16,522
Ratio of Expenses to Average
Net Assets(6) 0.89%(7)
Ratio of Net Investment Loss
to Average Net Assets (0.58%)(7)
Portfolio Turnover Rate 64%(8)
(1) On December 22, 1994, John Hancock Advisers, Inc. became the
investment adviser of the Fund.
(2) All per share amounts and net asset values have been restated to
reflect the four-for-one stock split effective May 1, 1998.
(3) Based on the average of the shares outstanding at the end of each month.
(4) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(5) Not annualized.
(6) Expense ratios do not include interest expense due to bank loans,
which amounted to $0.01 for the year ended October 31, 1998 and less
than $0.01 for the years ended October 31, 1997, 1999 and the period
ended April 30, 2000.
(7) Annualized.
(8) Portfolio turnover rate excludes merger activity.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Small Cap Growth Fund on April 30, 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 (1.53%)
24/7 Media, Inc.* 352,000 $6,908,000
Cybergold, Inc.* 921,200 7,599,900
Getty Images, Inc.* 396,000 12,028,500
Modem Media.Poppe Tyson, Inc.* 344,200 5,033,925
------------
31,570,325
------------
Business Services - Misc. (5.76%)
Corporate Executive Board Co. (The)* 267,600 15,721,500
Forrester Research, Inc.* 522,000 23,653,125
Jupiter Communications, Inc.* 257,550 6,712,397
META Group, Inc.* 531,100 11,949,750
On Assignment, Inc.* 711,800 22,332,725
ProBusiness Services, Inc.* 479,000 12,633,625
Quanta Services, Inc.* 564,700 26,223,256
------------
119,226,378
------------
Chemicals (0.10%)
Symyx Technologies, Inc.* 60,050 1,992,909
------------
Computers (18.48%)
Accrue Software, Inc.* 359,300 8,555,831
Advent Software, Inc.* 429,700 22,559,250
Apex, Inc.* 454,150 13,425,809
Aspect Development, Inc.* 200,000 13,825,000
Aspen Technology, Inc.* 336,800 11,914,300
Be Free, Inc.* 461,400 5,767,500
BindView Development Corp.* 815,200 6,572,550
Broadbase Software, Inc.* 273,200 4,319,975
Clarus Corp.* 226,100 9,086,394
Cognizant Technology Solutions Corp.* 405,800 18,616,075
Data Return Corp.* 412,900 10,141,856
Delano Technology Corp. (Canada)* 19,800 216,562
Digex, Inc.* 104,900 8,182,200
eMachines, Inc.* 1,006,450 8,617,728
Etinuum, Inc.* 422,250 2,454,328
Immersion Corp.* 324,900 11,696,400
Interwoven, Inc.* 122,200 8,462,350
IntraNet Solutions, Inc.* 356,900 7,941,025
Lifeminders.com, Inc.* 306,050 13,580,969
MarketWatch.com, Inc.* 497,450 7,492,841
Maxtor Corp.* 573,900 6,850,931
Media Metrix, Inc.* 517,050 16,610,231
Mediaplex, Inc.* 234,250 12,005,312
Micromuse, Inc.* 96,600 9,478,875
Multex.com, Inc.* 366,000 7,434,375
MyPoints.com, Inc.* 237,800 4,161,500
National Computer Systems, Inc. 429,900 22,112,981
National Instruments Corp.* 245,675 11,976,656
Net Perceptions, Inc.* 239,400 4,638,375
Netpliance, Inc.* 835,400 7,518,600
Network Appliance, Inc.* 32,000 2,366,000
Nuance Communications, Inc.* 31,750 958,453
Numerical Technologies, Inc.* 7,900 329,825
Packeteer, Inc.* 151,850 3,416,625
Predictive Systems, Inc.* 232,600 10,961,275
Quantum Corp., Hard Disk Drive Group* 825,600 9,649,200
RADVision Ltd. (Israel)* 5,450 208,463
Saba Software, Inc.* 29,500 838,906
SCM Microsystems, Inc.* 142,000 11,235,750
Secure Computing Corp.* 985,000 12,250,937
Software Technologies Corp.* 59,550 1,064,456
SportsLine USA, Inc.* 393,700 7,554,119
Transaction Systems Architects, Inc.
(Class A)* 556,700 9,081,169
Visual Networks, Inc.* 183,200 7,144,800
WebTrends Corp.* 278,600 9,141,563
------------
382,418,320
------------
Electronics (18.61%)
Alpha Industries, Inc.* 328,400 17,076,800
ATMI, Inc.* 335,600 12,920,600
Brooks Automation, Inc.* 196,900 17,659,469
Credence Systems Corp.* 128,200 18,300,550
DDi Corp.* 238,900 3,583,500
DuPont Photomasks, Inc.* 282,600 15,843,263
Elantec Semiconductor, Inc.* 339,800 13,761,900
Exar Corp.* 345,050 27,663,314
Flextronics International Ltd.
(Singapore)* 143,000 10,045,750
GaSonics International Corp.* 441,600 14,572,800
Integrated Silicon Solution, Inc.* 608,200 18,588,113
Kent Electronics Corp.* 404,300 11,800,506
Metalink Ltd. (Israel)* 315,050 8,998,616
Micrel, Inc.* 186,000 16,089,000
Microsemi Corp.* 394,300 11,533,275
Nanometrics, Inc.* 328,450 12,604,269
Novellus Systems, Inc.* 186,200 12,417,212
Plexus Corp.* 85,100 6,520,787
PLX Technology, Inc.* 730,250 24,052,609
Powerwave Technologies, Inc.* 105,400 21,929,787
PRI Automation, Inc.* 188,600 15,064,425
Qlogic Corp.* 93,600 9,389,250
Rudolph Technologies, Inc.* 319,350 9,700,256
Sage, Inc.* 302,300 5,120,206
Semtech Corp.* 251,800 17,169,613
Veeco Instruments, Inc.* 85,400 5,305,475
Virata Corp.* 218,700 27,392,175
------------
385,103,520
------------
Finance (1.45%)
Affiliated Managers Group, Inc.* 228,200 9,156,525
Medallion Financial Corp. 400,800 6,638,250
Metris Cos., Inc. 377,000 14,137,500
------------
29,932,275
------------
Food (0.34%)
Hain Food Group, Inc. (The)* 259,600 6,960,525
------------
Instruments - Scientific (0.70%)
Varian, Inc.* 397,000 14,440,875
------------
Leisure (0.71%)
Cinar Films, Inc. (Class B) (Canada)* 557,400 3,901,800
Premier Parks, Inc.* 499,600 10,772,625
------------
14,674,425
------------
Machinery (0.56%)
CVC, Inc.* 444,600 11,698,538
------------
Media (5.20%)
Acme Communications, Inc.* 588,550 13,536,650
Citadel Communications Corp.* 280,900 10,972,656
Classic Communications, Inc. (Class A)* 308,750 3,743,594
Pegasus Communications Corp.* 183,200 19,991,700
Radio One, Inc.* 307,950 17,861,100
Regent Communications, Inc.* 1,144,600 9,800,638
TiVo, Inc.* 162,850 2,910,944
Westwood One, Inc.* 438,188 15,500,901
Wink Communications, Inc.* 479,400 9,468,150
YouthStream Media Networks, Inc.* 605,700 3,861,337
------------
107,647,670
------------
Medical (13.67%)
Alexion Pharmaceuticals, Inc.* 311,100 13,882,837
Alkermes, Inc.* 199,700 10,634,025
Alpharma, Inc. (Class A) 307,700 11,884,912
Aspect Medical Systems, Inc.* 14,650 650,094
Aurora Biosciences Corp.* 371,900 13,481,375
BioSource International, Inc.* 559,900 5,494,019
COR Therapeutics, Inc.* 335,000 25,522,813
CV Therapeutics, Inc.* 489,900 19,534,762
Cyberonics, Inc.* 389,100 7,927,912
Cytyc Corp.* 264,800 11,849,800
Exelixis, Inc.* 101,100 1,927,219
Gene Logic, Inc.* 137,000 3,681,875
Genome Therapeutics Corp.* 293,600 5,027,900
Human Genome Sciences, Inc.* 99,500 7,617,969
Inhale Therapeutic Systems, Inc.* 185,500 11,477,812
Interpore International, Inc.* 1,121,700 10,936,575
Invitrogen Corp.* 215,400 13,435,575
LifePoint Hospitals, Inc.* 625,700 10,715,112
Ligand Pharmaceuticals, Inc.
(Class B)* 565,000 7,450,938
NPS Pharmaceuticals, Inc.* 991,700 12,892,100
Pharmacopeia, Inc.* 362,000 14,887,250
Pharmacyclics, Inc.* 205,000 9,301,875
Priority Healthcare Corp.* 29,250 1,619,719
Province Healthcare Co.* 514,000 14,841,750
Techne Corp.* 199,900 14,217,888
Titan Pharmaceuticals, Inc.* 378,500 12,112,000
Visible Genetics, Inc. (Canada)* 267,400 9,810,238
------------
282,816,344
------------
Metal (1.08%)
Maverick Tube Corp.* 783,300 22,324,050
------------
Oil & Gas (6.42%)
Atwood Oceanics, Inc.* 293,000 17,763,125
Core Laboratories NV (Netherlands)* 478,500 13,577,437
Dril-Quip, Inc.* 206,800 8,401,250
Marine Drilling Cos., Inc.* 692,400 18,002,400
NATCO Group, Inc. (Class A)* 718,600 6,512,313
Newfield Exploration Co.* 420,600 17,086,875
Patterson Energy, Inc.* 370,600 10,469,450
Pride International, Inc.* 811,300 18,355,662
Stone Energy Corp.* 276,800 13,078,800
Veritas DGC, Inc.* 397,900 9,549,600
------------
132,796,912
------------
Retail (8.79%)
99 Cents Only Stores* 517,149 19,457,731
Applebee's International, Inc. 215,600 7,855,925
Brightpoint, Inc.* 1,374,100 16,231,556
Cost Plus, Inc.* 357,400 10,923,038
Duane Reade, Inc.* 440,400 13,212,000
Insight Enterprises Inc.* 306,800 12,828,075
Linens 'N Things, Inc.* 454,200 14,023,425
Pacific Sunwear of California, Inc.* 497,200 16,935,875
ScanSource, Inc.* 338,800 11,688,600
Tech Data Corp.* 670,000 28,098,125
Too, Inc.* 132,100 3,954,744
Tweeter Home Entertainment Group, Inc.* 236,000 8,702,500
Whole Foods Market, Inc.* 222,500 9,470,156
Wild Oats Markets, Inc.* 632,500 8,380,625
------------
181,762,375
------------
Schools/Education (0.52%)
ProsoftTraining.com* 638,000 10,686,500
------------
Steel (1.19%)
Lone Star Technologies, Inc.* 531,500 24,515,437
------------
Telecommunications (11.17%)
Advanced Radio Telecom Corp.* 460,200 7,679,588
AirGate PCS, Inc.* 241,100 20,674,325
Alamosa PCS Holdings, Inc.* 490,620 13,982,670
Allegiance Telecom, Inc.* 50,000 3,537,500
BreezeCom Ltd. (Israel)* 21,000 577,500
CoreComm Ltd.* 369,300 11,540,625
CTC Communications Group, Inc.* 95,550 3,224,812
Efficient Networks, Inc.* 127,600 8,389,700
Gadzoox Networks, Inc.* 116,600 4,299,625
I-Link, Inc.* 1,345,800 10,093,500
interWAVE Communications International,
Ltd. (Bermuda)* 21,200 282,225
Latitude Communications, Inc.* 343,300 4,977,850
Orckit Communications Ltd. (Israel)* 417,000 18,452,250
Pinnacle Holdings, Inc.* 340,100 19,109,369
Powertel, Inc.* 181,800 12,226,050
Radyne ComStream, Inc.* 367,900 6,944,112
RF Micro Devices, Inc.* 91,500 9,521,719
Rural Cellular Corp. (Class A)* 230,100 17,013,019
SBA Communications Corp.* 440,400 17,891,250
Telaxis Communications Corp.* 277,150 7,257,866
Telocity, Inc.* 121,000 990,688
Terayon Communication Systems, Inc.* 108,200 10,062,600
US LEC Corp. (Class A)* 452,800 11,829,400
XM Satellite Radio Holdings, Inc.
(Class A)* 368,450 10,615,966
------------
231,174,209
------------
Transport (1.97%)
Circle International Group, Inc. 347,500 9,230,469
Expeditors International of Washington,
Inc. 360,636 15,417,189
Forward Air Corp.* 469,400 16,135,625
------------
40,783,283
------------
TOTAL COMMON STOCKS
(Cost $1,633,349,308) (98.25%) 2,032,524,870
---------- --------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.73%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-28-00, due 05-01-00
(Secured by U.S. Treasury
Bonds, 5.50% thru 9.25%,
due 02-15-16 thru 08-15-28)
- Note A 5.73% $35,857 35,857,000
---------- --------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.85% 850
---------- --------------
TOTAL SHORT-TERM INVESTMENTS (1.73%) 35,857,850
---------- --------------
TOTAL INVESTMENTS (99.98%) 2,068,382,720
---------- --------------
OTHER ASSETS AND LIABILITIES, NET (0.02%) 380,544
---------- --------------
TOTAL NET ASSETS (100.00%) $2,068,763,264
========== ==============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is U.S. dollar
denominated.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Small Cap Growth Fund
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Series Trust (the "Trust") is a diversified open-end management
investment company registered under the Investment Company Act of 1940. The
Trust consists of five series portfolios: John Hancock Small Cap Growth Fund
(the "Fund"), John Hancock Technology Fund, John Hancock Millennium Growth
Fund, John Hancock Real Estate Fund and John Hancock 500 Index Fund (which
commenced operations on August 18, 1999). Prior to March 1, 2000, the John
Hancock Technology Fund was known as John Hancock Global Technology Fund. The
other series of the Trust are reported in separate financial statements. The
investment objective of the Fund is to 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. Beginning May 1,
2000, all retail purchases of Class C shares will be assessed a 1% up-front
sales charge.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing
services or at fair value as determined in good faith in accordance with
procedures approved by the Trustees. Short-term debt investments maturing
within 60 days are valued at amortized cost, which approximates market value.
All portfolio transactions initially expressed in terms of foreign currencies
have been translated into U.S. dollars as described in "Foreign Currency
Translation."
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial
Group, Inc., may participate in a joint repurchase agreement. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring
that the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date
of purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund qualifies as a "regulated investment company"
by complying with the applicable provisions of the Internal Revenue Code and
will not be subject to federal income tax on taxable income which is
distributed to shareholders. Therefore, no federal income tax provision is
required.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date or, in the case of some
foreign securities, on the date thereafter when the Fund is made aware of the
dividend. Interest income on investment securities is recorded on the accrual
basis. Foreign income may be subject to foreign withholding taxes, which are
accrued as applicable.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined
in conformity with income tax regulations, which may differ from generally
accepted accounting principles. Dividends paid by the Fund with respect to
each class of shares will be calculated in the same manner, at the same time
and will be in the same amount, except for the effect of expenses that may be
applied differently to each class.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are calculated at the Fund level and allocated daily to each class
of shares based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly identifiable
to an individual fund. Expenses which are not readily identifiable to a
specific fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities,
revenues and expenses of the Fund. Actual results could differ from these
estimates.
BANK BORROWING The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that
otherwise might require the untimely disposition of securities. The Fund has
entered into a syndicated line of credit agreement with various banks. This
agreement enables the Fund to participate with other funds managed by the
Adviser in an unsecured line of credit with banks which permit borrowings up
to $500 million, collectively. Interest is charged to each fund, based on its
borrowings. In addition, a commitment fee is charged based on the average
daily unused portion of the line of credit and is allocated among the
participating funds. The maximum loan balance during the period amounted to
$20,340,000. The interest rate was in the range of 6.06% through 6.63%. At
April 30, 2000, there were no outstanding borrowings.
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 April 30, 2000, the Fund loaned securities
having a market value of $171,881,319 collateralized by securities in the
amount of $175,802,004.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed
in terms of foreign currencies are translated into U.S. dollars based on
London currency exchange quotations as of 5:00 p.m., London time, on the date
of any determination of the net asset value of the Fund. Transactions
affecting statement of operations accounts and net realized gain/(loss) on
investments are translated at the rates prevailing at the dates of the
transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains or losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent,
on an annual basis, to the sum of (a) 0.75% of the first $1,500,000,000 of
the Fund's average daily net asset value and (b) 0.70% of the Fund's average
daily net asset value in excess of $1,500,000,000.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the period ended April
30, 2000 net sales charges received with regard to sales of Class A shares
amounted to $709,903. Out of this amount, $93,442 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$431,908 was paid as sales commissions to unrelated broker-dealers and
$184,553 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.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed.
Proceeds from the CDSC are paid to JH Funds and are used in whole or in part
to defray its expenses related to providing distribution related services to
the Fund in connection with the sale of Class B shares. For the period ended
April 30, 2000, contingent deferred sales charges paid to JH Funds amounted
to $646,501.
Class C shares which are redeemed within one year of purchase will be subject
to a CDSC at a rate of 1.0% of the lesser of the current market value at the
time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from the CDSC are paid to JH Funds and are used in whole
or in part to defray its expenses related to providing distribution related
services to the Fund in connection with the sale of Class C shares. For the
period ended April 30, 2000, contingent deferred sales charges paid to JH
Funds amounted to $10,626
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Accordingly, the Fund will make payments to
JH Funds for distribution and service expenses, at an annual rate not to
exceed 0.25% of Class A average daily net assets and 1.00% of Class B and
Class C average daily net assets, to reimburse JH Funds for its distribution
and service costs. Up to a maximum of 0.25% of such payments may be service
fees as defined by the 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
transfer agent fees based on the number of shareholder accounts and certain
out-of-pocket expenses. Class I shares pay a monthly transfer agent fee
equivalent to 0.05% of the average daily net assets of the Class I shares of
the Fund.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the period
was at an annual rate of less than 0.02% of the average net assets of the
Fund.
Mr. Stephen L. Brown, Ms. Maureen R. Ford and Mr. Richard S.
Scipione 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 investment had no impact on the
operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of
the U.S. government and its agencies and short-term securities, during the
period ended April 30, 2000, aggregated $1,444,490,618 and $1,113,944,095,
respectively. There were no purchases or sales of obligations of the U.S.
government and its agencies during the period ended April 30, 2000.
The cost of investments owned at April 30, 2000 (excluding the corporate
savings account) for federal income tax purposes was $1,669,588,686. Gross
unrealized appreciation and depreciation of investments aggregated
$629,492,337 and $230,699,153, respectively, resulting in net unrealized
appreciation of $398,793,184.
NOTE D -
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 $373,930,478, $388,808,070, $90,380 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.
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Permit No. 75
This report is for the information of shareholders of the John Hancock
Small Cap Growth Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
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600SA 4/00
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