The latest report from your
Fund's management team
SEMIANNUAL REPORT
Global
Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*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 02199-7603
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-INVESTMENT ADVISER
Indocam International Investment Services
90 Boulevard Pasteur
Paris, France 75015
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 MIREN ETCHEVERRY AND ROBERT UEK
FOR THE PORTFOLIO MANAGEMENT TEAM
[A 3" x 2" photo at bottom right side of page of John Hancock
Global Fund. Caption below reads "Fund management team members (l-r):
Didier Le Conte, Miren Etcheverry, Alessandra Gaudio and
Jean-Claude Kaltenbach."]
John Hancock Global Fund
Technology stocks dominate world financial markets
Stock markets around the world produced solid results over the last six
months, with the "TMT" sectors -- technology, media and
telecommunications -- the main drivers of performance. Even with the
increasingly sharp volatility that culminated in tech stocks' plunge in
March and April, TMT stocks around the globe still posted strong gains
for the six-month period, as investors were riveted to so-called New
Economy stocks.
The world's advances were not restricted to one region, although some
parts of the world did better than others. As it became even clearer
that economies everywhere were picking up steam, the emerging markets of
Eastern Europe and Latin America benefited most, and turned in the
strongest performances this period. With improved conditions, investors
seeking higher growth appeared more confident that they could find it in
these newly emerging countries.
By contrast, most Asian markets, with the exception of Hong Kong, were
more lackluster, pausing after their significant rise last year.
Furthermore, Japan's market faltered on concerns that the country's
economy had fallen back into recession. European markets rallied as
economic recovery continued there and stocks were attractively valued.
But the ongoing decline in the year-old European currency, the euro,
took away those gains for U.S.-dollar-based investors. Last, but hardly
least, the U.S. stock market benefited from the predominance of
technology companies whose surge early in the period cushioned their
later fall and still helped lift the Standard & Poor's 500 Index by
7.18%. Taken as a whole, the world's financial markets, as measured by
the Fund's benchmark MSCI All Country World Free Index, were up 7.93%.
"Stock
markets
around the
world
produced
solid
results..."
Fund performance
For the six months ended April 30, 2000, John Hancock Global Fund's
Class A, Class B and Class C shares posted total returns of 3.13%, 2.69%
and 2.69%, respectively, at net asset value. That compared with the
16.44% return of the average international fund in the same period,
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. Historical performance information can be found on pages
six and seven.
[Pie chart at top left hand column with heading "Portfolio
Diversification." The chart is divided into seven sections (from
top to left): Latin America 1%, Canada 3%, Short-Term Investments
& Other 3%, United Kingdom & Ireland 11%, Pacific Rim 22%,
Continental Europe 27% and United States 33%. A note below the
chart reads "As a percentage of net assets on April 30, 2000."]
"During the
period, we
increased our
exposure to
emerging
markets."
U.S.: A weak link
The Fund's performance was modest compared to our peers because of both
our significant underweight in the U.S. stock market -- approximately
10% less than our benchmark index -- and some disappointing stock picks
there. When the period began last November, we believed that valuations
in the U.S. market were high compared to Asia and elsewhere, so we kept
our average U.S. weighting at 35% of the Fund's net assets and ended the
period at 33%. We also missed the boat by being underweight in
technology and telecom names, and by owning the ones that produced more
modest results. That's because the sky-high, triple-digit performances
came more from mid- and small-sized tech and telecom companies that had
no history of stable earnings growth. We focused more on larger
companies with stable earnings growth. Although some U.S. technology
stocks served us very well, the U.S. also produced some of our biggest
disappointments across sectors, including Microsoft, Johnson & Johnson,
Procter & Gamble and Lucent Technologies.
[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 Nokia followed by an up arrow with
the phrase "Dominant player in booming wireless communications
market." The second listing is Nikko Securities followed by an up
arrow with the phrase "Rebounding Japanese stock market boosts
trading and earnings." The third listing is Microsoft followed by
a down arrow with the phrase "Investors react to news of antitrust
ruling and soft earnings." A note below the table reads "See
'Schedule of Investments.' Investment holdings are subject to
change."]
Tech and telecom make strong contributions
Since technology, media and telecom stocks were the dominant group, our
holdings there were some of our biggest contributors to performance.
These included Finland's Nokia, Germany's Mannesmann, Canada's Nortel
Networks, Japan's Sony and the United States' Intel, Cisco Systems and
EMC.
Japan, Europe still focus areas
We have increased our overweighting in Japan to 17% of the Fund's net
assets because, despite short-term setbacks, the economic picture is
showing signs of improving slowly but surely. We would rather see a
gradual, tentative recovery in Japan than a sharp one, because it helps
maintain the discipline needed to ensure that recovery and corporate
reform actually happen in the long term. We also see real opportunity in
the corporate restructurings that continue to take place there. Our
focus remains on companies that stand to benefit from economic recovery,
corporate restructuring and the worldwide telecommunications boom.
[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 20% at the top. The first bar
represents the 3.13% total return for John Hancock Global Fund
Class A. The second bar represents the 2.69% total return for John
Hancock Global Fund Class B. The third bar represents the 2.69%
total return for John Hancock Global Fund Class C. The fourth bar
represents the 16.44 total return for Average global fund. A note
below the chart reads "Total returns for John Hancock Global Fund
are at net asset value with all distributions reinvested. The
average global fund is tracked by Lipper, Inc. See the following
two pages for historical performance information."]
To take advantage of the growing opportunity in Japan, we trimmed our
stake in Western Europe to an underweighted 38% of net assets. After the
Continent's strong run up last year, European stocks appear fully valued
compared to Japan, especially in the technology and telecommunications
areas. We continue to prefer countries in continental Europe to the
U.K., where the outlook for earnings is less certain. The Continent is
where most of the positive developments are occurring, including a more
robust economic growth picture and corporate restructurings.
Expanding our emerging world stake
During the period, we increased our exposure to emerging markets.
Valuations were attractive, the emerging economies continued to show
strong signs of growth, and the world economic environment was more
friendly. We have taken a diversified, low-risk approach, adding stocks
across Eastern Europe, Asia and Latin America, with the biggest emphasis
on Asia. In the last six months, we added to our emerging-market stake
by establishing small positions in Turkey, Hungary, Greece, South
Africa, Brazil, Chile, Argentina and Israel. Our investments for the
most part were in the most liquid, blue-chip stocks of each country.
"...we are
increasingly
positive
about Asia
overall and
Japan in
particular..."
Going forward
The current macroeconomic environment of high growth with low inflation,
combined with continued corporate restructurings, provides a positive
backdrop for stock markets worldwide. Nevertheless, the determination of
the Federal Reserve to slow down the U.S. economy leads us to be
cautious about the U.S. stock market, despite increasingly attractive
valuations. On the other hand, we are increasingly positive about Asia
overall and Japan in particular, where the fundamentals and valuation
levels are good. Corporate and economic reforms and the return to a more
sustainable level of earnings growth, due to growth in domestic demand,
will be the main forces behind performance of the Asian markets for the
rest of the year.
As for the Fund, the addition on January 1 of a subadviser, Indocam
International Investment Services, should bolster our investment
capabilities, but will not alter our strategy. We will continue to own a
diversified portfolio of stocks chosen through a combination of top-down
country and sector allocation and bottom-up individual stock selection.
-------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. Of
course, the team's views are subject to change as market and other
conditions warrant.
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global 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 August 1992, different sales
charges were in effect for Class A shares and are not reflected in the
performance data. 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 international investing, including currency and
political risks and differences in accounting standards and financial
reporting, before you invest or send money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/92)
------ ------- --------
Cumulative Total Returns 13.94% 85.35% 136.70%
Average Annual Total Returns 13.94% 13.14% 11.02%
CLASS B
For the period ended March 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
------ ------- --------
Cumulative Total Returns 14.15% 86.61% 155.07%
Average Annual Total Returns 14.15% 13.29% 9.82%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
------ -------
Cumulative Total Returns 16.93% 22.81%
Average Annual Total Returns 16.93% 20.91%
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock Global 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 Morgan Stanley (MSCI) All Country World
Free Index -- an unmanaged index used to measure the performance of both
developed and emerging non-U.S. stock markets. The index represents
stocks that are freely traded on equity exchanges around the world. It
is not possible to invest in an index. Past performance is not
indicative of future results.
Line chart with the heading John Hancock Global 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 MSCI All Country World Free Index and is equal
to $29,194 as of April 30, 2000. The second line represents the
value of the hypothetical $10,000 investment made in the John
Hancock Global Fund on January 3, 1992, before sales charge, and
is equal to $22,937 as of April 30, 2000. The third line
represents the same investment made in the John Hancock Global
Fund, after sales charge, and is equal to $21,790 as of April 30,
2000.
Line chart with the heading John Hancock Global 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 MSCI All Country World Free Index and is equal
to $31,387 as of April 30, 2000. The second line represents the
value of the hypothetical $10,000 investment made in the John
Hancock Global Fund on October 31, 1989, before sales charge, and
is equal to $23,044 as of April 30, 2000.
Line chart with the heading John Hancock Global 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 MSCI All Country World Free Index and is equal
to $12,318 as of April 30, 2000. The second line represents the
value of the hypothetical $10,000 investment made in the John
Hancock Global Fund on March 1, 1999, before sales charge, and is
equal to $11,400 as of April 30, 2000. The third line represents
the same investment made in the John Hancock Global Fund, after
sales charge, and is equal to $11,286 as of April 30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- Global 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, units and warrants
(cost -- $152,215,652) $177,264,112
Preferred stocks (cost -- $553,977) 598,457
Short-term investments
(cost -- $10,776,217) -- Note A 10,776,217
-----------------
188,638,786
Cash 725
Foreign currency, at value
(cost -- $1,340,236) 1,341,558
Receivable for investments sold 3,166,623
Receivable for forward foreign currency
exchange contracts sold -- Note A 24,884
Receivable for shares sold 2,207,059
Dividends receivable 265,871
Foreign tax receivable 65,001
Interest receivable 182
Other assets 9,169
-----------------
Total Assets 195,719,858
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 3,376,321
Payable for forward foreign currency
exchange contracts purchased -- Note A 71,416
Payable for shares repurchased 389,778
Payable upon return of securities on
loan -- Note A 10,395,217
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 196,959
Accounts payable and accrued expenses 74,661
-----------------
Total Liabilities 14,504,352
--------------------------------------------------------------
Net Assets:
Capital paid-in 148,976,571
Accumulated net realized gain on
investments and foreign currency
transactions 8,836,362
Net unrealized appreciation of
investments and foreign currency
transactions 25,086,058
Accumulated net investment loss (1,683,485)
-----------------
Net Assets $181,215,506
==============================================================
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 -- $128,689,834/8,519,516 $15.11
==============================================================
Class B -- $50,838,300/3,609,713 $14.08
==============================================================
Class C -- $1,687,372/119,802 -- Note A $14.08
==============================================================
Maximum Offering Price Per Share*
Class A -- ($15.11 / 0.95) $15.91
==============================================================
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net
gains (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $66,267) $794,091
Interest (including income on
securities loaned of $20,955) 171,663
-----------------
965,754
-----------------
Expenses:
Investment management fee -- Note B 800,551
Distribution and service fee -- Note B
Class A 197,411
Class B 277,049
Class C 3,445
Transfer agent fee -- Note B 311,946
Custodian fee 140,410
Interest expense -- Note A 40,266
Registration and filing fees 36,922
Auditing fee 17,902
Accounting and legal services fee --
Note B 17,780
Printing 16,200
Trustees' fees 5,062
Miscellaneous 3,641
Legal fees 2,517
-----------------
Total Expenses 1,871,102
--------------------------------------------------------------
Net Investment Loss (905,348)
--------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 10,461,773
Net realized loss on foreign currency
transactions (1,159,393)
Change in net unrealized
appreciation/depreciation of
investments 466,275
Change in net unrealized
appreciation/depreciation of foreign
currency transactions 7,435
-----------------
Net Realized and Unrealized Gain on
Investments and Foreign Currency
Transactions 9,776,090
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $8,870,742
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment and foreign
currency gains and losses, distributions paid to shareholders, if any,
and any increase or decrease in money shareholders invested in the Fund.
The footnote illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value.
Statement of Changes in Net Assets
----------------------------------------------------------------------------------------------------
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 ($730,924) ($905,348)
Net realized gain on investments
sold and foreign currency
transactions 23,950,301 9,302,380
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 12,230,760 473,710
------------ ------------
Net Increase in Net Assets
Resulting from Operations 35,450,137 8,870,742
------------ ------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold and foreign
currency transactions
Class A -- ($0.8634 and $0.6074 per share, respectively) (7,257,489) (5,012,505)
Class B -- ($0.8634 and $0.6074 per share, respectively) (3,737,875) (2,320,803)
Class C** -- (none and $0.6074 per share, respectively) -- (12,128)
------------ ------------
Total Distributions to
Shareholders (10,995,364) (7,345,436)
------------ ------------
From Fund Share Transactions -- Net:* (18,391,630) (2,377,440)
------------ ------------
Net Assets:
Beginning of period 176,004,497 182,067,640
------------ ------------
End of period (including
accumulated net investment loss
of $778,137 and $1,683,485,
respectively) $182,067,640 $181,215,506
============ ============
<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 49,592,367 $704,807,728 26,898,459 $423,292,060
Shares issued to shareholders in
reinvestment of distributions 537,813 6,888,024 314,905 4,761,379
----------- ------------ ----------- ------------
50,130,180 711,695,752 27,213,364 428,053,439
Less shares repurchased (50,696,112) (722,561,306) (27,099,617) (429,621,176)
----------- ------------ ----------- ------------
Net increase (decrease) (565,932) ($10,865,554) 113,747 ($1,567,737)
=========== ============ =========== ============
CLASS B
Shares sold 1,375,760 $18,393,897 1,125,595 $16,583,377
Shares issued to shareholders in
reinvestment of distributions 261,882 3,166,671 143,631 2,032,432
----------- ------------ ----------- ------------
1,637,642 21,560,568 1,269,226 18,615,809
Less shares repurchased (2,206,518) (29,287,957) (1,420,388) (20,918,382)
----------- ------------ ----------- ------------
Net decrease (568,876) ($7,727,389) (151,162) ($2,302,573)
=========== ============ =========== ============
CLASS C **
Shares sold 16,835 $228,716 526,854 $7,753,805
Shares issued to shareholders in
reinvestment of distributions -- -- 891 12,636
----------- ------------ ----------- ------------
16,835 228,716 527,745 7,766,441
Less shares repurchased (2,005) (27,403) (422,773) (6,273,571)
----------- ------------ ----------- ------------
Net increase 14,830 $201,313 104,972 $1,492,870
=========== ============ =========== ============
** Class C shares commenced operations on March 1, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
--------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------------------------------------- APRIL 30, 2000
1995 1996 1997 1998 1999 (UNAUDITED)
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $14.16 $12.67 $12.97 $12.94 $13.46 $15.24
-------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.03) (0.02) (0.05) (0.05) (0.03) (0.06)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions (0.13) 1.20 1.21 1.53 2.67 0.54
-------- -------- -------- -------- -------- --------
Total from Investment Operations (0.16) 1.18 1.16 1.48 2.64 0.48
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Foreign Currency Transactions (1.33) (0.88) (1.19) (0.96) (0.86) (0.61)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $12.67 $12.97 $12.94 $13.46 $15.24 $15.11
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(2) (0.37%) 9.87% 9.36% 11.88% 20.90% 3.13%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $93,597 $94,746 $92,127 $120,775 $128,081 $128,690
Ratio of Expenses to Average Net Assets 1.87% 1.88% 1.81%(3) 1.82%(3) 1.75%(3) 1.74%(3,5)
Ratio of Net Investment Loss to Average Net Assets (0.23%) (0.19%) (0.36%) (0.33%) (0.23%) (0.75%)(5)
Portfolio Turnover Rate 60% 98% 81% 160% 176% 94%
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $13.93 $12.36 $12.54 $12.39 $12.76 $14.30
-------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.11) (0.10) (0.14) (0.13) (0.11) (0.11)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions (0.13) 1.16 1.18 1.46 2.51 0.50
-------- -------- -------- -------- -------- --------
Total from Investment Operations (0.24) 1.06 1.04 1.33 2.40 0.39
-------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Foreign Currency Transactions (1.33) (0.88) (1.19) (0.96) (0.86) (0.61)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $12.36 $12.54 $12.39 $12.76 $14.30 $14.08
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value(2) (1.01%) 9.10% 8.67% 11.15% 20.12% 2.69%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $24,570 $27,599 $28,007 $55,229 $53,774 $50,838
Ratio of Expenses to Average Net Assets 2.57% 2.54% 2.49%(3) 2.46%(3) 2.34%(3) 2.44%(3,5)
Ratio of Net Investment Loss to Average Net Assets (0.89%) (0.83%) (1.04%) (0.97%) (0.82%) (1.46%)(5)
Portfolio Turnover Rate 60% 98% 81% 160% 176% 94%
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------------------------------
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 $12.88 $14.30
-------- --------
Net Investment Loss(1) (0.10) (0.11)
Net Realized and Unrealized Gain on
Investments and Foreign Currency Transactions 1.52 0.50
-------- --------
Total from Investment Operations 1.42 0.39
-------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold and Foreign Currency
Transactions -- (0.61)
-------- --------
Net Asset Value, End of Period $14.30 $14.08
======== ========
Total Investment Return at Net Asset Value(2) 11.02%(4) 2.69%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $212 $1,687
Ratio of Expenses to Average Net Assets 2.45%(3,5) 2.44%(3,5)
Ratio of Net Investment Loss to Average Net Assets (1.01%)(5) (1.45%)(5)
Portfolio Turnover Rate 176%(4) 94%
(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) Expense ratios do not include interest expense due to bank loans,
which amounted to less than 0.01% for the years ended October 31,
1997 and 1998, 0.03% for the year ended October 31, 1999 and 0.04%
for the period ended April 30, 2000.
(4) Not annualized.
(5) Annualized.
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indicated: net investment loss, gains
(losses), distributions and total investment return of the Fund. It
shows how the Fund's net asset value for a share has changed since the
end of the previous period. Additionally, important relationships
between some items presented in the financial statements are expressed
in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Global Fund on April 30, 2000. It's divided into five main
categories: common stocks, units, warrants, preferred stocks and
short-term investments. Common stocks, units, warrants and preferred
stocks are further broken down by country. 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
Argentina (0.04%)
PC Holdings SA* (Diversified Operations) 50,000 $76,052
------------
Australia (0.44%)
Davnet Ltd. (Telecommunications) 39,390 56,359
Gradipore Ltd.* (Medical) 7,740 26,669
Publishing & Broadcasting Ltd. (Media) 28,956 224,907
Telstra Corp. Ltd. (Telecommunications) 42,214 180,953
Westpac Banking Corp. Ltd. (Banks -- Foreign) 30,000 191,494
WMC Ltd. (Metal) 28,984 120,349
------------
800,731
------------
Belgium (0.00%)
Fortis (B)* (Insurance) 8,190 74
------------
Brazil (0.36%)
Companhia Brasileira de Distribuicao Grupo Pao
de Acucar, American Depositary Receipts (ADR)
(Retail) 5,800 165,300
Companhia Paranaense de Energia-Copel (ADR)
(Utilities) 15,000 110,625
Tele Norte Leste Participacoes SA (ADR)
(Telecommunications) 292 5,201
Telecomunicacoes Brasileiras SA (ADR)
(Telecommunications) 2,500 295,469
Uniao de Bancos Brasileiros SA, Global
Depositary Receipts (GDR) (Finance) 3,200 79,800
------------
656,395
------------
Canada (2.78%)
Bombardier, Inc. (Diversified Operations) 92,689 2,491,068
Nortel Networks Corp. (Telecommunications) 14,977 $1,692,991
Suncor Energy, Inc. (Oil & Gas) 20,050 856,346
------------
5,040,405
------------
Chile (0.06%)
Empresa Nacional de Electricidad SA (ADR)
(Utilities) 10,000 115,000
------------
China (0.03%)
Shandong International Power Development Co.
Ltd. (Utilities) 560,000 56,797
------------
Finland (2.12%)
Nokia Oyj (Telecommunications) 52,757 3,026,364
Nordic Baltic Holding AB (Banks -- Foreign) 48,628 307,686
Sonera Oyj (Telecommunications) 4,000 220,002
Tietoenator Oyj (Computers) 6,000 289,094
------------
3,843,146
------------
France (8.23%)
Accor SA (Leisure) 13,000 482,778
Alcatel SA (Telecommunications) 5,643 1,308,163
Banque Nationale de Paris (Banks -- Foreign) 4,800 387,931
Bouygues SA (Building) 785 500,978
Bouygues SA (New Shares)* (Building) 66 42,180
Cap Gemini SA (Computers) 2,500 490,914
Carrefour SA (Retail) 10,940 712,102
Credit Lyonnais SA (Banks -- Foreign) 20,500 798,576
Dassault Systemes SA (Computers) 10,147 780,404
France Telecom SA (Telecommunications) 7,513 1,162,478
Lagardere SCA (Diversified Operations) 5,600 379,277
L'Oreal SA (Cosmetics & Personal Care) 315 213,629
Pinault-Printemps-Redoute SA (Retail) 3,435 692,940
PSA Peugeot Citroen SA (Automobile/Trucks) 3,099 641,218
Schneider Electric SA (Machinery) 6,720 439,859
Sodexho Alliance SA (Business Services -- Misc.) 3,109 465,789
STMicroelectronics NV (Electronics) 4,200 801,444
Suez Lyonnaise des Eaux SA (Diversified
Operations) 4,526 $709,766
Television Francaise 1 SA (Media) 575 393,618
Total Fina SA (Oil & Gas) 12,000 1,820,745
Valeo SA (Automobile/Trucks) 12,610 699,289
Vivendi SA (Diversified Operations) 10,000 989,101
------------
14,913,179
------------
Germany (2.47%)
Allianz AG (Insurance) 2,769 1,065,572
Bayerische Motoren Werke AG (Automobile/Trucks) 11 296
Deutsche Telekom AG (Telecommunications) 15,916 1,032,959
Dresdner Bank AG (Banks -- Foreign) 13,000 535,487
SAP AG (Computers) 1,696 795,586
Siemens AG (Diversified Operations) 7,080 1,049,138
------------
4,479,038
------------
Greece (0.17%)
Alpha Credit Bank SA (Banks -- Foreign) 1,700 93,630
Hellenic Telecommunications Organization SA
(ADR) (Telecommunications) 10,000 116,875
STET Hellas Telecommunications SA (ADR)*
(Telecommunications) 4,300 98,363
------------
308,868
------------
Hong Kong (1.90%)
ASM Pacific Technology Ltd. (Electronics) 68,000 240,949
Cable & Wireless HKT Ltd. (Telecommunications) 110,969 262,136
Cheung Kong Holdings Ltd. (Real Estate
Operations) 56,000 668,618
Citic Pacific Ltd. (Diversified Operations) 32,000 147,075
Dah Sing Financial Group (Finance) 44,800 175,422
e-New Media Co. Ltd.* (Diversified Operations) 248,000 39,799
Guoco Group Ltd. (Finance) 48,000 111,847
Hongkong Electric Holdings Ltd. (Utilities) 16,000 50,018
Hongkong Land Holdings Ltd. (Real Estate
Operations) 40,000 60,800
HSBC Holdings Plc (Banks -- Foreign) 28,000 313,639
Hutchison Whampoa Ltd. (Diversified Operations) 30,000 435,218
JCG Holdings Ltd. (Finance) 361,000 187,702
Legend Holdings Ltd. (Computers) 86,000 99,368
Li & Fung Ltd. (Business Services -- Misc.) 20,000 $78,057
Next Media Ltd.* (Printing -- Commercial) 690,000 137,306
QPL International Holdings Ltd.* (Electronics) 145,000 204,771
Swire Pacific Ltd. (Diversified Operations) 18,500 104,504
Yuxing Infotech Holdings Ltd.* (Computers) 146,000 121,835
------------
3,439,064
------------
Hungary (0.06%)
Magyar Tavkozlesi Rt (Telecommunications) 14,900 102,065
------------
Indonesia (0.11%)
PT Gudang Garam (Tobacco) 64,000 101,266
PT Telekomunikasi Indonesia (Telecommunications) 243,000 106,120
------------
207,386
------------
Ireland (0.32%)
CRH Plc (Building) 36,503 585,049
------------
Israel (0.05%)
Partner Communications Co. Ltd. (ADR)*
(Telecommunications) 9,100 97,256
------------
Italy (3.56%)
ACEA SpA (Utilities) 20,850 339,290
Assicurazioni Generali SpA (Insurance) 27,175 773,260
Banca Intesa SpA (Banks -- Foreign) 192,847 710,035
Eni SpA (Oil & Gas) 67,000 333,176
Gruppo Editoriale L'Espresso SpA (Media) 35,650 502,346
Riunione Adriatica di Sicurta SpA (Insurance) 74,512 761,385
San Paolo-IMI SpA (Banks -- Foreign) 33,000 462,005
Seat Pagine Gialle SpA (Media) 64,700 284,095
Telecom Italia Mobile SpA (Telecommunications) 100,000 954,555
Telecom Italia SpA (Telecommunications) 95,058 1,329,097
------------
6,449,244
------------
Japan (17.29%)
Bank of Tokyo-Mitsubishi, Ltd. (Banks --
Foreign) 64,000 825,959
Daiwa House Industry Co., Ltd. (Building) 33,000 219,969
Fanuc Ltd. (Electronics) 17,000 $1,781,604
Fuji Heavy Industries Ltd. (Automobile/Trucks) 68,000 519,372
Fujitsu Ltd. (Computers) 54,000 1,529,788
Fujitsu Systems Construction Ltd.
(Engineering/R&D Services) 52,000 539,184
Ito-Yokado Co., Ltd. (Retail) 11,000 803,500
Japan Business Computer Co., Ltd. (Computers) 6,000 279,961
Marubeni Corp. (Diversified Operations) 214,000 620,118
Murata Manufacturing Co., Ltd. (Electronics) 9,000 1,749,757
NEC Corp. (Electronics) 71,000 1,932,509
Nihon Unisys, Ltd. (Computers) 12,000 278,850
Nikko Securities Co., Ltd. (The) (Broker
Services) 220,000 2,596,862
Nintendo Co., Ltd. (Leisure) 3,600 599,917
Nippon Telegraph & Telephone Corp.
(Telecommunications) 132 1,637,550
Nomura Securities Co., Ltd. (Broker Services) 21,000 528,815
NTT Mobile Communication Network, Inc.
(Telecommunications) 65 2,172,383
Orix Corp. (Leasing Companies) 8,520 1,216,298
Sakura Bank, Ltd. (The) (Banks -- Foreign) 183,000 1,284,211
Sekisui House, Ltd. (Building) 50,000 458,270
Seven-Eleven Japan Co., Ltd. (Retail) 10,000 1,231,310
Softbank Corp. (Computers) 800 197,010
Softbank Corp. (New Shares)* (Computers) 1,600 395,501
Sony Corp. (Electronics) 21,300 2,447,188
Sony Corp. (New Shares)* (Electronics) 22,400 2,592,233
Takeda Chemical Industries, Ltd. (Medical) 31,000 2,040,550
Toyota Motor Corp. (Automobile/Trucks) 17,000 845,160
------------
31,323,829
------------
Mexico (0.28%)
Grupo Financiero Bancomer SA de CV* (Finance) 575,000 256,642
Telefonos de Mexico SA (ADR)
(Telecommunications) 4,350 255,834
------------
512,476
------------
Netherlands (3.70%)
Aegon NV (Insurance) 9,055 $650,732
Akzo Nobel NV (Chemicals) 10,000 409,368
ASM Lithography Holding NV* (Computers) 15,253 596,260
Equant NV* (Computers) 4,172 322,954
Fortis (NL) NV (Insurance) 12,000 301,748
Koninklijke Numico NV (Food) 11,864 441,130
Royal Dutch Petroleum Co. (Oil & Gas) 28,143 1,622,076
Royal Philips Electronics NV (Electronics) 25,352 1,130,941
United Pan-Europe Communications NV* (Media) 10,000 363,913
VNU NV (Media) 8,340 446,194
Wolters Kluwer NV (Media) 17,649 416,521
------------
6,701,837
------------
Norway (0.27%)
Tomra Systems ASA (Machinery) 24,076 497,188
------------
Philippine Islands (0.02%)
Manila Electric Co. (Utilities) 25,000 44,810
------------
Portugal (0.23%)
PT Multimedia Servicos SGPS SA*
(Telecommunications) 6,000 418,641
------------
Russia (0.16%)
OAO Gazprom (ADR) (Oil & Gas) 14,500 94,975
OAO Lukoil Holding (ADR) (Oil & Gas) 3,100 186,868
------------
281,843
------------
Singapore (0.75%)
Chartered Semiconductor Manufacturing Ltd.*
(Electronics) 13,000 111,984
DBS Group Holdings Ltd. (Banks -- Foreign) 17,000 234,105
Flextech Holdings Ltd. (Electronics) 118,000 100,264
MediaRing.com Ltd.* (Telecommunications) 55,000 23,850
NatSteel Electronics Ltd. (Electronics) 16,000 91,884
NatSteel Ltd. (Steel) 24,000 58,787
Overseas-Chinese Banking Corp. Ltd. (Banks --
Foreign) 8,000 54,849
Overseas Union Bank Ltd. (Banks -- Foreign) 15,000 68,561
Pacific Century Regional Developments Ltd.*
(Real Estate Operations) 26,000 216,349
Singapore Technologies Engineering Ltd.
(Engineering/R&D Services) 230,000 323,469
Singapore Telecommunications, Ltd.
(Telecommunications) 54,000 $77,844
------------
1,361,946
------------
South Africa (0.36%)
ABSA Group Ltd. (Banks -- Foreign) 78,500 277,856
Comparex Holdings Ltd. (Computers) 92,000 137,718
DataTec Ltd.* (Computers) 10,100 73,436
Rembrandt Group Ltd. (Diversified Operations) 20,500 159,030
------------
648,040
------------
South Korea (0.88%)
Hanaro Telecom, Inc. (ADR)* (Telecommunications) 6,900 54,338
Kookmin Bank (Banks -- Foreign) 4,304 46,540
Korea Telecom Corp. (Telecommunications) 2,330 159,148
LG Chemical Ltd. (Chemicals) 5,260 120,865
Pohang Iron & Steel Co. Ltd. (Steel) 2,195 171,684
Samsung Electronics Co. (Electronics) 3,130 846,137
Shinhan Bank (Banks -- Foreign) 8,650 83,012
SK Corp. (Oil & Gas) 5,740 108,360
------------
1,590,084
------------
Spain (2.75%)
Amadeus Global Travel Distribution SA*
(Transport) 61,560 761,113
Banco Bilbao Vizcaya Argentaria SA (Banks --
Foreign) 92,409 1,260,135
Banco Santander Central Hispano SA (Banks --
Foreign) 86,526 902,239
Endesa SA (Utilities) 16,000 349,094
NH Holeles SA* (Real Estate Operations) 29,075 326,436
Telefonica SA* (Telecommunications) 61,989 1,379,551
------------
4,978,568
------------
Sweden (1.78%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) 24,264 2,156,860
Skandia Forsakrings AB (Insurance) 22,446 1,073,983
------------
3,230,843
------------
Switzerland (1.56%)
Adecco SA (Business Services -- Misc.) 1,190 976,400
Novartis AG (Medical) 693 968,042
Roche Holding AG (Medical) 84 877,238
------------
2,821,680
------------
Taiwan (0.68%)
Advanced Semiconductor Engineering, Inc. (GDR)*
(Electronics) (R) 4,400 $77,000
Asustek Computer, Inc. (GDR)* (Computers) (R) 9,410 121,389
China Steel Corp. (ADR)* (Steel) (R) 8,400 116,550
Taiwan Semiconductor Manufacturing Co., Ltd.*
(Electronics) 142,000 914,332
------------
1,229,271
------------
Thailand (0.17%)
BEC World Pcl (Media) 14,700 94,228
Golden Land Property Development Pcl* (Real
Estate Operations) 520,000 112,019
PTT Exploration & Production Pcl (Oil & Gas) 18,200 92,279
------------
298,526
------------
Turkey (0.19%)
Dogan Yayin Holding AS* (Diversified Operations) 3,600,000 86,844
Vestel Elektronik Sanayi ve Ticaret AS*
(Household) 230,000 86,517
Yapi ve Kredi Bankasi AS (Banks -- Foreign) 5,200,000 165,838
------------
339,199
------------
United Kingdom (10.85%)
ARM Holdings Plc* (Electronics) 25,000 253,005
Baltimore Technologies Plc* (Computers) 2,500 252,304
Barclays Plc (Banks -- Foreign) 42,111 1,077,229
BP Amoco Plc (Oil & Gas) 304,457 2,628,466
British Telecommunications Plc
(Telecommunications) 68,100 1,219,326
Cable & Wireless Plc (Telecommunications) 36,216 601,080
Capita Group Plc (Business Services -- Misc.) 24,108 619,327
Centrica Plc (Utilities) 206,724 740,276
CMG Plc (Computers) 7,700 493,505
COLT Telecom Group Plc* (Telecommunications) 8,000 355,608
Compass Group Plc (Food) 48,237 694,699
Freeserve Plc* (Computers) 540 3,006
Glaxo Wellcome Plc (Medical) 11,287 348,830
Invensys Plc (Diversified Operations) 176,714 852,919
Lloyds TSB Group Plc (Banks -- Foreign) 64,641 631,031
Logica Plc (Computers) 16,863 $510,657
Marconi Plc (Telecommunications) 79,564 989,779
New Dixons Group Plc (Electronics) 64,416 260,761
Pearson Plc (Media) 25,811 873,252
Prudential Plc (Insurance) 32,170 493,358
Sage Group Plc (Computers) 50,000 556,999
SEMA Group Plc (Computers) 31,667 511,282
SmithKline Beecham Plc (Medical) 30,419 416,776
Telewest Communications Plc* (Media) 95,473 584,182
Vodafone AirTouch Plc (Telecommunications) 805,614 3,687,646
------------
19,655,303
------------
United States (33.11%)
AFLAC, Inc. (Insurance) 16,100 785,881
Alcoa, Inc. (Metal) 9,500 616,313
ALLTEL Corp. (Utilities) 14,100 939,412
American Express Co. (Finance) 4,950 742,809
American General Corp. (Insurance) 11,000 616,000
American Home Products Corp. (Medical) 15,200 854,050
American International Group, Inc. (Insurance) 11,375 1,247,695
Amgen, Inc.* (Medical) 10,800 604,800
Anheuser-Busch Cos., Inc. (Beverages) 10,000 705,625
AT&T Corp. (Telecommunications) 6,250 291,797
Bank of America Corp. (Banks -- United States) 13,650 668,850
Baxter International, Inc. (Medical) 15,800 1,028,975
Bell Atlantic Corp. (Telecommunications) 11,350 672,487
Bestfoods (Food) 14,900 748,725
Chase Manhattan Corp. (Banks -- United States) 8,200 590,913
Chevron Corp. (Oil & Gas) 11,800 1,004,475
Cisco Systems, Inc.* (Computers) 32,600 2,260,097
Citigroup, Inc. (Finance) 20,375 1,211,039
Clorox Co. (The) (Soap & Cleaning Preparations) 14,000 514,500
Coca-Cola Co. (The) (Beverages) 17,700 833,006
Computer Associates International, Inc.
(Computers) 13,700 764,631
Costco Wholesale Corp.* (Retail) 6,500 351,406
CVS Corp. (Retail) 19,800 861,300
Dell Computer Corp.* (Computers) 17,600 882,200
Disney (Walt) Co. (The) (Leisure) 17,800 770,962
Dover Corp. (Machinery) 15,800 $802,837
Du Pont (E.I.) De Nemours & Co. (Diversified
Operations) 8,100 384,244
Duke Energy Corp. (Utilities) 17,050 980,375
Electronic Data Systems Corp. (Computers) 4,800 330,000
EMC Corp.* (Computers) 6,900 958,669
Emerson Electric Co. (Electronics) 16,100 883,487
Enron Corp. (Oil & Gas) 5,400 376,313
Exxon Mobil Corp. (Oil & Gas) 20,400 1,584,825
Fannie Mae (Mortgage Banking) 11,150 672,484
First Data Corp. (Computers) 10,600 516,088
Freddie Mac (Mortgage Banking) 13,250 608,672
Gap, Inc. (The) (Retail) 9,000 330,750
General Electric Co. (Electronics) 16,300 2,563,175
Halliburton Co. (Oil & Gas) 15,400 680,488
Hewlett-Packard Co. (Computers) 6,500 877,500
Home Depot, Inc. (The) (Retail) 7,200 403,650
Intel Corp. (Electronics) 15,200 1,927,550
International Business Machines Corp.
(Computers) 6,250 697,656
International Paper Co. (Paper & Paper Products) 13,800 507,150
Interpublic Group of Cos., Inc. (The)
(Advertising) 6,800 278,800
JDS Uniphase Corp.* (Electronics) 9,000 933,187
Johnson & Johnson (Medical) 14,915 1,230,487
Kimberly-Clark Corp. (Paper & Paper Products) 20,350 1,181,572
Level 3 Communications, Inc.*
(Telecommunications) 6,100 542,900
Lowe's Cos., Inc. (Retail) 12,100 598,950
Lucent Technologies, Inc. (Telecommunications) 5,800 360,688
McDonald's Corp. (Retail) 7,950 303,094
McGraw-Hill Cos., Inc. (The) (Media) 16,550 868,875
MCI WorldCom, Inc.* (Telecommunications) 23,525 1,068,917
Medtronic, Inc. (Medical) 20,850 1,082,897
Merck & Co., Inc. (Medical) 13,350 927,825
Microsoft Corp.* (Computers) 23,450 1,635,637
Minnesota Mining & Manufacturing Co.
(Diversified Operations) 7,000 605,500
Motorola, Inc. (Electronics) 2,800 333,375
Omnicom Group, Inc. (Advertising) 3,500 318,719
Oracle Corp.* (Computers) 7,600 607,525
PepsiCo, Inc. (Beverages) 19,600 $719,075
Pitney Bowes, Inc. (Office) 28,650 1,171,069
Safeway, Inc.* (Retail) 18,700 825,137
SBC Communications, Inc. (Utilities) 8,350 365,834
Schering-Plough Corp. (Medical) 8,061 324,959
Schlumberger Ltd. (Oil & Gas) 10,600 811,562
State Street Corp. (Banks -- United States) 6,700 649,062
Sun Microsystems, Inc.* (Computers) 13,200 1,213,575
Target Corp. (Retail) 9,920 660,300
Tyco International Ltd. (Diversified Operations) 23,150 1,063,453
United Technologies Corp. (Aerospace) 6,100 379,344
Wal-Mart Stores, Inc. (Retail) 22,400 1,240,400
Wells Fargo Co. (Banks -- United States) 25,400 1,042,987
------------
59,999,566
------------
TOTAL COMMON STOCKS
(Cost $152,050,529) (97.73%) 177,103,399
------- --------------
UNITS
Mexico (0.09%)
Controladora Comercial Mexicana SA de CV*
(Retail) 150,000 157,811
------- ------------
TOTAL UNITS
(Cost $163,423) (0.09%) 157,811
------- ------------
WARRANTS
Germany (0.00%)
Muenchener Rueckversicherungs- Gesellschaft AG*
(Insurance) 38 2,902
------------
TOTAL WARRANTS
(Cost $1,700) (0.00%) 2,902
------- ------------
TOTAL COMMON STOCKS, UNITS AND WARRANTS
(Cost $152,215,652) (97.82%) 177,264,112
------- ------------
PREFERRED STOCKS
Germany (0.20%)
Fresenius AG (Medical) 1,622 359,055
------------
Italy (0.13%)
Telecom Italia SpA (Telecommunications) 38,000 239,402
------------
TOTAL PREFERRED STOCKS
(Cost $553,977) (0.33%) 598,457
------- ------------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
------------------- -------- ------------ -----------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (0.21%)
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, 7.875% and 8.875%, due
08-15-17 and 02-15-21) -- Note A 5.73% $381 $381,000
------------
Non-Cash Security Lending Collateral
(0.04%)
U.S. Treasury Bills 5.56% and 5.81%,
due 06-22-00 and 07-13-00, and U.S.
Treasury Bonds, 6.250% thru 13.875%,
due 05-15-11 and 08-15-23** 72 72,257
------------
Cash Equivalents (5.70%)
Navigator Securities Lending Prime
Portfolio** 10,323 10,322,960
------------
TOTAL SHORT-TERM INVESTMENTS (5.95%) 10,776,217
--------- ------------
TOTAL INVESTMENTS (104.10%) 188,638,786
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (4.10%) (7,423,280)
--------- ------------
TOTAL NET ASSETS (100.00%) $181,215,506
========= ============
* Non-income producing security.
** Represents investment of security lending collateral -- Note A.
(R) These securities are exempt from registration under rule 144A of the
Securities and Exchange Act of 1933. Such securities may be resold,
normally to qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $314,939 as of April 30,
2000.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration (Unaudited)
----------------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other
countries. The performance of the Fund is closely tied to the economic
conditions within the countries in which it invests. The concentration
of investments by country for individual securities held by the Fund is
shown in the schedule of investments. In addition, the concentration of
investments can be aggregated by various industry groups. The table
below shows the percentages of the Fund's investments at April 30, 2000,
assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
--------------------- ---------------
Advertising 0.33%
Aerospace 0.21
Automobile/Trucks 1.49
Banks -- Foreign 5.91
Banks -- United States 1.63
Beverages 1.25
Broker Services 1.72
Building 1.00
Business Services -- Misc. 1.18
Chemicals 0.29
Computers 10.81
Cosmetics & Personal Care 0.12
Diversified Operations 5.62
Electronics 11.72
Engineering/R&D Services 0.48
Fiber Optics 0.51
Finance 1.53
Food 1.04
Household 0.05
Insurance 4.29
Leasing Companies 0.67
Leisure 1.02
Machinery 0.96
Media 2.79
Medical 6.12
Metal 0.41
Mortgage Banking 0.71
Office 0.65
Oil & Gas 6.73
Paper & Paper Products 0.93
Printing -- Commercial 0.08
Real Estate Operations 0.76
Retail 5.15
Soap & Cleaning Preparations 0.28
Steel 0.19
Telecommunications 16.78
Tobacco 0.06
Transport 0.42
Utilities 2.26
Short-Term Investments 5.95
-------
TOTAL INVESTMENTS 104.10%
=======
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- Global Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Investment Trust III (the "Trust") is an open-end
management investment company, registered under the Investment Company
Act of 1940. The Trust consists of four series: John Hancock Global Fund
(the "Fund"), John Hancock Large Cap Growth Fund, John Hancock Mid Cap
Growth Fund and John Hancock International Fund. The other three series
of the Trust are reported in separate financial statements. The
investment objective of the Fund is to achieve long-term growth of
capital primarily through investment in common stocks of companies
domiciled in foreign countries and the United States.
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 accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing services or at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value. All portfolio transactions initially
expressed in terms of foreign currencies have been translated into U.S.
dollars as described in "Foreign Currency Translation" below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in a joint repurchase
agreement transaction. 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, which 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 determined 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 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 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 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 unsecured lines
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 $10,017,000. The annualized interest rate charged during the period
ranged from 5.94% thru 6.81%. At April 30, 2000, there were no
outstanding loan balances.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. These fees are included
in interest income. The loans are collateralized at all times with cash
or securities with a market value at least equal to the market value of
the securities on loan. As with other extensions of credit, the Fund may
bear the risk of delay of the loaned securities in recovery or even loss
of rights in the collateral should the borrower of the securities fail
financially. At April 30, 2000, the Fund loaned securities having a
market value of $10,036,727 collateralized by cash and securities in the
amount of $10,395,217, which was invested in short-term instruments.
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.
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 if they are
offset by the currency amount of the underlying transaction.
At April 30, 2000, open forward foreign currency exchange contracts were
as follows:
UNREALIZED
PRINCIPAL AMOUNT EXPIRATION APPRECIATION/
CURRENCY COVERED BY CONTRACT DATE (DEPRECIATION)
-------- ------------------- ---------- --------------
BUYS
Euro Currency 1,515,981 May 00 ($45,328)
Pound Sterling 1,041,477 May 00 (26,088)
-----------
($71,416)
===========
SELLS
Japanese Yen 171,898,870 May 00 $20,671
Pound Sterling 185,749 May 00 4,653
Singapore Dollar 89,451 May 00 (77)
South African Rand 486,247 May 00 (363)
-----------
$24,884
===========
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. Buying futures tends to increase the Fund's exposure
to the underlying instrument. Selling futures tends to decrease the
Fund's exposure to the underlying instrument or hedge other Fund
instruments. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin,"
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange on which it trades. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market
price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market," are recorded by
the Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities.
For federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At April 30, 2000, there were no open positions in financial futures contracts.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Adviser is solely responsible for advising the Fund with respect to
investments in the United States and Canada. On December 1, 1999, Fund
shareholders approved a sub-advisory contract with Indocam International
Investment Services ("IIIS"), effective January 1, 2000. Under this
contract IIIS acts as co-sub-adviser with the Fund's original
sub-adviser, John Hancock Advisers International Limited ("JHAI"), a
wholly owned subsidiary of the Adviser, subject to the review of the
Trustees and overall supervision of the Adviser. Both JHAI and IIIS
provide the Fund with investment management services and advice with
respect to the portion of the Fund's assets invested in countries other
than the United States and Canada. As of March 1, 2000, the Adviser
terminated its contract with JHAI so that currently IIIS is the Fund's
sole subadviser.
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) 0.90% of the
first $100,000,000 of the Fund's average daily net asset value, (b)
0.80% of the next $200,000,000, (c) 0.75% of the next $200,000,000 and
(d) 0.625% of the Fund's average daily net asset value in excess of
$500,000,000. The Adviser paid JHAI a fee equivalent on an annual basis
to the sum of (a) 0.70% of the first $200,000,000 of the Fund's average
daily net asset value and (b) 0.6375% of the Fund's average daily net
asset value in excess of $200,000,000. JHAI waived all but 0.05% of that
fee from January 1, 2000 through February 29, 2000. Since January 1,
2000, the Adviser has paid IIIS 50% of its management fee. The Fund is
not responsible for the payment of the sub-advisers' fees.
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 $75,866. Of this amount, $10,754 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, $32,656 was paid as sales commissions to unrelated
broker-dealers and $32,456 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 for 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 $62,462.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market
value at the time of redemption or the original purchase cost of the
shares being redeemed. Proceeds from the CDSC are paid to JH Funds and
are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended April 30, 2000, contingent deferred
sales charges paid to JH Funds amounted to $121.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plan with respect to Class A, Class B and Class C pursuant to Rule 12b-1
under the Investment Company Act of 1940. Accordingly, the Fund will
make payments to JH Funds for distribution and service expenses, at an
annual rate not to exceed 0.30% of Class A average daily net assets and
1.00% of Class B and Class C average daily net assets, to reimburse JH
Funds for its distribution and service costs. Up to a maximum of 0.25%
of such payments may be service fees as defined by the 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
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.
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 $170,558,744 and
$168,539,896, 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 (including short-term
investments) for federal income tax purposes was $164,173,315. Gross
unrealized appreciation and depreciation of investments aggregated
$35,123,960 and $10,658,489, respectively, resulting in net unrealized
appreciation of $24,465,471.
SHAREHOLDER MEETING (UNAUDITED)
On December 1, 1999, the shareholders of John Hancock Global Fund
approved a sub-advisory contract between the Adviser and Indocam
International Investment Services (6,924,019 FOR; 215,366 AGAINST; and
622,906 ABSTAINING).
[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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Permit No. 75
This report is for the information of shareholders of the John Hancock
Global 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."
030SA 4/00
6/00
The latest report from your
Fund's management team
SEMIANNUAL REPORT
Large Cap
Growth Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*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 & 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
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and
Chief Executive Officer, flush right next to second paragraph.]
DEAR 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 DAVID L. EISENBERG, CFA, AND GEOFFREY R. PLUME, CFA,
PORTFOLIO MANAGERS
[A 3" x 2" photo at bottom right side of page of John Hancock
Large Cap Growth Fund. Caption below reads "Fund management team
members (l-r): John Golden, David Eisenberg and Geoffrey Plume."]
John Hancock
Large Cap Growth Fund
Tech stocks dominate market's six-month returns
In the first six months of fiscal 2000, activity within the technology
sector dominated the headlines and also captured many investors'
undivided attention. The powerful rally that occurred in large-company
technology stocks during the final months of 1999 broadened to include
medium- and small-sized technology issues through early March. Stock
performance in other industries was either hurt as a result or paled in
comparison.
In the second week of March, a sharp turnabout occurred within the broad
market and it continued through period's end. Small- and mid-size
technology stocks were hit the hardest, with the NASDAQ Composite Index
entering bear-market territory. The broader indexes, such as the
Standard & Poor's 500 Index and the Dow Jones Industrial Average also
declined, but to a far lesser extent. As money flowed out of the
technology sector, it flowed into such industry sectors as
pharmaceuticals, financials, retail and consumer staples.
"Stock perfor-
mance in
other indus-
tries was
either hurt
as a result or
paled in
comparison."
Performance results
For the six months ended April 30, 2000, John Hancock Large Cap Growth
Fund's Class A, Class B and Class C shares posted total returns of
5.36%, 4.98% and 4.94%, respectively, at net asset value. The Fund's
performance was somewhat lackluster when compared to its competitors,
many of which had much greater exposure to the real high-flying mid-cap
technology stocks. Over the six-month period, the S&P 500 Index returned
7.18% and the average large-cap growth fund returned 20.88%, according
to Lipper, Inc.1 (Lipper recently introduced new competitive categories
that more accurately reflect the average portfolio holdings of the funds
they track.)
[Table at top left hand column entitled "Top Five Stock Holdings."
The first listing is Time Warner 4.7%, the second is Intel 4.5%,
the third Microsoft 4.4%, the fourth General Electric 4.1% and the
fifth Cisco Systems 3.9%. A note below the table reads "As a
percentage of net assets on April 30, 2000."]
Keep in mind that your net asset value return will be different from the
Fund's stated performance if you were not invested in the Fund for the
entire period and did not reinvest all distributions. Longer-term
performance information can be found on pages six and seven.
"...we thought
it prudent
to remain
somewhat
defensive
throughout
the period."
Almost nothing but 'Net
The unbridled technology rally during the first four months of the
period centered mainly on mid-sized companies involved in Internet
infrastructure, business-to-business Internet companies, fiber-optic
communications equipment and communications semiconductor equipment. A
good many stocks doubled and even tripled in price, becoming
large-company issues along the way. The Fund had a substantial weighting
in technology, with exposure primarily in the large-company arena.
Holdings such as Cisco Systems, EMC Corp., Sprint PCS and Applied
Materials participated in the run-up.
[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 Applied Materials followed by an up
arrow with the phrase "Robust expansion in semiconductors." The
second listing is NBC Internet followed by a down arrow with the
phrase "Moved in sympathy with tech sector." The third listing is
Kroger followed by a sideways arrow with the phrase "Concerns
about the integration of a new acquisition." A note below the
table reads "See 'Schedule of Investments.' Investment holdings
are subject to change."]
As the rally wore on, we began to increase the Fund's stake in mid-cap
technology stocks to roughly 12%, up from 8% last November. In hindsight
this move was a bit late given that much of the gains had already been
realized. It also left us a bit more sensitive when these stocks pulled
back. One holding that suffered was NBC Internet, an emerging
business-to-consumer Internet content provider. Another was Conexant
Systems, a communications semiconductor company. We continue to hold
both issues, believing their prospects remain bright. We even added to
Conexant as the stock's price dropped.
Defensive bent helped later in the period
Although technology has been an emphasis of ours, diversified
industrials, financial, retail and consumer-staple stocks were also well
represented in the Fund throughout the period. In fact, outside of
technology, the stocks we pursued had, for the most part, a defensive
orientation. Given the likelihood of further interest-rate increases by
the Federal Reserve Board and the anticipated market volatility -- both
of which occurred -- we thought it prudent to remain somewhat defensive
throughout the period. While this approach provided a drag on
performance as tech stocks gained ground, it helped considerably during
the market's turnaround in the past two months.
Retail: Cyclicals and consumer staples
The Fund continues to have a meaningful weighting in retail stocks, both
cyclical and consumer staples. On the consumer cyclical side are such
holdings as Home Depot and Lowe's, two home- improvement retailers that
have profited from America's nine years of economic expansion. For
defensive purposes, we held several consumer staple companies including
Kroger, CVS and Wal-Mart, which enjoyed a pick-up in performance late in
the period.
[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 25% at the top. The first bar
represents the 5.36% total return for John Hancock Large Cap
Growth Fund Class A. The second bar represents the 4.98% total
return for John Hancock Large Cap Growth Fund Class B. The third
bar represents the 4.94% total return for John Hancock Large Cap
Growth Fund Class C. The fourth bar represents the 20.88% total
return for Average large-cap growth fund. A note below the chart
reads "Total returns for John Hancock Large Cap Growth Fund are at
net asset value with all distributions reinvested. The average
large-cap growth fund is tracked by Lipper, Inc.1 See the
following two pages for historical performance information."]
Somewhat outside the realm of the two traditional retail camps lay
consumer electronic retailers that are reaping the benefits of the
current digital age. With their inventories of high definition
televisions, digital cameras and appliances, portfolio holdings Best Buy
and Tandy are experiencing strong growth.
Finance unchanged, health care increased
Throughout the period, we maintained about the same emphasis in
financial stocks. For the most part, our focus has been on household
names, such as Citigroup and American Express. In the health-care arena
we continued to add to high-quality, solid pharmaceutical growth stocks,
further fortifying the Fund's defensive posture. For example, we
increased the Fund's existing stake in Warner-Lambert and
Schering-Plough. We also purchased holdings in the biotechnology and
medical-device arena, such as Amgen and Medtronic, which are somewhat
immune to the health-care-related price controls that are being
discussed in Washington, D.C.
Back into energy
As the period progressed and the outlook improved for oil exploration
and drilling activity, we selectively re-initiated small positions in
oil field services stocks. Schlumberger and Halliburton have been two
holdings that have performed quite well for the Fund.
"...for the
near term
we shall
pursue more
attractively
valued tech
stocks..."
Outlook: Healthier valuations going forward
The second half of fiscal 2000 begins with stock investors establishing
a newfound appreciation for stock valuations. We believe this, in turn,
will likely result in the continued broadening out of the market, with
industries other than technology regaining investor favor. Although tech
stocks have experienced a severe correction, prices remain relatively
high. Given the likelihood of further volatility, we have pared back our
technology positions, bringing the portfolio's weighting below that of
its benchmark S&P 500 Index. It is our strong belief, however, that
technology will remain an engine of growth in the years ahead.
Therefore, it will remain a key focus within the portfolio, though for
the near term we shall pursue more attractively valued tech stocks such
as IBM and Lucent Technologies. We shall also be on the lookout for
primarily large-cap companies with solid growth prospects that we
believe have gotten unduly punished in the recent rout.
-------------------------------------------------------------------------
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 Large 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%. 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 carefully before you invest or
send money.
CLASS A
For the period ended March 31, 2000
ONE FIVE TEN
YEAR YEARS YEARS
----- ----- -----
Cumulative Total Returns 7.20% 142.62% 297.93%
Average Annual Total Returns 7.20% 19.40% 14.81%
CLASS B
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
----- ----- ------
Cumulative Total Returns 7.09% 144.32% 148.06%
Average Annual Total Returns 7.09% 19.56% 15.68%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
----- ------
Cumulative Total Returns 10.02% 39.43%
Average Annual Total Returns 10.02% 19.92%
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock Large 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 the Standard & Poor's 500 Index. The
Standard & Poor's 500 Index is an unmanaged index that includes 500
widely traded common stocks and is a commonly used 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 Large Cap Growth 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 Standard & Poor's 500 Index
and is equal to $56,860 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Large Cap Growth Fund on October 31, 1989,
before sales charge, and is equal to $38,019 as of April 30, 2000.
The third line represents the same investment made in the John
Hancock Large Cap Growth Fund, after sales charge, and is equal to
$36,118 as of April 30, 2000.
Line chart with the heading John Hancock Large Cap Growth 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 Standard & Poor's 500 Index
and is equal to $35,278 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Large Cap Growth Fund on January 3, 1994,
before sales charge, and is equal to $23,362 as of April 30, 2000.
Line chart with the heading John Hancock Large Cap Growth Fund
Class C, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are three
lines. The first line represents the Standard & Poor's 500 Index
and is equal to $13,650 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Large Cap Growth Fund on June 1, 1998, before
sales charge, and is equal to $13,260 as of April 30, 2000. The
third line represents the same investment made in the John Hancock
Large Cap Growth Fund, after sales charge, and is equal to $13,128
as of April 30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- Large 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 -- $613,647,949) $781,688,459
Joint repurchase agreement
(cost -- $14,667,000) 14,667,000
Corporate savings account 707
-----------------
796,356,166
Receivable for investments sold 3,903,292
Receivable for shares sold 744,133
Dividends receivable 122,318
Interest receivable 7,591
Other assets 42,649
-----------------
Total Assets 801,176,149
-----------------
Liabilities:
Payable for shares repurchased 282,108
Payable for investments purchased 4,267,576
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 626,484
Accounts payable and accrued expenses 63,909
-----------------
Total Liabilities 5,240,077
-----------------
Net Assets:
Capital paid-in 579,523,076
Accumulated net realized gain on
investments 52,932,985
Net unrealized appreciation of
investments 168,040,510
Accumulated net investment loss (4,560,499)
-----------------
Net Assets $795,936,072
=================
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 -- $490,611,348/20,635,173 $23.78
==============================================================
Class B -- $303,074,926/13,572,919 $22.33
==============================================================
Class C -- $2,249,798/100,821 -- Note A $22.31
==============================================================
Maximum Offering Price Per Share*
Class A -- ($23.78 / 0.95) $25.03
==============================================================
* 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 (net of foreign withholding
taxes of $13,798) $1,707,084
Interest (including income on
securities loaned of $51,098) 324,021
-----------------
2,031,105
-----------------
Expenses:
Investment management fee -- Note B 3,038,201
Distribution and service fee -- Note B
Class A 745,414
Class B 1,580,351
Class C 9,045
Transfer agent fee -- Note B 953,912
Accounting and legal services fee --
Note B 77,285
Custodian fee 74,094
Trustees' fees 22,294
Printing 22,133
Auditing fee 18,161
Miscellaneous 16,501
Registration and filing fees 4,804
Legal fees 3,401
Interest expense -- Note A 2,878
-----------------
Total Expenses 6,568,474
-----------------
Net Investment Loss (4,537,369)
-----------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold 58,012,096
Change in net unrealized
appreciation/depreciation of
investments (11,823,175)
-----------------
Net Realized and Unrealized Gain on
Investments 46,188,921
-----------------
Net Increase in Net Assets Resulting
from Operations $41,651,552
=================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed 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.
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 ($7,146,985) ($4,537,369)
Net realized gain on investments
sold 110,762,438 58,012,096
Change in net unrealized
appreciation/depreciation of
investments 59,045,415 (11,823,175)
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 162,660,868 41,651,552
----------------- -----------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A -- ($2.7100 and $2.5980 per share, respectively) (45,972,496) (50,047,115)
Class B -- ($2.7100 and $2.5980 per share, respectively) (27,759,800) (34,402,171)
Class C -- ($2.7100 and $2.5980 per share, respectively) (27,033) (155,747)
----------------- -----------------
Total Distributions to
Shareholders (73,759,329) (84,605,033)
----------------- -----------------
From Fund Share Transactions -- Net: * 109,605,788 41,191,419
----------------- -----------------
Net Assets:
Beginning of period 599,190,807 797,698,134
----------------- -----------------
End of period (including
accumulated net investment loss
of $23,130 and $4,560,499,
respectively) $797,698,134 $795,936,072
================= =================
<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 9,568,899 $230,610,734 3,242,915 $78,251,159
Shares reinvested 2,130,741 42,891,827 1,962,795 46,597,000
----------------- ----------------- ----------------- -----------------
11,699,640 273,502,561 5,205,710 124,848,159
Less shares repurchased (9,499,232) (229,248,085) (3,906,627) (94,237,085)
----------------- ----------------- ----------------- -----------------
Net increase 2,200,408 $44,254,476 1,299,083 $30,611,074
================= ================= ================= =================
CLASS B
Shares sold 6,594,456 $150,932,220 2,964,849 $67,641,750
Shares reinvested 1,263,938 24,280,197 1,292,511 28,913,821
----------------- ----------------- ----------------- -----------------
7,858,394 175,212,417 4,257,360 96,555,571
Less shares repurchased (4,888,308) (111,107,205) (3,827,357) (86,877,215)
----------------- ----------------- ----------------- -----------------
Net increase 2,970,086 $64,105,212 430,003 $9,678,356
================= ================= ================= =================
CLASS C
Shares sold 60,561 $1,390,286 100,720 $2,309,016
Shares reinvested 1,368 26,263 5,950 133,107
----------------- ----------------- ----------------- -----------------
61,929 1,416,549 106,670 2,442,123
Less shares repurchased (7,655) (170,449) (67,245) (1,540,134)
----------------- ----------------- ----------------- -----------------
Net increase 54,274 $1,246,100 39,425 $901,989
================= ================= ================= =================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indicated: net investment income,
gains (losses), distributions and total investment return of 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.
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
---------------------- JANUARY 1, 1996 TO ------------------------------- APRIL 30, 2000
1994 1995 OCTOBER 31, 1996(7) 1997 1998 1999 (UNAUDITED)
-------- -------- ------------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $17.40 $15.89 $19.51 $23.28 $24.37 $22.27 $25.04
-------- -------- -------- -------- -------- -------- --------
Net Investment Loss (0.10) (0.09)(1) (0.13)(1) (0.12)(1) (0.11)(1) (0.17)(1) (0.10)(1)
Net Realized and Unrealized
Gain (Loss) on Investments (1.21) 4.40 3.90 3.49 2.17 5.65 1.44
-------- -------- -------- -------- -------- -------- --------
Total from Investment Operations (1.31) 4.31 3.77 3.37 2.06 5.48 1.34
-------- -------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized
Gain on Investments Sold (0.20) (0.69) -- (2.28) (4.16) (2.71) (2.60)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period $15.89 $19.51 $23.28 $24.37 $22.27 $25.04 $23.78
======== ======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(2) (7.50%) 27.17% 19.32%(5) 16.05% 9.80% 27.58% 5.36%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $146,466 $241,700 $279,425 $303,067 $381,591 $484,196 $490,611
Ratio of Expenses to Average
Net Assets 1.65% 1.48% 1.48%(6) 1.44% 1.40% 1.35%(8) 1.34%(6,8)
Ratio of Net Investment Loss
to Average Net Assets (0.64%) (0.46%) (0.73%)(6) (0.51%) (0.50%) (0.70%) (0.84%)(6)
Portfolio Turnover Rate 52% 68%(3) 59% 133% 153%(3) 183% 78%
<CAPTION>
Financial Highlights (continued)
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD FROM YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
---------------------- JANUARY 1, 1996 TO ------------------------------- APRIL 30, 2000
1994(4) 1995 OCTOBER 31, 1996(7) 1997 1998 1999 (UNAUDITED)
-------- -------- ------------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $17.16 $15.83 $19.25 $22.83 $23.70 $21.38 $23.74
-------- -------- -------- -------- -------- -------- --------
Net Investment Loss(1) (0.20) (0.26) (0.26) (0.27) (0.25) (0.31) (0.18)
Net Realized and Unrealized
Gain (Loss) on Investments (0.93) 4.37 3.84 3.42 2.09 5.38 1.37
-------- -------- -------- -------- -------- -------- --------
Total from Investment Operations (1.13) 4.11 3.58 3.15 1.84 5.07 1.19
-------- -------- -------- -------- -------- -------- --------
Less Distributions:
Distributions from Net Realized
Gain on Investments Sold (0.20) (0.69) -- (2.28) (4.16) (2.71) (2.60)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period $15.83 $19.25 $22.83 $23.70 $21.38 $23.74 $22.33
======== ======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(2) (6.56%)(5) 26.01% 18.60%(5) 15.33% 9.04% 26.70% 4.98%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $3,807 $15,913 $25,474 $36,430 $217,448 $312,046 $303,075
Ratio of Expenses to Average
Net Assets 2.38%(6) 2.31% 2.18%(6) 2.13% 2.08% 2.02%(8) 2.04%(6,8)
Ratio of Net Investment Loss
to Average Net Assets (1.25%)(6) (1.39%) (1.42%)(6) (1.20%) (1.16%) (1.37%) (1.54%)(6)
Portfolio Turnover Rate 52% 68%(3) 59% 133% 153%(3) 183% 78%
<CAPTION>
Financial Highlights (continued)
----------------------------------------------------------------------------------------------------------------------------------
FOR THE 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 $21.43 $21.37 $23.73
------------- ------------- -------------
Net Investment Loss(1) (0.10) (0.31) (0.17)
Net Realized and Unrealized
Gain on Investments 0.04 5.38 1.35
------------- ------------- -------------
Total from Investment Operations (0.06) 5.07 1.18
------------- ------------- -------------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (2.71) (2.60)
------------- ------------- -------------
Net Asset Value, End of
Period $21.37 $23.73 $22.31
============= ============= =============
Total Investment Return at
Net Asset Value(2) (0.28%)(5) 26.72% 4.94%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $152 $1,457 $2,250
Ratio of Expenses to Average
Net Assets 2.10%(6) 2.05%(8) 2.04%(6,8)
Ratio of Net Investment Loss
to Average Net Assets (1.14%)(6) (1.36%) (1.56%)(6)
Portfolio Turnover Rate 153%(3) 183% 78%
(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) Portfolio turnover rate excludes merger activity.
(4) Class B shares commenced operations on January 3, 1994.
(5) Not annualized.
(6) Annualized.
(7) Effective October 31, 1996, the fiscal period end changed from December 31 to October 31.
(8) Expense ratios do not include interest expense due to bank loans, which amounted to less than 0.01%.
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 Large 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 (2.01%)
Interpublic Group of Cos., Inc. (The) 390,000 $15,990,000
------------
Banks -- United States (0.43%)
State Street Corp. 35,000 3,390,625
------------
Beverages (0.59%)
Coca-Cola Co. (The) 100,000 4,706,250
------------
Computers (20.57%)
Apple Computer, Inc.* 140,000 17,368,750
BMC Software, Inc.* 290,000 13,575,625
Cisco Systems, Inc.* 450,000 31,197,645
Computer Associates International, Inc. 240,000 13,395,000
Edwards (J.D.) & Co.* 170,000 3,102,500
EMC Corp.* 150,000 20,840,625
International Business Machines Corp. 160,000 17,860,000
Microsoft Corp.* 500,000 34,875,000
NBC Internet, Inc. (Class A)* 270,000 6,243,750
Parametric Technology Corp.* 650,000 5,301,595
------------
163,760,490
------------
Diversified Operations (2.31%)
Tyco International Ltd. 400,000 18,375,000
------------
Electronics (15.97%)
Applied Materials, Inc.* 145,000 14,762,812
Conexant Systems, Inc.* 240,000 14,370,000
General Electric Co. 205,000 32,236,250
Intel Corp. 280,000 35,507,500
JDS Uniphase Corp.* 75,000 7,776,563
Solectron Corp.* 480,000 22,470,000
------------
127,123,125
------------
Finance (3.41%)
American Express Co. 90,000 13,505,625
Citigroup, Inc. 230,000 13,670,625
------------
27,176,250
------------
Media (11.78%)
AMFM, Inc.* 290,000 19,248,750
AT&T Corp. -- Liberty Media Group* 240,000 11,985,000
Cablevision Systems Corp. (Class A)* 140,000 9,476,250
Infinity Broadcasting Corp. (Class A)* 450,000 15,271,875
Time Warner, Inc. 420,000 37,773,750
------------
93,755,625
------------
Medical (10.68%)
Amgen Inc.* 200,000 11,200,000
Cardinal Health, Inc. 335,000 18,445,937
Medtronic, Inc. 400,000 20,775,000
Schering-Plough Corp. 350,000 14,109,375
Warner-Lambert Co. 180,000 20,486,250
------------
85,016,562
------------
Oil & Gas (4.61%)
Enron Corp. 210,000 14,634,375
Halliburton Co. 325,000 14,360,938
Schlumberger Ltd. 100,000 7,656,250
------------
36,651,563
------------
Retail (11.26%)
Best Buy Co., Inc.* 165,000 13,323,750
CVS Corp. 200,000 8,700,000
Home Depot, Inc. (The) 257,500 14,436,094
Kroger Co.* 500,000 9,281,250
Lowe's Cos., Inc. 200,000 9,900,000
Tandy Corp. 280,000 15,960,000
Wal-Mart Stores, Inc. 325,000 17,996,875
------------
89,597,969
------------
Telecommunications (14.59%)
ANTEC Corp.* 180,000 9,675,000
Corning, Inc. 70,000 13,825,000
Dobson Communications Corp. (Class A)* 725,000 18,578,125
Level 3 Communications, Inc.* 180,000 16,020,000
Lucent Technologies, Inc. 330,000 20,521,875
Nokia Corp., American Depositary Receipt
(Finland) 360,000 20,475,000
Sprint PCS* 310,000 17,050,000
------------
116,145,000
------------
TOTAL COMMON STOCKS
(Cost $613,647,949) (98.21%) 781,688,459
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
--------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.84%)
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% $14,667 14,667,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.85% 707
------------
TOTAL SHORT-TERM INVESTMENTS (1.84%) 14,667,707
--------- ------------
TOTAL INVESTMENTS (100.05%) 796,356,166
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.05%) (420,094)
--------- ------------
TOTAL NET ASSETS (100.00%) $795,936,072
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer; however, security is
U.S. dollar denominated.
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 -- Large Cap Growth Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Investment Trust III (the "Trust") is an open-end
management investment company, registered under the Investment Company
Act of 1940. The Trust consists of four series: John Hancock Large Cap
Growth Fund (the "Fund"), John Hancock Global Fund, John
Hancock Mid Cap Growth Fund and John Hancock International Fund. The
other three 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 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 accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing services or at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in a joint repurchase
agreement transaction. Aggregate cash balances are invested in one or
more 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 for
both financial reporting and federal income tax purposes.
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. 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 determined 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 appropriated net assets of each class and
the specific expense rate(s) applicable to each class.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not readily
identifiable to a specific fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and
type of expense and the relative size of the funds.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues and expenses of the Fund. Actual results
could differ from these estimates.
BANK BORROWINGS The Fund is permitted to have bank borrowings for
temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of
securities. The Fund 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 maximum loan balance during the period amounted to
$4,733,000. The annualized interest rate charged during the period
ranged from 5.94% through 6.44%. 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. These fees are included
in interest income. The loans are collateralized at all times with cash
or securities with a market value at least equal to the market value of
the securities on loan. As with other extensions of credit, the Fund may
bear the risk of delay of the loaned securities in recovery or even loss
of rights in the collateral should the borrower of the securities fail
financially. At April 30, 2000, the Fund loaned securities having a
market value of $17,689,613 collateralized by securities in the amount
of $18,043,405.
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 $750,000,000 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
$750,000,000.
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 $306,637. Out of this amount, $26,926 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $121,973 was paid as sales commissions to unrelated
broker-dealers and $157,738 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 amounted to $461,824.
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, contingent deferred
sales charges amounted to $1,622.
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 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, 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 obligations,
during the period ended April 30, 2000, aggregated $632,522,127 and
$692,408,609, respectively.
The cost of investments owned at April 30, 2000 (excluding the corporate
savings account) for federal income tax purposes was $628,408,609. Gross
unrealized appreciation and depreciation of investments aggregated
$215,603,756 and $47,656,906, respectively, resulting in net unrealized
appreciation of $167,946,850.
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
1-800-225-5291 1-800-554-6713 (TDD)
Internet: www.jhfunds.com
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
Large Cap Growth Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
200SA 4/00
6/00
The latest report from your
Fund's management team
SEMIANNUAL REPORT
Mid Cap
Growth Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*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 & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
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 BARBARA C. FRIEDMAN, CFA, PORTFOLIO MANAGER
[A 3" x 2" photo at bottom right side of page of John Hancock Mid
Cap Growth Fund. Caption below reads "Mid Cap Growth Fund
management team members (l-r): David Eisenberg, Barbara Friedman
and Darice Grippo."]
John Hancock
Mid Cap Growth Fund
Following strong run-up at year end,
stock market turns volatile in 2000
Mid-cap stocks fared well during the past six months. As investors
recognized the sector's strong earnings growth prospects, the Russell
Midcap Growth Index climbed 41.59%. By comparison, the Standard & Poor's
500 Index rose a far more modest 7.18%. Thanks to strong spending,
booming demand, increases in productivity and low inflation, most U.S.
corporations posted good earnings in the last quarter of 1999. The
market surged ahead late last year, as investors poured money into
stocks, especially in the small- and mid-cap sectors. But volatility
increased in the new year, as investors worried that further
interest-rate hikes would hurt earnings growth. Mounting concerns
culminated in a severe downdraft in March and April, as investors sold
off the high-priced technology and telecommunications stocks that had
earlier led the market's charge.
"Mid-cap stocks
fared well
during the
past six
months."
Performance review
John Hancock Mid Cap Growth Fund's Class A, Class B and Class C shares
returned 35.67%, 35.19% and 35.21%, respectively, at net asset value,
during the six-month period ended April 30, 2000. These returns exceeded
the 30.88% return of the average mid-cap core fund, 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 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 long-term performance information.
[Table at top left hand column entitled "Top Five Stock Holdings."
The first listing is McLeodUSA 1.7%, the second is Amphenol 1.5%,
the third Teradyne 1.5%, the fourth Baker Hughes 1.4% and the
fifth Scientific-Atlanta 1.4%. A note below the table reads "As a
percentage of net assets on April 30, 2000."]
The Fund benefited from its focus on companies with market
capitalizations between $1 billion and $10 billion, particularly in the
technology and oil service sectors.
"We also
boosted our
health-care
stake, buying
mostly
biotechnology
names."
Technology leaders
Our biggest winners were once again technology names, especially
software and electronics companies. Thanks to increased demand, i2
Technologies, a leader in inventory and production management software,
and VERITAS Software and Network Appliance, both of which provide
storage capabilities, returned over 100% for the six-month period. On
the electronics side, several stocks we owned benefited from the cable
upgrade that is currently underway. Oak Industries, a company that
supplies components for the cable, TV, wireless and fiber-optics
markets, did exceptionally well, following a buyout by Corning. The Fund
subsequently benefited from owning Corning, which is the leading
supplier of fiber for fiber-optics networks. Other top performers
included Amphenol, which makes components for the cable and wireless
industries, and Scientific-Atlanta, one of the foremost producers of
transmission equipment and digital set-top boxes for the cable industry.
Our investments in Teradyne, a leading manufacturer of testing equipment
for semiconductor manufacturers, and CMGI, a holding company with a
portfolio of Internet stocks, also gave a nice boost to the Fund's
returns. Late in the period, we sold our stake in CMGI, which appeared
to have reached full valuation.
[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 Amphenol followed by an up arrow
with the phrase "Strong sales of components to cable industry."
The second listing is BJ Services followed by an up arrow with the
phrase "Strong demand as oil and gas companies build reserves."
The third listing is ANTEC followed by a sideways arrow with the
phrase "First quarter earnings below expectations." A note below
the table reads "See 'Schedule of Investments.' Investment
holdings are subject to change."]
Telecommunications stumble
After strong advances in 1999, many telecommunications stocks weakened
in the new year, including companies such as McLeodUSA, NEXTLINK
Communications and Global Crossing that are involved with building
fiber-optic networks. Although this hurt near-term returns, both
McLeodUSA and NEXTLINK managed strong double-digit gains for the period.
We maintained our stakes in all these companies because their prospects
remained strong. McLeodUSA, which is a competitive local exchange
carrier in the Midwest and Rocky Mountain areas, recently made an
acquisition that will add to its nationwide data capabilities and, if
anything, should accelerate its earnings growth prospects. On the
wireless side, VoiceStream Wireless suffered a near-term setback because
of specific issues related to its business. And ANTEC, a company that
manufactures products that add telephone capabilities to cable systems,
provided only modest returns to the Fund during the period. However, we
remained invested in both companies.
[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 40% at the top. The first bar
represents the 35.67% total return for John Hancock Mid Cap Growth
Fund Class A. The second bar represents the 35.19% total return
for John Hancock Mid Cap Growth Fund Class B. The third bar
represents the 35.21 total return for John Hancock Mid Cap Growth
Fund Class C. The fourth bar represents the 30.88% total return
for Average mid-cap core fund. A note below the chart reads
"Total returns for John Hancock Mid Cap Growth Fund are at net
asset value with all distributions reinvested. The average mid-cap
core fund is tracked by Lipper, Inc.1 See the following two pages
for historical performance information."]
Energy and biotech additions
During the period, we substantially increased the Fund's stake in the
oil-service area. Oil and gas companies had cut back on exploration and
production in recent years, resulting in declining non-OPEC oil and gas
reserves. Expecting exploration and production spending to pick up, we
began adding to our investment in rig equipment and service companies
like BJ Services and Baker Hughes, as well as rig-only companies like
R&B Falcon and Diamond Offshore Drilling.
We also boosted our health-care stake, buying mostly biotechnology
names. We focused on companies like QLT PhotoTherapeutics that have
products in test; firms like Affymetrix, PE Corp.-PE Biosystems Group
and Waters that design and produce equipment used by biotechnology
companies; and companies like Millennium Pharmaceuticals that provide
genetic information to pharmaceutical companies. To fund these new
purchases, we pared back modestly in the technology and consumer
sectors. We took profits mainly in Internet names like CMGI and initial
public offerings (IPOs). We also sold retailers like Best Buy, Tandy
(which owns Radio Shack) and Estee Lauder, which could be hurt by rising
interest rates and slower consumer spending.
"Our plan is
to use market
weakness to
add to our
core investments."
Positive outlook
We expect U.S. economic growth to slow, but remain positive as the
Federal Reserve continues to increase interest rates. As long as
interest rates are rising, the stock market will remain volatile.
However, once inflation is in check and interest rates stabilize, the
stock market can again do well. Mid-cap stocks, in particular, should
benefit, given their strong growth prospects. Our plan is to use market
weakness to add to our core investments. We also expect to stick with
our high technology weighting, which -- including telecommunications and
electronics -- stands at about 65% of net assets. We believe that
technology and telecommunications will continue to be the
fastest-growing parts of the economy. Technology spending will most
likely remain strong, resulting in healthy earnings growth and rising
stock prices. Although technology stock prices relative to other
measures like earnings may seem high, so is their growth potential.
-------------------------------------------------------------------------
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 tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Mid 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%. 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 carefully before you invest or
send money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (11/1/93)
------ ------- -------
Cumulative Total Returns 68.26%(1) 201.82% 190.36%
Average Annual Total Returns 68.26%(1) 24.72% 18.09%
CLASS B
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (11/1/93)
------ ------- -------
Cumulative Total Returns 70.77%(1) 204.81% 192.37%
Average Annual Total Returns 70.77%(1) 24.97% 18.22%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
------ -------
Cumulative Total Returns 73.14%(1) 77.75%
Average Annual Total Returns 73.14%(1) 36.93%
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.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock Mid 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 Standard & Poor's 500 Index and
the Russell Midcap Growth Index. The Standard & Poor's 500 Index is an
unmanaged index that includes 500 widely traded common stocks and is a
commonly used measure of stock market performance. The Russell Midcap
Growth Index is an unmanaged index that contains those securities from
the Russell Midcap 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 Mid Cap Growth Fund Class
A, representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are four lines. The
first line represents the Russell Midcap Growth Index and is equal
to $37,386 as of April 30, 2000. The second line represents the
Standard & Poor's 500 Index and is equal to $35,364 as of April
30, 2000. The third line represents the value of the hypothetical
$10,000 investment made in the John Hancock Mid Cap Growth Fund on
November 1, 1993, before sales charge, and is equal to $28,157 as
of April 30, 2000. The fourth line represents the same
hypothetical investment made in the John Hancock Mid Cap Growth
Fund, after sales charge, and is equal to $26,749 as of April 30,
2000.
Line chart with the heading John Hancock Mid 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 Russell Midcap Growth Index and is equal
to $37,386 as of April 30, 2000. The second line represents the
Standard & Poor's 500 Index and is equal to $35,364 as of April
30, 2000. The third line represents the value of the hypothetical
$10,000 investment made in the John Hancock Mid Cap Growth Fund on
November 1, 1993, before sales charge, and is equal to $26,914 as
of April 30, 2000.
Line chart with the heading John Hancock Mid Cap Growth Fund Class
C, representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are four lines. The
first line represents the Russell Midcap Growth Index and is equal
to $17,927 as of April 30, 2000. The second line represents the
value of the hypothetical $10,000 investment made in the John
Hancock Mid Cap Growth Fund on June 1, 1998, before sales charge,
and is equal to $16,526 as of April 30, 2000. The third line
represents the same hypothetical investment made in the John
Hancock Mid Cap Growth Fund, after sales charge, and is equal to
$16,360 as of April 30, 2000. The fourth line represents the
Standard & Poor's 500 Index and is equal to $13,650 as of April
30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- Mid 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 -- $303,981,357) $398,272,580
Joint repurchase agreement
(cost -- $2,617,000) 2,617,000
Corporate savings account 668
-----------------
400,890,248
Receivable for investments sold 15,581,933
Receivable for shares sold 247,886
Dividends receivable 19,333
Foreign tax receivable 167
Interest receivable 1,252
Other assets 26,011
-----------------
Total Assets 416,766,830
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 3,025,877
Payable for shares repurchased 146,877
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 404,456
Accounts payable and accrued expenses 51,625
-----------------
Total Liabilities 3,628,835
--------------------------------------------------------------
Net Assets:
Capital paid-in 265,076,104
Accumulated net realized gain on
investments sold 56,494,570
Net unrealized appreciation of
investments 94,291,223
Accumulated net investment loss (2,723,902)
-----------------
Net Assets $413,137,995
==============================================================
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 -- $169,020,846/10,356,516 $16.32
==============================================================
Class B -- $242,038,359/15,704,546 $15.41
==============================================================
Class C -- $2,078,790/134,982 -- Note A $15.40
==============================================================
Maximum Offering Price Per Share*
Class A -- ($16.32/0.95) $17.18
==============================================================
* 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 (net of foreign withholding
taxes of $250) $249,110
Interest 212,571
Securities lending income -- Note A 171,753
-----------------
633,434
-----------------
Expenses:
Investment management fee -- Note B 1,443,253
Distribution and service fee -- Note B
Class A 228,893
Class B 1,035,707
Class C 5,383
Transfer agent fee -- Note B 484,037
Custodian fee 36,870
Accounting and legal services fee --
Note B 33,870
Registration and filing fees 31,530
Auditing fee 13,675
Printing 13,286
Trustees' fees 8,287
Miscellaneous 4,584
Legal fees 1,631
-----------------
Total Expenses 3,341,006
--------------------------------------------------------------
Net Investment Loss (2,707,572)
--------------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 57,371,617
Change in net unrealized
appreciation/depreciation of
investments 32,900,452
-----------------
Net Realized and Unrealized Gain on
Investments 90,272,069
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $87,564,497
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment gains and
losses, distributions paid to shareholders, if any, and any increase or
decrease in money shareholders invested in the Fund. The footnote
illustrates the number of Fund shares sold, reinvested and repurchased
during the last two periods, along with the corresponding dollar value.
Statement of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
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 ($3,587,423) ($2,707,572)
Net realized gain on investments
sold 30,387,309 57,371,617
Change in net unrealized
appreciation/depreciation of
investments 55,591,895 32,900,452
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 82,391,781 87,564,497
----------------- -----------------
Distributions to Shareholders:
Distributions from net realized gain
on investments sold
Class A -- (none and $0.8819
per share, respectively) -- (7,725,298)
Class B -- (none and $0.8819
per share, respectively) -- (10,531,936)
Class C -- (none and $0.8819
per share, respectively) -- (30,130)
----------------- -----------------
Total Distributions to
Shareholders -- (18,287,364)
----------------- -----------------
From Fund Share Transactions --
Net:* (59,644,150) 85,686,520
----------------- -----------------
Net Assets:
Beginning of period 235,426,711 258,174,342
----------------- -----------------
End of period (including
accumulated net investment loss
of $16,330 and $2,723,902,
respectively) $258,174,342 $413,137,995
================= =================
<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 4,311,988 $44,751,953 4,088,766 $66,192,268
Shares reinvested -- -- 559,529 7,229,118
----------------- ----------------- ----------------- -----------------
4,311,988 44,751,953 4,648,295 73,421,386
Less shares repurchased (6,689,665) (69,584,697) (3,017,522) (47,529,937)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (2,377,677) ($24,832,744) 1,630,773 $25,891,449
================= ================= ================= =================
CLASS B
Shares sold 1,928,686 $20,530,351 4,431,108 $69,959,851
Shares reinvested -- -- 792,446 9,699,559
----------------- ----------------- ----------------- -----------------
1,928,686 20,530,351 5,223,554 79,659,410
Less shares repurchased (5,386,043) (55,460,249) (1,455,651) (21,625,453)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (3,457,357) ($34,929,898) 3,767,903 $58,033,957
================= ================= ================= =================
CLASS C
Shares sold 24,769 $256,801 115,362 $1,813,165
Shares reinvested -- -- 1,965 24,049
----------------- ----------------- ----------------- -----------------
24,769 256,801 117,327 1,837,214
Less shares repurchased (13,684) (138,309) (4,948) (76,100)
----------------- ----------------- ----------------- -----------------
Net increase 11,085 $118,492 112,379 $1,761,114
================= ================= ================= =================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indi cated: the net investment income
(loss), gains (losses), distributions and total investment return of the
Fund. It shows how the Fund's net asset value for a share has changed
since the end of the previous period. Additionally, important rela
tionships between some items presented in the financial statements are
expressed in ratio form.
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 1996 1997 1998 1999 (UNAUDITED)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $7.93 $9.32 $10.92 $11.40 $9.11 $12.85
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss (1) (0.07) (0.11) (0.06) (0.09) (0.12) (0.09)
Net Realized and Unrealized
Gain (Loss) on Investments 1.46 3.34 1.00 (0.89) 3.86 4.44
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 1.39 3.23 0.94 (0.98) 3.74 4.35
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:-
Distributions from Net
Realized Gain on
Investments Sold -- (1.63) (0.46) (1.31) -- (0.88)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period $9.32 $10.92 $11.40 $9.11 $12.85 $16.32
========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value (2) 17.53% 36.15% 8.79% (9.40%) 41.05% 35.67%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $101,562 $156,578 $141,997 $101,138 $112,082 $169,021
Ratio of Expenses to Average
Net Assets 1.59% 1.59% 1.59% 1.59% 1.60% 1.45%(3)
Ratio of Net Investment Loss
to Average Net Assets (0.87%) (1.00%) (0.57%) (0.86%) (1.14%) (1.10%)(3)
Portfolio Turnover Rate 155% 240% 317% 168% 153% 79%
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $7.87 $9.19 $10.67 $11.03 $8.72 $12.22
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss (1) (0.13) (0.18) (0.13) (0.15) (0.18) (0.13)
Net Realized and Unrealized
Gain (Loss) on Investments 1.45 3.29 0.95 (0.85) 3.68 4.20
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 1.32 3.11 0.82 (1.00) 3.50 4.07
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- (1.63) (0.46) (1.31) -- (0.88)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period $9.19 $10.67 $11.03 $8.72 $12.22 $15.41
========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value (2) 16.77% 35.34% 7.84% (9.97%) 40.14% 35.19%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $137,363 $238,901 $204,812 $134,188 $145,816 $242,038
Ratio of Expenses to Average
Net Assets 2.30% 2.29% 2.28% 2.27% 2.23% 2.15%(3)
Ratio of Net Investment Loss
to Average Net Assets (1.55%) (1.70%) (1.25%) (1.54%) (1.77%) (1.80%)(3)
Portfolio Turnover Rate 155% 240% 317% 168% 153% 79%
<CAPTION>
Financial Highlights (continued)
-------------------------------------------------------------------------------------
PERIOD FROM
JUNE 1, 1998
(COMMENCEMENT OF YEAR ENDED SIX MONTHS ENDED
OPERATIONS) OCTOBER 31, APRIL 30, 2000
TO OCTOBER 31, 1998 1999 (UNAUDITED)
------------------- ---------- ----------
<S> <C> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $9.99 $8.72 $12.21
---------- ---------- ----------
Net Investment Loss (1) (0.06) (0.19) (0.14)
Net Realized and Unrealized
Gain (Loss) on Investments (1.21) 3.68 4.21
---------- ---------- ----------
Total From Investment
Operations (1.27) 3.49 4.07
---------- ---------- ----------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- -- (0.88)
---------- ---------- ----------
Net Asset Value, End of
Period $8.72 $12.21 $15.40
========== ========== ==========
Total Investment Return at
Net Asset Value (2) (12.71%)(4) 40.02% 35.21%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $100 $276 $2,079
Ratio of Expenses to Average
Net Assets 2.29%(3) 2.30% 2.15%(3)
Ratio of Net Investment Loss
to Average Net Assets (1.66%)(3) (1.82%) (1.82%)(3)
Portfolio Turnover Rate 168% 153% 79%
(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) Annualized.
(4) Not annualized.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned
by the Mid Cap Growth Fund on April 30, 2000. It's divided into two
main categories: common stocks and short-term investments. The common
stocks are further broken down by industry group. Short-term
investments, which represent the Fund's "cash" position, are listed
last.
Schedule of Investments
April 30, 2000 (Unaudited)
------------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ---------- ------------
<S> <C> <C> <C>
COMMON STOCKS
Advertising (1.04%)
Young & Rubicam, Inc. 77,050 $4,290,722
------------
Banks -- United States (1.78%)
Northern Trust Corp. 61,750 3,959,719
Zions Bancorp. 82,000 3,403,000
------------
7,362,719
------------
Computers (15.28%)
Art Technology Group, Inc.* 58,400 3,547,800
CheckFree Holdings Corp.* 46,150 2,344,997
DST Systems, Inc.* 24,700 1,832,431
E.piphany, Inc.* 6,650 439,316
EMC Corp.* 18,850 2,618,972
Exodus Communications, Inc.* 18,950 1,675,891
Fiserv, Inc.* 34,650 1,591,734
Globix Corp.* 39,950 898,875
Hyperion Solutions Corp.* 33,100 1,003,860
i2 Technologies, Inc.* 35,350 4,568,987
Informix Corp.* 311,150 3,422,650
Interwoven, Inc.* 8,070 558,848
Lexmark International Group, Inc. (Class A)* 38,670 4,563,060
Mercury Interactive Corp.* 37,100 3,339,000
Network Appliance, Inc.* 73,800 5,456,588
NorthPoint Communications Group, Inc.* 224,450 3,619,256
Parametric Technology Corp.* 219,250 1,788,269
Perot Systems Corp. (Class A)* 132,750 2,157,188
Phone.com, Inc.* 25,300 2,125,200
Proxicom, Inc.* 62,300 2,129,881
Rational Software Corp.* 47,750 4,064,719
RealNetworks, Inc.* 12,740 606,743
Siebel Systems, Inc.* 19,800 2,432,925
Unisys Corp.* 70,250 1,628,922
VERITAS Software Corp.* 29,387 3,152,214
Viant Corp.* 68,860 1,583,780
------------
63,152,106
------------
Cosmetics & Personal Care (0.45%)
Dial Corp. (The) 132,050 1,840,447
------------
Diversified Operations (0.81%)
Mitsubishi Corp., American Depositary Receipts
(ADR) (Japan) 191,456 3,330,549
------------
Electronics (24.89%)
Aeroflex, Inc.* 49,300 1,836,425
Altera Corp.* 35,490 3,628,852
Amkor Technology, Inc.* 29,600 1,811,150
Amphenol Corp. (Class A)* 99,650 6,352,687
Analog Devices, Inc.* 52,500 4,032,656
Applied Micro Circuits Corp.* 26,420 3,404,877
ASM Lithography Holding NV (Netherlands)* 82,500 3,300,000
Atmel Corp.* 79,300 3,880,744
Broadcom Corp. (Class A)* 15,700 2,706,287
Conexant Systems, Inc.* 54,250 3,248,219
Flextronics International, Ltd. (Singapore)* 43,800 3,076,950
Jabil Circuit, Inc.* 119,980 4,911,681
KLA-Tencor Corp.* 29,020 2,172,872
Lam Research Corp.* 89,400 4,101,225
Linear Technology Corp. 77,700 4,438,612
Maxim Intergrated Products, Inc.* 65,300 4,232,256
Molex Inc. 76,400 4,197,225
Novellus Systems, Inc.* 21,600 1,440,450
Qlogic Corp.* 42,450 4,258,266
Sanmina Corp.* 40,200 2,414,513
SCG Holding Corp.* 69,550 1,525,753
SCI Systems, Inc.* 83,900 4,467,675
STMicroelectronics NV (Netherlands) 14,500 2,750,469
Tektronix, Inc.* 54,900 3,177,338
Teradyne, Inc.* 55,600 6,116,000
Vishay Intertechnology, Inc.* 40,700 3,413,713
Vitesse Semiconductor Corp.* 38,750 2,637,422
Waters Corp.* 56,450 5,348,638
Xilinx, Inc.* 54,090 3,962,093
------------
102,845,048
------------
Fiber Optics (3.36%)
C-COR.net Corp.* 119,400 4,671,525
E-Tek Dynamics, Inc.* 25,450 5,210,887
JDS Uniphase Corp.* 38,800 4,023,075
------------
13,905,487
------------
Finance (1.18%)
Concord EFS, Inc.* 217,450 4,865,444
------------
Instruments (0.37%)
PE Corp.-PE Biosystems Group 25,500 1,530,000
------------
Insurance (0.39%)
AFLAC, Inc. 32,800 1,601,050
------------
Media (8.26%)
AMFM, Inc.* 77,150 5,120,831
Cox Radio, Inc. (Class A)* 27,100 1,964,750
Emmis Communications Corp. (Class A)* 77,190 3,280,575
Entercom Communications Corp.* 55,100 2,341,750
Hispanic Broadcasting Corp.* 22,300 2,253,694
Infinity Broadcasting Corp. (Class A)* 155,550 5,278,978
Pegasus Communications Corp.* 29,700 3,241,012
Radio One, Inc.* 78,330 4,543,140
Telewest Communications Plc (ADR) (United
Kingdom)* 55,683 3,480,188
Univision Communications, Inc. (Class A)* 17,700 1,933,725
Wink Communications, Inc.* 34,050 672,488
------------
34,111,131
------------
Medical (7.48%)
Affymetrix, Inc.* 15,000 2,025,938
Alkermes, Inc.* 19,950 1,062,337
Allergan, Inc. 57,050 3,358,819
Forest Laboratories, Inc.* 21,350 1,794,734
Health Management Associates, Inc. (Class A)* 211,400 3,369,188
Immunex Corp.* 50,700 1,996,312
Incyte Pharmaceuticals, Inc.* 12,900 993,300
MedImmune, Inc.* 20,350 3,254,728
Millennium Pharmaceuticals, Inc.* 29,000 2,301,875
Nycomed Amersham Plc (ADR) (United Kingdom) 49,910 2,058,787
Protein Design Labs, Inc.* 11,800 1,197,700
QLT PhotoTherapeutics, Inc. (Canada)* 65,550 3,642,122
Stryker Corp. 53,650 3,856,094
------------
30,911,934
------------
Office (1.17%)
Avery Dennison Corp. 73,800 4,843,125
------------
Oil & Gas (7.26%)
Baker Hughes, Inc. 184,900 5,882,131
BJ Services Co.* 77,250 5,426,812
Cooper Cameron Corp.* 48,200 3,615,000
Diamond Offshore Drilling, Inc. 97,900 3,946,594
Grant Prideco, Inc.* 74,350 1,431,238
R&B Falcon Corp.* 174,500 3,620,875
Transocean Sedco Forex, Inc. 64,850 3,047,950
Weatherford International, Inc.* 74,350 3,020,469
------------
29,991,069
------------
Retail (0.55%)
Kroger Co.* 121,850 2,261,841
------------
Telecommunications (22.13%)
Alamosa PCS Holdings, Inc.* 43,900 1,251,150
Allegiance Telecom, Inc.* 55,875 3,953,156
American Tower Corp. (Class A)* 72,250 3,359,625
ANTEC Corp.* 91,350 4,910,062
Broadwing, Inc.* 44,900 1,271,231
COLT Telecom Group Plc (ADR) (United Kingdom)* 11,645 1,988,384
Comverse Technology, Inc.* 63,000 5,618,812
Corning, Inc. 24,503 4,839,342
Crown Castle International Corp.* 66,480 2,551,170
Dobson Communications Corp. (Class A)* 179,420 4,597,637
Global Crossing Ltd. (Bermuda)* 134,427 4,234,451
Global TeleSystems Group, Inc.* 103,500 1,507,219
ICG Communications, Inc.* 41,500 1,234,625
IMPSAT Fiber Networks, Inc.* 90,900 1,437,356
Intermedia Communications, Inc.* 77,020 3,138,565
McLeodUSA, Inc. (Class A)* 287,670 7,191,750
Metromedia Fiber Network, Inc. (Class A)* 85,400 2,636,725
Microcell Telecommunications, Inc. (Class B)
(Canada)* 43,950 1,532,756
Nextel Communications, Inc. (Class A)* 26,700 2,921,981
NEXTLINK Communications, Inc. (Class A)* 56,500 4,763,656
NTL, Inc.* 35,787 2,737,705
Partner Communications Co. Ltd. (ADR) (Israel)* 99,000 1,058,063
Scientific-Atlanta, Inc. 90,200 5,868,638
Time Warner Telecom, Inc. (Class A)* 30,520 1,670,970
UnitedGlobalCom, Inc. (Class A)* 53,000 2,815,625
UTStarcom, Inc.* 29,500 1,401,250
Versatel Telecom International NV (ADR)
(Netherlands)* 62,000 2,507,125
VoiceStream Wireless Corp.* 39,212 3,881,988
Western Wireless Corp. (Class A)* 91,550 4,548,891
------------
91,429,908
------------
TOTAL COMMON STOCKS (Cost $303,981,357) (96.40%) 398,272,580
--------- ------------
<CAPTION>
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (0.64%)
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% $2,617 2,617,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company Daily
Interest Savings Account Current Rate
4.85% 668
------------
TOTAL SHORT-TERM INVESTMENTS (0.64%) 2,617,668
--------- ------------
TOTAL INVESTMENTS (97.04%) 400,890,248
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (2.96%) 12,247,747
--------- ------------
TOTAL NET ASSETS (100.00%) $413,137,995
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration (Unaudited)
------------------------------------------------------------------------
The Mid Cap Growth Fund invests primarily in common stocks of U.S. and
foreign issuers. The performance of the Fund is closely tied to the
economic and financial conditions within the countries in which it
invests. 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 percentages of the Fund's
investments at April 30, 2000 assigned to country categories.
MARKET VALUE
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
----------------------- ----------
Bermuda 1.03%
Canada 1.25
Israel 0.26
Japan 0.81
Netherlands 2.07
Singapore 0.74
United Kingdom 1.82
United States 88.42
Short-term Investments 0.64
-------
TOTAL INVESTMENTS 97.04%
=======
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- Mid Cap Growth Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Investment Trust III is an open-end management investment
company, registered under the Investment Company Act of 1940. The Trust
consists of four series: John Hancock Mid Cap Growth Fund (the "Fund"),
John Hancock Global Fund, John Hancock Large Cap Growth Fund and John
Hancock International Fund. The other three series of the Trust are
reported in separate financial statements. The investment objective of
the Fund is long-term capital appreciation.
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 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 transaction. 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 for
both financial reporting and federal income tax purposes. 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. For federal income tax purposes, at
October 31, 1999, the Fund had $6,126,325 of capital loss carryforwards
available, to the extent provided by regulations, to offset future net
realized capital gains. If such carryforwards are used by the Fund, no
capital gain distributions will be made. The Fund's carryforwards expire
as follows: October 31, 2000 -- $12,856, October 31, 2001 -- $1,657,886
and October 31, 2002 -- $4,455,583. Availability of a certain amount of
loss carryforwards which were acquired on September 6, 1996 and December
16, 1994 in mergers, may be limited in a given year.
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 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 determined 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 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 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 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 unsecured lines
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 based on the average daily
unused portion of the lines 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, there were no outstanding security loans.
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.
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 the
offset by the currency amount of the underlying transaction.
At April 30, 2000, there were no open foreign currency forward contracts.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for non-speculative purposes. 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 to and from
the broker, known as "variation margin," 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.
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) 0.80% of the
first $500,000,000 of the Fund's average daily net asset value, (b)
0.75% of the next $500,000,000 and (c) 0.70% of the Fund's average daily
net asset value in excess of $1,000,000,000.
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 $168,367. Out of this amount, $20,732 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $66,009 was paid as sales commissions to unrelated
broker-dealers and $81,626 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 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 $100,482.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market
value at the time of redemption or the original purchase cost of the
shares being redeemed. Proceeds from CDSC are paid to JH Funds and are
used in whole or in part to defray its expenses related to providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended April 30, 2000, contingent deferred
sales charges paid to JH Funds amounted to $137.
In addition, to reimburse JH Funds for the services it provides as
distributors 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. 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.
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.
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 $331,180,505 and
$277,559,480, respectively. There were no purchases or sales of
obli-gations 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 $307,454,696. Gross
unrealized appreciation and depreciation of investments aggregated
$128,112,223 and $34,677,339, respectively, resulting in net unrealized
appreciation of $93,434,884.
[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
Mid Cap Growth Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
390SA 4/00
6/00
The latest report from your
Fund's management team
SEMIANNUAL REPORT
International
Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*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 and 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
SUB-INVESTMENT ADVISER
Indocam International Investment
90 Boulevard Pasteur
Paris, France 75015
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 MIREN ETCHEVERRY FOR THE PORTFOLIO MANAGEMENT TEAM
[A 3" x 2" photo at bottom right side of page of John Hancock
International Fund. Caption below reads "Fund management team
members (l-r): Didier Le Conte, Miren Etcheverry, Alessandra
Gaudio and Jean-Claude Kaltenbach."]
John Hancock
International Fund
Technology stocks dominate overseas financial markets in
last six months
Overseas stock markets produced solid results over the last six months,
with the "TMT" sectors -- technology, media and telecommunications --
the main drivers of performance. Even with the increasingly sharp
volatility that culminated in tech stocks' plunge in March and April,
TMT stocks in markets worldwide still posted strong gains for the
six-month period, as investors were riveted to so-called New Economy
stocks.
The world's advances were not restricted to one region, although some
parts of the world did better than others. As it became even clearer
that economies everywhere were picking up steam, the emerging markets of
Eastern Europe and Latin America benefited most. With improved
conditions, investors seeking higher growth appeared more confident that
they could find it in these newly emerging countries.
"Overseas
stock mar-
kets pro-
duced solid
results..."
By contrast, most Asian markets, with the exception of Hong Kong, were
more lackluster, pausing after their significant rise last year.
Furthermore, Japan's market faltered on concerns that the country's
economy had fallen back into recession. European markets rallied as
economic recovery continued there and stocks were attractively valued.
But the continuing decline in the year-old European currency, the euro,
took away those gains for U.S.-dollar-based investors. Overall, overseas
markets, as measured by the Fund's benchmark, the MSCI All Country World
Free Ex-U.S. Index, were up 8.40%.
[Pie chart at top left hand column with heading "Portfolio
Diversification." The chart is divided into seven sections (from
top to left): Latin America 1%, Canada 4%, Short-Term Investments
& Other 7%, Pacific Rim ex Japan 9%, United Kingdom & Ireland 17%,
Japan 25% and Continental Europe 37%. A note below the chart reads
"As a percentage of net assets on April 30, 2000."]
"...our valua-
tion discipline
prevented us
from buying
the hot
technology
names..."
Fund performance
For the six months ended April 30, 2000, John Hancock International
Fund's Class A, Class B and Class C shares posted total returns of
5.15%, 4.86% and 4.96%, respectively, at net asset value. That compared
with the 14.17% return of the average international fund, 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.
Historical performance information can be found on pages six and seven.
[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 Nokia followed by an up arrow with
the phrase "Dominant player in booming wireless communications
market." The second listing is Nomura Securities followed by an up
arrow with the phrase "Strengthened Japanese stock market boosts
trading and earnings." The third listing is Carrefour followed by
a down arrow with the phrase "Price wars and inaction on a pending
merger hurt large French retailer." A note below the table reads
"See 'Schedule of Investments.' Investment holdings are subject to
change."]
Fund overweighted in tech, but not enough
Since technology, media and telecom stocks were the dominant groups, our
holdings there were some of our best performers, including Finland's
Nokia, Germany's Mannesmann, Canada's Nortel Networks and Japan's Sony.
Even though we were overweighted in tech and telecom stocks compared to
the index, our overweighting was less than that of our peers. That held
back our relative performance, since TMT was a group that moved so
dramatically during the period. We did not take a more aggressive stand
in the tech group because our valuation discipline prevented us from
buying the hot technology names that had reached sky-high valuation
levels. In fact, we took some profits in this sector as it made its
ascent.
Our stock selection in the United Kingdom also held us back. The U.K.
market turned in negative results this period due to concerns about the
economy and rising interest rates, as well as investor focus elsewhere
in Europe and Asia where there were more obvious catalysts for growth.
Some of the Fund's biggest disappointments were U.K. companies Vodafone,
Lloyds and Unilever.
Japan, Europe still focus areas
We are maintaining an overweighting in Japan of 25% of the Fund's net
assets because, despite short-term setbacks, the economic picture is
showing signs of improving slowly but surely. We would rather see a
gradual, tentative recovery in Japan than a sharp one, because it helps
maintain the discipline needed to ensure that recovery and corporate
reform actually happen in the long term. We also see real opportunity in
the corporate restructurings that continue to take place there. Our
focus remains on companies that stand to benefit from economic recovery,
corporate restructuring and the worldwide telecommunications boom.
To take advantage of the growing opportunity in Japan, we trimmed our
stake in Western Europe to an underweighted 54% of net assets. After the
Continent's strong run-up last year, European stocks appear fully valued
compared to Japan, especially in the technology and telecommunications
areas. We continue to prefer countries in continental Europe to the
U.K., where the outlook for earnings growth is less certain. The
Continent is where most of the positive developments are occurring,
including a more robust economic growth picture and corporate
restructurings.
[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 20% at the top. The first bar
represents the 5.15% total return for John Hancock International
Fund Class A. The second bar represents the 4.86% total return for
John Hancock International Fund Class B. The third bar represents
the 4.96% total return for John Hancock International Fund Class
C. The fourth bar represents the 14.17 total return for Average
international fund. A note below the chart reads "Total returns
for John Hancock International Fund are at net asset value with
all distributions reinvested. The average international fund is
tracked by Lipper, Inc.1 See the following two pages for historical
performance information."]
Expanding our emerging world stake
During the period, we increased our exposure to emerging markets.
Valuations were attractive, the emerging economies continued to improve
with strong signs of growth, and the world economic environment was more
friendly. We have taken a diversified, lower-risk approach, adding
stocks across Eastern Europe, Asia and Latin America, with the biggest
emphasis on Asia. In the last six months, we added to our
emerging-market stake by establishing small positions in the
Philippines, Turkey, Hungary, Greece, Israel, South Africa, Brazil,
Chile and Argentina. Our investments for the most part were in the most
liquid, blue-chip stocks of each country.
Going forward
The current macroeconomic environment of high growth with low inflation,
combined with continued corporate restructurings, provides a positive
backdrop for international equities. We are increasingly positive about
Japan, where the fundamentals and valuation levels are good, and Asia
overall. Corporate and economic reforms and the return to a more
sustainable level of earnings growth, through increased domestic demand,
will be the main forces behind performance of the Asian markets for the
rest of the year. Emerging markets should continue to benefit from the
strength of the developed world's economies and positive trends toward
keeping inflation in check.
"We are
increasingly
positive about
Japan...and
Asia overall."
As for the Fund, the addition January 1 of a subadviser, Indocam
International Investment Services, should bolster our investment
capabilities, but will not alter our strategy. We will continue to own a
diversified portfolio of stocks chosen through a combination of top-down
country and sector allocations, which take political and economic
factors into consideration, and bottom-up individual stock selection,
targeting companies with stable growth, reasonable valuations and strong
management.
-------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. Of
course, the team's views are subject to change as market and other
conditions warrant.
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
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 International 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 international investing, including currency and
political risks and differences in accounting standards and financial
reporting, before you invest or send money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
----- ----- ------
Cumulative Total Returns 23.47% 58.52% 45.97%
Average Annual Total Returns(1) 23.47% 9.65% 6.25%
CLASS B
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (1/3/94)
----- ----- ------
Cumulative Total Returns 24.08% 58.84% 47.04%
Average Annual Total Returns(1) 24.08% 9.70% 6.37%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
----- ------
Cumulative Total Returns 26.86% 30.42%
Average Annual Total Returns(1) 26.86% 15.62%
Note to Performance
(1) Effective January 3, 1994, the Adviser has temporarily voluntarily
undertaken to limit the Fund's expenses, including the management fee
(but not including the transfer agent fee and 12b-1 fee) to 0.90% of the
Fund's daily net asset value. Without the limitation of expenses, the
average annual total returns for the one-year period, five-year period
and since inception would have been 21.90%, 7.87% and 4.30%, respectively,
for Class A shares and 22.50%, 7.91% and 4.42%, respectively, for Class B
shares. The average annual total returns for the one-year period and
since inception would have been 25.25% and 13.87%, respectively, for
Class C shares.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock International 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 Morgan Stanley Capital International
(MSCI) All Country World Free Ex-U.S. Index, which measures the
performance of a broad range of developed and emerging stock markets
around the world. The index represents "free" securities that are traded
freely on equity exchanges around the world. It is not possible to
invest in an index. Past performance is not indicative of future
results.
Line chart with the heading John Hancock International 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 MSCI All Country World Free Ex-U.S.
Index and is equal to $18,195 as of April 30, 2000. The second
line represents the value of the hypothetical $10,000 investment
made in the John Hancock International Fund on January 3, 1994,
before sales charge, and is equal to $13,846 as of April 30, 2000.
The third line represents the same investment made in the John
Hancock International Fund, after sales charge, and is equal to
$13,154 as of April 30, 2000.
Line chart with the heading John Hancock International 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 MSCI All Country World Free Ex-U.S.
Index and is equal to $18,195 as of April 30, 2000. The second
line represents the value of the hypothetical $10,000 investment
made in the John Hancock International Fund on January 3, 1994,
before sales charge, and is equal to $13,247 as of April 30, 2000.
Line chart with the heading John Hancock International 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 MSCI All Country World Free Ex-U.S.
Index and is equal to $12,685 as of April 30, 2000. The second
line represents the value of the hypothetical $10,000 investment
made in the John Hancock International Fund on June 1, 1998,
before sales charge, and is equal to $11,863 as of April 30, 2000.
The third line represents the same investment made in the John
Hancock International Fund, after sales charge, and is equal to
$11,744 as of April 30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- International 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 and preferred stocks
and warrants (cost -- $21,012,182) $24,489,280
Short-term investments
(cost -- $4,696,481) -- Note A 4,696,481
-----------------
29,185,761
Cash 457
Foreign currency, at value
(cost -- $373,574) 374,431
Receivable for investments sold 406,534
Receivable for forward foreign currency
exchange contacts sold -- Note A 1,701
Receivable for shares sold 2,662
Dividends receivable 51,241
Foreign tax receivable 5,716
Interest receivable 451
Other assets 712
-----------------
Total Assets 30,029,666
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 332,176
Payable for forward foreign currency
exchange contacts purchased -- Note A 7,716
Payable for shares repurchased 2,022
Payable upon return of securities on
loan -- Note A 3,751,481
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 15,010
Accounts payable and accrued expenses 54,246
-----------------
Total Liabilities 4,162,651
--------------------------------------------------------------
Net Assets:
Capital paid-in 22,705,785
Accumulated net realized loss on
investments and foreign currency
transactions (40,765)
Net unrealized appreciation of
investments and foreign currency
transactions 3,475,127
Accumulated net investment loss (273,132)
-----------------
Net Assets $25,867,015
==============================================================
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 -- $11,120,514/1,002,550 $11.09
==============================================================
Class B -- $14,287,415/1,342,961 $10.64
==============================================================
Class C -- $459,086/43,125 -- Note A $10.65
==============================================================
Maximum Offering Price Per Share*
Class A -- ($11.09/0.95) $11.67
==============================================================
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net
gains (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $13,436) $90,830
Interest (including income on
securities loaned of $3,103) 33,208
-----------------
124,038
-----------------
Expenses:
Investment management fee -- Note B 113,049
Distribution and service fee -- Note B
Class A 14,388
Class B 62,058
Class C 1,617
Custodian fee 94,678
Transfer agent fee -- Note B 77,724
Registration and filing fees 20,610
Auditing fee 18,928
Printing 7,726
Legal fees 2,347
Accounting and legal services fee --
Note B 2,037
Miscellaneous 587
Trustees' fees 541
-----------------
Total Expenses 416,290
--------------------------------------------------------------
Less Expense Reductions -- Note B (158,760)
--------------------------------------------------------------
Net Expenses 257,530
--------------------------------------------------------------
Net Investment Loss (133,492)
--------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 42,170
Net realized loss on foreign currency
transactions (53,604)
Change in net unrealized
appreciation/depreciation of
investments 678,792
Change in net unrealized
appreciation/depreciation of foreign
currency transactions (1,098)
-----------------
Net Realized and Unrealized Gain on
Investments and Foreign Currency
Transactions 666,260
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $532,768
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment and foreign
currency gains and losses, distributions paid to shareholders, if any,
and any increase or decrease in money shareholders invested in the Fund.
The footnote illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding
dollar value.
Statement of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
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 ($98,658) ($133,492)
Net realized gain (loss) on
investments sold and foreign
currency transactions 1,232,968 (11,434)
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 2,432,425 677,694
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 3,566,735 532,768
----------------- -----------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold
Class A -- (none and $0.4521 per share, respectively) -- (295,164)
Class B -- (none and $0.4521 per share, respectively) -- (409,638)
Class C -- (none and $0.4521 per share, respectively) -- (7,457)
----------------- -----------------
Total Distributions to
Shareholders -- (712,259)
----------------- -----------------
From Fund Share Transactions -- Net:* (2,414,954) 9,035,334
----------------- -----------------
Net Assets:
Beginning of period 15,859,391 17,011,172
----------------- -----------------
End of period (including
accumulated net investment loss
of $139,640 and $273,132,
respectively) $17,011,172 $25,867,015
================= =================
<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 1,992,880 $19,868,374 2,081,883 $24,253,727
Shares issued to shareholders in
reinvestment of distributions -- -- 24,779 272,570
----------------- ----------------- ----------------- -----------------
1,992,880 19,868,374 2,106,662 24,526,297
Less shares repurchased (2,012,650) (20,158,135) (1,778,652) (20,926,766)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (19,770) ($289,761) 328,010 $3,599,531
================= ================= ================= =================
CLASS B
Shares sold 679,532 $6,557,542 671,157 $7,684,261
Shares issued to shareholders in
reinvestment of distributions -- -- 30,267 320,235
----------------- ----------------- ----------------- -----------------
679,532 6,557,542 701,424 8,004,496
Less shares repurchased (922,491) (8,828,604) (252,655) (2,862,399)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (242,959) ($2,271,062) 448,769 $5,142,097
================= ================= ================= =================
CLASS C
Shares sold 16,886 $164,040 36,146 $412,230
Shares issued to shareholders in
reinvestment of distributions -- -- 704 7,451
----------------- ----------------- ----------------- -----------------
16,886 164,040 36,850 419,681
Less shares repurchased (1,879) (18,171) (11,448) (125,975)
----------------- ----------------- ----------------- -----------------
Net increase 15,007 $145,869 25,402 $293,706
================= ================= ================= =================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indi cated: the net invest ment
income, gains (losses), distributions and total investment return of the
Fund. It shows how the Fund's net asset value for a share has changed
since the commencement of operations. Additionally, important rela
tionships between some items presented in the financial statements are
expressed in ratio form.
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 1996 1997 1998 1999 (UNAUDITED)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.65 $8.14 $8.70 $8.41 $8.81 $10.95
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Income (Loss) 0.04 0.06(1) (0.02)(1) 0.00(1,7) (0.02)(1) (0.05)(1)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (0.47) 0.50 (0.26) 0.47 2.16 0.64
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations (0.43) 0.56 (0.28) 0.47 2.14 0.59
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net
Investment Income (0.03) -- (0.01) -- -- --
Distributions from Net
Realized Gain on
Investments Sold and
Foreign Currency
Transactions (0.05) -- -- (0.07) -- (0.45)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions (0.08) -- (0.01) (0.07) -- (0.45)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period $8.14 $8.70 $8.41 $8.81 $10.95 $11.09
========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value (2) (4.96%) 6.88% (3.22%) 5.61% 24.29% 5.15%(3)
Total Adjusted Investment
Return at Net Asset Value (2,4) (8.12%) 5.33% (4.52%) 3.75% 22.44% 4.45%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $4,215 $5,098 $4,965 $6,116 $7,388 $11,122
Ratio of Expenses to Average
Net Assets 1.64% 1.75% 1.73%(8) 1.79%(8) 1.96% 1.89%(5)
Ratio of Adjusted Expenses
to Average Net Assets (6) 4.80% 3.30% 3.03%(8) 3.65%(8) 3.81% 3.29%(5)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.56% 0.68% (0.16%) 0.04% (0.20%) (0.79%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (6) (2.60%) (0.87%) (1.46%) (1.82%) (2.05%) (2.19%)(5)
Portfolio Turnover Rate 69% 83% 169% 129% 113% 59%
Fee Reduction Per Share (1) $0.25 $0.14 $0.12 $0.17 $0.18 $0.08
<CAPTION>
Financial Highlights (continued)
---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------------------------------------------------------- APRIL 30, 2000
1995 1996 1997 1998 1999 (UNAUDITED)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $8.61 $8.05 $8.55 $8.22 $8.55 $10.55
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Income (Loss) (0.03) 0.00(1,7) (0.08)(1) (0.06)(1) (0.09)(1) (0.08)(1)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (0.48) 0.50 (0.25) 0.46 2.09 0.62
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations (0.51) 0.50 (0.33) 0.40 2.00 0.54
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold and
Foreign Currency
Transactions (0.05) -- -- (0.07) -- (0.45)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period $8.05 $8.55 $8.22 $8.55 $10.55 $10.64
========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value (2) (5.89%) 6.21% (3.86%) 4.88% 23.39% 4.86%(3)
Total Adjusted Investment
Return at Net Asset Value (2,4) (9.05%) 4.66% (5.16%) 3.02% 21.54% 4.16%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $3,990 $8,175 $8,713 $9,720 $9,436 $14,285
Ratio of Expenses to Average
Net Assets 2.52% 2.45% 2.43%(8) 2.49%(8) 2.63% 2.57%(5)
Ratio of Adjusted Expenses
to Average Net Assets (6) 5.68% 4.00% 3.73%(8) 4.35%(8) 4.48% 3.97%(5)
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.37%) 0.02% (0.88%) (0.66%) (0.91%) (1.47%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (6) (3.53%) (1.53%) (2.18%) (2.52%) (2.76%) (2.87%)(5)
Portfolio Turnover Rate 69% 83% 169% 129% 113% 59%
Fee Reduction Per Share (1) $0.25 $0.14 $0.12 $0.17 $0.18 $0.08
<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 $9.36 $8.55 $10.57
------- ------- -------
Net Investment Loss (1) (0.03) (0.10) (0.08)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (0.78) 2.12 0.61
------- ------- -------
Total from Investment
Operations (0.81) 2.02 0.53
------- ------- -------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold and
Foreign Currency
Transactions -- -- (0.45)
------- ------- -------
Net Asset Value, End of
Period $8.55 $10.57 $10.65
======= ======= =======
Total Investment Return at
Net Asset Value (2) (8.65%)(3) 23.63% 4.96%(3)
Total Adjusted Investment
Return at Net Asset Value (2,4) (9.43%)(3) 21.78% 4.26%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $23 $187 $460
Ratio of Expenses to Average
Net Assets 2.29%(5,8) 2.66% 2.59%(5)
Ratio of Adjusted Expenses
to Average Net Assets (6) 4.15%(5,8) 4.51% 3.99%(5)
Ratio of Net Investment Loss
to Average Net Assets (1.27%)(5) (1.04%) (1.42%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets (6) (3.13%)(5) (2.89%) (2.82%)(5)
Portfolio Turnover Rate 129% 113% 59%
Fee Reduction Per Share (1) $0.07 $0.18 $0.08
(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 that does not take into
consideration management fee reductions and other expense subsidies by
the Adviser during the periods shown.
(5) Annualized.
(6) Unreimbursed, without fee reduction.
(7) Less than $0.01 per share.
(8) Expense ratios do not include interest expense due to bank loans,
which amounted to less than 0.01%.
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 International Fund on April 30, 2000. It's divided into four main
categories: common stocks, preferred stocks, warrants and short-term
investments. Common and preferred stocks and warrants are further broken
down by country. 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
Argentina (0.06%)
PC Holdings SA (Class B) (Diversified
Operations) 10,500 $15,971
------------
Australia (0.82%)
Davnet Ltd.* (Telecommunications) 7,880 11,275
Publishing & Broadcasting Ltd. (Media) 9,440 73,322
Telstra Corp., Ltd. (Telecommunications) 9,594 41,125
Westpac Banking Corp. Ltd. (Banks -- Foreign) 9,470 60,448
WMC Ltd. (Metal) 6,493 26,960
------------
213,130
------------
Belgium (0.00%)
Fortis AG* (Certificate De Valeur Garantie)
(Insurance) 1,134 10
------------
Brazil (0.54%)
Companhia Brasileira de Distribuicao Grupo Pao
de Acucar, American Depository Receipts (ADR)
(Retail) 1,300 37,050
Companhia Paranaense de Energia-Copel (ADR)
(Utilities) 3,400 25,075
Tele Norte Leste Participacoes SA (ADR)
(Telecommunications) 67 1,193
Telecomunicacoes Brasileiras SA (ADR)
(Telecommunications) 500 59,094
Uniao de Bancos Brasileiros SA, Global
Depository Receipts (GDR) (Finance) 720 17,955
------------
140,367
------------
Canada (4.35%)
Bombardier, Inc. (Diversified Operations) 19,136 $514,291
Nortel Networks Corp. (Telecommunications) 3,123 353,022
Suncor Energy, Inc. (Oil & Gas) 6,000 256,263
------------
1,123,576
------------
Chile (0.11%)
Empresa Nacional de Electricidad SA (ADR)
(Utilities) 2,500 28,750
------------
China (0.08%)
Shandong International Power Development Co.,
Ltd. (Utilities) 200,000 20,285
------------
Finland (2.82%)
Nokia Oyj (Telecommunications) 10,742 616,206
Nordic Baltic Holding AB (Banks -- Foreign) 9,055 57,294
Sonera Oyj (Telecommunications) 1,000 55,001
------------
728,501
------------
France (10.27%)
Accor SA (Leisure) 2,300 85,414
Alcatel SA (Telecommunications) 905 209,798
Banque Nationale de Paris (Banks -- Foreign) 1,000 80,819
Bouygues SA (Building) 273 174,225
Bouygues SA (New)* (Building) 18 11,504
Cap Gemini SA (Computers) 450 88,365
Carrefour SA (Retail) 2,496 162,469
Credit Lyonnais SA (Banks -- Foreign) 2,300 89,596
Dassault Systemes SA (Computers) 1,000 76,910
France Telecom SA (Telecommunications) 1,301 201,302
Lagardere S.C.A. (Diversified Operations) 1,568 106,197
Legrand SA (Electronics) 344 64,110
Pinault-Printemps-Redoute SA (Retail) 683 137,781
PSA Peugeot Citroen SA (Automobile/Trucks) 637 131,802
Societe Television Francaise 1 (Media) 114 78,039
Sodexho Alliance SA (Business Services -- Misc.) 500 $74,910
STMicroelectronics NV (Electronics) 646 123,270
Suez Lyonnaise des Eaux SA (Diversified
Operations) 600 94,092
Total Fina SA (Oil & Gas) 2,002 303,761
Valeo SA (Automobile/Trucks) 2,300 127,547
Vivendi (Diversified Operations) 2,363 233,725
------------
2,655,636
------------
Germany (3.66%)
Allianz AG (Insurance) 521 200,492
BASF AG (Chemicals) 2,000 87,437
Bayerische Motoren Werke AG (Automobile/Trucks) 2 54
Deutsche Telekom AG (Telecommunications) 1,769 114,809
Dresdner Bank AG (Banks -- Foreign) 2,800 115,336
SAP AG (Computers) 326 152,925
Siemens AG (Diversified Operations) 1,865 276,362
------------
947,415
------------
Greece (0.28%)
Alpha Credit Bank SA (Banks -- Foreign) 400 22,031
Hellenic Telecommunications Organization SA
(ADR) (Telecommunications) 2,400 28,050
STET Hellas Telecommunications SA* (ADR)
(Telecommunications) 1,000 22,875
------------
72,956
------------
Hong Kong (3.21%)
Aeon Credit Service Co., Ltd. (Finance) 72,000 26,806
ASM Pacific Technology Ltd. (Electronics) 20,000 70,867
Cable & Wireless HKT Ltd. (Telecommunications) 28,325 66,911
Cheung Kong Holdings Ltd. (Real Estate
Operations) 15,000 179,094
Citic Pacific Ltd. (Diversified Operations) 7,000 32,173
Guoco Group Ltd. (Finance) 12,000 27,962
Hongkong Electric Holdings Ltd. (Utilities) 4,000 12,504
Hongkong Land Holdings Ltd. (Real Estate
Operations) 10,000 15,200
HSBC Holdings Plc (Banks -- Foreign) 6,105 68,385
Hutchison Whampoa Ltd. (Diversified Operations) 8,000 116,058
JCG Holdings Ltd. (Finance) 87,000 45,236
Legend Holdings Ltd. (Computers) 24,000 27,731
Next Media Ltd.* (Printing -- Commercial) 136,000 $27,063
QPL International Holdings Ltd.* (Electronics) 40,000 56,488
Swire Pacific Ltd. (Diversified Operations) 4,500 25,420
Yuxing Infotech Holdings Ltd.* (Computers) 40,000 33,380
------------
831,278
------------
Hungary (0.09%)
Magyar Tavkozlesi Rt (Telecommunications) 3,400 23,290
------------
Indonesia (0.18%)
PT Gudang Garam Tbk (Tobacco) 14,000 22,152
PT Telekomunikasi Indonesia (Telecommunications) 54,000 23,582
------------
45,734
------------
Ireland (0.47%)
CRH Plc (Building) 7,606 121,905
------------
Israel (0.22%)
Bank Leumi Le-Israel*** (Banks -- Foreign) 15,500 33,683
Partner Communications Co., Ltd.* (ADR)
(Telecommunications) 2,100 22,444
------------
56,127
------------
Italy (4.92%)
ACEA SpA (Utilities) 5,421 88,215
Assicurazioni Generali SpA (Insurance) 4,688 133,396
Banca Intesa SpA (Banks -- Foreign) 30,608 112,694
ENI SpA (Oil & Gas) 9,500 47,241
Gruppo Editoriale L'Espresso (Media) 7,000 98,637
Holding Di Partecipazioni Industriali SpA*
(Diversified Operations) 49,580 59,722
Riunione Adriatica di Sicurta SpA (Insurance) 13,058 133,430
San Paolo-IMI SpA (Banks -- Foreign) 7,000 98,001
Seat Pagine Gialle SpA (Media) 20,912 91,824
Tecnost SpA (Telecommunications) 24,452 85,805
Telecom Italia Mobile SpA (Telecommunications) 13,605 129,867
Telecom Italia SpA (Telecommunications) 13,899 194,335
------------
1,273,167
------------
Japan (24.68%)
Bank of Tokyo-Mitsubishi, Ltd. (Banks --
Foreign) 13,000 $167,773
Daiwa House Industry Co., Ltd. (Building) 6,000 39,994
Fanuc Ltd. (Electronics) 3,100 324,881
Fuji Heavy Industries Ltd. (Automobile/Trucks) 11,000 84,016
Fujitsu Ltd. (Computers) 9,000 254,965
Fujitsu Systems Construction Ltd.
(Engineering/R&D Services) 9,000 93,320
Ito-Yokado Co., Ltd. (Retail) 2,000 146,091
Japan Business Computer Co., Ltd. (Computers) 1,000 46,660
Marubeni Corp. (Diversified Operations) 65,000 188,353
Murata Manufacturing Co., Ltd. (Electronics) 1,000 194,417
NEC Corp. (Electronics) 14,000 381,058
Nihon Unisys, Ltd. (Computers) 2,000 46,475
Nikko Securities Co., Ltd. (The) (Broker
Services) 46,000 542,980
Nintendo Co., Ltd. (Leisure) 700 116,650
Nippon Telegraph & Telephone Corp.
(Telecommunications) 20 248,114
Nomura Securities Co., Ltd. (Broker Services) 17,000 428,089
NTT DoCoMo, Inc. (Telecommunications) 10 334,213
Orix Corp. (Leasing Companies) 1,560 222,702
Sakura Bank, Ltd. (The) (Banks -- Foreign) 39,000 273,684
Sekisui House, Ltd. (Building) 11,000 100,819
Seven-Eleven Japan Co., Ltd. (Retail) 2,000 246,262
Softbank Corp. (Computers) 400 98,505
Softbank Corp. (New)* (Computers) 800 197,750
Sony Corp. (Electronics) 4,100 471,055
Sony Corp. (New)* (Electronics) 5,100 590,196
Takeda Chemical Industries, Ltd. (Medical) 6,000 394,945
Toyota Motor Corp. (Automobile/Trucks) 3,000 149,146
------------
6,383,113
------------
Mexico (0.54%)
Controladora Comercial Mexicana SA de CV
(Retail) 35,000 36,823
Grupo Financiero Bancomer SA de CV (Finance) 115,000 51,328
Telefonos de Mexico SA (ADR)
(Telecommunications) 860 50,579
------------
138,730
------------
Netherlands (5.54%)
AEGON NV (Insurance) 1,000 $71,864
Akzo Nobel NV (Chemicals) 2,823 115,565
ASM Lithography Holding NV* (Computers) 3,690 144,247
Equant NV* (Computers) 828 64,095
Fortis NV (Insurance) 2,300 57,835
ING Groep NV (Banks -- Foreign) 1,684 91,886
Koninklijke Numico NV (Food) 2,054 76,372
Royal Dutch Petroleum Co. (Oil & Gas) 4,769 274,871
Royal Philips Electronics NV (Electronics) 5,412 241,427
United Pan-Europe Communications NV* (Media) 1,500 54,587
VNU NV (Media) 2,747 146,966
Wolters Kluwer NV (Media) 3,947 93,150
------------
1,432,865
------------
Norway (0.26%)
Tomra Systems ASA (Machinery) 3,284 67,817
------------
Philippines (0.04%)
Manila Electric Co. (Utilities) 6,000 10,755
------------
Portugal (0.24%)
PT Multimedia Servicos SGPS SA*
(Telecommunications) 900 62,796
------------
Russia (0.26%)
OAO Gazprom (ADR) (Oil & Gas) 3,400 22,270
OAO Lukoil Holding (ADR) (Oil & Gas) 740 44,607
------------
66,877
------------
Singapore (1.31%)
Chartered Semiconductor Manufacturing Ltd.*
(Electronics) 3,000 25,842
DBS Group Holdings Ltd. (Banks -- Foreign) 4,000 55,084
Flextech Holdings Ltd. (Electronics) 26,000 22,092
MediaRing.com Ltd.* (Telecommunications) 14,000 6,071
NatSteel Electronics Ltd. (Electronics) 4,000 22,971
NatSteel Ltd. (Steel) 6,000 14,697
Overseas-Chinese Banking Corp. Ltd. (Banks --
Foreign) 2,000 13,712
Overseas Union Bank Ltd. (Banks -- Foreign) 3,000 13,712
Pacific Century Regional Developments Ltd.*
(Real Estate Operations) 7,000 58,248
Singapore Technologies Engineering Ltd.
(Engineering/R&D Services) 59,000 82,977
Singapore Telecommunications, Ltd.
(Telecommunications) 16,000 $23,065
------------
338,471
------------
South Africa (0.54%)
ABSA Group Ltd. (Banks -- Foreign) 15,500 54,863
Comparex Holdings Ltd.* (Computers) 21,000 31,436
DataTec Ltd.* (Computers) 2,400 17,450
Rembrandt Group Ltd. (Diversified Operations) 4,700 36,460
------------
140,209
------------
South Korea (1.50%)
Hanaro Telecom, Inc.* (ADR) (Telecommunications) 1,700 13,388
Kookmin Bank (Banks -- Foreign) 1,590 17,193
Korea Telecom Corp. (Telecommunications) 620 42,348
L.G. Chemical Ltd. (Chemicals) 1,010 23,208
Pohang Iron & Steel Co., Ltd. (Steel) 550 43,019
Samsung Electronics Co. (Electronics) 740 200,045
Shinhan Bank (Banks -- Foreign) 2,190 21,017
SK Corp. (Oil & Gas) 1,410 26,618
------------
386,836
------------
Spain (4.03%)
Amadeus Global Travel Distribution SA*
(Transport) 8,800 108,801
Banco Bilbao Vizcaya Argentaria SA* (Banks --
Foreign) 20,000 272,730
Banco Santander Central Hispano SA (Banks --
Foreign) 11,081 115,546
Centros Comerciales Pryca SA (Retail) 2,177 26,342
Endesa SA (Utilities) 3,500 76,364
Indra Sistemas SA (Computers) 2,413 57,079
NH Hoteles SA* (Real Estate Operations) 5,768 64,760
Telefonica SA* (Telecommunications) 11,881 264,409
Terra Networks SA* (Computers) 895 55,328
------------
1,041,359
------------
Sweden (2.56%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) 5,575 495,569
Skandia Forsakrings AB (Insurance) 3,467 165,887
------------
661,456
------------
Switzerland (1.91%)
Adecco SA (Business Services -- Misc.) 154 $126,358
Novartis AG (Medical) 144 201,152
Roche Holding AG (Medical) 16 167,093
------------
494,603
------------
Taiwan (1.30%)
Advanced Semiconductor Engineering, Inc.* (GDR)
(Electronics) (R) 1,700 29,750
China Steel Corp. (GDR) (Steel) 4,000 55,500
Quanta Computer, Inc. (Computers) 10,000 77,790
Taiwan Semiconductor Manufacturing Co., Ltd.*
(Electronics) 27,000 173,852
------------
336,892
------------
Thailand (0.23%)
BEC World Plc (Media) 3,300 21,153
Golden Land Property Development Plc* (Real
Estate Operations) 36,000 7,377
Golden Land Property Development Plc* (Real
Estate Operations) 28,000 6,032
PTT Exploration & Production Plc (Oil & Gas) 5,000 25,351
------------
59,913
------------
Turkey (0.30%)
Dogan Yayin Holding AS* (Diversified Operations) 830,000 20,022
Vestel Elektronik Sanayi ve Ticaret AS
(Household) 52,000 19,560
Yapi ve Kredi Bankasi AS (Banks -- Foreign) 1,220,000 38,908
------------
78,490
------------
United Kingdom (16.47%)
ARM Holdings Plc* (Electronics) 10,000 101,202
Baltimore Technologies Plc* (Computers) 500 50,461
Barclays Plc (Banks -- Foreign) 6,636 169,754
BP Amoco Plc (Oil & Gas) 64,469 556,580
British Telecommunications Plc
(Telecommunications) 15,623 279,729
Cable & Wireless Plc (Telecommunications) 5,389 89,442
Capita Group Plc (Business Services -- Misc.) 6,000 154,138
Centrica Plc (Utilities) 39,382 141,027
CMG Plc (Computers) 2,600 166,638
COLT Telecom Group Plc* (Telecommunications) 1,850 $82,234
Compass Group Plc (Food) 9,574 137,883
Dixons Group Plc (Electronics) 11,152 45,144
EMAP Plc (Media) 4,725 93,061
Glaxo Wellcome Plc (Medical) 2,352 72,690
Invensys Plc (Diversified Operations) 24,013 115,900
Lloyds TSB Group Plc (Banks -- Foreign) 11,637 113,601
Logica Plc (Computers) 3,012 91,211
Marconi Plc (Telecommunications) 11,291 140,461
Misys Plc (Computers) 4,702 53,954
Pearson Plc (Media) 4,587 155,190
Prudential Plc (Insurance) 6,500 99,684
Reckitt Benckiser Plc (Soap & Cleaning
Preparations) 8,000 82,300
Sage Group Plc (The) (Computers) 9,000 100,260
Scoot.com Plc* (Business Services -- Misc.) 29,396 77,806
SEMA Group Plc (Computers) 6,378 102,977
Shell Transport & Trading Co. (Oil & Gas) 22,000 180,256
SmithKline Beecham Plc (Medical) 5,473 74,986
Telewest Communications Plc* (Media) 11,466 70,158
Vodafone AirTouch Plc (Telecommunications) 144,532 661,586
------------
4,260,313
------------
TOTAL COMMON STOCKS
(Cost $20,798,743) (93.79%) 24,259,593
--------- ------------
PREFERRED STOCKS
Germany (0.47%)
Fresenius AG (Medical) 541 119,759
------------
Italy (0.42%)
Telecom Italia SpA (Telecommunications) 17,388 109,546
------------
TOTAL PREFERRED STOCKS
(Cost $213,215) (0.89%) 229,305
--------- ------------
WARRANTS
Germany (0.00%)
Muenchener Rueckversicherungs- Gesellschaft AG*
(Insurance) 5 382
------------
TOTAL WARRANTS
(Cost $224) (0.00%) 382
--------- ------------
TOTAL COMMON AND PREFERRED STOCKS AND WARRANTS
(Cost $21,012,182) (94.68%) 24,489,280
--------- ------------
INTEREST NUMBER OF MARKET
ISSUER, DESCRIPTION RATE SHARES VALUE
------------------- -------- ---------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.65%)
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, 7.875%, due 08-15-17 thru
02-15-21) -- Note A 5.73% $945 $945,000
------------
Cash Equivalents (14.50%)
Navigator Securities Lending Prime
Portfolio** 3,751 3,751,481
------------
TOTAL SHORT-TERM INVESTMENTS (18.15%) 4,696,481
--------- ------------
TOTAL INVESTMENTS (112.83%) 29,185,761
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (12.83%) (3,318,746)
--------- ------------
TOTAL NET ASSETS (100.00%) $25,867,015
========= ============
* Non-income producing security.
** Represents investment of security lending collateral -- Note A.
*** This security having an aggregate value of $33,683 or 0.13% of the
Fund's net assets, has been purchased as a forward commitment -- that
is, the Fund has agreed on trade date, to take delivery of and to make
payment for such security on a delayed basis subsequent to the date of
this schedule. The Fund has instructed its Custodian Bank to segregate
assets with a current value at least equal to the amount of the forward
commitment. Accordingly, the market value of $41,197 of Vodafone
AirTouch Plc has been segregated to cover the forward commitment.
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $29,750 or 0.12% of net
assets as of April 30, 2000.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration (Unaudited)
------------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other
countries. The performance of the Fund is closely tied to the economic
conditions within the countries in which it invests. The concentration
of investments by country for individual securities held by the Fund is
shown in the schedule of investments. In addition, the concentration of
investments can be aggregated by various industry groups. The table
below shows the percentages of the Fund's investments at April 30, 2000
assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
OF FUND'S
INVESTMENT CATEGORIES NET ASSETS
--------------------- ----------
Automobile/Trucks 1.90%
Banks -- Foreign 8.35
Broker Services 3.75
Building 1.73
Business Services -- Misc. 1.68
Chemicals 0.88
Computers 7.88
Diversified Operations 7.09
Electronics 12.14
Engineering/R&D Services 0.68
Finance 0.66
Food 0.83
Household 0.08
Insurance 3.34
Leasing Companies 0.86
Leisure 0.78
Machinery 0.26
Media 3.77
Medical 3.98
Metal 0.10
Oil & Gas 6.71
Printing 0.10
Real Estate 1.28
Retail 3.06
Soap and Cleaning Preparations 0.32
Steel 0.44
Telecommunications 19.96
Tobacco 0.09
Transport 0.42
Utilities 1.56
Short-Term Investments 18.15
-------
TOTAL INVESTMENTS 112.83%
=======
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- International Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Investment Trust III (the "Trust") is a diversified
open-end management investment company, registered under the Investment
Company Act of 1940. The Trust consists of four series: John Hancock
International Fund (the "Fund"), John Hancock Global Fund, John
Hancock Large Cap Growth Fund and John Hancock Mid Cap Growth Fund. The
other three series of the Trust are reported in separate financial
statements. The investment objective of the Fund is long-term growth of
capital through investment primarily in stocks of foreign companies.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting, redemptions,
dividends and liquidation, except that certain expenses, subject to the
approval of the Trustees, may be applied differently to each class of
shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a
class which bears distribution and service expenses under terms of a
distribution plan have exclusive voting rights to that distribution
plan. Beginning May 1, 2000, all retail purchases of Class C shares will
be assessed a 1.00% 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" 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, 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 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 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 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 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 unsecured lines
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. At April 30, 2000, the Fund loaned securities having a
market value of $3,143,656 collateralized by cash in the amount of
$3,751,481, which was invested in a short-term instrument.
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.
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 if they are
offset by the currency amount of the underlying transaction.
At April 30, 2000, open forward foreign currency exchange contracts were
as follows:
UNREALIZED
PRINCIPAL AMOUNT EXPIRATION APPRECIATION/
CURRENCY COVERED BY CONTRACT DATE (DEPRECIATION)
-------- ------------------- ---------- ------------
BUYS
Euro Currency 221,107 May 00 ($6,611)
Pound Sterling 44,096 May 00 (1,105)
-------
($7,716)
=======
SELLS
Pound Sterling 68,555 May 00 $1,717
Singapore Dollar 18,908 May 00 (16)
-------
$1,701
=======
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
On December 1, 1999 Fund shareholders approved a sub-advisory contract
with Indocam International Investment Services ("IIIS") to be effective
January 1, 2000. Under this contract IIIS acts as co-subadviser with the
Fund's original subadviser, John Hancock Advisers International Limited
("JHAI"), subject to the review of the Trustees and overall supervision
of the Adviser. Both JHAI and IIIS provide the Fund with investment
management services and advice. As of March 1, 2000 the Adviser
terminated its contract with JHAI so that currently IIIS is the Fund's
sole subadviser.
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) 1.00% of the
first $250,000,000 of the Fund's average daily net asset value, (b)
0.80% of the next $250,000,000, (c) 0.75% of the next $250,000,000 and
(d) 0.625% of the Fund's average daily net asset value in excess of
$750,000,000. The Adviser paid the JHAI a fee equivalent, on an annual
basis, to the sum of (a) 0.70% of the first $200,000,000 of the Fund's
average daily net asset value and (b) 0.6375% of the Fund's average
daily net asset value in excess of $200,000,000. JHAI waived all but
0.05% of its fee from January 1, 2000 through February 29, 2000. Since
January 1, 2000, the Adviser has paid IIIS 55% of its management fee.
The Adviser has agreed to limit Fund expenses, including the management
fee (but not including the transfer agent fee and the 12b-1 fee), to
0.90% of the Fund's average daily net assets. Accordingly, the reduction
in the Adviser's fee amounted to $158,760 for the period ended April 30,
2000. The Adviser reserves the right to terminate this limitation in the
future. The Fund is not responsible for the payment of the sub-advisers'
fees.
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 $32,396. Out of this amount, $4,152 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $16,848 was paid as sales commissions to unrelated
broker-dealers and $11,396 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 for 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 $8,802.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% of the lesser of the current market
value at the time of redemption or the original purchase cost of the
shares being redeemed. Proceeds from the CDSC are paid to JH Funds and
are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of
Class C shares. For the period ended April 30, 2000, contingent deferred
sales charges paid to JH Funds amounted to $10.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plan with respect to Class A, Class B and Class C pursuant to Rule 12b-1
under the Investment Company Act of 1940. Accordingly, the Fund will
make payments to JH Funds for distribution and service expenses, at an
annual rate not to exceed 0.30% of Class A average daily net assets and
1.00% of Class B and Class C average 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 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, 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.
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 $19,889,410 and
$12,616,913, 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 (including short-term
investments) for federal income tax purposes was $25,806,493. Gross
unrealized appreciation and depreciation of investments aggregated
$5,459,335 and $2,080,067, respectively, resulting in net unrealized
appreciation of $3,379,268.
SHAREHOLDER MEETING
On December 1, 1999 the shareholders of John Hancock International Fund
approved a sub-advisory contract between the Adviser and
Indocam International Investment Services (746,002 FOR; 33,726 AGAINST;
70,766 ABSTAINING).
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This report is for the information of shareholders of the John Hancock
International 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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