John Hancock
Growth
Trends
Fund
SEMI
ANNUAL
REPORT
4.30.03
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[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush
left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
A look at performance
page 6
Growth of $10,000
page 7
Fund's investments
page 8
Financial statements
page 12
For your information
page 25
Dear Fellow Shareholders,
After a strong start to 2003, the stock market succumbed to the
pressures of a weak economy, rising oil prices, concerns about corporate
earnings and uncertainties about the war in Iraq. The tide turned in
April, when the war ended and first-quarter corporate earnings came in
better than expected. As a result, the major indexes all gained some
ground year to date through April 30, 2003, with the Dow Jones
Industrial Average returning 2.50%, the Standard & Poor's 500 Index
returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%.
Bonds, which have outperformed stocks for the last three years,
continued their upward trend this year, as investors still sought their
relative safety.
After the jarring stock market losses of the last three years, it's a
relief for investors to be reminded that the market is indeed cyclical,
and does eventually move up -- not just down. But while the stock market
has been clawing its way back, the ride has been extremely volatile.
Uncertainty still abounds about the strength of the economy,
geopolitical issues, corporate governance problems, rising unemployment
and the sustainability of corporate earnings growth. And despite rallies
late last year and in April, many investors are still so bruised and
skeptical that they have remained on the sidelines. Even though the
statistics suggest we might be emerging from this long, difficult bear
market, we're not quite ready to call it history.
While no one can predict when this bear market cycle will turn,
investors can take charge of how they maneuver through such uncertain
times. First, take a look at how your portfolio is allocated among
stocks, bonds and cash to make sure it's in the proper balance. Work
with your investment professional, who knows your long-term goals and
can help keep you on the right track, rather than being lured by today's
stars, which could wind up tomorrow's laggards. And as always, keep a
long-term investment horizon. We believe this offers the best way for
you to survive the tough times and reach your investment objectives.
Sincerely,
/S/ MAUREEN R. FORD
Maureen R. Ford,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of April 30, 2003. They
are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term growth
of capital by
investing approxi-
mately one-third
of its assets in
stocks of U.S. and
foreign companies
in each of the
following sectors:
financial services,
health care and
technology.
Over the last six months
* Stocks posted decent gains during the period, buoyed largely by a
post-war surge in April 2003.
* Technology stocks led the market's rally, while the health-care sector
and financial stocks kept pace with the overall market.
* The Fund's technology portfolio provided some of its best performers.
[Bar chart with heading "John Hancock Growth Trends Fund." Under the
heading is a note that reads "Fund performance for the six months ended
April 30, 2003." The chart is scaled in increments of 2% with 0% at the
bottom and 4% at the top. The first bar represents the 3.12% total
return for Class A. The second bar represents the 2.94% total return for
Class B. The third bar represents the 2.94% total return for Class C. A
note below the chart reads "Total returns for the Fund are at net asset
value with all distributions reinvested."]
Top holdings
Financial Services
8.9% Citigroup
8.5% Goldman Sachs
8.3% American International Group
8.0% Marsh & McLennan
7.6% Wells Fargo
Health Care
7.6% WebMD
7.5% Diagnostic Products
6.0% Medtronic
5.2% Thoratec
5.2% Zimmer Holdings
Technology
11.3% Microsoft
8.7% IBM
6.3% Cisco Systems
5.8% EMC
4.6% Hewlett-Packard
As a percentage of Financial Services, Health Care and Technology net
assets, respectively, on April 30, 2003.
MANAGERS'
REPORT
John Hancock
Growth Trends Fund
The stock market rebounded during the six months ended April 30, 2003,
buoyed by optimism over the quick resolution of the war with Iraq and
improving corporate earnings, as well as nascent hopes that the economy
was on the mend. In this period, the Fund's Class A, Class B and Class C
shares posted total returns of 3.12%, 2.94% and 2.94%, respectively, at
net asset value. That compared with the 4.45% return of the average
multi-cap growth fund, according to Lipper, Inc.1 Keep in mind that your
net asset value will be different from the Fund's performance if you
were not invested in the Fund for the entire period and did not reinvest
all distributions. Please see pages six and seven for historical
performance information.
Technology stocks staged the strongest rebound, while the health-care
and financial sectors performed in line with the overall stock market.
FINANCIALS By James K. Schmidt, CFA, John Hancock Advisers, LLC
Financial stocks as a group kept pace with the broad market, but in a
reversal of the trend of the last two years, the more market-sensitive,
higher-risk financial companies, such as brokerage firms, did better
than the regional banks. Our best performers came from companies that
had an emphasis on mortgage banking and fixed-income activities, since
low interest rates continued to propel refinancing activity by both
individuals and corporations. Bond trading activity was strong as
investors still preferred bonds over stocks, and low rates and a weak
equity IPO market sparked a record wave of bond issuance by
corporations. These trends boosted our holdings in investment bankers
Legg Mason and Goldman Sachs, and financial giant Citigroup.
"...the more market-
sensitive, higher-risk
financial companies ...
did better than the
regional banks..."
The Fund's financial portfolio was held back by some disappointments
among our top holdings. State Street pre-announced lower-than-expected
earnings, and that hit the stocks of other more market-sensitive names
such as Mellon Financial. Fifth Third Bancorp had issues with regulators
surrounding its operational infrastructure. Although not a top holding,
regional bank BB&T's stock fell hard after it announced its intent to
buy First Virginia in a deal the market considered too rich.
We remain optimistic about the prospects for financial stocks,
especially those financial companies that we believe can benefit from an
improving economy and stock market, such as brokers, asset managers and
trust and processing banks.
HEALTH CARE By Jordan Schreiber, CFA, Mercury Advisors
Health-care companies performed in line with the overall stock market
during the period, although various sub-sectors of the industry
performed quite well. On the plus side, medical technology holding
Zimmer Holdings, a leading orthopedic device company, continued to
benefit from increased use of less invasive orthopedic procedures, which
it has pioneered. Our overweighting in the health-care service sector,
particularly HMOs, also helped performance. The companies in that
sub-sector benefited from the low incidence of influenza during this
past winter and provided superior performance. One particular standout
was Mid Atlantic Medical Services, Inc., a Maryland-based HMO. Elsewhere
in the health-care service area, we enjoyed good returns from Anthem,
Inc., one of the nation's largest health benefits companies, which
generated strong revenue and earnings growth. The portfolio also
benefited from its meaningful exposure to the biotech area, including
companies such as Amgen and Neurocrine Biosciences.
"Our overweighting in the
health-care service sector,
particularly HMOs, also
helped performance."
[Table at top left-hand side of page entitled "Top five industry
groups." The first listing is Medical 24%, the second is Computers 20%,
the third Banks-United States 13%, the fourth Finance 11% and the fifth
Electronics 8%.]
Disappointments during the period included our stake in Tenet Health
Care -- which we sold when its stock came under pressure due to a
federal investigation of the company's Medicare patient selection
practices. Baxter International, which we also sold, was another
disappointment due in part to soft sales of its key blood therapy
products. Looking ahead, we plan to remain diversified within the
health-care sector so as to minimize risk.
[Pie chart at middle of page with heading "Portfolio allocation As a
percentage of net assets on 4-30-03." The chart is divided into four
sections (from top to left): Technology 34%, Finance 33%, Medical 32%
and Short-term investments & other 1%.]
TECHNOLOGY By Anurag Pandit, CFA, John Hancock Advisers, LLC
On January 1, 2003, Anurag Pandit was appointed portfolio manager of the
technology portion of the Fund. Mr. Pandit, a vice president and
portfolio manager for John Hancock Advisers, currently manages John
Hancock Multi Cap Growth Fund and co-manages John Hancock Small Cap
Growth Fund. He began his business career in 1984.
After a long dry spell, pent-up demand for technology kicked off a rally
for this struggling group. Along with much-needed corporate spending,
rock-bottom valuations set the stage for strong performance.
[Table at top of page entitled "SCORECARD." The header for the left
column is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is
Zimmer Holdings followed by an up arrow with the phrase "Strong demand
for less invasive orthopedic procedures." The second listing is EMC
followed by an up arrow with the phrase "Boosted by strong fundamentals
and technology rally." The third listing is Fifth Third Bancorp followed
by a down arrow with the phrase "Market punishes stock over regulatory
issues."]
Software companies benefited the most from corporate spending, since
software enables clients to leverage existing systems. Citrix Systems, a
supplier of application server software, was one of our best performers
in this group. Rational Software, which we sold, was also a positive for
the Fund, as IBM paid a premium to acquire this company. In addition,
storage companies like EMC gained ground because of strong corporate
demand.
In spite of the last six months' performance, many areas within
technology remain distressed. For that reason, we increased our exposure
to companies such as Microsoft and IBM, because the dominant companies
are more likely to gain market share in a difficult environment. At the
same time, we scaled back on some of the smaller and more troubled names
in the portfolio. For example, we sold Siebel Systems, which specializes
in customer relationship management. We believed that demand had peaked
and management guidance was far too aggressive. We also de-emphasized
some mixed-signal semi-conductor companies because of their high
valuations.
"After a long dry spell,
pent-up demand for tech-
nology kicked off a rally..."
We are optimistic about technology companies going forward, and believe
that they will continue to benefit from pent-up demand. Cautious
earnings guidance has also made it easier for companies to meet -- or
beat -- expectations.
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. The managers'
statements reflect their own opinions. As such, they are in no way
guarantees of future events' and are not intended to be used as
investment advice or a recommendation regarding any specific security.
They are also subject to change at any time as market and other
conditions warrant.
Sector investing is subject to greater risks than the market as a whole.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT
PERFORMANCE
For the period ended
April 30, 2003
The index used for
comparison is the
Standard & Poor's
500 Index, an
unmanaged index
that includes 500
widely traded
common stocks.
It is not possible to
invest in an index.
Class A Class B Class C Index
Inception date 9-22-00 9-22-00 9-22-00 --
Average annual returns with maximum sales charge (POP)
One year -24.22% -24.70% -22.34% -13.30%
Since inception -27.02% -26.97% -26.39% -14.86%
Cumulative total returns with maximum sales charge (POP)
Six months -2.11% -2.06% 1.03% 4.47%
One year -24.22% -24.70% -22.34% -13.30%
Since inception -55.96% -55.86% -54.95% -34.22%
Performance figures assume all distributions are reinvested. Returns
with maximum sales charge reflect a sales charge on Class A shares of 5%
and Class C shares of 1%, and the applicable contingent deferred sales
charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC
declines annually between years 1-6 according to the following
schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the
sixth year. Class C shares held for less than one year are subject to a
1% CDSC. The return and principal value of an investment in the Fund
will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost. Index figures do not reflect sales charges and
would be lower if they did.
The returns reflect past results and should not be considered indicative
of future performance. The performance table above and the chart on the
next page do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
The Fund's performance results reflect any applicable expense
reductions, without which the expenses would increase and results would
have been less favorable. These reductions can be terminated in the
future. See the prospectus for details.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown the
same investment in the Standard & Poor's 500 Index.
Line chart with the heading "GROWTH OF $10,000." Within the chart are
three lines. The first line represents the Index and is equal to $6,578
as of April 30, 2003. The second line represents the value of the
hypothetical $10,000 investment made in the John Hancock Growth Trends
Fund, before sales charge, and is equal to $4,638 as of April 30, 2003.
The third line represents the value of the same hypothetical investment
made in the John Hancock Growth Trends Fund, after sales charge, and is
equal to $4,404 as of April 30, 2003.
Class B Class C 1
Period beginning 9-22-00 9-22-00
Without sales charge $4,550 $4,550
With maximum sales charge $4,414 $4,505
Index $6,578 $6,578
Assuming all distributions were reinvested for the period indicated, the
table above shows the value of a $10,000 investment in the Fund's Class
B and Class C shares, respectively, as of April 30, 2003. Performance of
the classes will vary based on the difference in sales charges paid by
shareholders investing in the different classes and the fee structure of
those classes.
1 No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
April 30, 2003
(unaudited)
This schedule is 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.
SHARES ISSUER VALUE
COMMON STOCKS (98.75%) $188,455,049
(Cost $216,581,224)
Advertising 0.51% 981,650
29,000 Getty Images, Inc.* 981,650
Banks -- United States 13.00% 24,803,519
64,500 Bank of America Corp. 4,776,225
33,000 BB&T Corp. 1,075,800
42,000 Charter One Financial, Inc. 1,220,100
26,000 City National Corp. 1,070,420
88,900 Fifth Third Bancorp 4,381,881
122,000 Mellon Financial Corp. 3,226,900
155,000 SouthTrust Corp. 4,163,455
101,300 Wells Fargo & Co. 4,888,738
Broker Services 2.84% 5,426,850
71,500 Goldman Sachs Group, Inc. (The) 5,426,850
Computers 20.19% 38,536,734
52,250 Advent Software, Inc.*+ 657,828
112,400 BEA Systems, Inc.* 1,203,804
81,350 Borland Software Corp.* 737,844
266,700 Cisco Systems, Inc.* 4,011,168
150,000 Citrix Systems, Inc.*+ 2,844,000
67,750 Dell Computer Corp.* 1,958,652
409,436 EMC Corp.* 3,721,773
181,015 Hewlett-Packard Co. 2,950,545
65,245 International Business Machines Corp. 5,539,301
21,958 Lexmark International, Inc.* 1,636,091
67,900 Macromedia, Inc.* 856,219
59,600 McDATA Corp. (Class A)*+ 630,568
35,550 Mercury Interactive Corp.*+ 1,206,567
282,300 Microsoft Corp. 7,218,411
150,000 Network Associates, Inc.*+ 1,714,500
17,000 Symantec Corp.* 747,150
72,650 VeriSign, Inc.* 902,313
Diversified Operations 0.52% 1,001,916
10,800 eBay, Inc.* 1,001,916
Electronics 8.07% 15,409,073
175,000 Applied Materials, Inc.* 2,555,000
194,050 Flextronics International Ltd.* (Singapore) 1,697,938
117,800 Intel Corp. 2,167,520
50,000 KLA-Tencor Corp.*+ 2,050,000
81,890 Micron Technology, Inc.*+ 696,065
36,000 Photronics, Inc. * 452,520
185,000 RF Micro Devices, Inc.*+ 878,750
225,565 Taiwan Semiconductor Manufacturing Co. Ltd.*
American Depositary Receipts (ADR) (Taiwan)+ 1,887,979
89,945 Texas Instruments, Inc. 1,663,083
61,800 VERITAS Software Corp.* 1,360,218
Finance 10.93% 20,855,477
120,200 American Express Co. 4,550,772
144,700 Citigroup, Inc. 5,679,475
71,000 Legg Mason, Inc. 3,855,300
171,000 MBNA Corp. 3,231,900
101,000 State Street Corp. 3,538,030
Insurance 5.48% 10,455,092
91,350 American International Group, Inc. 5,293,732
108,250 Marsh & McLennan Cos., Inc. 5,161,360
Media 0.41% 777,229
56,815 AOL Time Warner, Inc.*+ 777,229
Medical 24.40% 46,567,752
50,000 Amgen, Inc.* 3,065,500
30,000 Anthem, Inc.* 2,059,200
60,000 BioMarin Pharmaceutical, Inc.* 658,800
60,000 Boston Scientific Corp.* 2,583,000
100,000 Caremark Rx, Inc.* 1,991,000
20,000 Cerner Corp.* 399,600
20,700 CTI Molecular Imaging, Inc.* 380,052
120,000 Diagnostic Products Corp. 4,740,000
145,000 Emisphere Technologies, Inc.* 439,350
60,000 Genzyme Corp.* 2,416,800
20,000 Johnson & Johnson 1,127,200
140,000 Lexicon Genetics, Inc.* 700,000
80,000 Manor Care, Inc.* 1,556,000
80,000 Medtronic, Inc. 3,819,200
52,000 Mid Atlantic Medical Services, Inc.* 2,264,600
100,000 Millennium Pharmaceuticals, Inc.* 1,100,000
60,000 Neurocrine Biosciences, Inc.* 2,715,000
150,000 Smith & Nephew Plc (United Kingdom) 1,000,312
240,000 Thoratec Corp.* 3,300,000
14,200 Trimeris, Inc.* 630,338
500,000 WebMD Corp.* 4,820,000
20,000 Wellpoint Health Networks, Inc.* 1,518,800
70,000 Zimmer Holdings, Inc.* 3,283,000
Medical -- Drugs 7.65% 14,589,819
80,000 Abbott Laboratories 3,250,400
50,000 Biovail Corp.* (Canada) 1,807,500
40,000 Celgene Corp.* 1,064,400
80,000 Cubist Pharmaceuticals, Inc.* 738,400
100,000 Pfizer, Inc. 3,075,000
800,000 SkyePharma Plc* (United Kingdom) 632,911
30,800 Taro Pharmaceutical Industries Ltd.* (Israel) 1,409,408
60,000 Wyeth 2,611,800
Mortgage Banking 0.49% 926,400
16,000 Freddie Mac 926,400
Telecommunications 4.26% 8,123,538
275,000 AT&T Wireless Services, Inc.* 1,776,500
124,809 Motorola, Inc. 987,239
179,700 Nextel Partners, Inc. (Class A)*+ 1,044,057
116,113 Nokia Oyj (ADR) (Finland)+ 1,923,992
75,000 QUALCOMM, Inc.* 2,391,750
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS 9.80% $18,712,214
(Cost $18,712,214)
Joint Repurchase Agreement 1.41%
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust Co.-- Dated
04-30-03, due 05-01-03 (Secured by U.S. Treasury
Inflation Indexed Bond 3.875% due 04-15-29, U.S.
Treasury Inflation Indexed Notes 3.375% due 01-15-07
and 3.000% due 07-15-12) 1.280% $2,688 2,688,000
Cash Equivalents 8.39%
AIM Cash Investment Trust ** 16,024,214 16,024,214
TOTAL INVESTMENTS 108.55% $207,167,263
OTHER ASSETS AND LIABILITIES, NET (8.55%) ($16,320,758)
TOTAL NET ASSETS 100.00% $190,846,505
+ All or a portion of this security is on loan as of April 30, 2003.
* Non-income-producing security.
** Represents investment of security lending collateral.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
ASSETS AND
LIABILITIES
April 30, 2003
(unaudited)
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $235,293,438)
including $15,633,653 of securities loaned $207,167,263
Receivable for investments sold 1,271,737
Receivable for shares sold 110,399
Dividends and interest receivable 129,148
Other assets 4,164
Total assets 208,682,711
LIABILITIES
Due to custodian 75,948
Payable for investments purchased 977,362
Payable for shares repurchased 433,755
Payable for securities on loan 16,024,214
Payable to affiliates 241,762
Other payables and accrued expenses 83,165
Total liabilities 17,836,206
NET ASSETS
Capital paid-in 438,093,932
Accumulated net realized loss on investments, written
options and foreign currency transactions (218,032,103)
Net unrealized depreciation of investments, written
options and translation of assets and liabilities
in foreign currencies (28,125,801)
Accumulated net investment loss (1,089,523)
Net assets $190,846,505
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($59,390,438 [DIV] 12,835,433 shares) $4.63
Class B ($94,138,546 [DIV] 20,710,932 shares) $4.55
Class C ($37,317,521 [DIV] 8,210,104 shares) $4.55
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ($4.63 [DIV] 95%) $4.87
Class C ($4.55 [DIV] 99%) $4.60
1 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.
OPERATIONS
For the period ended
April 30, 2003
(unaudited) 1
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $7,315) $959,482
Interest (includes securities lending income of $14,014) 25,202
Total investment income 984,684
EXPENSES
Investment management fee 971,465
Class A distribution and service fee 90,304
Class B distribution and service fee 478,234
Class C distribution and service fee 192,217
Transfer agent fee 592,753
Custodian fee 38,873
Accounting and legal services fee 25,982
Printing 17,681
Interest expense 10,768
Auditing fee 10,166
Trustees' fee 6,128
Miscellaneous 4,288
Legal fee 1,292
Total expenses 2,440,151
Less expense reductions (367,759)
Net expenses 2,072,392
Net investment loss (1,087,708)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on
Investments (45,343,551)
Written options 45,465
Foreign currency transactions (8,623)
Change in net unrealized appreciation (depreciation) of
Investments 51,329,833
Written options 92,535
Translation of assets and liabilities in foreign currencies 294
Net realized and unrealized gain 6,115,953
Increase in net assets from operations $5,028,245
1 Semiannual period from 11-1-02 through 4-30-03.
See notes to
financial statements.
CHANGES IN
NET ASSETS
This 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 dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
YEAR PERIOD
ENDED ENDED
10-31-02 4-30-03 1
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($4,157,705) ($1,087,708)
Net realized loss (87,570,145) (45,306,709)
Change in net unrealized
appreciation (depreciation) 15,309,899 51,422,662
Increase (decrease) in net assets
resulting from operations (76,417,951) 5,028,245
From Fund share transactions (44,607,161) (22,600,371)
NET ASSETS
Beginning of period 329,443,743 208,418,631
End of period 1,2 $208,418,631 $190,846,505
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Accumulated net investment loss of $1,815 and $1,089,523 respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.54 $5.87 $4.49
Net investment income (loss)3 0.01 (0.05) (0.05) (0.01)
Net realized and unrealized
gain (loss) on investments (0.47) (3.61) (1.33) 0.15
Total from
investment operations (0.46) (3.66) (1.38) 0.14
Less distributions
From net investment income -- (0.01) -- --
Net asset value, end of period $9.54 $5.87 $4.49 $4.63
Total return 4,5 (%) (4.60)6 (38.37) (23.51) 3.12 6
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $86 $99 $65 $59
Ratio of expenses to
average net assets (%) 1.65 7 1.65 1.65 1.65 7
Ratio of adjusted expenses
to average net assets 8 (%) 1.75 7 1.85 1.88 2.03 7
Ratio of net investment
income (loss) to
average net assets (%) 0.57 7 (0.70) (0.91) (0.64)7
Portfolio turnover (%) 11 116 68 71
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.54 $5.83 $4.42
Net investment loss 3 -- 9 (0.10) (0.09) (0.03)
Net realized and unrealized
gain (loss) on investments (0.46) (3.61) (1.32) 0.16
Total from investment
operations (0.46) (3.71) (1.41) 0.13
Net asset value,
end of period $9.54 $5.83 $4.42 $4.55
Total return 4,5 (%) (4.60)6 (38.89) (24.19) 2.94 6
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $125 $161 $102 $94
Ratio of expenses to
average net assets (%) 2.34 7 2.35 2.35 2.35 7
Ratio of adjusted expenses
to average net assets 8 (%) 2.44 7 2.55 2.58 2.73 7
Ratio of net investment
loss to average
net assets (%) (0.13)7 (1.40) (1.61) (1.34)7
Portfolio turnover (%) 11 116 68 71
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-00 1 10-31-01 10-31-02 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.54 $5.83 $4.42
Net investment loss 3 -- 9 (0.10) (0.09) (0.03)
Net realized and unrealized
gain (loss) on investments (0.46) (3.61) (1.32) 0.16
Total from investment
operations (0.46) (3.71) (1.41) 0.13
Net asset value,
end of period $9.54 $5.83 $4.42 $4.55
Total return 4,5 (%) (4.60)6 (38.89) (24.19) 2.94 6
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $53 $69 $42 $37
Ratio of expenses to
average net assets (%) 2.34 7 2.35 2.35 2.35 7
Ratio of adjusted expenses
to average net assets 8 (%) 2.44 7 2.55 2.58 2.73 7
Ratio of net investment
loss to average
net assets (%) (0.13)7 (1.40) (1.61) (1.34)7
Portfolio turnover (%) 11 116 68 71
1 Class A, Class B and Class C shares began operations on 9-22-00.
2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
3 Based on average of the shares outstanding.
4 Assumes dividend reinvestment and does not reflect the effect of sales charges.
5 Total returns would have been lower had certain expenses not been reduced during the periods shown.
6 Not annualized.
7 Annualized.
8 Does not take into consideration expense reductions during the periods shown.
9 Less than $0.01 per share.
See notes to
financial statements.
NOTES TO
STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Growth Trends Fund (the "Fund") is a diversified series of
John Hancock Equity Trust, an open-end management investment company
registered under the Investment Company Act of 1940. The investment
objective of the Fund is to achieve long-term growth of capital. The
Fund will invest in a number of industry groups without concentration in
any particular industry.
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 as 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 that bears distribution and service expenses under terms of a
distribution plan have exclusive voting rights to that distribution
plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations are not readily available, or the value has been materially
affected by events occurring after the closing of a foreign market, 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.
Investments in AIM Cash Investment Trust are valued at their net asset
value each business day. 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, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more large repurchase agreements, whose
underlying securities are obligations of the U.S. government and/or its
agencies. The Fund's custodian bank receives delivery of the underlying
securities for the joint account on the Fund's behalf. The Adviser is
responsible for ensuring that the agreement is fully collateralized at all
times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars based on London currency
exchange quotations as of 5:00 P.M., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain (loss) on invest
ments are translated at the rates prevailing at the dates of the
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities,
other than investments in securities, resulting from changes in the
exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis. Capital gains realized on some
foreign securities are subject to foreign taxes, which are accrued as
applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
Expenses
The majority of the expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund will
be allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. The Fund has
entered into a syndicated line of credit agreement with various banks.
This agreement enables the Fund to participate with other funds managed
by the Adviser in an unsecured line of credit with banks, which permits
borrowings of up to $250 million, collectively. Interest is charged to
each fund, based on its borrowing. In addition, a commitment fee is
charged to each fund based on the average daily unused portion of the
line of credit and is allocated among the participating funds. The Fund
had no borrowing activity under the line of credit during the period
ended April 30, 2003.
Options
The Fund may enter into option contracts. Listed options will be valued
at the last quoted sales price on the exchange on which they are
primarily traded. Over-the-counter options are valued at the mean
between the last bid and asked prices. Upon the writing of a call or put
option, an amount equal to the premium received by the Fund will be
included in the Statement of Assets and Liabilities as an asset and
corresponding liability. The amount of the liability will be
subsequently marked to market to reflect the current market value of the
written option.
The Fund may use option contracts to manage its exposure to the price
volatility of financial instruments. Writing puts and buying calls will
tend to increase the Fund's exposure to the underlying instrument and buying
puts and writing calls will tend to decrease the Fund's exposure to the
underlying instrument, or hedge other Fund investments.
The maximum exposure to loss for any purchased options will be limited
to the premium initially paid for the option. In all other cases, the
face (or "notional") amount of each contract at value will reflect the
maximum exposure of the Fund in these contracts, but the actual exposure
will be limited to the change in value of the contract over the period
the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms ("credit risk") or if the Fund is unable to offset a
contract with a counterparty on a timely basis ("liquidity risk").
Exchange-traded options have minimal credit risk as the exchanges act as
counterparties to each transaction, and only present liquidity risk in
highly unusual market conditions. To minimize credit and liquidity risks
in over-the-counter option contracts, the Fund will continuously monitor
the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
Statement of Assets and Liabilities.
Written options for the period ended April 30, 2003 were as follows:
NUMBER OF CONTRACTS PREMIUMS RECEIVED
- ----------------------------------------------------------------------------
Outstanding, beginning of period 200 $45,465
Options expired (200) (45,465)
Outstanding, end of period -- --
Securities lending
The Fund may lend 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. On April 30, 2003,
the Fund loaned securities having a market value of $15,633,653
collateralized by cash in the amount of $16,024,214. The cash collateral
was invested in a short-term instrument.
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 exchange contracts are closed out. Risks may arise upon
entering these contracts from the potential inability of counterparties to
meet the terms of the contracts 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 transactions.
The Fund had no open forward foreign currency exchange contracts on
April 30, 2003.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $172,236,418 of a capital
loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. To the extent that such
carryforward is used by the Fund, no capital gain distributions will be
made. The loss carryforward expires as follows: October 31, 2008 --
$307,599, October 31, 2009 -- $84,312,445 and October 31, 2010 --
$87,616,374.
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 distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated in
the same manner, at the same time and are in the same amount, except for
the effect of expenses that may be applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, are reported in the
Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a monthly management
fee to the Adviser at an annual rate of 1.00% of the Fund's average
daily net asset value. The Adviser has a subadvisory agreement with
Mercury Advisors. The Adviser also had a subadvisory agreement with
American Fund Advisors, Inc., which was terminated on December 31, 2002.
The Fund is not responsible for payment of the subadvisory fees.
The Adviser has agreed to limit the Fund's expenses, excluding the
distribution and service fees, to 1.35% of the Fund's average daily net
assets, at least until February 28, 2004. Accordingly, the expense
reduction amounted to $367,759 for the period ended April 30, 2003. The
Adviser reserves the right to terminate this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. 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 to reimburse JH
Funds for the services it provides as distributor of shares of the Fund.
Accordingly, the Fund makes monthly payments to JH Funds at an annual
rate not to exceed 0.30% of Class A average daily net assets and 1.00%
of Class B and Class C average daily net assets. 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.
Class A and Class C shares are assessed up-front sales charges. During
the period ended April 30, 2003, JH Funds received net up-front sales
charges of $68,559 with regard to sales of Class A shares. Of this
amount, $9,750 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $47,771 was paid as
sales commissions to unrelated broker-dealers and $11,038 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. During the period ended April
30, 2003, JH Funds received net up-front sales charges of $7,852 with
regard to sales of Class C shares. Of this amount, $7,714 was paid as
sales commissions to unrelated broker-dealers and $138 was paid as sales
commissions to sales personnel of Signator Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares being
redeemed. Class C shares that are redeemed within one year of purchase
are 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 CDSCs are paid to JH Funds
and are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of
Class B and Class C shares. During the period ended April 30, 2003,
CDSCs received by JH Funds amounted to $285,360 for Class B shares and
$2,117 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a
monthly transfer agent fee at an annual rate of 0.05% of the average
daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for 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 approximately 0.03% of the average net
assets of the Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio 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 investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations
of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and repurchased
during the last two periods, along with the corresponding dollar value.
The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 3,686,868 $22,373,635 904,506 $4,068,293
Repurchased (6,138,410) (34,074,737) (2,499,328) (11,106,532)
Net decrease (2,451,542) ($11,701,102) (1,594,822) ($7,038,239)
CLASS B SHARES
Sold 3,843,229 $23,080,944 843,405 $3,736,994
Repurchased (8,380,789) (43,943,566) (3,240,656) (14,150,301)
Net decrease (4,537,560) ($20,862,622) (2,397,251) ($10,413,307)
CLASS C SHARES
Sold 1,748,760 $10,660,644 255,994 $1,128,004
Repurchased (4,240,501) (22,704,081) (1,436,775) (6,276,829)
Net decrease (2,491,741) ($12,043,437) (1,180,781) ($5,148,825)
NET DECREASE (9,480,843) ($44,607,161) (5,172,854) ($22,600,371)
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other
than short-term securities and obligations of the U.S. government,
during the period ended April 30, 2003, aggregated $74,101,589 and
$92,662,932, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $235,781,788. Gross
unrealized appreciation and depreciation of investments aggregated
$14,299,915 and $42,914,440, respectively, resulting in net unrealized
depreciation of $28,614,525. The difference between book basis and tax
basis net unrealized depreciation of investments is attributable primarily
to the tax deferral of losses on wash sales.
FOR YOUR
INFORMATION
TRUSTEES
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
*Members of the Audit Committee
OFFICERS
Maureen R. Ford
Chairman, President
and Chief Executive Officer
William L. Braman
Executive Vice President
and Chief Investment Officer
Richard A. Brown
Senior Vice President
and Chief Financial Officer
Susan S. Newton
Senior Vice President
and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-INVESTMENT ADVISER
Mercury Advisors
800 Scudders Mill Road
Plainsboro, New Jersey 08536
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
Growth Trends Fund.
460SA 4/03
6/03
John Hancock
Large Cap
Spectrum
Fund
SEMI
ANNUAL
REPORT
4.30.03
Sign up for electronic delivery at
www.jhancock.com/funds/edelivery
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush
left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
A look at performance
page 6
Growth of $10,000
page 7
Fund's investments
page 8
Financial statements
page 12
For your information
page 25
Dear Fellow Shareholders,
After a strong start to 2003, the stock market succumbed to the
pressures of a weak economy, rising oil prices, concerns about corporate
earnings and uncertainties about the war in Iraq. The tide turned in
April, when the war ended and first-quarter corporate earnings came in
better than expected. As a result, the major indexes all gained some
ground year to date through April 30, 2003, with the Dow Jones
Industrial Average returning 2.50%, the Standard & Poor's 500 Index
returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%.
Bonds, which have outperformed stocks for the last three years,
continued their upward trend this year, as investors still sought their
relative safety.
After the jarring stock market losses of the last three years, it's a
relief for investors to be reminded that the market is indeed cyclical,
and does eventually move up -- not just down. But while the stock market
has been clawing its way back, the ride has been extremely volatile.
Uncertainty still abounds about the strength of the economy,
geopolitical issues, corporate governance problems, rising unemployment
and the sustainability of corporate earnings growth. And despite rallies
late last year and in April, many investors are still so bruised and
skeptical that they have remained on the sidelines. Even though the
statistics suggest we might be emerging from this long, difficult bear
market, we're not quite ready to call it history.
While no one can predict when this bear market cycle will turn,
investors can take charge of how they maneuver through such uncertain
times. First, take a look at how your portfolio is allocated among
stocks, bonds and cash to make sure it's in the proper balance. Work
with your investment professional, who knows your long-term goals and
can help keep you on the right track, rather than being lured by today's
stars, which could wind up tomorrow's laggards. And as always, keep a
long-term investment horizon. We believe this offers the best way for
you to survive the tough times and reach your investment objectives.
Sincerely,
/S/ MAUREEN R. FORD
Maureen R. Ford,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of April 30, 2003. They
are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term
growth of capital
by normally
investing at least
80% of its assets
in stocks of large-
capitalization
companies. The
Fund's assets
are managed
according to
three separate
investment
strategies --
growth, core
and value.
Over the last six months
* Stock prices rebounded following a period of prolonged pessimism
related to war and economic uncertainty.
* Large-cap, multinational stocks benefited from the weak U.S. dollar.
* The Fund's value strategy helped it post especially strong gains as
bargain stocks made strong comebacks.
[Bar chart with heading "John Hancock Large Cap Spectrum Fund." Under
the heading is a note that reads "Fund performance for the six months
ended April 30, 2003." The chart is scaled in increments of 1% with 0%
at the bottom and 3% at the top. The first bar represents the 2.22%
total return for Class A. The second bar represents the 1.83% total
return for Class B. The third bar represents the 1.83% total return for
Class C. A note below the chart reads "Total returns for the Fund are at
net asset value with all distributions reinvested.]
Top 10 holdings
3.8% Microsoft Corp.
3.8% Pfizer, Inc.
3.5% General Electric Co.
3.4% Citigroup, Inc.
2.5% Wal-Mart Stores, Inc.
2.4% Freddie Mac
2.3% Bank of America Corp.
2.0% Viacom, Inc.
1.8% Goldman Sachs Group, Inc. (The)
1.8% American International Group, Inc.
As a percentage of net assets on April 30, 2003.
MANAGERS'
REPORT
John Hancock
Large Cap Spectrum Fund
Despite continued volatility, stocks closed up for the six months ended
April 30, 2003, with the Standard & Poor's 500 Index returning 4.47%.
After rallying late last year, stock prices trended down as the war with
Iraq, higher oil prices, the SARS virus and economic uncertainty
dominated headlines. Investors favored cheap stocks with less downside
risk. In April, however, stocks rebounded nicely, following success in
Iraq, a decline in oil prices and better-than-expected earnings reports.
Large, multinational stocks benefited from the weak U.S. dollar. The
Russell 1000 Value Index returned 5.25% for the six-month period,
slightly ahead of the Russell 1000 Growth Index's 4.28% return.
PERFORMANCE AND STRATEGY REVIEW
John Hancock Large Cap Spectrum Fund's Class A, Class B, and Class C
shares returned 2.22%, 1.83% and 1.83%, respectively, at net asset value
over the six-month period ended April 30, 2003. By comparison, the
average large-cap core fund returned 2.96%, 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 distributions. See pages six and seven for
historical performance information.
"The core portfolio
posted a modestly
positive return..."
In a volatile market, our strategy of allocating 50% of the Fund's
assets to a core portfolio and 25% each to growth and value stocks
helped the Fund maintain exposure to the best-performing asset classes.
LARGE CAP CORE STRATEGY by Paul J. Berlinguet, John Hancock Advisers
The core portfolio posted a modestly positive return, but lagged the S&P
500 due to stock selection in the financial, consumer staples and
technology sectors. In the financial area, we focused on banks with more
predictable earnings growth, which trailed more economically sensitive
brokers. State Street, which handles transactions and custodial services
for investment managers, was a particular disappointment as investors
worried about a recent acquisition. In the consumer staples sector,
Kraft Foods declined due to problems at parent company Altria, while
Coca-Cola suffered from slower sales growth. Our technology investments
focused on market leaders with strong balance sheets, such as Microsoft,
which lagged more aggressive names.
"Our focus on high-quality
growth stocks hampered
performance as low-
quality stocks rallied early..."
Positive returns came from the health-care sector, where we targeted
large-cap pharmaceuticals with cheap stock prices, such as Merck, as
well as more expensive equipment and service stocks with the potential
for faster growth. Our slightly above-average stake in consumer
discretionary stocks also did well, thanks to Wal-Mart Stores, which
continued to gain market share, and Comcast, a leading cable provider
benefiting from improved financial controls. Selected financials,
including Travelers Property Casualty and Citigroup, also helped returns
as their outlooks brightened.
LARGE CAP GROWTH STRATEGY by Stephanie Simon, CFA, AllianceBernstein
The portfolio, which is comprised of mainly high-quality growth stocks,
modestly underperformed the Russell 1000 Growth Index during an unusual
market rally of lower-quality stocks late in 2002. In the health-care
sector, Tenet Healthcare sank amid revelations of deceptive pricing
practices, causing us to sell. Cardinal Health, a drug distributor,
suffered amid revised growth prospects, while Pfizer, a large
pharmaceutical company, disappointed as investors worried about future
patent expirations. Our strongest performers were economically sensitive
consumer discretionary and industrial stocks, including Comcast and
General Electric.
[Table at top left-hand side of page entitled "Top five industry
groups." The first listing is medical 15%, the second is Retail 10%, the
third Computers 10%, the fourth Finance 8%, and the fifth Banks-United
States 8%.]
We kept an above-average stake in financials, where returns were mixed.
One of our largest and best investments was Citigroup. MBNA, the credit
card company, however, slid as investors reacted to deterioration in a
small segment of its business, even as prospects for its core business
strengthened. Freddie Mac, a government-backed mortgage lender, tumbled
amid concerns that it would suffer as the refinancing cycle ended.
American International Group, a large multi-line insurer, also declined
as weak financial markets hurt certain business units. We believe
prospects for all remain strong and even added to our investment in
MBNA. We kept a below-average stake in technology where we found little
evidence of recovery. We did, however, own Intel, which rallied on the
expectation that corporations would soon upgrade their personal
computers.
LARGE CAP VALUE STRATEGY by Marilyn Fedak, CFA, AllianceBernstein
The value portfolio, which focuses on identifying and selecting
bargains, nicely outpaced the Russell 1000 Value Index. Stock selection
was strong across most sectors. Within financials, we focused on
regional banks and savings and loans (S&Ls) that had tumbled on concerns
that the weak economy would increase loan losses. When earnings came in
better than expected, stocks like Washington Mutual, a leading S&L,
rallied nicely. Other top performers included Lehman Brothers and Morgan
Stanley, investment bankers that benefited from strong cost controls and
an improving market outlook.
[Table at top of page entitled "SCORECARD." The header for the left
column is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is
Nortel Networks followed by an up arrow with the phrase "Improved
balance sheet, lifting of pessimism." The second listing is Johnson &
Johnson followed by a sideways arrow with the phrase "Awaiting approval
of new drug-coated stents." The third listing is American International
Group followed by a down arrow with the phrase "Weak financial markets,
increased liability claims."]
Our above-average stake in the beaten-down technology sector also helped
performance, as many of these stocks rallied. Our strongest returns came
from telecommunications equipment companies, such as Nortel Networks and
Corning, that had strengthened their balance sheets. Other
telecom-related stocks, however, disappointed, including Tellabs, a well-
capitalized equipment company, and SBC Communications, a service
provider. Schering-Plough, a large pharmaceutical company, also faltered
amid concerns that its antihistamine products would lose market share.
"The value portfolio...nicely
outpaced the Russell 1000
Value Index."
MANAGERS' OUTLOOK
We believe the market outlook is improving now that the war with Iraq is
over. Oil prices have come down, lowering expenses for both consumers
and corporations. Although unemployment still hovers around 6%, wage and
income growth has continued, and inflation has remained benign.
Corporations have reaped strong productivity gains, while recent
economic data appears encouraging. In our view, investors' risk aversion
has made long-term expected returns for stocks very attractive compared
to bonds. We think these trends -- along with reasonable valuations and
a weakening U.S. dollar -- bode well for large-cap stocks.
This commentary reflects the views of the portfolio managers through the
end of the Fund's period discussed in this report. The managers'
statements reflect their own opinions. As such, they are in no way
guarantees of future events, and are not intended to be used as
investment advice or a recommendation regarding any specific security.
They are also subject to change at any time 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
For the period ended
April 30, 2003
The index used for
comparison is the
Standard & Poor's
500 Index, an unman-
aged index that
includes 500 widely
traded common stocks.
It is not possible to
invest in an index.
Class A Class B Class C Index
Inception date 2-25-02 2-25-02 2-25-02 --
Average annual returns with maximum sales charge (POP)
One year -21.21% -21.71% -19.26% -13.30%
Since inception -22.20% -21.99% -19.91% -13.49%
Cumulative total returns with maximum sales charge (POP)
Six months -2.85% -3.17% -0.21% 4.47%
One year -21.21% -21.71% -19.26% -13.30%
Since inception -25.55% -25.31% -22.97% -15.66%
Performance figures assume all distributions are reinvested. Returns
with maximum sales charge reflect a sales charge on Class A shares of 5%
and Class C shares of 1%, and the applicable contingent deferred sales
charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC
declines annually between years 1-6 according to the following
schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the
sixth year. Class C shares held for less than one year are subject to a
1% CDSC. The return and principal value of an investment in the Fund
will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost. Index figures do not reflect sales charges and
would be lower if they did.
The returns reflect past results and should not be considered indicative
of future performance. The performance table above and the chart on the
next page do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
The Fund's performance results reflect any applicable expense
reductions, without which the expenses would increase and results would
have been less favorable. These reductions can be terminated in the
future. See the prospectus for details.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown the
same investment in the Standard & Poor's 500 Index.
Line chart with the heading "GROWTH OF $10,000." Within the chart are
three lines. The first line represents the Index and is equal to $8,434
as of April 30, 2003. The second line represents the value of the
hypothetical $10,000 investment made in the John Hancock Large Cap
Spectrum Fund, before sales charge, and is equal to $7,840 as of April
30, 2003. The third line represents the value of the same hypothetical
investment made in the John Hancock Large Cap Spectrum Fund, after sales
charge, and is equal to $7,445 as of April 30, 2003.
Class B Class C 1
Period beginning 2-25-02 2-25-02
Without sales charge $7,780 $7,780
With maximum sales charge $7,469 $7,702
Index $8,434 $8,434
Assuming all distributions were reinvested for the period indicated, the
table above shows the value of a $10,000 investment in the Fund's Class
B and Class C shares, respectively, as of April 30, 2003. Performance of
the classes will vary based on the difference in sales charges paid by
shareholders investing in the different classes and the fee structure of
those classes.
1 No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
April 30, 2003
(unaudited)
This schedule is divided into two main categories: common stocks and
short-term investments. Stocks are further broken down by industry
group. Short-term investments, which represent the Fund's cash position,
are listed last.
SHARES ISSUER VALUE
COMMON STOCKS 98.88% $17,516,703
(Cost $18,498,264)
Advertising 0.70% 123,800
2,000 Omnicom Group, Inc. 123,800
Automobiles/Trucks 0.94% 167,033
1,400 Lear Corp.* 55,636
1,900 Magna International, Inc. (Class A) (Canada) 111,397
Banks -- United States 7.53% 1,333,194
5,500 Bank of America Corp. 407,275
4,800 FleetBoston Financial Corp. 127,296
3,000 J.P. Morgan Chase & Co. 88,050
3,000 National City Corp. 89,880
2,850 State Street Corp. 99,836
7,600 U.S. Bancorp 168,340
4,300 Wachovia Corp. 164,303
3,900 Wells Fargo & Co. 188,214
Beverages 1.65% 292,980
1,500 Anheuser-Busch Cos., Inc. 74,820
5,400 Coca-Cola Co. (The) 218,160
Broker Services 3.57% 632,769
4,300 Goldman Sachs Group, Inc. (The) 326,370
2,200 Lehman Brothers Holdings, Inc. 138,534
1,800 Merrill Lynch & Co., Inc. 73,890
2,100 Morgan Stanley 93,975
Building 0.13% 23,160
1,500 Georgia-Pacific Corp. 23,160
Chemicals 1.13% 199,971
3,600 Dow Chemical Co. (The) 117,504
1,700 PPG Industries, Inc. 82,467
Computers 9.62% 1,704,049
3,200 Affiliated Computer Services, Inc.* 152,640
10,600 Cisco Systems, Inc.* 159,424
6,100 Dell Computer Corp.* 176,351
1,500 Electronic Data Systems Corp. 27,225
17,800 Hewlett-Packard Co. 290,140
2,000 International Business Machines Corp. 169,800
1,800 Mercury Interactive Corp.* 61,092
26,100 Microsoft Corp. 667,377
Cosmetics & Personal Care 2.91% 515,449
1,000 Avon Products, Inc. 58,170
1,200 Colgate-Palmolive Co. 68,604
1,300 Estee Lauder Cos., Inc. (The) (Class A) 42,250
4,000 Gillette Co. (The) 121,800
2,500 Procter & Gamble Co. (The) 224,625
Diversified Operations 4.02% 712,568
700 3M Co. 88,228
21,200 General Electric Co. 624,340
Electronics 3.43% 607,591
6,000 Applied Materials, Inc.* 87,600
3,700 Avnet, Inc.* 47,175
15,100 Intel Corp. 277,840
1,200 KLA-Tencor Corp.* 49,200
11,500 Solectron Corp.* 36,685
5,900 Texas Instruments, Inc. 109,091
Finance 7.91% 1,400,390
2,500 American Express Co. 94,650
15,500 Citigroup, Inc. 608,375
2,000 Golden West Financial Corp. 150,840
15,750 MBNA Corp. 297,675
6,300 Washington Mutual, Inc. 248,850
Food 0.47% 83,430
2,700 Kraft Foods, Inc. (Class A) 83,430
Household 0.36% 63,551
2,085 Newell Rubbermaid, Inc. 63,551
Insurance 4.97% 880,710
5,400 American International Group, Inc. 312,930
1,900 Chubb Corp. (The) 100,491
4,800 CIGNA Corp. 251,040
13,324 Travelers Property Casualty Corp. (Class A) 216,249
Leisure 0.58% 102,178
4,700 Mattel, Inc. 102,178
Machinery 0.34% 59,360
1,600 Cooper Industries, Ltd. (Class A) 59,360
Media 6.42% 1,137,586
3,450 Clear Channel Communications, Inc.* 134,930
6,400 Comcast Corp. (Class A)* 204,224
8,400 Comcast Corp. (Special Class A)* 252,504
1,100 Gannett Co., Inc. 83,292
2,300 New York Times Co. (The) (Class A) 106,674
8,200 Viacom, Inc. (Class B)* 355,962
Medical 15.06% 2,667,402
4,450 Aetna, Inc. 221,610
1,500 Amgen, Inc.* 91,965
1,200 Bard (C.R.), Inc. 76,056
1,200 Barr Laboratories, Inc.* 66,720
1,500 Biovail Corp. (Canada)* 54,225
1,600 Cardinal Health, Inc. 88,448
2,500 Gilead Sciences, Inc.* 115,350
2,800 IDEC Pharmaceuticals Corp.* 91,700
4,400 Johnson & Johnson 247,984
4,594 Medtronic, Inc. 219,318
3,200 Merck & Co., Inc. 186,176
2,200 Novartis AG, American Depositary Receipt (ADR)
(Switzerland) 86,856
21,700 Pfizer, Inc. 667,275
6,100 Schering-Plough Corp. 110,410
1,100 St. Jude Medical, Inc. * 57,706
3,100 UnitedHealth Group, Inc. 285,603
Mortgage Banking 3.22% 571,070
2,050 Fannie Mae 148,400
7,300 Freddie Mac 422,670
Oil & Gas 3.99% 706,677
2,200 BJ Services Co.* 80,322
4,600 ConocoPhillips 231,380
7,000 Exxon Mobil Corp. 246,400
3,500 Occidental Petroleum Corp. 104,475
1,200 Valero Energy Corp. 44,100
Paper & Paper Products 0.69% 122,668
5,200 MeadWestvaco Corp. 122,668
Retail 10.45% 1,851,685
3,200 Bed Bath & Beyond, Inc.* 126,432
2,700 Gap, Inc. (The) 44,901
4,800 Genuine Parts Co. 153,456
4,995 Kohl's Corp.* 283,716
5,500 Lowe's Cos., Inc. 241,395
10,800 McDonald's Corp. 184,680
1,300 Safeway, Inc.* 21,606
2,600 Sears, Roebuck & Co. 73,684
1,300 Target Corp. 43,472
5,100 Walgreen Co. 157,386
7,850 Wal-Mart Stores, Inc. 520,957
Telecommunications 4.24% 751,715
5,500 Corning, Inc.* 29,810
13,100 Nokia Corp. (ADR) (Finland) 217,067
17,200 Nortel Networks Corp. (Canada)* 44,376
21,200 Qwest Communications International, Inc.* 79,924
6,900 SBC Communications, Inc. 161,184
11,300 Tellabs, Inc.* 69,834
4,000 Verizon Communications, Inc. 149,520
Tobacco 0.32% 56,906
1,850 Altria Group, Inc. 56,906
Transportation 2.40% 425,601
6,000 Burlington Northern Santa Fe Corp. 168,960
12,100 Norfolk Southern Corp. 256,641
Utilities 1.83% 323,210
5,400 American Electric Power Co., Inc. 142,452
1,100 Cinergy Corp. 37,554
1,800 Constellation Energy Group, Inc. 52,704
2,500 PPL Corp. 90,500
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS 3.06% $542,000
(Cost $542,000)
Joint Repurchase Agreement 3.06%
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust Co.
- -- Dated 04-30-03, due 05-01-03 (Secured
by U.S. Treasury Inflation Indexed Bond
3.875% due 04-15-29, U.S. Treasury Inflation
Indexed Notes 3.375% due 01-15-07 and 3.000%
due 07-15-12) 1.280% $542 542,000
TOTAL INVESTMENTS 101.94% $18,058,703
OTHER ASSETS AND LIABILITIES, NET (1.94%) ($343,783)
TOTAL NET ASSETS 100.00% $17,714,920
* Non-income-producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
ASSETS AND
LIABILITIES
April 30, 2003
(unaudited)
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $19,040,264) $18,058,703
Cash 1,745
Receivable for investments sold 161,812
Receivable for shares sold 982
Dividends and interest receivable 16,090
Other assets 20
Total assets 18,239,352
LIABILITIES
Payable for investments purchased 432,244
Payable for shares repurchased 45,420
Payable to affiliates 24,717
Other payables and accrued expenses 22,051
Total liabilities 524,432
NET ASSETS
Capital paid-in 23,950,399
Accumulated net realized loss on investments (5,231,588)
Net unrealized depreciation of investments (981,561)
Accumulated net investment loss (22,330)
Net assets $17,714,920
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($5,466,638 [DIV] 697,414 shares) $7.84
Class B ($7,422,524 [DIV] 954,490 shares) $7.78
Class C ($4,825,758 [DIV] 620,513 shares) $7.78
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ($7.84 [DIV] 95%) $8.25
Class C ($7.78 [DIV] 99%) $7.86
1 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.
OPERATIONS
For the period ended
April 30, 2003
(unaudited) 1
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $872) $153,964
Interest 4,368
Total investment income 158,332
EXPENSES
Investment management fee 77,289
Class A distribution and service fee 8,305
Class B distribution and service fee 38,321
Class C distribution and service fee 24,923
Transfer agent fee 49,984
Registration and filing fee 21,310
Custodian fee 13,858
Auditing fee 9,918
Printing 7,279
Accounting and legal services fee 2,431
Trustees' fee 873
Miscellaneous 685
Legal fees 120
Total expenses 255,296
Less expense reductions (74,634)
Net expenses 180,662
Net investment loss (22,330)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (1,128,732)
Change in net unrealized appreciation (depreciation)
of investments 1,388,045
Net realized and unrealized gain 259,313
Increase in net assets from operations $236,983
1 Semiannual period from 11-1-02 through 4-30-03.
See notes to
financial statements.
CHANGES IN
NET ASSETS
This 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 dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
PERIOD PERIOD
ENDED ENDED
10-31-02 1 4-30-03 2
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($68,104) ($22,330)
Net realized loss (4,102,856) (1,128,732)
Change in net unrealized appreciation
(depreciation) (2,369,606) 1,388,045
Increase (decrease) in net assets
resulting from operations (6,540,566) 236,983
From Fund share transactions 26,371,642 (2,353,139)
NET ASSETS
Beginning of period -- 19,831,076
End of period 3 $19,831,076 $17,714,920
1 Inception period 2-25-02 through 10-31-02.
2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
3 Includes accumulated net investment loss of none and $22,330, respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 10-31-02 1 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $7.67
Net investment income 3 -- 4 0.01
Net realized and unrealized gain (loss) on investments (2.33) 0.16
Total from investment operations (2.33) 0.17
Net asset value, end of period $7.67 $7.84
Total return 5,6 (%) (23.30)7 2.22 7
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $6 $5
Ratio of expenses to average net assets (%) 1.50 8 1.50 8
Ratio of adjusted expenses to average net assets 9 (%) 2.40 8 2.32 8
Ratio of net investment income to average net assets (%) -- 8 0.24 8
Portfolio turnover (%) 70 40
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-02 1 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $7.64
Net investment loss 3 (0.04) (0.02)
Net realized and unrealized gain (loss) on investments (2.32) 0.16
Total from investment operations (2.36) 0.14
Net asset value, end of period $7.64 $7.78
Total return 5,6 (%) (23.60)7 1.83 7
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $8 $7
Ratio of expenses to average net assets (%) 2.20 8 2.20 8
Ratio of adjusted expenses to average net assets 9 (%) 3.10 8 3.02 8
Ratio of net investment loss to average net assets (%) (0.69)8 (0.45)8
Portfolio turnover (%) 70 40
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-02 1 4-30-03 2
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $7.64
Net investment loss 3 (0.04) (0.02)
Net realized and unrealized gain (loss) on investments (2.32) 0.16
Total from investment operations (2.36) 0.14
Net asset value, end of period $7.64 $7.78
Total return 5,6 (%) (23.60)7 1.83 7
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $6 $5
Ratio of expenses to average net assets (%) 2.20 8 2.20 8
Ratio of adjusted expenses to average net assets 9 (%) 3.10 8 3.02 8
Ratio of net investment loss to average net assets (%) (0.69)8 (0.46)8
Portfolio turnover (%) 70 40
1 Class A, Class B, and Class C shares began operations on 2-25-02.
2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
3 Based on the average of the shares outstanding.
4 Less than $0.01 per share.
5 Assumes dividend reinvestment and does not reflect the effect of sales charges.
6 Total returns would have been lower had certain expenses not been reduced during the periods shown.
7 Not annualized.
8 Annualized.
9 Does not take into consideration expense reductions during the periods shown.
See notes to
financial statements.
NOTES TO
STATEMENTS
(Unaudited)
NOTE A
Accounting policies
John Hancock Large Cap Spectrum Fund (the "Fund") is a non-diversified
series of John Hancock Equity Trust, an open-end management investment
company registered under the Investment Company Act of 1940. The
investment objective of the Fund is to achieve long-term growth of
capital. The Fund's assets will be allocated among three investment
styles: growth, core and value.
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 as 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 that bears distribution and service expenses under terms of a
distribution plan have exclusive voting rights to that distribution
plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or at
fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost, which approximates market value.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with other registered investment companies
having a management contract with John Hancock Advisers, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
LLC, may participate in a joint repurchase agreement transaction.
Aggregate cash balances are invested in one or more large repurchase
agreements, whose underlying securities are obligations of the U.S.
government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
Expenses
The majority of the expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund will
be allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund has entered into a
syndicated line of credit agreement with various banks. This agreement
enables the Fund to participate with other funds managed by the Adviser in
an unsecured line of credit with banks, which permits borrowings of up to
$250 million, collectively. Interest is charged to each fund, based on its
borrowing. In addition, a commitment fee is charged to each fund based on
the average daily unused portion of the line of credit and is allocated
among the participating funds. The Fund had no borrowing activity under the
line of credit during the period ended April 30, 2003.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $4,063,884 of a capital
loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. To the extent that such
carryforward is used by the Fund, no capital gain distributions will be
made. The entire amount of the loss carryforward expires October 31,
2010.
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 distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated in
the same manner, at the same time and are in the same amount, except for
the effect of expenses that may be applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, are reported in the
Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a monthly management
fee to the Adviser at an annual rate of 0.85% of the Fund's average
daily net asset value. The Adviser has a subadvisory agreement with
Alliance Capital Management LP. The Fund is not responsible for payment
of the subadvisory fees.
The Adviser has agreed to limit the Fund's expenses, excluding
distribution and service fees, to 1.20% of the Fund's average daily net
assets, at least until February 28, 2004. Accordingly, the expense
reduction amounted to $74,634 for the period ended April 30, 2003. The
Adviser reserves the right to terminate this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. 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 to reimburse JH
Funds for the services it provides as distributor of shares of the Fund.
Accordingly, the Fund makes monthly payments to JH Funds at an annual
rate not to exceed 0.30% of Class A average daily net assets and 1.00%
of Class B and Class C average daily net assets. 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.
Class A and Class C shares are assessed up-front sales charges. During
the period ended April 30, 2003, JH Funds received net up-front sales
charges of $12,942 with regard to sales of Class A shares. Of this
amount, $1,876 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $9,179 was paid as
sales commissions to unrelated broker-dealers and $1,887 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. During the period ended April
30, 2003, JH Funds received net up-front sales charges of $3,802 with
regard to sales of Class C shares. Of this amount, $3,776 was paid as
sales commissions to unrelated broker-dealers and $26 was paid as sales
commissions to sales personnel of Signator Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares being
redeemed. Class C shares that are redeemed within one year of purchase
are 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 CDSCs are paid to JH Funds
and are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of
Class B and Class C shares. During the period ended April 30, 2003,
CDSCs received by JH Funds amounted to $21,517 for Class B shares and
$2,525 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a
monthly transfer agent fee at an annual rate of 0.05% of the average
daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for 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 approximately 0.03% of the average net
assets of the Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio 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 investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations
of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and repurchased
during the last two periods, along with the corresponding dollar value.
The Fund has an unlimited number of shares authorized with no par value.
PERIOD ENDED 10-31-02 1 PERIOD ENDED 4-30-03 2
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 1,065,563 $10,469,656 88,621 $676,568
Repurchased (278,331) (2,309,288) (178,439) (1,344,146)
Net increase (decrease) 787,232 $8,160,368 (89,818) ($667,578)
CLASS B SHARES
Sold 1,455,953 $14,180,950 95,719 $723,843
Repurchased (373,460) (3,099,618) (223,722) (1,656,506)
Net increase (decrease) 1,082,493 $11,081,332 (128,003) ($932,663)
CLASS C SHARES
Sold 885,678 $8,455,714 55,398 $425,246
Repurchased (162,390) (1,325,772) (158,173) (1,178,144)
Net increase (decrease) 723,288 $7,129,942 (102,775) ($752,898)
NET INCREASE (DECREASE) 2,593,013 $26,371,642 (320,596) ($2,353,139)
1 Inception period from 2-25-02 through 10-31-02.
2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other
than short-term securities and obligations of the U.S. government,
during the period ended April 30, 2003, aggregated $7,067,421 and
$8,633,226, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $19,079,236. Gross
unrealized appreciation and depreciation of investments aggregated
$716,176 and $1,736,709, respectively, resulting in net unrealized
depreciation of $1,020,533. The difference between book basis and tax
basis net unrealized depreciation of investments is attributable
primarily to the tax deferral of losses on wash sales.
OUR FAMILY
OF FUNDS
- -----------------------------------------------------------------
Equity Balanced Fund
Classic Value Fund
Core Equity Fund
Focused Equity Fund
Growth Trends Fund
Large Cap Equity Fund
Large Cap Growth Fund
Large Cap Spectrum Fund
Mid Cap Growth Fund
Multi Cap Growth Fund
Small Cap Equity Fund
Small Cap Growth Fund
Sovereign Investors Fund
U.S. Global Leaders Growth Fund
- -----------------------------------------------------------------
Sector Biotechnology Fund
Financial Industries Fund
Health Sciences Fund
Real Estate Fund
Regional Bank Fund
Technology Fund
- -----------------------------------------------------------------
Income Bond Fund
Government Income Fund
High Income Fund
High Yield Bond Fund
Investment Grade Bond Fund
Strategic Income Fund
- -----------------------------------------------------------------
International International Fund
Pacific Basin Equities Fund
- -----------------------------------------------------------------
Tax-Free Income California Tax-Free Income Fund
High Yield Municipal Bond Fund
Massachusetts Tax-Free Income Fund
New York Tax-Free Income Fund
Tax-Free Bond Fund
- -----------------------------------------------------------------
Money Market Money Market Fund
U.S. Government Cash Reserve
For more complete information on any John Hancock Fund
and a prospectus, which includes charges and expenses,
call your financial professional, or John Hancock Funds at
1-800-225-5291. Please read the prospectus carefully
before investing or sending money.
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FOR YOUR
INFORMATION
TRUSTEES
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
*Members of the Audit Committee
OFFICERS
Maureen R. Ford
Chairman, President
and Chief Executive Officer
William L. Braman
Executive Vice President
and Chief Investment Officer
Richard A. Brown
Senior Vice President
and Chief Financial Officer
Susan S. Newton
Senior Vice President
and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUBADVISER
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, New York 10105
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
Large Cap Spectrum Fund.
670SA 4/03
6/03
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: June 24, 2003