February 17, 2004
EDGAR
United States Securities and
Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form N-CSR
John Hancock Equity Trust (the "Registrant") on behalf of:
John Hancock Large Cap Spectrum Fund
File Nos. 2-92548; 811-4079
Ladies and Gentlemen:
Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and
the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing
containing the final report for John Hancock Large Cap Spectrum Fund (the
"Fund") for the period ending December 17, 2003. On December 19, 2003, the Fund
transferred all of its assets and liabilities to John Hancock Sovereign
Investors Fund ("Sovereign Investors Fund"), a series of John Hancock Investment
Trust, in exchange for shares of Sovereign Investors Fund pursuant to an
Agreement and Plan of Reorganization.
After this transaction and as of the close of business on December 19, 2003, the
Fund was terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and termination of the
Fund.
If you have any questions or comments regarding this filing, please contact the
undersigned at (617) 375-1722.
Sincerely,
/s/Brian E. Langenfeld
Brian E. Langenfeld
Attorney and Assistant Secretary
ITEM 1. REPORT TO STOCKHOLDERS.
- --------------------------------------------------------------------------------
FINAL REPORT
John Hancock
Large Cap Spectrum Fund
December 19, 2003
- --------------------------------------------------------------------------------
John Hancock Large Cap Spectrum Fund
Schedule of Investments
December 19, 2003 (Unaudited)
- ------------------------------------
NUMBER OF
ISSUER, DESCRIPTION SHARES VALUE
- ------------------------------------ --------- ---------
COMMON STOCKS
(Cost $15,443,647)
Advertising (0.29%)
Omnicom Group, Inc. 600 $50,874
-------------------------
Automobiles/Trucks (1.37%)
Lear Corp.* 1,400 85,092
Magna International, Inc. (Class A) (Canada) 1,900 152,798
-------------------------
237,890
---------
Banks - United States (6.16%)
Bank of America Corp. 3,800 300,200
FleetBoston Financial Corp. 1,600 68,400
Mellon Financial Corp. 2,100 66,843
National City Corp. 3,000 100,320
State Street Corp. 1,350 68,431
U.S. Bancorp 3,400 98,294
Wachovia Corp. 3,000 137,850
Wells Fargo & Co. 3,900 226,512
-------------------------
1,066,850
---------
Beverages (1.32%)
Coca-Cola Co. (The) 1,350 67,635
PepsiCo, Inc. 3,400 160,378
-------------------------
228,013
---------
Broker Services (3.93%)
Goldman Sachs Group, Inc. (The) 3,100 298,778
Lehman Brothers Holdings, Inc. 2,200 162,800
Merrill Lynch & Co., Inc. 1,050 59,745
Morgan Stanley 2,850 159,628
-------------------------
680,951
---------
Building (0.26%)
Georgia-Pacific Corp. 1,500 44,550
-------------------------
Computers (10.66%)
BEA Systems, Inc.* 5,900 71,685
Cisco Systems, Inc.* 6,400 152,320
Dell, Inc.* 8,100 269,082
Electronic Arts, Inc.* 1,000 46,140
Hewlett-Packard Co. 12,900 286,122
International Business Machines Corp. 1,700 158,338
Lexmark International, Inc.* 1,650 125,284
Microsoft Corp. 20,950 573,192
SAP A.G., American Depositary Receipt (ADR) (Germany) 113,260
VERITAS Software Corp.* 1,400 50,904
-------------------------
1,846,327
---------
Consumer Products - Misc. (0.52%)
Clorox Co. (The) 1,900 89,965
-------------------------
1 See notes to financial statements.
NUMBER OF
ISSUER, DESCRIPTION SHARES VALUE
- ------------------------------------ --------- ---------
Cosmetics & Personal Care (1.97%)
Avon Products, Inc. 1,000 $66,690
Colgate-Palmolive Co. 1,050 51,649
Gillette Co. (The) 2,150 77,357
Procter & Gamble Co. (The) 1,500 146,280
-------------------------
341,976
---------
Diversified Operations (4.80%)
3M Co. 1,050 88,273
eBay, Inc.* 800 49,112
General Electric Co. 16,100 497,329
SPX Corp.* 1,200 68,400
Tyco International Ltd. 5,100 128,214
-------------------------
831,328
---------
Electronics (6.95%)
Analog Devices, Inc.* 1,800 79,830
ASML Holding N.V. (New York Reg Shares) (Netherlands)* 71,250
Avnet, Inc.* 3,700 79,180
Flextronics International Ltd. (Singapore)* 4,800 71,472
Intel Corp. 12,900 395,127
KLA-Tencor Corp.* 2,200 122,584
Maxim Integrated Products, Inc. 900 43,749
Parker-Hannifin Corp. 1,800 105,948
Solectron Corp.* 11,500 67,620
Taiwan Semiconductor Manufacturing Co. Ltd., ADR (Taiwan)* 89,249
Texas Instruments, Inc. 2,700 76,518
-------------------------
1,202,527
---------
Finance (8.02%)
American Express Co. 1,850 87,338
Citigroup, Inc. 13,850 668,540
Golden West Financial Corp. 2,000 202,700
MBNA Corp. 10,650 264,014
Sovereign Bancorp., Inc. 1,850 43,642
Washington Mutual, Inc. 3,100 121,892
-------------------------
1,388,126
---------
Food (0.27%)
Dean Foods Co.* 1,450 47,154
-------------------------
Insurance (4.16%)
American International Group, Inc. 5,900 380,963
Chubb Corp. (The) 1,900 125,229
Hartford Financial Services Group, Inc. (The) 1,200 69,564
Progressive Corp. (The) 700 58,205
Travelers Property Casualty Corp. (Class A) 5,324 85,663
-------------------------
719,624
---------
Machinery (1.22%)
Caterpiller, Inc. 1,400 118,650
Cooper Industries, Ltd. (Class A) 1,600 92,480
-------------------------
211,130
---------
2 See notes to financial statements.
NUMBER OF
ISSUER, DESCRIPTION SHARES VALUE
- ------------------------------------ --------- ---------
Media (4.65%)
Comcast Corp. (Class A)* 2,800 $89,152
Comcast Corp. (Special Class A)* 11,600 352,756
Time Warner, Inc.* 5,450 98,645
Viacom, Inc. (Class B)* 6,200 265,050
-------------------------
805,603
---------
Medical (14.05%)
Aetna, Inc. 1,700 109,446
Amgen, Inc.* 3,700 229,030
Bard (C.R.), Inc. 1,250 101,400
Biogen Idec, Inc.* 3,200 119,872
Forest Laboratories, Inc.* 1,000 62,510
GlaxoSmithKline Plc, ADR (United Kingdom) 2,400 108,000
Johnson & Johnson 4,550 227,955
McKesson Corp. 2,850 89,461
Medtronic, Inc. 3,700 180,042
Millennium Pharmaceuticals, Inc.* 5,150 91,413
Pfizer, Inc. 18,150 622,000
Shire Pharmaceuticals Group Plc, ADR (United Kingdom)* 75,876
St. Jude Medical, Inc.* 1,700 102,085
UnitedHealth Group, Inc. 4,000 224,200
Valeant Pharmaceuticals International 1,677 41,573
Wyeth 1,150 47,150
-------------------------
2,432,013
---------
Metal (1.27%)
Newmont Mining Corp. 2,600 118,820
Phelps Dodge Corp.* 1,350 101,790
-------------------------
220,610
---------
Mortgage Banking (1.12%)
Fannie Mae 2,750 194,205
-------------------------
Oil & Gas (6.59%)
ChevronTexaco Corp. 1,150 95,761
ConocoPhillips 4,400 279,092
ENSCO International, Inc. 2,400 65,232
Nabors Industries, Ltd. (Barbados)* 2,200 91,674
Occidental Petroleum Corp. 3,500 144,025
Schlumberger Ltd. 1,900 100,947
Suncor Energy, Inc. (Canada) 4,600 109,342
Talisman Energy, Inc. (Canada) 1,600 88,208
Valero Energy Corp. 1,200 56,160
Weatherford International Ltd.* 3,050 110,105
-------------------------
1,140,546
---------
Paper & Paper Products (1.40%)
Bowater, Inc. 2,000 91,380
MeadWestvaco Corp. 5,200 151,424
-------------------------
242,804
---------
Retail (7.82%)
Best Buy Co., Inc. 2,500 129,050
Genuine Parts Co. 3,100 102,672
Home Depot, Inc. (The) 2,700 95,850
Kohl's Corp.* 1,100 49,566
Lowe's Cos., Inc. 2,900 160,457
McDonald's Corp. 4,700 114,210
3 See notes to financial statements.
NUMBER OF
ISSUER, DESCRIPTION SHARES VALUE
- ------------------------------------ --------- ---------
Retail - Continued
Safeway, Inc.* 3,200 $66,528
Staples, Inc.* 2,450 64,067
Target Corp. 2,900 110,229
Walgreen Co. 2,300 81,213
Wal-Mart Stores, Inc. 7,250 379,538
-------------------------
1,353,380
---------
Telecommunications (4.00%)
BellSouth Corp. 3,350 92,829
Corning, Inc.* 5,500 57,365
General Motors Corp. (Class H)* 8,300 132,634
Nextel Communications, Inc. (Class A)* 3,300 85,866
Nortel Networks Corp. (Canada)* 17,200 71,896
Sprint Corp. 3,300 52,272
Sprint Corp. (PCS Group)* 3,900 19,734
Tellabs, Inc.* 11,300 88,705
Verizon Communications, Inc. 2,650 90,498
-------------------------
691,799
---------
Tobacco (0.59%)
Altria Group, Inc. 1,850 101,602
-------------------------
Transportation (2.45%)
Burlington Northern Santa Fe Corp. 2,100 67,221
CSX Corp. 2,000 70,740
Norfolk Southern Corp. 12,100 285,439
-------------------------
423,400
---------
Utilities (2.46%)
American Electric Power Co., Inc. 5,400 161,352
Constellation Energy Group, Inc. 1,800 67,950
Entergy Corp. 1,600 90,240
PPL Corp. 2,500 106,825
-------------------------
426,367
---------
TOTAL COMMON STOCKS (98.30%) 17,019,614
-------------------------
TOTAL INVESTMENTS (98.30%) 17,019,614
-------------------------
OTHER ASSETS AND LIABILITIES, NET (1.70%) 294,401
-------------------------
TOTAL NET ASSETS (100.00%) $17,314,015
-------------------------
* 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.
4 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
- ----------------------- --------------------------------------------------------------------------------------------
ASSETS AND ASSETS
- ----------------------- --------------------------------------------------------------------------------------------
LIABILITIES Investments at value (cost -$15,443,647) $17,019,614
- ----------------------- Cash 257,285
Final report Receivable for investments sold 68,302
December 19, 2003 * Receivable for shares sold 518
(unaudited) Dividends receivable 16,257
Receivable from affiliates 30,825
Other assets 438
Total assets 17,393,239
--------------------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------------------
Payable for shares repurchased 518
Payable to affiliates
Management fee 21,372
Distribution and service fee 10,379
Other 11,444
Other payables and accrued expenses 35,511
Total liabilities 79,224
--------------------------------------------------------------------------------------------
NET ASSETS
--------------------------------------------------------------------------------------------
Capital paid-in 20,821,489
Accumulated net realized loss on investments and
foreign currency transactions (5,083,312)
Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currencies 1,575,854
Accumulated net investment loss (16)
Net assets $17,314,015
--------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------------------
Based on net asset values and shares outstanding
Class A ($5,459,225 / 598,745 shares) $9.12
Class B ($7,546,036 / 837,696 shares) $9.01
Class C ($4,308,754 / 478,283 shares) $9.01
--------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
--------------------------------------------------------------------------------------------
Class A(1) ($9.12 / 95%) $9.60
Class C ($9.01 / 99%) $9.10
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price was reduced
* The net assets of the Fund were merged into John Hancock Sovereign Investors Fund as of
the close of business on December 19, 2003, and the Fund was subsequently terminated.
The Statement of Assets and Liabilities reflects the Fund's position prior to the
transfer of net assets and the termination of the Fund. See Note A to financial
statements.
5 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
- ---------------------- ----------------------------------------------------------------------------------------------
OPERATIONS INVESTMENT INCOME
- ---------------------- ----------------------------------------------------------------------------------------------
Period from Dividends (net of foreign withholding taxes of $194) $36,762
November 1, 2003 to Interest (including securities lending income of $39) 182
December 19, 2003 * Total investment income 36,944
(unaudited)
----------------------------------------------------------------------------------------------
EXPENSES
----------------------------------------------------------------------------------------------
Investment management fee 19,955
Class A distribution and service fee 2,230
Class B distribution and service fee 10,232
Class C distribution and service fee 5,813
Transfer agent fee 12,725
Registration and filing fee 9,546
Custodian fee 3,540
Accounting and legal services fee 704
Total expenses 64,745
Less expense reductions (18,298)
Net expenses 46,447
Net investment loss (9,503)
----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
----------------------------------------------------------------------------------------------
Net realized loss on
Investments (59,067)
Foreign currency transactions (465)
Change in net unrealized appreciation (depreciation) of
Investments 441,562
Translation of assets and liabilities in foreign currencies (113)
Net realized and unrealized gain 381,917
Increase in net assets from operations $372,414
* The net assets of the Fund were merged into John Hancock Sovereign Investors Fund as of the close of
business on December 19, 2003, and the Fund was subsequently terminated. The Statement of Operations
reflects the Fund's position prior to the transfer of net assets and the termination of the Fund.
See Note A to financial statements.
6 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
PERIOD
FROM 11-1-03
YEAR ENDED TO 12-19-03 *
10-31-03 (UNAUDITED)
- ----------------- -------------------------------------------------------------------------------------------------------
CHANGES IN INCREASE (DECREASE) IN NET ASSETS
- ----------------- -------------------------------------------------------------------------------------------------------
NET ASSETS From operations
- ----------------- Net investment loss ($58,915) ($9,503)
Net realized loss (921,409) (59,532)
Change in net unrealized appreciation (depreciation) 3,504,011 441,449
Increase in net assets resulting from operations 2,523,687 372,414
From Fund share transactions (4,572,427) (840,735)
------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------
Beginning of period 19,831,076 17,782,336
End of period 1 $17,782,336 $17,314,015
(1) Includes accumulated net investment loss of $16 and $16 respectively.
* The net assets of the Fund were merged into John Hancock Sovereign Investors Fund as of the close of
business on December 19, 2003, and the Fund was subsequently terminated. The Statement of Changes
in Net Assets reflects the Fund's position prior to the transfer of net assets and the termination
of the Fund.
See Note A to financial statements.
7 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
Financial Highlights
CLASS A SHARES
PERIOD ENDED 10-31-02 (1) 10-31-03 12-19-03 (2)
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $7.67 $8.92
Net investment income (3) -4 0.01 -4
Net realized and unrealized gain (loss) on investments (2.33) 1.24 0.20
Total from investment operations (2.33) 1.25 0.20
Net asset value, end of period $7.67 $8.92 $9.12 (5)
Total return 6,7 (%) (23.30) (8) 16.30 2.24
- ---------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $6 $6 $5
Ratio of expenses to average net assets (%) 1.50 (9) 1.50 1.50
Ratio of adjusted expenses to average net assets (10) (%) 2.40 (9) 2.33 2.28
Ratio of net investment income to average net assets (%) -- (9) 0.16 0.08
Portfolio turnover (%) 70 81 7
8 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
Financial Highlights
CLASS B SHARES
PERIOD ENDED 10-31-02 (1) 10-31-03 12-19-03 (2)
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $7.64 $8.82
Net investment loss 3 (0.04) (0.04) (0.01)
Net realized and unrealized gain (loss) on investments (2.32) 1.22 0.20
Total from investment operations (2.36) 1.18 0.19
Net asset value, end of period $7.64 $8.82 $9.01 (5)
Total return 6,7 (%) (23.60) (8) 15.45 2.15
- ---------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $8 $8 $8
Ratio of expenses to average net assets (%) 2.20 (9) 2.20 2.20
Ratio of adjusted expenses to average net assets 10 (%) 3.10 (9) 3.03 2.98
Ratio of net investment loss to average net assets (%) (0.69) (9) (0.54) (0.63)
Portfolio turnover (%) 70 81 7
9 See notes to financial statements.
John Hancock Large Cap Spectrum Fund
Financial Highlights
CLASS C SHARES
PERIOD ENDED 10-31-02 (1) 10-31-03 12-19-03 (2)
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $7.64 $8.82
Net investment loss 3 (0.04) (0.04) (0.01)
Net realized and unrealized gain (loss) on investments (2.32) 1.22 0.20
Total from investment operations (2.36) 1.18 0.19
Net asset value, end of period $7.64 $8.82 $9.01 (5)
Total return 6,7 (%) (23.60) (8) 15.45 2.15
- ---------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $6 $4 $4
Ratio of expenses to average net assets (%) 2.20 (9) 2.20 2.20
Ratio of adjusted expenses to average net assets 10 (%) 3.10 (9) 3.03 2.98
Ratio of net investment loss to average net assets (%) (0.69) (9) (0.54) (0.63)
Portfolio turnover (%) 70 81 7
(1) Class A, Class B, and Class C shares began operations on 2-25-02.
(2) Final period from 11-1-03 through 12-19-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than $0.01 per share.
(5) Net asset value per share before the merger to John Hancock Sovereign
Investors Fund and the termination of the Fund. See Note A to financial
statements.
(6) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(7) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(8) Not annualized.
(9) Annualized.
(10) Does not take into consideration expense reductions during the periods
shown.
10 See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Large Cap Spectrum Fund (the "Fund") was 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 was to achieve long-term growth of capital. The Fund's assets were
allocated among three investment styles: core, growth and value.
The Trustees had 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 represented an interest in the same portfolio of investments of the Fund
and had equal rights as to voting, redemptions, dividends and liquidation,
except that certain expenses, subject to the approval of the Trustees, may have
been 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 bore distribution and service expenses
under the terms of a distribution plan had exclusive voting rights to that
distribution plan.
On December 19, 2003, the shareholders of the Fund approved an Agreement and
Plan of Reorganization, which provided for the transfer of substantially all of
the assets and liabilities of the Fund to the John Hancock Sovereign Investors
Fund (the "Acquiring Fund") in exchange solely for shares of beneficial interest
of the Acquiring Fund.
After this transaction and as of the close of business on December 19, 2003, the
Fund will be terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and termination of the
Fund.
Significant accounting policies of the Fund were as follows:
Valuation of investments
Securities in the Fund's portfolio were 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 were valued at
amortized cost, which approximated market value. Investments in AIM Cash
Investment Trust were valued at their net asset value each business day. All
portfolio transactions initially expressed in terms of foreign currencies were
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 have participated in a
joint repurchase agreement transaction. Aggregate cash balances were invested in
one or more large repurchase agreements, whose underlying securities were
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank received delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser was responsible for ensuring that the agreement was
fully collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies
were translated into U.S. dollars based on London currency exchange quotations
as of 4:00 P.M., London time, on the date of any determination of the net asset
value of the Fund. Transactions affecting statement of
11
operations accounts and net realized gain (loss) on investments were translated
at the rates prevailing on the dates of the transactions.
The Fund did 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 were
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency exchange gains or losses arose 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 arose 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 were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) were
determined at the fund level and allocated daily to each class of shares based
on the appropriate net asset value of the respective classes. Distribution and
service fees, if any, were calculated daily at the class level based on the
appropriate net asset value of each class and the specific expense rate(s)
applicable to each class.
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses that were not readily identifiable to a specific fund were 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 was 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 had entered into a
syndicated line of credit agreement with various banks. This agreement enabled
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permitted borrowings of up to $250 million,
collectively. Interest was charged to each fund, based on its borrowing. In
addition, a commitment fee was charged to each fund based on the average daily
unused portion of the line of credit and was allocated among the participating
funds. The Fund had no borrowing activity under the line of credit during the
period ended December 19, 2003.
Securities lending
The Fund may have lent securities to certain qualified brokers who paid the Fund
negotiated lender fees. These fees were included in interest income. The loans
were 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 would have borne the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities have failed financially. There were no securities
loaned on December 19, 2003. Securities lending expenses, if any, were paid by
the Fund to the Adviser.
Federal income taxes
The Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not subject to
federal income tax on taxable
12
income that was distributed to shareholders. Therefore, no federal income tax
provision was required as of December 19, 2003, the Fund's final tax year. As of
December 19, 2003, for federal income tax purposes, the Fund had $4,966,704 of a
capital loss carryforward expiring as follows: October 31, 2010 - $4,063,884,
October 31, 2011 - $817,112 and December 19, 2011 - $85,708. The unused capital
loss carryforward as of December 19, 2003 was transferred to the Acquiring Fund
and will be available, to the extent provided by regulations, to offset net
capital gains of the Acquiring Fund.
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the Fund
identified the dividend. Interest income on investment securities was recorded
on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable.
The Fund recorded distributions to shareholders from net investment income and
realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares were calculated in the same manner, at the same
time and were in the same amount, except for the effect of expenses that may
have been applied differently to each class.
As of December 19, 2003, there were no distributable earnings on a tax basis.
Such distributions and distributable earnings, on a tax basis, were 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, were 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 had an investment management contract with the Adviser. Under the
investment management contract, the Fund paid 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 had a subadvisory agreement with Alliance Capital Management L.P.
The Fund was not responsible for payment of the subadvisory fees.
The Adviser had agreed to limit the Fund's total expenses, excluding the
distribution and service fees, to 1.20% of the Fund's average daily net asset
value. Accordingly, the expense reduction related to total expense limitation
amounted to $18,298 for the period ended December 19, 2003. The Adviser reserved
the right to terminate this limitation in the future.
The Fund had Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund had 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
provided as distributor of shares of the Fund. Accordingly, the Fund made
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net asset value and 1.00% of Class B and Class C average daily net
asset value. A maximum of 0.25% of such payments may have been 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 have occurred under certain circumstances.
13
Class A and Class C shares were assessed up-front sales charges. During the
period ended December 19, 2003, JH Funds received net up-front sales charges of
$1,239 with regard to sales of Class A shares. Of this amount, $65 was retained
and used for printing prospectuses, advertising, sales literature and other
purposes, $205 was paid as sales commissions to unrelated broker-dealers and
$969 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 December 19, 2003, JH
Funds received net up-front sales charges of $270 with regard to sales of Class
C shares. Of this amount, $269 was paid as sales commissions to unrelated
broker-dealers and $1 was paid as sales commissions to sales personnel of
Signator Investors.
Class B shares that were redeemed within six years of purchase were 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 were
redeemed within one year of purchase were 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
were paid to JH Funds and were 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 December 19, 2003,
CDSCs received by JH Funds amounted to $2,861 for Class B shares and $25 for
Class C shares.
The Fund had a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICo. The Fund paid 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 had 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 asset value of the Fund.
Ms. Maureen Ford Goldfarb and Mr. John M. DeCiccio were directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of the Fund.
The compensation of unaffiliated Trustees was borne by the Fund. The
unaffiliated Trustees may have elected to defer, for tax purposes, their receipt
of this compensation under the John Hancock Group of Funds Deferred Compensation
Plan. The Fund made 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 were recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other asset
were always equal and were 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 had an
unlimited number of shares authorized with no par value.
14
PERIOD FROM 11-1-03
TO 12-19-03
YEAR ENDED 10-31-03 (UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
- ----------------------------------------------------------------------------------------------------------------------
Sold 141,090 $1,117,243 11,901 $106,018
Repurchased (297,409) (2,346,987) (44,069) (393,337)
Net decrease (156,319) ($1,229,744) (32,168) ($287,319)
- ----------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------------------------------------------------------
Sold 158,301 $1,247,849 2,855 $25,254
Repurchased (364,438) (2,826,826) (41,515) (368,633)
Net decrease (206,137) ($1,578,977) (38,660) ($343,379)
- ----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------------------------------------------------------
Sold 76,638 $600,868 3,564 $31,404
Repurchased (297,805) (2,364,574) (27,402) (241,441)
Net increase (decrease) (221,167) $1,763,706 (23,838) ($210,037)
- ----------------------------------------------------------------------------------------------------------------------
NET DECREASE (583,623) ($4,572,427) (94,666) ($840,735)
- ----------------------------------------------------------------------------------------------------------------------
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 December 19, 2003, aggregated $1,264,828 and $2,271,381, respectively.
The cost of investments owned on December 19, 2003, including short-term
investments, for federal income tax purposes was $15,560,255. Gross unrealized
appreciation and depreciation of investments aggregated $1,917,985 and $458,626,
respectively, resulting in net unrealized appreciation of $1,459,359. The
difference between book basis and tax basis net unrealized appreciation of
investments was attributable primarily to the tax deferral of losses on certain
sales of securities.
NOTE E
Reclassification of accounts
During the period ended December 19, 2003, the Fund reclassified amounts to
reflect a decrease in accumulated net realized loss on investments of $465, a
decrease in accumulated net investment loss of $9,503 and a decrease in capital
paid-in of $9,968. This represented the amounts necessary to report these
balances on a tax basis, excluding certain temporary differences, as of December
19, 2003. These reclassifications, which had no impact on the net asset value of
the Fund, were primarily attributable to certain differences in the computation
of distributable income and capital gains under federal tax rules versus
accounting principles generally accepted in the United States of America, and
book and tax differences in accounting for certain foreign currency adjustments
and net operating losses. The calculation of net investment loss per share in
the Fund's Financial Highlights excluded these adjustments.
15
NOTE F
Shareholders meeting
On December 19, 2003, the shareholders of the Fund approved an Agreement and
Plan of Reorganization between the Fund and the Acquiring Fund. The number of
votes cast for and against and that abstained from voting were as follows:
923,333 FOR, 60,785 AGAINST and 71,807 ABSTAINED.
The Agreement and Plan of Reorganization provided for the transfer of
substantially all of the assets and liabilities of the Fund for shares of
beneficial interest of the Acquiring Fund. After this transaction and as of the
close of business on December 19, 2003, the Fund was terminated. The financial
statements presented herein reflect the position of the Fund prior to the
exchange of net assets and termination of the Fund.
16
John Hancock Large Cap Spectrum Fund
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
William F. Glavin
Maureen Ford Goldfarb
John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen Ford Goldfarb
Chairman, President and Chief Executive 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
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
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
ITEM 2. CODE OF ETHICS.
As of the end of the period, December 19, 2003, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief
Executive Officer, Chief Financial Officer and Treasurer (respectively, the
principal executive officer, the principal financial officer and the principal
accounting officer, the "Senior Financial Officers"). A copy of the code of
ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
William F. Glavin is the audit committee financial expert and is "independent",
pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
See attached Exhibit "Principal Accountant Fees and Services".
All other
Audit fees Audit-related fees Tax fees fees
2002 2003 2002 2003 2002 2003 2002 2003
---- ---- ---- ---- ---- ---- ---- ----
- ------------- ------------- ------------ ------------- ------------- ----------
$18,500 $18,500 - - $1,500 $1,500 - -
- ------------- ------------- ------------ ------------- ------------- ----------
All services listed above were approved by the audit committee. See attachment
"Approval of Audit, Audit-related, Tax and Other Services Provided by the
Independent Auditor", with the Audit committee pre-approval policies and
procedures.
The Aggregate non-audit fees billed by the registrant's accountant(s) for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for each of the last
two fiscal years of the registrant were $32,050 for the fiscal year ended
December 31, 2002, and $322,850 for the fiscal year ended December 31, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form N-CSR,
the registrant's principal executive officer and principal financial officer
have concluded that those disclosure controls and procedures provide reasonable
assurance that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule
30a-2(b) under the Investment Company Act of 1940, are attached. The
certifications furnished pursuant to this paragraph are not deemed to be "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to the liability of that section. Such certifications are not deemed to
be incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the Registrant
specifically incorporates them by reference.
(c)(1) Contact person at the registrant
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 Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: February 11, 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 Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: February 11, 2003
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: February 11, 2003