ITEM 1. REPORT TO STOCKHOLDERS - -------------------------------------------------------------------------------- SEMI ANNUAL REPORT John Hancock Global Fund APRIL 30, 2003 - -------------------------------------------------------------------------------- John Hancock Global Fund Schedule of Investments April 30, 2003 (unaudited) ISSUER SHARES VALUE - ------ ------ ----- COMMON STOCKS (Cost $29,844,451) Australia (1.74%) Australia & New Zealand Banking Group Ltd. (Banks - Foreign) 38,400 $ 447,995 Woolworths Ltd. (Retail) 37,900 306,312 -------------- 754,307 -------------- Canada (4.15%) Biovail Corp.* (Medical) 5,500 198,825 Cott Corp.* (Beverages) 18,200 333,970 EnCana Corp. (Oil & Gas) 6,300 207,270 Royal Bank of Canada (Banks - Foreign) 11,000 459,250 Telus Corp. (Telecommunications) 29,600 431,228 WestJet Airlines Ltd.* (Transport) 14,950 171,947 -------------- 1,802,490 -------------- China (0.39%) Jiangsu Expressway Co., Ltd. (Transport) 500,000 168,290 -------------- France (4.86%) Alcatel SA* (Telecommunications) 46,100 377,624 Axa SA (Insurance) 25,000 379,718 BNP Paribas SA (Banks - Foreign) 10,800 506,939 France Telecom SA (Telecommunications) 12,800 295,695 JC Decaux SA* (Advertising) 30,000 289,601 Vivendi Universal SA (Media) 15,800 257,438 -------------- 2,107,015 -------------- Germany (1.42%) BASF AG (Chemicals) 6,000 265,496 Muenchener Rueckversicherungs-Gesellschaft AG (Insurance) 3,500 348,414 -------------- 613,910 -------------- Hong Kong (0.76%) CNOOC Ltd. (Oil & Gas) 250,000 328,566 -------------- Ireland (2.10%) Bank of Ireland (Banks - Foreign) 39,600 483,919 Ryanair Holdings Plc* American Depositary Receipts (ADR) (Transport) 10,800 428,436 -------------- 912,355 -------------- Israel (0.97%) Teva Pharmaceutical Industries Ltd. (ADR) (Medical) 9,000 420,300 -------------- Japan (4.03%) Dai Nippon Printing Co., Ltd. (Printing - Commercial) 41,000 398,105 Fanuc Ltd. (Electronics) 10,000 409,190 Japan Telecom Holdings Co., Ltd. (Telecommunications) 100 273,352 Kao Corp. (Cosmetics & Personal Care) 18,000 328,274 Mitsubishi Tokyo Financial Group, Inc. (Banks - Foreign) 100 338,756 -------------- 1,747,677 -------------- Netherlands (1.16%) Aegon NV (Insurance) 23,400 237,901 ING Groep NV (Insurance) 16,300 264,675 -------------- 502,576 -------------- See notes to financial statements. 1 ISSUER SHARES VALUE - ------ ------ ----- Russia (1.21%) YUKOS (ADR) (Oil & Gas) 3,000 $ 526,500 -------------- South Korea (1.66%) LG Electronics, Inc. (Electronics) 10,000 344,856 Samsung Electronics Co., Ltd. (Electronics) 1,500 376,543 -------------- 721,399 -------------- Sweden (0.52%) Hennes & Mauritz AB (B Shares) (Retail) 10,150 225,840 -------------- Switzerland (3.30%) Alcon, Inc.* (Medical) 9,200 405,260 Roche Holding AG (Medical) 3,600 229,064 UBS AG (Banks - Foreign) 16,800 797,080 -------------- 1,431,404 -------------- Taiwan (0.86%) Nanya Technology Corp.* (Electronics) 365,000 198,994 Taiwan Semiconductor Manufacturing Co., Ltd.* (ADR) (Electronics) 21,000 175,770 -------------- 374,764 -------------- United Kingdom (9.34%) British Sky Broadcasting Group Plc* (Media) 55,900 579,388 GlaxoSmithKline Plc (Medical) 18,900 378,797 HBOS Plc (Banks - Foreign) 22,200 260,079 Imperial Tobacco Group Plc (Tobacco) 17,800 297,862 Lloyds TSB Group Plc (ADR) (Banks - Foreign) 10,000 266,400 Lloyds TSB Group Plc (Banks - Foreign) 16,500 108,518 Man Group Plc (Finance) 22,700 382,760 Royal Bank of Scotland Group Plc (Banks - Foreign) 24,905 653,195 Shell Transport & Trading Co. Plc (Oil & Gas) 32,600 195,257 Smith & Nephew Plc (Medical) 34,200 228,071 Vodafone Group Plc (ADR) (Telecommunications) 35,500 701,480 -------------- 4,051,807 -------------- United States (34.52%) Adobe Systems, Inc. (Computers) 8,500 293,760 AdvancePCS* (Medical) 4,500 135,270 Affiliated Computer Services, Inc.* (Computers) 3,000 143,100 Allergan, Inc. (Medical) 1,500 105,375 Allstate Corp. (The) (Insurance) 3,300 124,707 Amdocs Ltd.* (Telecommunications) 34,300 605,738 Amgen, Inc.* (Medical) 10,400 637,624 Anadarko Petroleum Corp. (Oil & Gas) 1,900 84,360 Anheuser-Busch Cos., Inc. (Beverages) 3,100 154,628 Anthem, Inc.* (Medical) 2,500 171,600 Apache Corp. (Oil & Gas) 3,410 195,223 Apollo Group, Inc. (Class A)* (Schools / Education) 11,200 607,029 Applied Materials, Inc.* (Electronics) 21,600 315,360 AutoZone, Inc.* (Retail) 1,500 121,215 Bank of America Corp. (Banks - United States) 6,100 451,705 Barr Laboratories, Inc.* (Medical) 7,300 405,880 Comcast Corp. (Special Class A)* (Media) 17,100 514,026 Dell Computer Corp.* (Computers) 15,500 448,105 eBay, Inc.* (Diversified Operations) 3,200 296,864 EchoStar Communicaitons Corp. (Class A)* (Media) 2,800 83,888 EMC Corp.* (Computers) 10,700 97,263 Fannie Mae (Mortgage Banking) 2,800 202,692 General Electric Co. (Diversified Operations) 40,800 1,201,560 Gilead Sciences, Inc.* (Medical) 14,800 682,872 Intel Corp. (Electronics) 12,100 222,640 International Business Machines Corp. (Computers) 7,400 628,260 See notes to financial statements. 2 ISSUER SHARES VALUE - ------ ------ ----- United States (continued) Johnson & Johnson (Medical) 16,500 $ 929,940 Lowe's Cos., Inc. (Retail) 10,300 452,067 Merck & Co., Inc. (Medical) 12,600 733,068 Microsoft Corp. (Computers) 40,600 1,038,142 Noble Corp.* (Oil & Gas) 4,700 145,465 Patterson-UTI Energy, Inc.* (Oil & Gas) 2,700 89,343 Pfizer, Inc. (Medical) 29,700 913,275 Procter & Gamble Co. (The) (Cosmetics & Personal Care) 2,300 206,655 Tribune Co. (Media) 2,200 107,756 Univision Communications, Inc. (Class A)* (Media) 2,800 84,784 VERITAS Software Corp.* (Computers) 21,500 473,215 Wal-Mart Stores, Inc. (Retail) 9,400 529,408 Williams Cos., Inc. (The) (Oil & Gas) 12,400 86,180 Zimmer Holdings, Inc.* (Medical) 5,500 257,950 -------------- 14,977,992 -------------- TOTAL COMMON STOCKS (72.99%) 31,667,192 -------------- SHARES, ISSUER OR WARRANTS VALUE - ------ ----------- ----- RIGHTS AND WARRANTS (Cost $361,372) Netherlands (0.02%) Aegon NV* (Insurance), Right 23,400 9,516 -------------- Taiwan (0.36%) Taiwan Semiconductor Manufacturing Co., Ltd.* (Electronics), Warrant 113,800 156,087 United Kingdom (0.33%) United Microelectronics Corp.* (Electronics), Warrant 251,000 144,046 -------------- TOTAL RIGHTS AND WARRANTS (0.71%) 309,649 -------------- INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000'S OMITTED) VALUE - ---------------------------------- ---- --------------- ----- SHORT-TERM INVESTMENTS (Cost $1,922,000) Joint Repurchase Agreement (4.43%) 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) 1.28% $1,922 1,922,000 ---------------- TOTAL SHORT-TERM INVESTMENTS (4.43%) 1,922,000 ---------------- TOTAL INVESTMENTS (78.13%) 33,898,841 ---------------- OTHER ASSETS AND LIABILITIES, NET (21.87%) 9,486,057 ---------------- TOTAL NET ASSETS (100%) $ 43,384,898 ================ * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. 3 Portfolio Concentration (unaudited) This table shows the percentages of the Fund's investments aggregated by various industries as of April 30, 2003. VALUE AS A PERCENTAGE INVESTMENT CATEGORIES OF NET ASSETS - --------------------- --------------- Advertising 0.67% Banks - Foreign 9.96 Banks - United States 1.04 Beverages 1.13 Chemicals 0.61 Computers 7.19 Cosmetics & Personal Care 1.23 Diversified Operations 3.45 Electronics 5.40 Finance 0.88 Insurance 3.15 Media 3.75 Medical 15.75 Mortgage Banking 0.47 Oil & Gas 4.28 Printing - Commercial 0.92 Retail 3.77 Schools/Education 1.40 Telecommunications 6.19 Tobacco 0.69 Transport 1.77 Short-term investments 4.43 ------ Total Investments 78.13% ====== See notes to financial statements. 4 John Hancock Global Fund ASSETS AND ASSETS LIABILITIES Investments at value (cost - $ 32,127,823 ) $ 33,898,841 April 30, 2003 Cash 480 Unaudited Foreign cash at value (cost - $ 4,074 ) 4,074 Receivable for investments sold 15,238,650 Receivable for shares sold 300 Dividends and interest receivable 123,054 Other assets 10,562 Total assets 49,275,961 LIABILITIES Payable for investments purchased 5,739,651 Payable for shares repurchased 17,393 Payable to affiliates 91,731 Other payables and accrued expenses 42,288 Total liabilities 5,891,063 NET ASSETS Capital paid-in 96,296,247 Accumulated net realized loss on investments and foreign currency transactions (54,369,606) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 1,766,477 Accumulated net investment loss (308,220) Net assets $43,384,898 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($33,756,308 / 5,332,273 shares) $6.33 Class B ( $9,000,253 / 1,597,873 shares) $5.63 Class C ( $628,337 / 111,527 shares) $5.63 MAXIMUM OFFERING PRICE PER SHARE Class A(1) ( $6.33 / 95%) $6.66 Class C ( $5.63 / 99%) $5.69 (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. 5 John Hancock Global Fund OPERATIONS INVESTMENT INCOME For the period ended Dividends (net of foreign withholding taxes of $25,013) $ 293,633 April 30, 2003 Interest 4,966 Unaudited.(1) Total investment income 298,599 EXPENSES Investment management fee 204,030 Class A distribution and service fee 52,741 Class B distribution and service fee 47,640 Class C distribution and service fee 3,258 Transfer agent fee 225,491 Printing 22,632 Custodian fee 15,502 Registration and filing fee 10,046 Accounting and legal services fee 9,783 Auditing fee 2,560 Trustees' fee 2,555 Miscellaneous 2,233 Interest expense 1,662 Legal fee 660 Total expenses 600,793 Net investment loss (302,194) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on Investments (3,377,459) Foreign currency transactions (27,579) Change in net unrealized appreciation (depreciation) of Investments 1,506,752 Translation of assets and liabilties in foreign currencies (3,903) Net realized and unrealized loss (1,902,189) Decrease in net assets from operations ($2,204,383) (1) Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 6 John Hancock Global Fund YEAR ENDED PERIOD ENDED 10-31-02 4-30-03(1) CHANGES IN INCREASE (DECREASE) IN NET ASSETS NET ASSETS From operations Net investment loss ($951,314) ($302,194) Net realized loss (10,161,375) (3,405,038) Change in net unrealized appreciation (depreciation) 2,769,567 1,502,849 Decrease in net assets resulting from operations (8,343,122) (2,204,383) From Fund share transactions (10,750,858) (4,806,714) NET ASSETS Beginning of period 69,489,975.00 50,395,995 End of period(2) $50,395,995 $43,384,898 (1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Includes accumulated net investment loss of $6,026 and $308,220, respectively. See notes to financial statements. 7 John Hancock Global Fund Financial Highlights CLASS A PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03(1) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $12.94 $13.46 $15.24 $13.64 $7.71 $6.60 Net investment loss(2) (0.05) (0.03) (0.08) (0.11) (0.10) (0.04) Net realized and unrealized gain (loss) on investments 1.53 2.67 (0.91) (5.82) (1.01) (0.23) Total from investment operations 1.48 2.64 (0.99) (5.93) (1.11) (0.27) Less distributions >From net realized gain (0.96) (0.86) (0.61) -- -- -- Net asset value, end of period $13.46 $15.24 $13.64 $7.71 $6.60 $6.33 Total return(3)(%) 11.88 20.90 (6.90) (43.48) (14.40) (4.09)(4) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $121 $128 $105 $51 $39 $34 Ratio of expenses to average net assets (%) 1.82 1.78 1.87 2.14 2.35 2.49(5) Ratio of net investment loss to average net assets (%) (0.33) (0.23) (0.52) (1.01) (1.31) (1.18)(5) Portfolio turnover (%) 160 176 182 297 264 125 See notes to financial statements. 8 John Hancock Global Fund Financial Highlights CLASS B PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03(1) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $12.39 $12.76 $14.30 $12.67 $6.93 $5.90 Net investment loss(2) (0.13) (0.11) (0.18) (0.17) (0.14) (0.05) Net realized and unrealized gain (loss) on investments 1.46 2.51 (0.84) (5.57) (0.89) (0.22) Total from investment operations 1.33 2.40 (1.02) (5.74) (1.03) (0.27) Less distributions >From net realized gain (0.96) (0.86) (0.61) -- -- -- Net asset value, end of period $12.76 $14.30 $12.67 $6.93 $5.90 $5.63 Total return(3)(%) 11.15 20.12 (7.60) (45.30) (14.86) (4.58)(4) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $55 $54 $41 $17 $11 $9 Ratio of expenses to average net assets (%) 2.46 2.37 2.57 2.84 3.05 3.19(5) Ratio of net investment loss to average net assets (%) (0.97) (0.82) (1.25) (1.72) (2.01) (1.87)(5) Portfolio turnover (%) 160 176 182 297 264 125 See notes to financial statements. 9 John Hancock Global Fund Financial Highlights CLASS C PERIOD ENDED 10-31-99(6) 10-31-00 10-31-01 10-31-02 4-30-03(1) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $12.88 $14.30 $12.67 $6.93 $5.90 Net investment loss(2) (0.10) (0.15) (0.17) (0.14) (0.05) Net realized and unrealized gain (loss) on investments 1.52 (0.87) (5.57) (0.89) (0.22) Total from investment operations 1.42 (1.02) (5.74) (1.03) (0.27) Less distributions >From net realized gain -- (0.61) -- -- -- Net asset value, end of period $14.30 $12.67 $6.93 $5.90 $5.63 Total return(3)(%) 11.02(4) (7.60) (45.30) (14.86) (4.58)(4) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(7) $1 $1 $1 $1 Ratio of expenses to average net assets (%) 2.48(5) 2.57 2.84 3.05 3.19(5) Ratio of net investment loss to average net assets (%) (1.01)(5) (1.06) (1.72) (2.01) (1.86)(5) Portfolio turnover (%) 176 182 297 264 125 (1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Based on the average of the shares outstanding. (3) Assumes dividend reinvestment and does not reflect the effect of sales charges. (4) Not annualized. (5) Annualized. (6) Class C shares began operations on 3-1-99. (7) Less than $500,000. See notes to financial statements. 10 NOTES TO FINANCIAL STATEMENTS Unaudited. NOTE A Accounting policies John Hancock Global Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, 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 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. 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 investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign 11 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. 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. 12 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 $50,475,789 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, 2009 - $39,619,964 and October 31, 2010 - $10,855,825. 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 equivalent, on an annual basis, to the sum of: (a) 0.90% of the first $100,000,000 of the Fund's average daily net asset value, (b) 0.80% of the next $200,000,000, (c) 0.75% of the next $200,000,000 and (d) 0.625% of the Fund's average daily net asset value in excess of $500,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for the payment of the subadviser's fees. 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 $14,958 with regard to sales of Class A shares. Of this amount, $1,631 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $7,261 was paid as sales commissions to unrelated broker- 13 dealers and $6,066 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 $1,395 with regard to sales of Class C shares. Of this amount, $1,358 was paid as sales commissions to unrelated broker-dealers and $37 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 $15,582 for Class B shares and $129 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 0.04% 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. 14 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 1,786,452 $13,544,533 51,002 $303,860 Repurchased (2,543,191) (19,528,993) (638,004) (3,955,188) Net decrease (756,739) ($5,984,460) (587,002) ($3,651,328) CLASS B SHARES Sold 311,157 $2,161,259 121,009 $677,661 Repurchased (1,010,948) (7,061,861) (325,267) (1,813,656) Net decrease (699,791) ($4,900,602) (204,258) ($1,135,995) CLASS C SHARES Sold 78,832 $540,982 37,183 $207,924 Repurchased (64,039) (406,778) (41,061) (227,315) Net increase (decrease) 14,793 $134,204 (3,878) ($19,391) NET DECREASE (1,441,737) ($10,750,858) (795,138) ($4,806,714) (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 $54,533,038 and $68,626,849, respectively The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $32,290,917. Gross unrealized appreciation and depreciation of investments aggregated $2,620,631 and $1,012,707, respectively, resulting in net unrealized appreciation of $1,607,924. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales. NOTE E Proposed reorganization On November 19, 2002, the Trustees approved the reorganization of John Hancock European Equity Fund and John Hancock Global Fund into John Hancock International Fund, subject to the approval by shareholders. 15 John Hancock Global Fund 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 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 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 60 State Street Boston, Massachusetts 02109-1803 John Hancock Large Cap Growth 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 capital appreciation through invest- ments in large- capitalization companies with above-average projected earnings growth. Over the last six months * The stock market remained volatile, but moved higher. * Large-cap growth stocks benefited from overseas exposure as the U.S. dollar weakened. * The Fund was positioned to take advantage of an economic recovery. [Bar chart with heading "John Hancock Large Cap Growth 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 2% at the top. The first bar represents the 1.23% total return for Class A. The second bar represents the 0.93% total return for Class B. The third bar represents the 0.93% 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 5.7% General Electric Co. 5.2% Pfizer, Inc. 4.4% Microsoft Corp. 2.8% Johnson & Johnson 2.2% Medtronic, Inc. 2.2% Colgate-Palmolive Co. 2.2% Cisco Systems, Inc. 1.9% EMC Corp. 1.9% Citigroup, Inc. 1.9% Wal-Mart Stores, Inc. As a percentage of net assets on April 30, 2003. MANAGERS' REPORT BY PAUL J. BERLINGUET, ROBERT J. UEK, CFA, AND THOMAS P. NORTON, CFA, PORTFOLIO MANAGERS John Hancock Large Cap Growth Fund War with Iraq, tensions in North Korea, the SARS virus and a weak U.S. economy combined to create unrest in the stock market during the six months ended April 30, 2003. Skittish investors shifted in and out of sectors in search of cheap stocks with less downside risk. After making little headway, stocks finally rebounded in April, fueled by the "de facto" victory in Iraq, declining oil prices, rising consumer confidence, improved first-quarter earnings and somewhat encouraging economic data. The Standard & Poor's 500 Index, a broad measure of stock market performance, returned 4.47% for the six-month period, with large-cap, multinational stocks benefiting from the weak U.S. dollar. PERFORMANCE AND STRATEGY REVIEW John Hancock Large Cap Growth Fund's Class A, Class B, and Class C shares returned 1.23%, 0.93% and 0.93%, respectively, at net asset value, for the six months ended April 30, 2003. These returns were slightly behind the average large-cap growth fund, which returned 2.77% over the same period, according to Lipper, Inc.1 The Russell Top 200 Growth Index, which tracks the largest growth stocks, returned 3.33%. Keep in mind that your net asset value return will be different from the Fund's if you were not invested in the Fund for the entire period and did not reinvest all distributions. Long-term performance information can be found on pages six and seven. "...stocks finally rebounded in April..." The Fund remained diversified across industries, targeting companies with strong managements, steady cash flows and demonstrated earnings growth. Performance modestly lagged that of our benchmark, the Russell Top 200 Growth Index, due to both stock selection and minor variations in sector weights. Our strict sell discipline -- which involves setting price targets and then exiting investments that reach those targets -- helped us in a volatile market. [Photos of Paul Berlinguet, Robert Uek and Thomas Norton flush right next to first paragraph.] MORE ECONOMIC SENSITIVITY Last fall, we started increasing the Fund's exposure to stocks that we believed would benefit from an economic recovery. We added to technology, which became our largest sector concentration. After sliding late last year, tech stocks rebounded in the new year, buoyed by cheap valuations, extensive cost cutting and a more stable business environment. Companies with improved efficiencies and operating leverage, such as Cisco Systems, a leader in networking technology, and EMC, a leader in the growing field of data storage, were among our top performers. We lightened up on financials, moving away from banks and toward more economically sensitive brokers. Merrill Lynch was a particularly strong performer, rallying as investors rewarded its cost-cutting efforts. Offsetting these gains, however, were declines at State Street, the world's largest back-office processor, and American International Group, a global insurer that surprised investors with higher-than-expected claims costs. We reduced our investments in both companies. "Our strict sell disci- pline ... helped us in a volatile market." HEALTH-CARE GAINS AND LOSSES In health care, our focus was on health-service companies, generic pharmaceuticals and medical equipment companies. We mostly avoided big, branded pharmaceuticals due to concerns over patent expirations. We did, however, own Merck, whose earnings appeared, in our opinion, to have bottomed, and Pfizer, which we believe has the potential for cost savings from its merger with Pharmacia. Merck was one of our better performers, as was Mylan Laboratories, a generic pharmaceutical company benefiting as patents expire for many branded drugs. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Medical 20%, the second is Computers 17%, the third Retail 8%, the fourth Diversified operations 7%, and the fifth Oil & gas 6%.] Conversely, Cardinal Health, a drug distributor; Baxter International, which makes blood products; and HCA, a for-profit hospital company, posted sharp declines for individual reasons. We sold our stakes in each, fearing that their problems would linger. We also pared back on our health-services names, believing these companies could have less power to raise prices going forward. [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-03." The chart is divided into two sections (from top to left): Common stocks 98%, and Short-term investments & other 2%.] MIXED RESULTS FOR CONSUMER STOCKS In the consumer discretionary sector, our focus was on more economically sensitive media stocks. We trimmed our stake in Viacom, an industry giant, when it hit our price target, and added to Comcast, a leading cable provider. Comcast generated strong returns as it integrated AT&T Broadband and focused on improving its balance sheet and generating positive free cash flow. We also invested in office supply stores, including Staples, which benefited from a remodeling program that boosted sales, and Office Depot, which weakened when its sales numbers fell below expectations, and we sold it. [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 General Electric followed by an up arrow with the phrase "Cheap valuation, high dividend yield." 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 "Higher-than-expected claims, weak equity markets."] We avoided most apparel retailers and department stores due to our concerns about competitive positioning and fears that consumer spending might slow. Our stake in the more defensive consumer staples group was also light as we found most of these stocks too expensive relative to expected growth rates. We did, however, add Colgate-Palmolive, a well-run company with significant overseas exposure and a history of consistent earnings growth. "In our view, stock valuations seem attractive..." IMPROVING OUTLOOK We are encouraged that the economy, although still sluggish, has not gotten worse. In addition, the war has ended, consumer confidence has risen and oil prices have declined. Our outlook is for inflation to remain low and interest rates benign. We think this backdrop bodes well for the economy and the stock market. High unemployment levels and weak corporate spending, however, remain concerns. In our view, stock valuations seem attractive, especially given valuations for other asset classes, very low interest-rate levels and the current economic cycle. We are optimistic about large-cap growth stocks because they are among the higher quality names in the market. Many are also trading at valuations that are below average and some offer attractive dividend yields. 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 Russell Top 200 Growth Index, an unmanaged index containing growth- oriented stocks from the Russell Top 200 index. It is not possible to invest in an index. Class A Class B Class C Index Inception date 12-24-68 1-3-94 6-1-98 -- Average annual returns with maximum sales charge (POP) One year -24.33% -24.87% -22.44% -13.82% Five years -15.03% -14.99% -- -6.04% Ten years -0.35% -- -- 8.32% Since inception -- -2.01% --14.42% -- Cumulative total returns with maximum sales charge (POP) Six months -3.85% -4.07% -1.12% 3.34% One year -24.33% -24.87% -22.44% -13.82% Five years -55.70% -55.61% -- -26.77% Ten years -3.40% -- -- 122.28% Since inception -- -17.26% -53.47% -- 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. 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 Russell Top 200 Growth 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 $22,228 as of April 30, 2003. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Large Cap Growth Fund, before sales charge, and is equal to $10,168 as of April 30, 2003. The third line represents the value of the same hypothetical $10,000 investment made in the John Hancock Large Cap Growth Fund, after sales charge, and is equal to $9,660 as of April 30, 2003. Class B 1 Class C 1 Period beginning 1-3-94 6-1-98 Without sales charge $8,274 $4,701 With maximum sales charge -- $4,654 Index $21,067 $7,505 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 98.49% $179,886,791 (Cost $161,837,344) Advertising 1.46% 2,661,700 43,000 Omnicom Group, Inc. 2,661,700 Banks -- United States 2.93% 5,353,363 27,250 Bank of America Corp. 2,017,863 50,000 State Street Corp. 1,751,500 40,000 TCF Financial Corp. 1,584,000 Beverages 3.43% 6,261,230 50,163 Anheuser-Busch Cos., Inc. 2,502,130 60,000 Coca-Cola Co. (The) 2,424,000 65,000 Pepsi Bottling Group, Inc. (The) 1,335,100 Broker Services 3.83% 7,003,440 34,100 Goldman Sachs Group, Inc. (The) 2,588,190 55,000 Merrill Lynch & Co., Inc. 2,257,750 250,000 Schwab (Charles) Corp. (The) 2,157,500 Business Services -- Misc. 1.02% 1,868,400 60,000 Paychex, Inc. 1,868,400 Computers 17.10% 31,230,434 50,000 Affiliated Computer Services, Inc.*+ 2,385,000 270,000 BEA Systems, Inc.*+ 2,891,700 264,500 Cisco Systems, Inc.* 3,978,080 50,000 Dell Computer Corp.* 1,445,500 30,000 Electronic Arts, Inc.* 1,778,100 390,000 EMC Corp.* 3,545,100 150,000 Hewlett-Packard Co. 2,445,000 35,000 International Business Machines Corp. 2,971,500 312,200 Microsoft Corp. 7,982,954 100,000 Oracle Corp.* 1,188,000 25,000 Yahoo! Inc.* 619,500 Cosmetics & Personal Care 3.72% 6,790,300 20,000 Avon Products, Inc. 1,163,400 70,000 Colgate-Palmolive Co. 4,001,900 50,000 Estee Lauder Cos., Inc. (The) (Class A) 1,625,000 Diversified Operations 7.03% 12,841,729 20,000 3M Co. 2,520,800 350,456 General Electric Co. 10,320,929 Electronics 6.25% 11,424,250 70,000 Analog Devices, Inc.*+ 2,318,400 100,000 Applied Materials, Inc.* 1,460,000 251,000 Flextronics International Ltd. (Singapore)* 2,196,250 144,000 Intel Corp. 2,649,600 40,000 KLA-Tencor Corp.*+ 1,640,000 100,000 Teradyne, Inc.* 1,160,000 Fiber Optics 0.88% 1,615,000 500,000 JDS Uniphase Corp.*+ 1,615,000 Finance 3.62% 6,607,730 15,000 BlackRock, Inc. * 682,200 90,000 Citigroup, Inc. 3,532,500 61,000 First Data Corp.+ 2,393,030 Household 0.83% 1,524,000 50,000 Newell Rubbermaid, Inc. 1,524,000 Insurance 2.04% 3,727,820 20,000 American International Group, Inc. 1,159,000 58,000 RenaissanceRe Holdings Ltd. (Bermuda) 2,568,820 Leisure 1.18% 2,157,500 25,000 International Game Technology*+ 2,157,500 Manufacturing 0.76% 1,379,600 20,000 Danaher Corp. 1,379,600 Media 5.44% 9,931,400 80,000 Clear Channel Communications, Inc.* 3,128,800 35,000 Comcast Corp. (Class A)* 1,116,850 102,500 Comcast Corp. (Special Class A)* 3,081,150 60,000 Viacom, Inc. (Class B)* 2,604,600 Medical 19.85% 36,259,880 40,000 Abbott Laboratories 1,625,200 50,000 Amgen, Inc.* 3,065,500 55,000 Biovail Corp. (Canada)* 1,988,250 35,000 Forest Laboratories, Inc.*+ 1,810,200 40,000 IDEC Pharmaceuticals Corp.*+ 1,310,000 90,017 Johnson & Johnson 5,073,358 84,776 Medtronic, Inc. 4,047,206 50,000 Merck & Co., Inc. 2,909,000 62,500 Mylan Laboratories, Inc. 1,766,875 40,000 Novartis AG, American Depositary Receipt (ADR) (Switzerland) 1,579,200 306,561 Pfizer, Inc. 9,426,751 18,000 UnitedHealth Group, Inc. 1,658,340 Oil & Gas 6.28% 11,461,600 50,000 Anadarko Petroleum Corp. 2,220,000 60,000 BJ Services Co.* 2,190,600 105,000 ENSCO International, Inc. 2,667,000 80,000 Exxon Mobil Corp. 2,816,000 40,000 Nabors Industries Ltd. (Bermuda)*+ 1,568,000 Retail 8.04% 14,681,415 40,000 Best Buy Co., Inc.* 1,383,200 115,000 Home Depot, Inc. (The) 3,234,950 145,000 McDonald's Corp. 2,479,500 105,000 Staples, Inc.* 1,999,200 65,000 Target Corp. 2,173,600 60,564 Wal-Mart Stores, Inc. 3,410,965 Steel 0.56% 1,021,250 25,000 Nucor Corp.+ 1,021,250 Telecommunications 2.24% 4,084,750 145,000 Nokia Oyj (ADR) (Finland)+ 2,402,650 45,000 Verizon Communications, Inc. 1,682,100 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 15.97% $29,158,411 (Cost $29,158,411) Joint Repurchase Agreement 3.15% 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) 1.28% $5,743 5,743,000 SHARES Cash Equivalents 12.82% AIM Cash Investment Trust** 23,415,411 23,415,411 TOTAL INVESTMENTS 114.46% $209,045,202 OTHER ASSETS AND LIABILITIES, NET (14.46%) ($26,403,815) TOTAL NET ASSETS 100.00% $182,641,387 Notes to Schedule of Investments + All or a portion of this security is on loan on 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 $190,995,755), including $22,732,490 of securities loaned $209,045,202 Cash 794 Receivable for investments sold 2,216,264 Receivable for shares sold 1,627 Dividends and interest receivable 66,221 Other assets 47,822 Total assets 211,377,930 LIABILITIES Payable for investments purchased 4,945,284 Payable for shares repurchased 67,540 Payable for securities on loan 23,415,411 Payable to affiliates 230,220 Other payables and accrued expenses 78,088 Total liabilities 28,736,543 NET ASSETS Capital paid-in 445,580,493 Accumulated net realized loss on investments (280,059,652) Net unrealized appreciation of investments 18,049,447 Accumulated net investment loss (928,901) Net assets $182,641,387 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($132,973,836 [DIV] 16,129,553 shares) $8.24 Class B ($46,673,615 [DIV] 6,173,169 shares) $7.56 Class C ($2,993,936 [DIV] 396,200 shares) $7.56 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($8.24 [DIV] 95%) $8.67 Class C ($7.56 [DIV] 99%) $7.64 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 operating the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $6,604) $960,494 Interest (including securities lending income of $17,552) 52,991 Total investment income 1,013,485 EXPENSES Investment management fee 680,386 Class A distribution and service fee 197,387 Class B distribution and service fee 234,913 Class C distribution and service fee 14,311 Transfer agent fee 649,092 Accounting and legal services fee 38,784 Printing 23,677 Registration and filing fee 22,815 Custodian fee 20,272 Auditing fee 17,758 Trustees' fee 6,194 Miscellaneous 5,236 Interest expense 1,833 Legal fee 1,249 Total expenses 1,913,907 Net investment loss (900,422) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (5,077,877) Change in net unrealized appreciation (depreciation) of investments 7,772,943 Net realized and unrealized gain 2,695,066 Increase in net assets from operations $1,794,644 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, distri- butions paid to shareholders, if any, and any increase or decrease in money share- holders invested in the Fund. INCREASE (DECREASE) IN NET ASSETS From operations YEAR PERIOD ENDED ENDED 10-31-02 4-30-03 1 Net investment loss ($3,115,869) ($900,422) Net realized loss (53,440,499) (5,077,877) Change in net unrealized appreciation (depreciation) (984,611) 7,772,943 Increase (decrease) in net assets resulting from operations (57,540,979) 1,794,644 From Fund share transactions (48,397,414) (13,086,407) NET ASSETS Beginning of period 299,871,543 193,933,150 End of period 2 $193,933,150 $182,641,387 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $28,479 and $928,901, 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 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $24.37 $22.27 $25.04 $20.73 $10.38 $8.14 Net investment loss 2 (0.11) (0.17) (0.23) (0.13) (0.10) (0.03) Net realized and unrealized gain (loss) on investments 2.17 5.65 (1.48) (9.42) (2.14) 0.13 Total from investment operations 2.06 5.48 (1.71) (9.55) (2.24) 0.10 Less distributions From net realized gain (4.16) (2.71) (2.60) (0.80) -- -- Net asset value, end of period $22.27 $25.04 $20.73 $10.38 $8.14 $8.24 Total return 3 (%) 9.80 27.58 (8.15) (47.77) (21.58) 1.23 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $382 $484 $421 $209 $140 $133 Ratio of expenses to average net assets (%) 1.40 1.35 1.36 1.59 1.75 1.92 5 Ratio of net investment loss to average net assets (%) (0.50) (0.70) (0.97) (0.99) (0.96) (0.80) 5 Portfolio turnover (%) 153 6 183 162 131 228 84 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $23.70 $21.38 $23.74 $19.40 $9.62 $7.49 Net investment loss 2 (0.25) (0.31) (0.37) (0.21) (0.15) (0.05) Net realized and unrealized gain (loss) on investments 2.09 5.38 (1.37) (8.77) (1.98) 0.12 Total from investment operations 1.84 5.07 (1.74) (8.98) (2.13) 0.07 Less distributions From net realized gain (4.16) (2.71) (2.60) (0.80) -- -- Net asset value, end of period $21.38 $23.74 $19.40 $9.62 $7.49 $7.56 Total return 3 (%) 9.04 26.70 (8.79) (48.12) (22.14) 0.93 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $217 $312 $239 $88 $51 $47 Ratio of expenses to average net assets (%) 2.08 2.02 2.05 2.24 2.45 2.62 5 Ratio of net investment loss to average net assets (%) (1.16) (1.37) (1.66) (1.65) (1.66) (1.50) 5 Portfolio turnover (%) 153 6 183 162 131 228 84 FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-98 7 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $21.43 $21.37 $23.73 $19.39 $9.61 $7.49 Net investment loss 2 (0.10) (0.31) (0.37) (0.20) (0.15) (0.06) Net realized and unrealized gain (loss) on investments 0.04 5.38 (1.37) (8.78) (1.97) 0.13 Total from investment operations (0.06) 5.07 (1.74) (8.98) (2.12) 0.07 Less distributions From net realized gain -- (2.71) (2.60) (0.80) -- -- Net asset value, end of period $21.37 $23.73 $19.39 $9.61 $7.49 $7.56 Total return 3 (%) (0.28) 4 26.72 (8.80) (48.15) (22.06) 0.93 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $3 $4 $3 $3 Ratio of expenses to average net assets (%) 2.10 5 2.05 2.06 2.29 2.45 2.62 5 Ratio of net investment loss to average net assets (%) (1.14) 5 (1.36) (1.71) (1.68) (1.66) (1.50) 5 Portfolio turnover (%) 153 6 183 162 131 228 84 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Not annualized. 5 Annualized. 6 Excludes merger activity. 7 Class C shares began operations on 6-1-98. See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Large Cap Growth Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to seek long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B 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. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. 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. Distribu tion 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. 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 $22,732,490 collateralized by cash in the amount of $23,415,411. The cash collateral was invested in a short-term instrument. 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 $274,017,101 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, 2009 -- $218,821,116 and October 31, 2010 -- $55,195,985. 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 equivalent, on an annual basis, to the sum of: (a) 0.75% of the first $750,000,000 of the Fund's average daily net asset value and (b) 0.70% of the Fund's average daily net asset value in excess of $750,000,000. The Fund has 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. Accord ingly, 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 Con duct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 pay ments 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 $62,616 with regard to sales of Class A shares. Of this amount, $8,519 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $30,263 was paid as sales commissions to unrelated broker-dealers and $23,834 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 $3,059 with regard to sales of Class C shares. Of this amount, $2,450 was paid as sales commissions to unrelated broker-dealers and $609 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 $57,521 for Class B shares and $322 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 0.04% 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 1,947,091 $19,544,311 673,693 $5,405,056 Repurchased (4,847,316) (47,395,047) (1,764,446) (14,105,215) Net decrease (2,900,225) ($27,850,736) (1,090,753) ($8,700,159) CLASS B SHARES Sold 1,608,344 $15,305,021 619,870 $4,550,557 Repurchased (3,934,461) (36,201,222) (1,228,289) (9,002,535) Net decrease (2,326,117) ($20,896,201) (608,419) ($4,451,978) CLASS C SHARES Sold 151,406 $1,482,455 63,148 $467,894 Repurchased (128,882) (1,132,932) (54,962) (402,164) Net increase 22,524 $349,523 8,186 $65,730 NET DECREASE (5,203,818) ($48,397,414) (1,690,986) ($13,086,407) 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 $151,388,214 and $157,113,125, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $191,960,428. Gross unrealized appreciation and depreciation of investments aggregated $20,274,114 and $3,189,340, respectively, resulting in net unrealized appreciation of $17,084,774. The difference between book basis and tax basis net unrealized appreciation 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. ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of receiving annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhancock.com/funds/edelivery 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 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 Growth Fund. 200SA 4/03 6/03 John Hancock Mid Cap Growth 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 11 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 capital appreciation by investing primar- ily in stocks of medium capital ization companies (in the capitaliza- tion range of the Russell Midcap Growth Index) with above- average earnings growth. Over the last six months * The stock market rallied as the war with Iraq ended and earnings reports came in better than expected. * The Fund's emphasis was on quality companies. * The Fund's tilt toward economically sensitive areas, including technology and industrials, helped performance. [Bar chart with heading "John Hancock Mid Cap Growth 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 5% at the top. The first bar represents the 4.17% total return for Class A. The second bar represents the 3.85% total return for Class B. The third bar represents the 3.67% total return for Class C. The fourth bar represents the 4.45% total return for Class I. 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% Affiliated Computer Services, Inc. 3.6% BEA Systems, Inc. 3.2% Caremark Rx, Inc. 2.9% Performance Food Group Co. 2.6% Gilead Sciences, Inc. 2.4% Danaher Corp. 2.4% Pactiv Corp. 2.3% BJ Services Co. 2.3% MedImmune, Inc. 2.3% Electronic Arts, Inc. As a percentage of net assets on April 30, 2003. BY PAUL J. BERLINGUET, THOMAS P. NORTON, CFA, AND ROBERT J. UEK, CFA, PORTFOLIO MANAGERS John Hancock Mid Cap Growth Fund MANAGERS' REPORT Stocks finally rewarded patient investors. The Standard & Poor's 500 Index returned 4.47% for the six months ended April 30, 2003, but its gains did not come easily. Stocks rallied late last year, then fizzled in the new year amid worrisome headline news that included war with Iraq, the SARS virus and the weak economy. Strong sector rotations resulted, as investors reacted to the changing environment. Fortunately, the war came to a swift end, first-quarter earnings were better than expected and consumer confidence rose, boosting stock returns in April. The Russell Midcap Growth Index returned 8.19% for the six-month period, benefiting in part from lower headline risk than large-cap names. "Stocks finally rewarded patient investors." PERFORMANCE REVIEW The Fund remained broadly diversified across industries, focusing on quality companies that would benefit from an economic recovery. We followed our disciplined buying and selling process, setting price targets for each investment that helped us lock in profits and minimize losses in a volatile market. John Hancock Mid Cap Growth Fund's Class A, Class B, Class C and Class I shares posted total returns of 4.17%, 3.85%, 3.67% and 4.45%, respectively, at net asset value for the six months ended April 30, 2003. By comparison, the average mid-cap growth fund returned 4.04%, according to Lipper, Inc.1 Keep in mind that your net asset value return will be different from the Fund's if you were not invested in the Fund for the entire period and did not reinvest all distributions. Long-term performance information can be found on pages six and seven. [Photos of Paul Berlinguet, Thomas Norton and Robert Uek flush right next to first paragraph.] TECHNOLOGY CONCENTRATION Technology, which enjoyed a nice comeback from depressed levels, was the Fund's largest sector. At certain points, our buy and sell discipline caused our stake to fall slightly below that of our benchmark, the Russell Midcap Growth Index. This hindered the Fund when tech stocks were climbing. On the positive side, our tech stocks were among the Fund's best performers. We focused on software companies, some of which posted especially strong gains as sales and earnings came in better than expected. Both Mercury Interactive, which sells testing and monitoring software, and BEA Systems, which develops systems software for application servers, posted robust returns for the portfolio. We sold Mercury, as it reached what we thought was full valuation. The Fund also benefited from owning Electronic Arts, which provides video game programming, and Precise Software Solutions, which was bought out during the period by Veritas Software. Disappointments included RF Micro Devices, a company that makes semiconductors for cell phones, and Tellabs, which supplies switches for routing telecommunications in metropolitan areas. Both stocks sank amid weak demand, causing us to sell. We held on, however, to our large stake in Affiliated Computer Services, which is a leader in the growing field of business processing outsourcing. It declined as competitors' disappointments hurt the group. "...our tech stocks were among the Fund's best performers." GAINS IN INDUSTRIALS AND FINANCIALS Our industrial and financial stock selection, which focused on more economically sensitive companies, gave a nice boost to returns. Danaher, which manufactures Craftsman tools as well as processing and environmental controls for factories, benefited from strong execution and steady demand. In the finance sector, we owned a mix of banks, brokers and property and casualty insurers. Legg Mason, a broker, did especially well as business stabilized, while insurer RenaissanceRe benefited from improved industry pricing. Our energy stocks also did well. We focused on oil services companies, which we expect to benefit from increased drilling activity. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Medical 21%, the second is Computers 16%, the third Retail 10%, the fourth Oil & gas 8%, and the fifth Media 6%.] [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-03." The chart is divided into two sections (from top to left): Common stocks 94% and Short-term investments & other 6%.] HEALTH CARE AND CONSUMER Our health-care stocks lagged the benchmark. We emphasized biotechnology and pharmaceuticals and largely avoided medical services and technology companies. Disappointments included King Pharmaceuticals, which tumbled amid missed earnings and a pricing investigation. We added to our stake, believing investors had overreacted. However, we sold Charles River Laboratories International, a medical research company that suffered due to slowing demand for its products and services. Some of these losses were offset by strong gains at Gilead Sciences, a biotech company specializing in HIV drugs, and MedImmune, a biotech company that recently launched an aerosol flu vaccine. Caremark Rx, a pharmaceutical benefits management company, also did well as demand remained strong. [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 Mercury Interactive followed by an up arrow with the phrase "Better-than-expected sales, rally in tech stocks." The second listing is Electronic Arts followed by an up arrow with the phrase "Strong balance sheet, good management, reasonable valuation." The third listing is RF Micro Devices followed by a down arrow with the phrase "Weaker-than-expected demand and pricing."] In aggregate, consumer stocks were disappointing. We focused on specialty retailers and media, downplaying leisure. Unfortunately, a couple of our investments missed earnings, resulting in sharp declines. Among them were Monster Worldwide, which does on-line recruiting, and Office Depot. We cut our losses and eliminated both from the portfolio. We maintained a large stake in Performance Food Group, however, as a competitor's problems hurt the group. Select retailers -- including Coach, a leather goods company with good profit margins, and Staples, the office supply store -- rallied nicely. We trimmed our stake in Coach when it reached our price target and added Williams-Sonoma, an upscale home goods retailer with a lower valuation. "We believe the outlook for the market in general and mid-cap stocks in particular is favorable." IMPROVING OUTLOOK We believe the outlook for the market in general and mid-cap stocks in particular is favorable. We believe the economy will slowly and steadily improve through 2003 and 2004. As conditions stabilize, we think companies will be more apt to increase capital spending. This is key, given that weak capital spending has contributed heavily to the sluggish economy. 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, Index 1, an unmanaged index that includes 500 widely traded common stocks. Also shown on page 7 is the Russell Midcap Growth Index, Index 2, an unmanaged index that contains those stocks from the Russell Midcap Index with a greater-than-average growth orientation. It is not possible to invest in an index. Class A Class B Class C Class I 1 Index 1 Inception date 11-1-93 11-1-93 6-1-98 3-1-02 -- Average annual returns with maximum sales charge (POP) One year -21.08% -21.65% -19.21% -16.36% -13.30% Five years -8.41% -8.43% -- -- -2.42% Since inception 1.56% 1.40% -7.16% -14.49% -- Cumulative total returns with maximum sales charge (POP) Six months -1.03% -1.15% 1.65% 4.45% 4.47% One year -21.08% -21.65% -19.21% -16.36% -13.30% Five years -35.55% -35.62% -- -- -11.54% Since inception 15.87% 14.14% -30.56% -16.67% -- 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. Sales charge is not applicable for Class I shares. 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. 1 For certain types of investors as described in the Fund's prospectus for Class I shares. 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 two indexes described on page 6. Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Index 1 and is equal to $23,317 as of April 30, 2003. The second line represents Index 2 and is equal to $18,675 as of April 30, 2003. The third line represents the value of the hypothetical $10,000 investment made in the John Hancock Mid Cap Growth Fund, before sales charge, and is equal to $12,200 as of April 30, 2003. The fourth line represents the value of the same hypothetical investment made in the John Hancock Mid Cap Growth Fund, after sales charge, and is equal to $11,587 as of April 30, 2003. Class B 1 Class C 1 Class I 2 Period beginning 11-1-93 6-1-98 3-1-02 Without sales charge $11,414 $7,013 $9,333 With maximum sales charge -- $6,943 -- Index 1 $23,317 $9,000 $8,451 Index 2 $18,675 $8,955 $8,494 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, Class C and Class I 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. 2 For certain types of investors as described in the Fund's prospectus for Class I shares. 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 93.73% $124,101,407 (Cost $112,765,596) Advertising 2.19% 2,897,849 46,815 Omnicom Group, Inc. 2,897,849 Beverages 1.41% 1,871,040 96,000 Coca-Cola Enterprises, Inc. 1,871,040 Business Services -- Misc. 4.35% 5,762,152 43,597 ChoicePoint, Inc.* 1,538,102 54,200 Corporate Executive Board Co. (The)*+ 2,221,658 60,900 Manpower, Inc. 2,002,392 Computers 16.39% 21,706,425 105,933 Affiliated Computer Services, Inc.*+ 5,053,004 97,500 Alliance Data Systems Corp.* 2,047,500 443,600 BEA Systems, Inc.* 4,750,956 51,100 Electronic Arts, Inc.*+ 3,028,697 66,600 Intuit, Inc.* 2,582,748 136,000 McDATA Corp. (Class B)*+ 1,430,720 64,000 Symantec Corp.* 2,812,800 Containers 2.40% 3,170,340 154,500 Pactiv Corp.* 3,170,340 Cosmetics & Personal Care 0.52% 682,500 21,000 Estee Lauder Cos., Inc. (The) (Class A) 682,500 Electronics 4.16% 5,508,685 139,900 Flextronics International Ltd.* (Singapore) 1,224,125 88,800 Jabil Circuit, Inc.*+ 1,660,560 64,000 KLA-Tencor Corp.*+ 2,624,000 Finance 5.33% 7,050,450 60,098 Eaton Vance Corp. 1,790,920 38,785 Legg Mason, Inc. 2,106,025 33,500 State Street Corp. 1,173,505 50,000 TCF Financial Corp. 1,980,000 Insurance 1.72% 2,269,863 51,250 RenaissanceRe Holdings Ltd. (Bermuda) 2,269,863 Leisure 1.11% 1,467,100 17,000 International Game Technology* 1,467,100 Manufacturing 2.40% 3,181,013 46,115 Danaher Corp. 3,181,013 Media 5.81% 7,696,840 60,000 Cablevision Systems New York Group (Class A)*+ 1,345,200 41,000 Entercom Communications Corp.*+ 1,992,190 136,500 Radio One, Inc. (Class D)*+ 2,088,450 75,000 Univision Communications, Inc. (Class A)*+ 2,271,000 Medical 20.72% 27,439,426 32,000 Aetna, Inc. 1,593,600 24,000 Barr Laboratories, Inc.* 1,334,400 35,000 Biogen, Inc.*+ 1,329,650 68,800 Biomet, Inc. 2,095,648 32,000 Biovail Corp.* (Canada) 1,156,800 214,500 Caremark Rx, Inc.* 4,270,695 39,500 Cephalon, Inc. *+ 1,613,180 12,700 Forest Laboratories, Inc.* 656,844 75,000 Gilead Sciences, Inc.*+ 3,460,500 75,000 IDEC Pharmaceuticals Corp.* 2,456,250 60,000 King Pharmaceuticals, Inc.* 756,600 86,100 MedImmune, Inc.* 3,036,747 31,200 Stryker Corp.+ 2,090,712 34,000 Teva Pharmaceutical Industries Ltd. American Depositary Receipts (Israel) 1,587,800 Metal 2.26% 2,993,705 564,850 Crown Holdings Inc.* 2,993,705 Oil & Gas 7.82% 10,351,855 83,500 BJ Services Co.*+ 3,048,585 39,000 Nabors Industries Ltd.* (Bermuda)+ 1,528,800 48,450 Patterson-UTI Energy, Inc.* 1,603,210 138,000 Pride International, Inc.* 2,141,760 99,000 Rowan Cos., Inc.* 2,029,500 Retail 9.51% 12,596,229 33,700 Bed Bath & Beyond, Inc.* 1,331,487 48,700 Best Buy Co., Inc.* 1,684,046 55,200 Fastenal Co.+ 1,909,368 108,600 Performance Food Group Co.*+ 3,809,688 90,000 Staples, Inc.* 1,713,600 83,000 Williams-Sonoma, Inc.* 2,148,040 Steel 1.48% 1,960,800 48,000 Nucor Corp. 1,960,800 Telecommunications 1.37% 1,806,993 83,000 UTStarcom, Inc.*+ 1,806,993 Textile 1.12% 1,488,042 34,200 Coach, Inc.* 1,488,042 Transportation 1.66% 2,200,100 70,000 JetBlue Airways Corp.*+ 2,200,100 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 37.78% $50,027,506 (Cost $50,027,506) Joint Repurchase Agreement 7.24% 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% $9,592 9,592,000 SHARES Cash Equivalents 30.54% AIM Cash Investment Trust ** 40,435,506 40,435,506 TOTAL INVESTMENTS 131.51% $174,128,913 OTHER ASSETS AND LIABILITIES, NET (31.51%) ($41,719,186) TOTAL NET ASSETS 100.00% $132,409,727 * Non-income-producing security. ** Represents investment of security lending collateral. + All or a portion of this security is on loan as of April 30, 2003. 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. 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 $162,793,102) including $39,642,653 of securities loaned $174,128,913 Cash 2 Receivable for investments sold 1,686,089 Receivable for shares sold 1,956 Dividends and interest receivable 31,165 Other assets 31,443 Total assets 175,879,568 LIABILITIES Payable for investments purchased 2,757,373 Payable for shares repurchased 53,341 Payable for securities on loan 40,435,506 Payable to affiliates 122,014 Other payables and accrued expenses 101,607 Total liabilities 43,469,841 NET ASSETS Capital paid-in 251,699,914 Accumulated net realized loss on investments (129,346,627) Net unrealized appreciation of investments 11,335,811 Accumulated net investment loss (1,279,371) Net assets $132,409,727 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($85,829,191 [DIV] 12,739,154 shares) $6.74 Class B ($41,285,553 [DIV] 6,651,047 shares) $6.21 Class C ($2,586,784 [DIV] 416,615 shares) $6.21 Class I ($2,708,199 [DIV] 398,413 shares) $6.80 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($6.74 [DIV] 95%) $7.09 Class C ($6.21 [DIV] 99%) $6.27 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 $776) $172,265 Interest 34,804 Securities lending 28,349 Total investment income 235,418 EXPENSES Investment management fee 521,238 Class A distribution and service fee 123,917 Class B distribution and service fee 206,768 Class C distribution and service fee 12,501 Class A, B and C transfer agent fee 486,183 Class I transfer agent fee 5,893 Registration and filing fee 43,509 Accounting and legal services fee 27,831 Printing 18,902 Auditing fee 17,474 Custodian fee 16,445 Trustees' fee 5,084 Miscellaneous 4,962 Interest expense 2,359 Legal fee 1,049 Total expenses 1,494,115 Net investment loss (1,258,697) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (2,127,872) Change in net unrealized appreciation (depreciation) of investments 8,233,527 Net realized and unrealized gain 6,105,655 Increase in net assets from operations $4,846,958 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 ($3,202,072) ($1,258,697) Net realized loss (24,492,579) (2,127,872) Change in net unrealized appreciation (depreciation) 791,079 8,233,527 Increase (decrease) in net assets resulting from operations (26,903,572) 4,846,958 From Fund share transactions 25,804,343 (9,000,108) NET ASSETS Beginning of period 189,270,792 136,562,877 End of period 2 $136,562,877 $132,409,727 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $20,674 and $1,279,371, 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 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $11.40 $9.11 $12.85 $16.03 $7.66 $6.47 Net investment loss 2 (0.09) (0.12) (0.17) (0.12) (0.11) (0.05) Net realized and unrealized gain (loss) on investments (0.89) 3.86 4.23 (7.48) (1.08) 0.32 Total from investment operations (0.98) 3.74 4.06 (7.60) (1.19) 0.27 Less distributions From net realized gain (1.31) -- (0.88) (0.77) -- -- Net asset value, end of period $9.11 $12.85 $16.03 $7.66 $6.47 $6.74 Total return 3 (%) (9.40) 41.05 33.26 (49.87) (15.54) 4.17 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $101 $112 $176 $85 $85 $86 Ratio of expenses to average net assets (%) 1.59 1.60 1.46 1.63 1.89 2.07 5 Ratio of net investment loss to average net assets (%) (0.86) (1.14) (1.08) (1.13) (1.52) (1.71) 5 Portfolio turnover (%) 168 153 146 211 267 6 121 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $11.03 $8.72 $12.22 $15.08 $7.13 $5.98 Net investment loss 2 (0.15) (0.18) (0.27) (0.18) (0.16) (0.07) Net realized and unrealized gain (loss) on investments (0.85) 3.68 4.01 (7.00) (0.99) 0.30 Total from investment operations (1.00) 3.50 3.74 (7.18) (1.15) 0.23 Less distributions From net realized gain (1.31) -- (0.88) (0.77) -- -- Net asset value, end of period $8.72 $12.22 $15.08 $7.13 $5.98 $6.21 Total return 3 (%) (9.97) 40.14 32.30 (50.24) (16.13) 3.85 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $134 $146 $241 $101 $46 $41 Ratio of expenses to average net assets (%) 2.27 2.23 2.16 2.33 2.56 2.75 5 Ratio of net investment loss to average net assets (%) (1.54) (1.77) (1.78) (1.83) (2.20) (2.39) 5 Portfolio turnover (%) 168 153 146 211 267 6 121 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-98 7 10-31-99 10-31-00 10-31-01 10-31-02 6 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $9.99 $8.72 $12.21 $15.07 $7.13 $5.99 Net investment loss 2 (0.06) (0.19) (0.27) (0.18) (0.16) (0.07) Net realized and unrealized gain (loss) on investments (1.21) 3.68 4.01 (6.99) (0.98) 0.29 Total from investment operations (1.27) 3.49 3.74 (7.17) (1.14) 0.22 Less distributions From net realized gain -- -- (0.88) (0.77) -- -- Net asset value, end of period $8.72 $12.21 $15.07 $7.13 $5.99 $6.21 Total return 3 (%) 12.71 4 40.02 32.32 (50.21) (15.99) 3.67 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 8 -- 8 $5 $3 $2 $3 Ratio of expenses to average net assets (%) 2.29 5 2.30 2.16 2.33 2.58 2.77 5 Ratio of net investment loss to average net assets (%) (1.66) 5 (1.82) (1.80) (1.83) (2.21) (2.41) 5 Portfolio turnover (%) 168 153 146 211 267 6 121 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 7 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.16 $6.51 Net investment loss 2 (0.06) (0.03) Net realized and unrealized gain (loss) on investments (1.59) 0.32 Total from investment operations (1.65) 0.29 Net asset value, end of period $6.51 $6.80 Total return 3 (%) (20.22) 4 4.45 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 Ratio of expenses to average net assets (%) 1.46 5 1.44 5 Ratio of net investment loss to average net assets (%) (1.00) 5 (1.07) 5 Portfolio turnover (%) 267 6 121 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Not annualized. 5 Annualized. 6 Excludes merger activity. 7 Class C and Class I shares began operations on 6-1-98 and 3-1-02, respectively. 8 Less than $500,000. See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Mid Cap Growth Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, 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 capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B, Class C and Class I shares. The 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. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. 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. Distri bution and service fees, if any, and transfer agent fees for Class I shares, 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. Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $39,642,653 collateralized by cash in the amount of $40,435,506. The cash collateral was invested in a short-term instrument. 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 $127,218,756 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- $2,538,691, October 31, 2009 -- $99,673,619 and October 31, 2010 -- $25,006,446. 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 equivalent, on an annual basis, to the sum of: (a) 0.80% of the first $500,000,000 of the Fund's average daily net asset value, (b) 0.75% of the next $500,000,000 and (c) 0.70% of the Fund's average daily net asset value in excess of $1,000,000,000. The Fund has 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 de fined 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 $39,363 with regard to sales of Class A shares. Of this amount, $4,151 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $23,960 was paid as sales commissions to unrelated broker-dealers and $11,252 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 $3,805 with regard to sales of Class C shares. Of this amount, $3,425 was paid as sales commissions to unrelated broker-dealers and $380 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 $43,438 for Class B shares and $133 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. For Class A, B and C shares, 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, aggregated and allocated to each Class on the basis of its relative net asset value. For Class I shares, the Fund pays a monthly transfer agent fee at an an nual rate of 0.05% of the average daily net asset value, plus certain out-of-pocket expenses attributable to Class I shares. 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 0.04% 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, issued in reorganization 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 6,779,923 $53,607,931 1,162,602 $7,440,085 Repurchased (4,712,845) (36,297,979) (1,580,633) (10,043,728) Net increase (decrease) 2,067,078 $17,309,952 (418,031) ($2,603,643) CLASS B SHARES Sold 951,215 $6,872,300 341,880 $2,040,988 Repurchased (7,448,783) (53,300,949) (1,384,565) (8,191,150) Net decrease (6,497,568) ($46,428,649) (1,042,685) ($6,150,162) CLASS C SHARES Sold 138,670 $1,002,856 74,293 $448,778 Repurchased (170,318) (1,164,263) (68,236) (404,853) Net increase (decrease) (31,648) ($161,407) 6,057 $43,925 CLASS I SHARES 2 Sold 41,324 $272,525 103,999 $671,467 Issued in reorganization 533,703 4,100,229 -- -- Repurchased (131,455) (896,993) (149,158) (961,695) Net increase (decrease) 443,572 $3,475,761 (45,159) ($290,228) NET DECREASE (4,018,566) ($25,804,343) (1,499,818) ($9,000,108) 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Class I shares began operations on 3-1-02. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obli gations of the U.S. government, during the period ended April 30, 2003, aggregated $154,662,812 and $174,067,908, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $162,793,102. Gross unrealized appreciation and depreciation of investments aggregated $13,096,391 and $1,760,580, respectively, resulting in net unrealized appreciation of $11,335,811. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales. NOTE E Reorganization On May 29, 2002, the shareholders of the John Hancock Medium Capitalization Growth Fund ("Medium Capitalization Growth Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the Medium Capitalization Growth Fund in exchange solely for Class I shares of the Fund. The acquisition was accounted for as a tax-free exchange of 533,703 Class I shares of the Fund for the net assets of the Medium Capitalization Growth Fund, which amounted to $4,100,229, including $120,950 of unrealized appreciation, after the close of business on June 7, 2002. 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. 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 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 Mid Cap Growth Fund. 390SA 4/03 6/03 John Hancock International 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 14 For your information page 29 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 primarily in stocks of foreign companies. Over the last six months * The buildup to the U.S.-led war against Iraq created uncertainty and unsettled the international stock markets. * Global economic growth remained sluggish. * Growth stocks appeared to be coming back into favor. [Bar chart with heading "John Hancock International 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 -1% at the bottom and 1% at the top. The first bar represents the 0.00% total return for Class A. The second bar represents the -0.62% total return for Class B. The third bar represents the -0.62% total return for Class C. The fourth bar represents the 0.59% total return for Class I. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 2.2% Royal Bank of Scotland Group Plc 2.0% Vodafone Group Plc 1.8% Teva Pharmaceutical Industries Ltd. 1.8% GlaxoSmithKline Plc 1.7% Australia & New Zealand Banking Group Ltd. 1.6% ING Groep NV 1.5% Credit Suisse Group 1.5% Gallaher Group Plc 1.5% Diageo Plc 1.4% Novartis AG As a percentage of net assets on April 30, 2003. BY LORETTA MORRIS FOR THE NICHOLAS-APPLEGATE CAPITAL MANAGEMENT PORTFOLIO MANAGEMENT TEAM John Hancock International Fund MANAGERS' REPORT Upon shareholder approval, John Hancock Global Fund and John Hancock European Equity Fund were merged into John Hancock International Fund at the close of business on May 9, 2003. The international stock markets endured yet another challenging period during the six months ended April 30, 2003. Sluggish economic growth worldwide, the specter of war in Iraq and deteriorating conditions in the German and Japanese financial systems dampened investor sentiment. Despite these issues, international equities held up remarkably well. "The international stock markets endured yet another challenging period..." The international equity market became sharply oversold in the third quarter and into the fourth quarter of 2002, with investor sentiment dampened by anemic growth rates, pessimism over financial services companies (particularly in Germany), the overhang of the Iraq situation and terrorism, and debt downgrades from credit-rating agencies. Then, in early October, international equities rallied sharply as many beaten-down stocks rebounded. In December, international stocks retreated somewhat as concerns arose that per-share earnings estimates remained high. The year opened with a steady drumbeat of news surrounding the prospect of U.S.-led military action in Iraq. The international stock markets came under pressure in the first quarter of 2003 as a combination of war worries and weak economic data spurred a sell-off in equities. A snap-back in late March erased almost all of January and February's losses. In April, the international stock markets staged a strong rally as the situation in Iraq appeared to be nearing resolution, energy prices moderated and earnings -- although still weak -- came in slightly better than anticipated. FUND PERFORMANCE EXPLAINED For the six months ended April 30, 2003, the Fund's Class A, Class B, Class C and Class I shares posted total returns of 0.00%, -0.62%, - -0.62% and 0.59%, respectively, at net asset value. During the same period, the average international fund returned 0.92%, according to Lipper, Inc.1, while the benchmark MSCI All-Country World Free Ex-U.S. Index advanced 3.08%. Keep in mind that your net asset value return will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. See pages six and seven for historical performance information. The portfolio's underperformance relative to both peers and the benchmark is attributable to disappointing stock selection in the consumer durables sector and underweight holdings in financial services companies, which had been under pressure but snapped back late in the period. Specifically, the portfolio's holdings in money center banks and companies classified as "other financial" lagged their counterparts in the benchmark. By country, stock selection in Japan and Australia negatively influenced performance. "Integrated oil companies and food chains in the Fund performed especially well..." On the positive side, both relative and absolute portfolio returns were driven by strong stock selection and slightly overweight holdings in the retail trade, technology and energy sectors. Integrated oil companies and food chains in the Fund performed especially well on a relative basis, as did industrial engineering holdings on an absolute basis. Holdings in France and Germany -- where many hard-hit financial services firms that staged a late-period recovery are domiciled -- contributed to relative returns, as did Brazilian stocks. Brazil's stock market surged more than 40% on positive signs of reform from its recently elected leadership. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Banks-Foreign 18%, the second is Telecommunications 13%, the third Oil & gas 10%, the fourth Medical 8%, and the fifth Utilities 7%.] Gainers included Ryanair, an Irish discount airline that benefited from increased market share; Teva Pharmaceutical, a generic drug maker based in Israel that advanced on steady demand and firming prices; and Royal Bank of Scotland, which gained due to solid organic growth, cost control and its diversity of brands and businesses. Decliners included a number of Japanese companies, such as Nomura Securities, Mitsubishi Tokyo and Sony, all of which traded lower on concerns over the state of Japan's overall economy. [Bar chart at middle of page with heading "Top countries As a percentage of net assets on 4-30-03." The chart is divided into five sections: United Kingdom 23%, Japan 13%, Netherlands 6%, Switzerland 5% and Canada 5%.] FUND MOVES During the period, as a result of our bottom-up assessment of individual stocks' appreciation potential, assets were shifted out of Italy and Japan in favor of opportunities identified in the United Kingdom and the Netherlands. By sector, we increased our weighting in financial services stocks as a result of their improved outlook, and reduced exposure to the energy, producers/manufacturing and consumer durables sectors. At period's end, relative to its benchmark, the Fund was overweight stocks in the transportation and utilities sector and underweight producers/manufacturing and consumer durables stocks. By country, overweights included Ireland and Brazil while underweights included France and Japan. [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 Ryanair followed by an up arrow with the phrase "Surging passenger load amid cutbacks by long-haul carriers." The second listing is Corus Group followed by a down arrow with the phrase "Failed to sell aluminum unit; carbon steel unit is losing money." The third listing is Credit Suisse Group followed by an up arrow with the phrase "Bounced back from an oversold condition."] OUTLOOK Overall, our outlook is becoming more positive. First-quarter corporate earnings were better than expected, but against lowered expectations; the overhang of Iraq has been removed; and developed economies appear to be strengthening somewhat. We believe that, absent an extraordinary event, we are in a bottoming process. In Asia, we continue to monitor the SARS outbreak closely, but believe aggressive action by health ministers and the World Health Organization seems to be impeding its spread. "Overall, our outlook is becoming more positive." A more selective environment focusing on fundamental strength bodes well for our style, which is predicated on identifying companies that are benefiting from positive, sustainable change and investing in them just as the market is recognizing strength. Currently, we are looking closely for stocks that will benefit over the intermediate term and continue to strengthen when higher-growth stocks come back into favor. As we look forward, we believe better times lie ahead for the international equity markets. We appreciate your patience and com- mend you for staying the course throughout this difficult period. This commentary reflects the views of the portfolio management team through the end of the Fund's period discussed in this report. The team's 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. International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Morgan Stanley Capital International (MSCI) All Country World Free Ex-U.S. Index, an unmanaged index of freely traded stocks of foreign companies. It is not possible to invest in an index. Class A Class B Class C Class I 1 Index Inception date 1-3-94 1-3-94 6-1-98 3-1-02 -- Average annual returns with maximum sales charge (POP) One year -24.22% -24.82% -22.42% -19.53% -15.23% Five years -12.31% -12.39% -- -- -4.95% Since inception -5.25% -5.42% -12.21% -14.49% -- Cumulative total returns with maximum sales charge (POP) Six months -5.03% -5.59% -2.63% 0.59% 3.08% One year -24.22% -24.82% -22.42% -19.53% -15.23% Five years -48.15% -48.38% -- -- -22.40% Since inception -39.53% -40.49% -47.26% -16.67% -- 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. Sales charge is not applicable for Class I shares. 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. 1 For certain types of investors as described in the Fund's prospectus for Class I shares. 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 MSCI All Country World Free Ex-U.S. 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 $11,336 as of April 30, 2003. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock International Fund, before sales charge, and is equal to $6,367 as of April 30, 2003. The third line represents the value of the same hypothetical investment made in the John Hancock International Fund, after sales charge, and is equal to $6,047 as of April 30, 2003. Class B 1 Class C 1 Class I 2 Period beginning 1-3-94 6-1-98 3-1-02 Without sales charge $5,951 $5,325 $8,333 With maximum sales charge -- $5,272 -- Index $11,336 $7,903 $8,996 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, Class C and Class I 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. 2 For certain types of investors as described in the Fund's prospectus for Class I shares. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2003 (unaudited) This schedule is divided into five main categories: common stocks, preferred stocks, options, rights and short-term investments. Common stocks, preferred stocks, options and rights are further broken down by country. Short-term investments, which represent the Fund's cash position, are listed last. SHARES ISSUER VALUE COMMON STOCKS 95.08% $10,344,064 (Cost $9,727,491) Australia 3.94% 428,700 15,700 Australia & New Zealand Banking Group Ltd. (Banks -- Foreign) 183,165 20,000 Foster's Group Ltd. (Beverages) 56,049 15,000 News Corp., Ltd. (The) (Media) 106,782 10,233 Woolworths Ltd. (Retail) 82,704 Belgium 1.03% 111,600 5,000 Interbrew SA (Beverages) 111,600 Bermuda 0.32% 35,280 900 Nabors Industries Ltd.* (Oil & Gas) 35,280 Brazil 2.55% 276,827 2,300 Aracruz Celulose SA American Depositary Receipts (ADR) (Paper & Paper Products) 48,300 3,900 Companhia de Bebidas das Americas (ADR) (Beverages) 77,571 2,600 Petroleo Brasileiro SA (ADR) (Oil & Gas) 44,486 6,300 Tele Norte Leste Participacoes SA (ADR) (Telecommunications) 68,355 2,100 Uniao de Bancos Brasileiros SA (ADR) (Banks -- Foreign) 38,115 Canada 5.20% 565,216 1,300 Biovail Corp.* (Medical) 46,995 2,100 Canadian National Railway Co. (Transportation) 102,123 1,800 Loblaw Cos., Ltd. (Retail) 70,263 1,500 Petro-Canada (Oil & Gas) 49,425 4,300 Placer Dome, Inc. (Metal) 42,527 3,000 Shoppers Drug Mart Corp.* (Retail) 49,874 3,800 Suncor Energy, Inc. (Oil & Gas) 62,486 1,600 Talisman Energy, Inc. (Oil & Gas) 63,824 1,900 Telus Corp. (Telecommunications) 27,680 3,718 Telus Corp. (Non-Voting Shares) (Telecommunications) 50,019 China 1.09% 118,374 454,000 China Telecom Corp., Ltd. (H Shares) (Telecommunications) 86,736 94,000 Jiangsu Expressway Co., Ltd. (H Shares) (Transportation) 31,638 Denmark 0.46% 49,755 2,000 TDC AS (Telecommunications) 49,755 Finland 1.47% 159,978 2,600 Nokia Oyj (ADR) (Telecommunications) 43,988 7,000 Nokia Oyj (Telecommunications) 115,990 France 3.72% 404,740 7,500 Alcatel SA (Telecommunications) 61,436 2,600 BNP Paribas SA (Banks -- Foreign) 122,041 1,900 France Telecom SA (Telecommunications) 43,892 700 Michelin (CGDE) (B Shares) (Rubber -- Tires & Misc.) 25,897 5,000 Suez SA (Pollution Control) 81,412 4,300 Vivendi Universal SA (Media) 70,062 Germany 3.78% 411,639 1,700 BASF AG (Chemicals) 75,224 5,100 Deutsche Telekom AG (Telecommunications) 68,185 2,100 E.ON AG (Utilities) 99,603 800 Muenchener Rueckversicherungs-Gesellschaft AG (Insurance) 79,637 1,800 Siemens AG (Diversified Operations) 88,990 Hong Kong 1.91% 208,217 10,000 Cheung Kong (Holdings) Ltd. (Real Estate Operations) 55,442 20,000 CLP Holdings Ltd. (Utilities) 81,805 54,000 CNOOC Ltd. (Oil & Gas) 70,970 Hungary 0.67% 73,005 6,800 OTP Bank Rt. (Banks -- Foreign) 73,005 Ireland 2.20% 239,393 7,000 Allied Irish Banks Plc (Banks -- Foreign) 107,415 10,800 Bank of Ireland (Banks -- Foreign) 131,978 Israel 1.80% 196,140 4,200 Teva Pharmaceutical Industries Ltd. (ADR) (Medical) 196,140 Italy 3.42% 372,279 7,300 ENI SpA (Oil & Gas) 104,034 6,300 Mediaset SpA (Media) 53,856 29,800 Snam Rete Gas SpA (Utilities) 108,084 24,300 UniCredito Italiano SpA (Banks -- Foreign) 106,305 Japan 12.55% 1,365,343 11,000 Asahi Glass Co., Ltd. (Building) 58,569 2,000 CANON, Inc. (Office) 80,832 10,000 Dai Nippon Printing Co., Ltd. (Printing -- Commercial) 97,099 16 East Japan Railway Co. (Transportation) 72,447 1,900 Fanuc Ltd. (Electronics) 77,746 1,500 Hoya Corp. (Electronics) 88,672 30 Japan Telecom Holdings Co., Ltd. (Telecommunications) 82,006 4,000 Kao Corp. (Cosmetics & Personal Care) 72,950 30 KDDI Corp. (Telecommunications) 91,062 550 Keyence Corp. (Electronics) 88,408 11 Millea Holdings, Inc.* (Insurance) 71,390 19 Mitsubishi Tokyo Financial Group, Inc. (Banks -- Foreign) 64,364 3,000 Shin-Etsu Chemical Co., Ltd. (Chemicals) 89,804 2,500 Takeda Chemical Industries Ltd. (Medical) 91,607 3,200 Tokyo Electric Power Co., Inc. (Utilities) 64,934 22,000 Tokyo Gas Co., Ltd. (Utilities) 71,575 4,500 Toyota Motor Corp. (Automobiles/Trucks) 101,878 Netherlands 5.81% 632,381 7,500 Aegon NV (Insurance) 76,250 6,500 ASML Holding NV (NY Reg Shares)* (Electronics) 57,265 10,700 ING Groep NV (Insurance) 173,744 2,700 Royal Dutch Petroleum Co. (Oil & Gas) 110,433 7,300 TPG NV (Transportation) 113,892 1,600 Unilever NV (Food) 100,797 Norway 0.54% 58,690 7,400 Statoil ASA (Oil & Gas) 58,690 Russia 1.05% 114,606 900 LUKOIL (ADR) (Oil & Gas) 61,956 300 YUKOS (ADR) (Oil & Gas) 52,650 Singapore 0.68% 74,341 8,000 Singapore Press Holdings Ltd. (Media) 74,341 South Korea 3.42% 371,905 2,700 Korea Electric Power Corp. (Utilities) 45,444 2,850 LG Electronics, Inc. (Electronics) 98,284 800 Samsung Electronics Ltd.* Global Depositary Receipt (GDR) (Electronics) (R) 100,411 2,000 SK Telecom Co., Ltd. (ADR) (Telecommunications) 30,400 700 SK Telecom Co., Ltd. (Telecommunications) 97,366 Spain 3.33% 361,852 1,400 Banco Popular Espanol SA (Banks -- Foreign) 67,870 9,000 Endesa SA (Utilities) 127,659 2,900 Repsol YPF, SA (Oil & Gas) 42,235 11,220 Telefonica SA* (Telecommunications) 124,088 Sweden 2.86% 311,160 5,900 Hennes & Mauritz AB (B Shares) (Retail) 131,276 13,400 Skandinaviska Enskilda Banken AB (A Shares) (Banks -- Foreign) 139,247 1,200 Svenska Cellulosa AB (B Shares) (Paper & Paper Products) 40,637 Switzerland 5.31% 577,953 1,200 Converium Holding AG* (Insurance) 54,192 7,000 Credit Suisse Group (Banks -- Foreign) 167,220 3,932 Novartis AG (Medical) 155,100 1,600 Roche Holding AG (Medical) 101,806 2,100 UBS AG (Banks -- Foreign) 99,635 Taiwan 1.14% 124,236 59,000 Nanya Technology Corp.* (Electronics) 32,166 Taiwan Semiconductor Manufacturing Co., Ltd.* 11,000 (ADR) (Electronics) 92,070 United Kingdom 22.85% 2,485,493 3,000 AstraZeneca Plc (Medical) 117,712 400 Barclays Plc (ADR) (Banks -- Foreign) 11,208 20,858 Barclays Plc (Banks -- Foreign) 144,097 17,963 BHP Billiton Plc (Metal) 91,871 18,700 BP Plc (Oil & Gas) 118,504 11,100 British Sky Broadcasting Group Plc* (Media) 115,048 14,400 Diageo Plc (Beverages) 159,724 16,900 Gallaher Group Plc (Tobacco) 160,038 9,500 GlaxoSmithKline Plc (Medical) 190,401 10,600 HBOS Plc (Banks -- Foreign) 124,182 6,779 InterContinental Hotels Group Plc* (Leisure) 41,171 20,000 Kingfisher Plc (Retail) 78,155 14,900 Lloyds TSB Group Plc (Banks -- Foreign) 97,995 7,800 Man Group Plc (Finance) 131,521 6,779 Mitchells & Butler Plc* (Retail) 22,969 101,000 mm02 Plc* (Telecommunications) 89,994 16,500 National Grid Transco Plc (Utilities) 108,386 3,400 Reckitt Benckiser Plc (Soap & Cleaning Preparations) 59,965 9,122 Royal Bank of Scotland Group Plc (Banks -- Foreign) 239,247 28,100 Tesco Plc (Retail) 88,924 3,700 Vodafone Group Plc (ADR) (Telecommunications) 73,112 112,100 Vodafone Group Plc (Telecommunications) 221,269 United States 1.98% 214,961 2,400 GlobalSantaFe Corp. (Oil & Gas) 50,784 2,300 Noble Corp.* (Oil & Gas) 71,185 1,400 Schlumberger Ltd. (Oil & Gas) 58,702 1,800 Transocean, Inc.* (Oil & Gas) 34,290 OPTIONS 0.57% $61,570 (Cost $57,232) Ireland 0.57% 61,570 9,000 Ryanair Holdings Plc (Transportation) Zero Strike Call Expiration 2-27-04 61,570 PREFERRED STOCKS 0.83% $89,931 (Cost $91,758) Germany 0.67% 72,763 200 Porsche AG (Automobiles/Trucks) 72,763 Japan 0.16% 17,168 3,000,000 SMFG Finance Ltd. (Banks -- Foreign) (R) 17,168 RIGHTS 0.05% 5,531 (Cost $0) Netherlands 0.05% 5,531 13,600 Aegon NV* (Insurance) 5,531 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 4.08% $444,000 (Cost $444,000) Joint Repurchase Agreement 4.08% 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 and U.S. Treasury Inflation Indexed Notes, 3.000% thru 3.875%, due 01-15-07 thru 07-15-12) 1.280% $444 444,000 TOTAL INVESTMENTS 100.61% $10,945,096 OTHER ASSETS & LIABILITIES, NET (0.61%) ($66,175) TOTAL NET ASSETS 100.00% $10,878,921 * Non-income-producing security. (R) These securities are exempt from registration under rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $117,579 or 1.08% of net assets as of April 30, 2003. 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. PORTFOLIO CONCENTRATION April 30, 2003 (unaudited) This table shows the percentages of the Fund's investments aggregated by various industry groups. VALUE AS A PERCENTAGE INVESTMENT DISTRIBUTION OF NET ASSETS Automobiles/Trucks 1.60% Banks -- Foreign 17.78 Beverages 3.72 Building 0.54 Chemicals 1.52 Cosmetics & Personal Care 0.67 Diversified Operations 0.82 Electronics 5.84 Finance 1.21 Food 0.93 Insurance 4.23 Leisure 0.38 Media 3.86 Medical 8.27 Metal 1.24 Office 0.74 Oil & Gas 10.02 Paper & Paper Products 0.82 Pollution Control 0.75 Printing -- Commercial 0.89 Real Estate Operations 0.51 Retail 4.82 Rubber -- Tires & Misc. 0.24 Short-Term Investments 4.08 Soap & Cleaning Preparations 0.55 Telecommunications 13.10 Tobacco 1.47 Transportation 3.51 Utilities 6.50 Total investments 100.61% See notes to financial statements. 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 $10,320,481) $10,945,096 Cash 783 Foreign cash at value (cost $19,628) 19,628 Receivable for investments sold 496,829 Receivable for shares sold 30,412 Dividends and interest receivable 69,769 Other assets 2,243 Total assets 11,564,760 LIABILITIES Payable for investments purchased 593,909 Payable for shares repurchased 4,797 Payable to affiliates 14,299 Other payables and accrued expenses 72,834 Total liabilities 685,839 NET ASSETS Capital paid-in 25,485,530 Accumulated net realized loss on investments and foreign currency transactions (15,163,284) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 625,761 Accumulated net investment loss (69,086) Net assets $10,878,921 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($5,193,899 [DIV] 1,018,621 shares) $5.10 Class B ($3,955,911 [DIV] 827,019 shares) $4.78 Class C ($847,707 [DIV] 177,160 shares) $4.78 Class I ($881,404 [DIV] 171,282 shares) $5.15 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($5.10 [DIV] 95%) $5.37 Class C ($4.78 [DIV] 99%) $4.83 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 $19,431) $132,470 Interest 2,275 Total investment income 134,745 EXPENSES Investment management fee 55,689 Class A distribution and service fee 7,833 Class B distribution and service fee 20,917 Class C distribution and service fee 3,888 Class A, B and C transfer agent fee 115,115 Class I transfer agent fee 5,333 Registration and filing fee 33,383 Auditing fee 17,964 Custodian fee 13,006 Printing 8,284 Accounting and legal services fee 1,492 Miscellaneous 1,337 Trustees' fee 369 Legal fee 166 Total expenses 284,776 Less expense reductions (81,569) Net expenses 203,207 Net investment loss (68,462) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on Investments (1,176,145) Foreign currency transactions (21,103) Change in net unrealized appreciation (depreciation) of Investments 1,181,811 Translation of assets and liabilities in foreign currencies 1,694 Net realized and unrealized loss (13,743) Decrease in net assets from operations ($82,205) 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 ($144,114) ($68,462) Net realized loss 2,546,024) (1,197,248) Change in net unrealized appreciation (depreciation) 56,756 1,183,505 Decrease in net assets resulting from operations 2,633,382) (82,205) From Fund share transactions (280,938) (1,103,231) NET ASSETS Beginning of period 4,978,677 12,064,357 End of period 2 2,064,357 $10,878,921 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $624 and $69,086, 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 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.41 $8.81 $10.95 $9.45 $6.18 $5.10 Net investment loss 2 -- 3 (0.02) (0.04) (0.05) (0.04) (0.03) Net realized and unrealized gain (loss) on investments 0.47 2.16 (1.01) (3.22) (1.04) 0.03 Total from investment operations 0.47 2.14 (1.05) (3.27) (1.08) -- Less distributions From net realized gain (0.07) -- (0.45) -- -- -- Net asset value, end of period $8.81 $10.95 $9.45 $6.18 $5.10 $5.10 Total return 4,5 (%) 5.61 24.29 (10.15) (34.60) (17.48) 0.00 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 $7 $15 $8 $6 $5 Ratio of expenses to average net assets (%) 1.79 1.96 1.88 2.23 2.38 3.46 7 Ratio of adjusted expenses to average net assets 8 (%) 3.65 3.81 3.44 3.83 4.43 4.91 7 Ratio of net investment income (loss) to average net assets (%) 0.04 (0.20) (0.43) (0.65) (0.68) (1.04) 7 Portfolio turnover (%) 129 113 163 278 228 9 98 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.22 $8.55 $10.55 $9.04 $5.86 $4.81 Net investment loss 2 (0.06) (0.09) (0.12) (0.10) (0.08) (0.04) Net realized and unrealized gain (loss) on investments 0.46 2.09 (0.94) (3.08) (0.97) 0.01 Total from investment operations 0.40 2.00 (1.06) (3.18) (1.05) (0.03) Less distributions From net realized gain (0.07) -- (0.45) -- -- -- Net asset value, end of period $8.55 $10.55 $9.04 $5.86 $4.81 $4.78 Total return 4,5 (%) 4.88 23.39 (10.65) (35.18) (17.92) (0.62) 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $10 $9 $12 $6 $5 $4 Ratio of expenses to average net assets (%) 2.49 2.63 2.57 2.93 3.08 4.16 7 Ratio of adjusted expenses to average net assets 8 (%) 4.35 4.48 4.13 4.53 5.13 5.62 7 Ratio of net investment loss to average net assets (%) (0.66) (0.91) (1.13) (1.34) (1.38) (1.76) 7 Portfolio turnover (%) 129 113 163 278 228 9 98 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-98 10 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $9.36 $8.55 $10.57 $9.05 $5.87 $4.81 Net investment loss 2 (0.03) (0.10) (0.11) (0.10) (0.08) (0.04) Net realized and unrealized gain (loss) on investments (0.78) 2.12 (0.96) (3.08) (0.98) 0.01 Total from investment operations (0.81) 2.02 (1.07) (3.18) (1.06) (0.03) Less distributions From net realized gain -- -- (0.45) -- -- -- Net asset value, end of period $8.55 $10.57 $9.05 $5.87 $4.81 $4.78 Total return 4,5 (%) (8.65) 6 23.63 (10.72) (35.14) (18.06) (0.62) 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 11 -- 11 $1 $1 $1 $1 Ratio of expenses to average net assets (%) 2.29 7 2.66 2.57 2.93 3.08 4.16 7 Ratio of adjusted expenses to average net assets 8 (%) 4.15 7 4.51 4.13 4.53 5.13 5.66 7 Ratio of net investment loss to average net assets (%) (1.27) 7 (1.04) (1.07) (1.35) (1.38) (1.62)7 Portfolio turnover (%) 129 113 163 278 228 9 98 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 10 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $6.18 $5.12 Net investment income (loss) 2 (0.01) 0.01 Net realized and unrealized gain (loss) on investments (1.05) 0.02 Total from investment operations (1.06) 0.03 Net asset value, end of period $5.12 $5.15 Total return 4,5 (%) (17.15) 6 0.59 6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 Ratio of expenses to average net assets (%) 2.04 7 2.02 7 Ratio of adjusted expenses to average net assets 8 (%) 4.09 7 3.48 7 Ratio of net investment income (loss) to average net assets (%) (0.34) 7 0.39 7 Portfolio turnover (%) 228 9 98 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Based on the average of the shares outstanding. 3 Less than $0.01 per share. 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 Excludes merger activity. 10 Class C and Class I shares began operations on 6-1-98 and 3-1-02, respectively. 11 Less than $500,000. See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock International Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, 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 Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B, Class C and Class I shares. The 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. 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 investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange 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. Distri bution and service fees, if any, and transfer agent fees for Class I shares, 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. 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 $13,871,763 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, 2007 -- $636,448, October 31, 2008 -- $2,888,578, October 31, 2009 -- $7,757,736 and October 31, 2010 -- $2,589,001. Availability of a certain amount of this loss carryforward that was acquired on June 7, 2002 in a merger with John Hancock International Equity Fund may be limited in a given year. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend 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 equivalent, on an annual basis, to the sum of: (a) 1.00% of the first $250,000,000 of the Fund's average daily net asset value, (b) 0.80% of the next $250,000,000, (c) 0.75% of the next $250,000,000 and (d) 0.625% of the Fund's average daily net asset value in excess of $750,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for the payment of the subadvisory fees. The Adviser has agreed to limit the Fund's expenses, excluding the distribution and service fees and transfer agent fee, to 0.90% of the Fund's average daily net assets, at least until February 24, 2004. Accordingly, the expense reduction amounted to $81,569 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 $6,991 with regard to sales of Class A shares. Of this amount, $632 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $5,198 was paid as sales commissions to unrelated broker-dealers and $1,161 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 $2,128 with regard to sales of Class C shares. Of this amount, $1,984 was paid as sales commissions to unrelated broker-dealers and $144 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 $11,440 for Class B shares and $43 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. For Class A, B and C shares, 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, aggregated and allocated to each Class on the basis of its relative net asset value. For Class I shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus certain out-of-pocket expenses attributable to Class I shares. 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, issued in reorganization 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 1,608,472 $9,646,755 357,443 $1,807,695 Repurchased (1,773,317) (10,715,750) (430,981) (2,154,643) Net decrease (164,845) ($1,068,995) (73,538) ($346,948) CLASS B SHARES Sold 397,117 $2,291,714 113,489 $527,437 Repurchased (510,300) (2,891,269) (265,029) (1,231,276) Net decrease (113,183) ($599,555) (151,540) ($703,839) CLASS C SHARES Sold 295,202 $1,675,337 85,635 $394,959 Repurchased (271,816) (1,534,260) (71,294) (331,576) Net increase 23,386 $141,077 14,341 $63,383 CLASS I SHARES 2 Sold 34,945 $187,366 21,795 $107,664 Issued in reorganization 257,801 1,609,274 -- -- Repurchased (96,794) (550,105) (46,465) (223,491) Net increase (decrease) 195,952 $1,246,535 (24,670) ($115,827) NET DECREASE (58,690) ($280,938) (235,407) ($1,103,231) 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Class I shares began operations on 3-1-02. 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 $10,676,133 and $11,437,691, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $10,414,006. Gross unrealized appreciation and depreciation of investments aggregated $913,559 and $382,469, respectively, resulting in net unrealized appreciation of $531,090. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. NOTE E Reorganization On May 29, 2002, the shareholders of John Hancock International Equity Fund ("International Equity Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of International Equity Fund in exchange solely for Class I shares of the Fund. The acquisition was accounted for as a tax-free exchange of 257,801 Class I shares of the Fund for the net assets of the International Equity Fund, which amounted to $1,609,274, including $62,490 of unrealized appreciation, after the close of business on June 7, 2002. NOTE F Proposed reorganization On November 19, 2002, the Trustees approved the reorganization of John Hancock European Equity Fund and John Hancock Global Fund into John Hancock International Fund, subject to the approval by shareholders. 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. 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 Nicholas-Applegate Capital Management LP 600 West Broadway San Diego, California 92101 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 International Fund. 400SA 4/03 6/03 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. 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 amended 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 significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. ITEM 10. EXHIBITS. (a) Not applicable at this time. (b)(1) 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 as Ex99.CERT. (b)(2) 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 as Ex99.CERT. 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. 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 30, 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 30, 2003 By: ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: June 30, 2003