January 2, 2004 EDGAR United States Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Form N-CSR John Hancock Investment Trust III (the "Registrant") on behalf of: John Hancock Large Cap Growth Fund John Hancock International Fund John Hancock Mid Cap Growth Fund File Nos. 33-4559; 811-4630 Ladies and Gentlemen: Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for the period ending October 31, 2003. If you have any questions or comments regarding this filing, please contact the undersigned at (617) 375-1513. Sincerely, /s/Alfred P. Ouellette Alfred P. Ouellette Senior Attorney and Assistant Secretary ITEM 1. REPORT TO STOCKHOLDERS. John Hancock Large Cap Growth Fund ANNUAL REPORT 10.31.03 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 Ford Goldfarb, 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 Trustees & officers page 26 For your information page 29 Dear Fellow Shareholders, The stock market has made a strong recovery in 2003. Historically low interest rates, improving corporate earnings and government stimulus in the form of tax cuts gave investors hope that the economy would begin to strengthen, which it did. The market's move up began in April and the breadth of the rally was enormous. As a result, the major indexes were able to wipe out their first-quarter losses and post solid gains year-to-date through October 31. With technology leading the way, the tech-heavy Nasdaq Composite Index rose 45.22% through October, while the Dow Jones Industrial Average was up 19.82% and the Standard & Poor's 500 Index returned 21.19%. With falling interest rates, bonds also did well, although they began to reverse course in July. High yield bonds led the pack, returning 24.23% through October, as measured by the Lehman Brothers High Yield Index. In other news, we are pleased to inform you that on September 28, 2003, the Boards of Directors of Canada-based Manulife Financial Corporation and Boston-based John Hancock Financial Services, Inc., the parent company of John Hancock Funds, unanimously voted to merge the two companies. Please be assured that the completion of the merger -- anticipated to occur in the first half of 2004 -- will have no effect on your investment in our John Hancock mutual funds. Your fund's adviser and board of trustees will remain the same, as will your relationship with your financial adviser. The merger is subject to customary closing conditions, including receipt of required regulatory approvals and approval by John Hancock stockholders. If you only own shares in a John Hancock mutual fund you are not affected and will not receive a proxy. Additional information on this transaction is available on our Web site: www.jhfunds.com. If you have questions about the merger, you may also call 800-732-5543. Separately, for information about your investments in John Hancock funds, please contact your financial adviser or our Customer Service representatives at 800-225-5291. Sincerely, /S/ MAUREEN FORD GOLDFARB Maureen Ford Goldfarb, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of October 31, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term capital appreciation by normally invest- ing at least 80% of its assets in large- capitalization companies in the capitalization range of the Russell Top 200 Growth Index. Over the last twelve months * The stock market made a strong comeback, led by economically sensitive technology and consumer discretionary stocks. * Large-cap stocks turned in strong absolute returns, but lagged small-cap stocks. * 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 year ended October 31, 2003." The chart is scaled in increments of 5% with 0% at the bottom and 20% at the top. The first bar represents the 17.20% total return for Class A. The second bar represents the 16.42% total return for Class B. The third bar represents the 16.29% 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 4.3% General Electric Co. 3.7% Microsoft Corp. 3.2% Pfizer, Inc. 2.8% Intel Corp. 2.5% Johnson & Johnson 2.2% Cisco Systems, Inc. 2.2% EMC Corp. 2.1% Staples, Inc. 2.1% Home Depot, Inc. 2.1% Nokia As a percentage of net assets on October 31, 2003. MANAGERS' REPORT BY ROBERT J. UEK, CFA, AND ROBERT C. JUNKIN, CPA, PORTFOLIO MANAGERS John Hancock Large Cap Growth Fund Recently Robert Junkin joined the Fund's management team, replacing Paul Berlinguet and Thomas Norton. Mr. Junkin, who joined John Hancock in 2003, began his business career in 1988. The stock market finally turned the corner, buoyed by an improving economy, low interest rates and continued strong consumer spending. Revenues began to stabilize in many industries, boosting cash flows and earnings at companies that had already slashed costs. More economically sensitive sectors, such as technology and consumer discretionary, did especially well. Sectors less affected by the economy's moves, including consumer staples and health care, made the least headway. The biggest gains came from lower-quality stocks that had been hardest hit in the market downturn. Although large-cap stocks lagged smaller-cap stocks in the rebound, they still did quite well, benefiting in part from the weak U.S. dollar. For the fiscal year ended October 31, 2003, the Standard & Poor's 500 Index returned 20.79%. "The stock market finally turned the corner..." PERFORMANCE AND STRATEGY REVIEW John Hancock Large Cap Growth Fund's Class A, Class B and Class C shares returned 17.20%, 16.42% and 16.29%, respectively, at net asset value, for the year ended October 31, 2003. The Fund slightly trailed the 17.75% return of the Russell Top 200 Growth Index, which tracks the performance of the largest growth stocks, and the average large-cap growth fund, which returned 19.03% over the same period, 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. The Fund remained diversified across industries and attempted to gain ground through strong stock selection. We targeted quality companies with strong managements, steady or accelerating cash flows and demonstrated earnings growth. Our focus on higher-growth names within the index helped the Fund stay close to the return of our benchmark, the Russell Top 200 Growth Index. Our below-average stake in low-quality companies, however, hampered returns relative to our Lipper peer group, as these names rebounded sharply early in the period. We maintained our strict buy-and-sell discipline, setting price targets in advance to determine when to move in and out of a stock. [Photos of Robert Uek and Robert Junkin flush right next to first paragraph.] GAINS FROM ECONOMICALLY SENSITIVE STOCKS Financial stocks were definite winners for the Fund. We targeted stocks that would benefit from a stock market rebound, including firms with strong brokerage and investment banking businesses. Our best performers included Merrill Lynch, Charles Schwab, Goldman Sachs and Citigroup. Stock selection in the consumer discretionary sector was also quite strong, as many of these names benefited from solid consumer spending. Staples, McDonald's and Home Depot gained as new company-specific initiatives took effect, boosting their bottom lines. Best Buy, the consumer electronics retailer, did well, as it continued to take market share from the competition in an environment where demand remained strong. "Financial stocks were definite winners for the Fund." Technology stocks posted the biggest gains, benefiting from renewed investor interest as the economy improved. Both Intel and Cisco Systems saw profit margins jump, thanks in part to earlier cost-cutting initiatives. EMC, which makes storage systems, rallied amid strong demand, new product rollouts and news of new acquisitions. DISAPPOINTMENTS FROM ENERGY AND STAPLES Energy stocks were the biggest detractors from performance. We had an above-average stake in the sector, believing that high oil and natural gas prices would push up stock prices. Although commodity prices remained high and cash flows improved, earnings did not pick up as quickly as expected. Exploration and production companies stuck with the cost-cutting initiatives that investors had applauded, causing the energy services stocks that we owned to languish. Consumer staples stocks -- a group that includes grocers and beverage companies -- also lagged the market. We had a below-average stake in what was a weak sector, but somewhat disappointing stock selection. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Computers 16%, the second is Medical 16%, the third Retail 10%, the fourth Electronics 10%, and the fifth Diversified operations 7%.] CHALLENGES IN HEALTH CARE Health-care stocks, which tend to be more defensive, also hampered returns. The large, branded pharmaceutical companies struggled with changes in Medicare reimbursements, upcoming patent expirations, a lack of new blockbuster products in the pipeline and the issue of U.S. consumers re-importing drugs from Canada. We maintained a large stake in Pfizer, believing it has fewer patent expiration issues than its competitors and the potential for greater cost savings. Johnson & Johnson, a diversified medical device and products company, Baxter International, which makes blood plasma products, and HCA, a health-services company, were all among our worst performers for the period. We sold HCA and Baxter due to company specific issues, but maintained a significant position in Johnson & Johnson. We also held onto Mylan Laboratories, a generic pharmaceutical company that benefits as more drugs come off patent. [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 10-31-03." The chart is divided into two sections (from top to left): Common stocks 99%, and Short-term investments & other 1%.] CUTS IN HEALTH CARE AND FINANCIALS We trimmed our investment in health care, as we saw no near-term catalysts to jumpstart prospects for the large pharmaceutical companies. We also pared back on financials in anticipation of a future rise in interest rates. While we're not sure exactly when interest rates will shift direction, we do think that a lot of banks and other financial companies have already had the better part of their runs. We added opportunistically to investments in other sectors, including Nokia, which makes wireless handsets. As legislation governing wireless phone number portability goes into effect, we expect more people to switch carriers, which should boost demand for handsets. [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 Staples followed by an up arrow with the phrase "Improving economy, new store layouts." The second listing is American International Group followed by a down arrow with the phrase "Restatement of past profitability." The third listing is Intel followed by an up arrow with the phrase "Strong laptop processor sales, better manufacturing efficiencies."] POSITIVE OUTLOOK We believe conditions are favorable for stock prices to continue to climb. The economy has shown signs of strengthening. Interest rates remain at historic lows. And consumer spending seems intact. The outstanding question is whether corporate spending will pick up any time soon. Assuming the economy continues to improve, we believe stocks can benefit. We believe large-cap stocks have especially strong prospects, given the recent disparity between their performance and that of small-cap stocks. Over time, we believe investors could return to large-cap stocks, which continue to offer attractive valuations and higher dividend yields than smaller-company stocks. In addition, large-cap stocks are the biggest beneficiaries of strengthening overseas economies and a weak U.S. dollar. In the coming months, we plan to maintain the Fund's bias toward economically sensitive companies. "We believe large-cap stocks have especially strong prospects, given the recent disparity between their performance and that of small-cap stocks." This commentary reflects the views of the portfolio managers through the end of the Fund's period discussed in this report. The managers' statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended October 31, 2003 Class A Class B Class C Inception date 12-24-68 1-3-94 6-1-98 Average annual returns with maximum sales charge (POP) One year 11.32% 11.42% 14.07% Five years -11.78% -11.75% -11.67% Ten years -0.52% -- -- Since inception -- -0.34% -10.87% Cumulative total returns with maximum sales charge (POP) One year 11.32% 11.42% 14.07% Five years -46.56% -46.47% -46.24% Ten years -5.04% -- -- Since inception -- -3.33% -46.39% 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. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the 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 Russell Top 200 Growth Index and is equal to $24,203 as of October 31, 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 $9,997 as of October 31, 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 $9,496 as of October 31, 2003. Cum Value of $10K Cum Value of $10K Russell Top 200 Plot Date (No Load) (w/Load) Growth Index 10/31/1993 $10,000 $9,500 $10,000 4/30/1994 9,066 8,612 9,658 10/31/1994 9,358 8,889 10,670 4/30/1995 9,938 9,440 11,840 10/31/1995 11,784 11,193 14,032 4/30/1996 13,248 12,584 15,630 10/31/1996 13,949 13,249 17,374 4/30/1997 13,896 13,199 20,354 10/31/1997 16,187 15,375 23,115 4/30/1998 18,516 17,588 29,008 10/31/1998 17,774 16,883 30,474 4/30/1999 22,105 20,996 37,907 10/31/1999 22,675 21,538 40,663 4/30/2000 23,891 22,693 46,557 10/31/2000 20,827 19,782 42,324 4/30/2001 13,665 12,980 31,274 10/31/2001 10,878 10,332 25,673 4/30/2002 10,846 10,302 24,650 10/31/2002 8,530 8,102 20,556 4/30/2003 8,635 8,202 21,242 10/31/2003 $9,997 $9,496 $24,203 Class B 1 Class C 1 Period beginning 1-3-94 6-1-98 Without sales charge $9,667 $5,416 With maximum sales charge $9,667 $5,361 Index $24,004 $8,580 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 October 31, 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. Russell Top 200 Growth Index is an unmanaged index containing growth- oriented stocks from the Russell Top 200 Index. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on October 31, 2003 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 98.52% $198,567,122 (Cost $159,341,685) Advertising 1.11% 2,234,400 28,000 Omnicom Group, Inc. 2,234,400 Automobiles/Trucks 0.78% 1,575,500 50,000 CarMax, Inc.* 1,575,500 Banks -- United States 1.08% 2,173,600 20,000 State Street Corp. 1,047,200 20,000 Wells Fargo & Co. 1,126,400 Beverages 2.61% 5,255,029 50,163 Anheuser-Busch Cos., Inc. 2,471,029 60,000 Coca-Cola Co. (The) 2,784,000 Broker Services 2.62% 5,273,990 34,100 Goldman Sachs Group, Inc. (The)+ 3,201,990 35,000 Merrill Lynch & Co., Inc.+ 2,072,000 Computers 16.45% 33,147,280 45,700 Accenture Ltd. (Class A) (Bermuda)*+ 1,069,380 60,000 Affiliated Computer Services, Inc.*+ 2,935,800 194,500 BEA Systems, Inc.*+ 2,703,550 214,500 Cisco Systems, Inc.* 4,500,210 100,000 Dell, Inc.* 3,612,000 325,000 EMC Corp.*+ 4,498,000 15,000 Lexmark International, Inc.* 1,104,150 282,200 Microsoft Corp. 7,379,530 160,000 Oracle Corp.* 1,913,600 64,000 SAP AG, American Depositary Receipt (ADR) (Germany)+ 2,338,560 25,000 Yahoo! Inc.*+ 1,092,500 Consumer Products Misc. 0.83% 1,676,100 37,000 Clorox Co. (The) 1,676,100 Cosmetics & Personal Care 3.98% 8,029,450 20,000 Avon Products, Inc. 1,359,200 30,000 Colgate-Palmolive Co. 1,595,700 70,000 Estee Lauder Cos., Inc. (The) (Class A) 2,617,300 25,000 Procter & Gamble Co. (The) 2,457,250 Diversified Operations 7.11% 14,322,629 40,000 3M Co. 3,154,800 120,000 Cendant Corp.* 2,451,600 300,456 General Electric Co.+ 8,716,229 Electronics 10.00% 20,159,160 25,000 Analog Devices, Inc.* 1,108,250 100,000 Applied Materials, Inc.*+ 2,337,000 100,000 ASML Holding N.V. (NY Reg Shares) (Netherlands)* 1,755,000 40,000 Emerson Electric Co. 2,270,000 192,000 Flextronics International Ltd. (Singapore)*+ 2,688,000 169,000 Intel Corp. 5,585,450 70,000 Intersil Corp. (Class A) 1,805,300 236,000 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (Taiwan)* 2,610,160 Fiber Optics 0.88% 1,775,000 500,000 JDS Uniphase Corp.*+ 1,775,000 Finance 4.23% 8,535,050 25,000 American Express Co. 1,173,250 32,000 Capital One Financial Corp. 1,945,600 65,000 Citigroup, Inc. 3,081,000 60,000 Paychex, Inc. 2,335,200 Insurance 2.35% 4,737,740 20,000 American International Group, Inc. 1,216,600 30,000 Radian Group, Inc. 1,587,000 43,000 RenaissanceRe Holdings Ltd. (Bermuda) 1,934,140 Leisure 1.46% 2,947,500 90,000 International Game Technology+ 2,947,500 Linen Supply & Related 0.64% 1,279,800 30,000 Cintas Corp. 1,279,800 Media 5.47% 11,024,600 40,000 Clear Channel Communications, Inc. 1,632,800 102,500 Comcast Corp. (Special Class A)*+ 3,343,550 200,000 Time Warner, Inc.* 3,058,000 75,000 Viacom, Inc. (Class B)* 2,990,250 Medical 15.91% 32,059,118 40,000 Abbott Laboratories 1,704,800 50,000 Amgen, Inc.* 3,088,000 20,000 Biogen Idec, Inc.* 702,600 45,000 Forest Laboratories, Inc.* 2,250,450 100,017 Johnson & Johnson 5,033,856 64,776 Medtronic, Inc. 2,951,842 25,000 Merck & Co., Inc. 1,106,250 50,000 Millennium Pharmaceuticals, Inc.* 796,000 93,750 Mylan Laboratories, Inc. 2,264,062 206,561 Pfizer, Inc. 6,527,328 36,000 UnitedHealth Group, Inc. 1,831,680 50,000 Wyeth 2,207,000 25,000 Zimmer Holdings, Inc.* 1,595,250 Mortgage Banking 1.30% 2,628,000 25,000 Countrywide Financial Corp. 2,628,000 Oil & Gas 3.63% 7,319,100 30,000 Apache Corp. 2,091,600 75,000 BJ Services Co.*+ 2,460,750 105,000 ENSCO International, Inc. 2,766,750 Retail 10.12% 20,400,376 40,000 Best Buy Co., Inc.* 2,332,400 50,000 Costco Wholesale Corp.* 1,768,500 115,000 Home Depot, Inc. (The) 4,263,050 95,000 McDonald's Corp. 2,375,950 160,400 Staples, Inc.*+ 4,301,928 45,000 Target Corp. 1,788,300 60,564 Wal-Mart Stores, Inc. 3,570,248 Telecommunications 5.96% 12,013,700 150,000 AT&T Wireless Services, Inc.* 1,087,500 180,000 General Motors Corp. (Class H)* 2,957,400 125,000 Motorola, Inc. 1,691,250 245,000 Nokia Oyj (ADR) (Finland) 4,162,550 100,000 Vodafone Group Plc (ADR) (United Kingdom) 2,115,000 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 18.74% $37,775,900 (Cost $37,775,900) Joint Repurchase Agreement 0.87% Investment in a joint repurchase agreement transaction with Barclays Capital, Inc. -- Dated 10-31-03, due 11-03-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.625% due 04-15-28, U.S. Treasury Inflation Indexed Note 1.875% due 07-15-13) 1.02% $1,748 1,748,000 SHARES Cash Equivalents 17.87% AIM Cash Investment Trust** 36,027,900 36,027,900 TOTAL INVESTMENTS 117.26% $236,343,022 OTHER ASSETS AND LIABILITIES, NET (17.26%) ($34,791,985) TOTAL NET ASSETS 100.00% $201,551,037 + All or a portion of this security is on loan as of October 31, 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 of that category as a percentage of the net assets of the Fund. See notes to financial statements. ASSETS AND LIABILITIES October 31, 2003 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 $197,117,585), including $35,518,735 of securities loaned $236,343,022 Cash 151 Receivable for investments sold 5,464,815 Receivable for shares sold 12,600 Dividends and interest receivable 139,841 Other assets 39,367 Total assets 241,999,796 LIABILITIES Payable for investments purchased 3,899,037 Payable for shares repurchased 174,998 Payable for securities on loan 36,027,900 Payable to affiliates Management fee 127,821 Distribution and service fee 8,074 Other 118,239 Other payables and accrued expenses 92,690 Total liabilities 40,448,759 NET ASSETS Capital paid-in 434,633,232 Accumulated net realized loss on investments and written options (272,278,932) Net unrealized appreciation of investments 39,225,437 Accumulated net investment loss (28,700) Net assets $201,551,037 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($147,607,255 [DIV] 15,473,703 shares) $9.54 Class B ($50,420,669 [DIV] 5,783,851 shares) $8.72 Class C ($3,523,113 [DIV] 404,371 shares) $8.71 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($9.54 [DIV] 95%) $10.04 Class C ($8.71 [DIV] 99%) $8.80 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 year ended October 31, 2003 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 $11,252) $1,871,493 Securities lending 52,147 Interest 42,202 Total investment income 1,965,842 EXPENSES Investment management fee 1,418,015 Class A distribution and service fee 412,765 Class B distribution and service fee 483,937 Class C distribution and service fee 30,864 Transfer agent fee 1,273,227 Accounting and legal services fee 68,290 Custodian fee 51,596 Registration and filing fee 42,987 Printing 41,966 Auditing fee 36,700 Miscellaneous 14,399 Trustees' fee 11,685 Interest 7,041 Legal fee 3,306 Total expenses 3,896,778 Less expense reductions (15,799) Net expenses 3,880,979 Net investment loss (1,915,137) REALIZED AND UNREALIZED GAIN Net realized gain on Investments 2,429,768 Written options 272,877 Change in unrealized appreciation (depreciation) of investments 28,948,933 Net realized and unrealized gain 31,651,578 Increase in net assets from operations $29,736,441 See notes to financial statements. CHANGES IN NET ASSETS These Statements of Changes in Net Assets show how the value of the Fund's net assets has changed during the last two periods. 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 YEAR ENDED ENDED 10-31-02 1 10-31-03 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($3,115,869) ($1,915,137) Net realized gain (loss) (53,440,499) 2,702,645 Change in net unrealized appreciation (depreciation) (984,611) 28,948,933 Increase (decrease) in net assets resulting from operations (57,540,979) 29,736,441 From Fund share transactions (48,397,414) (22,118,554) NET ASSETS Beginning of period 299,871,543 193,933,150 End of period 2 $193,933,150 $201,551,037 1 Audited by previous auditor. 2 Includes accumulated net investment loss of $28,479 and $28,700, 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 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $22.27 $25.04 $20.73 $10.38 $8.14 Net investment loss 2 (0.17) (0.23) (0.13) (0.10) (0.07) Net realized and unrealized gain (loss) on investments 5.65 (1.48) (9.42) (2.14) 1.47 Total from investment operations 5.48 (1.71) (9.55) (2.24) 1.40 Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- Net asset value, end of period $25.04 $20.73 $10.38 $8.14 $9.54 Total return 3 (%) 27.58 (8.15) (47.77) (21.58) 17.20 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $484 $421 $209 $140 $148 Ratio of expenses to average net assets (%) 1.35 1.36 1.59 1.75 1.86 Ratio of adjusted expenses to average net assets 5 (%) -- -- -- -- 1.87 Ratio of net investment loss to average net assets (%) (0.70) (0.97) (0.99) (0.96) (0.82) Portfolio turnover (%) 183 162 131 228 121 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $21.38 $23.74 $19.40 $9.62 $7.49 Net investment loss 2 (0.31) (0.37) (0.21) (0.15) (0.12) Net realized and unrealized gain (loss) on investments 5.38 (1.37) (8.77) (1.98) 1.35 Total from investment operations 5.07 (1.74) (8.98) (2.13) 1.23 Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- Net asset value, end of period $23.74 $19.40 $9.62 $7.49 $8.72 Total return 3 (%) 26.70 (8.79) (48.12) (22.14) 16.42 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $312 $239 $88 $51 $50 Ratio of expenses to average net assets (%) 2.02 2.05 2.24 2.45 2.56 Ratio of adjusted expenses to average net assets 5 (%) -- -- -- -- 2.57 Ratio of net investment loss to average net assets (%) (1.37) (1.66) (1.65) (1.66) (1.52) Portfolio turnover (%) 183 162 131 228 121 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $21.37 $23.73 $19.39 $9.61 $7.49 Net investment loss 2 (0.31) (0.37) (0.20) (0.15) (0.12) Net realized and unrealized gain (loss) on investments 5.38 (1.37) (8.78) (1.97) 1.34 Total from investment operations 5.07 (1.74) (8.98) (2.12) 1.22 Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- Net asset value, end of period $23.73 $19.39 $9.61 $7.49 $8.71 Total return 3 (%) 26.72 (8.80) (48.15) (22.06) 16.29 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $3 $4 $3 $4 Ratio of expenses to average net assets (%) 2.05 2.06 2.29 2.45 2.56 Ratio of adjusted expenses to average net assets 5 (%) -- -- -- -- 2.57 Ratio of net investment loss to average net assets (%) (1.36) (1.71) (1.68) (1.66) (1.53) Portfolio turnover (%) 183 162 131 228 121 1 Audited by previous auditor. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Total return would have been lower had certain expenses not been reduced during the period shown. 5 Does not take into consideration expense reductions during the period shown. See notes to financial statements. NOTES TO STATEMENTS 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 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 and Class C. 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 the 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 asset value of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. 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 year ended October 31, 2003. Options The Fund may enter into option contracts. Listed options will be valued at the last quoted sales price on the exchange on which they are primarily traded. Over-the-counter options are valued at the mean between the last bid and asked prices. Upon the writing of a call or put option, an amount equal to the premium received by the Fund will be included in the Fund's Statement of Assets and Liabilities as an asset and corresponding liability. The amount of the liability will be subsequently marked to market to reflect the current market value of the written option. The Fund may use option contracts to manage its exposure to the price volatility of financial instruments. Writing puts and buying calls will tend to increase the Fund's exposure to the underlying instrument, and buying puts and writing calls will tend to decrease the Fund's exposure to the underlying instrument, or hedge other Fund investments. The maximum exposure to loss for any purchased options will be limited to the premium initially paid for the option. In all other cases, the face (or "notional") amount of each contract at value will reflect the maximum exposure of the Fund in these contracts, but the actual exposure will be limited to the change in value of the contract over the period the contract remains open. Risks may also arise if counterparties do not perform under the contracts' terms ("credit risk") or if the Fund is unable to offset a contract with a counterparty on a timely basis ("liquidity risk"). Exchange-traded options have minimal credit risk, as the exchanges act as counterparties to each transaction and only present liquidity risk in highly unusual market conditions. To minimize credit and liquidity risks in over-the-counter option contracts, the Fund will continuously monitor the creditworthiness of all its counterparties. At any particular time, except for purchased options, market or credit risk may involve amounts in excess of those reflected in the Fund's Statement of Assets and Liabilities. The Fund had no open written option positions on October 31, 2003. Written options for the year ended October 31, 2003 were as follows: NUMBER OF CONTRACTS PREMIUMS - ------------------------------------------------------------------- Outstanding, beginning of period -- -- Options written 1,830 $330,332 Option closed (1,100) (205,691) Options expired (730) (124,641) Outstanding, end of period -- -- 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. At October 31, 2003, the Fund loaned securities having a market value of $35,518,735 collateralized by cash in the amount of $36,027,900. 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. There fore, no federal income tax provision is required. For federal income tax purposes, the Fund has $271,450,368 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 -- $216,254,383 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. As of October 31, 2003, the Fund had no distributable earning on a tax basis. Such distributions and distributable earnings, 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 an agreement with its custodian bank under which custody fees are reduced by brokerage commissions offsets applied during the period. Accordingly, the expense reductions related to custody fee offsets amounted to $15,799, or 0.01% of the Fund's average net asset value, for the year ended October 31, 2003. 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 asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $115,505 with regard to sales of Class A shares. Of this amount, $15,970 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $56,217 was paid as sales commissions to unrelated broker-dealers and $43,318 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $5,707 with regard to sales of Class C shares. Of this amount, $4,407 was paid as sales commissions to unrelated broker-dealers and $1,300 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 year ended October 31, 2003, CDSCs received by JH Funds amounted to $105,171 for Class B shares and $783 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. Effective January 1, 2003, 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. Until January 1, 2003, the Fund paid a monthly transfer agent fee based on the number of shareholder accounts, plus certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the year was at an annual rate of approximately 0.04% of the average net asset value of the Fund. Ms. Maureen Ford Goldfarb 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 1 YEAR ENDED 10-31-03 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,947,091 $19,544,311 1,307,717 $11,137,303 Repurchased (4,847,316) (47,395,047) (3,054,320) (25,747,820) Net decrease (2,900,225) ($27,850,736) (1,746,603) ($14,610,517) CLASS B SHARES Sold 1,608,344 $15,305,021 1,154,106 $8,948,550 Repurchased (3,934,461) (36,201,222) (2,151,843) (16,592,814) Net decrease (2,326,117) ($20,896,201) (997,737) ($7,644,264) CLASS C SHARES Sold 151,406 $1,482,455 118,376 $923,718 Repurchased (128,882) (1,132,932) (102,019) (787,491) Net increase 22,524 $349,523 16,357 $136,227 NET DECREASE (5,203,818) ($48,397,414) (2,727,983) ($22,118,554) 1 Audited by previous auditor. 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 year ended October 31, 2003, aggregated $225,340,535 and $241,341,627, respectively. The cost of investments owned on October 31, 2003, including short-term investments, for federal income tax purposes was $197,946,148. Gross unrealized appreciation and depreciation of investments aggregated $41,300,207 and $2,903,333, respectively, resulting in net unrealized appreciation of $38,396,874. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on certain sales of securities. NOTE E Reclassification of accounts During the year ended October 31, 2003, the Fund reclassified amounts to reflect a decrease in accumulated net realized loss on investments of $198, a decrease in accumulated net investment loss of $1,914,916 and a decrease in capital paid-in of $1,915,114. This represents the amount necessary to report these balances on a tax basis, excluding certain temporary differences, as of October 31, 2003. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Fund, are primarily attributable to certain differences in the computation of distributable income and capital gains under federal tax rules versus accounting principles generally accepted in the United States of America, and book and tax differences in accounting for deferred compensation. The calculation of net investment loss per share in the Fund's Financial Highlights excludes these adjustments. NOTE F Change in Independent Auditor Based on the recommendation of the Audit Committee of the Fund, the Board of Trustees has determined not to retain Ernst & Young LLP as the Fund's independent auditor and voted to appoint PricewaterhouseCoopers LLP for the fiscal year ended October 31, 2003. During the two most recent fiscal years, Ernst & Young LLP's audit reports contained no adverse opinion or disclaimer of opinion; nor were their reports qualified as to uncertainty, audit scope, or accounting principles. Further, there were no disagreements between the Fund and Ernst & Young LLP on accounting principles, financial statements disclosure or audit scope, which if not resolved to the satisfaction of Ernst & Young LLP would have caused them to make reference to the disagreement in their report. AUDITORS' REPORT Report of Pricewaterhouse- Coopers LLP, Independent Auditors To the Board of Trustees and Shareholders of John Hancock Large Cap Growth Fund, In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Large Cap Growth Fund (the "Fund") at October 31, 2003, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities owned at October 31, 2003, by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of changes in net assets of the Fund for the year ended October 31, 2002, and the financial highlights for each of the periods ended on or before October 31, 2002, were audited by other independent auditors, whose report dated December 11, 2002, expressed an unqualified opinion thereon. PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 2003 TAX INFORMATION Unaudited For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended October 31, 2003. The fund hereby designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form 1099-DIV for the calendar year 2003. Shareholders will be mailed a 2003 U.S. Treasury Department Form 1099-DIV in January 2004. This will reflect the total of all distributions that are taxable for the calendar year 2003. TRUSTEES & OFFICERS This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees. INDEPENDENT TRUSTEES NUMBER OF NAME, AGE TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE Dennis S. Aronowitz, Born: 1931 1988 21 Professor of Law, Emeritus, Boston University School of Law (as of 1996); Director, Brookline Bancorp (since 1998). Richard P. Chapman, Jr., Born: 1935 1978 21 President and Chief Executive Officer, Brookline Bancorp Inc. (lending) (since 1972); Director, Lumber Insurance Co. (insurance) (until 2000); Chairman and Director, Northeast Retirement Services, Inc. (retirement administration) (since 1998). William J. Cosgrove, Born: 1933 1991 21 Vice President, Senior Banker and Senior Credit Officer, Citibank, N.A. (retired 1991); Executive Vice President, Citadel Group Representatives, Inc. (financial reinsurance); Trustee, Hudson City Savings Bank (since 1995); Director, Hudson City Bancorp (since 1999); Trustee, Scholarship Fund for Inner City Children (since 1986). Richard A. Farrell, Born: 1932 1996 21 President, Farrell, Healer & Co., Inc. (venture capital management firm) (since 1980) and President, the Venture Capital Fund of NE (since 1980); prior to 1980, headed the venture capital group at Bank of Boston Corporation; Trustee, Marblehead Savings Bank (since 1994). William F. Glavin, 2 Born: 1932 1996 21 President Emeritus, Babson College (as of 1998); Vice Chairman, Xerox Corporation (until 1989); Director, Reebok, Inc. (until 2002) and Inco Ltd. (until 2002). John A. Moore, 2 Born: 1939 1996 29 President and Chief Executive Officer, Institute for Evaluating Health Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences International (health research) (since 1998); Principal, Hollyhouse (consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002). Patti McGill Peterson, 2 Born: 1943 1996 29 Executive Director, Council for International Exchange of Scholars (since 1998); Vice President, Institute of International Education (since 1998); Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until 1997); President Emerita of Wells College and St. Lawrence University; Director, Niagara Mohawk Power Corporation (electric utility). John W. Pratt, Born: 1931 1996 21 Professor of Business Administration Emeritus, Harvard University Graduate School of Business Administration (as of 1998). INTERESTED TRUSTEES 3 NAME, AGE NUMBER OF POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE John M. DeCiccio, Born: 1948 2001 51 Trustee Executive Vice President and Chief Investment Officer, John Hancock Financial Services, Inc.; Director, Executive Vice President and Chief Investment Officer, John Hancock Life Insurance Company; Chairman of the Committee of Finance of John Hancock Life Insurance Company; Director, John Hancock Subsidiaries, LLC (Subsidiaries, LLC), Hancock Natural Resource Group, Independence Investment LLC, Declaration Management Research LLC, John Hancock Advisers, LLC (the "Adviser"), The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock Funds, LLC ("John Hancock Funds") and Massachusetts Business Development Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance Agency, Inc.") (until 1999). Maureen Ford Goldfarb, Born: 1955 2000 51 Trustee, Chairman, President and Chief Executive Officer Executive Vice President, John Hancock Financial Services, Inc., John Hancock Life Insurance Company; Chairman, Director, President and Chief Executive Officer, the Adviser and The Berkeley Group; Chairman, Director, President and Chief Executive Officer, John Hancock Funds; Chairman, Director, President and Chief Executive Officer, Sovereign Asset Management Corporation ("SAMCorp."); Director, Independence Investment LLC, Subsidiaries, LLC and Signature Services; Senior Vice President, MassMutual Insurance Co. (until 1999). PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES NAME, AGE POSITION(S) HELD WITH FUND OFFICER PRINCIPAL OCCUPATION(S) AND OF FUND DIRECTORSHIPS DURING PAST 5 YEARS SINCE Richard A. Brown, Born: 1949 2000 Senior Vice President and Chief Financial Officer Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock Funds and The Berkeley Group; Second Vice President and Senior Associate Controller, Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001). Thomas H. Connors, Born: 1959 1992 Vice President and Compliance Officer Vice President and Compliance Officer, the Adviser and each of the John Hancock funds; Vice President, John Hancock Funds. William H. King, Born: 1952 1988 Vice President and Treasurer Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001). Susan S. Newton, Born: 1950 1984 Senior Vice President, Secretary and Chief Legal Officer Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President, Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital. The business address for all Trustees and Officers is 101 Huntington Avenue, Boston, Massachusetts 02199. The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available, without charge, upon request, by calling 1-800-225-5291. 1 Each Trustee serves until resignation, retirement age or until his or her successor is elected. 2 Member of Audit Committee. 3 Interested Trustees hold positions with the Fund's investment adviser, underwriter and certain other affiliates. FOR YOUR INFORMATION 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 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 125 High Street Boston, Massachusetts 02110 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 The Fund's voting policies and procedures are available without charge, upon request: By phone 1-800-225-5291 On the Fund's Web site www.jhfunds.com/proxy On the SEC's Web site www.sec.gov [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. 2000A 10/03 12/03 John Hancock Mid Cap Growth Fund ANNUAL REPORT 10.31.03 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 Ford Goldfarb, 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 Trustees & officers page 26 For your information page 29 Dear Fellow Shareholders, The stock market has made a strong recovery in 2003. Historically low interest rates, improving corporate earnings and government stimulus in the form of tax cuts gave investors hope that the economy would begin to strengthen, which it did. The market's move up began in April and the breadth of the rally was enormous. As a result, the major indexes were able to wipe out their first-quarter losses and post solid gains year-to-date through October 31. With technology leading the way, the tech-heavy Nasdaq Composite Index rose 45.22% through October, while the Dow Jones Industrial Average was up 19.82% and the Standard & Poor's 500 Index returned 21.19%. With falling interest rates, bonds also did well, although they began to reverse course in July. High yield bonds led the pack, returning 24.23% through October, as measured by the Lehman Brothers High Yield Index. In other news, we are pleased to inform you that on September 28, 2003, the Boards of Directors of Canada-based Manulife Financial Corporation and Boston-based John Hancock Financial Services, Inc., the parent company of John Hancock Funds, unanimously voted to merge the two companies. Please be assured that the completion of the merger -- anticipated to occur in the first half of 2004 -- will have no effect on your investment in our John Hancock mutual funds. Your fund's adviser and board of trustees will remain the same, as will your relationship with your financial adviser. The merger is subject to customary closing conditions, including receipt of required regulatory approvals and approval by John Hancock stockholders. If you only own shares in a John Hancock mutual fund you are not affected and will not receive a proxy. Additional information on this transaction is available on our Web site: www.jhfunds.com. If you have questions about the merger, you may also call 800-732-5543. Separately, for information about your investments in John Hancock funds, please contact your financial adviser or our Customer Service representatives at 800-225-5291. Sincerely, /S/ MAUREEN FORD GOLDFARB Maureen Ford Goldfarb, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of October 31, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term capital appreciation by investing at least 80% of its assets in stocks of medium capital ization companies (in the capitaliza- tion range of the Russell Midcap Growth Index). Over the past twelve months * Stocks staged a major recovery in anticipation of improved revenues and earnings. * Economically sensitive technology and consumer discretionary stocks, as well as small-cap companies, were among the year's top performers. * Mid-cap stocks did nearly as well as small-cap names during the market rebound and handily beat large-cap stocks. [Bar chart with heading "John Hancock Mid Cap Growth Fund." Under the heading is a note that reads "Fund performance for the year ended October 31, 2003." The chart is scaled in increments of 10% with 0% at the bottom and 40% at the top. The first bar represents the 30.29% total return for Class A. The second bar represents the 29.43% total return for Class B. The third bar represents the 29.22% total return for Class C. The fourth bar represents the 31.18% 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 2.7% Symantec Corp. 2.4% Axcelis Technologies, Inc. 2.4% Zimmer Holdings, Inc. 2.3% BEA Systems, Inc. 2.3% Yankee Candle Co, Inc. (The) 2.3% Omnicom Group, Inc. 2.1% Pactiv Corp. 2.1% Intuit, Inc. 2.0% Microchip Technology, Inc. 2.0% Affiliated Computer Services, Inc. As a percentage of net assets on October 31, 2003. MANAGERS' REPORT BY THOMAS P. NORTON, CFA, AND ROBERT J. UEK, CFA, PORTFOLIO MANAGERS John Hancock Mid Cap Growth Fund Recently, Paul Berlinguet, formerly a member of the Fund's management team, left the company. Stocks made a long-awaited comeback this past year. After a strong start last fall, the market retreated in the months leading up to the war with Iraq. The swift end of major military conflict, coupled with strong consumer spending, low interest rates and increased money supply, led to an improved economic environment. As business conditions picked up, corporate earnings and stock prices moved higher. For the year, the biggest gains came from companies that had been the hardest hit in the downturn, including lower-quality, smaller-cap stocks. Mid-cap growth stocks fared almost as well as small-cap stocks and much better than large-cap stocks, with the Russell Midcap Growth Index returning 39.30% for the year ended October 31, 2003. "Stocks made a long- awaited comeback this past year." PERFORMANCE REVIEW John Hancock Mid Cap Growth Fund remained broadly diversified across industries with a bias toward mid-cap companies that would benefit from an economic recovery. Our focus was on solid, well-run companies with strong earnings growth prospects which were selling at reasonable valuations. We maintained a disciplined approach, setting price targets in advance to determine when to buy or sell a particular stock. For the year ended October 31, 2003, the Fund's Class A, Class B, Class C shares and Class I shares returned 30.29%, 29.43%, 29.22% and 31.18%, respectively, at net asset value. The Fund trailed its benchmark, the Russell Midcap Growth Index, in part because of our focus on higher-quality companies. Strong stock selection, however, helped us keep pace with the average mid-cap growth fund, which returned 30.87%, according to Lipper, Inc. 1 Keep in mind that your net asset value 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 Thomas Norton and Robert Uek flush right next to first paragraph.] STRENGTH IN INDUSTRIALS AND MATERIALS The Fund benefited from above-average stock returns in the industrial sector. JetBlue Airways, a discount airline, gained handsomely as expansion into new markets, continued strength from its existing routes, an attractive cost structure and an experienced management team attracted investor interest. We sold our stake as the stock approached full valuation. Our stock selection in the materials sector was also very strong. Top performers included Sealed Air, which makes specialty packaging, such as the bubble wrap used for shipping consumer electronic products, and Crown Holdings, which makes cans for beverages. When Sealed Air reached our price target, we eliminated it from the portfolio. We also had superior stock selection in the financial area, where companies such as Legg Mason, an asset manager and brokerage firm, benefited from the market rebound. We later sold our investment in Legg Mason. TECHNOLOGY AND CONSUMER WINNERS Economically sensitive technology stocks generated some of the Fund's biggest absolute gains. Symantec, which makes Norton anti-virus software, had a great run, thanks in part to increased demand and strong pricing power in the aftermath of the worm virus. BEA Systems benefited from its leadership position in the growing application server software market, while Jabil Circuit, an electronic manufacturing services company, gained as companies continued to find outsourcing cheaper than in-house production. Our slightly below-average stake in the technology sector, however, hampered performance relative to our Russell benchmark. "Economically sensitive technology stocks gener ated some of the Fund's biggest absolute gains." Consumer discretionary stocks, which benefit from strong consumer spending, were also top contributors to performance. Coach, a leather goods company, rallied amid growing same-store sales, new store openings and successful new product launches. Staples, an office supply chain, also did well, benefiting from new store designs and a renewed focus on small businesses. Top performers elsewhere included Gilead Sciences, a biotechnology company specializing in HIV drugs; Caremark Rx, a pharmaceutical benefits manager that continued to gain market share; and UTStarcom, a wireless phone company operating in China and other developing markets. [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 Electronics 15%, the fourth Retail 9%, and the fifth Business services-Misc. 5%.] ENERGY AND HEALTH CARE DISAPPOINTMENTS The Fund had an above-average stake in energy stocks, which have historically benefited from high oil and natural gas prices. Unfortunately, exploration and production companies did not increase spending on drilling as quickly as expected, causing energy services stocks to lag the market and hamper our overall returns. Although we still believe in the long-term outlook for the sector, we decided to reduce our stake. [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 10-31-03." The chart is divided into two sections (from top to left): Common stocks 97%, and Short-term investments & other 3%.] A number of individual health-care and tech stocks also turned in disappointing returns. Baxter International, which makes blood plasma products and medical devices, and King Pharmaceuticals, a branded pharmaceutical company, both suffered from weak execution. We sold Baxter and cut back on King. In the technology sector, RF Microdevices, which makes semiconductors used in cell phones, and Atmel, a semiconductor equipment manufacturer, declined last spring amid weaker-than-expected demand. We sold our positions as fundamentals deteriorated. [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 JetBlue Airways followed by an up arrow with the phrase "Strong niche, cost efficient, increased traffic." The second listing is Symantec followed by an up arrow with the phrase "Strong demand following worm virus." The third listing is GameStop followed by a down arrow with the phrase "Missed earnings, sell-off in stock."] POSITIONED FOR RECOVERY Throughout the year, the Fund was set up to take advantage of steady improvement in the economy. By the period's end, we had above-average stakes in both the consumer discretionary and technology sectors. New additions in the consumer area focused on retailers, such as CarMax, a nationwide used car dealership, and Yankee Candle, which makes high-quality candles. We also added to our tech stake in the fall, buying shares in companies such as Axcelis Technologies, a semiconductor capital equipment maker. We believe tech stocks stand to benefit as corporations step up spending in the fourth quarter of 2003. "The economy appears to be on the road to recovery." OPTIMISTIC OUTLOOK The economy appears to be on the road to recovery. The Federal Reserve has signaled that it is in no hurry to raise interest rates, which are still at historic lows. Consumer spending remains strong. And corporate profitability and cash flows have started to improve, leading to expectations that corporate spending will pick up. All of this bodes well for stocks. In the next leg of the market rebound, we believe investors could shift toward the higher-quality companies we favor. We believe the mid-cap sector is particularly attractive as it boasts a greater percentage of those companies than the small-cap sector. 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 October 31, 2003 Class A Class B Class C Class I 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 23.79% 24.43% 26.94% 31.18% Five years -0.30% -0.33% -0.18% -- Ten years 3.78% 3.74% -- -- Since inception -- -- -2.63% 2.77% Cumulative total returns with maximum sales charge (POP) One year 23.79% 24.43% 26.94% 31.18% Five years -1.48% -1.63% -0.88% -- Ten years 44.92% 44.42% -- -- Since inception -- -- -13.45% 4.66% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. 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. 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 two separate indexes. Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Standard & Poor's 500 Index and is equal to $26,889 as of October 31, 2003. The second line represents Russell Midcap Growth Index and is equal to $24,044 as of October 31, 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 $15,259 as of October 31, 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 $14,492 as of October 31, 2003. Cum Value of $10K Cum Value of $10K S&P 500 Russell Midcap Plot Date (No Load) (w/Load) Index Growth Index 11/1/93 $10,000 $9,500 $10,000 $10,000 4/30/1994 9,471 8,994 9,768 9,820 10/31/1994 9,329 8,860 10,387 10,254 4/30/1995 9,882 9,385 11,474 11,107 10/31/1995 10,965 10,413 13,133 12,740 4/30/1996 14,341 13,620 14,941 14,860 10/31/1996 14,929 14,178 16,297 15,027 4/30/1997 13,520 12,840 18,696 15,443 10/31/1997 16,241 15,424 21,531 18,725 4/30/1998 17,976 17,072 26,373 21,750 10/31/1998 14,713 13,974 26,266 19,181 4/30/1999 18,202 17,287 32,129 24,432 10/31/1999 20,754 19,710 33,008 26,405 4/30/2000 28,157 26,742 35,383 37,386 10/31/2000 27,657 26,266 35,018 36,616 4/30/2001 18,898 17,948 30,793 26,368 10/31/2001 13,866 13,168 26,297 20,951 4/30/2002 14,680 13,942 26,905 22,411 10/31/2002 11,712 11,123 22,325 17,261 4/30/2003 12,200 11,587 23,324 18,675 10/31/2003 15,259 14,492 26,889 24,044 Class B 1 Class C 1 Class I 2 Period beginning 11-1-93 6-1-98 3-1-02 Without sales charge $14,442 $8,741 $10,466 With maximum sales charge $14,442 $8,655 $10,466 Index 1 $26,889 $10,403 $9,554 Index 2 $24,044 $11,652 $10,620 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 October 31, 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. Standard & Poor's 500 Index -- Index 1 -- is an unmanaged index that includes 500 widely traded common stocks. Russell Midcap Growth Index -- Index 2 -- is 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 directly in an index. Index figures do not reflect sales charges and would be lower if they did. 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 October 31, 2003 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 97.33% $156,595,357 (Cost $130,248,688) Advertising 2.32% 3,735,837 46,815 Omnicom Group, Inc. 3,735,837 Automobiles/Trucks 1.96% 3,151,000 100,000 CarMax, Inc.* 3,151,000 Banks -- United States 1.62% 2,609,000 50,000 TCF Financial Corp. 2,609,000 Business Services -- Misc. 5.16% 8,309,501 77,597 ChoicePoint, Inc.* 2,718,999 54,200 Corporate Executive Board Co. (The)* 2,764,742 60,900 Manpower, Inc. + 2,825,760 Computers 17.34% 27,897,888 65,000 Affiliated Computer Services, Inc.* + 3,180,450 500,000 Atari, Inc. * 1,930,000 269,900 BEA Systems, Inc.* 3,751,610 60,000 Emulex Corp.* + 1,699,200 82,000 Fiserv, Inc.* 2,896,240 84,000 Foundry Networks, Inc.* 1,953,840 66,600 Intuit, Inc.* 3,328,668 38,000 Lexmark International, Inc.* 2,797,180 205,000 McDATA Corp. (Class B)* + 2,095,100 64,000 Symantec Corp.* + 4,265,600 Consumer Products -- Misc. 2.33% 3,749,320 134,000 Yankee Candle Co, Inc. (The)* 3,749,320 Containers 3.91% 6,289,040 364,850 Crown Holdings, Inc.* 2,882,315 154,500 Pactiv Corp.* 3,406,725 Cosmetics & Personal Care 1.60% 2,579,910 69,000 Estee Lauder Cos., Inc. (The) (Class A) + 2,579,910 Electronics 14.94% 24,031,130 600,000 Agere Systems, Inc. * 2,034,000 433,500 Applied Micro Circuits Corp.* 2,522,970 371,000 Axcelis Technologies, Inc.* 3,925,180 200,000 ChipPAC, Inc. * 1,668,000 181,900 Flextronics International Ltd. (Singapore)* 2,546,600 69,000 Intersil Corp. (Class A) 1,779,510 88,800 Jabil Circuit, Inc.* + 2,473,080 29,000 KLA-Tencor Corp.* + 1,662,570 98,000 Microchip Technology, Inc. + 3,205,580 258,000 Skyworks Solutions, Inc.* + 2,213,640 Finance 1.58% 2,537,500 35,000 Affiliated Managers Group, Inc.* 2,537,500 Insurance 0.62% 989,560 22,000 RenaissanceRe Holdings Ltd. (Bermuda) 989,560 Leisure 0.95% 1,521,080 44,000 LeapFrog Enterprises, Inc.* + 1,521,080 Manufacturing 1.32% 2,130,487 25,715 Danaher Corp. 2,130,487 Media 4.10% 6,594,810 41,000 Entercom Communications Corp.* 1,878,210 136,500 Radio One, Inc. (Class D)* 2,170,350 75,000 Univision Communications, Inc. (Class A)* + 2,546,250 Medical 20.46% 32,918,510 32,000 Aetna, Inc. 1,837,120 24,000 Barr Laboratories, Inc.* 1,842,480 35,000 Biogen, Inc.* + 1,416,450 83,000 Biovail Corp. (Canada)* 1,996,150 117,500 Caremark Rx, Inc.* 2,943,375 57,000 Cephalon, Inc. + 2,676,720 73,000 Community Health Systems, Inc.* + 1,753,460 78,500 Edwards Lifesciences Corp.* 2,276,500 28,000 Gilead Sciences, Inc.* 1,528,240 112,000 Health Management Associates, Inc. (Class A) 2,480,800 75,000 IDEC Pharmaceuticals Corp.* 2,634,750 41,000 Invitrogen Corp.* 2,607,190 60,000 King Pharmaceuticals, Inc.* 804,000 138,000 Millennium Pharmaceuticals, Inc.* 2,196,960 61,500 Zimmer Holdings, Inc.* 3,924,315 Oil & Gas 4.28% 6,891,900 39,000 Nabors Industries Ltd. (Bermuda)* 1,474,200 55,000 Patterson-UTI Energy, Inc.* 1,572,450 90,000 Pride International, Inc.* + 1,474,200 99,000 Rowan Cos., Inc. + 2,371,050 Paper & Paper Products 1.07% 1,720,500 111,000 Smurfit-Stone Container Corp.* 1,720,500 Retail 9.32% 15,000,236 79,000 Dollar Tree Stores, Inc.* 3,016,220 55,200 Fastenal Co. + 2,454,744 97,500 Linens 'n Things, Inc.* 2,878,200 52,400 Panera Bread Co.* + 2,108,052 49,000 Talbots, Inc. (The) 1,610,630 83,000 Williams-Sonoma, Inc.* + 2,932,390 Telecommunications 0.94% 1,512,000 48,000 UTStarcom, Inc.* + 1,512,000 Textile 1.51% 2,426,148 68,400 Coach, Inc.* 2,426,148 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 28.91% $46,505,078 (Cost $46,505,078) Joint Repurchase Agreement 0.74% Investment in a joint repurchase agreement transaction with Barclays Capital, Inc. -- Dated 10-31-03, due 11-03-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.625% due 04-15-28, U.S. Treasury Inflation Indexed Note 1.875% due 07-15-13) 1.020% $1,185 1,185,000 SHARES Cash Equivalents 28.17% AIM Cash Investment Trust ** 45,320,078 45,320,078 TOTAL INVESTMENTS 126.24% $203,100,435 OTHER ASSETS AND LIABILITIES, NET (26.24%) ($42,220,958) TOTAL NET ASSETS 100.00% $160,879,477 * Non-income producing security. ** Represents investment of security lending collateral. + All or a portion of this security is on loan as of October 31, 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. FINANCIAL STATEMENTS ASSETS AND LIABILITIES October 31, 2003 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 $176,753,766), including $43,808,340 of securities loaned $203,100,435 Cash 52 Receivable for investments sold 6,545,346 Receivable for shares sold 102,949 Dividends and interest receivable 5,091 Other assets 24,726 Total assets 209,778,599 LIABILITIES Payable for investments purchased 3,177,944 Payable for shares repurchased 98,559 Payable for securities on loan 45,320,078 Payable to affiliates Management fee 112,827 Distribution and service fee 6,923 Other 104,088 Other payables and accrued expenses 78,703 Total liabilities 48,899,122 NET ASSETS Capital paid-in 245,054,431 Accumulated net realized loss on investments (110,500,814) Net unrealized appreciation of investments 26,346,669 Accumulated net investment loss (20,809) Net assets $160,879,477 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($106,563,270 [DIV] 12,641,251 shares) $8.43 Class B ($48,033,109 [DIV] 6,206,413 shares) $7.74 Class C ($3,223,268 [DIV] 416,361 shares) $7.74 Class I ($3,059,830 [DIV] 358,147 shares) $8.54 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($8.43 [DIV] 95%) $8.87 Class C ($7.74 [DIV] 99%) $7.82 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 year ended October 31, 2003 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 taxes withholding of $17,085) $376,316 Securities lending 80,749 Interest 55,727 Total investment income 512,792 EXPENSES Investment management fee 1,121,680 Class A distribution and service fee 271,246 Class B distribution and service fee 436,265 Class C distribution and service fee 27,391 Class A, B and C transfer agent fee 1,006,110 Class I transfer agent fee 7,647 Registration and filing fee 60,976 Accounting and legal services fee 50,347 Printing 27,591 Custodian fee 26,357 Auditing fee 21,700 Miscellaneous 10,868 Trustees' fee 8,464 Interest 3,095 Legal fee 2,369 Total expenses 3,082,106 Net investment loss (2,569,314) REALIZED AND UNREALIZED GAIN Net realized gain on investments 16,717,797 Change in unrealized appreciation (depreciation) of investments 23,244,385 Net realized and unrealized gain 39,962,182 Increase in net assets from operations $37,392,868 See notes to financial statements. CHANGES IN NET ASSETS These Statements of Changes in Net Assets show how the value of the Fund's net assets has changed during the last two periods. 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 YEAR ENDED ENDED 10-31-02 10-31-03 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($3,202,072) ($2,569,314) Net realized gain (loss) (24,492,579) 16,717,797 Change in net unrealized appreciation (depreciation) 791,079 23,244,385 Increase (decrease) in net assets resulting from operations (26,903,572) 37,392,868 From Fund share transactions (25,804,343) (13,076,268) NET ASSETS Beginning of period 189,270,792 136,562,877 End of period 1 $136,562,877 $160,879,477 1 Includes accumulated net investment loss of $20,674 and $20,809, 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. FINANCIAL HIGHLIGHTS PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $9.11 $12.85 $16.03 $7.66 $6.47 Net investment loss 1 (0.12) (0.17) (0.12) (0.11) (0.11) Net realized and unrealized gain (loss) on investments 3.86 4.23 (7.48) (1.08) 2.07 Total from investment operations 3.74 4.06 (7.60) (1.19) 1.96 Less distributions From net realized gain -- (0.88) (0.77) -- -- Net asset value, end of period $12.85 $16.03 $7.66 $6.47 $8.43 Total return 2 (%) 41.05 33.26 (49.87) (15.54) 30.29 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $112 $176 $85 $85 $107 Ratio of expenses to average net assets (%) 1.60 1.46 1.63 1.89 1.98 Ratio of net investment loss to average net assets (%) (1.14) (1.08) (1.13) (1.52) (1.62) Portfolio turnover (%) 153 146 211 267 3 183 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.72 $12.22 $15.08 $7.13 $5.98 Net investment loss 1 (0.18) (0.27) (0.18) (0.16) (0.15) Net realized and unrealized gain (loss) on investments 3.68 4.01 (7.00) (0.99) 1.91 Total from investment operations 3.50 3.74 (7.18) (1.15) 1.76 Less distributions From net realized gain -- (0.88) (0.77) -- -- Net asset value, end of period $12.22 $15.08 $7.13 $5.98 $7.74 Total return 2 (%) 40.14 32.30 (50.24) (16.13) 29.43 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $146 $241 $101 $46 $48 Ratio of expenses to average net assets (%) 2.23 2.16 2.33 2.56 2.67 Ratio of net investment loss to average net assets (%) (1.77) (1.78) (1.83) (2.20) (2.31) Portfolio turnover (%) 153 146 211 267 3 183 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.72 $12.21 $15.07 $7.13 $5.99 Net investment loss 1 (0.19) (0.27) (0.18) (0.16) (0.15) Net realized and unrealized gain (loss) on investments 3.68 4.01 (6.99) (0.98) 1.90 Total from investment operations 3.49 3.74 (7.17) (1.14) 1.75 Less distributions From net realized gain -- (0.88) (0.77) -- -- Net asset value, end of period $12.21 $15.07 $7.13 $5.99 $7.74 Total return 2 (%) 40.02 32.32 (50.21) (15.99) 29.22 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 4 $5 $3 $2 $3 Ratio of expenses to average net assets (%) 2.30 2.16 2.33 2.58 2.68 Ratio of net investment loss to average net assets (%) (1.82) (1.80) (1.83) (2.21) (2.32) Portfolio turnover (%) 153 146 211 267 3 183 See notes to financial statements. FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 5 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.16 $6.51 Net investment loss 1 (0.06) (0.06) Net realized and unrealized gain (loss) on investments (1.59) 2.09 Total from investment operations (1.65) 2.03 Net asset value, end of period $6.51 $8.54 Total return 2 (%) (20.22) 6 31.18 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 Ratio of expenses to average net assets (%) 1.46 7 1.22 Ratio of net investment loss to average net assets (%) (1.00) 7 (0.85) Portfolio turnover (%) 267 3 183 1 Based on the average of the shares outstanding. 2 Assumes dividend reinvestment and does not reflect the effect of sales charges. 3 Excludes merger activity. 4 Less than $500,000. 5 Class I shares began operations on 3-1-02. 6 Not annualized. 7 Annualized. See notes to financial statements. NOTES TO STATEMENTS 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 the 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 asset value of the respective classes. Distribution 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 asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. 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 commit ment 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 year ended October 31, 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. At October 31, 2003, the Fund loaned securities having a market value of $43,808,340 collateralized by cash in the amount of $45,320,078. 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 $109,741,917 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 -- $82,196,780 and October 31, 2010 -- $25,006,446. Availability of a certain amount of loss carryforward, which was acquired on September 7, 2002, in a merger, may be limited in a given year. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund 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. Distri butions 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. As of October 31, 2003, there were no distributable earnings on a tax basis. Such distributions and distributable earnings, 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 asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $79,946 with regard to sales of Class A shares. Of this amount, $9,105 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $49,900 was paid as sales commissions to unrelated broker-dealers and $20,941 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $6,411 with regard to sales of Class C shares. Of this amount, $5,574 was paid as sales commissions to unrelated broker-dealers and $837 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 year ended October 31, 2003, CDSCs received by JH Funds amounted to $78,271 for Class B shares and $403 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. Effective January 1, 2003, for Class A, Class B and Class 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. Until January 1, 2003, for Class A, Class B and Class C shares, the Fund paid monthly transfer agent fees based on the number of shareholder accounts plus certain out-of-pocket expenses. Effective June 1, 2003, for Class I shares, the Fund pays a monthly transfer agent fee at a total annual rate of 0.05% of Class I average daily net asset value. Until June 1, 2003, for Class I shares, the Fund paid 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 year was at an annual rate of approximately 0.04% of the average net asset value of the Fund. Ms. Maureen Ford Goldfarb 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 YEAR ENDED 10-31-03 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 6,779,923 $53,607,931 2,334,794 $16,511,673 Repurchased (4,712,845) (36,297,979) (2,850,728) (19,782,837) Net increase (decrease) 2,067,078 $17,309,952 (515,934) ($3,271,164) CLASS B SHARES Sold 951,215 $6,872,300 913,561 $6,171,951 Repurchased (7,448,783) (53,300,949) (2,400,880) (15,429,942) Net decrease (6,497,568) ($46,428,649) (1,487,319) ($9,257,991) CLASS C SHARES Sold 138,670 $1,002,856 128,247 $829,129 Repurchased (170,318) (1,164,263) (122,444) (789,063) Net increase (decrease) (31,648) ($161,407) 5,803 $40,066 CLASS I SHARES 1 Shares sold 41,324 $272,525 173,708 $1,227,046 Shares issued in reorganization 533,703 4,100,229 -- -- Shares reinvested (131,455) (896,993) (259,133) (1,814,225) Net increase (decrease) 443,572 $3,475,761 (85,425) ($587,179) NET DECREASE (4,018,566) ($25,804,343) (2,082,875) ($13,076,268) 1 Class I shares began operations 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 year ended October 31, 2003, aggregated $251,165,157 and $271,932,884, respectively. The cost of investments owned on October 31, 2003, including short-term investments, for federal income tax purposes was $177,512,663. Gross unrealized appreciation and depreciation of investments aggregated $27,949,412 and $2,361,640, respectively, resulting in net unrealized appreciation of $25,587,772. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on certain sales of securities. NOTE E Reclassification of accounts During the year ended October 31, 2003, the Fund reclassified amounts to reflect a decrease in accumulated net realized loss on investments of $144, a decrease in accumulated net investment loss of $2,569,179 and a decrease in capital paid-in of $2,569,323. This represents the amount necessary to report these balances on a tax basis, excluding certain temporary differences, as of October 31, 2003. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Fund, are primarily attributable to certain differences in the computation of distributable income and capital gains under federal tax rules versus accounting principles generally accepted in the United States of America, and book and tax differences in accounting of net operating loss and deferred compensa tion. The calculation of net investment loss per share in the Fund's Financial Highlights excludes these adjustments. NOTE F 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. AUDITORS' REPORT Report of Pricewaterhouse- Coopers LLP, Independent Auditors To the Board of Trustees and Shareholders of John Hancock Mid Cap Growth Fund, In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Mid Cap Growth Fund (the "Fund") at October 31, 2003, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at October 31, 2003, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 2003 TAX INFORMATION Unaudited For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended October 31, 2003. The fund hereby designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form 1099-DIV for the calendar year 2003. Shareholders will be mailed a 2003 U.S. Treasury Department Form 1099-DIV in January 2004. This will reflect the total of all distributions that are taxable for the calendar year 2003. TRUSTEES & OFFICERS This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees. INDEPENDENT TRUSTEES NUMBER OF NAME, AGE TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE Dennis S. Aronowitz, Born: 1931 1996 21 Professor of Law, Emeritus, Boston University School of Law (as of 1996); Director, Brookline Bancorp (since 1998). Richard P. Chapman, Jr., Born: 1935 1996 21 President and Chief Executive Officer, Brookline Bancorp Inc. (lending) (since 1972); Director, Lumber Insurance Co. (insurance) (until 2000); Chairman and Director, Northeast Retirement Services, Inc. (retirement administration) (since 1998). William J. Cosgrove, Born: 1933 1996 21 Vice President, Senior Banker and Senior Credit Officer, Citibank, N.A. (retired 1991); Executive Vice President, Citadel Group Representatives, Inc. (financial reinsurance); Trustee, Hudson City Savings Bank (since 1995); Director, Hudson City Bancorp (since 1999); Trustee, Scholarship Fund for Inner City Children (since 1986). Richard A. Farrell, Born: 1932 1993 21 President, Farrell, Healer & Co., Inc. (venture capital management firm) (since 1980) and President, the Venture Capital Fund of NE (since 1980); prior to 1980, headed the venture capital group at Bank of Boston Corporation; Trustee, Marblehead Savings Bank (since 1994). William F. Glavin, 2 Born: 1932 1993 21 President Emeritus, Babson College (as of 1998); Vice Chairman, Xerox Corporation (until 1989); Director, Reebok, Inc. (until 2002) and Inco Ltd. (until 2002). John A. Moore, 2 Born: 1939 1993 29 President and Chief Executive Officer, Institute for Evaluating Health Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences International (health research) (since 1998); Principal, Hollyhouse (consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002). Patti McGill Peterson, 2 Born: 1943 1993 29 Executive Director, Council for International Exchange of Scholars (since 1998); Vice President, Institute of International Education (since 1998); Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until 1997); President Emerita of Wells College and St. Lawrence University; Director, Niagara Mohawk Power Corporation (electric utility). John W. Pratt, Born: 1931 1993 21 Professor of Business Administration Emeritus, Harvard University Graduate School of Business Administration (as of 1998). INTERESTED TRUSTEES 3 NAME, AGE NUMBER OF POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE John M. DeCiccio, Born: 1948 2001 51 Trustee Executive Vice President and Chief Investment Officer, John Hancock Financial Services, Inc.; Director, Executive Vice President and Chief Investment Officer, John Hancock Life Insurance Company; Chairman of the Committee of Finance of John Hancock Life Insurance Company; Director, John Hancock Subsidiaries, LLC (Subsidiaries, LLC), Hancock Natural Resource Group, Independence Investment LLC, Declaration Management Research LLC, John Hancock Advisers, LLC (the "Adviser"), The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock Funds, LLC ("John Hancock Funds") and Massachusetts Business Development Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance Agency, Inc.") (until 1999). Maureen Ford Goldfarb, Born: 1955 2000 51 Trustee, Chairman, President and Chief Executive Officer Executive Vice President, John Hancock Financial Services, Inc., John Hancock Life Insurance Company; Chairman, Director, President and Chief Executive Officer, the Adviser and The Berkeley Group; Chairman, Director, President and Chief Executive Officer, John Hancock Funds; Chairman, Director, President and Chief Executive Officer, Sovereign Asset Management Corporation ("SAMCorp."); Director, Independence Investment LLC, Subsidiaries, LLC and Signature Services; Senior Vice President, MassMutual Insurance Co. (until 1999). PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES NAME, AGE POSITION(S) HELD WITH FUND OFFICER PRINCIPAL OCCUPATION(S) AND OF FUND DIRECTORSHIPS DURING PAST 5 YEARS SINCE Richard A. Brown, Born: 1949 2000 Senior Vice President and Chief Financial Officer Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock Funds and The Berkeley Group; Second Vice President and Senior Associate Controller, Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001). Thomas H. Connors, Born: 1959 1993 Vice President and Compliance Officer Vice President and Compliance Officer, the Adviser and each of the John Hancock funds; Vice President, John Hancock Funds. William H. King, Born: 1952 1993 Vice President and Treasurer Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001). Susan S. Newton, Born: 1950 1993 Senior Vice President, Secretary and Chief Legal Officer Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President, Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital. The business address for all Trustees and Officers is 101 Huntington Avenue, Boston, Massachusetts 02199. The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available, without charge, upon request, by calling 1-800-225-5291. 1 Each Trustee serves until resignation, retirement age or until his or her successor is elected. 2 Member of Audit Committee. 3 Interested Trustees hold positions with the Fund's investment adviser, underwriter and certain other affiliates. FOR YOUR INFORMATION 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 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 125 High Street Boston, Massachusetts 02110 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 The Fund's voting policies and procedures are available without charge, upon request: By phone 1-800-225-5291 On the Fund's Web site www.jhfunds.com/proxy On the SEC's Web site www.sec.gov [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. 3900A 10/03 12/03 John Hancock International Fund ANNUAL REPORT 10.31.03 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 Ford Goldfarb, 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 16 Trustees & officers page 33 For your information page 37 Dear Fellow Shareholders, The stock market has made a strong recovery in 2003. Historically low interest rates, improving corporate earnings and government stimulus in the form of tax cuts gave investors hope that the economy would begin to strengthen, which it did. The market's move up began in April and the breadth of the rally was enormous. As a result, the major indexes were able to wipe out their first-quarter losses and post solid gains year-to-date through October 31. With technology leading the way, the tech-heavy Nasdaq Composite Index rose 45.22% through October, while the Dow Jones Industrial Average was up 19.82% and the Standard & Poor's 500 Index returned 21.19%. With falling interest rates, bonds also did well, although they began to reverse course in July. High yield bonds led the pack, returning 24.23% through October, as measured by the Lehman Brothers High Yield Index. In other news, we are pleased to inform you that on September 28, 2003, the Boards of Directors of Canada-based Manulife Financial Corporation and Boston-based John Hancock Financial Services, Inc., the parent company of John Hancock Funds, unanimously voted to merge the two companies. Please be assured that the completion of the merger -- anticipated to occur in the first half of 2004 -- will have no effect on your investment in our John Hancock mutual funds. Your fund's adviser and board of trustees will remain the same, as will your relationship with your financial adviser. The merger is subject to customary closing conditions, including receipt of required regulatory approvals and approval by John Hancock stockholders. If you only own shares in a John Hancock mutual fund you are not affected and will not receive a proxy. Additional information on this transaction is available on our Web site: www.jhfunds.com. If you have questions about the merger, you may also call 800-732-5543. Separately, for information about your investments in John Hancock funds, please contact your financial adviser or our Customer Service representatives at 800-225-5291. Sincerely, /S/ MAUREEN FORD GOLDFARB Maureen Ford Goldfarb, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of October 31, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by normally investing at least 80% of its assets in stocks of foreign companies. Over the last twelve months * Non-U.S. stocks posted strong gains after struggling through several tough years. * The Fund posted strong absolute returns, but its growth focus hurt relative returns, as value stocks outperformed. * The Fund's utilities holdings and slight overweight in technology helped performance. [Bar chart with heading "John Hancock International Fund." Under the heading is a note that reads "Fund performance for the year ended October 31, 2003." The chart is scaled in increments of 10% with 0% at the bottom and 30% at the top. The first bar represents the 21.76% total return for Class A. The second bar represents the 20.79% total return for Class B. The third bar represents the 20.79% total return for Class C. The fourth bar represents the 23.05% 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 2.1% HSBC Holdings Plc 1.9% Mitsubishi Tokyo Financial Group, Inc. 1.3% Vodafone Group Plc 1.3% BHP Billiton Plc 1.2% GlaxoSmithKline Plc 1.1% Canadian National Railway Co. 1.1% Henderson Land Development Co., Ltd. 1.1% Total Fina SA 1.0% Ito-Yokado Co., Ltd. 1.0% Hoya Corp. As a percentage of net assets on October 31, 2003. MANAGERS' REPORT BY HORACIO A. VALEIRAS, CFA, FOR THE NICHOLAS-APPLEGATE CAPITAL MANAGEMENT PORTFOLIO MANAGEMENT TEAM John Hancock International Fund 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, and John Hancock Pacific Basin Equities Fund was merged into the International Fund on September 26, 2003. Investors in international equities were well rewarded during the 12 months ended October 31, 2003. Following a disappointing few years, non-U.S. stock markets posted strong increases this reporting period. The sharp appreciation of foreign currencies added to equity gains for U.S.-based investors by substantially boosting returns in dollar terms. During the first several months of the fiscal year, international stock prices fell due to concerns about war and weakness in the global economy. The tide turned in April, however, as investors cheered the end of major military conflict in Iraq. Stimulative monetary policies pursued by central banks worldwide contributed to positive market sentiment, as did the diminishing threat of severe acute respiratory syndrome (SARS). "This period's gains were broadly based, with stocks in nearly every country registering steep price increases." The rally extended through the end of October, fueled by positive economic and earnings reports from the United States and around the world. This period's gains were broadly based, with stocks in nearly every country registering steep price increases. Among developed markets, Japan was a notable bright spot amid signs that the government was getting serious about long-awaited banking reforms. In addition, economic conditions in Japan improved -- exports rose strongly, industrial production began to recover and trends in consumer confidence and income growth pointed to a rebound in domestic spending. Similarly, in Europe, mounting evidence of economic improvement helped send stock prices higher throughout the region. Emerging-market equities also turned in impressive returns, with numerous countries posting gains in excess of 50%. Investment performance among economic sectors was strong across the board, with technology companies leading the way. Evidence of a revival in corporate IT spending buoyed prices of technology stocks, many of which had been trading at severely depressed levels. Additionally, a number of global technology bellwethers, including Nokia and Intel, stated that their businesses were improving -- the first significantly upbeat comments from major companies such as these in several years. Stocks in the economically sensitive transportation and producers/manufacturing sectors also did particularly well given investors' expectations for a pickup in GDP growth. FUND PERFORMANCE EXPLAINED For the 12 months ended October 31, 2003, John Hancock International Fund's Class A, Class B, Class C and Class I shares gained 21.76%, 20.79%, 20.79% and 23.05%, respectively, at net asset value. During the same period, the average international fund returned 24.51%, according to Lipper, Inc.,1 while the benchmark MSCI All Country World Free Ex-U.S. Index advanced 30.40%. 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. "A modest overweight in technology compa- nies compared with the benchmark was another plus." The Fund participated in this period's market rally, with holdings in the majority of countries and sectors posting strong, double-digit returns. Compared with its peers and benchmark, however, the Fund trailed. One reason for the underperformance was investors' preference for value stocks over growth stocks. This hurt the Fund's relative performance since its holdings were concentrated in companies with higher growth expectations. In contrast, the Fund's peer group includes value-oriented, growth-oriented and style-neutral funds, and its benchmark contains both value and growth stocks. Another unfavorable influence was disappointing security selection among companies in Japan and in the consumer durables sector. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Banks--foreign 14%, the second is Electronics 12%, the third Telecommunications 10%, the fourth Oil & gas 9%, and the fifth Transportation 5%.] On a positive note, select positions in France and Switzerland favorably impacted performance versus the MSCI All Country World Free Ex-U.S. Index. From a sector perspective, the Fund's utilities holdings, which rose by approximately 40%, boosted relative results. A modest overweight in technology companies compared with the benchmark was another plus. [Bar chart at middle of page with heading "Top five countries As a percentage of net assets on 10-31-03." The chart is divided into five sections: Japan 22%, United Kingdom 14%, Taiwan 8%, South Korea 6% and Hong Kong 6%.] Among the best-performing stocks were Endesa SA, a Spanish electric utility that benefited from financial restructuring; JC Decaux, a French advertiser that gained amid acceleration in free cash-flow growth; and Credit Suisse Group, a Swiss financial services firm that advanced on strength in its equity and private banking units. Decliners included Prudential Plc, a U.K. insurer that announced disappointing sales; Sony, a Japanese electronics manufacturer that suffered from declining profits; and Yamato Transport, a Japanese parcel delivery company that experienced sluggish volume growth and unfavorable pricing trends. We sold all three stocks. FUND MOVES During the period, our stock-by-stock analysis of companies' fundamental prospects resulted in some changes in the Fund's country and sector weightings. We decreased holdings in developed European countries, particularly Italy and the United Kingdom, and increased holdings in Taiwan and Japan, where we identified better opportunities. By sector, we reduced positions in utilities and non-cyclical consumer goods stocks, and increased the Fund's weighting in general industrial and cyclical services companies. [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 JC Decaux followed by an up arrow with the phrase "Stock boosted by free cash-flow growth." The second listing is Credit Suisse Group followed by an up arrow with the phrase "Strength in equity and private banking units." The third listing is Prudential Pic followed by a down arrow with the phrase "Disappointing sales."] "The upturn in economic and earnings growth world wide, along with the more stable geopolitical back drop, inspire confidence in the future." OUTLOOK The upturn in economic and earnings growth worldwide, along with the more stable geopolitical backdrop, inspire confidence in the future. We find the recent improvement in the U.S. employment market especially encouraging given that we believe this has been a key risk to a sustained global recovery. We are also optimistic that corporations, which have held back spending for the past several years, will once again make a contribution to global growth. In particular, we are excited about the investment potential of many Asian companies that are leveraged to a cyclical resurgence in economic activity. 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 October 31, 2003 Class A Class B Class C Class I 1 Inception date 1-3-94 1-3-94 6-1-98 3-1-02 Average annual returns with maximum sales charge (POP) One year 15.64% 15.79% 18.56% 23.05% Five years -6.95% -7.02% -6.85% -- Since inception -3.07% -3.12% -7.88% 1.16% Cumulative total returns with maximum sales charge (POP) One year 15.64% 15.79% 18.56% 23.05% Five years -30.26% -30.50% -29.88% -- Since inception -26.36% -26.77% -35.89% 1.94% 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. 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 Class I share prospectus. 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 MSCI All Country World Free Ex-U.S. Index and is equal to $11,834 as of October 31, 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 $7,753 as of October 31, 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 $7,364 as of October 31, 2003. Cum Value of $10K Cum Value of $10K MSCI All Country World Plot Date (No Load) (w/Load) Ex-U.S. Free Index 1/3/94 $10,000 $9,500 $10,000 4/30/1994 9,600 9,117 10,595 10/31/1994 10,176 9,665 11,230 4/30/1995 9,505 9,027 11,115 10/31/1995 9,672 9,185 11,021 4/30/1996 10,551 10,020 12,474 10/31/1996 10,337 9,817 12,185 4/30/1997 10,659 10,123 12,581 10/31/1997 10,005 9,501 12,779 4/30/1998 11,669 11,082 14,612 10/31/1998 10,565 10,034 13,403 4/30/1999 12,004 11,401 15,704 10/31/1999 13,132 12,471 16,789 4/30/2000 13,846 13,150 18,199 10/31/2000 11,799 11,205 16,440 4/30/2001 9,763 9,273 15,063 10/31/2001 7,716 7,328 12,342 4/30/2002 7,978 7,577 13,374 10/31/2002 6,367 6,047 10,997 4/30/2003 6,367 6,047 11,336 10/31/2003 7,753 7,364 14,340 Class B 1 Class C 1 Class I 2 Period beginning 1-3-94 6-1-98 3-1-02 Without sales charge $7,323 $6,473 $10,194 With maximum sales charge $7,323 $6,411 $10,194 Index $14,340 $9,998 $11,247 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 October 31, 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. Morgan Stanley Capital International (MSCI) All Country World Free Ex-U.S. Index is an unmanaged index of freely traded stocks of foreign companies. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. 2 For certain types of investors as described in the Fund's Class I share prospectus. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on October 31, 2003 This schedule is divided into five main categories: common stocks, preferred stocks, rights, securities-linked warrants and bonds, all of which are further broken down by country. SHARES ISSUER VALUE COMMON STOCKS 95.17% $92,191,334 (Cost $76,208,594) Australia 2.40% 2,327,928 59,800 BHP Billiton Plc (Diversified Operations) 497,294 13,800 Commonwealth Bank of Australia (Banks -- Foreign) 269,275 65,000 News Corp., Ltd. (The) (Media) 578,817 59,000 Publishing & Broadcasting Ltd. (Media) 504,456 18,900 Rio Tinto Ltd. (Diversified Operations) 478,086 Belgium 0.40% 386,308 16,500 Interbrew SA (Beverages) 386,308 Brazil 1.47% 1,424,411 8,100 Aracruz Celulose SA, American Depositary Receipts (ADR) (Paper & Paper Products) 227,610 13,900 Companhia de Bebidas das Americas (ADR) (Beverages) 294,680 16,500 Petroleo Brasileiro SA (ADR) (Oil & Gas) 387,750 36,300 Tele Norte Leste Participacoes SA (ADR) (Telecommunications) 514,371 Canada 4.48% 4,336,836 10,000 Alcan, Inc. (Metal) 399,300 18,100 Canadian National Railway Co. (Transportation) 1,089,620 18,200 Cott Corp.* (Beverages) 474,110 18,300 EnCana Corp. (Oil & Gas) 628,971 2,900 Magna International, Inc. (Class A) (Automobiles/Trucks) 232,629 6,500 Petro-Canada (Oil & Gas) 262,012 15,000 Precision Drilling Corp.* (Oil & Gas) 590,700 7,600 Talisman Energy, Inc. (Oil & Gas) 370,880 13,250 WestJet Airlines Ltd.* (Transportation) 288,614 China 1.09% 1,058,682 120,000 BYD Co., Ltd. (Electronics) 312,915 594,000 Jiangsu Expressway Co., Ltd. (H Shares) (Transportation) 298,312 348,000 Shangri-La Asia Ltd. (Leisure) 333,853 401,000 Sinopec Shanghai Petrochemical Co., Ltd.* (Chemicals) 113,602 Denmark 1.60% 1,547,192 73 A.P. Moeller-Maersk AS (Transportation) 573,082 11,000 Novo Nordisk AS (Medical) 395,649 18,000 TDC AS (Telecommunications) 578,461 Finland 1.78% 1,724,184 49,400 Nokia Oyj (ADR) (Telecommunications) 839,306 37,400 Stora Enso Oyj (R shares) (Paper & Paper Products) 508,684 20,100 UPM-Kymmene Oyj (Paper & Paper Products) 376,194 France 5.55% 5,372,522 35,000 Alcatel SA* (Telecommunications) 461,800 20,600 Axa SA (Insurance) 390,342 8,100 Cap Gemini SA* (Computers) 408,192 10,000 Cie. de Saint-Gobain SA (Building) 421,869 38,900 JC Decaux SA* (Advertising) 572,498 7,800 LVMH Moet Hennessy-Louis Vuitton SA (Diversified Operations) 539,060 6,200 Renault SA (Automobiles/Trucks) 410,104 8,200 Societe Generale SA (Banks -- Foreign) 609,123 24,600 Thomson SA (Electronics) 518,184 6,700 Total Fina SA (Oil & Gas) 1,041,350 Germany 4.05% 3,926,405 12,200 BASF AG (Chemicals) 560,206 14,300 Bayerische Motoren Werke AG (Automobiles/Trucks) 573,516 3,100 Continental AG (Rubber -- Tires & Misc.) 105,589 22,500 Deutsche Post AG (Transportation) 435,499 3,600 Medion AG (Business Services -- Misc.) 160,661 7,700 Metro AG (Retail) 312,397 5,500 SAP AG (Computers) 797,296 9,000 Siemens AG (Diversified Operations) 604,729 29,100 T-Online International AG* (Computers) 376,512 Hong Kong 5.89% 5,709,330 458,000 BOC Hong Kong Holdings Ltd. (Banks -- Foreign) 793,245 98,000 Cheung Kong Holdings Ltd. (Real Estate Operations) 817,119 572,000 China Unicom Ltd. (Telecommunications) 537,698 100,300 CLP Holdings Ltd. (Utilities) 453,344 416,500 CNOOC Ltd. (Oil & Gas) 785,728 574,500 Dickson Concepts International Ltd. (Retail) 299,616 254,000 Henderson Land Development Co., Ltd. (Real Estate Operations) 1,066,279 57,000 Hutchison Whampoa Ltd. (Diversified Operations) 442,233 952,000 Sino Land Co., Ltd. (Real Estate Operations) 496,491 78,000 Tingyi Holding Corp. (Food) 17,577 Indonesia 0.88% 856,411 4,625,000 PT Bank Pan Indonesia Tbk (Banks -- Foreign) 152,416 5,255,500 PT Bentoel Internasional Investama Tbk* (Tobacco) 55,669 3,030,500 PT Perusahaan Perkebunan London Sumatra Indonesia Tbk* (Agricultural Operations) 356,676 413,000 PT Telekomunikasi Indonesia (Telecommunications) 291,650 Israel 0.13% 128,500 2,000 Taro Pharmaceutical Industries Ltd.* (Medical) 128,500 Italy 1.12% 1,088,631 33,900 ENI SpA (Oil & Gas) 538,320 39,684 Fiat SpA* (Automobiles/Trucks) 310,932 175,000 Impregilo SpA (Building) 112,093 12,600 Mediaset SpA (Media) 127,286 Japan 21.58% 20,904,563 4,000 Advantest Corp. (Electronics) 297,994 68,000 Asahi Glass Co., Ltd. (Building) 536,899 116,000 Asahi Kasei Corp. (Chemicals) 552,909 143,000 Bank of Yokohama, Ltd. (Banks -- Foreign) 617,865 11,000 Canon, Inc. (Office) 532,315 19,300 Capcom Co., Ltd. (Computers) 249,293 38,000 Chugai Pharmaceutical Co., Ltd. (Medical) 541,302 45,000 Dai Nippon Printing Co., Ltd. (Printing -- Commercial) 695,047 93 Dentsu, Inc. (Advertising) 418,747 169 East Japan Railway Co. (Transportation) 765,561 1,800 Fanuc Ltd. (Electronics) 108,228 1,700 Funai Electric Co., Ltd. (Electronics) 226,543 5,500 Hogy Medical Co., Inc. (Medical) 269,659 10,700 Hoya Corp. (Electronics) 968,436 27,000 Ito-Yokado Co., Ltd. (Retail) 992,223 22,000 Kao Corp. (Cosmetics & Personal Care) 452,267 160 KDDI Corp. (Telecommunications) 868,877 1,650 Keyence Corp. (Electronics) 362,914 10,800 Kyocera Corp. (Electronics) 650,348 31,800 Matsui Securities Co., Ltd. (Broker Services) 763,651 71,000 Matsushita Electric Industrial Co., Ltd. (Electronics) 935,817 51 Millea Holdings, Inc.* (Insurance) 607,723 65,000 Mitsubishi Estate Co., Ltd. (Real Estate Operations) 623,186 256 Mitsubishi Tokyo Financial Group, Inc. (Banks -- Foreign) 1,839,633 14,500 Murata Manufacturing Co., Ltd. (Electronics) 824,351 44,000 Nomura Holdings, Inc. (Broker Services) 755,647 38,000 Sega Corp.* (Leisure) 420,667 9,600 Shin-Etsu Chemical Co., Ltd. (Chemicals) 357,157 5,800 SMC Corp. (Machinery) 697,994 75,000 Sumitomo Corp. (Diversified Operations) 520,535 113,000 Sumitomo Trust & Banking Co., Ltd. (Banks -- Foreign) 631,118 134,000 Tokyo Gas Co., Ltd. (Utilities) 459,526 27,200 Toyota Motor Corp. (Automobiles/Trucks) 774,421 137 UFJ Holdings, Inc. (Banks -- Foreign) 585,710 Malaysia 0.88% 847,926 172,700 New Straits Times Press Berhad (Media) 188,152 55,000 Perusahaan Otomobil Nasional Berhad (Automobiles/Trucks) 117,237 50,600 Resorts World Berhad (Leisure) 146,474 187,000 Road Builder (M) Holdings Berhad (Building) 194,874 83,100 Telekom Malaysia Berhad (Telecommunications) 201,189 Mexico 0.51% 496,366 178,000 Wal-Mart de Mexico SA de CV (Retail) 496,366 Netherlands 3.23% 3,126,544 34,300 ASML Holding NV (NY Reg Shares)* (Electronics) 601,965 46,000 ING Groep NV (Insurance) 955,058 17,700 Royal Philips Electronics NV (Electronics) 477,161 15,300 Royal Philips Electronics NV (NY Reg Shares) (Electronics) 410,652 14,600 STMicroelectronics NV (Electronics) 388,668 11,000 STMicroelectronics NV (NY Reg Shares) (Electronics) 293,040 Norway 0.86% 829,043 39,000 Statoil ASA (Oil & Gas) 366,725 84,923 Telenor ASA (Telecommunications) 462,318 Philippine Islands 0.32% 313,647 2,409,000 Ayala Corp. (Diversified Operations) 222,108 779,000 Ayala Land, Inc. (Real Estate Operations) 91,539 Portugal 0.42% 402,591 47,900 Portugal Telecom SGPS SA (Telecommunications) 402,591 Russia 2.05% 1,988,746 16,400 Gazprom (ADR) (Oil & Gas) 393,600 11,800 Lukoil (ADR) (Oil & Gas) 953,440 7,700 VimpelCom* (ADR) (Telecommunications) 501,270 3,107 YUKOS (ADR) (Oil & Gas) 140,436 Singapore 1.53% 1,484,184 75,000 City Developments, Ltd. (Real Estate Operations) 260,634 56,000 DBS Group Holdings Ltd. (Banks -- Foreign) 459,979 140,000 Keppel Corp., Ltd. (Diversified Operations) 478,474 299,000 Singapore Exchange Ltd. (Finance) 285,097 South Korea 5.43% 5,264,073 22,900 Hana Bank (Banks -- Foreign) 398,597 4,440 Hyundai Department Store Co., Ltd. (Retail) 112,360 10,000 Kookmin Bank (Banks -- Foreign) 365,019 16,260 Korean Air Co., Ltd. (Transportation) 217,075 16,370 LG Chem Ltd. (Chemicals) 657,013 12,850 LG Electronics, Inc. (Electronics) 665,572 2,900 POSCO (Steel) 338,150 1,500 Samsung Electronics Co., Ltd. (Electronics) 595,691 800 Samsung Electronics Co., Ltd., Global Depositary Receipts (GDR) (Electronics) (R) 158,851 90,000 Samsung Heavy Industries Co., Ltd. (Building) 416,730 16,150 Shinhan Financial Group Co., Ltd. (Finance) 231,981 780 Shinsegae Co., Ltd. (Retail) 156,527 4,000 SK Telecom Co., Ltd. (Telecommunications) 706,379 33,020 Sangyong Motor Co. * (Automobiles/Trucks) 244,128 Spain 0.61% 586,180 191 Antena 3 Television SA* (Media) 6,239 46,624 Telefonica SA* (Telecommunications) 579,941 Sweden 2.26% 2,189,743 7,900 Elekta AB (B Shares)* (Medical) 156,970 552,000 Ericsson (LM) Telefonaktiebolaget AB (B Shares)* (Telecommunications) 948,204 94,400 Nordea AB (Banks -- Foreign) 585,700 41,400 Skandinaviska Enskilda Banken AB (A Shares) (Banks -- Foreign) 498,869 Switzerland 4.69% 4,537,552 1,200 Actelion Ltd.* (Medical) 114,127 11,100 Adecco SA (Business Services -- Misc) 654,604 26,000 Credit Suisse Group (Banks -- Foreign) 916,089 2,400 Nestle SA (Food) 528,401 19,773 Novartis AG (Medical) 753,694 6,900 Roche Holding AG (Medical) 570,974 150 SGS Societe Generale de Surveillance Holding SA (Business Services -- Misc.) 84,697 14,900 UBS AG (Banks -- Foreign) 914,966 Taiwan 4.05% 3,924,982 3,274 Acer, Inc. (GDR) (Computers) 24,490 481,800 Advanced Semiconductor Engineering, Inc.* (Electronics) 446,702 9,250 Asustek Computer, Inc. (Computers) 22,053 725,000 Cheng Loong Corp. (Paper & Paper Products) 247,535 30,000 China Steel Corp. (GDR) (Steel) 487,500 28,000 Chunghwa Telecom Co., Ltd. (ADR) (Telecommunications) 433,440 906,705 Eva Airways Corp.* (Transportation) 384,299 207,000 Fubon Financial Holding Co., Ltd. (Finance) 218,119 184,000 Giant Manufacturing Co., Ltd. (Manufacturing) 238,293 14,100 Largan Precision Co., Ltd. (Leisure) 150,649 810 Nanya Technology Corp.* (Electronics) 515 399,000 Phihong Technology Co., Ltd. (Utilities) 209,042 348,000 Phoenix Precision Technology Corp.* (Electronics) 254,022 169,280 Taiwan Semiconductor Manufacturing Co. Ltd.* (Electronics) 333,827 267,000 Taiwan Styrene Monomer Corp. (Chemicals) 231,046 392,000 Yuanta Core Pacific Securities Co.* (Finance) 243,450 Thailand 0.32% 311,859 648,000 United Securities Pcl * (Broker Services) 311,859 United Kingdom 14.38% 13,928,142 43,700 BAA Plc (Transportation) 345,572 80,798 Barclays Plc (Banks -- Foreign) 681,441 36,000 Berkeley Group Plc (Building) 466,120 10,600 BG Group Plc (Oil & Gas) 48,342 159,975 BHP Billiton Plc (Metal) 1,256,231 133,000 BP Plc (Oil & Gas) 923,094 72,400 British Airways Plc* (Transportation) 255,548 76,300 British Sky Broadcasting Group Plc* (Media) 828,658 11,300 Carnival Plc (Leisure) 390,224 42,500 George Wimpey Plc (Building) 235,835 55,200 GlaxoSmithKline Plc (Medical) 1,182,141 136,000 HSBC Holdings Plc (Banks -- Foreign) 2,042,458 48,000 Imperial Tobacco Group Plc (Tobacco) 795,805 31,949 Kingfisher Plc (Retail) 153,160 38,500 Man Group Plc (Finance) 946,673 28,300 Peninsular and Oriental Steam Navigation Co. (Transportation) 132,786 19,100 Reckitt Benckiser Plc (Soap & Cleaning Preparations) 401,907 28,419 Royal Bank of Scotland Group Plc (Banks -- Foreign) 761,486 293,000 SkyePharma Plc* (Medical) 321,943 124,400 Tesco Plc (Retail) 498,727 600,000 Vodafone Group Plc (Telecommunications) 1,259,991 United States 1.21% 1,167,853 3,410 Apache Corp. (Oil & Gas) 237,745 28,800 GlobalSantaFe Corp. (Oil & Gas) 648,288 6,000 Schlumberger Ltd. (Oil & Gas) 281,820 PREFERRED STOCKS 0.84% $810,126 (Cost $357,163) Germany 0.10% 98,114 200 Porsche AG (Automobiles/Trucks) 98,114 South Korea 0.74% 712,012 9,780 LG Household & Health Care Ltd. (Soap & Cleaning Preparations) 142,134 2,870 Samsung Electronics Co., Ltd. (Electronics) 569,878 RIGHTS 0.00% $405 (Cost $0) Sweden 0.00% 7,900 Elekta AB* (Medical) 405 SECURITIES-LINKED WARRANTS 4.12% $3,988,683 (Cost $3,338,183) India 0.42% 402,361 115,000 Hindustan Lever Ltd.* + (Soap & Cleaning Preparations) 16,309 100,095 Hindustan Lever Ltd.* # (Soap & Cleaning Preparations) 386,052 Taiwan 3.70% 3,586,322 553,000 Advanced Semiconductor Engineering* # (Electronics) 553,813 605,000 Chinatrust Financial Holding Co., Ltd.* # (Banks -- Foreign) 605,889 331,338 Formosa Plastics Corp.* # (Chemicals) 507,799 385,000 Fubon Financial Holding Co., Ltd.* # (Finance) 406,217 12,720 Nanya Technology Corp.* # (Electronics) 8,098 186,654 Quanta Computer, Inc.* # (Computers) 508,856 279,904 Taiwan Semiconductor Manufacturing Co., Ltd.* # (Electronics) 552,712 483,245 United Microelectronics Corp.* # (Electronics) 442,938 ISSUER, DESCRIPTION, INTEREST CREDIT PAR VALUE MATURITY DATE RATE RATING** (000s OMITTED) VALUE BONDS 0.02% $22,038 (Cost $19,342) France 0.02% Axa SA (Insurance) Conv Bond, 12-21-04 Zero A $129 22,038 TOTAL INVESTMENTS 100.15% $97,012,586 OTHER ASSETS & LIABILITIES, NET (0.15%) ($148,961) TOTAL NET ASSETS 100.00% $96,863,625 * Non-income producing security. ** Credit ratings are unaudited and rated by Standard & Poor's where available, or Moody's Investors Service, Fitch or John Hancock Advisors, LLC, where Standard & Poor's ratings are not available. + Credit-linked warrant. # Equity-linked warrant. (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 $158,851 or 0.16% of net assets as of October 31, 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 October 31, 2003 (unaudited) This table shows the percentages of the Fund's investments aggregated by various industries. VALUE AS A PERCENTAGE INVESTMENT DISTRIBUTION OF NET ASSETS - ---------------------------------------------------------- Advertising 1.02% Agricultural Operations 0.37 Automobiles/Trucks 2.85 Banks -- Foreign 14.17 Beverages 1.19 Broker Services 1.89 Building 2.46 Business Services -- Misc. 0.93 Chemicals 3.08 Computers 2.46 Cosmetics & Personal Care 0.47 Diversified Operations 3.90 Electronics 12.35 Finance 2.41 Food 0.56 Insurance 2.04 Leisure 1.49 Machinery 0.72 Manufacturing 0.25 Media 2.30 Medical 4.58 Metal 1.71 Office 0.55 Oil & Gas 8.88 Paper & Paper Products 1.40 Printing -- Commercial 0.72 Real Estate Operations 3.46 Retail 3.12 Rubber -- Tires & Misc. 0.11 Soap & Cleaning Preparations 0.98 Steel 0.85 Telecommunications 9.90 Tobacco 0.88 Transportation 4.94 Utilities 1.16 Total Investments 100.15% See notes to financial statements ASSETS AND LIABILITIES October 31, 2003 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 $79,923,282) $97,012,586 Foreign cash at value (cost $2,749) 2,740 Receivable for investments sold 3,027,441 Receivable for shares sold 15,012 Dividends and interest receivable 184,168 Receivable from affiliates 70,127 Other assets 13,742 Total assets 100,325,816 LIABILITIES Due to custodian 290,187 Payable for investments purchased 2,727,933 Payable for shares repurchased 29,687 Payable to affiliates Management fee 90,792 Distribution and service fee 6,262 Other 70,737 Other payables and accrued expenses 246,593 Total liabilities 3,462,191 NET ASSETS Capital paid-in 167,169,947 Accumulated net realized loss on investments, foreign currency transactions and options (87,374,091) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 17,088,560 Accumulated net investment loss (20,791) Net assets $96,863,625 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($62,456,496 [DIV] 10,059,853 shares) $6.21 Class B ($30,181,474 [DIV] 5,197,222 shares) $5.81 Class C ($3,144,003 [DIV] 541,134 shares) $5.81 Class I ($1,081,652 [DIV] 171,677 shares) $6.30 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($6.21 [DIV] 95%) $6.54 Class C ($5.81 [DIV] 99%) $5.87 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 year ended October 31, 2003 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 $106,900) $743,788 Interest 10,763 Total investment income 754,551 EXPENSES Investment management fee 373,514 Class A distribution and service fee 78,218 Class B distribution and service fee 123,321 Class C distribution and service fee 14,493 Class A, B and C transfer agent fee 438,132 Class I transfer agent fee 3,781 Custodian fee 123,500 Registration and filing fee 70,319 Auditing fee 48,790 Printing 16,159 Accounting and legal services fee 12,077 Miscellaneous 5,461 Interest 1,392 Trustees' fee 1,314 Legal fee 1,211 Total expenses 1,311,682 Less expense reductions (224,393) Net expenses 1,087,289 Net investment loss (332,738) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on Investments 3,428,490 Foreign currency transactions (301,980) Options 1,574 Change in net unrealized appreciation (depreciation) of Investments 10,775,829 Translation of assets and liabilities in foreign currencies (196) Net realized and unrealized gain 13,903,717 Increase in net assets from operations $13,570,979 See notes to financial statements CHANGES IN NET ASSETS These Statements of Changes in Net Assets show how the value of the Fund's net assets has changed during the last two periods. 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 YEAR ENDED ENDED 10-31-02 10-31-03 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($144,114) ($332,738) Net realized gain (loss) (2,546,024) 3,128,084 Change in net unrealized appreciation (depreciation) 56,756 10,775,633 Increase (decrease) in net assets resulting from operations (2,633,382) 13,570,979 From Fund share transactions (280,938) 71,228,289 NET ASSETS Beginning of period 14,978,677 12,064,357 End of period 1 $12,064,357 $96,863,625 1 Includes accumulated net investment loss of $624 and $20,791, 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 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.81 $10.95 $9.45 $6.18 $5.10 Net investment loss 1 (0.02) (0.04) (0.05) (0.04) (0.04) Net realized and unrealized gain (loss) on investments 2.16 (1.01) (3.22) (1.04) 1.15 Total from investment operations 2.14 (1.05) (3.27) (1.08) 1.11 Less distributions From net realized gain -- (0.45) -- -- -- Net asset value, end of period $10.95 $9.45 $6.18 $5.10 $6.21 Total return 2,3 (%) 24.29 (10.15) (34.60) (17.48) 21.76 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $7 $15 $8 $6 $62 Ratio of expenses to average net assets (%) 1.96 1.88 2.23 2.38 2.45 Ratio of adjusted expenses to average net assets 4 (%) 3.81 3.44 3.83 4.43 3.00 Ratio of net investment loss to average net assets (%) (0.20) (0.43) (0.65) (0.68) (0.63) Portfolio turnover (%) 113 163 278 228 5 216 5 See notes to financial statements FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.55 $10.55 $9.04 $5.86 $4.81 Net investment loss 1 (0.09) (0.12) (0.10) (0.08) (0.07) Net realized and unrealized gain (loss) on investments 2.09 (0.94) (3.08) (0.97) 1.07 Total from investment operations 2.00 (1.06) (3.18) (1.05) 1.00 Less distributions From net realized gain -- (0.45) -- -- -- Net asset value, end of period $10.55 $9.04 $5.86 $4.81 $5.81 Total return 2,3 (%) 23.39 (10.65) (35.18) (17.92) 20.79 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 $12 $6 $5 $30 Ratio of expenses to average net assets (%) 2.63 2.57 2.93 3.08 3.15 Ratio of adjusted expenses to average net assets 4 (%) 4.48 4.13 4.53 5.13 3.70 Ratio of net investment loss to average net assets (%) (0.91) (1.13) (1.34) (1.38) (1.28) Portfolio turnover (%) 113 163 278 228 5 216 5 See notes to financial statements FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.55 $10.57 $9.05 $5.87 $4.81 Net investment loss 1 (0.10) (0.11) (0.10) (0.08) (0.06) Net realized and unrealized gain (loss) on investments 2.12 (0.96) (3.08) (0.98) 1.06 Total from investment operations 2.02 (1.07) (3.18) (1.06) 1.00 Less distributions From net realized gain -- (0.45) -- -- -- Net asset value, end of period $10.57 $9.05 $5.87 $4.81 $5.81 Total return 2,3 (%) 23.63 (10.72) (35.14) (18.06) 20.79 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 6 $1 $1 $1 $3 Ratio of expenses to average net assets (%) 2.66 2.57 2.93 3.08 3.15 Ratio of adjusted expenses to average net assets 4 (%) 4.51 4.13 4.53 5.13 3.70 Ratio of net investment loss to average net assets (%) (1.04) (1.07) (1.35) (1.38) (1.11) Portfolio turnover (%) 113 163 278 228 5 216 5 See notes to financial statements FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 7 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $6.18 $5.12 Net investment gain (loss)1 (0.01) 0.03 Net realized and unrealized gain (loss) on investments (1.05) 1.15 Total from investment operations (1.06) 1.18 Net asset value, end of period $5.12 $6.30 Total return 2,3 (%) (17.15) 8 23.05 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 Ratio of expenses to average net assets (%) 2.04 9 1.60 Ratio of adjusted expenses to average net assets 4 (%) 4.09 9 2.15 Ratio of net investment income (loss) to average net assets (%) (0.34) 9 0.58 Portfolio turnover (%) 228 5 216 5 1 Based on the average of the shares outstanding. 2 Assumes dividend reinvestment and does not reflect the effect of sales charges. 3 Total returns would have been lower had certain expenses not been reduced during the periods shown. 4 Does not take into consideration expense reductions during the periods shown. 5 Excludes merger activity. 6 Less than $500,000. 7 Class I shares began operations on 3-1-02. 8 Not annualized. 9 Annualized. See notes to financial statements ` NOTES TO STATEMENTS 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 the 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 4:00 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 currency 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 currency 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. Discount and premium on securities The Fund accretes discount and amortizes premium from par value on securities from either the date of issue or the date of purchase over the life of the security. 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 asset value of the respective classes. Distribution 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 asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. 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 year ended October 31, 2003. Options The Fund may enter into option contracts. Listed options will be valued at the last quoted sales price on the exchange on which they are primarily traded. Over-the-counter options are valued at the mean between the last bid and asked prices. Upon the writing of a call or put option, an amount equal to the premium received by the Fund will be included in the Fund's Statement of Assets and Liabilities as an asset and corresponding liability. The amount of the liability will be subsequently marked to market to reflect the current market value of the written option. The Fund may use option contracts to manage its exposure to the price volatility of financial instruments. Writing puts and buying calls will tend to increase the Fund's exposure to the underlying instrument and buying puts and writing calls will tend to decrease the Fund's exposure to the underlying instrument, or hedge other Fund investments. The maximum exposure to loss for any purchased options will be limited to the premium initially paid for the option. In all other cases, the face (or "notional") amount of each contract at value will reflect the maximum exposure of the Fund in these contracts, but the actual exposure will be limited to the change in value of the contract over the period the contract remains open. Risks may also arise if counterparties do not perform under the contracts' terms ("credit risk") or if the Fund is unable to offset a contract with a counterparty on a timely basis ("liquidity risk"). Exchange-traded options have minimal credit risk as the exchanges act as counterparties to each transaction, and only present liquidity risk in highly unusual market conditions. To minimize credit and liquidity risks in over-the-counter option contracts, the Fund will continuously monitor the creditworthiness of all its counterparties. At any particular time, except for purchased options, market or credit risk may involve amounts in excess of those reflected in the Fund's Statement of Assets and Liabilities. The Fund had no out standing written options during the year ended October 31, 2003. Securities-linked warrants The Fund may buy and sell securities-linked warrants. The Fund purchases the equity-linked and credit-linked warrants from a broker, who in turn purchases the underlying securities in the local market and issues a call warrant hedged on the underlying holding. If the Fund exercises its call and closes its position, the under lying securities are sold and the warrant re deemed with the proceeds. Each warrant represents one share of the underlying stock or unit of fixed income security, therefore the price, performance and liquidity of the warrant are all directly linked to the underlying investments. The warrants can be re deemed for 100% of the value of the underlying securities, less transaction costs. Equity-linked and credit-linked warrants are subject to risks related to the counterparty's ability to perform under the contract, and to the market risk of the underlying holding. The Fund may also suffer losses if it is unable to sell outstanding securities-linked warrants or reduce its exposure through offsetting transactions. 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 asset value. 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 October 31, 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 $86,921,411 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, 2005 -- $587,636, October 31, 2006 -- $1,234,369, October 31, 2007 -- $523,573, October 31, 2008 -- $57,323,110, October 31, 2009 -- $20,736,888 and October 31, 2010 -- $6,515,835. Availability of a certain amount of the carryforwards which were ac quired on June 7, 2002, in a merger with John Hancock International Equity Fund, on May 9, 2003, in mergers with John Hancock European Equity Fund and John Hancock Global Fund and in a merger with John Hancock Pacific Basin Equity Fund on September 26, 2003, may be limited in a given year. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund 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. As of October 31, 2003, there were no distributable earnings on a tax basis. Such distributions and distributable earnings, 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, effective May 9, 2003, 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. Until May 9, 2003, the Fund paid a monthly management fee 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. Effective May 9, 2003, the Adviser has agreed to limit the Fund's total expenses, excluding the distribution and service fees and transfer agent fees, to 1.27% of the Fund's average daily net asset value, at least until February 28, 2005. Prior to May 9, 2003, the Adviser had agreed to limit the Fund's total expenses, excluding the distribution and service fees and transfer agent fees, to 0.90% of the Fund's average net asset value. Accordingly, the expense reductions related to the Fund's total expense limitation amounted to $156,502 for the year ended October 31, 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 asset value and 1.00% of Class B and Class C average daily net asset value. A maximum of 0.25% of such payments may 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $30,451 with regard to sales of Class A shares. Of this amount, $3,693 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $20,060 was paid as sales commissions to unrelated broker-dealers and $6,698 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 year ended October 31, 2003, JH Funds received net up-front sales charges of $5,893 with regard to sales of Class C shares. Of this amount, $5,174 was paid as sales commissions to unrelated broker-dealers and $719 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 year ended October 31, 2003, CDSCs received by JH Funds amounted to $40,962 for Class B shares and $79 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo. Effective January 1, 2003, for Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the Fund's 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. Until January 1, 2003, for Class A, Class B and Class C shares, the Fund paid a monthly transfer agent fee based on the number of shareholder accounts plus certain out-of-pocket expenses. 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. Effective May 9, 2003, Signature Services agreed to limit Class A, Class B and Class C shares transfer agent fees to 0.78% of each Class's average daily net asset value, at least until February 28, 2005. Accordingly, the expense reductions related to transfer agent fee limitation amounted to $67,891 for the year ended October 31, 2003. Signature Services reserves the right to terminate this limitation in the future. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the year was at an annual rate of approximately 0.03% of the average net asset value of the Fund. Ms. Maureen Ford Goldfarb 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 reorganizations 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 YEAR ENDED 10-31-03 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,608,472 $9,646,755 1,647,644 $9,092,862 Issued in reorganizations -- -- 9,576,643 51,258,116 Repurchased (1,773,317) (10,715,750) (2,256,593) (12,418,091) Net increase (decrease) (164,845) ($1,068,995) 8,967,694 $47,932,887 CLASS B SHARES Sold 397,117 $2,291,714 452,210 $2,359,494 Issued in reorganizations -- -- 4,660,904 23,715,852 Repurchased (510,300) (2,891,269) (894,451) (4,591,171) Net increase (decrease) (113,183) ($599,555) 4,218,663 $21,484,175 CLASS C SHARES Sold 295,202 $1,675,337 193,720 $972,776 Issued in reorganizations -- -- 313,872 1,607,553 Repurchased (271,816) (1,534,260) (129,277) (641,150) Net increase 23,386 $141,077 378,315 $1,939,179 CLASS I SHARES 1 Shares sold 34,945 $187,366 177,491 $978,406 Issued in reorganization 257,801 1,609,274 -- -- Shares reinvested (96,794) (550,105) (201,766) (1,106,358) Net increase (decrease) 195,952 $1,246,535 (24,275) ($127,952) NET INCREASE (DECREASE) (58,690) ($280,938) 13,540,397 $71,228,289 1 Class I shares began operations 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 year ended October 31, 2003, aggregated $151,450,814 and $86,771,780, respectively. The cost of investments owned on October 31, 2003, including short-term investments, for federal income tax purposes was $80,375,961. Gross unrealized appreciation and depreciation of investments aggregated $16,886,337 and $249,712, respectively, resulting in net unrealized appreciation of $16,636,625. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on certain sales of securities. NOTE E Reclassification of accounts During the year ended October 31, 2003, the Fund reclassified amounts to reflect an increase in accumulated net realized loss on investments of $76,536,139, a decrease in accumulated net investment loss of $312,571 and an increase in capital paid-in of $76,223,568. This represents the amount necessary to report these balances on a tax basis, excluding certain temporary differences, as of October 31, 2003. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Fund, are primarily attributable to certain differences in the computation of distributable income and capital gains under federal tax rules versus accounting principles generally accepted in the United States of America, and book and tax differences in accounting for deferred compensation, net operating loss, adjustments due to Fund mergers and foreign currency adjustments. The calculation of net investment income (loss) per share in the Fund's Financial Highlights excludes these adjustments. NOTE F Reorganizations On May 29, 2002, the shareholders of John Hancock International Equity Fund ("Inter national 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 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 Inter national Equity Fund, which amounted to $1,609,274, including $62,490 of unrealized appreciation, after the close of business on June 7, 2002. On May 7, 2003, the shareholders of the John Hancock Global Fund ("Global Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the Global Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax-free exchange of 6,558,929 Class A shares, 1,864,356 Class B shares and 130,784 of Class C shares of the Fund for the net assets of the Global Fund, which amounted to $34,316,962, $9,149,332 and $642,073 for Class A, Class B and Class C shares of the Global Fund, respectively, including the total of $1,730,018 of unrealized appreciation, after the close of business on May 9, 2003. On May 7, 2003, the shareholders of the John Hancock European Equity Fund ("European Equity Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the European Equity Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax-free exchange of 889,585 Class A shares, 1,099,066 Class B shares and 48,954 Class C shares of the Fund for the net assets of the European Equity Fund, which amounted to $4,654,400, $5,393,668 and $240,336 for Class A, Class B and Class C shares of the European Equity Fund, respectively, including the total of $1,183,872 of unrealized appreciation, after the close of business on May 9, 2003. On September 24, 2003, the shareholders of the John Hancock Pacific Basin Equities Fund ("Pacific Basin Equities Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the Pacific Basin Equities Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax-free exchange of 2,128,129 Class A shares, 1,697,482 Class B shares and 134,134 Class C shares of the Fund for the net assets of the Pacific Basin Equities Fund, which amounted to $12,286,754, $9,172,852 and $725,144 for Class A, Class B and Class C shares of the Pacific Basin Equities Fund, respectively, including the total of $3,956,781 of unrealized appreciation, after the close of business on September 26, 2003. AUDITORS' REPORT Report of Pricewaterhouse- Coopers LLP, Independent Auditors To the Board of Trustees and Shareholders of John Hancock International Fund, In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock International Fund (the "Fund") at October 31, 2003, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at October 31, 2003, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts December 15, 2003 TAX INFORMATION Unaudited For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended October 31, 2003. The fund hereby designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form 1099-DIV for the calendar year 2003. Shareholders will be mailed a 2003 U.S. Treasury Department Form 1099-DIV in January 2004. This will reflect the total of all distributions that are taxable for the calendar year 2003. TRUSTEES & OFFICERS This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees. INDEPENDENT TRUSTEES NUMBER OF NAME, AGE TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE Dennis S. Aronowitz, Born: 1931 1996 21 Professor of Law, Emeritus, Boston University School of Law (as of 1996); Director, Brookline Bancorp (since 1998). Richard P. Chapman, Jr., Born: 1935 1996 21 President and Chief Executive Officer, Brookline Bancorp Inc. (lending) (since 1972); Director, Lumber Insurance Co. (insurance) (until 2000); Chairman and Director, Northeast Retirement Services, Inc. (retirement administration) (since 1998). William J. Cosgrove, Born: 1933 1996 21 Vice President, Senior Banker and Senior Credit Officer, Citibank, N.A. (retired 1991); Executive Vice President, Citadel Group Representatives, Inc. (financial reinsurance); Trustee, Hudson City Savings Bank (since 1995); Director, Hudson City Bancorp (since 1999); Trustee, Scholarship Fund for Inner City Children (since 1986). Richard A. Farrell, Born: 1932 1994 21 President, Farrell, Healer & Co., Inc. (venture capital management firm) (since 1980) and President, the Venture Capital Fund of NE (since 1980); prior to 1980, headed the venture capital group at Bank of Boston Corporation; Trustee, Marblehead Savings Bank (since 1994). William F. Glavin,2 Born: 1932 1994 21 President Emeritus, Babson College (as of 1998); Vice Chairman, Xerox Corporation (until 1989); Director, Reebok, Inc. (until 2002) and Inco Ltd. (until 2002). John A. Moore,2 Born: 1939 1994 29 President and Chief Executive Officer, Institute for Evaluating Health Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences International (health research) (since 1998); Principal, Hollyhouse (consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002). Patti McGill Peterson,2 Born: 1943 1994 29 Executive Director, Council for International Exchange of Scholars (since 1998); Vice President, Institute of International Education (since 1998); Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until 1997); President Emerita of Wells College and St. Lawrence University; Director, Niagara Mohawk Power Corporation (electric utility). John W. Pratt, Born: 1931 1994 21 Professor of Business Administration Emeritus, Harvard University Graduate School of Business Administration (as of 1998). INTERESTED TRUSTEES 3 NAME, AGE NUMBER OF POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE John M. DeCiccio, Born: 1948 2001 51 Trustee Executive Vice President and Chief Investment Officer, John Hancock Financial Services, Inc.; Director, Executive Vice President and Chief Investment Officer, John Hancock Life Insurance Company; Chairman of the Committee of Finance of John Hancock Life Insurance Company; Director, John Hancock Subsidiaries, LLC (Subsidiaries, LLC), Hancock Natural Resource Group, Independence Investment LLC, Declaration Management Research LLC, John Hancock Advisers, LLC (the "Adviser"), The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock Funds, LLC ("John Hancock Funds") and Massachusetts Business Development Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance Agency, Inc.") (until 1999). Maureen Ford Goldfarb, Born: 1955 2000 51 Trustee, Chairman, President and Chief Executive Officer Executive Vice President, John Hancock Financial Services, Inc., John Hancock Life Insurance Company; Chairman, Director, President and Chief Executive Officer, the Adviser and The Berkeley Group; Chairman, Director, President and Chief Executive Officer, John Hancock Funds; Chairman, Director, President and Chief Executive Officer, Sovereign Asset Management Corporation ("SAMCorp."); Director, Independence Investment LLC, Subsidiaries, LLC and Signature Services; Senior Vice President, MassMutual Insurance Co. (until 1999). PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES NAME, AGE POSITION(S) HELD WITH FUND OFFICER PRINCIPAL OCCUPATION(S) AND OF FUND DIRECTORSHIPS DURING PAST 5 YEARS SINCE Richard A. Brown, Born: 1949 2000 Senior Vice President and Chief Financial Officer Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock Funds and The Berkeley Group; Second Vice President and Senior Associate Controller, Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001). Thomas H. Connors, Born: 1959 1994 Vice President and Compliance Officer Vice President and Compliance Officer, the Adviser and each of the John Hancock funds; Vice President, John Hancock Funds. William H. King, Born: 1952 1994 Vice President and Treasurer Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001). Susan S. Newton, Born: 1950 1994 Senior Vice President, Secretary and Chief Legal Officer Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President, Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital. The business address for all Trustees and Officers is 101 Huntington Avenue, Boston, Massachusetts 02199. The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available, without charge, upon request, by calling 1-800-225-5291. 1 Each Trustee serves until resignation, retirement age or until his or her successor is elected. 2 Member of Audit Committee. 3 Interested Trustees hold positions with the Fund's investment adviser, underwriter and certain other affiliates. OUR FAMILY OF FUNDS - ------------------------------------------------------------------------ Equity Balanced Fund Classic Value Fund Core Equity Fund Focused Equity Fund Growth Trends Fund International Fund Large Cap Equity Fund Large Cap Growth Fund Large Cap Select 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 - ------------------------------------------------------------------------ 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 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 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 125 High Street Boston, Massachusetts 02110 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 The Fund's voting policies and procedures are available without charge, upon request: By phone 1-800-225-5291 On the Fund's Web site www.jhfunds.com/proxy On the SEC's Web site www.sec.gov [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. 4000A 10/03 12/03 ITEM 2. CODE OF ETHICS. As of the end of the period, October 31, 2003, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the "Senior Financial Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. William F. Glavin is the audit committee financial expert and is "independent", pursuant to general instructions on Form N-CSR Item 3. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 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 Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 10. EXHIBITS. (a)(1) Code of Ethics for Senior Financial Officers is attached. (a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference. (c)(1) Contact person at the registrant SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: - ------------------------------ Maureen Ford Goldfarb Chairman, President and Chief Executive Officer Date: December 18, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: - ------------------------------- Maureen Ford Goldfarb Chairman, President and Chief Executive Officer Date: December 18, 2003 By: - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: December 18, 2003