ITEM 1. REPORTS TO STOCKHOLDERS.
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FINAL REPORT
John Hancock Communications Fund
May 7, 2003
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John Hancock Communications Fund
Schedule of Investments
May 7, 2003 (Unaudited)
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
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SHORT-TERM INVESTMENTS
(Cost of $1,318,000)
Joint Repurchase Agreement (100.67%)
Investment in joint repurchase agreement transaction
with Barclays Capital, Inc. - Dated 5-7-03, due 5-8-03
(Secured by U.S. Treasury Inflation Indexed Note,
3.000% due 7-15-12) 1.19% $1,318 $ 1,318,000
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TOTAL INVESTMENTS (100.67%) 1,318,000
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OTHER ASSETS AND LIABILITIES, NET (0.67%) (8,755)
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TOTAL NET ASSETS (100.00%) $ 1,309,245
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The percentage shown for each investment category is the total value of that
catergory as a percentage of the net assets of the Fund.
See notes to financial statements. 1
John Hancock Communications Fund
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ASSETS AND ASSETS
LIABILITIES ----------------------------------------------------------------------
Final report Investments at value (cost - $1,318,000) $1,318,000
5-7-03* (unaudited) Cash 163
Dividends and interest receivable 90
Receivable from affiliates 2,394
Other assets 9
Total assets 1,320,656
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LIABILITIES
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Other payables and accrued expenses 11,411
Total liabilities 11,411
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NET ASSETS
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Capital paid-in 2,988,869
Accumulated net realized loss on investments (1,679,623)
Accumulated net investment loss (1)
Net assets $1,309,245
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NET ASSET VALUE PER SHARE
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Based on net asset values and shares outstanding
Class A ($1,283,249 / 294,000 shares) $4.36
Class B ($12,998 / 3,000 shares) $4.33
Class C ($12,998 / 3,000 shares) $4.33
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MAXIMUM OFFERING PRICE PER SHARE
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Class A (1) ($4.36 / 95%) $4.59
Class C ($4.33 / 99%) $4.37
(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.
* The Statement of Assets and Liabilities reflects the Fund's position prior to
the liquidation of net assets and the termination of the Fund. See Note A to
financial statements.
See notes to financial statements. 2
John Hancock Communications Fund
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OPERATIONS INVESTMENT INCOME
Period from 11-1-02 ----------------------------------------------------------------------
through 5-7-03* Dividends (net of foreign withholding taxes of $192) $7,458
(unaudited) Interest (including securities lending income of $1,578) 1,832
Total investment income 9,290
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EXPENSES
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Investment management fee 5,821
Class A distribution and service fee 1,902
Class B distribution and service fee 48
Class C distribution and service fee 48
Printing 7,345
Custodian fee 4,174
Registration and filing fee 3,817
Auditing fee 3,000
Accounting and legal services fee 174
Trustees' fee 68
Transfer agent fee 21
Miscellaneous 17
Total expenses 26,435
Less expense reductions (16,028)
Net expenses 10,407
Net investment loss (1,117)
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REALIZED AND UNREALIZED GAIN (LOSS)
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Net realized loss on investments (247,118)
Change in net unrealized appreciation (depreciation)
of investments 309,118
Net realized and unrealized gain 62,000
Increase in net assets from operations $60,883
* The Statement of Operations reflects the Fund's position prior to the
liquidation of net assets and the termination of the Fund. See Note A to
financial statements.
See notes to financial statements. 3
John Hancock Communications Fund
PERIOD FROM
11-1-02 to
YEAR ENDED 5-7-03*
10-31-02 (unaudited)
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CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS ------------------------------------------------------------------------------------------
From operations
Net investment loss ($1,878) ($1,117)
Net realized loss (867,565) (247,118)
Change in net unrealized appreciation (depreciation) 42,870 309,118
Increase (decrease) in net assets resulting from operations (826,573) 60,883
Distributions to shareholders
From net investment income
Class A (5,627) --
--
From Fund share transactions (47) --
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NET ASSETS
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Beginning of period 2,080,609 1,248,362
End of period (1) 1,248,362 $1,309,245
(1) Includes undistributed net investment loss of $1 and $1, respectively.
* The Statements of Changes in Net Assets reflect the Fund's position prior to
the liquidation of net assets and the termination of the Fund. See Note A to
financial statements.
See notes to financial statements. 4
John Hancock Communications Fund
Financial Highlights
CLASS A
PERIOD ENDED 10-31-01(1) 10-31-02 5-7-03(2)
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PER SHARE OPERATING PERFORMANCE
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Net asset value, beginning of period $10.00 $6.94 $4.16
Net investment loss (3) (0.01) (0.01) --(4)
Net realized and unrealized gain (loss) on investments (3.05) (2.75) 0.20
Total from investment operations (3.06) (2.76) 0.20
Less distributions
From net investment income -- (0.02) --
Net asset value, end of period $6.94 $4.16 $4.36(5)
Total return (6,7) (%) (30.60)(8) (39.90) 4.81(8)
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RATIOS AND SUPPLEMENTAL DATA
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Net assets, end of period (in millions) $2 $1 $1
Ratio of expenses to average net assets (%) 1.60(9) 1.60 1.60(9)
Ratio of adjusted expenses to average net assets (10) (%) 3.99(9) 3.19 4.08(9)
Ratio of net investment loss to average net assets (%) (0.23)(9) (0.10) (0.16)(9)
Portfolio turnover (%) 81 119 85
See notes to financial statements. 5
John Hancock Communications Fund
Financial Highlights
CLASS B
PERIOD ENDED 10-31-01(1) 10-31-02 5-7-03(2)
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PER SHARE OPERATING PERFORMANCE
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Net asset value, beginning of period $10.00 $6.92 $4.14
Net investment loss (3) (0.03) (0.03) (0.01)
Net realized and unrealized gain (loss) on investments (3.05) (2.75) 0.20
Total from investment operations (3.08) (2.78) 0.19
Net asset value, end of period $6.92 $4.14 $4.33(5)
Total return (6,7) (%) (30.80)(8) (40.17) 4.59(8)
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RATIOS AND SUPPLEMENTAL DATA
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Net assets, end of period (in millions) --(11) --(11) --(11)
Ratio of expenses to average net assets (%) 2.30(9) 2.08 2.05(9)
Ratio of adjusted expenses to average net assets (10) (%) 4.69(9) 3.67 4.53(9)
Ratio of net investment loss to average net assets (%) (0.93)(9) (0.58) (0.61)(9)
Portfolio turnover (%) 81 119 85
See notes to financial statements. 6
John Hancock Communications Fund
Financial Highlights
CLASS C
PERIOD ENDED 10-31-01(1) 10-31-02 5-7-03(2)
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PER SHARE OPERATING PERFORMANCE
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Net asset value, beginning of period $10.00 $6.92 $4.14
Net investment loss (3) (0.03) (0.03) (0.01)
Net realized and unrealized gain (loss) on investments (3.05) (2.75) 0.20
Total from investment operations (3.08) (2.78) 0.19
Net asset value, end of period $6.92 $4.14 $4.33(5)
Total return (6,7) (%) (30.80)(8) (40.17) 4.59(8)
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RATIOS AND SUPPLEMENTAL DATA
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Net assets, end of period (in millions) --(11) --(11) --(11)
Ratio of expenses to average net assets (%) 2.30(9) 2.08 2.05(9)
Ratio of adjusted expenses to average net assets (10) (%) 4.69(9) 3.67 4.53(9)
Ratio of net investment loss to average net assets (%) (0.93)(9) (0.58) (0.61)(9)
Portfolio turnover (%) 81 119 85
(1) Class A, Class B and Class C shares began operations on 6-1-01.
(2) Final period from 11-1-02 through 5-7-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than $0.01 per share.
(5) Net assets value per share before the liquidation of assets and termination
of the Fund. See Note A to financial statements.
(6) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(7) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(8) Not annualized.
(9) Annualized.
(10) Does not take into consideration expense reductions during the periods
shown.
(11) Less than $500,000.
See notes to financial statements. 7
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE A
Accounting policies
John Hancock Communications Fund (the "Fund") was a non-diversified series of
John Hancock World Fund an open-end management investment company registered
under the Investment Company Act of 1940, organized as a Massachusetts business
trust in 1995. The investment objective of the Fund was to seek long-term
capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
On May 7, 2003 the Fund's sole shareholder, John Hancock Advisers, LLC, (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, a
wholly owned indirect subsidiary of John Hancock Life Insurance Company
("JHLICO"), redeemed its shares. On May 20, 2003, the Board of Trustees voted to
terminate the Fund which had no assets, liabilities or shareholders. The
financial statements presented herein reflect the position of the Fund prior to
the liquidation of net assets and termination of the Fund.
Significant accounting policies of the Funds were as follows:
Valuation of investments
Securities in the Fund's portfolio were valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations were not readily available, or the value had 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 were valued at amortized
cost, which approximated market value. Investments in AIM Cash Investment Trust
were valued at their net asset value each business day.
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 the Adviser, may have participated in a joint repurchase agreement
transaction. Aggregate cash balances were invested in one or more large
repurchase agreements, whose underlying securities were obligations of the U.S.
government and/or its agencies. The Fund's custodian bank received delivery of
the underlying securities for the joint account on the Fund's behalf. The
Adviser was responsible for ensuring that the agreement was fully collateralized
at all times.
Investment transactions
Investment transactions were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis.
8
Class allocations
Income, common expenses and realized and unrealized gains (losses) were
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, were calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses that were not readily identifiable to a specific fund were allocated in
such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Securities lending
The Fund may have lent securities to certain qualified brokers who paid the Fund
negotiated lender fees. These fees were included in interest income. The loans
were collateralized at all times with cash or securities with a market value at
least equal to the market value of the securities on loan. As with other
extensions of credit, the Fund would have borne the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities have failed financially. There were no securities
loaned as of May 7, 2003.
Federal income taxes
The Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not a subject to
federal income tax on taxable income that was distributed to shareholders.
Therefore, no federal income tax provision was required as of May 7, 2003, the
Fund's final tax year. As of May 7, 2003, for federal income tax purposes, the
Fund had $1,679,623 of a capital loss carryforward, expiring as follows: October
31, 2009 - $558,949, October 31, 2010 - $867,560 and May 7, 2011 - $253,114.
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the Fund
identified the dividend. Interest income on investment securities was recorded
on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable.
The Fund recorded distributions to shareholders from net investment income and
realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares were calculated in the same manner, at the same
time and were in the same amount, except for the effect of expenses that may
have been applied differently to each class.
As of May 7, 2003, the Fund had no distributable earnings on a tax basis. Such
distributions and distributable earnings, on a tax basis, were determined in
conformity with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, were reported in the Fund's
financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
9
NOTE B
Management fee and transactions with affiliates and others
The Fund had an investment management contract with the Adviser. Under the
investment management contract, the Fund paid a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of (a) 0.90% of the first
$500,000,000 of the Fund's average daily net asset value, (b) 0.85% of the next
$500,000,000 of the Fund's average daily net asset value and (c) 0.80% of the
Fund's average daily net asset value in excess of $1,000,000,000.
The Adviser had agreed to limit the Fund's expenses, excluding the distribution
and service fees, to 1.30% of Fund's average daily net assets. Accordingly, the
expense reduction amounted to $16,028 for the period ended May 7, 2003.
The Fund had Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund had adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provided as distributor of shares of the Fund. Accordingly, the Fund made
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may have been service fees as
defined by the Conduct Rules of the National Association of Securities Dealers.
Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments
could have occurred under certain circumstances.
Class A and Class C shares were assessed up-front sales charges. During the
period ended May 7, 2003, JH Funds received no up-front sales charges with
regard to sales of Class A and Class C shares.
Class B shares that were redeemed within six years of purchase were subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that were
redeemed within one year of purchase were subject to a CDSC at a rate of 1.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Proceeds from the CDSCs
were paid to JH Funds and were used in whole or in part to defray its expenses
for providing distribution related services to the Fund in connection with the
sale of Class B and Class C shares. During the period ended May 7, 2003, JH
Funds received no CDSCs with regard to Class B and Class C shares.
The Fund had a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICO. The Fund paid a monthly transfer agent
fee at an annual rate of 0.05%, of the average daily net asset value, plus a fee
based on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
The Fund had an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser owned 300,000 shares of beneficial interest of the Fund on May 7,
2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio were directors and/or officers of
the Adviser and its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees was borne by the Fund. The unaffiliated
Trustees may have elected to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund made investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability were recorded on the Fund's books as other
assets. The deferred compensation liability and the related other assets were
always equal and were marked to market on a periodic basis to reflect any income
earned by the
10
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's shares repurchased during the last
two periods, along with the corresponding dollar value. The Fund had an
unlimited number of shares authorized with no par value.
PERIOD FROM 11-1-02 TO 5-7-03
YEAR ENDED 10-31-02 (UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
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CLASS A SHARES
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Repurchased (6) ($47) -- --
Net decrease (6) ($47) -- --
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NET DECREASE (6) ($47) -- --
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NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended May 7, 2003 aggregated to $918,097 and $2,191,495, respectively.
The cost of investments owned on May 7, 2003, including short-term investments,
for federal income tax purposes was $1,318,000.
NOTE E
Reclassification of accounts
During the period ended May 7, 2003, the Fund reclassified amounts to reflect a
decrease in accumulated net realized loss of $1,117 and a decrease in capital
paid-in of $1,117. This represented the amounts necessary to report these
balances on a tax basis, excluding certain temporary differences, as of May 7,
2003. These reclassifications, which had no impact on the net asset value of the
Fund, were primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America and book and tax
differences in accounting for net operating loss. The calculation of net
investment income (loss) per share in the financial highlights excluded these
adjustments.
NOTE F
Termination
On May 20, 2003, the Trustees voted to terminate the Fund after the close of
business on May 20, 2003, as it had no assets, liabilities, or shareholders.
11
John Hancock Communications Fund
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen R. Ford
Chairman, President and Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Richard A. Brown
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
Investment Adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Transfer Agent
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
Final Draft
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FINAL REPORT
John Hancock Consumer Industries Fund
MAY 12, 2003
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John Hancock Consumer Industries Fund
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS
(Cost $2,667,000)
Joint Repurchase Agreement 100.52%
Investment in a joint repurchase agreement transaction
with UBS Warburg, Inc. - Dated 05-12-03, due 05-13-03
(Secured by U.S. Treasury Bond, 6.000% due 02-15-26,
U.S. Treasury Inflation Indexed Bond, 3.625% due
04-15-28, and U.S. Treasury Inflation Indexed Notes,
3.875% through 4.250%, due 01-15-09 through 01-15-10) 1.22% $ 2,667 $ 2,667,000
TOTAL SHORT-TERM INVESTMENTS 100.52%
(Cost $2,667,000) 2,667,000
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TOTAL INVESTMENTS 100.52% 2,667,000
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OTHER ASSETS AND LIABILITIES, NET (0.52%) (13,720)
----------
TOTAL NET ASSETS 100.00% $ 2,653,280
==========
The percentage shown for each investment category is the total of that category
as a percentage of the net assets of the Fund.
See Note A to financial statements.
1
John Hancock Consumer Industries Fund
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ASSETS AND LIABILITIES Final report May 12, 2003 (unaudited)
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ASSETS
- -----------------------------------------------------------------------------------
Investments at value (cost $2,667,000) $2,667,000
Cash 680
Dividends and interest receivable 439
Other assets 14
Total assets 2,668,133
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LIABILITIES
- -----------------------------------------------------------------------------------
Payable to affiliates 1,144
Other payables and accrued expenses 13,709
Total liabilities 14,853
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NET ASSETS
- -----------------------------------------------------------------------------------
Capital paid-in 2,950,183
Accumulated net realized loss on investments (296,901)
Accumulated net investment loss (2)
Net assets $2,653,280
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NET ASSET VALUE PER SHARE
- -----------------------------------------------------------------------------------
Based on net asset values and shares outstanding
Class A ($2,600,726 / 294,000 shares) $8.85
Class B ( $26,277 / 3,000 shares) $8.76
Class C ( $26,277 / 3,000 shares) $8.76
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MAXIMUM OFFERING PRICE PER SHARE
- -----------------------------------------------------------------------------------
Class A ($8.85 / 95%) $9.32
Class C ($8.76 / 99%) $8.85
* The Statement of Assets and Liabilities reflects the Fund's position prior to
the liquidation of net assets and the termination of the Fund. See Note A to
financial statements. See Note A to financial statements.
2
John Hancock Consumer Industries Fund
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OPERATIONS Period from 11-1-02 through 5-12-03 * (unaudited)
- --------------------------------------------------------------------------------
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INVESTMENT INCOME
- -------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $6) $ 4,739
Interest (including securities lending income of $62) 1,500
Total investment income 6,239
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EXPENSES
- -------------------------------------------------------------------------------------
Investment management fee 11,200
Class A distribution and service fee 3,875
Class B distribution and service fee 98
Class C distribution and service fee 98
Custodian fee 3,908
Auditing fee 3,000
Printing 6,439
Registration and filing fee 3,817
Accounting and legal services fee 357
Trustees' fee 132
Miscellaneous 21
Legal fee 2
Total expenses 32,947
Less expense reductions (12,406)
Net expenses 20,541
Net investment loss (14,302)
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REALIZED AND UNREALIZED GAIN (LOSS)
- -------------------------------------------------------------------------------------
Net realized gain on investments 149,028
Change in net unrealized appreciation (depreciation)
of investments (45,139)
Net realized and unrealized gain 103,889
Increase in net assets from operations $89,587
* The Statement of Operations reflects the Fund's position prior to the
liquidation of net assets and the termination of the Fund. See Note A to
financial statements.
3
John Hancock Consumer Industries Fund
- --------------------------------------------------------------------------------
CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Period from
11-1-02 to
Year ended 5-12-03 *
10-31-02 (unaudited)
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------------------------
From operations
Net investment loss ($ 27,104) ($ 14,302)
Net realized gain (loss) (285,960) 149,028
Change in net unrealized appreciation (depreciation) 212,081 (45,139)
Increase (decrease) in net assets resulting from operations (100,983) 89,587
Distributions to shareholders
Class A (5,424) --
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NET ASSETS
- --------------------------------------------------------------------------------------------------
Beginning of period 2,670,100 2,563,693
End of period (1) $ 2,563,693 $2,653,280
(1) Includes accumulated net investment loss of $2 and $2, respectively.
* The Statement of Changes in Net Assets reflects the Fund's position prior to
the liquidation of net assets and the termination of the Fund. See Note A to
financial statements. See Note A to financial statements.
4
John Hancock Consumer Industries Fund
Financial Highlights
CLASS A SHARES
PERIOD ENDED 10-31-01 (1) 10-31-02 5-12-03 (2)
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PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 8.90 $ 8.55
Net investment loss (3) (0.01) (0.09) (0.05)
Net realized and unrealized gain (loss) on investments (1.09) (0.24) 0.35
Total from investment operations (1.10) (0.33) 0.30
Less distributions
From net investment income -- (0.02) --
Net asset value, end of period $ 8.90 $ 8.55 $ 8.85 (4)
Total return (5),(6) (%) (11.00) (3.75) 3.51
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RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $ 3 $ 3 $ 3
Ratio of expenses to average net assets (%) 1.55 (8) 1.55 1.55 (8)
Ratio of adjusted expenses to average net assets (9) (%) 3.04 (8) 2.64 2.49 (8)
Ratio of net investment loss to average net assets (%) (0.14)(8) (0.95) (1.08)(8)
Portfolio turnover (%) (1)(2)(1) (1)(5)(7) (7)(4)
(1) Class A, Class B, and Class C shares began operations on 3-1-01.
(2) Final period from 11-1-02 through 5-12-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Net asset value per share before the liquidation of assets and the
termination of the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the period
shown.
(10) Less than $500,000.
5
John Hancock Consumer Industries Fund
Financial Highlights
CLASS B SHARES
PERIOD ENDED 10-31-01 (1) 10-31-02 5-12-03 (2)
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 8.86 $ 8.48
Net investment loss (3) (0.06) (0.13) (0.07)
Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.35
Total from investment operations (1.14) (0.38) 0.28
Net asset value, end of period $ 8.86 $ 8.48 $ 8.76 (4)
Total return (5),(6) (%) (11.40) (4.29) 3.30
- --------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) -- (10) -- (10) -- (10)
Ratio of expenses to average net assets (%) 2.25 (8) 2.02 2.00 (8)
Ratio of adjusted expenses to average net assets (9) (%) 3.74 (8) 3.11 2.94 (8)
Ratio of net investment loss to average net assets (%) (0.84)(8) (1.42) (1.52)(8)
Portfolio turnover (%) (1)(2)(1) (1)(5)(7) (7)(4)
(1) Class A, Class B, and Class C shares began operations on 3-1-01.
(2) Final period from 11-1-02 through 5-12-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Net asset value per share before the liquidation of assets and the
termination of the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the period
shown.
(10) Less than $500,000.
6
John Hancock Consumer Industries Fund
Financial Highlights
CLASS C SHARES
PERIOD ENDED 10-31-01 (1) 10-31-02 5-12-03 (2)
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 8.86 $ 8.48
Net investment loss (3) (0.06) (0.13) (0.07)
Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.35
Total from investment operations (1.14) (0.38) 0.28
Net asset value, end of period $ 8.86 $ 8.48 $ 8.76 (4)
Total return (5),(6) (%) (11.40) (7) (4.29) 3.30 (7)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) -- (10) -- (10) -- (10)
Ratio of expenses to average net assets (%) 2.25 (8) 2.02 2.00 (8)
Ratio of adjusted expenses to average net assets (9) (%) 3.74 (8) 3.11 2.94 (8)
Ratio of net investment loss to average net assets (%) (0.84) (8) (1.42) (1.52) (8)
Portfolio turnover (%) (1)(2)(1) (1)(5)(7) (7)(4)
(1) Class A, Class B, and Class C shares began operations on 3-1-01.
(2) Final period from 11-1-02 through 5-12-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Net asset value per share before the liquidation of assets and the
termination of the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the period
shown.
(10) Less than $500,000.
7
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Consumer Industries Fund (the "Fund") was a non-diversified series
of John Hancock World Fund, an open-end management investment company registered
under the Investment Company Act of 1940. The investment objective of the Fund
was to achieve long term capital appreciation.
The Trustees had authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represented an interest in the same portfolio of investments of the Fund
and had equal rights as to voting, redemptions, dividends and liquidation,
except that certain expenses, subject to the approval of the Trustees, may have
been applied differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the Internal Revenue
Service. Shareholders of a class that bore distribution and service expenses
under terms of a distribution plan had exclusive voting rights to that
distribution plan.
On May 12, 2003 the Fund's sole shareholder, John Hancock Advisers, LLC, (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, a
wholly owned indirect subsidiary of John Hancock Life Insurance Company
("JHLICO"), redeemed its shares. On May 20, 2003, the Board of Trustees voted to
terminate the Fund, which had no assets, liabilities or shareholders. The
financial statements presented herein reflect the position of the Fund prior to
the liquidation of net assets and termination of the Fund.
Significant accounting policies of the Fund were as follows:
Valuation of investments
Securities in the Fund's portfolio were valued on the basis of market
quotations, valuations provided by independent pricing services or at fair value
as determined in good faith in accordance with procedures approved by the
Trustees. Short-term debt investments maturing within 60 days were valued at
amortized cost, which approximated market value. Investments in AIM Cash
Investment Trust were valued at their net asset value each business day.
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 the Adviser, may have participated in a joint repurchase agreement
transaction. Aggregate cash balances were invested in one or more large
repurchase agreements, whose underlying securities were obligations of the U.S.
government and/or its agencies. The Fund's custodian bank received delivery of
the underlying securities for the joint account on the Fund's behalf. The
Adviser was responsible for ensuring that the agreement was fully collateralized
at all times.
Investment transactions
Investment transactions were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) were
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, were calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
8
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses that were not readily identifiable to a specific fund were allocated in
such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Securities lending
The Fund may have lent securities to certain qualified brokers who paid the Fund
negotiated lender fees. These fees were included in interest income. The loans
were collateralized at all times with cash or securities with a market value at
least equal to the market value of the securities on loan. As with other
extensions of credit, the Fund would have borne the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities fail financially. There were no securities loaned on
May 12, 2003.
Federal income taxes
The Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not subject to
federal income tax on taxable income that was distributed to shareholders.
Therefore, no federal income tax provision was required as of May 12, 2003, the
Fund's final tax year. As of May 12, 2003, for federal income tax purposes, the
Fund had $296,901 of a capital loss carryforward expiring October 31, 2010.
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the Fund
identified the dividend. Interest income on investment securities was recorded
on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable.
The Fund recorded distributions to shareholders from net investment income and
net realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares were calculated in the same manner, at the same
time and were in the same amount, except for the effect of expenses that may
have been applied differently to each class.
As of May 12, 2003, there were no distributable earnings on a tax basis. Such
distributions and distributable earnings, on a tax basis, were determined in
conformity with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, were reported in the Fund's
financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund had an investment management contract with the Adviser. Under the
investment management contract, the Fund paid a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.85% of the first
$500,000,000 of the Fund's average daily net asset value, (b) 0.80% of the next
$500,000,000 and (c) 0.75% in excess of $1,000,000,000.
The Adviser had agreed to limit the Fund's expenses, excluding the distribution
and service fees, to 1.25% of the Fund's average daily net assets. Accordingly,
the expense reduction amounted to $12,406 for the period ended May 12, 2003.
9
The Fund had Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund had adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provided as distributor of shares of the Fund. Accordingly, the Fund made
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may have been service fees as
defined by the Conduct Rules of the National Association of Securities Dealers.
Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments
could have occurred under certain circumstances.
Class A and Class C shares were assessed up-front sales charges. During the
period ended May 12, 2003, JH Funds received no up-front sales charges with
regard to sales of Class A and Class C shares.
Class B shares that were redeemed within six years of purchase were subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that were
redeemed within one year of purchase were subject to a CDSC at a rate of 1.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Proceeds from the CDSCs
were paid to JH Funds and were used in whole or in part to defray its expenses
for providing distribution related services to the Fund in connection with the
sale of Class B and Class C shares. During the period ended May 12, 2003, JH
Funds received no CDSCs with regard to Class B and Class C shares.
The Fund had a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICo. The Fund paid a monthly transfer agent
fee at an annual rate of 0.05% of the average daily net asset value, plus a fee
based on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
The Fund had an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial
interest of the Fund on May 12, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio were directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees was borne by the Fund. The unaffiliated
Trustees may have elected to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund made investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability were recorded on the Fund's books as an other
asset. The deferred compensation liability and the related other asset were
always equal and were marked to market on a periodic basis to reflect any income
earned by the investment 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
The Fund had an unlimited number of shares authorized with no par value.
John Hancock Consumer Industries Fund
Note C
Fund share transactions
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-02 (1)
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
CLASS A SHARES
- ---------------------------------------------------------------------------------------------------------
Sold -- $ -- -- $ --
Net increase (decrease) -- $ -- -- $ --
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------------------------------------------------------------
Sold -- $ -- -- $ --
Net increase (decrease) -- $ -- -- $ --
- ---------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------------------------------------------------------------
Sold -- $ -- -- $ --
Net increase (decrease) -- $ -- -- $ --
- ---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) -- $ -- -- $ --
- ---------------------------------------------------------------------------------------------------------
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
10
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended May 12, 2003, aggregated $1,518,005 and $3,977,804, respectively.
The cost of investments owned on May 12, 2003, including short-term investments,
for federal income tax purposes was $2,667,000.
NOTE E
Reclassification of accounts
During the period ended May 12, 2003, the Fund reclassified amounts to reflect a
decrease in accumulated net investment loss of $14,302 and a decrease in capital
paid-in of $14,302. This represented the amount necessary to report these
balances on a tax basis, excluding certain temporary differences, as of May 12,
2003. These reclassifications, which had no impact on the net asset value of the
Fund, were primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America, book and tax
differences in accounting for deferred compensation and net operating losses.
The calculation of net investment income (loss) per share in the financial
highlights excluded these adjustments.
NOTE F
Termination
On May 20, 2003, the Board of Trustees voted to terminate the Fund, which had no
assets, liabilities or shareholders.
11
John Hancock Funds - Consumer Industries Fund
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen R. Ford
Chairman, President and Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Richard A. Brown
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, Inc.
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
60 State Street
Boston, Massachusetts 02109-1803
12
- --------------------------------------------------------------------------------
FINAL REPORT
John Hancock European Equity Fund
May 9, 2003
- --------------------------------------------------------------------------------
John Hancock European Equity Fund
Schedule of Investments
5/9/2003 (Unaudited)
ISSUER SHARES VALUE
- ------ ------ -----
COMMON STOCKS
Austria 1.19%
Gericom AG (Computers) 3,800 $ 58,499
OMV AG (Oil & Gas) 500 63,537
-----------
122,036
-----------
Belgium 1.13%
Interbrew SA (Beverages) 3,000 69,000
Mobistar SA* (Telecommunications) 1,400 47,110
-----------
116,110
-----------
Denmark 1.47%
Jyske Bank AS* (Banks - Foreign) 2,400 84,112
TDC AS (Telecommunications) 2,600 66,782
-----------
150,894
-----------
Finland 3.26%
Nokia OYJ American Depositary Receipts (ADR) (Telecommunications) 15,000 257,250
Sampo Oyj (A Shares) (Finance) 11,100 78,553
-----------
335,803
-----------
France 6.00%
BNP Paribas SA (Banks - Foreign) 2,500 119,336
France Telecom SA (Telecommunications) 1,800 41,234
JC Decaux SA* (Advertising) 8,900 87,933
Pernod-Ricard SA (Beverages) 350 33,696
Suez SA (Pollution Control) 5,000 81,625
Unibail SA (Real Estate Operations) 900 62,400
Vinci SA (Engineering / R&D Services) 1,500 100,466
Vivendi Universal SA (Media) 5,700 91,023
-----------
617,713
-----------
Germany 7.86%
BASF AG (Chemicals) 1,600 68,287
Continental AG* (Rubber - Tires & Misc) 3,100 57,339
Deutsche Boerse AG (Finance) 2,200 104,890
Deutsche Telekom AG (Telecommunications) 4,900 64,512
E.ON AG (Utilities) 2,100 101,328
Medion AG (Business Services - Misc) 1,900 78,363
Muenchener Rueckversicherungs-Gesellschaft AG (Insurance) 800 81,338
Schwarz Pharma AG (Medical) 2,500 107,273
SGL Carbon AG* (Chemicals) 3,500 54,484
Siemens AG (Diversified Operations) 1,800 90,368
-----------
808,182
-----------
Hungary 0.65%
OTP Bank Rt. (Banks - Foreign) 6,000 66,376
-----------
See notes to financial statements. 1
ISSUER SHARES VALUE
- ------ ------ -----
Ireland 2.21%
Bank of Ireland (Banks - Foreign) 10,500 $ 134,260
Irish Life & Permanent Plc (Finance) 8,000 93,260
-----------
227,520
-----------
Israel 2.64%
Taro Pharmaceutical Industries Ltd.* (Medical) 2,000 95,620
Teva Pharmaceutical Industries Ltd. (ADR) (Medical) 3,700 176,379
-----------
271,999
-----------
Italy 6.25%
Banco Popolare di Verona e Novara Scrl (Banks - Foreign) 4,600 61,778
ENI SpA (Oil & Gas) 7,100 108,322
ERG SpA (Oil & Gas) 5,100 22,440
Finmeccanica SpA (Aerospace) 88,000 53,885
Impregilo SpA* (Building) 175,000 79,414
Italcementi SpA (Building) 7,500 78,322
Mediaset SpA (Media) 6,300 53,849
Saipem SpA (Oil & Gas) 11,800 83,372
UniCredito Italiano SpA (Banks - Foreign) 22,100 101,558
-----------
642,940
-----------
Netherlands 6.81%
Aegon NV (Insurance) 1,064 10,537
ASML Holding NV (NY Reg Shares)* (Electronics) 7,800 72,306
Euronext NV (Finance) 3,800 87,399
Fugro NV (Engineering / R&D Services) 1,300 57,948
IHC Caland NV (Oil & Gas) 800 42,314
ING Groep NV (Insurance) 6,400 106,466
Royal Dutch Petroleum Co. (Oil & Gas) 2,600 114,402
TPG NV (Transport) 6,900 121,284
Unilever NV (Food) 1,500 87,714
-----------
700,370
-----------
Norway 1.08%
ProSafe ASA * (Oil & Gas) 3,200 54,144
Statoil ASA (Oil & Gas) 7,000 57,178
-----------
111,322
-----------
Russia 2.08%
Lukoil (ADR) (Oil & Gas) 900 61,272
VimpelCom* (ADR) (Telecommunications) 1,700 68,306
YUKOS (ADR) (Oil & Gas) 500 84,375
-----------
213,953
-----------
Spain 7.70%
Acciona SA (Building) 1,400 68,678
Acesa Infraestructuras SA (Transport) 4,000 53,444
Actividades de Construccion y Servicios SA (Building) 2,500 100,237
Banco Popular Espanol SA (Banks - Foreign) 1,600 80,860
Bankinter SA (Banks - Foreign) 2,500 79,988
Corporacion Mapfre SA (Insurance) 11,600 116,474
Endesa SA (Utilities) 8,600 129,231
Iberia Lineas Aereas de Espana SA (Transport) 27,300 49,554
Telefonica SA* (Telecommunications) 10,404 114,147
-----------
792,613
-----------
See notes to financial statements. 2
ISSUER SHARES VALUE
- ------ ------ -----
Sweden 2.59%
Elekta AB (B Shares)* (Medical) 7,900 $ 92,026
Hennes & Mauritz AB (B Shares) (Retail) 4,500 102,021
Skandinaviska Enskilda Banken AB (A Shares) (Banks - Foreign) 7,000 71,897
-----------
265,944
-----------
Switzerland 6.70%
Actelion Ltd.* (Medical) 1,200 81,537
Converium Holding AG (Insurance) 1,000 46,454
Credit Suisse Group (Banks - Foreign) 5,000 121,947
Novartis AG (Medical) 3,841 156,181
Roche Holding AG (Medical) 1,700 110,781
SGS Societe Generale de Surveillance Holding SA (Business Services - Misc) 150 54,247
UBS AG (Banks - Foreign) 2,400 118,624
-----------
689,771
-----------
United Kingdom 34.30%
Acambis Plc* (Medical) 12,400 60,204
Arriva Plc (Transport) 13,000 67,856
AstraZeneca Plc (Medical) 3,400 135,656
Barclays Plc (Banks - Foreign) 20,798 136,303
BG Group Plc (Oil & Gas) 10,600 43,864
BHP Billiton Plc (Metal) 16,912 84,752
BP Plc (Oil & Gas) 17,500 114,969
British Sky Broadcasting Group Plc* (Media) 9,300 100,588
Diageo Plc (Beverages) 12,300 128,798
Gallaher Group Plc (Tobacco) 16,300 152,793
GlaxoSmithKline Plc (Medical) 12,300 255,232
HBOS Plc (Banks - Foreign) 11,800 133,867
Imperial Tobacco Group Plc (Tobacco) 4,300 70,142
InterContinental Hotels Group Plc* (Leisure) 6,949 46,543
Kelda Group Plc (Utilities) 15,000 98,605
Kingfisher Plc (Retail) 14,000 56,083
Lloyds TSB Group Plc (Banks - Foreign) 14,900 99,559
Man Group Plc (Finance) 8,000 137,931
Mitchells & Butler Plc* (Retail) 6,949 23,940
mm02 Plc* (Telecommunications) 109,000 96,498
National Grid Transco Plc (Utilities) 25,100 163,089
Northern Rock Plc (Banks - Foreign) 5,700 64,756
Peninsular and Oriental Steam Navigation Co. (Transport) 28,300 97,496
Reckitt Benckiser Plc (Soap & Cleaning Preparations) 3,300 59,170
Royal Bank of Scotland Group Plc (Banks - Foreign) 8,892 233,100
Severn Trent Plc (Utilities) 6,000 67,732
SkyePharma Plc* (Medical) 93,000 78,980
Smith & Nephew Plc (Medical) 9,600 62,953
Smiths Group Plc (Manufacturing) 4,200 45,494
Tesco Plc (Retail) 27,700 87,217
Tullow Oil Plc* (Oil & Gas) 67,700 79,733
Vodafone Group Plc (Telecommunications) 200,000 386,168
Wood Group (John) Plc (Oil & Gas) 22,500 58,676
-----------
3,528,747
-----------
See notes to financial statements. 3
ISSUER SHARES VALUE
- ------ ------ -----
United States 1.03%
Schlumberger Ltd. (Oil & Gas) 1,600 $ 71,968
Transocean, Inc. (Oil & Gas) 1,700 34,374
-----------
106,342
-----------
TOTAL COMMON STOCKS 94.95%
(Cost $8,625,797) 9,768,635
-----------
PREFERRED STOCKS
Germany 2.40%
Henkel KGaA (Chemicals) 800 52,295
Porsche AG (Automobiles / Trucks) 200 72,837
Wella AG (Cosmetics & Personal Care) 1,600 122,053
-----------
247,185
-----------
TOTAL PREFERRED STOCKS 2.40%
(Cost $206,151) 247,185
-----------
TOTAL INVESTMENTS 97.35%
(Cost $8,831,948) 10,015,820
-----------
OTHER ASSETS AND LIABILITIES, NET 2.65% 272,584
-----------
TOTAL NET ASSETS 100.00% $10,288,404
===========
* Non-Income producing security.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements. 4
John Hancock European Equity Fund
Portfolio Concentration
5-9-03 (Unaudited)
VALUE
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
---------------
Advertising 0.85%
Aerospace 0.52
Automobiles / Trucks 0.71
Banks - Foreign 16.60
Beverages 2.25
Building 3.18
Business Services - Misc 1.29
Chemicals 1.70
Computers 0.57
Cosmetics & Personal Care 1.19
Diversified Operations 0.88
Electronics 0.70
Engineering / R&D Services 1.54
Finance 4.88
Food 0.85
Insurance 3.51
Leisure 0.45
Manufacturing 0.44
Media 2.39
Medical 13.73
Metal 0.82
Oil & Gas 10.64
Pollution Control 0.79
Real Estate Operations 0.61
Retail 2.62
Rubber - Tires & Misc 0.56
Soap & Cleaning Preparations 0.58
Telecommunications 11.10
Tobacco 2.17
Transport 3.79
Utilities 5.44
---------------
Total Investments 97.35%
---------------
See notes to financial statements. 5
John Hancock European Equity Fund
--------------------------------------------------------------------------------------------------
ASSETS AND ASSETS
LIABILITIES --------------------------------------------------------------------------------------------------
May 9, 2003 Investments at value (cost - $8,831,948) $10,015,820
(unaudited) Cash 225,293
Foreign cash at value (cost - $837) 836
Dividends receivable 71,876
Other assets 8,187
Total assets 10,322,012
--------------------------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------------------------
Payable for shares repurchased 3,313
Payable to affiliates 1,595
Other payables and accrued expenses 28,700
Total liabilities 33,608
--------------------------------------------------------------------------------------------------
NET ASSETS
--------------------------------------------------------------------------------------------------
Capital paid-in 18,715,602
Accumulated net realized loss on investments and foreign currency transactions (9,615,768)
Net unrealized appreciation of investments and translation of assets and liabilities
in foreign currencies 1,188,779
Accumulated net investment loss (209)
Net assets $10,288,404
--------------------------------------------------------------------------------------------------
NET ASET VALUE PER SHARE
--------------------------------------------------------------------------------------------------
Based on net asset values and shares outstanding
Class A ($4,654,400 / 666,968 shares) $ 6.98
Class B ($5,393,668 / 799,993 shares) $ 6.74
Class C ($240,336 / 35,641 shares) $ 6.74
--------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
--------------------------------------------------------------------------------------------------
Class A (1) ($6.98 / 95%) $ 7.35
Class C ($6.74 / 99%) $ 6.81
(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.
* The net assets of the Fund were merged into John Hancock International Fund as
of the close of business on May 9, 2003, and the Fund was subsequently
terminated. The Statement of Assets and Liabilities reflects the Fund's position
prior to the transfer of net assets and the termination of the Fund. See Note A
to financial statements.
See notes to financial statements. 6
John Hancock European Equity Fund
--------------------------------------------------------------------------------------------------
OPERATIONS INVESTMENT INCOME
For the period from --------------------------------------------------------------------------------------------------
11-1-02 to 5-9-03* Dividends (net of foreign witholding taxes of $18,533) $ 136,864
(unaudited) Interest 2,156
Total investment income 139,020
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EXPENSES
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Investment management fee 50,887
Class A distribution and service fee 8,317
Class B distribution and service fee 27,588
Class C distribution and service fee 1,229
Transfer agent fee 50,982
Registration and filing fee 24,646
Custodian fee 24,452
Printing 7,956
Auditing fee 6,500
Accounting and legal services fee 1,524
Trustee's fee 599
Miscellaneous 219
Total expenses 204,899
Less expense reductions (77,298)
Net expenses 127,601
Net investment loss 11,419
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REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------------------------
Net realized income (loss) on
Investments (855,511)
Foreign currency transactions (13,349)
Options 6,652
Change in unrealized appreciation (depreciation) on
Investments 1,666,664
Translation of assets and liabilities in foreign currencies 4,125
Net realized and unrealized gain 808,581
Increase in net assets from operations $ 820,000
* The net assets of the Fund were merged into John Hancock International Fund as
of the close of business May 9, 2003, and the Fund was subsequently terminated.
The Statement of Operations reflects the Fund's position prior to the transfer
of net assets and the termination of the Fund. See Note A to financial
statements.
See notes to financial statements. 7
John Hancock European Equity Fund
PERIOD FROM
YEAR ENDED 11-1-02 TO
10-31-02 5-9-03* (UNAUDITED)
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CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS --------------------------------------------------------------------------------------------------
From operations
Net investment income (loss) $ (66,022) $ 11,419
Net realized loss (3,026,167) (862,208)
Change in net unrealized appreciation (depreciation) 482,764 1,670,789
Increase (decrease) in net assets resulting from operations (2,609,425) 820,000
From Fund share transactions (2,487,052) (1,980,096)
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NET ASSETS
--------------------------------------------------------------------------------------------------
Beginning of period 16,544,977 11,448,500
End of period (1) $11,448,500 $ 10,288,404
(1) Includes accumulated net investment income (loss) of $184 and ($209)
respectively.
* The net assets of the Fund were merged into John Hancock International Fund
as of the close of business on May 9, 2003, and the Fund was subsequently
terminated. The Statements of Changes in Net Assets reflect the Fund's
position prior to the transfer of net assets and the termination of the
Fund. See Note A to financial statements.
See notes to financial statements. 8
John Hancock European Equity Fund
Financial Highlights
CLASS A SHARES
PERIOD ENDED 10-31-98(1) 10-31-99 10-31-00 10-31-01 10-31-02 5-9-03(2)
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $10.07 $11.16 $10.98 $7.80 $6.44
Net investment income (loss) (3) 0.01 (0.04) (0.06) --(4) (0.01) 0.02
Net realized and unrealized gain (loss) on investments 0.06 1.13 (0.12) (3.18) (1.35) 0.52
Total from investment operations 0.07 1.09 (0.18) (3.18) (1.36) 0.54
Net asset value, end of period $10.07 $11.16 $10.98 $7.80 $6.44 $6.98(5)
Total return (6,7) (%) 0.70(8) 10.82 (1.61) (28.96) (17.44) 8.39(8)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $12 $14 $13 $8 $6 $5
Ratio of expenses to average net assets (%) 1.90(9) 1.90 1.90 1.90 1.90 1.90(9)
Ratio of adjusted expenses to average net assets (10) (%) 3.31(9) 2.23 2.30 3.02 2.65 3.27(9)
Ratio of net investment income (loss) to average net assets (%) 0.16(9) (0.38) (0.52) 0.03 (0.08) 0.54(9)
Portfolio turnover (%) 31 64 97 260 198 84
See notes to financial statements. 9
John Hancock European Equity Fund
Financial Highlights
CLASS B SHARES
PERIOD ENDED 10-31-98(1) 10-31-99 10-31-00 10-31-01 10-31-02 5-9-03(2)
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.07 $10.04 $11.06 $10.80 $7.62 $6.24
Net investment loss (3) (0.04) (0.12) (0.15) (0.06) (0.06) --(4)
Net realized and unrealized gain (loss) on investments (0.99) 1.14 (0.11) (3.12) (1.32) 0.50
Total from investment operations (1.03) 1.02 (0.26) (3.18) (1.38) 0.50
Net asset value, end of period $10.04 $11.06 $10.80 $7.62 $6.24 $6.74(5)
Total return (6,7) (%) (9.30)(8) 10.16 (2.35) (29.44) (18.11) 8.01(8)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $16 $15 $15 $8 $6 $5
Ratio of expenses to average net assets (%) 2.60(9) 2.60 2.60 2.60 2.60 2.60(9)
Ratio of adjusted expenses to average net assets (10) (%) 4.01(9) 2.93 3.00 3.72 3.35 3.97(9)
Ratio of net investment loss to average net assets (%) (1.12)(9) (1.08) (1.23) (0.67) (0.78) (0.13)(9)
Portfolio turnover (%) 31 64 97 260 198 84
See notes to financial statements. 10
John Hancock European Equity Fund
Financial Highlights
CLASS C SHARES
PERIOD ENDED 10-31-99(1) 10-31-00 10-31-01 10-31-02 5-9-03(2)
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.64 $11.06 $10.80 $7.62 $6.24
Net investment loss (3) (0.07) (0.13) (0.06) (0.06) --(4)
Net realized and unrealized gain (loss) on investments 0.49 (0.13) (3.12) (1.32) 0.50
Total from investment operations 0.42 (0.26) (3.18) (1.38) 0.50
Net asset value, end of period $11.06 $10.80 $7.62 $6.24 $6.74(5)
Total return (6,7) (%) 3.95(8) (2.35) (29.44) (18.11) 8.01(8)
- -----------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) --(11) --(11) --(11) --(11) --(11)
Ratio of expenses to average net assets (%) 2.60(9) 2.60 2.60 2.60 2.60(9)
Ratio of adjusted expenses to average net assets (10) (%) 2.93(9) 3.00 3.72 3.35 3.97(9)
Ratio of net investment loss to average net assets (%) (1.17)(9) (1.16) (0.61) (0.78) (0.10)(9)
Portfolio turnover (%) 64 97 260 198 84
(1) Class A, Class B and Class C shares began operations on 3-2-98, 6-1-98, and
3-1-99, respectively.
(2) Final period from 11-1-02 through 5-9-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than $0.01 per share.
(5) Net assets value per share before the merger to John Hancock International
Fund and the termination of the Fund. See Note A to financial statements.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(8) Not annualized.
(9) Annualized.
(10) Does not take into consideration expense reductions during the periods
shown.
(11) Less than $500,000.
See notes to financial statements. 11
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Organization
John Hancock European Equity Fund (the "Fund") was a diversified series of John
Hancock World Fund, an open-end investment management company registered under
the Investment Company Act of 1940. The investment objective of the Fund was to
achieve long-term capital growth.
The Trustees had authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represented an interest in the same portfolio of investments of the Fund
and had equal rights as to voting, redemptions, dividends and liquidation,
except that certain expenses, subject to the approval of the Trustees, may have
been applied differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the Internal Revenue
Service. Shareholders of a class that bore distribution and service expenses
under terms of a distribution plan had exclusive voting rights to that
distribution plan.
On May 7, 2003, the shareholders of the Fund approved an Agreement and Plan of
Reorganization, which provided for the transfer of substantially all of the
assets and liabilities of the Fund to the John Hancock International Fund (the
"Acquiring Fund") in exchange solely for shares of beneficial interest of the
Acquiring Fund.
After this transaction and as of the close of business on May 9, 2003, the Fund
will be terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and termination of the
Fund.
Significant accounting policies of the Fund were as follows:
Valuation of investments
Securities in the Fund's portfolio were valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations were not readily available, or the value had been materially affected
by events occurring after the closing of a foreign market, or at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days were valued at amortized
cost, which approximated market value. All portfolio transactions initially
expressed in terms of foreign currencies were translated into U.S. dollars as
described in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with the Adviser, may have participated in a joint repurchase agreement
transaction. Aggregate cash balances were invested in one or more large
repurchase agreements, whose underlying securities were obligations of the U.S.
government and/or its agencies. The Fund's custodian bank received delivery of
the underlying securities for the joint account on the Fund's behalf. The
Adviser was responsible for ensuring that the agreement was fully collateralized
at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies
were translated into U.S. dollars based on London currency exchange quotations
as of 5:00 p.m., London time, on the date of any determination of the net asset
value of the Fund. Transactions affecting statement of operations accounts and
net realized gains (losses) on investments were translated at the rates
prevailing at the dates of the transactions.
12
The Fund did not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations were
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arose from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund' books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arose from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in the exchange rates.
Investment transactions
Investment transactions were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis. Capital gains realized on some foreign securities
were subject to foreign taxes, which were accrued as applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) were
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, were calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses which were not readily identifiable to a specific fund were allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the fund.
Bank borrowings
The Fund was permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund had entered into a
syndicated line of credit agreement with various banks. This agreement enabled
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permitted borrowings up to $250 million,
collectively. Interest was charged to each fund, based on its borrowing. In
addition, a commitment fee was charged to each fund based on the average daily
unused portion of the line of credit and was allocated among the participating
funds. The Fund had no borrowing activity under the line of credit during the
period ended May 9, 2003.
Options
The Fund may have entered into option contracts. Listed options were valued at
the last quoted sales price on the exchange on which they were primarily traded.
Over-the-counter options were 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 would be included in the Statement of Assets and
Liabilities as an asset and corresponding liability. The amount of the liability
would be subsequently marked to market to reflect the current market value of
the written option.
The Fund may have used option contracts to manage its exposure to the price
volatility of financial instruments. Writing puts and buying calls would tend to
increase the Fund's exposure to the underlying instrument and buying puts and
writing calls would tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments.
13
The maximum exposure to loss for any purchased options would be limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value would reflect the maximum exposure
of the Fund in these contracts, but the actual exposure would be limited to the
change in value of the contract over the period the contract remained open.
Risks may have also arisen if counterparties did not perform under the
contracts' terms ("credit risk") or if the Fund was unable to offset a contract
with a counterparty on a timely basis ("liquidity risk"). Exchange-traded
options had minimal credit risk as the exchanges acted as counterparties to each
transaction, and only presented liquidity risk in highly unusual market
conditions. To minimize credit and liquidity risks in over-the-counter option
contracts, the Fund would continuously monitor the creditworthiness of all its
counterparties.
At any particular time, except for purchased options, market or credit risk may
have involved amounts in excess of those reflected in the Fund's Statement of
Assets and Liabilities.
The Fund had no written option transactions during the period ended May 9, 2003.
Forward foreign currency exchange contracts
The Fund may have entered 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 were marked to market daily at the applicable foreign
currency exchange rates. Any resulting unrealized gains and losses were included
in the determination of the Fund's daily net assets. The Fund recorded realized
gains and losses at the time the forward foreign currency exchange contracts
were closed out. Risks may have arose upon entering these contracts from the
potential inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar. These contracts involved 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 have also purchased and sold forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under which
they intended to take delivery of the foreign currency. Such contracts normally
involved no market risk if they were offset by the currency amount of the
underlying transactions. The Fund had no open forward foreign currency exchange
contracts on May 9, 2003.
Federal income taxes
The Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not subject to
federal income tax on taxable income that was distributed to shareholders.
Therefore, no federal income tax provision was required as of May 9, 2003, the
Fund's final tax year. As of May 9, 2003, for federal income tax purposes, the
Fund had $9,560,292 of a capital loss carryforward expiring as follows: October
31, 2006 - $821,474, October 31, 2007 - $1,234,369, October 31, 2009 -
$3,678,367, October 31, 2010 - $3,007,088 and May 9, 2011 - $818,994. The unused
capital loss carryforward as of May 9, 2003 was transferred to the International
Fund and will be available, to the extent provided by regulations, to offset net
capital gains of the International Fund.
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the Fund
identified the dividend. Interest income on investment securities was recorded
on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable.
14
The Fund recorded distributions to shareholders from net investment income and
realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares were calculated in the same manner, at the same
time and were in the same amount, except for the effect of expenses that may
have been applied differently to each class. As of May 9, 2003, there were no
distributable earnings on a tax basis.
Such distributions and distributable earnings, on a tax basis, were determined
in conformity with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, were reported in the Fund's
financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund had an investment management contract with the Adviser. Under the
investment management contract, the Fund paid a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first
$500,000,000 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 $500,000,000. The Adviser had
a subadvisory contract with Nicholas-Applegate Capital Management LP. The Fund
was not responsible for payment of the subadvisory fees.
The Adviser had agreed to limit the Fund's expenses to 1.90%, 2.60% and 2.60%,
of the Fund's average daily net assets attributable to Class A, Class B and
Class C shares, respectively. Accordingly, the expense reduction for the Fund
amounted to $77,298 for the period ended May 9, 2003.
The Fund had Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund had adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provided as distributor of shares of the Fund. Accordingly, the Fund made
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may have been service fees as
defined by the Conduct Rules of the National Association of Securities Dealers.
Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments
could have occurred under certain circumstances.
Class A and Class C shares were assessed up-front sales charges. During the
period ended May 9, 2003, JH Funds received net up-front sales charges of $3,519
with regard to sales of Class A shares. Of this amount, $396 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, $2,383 was paid as sales commissions to unrelated broker-dealers and
$740 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"), was the indirect sole
shareholder of Signator Investors. During the period ended May 9, 2003, JH Funds
received net up-front sales charges of $66 with regard to sales of Class C
shares, all of which was paid as sales commissions to unrelated broker-dealers.
Class B shares that were redeemed within six years of purchase were subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that were
redeemed within one year of purchase were subject to a CDSC at a rate of 1.00%
of the lesser of the current market value at the time of redemption or
15
the original purchase cost of the shares being redeemed. Proceeds from the CDSCs
were paid to JH Funds and were used in whole or in part to defray its expenses
for providing distribution related services to the Fund in connection with the
sale of Class B and Class C shares. During the period ended May 9, 2003, CDSCs
received by JH Funds amounted to $8,671 for Class B shares and none for Class C
shares.
The Fund had a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICo. The Fund paid a monthly transfer agent
fee at an annual rate of 0.05% of the average daily net asset value, plus a fee
based on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
The Fund had an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser and other subsidiaries of JHLICo owned 150,000 shares of beneficial
interest of the Fund on May 9, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio were directors and/or officers of
the Adviser and its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees was borne by the Fund. The unaffiliated
Trustees may have elected to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund made investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability were recorded on the Fund's books as an other
asset. The deferred compensation liability and the related other asset were
always equal and were marked to market on a periodic basis to reflect any income
earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations of the
Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and repurchased during
the last two periods, along with the corresponding dollar value. The Fund had an
unlimited number of shares authorized with no par value.
PERIOD FROM 11-1-02 TO 5-9-03
YEAR ENDED 10-31-02 (UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
Sold 243,515 $1,801,403 42,988 $276,714
Repurchased (359,333) (2,672,712) (249,341) (1,653,604)
Net decrease (115,818) ($871,309) (206,353) ($1,376,890)
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
Sold 146,815 $1,075,119 34,545 $215,880
Repurchased (368,071) (2,672,695) (128,286) (793,117)
Net decrease (221,256) ($1,597,576) (93,741) ($577,237)
- --------------------------------------------------------------------------------
CLASS C SHARES
- --------------------------------------------------------------------------------
Sold 113,551 $805,510 1,050 $6,498
Repurchased (117,426) (823,677) (5,158) (32,467)
Net decrease (3,875) ($18,167) (4,108) ($25,969)
- --------------------------------------------------------------------------------
NET DECREASE (340,949) ($2,487,052) (304,202) ($1,980,096)
- --------------------------------------------------------------------------------
16
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. Government, during the period
ended May 9, 2003, aggregated $8,784,120 and $10,385,277 respectively.
The cost of investments owned on May 9, 2003, including short-term investments,
was $8,887,424 for federal income tax purposes. Gross unrealized appreciation
and depreciation of investments aggregated $1,251,398 and $123,002 respectively,
resulting in net unrealized appreciation of $1,128,396. The difference between
book basis and tax basis net unrealized appreciation of investments is
attributable primarily to the tax deferral of losses on wash sales and the
realization for tax purposes of unrealized gains on certain forward foreign
currency contracts.
NOTE E
Reclassification of accounts
During the period ended May 9, 2003, the Fund reclassified amounts to reflect a
decrease in accumulated net realized loss on investments of $13,349, an increase
in accumulated net investment loss of $11,444 and a decrease in capital paid-in
of $1,905. This represented the amounts necessary to report these balances on a
tax basis, excluding certain temporary differences, as of May 9, 2003. These
reclassifications, which had no impact on the net asset value of the Fund, were
primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America, book and tax
differences in accounting for tax differences in accounting for, net operating
loss, foreign currency adjustments. The calculation of net investment income
(loss) per share in the financial highlights excluded these adjustments.
NOTE F
Shareholder meeting
On May 7, 2003, at a Special Shareholder Meeting, the shareholders of the Fund
approved an Agreement and Plan of Reorganization between the Fund and
International Fund. The number of votes cast for and against the proposal and
that abstained from voting was as follows:
FOR: 787,757, AGAINST 24,546 and ABSTAINING 68,825.
The Plan of Reorganization provided for the transfer of substantially all of the
assets and liabilities of the Fund to the International Fund in exchange solely
for shares of beneficial interest of the European Equity Fund. After this
transaction and as of the close of business on May 9, 2003, the Fund was
terminated. The financial statements presented herein reflect the position of
the Fund prior to the exchange of net assets and termination of the Fund.
17
John Hancock Funds
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen R. Ford
Chairman, President and Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Richard A. Brown
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
Investment Adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Principal Distributor
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Sub-Investment Adviser
Nicholas-Applegate Capital Management
600 West Broadway
San Diego, California 92101
Transfer Agent
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form N-CSR,
the registrant's principal executive officer and principal financial officer
have concluded that those disclosure controls and procedures provide reasonable
assurance that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation.
ITEM 10. EXHIBITS.
(a) Not applicable at this time.
(b)(1) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of
1940, are attached as Ex99.CERT.
(b)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule
30a-2(b) under the Investment Company Act of 1940, are attached as Ex99.CERT.
The certifications furnished pursuant to this paragraph are not deemed to be
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or
otherwise subject to the liability of that section. Such certifications are not
deemed to be incorporated by reference into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent that the
Registrant specifically incorporates them by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
By:
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Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: June 24, 2003