ITEM 1. REPORT TO STOCKHOLDERS.
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SEMI ANNUAL REPORT
John Hancock European Equity Fund
APRIL 30, 2003
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John Hancock European Equity Fund
Schedule of Investments
April 30, 2003
(unaudited)
ISSUER SHARES VALUE
- ------ ------ -----
COMMON STOCKS
Austria (1.16%)
Gericom AG (Computers) 3,800 $ 57,208
OMV AG (Oil & Gas) 500 60,041
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117,249
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Belgium (1.12%)
Interbrew SA (Beverages) 3,000 66,960
Mobistar SA* (Telecommunications) 1,400 45,622
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112,582
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Denmark (1.42%)
Jyske Bank AS* (Banks - Foreign) 2,400 78,285
TDC AS (Telecommunications) 2,600 64,681
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142,966
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Finland (3.26%)
Nokia Oyj American Depositary Receipts (ADR) (Telecommunications) 15,000 248,550
Sampo Oyj (A Shares) (Finance) 11,100 80,519
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329,069
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France (6.03%)
BNP Paribas SA (Banks - Foreign) 2,500 117,347
France Telecom SA (Telecommunications) 1,800 41,582
JC Decaux SA* (Advertising) 8,900 85,915
Pernod-Ricard SA (Beverages) 350 30,721
Suez SA (Pollution Control) 5,000 81,412
Unibail SA (Real Estate Operations) 900 60,214
Vinci SA (Engineering / R&D Services) 1,500 97,678
Vivendi Universal SA (Media) 5,700 92,873
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607,742
------------
Germany (7.84%)
BASF AG (Chemicals) 1,600 70,799
Continental AG* (Rubber - Tires & Misc) 3,100 55,007
Deutsche Boerse AG (Finance) 2,200 102,136
Deutsche Telekom AG (Telecommunications) 4,900 65,511
E.ON AG (Utilities) 2,100 99,603
Medion AG (Business Services - Misc) 1,900 70,185
Muenchener Rueckversicherungs-Gesellschaft AG (Insurance) 800 79,638
Schwarz Pharma AG (Medical) 2,500 107,136
SGL Carbon AG* (Chemicals) 3,500 51,364
Siemens AG (Diversified Operations) 1,800 88,990
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790,369
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Hungary (0.64%)
OTP Bank Rt. (Banks - Foreign) 6,000 64,417
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See notes to financial statements.
1
ISSUER SHARES VALUE
- ------ ------ -----
Ireland (2.19%)
Bank of Ireland (Banks - Foreign) 10,500 $ 128,312
Irish Life & Permanent Plc (Finance) 8,000 92,799
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221,111
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Israel (2.62%)
Taro Pharmaceutical Industries Ltd.* (Medical) 2,000 91,520
Teva Pharmaceutical Industries Ltd. (ADR) (Medical) 3,700 172,790
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264,310
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Italy (6.19%)
Banco Popolare di Verona e Novara Scrl (Banks - Foreign) 4,600 62,476
ENI SpA (Oil & Gas) 7,100 101,184
ERG SpA (Oil & Gas) 5,100 22,653
Finmeccanica SpA (Aerospace) 88,000 52,247
Impregilo SpA* (Building) 175,000 74,214
Italcementi SpA (Building) 7,500 78,343
Mediaset SpA (Media) 6,300 53,856
Saipem SpA (Oil & Gas) 11,800 82,305
UniCredito Italiano SpA (Banks - Foreign) 22,100 96,681
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623,959
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Netherlands (7.30%)
Aegon NV (Insurance) 7,600 77,267
ASML Holding NV (NY Reg Shares)* (Electronics) 7,800 68,718
Euronext NV (Finance) 3,800 83,968
Fugro NV (Engineering / R&D Services) 1,300 52,736
IHC Caland NV (Oil & Gas) 800 41,292
ING Groep NV (Insurance) 6,400 103,922
Royal Dutch Petroleum Co. (Oil & Gas) 2,600 106,343
TPG NV (Transport) 6,900 107,651
Unilever NV (Food) 1,500 94,497
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736,394
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Norway (1.09%)
ProSafe ASA * (Oil & Gas) 3,200 53,960
Statoil ASA (Oil & Gas) 7,000 55,517
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109,477
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Russia (2.16%)
Lukoil (ADR) (Oil & Gas) 900 61,956
VimpelCom* (ADR) (Telecommunications) 1,700 67,762
YUKOS (ADR) (Oil & Gas) 500 87,750
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217,468
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Spain (7.54%)
Acciona SA (Building) 1,400 67,183
Acesa Infraestructuras SA (Transport) 4,000 52,005
Actividades de Construccion y Servicios SA (Building) 2,500 94,162
Banco Popular Espanol SA (Banks - Foreign) 1,600 77,566
Bankinter SA (Banks - Foreign) 2,500 76,362
Corporacion Mapfre SA (Insurance) 11,600 108,743
Endesa SA (Utilities) 8,600 121,985
Iberia Lineas Aereas de Espana SA (Transport) 27,300 47,833
Telefonica SA* (Telecommunications) 10,404 115,063
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760,902
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See notes to financial statements.
2
ISSUER SHARES VALUE
- ------ ------ -----
Sweden (3.00%)
Elekta AB (B Shares)* (Medical) 7,900 $ 85,957
Hennes & Mauritz AB (B Shares) (Retail) 4,500 100,126
Skandinaviska Enskilda Banken AB (A Shares) (Banks - Foreign) 11,200 116,386
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302,469
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Switzerland (6.62%)
Actelion Ltd.* (Medical) 1,200 76,841
Converium Holding AG* (Insurance) 1,000 45,160
Credit Suisse Group (Banks - Foreign) 5,000 119,443
Novartis AG (Medical) 3,841 151,510
Roche Holding AG (Medical) 1,700 108,169
SGS Societe Generale de Surveillance Holding SA (Business Services - Misc) 150 52,477
UBS AG (Banks - Foreign) 2,400 113,869
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667,469
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United Kingdom (34.76%)
Acambis Plc* (Medical) 12,400 56,483
Arriva Plc (Transport) 13,000 66,591
AstraZeneca Plc (Medical) 3,400 133,407
Barclays Plc (Banks - Foreign) 20,798 143,683
BG Group Plc (Oil & Gas) 10,600 42,396
BHP Billiton Plc (Metal) 16,912 86,495
BP Plc (Oil & Gas) 17,500 110,899
British Sky Broadcasting Group Plc* (Media) 9,300 96,392
Diageo Plc (Beverages) 12,300 136,431
Gallaher Group Plc (Tobacco) 16,300 154,356
GlaxoSmithKline Plc (Medical) 12,300 246,519
HBOS Plc (Banks - Foreign) 11,800 138,240
Imperial Tobacco Group Plc (Tobacco) 4,300 71,955
InterContinental Hotels Group Plc* (Leisure) 6,949 42,204
Kelda Group Plc (Utilities) 15,000 98,653
Kingfisher Plc (Retail) 14,000 54,708
Lloyds TSB Group Plc (Banks - Foreign) 14,900 97,995
Man Group Plc (Finance) 8,000 134,893
Mitchells & Butler Plc* (Retail) 6,949 23,545
mm02 Plc* (Telecommunications) 109,000 97,122
National Grid Transco Plc (Utilities) 25,100 164,878
Northern Rock Plc (Banks - Foreign) 5,700 65,183
Peninsular and Oriental Steam Navigation Co. (Transport) 28,300 87,295
Reckitt Benckiser Plc (Soap & Cleaning Preparations) 3,300 58,201
Royal Bank of Scotland Group Plc (Banks - Foreign) 8,892 233,215
Severn Trent Plc (Utilities) 6,000 68,565
SkyePharma Plc* (Medical) 93,000 73,576
Smith & Nephew Plc (Medical) 9,600 64,020
Smiths Group Plc (Manufacturing) 4,200 44,908
Tesco Plc (Retail) 27,700 87,658
Tullow Oil Plc* (Oil & Gas) 67,700 74,735
Vodafone Group Plc (Telecommunications) 200,000 394,769
Wood Group (John) Plc (Oil & Gas) 22,500 56,009
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3,505,979
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See notes to financial statements.
3
ISSUER SHARES VALUE
- ------ ------ -----
United States (0.99%)
Schlumberger Ltd. (Oil & Gas) 1,600 $ 67,088
Transocean, Inc. (Oil & Gas) 1,700 32,385
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99,473
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TOTAL COMMON STOCKS (95.93%)
(Cost $8,729,378) 9,673,405
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PREFERRED STOCKS
Germany (2.41%)
Henkel KGaA (Chemicals) 800 51,514
Porsche AG (Automobiles / Trucks) 200 72,763
Wella AG (Cosmetics & Personal Care) 1,600 118,563
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242,840
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TOTAL PREFERRED STOCKS (2.41%)
(Cost $206,151) 242,840
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RIGHTS
Netherlands (0.05%)
Aegon NV* (Insurance) 13,300 5,409
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TOTAL RIGHTS (0.05%)
(Cost $0) 5,409
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TOTAL INVESTMENTS (98.39%) 9,921,654
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(Cost $8,935,529)
OTHER ASSETS AND LIABILITIES, NET (1.61%) 162,382
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TOTAL NET ASSETS (100.00%) $ 10,084,036
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* 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
Portfolio Concentration
(unaudited)
This table shows the percentages of the Fund's investments aggregated by various
industries as of April 30, 2003.
VALUE
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
- --------------------- -------------
Advertising 0.85%
Aerospace 0.52
Automobiles / Trucks 0.72
Banks - Foreign 17.15
Beverages 2.32
Building 3.11
Business Services - Misc 1.22
Chemicals 1.72
Computers 0.57
Cosmetics & Personal Care 1.18
Diversified Operations 0.88
Electronics 0.68
Engineering / R&D Services 1.49
Finance 4.90
Food 0.94
Insurance 4.17
Leisure 0.42
Manufacturing 0.45
Media 2.41
Medical 13.56
Metal 0.86
Oil & Gas 10.47
Pollution Control 0.81
Real Estate Operations 0.60
Retail 2.64
Rubber - Tires & Misc 0.55
Soap & Cleaning Preparations 0.58
Telecommunications 11.31
Tobacco 2.24
Transport 3.58
Utilities 5.49
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Total investments 98.39%
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See notes to financial statements.
5
John Hancock European Equity Fund
ASSETS AND ASSETS
LIABILITIES Investments at value (cost - $8,935,529) $ 9,921,654
April 30, 2003 Foreign cash at value (cost - $1,657) 1,657
(unaudited) Receivable for investments sold 1,041,340
Dividends and interest receivable 76,897
Receivable from affiliates 3,650
Other assets 617
Total assets 11,045,815
LIABILITIES
Due to custodian 697,804
Payable for investments purchased 242,587
Payable for shares repurchased 760
Other payables and accrued expenses 20,628
Total liabilities 961,779
NET ASSETS
Capital paid-in 18,732,639
Accumulated net realized loss on investments, options and
foreign currency transactions (9,643,855)
Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currencies 997,476
Accumulated net investment loss (2,224)
Net assets $ 10,084,036
NET ASET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ( $4,559,323 / 667,629 shares) $ 6.83
Class B ( $5,289,823 / 801,603 shares) $ 6.60
Class C ( $234,890 / 35,589 shares) $ 6.60
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ( $ / 95% 6.83 ) $ 7.19
Class C ( $ / 99% 6.60 ) $ 6.67
(1) On single retail sales of less than $50,000. On sales of
$50,000 or more and on group sales the offering price is
reduced.
See notes to financial statements.
6
John Hancock European Equity Fund
OPERATIONS INVESTMENT INCOME
For the period ended Dividends (net of foreign witholding taxes of $15,510) $ 117,512
April 30, 2003 Interest 2,301
(unaudited) (1) Total investment income 119,813
EXPENSES
Investment management fee 48,622
Class A distribution and service fee 7,976
Class B distribution and service fee 26,268
Class C distribution and service fee 1,170
Transfer agent fee 49,481
Custodian fee 23,103
Registration and filing fee 22,806
Printing 14,791
Auditing fee 2,382
Accounting and legal services fee 1,448
Trustee's fee 571
Miscellaneous 217
Total expenses 198,835
Less expense reductions (76,982)
Net expenses 121,853
Net investment loss (2,040)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on
Investments (865,543)
Foreign currency transactions (18,055)
Options 6,652
Change in unrealized appreciation (depreciation) on
Investments 1,468,917
Translation of assets and liabilities in foreign currencies 10,569
Net realized and unrealized gain 602,540
Increase in net assets from operations $ 600,500
(1) Semiannual period from 11-1-02 through 4-30-03.
See notes to financial statements.
7
John Hancock European Equity Fund
YEAR ENDED PERIOD ENDED
10-31-02 4-30-03 (1)
CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS From operations
Net investment loss $ (66,022) $ (2,040)
Net realized loss (3,026,167) (876,946)
Change in net unrealized appreciation (depreciation) 482,764 1,479,486
Increase (decrease) in net assets resulting from operations (2,609,425) 600,500
From Fund share transactions (2,487,052) (1,964,964)
NET ASSETS
Beginning of period 16,544,977 11,448,500
End of period (2) $11,448,500 $ 10,084,036
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(2) Includes accumulated net investment loss of $184 and $2,224
respectively.
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 4-30-03(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) 0.01
Net realized and unrealized gain (loss) on investments 0.06 1.13 (0.12) (3.18) (1.35) 0.38
Total from investment operations 0.07 1.09 (0.18) (3.18) (1.36) 0.39
Net asset value, end of period $10.07 $11.16 $10.98 $7.80 $6.44 $6.83
Total return (5,6) (%) 0.70(7) 10.82 (1.61) (28.96) (17.44) 6.06(7)
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 8 1.90 1.90 1.90 1.90 1.90(8)
Ratio of adjusted expenses to average net assets (9) (%) 3.31(8) 2.23 2.30 3.02 2.65 3.32(8)
Ratio of net investment income (loss) to average net assets (%) 0.16(8) (0.38) (0.52) 0.03 (0.08) 0.32(8)
Portfolio turnover (%) 31 64 97 260 198 83
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 4-30-03(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) (0.01)
Net realized and unrealized gain (loss) on investments (0.99) 1.14 (0.11) (3.12) (1.32) 0.37
Total from investment operations (1.03) 1.02 (0.26) (3.18) (1.38) 0.36
Net asset value, end of period $10.04 $11.06 $10.80 $7.62 $6.24 $6.60
Total return (5,6) (%) (9.30)(7) 10.16 (2.35) (29.44) (18.11) 5.77(7)
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(8) 2.60 2.60 2.60 2.60 2.60(8)
Ratio of adjusted expenses to average net assets (9) (%) 4.01(8) 2.93 3.00 3.72 3.35 4.02
Ratio of net investment loss to average net assets (%) (1.12)(8) (1.08) (1.23) (0.67) (0.78) (0.39)(8)
Portfolio turnover (%) 31 64 97 260 198 83
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 4-30-03(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) (0.01)
Net realized and unrealized gain (loss) on investments 0.49 (0.13) (3.12) (1.32) 0.37
Total from investment operations 0.42 (0.26) (3.18) (1.38) 0.36
Net asset value, end of period $11.06 $10.80 $7.62 $6.24 $6.60
Total return(5,6)(%) 3.95(7) (2.35) (29.44) (18.11) 5.77(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(10) --(10) --(10) --(10) --(10)
Ratio of expenses to average net assets (%) 2.60(8) 2.60 2.60 2.60 2.60(8)
Ratio of adjusted expenses to average net assets(9)(%) 2.93(8) 3.00 3.72 3.35 4.02(8)
Ratio of net investment loss to average net assets (%) (1.17)(8) (1.16) (0.61) (0.78) (0.36)(8)
Portfolio turnover(%) 64 97 260 198 83
(1) Class A, Class B and Class C shares began operations on 3-2-98, 6-1-98 and 3-1-99, respectively.
(2) Semiannual period from 11-1-02 through 4-30-03. Unaudited
(3) Based on the average of the shares outstanding.
(4) Less than $0.01 per share.
(5) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(6) Total returns would have been lower had certain expenses not been reduced during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the periods shown.
(10) Less than $500,000.
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock European Equity Fund (the "Fund") is a 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 is to
achieve long-term capital growth.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services or, if quotations are not
readily available, or the value has been materially affected by events occurring
after the closing of a foreign market, at fair value as determined in good faith
in accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value. All portfolio transactions initially expressed in
terms of foreign currencies have been translated into U.S. dollars as described
in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may participate in a joint
repurchase agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the Fund's
behalf. The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars based on London currency exchange quotations as of
5:00 P.M., London time, on the date of any determination of the net asset value
of the Fund. Transactions affecting statement of operations accounts and net
realized gain (loss) on investments are translated at the rates prevailing at
the dates of the transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
12
in the value of assets and liabilities, other than investments in securities,
resulting from changes in the exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are determined
on the identified cost basis. Capital gains realized on some foreign securities
are subject to foreign taxes, which are accrued as applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund will be allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund has entered into a
syndicated line of credit agreement with various banks. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permits borrowings of up to $250 million,
collectively. Interest is charged to each fund, based on its borrowing. In
addition, a commitment fee is charged to each fund based on the average daily
unused portion of the line of credit and is allocated among the participating
funds. The Fund had no borrowing activity under the line of credit during the
period ended April 30, 2003.
Options
The Fund may enter into option contracts. Listed options will be valued at the
last quoted sales price on the exchange on which they are primarily traded.
Over-the-counter options are valued at the mean between the last bid and asked
prices. Upon the writing of a call or put option, an amount equal to the premium
received by the Fund will be included in the Statement of Assets and Liabilities
as an asset and corresponding liability. The amount of the liability will be
subsequently marked to market to reflect the current market value of the written
option.
The Fund may use option contracts to manage its exposure to the price volatility
of financial instruments. Writing puts and buying calls will tend to increase
the Fund's exposure to the underlying instrument and buying puts and writing
calls will tend to decrease the Fund's exposure to the underlying instrument, or
hedge other Fund investments.
The maximum exposure to loss for any purchased options will be limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the contracts' terms
("credit risk") or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded options have
minimal credit risk as the exchanges act as counterparties to each transaction,
and only present liquidity risk in highly unusual market conditions. To minimize
credit
13
and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit risk may
involve amounts in excess of those reflected in the Fund's Statement of Assets
and Liabilities.
The Fund had no written option transactions during the period ended April 30,
2003.
Forward foreign currency exchange contracts
The Fund may enter into forward foreign currency exchange contracts as a hedge
against the effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date at a set price. The aggregate principal amounts of the
contracts are marked to market daily at the applicable foreign currency exchange
rates. Any resulting unrealized gains and losses are included in the
determination of the Fund's daily net assets. The Fund records realized gains
and losses at the time the forward foreign currency exchange contracts are
closed out. Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities.
The Fund may also purchase and sell forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under which
it intends to take delivery of the foreign currency. Such contracts normally
involve no market risk if they are offset by the currency amount of the
underlying transactions. The Fund had no open forward foreign currency exchange
contracts on April 30, 2003.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and will not be subject to
federal income tax on taxable income that is distributed to shareholders.
Therefore, no federal income tax provision is required. For federal income tax
purposes, the Fund has $8,741,298 of a capital loss carryforward available, to
the extent provided by regulations, to offset future net realized capital gains.
To the extent that such carryforward is used by the Fund, no capital gain
distributions will be made. The loss carryforward expires as follows:
October 31, 2006, -- $821,474, October 31, 2007 -- $1,234,369, October 31, 2009
- --$3,678,367 and October 31, 2010 - $3,007,088.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend date or,
in the case of some foreign securities, on the date thereafter when the Fund
identifies the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding taxes,
which are accrued as applicable.
The Fund records distributions to shareholders from net investment income and
net realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares are calculated in the same manner, at the same
time and are in the same amount, except for the effect of expenses that may be
applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with income tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a return of
capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in
14
determining the reported amount of assets, liabilities, revenues and expenses of
the Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions
with affiliates and others
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first
$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 has
a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund
is not responsible for payment of the subadvisory fees.
The Adviser has agreed to limit the Fund's total 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 amounted to
$76,982 for the period ended April 30, 2003. The Adviser reserves the right to
terminate this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provides as distributor of shares of the Fund. Accordingly, the Fund makes
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
period ended April 30, 2003, JH Funds received net up-front sales charges of
$3,447 with regard to sales of Class A shares. Of this amount, $387 was retained
and used for printing prospectuses, advertising, sales literature and other
purposes, $2,340 was paid as sales commissions to unrelated broker-dealers and
$720 was paid as sales commissions to sales personnel of Signator Investors,
Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect
parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole
shareholder of Signator Investors. During the period ended April 30, 2003, JH
Funds received net up-front sales charges of $62 with regard to sales of Class C
shares, all of which was paid as sales commissions to unrelated broker-dealers.
Class B shares that are redeemed within six years of purchase are subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that are
redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of
the lesser of the current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to
JH Funds and are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of Class B
and Class C shares. During the period ended April 30, 2003, CDSCs received by JH
Funds amounted to $8,338 for Class B shares and none for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent
fee at an annual rate of 0.05% of the Fund's average daily net asset value, plus
a fee based on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
15
The Fund has an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser and other subsidiaries of JHLICo owned 150,000 shares of beneficial
interest of the Fund on April 30, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always equal and
are marked to market on a periodic basis to reflect any income earned by the
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
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 (1)
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 243,515 $1,801,403 42,385 $272,540
Repurchased (359,333) (2,672,712) (248,077) (1,644,807)
Net decrease (115,818) ($871,309) (205,692) ($1,372,267)
CLASS B SHARES
Sold 146,815 $1,075,119 33,891 $211,487
Repurchased (368,071) (2,672,695) (126,022) (777,870)
Net decrease (221,256) ($1,597,576) (92,131) ($566,383)
CLASS C SHARES
Sold 113,551 $805,510 998 $6,153
Repurchased (117,426) (823,677) (5,158) (32,467)
Net decrease (3,875) ($18,167) (4,160) ($26,314)
NET DECREASE (340,949) ($2,487,052) (301,983) ($1,964,964)
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended April 30, 2003, aggregated $8,784,120 and $10,271,665, respectively.
16
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $8,945,637. Gross unrealized
appreciation and depreciation of investments aggregated $1,112,730 and $136,713,
respectively, resulting in net unrealized appreciation of $976,017. 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
Proposed reorganization
On November 19, 2002, the Trustees approved the reorganization of John Hancock
European Equity Fund and John Hancock Global Fund into John Hancock
International Fund, subject to approval by shareholders.
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
- --------------------------------------------------------------------------------
John Hancock
Biotechnology
FUND
SEMI
ANNUAL
REPORT
4.30.03
Sign up for electronic delivery at
www.jhancock.com/funds/edelivery
[LOGO] John Hancock
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left
next to first paragraph.]
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Table of contents
- -----------------------------
Your fund at a glance
page 1
- -----------------------------
Manager's report
page 2
- -----------------------------
A look at performance
page 6
- -----------------------------
Growth of $10,000
page 7
- -----------------------------
Fund's investments
page 8
- -----------------------------
Financial statements
page 10
- -----------------------------
For your information
page 21
- -----------------------------
Dear Fellow Shareholders,
After a strong start to 2003, the stock market succumbed to the pressures of a
weak economy, rising oil prices, concerns about corporate earnings and
uncertainties about the war in Iraq. The tide turned in April, when the war
ended and first-quarter corporate earnings came in better than expected. As a
result, the major indexes all gained some ground year to date through April 30,
2003, with the Dow Jones Industrial Average returning 2.50%, the Standard &
Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up
9.64%. Bonds, which have outperformed stocks for the last three years, continued
their upward trend this year, as investors still sought their relative safety.
After the jarring stock market losses of the last three years, it's a relief for
investors to be reminded that the market is indeed cyclical, and does eventually
move up - not just down. But while the stock market has been clawing its way
back, the ride has been extremely volatile. Uncertainty still abounds about the
strength of the economy, geopolitical issues, corporate governance problems,
rising unemployment and the sustainability of corporate earnings growth. And
despite rallies late last year and in April, many investors are still so bruised
and skeptical that they have remained on the sidelines. Even though the
statistics suggest we might be emerging from this long, difficult bear market,
we're not quite ready to call it history.
While no one can predict when this bear market cycle will turn, investors can
take charge of how they maneuver through such uncertain times. First, take a
look at how your portfolio is allocated among stocks, bonds and cash to make
sure it's in the proper balance. Work with your investment professional, who
knows your long-term goals and can help keep you on the right track, rather than
being lured by today's stars, which could wind up tomorrow's laggards. And as
always, keep a long-term investment horizon. We believe this offers the best way
for you to survive the tough times and reach your investment objectives.
Sincerely,
/s/Maureen R. Ford,
- -------------------
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of April 30, 2003. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks long-term capital appreciation by investing primarily in stocks
of U.S. and foreign companies principally engaged in the research, development
and manufacture of various biotechnology products, services and processes.
Over the last six months
[ ] Biotechnology stocks rebounded modestly during the period, as regulatory
conditions seemingly turned more favorable.
[ ] The Fund benefited from its holdings in some of the industry's best-known
biotech companies, as investors warmed to the sector.
[ ] Holdings in suppliers to the biotech industry faltered due to declining
spending by their customers.
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[Bar chart with heading "John Hancock Biotechnology Fund". Under the heading is
a note that reads "Fund performance for the six months ended April 30, 2003."
The chart is scaled in increments of 0% with 0.0% at the bottom and 1.0% at the
top. The first bar represents the 0.54% total return for Class A. The second bar
represents the 0.18% total return for Class B. The third bar represents the
0.18% total return for Class C. A note below the chart reads "Total returns for
the Fund are at net asset value with all distributions reinvested."]
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Top 10 holdings
12.0% Amgen, Inc.
5.4% Genzyme Corp.
5.1% Genentech, Inc.
4.3% Gilead Sciences, Inc.
4.2% Neurocrine Biosciences, Inc.
4.2% MedImmune, Inc.
4.0% IDEC Pharmaceuticals Corp.
3.7% Trimeris, Inc.
3.3% ICOS Corp.
3.2% Serona SA
As a percentage of net assets on April 30, 2003.
1
BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER
John Hancock
Biotechnology
Fund
MANAGER'S REPORT
The biotechnology stock sector
posted positive returns during the six months ended April 30, 2003, a welcome
relief after its disappointing losses in the previous year. During the period,
investors seemingly became more optimistic - albeit cautiously so - about the
group, buoyed by a number of favorable developments. More drugs were put into
clinical trials, which underscored the longer-term promise of this industry. In
addition, large pharmaceutical companies continued to pay a premium for
innovative new therapies, scooping up small biotech firms in the process. In
another positive development, a spate of FDA approvals seemingly signaled an
effective agenda on the part of the new commissioner of that agency. And a
number of biotechnology companies reported revenue and earnings gains that
exceeded investor expectations. Against that backdrop, large, well-established
biotech companies tended to outperform smaller, more speculative ventures.
"The biotechnology stock sector posted a positive return..."
PERFORMANCE AND STRATEGY REVIEW
For the six months ended April 30, 2003, John Hancock Biotechnology Fund's Class
A, Class B and Class C shares posted total returns of 0.54%, 0.18% and 0.18%,
respectively, at net asset value. During the same period, the more broadly
diversified average health/biotechnology fund had a total return of 4.99%,
according to Lipper, Inc.1, while the Standard & Poor's 500 Index returned
4.47%. Keep in mind that your net asset value return will be different from the
Fund's performance if you were not invested in the Fund for the entire period
and did not reinvest all distributions. See pages six and seven for historical
performance results.
While we were gratified that the biotechnology sector showed renewed signs of
life during the past six months, our stock
2
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[A photo of Linda Miller flush right next to first paragraph.]
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selection worked against us during the period. Additionally, our investment
focus on the narrow biotech sector may have curtailed our performance relative
to our peers. Other funds in the peer group had broader investment parameters,
giving them the ability to venture into better-performing health-care industry
groups.
LEADERS AND LAGGARDS
Our largest holding was also one of the best performers. Amgen, the world's
largest biotechnology company, enjoyed significantly higher sales and earnings.
It benefited from its 2002 acquisition of Immunex, which gave it the arthritis
drug Enbrel. Higher sales of anemia treatments Epogen and Aranesp, and drugs for
boosting the immune systems of chemotherapy patients also helped. According to
the company, another factor working in its favor was its ability to fill
prescriptions for thousands of patients on a waiting list, thanks to increased
manufacturing capacity. Another large holding that boosted performance was
Genzyme, helped by the expected FDA approval of two new drugs used to treat rare
genetic disorders, as well as its ability to correct problems with supplies of
existing drugs.
Another winner was MedImmune, helped in part by the excitement generated by the
company's expected introduction before the next flu season of a product called
FluMist. This nasal spray influenza vaccine is considered by many users to be a
more pleasant alternative to a flu shot. The company's existing products,
particularly Synagis, used to treat premature infants at risk for respiratory
distress, continued to gain wide acceptance by the medical community. Our
holdings in Scios also posted attractive gains, in part because it
"Suppliers to the biotech industry generally disappointed us during the period."
3
was purchased by health-care giant Johnson & Johnson, which was attracted to
Scios partly due to the company's experimental rheumatoid arthritis drug. Scios
also enjoyed success from its congestive heart failure drug, which is in the
process of early acceptance by hospitals.
SPENDING SLOWDOWN HURTS SUPPLIERS
Suppliers to the biotech industry generally disappointed us during the period.
Many of these companies' earnings and revenues fell short of expectations due to
cautious spending in the academic, pharmaceutical and biotech industries.
Companies that were negatively affected by this trend included Affymetrix,
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[Pie chart at middle of page with heading "Portfolio diversification As a
percentage of net assets on 4-30-03." The chart is divided into two sections
(from top to left): Common stocks 96%, and Short-term investments and other 4%.]
- --------------------------------------------------------------------------------
which makes chips used for genetic research; Albany Molecular Research, a drug
research and development company; and Charles River Laboratories, which provides
research tools and support that enable drug discovery and development. Enzon, a
biopharmaceutical company that develops, manufactures and markets therapies for
life-threatening diseases, was also a disappointment mainly because investors
tended to view with some skepticism the company's proposed merger with another
biotech company.
4
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[Table at top of page entitled "SCORECARD". The header for the left column is
"INVESTMENT" and the header for the right column is "PERIOD'S PERFORMANCE...AND
WHAT'S BEHIND THE NUMBERS." The first listing is Amgen followed by an up arrow
with the phrase "Strong demand for company's products." The second listing is
MedImmune followed by an up arrow with the phrase "Investors anticipate approval
of nasal spray vaccine." The third listing is Affymetrix followed by an up arrow
with the phrase "Supplier suffers as drug, biotech companies curtail spending."]
- --------------------------------------------------------------------------------
OUTLOOK
In our opinion, it's quite likely that the biotech group will continue to face
some challenges in 2003, which may mean that the group will experience more
volatility. There are always ongoing hurdles for the group, such as the risks
involved in new product development; the rising costs of research, development,
manufacturing and sales; and the weaker financial condition of payers for health
care around the world. That said, we believe that there are things working in
the group's longer-term favor, specifically the fact that as we live longer
lives, we will require more and more health-care services and new biotech
products. As a growing number of people enter their mature years, new scientific
developments and improved efficiencies could serve as a catalyst for continued
growth of the biotechnology sector.
"...we believe that there are things working in the group's longer-term
favor..."
This commentary reflects the views of the portfolio manager through the end of
the Fund's period discussed in this report. The manager's statements reflect her
own opinions. As such, they are in no way guarantees of future events, and are
not intended to be used as investment advice or a recommendation regarding any
specific security. They are also subject to change at any time as market and
other conditions warrant.
Sector investing is subject to greater risks than the market as a whole.
1 Figures from Lipper, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
5
A LOOK AT
PERFORMANCE
For the period ended April 30, 2003
The index used for comparison is the Standard & Poor's 500 Index, Index 1, an
unmanaged index that includes 500 widely traded common stocks. Also shown on
page 7 is the Nasdaq Biotechnology Index, Index 2, an unmanaged index that
represents the largest and most actively traded Nasdaq biotechnology stocks.
It is not possible to invest in an index.
Class A Class B Class C Index
Inception date 3-1-01 3-1-01 3-1-01 -
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Average annual returns with maximum sales charge (POP)
- --------------------------------------------------------------------------------
One year -23.35% -23.94% -21.54% -13.30%
Since inception -25.39% -25.20% -24.48% -11.71%
- --------------------------------------------------------------------------------
Cumulative total returns with maximum sales charge (POP)
- --------------------------------------------------------------------------------
Six months -4.45% -4.82% -1.89% 4.47%
One year -23.35% -23.94% -21.54% -13.30%
Since inception -46.95% -46.65% -45.54% -23.62%
Performance figures assume all distributions are reinvested. Returns with
maximum sales charge reflect a sales charge on Class A shares of 5% and Class C
shares of 1%, and the applicable contingent deferred sales charge (CDSC) on
Class B and Class C shares. The Class B shares' CDSC declines annually between
years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales
charge will be assessed after the sixth year. Class C shares held for less than
one year are subject to a 1% CDSC. The return and principal value of an
investment in the Fund will fluctuate, so that shares, when redeemed, may be
worth more or less than the original cost.
The returns reflect past results and should not be considered indicative of
future performance. The performance table above and the chart on the next page
do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
The Fund's performance results reflect any applicable expense reductions,
without which the expenses would increase and results would have been less
favorable. These reductions can be terminated in the future. See the prospectus
for details.
6
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in Class A
shares for the period indicated. For comparison, we've shown the same investment
in the two indexes described on page 6.
- --------------------------------------------------------------------------------
Line chart with the heading "GROWTH OF $10,000." Within the chart are four
lines. The first line represents Index 1 and is equal to $7,638 as of April 30,
2003. The second line represents Index 2 and is equal to $5,966 as of April 30,
2003. The third line represents the value of the hypothetical $10,000 investment
made in the John Hancock Biotechnology Fund, before sales charge, and is equal
to $5,586 as of April 30, 2003. The fourth line represents the value of the same
hypothetical $10,000 investment made in the John Hancock Biotechnology Fund,
after sales charge, and is equal to $5,305 as of April 30, 2003.
- --------------------------------------------------------------------------------
Assuming all distributions were reinvested for the period indicated, the table
above shows the value of a $10,000 investment in the Fund's Class B and Class C
shares, respectively, as of April 30, 2003. Performance of the classes will vary
based on the difference in sales charges paid by shareholders investing in the
different classes and the fee structure of those classes.
1 No contingent deferred sales charge applicable.
7
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned by the Fund on April 30, 2003 (unaudited)
This schedule is divided into two main categories: common stocks and short-term
investments. Common stocks are further broken down by industry group. Short-term
investments, which represent the Fund's cash position, are listed last.
SHARES ISSUER VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 95.60% $9,291,135
- --------------------------------------------------------------------------------
(Cost $9,277,439)
Biotechnology 95.60% 9,291,135
31,000 Abgenix, Inc.* 294,500
13,554 Adolor Corp.*+ 189,620
6,500 Affymetrix, Inc.*+ 120,575
19,000 Amgen, Inc.* 1,164,890
10,000 Amylin Pharmaceuticals, Inc.*+ 191,500
5,000 Biogen, Inc.* 189,950
12,000 BioMarin Pharmaceutical, Inc.* 131,760
11,500 Celgene Corp.* 306,015
7,500 Cephalon, Inc.*+ 306,300
3,500 Chiron Corp.* 142,905
5,000 CV Therapeutics, Inc.*+ 99,900
8,000 Enzon Pharmaceuticals, Inc.* 109,760
13,000 Genentech, Inc.* 493,870
15,000 Genta, Inc.*+ 112,200
13,000 Genzyme Corp.* 523,640
9,000 Gilead Sciences, Inc.* 415,260
22,500 Human Genome Sciences, Inc.* 263,025
12,000 ICOS Corp.*+ 321,000
12,000 IDEC Pharmaceuticals Corp.* 393,000
12,000 ILEX Oncology, Inc.* 160,680
18,000 Kosan Biosciences, Inc.* 117,720
45,000 Medarex, Inc.* 187,650
15,000 Medicines Co. (The)* 308,250
See notes to
financial statements.
8
SHARES ISSUER VALUE
Biotechnology (continued)
11,500 MedImmune, Inc.* $405,605
27,500 Millennium Pharmaceuticals, Inc.* 302,500
12,500 Myriad Genetics, Inc.*+ 149,000
9,000 Neurocrine Biosciences, Inc.*+ 407,250
6,000 OSI Pharmaceuticals, Inc.* 126,000
30,000 Protein Design Labs, Inc.* 297,900
23,000 Serona SA, American Depositary
Receipt (ADR) (Switzerland) 312,340
16,000 Telik, Inc.*+ 210,400
8,000 Trimeris, Inc.*+ 355,120
15,000 Vertex Pharmaceuticals, Inc. * 181,050
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
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SHORT-TERM INVESTMENTS 33.28% $3,233,796
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(Cost $3,233,796)
Joint Repurchase Agreement 10.95%
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust
Co. - Dated 04-30-03, due 05-01-03 (Secured
by U.S. Treasury Inflation Indexed Bond,
3.875% due 04-15-29 and U.S. Treasury
Inflation Indexed Notes, 3.000% thru 3.875%,
due 01-15-07 thru 07-15-12) 1.28% $1,064 1,064,000
SHARES
Cash Equivalents 22.33%
AIM Cash Investment Trust** 2,169,796 2,169,796
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 128.88% $12,524,931
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- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (28.88%) ($2,806,439)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.00% $9,718,492
- --------------------------------------------------------------------------------
+ All or a portion of this security is on loan on April 30, 2003.
* Non-income-producing security.
** Represents investment of security lending collateral.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to
financial statements.
9
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
April 30, 2003
(unaudited)
This Statement of Assets and Liabilities is the Fund's balance sheet. It shows
the value of what the Fund owns, is due and owes. You'll also find the net asset
value and the maximum offering price per share.
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments at value (cost $12,511,235),
including $2,127,251 of securities loaned $12,524,931
Cash 271
Receivable for investments sold 160,067
Receivable for shares sold 1,595
Interest receivable 38
Other assets 60
Total assets 12,686,962
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for investments purchased 756,398
Payable for shares purchased 14,345
Payable for securities on loan 2,169,796
Payable to affiliates 3,501
Other payables and accrued expenses 24,430
Total liabilities 2,968,470
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Capital paid-in 17,041,583
Accumulated net realized loss on investments (7,253,074)
Net unrealized appreciation of investments 13,696
Accumulated net investment loss (83,713)
Net assets $9,718,492
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Based on net asset values and shares outstanding
Class A ($4,164,745 / 746,609 shares) $5.58
Class B ($4,006,104 / 728,395 shares) $5.50
Class C ($1,547,643 / 281,417 shares) $5.50
- --------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
- --------------------------------------------------------------------------------
Class A 1 ($5.58 / 95%) $5.87
Class C ($5.50 / 99%) $5.56
1 On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
See notes to
financial statements.
10
FINANCIAL STATEMENTS
OPERATIONS
For the period ended
April 30, 2003
(unaudited)1
This Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Securities lending $7,489
Interest 3,103
Total investment income 10,592
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Investment management fee 42,488
Class A distribution and service fee 6,121
Class B distribution and service fee 19,437
Class C distribution and service fee 7,369
Transfer agent fee 36,117
Registration and filing fee 24,966
Auditing fee 9,918
Printing 6,692
Custodian fee 6,534
Accounting and legal services fee 1,261
Miscellaneous 1,018
Advisory board expense 546
Trustees' fee 306
Interest expense 112
Total expenses 162,885
Less expense reductions (68,586)
Net expenses 94,299
Net investment loss (83,707)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized loss on investments (1,081,626)
Change in net unrealized appreciation
(depreciation) of investments 1,157,315
Net realized and unrealized gain 75,689
Decrease in net assets from operations ($8,018)
1 Semiannual period from 11-1-02 through 4-30-03.
See notes to
financial statements.
11
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
This Statement of Changes in Net Assets shows how the value of the Fund's net
assets has changed since the end of the previous period. The difference reflects
earnings less expenses, any investment gains and losses, distributions, if any,
paid to shareholders and any increase or decrease in money shareholders invested
in the Fund.
YEAR PERIOD
ENDED ENDED
10-31-02 4-30-03 1
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
From operations
Net investment loss ($209,026) ($83,707)
Net realized loss (5,977,530) (1,081,626)
Change in net unrealized appreciation
(depreciation) (1,212,776) 1,157,315
Decrease in net assets resulting
from operations (7,399,332) (8,018)
Distributions to shareholders
From net investment income
Class A (7,371) -
From Fund share transactions 5,858,644 (634,611)
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 11,909,180 10,361,121
End of period 2 $10,361,121 $9,718,492
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Includes accumulated net investment loss of $6 and $83,713, respectively.
See notes to
financial statements.
12
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share has
changed since the end of the previous period.
PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $9.49 $5.55
Net investment loss 3 (0.07) (0.09) (0.03)
Net realized and unrealized gain (loss) on investments (0.44) (3.84) 0.06
Total from investment operations (0.51) (3.93) 0.03
Less distributions
From net investment income - (0.01) -
Net asset value, end of period $9.49 $5.55 $5.58
Total return 4,5 (%) (5.10) 6 (41.46) 0.54 6
- ---------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $6 $4 $4
Ratio of expenses to average net assets (%) 1.60 7 1.60 1.60 7
Ratio of adjusted expenses to average net assets 8 (%) 4.34 7 2.59 3.05 7
Ratio of net investment loss to average net assets (%) (1.15) 7 (1.29) (1.38) 7
Portfolio turnover (%) 63 97 61
See notes to
financial statements.
13
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $9.44 $5.49
Net investment loss 3 (0.13) (0.14) (0.05)
Net realized and unrealized gain (loss) on investments (0.43) (3.81) 0.06
Total from investment operations (0.56) (3.95) 0.01
Net asset value, end of period $9.44 $5.49 $5.50
Total return 4,5 (%) (5.60) 6 (41.84) 0.18 6
- ---------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $4 $4 $4
Ratio of expenses to average net assets (%) 2.30 7 2.30 2.30 7
Ratio of adjusted expenses to average net assets 8 (%) 5.05 7 3.29 3.75 7
Ratio of net investment loss to average net assets (%) (2.01) 7 (1.99) (2.08) 7
Portfolio turnover (%) 63 97 61
See notes to
financial statements.
14
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $9.44 $5.49
Net investment loss 3 (0.13) (0.14) (0.05)
Net realized and unrealized gain (loss) on investments (0.43) (3.81) 0.06
Total from investment operations (0.56) (3.95) 0.01
Net asset value, end of period $9.44 $5.49 $5.50
Total return 4,5 (%) (5.60) 6 (41.84) 0.18 6
- ---------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $2 $2 $2
Ratio of expenses to average net assets (%) 2.30 7 2.30 2.30 7
Ratio of adjusted expenses to average net assets 8 (%) 5.05 7 3.29 3.75 7
Ratio of net investment loss to average net assets (%) (2.07) 7 (1.99) (2.08) 7
Portfolio turnover (%) 63 97 61
1 Class A, Class B and Class C shares began operations on 3-1-01.
2 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
3 Based on the average of the shares outstanding.
4 Assumes dividend reinvestment and does not reflect the effect of sales charges.
5 Total returns would have been lower had certain expenses not been reduced
during the periods shown.
6 Not annualized.
7 Annualized.
8 Does not take into consideration expense reductions during the periods shown.
See notes to
financial statements.
15
NOTES TO
STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Biotechnology Fund (the "Fund") is a nondiversified 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 is to
achieve long-term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services, or at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days are valued at amortized
cost, which approximates market value. Investments in AIM Cash Investment Trust
are valued at their net asset value each business day.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may participate in a joint
repurchase agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's
16
custodian bank receives delivery of the underlying securities for the joint
account on the Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are determined
on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund will be allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund has entered into a
syndicated line of credit agreement with various banks. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permits borrowings of up to $250 million,
collectively. Interest is charged to each fund, based on its borrowing. In
addition, a commitment fee is charged to each fund based on the average daily
unused portion of the line of credit and is allocated among the participating
funds. The Fund had no borrowing activity under the line of credit during the
period ended April 30, 2003.
Securities lending
The Fund may lend securities to certain qualified brokers who pay the Fund
negotiated lender fees. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear the
risk of delay of the loaned securities in recovery or even loss of rights in the
collateral, should the borrower of the securities fail financially. On April 30,
2003, the Fund loaned securities having a market value of $2,127,251
collateralized by cash in the amount of $2,169,796. The cash collateral was
invested in a short-term instrument.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and will not be subject to
federal income tax on taxable income that is distributed to shareholders.
Therefore, no federal income tax provision is required. For federal income tax
purposes, the Fund has $5,313,084 of a capital loss carryforward available, to
the extent provided by regulations, to offset future net realized capital gains.
To the extent that such carryforward is used by the Fund, no capital gain
distributions will be made. The loss carryforward expires as follows: October
31, 2009 - $139,642 and October 31, 2010 - $5,173,442.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend date or,
in the case of some foreign securities, on the date thereafter when the Fund
identifies the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding taxes,
which are accrued as applicable.
The Fund records distributions to shareholders from
17
net investment income and net realized gains on the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time and are in the same amount,
except for the effect of expenses that may be applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with income tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a return of
capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first
$500,000,000 of the Fund's average daily net asset value, (b) 0.85% of the next
$500,000,000 and (c) 0.80% of the Fund's average daily net asset value in excess
of $1,000,000,000.
The Adviser has agreed to limit the Fund's expenses, excluding the distribution
and service fees, to 1.30% of the Funds' average daily net assets, at least
until February 28, 2004. Accordingly, the expense reduction amounted to $68,586
for the period ended April 30, 2003. The Adviser reserves the right to terminate
this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provides as distributor of shares of the Fund. Accordingly, the Fund makes
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
period ended April 30, 2003, JH Funds received net up-front sales charges of
$6,938 with regard to sales of Class A shares. Of this amount, $1,037 was
retained and used for printing prospectuses, advertising, sales literature and
other purposes, $4,488 was paid as sales commissions to unrelated broker-dealers
and $1,413 was paid as sales commissions to sales personnel of Signator
Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's
indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect
sole shareholder of Signator Investors. During the period ended April 30, 2003,
JH Funds received net up-front sales charges of $531 with regard to sales of
Class C shares. Of this amount, $422 was paid as sales commissions to unrelated
broker-dealers and $109 was paid as sales commissions to sales personnel of
Signator Investors.
Class B shares that are redeemed within six years of purchase are subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser
18
of the current market value at the time of redemption or the original purchase
cost of the shares being redeemed. Class C shares that are redeemed within one
year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original purchase cost of
the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are
used in whole or in part to defray its expenses for providing distribution
related services to the Fund in connection with the sale of Class B and Class C
shares. During the period ended April 30, 2003, CDSCs received by JH Funds
amounted to $8,186 for Class B shares and $119 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent
fee at an annual rate of 0.05% of the average daily net asset value, plus a fee
based on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Fund has an independent advisory board composed of scientific and medical
experts who provide the investment officers of the Fund with advice and
consultation on health-care developments, for which the Fund pays the advisory
board a fee.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial
interest of the Fund on April 30, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always equal and
are marked to market on a periodic basis to reflect any income earned by the
investments as well as any unrealized gains or losses. The Deferred Compensation
Plan investments had no impact on the operations of the Fund.
19
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding dollar
value. The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------------------------------------------------------
Sold 409,749 $3,245,104 89,517 $480,384
Distributions reinvested 389 3,952 - -
Repurchased (209,765) (1,422,329) (156,407) (825,367)
Net increase (decrease) 200,373 $1,826,727 (66,890) ($344,983)
- -----------------------------------------------------------------------------------------------------
CLASS B SHARES
- -----------------------------------------------------------------------------------------------------
Sold 656,696 $5,487,821 69,121 $362,275
Repurchased (275,485) (1,934,504) (124,555) (650,314)
Net increase (decrease) 381,211 $3,553,317 (55,434) ($288,039)
- -----------------------------------------------------------------------------------------------------
CLASS C SHARES
- -----------------------------------------------------------------------------------------------------
Sold 97,638 $826,162 34,855 $183,653
Repurchased (58,498) (347,562) (35,044) (185,242)
Net increase (decrease) 39,140 $478,600 (189) ($1,589)
- -----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) 620,724 $5,858,644 (122,513) ($634,611)
- -----------------------------------------------------------------------------------------------------
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment
transactions
Purchases and proceeds from sales or maturities
of securities, other than short-term securities and obligations of the U.S.
government, during the period ended April 30, 2003, aggregated $5,682,361 and
$6,705,825, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $13,000,927. Gross unrealized
appreciation and depreciation of investments aggregated $696,461 and $1,172,457,
respectively, resulting in net unrealized depreciation of $475,996. The
difference between book basis and tax basis net unrealized depreciation of
investments is attributable primarily to the tax deferral of losses on wash
sales.
20
FOR YOUR
INFORMATION
TRUSTEES
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
*Members of the Audit Committee
OFFICERS
Maureen R. Ford
Chairman, President
and Chief Executive Officer
William L. Braman
Executive Vice President
and Chief Investment Officer
Richard A. Brown
Senior Vice President
and Chief Financial Officer
Susan S. Newton
Senior Vice President
and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
- --------------------------------------------------------------------------------
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
21
- --------------------------------------------------------------------------------
[LOGO] John Hancock
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of the shareholders of the John Hancock
Biotechnology Fund.
730SA 4/03
6/03
John Hancock
Health
Sciences Fund
SEMI
ANNUAL
REPORT
4.30.03
Sign up for electronic delivery at
www.jhancock.com/funds/edelivery
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen R. Ford, Chairman and Chief Executive Officer,
flush left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Manager's report
page 2
A look at performance
page 6
Growth of $10,000
page 7
Fund's investments
page 8
Financial statements
page 11
For your information
page 25
Dear Fellow Shareholders,
After a strong start to 2003, the stock market succumbed to the
pressures of a weak economy, rising oil prices, concerns about corporate
earnings and uncertainties about the war in Iraq. The tide turned in
April, when the war ended and first-quarter corporate earnings came in
better than expected. As a result, the major indexes all gained some
ground year to date through April 30, 2003, with the Dow Jones
Industrial Average returning 2.50%, the Standard & Poor's 500 Index
returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%.
Bonds, which have outperformed stocks for the last three years,
continued their upward trend this year, as investors still sought their
relative safety.
After the jarring stock market losses of the last three years, it's a
relief for investors to be reminded that the market is indeed cyclical,
and does eventually move up -- not just down. But while the stock market
has been clawing its way back, the ride has been extremely volatile.
Uncertainty still abounds about the strength of the economy,
geopolitical issues, corporate governance problems, rising unemployment
and the sustainability of corporate earnings growth. And despite rallies
late last year and in April, many investors are still so bruised and
skeptical that they have remained on the sidelines. Even though the
statistics suggest we might be emerging from this long, difficult bear
market, we're not quite ready to call it history.
While no one can predict when this bear market cycle will turn,
investors can take charge of how they maneuver through such uncertain
times. First, take a look at how your portfolio is allocated among
stocks, bonds and cash to make sure it's in the proper balance. Work
with your investment professional, who knows your long-term goals and
can help keep you on the right track, rather than being lured by today's
stars, which could wind up tomorrow's laggards. And as always, keep a
long-term investment horizon. We believe this offers the best way for
you to survive the tough times and reach your investment objectives.
Sincerely,
/S/ MAUREEN R. FORD
Maureen R. Ford,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of April 30, 2003. They
are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term growth
of capital by
investing primar-
ily in stocks of
U.S. and foreign
health-care
companies.
Over the last six months
* Health-care stocks kept pace with the overall stock market, but
subsectors posted mixed results.
* The Fund benefited from its biotech and health-equipment company
holdings.
* Health-care facility companies, including hospital systems, were the
biggest disappointments.
[Bar chart with heading "John Hancock Health Sciences Fund." Under the
heading is a note that reads "Fund performance for the six months ended
April 30, 2003." The chart is scaled in increments of 1% with 0% at the
bottom and 2% at the top. The first bar represents the 1.70% total
return for Class A. The second bar represents the 1.33% total return for
Class B. The third bar represents the 1.33% total return for Class C. A
note below the chart reads "Total returns for the Fund are at net asset
value with all distributions reinvested."]
Top 10 holdings
6.4% Pfizer, Inc.
6.2% Amgen, Inc.
5.9% Medtronic, Inc.
5.4% Johnson & Johnson
3.5% UnitedHealth Group, Inc.
3.3% Merck & Co., Inc.
3.2% Forest Laboratories, Inc.
3.1% Lilly (Eli) & Co.
3.0% Stryker Corp.
2.6% Varian Medical Systems, Inc.
As a percentage of net assets on April 30, 2003.
MANAGER'S
REPORT
BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER
John Hancock
Health Sciences Fund
As a group, health-care stocks generally performed in line with the
overall stock market over the last six months, enjoying a bit of a
rebound. Part of health care's strength stemmed from investors' concerns
about the strength of an economic recovery. Health-care companies
generally aren't dependent on an upturn in the economy to do well. That
said, the various industry groups that comprise the health-care sector
posted mixed results. Makers of high-technology medical equipment --
such as those offering orthopedic implants, cardiovascular devices,
diagnostic and oncology treatment systems and others -- benefited from a
robust new-product cycle, industry consolidation, the relatively strong
financial position of their customers (primarily hospitals) and
increasing demand from the aging U.S. and European populations. In
addition, these companies generally were helped by favorable currency
trends. As the U.S. dollar declined in value relative to the euro, many
of these companies -- whose products became cheaper in euro terms and
thus more competitive -- enjoyed significant increases in European
sales. Managed care companies such as HMOs benefited from better
financial results based on some moderation in medical cost increases,
rising premiums for health insurance products and seasonal factors. Drug
stocks continued to face the challenges of patent expirations,
regulatory scrutiny of manufacturing procedures, inventory management
and the lack of new-product approvals. Biotech stock returns, generally
the most volatile in this group, varied from relatively strong gains for
the more visible, established companies and those who enjoyed positive
new-product or reimbursement developments, to weaker results for
companies with negative clinical developments or disappointing revenue
and earnings performance.
"...health-care stocks
generally performed
in line with the overall
stock market..."
PERFORMANCE AND STRATEGY REVIEW
For the six months ended April 30, 2003, John Hancock Health Sciences
Fund's Class A, Class B and Class C shares posted total returns of
1.70%, 1.33% and 1.33%, respectively, at net asset value. The Fund's
returns lagged the 4.99% return of the average health-care/biotechnology
fund, according to Lipper, Inc.1 In this period, the broad Standard &
Poor's 500 Index returned 4.47%. Keep in mind that your net asset value
return will be different from the Fund's performance if you were not
invested in the Fund for the entire period and did not reinvest all
distributions. Please see pages six and seven for longer-term
performance information.
[A photo of Linda Miller flush right next to first paragraph.]
We believe a key reason for the Fund's lag was our overweighting --
relative to the overall health sector -- in companies that distribute
drugs. It stands to reason that if drug companies sell more drugs, which
they did during the period, then companies that distribute those drugs
would prosper. Unfortunately, many drug distributors came under pressure
because the drug companies streamlined operations, cutting into the
margins of the companies that service them. Against that backdrop,
Cardinal Health was one of our biggest disappointments during the
period.
"We also enjoyed good
returns from our holdings
in health-care equipment
companies..."
BIOTECH, EQUIPMENT STOCKS BOOST RETURNS
One of the biggest positive contributors to the Fund's performance
during the period was Amgen, the world's largest biotechnology company.
Amgen enjoyed significantly higher sales, benefiting from its 2002
acquisition of Immunex, which gave it the arthritis drug Enbrel. Higher
sales of anemia treatments Epogen and Aranesp and drugs for boosting the
immune systems of chemotherapy patients also helped. According to the
company, another factor working in its favor was its ability to fill
prescriptions for thousands of patients on a waiting list, thanks to
increased manufacturing capacity. Another biotech company that helped
performance was Genzyme, profiting from the expected FDA approval of two
new drugs, as well as its ability to correct problems with supplies of
existing drugs.
[Table at top left-hand side of page entitled "Top five industry groups."
The first listing is Medical devices & products 22%, the second is
Drugs-biotechnology 21%, the third Drugs-major 15%, the fourth
Drugs-specialty & generic 11% and the fifth Drugs-diversified 8 %.]
We also enjoyed good returns from our holdings in health-care equipment
companies -- the manufacturers of heart devices, artificial knees, hips
and shoulders and other medical products -- including Medtronic, St.
Jude Medical, Integra LifeSciences and Stryker. While the weak economy,
war with Iraq and bad weather curtailed demand for nonessential medical
procedures, the demand for life-saving and essential medical procedures
continued to expand. Many of these companies also were helped by new
products and improving reimbursement trends. Thoratech, for example, was
boosted by Medicare's decision to pay for an artificial pump to keep the
blood flowing in heart-failure patients too sick for a heart transplant.
[Pie chart at middle of page with heading "Portfolio diversification As
a percentage of net assets on 4-30-03." The chart is divided into two
sections (from top to left): Common stocks 94% and Short-term
investments & other 6%.]
War, weather and the economy, however, did hold back some of our
health-care facilities companies, which saw a decline in patient
traffic. HCA, a leading hospital company, posted lower-than-expected
earnings due to those factors and others, including intensifying
pressure from managed care companies and heightened competition in some
markets.
[Table at top of page entitled "SCORECARD." The header for the left
column is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is Amgen
followed by an up arrow with the phrase "Strong demand for company's
products." The second listing is Thoratech followed by an up arrow with
the phrase "Medicare agrees to pay for heart pump." The third listing is
Cardinal Health followed by a down arrow with the phrase "Revenues
squeezed by drug makers."]
Large pharmaceutical company returns were inconsistent. Merck and Eli
Lilly turned in positive results, while Pfizer -- plagued by investors'
concerns over its mega-acquisition of Pharmacia -- lagged during the
period.
OUTLOOK
In our opinion, it's quite likely that the health-care group will
continue to face some challenges in 2003, which may mean that the group
experiences ongoing volatility. A rebound in economic growth, for
example, may prompt investors to move away from this sector into
faster-growing industry groups. And there are always ongoing hurdles for
the group, such as the risks involved in new-product development; the
rising costs of research, development, manufacturing and sales; and the
weaker financial condition of payers for health care around the world.
That said, we believe that there are also a number of positives working
in the group's longer-term favor including an aging world population,
continued innovation and discovery in the field of medical sciences and
reduced near-term political risk.
"...we believe that there are
also a number of positives
working in the group's
longer-term favor..."
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. The manager's
statements reflect her own opinions. As such, they are in no way
guarantees of future events, and are not intended to be used as
investment advice or a recommendation regarding any specific security.
They are also subject to change at any time as market and other
conditions warrant.
Sector investing is subject to greater risks than the market as a whole.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT
PERFORMANCE
For the period ended
April 30, 2003
The index used for
comparison is the
Standard & Poor's 500
Index, Index 1, an
unmanaged index that
includes 500 widely
traded common stocks.
Also shown on page 7
is the Russell 3000
Healthcare Index,
Index 2, a capitaliza-
tion-weighted index
composed of compa-
nies involved in medical
services or health care.
It is not possible to
invest in an index.
Class A Class B Class C Index 1
Inception date 10-1-91 3-7-94 3-1-99 --
Average annual returns with maximum sales charge (POP)
One year -15.57% -16.16% -13.52% -13.30%
Five years 0.75% 0.70% -- -2.42%
Ten years 11.70% -- -- 9.66%
Since inception -- 9.08% 0.87% --
Cumulative total returns with maximum sales charge (POP)
Six months -3.37% -3.67% -0.68% 4.47%
One year -15.57% -16.16% -13.52% -13.30%
Five years 3.80% 3.56% -- -11.54%
Ten years 202.24% -- -- 151.49%
Since inception -- 121.42% 3.69% --
Performance figures assume all distributions are reinvested. Returns
with maximum sales charge reflect a sales charge on Class A shares of 5%
and Class C shares of 1%, and the applicable contingent deferred sales
charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC
declines annually between years 1-6 according to the following
schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the
sixth year. Class C shares held for less than one year are subject to a
1% CDSC. The return and principal value of an investment in the Fund
will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost. Index figures do not reflect sales charges and
would be lower if they did.
The returns reflect past results and should not be considered indicative
of future performance. The performance table above and the chart on the
next page do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown the
same investment in the two indexes described on page 6.
Line chart with the heading "GROWTH OF $10,000." Within the chart are four
lines. The first line represents Index 2 and is equal to $37,979 as of April
30, 2003. The second line represents the value of the hypothetical $10,000
investment made in the John Hancock Health Sciences Fund, before sales
charge, and is equal to $31,823 as of April 30, 2003. The third line
represents the value of the same hypothetical investment made in the John
Hancock Health Sciences Fund, after sales charge, and is equal to $30,224 as
of April 30, 2003. The fourth line represents Index 1 and is equal to
$25,149 as of April 30, 2003.
Class B 1 Class C 1
Period beginning 3-7-94 3-1-99
Without sales charge $22,142 $10,473
With maximum sales charge -- $10,368
Index 1 $23,124 $7,844
Index 2 $35,652 $9,279
Assuming all distributions were reinvested for the period indicated, the
table above shows the value of a $10,000 investment in the Fund's Class
B and Class C shares, respectively, as of April 30, 2003. Performance of
the classes will vary based on the difference in sales charges paid by
shareholders investing in the different classes and the fee structure of
those classes.
1 No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
April 30, 2003
(unaudited)
This schedule is divided into two main categories: common stocks and
short-term investments. Stocks are further broken down by industry
group. Short-term investments, which represent the Fund's cash position,
are listed last.
SHARES ISSUER VALUE
COMMON STOCKS 94.44% $250,336,439
(Cost $190,591,160)
Drugs -- Biotechnology 20.55% 54,464,989
65,000 Adolor Corp.* + 909,350
270,000 Amgen, Inc.* + 16,553,700
100,000 Amylin Pharmaceuticals, Inc.* + 1,915,000
35,000 Biogen, Inc.* + 1,329,650
90,000 BioMarin Pharmaceutical, Inc.* 988,200
70,000 Celgene Corp.* + 1,862,700
75,000 Cephalon, Inc. + 3,063,000
30,000 Chiron Corp. * + 1,224,900
55,000 CV Therapeutics, Inc.* + 1,098,900
110,000 Genentech, Inc.* + 4,178,900
65,000 Genzyme Corp.* 2,618,200
31,946 Gilead Sciences, Inc.* 1,473,989
120,000 Human Genome Sciences, Inc.* 1,402,800
55,000 ICOS Corp.* + 1,471,250
90,000 IDEC Pharmaceuticals Corp.* + 2,947,500
105,000 Kosan Biosciences, Inc. * 686,700
70,000 Medicines Co. (The)* + 1,438,500
55,000 MedImmune, Inc.* 1,939,850
185,000 Millennium Pharmaceuticals, Inc.* + 2,035,000
50,000 Neurocrine Biosciences, Inc.* + 2,262,500
50,000 Trimeris, Inc.* + 2,219,500
70,000 Vertex Pharmaceuticals, Inc. * 844,900
Drugs -- Diversified 7.80% 20,669,450
155,000 Abbott Laboratories 6,297,650
255,000 Johnson & Johnson 14,371,800
Drugs -- Major 15.42% 40,876,300
80,000 AstraZeneca Plc American Depositary
Receipts (ADR) (United Kingdom) 3,189,600
130,000 Lilly (Eli) & Co. 8,296,600
150,000 Merck & Co., Inc. 8,727,000
95,000 Novartis AG (ADR) (Switzerland) + 3,750,600
550,000 Pfizer, Inc. 16,912,500
Drugs -- Specialty and Generic 10.90% 28,883,850
100,000 aaiPharma, Inc.*+ 1,130,000
70,000 Alcon, Inc.* (Switzerland) 3,083,500
40,000 Allergan, Inc. 2,810,000
41,000 Barr Laboratories, Inc.* 2,279,600
80,000 Biovail Corp.* (Canada) 2,892,000
165,000 Forest Laboratories, Inc.* + 8,533,800
50,000 Medicis Pharmaceutical Corp. (Class A)* + 2,882,000
60,000 Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 2,802,000
85,000 Watson Pharmaceutical, Inc.* 2,470,950
Drugs & Sundries -- Wholesale 2.99% 7,931,950
75,000 AmerisourceBergen Corp. + 4,338,750
65,000 Cardinal Health, Inc. 3,593,200
Health Care -- Hospitals 1.51% 4,012,500
125,000 HCA, Inc. 4,012,500
Health Care -- Services 5.71% 15,139,600
70,000 Advisory Board Co. (The)* + 2,563,400
110,000 Caremark Rx, Inc.* 2,190,100
75,000 Charles River Laboratories International, Inc.* 2,036,250
135,000 Covance, Inc.* 2,393,550
115,000 DaVita, Inc.* + 2,371,300
60,000 Quest Diagnostics, Inc.* + 3,585,000
Instruments -- Scientific 0.60% 1,580,400
60,000 Affymetrix, Inc.* + 1,113,000
60,000 Bruker AXS, Inc.* 123,600
20,000 Robbins & Myers, Inc. 343,800
Insurance 7.28% 19,305,900
60,000 Anthem, Inc.* + 4,118,400
50,000 Mid Atlantic Medical Services, Inc.* 2,177,500
100,000 UnitedHealth Group, Inc. 9,213,000
50,000 Wellpoint Health Networks, Inc.* + 3,797,000
Medical Devices and Products 21.68% 57,471,500
60,000 Biomet, Inc. 1,827,600
65,000 Boston Scientific Corp.* + 2,798,250
50,000 CTI Molecular Imaging, Inc.* + 918,000
80,000 DENTSPLY International, Inc. 2,996,000
85,000 Diagnostic Products Corp. 3,357,500
70,000 Edwards Lifesciences Corp.* + 2,020,900
45,000 ICU Medical, Inc.* + 1,430,100
85,000 Integra LifeSciences Holdings* + 2,268,650
325,000 Medtronic, Inc. 15,515,500
75,000 St. Jude Medical, Inc.* 3,934,500
120,000 Stryker Corp. + 8,041,200
100,000 Thoratec Corp.* + 1,375,000
130,000 Varian Medical Systems, Inc.* 7,001,800
85,000 Zimmer Holdings, Inc.* + 3,986,500
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS 34.48% $91,380,699
(Cost $91,380,699)
Joint Repurchase Agreement 6.40%
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust
Co. -- Date 04-30-03, due 05-01-03 (Secured by
U.S. Treasury Inflation Indexed Bond 3.875%
due 04-15-29, U.S. Treasury Inflation Indexed
Notes 3.875% due 01-15-07 and 3.000%
due 07-15-12) 1.280% $16,967 16,967,000
SHARES
Cash Equivalents 28.08%
AIM Cash Investment Trust ** 74,413,699 74,413,699
TOTAL INVESTMENTS 128.92% $341,717,138
OTHER ASSETS AND LIABILITIES, NET (28.92%) ($76,653,337)
TOTAL NET ASSETS 100.00% $265,063,801
+ All or a portion of this security is on loan on April 30, 2003.
* Non-income-producing security.
** Represents investment of security lending collateral.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
ASSETS AND
LIABILITIES
April 30, 2003
(unaudited) 1
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $281,971,859)
including $72,954,607 of securities loaned $341,717,138
Receivable for investments sold 2,845,781
Receivable for shares sold 29,756
Dividends and interest receivable 45,048
Other assets 10,837
Total assets 344,648,560
LIABILITIES
Due to custodian 118,147
Payable for investments purchased 4,208,978
Payable for shares repurchased 80,752
Payable for securities on loan 74,413,699
Payable to affiliates 683,038
Other payables and accrued expenses 80,145
Total liabilities 79,584,759
NET ASSETS
Capital paid-in 245,748,521
Accumulated net realized loss on investments (38,390,243)
Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currencies 59,745,363
Accumulated net investment loss (2,039,840)
Net assets $265,063,801
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($105,212,955 [DIV] 2,983,818 shares) $35.26
Class B ($148,450,234 [DIV] 4,522,534 shares) $32.82
Class C ($11,400,612 [DIV] 347,331 shares) $32.82
MAXIMUM OFFERING PRICE PER SHARE
Class A1 ($35.26 [DIV] 95%) $37.12
Class C ($32.82 [DIV] 99%) $33.15
1 On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to
financial statements.
OPERATIONS
For the period ended
April 30, 2003
(unaudited) 1
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $11,587) $698,838
Securities lending 98,708
Interest 75,741
Total investment income 873,287
EXPENSES
Investment management fee 1,025,814
Class A distribution and service fee 155,140
Class B distribution and service fee 749,957
Class C distribution and service fee 56,676
Transfer agent fee 736,609
Accounting and legal services fee 55,471
Custodian fee 30,027
Registration and filing fee 28,094
Printing 17,436
Auditing fee 16,829
Advisory board expense 15,594
Trustees' fee 9,117
Miscellaneous 8,829
Legal fee 1,708
Interest expense 344
Total expenses 2,907,645
Net investment loss (2,034,358)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (2,781,597)
Change in net unrealized appreciation
(depreciation) of
Investments 8,062,804
Translation of assets and liabilities in foreign currencies 24
Net realized and unrealized gain 5,281,231
Increase in net assets from operations $3,246,873
1 Semiannual period from 11-1-02 through 4-30-03.
See notes to
financial statements.
CHANGES IN
NET ASSETS
This Statement
of Changes in
Net Assets
shows how the
value of the
Fund's net assets
has changed
since the end of
the previous
period. The dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
YEAR PERIOD
ENDED ENDED
10-31-02 4-30-03 1
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($5,230,634) ($2,034,358)
Net realized loss (15,488,263) (2,781,597)
Change in net unrealized
appreciation (depreciation) (31,410,259) 8,062,828
Increase (decrease) in net assets
resulting from operations (52,129,156) 3,246,873
From Fund share transactions (54,454,608) (21,973,281)
NET ASSETS
Beginning of period 390,373,973 283,790,209
End of period 2 $283,790,209 $265,063,801
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Includes accumulated net investment loss of $5,482 and
$2,039,840, respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $30.25 $33.89 $34.28 $49.99 $40.06 $34.67
Net investment loss 2 (0.23) (0.18) (0.33) (0.37) (0.41) (0.19)
Net realized and unrealized
gain (loss) on investments 4.38 0.57 16.04 (5.99) (4.98) 0.78
Total from
investment operations 4.15 0.39 15.71 (6.36) (5.39) 0.59
Less distributions
From net realized gain (0.51) -- -- (3.57) -- --
Net asset value,
end of period $33.89 $34.28 $49.99 $40.06 $34.67 $35.26
Total return 3 (%) 13.91 1.15 45.83 (13.56) (13.45) 1.70 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $84 $93 $178 $145 $110 $105
Ratio of expenses to
average net assets (%) 1.61 1.60 1.50 1.50 1.59 1.77 5
Ratio of net investment loss
to average net assets (%) (0.71) (0.52) (0.75) (0.87) (1.06) (1.11) 5
Portfolio turnover (%) 39 61 147 91 85 38
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $29.40 $32.69 $32.83 $47.55 $37.68 $32.39
Net investment loss 2 (0.45) (0.41) (0.60) (0.63) (0.63) (0.29)
Net realized and unrealized
gain (loss) on investments 4.25 0.55 15.32 (5.67) (4.66) 0.72
Total from
investment operations 3.80 0.14 14.72 (6.30) (5.29) 0.43
Less distributions
From net realized gain (0.51) -- -- (3.57) -- --
Net asset value,
end of period $32.69 $32.83 $47.55 $37.68 $32.39 $32.82
Total return 3 (%) 13.11 0.43 44.84 (14.18) (14.04) 1.33 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $124 $152 $294 $231 $162 $148
Ratio of expenses to
average net assets (%) 2.31 2.30 2.20 2.20 2.29 2.47 5
Ratio of net investment loss
to average net assets (%) (1.41) (1.22) (1.46) (1.57) (1.76) (1.81) 5
Portfolio turnover (%) 39 61 147 91 85 38
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-99 6 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $33.94 $32.83 $47.55 $37.68 $32.39
Net investment loss 2 (0.28) (0.64) (0.63) (0.63) (0.29)
Net realized and unrealized
gain (loss) on investments (0.83) 15.36 (5.67) (4.66) 0.72
Total from investment operations (1.11) 14.72 (6.30) (5.29) 0.43
Less distributions
From net realized gain -- -- (3.57) -- --
Net asset value, end of period $32.83 $47.55 $37.68 $32.39 $32.82
Total return 3 (%) (3.27) 4 44.84 (14.18) (14.04) 1.33 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $14 $15 $12 $11
Ratio of expenses to average net assets (%) 2.40 5 2.20 2.20 2.29 2.47 5
Ratio of net investment loss to
average net assets (%) (1.30) 5 (1.50) (1.58) (1.76) (1.81) 5
Portfolio turnover (%) 61 147 91 85 38
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Based on the average of the shares outstanding.
3 Assumes dividend reinvestment and does not reflect the effect of sales charges.
4 Not annualized.
5 Annualized.
6 Class C shares began operations on 3-1-99.
See notes to
financial statements.
NOTES TO
STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Health Sciences Fund (the "Fund") is 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 is to achieve long-term growth of
capital.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights as to voting, redemptions,
dividends and liquidation, except that certain expenses, subject to the
approval of the Trustees, may be applied differently to each class of
shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a
class that bears distribution and service expenses under terms of a
distribution plan have exclusive voting rights to that distribution
plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations are not readily available, or the value has been materially
affected by events occurring after the closing of a foreign market, at
fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost, which approximates market value.
Investments in AIM Cash Investment Trust are valued at their net asset
value each business day. All portfolio transactions initially expressed
in terms of foreign currencies have been translated into U.S. dollars as
described in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with other registered investment companies
having a management contract with John Hancock Advisers, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
LLC, may participate in a joint repurchase agreement transaction.
Aggregate cash balances are invested in one or more large repurchase
agreements, whose underlying securities are obligations of the U.S.
government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars based on London currency
exchange quotations as of 5:00 P.M., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain (loss) on
investments are translated at the rates prevailing at the dates of the
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities,
other than invest -ments in securities, resulting from changes in the
exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis. Capital gains realized on some
foreign securities are subject to foreign taxes, which are accrued as
applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net assets of the respective classes. Distri
bution and service fees, ifany, are calculated daily at the class level
based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
Expenses
The majority of the expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund will
be allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. The Fund has
entered into a syndicated line of credit agreement with various banks.
This agreement enables the Fund to participate with other funds managed
by the Adviser in an unsecured line of credit with banks, which permits
borrowings of up to $250 million, collectively. Interest is charged to
each fund, based on its borrowing. In addition, a commit -ment fee is
charged to each fund based on the average daily unused portion of the
line of credit and is allocated among the participating funds. The Fund
had no borrowing activity under the line of credit during the period
ended April 30, 2003.
Securities lending
The Fund may lend securities to certain qualified brokers who pay the
Fund negotiated lender fees. The loans are collateralized at all times
with cash or securities with a market value at least equal to the market
value of the securities on loan. As with other extensions of credit, the
Fund may bear the risk of delay of the loaned securities in recovery or
even loss of rights in the collateral, should the borrower of the
securities fail financially. On April 30, 2003, the Fund loaned
securities having a market value of $72,954,607 collateralized by cash
in the amount of $74,413,699. The cash collateral was invested in a
short-term instrument.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with
the applicable provisions of the Internal Revenue Code and will not be
subject to federal income tax on taxable income that is distributed to
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $29,055,115 of a capital
loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. To the extent that such
carryforward is used by the Fund, no capital gain distributions will be
made. The loss carryforward expires as follows: October 31, 2009 --
$16,212,040 and October 31, 2010 -- $12,843,075.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend
date or, in the case of some foreign securities, on the date thereafter
when the Fund identifies the dividend. Interest income on investment
securities is recorded on the accrual basis. Foreign income may be
subject to foreign withholding taxes, which are accrued as applicable.
The Fund records distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated in
the same manner, at the same time and are in the same amount, except for
the effect of expenses that may be applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, are reported in the
Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a quarterly management
fee to the Adviser equivalent, on an annual basis, to the sum of: (a)
0.80% of the first $200,000,000 of the Fund's average daily net asset
value and (b) 0.70% of the Fund's daily average net asset value in
excess of $200,000,000.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted
Distribution Plans with respect to Class A, Class B and Class C pursuant
to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH
Funds for the services it provides as distributor of shares of the Fund.
Accordingly, the Fund makes monthly payments to JH Funds at an annual
rate not to exceed 0.30% of Class A average daily net assets and 1.00%
of Class B and Class C average daily net assets. A maximum of 0.25% of
such payments may be service fees as defined by the Conduct Rules of the
National Association of Securities Dealers. Under the Conduct Rules,
curtailment of a portion of the Fund's 12b-1 payments could occur under
certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During
the period ended April 30, 2003, JH Funds received net up-front sales
charges of $92,746 with regard to sales of Class A shares. Of this
amount, $11,688 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $64,852 was paid as
sales commissions to unrelated broker-dealers and $16,206 was paid as
sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer. The Adviser's indirect
parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect
sole shareholder of Signator Investors. During the period ended April
30, 2003, JH Funds received net up-front sales charges of $9,183 with
regard to sales of Class C shares. Of this amount, $8,905 was paid as
sales commissions to unrelated broker-dealers and $278 was paid as sales
commissions to sales personnel of Signator Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares being
redeemed. Class C shares that are redeemed within one year of purchase
are subject to a CDSC at a rate of 1.00% of the lesser of the current
market value at the time of redemption or the original purchase cost of
the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds
and are used in whole or in part to defray its expenses for providing
distribution-related services to the Fund in connection with the sale of
Class B and Class C shares. During the period ended April 30, 2003,
CDSCs received by JH Funds amounted to $182,298 for Class B shares and
$903 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a
monthly transfer agent fee at an annual rate of 0.05%, plus a fee based
on the number of shareholder accounts and reimbursement for certain
out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
period was at an annual rate of approximately 0.04% of the average net
assets of the Fund.
The Fund has an independent advisory board composed of scientific and
medical experts who provide the investment officers of the Fund with
advice and consultation on health-care developments, for which the Fund
pays the advisory board a fee.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the
Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations
of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and repurchased
during the last two periods, along with the corresponding dollar value.
The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 811,501 $30,907,585 310,941 $10,634,697
Repurchased (1,238,558) (46,192,043) (510,577) (17,343,705)
Net decrease (427,057) ($15,284,458) (199,636) ($6,709,008)
CLASS B SHARES
Sold 629,775 $23,090,576 163,982 $5,231,833
Repurchased (1,767,118) (61,384,888) (630,193) (19,937,758)
Net decrease (1,137,343) ($38,294,312) (466,211) ($14,705,925)
CLASS C SHARES
Sold 97,382 $3,575,235 34,505 $1,103,239
Repurchased (128,009) (4,451,073) (52,616) (1,661,587)
Net decrease (30,627) ($875,838) (18,111) ($558,348)
NET DECREASE (1,595,027) ($54,454,608) (683,958) ($21,973,281)
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other
than short-term securities and obligations of the U.S. government,
during the period ended April 30, 2003, aggregated $97,931,460 and
$133,045,745, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $285,767,749. Gross
unrealized appreciation and depreciation of investments aggregated
$60,621,022 and $4,671,633, respectively, resulting in net unrealized
appreciation of $55,949,389. The difference between book basis and tax
basis net unrealized appreciation of investments is attributable
primarily to the tax deferral of losses on wash sales.
OUR FAMILY
OF FUNDS
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Sovereign Investors Fund
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Health Sciences Fund
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FOR YOUR
INFORMATION
TRUSTEES
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
*Members of the Audit Committee
OFFICERS
Maureen R. Ford
Chairman, President
and Chief Executive Officer
William L. Braman
Executive Vice President
and Chief Investment Officer
Richard A. Brown
Senior Vice President
and Chief Financial Officer
Susan S. Newton
Senior Vice President
and Secretary
William H. King
Vice President
and Treasurer
Thomas H. Connors
Vice President
and Compliance Officer
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
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This report is for the information of
the shareholders of the John Hancock
Health Sciences Fund.
280SA 4/03
6/03
John Hancock
Pacific Basin
Equities Fund
SEMI
ANNUAL
REPORT
4.30.03
Sign up for electronic delivery at
www.jhancock.com/funds/edelivery
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen R. Ford, Chairman and Chief Executive Officer,
flush left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
A look at performance
page 6
Growth of $10,000
page 7
Fund's investments
page 8
Financial statements
page 13
For your information
page 25
Dear Fellow Shareholders,
After a strong start to 2003, the stock market succumbed to the
pressures of a weak economy, rising oil prices, concerns about corporate
earnings and uncertainties about the war in Iraq. The tide turned in
April, when the war ended and first-quarter corporate earnings came in
better than expected. As a result, the major indexes all gained some
ground year to date through April 30, 2003, with the Dow Jones
Industrial Average returning 2.50%, the Standard & Poor's 500 Index
returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%.
Bonds, which have outperformed stocks for the last three years,
continued their upward trend this year, as investors still sought their
relative safety.
After the jarring stock market losses of the last three years, it's a
relief for investors to be reminded that the market is indeed cyclical,
and does eventually move up -- not just down. But while the stock market
has been clawing its way back, the ride has been extremely volatile.
Uncertainty still abounds about the strength of the economy,
geopolitical issues, corporate governance problems, rising unemployment
and the sustainability of corporate earnings growth. And despite rallies
late last year and in April, many investors are still so bruised and
skeptical that they have remained on the sidelines. Even though the
statistics suggest we might be emerging from this long, difficult bear
market, we're not quite ready to call it history.
While no one can predict when this bear market cycle will turn,
investors can take charge of how they maneuver through such uncertain
times. First, take a look at how your portfolio is allocated among
stocks, bonds and cash to make sure it's in the proper balance. Work
with your investment professional, who knows your long-term goals and
can help keep you on the right track, rather than being lured by today's
stars, which could wind up tomorrow's laggards. And as always, keep a
long-term investment horizon. We believe this offers the best way for
you to survive the tough times and reach your investment objectives.
Sincerely,
/S/ MAUREEN R. FORD
Maureen R. Ford,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of April 30, 2003. They
are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term growth
of capital by
investing
primarily in stocks
of companies
located in the
Pacific Basin.
Over the last six months
* The buildup to the U.S.-led war against Iraq created uncertainty and
unsettled the international stock markets.
* Global economic growth remained sluggish.
* Growth stocks appeared to be coming back into favor.
[Bar chart with heading "John Hancock Pacific Basin Equities Fund."
Under the heading is a note that reads "Fund performance for the six
months ended April 30, 2003." The chart is scaled in increments of 7%
with -14% at the bottom and 0% at the top. The first bar represents the
- -11.81% total return for Class A. The second bar represents the -12.16%
total return for Class B. The third bar represents the -12.16% total
return for Class C. A note below the chart reads "Total returns for the
Fund are at net asset value with all distributions reinvested."]
Top 10 holdings
3.4% Samsung Electronics Co., Ltd.
3.3% Toyota Motor Corp.
3.1% BYD Co., Ltd.
2.5% Hyundai Department Store Co., Ltd.
2.5% Hoya Corp.
2.5% Shinsegae Co., Ltd.
2.4% Shinhan Financial Group Co., Ltd.
2.3% Taiwan Semiconductor Manufacturing Co. Ltd.
2.3% Ssangyong Motor Co.
2.3% Chartered Semiconductor Manufacturing Ltd.
As a percentage of net assets on April 30, 2003.
BY SHU NUNG LEE, CFA, FOR THE NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
PORTFOLIO MANAGEMENT TEAM
John Hancock
Pacific Basin Equities Fund
MANAGERS'
REPORT
The international stock markets endured yet another challenging period
during the six months ended April 30, 2003. Sluggish economic growth
worldwide, the specter of war in Iraq and deteriorating conditions in
the German and Japanese financial systems dampened investor sentiment.
Amid such uncertainty, Pacific Rim equities lost ground in the period,
with the representative MSCI All Country Pacific Free Index returning
- -4.98%.
In early October, shortly before the period began, international
equities, which became sharply oversold in the third quarter, rallied as
many beaten-down stocks rebounded. Late in 2002, international stocks
retreated somewhat as concerns arose that per-share earnings estimates
remained high.
"Amid such uncertainty,
Pacific Rim equities lost
ground in the period..."
The new year opened with investors holding high hopes, but declines in
each month of the first quarter dashed those hopes, as a combination of
war worries and weak economic data spurred a sell-off in stocks. In
developed markets, European equities outperformed Japanese equities, in
part due to a somewhat stronger euro and slightly weaker yen. Asian
performance was hurt most by negative returns in Korea, India and China.
In April, the international stock markets staged a strong rally as the
situation in Iraq appeared to be nearing resolution, energy prices
moderated and earnings -- although still weak -- came in slightly better
than anticipated. However, Pacific Rim equities advanced significantly
less than their counterparts in the United States and Europe.
FUND PERFORMANCE EXPLAINED
For the six months ended April 30, 2003, John Hancock Pacific Basin
Equities Fund's Class A, Class B and Class C shares posted total returns
of -11.81%, -12.16% and -12.16%, respectively, at net asset value.
During the same period, the average Pacific region fund returned
- -6.57%, according to Lipper, Inc.,1 while the benchmark MSCI All
Country Pacific Free Index fell 4.98%. Keep in mind that your net asset
value return will be different from the Fund's performance if you were
not invested in the Fund for the entire period and did not reinvest all
distributions. See pages six and seven for historical performance
information.
The Fund's underperformance relative to its peers and benchmark was
largely the result of disappointing stock selection in the
producers/manufacturing, financial services and consumer services
sectors. In particular, holdings in Japanese financial firms negatively
influenced both absolute and relative returns, as did investments in
leisure/gaming companies and electronic instruments manufacturers. By
country, Japanese and Australian stocks hurt the portfolio despite
underweight positions in both nations.
"...stock selection and over
weight exposure to the
consumer nondurables
sector...proved to be the
lone bright spot..."
On the positive side, stock selection and overweight exposure to the
consumer nondurables sector, while down slightly in absolute terms,
proved to be the lone bright spot for the portfolio. Industry holdings
that supported performance included agriculture, telephone companies and
advertising firms. By country, our overweight positions in Indonesia,
whose stock market rose 37%, and stock selection in Thailand and the
Philippines proved positive.
Top-performing holdings during the reporting period included Philippine
Long Distance Telephone Co., the leading supplier of domestic and
international telecommunications services in the Philippines, and Thai
Union Frozen Products, which specializes in frozen packaged seafood
products. Philippine Long Distance benefited from continuing
stronger-than-expected results at its Smart subsidiary, the removal of
provisions for its Piltel subsidiary, and lower compensation expenses as
it continues to substantially reduce headcount. Thai Union gained on
strong sales growth of its tuna products, particularly in the European
Union and the Middle East. The company is the only supplier of tuna
products to the U.S. military, so it also advanced on the prospect of
increased war-related spending. Decliners included numerous Japanese
companies, such as Nomura Securities, Mitsubishi Tokyo, Sony and
Hitachi.
[Table at top left-hand side of page entitled "Top five industry
groups." The first listing is Electronics 25%, the second is
Automobiles/trucks 9%, the third Retail 6%, the fourth Finance 5%, and
the fifth Leisure 4%.]
FUND MOVES
During the period, based on our assessment of individual stocks'
appreciation potential, we shifted assets out of Japan and Australia in
favor of opportunities in South Korea and China. We believe easing of
tensions with North Korea should help the South Korean stock market
regain its footing. Meanwhile, China -- despite the impact of Severe
Acute Respiratory Syndrome, or SARS -- continues to experience strong
export growth.
[Bar chart at middle of page with heading "Top Countries As a percentage
of net assets on 4-30-03." The chart is divided into five sections:
Japan 37%, South Korea 17%, Taiwan 8%, Hong Kong 6% and Singapore 6%. ]
OUTLOOK
On a macro level, geopolitical concerns are currently driving the equity
markets. Fundamentals remain weak, especially in Germany, France and
Japan. Capital equipment spending is beginning to stabilize, which bodes
well for future growth, and inflation remains tame. Although U.S.
companies generally have been meeting or beating earnings expectations,
international companies are not yet doing so. Positive developments
include a stability pact in the European Union that allows higher budget
deficits and government spending during exceptional periods, as well as
a reform package in Germany tightening unemployment and insurance
benefits. Japan was under selling pressure because its fiscal year ended
March 31, but we believe this pressure should be abating now that its
new fiscal year has begun.
[Table at top of page entitled "SCORECARD." The header for the left
column is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is
Philippine Long Distance Telephone followed by an up arrow with the
phrase "Stronger-than-expected performance; successful cost-control
measures. " The second listing is Sony Corp. followed by a down arrow
with the phrase "Weak sales and uncertainty regarding planned
restructuring." The third listing is Thai Union Frozen Products followed
by an up arrow with the phrase "Accelerating sales of tuna products."]
"Currently, Asia is
posting attractive
relative trade figures."
Currently, Asia is posting attractive relative trade figures. China, in
particular, is experiencing strong export growth. China is a source of
production for Taiwan, which has the technological know-how and the
customer base while China supplies the manufacturing capacity and labor.
Recently, Thailand has been the best-performing market in Asia.
Thailand's financial sector is undergoing recovery and the government
has placed a fiscal stimulus package in place.
Now that the overhang of Iraq is behind us, we believe the financial
markets should begin to normalize and investors should once again reward
fundamental strength.
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. The
team's statements reflect their own opinions. As such, they are in no
way guarantees of future events, and are not intended to be used as
investment advice or a recommendation regarding any specific security.
They are also subject to change at any time as market and other
conditions warrant.
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT
PERFORMANCE
For the period ended
April 30, 2003
The index used for
comparison is the
Morgan Stanley
Capital International
(MSCI) All Country
Pacific Free Index, an
unmanaged index
composed of compa
nies in Australia, Japan
and certain other
Pacific Basin countries.
It is not possible to
invest in an index.
Class A Class B Class C Index
Inception date 9-8-87 3-7-94 3-1-99 --
Average annual returns with maximum sales charge (POP)
One year -32.22% -32.74% -30.55% -20.97%
Five years -4.74% -4.81% -- -5.83%
Ten years -3.22% -- -- -5.78%
Since inception -- -6.47% -3.78% --
Cumulative total returns with maximum sales charge (POP)
Six months -16.26% -16.55% -13.92% -4.98%
One year -32.22% -32.74% -30.55% -20.97%
Five years -21.55% -21.85% -- -25.94%
Ten years -27.88% -- -- -44.87%
Since inception -- -45.79% -14.82% --
Performance figures assume all distributions are reinvested. Returns
with maximum sales charge reflect a sales charge on Class A shares of 5%
and Class C shares of 1%, and the applicable contingent deferred sales
charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC
declines annually between years 1-6 according to the following
schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the
sixth year. Class C shares held for less than one year are subject to a
1% CDSC. The return and principal value of an investment in the Fund
will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost. Index figures do not reflect sales charges and
would be lower if they did.
The returns reflect past results and should not be considered indicative
of future performance. The performance table above and the chart on the
next page do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown the
same investment in the Morgan Stanley Capital International (MSCI) All
Country Pacific Free Index.
Line chart with the heading "GROWTH OF $10,000." Within the chart are
three lines. The first line represents the value of the hypothetical
$10,000 investment made in the John Hancock Pacific Basin Equities Fund,
before sales charge, and is equal to $7,590 as of April 30, 2003. The
second line represents the value of the same hypothetical investment
made in the John Hancock Pacific Basin Equities Fund, after sales
charge, and is equal to $7,212 as of April 30, 2003. The third line
represents the Index and is equal to $5,513 as of April 30, 2003.
Class B 1 Class C 1
Period beginning 3-7-94 3-1-99
Without sales charge $5,421 $8,603
With maximum sales charge -- $8,517
Index $5,350 $7,795
Assuming all distributions were reinvested for the period indicated, the
table above shows the value of a $10,000 investment in the Fund's Class
B and Class C shares, respectively, as of April 30, 2003. Performance of
the classes will vary based on the difference in sales charges paid by
shareholders investing in the different classes and the fee structure of
those classes.
1 No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
This schedule is divided into four main categories: common stocks,
preferred stocks, warrants and short-term investments. Common and
preferred stocks and warrants are further broken down by country.
Short-term investments, which represent the Fund's cash position, are
listed last.
Securities owned
by the Fund on
April 30, 2003
(unaudited)
SHARES ISSUER VALUE
COMMON STOCKS 86.21% $14,802,491
(Cost $16,118,391)
Australia 1.82% 311,960
38,900 Aristocrat Leisure, Ltd. (Leisure) 37,961
10,200 Australia & New Zealand Banking Group Ltd. (Banks -- Foreign) 118,999
7,000 Commonwealth Bank of Australia (Banks -- Foreign) 119,193
18,000 Qantas Airways Ltd. (Transportation) 35,807
China 5.30% 910,687
273,000 BYD Co., Ltd. (Electronics) 540,816
2,384,000 Sinopec Shanghai Petrochemical Co., Ltd.* (Chemicals) 369,871
Hong Kong 5.90% 1,014,020
342,000 China Resources Enterprise Ltd. (Diversified Operations) 271,879
25,500 CLP Holdings Ltd. (Utilities) 104,301
661,500 Dickson Concepts International Ltd. (Retail) 100,085
60,000 Henderson Land Development Co., Ltd. (Real Estate Operations) 148,864
794,000 Ngai Lik Industrial Holding Ltd. (Electronics) 185,289
177,000 TCL International Holdings Cos., Ltd. (Electronics) 33,135
78,000 Tingyi Holding Corp. (Food) 14,102
271,000 VTech Holdings Ltd. (Telecommunications) 156,365
Indonesia 2.38% 408,716
5,325,000 PT Bank Pan Indonesia Tbk (Banks -- Foreign) 144,276
5,255,500 PT Bentoel Internasional Investama Tbk* (Tobacco) 69,682
3,490,500 PT Perusahaan Perkebunan London Sumatra Indonesia Tbk*
(Agricultural Operations) 152,924
88,500 PT Telekomunikasi Indonesia (Telecommunications) 41,834
Japan 36.71% 6,302,698
1,000 Aderans Co., Ltd. (Cosmetics & Personal Care) 18,321
67,000 Asahi Glass Co., Ltd. (Building) 356,742
3,000 Bridgestone Corp. (Rubber -- Tires & Misc) 34,035
6,000 Daiwa House Industry Co., Ltd. (Building) 36,223
54,000 Dowa Mining Co., Ltd. (Metal) 178,853
43 East Japan Railway Co. (Transportation) 194,701
5,600 Eneserve Corp. (Utilities) 196,277
2,100 Fanuc Ltd. (Electronics) 85,930
2,000 Funai Electric Co., Ltd. (Electronics) 201,241
101,000 Hitachi Ltd. (Electronics) 337,062
3,400 Hogy Medical Co., Inc. (Medical) 143,971
5,600 Honda Motor Co., Ltd. (Automobiles/Trucks) 185,477
7,300 Hoya Corp. (Electronics) 431,536
54,000 Jeol Ltd. (Instruments -- Scientific) 131,310
5,000 Kao Corp. (Cosmetics & Personal Care) 91,187
27,000 Kikkoman Corp. (Food) 168,212
620 Kose Corp. (Cosmetics & Personal Care) 19,651
7,300 Kyocera Corp. (Electronics) 356,247
1,200 Mabuchi Motor Co., Ltd. (Electronics) 89,653
44 Millea Holdings, Inc.* (Insurance) 285,561
87 Mitsubishi Tokyo Financial Group, Inc. (Banks -- Foreign) 294,717
1,200 Nintendo Co., Ltd. (Leisure) 93,778
4,800 Nissan Motor Co., Ltd. (Automobiles/Trucks) 36,827
700 Nitto Denko Corp. (Chemicals) 20,133
24 NTT DoCoMo, Inc. (Telecommunications) 49,505
5,000 Olympus Optical Co., Ltd. (Leisure) 86,576
6,000 Ricoh Co., Ltd. (Office) 92,017
9,900 Shin-Etsu Chemical Co., Ltd. (Chemicals) 296,353
800 SMC Corp. (Machinery) 60,238
36 Sparx Asset Management Co., Ltd. (Finance) 152,440
7,800 Takeda Chemical Industries, Ltd. (Medical) 285,813
14,500 THK Co., Ltd. (Machinery) 133,741
19,000 Tokai Rika Co., Ltd. (Automobiles/Trucks) 102,440
36,000 TonenGeneral Sekiyu K.K. (Oil & Gas) 228,811
24,700 Toyota Motor Corp. (Automobiles/Trucks) 559,198
500 Uni-Charm Corp. (Cosmetics & Personal Care) 19,914
1,500 Yamaichi Electronics Co., Ltd. (Electronics) 19,810
3,000 Yamato Transport Co., Ltd. (Transportation) 33,557
14,400 Yushin Precision Equipment Co., Ltd. (Machinery) 194,640
Malaysia 3.07% 526,815
205,000 Perusahaan Otomobil Nasional Berhad (Automobiles/Trucks) 339,868
96,000 Telekom Malaysia Berhad (Telecommunications) 186,947
Philippine Islands 2.47% 423,903
2,215,300 Ayala Land, Inc. (Real Estate Operations) 211,081
915,300 Manila Electric Co.* (Utilities) 178,787
4,700 Philippine Long Distance Telephone Co.* (Telecommunications) 34,035
Singapore 5.67% 973,310
1,013,000 Chartered Semiconductor Manufacturing Ltd.* (Electronics) 393,653
86,000 City Developments, Ltd. (Real Estate Operations) 163,708
343,000 Singapore Exchange Ltd. (Finance) 235,672
19,400 Singapore Press Holdings Ltd. (Media) 180,277
South Korea 13.51% 2,319,215
66,600 Hotel Shilla Co., Ltd. (Leisure) 254,889
26,700 Hyundai Department Store Co., Ltd. (Retail) 437,309
3,210 LG Ad, Inc. (Advertising) 42,668
680 LG Home Shopping, Inc. (Retail) 38,673
11,280 LG Household & Health Care Ltd. (Soap & Cleaning Preparations) 160,148
41,400 Shinhan Financial Group Co., Ltd. (Finance) 408,889
3,570 Shinsegae Co., Ltd. (Retail) 426,049
8,000 SK Telecom Co., Ltd. American Depositary Receipts (ADR)
(Telecommunications) 121,600
91,940 Ssangyong Motor Co.* (Automobiles/Trucks) 395,002
1,780 You Eal Electronics Co., Ltd. (Telecommunications) 33,988
Taiwan 8.31% 1,427,672
579,000 Eva Airways Corp.* (Transportation) 177,719
44,000 Largan Precision Co., Ltd. (Leisure) 271,371
27,000 Nanya Technology Corp.* (Electronics) 14,716
112,000 Optimax Technology Corp.* (Electronics) 128,514
375,000 Siliconware Precision Industries Co.* (Electronics) 177,496
108,300 Siliconware Precision Industries Co.* (ADR) (Electronics) 258,837
291,000 Taiwan Semiconductor Manufacturing Co. Ltd.* (Electronics) 399,019
Thailand 1.07% 183,495
104,000 Bangkok Expressway Pcl (Building) 36,147
300,800 Thai Union Frozen Products Pcl (Food) 147,348
PREFERRED STOCKS 3.56% $611,942
(Cost $556,575)
Japan 0.20% 34,337
6,000,000 SMFG Finance Ltd. (Banks -- Foreign) (R) 34,337
South Korea 3.36% 577,605
4,710 Samsung Electronics Co., Ltd. (Electronics) 577,605
WARRANTS 4.21% 722,338
(Cost $739,482)
India 4.21% 722,338
115,000 Hindustan Lever Ltd.* (Soap & Cleaning Preparations) 350,808
6,300 Infosys Technologies Ltd.* (Computers) 371,530
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS 2.91% $499,000
(Cost $499,000)
Joint Repurchase Agreement 2.91%
Investment in a joint repurchase agreement transaction
with State Street Bank & Trust Co. -- Date 04-30-03,
due 05-01-03 (Secured by U.S. Treasury Inflation
Indexed Bond 3.875% due 04-15-29, U.S. Treasury
Inflation Indexed Notes 3.875% due 01-15-07 and
3.000% due 07-15-12) 1.280% $499 499,000
TOTAL INVESTMENTS 96.89% $16,635,771
OTHER ASSETS AND LIABILITIES, NET 3.11% $533,888
TOTAL NET ASSETS 100.00% $17,169,659
* Non-income-producing security.
(R) This security is exempt from registration under rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $34,337 or 0.20% of net
assets as of April 30, 2003.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
PORTFOLIO
CONCENTRATION
April 30, 2003
(unaudited)
This table shows
the percentages
of the Fund's
investments
aggregated
by various
industries.
VALUE AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
Advertising 0.25%
Agricultural Operations 0.89
Automobiles/Trucks 9.43
Banks -- Foreign 4.14
Building 2.50
Chemicals 4.00
Computers 2.16
Cosmetics & Personal Care 0.87
Diversified Operations 1.58
Electronics 24.64
Finance 4.64
Food 1.92
Instruments -- Scientific 0.76
Insurance 1.66
Leisure 4.34
Machinery 2.26
Media 1.05
Medical 2.50
Metal 1.04
Office 0.54
Oil & Gas 1.33
Real Estate Operations 3.05
Retail 5.84
Rubber -- Tires & Misc. 0.20
Soap & Cleaning Preparations 2.98
Telecommunications 3.64
Tobacco 0.41
Transportation 2.57
Utilities 2.79
Short-term investments 2.91
Total investments 96.89%
See notes to
financial statements.
ASSETS AND
LIABILITIES
April 30, 2003
(unaudited)
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $17,913,448) $16,635,771
Cash 670
Foreign cash at value (cost $527,101) 528,259
Receivable for investments sold 449,526
Receivable for shares sold 95,000
Dividends and interest receivable 78,248
Other assets 4,144
Total assets 17,791,618
LIABILITIES
Payable for investments purchased 497,385
Payable for shares repurchased 2,130
Payable to affiliates 58,681
Other payables and accrued expenses 63,763
Total liabilities 621,959
NET ASSETS
Capital paid-in 34,384,832
Accumulated net realized loss on investments
and foreign currency transactions (15,848,143)
Net unrealized depreciation of investments and translation
of assets and liabilities in foreign currencies (1,274,216)
Accumulated net investment loss (92,814)
Net assets $17,169,659
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($9,032,368 [DIV] 1,110,201 shares) $8.14
Class B ($7,489,200 [DIV] 978,115 shares) $7.66
Class C ($648,091 [DIV] 84,640 shares) $7.66
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ($8.14 [DIV] 95%) $8.57
Class C ($7.66 [DIV] 99%) $7.74
1 On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to
financial statements.
OPERATIONS
For the period ended
April 30, 2003
(unaudited) 1
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $37,850) $239,603
Interest 3,938
Total investment income 243,541
EXPENSES
Investment management fee 81,090
Class A distribution and service fee 15,256
Class B distribution and service fee 46,337
Class C distribution and service fee 4,171
Transfer agent fee 98,246
Custodian fee 35,982
Registration and filing fee 20,390
Auditing fee 16,282
Printing 8,735
Accounting and legal services fee 4,363
Interest expense 1,081
Trustee's fee 698
Miscellaneous 460
Legal fee 176
Total expenses 333,267
Net investment loss (89,726)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on
Investments (2,111,563)
Foreign currency transactions (162,904)
Change in unrealized appreciation (depreciation) of
Investments (26,106)
Translation of assets and liabilities in foreign currencies 19
Net realized and unrealized loss (2,300,554)
Decrease in net assets from operations ($2,390,280)
1 Semiannual period from 11-1-02 through 4-30-03.
See notes to
financial statements.
CHANGES IN
NET ASSETS
This Statement
of Changes in
Net Assets
shows how the
value of the
Fund's net assets
has changed
since the end of
the previous
period. The dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
YEAR PERIOD
ENDED ENDED
10-31-02 4-30-03 1
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($368,514) ($89,726)
Net realized gain (loss) 476,358 (2,274,467)
Change in net unrealized appreciation
(depreciation) (1,094,526) (26,087)
Decrease in net assets
resulting from operations (986,682) (2,390,280)
From Fund share transactions (2,622,422) (2,616,983)
NET ASSETS
Beginning of period 25,786,026 22,176,922
End of period 2 $22,176,922 $17,169,659
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Includes accumulated net investment loss of $3,088 and $92,814,
respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $11.63 $8.76 $14.46 $14.02 $9.62 $9.23
Net investment income (loss)2 0.02 (0.09) (0.14) (0.08) (0.10) (0.02)
Net realized and unrealized
gain (loss) on investments (2.89) 5.79 0.08 (4.32) (0.29) (1.07)
Total from
investment operations (2.87) 5.70 (0.06) (4.40) (0.39) (1.09)
Less distributions
From net investment income -- -- (0.37) -- -- --
In excess of net investment income -- -- (0.01) -- -- --
-- -- (0.38) -- -- --
Net asset value,
end of period $8.76 $14.46 $14.02 $9.62 $9.23 $8.14
Total return 3 (%) (24.68) 65.07 (0.57) (31.38) (4.05) (11.81) 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $15 $33 $23 $12 $11 $9
Ratio of expenses to
average net assets (%) 2.46 2.37 2.06 2.67 2.57 2.94 5
Ratio of net investment
income (loss) to average
net assets (%) 0.22 (0.77) (0.81) (0.64) (0.99) (0.52) 5
Portfolio turnover (%) 230 174 258 448 293 148
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $11.32 $8.47 $13.89 $13.43 $9.15 $8.72
Net investment loss 2 (0.04) (0.17) (0.25) (0.15) (0.17) (0.05)
Net realized and unrealized
gain (loss) on investments (2.81) 5.59 0.09 (4.13) (0.26) (1.01)
Total from
investment operations (2.85) 5.42 (0.16) (4.28) (0.43) (1.06)
Less distributions
From net investment income -- -- (0.29) -- -- --
In excess of net investment income -- -- (0.01) -- -- --
-- -- (0.30) -- -- --
Net asset value,
end of period $8.47 $13.89 $13.43 $9.15 $8.72 $7.66
Total return 3 (%) (25.18) 63.99 (1.30) (31.87) (4.70) (12.16) 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $13 $37 $29 $14 $10 $7
Ratio of expenses to
average net assets (%) 3.16 3.07 2.77 3.37 3.27 3.64 5
Ratio of net investment
loss to average
net assets (%) (0.48) (1.47) (1.51) (1.36) (1.69) (1.25) 5
Portfolio turnover (%) 230 174 258 448 293 148
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-99 6 10-31-00 10-31-01 10-31-02 4-30-03 1
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $9.09 $13.89 $13.43 $9.15 $8.72
Net investment loss 2 (0.13) (0.24) (0.17) (0.17) (0.05)
Net realized and unrealized
gain (loss) on investments 4.93 0.08 (4.11) (0.26) (1.01)
Total from
investment operations 4.80 (0.16) (4.28) (0.43) (1.06)
Less distributions
From net investment income -- (0.29) -- -- --
In excess of net investment income -- (0.01) -- -- --
-- (0.30) -- -- --
Net asset value,
end of period $13.89 $13.43 $9.15 $8.72 $7.66
Total return 3 (%) 52.81 4 (1.30) (31.87) (4.70) (12.16) 4
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $1 $1 -- 7 $1 $1
Ratio of expenses to
average net assets (%) 3.14 5 2.77 3.37 3.27 3.64 5
Ratio of net investment
loss to average
net assets (%) (1.76) 5 (1.48) (1.48) (1.69) (1.28) 5
Portfolio turnover (%) 174 258 448 293 148
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
2 Based on the average of the shares outstanding.
3 Assumes dividend reinvestment and does not reflect the effect of sales charges.
4 Not annualized.
5 Annualized.
6 Class C shares began operations on 3-1-99.
7 Less than $500,000.
See notes to
financial statements.
NOTES TO
STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Pacific Basin Equities Fund (the "Fund") is a 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 is to seek long-term capital
appreciation.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights as to voting, redemptions,
dividends and liquidation, except that certain expenses, subject to the
approval of the Trustees, may be applied differently to each class of
shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a
class that bears distribution and service expenses under terms of a
distribution plan have exclusive voting rights to that distribution
plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations are not readily available or the value has been materially
affected by events occurring after the closing of a foreign market, at
fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost, which approximates market value. All
portfolio transactions initially expressed in terms of foreign
currencies have been translated into U.S. dollars as described in
"Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with other registered investment companies
having a management contract with John Hancock Advisers, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
LLC, may participate in a joint repurchase agreement transaction.
Aggregate cash balances are invested in one or more large repurchase
agreements, whose underlying securities are obligations of the U.S.
government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars based on London currency
exchange quotations as of 5:00 P.M., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain (loss) on
investments are translated at the rates prevailing at the dates of the
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities,
other than investments in securities, resulting from changes in the
exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis. Capital gains realized on some
foreign securities are subject to foreign taxes, which are accrued as
applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net assets of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net assets of each class and the specific
expense rate(s) applicable to each class.
Expenses
The majority of the expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund will
be allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. The Fund has
entered into a syndicated line of credit agreement with various banks.
This agreement enables the Fund to participate with other funds managed
by the Adviser in an unsecured line of credit with banks, which permits
borrowings of up to $250 million, collectively. Interest is charged to
each fund, based on its borrowing. In addition, a commitment fee is
charged to each fund based on the average daily unused portion of the
line of credit and is allocated among the participating funds. The Fund
had no borrowing activity under the line of credit during the period
ended April 30, 2003.
Forward foreign currency exchange contracts
The Fund may enter into forward foreign currency exchange contracts as a
hedge against the effect of fluctuations in currency exchange rates. A
forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date at a set price.
The aggregate principal amounts of the contracts are marked to market
daily at the applicable foreign currency exchange rates. Any resulting
unrealized gains and losses are included in the determination of the
Fund's daily net assets. The Fund records realized gains and losses at
the time the forward foreign currency exchange contracts are closed out.
Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of the contracts and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. These contracts involve market or credit risk in excess
of the unrealized gain or loss reflected in the Fund's statement of
assets and liabilities.
The Fund may also purchase and sell forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under
which it intends to take delivery of the foreign currency. Such
contracts normally involve no market risk if they are offset by the
currency amount of the underlying transactions.
The Fund had no open forward foreign currency exchange contracts on
April 30, 2003.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with
the applicable provisions of the Internal Revenue Code and will not be
subject to federal income tax on taxable income that is distributed to
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $13,280,111 of a capital
loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. To the extent that such
carryforward is used by the Fund, no capital gain distributions will be
made. The entire amount of the loss carryforward expires October 31,
2009.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend
date or, in the case of some foreign securities, on the date thereafter
when the Fund identifies the dividend. Interest income on investment
securities is recorded on the accrual basis. Foreign income may be
subject to foreign withholding taxes, capital gains and repatriation
taxes imposed by certain countries in which the Fund invests, which are
accrued as applicable.
The Fund records distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated in
the same manner, at the same time and are in the same amount, except for
the effect of expenses that may be applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, are reported in the
Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, the Fund pays a quarterly management
fee to the Adviser equivalent, on an annual basis, to the sum of: (a)
0.80% of the first $200,000,000 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 $200,000,000. The Adviser has a subadvisory agreement with
Nicholas-Applegate Capital Management LP. The Fund is not responsible
for payment of the subadvisory fees.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted
Distribution Plans with respect to Class A, Class B and Class C pursuant
to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH
Funds for the services it provides as distributor of shares of the Fund.
Accordingly, the Fund makes monthly payments to JH Funds at an annual
rate not to exceed 0.30% of Class A average daily net assets and 1.00%
of Class B and Class C average daily net assets. A maximum of 0.25% of
such payments may be service fees as defined by the Conduct Rules of the
National Association of Securities Dealers. Under the Conduct Rules,
curtailment of a portion of the Fund's 12b-1 payments could occur under
certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During
the period ended April 30, 2003, JH Funds received net up-front sales
charges of $5,073 with regard to sales of Class A shares. Of this
amount, $619 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $3,075 was paid as
sales commissions to unrelated broker-dealers and $1,379 was paid as
sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer. The Adviser's indirect
parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect
sole shareholder of Signator Investors. During the period ended April
30, 2003, JH Funds received net up-front sales charges of $1,632 with
regard to sales of Class C shares. Of this amount, $1,626 was paid as
sales commissions to unrelated broker-dealers and $6 was paid as sales
commissions to sales personnel of Signator Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares being
redeemed. Class C shares that are redeemed within one year of purchase
are subject to a CDSC at a rate of 1.00% of the lesser of the current
market value at the time of redemption or the original purchase cost of
the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds
and are used in whole or in part to defray its expenses for providing
distribution-related services to the Fund in connection with the sale of
Class B and Class C shares. During the period ended April 30, 2003,
CDSCs received by JH Funds amounted to $11,702 for Class B shares and
$523 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a
monthly transfer agent fee at an annual rate of 0.05% of the average
daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
period was at an annual rate of approximately 0.04%
of the average net assets of the Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the
Fund. The unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability for the deferred
compensation. Investments to cover the Fund's deferred compensation
liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations
of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and repurchased
during the last two periods, along with the corresponding dollar value.
The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 1,121,272 $11,813,825 606,875 $5,327,726
Repurchased (1,180,930) (12,396,555) (662,588) (5,889,872)
Net decrease (59,658) ($582,730) (55,713) ($562,146)
CLASS B SHARES
Sold 508,893 $5,177,571 33,473 $282,745
Repurchased (794,841) (7,929,140) (254,031) (2,124,914)
Net decrease (285,948) ($2,751,569) (220,558) ($1,842,169)
CLASS C SHARES
Sold 369,684 $3,661,327 46,586 $408,780
Repurchased (304,259) (2,949,450) (71,767) (621,448)
Net increase (decrease) 65,425 $711,877 (25,181) ($212,668)
NET DECREASE (280,181) ($2,622,422) (301,452) ($2,616,983)
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, including
short-term securities and obligations of the U.S. government, during the
period ended April 30, 2003, aggregated $28,757,593 and $31,686,830,
respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $18,207,013. Gross
unrealized appreciation and depreciation of investments aggregated
$564,675 and $2,135,917, respectively, resulting in net unrealized
depreciation of $1,571,242. The difference between book basis and tax
basis net unrealized depreciation of investments is attributable
primarily to the tax deferral of losses on wash sales and the
realization for tax purposes of unrealized gains on certain forward
foreign currency contracts.
FOR YOUR
INFORMATION
TRUSTEES
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
*Members of the Audit Committee
OFFICERS
Maureen R. Ford
Chairman, President
and Chief Executive Officer
William L. Braman
Executive Vice President
and Chief Investment Officer
Richard A. Brown
Senior Vice President
and Chief Financial Officer
Susan S. Newton
Senior Vice President
and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUBADVISER
Nicholas-Applegate Capital Management LP
600 West Broadway
San Diego, California 92101
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
Pacific Basin Equities Fund.
580SA 4/03
6/03
- --------------------------------------------------------------------------------
SEMI ANNUAL REPORT
John Hancock
International Small Cap
Growth Fund
APRIL 30, 2003
- --------------------------------------------------------------------------------
John Hancock International Small Cap Growth Fund
Schedule of Investments
April 30, 2003 (Unaudited)
ISSUER SHARES VALUE
- ------ ------ -----
COMMON STOCKS
Argentina (0.50%)
BBVA Banco Frances SA* (Banks - Foreign) 2,000 $11,100
--------
Austria (1.89%)
Erste Bank der oesterreichischen Sparkassen AG
(Banks - Foreign) 320 25,320
OMV AG (Oil & Gas) 100 12,008
Voestalpine AG (Steel) 152 4,275
--------
41,603
--------
Belgium (1.04%)
Colruyt SA (Retail) 200 13,068
Mobistar SA* (Telecommunications) 300 9,776
--------
22,844
--------
Brazil (1.21%)
Companhia Paranaense de Energia-Copel American
Despositary Receipts (ADR) (Utilities) 4,800 15,552
Empresa Brasileira de Aeronautica SA (ADR) (Aerospace) 800 11,096
--------
26,648
--------
Canada (12.48%)
Abitibi-Consolidated, Inc. (Paper & Paper Products) 1,500 10,508
Ballard Power Systems, Inc.* (Electronics) 600 6,145
Bonavista Petroleum Ltd.* (Oil & Gas) 200 4,684
Canadian 88 Energy Corp.* (Oil & Gas) 2,600 3,933
Cequel Energy, Inc.* (Oil & Gas) 1,300 5,709
Compton Petroleum Corp.* (Oil & Gas) 1,300 4,848
Cott Corp.* (Beverages) 1,200 22,020
CP Ships Ltd. (Transport) 600 8,762
Dofasco, Inc. (Steel) 700 13,389
Finning Internatonal, Inc. (Machinery) 1,000 19,657
Gildan Activewear, Inc.* (Retail) 300 8,277
Industrial Alliance Life Insurance Co. (Insurance) 600 15,621
IPSCO, Inc. (Steel) 1,100 9,201
Ketch Resources Ltd.* (Oil & Gas) 900 3,733
Kingsway Financial Services, Inc.* (Insurance) 400 4,601
Kingsway Financial Services, Inc.* (USD)(Insurance) 900 10,278
Masonite International Corp.* (Building) 500 8,522
Molson, Inc. (A Shares) (Beverages) 900 20,703
Olympia Energy, Inc.* (Oil & Gas) 1,000 2,572
Precision Drilling Corp.* (Oil & Gas) 700 24,066
Progress Energy Ltd.* (Oil & Gas) 900 5,458
RONA, inc.* (Retail) 1,700 18,687
Saputo, Inc. (Food) 700 12,320
Teck Cominco Ltd. (Class B) (Metal) 1,260 9,011
Tesco Corp.* (Oil & Gas) 900 9,536
Thunder Energy, Inc.* (Oil & Gas) 900 3,952
WestJet Airlines Ltd.* (Transport) 750 8,626
--------
274,819
--------
China (0.54%)
BYD Co., Ltd. (Electronics) 6,000 11,886
--------
Denmark (2.09%)
Coloplast AS (Medical) 200 14,791
Danisco AS (Food) 500 18,263
Jyske Bank AS* (Banks - Foreign) 400 13,047
--------
46,101
--------
Finland (1.12%)
Sampo Oyj (A Shares) (Finance) 3,400 24,664
--------
See notes to financial statements.
1
ISSUER SHARES VALUE
- ------ ------ -----
France (7.03%)
Business Objects SA* (ADR) (Computers) 300 $6,519
Cap Gemini SA* (Computers) 1,000 31,114
CNP Assurances SA (Insurance) 300 12,059
Dassault Systemes SA (Computers) 400 11,557
Essilor International SA (Retail) 300 12,284
JC Decaux SA* (Advertising) 1,800 17,376
Pechiney SA (Metal) 300 8,655
Pernod-Ricard SA (Beverages) 150 13,166
Thales SA (Electronics) 338 9,042
Unibail SA (Real Estate Operations) 200 13,381
Vinci SA (Engineering / R&D Services) 300 19,535
--------
154,688
--------
Germany (4.75%)
Continental AG* (Rubber - Tires & Misc.) 600 10,647
Deutsche Boerse AG (Finance) 600 27,855
Fraport AG (Transportation) 400 8,080
Medion AG (Business Services - Misc.) 400 14,776
Schwarz Pharma AG (Medical) 400 17,142
SGL Carbon AG* (Chemicals) 700 10,273
Stada Arzneimittel AG (Medical) 300 15,685
--------
104,458
--------
Greece (0.40%)
Coca-Cola Hellenic Bottling Co. SA (Beverages) 600 8,772
--------
Hong Kong (0.50%)
Cathay Pacific Airways Ltd. (Transportation) 9,000 10,956
--------
India (0.71%)
Ranbaxy Laboratories Ltd. Global Despositary
Receipts (Medical) 360 5,627
Saytam Computer Services Ltd. (ADR) (Computers) 1,300 10,010
--------
15,637
--------
Ireland (3.00%)
Anglo Irish Bank Corp. Plc (Banks - Foreign) 4,600 34,600
Greencore Group Plc (Food) 1,900 5,831
Irish Life & Permanent Plc (Finance) 2,200 25,520
--------
65,951
--------
Israel (0.62%)
Taro Pharmaceutical Industries Ltd.* (Medical) 300 13,728
--------
Italy (4.05%)
Banco Popolare di Verona e Novara Scrl (Banks - Foreign) 2,000 27,163
ERG SpA (Oil & Gas) 1,300 5,774
Impregilo SpA* (Building) 35,000 14,843
Italcementi SpA (Building) 2,500 26,114
Saipem SpA (Oil & Gas) 2,200 15,345
--------
89,239
--------
Japan (13.14%)
Bank of Yokohama, Ltd. (Banks - Foreign) 4,000 14,120
Capcom Co., Ltd. (Computers) 700 5,588
Eneserve Corp. (Utilities) 200 7,010
Funai Electric Co., Ltd. (Electronics) 100 10,062
Hogy Medical Co., Inc. (Medical) 200 8,469
JSR Corp. (Rubber - Tires & Misc) 1,000 10,431
Keihin Electric Express Railway Co., Ltd. (Transport) 2,000 9,576
Komatsu Ltd. (Machinery) 8,000 30,522
Konica Corp. (Office) 1,000 9,148
Kose Corp. (Cosmetics & Personal Care) 430 13,629
Mitsui Mining & Smelting Co., Ltd. (Metal) 6,000 15,747
Nichii Gakkan Co. (Medical) 200 10,196
Nidec Corp. (Machinery) 300 15,823
Nippon Electric Glass Co., Ltd. (Electronics) 1,000 10,951
See notes to financial statements.
2
ISSUER SHARES VALUE
- ------ ------ -----
Japan - Continued
Nitto Denko Corp. (Chemicals) 600 $17,256
NSK Ltd. (Metal) 6,000 15,999
Pioneer Corp. (Electronics) 500 10,020
Shizuoka Bank Ltd. (Banks - Foreign) 2,000 13,215
THK Co., Ltd. (Machinery) 900 8,301
Toho Gas Co., Ltd. (Oil & Gas) 4,000 11,102
TonenGeneral Sekiyu K.K. (Oil & Gas) 3,000 19,068
UMC Japan* (Electronics) 9 7,094
Uni-Charm Corp. (Cosmetics & Personal Care) 400 15,932
--------
289,259
--------
Luxembourg (0.31%)
Tenaris SA* (Oil & Gas) 211 527
Tenaris SA* (ADR) (Oil & Gas) 264 6,204
--------
6,731
--------
Netherlands (2.19%)
Euronext NV (Finance) 700 15,468
Fugro NV (Engineering / R&D Services) 300 12,170
IHC Caland NV (Oil & Gas) 300 15,484
Rodamco Europe NV (Real Estate Operations) 104 5,055
--------
48,177
--------
Norway (1.64%)
Frontline Ltd. (Transportation) 1,300 13,747
Gjensidige NOR ASA* (Finance) 450 15,594
ProSafe ASA * (Oil & Gas) 400 6,745
--------
36,086
--------
Portugal (0.76%)
Brisa-Auto Estrada de Portugal SA (Transportation) 3,100 16,710
--------
Russia (0.36%)
VimpelCom* (ADR) (Telecommunications) 200 7,972
--------
Singapore (0.50%)
Singapore Exchange Ltd. (Finance) 16,000 10,993
--------
South Korea (2.33%)
Kumgang Korea Chemical Co., Ltd. (Building) 150 12,778
LG Home Shopping, Inc. (Retail) 100 5,687
Samsung SDI Co., Ltd. (Electronics) 100 6,255
Shinsegae Co., Ltd. (Retail) 100 11,934
SK Corp. (Oil & Gas) 860 7,078
You Eal Electronics Co., Ltd. (Telecommunications) 400 7,638
--------
51,370
--------
Spain (7.29%)
Acciona SA (Building) 300 14,396
Acesa Infraestructuras SA (Transportation) 1,900 24,703
Actividades de Construccion y Servicios SA (Building) 600 22,599
Altadis SA (Tobacco) 800 20,624
Bankinter SA (Banks - Foreign) 500 15,272
Corporacion Mapfre SA (Insurance) 2,500 23,436
Ebro Puleva SA (Food) 1,300 11,331
Iberia Lineas Aereas de Espana SA (Transport) 5,900 10,337
Red Electrica de Espana SA (Utilities) 1,500 17,828
--------
160,526
--------
Sweden (3.45%)
Autoliv, Inc. Swedish Depositary Receipts
(Automobiles/Trucks) 600 14,670
Billerud AB (Paper & Paper Products) 600 7,959
Elekta AB (B Shares)* (Medical) 2,000 21,761
Gambro AB (B Shares) (Medical) 800 4,518
SKF AB (B Shares) (Metal) 400 11,590
Swedish Match AB (Tobacco) 2,100 15,532
--------
76,030
--------
See notes to financial statements.
3
ISSUER SHARES VALUE
- ------ ------ -----
Switzerland (2.91%)
Actelion Ltd.* (Medical) 300 $19,210
Converium Holding AG* (Insurance) 300 13,548
Logitech International AG* (Computers) 300 11,059
Saurer AG* (Machinery) 300 7,841
Swiss Life Holding (Insurance) 200 12,505
---------
64,163
---------
Taiwan (0.22%)
Siliconware Precision Industries Co. * (ADR)
(Electronics) 2,000 4,780
---------
United Kingdom (17.30%)
Acambis Plc* (Medical) 3,400 15,487
Amvescap Plc (Finance) 2,153 11,700
Arriva Plc (Transportation) 3,000 15,367
Cattles Plc (Finance) 3,400 17,280
Close Brothers Group Plc (Finance) 1,600 13,790
Cobham Plc (Aerospace) 700 12,866
easyJet Plc* (Transportation) 3,900 11,781
Exel Plc (Transporttion) 1,300 12,466
Friends Provident Plc (Insurance) 12,800 20,100
GKN Plc (Automobiles/Trucks) 4,500 14,816
Kelda Group Plc (Utilities) 3,000 19,731
Kidde Plc (Protection - Safety Equipment & Services) 4,400 5,063
Man Group Plc (Finance) 1,500 25,292
Northern Rock Plc (Banks - Foreign) 2,000 22,871
Peninsular and Oriental Steam Navigation Co.
(Transportation) 5,300 16,349
Schroders Plc (Finance) 1,900 18,456
Severn Trent Plc (Utilities) 1,957 22,364
SIG Plc (Building) 2,500 9,310
Signet Group Plc (Retail) 8,800 11,814
SkyePharma Plc* (Medical) 15,600 12,342
Smith & Nephew Plc (Medical) 3,100 20,673
Smiths Group Plc (Manufacturing) 1,600 17,108
Taylor Woodrow Plc (Building) 3,700 11,591
Tullow Oil Plc* (Oil & Gas) 9,500 10,487
Wood Group (John) Plc (Oil & Gas) 4,720 11,749
---------
380,853
---------
United States (1.47%)
deCode genetics, Inc.* (Medical) 4,000 8,400
Ultra Petroleum Corp.* (Oil & Gas) 2,400 24,000
---------
32,400
---------
TOTAL COMMON STOCKS (95.80%)
(Cost $1,966,442) 2,109,144
---------
PREFERRED STOCKS
Germany (1.59%)
Henkel KGaA (Chemicals) 200 12,879
Wella AG (Cosmetics & Personal Care) 300 22,231
---------
35,110
---------
TOTAL PREFERRED STOCKS (1.59%)
(Cost $29,565) 35,110
---------
WARRANTS
India (0.39%)
Ranbaxy Laboratories Ltd.* (Medical) 600 8,559
---------
8,559
---------
TOTAL WARRANTS (0.39%)
(Cost $8,108) 8,559
---------
See notes to financial statements.
4
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000'S OMITTED) VALUE
- --------------------------------------- --------- -------------- -----------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (4.45%)
(Cost $98,000)
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust Co. -
Date 04-30-03, due 05-01-03 (Secured by U.S. Treasury
Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury
Inflation Indexed Notes 3.875% due 01-15-07
and 3.000% due 07-15-12) 1.280% $98 $98,000
----------
TOTAL INVESTMENTS 102.23% 2,250,813
----------
OTHER ASSETS AND LIABILITIES, NET (2.23%) (49,159)
----------
TOTAL NET ASSETS 100.00% $2,201,654
==========
* 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.
5
Portfolio Concentration
(unaudited)
VALUE
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
- --------------------- ----------------
Advertising 0.79 %
Aerospace 1.09
Automobiles/Trucks 1.34
Banks - Foreign 8.03
Beverages 2.94
Building 5.46
Business Services - Misc 0.67
Chemicals 1.83
Computers 3.44
Cosmetics & Personal Care 2.35
Electronics 3.46
Engineering / R&D Services 1.44
Finance 9.38
Food 2.17
Insurance 5.09
Machinery 3.73
Manufacturing 0.78
Medical 8.93
Metal 2.77
Office 0.42
Oil & Gas 9.72
Paper & Paper Products 0.84
Protection - Safety Equipment & Services 0.23
Real Estate Operations 0.84
Retail 3.71
Rubber - Tires & Misc 0.96
Steel 1.22
Telecommunications 1.15
Tobacco 1.64
Transportation 7.61
Utilities 3.75
Short-term investments 4.45
------
Total investments 102.23 %
======
See notes to financial statements.
6
John Hancock International Small Cap Growth Fund
ASSETS AND ASSETS
LIABILITIES Investments at value (cost - $2,102,115) $2,250,813
April 30, 2003 Cash 58
Unaudited. Foreign cash at value (cost - $9,509) 9,688
Receivable for investments sold 12,557
Dividends and interest receivable 9,675
Other assets 11
Total assets 2,282,802
LIABILITIES
Payable for investments purchased 45,779
Payable to affiliates 1,876
Other payables and accrued expenses 33,493
Total liabilities 81,148
NET ASSETS
Capital paid-in 2,987,626
Accumulated net realized loss on investments and
foreign currency transactions (926,853)
Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currencies 149,023
Accumulated net investment income 858
Net assets $2,201,654
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($2,158,046 / 294,000 shares) $7.34
Class B ( $21,804 / 3,000 shares) $7.27
Class C ( $21,804 / 3,000 shares) $7.27
MAXIMUM OFFERING PRICE PER SHARE
Class A(1) ($7.34 / 95%) $7.73
Class C ($7.27 / 99%) $7.34
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
See notes to financial statements.
7
John Hancock International Small Cap Growth Fund
OPERATIONS INVESTMENT INCOME
For the period ended Dividends (net of foreign withholding taxes of $3,320) $17,077
April 30, 2003 Interest 621
(Unaudited) (1) Total investment income 17,698
EXPENSES
Investment management fee 10,481
Class A distribution and service fee 3,082
Class B distribution and service fee 78
Class C distribution and service fee 78
Custodian fee 27,498
Printing 8,034
Auditing fee 7,438
Registration and filing fee 1,422
Accounting and legal services fee 282
Transfer agent fee 155
Trustees' fee 67
Miscellaneous 23
Legal fee 8
Total expenses 58,646
Less expense reductions (41,782)
Net expenses 16,864
Net investment income 834
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on
Investments (192,733)
Foreign currency transactions (1,482)
Change in net unrealized appreciation (depreciation) of
Investments 274,874
Translation of assets and liabilities in foreign currencies 104
Net realized and unrealized gain 80,763
Increase in net assets from operations $81,597
(1) Semiannual period from 11-1-02 through 4-30-03.
See notes to financial statements.
8
John Hancock International Small Cap Growth Fund
YEAR ENDED PERIOD ENDED
10-31-02 4-30-03(1)
CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS From operations
Net investment income (loss) ($2,068) $834
Net realized loss (459,945) (194,215)
Change in net unrealized appreciation (depreciation) 78,819 274,978
Increase (decrease) in net assets resulting from operations (383,194) 81,597
NET ASSETS
Beginning of period 2,503,251 2,120,057
End of period (2) $2,120,057 $2,201,654
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(2) Includes accumulated net investment income of $24 and $858, respectively.
See notes to financial statements.
9
John Hancock International Small Cap Growth Fund
Financial Highlights
CLASS A
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $8.34 $7.07
Net investment loss(3) (0.01) (0.01) --(4)
Net realized and unrealized gain (loss) on investments (1.65) (1.26) 0.27
Total from investment operations (1.66) (1.27) 0.27
Net asset value, end of period $8.34 $7.07 $7.34
Total return(5,6)(%) (16.60)(7) (15.23) 3.82(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $2 $2
Ratio of expenses to average net assets (%) 1.60(8) 1.60 1.60(8)
Ratio of adjusted expenses to average net assets(9)(%) 9.61(8) 7.51 5.59(8)
Ratio of net investment income (loss) to average net assets (%) (0.21)(8) (0.07) 0.09(8)
Portfolio turnover (%) 59 153 51
See notes to financial statements.
10
John Hancock International Small Cap Growth Fund
Financial Highlights
CLASS B
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $8.32 $7.01
Net investment loss(3) (0.03) (0.04) (0.01)
Net realized and unrealized gain (loss) on investments (1.65) (1.27) 0.27
Total from investment operations (1.68) (1.31) 0.26
Net asset value, end of period $8.32 $7.01 $7.27
Total return(5,6)(%) (16.80)(7) (15.75) 3.71(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(10) --(10) --(10)
Ratio of expenses to average net assets (%) 2.30(8) 2.07 2.05(8)
Ratio of adjusted expenses to average net assets(9)(%) 10.31(8) 7.98 6.04(8)
Ratio of net investment loss to average net assets (%) (0.92)(8) (0.54) (0.36)(8)
Portfolio turnover (%) 59 153 51
See notes to financial statements.
11
John Hancock International Small Cap Growth Fund
Financial Highlights
CLASS C
PERIOD ENDED 10-31-01 (1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $8.32 $7.01
Net investment loss(3) (0.03) (0.04) (0.01)
Net realized and unrealized gain (loss) on investments (1.65) (1.27) 0.27
Total from investment operations (1.68) (1.31) 0.26
Net asset value, end of period $8.32 $7.01 $7.27
Total return(5,6)(%) (16.80)(7) (15.75) 3.71(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(10) --(10) --(10)
Ratio of expenses to average net assets (%) 2.30(8) 2.07 2.05(8)
Ratio of adjusted expenses to average net assets(9)(%) 10.31(8) 7.98 6.04(8)
Ratio of net investment loss to average net assets (%) (0.92)(8) (0.54) (0.36)(8)
Portfolio turnover (%) 59 153 51
(1) Class A, Class B and Class C shares began operations on 6-1-01.
(2) Semiannual period from 11-01-02 through 4-30-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than $0.01per share.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the periods
shown.
(10) Less than $500,000.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock International Small Cap Growth Fund (the "Fund") is a 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 is to achieve long-term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services or, if quotations are not
readily available, or the value has been materially affected by events occurring
after the closing of a foreign market, at fair value as determined in good faith
in accordance with procedures approved by the Trustees. Short-term debt
investments maturing within 60 days are valued at amortized cost, which
approximates market value. All portfolio transactions initially expressed in
terms of foreign currencies have been translated into U.S. dollars as described
in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may participate in a joint
repurchase agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the Fund's
behalf. The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars based on London currency exchange quotations as of
5:00 P.M., London time, on the date of any determination of the net asset value
of the Fund. Transactions affecting statement of operations accounts and net
realized gain (loss) on investments are translated at the rates prevailing at
the dates of the transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities
13
transactions and the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities, resulting from changes in the
exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are determined
on the identified cost basis. Capital gains realized on some foreign securities
are subject to foreign taxes, which are accrued as applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund will be allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Forward foreign currency exchange contracts
The Fund may enter into forward foreign currency exchange contracts as a hedge
against the effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date at a set price. The aggregate principal amounts of the
contracts are marked to market daily at the applicable foreign currency exchange
rates. Any resulting unrealized gains and losses are included in the
determination of the Fund's daily net assets. The Fund records realized gains
and losses at the time the forward foreign currency exchange contracts are
closed out. Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities.
The Fund may also purchase and sell forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under which
it intends to take delivery of the foreign currency. Such contracts normally
involve no market risk if they are offset by the currency amount of the
underlying transactions.
The Fund had no open forward foreign currency exchange contracts on April 30,
2003.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and will not be subject to
federal income tax on taxable income that is distributed to shareholders.
Therefore, no federal income tax provision is required. For federal income tax
purposes, the Fund has $728,552 of a capital loss carryforward available, to the
extent provided by regulations, to offset future net realized capital gains. To
the extent that such carryforward is used by the Fund, no capital gain
distributions will be made. The loss carryforward expires as follows: October
31, 2009 - $271,490 and October 31, 2010 - $457,062.
14
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend or, in
the case of some foreign securities, on the date thereafter when the Fund
identifies the dividend date. Interest income on investment securities is
recorded on the accrual basis. Foreign income may be subject to foreign
withholding taxes, which are accrued as applicable.
The Fund records distributions to shareholders from net investment income and
net realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares are calculated in the same manner, at the same
time and are in the same amount, except for the effect of expenses that may be
applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with income tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a return of
capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 1.00% of the first
$500,000,000 of the Fund's average daily net asset value, (b) 0.90% of the next
$500,000,000 and (c) 0.85% of the Fund's average daily net asset value in excess
of $1,000,000,000. The Adviser has a subadvisory agreement with
Nicholas-Applegate Capital Management LP. The Fund is not responsible for
payment of the subadvisory fees.
The Adviser has agreed to limit the Fund's expenses, excluding the distribution
and service fees, to 1.30% of the Fund's average daily net assets, at least
until February 28, 2004. Accordingly, the expense reduction amounted to $41,782
for the period ended April 30, 2003. The Adviser reserves the right to terminate
this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provides as distributor of shares of the Fund. Accordingly, the Fund makes
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
period ended April 30, 2003, JH Funds received no up-front sales charges with
regard to Class A and Class C shares.
Class B shares that are redeemed within six years of purchase are subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that are
redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of
the lesser of the current market value at the time of redemption or
15
the original purchase cost of the shares being redeemed. Proceeds from the CDSCs
are paid to JH Funds and are used in whole or in part to defray its expenses for
providing distribution related services to the Fund in connection with the sale
of Class B and Class C shares. During the period ended April 30, 2003, JH Funds
received no CDSCs with regard to Class B and Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHlLCo").
The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the
average daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for certain out-of-pocket expenses.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial
interest of the Fund on April 30, 2003.
The Fund has an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always equal and
are marked to market on a periodic basis to reflect any income earned by the
investments as well as any unrealized gains or losses. The Deferred Compensation
Plan investments had no impact on the operations of the Fund.
NOTE C
Fund share transactions
The Fund had no shares sold and repurchased during the last two periods. The
Fund has an unlimited number of shares authorized with no par value.
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended April 30, 2003, aggregated $1,089,747 and $1,042,429, respectively
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $2,104,087. Gross unrealized
appreciation and depreciation of investments aggregated $235,671 and $88,945,
respectively, resulting in net unrealized appreciation of $146,726. The
difference between book basis and tax basis net unrealized appreciation of
investments is attributable primarily to the tax deferral of losses on wash
sales.
NOTE E
Subsequent events
On June 23, 2003, the Trustees approved the liquidation of the Fund.
16
John Hancock International Small Cap Growth 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
- --------------------------------------------------------------------------------
SEMI ANNUAL REPORT
John Hancock Consumer Industries Fund
APRIL 30, 2003
- --------------------------------------------------------------------------------
John Hancock Consumer Industries Fund
Schedule of Investments
April 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
- ------ ------ -----
COMMON STOCKS
Automobiles / Trucks (3.09%)
Thor Industries, Inc. 2,600 $ 83,148
----------
Beverages (3.45%)
Anheuser-Busch Cos., Inc. 1,050 52,374
Coca-Cola Co. (The) 1,000 40,400
----------
92,774
----------
Computers (1.98%)
Electronic Arts, Inc.* 900 53,343
----------
Cosmetics & Personal Care (5.01%)
Estee Lauder Cos., Inc. (The) (Class A) 1,800 58,500
Procter & Gamble Co. (The) 850 76,373
----------
134,873
----------
Diversified Operations (2.13%)
General Electric Co. 1,950 57,428
----------
Food (12.29%)
American Italian Pasta Co. (Class A)* 850 37,485
Dean Foods Co.* 1,100 47,883
Del Monte Foods Co.* 3,500 27,825
Horizon Organic Holding Corp.* 4,250 58,650
Peet's Coffee & Tea, Inc.* 2,200 37,422
Ralcorp Holdings, Inc.* 1,350 33,615
United Natural Foods, Inc.* 2,300 67,137
Whole Foods Market, Inc.* 350 20,776
----------
330,793
----------
Household (0.46%)
Tupperware Corp. 900 12,474
----------
Leisure (2.05%)
Callaway Golf Co. 2,050 28,556
Harley-Davidson, Inc. 600 26,664
----------
55,220
----------
Media (5.32%)
Clear Channel Communications, Inc.* 900 35,199
Entercom Communications Corp.* 500 24,295
NetFlix, Inc.* 1,200 27,480
Thomson Corp. (The) (Canada) 950 27,987
Viacom, Inc. (Class A)* 650 28,223
----------
143,184
----------
See notes to financial statements
1
ISSUER SHARES VALUE
- ------ ------ -----
Medical (2.20%)
NBTY, Inc.* 1,250 $ 19,375
Weight Watchers International, Inc.* 850 39,933
----------
59,308
----------
Retail (56.18%)
99 Cents Only Stores* 1,783 52,527
A.C. Moore Arts & Crafts, Inc.*+ 5,450 93,903
Abercrombie & Fitch Co. (Class A)* 1,650 54,252
Amazon.com, Inc.* 900 25,803
Applebee's International, Inc. 2,850 78,090
AutoZone, Inc.* 500 40,405
Bed Bath & Beyond, Inc.* 500 19,755
Best Buy Co., Inc.* 900 31,122
Coach, Inc.* 625 27,194
Columbia Sportswear Co.* 1,300 62,413
Cost Plus, Inc.* 2,800 86,044
Costco Wholesale Corp. 850 29,435
Darden Restaurants, Inc. 2,475 43,337
Family Dollar Stores, Inc. 2,000 68,380
Fred's, Inc. 1,000 32,450
Hollywood Entertainment Corp.* 4,900 86,975
Hot Topic, Inc.* 3,200 78,240
Kohl's Corp.* 800 45,440
Lowe's Cos., Inc. 1,000 43,890
Panera Bread Co.* 2,450 83,374
Quiksilver, Inc. * 1,600 52,160
RARE Hospitality International, Inc.* 2,600 75,738
Staples, Inc.* 2,050 39,032
Tiffany & Co. 2,900 80,446
Urban Outfitters, Inc.* 1,450 43,239
Walgreen Co. 1,650 50,919
Wal-Mart Stores, Inc. 1,550 87,296
----------
1,511,859
----------
Schools / Education (0.81%)
Apollo Group, Inc. (Class A)* 400 21,680
----------
TOTAL COMMON STOCKS (94.97%)
(Cost $2,294,785) 2,556,084
----------
See notes to financial statements.
2
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (5.50%)
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust Co. -
Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury
Inflation Indexed Bond, 3.875% due 04-15-29 and U.S.
Treasury Inflation Indexed Notes, 3.000% thru 3.875%,
due 01-15-07 thru 07-15-12) 1.28 % $ 148 $ 148,000
------------
SHARES
Cash Equivalents (2.54%)
AIM Cash Investment Trust** 68,422 68,422
------------
TOTAL SHORT-TERM INVESTMENTS (8.04%)
(Cost $216,422) 216,422
------------
TOTAL INVESTMENTS (103.01%) 2,772,506
------------
OTHER ASSETS AND LIABILITIES, NET (3.01%) (81,121)
------------
TOTAL NET ASSETS (100.00%) $ 2,691,385
============
* Non-income producing security.
** Represents investment of security lending collateral.
+ All or a portion of this security is on loan on April 30, 2003.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total of that category
as a percentage of the net assets of the Fund.
See notes to financial statements.
3
John Hancock Consumer Industries Fund
April 30, 2003 (unaudited)
ASSETS AND ASSETS
LIABILITIES Investments at value (cost $2,511,207)
including $67,197 of securities loaned $2,772,506
Cash 300
Dividends and interest receivable 478
Other assets 14
Total assets 2,773,298
LIABILITIES
Payable for securities on loan 68,422
Payable to affiliates 457
Other payables and accrued expenses 13,034
Total liabilities 81,913
NET ASSETS
Capital paid-in 2,964,485
Accumulated net realized loss on investments (520,805)
Net unrealized appreciation of investments 261,299
Accumulated net investment loss (13,594)
Net assets $2,691,385
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($2,638,068 / 294,000 shares) $8.97
Class B ( $26,659 / 3,000 shares) $8.89
Class C ( $26,659 / 3,000 shares) $8.89
MAXIMUM OFFERING PRICE PER SHARE
Class A (1) ($8.97 / 95%) $9.44
Class C ($8.89 / 99%) $8.98
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
See notes to financial statements.
4
John Hancock Consumer Industries Fund
OPERATIONS INVESTMENT INCOME
For the period ended Dividends (net of foreign withholding taxes of $6) $4,739
April 30, 2003 (unaudited) (1) Interest (including securities lending income of $48) 848
Total investment income 5,587
EXPENSES
Investment management fee 10,458
Class A distribution and service fee 3,618
Class B distribution and service fee 91
Class C distribution and service fee 91
Printing 5,632
Auditing fee 4,959
Custodian fee 4,374
Registration and filing fee 1,893
Accounting and legal services fee 331
Trustees' fee 75
Legal fee 13
Total expenses 31,535
Less expense reductions (12,356)
Net expenses 19,179
Net investment loss (13,592)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (74,876)
Change in net unrealized appreciation (depreciation)
of investments 216,160
Net realized and unrealized gain 141,284
Increase in net assets from operations $127,692
(1) Semiannual period from 11-1-02 through 4-30-03.
See notes to financial statements.
5
John Hancock Consumer Industries Fund
YEAR ENDED PERIOD ENDED
10-31-02 4-30-03 (1)
CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS From operations
Net investment loss ($27,104) ($13,592)
Net realized loss (285,960) (74,876)
Change in net unrealized appreciation (depreciation) 212,081 216,160
Increase (decrease) in net assets resulting from operations (100,983) 127,692
Distributions to shareholders
Class A (5,424) --
NET ASSETS
Beginning of period 2,670,100 2,563,693
End of period (2) $2,563,693 $2,691,385
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(2) Includes accumulated net investment loss of $2 and $13,594, respectively.
See notes to financial statements.
6
John Hancock Consumer Industries Fund
Financial Highlights
CLASS A SHARES
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.00 $8.90 $8.55
Net investment loss (3) (0.01) (0.09) (0.04)
Net realized and unrealized gain (loss) on investments (1.09) (0.24) 0.46
Total from investment operations (1.10) (0.33) 0.42
Less distributions
From net investment income -- (0.02) --
Net asset value, end of period $8.90 $8.55 $8.97
Total return(4,5)(%) (11.00)(6) (3.75) 4.91(6)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $3 $3
Ratio of expenses to average net assets(%) 1.55(7) 1.55 1.55(7)
Ratio of adjusted expenses to average net assets(8)(%) 3.04(7) 2.64 2.55(7)
Ratio of net investment loss to average net assets(%) (0.14)(7) (0.95) (1.10)(7)
Portfolio turnover(%) 121 157 62
See notes to financial statements.
7
John Hancock Consumer Industries Fund
Financial Highlights
CLASS B SHARES
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(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) (0.06)
Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.47
Total from investment operations (1.14) (0.38) 0.41
Net asset value, end of period $8.86 $8.48 $8.89
Total return(4,5)(%) (11.40)(6) (4.29) 4.83(6)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(9) --(9) --(9)
Ratio of expenses to average net assets(%) 2.25(7) 2.02 2.00(7)
Ratio of adjusted expenses to average net assets(8)(%) 3.74(7) 3.11 3.00(7)
Ratio of net investment loss to average net assets (%) (0.84)(7) (1.42) (1.54)(7)
Portfolio turnover(%) 121 157 62
See notes to financial statements.
8
John Hancock Consumer Industries Fund
Financial Highlights
CLASS C SHARES
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(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) (0.06)
Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.47
Total from investment operations (1.14) (0.38) 0.41
Net asset value, end of period $8.86 $8.48 $8.89
Total return(4,5)(%) (11.40)(6) (4.29) 4.83(6)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(9) --(9) --(9)
Ratio of expenses to average net assets(%) 2.25(7) 2.02 2.00(7)
Ratio of adjusted expenses to average net assets(8)(%) 3.74(7) 3.11 3.00(7)
Ratio of net investment loss to average net assets(%) (0.84)(7) (1.42) (1.54)(7)
Portfolio turnover(%) 121 157 62
(1) Class A, Class B, and Class C shares began operations on 3-1-01.
(2) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(5) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(6) Not annualized.
(7) Annualized.
(8) Does not take into consideration expense reductions during the periods
shown.
(9) Less than $500,000.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Consumer Industries Fund (the "Fund") is 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
is to achieve long term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services or at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days are valued at amortized
cost, which approximates market value. Investments in AIM Cash Investment Trust
are valued at their net asset value each business day.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may participate in a joint
repurchase agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the Fund's
behalf. The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are determined
on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund will be allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
10
Securities lending
The Fund may lend securities to certain qualified brokers who pay the Fund
negotiated lender fees. These fees are included in interest income. The loans
are collateralized at all times with cash or securities with a market value at
least equal to the market value of the securities on loan. As with other
extensions of credit, the Fund may bear the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities fail financially. On April 30, 2003, the Fund loaned
securities having a market value of $67,197 collateralized by cash in the amount
of $68,422. The cash collateral was invested in a short-term instrument.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and will not be subject to
federal income tax on taxable income that is distributed to shareholders.
Therefore, no federal income tax provision is required. For federal income tax
purposes, the Fund has $443,618 of a capital loss carryforward available, to the
extent provided by regulations, to offset future net realized capital gains. To
the extent that such carryforward is used by the Fund, no capital gain
distributions will be made. The loss carryforward expires as follows: October
31, 2009 - $114,047 and October 31, 2010 - $329,571.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend date or,
in the case of some foreign securities, on the date thereafter when the Fund
identifies the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding taxes,
which are accrued as applicable.
The Fund records distributions to shareholders from net investment income and
net realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares are calculated in the same manner, at the same
time and are in the same amount, except for the effect of expenses that may be
applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with income tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a return of
capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.85% 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 has agreed to limit the Fund's expenses, excluding the distribution
and service fees, to 1.25% of the Fund's average daily net assets, at least
until February 28, 2004. Accordingly, the expense reduction amounted to $12,356
for the period ended April 30, 2003. The Adviser reserves the right to terminate
this limitation in the future.
11
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provides as distributor of shares of the Fund. Accordingly, the Fund makes
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
period ended April 30, 2003, JH Funds received no up-front sales charges with
regard to sales of Class A and Class C shares.
Class B shares that are redeemed within six years of purchase are subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that are
redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of
the lesser of the current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to
JH Funds and are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of Class B
and Class C shares. During the period ended April 30, 2003, JH Funds received no
CDSCs with regard to Class B and Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHLICo").
The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the
average daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial
interest of the Fund on April 30, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always equal and
are marked to market on a periodic basis to reflect any income earned by the
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 has an unlimited number of shares authorized with no par value.
12
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended April 30, 2003, aggregated $1,518,005 and $1,459,115, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $2,513,672. Gross unrealized
appreciation and depreciation of investments aggregated $336,241 and $77,407,
respectively, resulting in net unrealized appreciation of $258,834. The
difference between book basis and tax basis net unrealized appreciation of
investments is attributable primarily to the tax deferral of losses on wash
sales.
NOTE E
Subsequent events
On May 20, 2003, the Trustees approved the liquidation of the Fund after the
close of business on May 7, 2003.
13
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, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Transfer Agent
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
14
- --------------------------------------------------------------------------------
SEMI ANNUAL REPORT
John Hancock Communications Fund
APRIL 30, 2003
- --------------------------------------------------------------------------------
John Hancock Communications Fund
Schedule of Investments
April 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
ISSUER SHARES VALUE
COMMON STOCKS
Advertising (3.34%)
Omnicom Group, Inc. 700 $ 43,330
---------
Computers (9.30%)
Cisco Systems, Inc.* 2,100 31,584
Emulex Corp.* 1,100 22,539
Hewlett-Packard Co. 1,600 26,080
Lexmark International, Inc.* 300 22,353
McDATA Corp. (Class A)* 1,700 17,986
---------
120,542
---------
Electronics (14.27%)
Intersil Corp. (Class A)* 1,500 27,750
L-3 Communications Holdings, Inc.* 900 39,960
QLogic Corp.* 700 30,793
Silicon Laboratories, Inc.* 850 24,183
Texas Instruments, Inc. 2,200 40,678
Xilinx, Inc.* 800 21,656
---------
185,020
---------
Fiber Optics (4.06%)
JDS Uniphase Corp.* 16,300 52,649
---------
Media (38.02%)
Clear Channel Communications, Inc.* 1,600 62,576
Comcast Corp. (Class A)* 3,941 125,757
Comcast Corp. (Special Class A)* 1,400 42,084
EchoStar Communications Corp. (Class A)* 1,700 50,932
Fox Entertainment Group, Inc. (Class A)* 1,600 40,640
Harte-Hanks, Inc. 900 16,200
New York Times Co. (The) (Class A) 600 27,828
Univision Communications, Inc. (Class A)* 1,900 57,532
USA Interactive* 1,300 38,935
Viacom, Inc. (Class B)* 700 30,387
---------
492,871
---------
Printing - Commercial (2.05%)
Valassis Communications, Inc.* 1,000 26,600
---------
Telecommunications (25.12%)
BellSouth Corp. 1,100 28,039
Level 3 Communications, Inc.*+ 6,000 34,320
Motorola, Inc. 5,200 41,132
Nextel Communications, Inc. (Class A)* 1,900 28,101
Nokia Corp., American Depositary Receipt (ADR) (Finland) 4,211 69,776
QUALCOMM, Inc.* 1,200 38,268
Verizon Communications, Inc. 2,300 85,974
---------
325,610
---------
Utilities (2.89%)
ALLTEL Corp. 800 37,488
---------
TOTAL COMMON STOCKS (99.05%)
(Cost $1,326,221) 1,284,110
---------
See notes to financial statements.
1
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.46%)
Investment in a joint repurchase agreement
transaction with State Street Bank & Trust Co. -
Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury
Inflation Indexed Bond, 3.875% due 04-15-29 and U.S.
Treasury Inflation Indexed Notes, 3.000% thru 3.875%,
due 01-15-07 thru 07-15-12) 1.28 % $ 19 $ 19,000
------------
SHARES
Cash Equivalents (2.65%)
AIM Cash Investment Trust** 34,303 34,303
------------
TOTAL SHORT-TERM INVESTMENTS (4.11%)
(Cost $53,303) 53,303
------------
TOTAL INVESTMENTS (103.16%) 1,337,413
------------
OTHER ASSETS AND LIABILITIES, NET (3.16%) (41,058)
------------
TOTAL NET ASSETS (100.00%) $ 1,296,355
============
* Non-income producing security.
** Represents investment of security lending collateral.
+ All or a portion of this security is on loan on April 30, 2003.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total of that category
as a percentage of the net assets of the Fund.
See notes to financial statements.
2
John Hancock Communications Fund
ASSETS AND ASSETS
LIABILITIES Investments at value (cost - $1,379,524) including $33,748 of securities loaned $1,337,413
April 30, 2003 (unaudited) Cash 95
Dividends and interest receivable 1,755
Receivable from affiliates 1,841
Other assets 9
Total assets 1,341,113
LIABILITIES
Payable for securities on loan 34,303
Other payables and accrued expenses 10,455
Total liabilities 44,758
NET ASSETS
Capital paid-in 2,989,986
Accumulated net realized loss on investments (1,650,758)
Net unrealized depreciation of investments (42,111)
Accumulated net investment loss (762)
Net assets $1,296,355
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($1,270,613 / 294000 shares) $4.32
Class B ( $12,871 / 3000 shares) $4.29
Class C ( $12,871 / 3000 shares) $4.29
MAXIMUM OFFERING PRICE PER SHARE
Class A(1) ( $4.32 / 95%) $4.55
Class C ( $4.29 / 99%) $4.33
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
See notes to financial statements.
3
John Hancock Communications Fund
OPERATIONS INVESTMENT INCOME
For the period ended Dividends (net of foreign withholding taxes of $192) $7,458
April 30, 2003 (unaudited)(1) Securities lending income 1,578
Interest 207
Total investment income 9,243
EXPENSES
Investment management fee 5,596
Class A distribution and service fee 1,828
Class B distribution and service fee 46
Class C distribution and service fee 46
Printing 6,289
Auditing fee 4,959
Custodian fee 4,242
Registration and filing fee 1,893
Accounting and legal services fee 167
Trustees' fee 39
Miscellaneous 35
Transfer agent fee 10
Legal fee 8
Total expenses 25,158
Less expense reductions (15,154)
Net expenses 10,004
Net investment loss (761)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (218,253)
Change in net unrealized appreciation (depreciation)
of investments 267,007
Net realized and unrealized gain 48,754
Increase in net assets from operations $47,993
(1) Semiannual period from 11-1-02 through 4-30-03.
See notes to financial statements.
4
John Hancock Communications Fund
YEAR ENDED PERIOD ENDED
10-31-02 4-30-03(1)
CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS From operations
Net investment loss ($1,878) ($761)
Net realized loss (867,565) (218,253)
Change in net unrealized appreciation (depreciation) 42,870 267,007
Increase (decrease) in net assets resulting from operations (826,573) 47,993
Distributions to shareholders
From net investment income
Class A (5,627) --
From Fund share transactions (47) --
NET ASSETS
Beginning of period 2,080,609 1,248,362
End of period(2) $1,248,362 $1,296,355
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(2) Includes accumulated net investment loss of $1 and $762, respectively.
See notes to financial statements.
5
John Hancock Communications Fund
Financial Highlights
CLASS A
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
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) 0.16
Total from investment operations (3.06) (2.76) 0.16
Less distributions
From net investment income -- (0.02) --
Net asset value, end of period $6.94 $4.16 $4.32
Total return(5,6)(%) (30.60)(7) (39.90) 3.85(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $1 $1
Ratio of expenses to average net assets (%) 1.60(8) 1.60 1.60(8)
Ratio of adjusted expenses to average net assets(9)(%) 3.99(8) 3.19 4.04(8)
Ratio of net investment loss to average net assets(%) (0.23)(8) (0.10) (0.11)(8)
Portfolio turnover(%) 81 119 73
See notes to financial statements.
6
John Hancock Communications Fund
Financial Highlights
CLASS B
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
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) 0.16
Total from investment operations (3.08) (2.78) 0.15
Net asset value, end of period $6.92 $4.14 $4.29
Total return(5,6)(%) (30.80)(7) (40.17) 3.62(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) --(10) --(10) --(10)
Ratio of expenses to average net assets (%) 2.30(8) 2.08 2.05(8)
Ratio of adjusted expenses to average net assets(9)(%) 4.69(8) 3.67 4.49(8)
Ratio of net investment loss to average net assets(%) (0.93)(8) (0.58) (0.56)(8)
Portfolio turnover(%) 81 119 73
See notes to financial statements.
7
John Hancock Communications Fund
Financial Highlights
CLASS C
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2)
PER SHARE OPERATING PERFORMANCE
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) 0.16
Total from investment operations (3.08) (2.78) 0.15
Net asset value, end of period $6.92 $4.14 $4.29
Total return(5,6)(%) (30.80)(7) (40.17) 3.62(7)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period(in millions) --(10) --(10) --(10)
Ratio of expenses to average net assets(%) 2.30(8) 2.08 2.05(8)
Ratio of adjusted expenses to average net assets(9)(%) 4.69(8) 3.67 4.49(8)
Ratio of net investment loss to average net assets(%) (0.93)(8) (0.58) (0.56)(8)
Portfolio turnover(%) 81 119 73
(1) Class A, Class B and Class C shares began operations on 6-1-01.
(2) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than $0.01 per share.
(5) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(6) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(7) Not annualized.
(8) Annualized.
(9) Does not take into consideration expense reductions during the periods
shown.
(10) Less than $500,000.
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE A
Accounting policies
John Hancock Communications Fund (the "Fund") is 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
is to seek long-term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares of the
Fund, designated as Class A, Class B and Class C shares. The shares of each
class represent an interest in the same portfolio of investments of the Fund and
have equal rights as to voting, redemptions, dividends and liquidation, except
that certain expenses, subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current regulations of
the Securities and Exchange Commission and the Internal Revenue Service.
Shareholders of a class that bears distribution and service expenses under terms
of a distribution plan have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund were as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market quotations,
valuations provided by independent pricing services or at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days are valued at amortized
cost, which approximates market value. Investments in AIM Cash Investment Trust
are valued at their net asset value each business day.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may participate in a joint
repurchase agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are obligations of
the U.S. government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the Fund's
behalf. The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are determined
on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Distribution and
service fees, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate(s) applicable
to each class.
Expenses
The majority of the expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund will be allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
9
Securities lending
The Fund may lend securities to certain qualified brokers who pay the Fund
negotiated lender fees. The loans are collateralized at all times with cash or
securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear the
risk of delay of the loaned securities in recovery or even loss of rights in the
collateral, should the borrower of the securities fail financially. On April 30,
2003, the Fund loaned securities having a market value of $33,748 collateralized
by cash in the amount of $34,303. The cash collateral was invested in a
short-term instrument.
Federal income taxes
The Fund qualifies as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and will not be subject to
federal income tax on taxable income that is distributed to shareholders.
Therefore, no federal income tax provision is required. For federal income tax
purposes, the Fund has $1,426,509 of a capital loss carryforward available, to
the extent provided by regulations, to offset future net realized capital gains.
To the extent that such carryforward is used by the Fund, no capital gain
distributions will be made. The loss carryforward expires as follows: October
31, 2009 - $558,949 and October 31, 2010 - $867,560.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend date or,
in the case of some foreign securities, on the date thereafter when the Fund
identifies the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding taxes,
which are accrued as applicable.
The Fund records distributions to shareholders from net investment income and
net realized gains on the ex-dividend date. Distributions paid by the Fund with
respect to each class of shares are calculated in the same manner, at the same
time and are in the same amount, except for the effect of expenses that may be
applied differently to each class.
Such distributions, on a tax basis, are determined in conformity with income tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a return of
capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Fund. Actual results could differ from
these estimates.
NOTE B
Management fee and transactions
with affiliates and others
The Fund has an investment management contract with the Adviser. Under the
investment management contract, the Fund pays a monthly management fee to the
Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first
$500,000,000 of the Fund's average daily net asset value (b) 0.85% of the next
$500,000,000 and (c) 0.80% of the Fund's average daily net asset value in excess
of $1,000,000,000.
The Adviser has agreed to limit the Fund's expenses, excluding distribution and
service fees, to 1.30% of the Fund's average daily net assets, at least until
February 28, 2004. Accordingly, the expense reduction amounted to $15,154 for
the period ended April 30, 2003. The Adviser reserves the right to terminate
this limitation in the future.
10
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans
with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to reimburse JH Funds for the services it
provides as distributor of shares of the Fund. Accordingly, the Fund makes
monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B and Class C average daily net
assets. A maximum of 0.25% of such payments may be service fees as defined by
the Conduct Rules of the National Association of Securities Dealers. Under the
Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
period ended April 30, 2003, JH Funds received no up-front sales charges with
regard to sales of Class A and Class C shares.
Class B shares that are redeemed within six years of purchase are subject to a
contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Class C shares that are
redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of
the lesser of the current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to
JH Funds and are used in whole or in part to defray its expenses for providing
distribution related services to the Fund in connection with the sale of Class B
and Class C shares. During the period ended April 30, 2003, JH Funds received no
CDSCs with regard to Class B and Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature Services,
Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHLICo").
The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the
average daily net asset value, plus a fee based on the number of shareholder
accounts and reimbursement for certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of the Fund.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial
interest of the Fund on April 30, 2003.
Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of
the Adviser and/or its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated
Trustees may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other asset. The
deferred compensation liability and the related other asset are always equal and
are marked to market on a periodic basis to reflect any income earned by the
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
This listing illustrates the number of Fund shares sold and repurchased during
the last two periods, along with the corresponding dollar value. The Fund has an
unlimited number of shares authorized with no par value.
11
YEAR ENDED 10-31-02(1) PERIOD ENDED 4-30-03(1)
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Repurchased (6) ($47) -- --
Net decrease (6) ($47) -- --
NET DECREASE (6) ($47) -- --
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited.
NOTE D
Investment transactions Purchases and proceeds from sales or maturities of
securities, other than short-term securities and obligations of the U.S.
government, during the period ended April 30, 2003, aggregated $918,097 and
$894,139, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $1,379,524. Gross unrealized
appreciation and depreciation of investments aggregated $84,526 and $126,637,
respectively, resulting in net unrealized depreciation of $42,111.
NOTE E
Subsequent events On May 20, 2003, the Trustees approved the liquidation of the
Fund after the close of business on May 7, 2003.
NOTE F
Subsequent events
On May 20, 2003, the Trustees voted to terminate the Fund after the close of
business on May 20, 2003.
12
John Hancock Funds - 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
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
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this amended Form
N-CSR, the registrant's principal executive officer and principal financial
officer have concluded that those disclosure controls and procedures provide
reasonable assurance that the material information required to be disclosed by
the registrant on this report is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation.
ITEM 10. EXHIBITS.
(a) Not applicable at this time.
(b)(1) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of
1940, are attached as Ex99.CERT.
(b)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule
30a-2(b) under the Investment Company Act of 1940, are attached as Ex99.CERT.
The certifications furnished pursuant to this paragraph are not deemed to be
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or
otherwise subject to the liability of that section. Such certifications are not
deemed to be incorporated by reference into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent that the
Registrant specifically incorporates them by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 30, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 30, 2003
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: June 30, 2003