January 5, 2004
EDGAR
United States Securities and
Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form N-CSR
John Hancock World Fund (the "Registrant") on behalf of:
John Hancock Biotechnology Fund
John Hancock Health Sciences Fund
File Nos. 33-10722; 811-4932
Ladies and Gentlemen:
Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and
the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for
the period ending October 31, 2003.
If you have any questions or comments regarding this filing, please contact the
undersigned at (617) 375-1722.
Sincerely,
/s/Brian E. Langenfeld
Brian E. Langenfeld
Attorney and Assistant Secretary
ITEM 1. REPORT TO STOCKHOLDERS.
John Hancock
Health
Sciences Fund
ANNUAL REPORT
10.31.03
Sign up for electronic delivery at
www.jhancock.com/funds/edelivery
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen Ford goldfarb, Chairman and Chief Executive Officer,
flush left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
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
Trustees & officers
page 25
For your information
page 29
Dear Fellow Shareholders,
The stock market has made a strong recovery in 2003. Historically low
interest rates, improving corporate earnings and government stimulus
in the form of tax cuts gave investors hope that the economy would
begin to strengthen, which it did. The market's move up began in April
and the breadth of the rally was enormous. As a result, the major
indexes were able to wipe out their first-quarter losses and post
solid gains year-to-date through October 31. With technology leading
the way, the tech-heavy Nasdaq Composite Index rose 45.22% through
October, while the Dow Jones Industrial Average was up 19.82% and the
Standard & Poor's 500 Index returned 21.19%. With falling interest
rates, bonds also did well, although they began to reverse course in
July. High yield bonds led the pack, returning 24.23% through October,
as measured by the Lehman Brothers High Yield Index.
In other news, we are pleased to inform you that on September 28,
2003, the Boards of Directors of Canada-based Manulife Financial
Corporation and Boston-based John Hancock Financial Services, Inc.,
the parent company of John Hancock Funds, unanimously voted to merge
the two companies.
Please be assured that the completion of the merger -- anticipated to
occur in the first half of 2004 -- will have no effect on your
investment in our John Hancock mutual funds. Your fund's adviser and
board of trustees will remain the same, as will your relationship with
your financial adviser.
The merger is subject to customary closing conditions, including
receipt of required regulatory approvals and approval by John Hancock
stockholders. If you only own shares in a John Hancock mutual fund you
are not affected and will not receive a proxy.
Additional information on this transaction is available on our Web
site: www.jhfunds.com. If you have questions about the merger, you may
also call 800-732-5543. Separately, for information about your
investments in John Hancock funds, please contact your financial
adviser or our Customer Service representatives at 800-225-5291.
Sincerely,
/S/ MAUREEN FORD GOLDFARB
Maureen Ford Goldfarb,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of October 31, 2003.
They are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term growth
of capital by nor-
mally investing at
least 80% of its
assets in stocks of
U.S. and foreign
health-care
companies.
Over the last twelve months
* Health-care stocks posted decent returns, but lagged the overall
stock market as investors moved toward higher-growth sectors.
* The Fund benefited from its holdings in biotech companies with
success in cancer-related treatments.
* Some health-care service companies disappointed.
[Bar chart with heading "John Hancock Health Sciences Fund." Under the
heading is a note that reads "Fund performance for the year ended October
31, 2003." The chart is scaled in increments of 5% with 0% at the bottom
and 15% at the top. The first bar represents the 14.77% total return for
Class A. The second bar represents the 13.95% total return for Class B. The
third bar represents the 13.95% total return for Class C. A note below the
chart reads "Total returns for the Fund are at net asset value with all
distributions reinvested."]
Top 10 holdings
5.7% Amgen, Inc.
5.5% Pfizer, Inc.
5.2% Medtronic, Inc.
3.7% UnitedHealth Group, Inc.
3.2% Genentech, Inc.
2.9% Stryker Corp.
2.8% Wyeth
2.7% Zimmer Holdings, Inc.
2.6% St. Jude Medical, Inc.
2.5% Teva Pharmaceutical Industries Ltd.
As a percentage of net assets on October 31, 2003.
MANAGER'S
REPORT
BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER
John Hancock
Health Sciences
Fund
"Health-care stocks posted
decent gains during the
12 months ended
October, 31, 2003..."
Health-care stocks posted decent gains during the 12 months ended October,
31, 2003, although they lagged the overall stock market. The biotechnology
sector led the pack with much-better-than-market returns. Biotech stocks
were boosted initially by greater investor receptivity to companies with
longer-term growth prospects, then later by positive clinical trial results
from a number of products in development and a jumpstart in product
approvals by the FDA. Medical device makers continued their strong overall
performance, though some large-cap names lagged. Health-care service
companies posted mixed results, with drug distribution, managed care and
hospital companies weak for much of the period. Many stocks of big
multinational pharmaceutical companies performed poorly during the year,
accounting for some of the year's biggest disappointments. They suffered
from a variety of ills, including having too few new blockbusters to fuel
profits, as well as increased competition from generic drug makers, despite
the weakening of the U.S. dollar against major foreign currencies and the
potential for a benign Medicare drug benefit passing through Congress. In
contrast, investors became more enthusiastic about generic drug companies
and specialty companies, based on the number of drugs that faced patent
expiration and the development of attractive niche market opportunities.
PERFORMANCE AND STRATEGY REVIEW
For the 12 months ended October 31, 2003, John Hancock Health Sciences
Fund's Class A, Class B and Class C shares posted total returns of
14.77%, 13.95% and 13.95%, respectively, at net asset value. During
the same period, the Russell 3000 Healthcare Index returned 15.03% and
the more broadly diversified average health/biotechnology fund had a
total return of 21.19%, according to Lipper, Inc.,1 while the Standard
& Poor's 500 Index returned 20.79%. 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.
[A photo of Linda Miller flush right next to first paragraph.]
The Fund's underperformance of its peer group can be attributed mainly
to its focus on the broader health-care stock universe. Other funds
with narrower investment parameters generally were more concentrated
in biotech stocks, which were the best-performing health-care group.
Our decision to underweight pharmaceutical companies, and good stock
selection within that group, benefited the Fund's performance. Our
holdings in U.K.-based AstraZeneca posted strong returns during the
year, buoyed in part by the company's new products, such as heartburn
medication Nexium, which helped offset competition from generic drug
makers. Our emphasis on specialty and generic drug manufacturers --
such as Biovail and Teva Pharmaceutical Industries -- was rewarded.
Even though we maintained an underweighting relative to our benchmark
in large multinational pharmaceutical companies, we didn't completely
sidestep their problems, as holdings Johnson & Johnson, Eli Lilly,
Wyeth and Pfizer came under pressure.
"Among our best
performers during the
year were companies
involved in cancer
treatment and research."
CANCER-RELATED TREATMENTS HELP BOOST BIOTECHS
Among our best performers during the year were companies involved in
cancer treatment and research. Genentech posted significant profits
and earnings during the period, driven by strong sales of its flagship
non-Hodgkin's lymphoma drug Rituxan and its breast cancer therapy
Herceptin. Part of the stock's most recent rise can be traced to hopes
about the company's experimental therapy Avastin, which fights cancer
by stopping the blood supply to tumors. It may be the first of the
so-called anti-angiogenesis drugs to reach the market. Amgen, the
world's largest biotech company and one of the Fund's largest holdings
during the period, also enjoyed better earnings due to stronger sales
of many of its cancer-related medicines. These included its anemia
treatments and infection-fighting drugs often used by patients
undergoing chemotherapy treatments. The company also posted strong
sales increases of rheumatoid arthritis drug Enbrel, which is also
used to treat other immune related disorders like the skin disease
psoriasis. Millennium Pharmaceuticals also performed well, largely
based on the May FDA approval of its breakthrough cancer drug Velcade,
used to treat a rare bone marrow cancer. Celgene enjoyed growing sales
of Thalomid, a drug used to treat a cancer of plasma cells contained
in bone marrow. But not all biotech stocks were winners. Trimeris,
which was troubled by questions about sales of the biotech firm's new
HIV therapy, declined during the year and we sold it. Another
disappointment was IDEC Pharmaceuticals, which slumped due to concerns
over its proposed merger with rival Biogen, although it posted profit
increases toward the end of the period on higher sales of Rituxan.
[Table at top left-hand side of page entitled "Top five industry groups."
The first listing is Medical devices & products 21%, the second is
Drugs--specialty & generic 20%, the third Drugs--biotechnology 19%, the
fourth Drugs--major 13% and the fifth Insurance 7%.]
[Pie chart at middle of page with heading "Portfolio diversification As a
percentage of net assets on 10-31-03." The chart is divided into two
sections (from top to left): Common stocks 94%, and Short-term investments
& other 6%. ]
HEALTH-CARE DEVICE AND SERVICE COMPANIES MIXED
Health-care device and service companies turned in mixed results for
the year. Some of our best performers in this area were Zimmer
Holdings and Stryker Corp., which were driven higher by continued
strong demand for artificial hip and knee devices from aging Baby
Boomers. Cardiovascular device maker St. Jude Medical also performed
well, powered by strong sales of implants to regulate racing
heartbeats, and solid sales in its pacemakers and artificial heart
valves. Broad service providers like drug distributors Cardinal Health
and AmerisourceBergen, on the other hand, proved to be disappointing
during the period and we sold our stakes.
[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
Genentech followed by an up arrow with the phrase "Strong demand for
company's cancer treatments." The second listing is AstraZeneca followed by
an up arrow with the phrase "Sales of heartburn drug boost profits." The
third listing is Charles River Laboratories followed by a down arrow with
the phrase "Drug and biotech companies chop spending on supplies."]
OUTLOOK
We remain optimistic about the outlook for health-care companies over
the long term, but note that there are some considerations that may
affect their near-term returns. Major consolidations may cause
repercussions that are difficult to anticipate at this point. A
protracted rebound in economic activity may further prompt investors
to rotate away from this defensive sector in favor of faster-growing,
economically sensitive companies. In addition, continuing government
scrutiny of product marketing and manufacturing and Medicare billing
practices may continue to grab headlines. And there are always
existing risks that accompany this industry including: new product
development; the rising costs of research, development, manufacturing
and sales; execution success of business consolidations; and the
weaker economic condition of payers for health care around the world.
In addition, many stocks have sharply appreciated over the past year
and could be subject to profit taking or weakness based on dilution
from stock and/or other financings. That said, over the longer term,
we believe that strong demographic trends, value-added new technology,
moderating political risk and low interest rates also could work in
the industry's favor.
"A protracted rebound in
economic activity may
further prompt investors
to rotate away from this
defensive sector..."
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
October 31, 2003
Class A Class B Class C
Inception date 10-1-91 3-7-94 3-1-99
Average annual returns with maximum sales charge (POP)
One year 9.04% 8.95% 11.82%
Five years 3.77% 3.76% --
Ten years 11.36% -- --
Since inception -- 10.05% 3.35%
Cumulative total returns with maximum sales charge (POP)
One year 9.04% 8.95% 11.82%
Five years 20.32% 20.29% --
Ten years 193.37% -- --
Since inception -- 151.93% 16.62%
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.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown
the same investment in two separate indexes.
Line chart with the heading "GROWTH OF $10,000." Within the chart are four
lines. The first line represents Russell 3000 Healthcare Index and is equal
to $38,709 as of October 31, 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 $30,888 as of October
31, 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 $29,337 as of October 31, 2003. The fourth line
represents Standard & Poor's 500 Index and is equal to $26,968 as of
October 31, 2003.
Cum Value of $10K Cum Value of $10K S&P 500 Russell 3000
Plot Date (No Load) (w/Load) Index Healthcare Index
10/31/1993 $10,000 $9,500 $10,000 $10,000
4/30/1994 10,636 10,102 9,768 9,818
10/31/1994 11,399 10,826 10,387 11,538
4/30/1995 12,664 12,028 11,474 13,105
10/31/1995 14,933 14,183 13,133 16,063
4/30/1996 18,619 17,684 14,941 18,624
10/31/1996 16,909 16,060 16,297 19,881
4/30/1997 17,370 16,498 18,696 22,585
10/31/1997 21,412 20,336 21,531 26,484
4/30/1998 25,052 23,794 26,373 33,569
10/31/1998 24,390 23,165 26,266 35,327
4/30/1999 24,109 22,898 32,129 37,617
10/31/1999 24,670 23,431 33,008 38,362
4/30/2000 29,024 27,567 35,383 39,546
10/31/2000 35,977 34,170 35,018 47,290
4/30/2001 31,983 30,376 30,793 43,644
10/31/2001 31,098 29,536 26,297 43,027
4/30/2002 30,795 29,248 26,905 40,678
10/31/2002 26,914 25,562 22,325 35,107
4/30/2003 27,372 25,997 23,324 36,409
10/31/2003 $30,888 $29,337 $26,968 $38,709
Class B 1 Class C 1
Period beginning 3-7-94 3-1-99
Without sales charge $25,193 $11,778
With maximum sales charge $25,193 $11,662
Index 1 $26,737 $9,083
Index 2 $37,907 2 $9,865
Assuming all distributions were reinvested for the period indicated,
the table above shows the value of a $10,000 investment in the Fund's
Class B and Class C shares, respectively, as of October 31, 2003.
Performance of the classes will vary based on the difference in sales
charges paid by shareholders investing in the different classes and
the fee structure of those classes.
Standard & Poor's 500 Index -- Index 1 -- is an unmanaged index that
includes 500 widely traded common stocks.
Russell 3000 Healthcare Index -- Index 2 -- is a
capitalization-weighted index composed of companies involved in
medical services or health care.
It is not possible to invest directly in an index. Index figures do
not reflect sales charges and would be lower if they did.
1 No contingent deferred sales charge applicable.
2 Period beginning 2-28-94.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
October 31, 2003
This schedule is divided into two main categories: common stocks and
short-term investments. Common stocks are further broken down by
industry group. Short-term investments, which represent the Fund's
cash position, are listed last.
SHARES ISSUER VALUE
COMMON STOCKS 93.76% $266,247,040
(Cost $193,544,474)
Drugs -- Biotechnology 19.17% 54,425,700
260,000 Amgen, Inc.* + 16,057,600
125,000 Amylin Pharmaceuticals, Inc.* + 3,416,250
35,000 Biogen, Inc.* 1,416,450
67,600 BioMarin Pharmaceutical, Inc.* + 473,200
105,000 Chiron Corp.* + 5,736,150
110,000 Genentech, Inc.* + 9,016,700
125,000 Genzyme Corp.* + 5,737,500
125,000 Human Genome Sciences, Inc.* + 1,738,750
40,000 IDEC Pharmaceuticals Corp.* 1,405,200
140,000 Kosan Biosciences, Inc. 1,283,800
35,000 MedImmune, Inc.* 933,100
175,000 Millennium Pharmaceuticals, Inc.* + 2,786,000
65,000 OSI Pharmaceuticals, Inc.* 1,820,000
100,000 Protein Design Labs, Inc.* 1,348,000
100,000 Tularik, Inc.* + 1,257,000
Drugs -- Diversified 3.16% 8,986,600
140,000 Abbott Laboratories 5,966,800
60,000 Johnson & Johnson 3,019,800
Drugs -- Major 13.32% 37,822,100
65,000 AstraZeneca Plc American Depositary
Receipts (ADR) (United Kingdom) 3,099,200
75,000 Lilly (Eli) & Co. 4,996,500
160,000 Novartis AG (ADR) (Switzerland)+ 6,139,200
495,000 Pfizer, Inc. 15,642,000
180,000 Wyeth 7,945,200
Drugs -- Specialty and Generic 19.90% 56,496,335
110,000 Alcon, Inc. (Switzerland)* 6,062,100
80,000 Allergan, Inc. 6,049,600
75,000 Atrix Laboratories, Inc.* + 1,506,750
75,000 Biovail Corp. (Canada)* 1,803,750
75,000 Celgene Corp.* + 3,126,750
25,000 Eon Labs, Inc.* 1,052,750
120,000 Forest Laboratories, Inc.* + 6,001,200
115,000 Gilead Sciences, Inc.* + 6,276,700
100,000 Medicines Co. (The)* + 2,665,000
170,000 Mylan Laboratories, Inc. 4,105,500
65,000 Neurocrine Biosciences, Inc.* + 3,043,950
85,000 NPS Pharmaceuticals, Inc.* + 2,238,050
126,471 Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 7,194,935
100,000 Vicuron Pharmaceuticals, Inc. * + 1,835,000
90,000 Watson Pharmaceutical, Inc.* 3,534,300
Health Care -- Hospitals 0.58% 1,646,750
35,000 Universal Health Services, Inc. (Class B)* 1,646,750
Health Care -- Services 4.99% 14,173,150
85,000 Advisory Board Co. (The)* + 3,093,150
175,000 Caremark Rx, Inc.* + 4,383,750
125,000 Covance, Inc.* 3,253,750
25,000 DaVita, Inc.* 877,500
60,000 ICON Plc (ADR) (Ireland) * + 2,565,000
Instruments -- Scientific 4.66% 13,240,300
135,000 Affymetrix, Inc.* + 3,460,050
85,000 Fisher Scientific International, Inc. * 3,421,250
100,000 Invitrogen Corp.* 6,359,000
Insurance 7.45% 21,152,600
50,000 Anthem, Inc.* 3,421,500
90,000 Mid Atlantic Medical Services, Inc.* 5,256,000
205,000 UnitedHealth Group, Inc. + 10,430,400
23,000 Wellpoint Health Networks, Inc.* 2,044,700
Medical Devices and Products 20.53% 58,303,505
45,000 Biomet, Inc. 1,613,700
95,000 Boston Scientific Corp.* 6,433,400
77,892 DENTSPLY International, Inc. + 3,442,048
34,100 Diagnostic Products Corp. 1,391,962
85,000 Edwards Lifesciences Corp.* 2,465,000
65,000 Guidant Corp. 3,315,650
325,000 Medtronic, Inc. 14,810,250
43,015 Respironics, Inc.* 1,793,295
125,000 St. Jude Medical, Inc. * 7,270,000
100,000 Stryker Corp. + 8,111,000
120,000 Zimmer Holdings, Inc.* + 7,657,200
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE
SHORT-TERM INVESTMENTS 34.68% $98,487,049
(Cost $98,487,049)
Joint Repurchase Agreement 6.29%
Investment in a joint repurchase agreement
transaction with Barclays Capital, Inc. --
Dated 10-31-03, due 11-03-03 (Secured by
U.S. Treasury Inflation Indexed Bond 3.625%
due 04-15-28, U.S. Treasury Inflation Indexed
Note 1.875% due 07-15-13) 1.020% $17,860 17,860,000
SHARES
Cash Equivalents 28.39%
AIM Cash Investment Trust** 80,627,049 80,627,049
TOTAL INVESTMENTS 128.44% $364,734,089
OTHER ASSETS AND LIABILITIES, NET (28.44%) ($80,773,302)
TOTAL NET ASSETS 100.00% $283,960,787
+ All or a portion of this security is on loan as of October 31, 2003.
* Non-income producing security.
** Represents investment of security lending collateral.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
ASSETS AND
LIABILITIES
October 31, 2003
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $292,031,523),
including $79,523,464 of securities loaned $364,734,089
Cash 517
Receivable for investments sold 5,110,790
Receivable for shares sold 71,218
Dividends and interest receivable 42,422
Other assets 12,345
Total assets 369,971,381
LIABILITIES
Payable for investments purchased 4,364,469
Payable for shares repurchased 212,780
Payable for securities on loan 80,627,049
Payable to affiliates
Management fee 583,494
Distribution and service fee 21,022
Other 112,024
Other payables and accrued expenses 89,756
Total liabilities 86,010,594
NET ASSETS
Capital paid-in 227,586,064
Accumulated net realized loss on investments (16,322,155)
Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currencies 72,702,655
Accumulated net investment loss (5,777)
Net assets $283,960,787
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($116,932,277 [DIV] 2,938,717 shares) $39.79
Class B ($154,325,548 [DIV] 4,181,151 shares) $36.91
Class C ($12,702,962 [DIV] 344,173 shares) $36.91
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ($39.79 [DIV] 95%) $41.88
Class C ($36.91 [DIV] 99%) $37.28
1 On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to
financial statements.
OPERATIONS
For the year ended
October 31, 2003
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $18,094) $1,307,602
Securities lending 279,472
Interest 165,864
Total investment income 1,752,938
EXPENSES
Investment management fee 2,133,426
Class A distribution and service fee 328,600
Class B distribution and service fee 1,546,915
Class C distribution and service fee 119,789
Transfer agent fee 1,340,342
Accounting and legal services fee 98,619
Custodian fee 68,652
Registration and filing fee 48,897
Auditing fee 31,200
Printing 29,542
Miscellaneous 21,613
Trustees' fee 17,160
Legal fee 4,666
Interest 344
Total expenses 5,789,765
Less expense reductions (10,915)
Net expenses 5,778,850
Net investment loss (4,025,912)
REALIZED AND UNREALIZED GAIN
Net realized gain on investments 19,286,206
Change in net unrealized appreciation
(depreciation) of
Investments 21,020,091
Translation of assets and liabilities in foreign currencies 29
Net realized and unrealized gain 40,306,326
Increase in net assets from operations $36,280,414
See notes to
financial statements.
CHANGES IN
NET ASSETS
These Statements
of Changes in
Net Assets show
how the value
of the Fund's
net assets has
changed during
the last two
periods. The dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
YEAR YEAR
ENDED ENDED
10-31-02 10-31-03
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($5,230,634) ($4,025,912)
Net realized gain (loss) (15,488,263) 19,286,206
Change in net unrealized
appreciation (depreciation) (31,410,259) 21,020,120
Increase (decrease) in net assets
resulting from operations (52,129,156) 36,280,414
From Fund share transactions (54,454,608) (36,109,836)
NET ASSETS
Beginning of period 390,373,973 283,790,209
End of period 1 $283,790,209 $283,960,787
1 Includes accumulated net investment loss of $5,482 and $5,777, respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a
share has changed since the end of the previous period.
PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $33.89 $34.28 $49.99 $40.06 $34.67
Net investment loss 1 (0.18) (0.33) (0.37) (0.41) (0.38)
Net realized and unrealized
gain (loss) on investments 0.57 16.04 (5.99) (4.98) 5.50
Total from
investment operations 0.39 15.71 (6.36) (5.39) 5.12
Less distributions
From net realized gain -- -- (3.57) -- --
Net asset value,
end of period $34.28 $49.99 $40.06 $34.67 $39.79
Total return 2 (%) 1.15 45.83 (13.56) (13.45) 14.77
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $93 $178 $145 $110 $117
Ratio of expenses to
average net assets (%) 1.60 1.50 1.50 1.59 1.67
Ratio of net investment loss
to average net assets (%) (0.52) (0.75) (0.87) (1.06) (1.04)
Portfolio turnover (%) 61 147 91 85 95
See notes to
financial statements.
FINANCIAL HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $32.69 $32.83 $47.55 $37.68 $32.39
Net investment loss 1 (0.41) (0.60) (0.63) (0.63) (0.59)
Net realized and unrealized
gain (loss) on investments 0.55 15.32 (5.67) (4.66) 5.11
Total from
investment operations 0.14 14.72 (6.30) (5.29) 4.52
Less distributions
From net realized gain -- -- (3.57) -- --
Net asset value,
end of period $32.83 $47.55 $37.68 $32.39 $36.91
Total return 2 (%) 0.43 44.84 (14.18) (14.04) 13.95
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $152 $294 $231 $162 $154
Ratio of expenses to
average net assets (%) 2.30 2.20 2.20 2.29 2.37
Ratio of net investment loss
to average net assets (%) (1.22) (1.46) (1.57) (1.76) (1.74)
Portfolio turnover (%) 61 147 91 85 95
See notes to
financial statements.
FINANCIAL HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-99 3 10-31-00 10-31-01 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $33.94 $32.83 $47.55 $37.68 $32.39
Net investment loss 1 (0.28) (0.64) (0.63) (0.63) (0.59)
Net realized and unrealized
gain (loss) on investments (0.83) 15.36 (5.67) (4.66) 5.11
Total from
investment operations (1.11) 14.72 (6.30) (5.29) 4.52
Less distributions
From net realized gain -- -- (3.57) -- --
Net asset value,
end of period $32.83 $47.55 $37.68 $32.39 $36.91
Total return 2 (%) (3.27)4 44.84 (14.18) (14.04) 13.95
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $2 $14 $15 $12 $13
Ratio of expenses to
average net assets (%) 2.40 5 2.20 2.20 2.29 2.37
Ratio of net investment loss
to average net assets (%) (1.30) 5 (1.50) (1.58) (1.76) (1.73)
Portfolio turnover (%) 61 147 91 85 95
1 Based on the average of the shares outstanding.
2 Assumes dividend reinvestment and does not reflect the effect of
sales charges.
3 Class C shares began operations on 3-1-99.
4 Not annualized.
5 Annualized.
See notes to
financial statements.
NOTES TO
STATEMENTS
NOTE A
Accounting policies
John Hancock Health Sciences 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 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 the terms of a distribution plan have exclusive voting rights to
that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations are not readily available, or if 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 currency exchange gains or losses arise
from sales of foreign currency, currency gains or losses realized
between the trade and settlement dates on securities transactions and
the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency exchange gains and losses arise from changes in the
value of assets and liabilities, other than investments in securities,
resulting from changes in the exchange rates.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis. Capital gains realized on some
foreign securities are subject to foreign taxes, which are accrued as
applicable.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of shares
based on the appropriate net asset value of the respective classes.
Distribution and service fees, if any, are calculated daily at the class
level based on the appropriate net asset value of each class and the
specific expense rate(s) applicable to each class.
Expenses
The majority of expenses are directly identifiable to an individual fund.
Expenses that are not readily identifiable to a specific fund are allocated
in such a manner as deemed equitable, taking into consideration, among
other things, the nature and type of expense and the relative sizes of the
funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund has entered into a
syndicated line of credit agreement with various banks. This agreement
enables the Fund to participate with other funds managed by the Adviser in
an unsecured line of credit with banks, which permits borrowings of up to
$250 million, collectively. Interest is charged to each fund, based on its
borrowing. In addition, a commitment fee is charged to each fund based on
the average daily unused portion of the line of credit and is allocated
among the participating funds. The Fund had no borrowing activity under the
line of credit during the year ended October 31, 2003.
Securities lending
The Fund may lend securities to certain qualified brokers who pay the Fund
negotiated lender fees. The loans are collateralized at all times with cash
or securities with a market value at least equal to the market value of the
securities on loan. As with other extensions of credit, the Fund may bear
the risk of delay of the loaned securities in recovery or even loss of
rights in the collateral, should the borrower of the securities fail
financially. At October 31, 2003, the Fund loaned securities having a
market value of $79,523,464 collateralized by cash in the amount of
$80,627,049. 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 $11,828,742 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, 2010.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend
date or, in the case of some foreign securities, on the date thereafter
when the Fund identifies the dividend. Interest income on investment
securities is recorded on the accrual basis. Foreign income may be subject
to foreign withholding taxes, which are accrued as applicable.
The Fund records distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated
in the same manner, at the same time and are in the same amount,
except for the effect of expenses that may be applied differently to
each class.
As of October 31, 2003, there were no distributable earnings on a tax
basis. Such distributions and distributable earnings, on a tax basis,
are determined in conformity with income tax regulations, which may
differ from accounting principles generally accepted in the United
States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a
return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of America,
incorporates estimates made by management in determining the reported
amount of assets, liabilities, revenues and expenses of the Fund. Actual
results could differ from these estimates.
NOTE B
Management fee and
transactions with
affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, 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 an agreement with its custodian bank under which custody
fees are reduced by brokerage commission offsets applied during the
period. Accordingly, the expense reductions related to custody fee
offsets amounted to $10,915, and had no impact on the Fund's ratio of
expenses to average net assets, for the year ended October 31, 2003.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. The Fund has
adopted Distribution Plans with respect to Class A, Class B and Class
C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to
reimburse JH Funds for the services it provides as distributor of
shares of the Fund. Accordingly, the Fund makes monthly payments to JH
Funds at an annual rate not to exceed 0.30% of Class A average daily
net asset value and 1.00% of Class B and Class C average daily net
asset value. A maximum of 0.25% of such payments may be service fees
as defined by the Conduct Rules of the National Association of
Securities Dealers. Under the Conduct Rules, curtailment of a portion
of the Fund's 12b-1 payments could occur under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During
the year ended October 31, 2003, JH Funds received net up-front sales
charges of $183,894 with regard to sales of Class A shares. Of this
amount, $24,958 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $126,566 was paid as
sales commissions to unrelated broker-dealers and $32,370 was paid as
sales commissions to sales personnel of Signator Investors, Inc.
("Signator Investors"), a related broker-dealer. The Adviser's
indirect parent, John Hancock Life Insurance Company ("JHLICo"), is
the indirect sole shareholder of Signator Investors. During the year
ended October 31, 2003, JH Funds received net up-front sales charges
of $12,993 with regard to sales of Class C shares. Of this amount,
$12,184 was paid as sales commissions to unrelated broker-dealers and
$809 was paid as sales commissions to sales personnel of Signator
Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares
being redeemed. Class C shares that are redeemed within one year of
purchase are subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSCs
are paid to JH Funds and are used in whole or in part to defray its
expenses for providing distribution related services to the Fund in
connection with the sale of Class B and Class C shares. During the
year ended October 31, 2003, CDSCs received by JH Funds amounted to
$333,187 for Class B shares and $1,669 for Class C shares.
The Fund has a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. Effective January 1,
2003, the Fund pays a monthly transfer agent fee at an annual rate of
0.05% of the average daily net asset value, plus a fee based on the
number of shareholder accounts and reimbursement for certain
out-of-pocket expenses. Until January 1, 2003, the Fund paid a monthly
transfer agent fee based on the number of shareholder accounts plus
certain out-of-pocket expenses.
The Fund had an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
year was at an annual rate of approximately 0.04% of the average net
asset value of the Fund.
The Fund had an independent advisory board composed of scientific and
medical experts who provided the investment officers of the Fund with
advice and consultation on health-care developments, for which the
Fund paid the advisory board a fee. The Board of Trustees voted to
discontinue the advisory board effective July 15, 2003.
Ms. Maureen Ford Goldfarb and Mr. John M. DeCiccio are directors
and/or officers of the Adviser and/or its affiliates, as well as
Trustees of the Fund. The compensation of unaffiliated Trustees is
borne by the Fund. The unaffiliated Trustees may elect to defer for
tax purposes their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Fund makes investments
into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's
deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other
asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investments as well as any unrealized
gains or losses. The Deferred Compensation Plan investments had no
impact on the operations of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold and
repurchased during the last two periods, along with the corresponding
dollar value. The Fund has an unlimited number of shares authorized
with no par value.
YEAR ENDED 10-31-02 YEAR ENDED 10-31-03
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 811,501 $30,907,585 611,552 $22,343,109
Repurchased (1,238,558) (46,192,043) (856,289) (30,738,589)
Net decrease (427,057) ($15,284,458) (244,737) ($8,395,480)
CLASS B SHARES
Sold 629,775 $23,090,576 333,518 $11,357,801
Repurchased (1,767,118) (61,384,888) (1,141,112) (38,411,221)
Net decrease (1,137,343) ($38,294,312) (807,594) ($27,053,420)
CLASS C SHARES
Sold 97,382 $3,575,235 65,171 $2,217,346
Repurchased (128,009) (4,451,073) (86,440) (2,878,282)
Net decrease (30,627) ($875,838) (21,269) ($660,936)
NET DECREASE (1,595,027) ($54,454,608) (1,073,600) ($36,109,836)
NOTE D
Investment
transactions
Purchases and proceeds from sales or maturities of securities, other
than short-term securities and obligations of the U.S. government,
during the year ended October 31, 2003, aggregated $250,581,133 and
$304,809,906, respectively.
The cost of investments owned on October 31, 2003, including
short-term investments, for federal income tax purposes was
$296,524,935. Gross unrealized appreciation and depreciation of
investments aggregated $69,608,061 and $1,398,907, respectively,
resulting in net unrealized appreciation of $68,209,154. The
difference between book basis and tax basis net unrealized
appreciation of investments is attributable primarily to the tax
deferral of losses on certain sales of securities.
NOTE E
Reclassification
of accounts
During the year ended October 31, 2003, the Fund reclassified amounts
to reflect a decrease in accumulated net realized loss on investments
of $285, a decrease in accumulated net investment loss of $4,025,617
and a decrease in capital paid-in of $4,025,902. This represents the
amount necessary to report these balances on a tax basis, excluding
certain temporary differences, as of October 31, 2003. Additional
adjustments may be needed in subsequent reporting periods. These
reclassifications, which have no impact on the net asset value of the
Fund, are primarily attributable to certain differences in the
computation of distributable income and capital gains under federal
tax rules versus accounting principles generally accepted in the
United States of America, and book and tax differences in accounting
for net operating loss and deferred compensation. The calculation of
net investment loss per share in the Fund's Financial Highlights
excludes these adjustments.
AUDITORS'
REPORT
Report of
Pricewaterhouse-
Coopers LLP,
Independent
Auditors
To the Board of Trustees and Shareholders of
John Hancock Health Sciences Fund,
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
the John Hancock Health Sciences Fund (the "Fund") at October 31,
2003, the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States of
America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at October 31, 2003, by
correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 15, 2003
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is
furnished with respect to the distributions of the Fund, if any, paid
during its taxable year ended October 31, 2003.
The fund hereby designates the maximum amount allowable of its net
taxable income as qualified dividend income as provided in the Jobs
and Growth Tax Relief Reconciliation Act of 2003. This amount will be
reflected on Form 1099-DIV for the calendar year 2003.
Shareholders will be mailed a 2003 U.S. Treasury Department Form
1099-DIV in January 2004. This will reflect the total of all
distributions that are taxable for the calendar year 2003.
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who
oversee your John Hancock fund. Officers elected by the Trustees
manage the day-to-day operations of the Fund and execute policies
formulated by the Trustees.
INDEPENDENT TRUSTEES
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
Dennis S. Aronowitz, Born: 1931 1991 21
Professor of Law, Emeritus, Boston University School of Law
(as of 1996); Director, Brookline Bancorp (since 1998).
Richard P. Chapman, Jr., Born: 1935 1991 21
President and Chief Executive Officer, Brookline Bancorp Inc. (lending)
(since 1972); Director, Lumber Insurance Co. (insurance) (until 2000);
Chairman and Director, Northeast Retirement Services, Inc. (retirement
administration) (since 1998).
William J. Cosgrove, Born: 1933 1991 21
Vice President, Senior Banker and Senior Credit Officer, Citibank, N.A.
(retired 1991); Executive Vice President, Citadel Group Representatives,
Inc. (financial reinsurance); Trustee, Hudson City Savings Bank (since 1995);
Director, Hudson City Bancorp (since 1999); Trustee, Scholarship Fund for
Inner City Children (since 1986).
Richard A. Farrell, Born: 1932 1996 21
President, Farrell, Healer & Co., Inc. (venture capital management firm)
(since 1980) and President, the Venture Capital Fund of NE (since 1980);
prior to 1980, headed the venture capital group at Bank of Boston Corporation;
Trustee, Marblehead Savings Bank (since 1994).
William F. Glavin,2 Born: 1932 1996 21
President Emeritus, Babson College (as of 1998); Vice Chairman, Xerox
Corporation (until 1989); Director, Reebok, Inc. (until 2002) and Inco Ltd.
(until 2002).
John A. Moore,2 Born: 1939 1996 29
President and Chief Executive Officer, Institute for Evaluating Health
Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (since 1998); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson,2 Born: 1943 1996 29
Executive Director, Council for International Exchange of Scholars (since
1998); Vice President, Institute of International Education (since 1998);
Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until
1997); President Emerita of Wells College and St. Lawrence University;
Director, Niagara Mohawk Power Corporation (electric utility).
John W. Pratt, Born: 1931 1996 21
Professor of Business Administration Emeritus, Harvard University
Graduate School of Business Administration (as of 1998).
INTERESTED TRUSTEES 3
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
John M. DeCiccio, Born: 1948 2001 51
Trustee
Executive Vice President and Chief Investment Officer, John Hancock
Financial Services, Inc.; Director, Executive Vice President and Chief
Investment Officer, John Hancock Life Insurance Company; Chairman of
the Committee of Finance of John Hancock Life Insurance Company;
Director, John Hancock Subsidiaries, LLC (Subsidiaries, LLC), Hancock
Natural Resource Group, Independence Investment LLC, Declaration
Management Research LLC, John Hancock Advisers, LLC (the "Adviser"),
The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock
Funds, LLC ("John Hancock Funds") and Massachusetts Business Development
Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance
Agency, Inc.") (until 1999).
Maureen Ford Goldfarb, Born: 1955 2000 51
Trustee, Chairman, President and Chief Executive Officer
Executive Vice President, John Hancock Financial Services, Inc., John
Hancock Life Insurance Company; Chairman, Director, President and
Chief Executive Officer, the Adviser and The Berkeley Group; Chairman,
Director, President and Chief Executive Officer, John Hancock Funds;
Chairman, Director, President and Chief Executive Officer, Sovereign Asset
Management Corporation ("SAMCorp."); Director, Independence
Investment LLC, Subsidiaries, LLC and Signature Services; Senior Vice
President, MassMutual Insurance Co. (until 1999).
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE
POSITION(S) HELD WITH FUND OFFICER
PRINCIPAL OCCUPATION(S) AND OF FUND
DIRECTORSHIPS DURING PAST 5 YEARS SINCE
Richard A. Brown, Born: 1949 2000
Senior Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock
Funds and The Berkeley Group; Second Vice President and Senior Associate Controller,
Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001).
Thomas H. Connors, Born: 1959 1992
Vice President and Compliance Officer
Vice President and Compliance Officer, the Adviser and each of the John Hancock funds;
Vice President, John Hancock Funds.
William H. King, Born: 1952 1991
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each of
the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001).
Susan S. Newton, Born: 1950 1991
Senior Vice President, Secretary and Chief Legal Officer
Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each
of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President,
Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital.
The business address for all Trustees and Officers is 101 Huntington
Avenue, Boston, Massachusetts 02199.
The Statement of Additional Information of the Fund includes
additional information about members of the Board of Trustees of the
Fund and is available, without charge, upon request, by calling
1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his
or her successor is elected.
2 Member of Audit Committee.
3 Interested Trustees hold positions with the Fund's investment
adviser, underwriter and certain other affiliates.
OUR FAMILY
OF FUNDS
- -------------------------------------------------------
Equity Balanced Fund
Classic Value Fund
Core Equity Fund
Focused Equity Fund
Growth Trends Fund
International Fund
Large Cap Equity Fund
Large Cap Growth Fund
Large Cap Select Fund
Mid Cap Growth Fund
Multi Cap Growth Fund
Small Cap Equity Fund
Small Cap Growth Fund
Sovereign Investors Fund
U.S. Global Leaders Growth Fund
- -------------------------------------------------------
Sector Biotechnology Fund
Financial Industries Fund
Health Sciences Fund
Real Estate Fund
Regional Bank Fund
Technology Fund
- -------------------------------------------------------
Income Bond Fund
Government Income Fund
High Income Fund
High Yield Bond Fund
Investment Grade Bond Fund
Strategic Income Fund
- -------------------------------------------------------
Tax-Free Income California Tax-Free Income Fund
High Yield Municipal Bond Fund
Massachusetts Tax-Free Income Fund
New York Tax-Free Income Fund
Tax-Free Bond Fund
- -------------------------------------------------------
Money Market Money Market Fund
U.S. Government Cash Reserve
For more complete information on any John Hancock Fund
and a prospectus, which includes charges and expenses,
call your financial professional, or John Hancock Funds at
1-800-225-5291. Please read the prospectus carefully before
investing or sending money.
FOR YOUR
INFORMATION
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
125 High Street
Boston, Massachusetts 02110
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
The Fund's voting policies and procedures are available without
charge, upon request:
By phone 1-800-225-5291
On the Fund's Web site www.jhfunds.com/proxy
On the SEC's Web site www.sec.gov
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
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This report is for the information of
the shareholders of the John Hancock
Health Sciences Fund.
2800A 10/03
12/03
John Hancock
Biotechnology
Fund
ANNUAL
REPORT
10.31.03
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[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Maureen Ford Goldfarb, Chairman and Chief Executive Officer,
flush left next to first paragraph.]
WELCOME
Table of contents
Your fund at a glance
page 1
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
Trustees & officers
page 23
For your information
page 29
Dear Fellow Shareholders,
The stock market has made a strong recovery in 2003. Historically low
interest rates, improving corporate earnings and government stimulus
in the form of tax cuts gave investors hope that the economy would
begin to strengthen, which it did. The market's move up began in April
and the breadth of the rally was enormous. As a result, the major
indexes were able to wipe out their first-quarter losses and post
solid gains year-to-date through October 31. With technology leading
the way, the tech-heavy Nasdaq Composite Index rose 45.22% through
October, while the Dow Jones Industrial Average was up 19.82% and the
Standard & Poor's 500 Index returned 21.19%. With falling interest
rates, bonds also did well, although they began to reverse course in
July. High yield bonds led the pack, returning 24.23% through October,
as measured by the Lehman Brothers High Yield Index.
In other news, we are pleased to inform you that on September 28,
2003, the Boards of Directors of Canada-based Manulife Financial
Corporation and Boston-based John Hancock Financial Services, Inc.,
the parent company of John Hancock Funds, unanimously voted to merge
the two companies.
Please be assured that the completion of the merger -- anticipated to
occur in the first half of 2004 -- will have no effect on your
investment in our John Hancock mutual funds. Your fund's adviser and
board of trustees will remain the same, as will your relationship with
your financial adviser.
The merger is subject to customary closing conditions, including
receipt of required regulatory approvals and approval by John Hancock
stockholders. If you only own shares in a John Hancock mutual fund you
are not affected and will not receive a proxy.
Additional information on this transaction is available on our Web
site: www.jhfunds.com. If you have questions about the merger, you may
also call 800-732-5543. Separately, for information about your
investments in John Hancock funds, please contact your financial
adviser or our Customer Service representatives at 800-225-5291.
Sincerely,
/S/ MAUREEN FORD GOLDFARB
Maureen Ford Goldfarb,
Chairman and Chief Executive Officer
This commentary reflects the chairman's views as of October 31, 2003.
They are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term capital
appreciation by
normally invest
ing at least 80% of
its assets in stocks
of U.S. and foreign
biotechnology
companies princi-
pally engaged
in the research,
development and
manufacture of
various biotech-
nology products,
services and
processes.
Over the last twelve months
* Biotechnology stocks posted very strong returns, outpacing the
overall stock market.
* The Fund benefited from its holdings in companies with success in
cancer-related treatments.
* Disappointing sales from new drugs hurt some companies.
[Bar chart with heading "John Hancock Biotechnology Fund." Under the
heading is a note that reads "Fund performance for the year ended October
31, 2003." The chart is scaled in increments of 10% with 0% at the bottom
and 40% at the top. The first bar represents the 33.15% total return for
Class A. The second bar represents the 32.24% total return for Class B. The
third bar represents the 32.24% 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
10.6% Amgen, Inc.
5.9% Genentech, Inc.
5.8% Gilead Sciences, Inc.
4.2% Affymetrix, Inc.
4.1% ILEX Oncology, Inc.
4.0% Chiron Corp.
4.0% Invitrogen Corp.
4.0% Genzyme Corp.
4.0% Millennium Pharmaceuticals, Inc.
3.8% MGI Pharma, Inc.
As a percentage of net assets on October 31, 2003.
MANAGER'S
REPORT
BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER
John Hancock
Biotechnology Fund
The biotechnology sector posted strong returns during the 12 months
ended October 31, 2003, outperforming the broader stock market by a
wide margin. Much of the sector's first-half success can be tied to
investors' more receptive mood for companies with longer-term growth
prospects. With that, a number of stocks that had been shunned and
beaten down the most during the previous year suddenly became market
favorites. Later in the period, the biotech sector was powered by
positive clinical trial results and a jumpstart in product approvals,
as the FDA accelerated the drug approval process and announced new
initiatives aimed at cutting the cost of drug development by further
reducing agency review times. One indication of the biotech sector's
vigor was positive restructuring within the industry, with many
companies able to finance future growth through various forms of
financing and partnering transactions. And, after a year-long drought
of initial public offerings in the sector, a couple of biotech
companies went public late in the period and more are indicating that
they plan to do the same in the coming months. Furthermore, there was
some consolidation within the industry, which also served as a
positive for biotech stocks.
"The biotechnology
sector posted strong
returns...outperforming
the broader stock market
by a wide margin."
PERFORMANCE AND STRATEGY REVIEW
For the 12 months ended October 31, 2003, John Hancock Biotechnology Fund's
Class A, Class B and Class C shares posted total returns of 33.15%, 32.24% and
32.24%, respectively, at net asset value. During the same period, the more
broadly diversified average health/biotechnology fund had a total return of
21.19%, according to Lipper, Inc.,1 while the Standard & Poor's 500 Index
returned 20.79% and the Nasdaq Biotech Index returned 39.85%. 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.
[A photo of Linda Miller flush right next to first paragraph.]
The Fund's outperformance of its peer group can be attributed in part
to its investment focus on the narrow biotech sector. Other funds with
broader investment parameters generally weren't as concentrated in
biotech stocks, which were among the best-performing subgroups in
health care. The Fund also benefited from good stock selection and a
relatively high concentration of assets across biotechnology stocks
during the year.
"Among our best perform-
ers during the year were
companies involved in
developing and marketing
cancer treatments and
cancer research."
CANCER-RELATED TREATMENTS BOOST BOTTOM LINE
Among our best performers during the year were companies involved in
developing and marketing cancer treatments and cancer research. Genentech
posted significant profits and earnings gains during the period, driven by
strong sales of its flagship non-Hodgkin's lymphoma drug Rituxan -- marketed
in a co-promotion agreement with drug maker IDEC -- and its breast cancer
therapy Herceptin. Part of the stock's most recent rise can be traced to hopes
for the company's experimental therapy Avastin, which fights cancer by
stopping the blood supply to tumors. It may be the first of the so-called
anti-angiogenesis drugs to reach the market. Amgen, the world's largest
biotech company and the Fund's largest holding during the period, also enjoyed
better earnings due to stronger sales of many of its cancer-related medicines
including Aranesp, a new, long-lasting version of the company's flagship
anemia treatment Epogen; Neupogen; and its longer-lasting formulation,
Neulasta, used to fight infections in patients undergoing chemotherapy. The
company also posted strong sales increases of rheumatoid arthritis drug
Enbrel, which is also used to treat other autoimmune disorders like the skin
disease psoriasis. Cancer drug maker ILEX Oncology also turned in good returns
for the year, boosted in part by increased revenues from cancer treatment
Campath, as well as enthusiasm about the company's receiving FDA fast-track
status for its experimental drug Clofarabine, used to treat a form of leukemia
in children. The accelerated review status, which the company received in the
last weeks of the period, means that the FDA could make a decision on Ilex's
application to market the drug within six months, rather than the normal 12
months. Millennium Pharmaceuticals also performed well, largely on the May
approval of its breakthrough cancer drug Velcade, used to treat a rare bone
marrow cancer. Celgene Corp. enjoyed growing sales of Thalomid, a drug used to
treat multiple myeloma, a cancer of plasma cells contained in bone marrow.
LAGGARDS
The stocks of companies that supply the biotech industry generally lagged the
sector overall during the period due in part to reduced spending on drug
research. Charles River Laboratories, for example, slumped in response to a
slowdown in business for its laboratory animal research models. Another
disappointment was Trimeris, which was troubled by concerns about sales of the
biotech firm's new HIV therapy. We sold both stocks. IDEC Pharmaceuticals
declined in part due to concerns over its proposed merger with rival Biogen,
although it posted profit increases toward the end of the period on higher
sales of Rituxan.
[Pie chart at middle of page with heading "Portfolio diversification As a
percentage of net assets on 10-31-03." The chart is divided into two
sections (from top to left): Common stocks 98%, and Short-term investments
& other 2%.]
[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
Genentech followed by an up arrow with the phrase "Strong demand for
company's cancer treatments." The second listing is ILEX Oncology followed
by an up arrow with the phrase "Investors cheer FDA approval of pediatric
leukemia drug." The third listing is Charles River Laboratories followed by
a down arrow with the phrase "Drug and biotech companies chop spending on
supplies."]
OUTLOOK
We remain optimistic about the long-term prospects for biotechnology stocks,
although investors should temper their short-term expectations after such a
strong runup. Many maturing biotechnology companies have graduated to the
ranks of mid-size pharmaceutical companies. The valuations these stocks carry
have risen and lie in sharp contrast to underperforming multinational
pharmaceutical stock valuations. However, we believe the growth prospects for
this sector still remain robust. In our view, there may be the risk that
value-oriented investors in the health-care segment may rotate from the more
expensively priced biotech companies to cheaper drug companies at some point.
Additionally, fundamental challenges remain for the industry, including the
risks of new product development; high research, development, manufacturing
and sales costs; and the weak economic conditions of payers for health care
around the world -- especially as systems stretch to afford these relatively
expensive biotechnology medications. That said, we expect that event-driven
performance, reflecting new information presented at major medical meetings
and FDA deadlines for product reviews, will continue to favorably affect the
industry. Longer term, strong demographic trends, value-added new technology,
moderating political risk and low interest rates also could work in the
industry's favor.
"...we believe the growth
prospects for this sector
still remain robust..."
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
October 31, 2003
Class A Class B Class C
Inception date 3-1-01 3-1-01 3-1-01
Average annual returns with maximum sales charge (POP)
One year 26.54% 27.24% 29.82%
Since inception -12.39% -12.31% -11.64%
Cumulative total returns with maximum sales charge (POP)
One year 26.54% 27.24% 29.82%
Since inception -29.75% -29.58% -28.12%
Performance figures assume all distributions are reinvested. Returns
with maximum sales charge reflect a sales charge on Class A shares of
5% and Class C shares of 1%, and the applicable contingent deferred
sales charge (CDSC) on Class B and Class C shares. The Class B shares'
CDSC declines annually between years 1-6 according to the following
schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after
the sixth year. Class C shares held for less than one year are subject
to a 1% CDSC. The return and principal value of an investment in the
Fund will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost.
The returns reflect past results and should not be considered
indicative of future performance. The performance table above and the
chart on the next page do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The Fund's performance results reflect any applicable expense
reductions, without which the expenses would increase and results
would have been less favorable. These reductions can be terminated in
the future. See the prospectus for details.
GROWTH OF
$10,000
This chart shows what happened to a hypothetical $10,000 investment in
Class A shares for the period indicated. For comparison, we've shown
the same investment in two separate indexes.
Line chart with the heading "GROWTH OF $10,000." Within the chart are four
lines. The first line represents Standard & Poor's 500 Index and is equal
to $8,831 as of October 31, 2003. The second line represents the Nasdaq
Biotechnology Index and is equal to $7,550 as of October 31, 2003. The
third line represents Index 1 and is equal to $5,399 as of October 31,
2002. 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 $7,398 as of October 31, 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
$7,025 as of October 31, 2003.
Cum Value Cum Value Nasdaq
of $10K of $10K S&P 500 Biotechnology
Plot Date (No Load) (w/Load) Index Index
3/1/01 $10,000 $9,500 $10,000 $10,000
4/30/2001 9,870 9,373 10,094 9,476
10/31/2001 9,490 9,012 8,621 8,975
4/30/2002 6,927 6,578 8,820 6,769
10/31/2002 5,556 5,276 7,318 5,315
4/30/2003 5,586 5,305 7,646 5,966
10/31/2003 7,398 7,025 8,831 7,550
Class B Class C 1
Period beginning 3-1-01 3-1-01
Without sales charge $7,260 $7,260
With maximum sales charge $7,042 $7,188
Index 1 $8,831 $8,831
Index 2 $7,550 $7,550
Assuming all distributions were reinvested for the period indicated,
the table above shows the value of a $10,000 investment in the Fund's
Class B and Class C shares, respectively, as of October 31, 2003.
Performance of the classes will vary based on the difference in sales
charges paid by shareholders investing in the different classes and
the fee structure of those classes.
Standard & Poor's 500 Index -- Index 1 -- is an unmanaged index that
includes 500 widely traded common stocks.
Nasdaq Biotechnology Index -- Index 2 -- is an unmanaged index that
represents the largest and most actively traded Nasdaq biotechnology
stocks.
It is not possible to invest directly in an index. Index figures do
not reflect sales charges and would be lower if they did.
1 No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
October 31, 2003
This schedule is divided into two main categories: common stocks and
short-term investments. Common stocks are further broken down by
industry group. Short-term investments, which represent the Fund's
cash position, are listed last.
SHARES ISSUER VALUE
COMMON STOCKS 98.27% $18,576,175
(Cost $15,112,367)
Biotechnology 98.27% 18,576,175
40,000 Abgenix, Inc.* + 490,000
31,000 Affymetrix, Inc.* + 794,530
35,000 Alkermes, Inc.* 453,950
32,500 Amgen, Inc.* 2,007,200
26,000 Amylin Pharmaceuticals, Inc.* + 710,580
4,000 Atrix Laboratories, Inc.* + 80,360
14,000 Celgene Corp.* + 583,660
14,000 Chiron Corp. * 764,820
25,000 Esperion Therapeutics, Inc.* + 596,750
11,500 Fisher Scientific International, Inc. 462,875
13,500 Genentech, Inc.* 1,106,595
16,500 Genzyme Corp.* 757,350
20,000 Gilead Sciences, Inc.* + 1,091,600
35,000 Human Genome Sciences, Inc.* 486,850
16,000 IDEC Pharmaceuticals Corp.* 562,080
37,000 ILEX Oncology, Inc.* 771,820
12,000 Invitrogen Corp.* 763,080
30,000 Kosan Biosciences, Inc.* 275,100
50,000 Medarex, Inc.* 357,500
18,000 Medicines Co. (The)* 479,700
19,000 MGI Pharma, Inc.* 713,640
47,000 Millennium Pharmaceuticals, Inc.* 748,240
11,500 Neurocrine Biosciences, Inc.* + 538,545
13,000 NPS Pharmaceuticals, Inc.* + 342,290
18,000 OSI Pharmaceuticals, Inc.* 504,000
30,000 Protein Design Labs, Inc.* 404,400
12,000 Sepracor, Inc. * 319,560
15,000 Serona SA, American Depositary Receipt (ADR) (Switzerland) + 258,600
20,000 Telik, Inc.* + 406,400
30,000 Tularik, Inc.* + 377,100
20,000 Vicuron Pharmaceuticals, Inc. * 367,000
INTEREST PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE (000s omitted) VALUE
SHORT-TERM INVESTMENTS 35.54% $6,718,801
(Cost $6,718,801)
Joint Repurchase Agreement 5.87%
Investment in a joint repurchase agreement transaction
with Barclays Capital, Inc. -- Dated 10-31-03,
due 11-03-03 (Secured by U.S. Treasury Inflation
Indexed Bond, 3.625% due 04-15-28 and U.S.
Treasury Inflation Indexed Note, 1.875% due 07-15-13) 1.02% $1,109 1,109,000
SHARES
Cash Equivalents 29.67%
AIM Cash Investment Trust** 5,609,801 5,609,801
TOTAL INVESTMENTS 133.81% $25,294,976
OTHER ASSETS AND LIABILITIES, NET (33.81%) ($6,391,589)
TOTAL NET ASSETS 100.00% $18,903,387
* Non-income producing security.
** Represents investment of security lending collateral.
+ All or a portion of this security is on loan on October 31, 2003.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
October 31, 2003
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value and
the maximum
offering price
per share.
ASSETS
Investments at value (cost $21,831,168),
including $5,512,776 of securities loaned $25,294,976
Cash 921
Receivable for shares sold 22,628
Interest receivable 31
Receivable from affiliates 11,496
Other assets 269
Total assets 25,330,321
LIABILITIES
Payable for investments purchased 744,362
Payable for shares repurchased 7,798
Payable for securities on loan 5,609,801
Payable to affiliates
Management fee 13,876
Distribution and service fee 1,179
Other 9,277
Other payables and accrued expenses 40,641
Total liabilities 6,426,934
NET ASSETS
Capital paid-in 22,723,242
Accumulated net realized loss on investments (7,283,646)
Net unrealized appreciation of investments 3,463,808
Accumulated net investment loss (17)
Net assets $18,903,387
NET ASSET VALUE PER SHARE
Based on net asset values and shares outstanding
Class A ($8,121,387 [DIV] 1,098,977 shares) $7.39
Class B ($8,310,777 [DIV] 1,144,564 shares) $7.26
Class C ($2,471,223 [DIV] 340,400 shares) $7.26
MAXIMUM OFFERING PRICE PER SHARE
Class A 1 ($7.39 [DIV] 95%) $7.78
Class C ($7.26 [DIV] 99%) $7.33
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.
OPERATIONS
For the year ended
October 31, 2003
This Statement
of Operations
summarizes the
Fund's investment
income earned
and expenses
incurred in operat-
ing the Fund.
It also shows net
gains (losses) for
the period stated.
INVESTMENT INCOME
Securities lending $21,395
Interest 6,784
Dividend income (net of foreign withholding taxes of $528) 2,526
Total investment income 30,705
EXPENSES
Investment management fee 110,374
Class A distribution and service fee 15,799
Class B distribution and service fee 51,741
Class C distribution and service fee 18,232
Transfer agent fee 78,217
Registration and filing fee 50,346
Auditing fee 18,500
Custodian fee 13,096
Printing 11,058
Accounting and legal services fee 3,524
Miscellaneous 1,712
Trustees' fee 648
Legal fee 305
Interest 112
Total expenses 373,664
Less expense reductions (128,462)
Net expenses 245,202
Net investment loss (214,497)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (1,112,209)
Change in unrealized appreciation
(depreciation) of investments 4,607,427
Net realized and unrealized gain 3,495,218
Increase in net assets from operations $3,280,721
See notes to
financial statements.
CHANGES IN
NET ASSETS
These Statements
of Changes in
Net Assets show
how the value
of the Fund's
net assets has
changed during
the last two
periods. The dif-
ference reflects
earnings less
expenses, any
investment gains
and losses,
distributions, if
any, paid to
shareholders and
any increase or
decrease in
money share-
holders invested
in the Fund.
YEAR YEAR
ENDED ENDED
10-31-02 10-31-03
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ($209,026) ($214,497)
Net realized loss (5,977,530) (1,112,209)
Change in net unrealized appreciation
(depreciation) (1,212,776) 4,607,427
Increase (decrease) in net assets
resulting from operations (7,399,332) 3,280,721
Distributions to shareholders
From net investment income
Class A (7,371) --
From Fund share transactions 5,858,644 5,261,545
NET ASSETS
Beginning of period 11,909,180 10,361,121
End of period 1 $10,361,121 $18,903,387
1 Includes accumulated net investment loss of $6 and $17, respectively.
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS A SHARES
The Financial Highlights show how the Fund's net asset value for a
share has changed since the end of the previous period.
FINANCIAL HIGHLIGHTS
PERIOD ENDED 10-31-01 1 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.49 $5.55
Net investment loss 2 (0.07) (0.09) (0.08)
Net realized and unrealized
gain (loss) on investments (0.44) (3.84) 1.92
Total from
investment operations (0.51) (3.93) 1.84
Less distributions
From net investment income -- (0.01) --
Net asset value,
end of period $9.49 $5.55 $7.39
Total return 3,4 (%) (5.10) 5 (41.46) 33.15
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $6 $5 $8
Ratio of expenses
to average net assets (%) 1.60 6 1.60 1.60
Ratio of adjusted expenses
to average net assets 7 (%) 4.34 6 2.59 2.65
Ratio of net investment loss
to average net assets (%) (1.15) 6 (1.29) (1.35)
Portfolio turnover (%) 63 97 130
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS B SHARES
PERIOD ENDED 10-31-01 1 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.44 $5.49
Net investment loss 2 (0.13) (0.14) (0.13)
Net realized and unrealized
gain (loss) on investments (0.43) (3.81) 1.90
Total from
investment operations (0.56) (3.95) 1.77
Net asset value,
end of period $9.44 $5.49 $7.26
Total return 3,4 (%) (5.60) 5 (41.84) 32.24
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $4 $4 $8
Ratio of expenses
to average net assets (%) 2.30 6 2.30 2.30
Ratio of adjusted expenses
to average net assets 7 (%) 5.05 6 3.29 3.35
Ratio of net investment loss
to average net assets (%) (2.01) 6 (1.99) (2.05)
Portfolio turnover (%) 63 97 130
See notes to
financial statements.
FINANCIAL
HIGHLIGHTS
CLASS C SHARES
PERIOD ENDED 10-31-01 1 10-31-02 10-31-03
PER SHARE OPERATING PERFORMANCE
Net asset value,
beginning of period $10.00 $9.44 $5.49
Net investment loss 2 (0.13) (0.14) (0.13)
Net realized and unrealized
gain (loss) on investments (0.43) (3.81) 1.90
Total from
investment operations (0.56) (3.95) 1.77
Net asset value,
end of period $9.44 $5.49 $7.26
Total return 3,4 (%) (5.60) 5 (41.84) 32.24
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $2 $2 $2
Ratio of expenses
to average net assets (%) 2.30 6 2.30 2.30
Ratio of adjusted expenses
to average net assets 7 (%) 5.05 6 3.29 3.35
Ratio of net investment loss
to average net assets (%) (2.07) 6 (1.99) (2.05)
Portfolio turnover (%) 63 97 130
1 Class A, Class B and Class C shares began operations on 3-1-01.
2 Based on the average of the shares outstanding.
3 Assumes dividend reinvestment and does not reflect the effect of
sales charges.
4 Total returns would have been lower had certain expenses not been
reduced during the periods shown.
5 Not annualized.
6 Annualized.
7 Does not take into consideration expense reductions during the periods shown.
See notes to
financial statements.
NOTES TO
STATEMENTS
NOTE A
Accounting policies
John Hancock Biotechnology 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 the terms of a distribution plan have exclusive voting rights to
that distribution plan.
Significant accounting policies of the Fund are as follows:
Valuation of investments
Securities in the Fund's portfolio are valued on the basis of market
quotations, valuations provided by independent pricing services or at fair
value as determined in good faith in accordance with procedures approved by
the Trustees. Short-term debt investments maturing within 60 days are valued
at amortized cost, which approximates market value. Investments in AIM Cash
Investment Trust are valued at their net asset value each business day.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with other registered investment companies
having a management contract with John Hancock Advisers, LLC (the
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group,
LLC, may participate in a joint repurchase agreement transaction.
Aggregate cash balances are invested in one or more large repurchase
agreements, whose underlying securities are obligations of the U.S.
government and/or its agencies. The Fund's custodian bank receives
delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Investment transactions
Investment transactions are recorded as of the date of purchase, sale
or maturity. Net realized gains and losses on sales of investments are
determined on the identified cost basis.
Class allocations
Income, common expenses and realized and unrealized gains (losses) are
determined at the fund level and allocated daily to each class of
shares based on the appropriate net asset value of the respective
classes. Distribution and service fees, if any, are calculated daily
at the class level based on the appropriate net asset value of each
class and the specific expense rate(s) applicable to each class.
Expenses
The majority of expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund
are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative sizes of the funds.
Bank borrowings
The Fund is permitted to have bank borrowings for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Fund has entered into a
syndicated line of credit agreement with various banks. This agreement enables
the Fund to participate with other funds managed by the Adviser in an
unsecured line of credit with banks, which permits borrowings of up to $250
million, collectively. Interest is charged to each fund, based on its
borrowing. In addition, a commitment fee is charged to each fund based on the
average daily unused portion of the line of credit and is allocated among the
participating funds. The Fund had no borrowing activity under the line of
credit during the year ended October 31, 2003.
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
October 31, 2003, the Fund loaned securities having a market value of
$5,512,776 collateralized by cash in the amount of $5,609,801. 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
$6,698,221 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, October 31, 2010 -- $5,173,442,
and October 31, 2011 -- $1,385,137.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the
ex-dividend date or, in the case of some foreign securities, on the
date thereafter when the Fund identifies the dividend. Interest income
on investment securities is recorded on the accrual basis. Foreign
income may be subject to foreign withholding taxes, which are accrued
as applicable.
The Fund records distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. Distributions
paid by the Fund with respect to each class of shares are calculated
in the same manner, at the same time and are in the same amount,
except for the effect of expenses that may be applied differently to
each class.
As of October 31, 2003, there were no distributable earnings on a tax
basis. Such distributions and distributable earnings, on a tax basis,
are determined in conformity with income tax regulations, which may
differ from accounting principles generally accepted in the United
States of America. Distributions in excess of tax basis earnings and
profits, if any, are reported in the Fund's financial statements as a
return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund has an investment management contract with the Adviser. Under
the investment management contract, 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 total expenses, excluding the
distribution and service fees, to 1.30% of the Fund's average daily net
asset value, at least until February 28, 2004. Accordingly, the expense
reductions related to the total expense limitation amounted to $128,462
for the year ended October 31, 2003. The Adviser reserves the right to
terminate this limitation in the future.
The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a
wholly owned subsidiary of the Adviser. The Fund has adopted Distribution
Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1
under the Investment Company Act of 1940 to reimburse JH Funds for the
services it provides as distributor of shares of the Fund. Accordingly, the
Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30%
of Class A average daily net asset value and 1.00% of Class B and Class C
average daily net asset value. A maximum of 0.25% of such payments may be
service fees as defined by the Conduct Rules of the National Association of
Securities Dealers. Under the Conduct Rules, curtailment of a portion of the
Fund's 12b-1 payments could occur under certain circumstances.
Class A and Class C shares are assessed up-front sales charges. During the
year ended October 31, 2003, JH Funds received net up-front sales charges of
$68,423 with regard to sales of Class A shares. Of this amount, $10,775 was
retained and used for printing prospectuses, advertising, sales literature and
other purposes, $55,074 was paid as sales commissions to unrelated
broker-dealers and $2,574 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 Insur ance Company ("JHLICo"), is
the indirect sole shareholder of Signator Investors. During the year ended
October 31, 2003, JH Funds received net up-front sales charges of $5,474 with
regard to sales of Class C shares. Of this amount, $5,050 was paid as sales
commissions to unrelated broker-dealers and $424 was paid as sales commissions
to sales personnel of Signator Investors.
Class B shares that are redeemed within six years of purchase are
subject to a contingent deferred sales charge ("CDSC") at declining
rates, beginning at 5.00% of the lesser of the current market value at
the time of redemption or the original purchase cost of the shares
being redeemed. Class C shares that are redeemed within one year of
purchase are subject to a CDSC at a rate of 1.00% of the lesser of the
current market value at the time of redemption or the original
purchase cost of the shares being redeemed. Proceeds from the CDSCs
are paid to JH Funds and are used in whole or in part to defray its
expenses for providing distribution related services to the Fund in
connection with the sale of Class B and Class C shares. During the
year ended October 31, 2003, CDSCs received by JH Funds amounted to
$22,271 for Class B shares and $186 for Class C shares.
The Fund had a transfer agent agreement with John Hancock Signature
Services, Inc., an indirect subsidiary of JHLICo. Effective January 1,
2003, the Fund pays a monthly transfer agent fee at an annual rate of
0.05% of the average daily net asset value, plus a fee based on the
number of shareholder accounts and reimbursement for certain
out-of-pocket expenses. Until January 1, 2003, the Fund paid a monthly
transfer agent fee based on the number of shareholder accounts, plus
certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Fund. The compensation for the
year was at an annual rate of approximately 0.03% of the average net
asset value of the Fund.
The Fund had an independent advisory board composed of scientific and
medical experts who provided the investment officers of the Fund with
advice and consultation on health-care developments, for which the
Fund paid the advisory board a fee. The Board of Trustees voted to
discontinue the advisory board effective July 15, 2003.
The Adviser and other subsidiaries of JHLICo owned 300,000 shares of
beneficial interest of the Fund on October 31, 2003.
Ms. Maureen Ford Goldfarb and Mr. John M. DeCiccio are directors
and/or officers of the Adviser and/or its affiliates, as well as
Trustees of the Fund. The compensation of unaffiliated Trustees is
borne by the Fund. The unaffiliated Trustees may elect to defer for
tax purposes their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Fund makes investments
into other John Hancock funds, as applicable, to cover its liability
for the deferred compensation. Investments to cover the Fund's
deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other
asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investments as well as any unrealized
gains or losses. The Deferred Compensation Plan investments had no
impact on the operations of the Fund.
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold, 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 YEAR ENDED 10-31-03
SHARES AMOUNT SHARES AMOUNT
CLASS A SHARES
Sold 409,749 $3,245,104 559,783 $3,876,141
Distribution reinvested 389 3,952 -- --
Repurchased (209,765) (1,422,329) (274,305) (1,674,677)
Net increase 200,373 $1,826,727 285,478 $2,201,464
CLASS B SHARES
Sold 656,696 $5,487,821 715,050 $4,927,300
Repurchased (275,485) (1,934,504) (354,315) (2,274,524)
Net increase 381,211 $3,553,317 360,735 $2,652,776
CLASS C SHARES
Sold 97,638 $826,162 111,436 $716,782
Repurchased (58,498) (347,562) (52,642) (309,477)
Net increase 39,140 $478,600 58,794 $407,305
NET INCREASE 620,724 $5,858,644 705,007 $5,261,545
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities other
than short-term securities and obligations of the U.S. government,
during the year ended October 31, 2003, aggregated $20,464,013 and
$15,621,966, respectively.
The cost of investments owned on October 31, 2003, including short-term
investments, for federal income tax purposes was $22,416,592. Gross unrealized
appreciation and depreciation of investments aggregated $3,019,422 and
$141,038, respectively, resulting in net unrealized appreciation of
$2,878,384. The difference between book basis and tax basis net unrealized
appreciation of investments is attributable primarily to the tax deferral of
losses on certain sales of securities.
NOTE E
Reclassification of accounts
During the year ended October 31, 2003, the Fund reclassified amounts to
reflect a decrease in accumulated net realized loss on investments of $11, a
decrease in accumulated net investment loss of $214,486 and a decrease in
capital paid-in of $214,497. This represents the amount necessary to report
these balances on a tax basis, excluding certain temporary differences, as of
October 31, 2003. Additional adjustments may be needed in subsequent reporting
periods. These reclassifications, which have no impact on the net asset value
of the Fund, are primarily attributable to certain differences in the
computation of distributable income and capital gains under federal tax rules
versus accounting principles generally accepted in the United States of
America and book and tax differences in accounting for net operating loss and
deferred compensation. The calculation of net investment loss per share in the
Fund's Financial Highlights excludes these adjustments.
AUDITORS'
REPORT
Report of
Pricewaterhouse-
Coopers LLP,
Independent
Auditors
To the Board of Trustees and Shareholders of
John Hancock Biotechnology Fund,
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of the John Hancock
Biotechnology Fund (the "Fund") at October 31, 2003, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities owned at October 31, 2003, by correspondence with
the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 15, 2003
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund, if any, paid during its taxable year
ended October 31, 2003.
The fund hereby designates the maximum amount allowable of its net
taxable income as qualified dividend income as provided in the Jobs
and Growth Tax Relief Reconciliation Act of 2003. This amount will be
reflected on Form 1099-DIV for the calendar year 2003.
Shareholders will be mailed a 2003 U.S. Treasury Department Form
1099-DIV in January 2004. This will reflect the total of all
distributions that are taxable for the calendar year 2003.
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who
oversee your John Hancock fund. Officers elected by the Trustees
manage the day-to-day operations of the Fund and execute policies
formulated by the Trustees.
INDEPENDENT TRUSTEES
NUMBER OF
NAME, AGE TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
Dennis S. Aronowitz, Born: 1931 2001 21
Professor of Law, Emeritus, Boston University School of Law
(as of 1996); Director, Brookline Bancorp (since 1998).
Richard P. Chapman, Jr., Born: 1935 2001 21
President and Chief Executive Officer, Brookline Bancorp Inc. (lending)
(since 1972); Director, Lumber Insurance Co. (insurance) (until 2000);
Chairman and Director, Northeast Retirement Services, Inc. (retirement
administration) (since 1998).
William J. Cosgrove, Born: 1933 2001 21
Vice President, Senior Banker and Senior Credit Officer, Citibank, N.A.
(retired 1991); Executive Vice President, Citadel Group Representatives,
Inc. (financial reinsurance); Trustee, Hudson City Savings Bank (since 1995);
Director, Hudson City Bancorp (since 1999); Trustee, Scholarship Fund for
Inner City Children (since 1986).
Richard A. Farrell, Born: 1932 2001 21
President, Farrell, Healer & Co., Inc. (venture capital management firm)
(since 1980) and President, the Venture Capital Fund of NE (since 1980);
prior to 1980, headed the venture capital group at Bank of Boston Corporation;
Trustee, Marblehead Savings Bank (since 1994).
William F. Glavin, 2 Born: 1932 2001 21
President Emeritus, Babson College (as of 1998); Vice Chairman, Xerox
Corporation (until 1989); Director, Reebok, Inc. (until 2002) and Inco Ltd.
(until 2002).
John A. Moore, 2 Born: 1939 2001 29
President and Chief Executive Officer, Institute for Evaluating Health
Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (since 1998); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson, 2 Born: 1943 2001 29
Executive Director, Council for International Exchange of Scholars (since
1998); Vice President, Institute of International Education (since 1998);
Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until
1997); President Emerita of Wells College and St. Lawrence University;
Director, Niagara Mohawk Power Corporation (electric utility).
John W. Pratt, Born: 1931 2001 21
Professor of Business Administration Emeritus, Harvard University
Graduate School of Business Administration (as of 1998).
INTERESTED TRUSTEES 3
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
John M. DeCiccio, Born: 1948 2001 51
Trustee
Executive Vice President and Chief Investment Officer, John Hancock
Financial Services, Inc.; Director, Executive Vice President and Chief
Investment Officer, John Hancock Life Insurance Company; Chairman of
the Committee of Finance of John Hancock Life Insurance Company;
Director, John Hancock Subsidiaries, LLC (Subsidiaries, LLC), Hancock
Natural Resource Group, Independence Investment LLC, Declaration
Management Research LLC, John Hancock Advisers, LLC (the "Adviser"),
The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock
Funds, LLC ("John Hancock Funds") and Massachusetts Business Development
Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance
Agency, Inc.") (until 1999).
Maureen Ford Goldfarb, Born: 1955 2001 51
Trustee, Chairman, President and Chief Executive Officer
Executive Vice President, John Hancock Financial Services, Inc., John
Hancock Life Insurance Company; Chairman, Director, President and
Chief Executive Officer, the Adviser and The Berkeley Group; Chairman,
Director, President and Chief Executive Officer, John Hancock Funds;
Chairman, Director, President and Chief Executive Officer, Sovereign Asset
Management Corporation ("SAMCorp."); Director, Independence
Investment LLC, Subsidiaries, LLC and Signature Services; Senior Vice
President, MassMutual Insurance Co. (until 1999).
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE
POSITION(S) HELD WITH FUND OFFICER
PRINCIPAL OCCUPATION(S) AND OF FUND
DIRECTORSHIPS DURING PAST 5 YEARS SINCE
Richard A. Brown, Born: 1949 2001
Senior Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock
Funds and The Berkeley Group; Second Vice President and Senior Associate Controller,
Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001).
Thomas H. Connors, Born: 1959 2001
Vice President and Compliance Officer
Vice President and Compliance Officer, the Adviser and each of the John Hancock funds;
Vice President, John Hancock Funds.
William H. King, Born: 1952 2001
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each of
the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001).
Susan S. Newton, Born: 1950 2001
Senior Vice President, Secretary and Chief Legal Officer
Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each
of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President,
Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital.
The business address for all Trustees and Officers is 101 Huntington
Avenue, Boston, Massachusetts 02199.
The Statement of Additional Information of the Fund includes
additional information about members of the Board of Trustees of the
Fund and is available, without charge, upon request, by calling
1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his
or her successor is elected.
2 Member of Audit Committee.
3 Interested Trustees hold positions with the Fund's investment
adviser, underwriter and certain other affiliates.
OUR FAMILY
OF FUNDS
- ---------------------------------------------------------------
Equity Balanced Fund
Classic Value Fund
Core Equity Fund
Focused Equity Fund
Growth Trends Fund
International Fund
Large Cap Equity Fund
Large Cap Growth Fund
Large Cap Select Fund
Mid Cap Growth Fund
Multi Cap Growth Fund
Small Cap Equity Fund
Small Cap Growth Fund
Sovereign Investors Fund
U.S. Global Leaders Growth Fund
- ---------------------------------------------------------------
Sector Biotechnology Fund
Financial Industries Fund
Health Sciences Fund
Real Estate Fund
Regional Bank Fund
Technology Fund
- ---------------------------------------------------------------
Income Bond Fund
Government Income Fund
High Income Fund
High Yield Bond Fund
Investment Grade Bond Fund
Strategic Income Fund
- ---------------------------------------------------------------
Tax-Free Income California Tax-Free Income Fund
High Yield Municipal Bond Fund
Massachusetts Tax-Free Income Fund
New York Tax-Free Income Fund
Tax-Free Bond Fund
- ---------------------------------------------------------------
Money Market Money Market Fund
U.S. Government Cash Reserve
For more complete information on any John Hancock Fund and a prospectus, which
includes charges and expenses, call your financial professional, or John
Hancock Funds at 1-800-225-5291. Please read the prospectus carefully before
investing or sending money.
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DELIVERY
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www.jhfunds.com
View the latest information for your account.
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FOR YOUR
INFORMATION
INVESTMENT ADVISER
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
125 High Street
Boston, Massachusetts 02110
HOW TO
CONTACT US
On the Internet www.jhfunds.com
By regular mail John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, MA 02217-1000
By express mail John Hancock Signature Services, Inc.
Attn: Mutual Fund Image Operations
529 Main Street
Charlestown, MA 02129
Customer service representatives 1-800-225-5291
24-hour automated information 1-800-338-8080
TDD line 1-800-554-6713
The Fund's voting policies and procedures are available without
charge, upon request:
By phone 1-800-225-5291
On the Fund's Web site www.jhfunds.com/proxy
On the SEC's Web site www.sec.gov
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-225-5291
1-800-554-6713 (TDD)
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhancock.com/funds/edelivery
This report is for the information of
the shareholders of the John Hancock
Biotechnology Fund.
7300A 10/03
12/03
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2003, the registrant has adopted a code
of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief
Executive Officer, Chief Financial Officer and Treasurer (respectively, the
principal executive officer, the principal financial officer and the principal
accounting officer, the "Senior Financial Officers"). A copy of the code of
ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
William F. Glavin is the audit committee financial expert and is "independent",
pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form N-CSR,
the registrant's principal executive officer and principal financial officer
have concluded that those disclosure controls and procedures provide reasonable
assurance that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule
30a-2(b) under the Investment Company Act of 1940, are attached. The
certifications furnished pursuant to this paragraph are not deemed to be "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to the liability of that section. Such certifications are not deemed to
be incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the Registrant
specifically incorporates them by reference.
(c)(1) Contact person at the registrant
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
- ------------------------------
Maureen Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: December 18, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
- -------------------------------
Maureen Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: December 18, 2003
By:
- -----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: December 18, 2003