June 24, 2004 EDGAR United States Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Form N-CSR John Hancock Investment Trust III (the "Registrant") on behalf of: John Hancock Large Cap Growth Fund John Hancock International Fund John Hancock Mid Cap Growth Fund File Nos. 33-4559; 811-4630 Ladies and Gentlemen: Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for the period ending April 30, 2004. If you have any questions or comments regarding this filing, please contact the undersigned at (617) 375-1513. Sincerely, /s/Alfred P. Ouellette Alfred P. Ouellette Senior Attorney and Assistant Secretary ITEM 1. REPORT TO SHAREHOLDERS. JOHN HANCOCK Large Cap Growth Fund 4.30.2004 Semiannual Report [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 James A. Shepherdson, Chairman, President and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 12 For your information page 25 To Our Shareholders, I am pleased to be writing to you as Chairman, President and Chief Executive Officer of John Hancock Funds, LLC. As you may know, John Hancock Financial Services, Inc. -- the parent company of John Hancock Funds -- was acquired by Manulife Financial Corporation on April 28, 2004. The merger combines two exceptionally strong companies into a single, integrated, global market leader whose scale and capital will create an industry pacesetter strengthening our company's leadership in markets around the world. Although this change has no impact on the mutual funds you have invested in, it did bring with it some changes in the executive-level management of John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step down as chairman, president and chief executive officer in order to pursue personal interests. Since her appointment in January 2000, Maureen has provided John Hancock Funds with strong leadership and steady guidance through several years of extremely turbulent market and industry conditions. Effective May 12, 2004, I have also been appointed by your Board of Trustees to the roles of Trustee, President and Chief Executive Officer of your fund. I have been in the investment business for over 25 years, most recently as President of Retirement Services at John Hancock Financial Services. In that role, my responsibilities included developing and directing the sale of John Hancock's variable and fixed annuity businesses through a diverse distribution network of banks and broker-dealers -- including wirehouses, regional brokerage houses and financial planners. Prior to joining John Hancock, I served as Co-Chief Executive Officer of MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my responsibilities included the design, manufacture and distribution of MetLife's annuity and life insurance products sold through third-party channels. Although there has been a change in executive-level management, the one thing that never wavers is John Hancock Funds' commitment to placing the needs of our shareholders above all else. We are all dedicated to the task of working with you and your financial advisors to help you reach your long-term financial goals. Sincerely, /S/ JAMES A. SHEPHERDSON James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of April 30, 2004. 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 large-capitaliza- tion companies in the capitalization range of the Russell Top 200 Growth Index. Over the last six months * Stock prices moved up despite a volatile market environment. * Large- and mega-cap stocks continued to lag small- and mid-cap stocks. * The Fund maintained an economically sensitive bias, which hurt performance as investors shifted into more defensive sectors. [Bar chart with heading "John Hancock Large Cap Growth Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2004." The chart is scaled in increments of 1% with -1% at the bottom and 1% at the top. The first bar represents the 0.10% total return for Class A. The second bar represents the -0.34% total return for Class B. The third bar represents the -0.23% total return for Class C. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 4.3% General Electric Co. 3.5% Pfizer, Inc. 3.4% Intel Corp. 3.3% Comcast Corp. (Special Class A) 3.2% Microsoft Corp. 3.0% EMC Corp. 2.5% Time Warner, Inc. 2.4% Amgen, Inc. 2.4% Cisco Systems, Inc. 2.3% Johnson & Johnson As a percentage of net assets on April 30, 2004. 1 BY ROGER C. HAMILTON AND ROBERT C. JUNKIN, CPA, PORTFOLIO MANAGERS MANAGERS' REPORT JOHN HANCOCK Large Cap Growth Fund Recently, Roger C. Hamilton became a member of the Fund's management team, replacing Robert J. Uek. Mr. Hamilton, who has been with John Hancock since 1994, currently serves as a member of several of John Hancock's large-cap mutual fund equity teams. He began his business career in 1980. Positive reports on the economy, job growth and corporate earnings dominated headlines during the six months ended April 30, 2004. Stock prices, however, were choppy as investors worried about the war in Iraq, the sustainability of the U.S. economic recovery and the potential for a slowdown in China's rapid growth. Concerns about whether interest rates would rise sooner or faster than originally anticipated weighed heavily on the market. Economically sensitive sectors such as technology, which had done well early in the period, faltered in the new year, as investors rotated into sectors that would be less affected by rising interest rates. Despite this volatility, the Standard & Poor's 500 Index delivered a 6.27% return for the six-month period. Although large-cap stocks benefited from the weak U.S. dollar, they lagged small- and mid-cap stocks, which received the biggest boost from the economic recovery. "Concerns about whether interest rates would rise sooner or faster than originally anticipated weighed heavily on the market." PERFORMANCE REVIEW To take advantage of an improving economy, we invested heavily in technology and consumer cyclical stocks and kept below-average stakes in the health-care and consumer staples sectors. This positioning hurt performance as market leadership shifted. John Hancock Large Cap Growth Fund's Class A, Class B and Class C shares returned 0.10%, -0.34% and - -0.23%, respectively, at net asset value, for the six months ended April 30, 2004. By comparison, the Russell Top 200 Growth Index, which tracks the performance of the largest growth stocks, returned 3.72% during the same period. The average large-cap growth fund returned 2.47%, according to Lipper, Inc.1 Keep in mind that your net asset 2 value return will be different from the Fund's if you were not invested in the Fund for the entire period and did not reinvest all distributions. Long-term performance information can be found on pages six and seven. [Photos of Roger Hamilton and Robert Junkin flush right next to first paragraph.] WEAKNESS IN TECHNOLOGY SECTOR The Fund had a very sizable stake in technology, which was the worst-performing sector in the large-cap growth universe during the six-month period. Investments in semiconductor companies Intel and Fairchild Semiconductor and semiconductor equipment manufacturer Applied Materials were among our biggest disappointments. Although earnings for the semiconductor companies were strong and valuations remained attractive, stock prices fell sharply as investors worried that the best times might be over. We took advantage of the downturn and added to some of our holdings, believing that technology spending would continue to drive strong demand. A large investment in EMC, a storage company, also hurt performance, as problems at other storage-related companies dampened returns for the whole industry. Partially offsetting some of our technology losses were sharp gains from Motorola, which benefited from a recovery in telecommunications equipment spending, as well as from initiatives under new management that focused on improved profitability. In addition, Yahoo!, a leader in the Internet search market, did well as advertising spending continued to migrate online. "The Fund had a very sizable stake in technology, which was the worst-performing sector in the large-cap growth universe..." GAINS FROM ENERGY AND HEALTH-CARE STOCKS The Fund's above-average stake in the energy sector helped performance. Tight supply and growing demand fueled continued high oil and natural gas commodity prices. As exploration and production companies saw improved revenues, they began spending more to find new reserves. This benefited energy services stocks, such as BJ Services, which supplies drilling equipment. Strong stock selection in the health-care sector also contributed positively to performance. Biogen Idec, a biotechnology company, posted exceptionally strong gains as its new multiple sclerosis drug posted better-than-expected results in trials. Pfizer, a leading 3 branded-drug company, and Forest Laboratories, which manufactures and distributes generic and specialty drugs, also rallied as investors renewed their interest in pharmaceuticals. We added to Amgen, a large biotechnology company whose stock price looked attractive given its strong earnings growth prospects. The Fund lost ground, however, by not having a bigger stake in the health-care sector, which generated some of the best returns for the period. In addition, our below-average stake in consumer staples stocks -- which include food and beverage companies -- hurt performance as investors shifted into these more defensive names. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Medical 18%, the second is Computers 15%, the third Electronics 12%, the fourth Media 11%, and the fifth Retail 7%.] [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-04." The chart is divided into two sections (from top to left): Common stocks 99%, and Short-term investments & other 1%.] SHIFT IN CONSUMER POSITIONING In response to an expected increase in interest rates, we lowered the Fund's sensitivity to the consumer side of the economy. To do this, we trimmed various retail investments, including The Gap, which had had disappointing revenue growth. Our focus instead was on media names, many of which stand to benefit from increased advertising spending related to an improving economy, the upcoming presidential election and the summer Olympics. Within the consumer discretionary sector, winners offset losers. Comcast, a leading cable provider, detracted from performance, as investors worried about whether the company would bid too high to acquire Disney. We added to our stake as the price tumbled, believing these concerns were overdone. We also purchased Liberty Media, a media holding company. The stock was selling at an attractive valuation despite strong execution by management. By contrast, media giant Time Warner rallied as investors anticipated that various catalysts would boost the stock price. Slot machine manufacturer International Game 4 Technology also did well, benefiting as more fiscally troubled states legalized gambling in an effort to boost revenues. [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 Motorola followed by an up arrow with the phrase "Rebound in telecom equipment spending; new management." The second listing is Intel followed by a down arrow with the phrase "Questions about sustainability of semiconductor cycle." The third listing is Comcast followed by a down arrow with the phrase "Concerns about bid for Disney and cable industry growth rate."] PATIENT AND HOPEFUL OUTLOOK Despite the market's recent volatility, we remain optimistic about its prospects, particularly in the large-cap growth area. Our expectation is that the economic recovery will continue longer than people think, driven by stronger-than-expected corporate spending. The manufacturing and industrial sectors were in a slump for four years, so we don't think they will slow down after just a few quarters of recovery. Given this outlook, we plan to keep the Fund heavily weighted toward sectors such as technology and industrials that will benefit from increased corporate spending. However, we most likely will continue to cut back on more economically sensitive consumer holdings, which tend to weaken when interest rates rise. Going forward, we think large-cap growth stocks are due to lead the market. We expect their high dividend yields to attract renewed attention in an environment of rising interest rates. We also think large-cap stocks will benefit as higher-quality companies with strong balance sheets and stable earnings move back into favor with investors. "Despite the market's recent volatility, we remain opti- mistic about its prospects, particularly in the large-cap growth area." This commentary reflects the views of the portfolio managers through the end of the Fund's period discussed in this report. The managers' statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2004 Class A Class B Class C Inception date 12-24-68 1-3-94 6-1-98 Average annual returns with maximum sales charge (POP) One year 10.15% 9.95% 12.75% Five years -15.52% -15.55% -15.41% Ten years 0.48% 0.43% -- Since inception -- -- -10.04% Cumulative total returns with maximum sales charge (POP) Six months -4.88% -5.33% -2.24% One year 10.15% 9.95% 12.75% Five years -56.98% -57.05% -56.69% Ten years 4.89% 4.36% -- Since inception -- -- -46.51% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the Russell Top 200 Growth Index. Russell Cum Value Cum Value Top 200 of $10K of $10K Growth Plot Date (No Load) (w/Load) Index 4-30-04 $10,000 $9,500 $10,000 5-31-94 9,899 9,406 10,212 10-31-94 10,322 9,808 11,049 4-30-95 10,962 10,417 12,260 10-31-95 12,997 12,351 14,530 4-30-96 14,612 13,885 16,184 10-31-96 15,386 14,620 17,990 4-30-97 15,327 14,564 21,075 10-31-97 17,854 16,966 23,935 4-30-98 20,424 19,407 30,036 10-31-98 19,605 18,630 31,555 4-30-99 24,382 23,169 39,251 10-31-99 25,011 23,767 42,105 4-30-00 26,352 25,041 48,208 10-31-00 22,972 21,829 43,825 4-30-01 15,073 14,323 32,383 10-31-01 11,998 11,401 26,583 4-30-02 11,963 11,368 25,524 10-31-02 9,409 8,941 21,285 4-30-03 9,525 9,051 21,995 10-31-03 11,027 10,478 25,062 4-30-04 11,039 10,489 25,993 Line chart with the heading "GROWTH OF $10,000." Within the chart are three lines. The first line represents the Index and is equal to $25,993 as of April 30, 2004. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Large Cap Growth Fund, before sales charge, and is equal to $11,039 as of April 30, 2004. The third line represents the value of the same hypothetical $10,000 investment made in the John Hancock Large Cap Growth Fund, after sales charge, and is equal to $10,489 as of April 30, 2004. Class B 1 Class C 1 Period beginning 4-30-94 6-1-98 Without sales charge $10,436 $5,404 With maximum sales charge $10,436 $5,349 Index $25,993 $8,899 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2004. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. Russell Top 200 Growth Index is an unmanaged index containing growth- oriented stocks from the Russell Top 200 Index. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. 7 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2004 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last. ISSUER SHARES VALUE COMMON STOCKS 99.76% $190,405,326 (Cost $160,435,701) Beverages 2.14% 4,080,752 Anheuser-Busch Cos., Inc. 40,163 2,057,952 Coca-Cola Co. (The) 40,000 2,022,800 Broker Services 2.35% 4,491,950 Goldman Sachs Group, Inc. (The) 15,600 1,509,300 Merrill Lynch & Co., Inc. 55,000 2,982,650 Business Services -- Misc. 1.46% 2,788,205 Manpower, Inc. 59,450 2,788,205 Computers 14.89% 28,414,944 BEA Systems, Inc.*+ 194,500 2,219,245 Cisco Systems, Inc.* 214,500 4,476,615 EMC Corp.* 505,000 5,635,800 Emulex Corp.*+ 75,000 1,250,250 Mercury Interactive Corp.*+ 50,000 2,127,500 Microsoft Corp. 232,200 6,030,234 Oracle Corp.* 160,000 1,795,200 VERITAS Software Corp.* 60,000 1,600,200 Yahoo! Inc.*+ 65,000 3,279,900 Consumer Products Misc. 0.73% 1,398,060 Clorox Co. (The) 27,000 1,398,060 Cosmetics & Personal Care 2.46% 4,700,700 Estee Lauder Cos., Inc. (The) (Class A)+ 45,000 2,056,950 Procter & Gamble Co. (The) 25,000 2,643,750 Diversified Operations 6.72% 12,821,107 3M Co. 20,000 1,729,600 Cendant Corp.*+ 120,000 2,841,600 General Electric Co. 275,456 8,249,907 Electronics 12.44% 23,740,770 Analog Devices, Inc.* 65,000 2,769,000 Applied Materials, Inc.*+ 155,000 2,825,650 ASML Holding N.V. (NY Reg Shares) (Netherlands)* 105,000 1,632,750 See notes to financial statements. 8 FINANCIAL STATEMENTS ISSUER SHARES VALUE Electronics (continued) Emerson Electric Co. 40,000 $2,408,800 Fairchild Semiconductor International, Inc.* 135,000 2,628,450 Flextronics International Ltd. (Singapore)*+ 72,000 1,159,200 Intel Corp. 249,000 6,406,770 Intersil Corp. (Class A) 100,000 1,975,000 Parker Hannifin Corp. 35,000 1,935,150 Fiber Optics 0.83% 1,580,800 JDS Uniphase Corp.*+ 520,000 1,580,800 Finance 3.60% 6,860,110 Capital One Financial Corp.+ 22,000 1,441,660 Citigroup, Inc. 35,000 1,683,150 Paychex, Inc. 60,000 2,236,800 Sovereign Bancorp, Inc. 75,000 1,498,500 Insurance 2.88% 5,489,920 American International Group, Inc. 45,000 3,224,250 RenaissanceRe Holdings Ltd. (Bermuda) 43,000 2,265,670 Leisure 0.59% 1,132,200 International Game Technology 30,000 1,132,200 Machinery 1.55% 2,953,740 Caterpillar, Inc. 38,000 2,953,740 Media 11.16% 21,302,587 Comcast Corp. (Special Class A)*+ 215,500 6,247,345 DIRECTV Group, Inc. (The)* 204,642 3,663,092 InterActiveCorp.*+ 40,000 1,274,800 Liberty Media Corp. (Class A)* 300,000 3,282,000 Time Warner, Inc.*+ 280,000 4,709,600 Viacom, Inc. (Class B)*+ 55,000 2,125,750 Medical 18.17% 34,676,129 Abbott Laboratories 40,000 1,760,800 Amgen, Inc.* 80,000 4,501,600 Biogen Idec, Inc.*+ 42,000 2,478,000 Express Scripts, Inc.*+ 30,000 2,320,200 Forest Laboratories, Inc.* 30,000 1,934,400 Johnson & Johnson 80,017 4,323,319 Medtronic, Inc. 64,776 3,268,597 Merck & Co., Inc. 25,000 1,175,000 Mylan Laboratories, Inc. 88,750 2,033,262 Pfizer, Inc. 186,561 6,671,421 UnitedHealth Group, Inc. 36,000 2,213,280 Zimmer Holdings, Inc.* 25,000 1,996,250 Metal 0.56% 1,076,250 Alcoa, Inc.+ 35,000 1,076,250 See notes to financial statements. 9 FINANCIAL STATEMENTS ISSUER SHARES VALUE Oil & Gas 4.50% $8,590,050 Apache Corp. 40,000 1,674,800 BJ Services Co.*+ 65,000 2,892,500 ENSCO International, Inc. 75,000 2,052,750 EOG Resources, Inc. 40,000 1,970,000 Retail 6.97% 13,300,002 Best Buy Co., Inc. 55,000 2,983,750 Costco Wholesale Corp.*+ 30,000 1,123,500 Home Depot, Inc. (The) 70,000 2,463,300 McDonald's Corp. 75,000 2,042,250 Staples, Inc.* 55,400 1,427,104 Target Corp. 35,000 1,517,950 Wal-Mart Stores, Inc. 30,564 1,742,148 Telecommunications 5.02% 9,587,050 Avaya, Inc.* 105,000 1,436,400 Motorola, Inc. 215,000 3,923,750 Nortel Networks Corp. (Canada)* 310,000 1,159,400 Vodafone Group Plc, American Depositary Receipt (United Kingdom) 125,000 3,067,500 Waste Disposal Service & Equip. 0.74% 1,420,000 Waste Management, Inc. 50,000 1,420,000 INTEREST PAR VALUE ISSUER, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 21.77% $41,550,539 (Cost $41,550,539) Joint Repurchase Agreement 0.93% Investment in a joint repurchase agreement transaction with Barclays Capital, Inc. -- Dated 04-30-04, due 05-03-04 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Note 3.00% due 07-15-12) 0.930% $1,778 1,778,000 SHARES Cash Equivalents 20.84% AIM Cash Investment Trust** 39,772,539 39,772,539 See notes to financial statements. 10 FINANCIAL STATEMENTS ISSUER VALUE TOTAL INVESTMENTS 121.53% $231,955,865 OTHER ASSETS AND LIABILITIES, NET (21.53%) ($41,101,981) TOTAL NET ASSETS 100.00% $190,853,884 + All or a portion of this security is on loan as of April 30, 2004. * Non-income-producing security. ** Represents investment of security lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total of that category as a percentage of the net assets of the Fund. See notes to financial statements. 11 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2004 (unaudited) This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. ASSETS Investments at value (cost $201,986,240) including $38,190,586 of securities loaned $231,955,865 Cash 103 Receivable for investments sold 644,925 Receivable for shares sold 14,335 Dividends and interest receivable 90,626 Other assets 41,553 Total assets 232,747,407 LIABILITIES Payable for investments purchased 1,705,467 Payable for shares repurchased 91,093 Payable for securities on loan 39,772,539 Payable to affiliates Management fees 123,626 Distribution and service fees 7,675 Other 110,932 Other payables and accrued expenses 82,191 Total liabilities 41,893,523 NET ASSETS Capital paid-in 423,580,420 Accumulated net realized loss on investments (261,621,842) Net unrealized appreciation of investments 29,969,625 Accumulated net investment loss (1,074,319) Net assets $190,853,884 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($142,976,752 [DIV] 14,976,321 shares) $9.55 Class B ($44,377,769 [DIV] 5,104,254 shares) $8.69 Class C ($3,499,363 [DIV] 402,708 shares) $8.69 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($9.55 [DIV] 95%) $10.05 Class C ($8.69 [DIV] 99%) $8.78 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. 12 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2004 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in oper- ating the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $5,911) $834,748 Securities lending 50,183 Interest 9,669 Total investment income 894,600 EXPENSES Investment management fees 760,833 Class A distribution and service fees 224,578 Class B distribution and service fees 247,198 Class C distribution and service fees 18,653 Transfer agent fees 595,924 Accounting and legal services fees 30,433 Printing 24,667 Registration and filing fees 22,729 Professional fees 21,054 Miscellaneous 6,512 Custodian fees 6,060 Trustees' fees 5,477 Interest 3,115 Securities lending fees 1,233 Total expenses 1,968,466 Less expense reductions (28,247) Net expenses 1,940,219 Net investment loss (1,045,619) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on investments 10,657,090 Change in unrealized appreciation (depreciation) of investments (9,255,812) Net realized and unrealized gain 1,401,278 Increase in net assets from operations $355,659 1 Semiannual period from 11-1-03 through 4-30-04. See notes to financial statements. 13 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 PERIOD ENDED ENDED 10-31-03 4-30-04 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($1,915,137) ($1,045,619) Net realized gain 2,702,645 10,657,090 Change in net unrealized appreciation (depreciation) 28,948,933 (9,255,812) Increase in net assets resulting from operations 29,736,441 355,659 From Fund share transactions (22,118,554) (11,052,812) NET ASSETS Beginning of period 193,933,150 201,551,037 End of period 2 $201,551,037 $190,853,884 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 2 Includes accumulated net investment loss of $28,700 and $1,074,319, respectively. See notes to financial statements. 14 FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. PERIOD ENDED 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 4-30-04 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $22.27 $25.04 $20.73 $10.38 $8.14 $9.54 Net investment loss 3 (0.17) (0.23) (0.13) (0.10) (0.07) (0.06) Net realized and unrealized gain (loss) on investments 5.65 (1.48) (9.42) (2.14) 1.47 0.07 Total from investment operations 5.48 (1.71) (9.55) (2.24) 1.40 0.01 Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- -- Net asset value, end of period $25.04 $20.73 $10.38 $8.14 $9.54 $9.55 Total return 4 (%) 27.58 (8.15) (47.77) (21.58) 17.20 5 0.10 5,6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $484 $421 $209 $140 $148 $143 Ratio of expenses to average net assets (%) 1.35 1.36 1.59 1.75 1.86 1.73 7 Ratio of adjusted expenses to average net assets 8 (%) -- -- -- -- 1.87 1.76 7 Ratio of net investment loss to average net assets (%) (0.70) (0.97) (0.99) (0.96) (0.82) (0.85) 7 Portfolio turnover (%) 183 162 131 228 121 45 See notes to financial statements. 15 FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 4-30-04 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $21.38 $23.74 $19.40 $9.62 $7.49 $8.72 Net investment loss 3 (0.31) (0.37) (0.21) (0.15) (0.12) (0.10) Net realized and unrealized gain (loss) on investments 5.38 (1.37) (8.77) (1.98) 1.35 0.07 Total from investment operations 5.07 (1.74) (8.98) (2.13) 1.23 (0.03) Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- -- Net asset value, end of period $23.74 $19.40 $9.62 $7.49 $8.72 $8.69 Total return 4 (%) 26.70 (8.79) (48.12) (22.14) 16.42 5 (0.34) 5,6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $312 $239 $88 $51 $50 $44 Ratio of expenses to average net assets (%) 2.02 2.05 2.24 2.45 2.56 2.43 7 Ratio of adjusted expenses to average net assets 8 (%) -- -- -- -- 2.57 2.46 7 Ratio of net investment loss to average net assets (%) (1.37) (1.66) (1.65) (1.66) (1.52) (1.55) 7 Portfolio turnover (%) 183 162 131 228 121 45 See notes to financial statements. 16 FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 1 10-31-00 1 10-31-01 1 10-31-02 1 10-31-03 4-30-04 2 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $21.37 $23.73 $19.39 $9.61 $7.49 $8.71 Net investment loss 3 (0.31) (0.37) (0.20) (0.15) (0.12) (0.10) Net realized and unrealized gain (loss) on investments 5.38 (1.37) (8.78) (1.97) 1.34 0.08 Total from investment operations 5.07 (1.74) (8.98) (2.12) 1.22 (0.02) Less distributions From net realized gain (2.71) (2.60) (0.80) -- -- -- Net asset value, end of period $23.73 $19.39 $9.61 $7.49 $8.71 $8.69 Total return 4 (%) 26.72 (8.80) (48.15) (22.06) 16.29 5 (0.23) 5,6 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $3 $4 $3 $4 $3 Ratio of expenses to average net assets (%) 2.05 2.06 2.29 2.45 2.56 2.43 7 Ratio of adjusted expenses to average net assets 8 (%) -- -- -- -- 2.57 2.46 7 Ratio of net investment loss to average net assets (%) (1.36) (1.71) (1.68) (1.66) (1.53) (1.55) 7 Portfolio turnover (%) 183 162 131 228 121 45 1 Audited by previous auditor. 2 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 3 Based on the average of the shares outstanding. 4 Assumes dividend reinvestment and does not reflect the effect of sales charges. 5 Total returns would have been lower had certain expenses not been reduced during the periods shown. 6 Not annualized. 7 Annualized. 8 Does not take into consideration expense reductions during the periods shown. See notes to financial statements. 17 NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Large Cap Growth Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to 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 John Hancock Financial Services, Inc., 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. 18 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 period ended April 30, 2004. 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 April 30, 2004, the Fund loaned securities having a market value of $38,190,586 collateralized by cash in the amount of $39,772,539. The cash collateral was invested in a short-term instrument. Securities lending expenses are paid by the Fund to the Adviser. 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 $271,450,368 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 - $216,254,383 and October 31, 2010 - $55,195,985. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of 19 shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.75% of the first $750,000,000 of the Fund's average daily net asset value and (b) 0.70% of the Fund's average daily net asset value in excess of $750,000,000. The Fund has an agreement with its custodian bank under which custody fees are reduced by brokerage commissions offsets applied during the period. Accordingly, the expense reductions related to custody fee offsets amounted to $2,220 and had no impact on the Fund's ratio of expenses to average net assets, for the period ended April 30, 2004. 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 period ended April 30, 2004, JH Funds received net up-front sales charges of $65,393 with regard to sales of Class A shares. Of this amount, $9,572 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $34,221 was paid as sales commissions to unrelated broker-dealers and $21,600 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2004, JH Funds received net up-front sales charges of $2,782 with regard to sales of Class C shares. Of this amount, $2,594 was paid as sales commissions to unrelated broker-dealers and $188 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 20 contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used, in whole or in part, to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2004, CDSCs received by JH Funds amounted to $45,243 for Class B shares and $322 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the Fund's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses, aggregated and allocated to each class on the basis of its relative net asset value. Signature Services reduced the transfer agent fee for Class A, Class B and Class C shares by $26,027 during the period ended April 30, 2004. Signature Services reserves the right to terminate this limitation in the future. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average daily net asset value of the Fund. The Fund also paid the Adviser the amount of $160 for certain publishing services, included in the printing fees. Mr. James A. Shepherdson is a director and/or officer of the Adviser and/or its affiliates, as well as Trustee 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. 21 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 10-31-03 PERIOD ENDED 4-30-04 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,307,717 $11,137,303 718,063 $7,086,674 Repurchased (3,054,320) (25,747,820) (1,215,445) (12,030,572) Net decrease (1,746,603) ($14,610,517) (497,382) ($4,943,898) CLASS B SHARES Sold 1,154,106 $8,948,550 388,455 $3,523,678 Repurchased (2,151,843) (16,592,814) (1,068,052) (9,621,137) Net decrease (997,737) ($7,644,264) (679,597) ($6,097,459) CLASS C SHARES Sold 118,376 $923,718 62,530 $565,418 Repurchased (102,019) (787,491) (64,193) (576,873) Net increase (decrease) 16,357 $136,227 (1,663) ($11,455) NET DECREASE (2,727,983) ($22,118,554) (1,178,642) ($11,052,812) 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2004, aggregated $90,377,137 and $99,940,210, respectively. The cost of investments owned on April 30, 2004, including short-term investments, for federal income tax purposes, was $202,591,371. Gross unrealized appreciation and depreciation of investments aggregated $34,126,619 and $4,762,125, respectively, resulting in net unrealized appreciation of $29,364,494. 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. 22 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 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. 23 ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of sending annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhancock.com/funds/edelivery 24 FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove Richard A. Farrell William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt James A. Shepherdson *Members of the Audit Committee OFFICERS James A. Shepherdson President and Chief Executive Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 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 25 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Large Cap Growth Fund. 200SA 4/04 6/04 JOHN HANCOCK International Fund 4.30.2004 Semiannual Report [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 James A. Shepherdson, Chairman, President and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 14 For your information page 29 To Our Shareholders, I am pleased to be writing to you as Chairman, President and Chief Executive Officer of John Hancock Funds, LLC. As you may know, John Hancock Financial Services, Inc. -- the parent company of John Hancock Funds -- was acquired by Manulife Financial Corporation on April 28, 2004. The merger combines two exceptionally strong companies into a single, integrated, global market leader whose scale and capital will create an industry pacesetter strengthening our company's leadership in markets around the world. Although this change has no impact on the mutual funds you have invested in, it did bring with it some changes in the executive-level management of John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step down as chairman, president and chief executive officer in order to pursue personal interests. Since her appointment in January 2000, Maureen has provided John Hancock Funds with strong leadership and steady guidance through several years of extremely turbulent market and industry conditions. Effective May 12, 2004, I have also been appointed by your Board of Trustees to the roles of Trustee, President and Chief Executive Officer of your fund. I have been in the investment business for over 25 years, most recently as President of Retirement Services at John Hancock Financial Services. In that role, my responsibilities included developing and directing the sale of John Hancock's variable and fixed annuity businesses through a diverse distribution network of banks and broker-dealers -- including wirehouses, regional brokerage houses and financial planners. Prior to joining John Hancock, I served as Co-Chief Executive Officer of MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my responsibilities included the design, manufacture and distribution of MetLife's annuity and life insurance products sold through third-party channels. Although there has been a change in executive-level management, the one thing that never wavers is John Hancock Funds' commitment to placing the needs of our shareholders above all else. We are all dedicated to the task of working with you and your financial advisors to help you reach your long-term financial goals. Sincerely, /S/ JAMES A. SHEPHERDSON James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of April 30, 2004. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by normally investing at least 80% of its assets in stocks of foreign companies. Over the last six months * Rising corporate profits and accelerating growth boosted international equity markets. * The Fund's holdings in most countries and sectors produced positive results. * On a relative basis, the Fund's emphasis on growth stocks held it back as value stocks outperformed growth. [Bar chart with heading "John Hancock International Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2004." The chart is scaled in increments of 4% with 0% at the bottom and 8% at the top. The first bar represents the 7.25% total return for Class A. The second bar represents the 6.88% total return for Class B. The third bar represents the 6.88% total return for Class C. The fourth bar represents the 7.78% total return for Class I. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 2.5% Roche Holding AG 2.2% Vodafone Group Plc 2.2% Mizuho Financial Group, Inc. 1.7% Diageo Plc 1.7% Kyocera Corp. 1.6% Toyota Motor Corp. 1.5% Man Group Plc 1.4% Holcim Ltd. 1.4% Siemens AG 1.4% HSBC Holdings Plc As a percentage of net assets on April 30, 2004. 1 BY HORACIO A. VALEIRAS, CFA, FOR THE NICHOLAS-APPLEGATE CAPITAL MANAGEMENT PORTFOLIO MANAGEMENT TEAM MANAGERS' REPORT JOHN HANCOCK International Fund International equity markets rallied sharply during the six months ended April 30, 2004. Investors bid stock prices higher in response to rising corporate profits and accelerating growth in many of the world's economies. Depreciation of the U.S. dollar boosted performance for U.S.-based investors, as returns in local currencies were generally worth more in dollar terms. In Japan, the world's second-largest economy, a number of favorable developments inspired investor enthusiasm. Japanese banks, which were at the center of the country's problems in the 1990s, saw non-performing loans decline and evidence of a revival in loan growth. In February, Japan reported that its economy grew at a 7% annual rate in the fourth quarter of 2003 -- its best performance since 1990. Business sentiment among large manufacturers reached a seven-year high and domestic consumption picked up, illustrated by better-than-expected earnings from Japanese retailers. "International equity markets rallied sharply during the six months ended April 30, 2004." In Europe, while high unemployment and the strength of the euro restrained economic activity, corporate profit growth soared to a level unseen in more than two decades. Earnings acceleration was driven by easy year-over-year comparisons and a recovery in the global capital-expenditure cycle that fueled demand for European exports. Business with China was particularly strong, as European companies supplied infrastructure equipment used to build Chinese power plants, railways and water-treatment systems. This period's gain in international equity prices was broad-based, with stocks in most countries and economic sectors posting solid increases. On a comparative basis, developed markets outperformed emerging markets, and defensive sectors beat economically sensitive groups. Investors shied away from riskier equities given concerns the surging U.S. economy would prompt the Federal Reserve to begin raising U.S. interest rates sooner than expected. Weak domestic demand in Europe made an early rate hike from 2 the European Central Bank less likely, despite brisk exports, an upturn in manufacturing and a rebound in business confidence. FUND PERFORMANCE EXPLAINED For the six months ended April 30, 2004, John Hancock International Fund's Class A, Class B, Class C and Class I shares gained 7.25%, 6.88%, 6.88% and 7.78%, respectively, at net asset value. According to Lipper, Inc.,1 the average international fund increased 10.46% during the same period, while the benchmark MSCI All Country World Free Ex-U.S. Index rose 11.71%. Keep in mind that your net asset value return will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. See pages six and seven for historical performance information. "The Fund's holdings in most countries and sectors of investment generated gains, result- ing in a solid total return for the period." The Fund's holdings in most countries and sectors of investment generated gains, resulting in a solid total return for the period. Absolute performance was especially strong in Mexico, Spain and the energy sector, where positions were up more than 20% on average. On a relative basis, the Fund lagged its peer group and the MSCI All Country World Free Ex-U.S. Index. The Fund had more exposure to companies with higher growth expectations than its peer group and the index, which hurt performance given that growth stocks trailed value stocks. Issue selection in Switzerland, the Netherlands and the consumer discretionary sector also negatively affected the Fund's results versus the benchmark. On the positive side, security selection in Japan helped relative performance, as did a modest overweight in Russia, which was one of the best-performing countries this period. Stock selection among financial services companies favorably impacted relative results, and an underweight in basic materials, a sector that trailed the broad market, was another plus. LEADERS AND LAGGARDS The Fund's top-performing stocks included Shinsei Bank and Mizuho Financial Group, two Japanese banks that benefited 3 from increased confidence in the country's economic recovery. U.K.-based mmO2, a provider of mobile communications services, was another strong performer amid rumors the company was being purchased. Decliners included Adecco, a Swiss staffing firm that confronted accounting issues in its U.S. division; Netherlands-based ASM International, a semiconductor equipment maker with near-term profit concerns; and Aegis Group, a U.K. advertising and market research company that experienced a slowdown in new business. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Banks -- foreign 12%, the second is Electronics 12%, the third Telecommunications 12%, the fourth Medical 8%, and the fifth Oil & gas 6%.] FUND MOVES As a result of our stock-by-stock investment decisions, there were some changes to the Fund's country and sector weightings during the period. For example, we reduced holdings in emerging Asian countries, most notably Taiwan, and increased holdings in Europe, where we identified more promising growth opportunities. In terms of sectors, we decreased positions in basic materials and financial services stocks, and increased the Fund's weighting in consumer discretionary names. [Bar chart at middle of page with heading "Top five countries As a percentage of net assets on 4-30-04." The chart is divided into five sections: Japan 21%, United Kingdom 21%, Switzerland 9%, France 9% and South Korea 5%.] As of April 30, 2004, we believe the Fund is well positioned to capitalize on the favorable investment climate. The Fund was overweight stocks in emerging Asia and underweight European companies relative to the benchmark, despite the changes to country exposures described above. The Fund was overweight the consumer discretionary and technology sectors and underweight basic materials and financial services companies. 4 [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 Shinsei Bank followed by an up arrow with the phrase "Increased confidence in the country's economic recovery." The second listing is mm02 followed by an up arrow with the phrase "Acquisition rumors boost stock." The third listing is Adecco followed by a down arrow with the phrase "Accounting issues in U.S. division."] OUTLOOK Nicholas-Applegate's outlook for international equities remains positive. Many of the world's economies are experiencing accelerating growth rates as business and consumer spending picks up. In particular, strength in Asian export markets and signs of a recovery in U.S. employment bode well for continued global economic expansion. Growth expectations for Europe and Japan are more subdued, but corporate earnings are strong in both regions. Although interest rates may be headed higher in the near future, global monetary policy remains accommodative and supports corporate investment. We are especially optimistic in our outlook for international growth stocks, given increased advertising and media budgets, robust retail sales and solid demand from consumers and corporations for the latest technology. "Many of the world's economies are experiencing accelerating growth rates as business and consumer spending picks up." Throughout the rest of 2004 and beyond, we will consistently adhere to our research-intensive stock selection process. We are confident that our focus on making timely investments in companies exhibiting positive, sustainable change will benefit the Fund's shareholders over the long term. This commentary reflects the views of the portfolio management team through the end of the Fund's period discussed in this report. The managers' statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2004 Class A Class B Class C Class I 1 Inception date 1-3-94 1-3-94 6-1-98 3-1-02 Average annual returns with maximum sales charge (POP) One year 24.02% 24.92% 27.58% 31.84% Five years -8.03% -8.08% -7.92% -- Ten years -1.93% -1.98% -- -- Since inception -- -- -6.19% 4.45% Cumulative total returns with maximum sales charge (POP) Six months 1.83% 1.88% 4.80% 7.78% One year 24.02% 24.92% 27.58% 31.84% Five years -34.22% -34.39% -33.79% -- Ten years -17.72% -18.16% -- -- Since inception -- -- -31.48% 9.87% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. Sales charge is not applicable for Class I shares. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. 1 For certain types of investors as described in the Fund's Class I share prospectus. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the MSCI All Country World Free Ex-U.S. Index. MSCI All Country Cum Value Cum Value World of $10K of $10K Ex-U.S. Plot Date (No Load) (w/Load) Free Index 4-30-04 $10,000 $9,500 $10,000 5-31-94 10,196 9,686 9,988 10-31-94 10,600 10,070 10,507 4-30-95 9,901 9,406 10,300 10-31-95 10,075 9,570 10,112 4-30-96 10,990 10,440 11,338 10-31-96 10,768 10,229 10,968 4-30-97 11,103 10,547 11,219 10-31-97 10,421 9,900 11,292 4-30-98 12,155 11,546 12,798 10-31-98 11,006 10,455 11,625 4-30-99 12,505 11,879 13,504 10-31-99 13,679 12,994 14,317 4-30-00 14,423 13,701 15,411 10-31-00 12,290 11,675 13,818 4-30-01 10,170 9,661 12,540 10-31-01 8,037 7,635 10,169 4-30-02 8,311 7,895 10,919 10-31-02 6,633 6,301 8,871 4-30-03 6,633 6,301 9,014 10-31-03 8,076 7,672 11,250 4-30-04 8,662 8,228 12,416 Line chart with the heading "GROWTH OF $10,000." Within the chart are three lines. The first line represents the Index and is equal to $12,416 as of April 30, 2004. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock International Fund, before sales charge, and is equal to $8,662 as of April 30, 2004. The third line represents the value of the same hypothetical investment made in the John Hancock International Fund, after sales charge, and is equal to $8,228 as of April 30, 2004. Class B 1 Class C 1 Class I 2 Period beginning 4-30-94 6-1-98 3-1-02 Without sales charge $8,184 $6,918 $10,987 With maximum sales charge $8,184 $6,852 $10,987 Index $12,416 $10,005 $11,854 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B, Class C and Class I shares, respectively, as of April 30, 2004. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. Morgan Stanley Capital International (MSCI) All Country World Free Ex-U.S. Index is an unmanaged index of freely traded stocks of foreign companies. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. 2 For certain types of investors as described in the Fund's Class I share prospectus. 7 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2004 (unaudited) This schedule is divided into five main categories: common stocks, preferred stocks, securities-linked warrants, units and short-term investments. The common and preferred stocks, securities-linked warrants and units are further broken down by country. Short-term investments, which represent the Fund's cash position, are listed last. ISSUER SHARES VALUE COMMON STOCKS 91.91% $94,559,338 (Cost $84,638,884) Australia 3.43% 3,526,267 BNP Billiton Ltd. (Diversified Operations) 59,800 495,361 News Corp. Ltd. (The) (Media) 135,081 1,245,782 Rio Tinto Ltd. (Diversified Operations) 18,900 444,020 Westpac Banking Corp. (Banks -- Foreign) 106,295 1,341,104 Austria 1.01% 1,041,867 Telekom Austria AG* (Telecommunications) 70,949 1,041,867 Canada 2.04% 2,096,335 ATI Technologies, Inc.* (Electronics) 47,200 686,760 Petro-Canada (Oil & Gas) 14,700 647,965 Precision Drilling Corp.* (Oil & Gas) 15,900 761,610 France 9.36% 9,633,782 Alcatel SA* (Telecommunications) 53,872 802,720 Axa SA (Insurance) 20,600 433,879 Bouygues SA (Building) 30,600 1,045,066 Christian Dior SA (Cosmetics & Personal Care) 17,565 1,103,340 Havas SA (Advertising) 198,771 1,098,459 L'Oreal SA (Cosmetics & Personal Care) 15,146 1,142,032 Societe Generale SA (Banks -- Foreign) 14,483 1,206,627 Television Francaise 1 SA (Media) 25,472 786,878 Thales SA (Electronics) 25,416 944,188 Total SA (Oil & Gas) 5,788 1,070,593 Germany 3.87% 3,985,353 Deutsche Post AG (Transportation) 43,897 968,239 Merck KGaA (Medical) 21,046 1,125,212 SAP AG (Computers) 3,000 458,883 Siemens AG (Diversified Operations) 19,957 1,433,019 Hong Kong 3.10% 3,188,075 CLP Holdings Ltd. (Utilities) 20,300 108,009 Esprit Holdings Ltd. (Diversified Operations) 177,300 727,403 Hang Lung Properties Ltd. (Real Estate Operations) 472,000 638,427 See notes to financial statements. 8 FINANCIAL STATEMENTS ISSUER SHARES VALUE Hong Kong (continued) Henderson Land Development Co., Ltd. (Real Estate Operations) 168,000 $753,865 Hutchison Whampoa Ltd. (Diversified Operations) 57,000 383,664 Sino Land Co., Ltd. (Real Estate Operations) 952,000 576,707 Italy 2.29% 2,358,489 ENI SpA (Oil & Gas) 33,900 689,216 Mediaset SpA (Media) 7,800 85,555 Saipem SpA (Oil & Gas) 77,700 728,379 Telecom Italia Mobile SpA (Telecommunications) 149,900 855,339 Japan 21.36% 21,970,813 Ajinomoto Co., Inc. (Food) 90,000 1,052,875 Asahi Glass Co., Ltd. (Building) 76,000 804,386 Canon, Inc. (Office) 22,000 1,154,275 Chugai Pharmaceutical Co., Ltd. (Medical) 72,800 1,101,681 Daiwa Securities Group, Inc. (Finance) 157,000 1,180,826 Fuji Photo Film Co., Ltd. (Leisure) 36,000 1,158,081 Ito-Yokado Co., Ltd. (Retail) 24,000 998,233 JFE Holdings, Inc. (Steel) 23,600 529,292 Kyocera Corp. (Electronics) 20,800 1,720,846 Matsushita Electric Industrial Co., Ltd. (Electronics) 89,000 1,307,317 Mitsubishi Estate Co., Ltd. (Real Estate Operations) 57,000 674,052 Mizuho Financial Group, Inc. (Banks -- Foreign) 472 2,232,649 Nintendo Co., Ltd. (Leisure) 9,200 868,687 NTT DoCoMo, Inc. (Telecommunications) 676 1,341,525 Sumitomo Corp. (Diversified Operations) 118,000 905,677 Sumitomo Mitsui Financial Group, Inc. (Banks -- Foreign) 93 702,841 Sumitomo Trust & Banking Co., Ltd. (Banks -- Foreign) 113,000 679,915 Tokyo Gas Co., Ltd. (Utilities) 226,000 837,606 Toppan Printing Co., Ltd. (Printing -- Commercial) 93,000 1,093,027 Toyota Motor Corp. (Automobiles/Trucks) 45,000 1,627,022 Mexico 1.09% 1,125,540 America Movil SA de CV, American Depositary Receipts (ADR) (Telecommunications) 33,300 1,125,540 Netherlands 3.45% 3,553,954 ASM International NV* (Electronics) 30,259 627,524 ASML Holding NV (NY Reg Shares)* (Electronics) 61,000 948,550 ING Groep NV (Insurance) 46,000 985,951 Royal Philips Electronics NV (Electronics) 17,700 482,071 STMicroelectronics NV (Electronics) 23,128 509,858 Norway 0.92% 947,507 Telenor ASA (Telecommunications) 144,123 947,507 Russia 1.74% 1,792,016 Gazprom (ADR) (Oil & Gas) 16,400 506,760 Lukoil (ADR) (Oil & Gas) 11,800 1,285,256 See notes to financial statements. 9 FINANCIAL STATEMENTS ISSUER SHARES VALUE Singapore 0.57% $588,322 Keppel Corp. Ltd. (Diversified Operations) 140,000 588,322 South Korea 4.36% 4,482,226 Hana Bank (Banks -- Foreign) 22,900 494,750 Hyundai Department Store Co., Ltd. (Retail) 4,440 119,954 Korean Air Co. Ltd. (Transportation) 16,260 221,724 LG Chem Ltd. (Chemicals) 4,470 180,575 LG Electronics, Inc. (Electronics) 14,670 890,190 NHN Corp. (Computers) 5,558 495,476 Samsung Electronics Co., Ltd. (Electronics) 2,060 977,901 Shinhan Financial Group Co., Ltd. (Finance) 16,150 281,474 Shinsegae Co., Ltd. (Retail) 780 176,162 SK Telecom Co., Ltd. (Telecommunications) 2,370 403,972 Ssangyong Motor Co.* (Automobiles/Trucks) 33,020 240,048 Spain 0.82% 839,410 Banco Bilbao Vizcaya Argentaria SA (Banks -- Foreign) 63,600 839,410 Sweden 2.34% 2,403,393 Ericsson (LM) Telefonaktiebolaget AB* (ADR) (Telecommunications) 50,400 1,344,168 Skandinaviska Enskilda Banken AB (A Shares) (Banks -- Foreign) 72,900 1,059,225 Switzerland 8.39% 8,634,998 Adecco SA (Business Services -- Misc.) 19,499 871,485 Holcim Ltd. (Building) 28,416 1,467,261 Nestle SA (Food) 3,195 808,237 Novartis AG (Medical) 20,188 899,943 Roche Holding AG (Medical) 24,701 2,590,881 Synthes, Inc. (Medical) 777 844,357 UBS AG (Banks -- Foreign) 16,221 1,152,834 Taiwan 0.01% 6,813 Eva Airways Corp.* (Transportation) 16,704 6,813 Thailand 0.78% 802,049 Advanced Info Service Pcl (Telecommunications) 320,900 802,049 United Kingdom 20.98% 21,582,129 Aegis Group Plc (Advertising) 324,730 519,718 Berkeley Group Plc (Building) 61,603 1,070,597 British Sky Broadcasting Group Plc* (Media) 76,300 901,149 Carnival Plc (Leisure) 18,148 813,265 Celltech Group Plc* (Medical) 160,576 1,196,703 Diageo Plc (Beverages) 128,395 1,722,483 Electrocomponents Plc (Electronics) 128,006 809,259 George Wimpey Plc (Building) 177,700 1,292,808 HSBC Holdings Plc (Banks -- Foreign) 97,607 1,398,589 Imperial Tobacco Group Plc (Tobacco) 48,000 1,063,167 InterContinental Hotels Group Plc (Leisure) 106,349 993,898 Man Group Plc (Finance) 51,000 1,526,654 mm02 Plc* (Telecommunications) 604,673 1,072,305 See notes to financial statements. 10 FINANCIAL STATEMENTS ISSUER SHARES VALUE United Kingdom (continued) Next Plc (Retail) 37,855 $936,473 Reckitt Benckiser Plc (Soap & Cleaning Preparations) 44,000 1,143,891 Royal Bank of Scotland Group Plc (Banks -- Foreign) 44,819 1,345,603 Tesco Plc (Retail) 124,400 548,759 United Business Media Plc (Printing -- Commercial) 115,510 942,270 Vodafone Group Plc (Telecommunications) 940,329 2,284,538 PREFERRED STOCKS 0.91% $941,282 (Cost $358,022) South Korea 0.91% 941,282 LG Household & Health Care Ltd. (Soap & Cleaning Preparations) 9,780 148,782 Samsung Electronics Co., Ltd. (Electronics) 2,870 792,500 SECURITIES-LINKED WARRANTS 2.47% $2,545,926 (Cost $2,756,944) India 0.02% 16,842 Hindustan Lever Ltd.*+ (Soap & Cleaning Preparations) 115,000 16,842 Taiwan 2.45% 2,529,084 Cathay Financial Holding Co., Ltd.*# (Insurance) 562,000 998,286 United Microelectronics Corp.*# (Electronics) 1,132,245 1,015,839 Yageo Corp.*# (Electronics) 945,000 514,959 UNITS 1.06% $1,086,023 (Cost $1,078,968) Switzerland 1.06% 1,086,023 Compagnie Financiere Richemont AG* (Retail) 42,223 1,086,023 See notes to financial statements. 11 FINANCIAL STATEMENTS INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000S OMITTED) VALUE SHORT-TERM INVESTMENTS 2.90% $2,986,000 (Cost $2,986,000) Joint Repurchase Agreement 2.90% Investment in a joint repurchase agreement transaction with Barclays Capital, Inc. -- Dated 04-30-04, due 05-03-04 (Secured by U.S. Treasury Inflation Indexed Bond, 3.875% due 04-15-29 and U.S. Treasury Inflation Indexed Note, 3.000% due 07-15-12) 0.930% $2,986 2,986,000 TOTAL INVESTMENTS 99.25% $102,118,569 OTHER ASSETS AND LIABILITIES, NET 0.75% $768,748 TOTAL NET ASSETS 100.00% $102,887,317 * Non-income-producing security. + Credit-linked warrant. # Equity-linked warrant. 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. 12 FINANCIAL STATEMENTS PORTFOLIO CONCENTRATION April 30, 2004 (unaudited) This table shows the percentages of the Fund's investments aggregated by various industries. VALUE AS A PERCENTAGE INVESTMENT DISTRIBUTION OF NET ASSETS - ----------------------------------------------------------- Advertising 1.57% Automobiles/Trucks 1.82 Banks -- Foreign 12.10 Beverages 1.67 Building 5.52 Business Services -- Misc. 0.85 Chemicals 0.18 Computers 0.93 Cosmetics & Personal Care 2.18 Diversified Operations 4.84 Electronics 11.88 Finance 2.91 Food 1.81 Insurance 2.35 Leisure 3.73 Media 2.94 Medical 7.54 Office 1.12 Oil & Gas 5.53 Printing -- Commercial 1.98 Real Estate Operations 2.57 Retail 3.76 Soap & Cleaning Preparations 1.27 Steel 0.51 Telecommunications 11.68 Tobacco 1.03 Transportation 1.16 Utilities 0.92 Short-term investments 2.90 Total Investments 99.25% See notes to financial statements. 13 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2004 (unaudited) This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. ASSETS Investments at value (cost $91,818,723) $102,118,569 Cash 805 Foreign cash at value (cost $45,865) 45,868 Receivable for investments sold 2,849,048 Receivable for shares sold 52,968 Dividends and interest receivable 338,097 Other assets 63,427 Total assets 105,468,782 LIABILITIES Payable for investments purchased 2,000,485 Payable for shares repurchased 108,519 Payable to affiliates Management fees 94,880 Distribution and service fees 6,533 Other 158,586 Other payables and accrued expenses 212,462 Total liabilities 2,581,465 NET ASSETS Capital paid-in 166,438,217 Accumulated net realized loss on investments and foreign currency transactions (73,399,889) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 10,288,230 Accumulated net investment loss (439,241) Net assets $102,887,317 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($67,056,309 [DIV] 10,065,827 shares) $6.66 Class B ($30,458,595 [DIV] 4,905,291 shares) $6.21 Class C ($4,101,138 [DIV] 660,135 shares) $6.21 Class I ($1,271,275 [DIV] 187,114 shares) $6.79 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($6.66 [DIV] 95%) $7.01 Class C ($6.21 [DIV] 99%) $6.27 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 14 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2004 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in oper- ating the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $115,982) $876,841 Interest 8,620 Total investment income 885,461 EXPENSES Investment management fees 456,844 Class A distribution and service fees 98,986 Class B distribution and service fees 155,012 Class C distribution and service fees 18,553 Class A, B and C transfer agent fees 392,745 Class I transfer agent fees 293 Custodian fees 92,917 Registration and filing fees 36,291 Professional fees 17,000 Accounting and legal services fees 15,282 Printing 10,355 Miscellaneous 9,148 Interest expense 5,060 Trustees' fees 4,017 Total expenses 1,312,503 Less expense reductions (8,592) Net expenses 1,303,911 Net investment loss (418,450) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on Investments 14,422,253 Foreign currency transactions (448,051) Change in net unrealized appreciation (depreciation) of Investments (6,789,458) Translation of assets and liabilities in foreign currencies (10,872) Net realized and unrealized gain 7,173,872 Increase in net assets from operations $6,755,422 1 Semiannual period from 11-1-03 through 4-30-04. See notes to financial statements. 15 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 differ- ence reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to share- holders and any increase or decrease in money shareholders invested in the Fund. YEAR PERIOD ENDED ENDED 10-31-03 4-30-04 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($332,738) ($418,450) Net realized gain 3,128,084 13,974,202 Change in net unrealized appreciation (depreciation) 10,775,633 (6,800,330) Increase in net assets resulting from operations 13,570,979 6,755,422 From Fund share transactions 71,228,289 (731,730) NET ASSETS Beginning of period 12,064,357 96,863,625 End of period 2 $96,863,625 $102,887,317 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 2 Includes accumulated net investment loss of $20,791 and $439,241, respectively. See notes to financial statements. 16 FINANCIAL HIGHLIGHTS 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 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.81 $10.95 $9.45 $6.18 $5.10 $6.21 Net investment loss 2 (0.02) (0.04) (0.05) (0.04) (0.04) (0.02) Net realized and unrealized gain (loss) on investments 2.16 (1.01) (3.22) (1.04) 1.15 0.47 Total from investment operations 2.14 (1.05) (3.27) (1.08) 1.11 0.45 Less distributions From net realized gain -- (0.45) -- -- -- -- Net asset value, end of period $10.95 $9.45 $6.18 $5.10 $6.21 $6.66 Total return 3,4 (%) 24.29 (10.15) (34.60) (17.48) 21.76 7.25 5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $7 $15 $8 $6 $62 $67 Ratio of expenses to average net assets (%) 1.96 1.88 2.23 2.38 2.45 2.33 6 Ratio of adjusted expenses to average net assets 7 (%) 3.81 3.44 3.83 4.43 3.00 2.35 6 Ratio of net investment loss to average net assets (%) (0.20) (0.43) (0.65) (0.68) (0.63) (0.59) 6 Portfolio turnover (%) 113 163 278 228 8 216 8 99 See notes to financial statements. 17 FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.55 $10.55 $9.04 $5.86 $4.81 $5.81 Net investment loss 2 (0.09) (0.12) (0.10) (0.08) (0.07) (0.04) Net realized and unrealized gain (loss) on investments 2.09 (0.94) (3.08) (0.97) 1.07 0.44 Total from investment operations 2.00 (1.06) (3.18) (1.05) 1.00 0.40 Less distributions From net realized gain -- (0.45) -- -- -- -- Net asset value, end of period $10.55 $9.04 $5.86 $4.81 $5.81 $6.21 Total return 3,4 (%) 23.39 (10.65) (35.18) (17.92) 20.79 6.88 5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $9 $12 $6 $5 $30 $30 Ratio of expenses to average net assets (%) 2.63 2.57 2.93 3.08 3.15 3.03 6 Ratio of adjusted expenses to average net assets 7 (%) 4.48 4.13 4.53 5.13 3.70 3.05 6 Ratio of net investment loss to average net assets (%) (0.91) (1.13) (1.34) (1.38) (1.28) (1.31) 6 Portfolio turnover (%) 113 163 278 228 8 216 8 99 See notes to financial statements. 18 FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.55 $10.57 $9.05 $5.87 $4.81 $5.81 Net investment loss 2 (0.10) (0.11) (0.10) (0.08) (0.06) (0.04) Net realized and unrealized gain (loss) on investments 2.12 (0.96) (3.08) (0.98) 1.06 0.44 Total from investment operations 2.02 (1.07) (3.18) (1.06) 1.00 0.40 Less distributions From net realized gain -- (0.45) -- -- -- -- Net asset value, end of period $10.57 $9.05 $5.87 $4.81 $5.81 $6.21 Total return 3,4 (%) 23.63 (10.72) (35.14) (18.06) 20.79 6.88 5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 9 $1 $1 $1 $3 $4 Ratio of expenses to average net assets (%) 2.66 2.57 2.93 3.08 3.15 3.03 6 Ratio of adjusted expenses to average net assets 7 (%) 4.51 4.13 4.53 5.13 3.70 3.05 6 Ratio of net investment loss to average net assets (%) (1.04) (1.07) (1.35) (1.38) (1.11) (1.26) 6 Portfolio turnover (%) 113 163 278 228 8 216 8 99 See notes to financial statements. 19 FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 10 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $6.18 $5.12 $6.30 Net investment income (loss) 2 (0.01) 0.03 0.01 Net realized and unrealized gain (loss) on investments (1.05) 1.15 0.48 Total from investment operations (1.06) 1.18 0.49 Net asset value, end of period $5.12 $6.30 $6.79 Total return 3 (%) (17.15) 4,5 23.05 4 7.78 5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $1 Ratio of expenses to average net assets (%) 2.04 6 1.60 1.32 6 Ratio of adjusted expenses to average net assets 7 (%) 4.09 6 2.15 -- Ratio of net investment income (loss) to average net assets (%) (0.34) 6 0.58 0.44 6 Portfolio turnover (%) 228 8 216 8 99 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 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. 8 Excludes merger activity. 9 Less than $500,000. 10 Class I shares began operations on 3-01-02. See notes to financial statements. 20 NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock International Fund (the "Fund") is a diversified series of John Hancock Investment III Trust, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long-term growth of capital. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B, Class C and Class I shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under the terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of John Hancock Financial Services, Inc., 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. 21 dollars based on London currency exchange quotations as of 4:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign currency exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Discount and premium on securities The Fund accretes discount and amortizes premium from par value on securities from either the date of issue or the date of purchase over the life of the security. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net asset value of the respective classes. Distribution and service fees, if any, and transfer agent fees for Class I shares are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate, with other funds managed by the Adviser, in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit, and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2004. Securities-linked warrants The Fund may buy and sell securities-linked warrants. The Fund purchases the equity-linked and credit-linked warrants from a broker, who in turn purchases the underlying securities in the local market and issues a call warrant hedged on the underlying holding. If the Fund exercises its call and closes its position, the underlying securities are sold and 22 the warrant redeemed with the proceeds. Each warrant represents one share of the underlying stock or unit of fixed income security, therefore the price, performance and liquidity of the warrant are all directly linked to the underlying investments. The warrants can be redeemed for 100% of the value of the underlying securities, less transaction costs. Securities-linked warrants are subject to risks related to the counterparty's ability to perform under the contract, and to the market risk of the underlying holding. The Fund may also suffer losses if it is unable to sell outstanding securities-linked warrants or reduce its exposure through offsetting transactions. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net asset value. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's Statement of Assets and Liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2004. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $86,921,411 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2005 -- $587,636, October 31, 2006 -- $1,234,369, October 31, 2007 -- $523,573, October 31, 2008 -- 57,323,110, October 31, 2009 -- $20,736,888 and October 31, 2010 -- $6,515,835. Availability of a certain amount of the carryforwards which were acquired on June 7, 2002, in a merger with John Hancock International Equity fund, on May 9, 2003, in mergers with John Hancock European Equity Fund and John Hancock Global fund and in a merger with John Hancock Pacific Basin Equity Fund on September 26, 2003, may be limited in a given year. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same 23 manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first $100,000,000 of the Fund's average daily net asset value, (b) 0.80% of the next $200,000,000, (c) 0.75% of the next $200,000,000 and (d) 0.625% of the Fund's average daily net asset value in excess of $500,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for payment of the subadvisory fees. The Adviser has agreed to limit the Fund's total expenses, excluding the distribution and service fees and transfer agent fees, to 1.27% of the Fund's average daily net asset value, at least until February 28, 2005. There were no expense reductions related to this total expense limitation for the period ended April 30, 2004. 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 period ended April 30, 2004, JH Funds received net up-front sales charges of $34,758 with regard to sales of Class A shares. Of this amount, $4,645 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $21,345 was paid as sales commissions to unrelated broker-dealers and $8,768 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2004, JH Funds received net up-front sales charges of $3,691 with regard to sales of Class C shares. Of this amount, $3,675 was paid as sales commissions to unrelated broker-dealers and $16 was paid as sales commissions to sales personnel of Signator Investors. 24 Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used, in whole or in part, to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2004, CDSCs received by JH Funds amounted to $26,219 for Class B shares and $396 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo. For Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of each class's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses, aggregated and allocated to each class on the basis of its relative net asset value. For Class I shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value. Signature Services agreed to limit Class A, Class B and Class C shares' transfer agent fees to 0.78% of each class's average daily net asset value, at least until February 28, 2005. Signature Services also reduced the transfer agent fee for Class A, Class B and Class C shares by $8,592 during the period ended April 30, 2004. Signature Services reserves the right to terminate these limitations in the future. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average daily net asset value of the Fund. The Fund also paid the Adviser the amount of $195 for certain publishing services, included in the printing fees. Mr. James A. Shepherdson is a director and/or officer of the Adviser and/or its affiliates, as well as Trustee 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. 25 NOTE C Fund share transactions This listing illustrates the number of Fund shares sold, issued in reorganizations and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value. YEAR ENDED 10-31-03 PERIOD ENDED 4-30-04 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,647,644 $9,092,862 1,223,602 $8,309,167 Issued in reorganizations 9,576,643 51,258,116 -- -- Repurchased (2,256,593) (12,418,091) (1,217,628) (8,141,716) Net increase 8,967,694 $47,932,887 5,974 $167,451 CLASS B SHARES Sold 452,210 $2,359,494 704,090 $4,468,904 Issued in reorganizations 4,660,904 23,715,852 -- -- Repurchased (894,451) (4,591,171) (996,021) (6,226,667) Net increase (decrease) 4,218,663 $21,484,175 (291,931) ($1,757,763) CLASS C SHARES Sold 193,720 $972,776 217,038 $1,368,926 Issued in reorganizations 313,872 1,607,553 -- -- Repurchased (129,277) (641,150) (98,037) (618,550) Net increase 378,315 $1,939,179 119,001 $750,376 CLASS I SHARES Sold 177,491 $978,406 32,723 $226,359 Repurchased (201,766) (1,106,358) (17,286) (118,153) Net increase (decrease) (24,275) ($127,952) 15,437 $108,206 NET INCREASE (DECREASE) 13,540,397 $71,228,289 (151,519) ($731,730) 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2004, aggregated $98,916,910 and $104,407,433, respectively. The cost of investments owned on April 30, 2004, including short-term investments, for federal income tax purposes, was $91,872,973. Gross unrealized appreciation and depreciation of investments aggregated $12,668,293 and $2,422,697, respectively, resulting in net unrealized appreciation of $10,245,596. 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. 26 NOTE E Reorganizations On May 7, 2003, the shareholders of the John Hancock Global Fund ("Global Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the Global Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax-free exchange of 6,558,929 Class A shares, 1,864,356 Class B shares and 130,784 of Class C shares of the Fund for the net assets of the Global Fund, which amounted to $34,316,962, $9,149,332 and $642,073 for Class A, Class B and Class C shares of the Global Fund, respectively, including the total of $1,730,018 of unrealized appreciation, after the close of business on May 9, 2003. On May 7, 2003, the shareholders of the John Hancock European Equity Fund ("European Equity Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the European Equity Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax- free exchange of 889,585 Class A shares, 1,099,066 Class B shares and 48,954 Class C shares of the Fund for the net assets of the European Equity Fund, which amounted to $4,654,400, $5,393,668 and $240,336 for Class A, Class B and Class C shares of the European Equity Fund, respectively, including the total of $1,183,872 of unrealized appreciation, after the close of business on May 9, 2003. On September 24, 2003, the shareholders of the John Hancock Pacific Basin Equities Fund ("Pacific Basin Equities Fund") approved an Agreement and Plan of Reorganization, which provided for the transfer of substantially all of the assets and liabilities of the Pacific Basin Equities Fund in exchange for Class A, Class B and Class C shares of the Fund. The acquisition was accounted for as a tax-free exchange of 2,128,129 Class A shares, 1,697,482 Class B shares and 134,134 Class C shares of the Fund for the net assets of the Pacific Basin Equities Fund, which amounted to $12,286,754, $9,172,852 and $725,144 for Class A, Class B and Class C shares of the Pacific Basin Equities Fund, respectively, including the total of $3,956,781 of unrealized appreciation, after the close of business on September 26, 2003. 27 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 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. 28 FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove Richard A. Farrell William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt James A. Shepherdson *Members of the Audit Committee OFFICERS James A. Shepherdson President and Chief Executive Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 SUBADVISER Nicholas-Applegate Capital Management LP 600 West Broadway San Diego, California 92101 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 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 29 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock International Fund 400SA 4/04 6/04 JOHN HANCOCK Mid Cap Growth Fund 4.30.2004 Semiannual Report [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 James A. Shepherdson, Chairman, President and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 11 For your information page 25 To Our Shareholders, I am pleased to be writing to you as Chairman, President and Chief Executive Officer of John Hancock Funds, LLC. As you may know, John Hancock Financial Services, Inc. -- the parent company of John Hancock Funds -- was acquired by Manulife Financial Corporation on April 28, 2004. The merger combines two exceptionally strong companies into a single, integrated, global market leader whose scale and capital will create an industry pacesetter strengthening our company's leadership in markets around the world. Although this change has no impact on the mutual funds you have invested in, it did bring with it some changes in the executive-level management of John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step down as chairman, president and chief executive officer in order to pursue personal interests. Since her appointment in January 2000, Maureen has provided John Hancock Funds with strong leadership and steady guidance through several years of extremely turbulent market and industry conditions. Effective May 12, 2004, I have also been appointed by your Board of Trustees to the roles of Trustee, President and Chief Executive Officer of your fund. I have been in the investment business for over 25 years, most recently as President of Retirement Services at John Hancock Financial Services. In that role, my responsibilities included developing and directing the sale of John Hancock's variable and fixed annuity businesses through a diverse distribution network of banks and broker-dealers -- including wirehouses, regional brokerage houses and financial planners. Prior to joining John Hancock, I served as Co-Chief Executive Officer of MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my responsibilities included the design, manufacture and distribution of MetLife's annuity and life insurance products sold through third-party channels. Although there has been a change in executive-level management, the one thing that never wavers is John Hancock Funds' commitment to placing the needs of our shareholders above all else. We are all dedicated to the task of working with you and your financial advisors to help you reach your long-term financial goals. Sincerely, /S/ JAMES A. SHEPHERDSON James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of April 30, 2004. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term capital appreciation by investing at least 80% of its assets in stocks of medium- capitalization companies (in the capitalization range of the Russell Midcap Growth Index) with above- average earnings growth. Over the last six months * The stock market was volatile as investors rotated from economically sensitive sectors such as technology to more defensive sectors such as health care. * Mid-cap stocks held up well, beating large-cap stocks, but lagging small-cap stocks. * Disappointing stock selection in the technology and consumer discretionary sectors hurt Fund performance. [Bar chart with heading "John Hancock Mid Cap Growth Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2004." The chart is scaled in increments of 1% with -1% at the bottom and 1% at the top. The first bar represents the 0.00% total return for Class A. The second bar represents the -0.39% total return for Class B. The third bar represents the -0.39% total return for Class C. The fourth bar represents the 0.47% total return for Class I. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 2.8% Comverse Technology, Inc. 2.8% Biogen Idec, Inc. 2.6% Caremark Rx, Inc. 2.6% Symantec Corp. 2.4% BJ Services Co. 2.4% Yankee Candle Co, Inc. (The) 2.3% Panera Bread Co. 2.3% Pactiv Corp. 2.3% Coach, Inc. 2.2% Patterson-UTI Energy, Inc. As a percentage of net assets on April 30, 2004. 1 MANAGER'S REPORT BY THOMAS F. NORTON, CFA, PORTFOLIO MANAGER JOHN HANCOCK Mid Cap Growth Fund Robert J. Uek, previously a member of the Fund's portfolio management team, recently left John Hancock Advisers, LLC to pursue other opportunities. Stock prices closed higher for the six months ended April 30, 2004, but gave investors a bumpy ride. The market gained ground early on, fueled by signs the economy was improving and corporate earnings were meeting or beating expectations. Economically sensitive sectors such as technology and industrials led the rally. After the New Year began, however, sentiment shifted. Investors began to lock in profits, selling stocks that had previously performed well and moving into sectors such as health care that tend to be less affected by changes in the economy or interest rates. In April, the market changed course again, as investors began to reward companies that met expectations. In this volatile six-month period, the Russell Midcap Growth Index returned 5.74%. Mid-cap stocks beat their large-cap peers, but lagged small-cap names, which reaped the most benefit from an improving economy. "Stock prices closed higher for the six months ended April 30, 2004, but gave a bumpy ride to investors." STRATEGY AND PERFORMANCE REVIEW John Hancock Mid Cap Growth Fund remained diversified across industries, focusing on solid, well-run companies with strong earnings growth prospects that were selling at reasonable valuations. We continued to tilt the Fund toward economically sensitive sectors, even though stocks in these areas faltered in the first quarter of 2004. We took a long-term approach, believing that stocks that continued to meet or exceed investors' expectations would be rewarded with higher prices. However, we also continued our disciplined approach of re-evaluating and often selling individual stocks that reached our pre-established price targets. 2 [A photo of Thomas Norton flush right next to first paragraph.] For the six months ended April 30, 2004, the Fund's Class A, Class B, Class C and Class I shares returned 0.00%, -0.39%, -0.39% and 0.47%, respectively, at net asset value. The Fund trailed the average mid-cap growth fund, which returned 2.64%, according to Lipper, Inc.1 Keep in mind that your net asset value will be different from the Fund's if you were not invested in the Fund for the entire period and did not reinvest all distributions. Long-term performance information can be found on pages six and seven. Weak performance from technology and consumer discretionary stocks -- sectors that represented sizable weights in the portfolio -- hurt performance. In addition, specific stocks declined when their companies missed earnings or revenue expectations. WINNERS AND LOSERS IN TECHNOLOGY Technology stocks suffered overall, as investors took profits amid concerns the sector's run might be over. In addition, certain stocks that we owned tumbled sharply for company specific reasons. McDATA, a storage-based company, fell after missing earnings estimates for the fourth quarter of 2003 and then announcing that first quarter 2004 earnings would be lower than originally expected. Foundry Networks, a networking company, also took a hard hit as rumors circulated that the company's earnings and revenue numbers would fall short of investors' expectations. "The Fund's above-average investment in the poorly performing technology sector detracted from performance." Strong performance from a few technology names somewhat eased these disappointments. Symantec, which makes Norton Anti-Virus software, soared as demand remained strong, enabling the company to raise prices. The result was strong revenue and profit growth. Lexmark International benefited as prices for the printers it makes remained stable. In addition, order flow increased under a recent deal to produce printers for Dell. We added a large stake in Comverse Technology, a company that sells voice-mail software to wireless and wireline carriers. Although Comverse had little impact on performance during the period, we believe it has strong growth potential as demand for its services increases. 3 [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Computers 19%, the second is Medical 15%, the third Oil & gas 10%, the fourth Electronics 8%, and the fifth Retail 6%.] DISAPPOINTMENTS FROM CONSUMER STOCKS Weak stock selection and a below-average stake in the consumer discretionary sector further hampered returns. Among our biggest detractors were LeapFrog Enterprises, a company that makes educational toys, and Dollar Tree Stores, a retail chain that sells items for a dollar or less. LeapFrog continued to gain market share, but suffered because of a slight miss in expected revenues. Rising fuel prices contributed to higher costs for Dollar Tree, while also crimping spending by shoppers and ultimately hurting same-store sales comparisons. We sold our stake in Dollar Tree, concerned that higher energy costs would continue to hamper performance. Amid concerns about rising interest rates, we reduced our overall stake in consumer discretionary stocks. [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-04." The chart is divided into two sections (from top to left): Common stocks 99% and Short-term investments & other 1%.] STRENGTH FROM HEALTH CARE AND ENERGY The Fund benefited from a sizable investment and strong stock selection in health care. The biggest gains came from a handful of companies. Biogen Idec, a biotechnology company, climbed sharply after announcing very successful trial results for its new multiple sclerosis drug. Investors' expectations for the drug and the stock soared. Caremark Rx, a pharmacy benefits manager, also took off, as more investors recognized the company's strengths in terms of management, product offerings, services and market share. Aetna, a health insurer, enjoyed a strong turnaround after restructuring its business and delivering higher profits. We trimmed our stakes in some of these winners, reducing our overall investment in the health-care sector. The Fund also had an above-average stake in energy stocks, which 4 contributed positively to performance. Tightening supplies and increased demand resulted in continued strong oil and natural gas commodity prices. High prices boosted cash flows for the exploration and production companies, giving them more resources to spend on finding new reserves. We favored energy service companies that supply drilling equipment. Among our additions were Smith International, which rallied nicely amid improved demand for its services and better pricing, and BJ Services. [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 Biogen Idec followed by an up arrow with the phrase "Better-than-expected trial results for new multiple sclerosis drug." The second listing is McDATA followed by a down arrow with the phrase "Missed and lowered earnings expectations." The third listing is LeapFrog Enterprises followed by a down arrow with the phrase "Slightly disappointing revenues in highly competitive business."] CAUTIOUS OPTIMISM We think that improving economic growth and the prospect of higher interest rates will most likely result in continued market volatility. However, we remain optimistic that mid-cap stocks will continue to do well, benefiting from a combination of attractive valuations and strong growth outlooks. Our plan is to maintain the Fund's economically sensitive tilt with a focus on companies that continue to exhibit improved earnings and revenue growth. We think that investors will eventually reward these companies with higher stock prices. "We think that improving economic growth and the prospect of higher interest rates will most likely result in continued market volatility." 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 his own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2004 Class A Class B Class C Class I 1 Inception date 11-1-93 11-1-93 6-1-98 3-1-02 Average annual returns with maximum sales charge (POP) One year 18.90% 19.15% 21.98% 26.18% Five years -4.45% -4.49% -4.32% -- Ten years 4.35% 4.30% -- -- Since inception -- -- -2.48% 2.35% Cumulative total returns with maximum sales charge (POP) Six months -4.96% -5.37% -2.39% 0.47% One year 18.90% 19.15% 21.98% 26.18% Five years -20.34% -20.52% -19.83% -- Ten years 53.13% 52.28% -- -- Since inception -- -- -13.79% 5.15% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. Sales charge is not applicable for Class I shares. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. 1 For certain types of investors as described in the Fund's Class I share prospectus. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in two separate indexes. Russell Cum Value Cum Value Midcap of $10K of $10K S&P 500 Growth Plot Date (No Load) (w/Load) Index Index 4-30-04 $10,000 $9,500 $10,000 $10,000 5-31-94 9,950 9,457 10,164 10,015 10-31-94 9,851 9,362 10,633 10,442 4-30-95 10,435 9,917 11,747 11,310 10-31-95 11,578 11,004 13,445 12,973 4-30-96 15,143 14,392 15,295 15,132 10-31-96 15,763 14,982 16,684 15,302 4-30-97 14,275 13,567 19,140 15,726 10-31-97 17,148 16,298 22,042 19,068 4-30-98 18,981 18,040 27,000 22,148 10-31-98 15,536 14,766 26,890 19,532 4-30-99 19,219 18,266 32,892 24,879 10-31-99 21,914 20,827 33,792 26,888 4-30-00 29,731 28,257 36,223 38,071 10-31-00 29,203 27,755 35,850 37,287 4-30-01 19,954 18,965 31,524 26,851 10-31-01 14,641 13,915 26,922 21,335 4-30-02 15,501 14,732 27,544 22,821 10-31-02 12,366 11,753 22,855 17,577 4-30-03 12,882 12,243 23,879 19,017 10-31-03 16,112 15,313 27,609 24,484 4-30-04 16,112 15,313 29,341 25,890 Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Index 1 and is equal to $29,341 as of April 30, 2004. The second line represents Index 2 and is equal to $25,890 as of April 30, 2004. The third line represents the value of the hypothetical $10,000 investment made in the John Hancock Mid Cap Growth Fund, before sales charge, and is equal to $16,112 as of April 30, 2004. The fourth line represents the value of the same hypothetical investment made in the John Hancock Mid Cap Growth Fund, after sales charge, and is equal to $15,313 as of April 30, 2004. Class B 1 Class C 1 Class I 2 Period beginning 4-30-94 6-1-98 3-1-02 Without sales charge $15,228 $8,707 $10,515 With maximum sales charge $15,228 $8,621 $10,515 Index 1 $29,341 $11,055 $10,153 Index 2 $25,890 $12,322 $11,230 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B, Class C and Class I shares, respectively, as of April 30, 2004. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. Standard & Poor's 500 Index -- Index 1 -- is an unmanaged index that includes 500 widely traded common stocks. Russell Midcap Growth Index -- Index 2 -- is an unmanaged index that contains those stocks from the Russell Midcap Index with a greater-than-average growth orientation. It is not possible to invest directly in an index. Index figures do not reflect sales charges and would be lower if they did. 1 No contingent deferred sales charge applicable. 2 For certain types of investors as described in the Fund's prospectus for Class I shares. 7 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2004 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last. ISSUER SHARES VALUE COMMON STOCKS 99.24% $152,560,370 (Cost $136,375,547) Advertising 1.61% 2,480,712 Omnicom Group, Inc. 31,200 2,480,712 Business Services -- Misc. 5.90% 9,063,700 ChoicePoint, Inc.* + 77,597 3,408,060 Corporate Executive Board Co. (The)* 54,200 2,799,430 Manpower, Inc. 60,900 2,856,210 Computers 19.10% 29,365,858 Affiliated Computer Services, Inc.* + 65,000 3,152,500 BEA Systems, Inc.* + 197,700 2,255,757 Emulex Corp.* + 60,000 1,000,200 Fiserv, Inc.* 82,000 2,997,920 Foundry Networks, Inc.* 211,650 2,391,645 Lexmark International, Inc.* 38,000 3,437,480 Manhattan Associates, Inc.* 57,500 1,545,025 McDATA Corp. (Class B)* 281,000 1,441,530 Mercury Interactive Corp.* 65,500 2,787,025 SanDisk Corp.* + 101,200 2,338,732 Symantec Corp.* + 87,350 3,935,117 VERITAS Software Corp.* 78,100 2,082,927 Consumer Products Misc. 4.18% 6,418,720 Jarden Corp.* 75,000 2,790,000 Yankee Candle Co, Inc. (The)* 134,000 3,628,720 Containers 4.31% 6,625,109 Crown Holdings, Inc.* 364,850 3,079,334 Pactiv Corp.* 154,500 3,545,775 Cosmetics & Personal Care 2.05% 3,153,990 Estee Lauder Cos., Inc. (The) (Class A) + 69,000 3,153,990 Electronics 8.17% 12,554,220 Agere Systems, Inc.* 600,000 1,302,000 Applied Micro Circuits Corp.* + 433,500 1,911,735 ASML Holding NV (N Y Reg Shares) (Netherlands)* 87,000 1,352,850 Axcelis Technologies, Inc.* + 175,000 1,839,250 See notes to financial statements. 8 FINANCIAL STATEMENTS ISSUER SHARES VALUE Electronics (continued) Flextronics International Ltd. (Singapore)* 53,000 853,300 Jabil Circuit, Inc.* + 88,800 2,343,432 LTX Corp.* 114,500 1,251,485 Parker-Hannifin Corp. 30,750 1,700,168 Fiber Optics 1.15% 1,770,800 JDS Uniphase Corp.* 582,500 1,770,800 Finance 1.66% 2,556,750 Affiliated Managers Group, Inc.* + 52,500 2,556,750 Insurance 1.49% 2,292,015 RenaissanceRe Holdings Ltd. (Bermuda) 43,500 2,292,015 Leisure 1.09% 1,677,780 LeapFrog Enterprises, Inc.* + 78,000 1,677,780 Machinery 1.51% 2,321,550 AGCO Corp.* 120,600 2,321,550 Manufacturing 1.55% 2,379,152 Danaher Corp. 25,715 2,379,152 Media 5.21% 8,006,940 Radio One, Inc. (Class D)* + 136,500 2,588,040 Univision Communications, Inc. (Class A)* + 75,000 2,538,750 Westwood One, Inc.* 97,500 2,880,150 Medical 14.95% 22,977,700 Aetna, Inc. 32,000 2,648,000 Barr Pharmaceuticals, Inc.* 36,000 1,491,120 Biogen Idec, Inc.* + 73,750 4,351,250 Caremark Rx, Inc.* 117,500 3,977,375 Community Health Systems, Inc.* + 73,000 1,882,670 Gilead Sciences, Inc.* 28,000 1,703,240 Invitrogen Corp.* + 41,000 2,961,430 Kinetic Concepts, Inc.* 4,550 220,220 Millennium Pharmaceuticals, Inc.* 138,000 2,068,620 Taro Pharmaceutical Industries Ltd. (Israel)* 38,700 1,673,775 Oil & Gas 9.76% 15,000,000 BJ Services Co.* 82,500 3,671,250 EOG Resources, Inc. + 63,800 3,142,150 Patterson-UTI Energy, Inc.* + 95,000 3,438,050 Pride International, Inc.* + 90,000 1,518,300 Smith International, Inc.* 59,000 3,230,250 Paper & Paper Products 1.24% 1,908,090 Smurfit-Stone Container Corp.* + 111,000 1,908,090 Retail 6.33% 9,739,240 Fastenal Co. + 55,200 3,028,824 Linens 'n Things, Inc.* + 97,500 3,162,900 Panera Bread Co.* 86,800 3,547,516 See notes to financial statements. 9 FINANCIAL STATEMENTS ISSUER SHARES VALUE Telecommunications 4.33% $6,656,544 Avaya, Inc.* + 168,000 2,298,240 Comverse Technology, Inc.* 266,400 4,358,304 Textile 2.30% 3,535,800 Coach, Inc.* 83,000 3,535,800 Transportation 1.35% 2,075,700 AirTran Holdings, Inc.* 170,000 2,075,700 INTEREST PAR VALUE ISSUER, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 34.22% $52,601,712 (Cost $52,601,712) Joint Repurchase Agreement 1.06% Investment in a joint repurchase agreement transaction with Barclays Capital, Inc. -- Dated 04-30-04, due 05-03-04 (Secured by U.S. Treasury Inflation Indexed Bond 3.875%, due 04-15-29, and U.S. Treasury Inflation Indexed Note 3.000%, due 07-15-12) 0.930% $1,623 1,623,000 SHARES Cash Equivalents 33.16% AIM Cash Investment Trust ** 50,978,712 50,978,712 TOTAL INVESTMENTS 133.46% $205,162,082 OTHER ASSETS AND LIABILITIES, NET (33.46%) ($51,432,750) TOTAL NET ASSETS 100.00% $153,729,332 + All or a portion of this security is on loan as of April 30, 2004. * Non-income-producing security. ** Represents investment of securities 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. 10 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2004 (unaudited) This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. ASSETS Investments at value (cost $188,977,259) including $49,244,911 of securities loaned $205,162,082 Cash 435 Receivable for investments sold 2,595,799 Receivable for shares sold 11,522 Interest receivable 42 Other assets 25,867 Total assets 207,795,747 LIABILITIES Payable for investments purchased 2,711,286 Payable for shares repurchased 143,577 Payable for securities on loan 50,978,712 Payable to affiliates Management fees 113,005 Distribution and service fees 6,649 Other 55,637 Other payables and accrued expenses 57,549 Total liabilities 54,066,415 NET ASSETS Capital paid-in 237,772,527 Accumulated net realized loss on investments (98,885,674) Net unrealized appreciation of investments 16,184,823 Accumulated net investment loss (1,342,344) Net assets $153,729,332 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($105,606,248 [DIV] 12,525,180 shares) $8.43 Class B ($42,044,432 [DIV] 5,450,391 shares) $7.71 Class C ($3,258,937 [DIV] 422,420 shares) $7.71 Class I ($2,819,715 [DIV] 328,777 shares) $8.58 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($8.43 [DIV] 95%) $8.87 Class C ($7.71 [DIV] 99%) $7.79 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. 11 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2004 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in oper- ating the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Securities lending $123,663 Dividends (net of foreign withholding taxes of $167) 104,600 Interest 10,385 Total investment income 238,648 EXPENSES Investment management fees 652,651 Class A distribution and service fees 163,656 Class B distribution and service fees 237,661 Class C distribution and service fees 17,295 Class A, B and C transfer agent fees 400,240 Class I transfer agent fees 767 Registration and filing fees 28,416 Accounting and legal services fees 24,474 Custodian fees 15,614 Professional fees 15,333 Printing 12,393 Miscellaneous 4,467 Trustees' fees 4,027 Securities lending fees 3,048 Interest 602 Total expenses 1,580,644 Less expense reductions (20,461) Net expenses 1,560,183 Net investment loss (1,321,535) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on investments 11,615,140 Change in unrealized appreciation (depreciation) of investments (10,161,846) Net realized and unrealized gain 1,453,294 Increase in net assets from operations $131,759 1 Semiannual period from 11-1-03 through 4-30-04. See notes to financial statements. 12 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 PERIOD ENDED ENDED 10-31-03 4-30-04 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($2,569,314) ($1,321,535) Net realized gain 16,717,797 11,615,140 Change in net unrealized appreciation (depreciation) 23,244,385 (10,161,846) Increase in net assets resulting from operations 37,392,868 131,759 From Fund share transactions (13,076,268) (7,281,904) NET ASSETS Beginning of period 136,562,877 160,879,477 End of period 2 $160,879,477 $153,729,332 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 2 Includes accumulated net investment loss of $20,809 and $1,342,344, respectively. See notes to financial statements. 13 FINANCIAL HIGHLIGHTS 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 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $9.11 $12.85 $16.03 $7.66 $6.47 $8.43 Net investment loss 2 (0.12) (0.17) (0.12) (0.11) (0.11) (0.06) Net realized and unrealized gain (loss) on investments 3.86 4.23 (7.48) (1.08) 2.07 0.06 Total from investment operations 3.74 4.06 (7.60) (1.19) 1.96 0.00 Less distributions From net realized gain -- (0.88) (0.77) -- -- -- Net asset value, end of period $12.85 $16.03 $7.66 $6.47 $8.43 $8.43 Total return 3 (%) 41.05 33.26 (49.87) (15.54) 30.29 0.00 4,5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $112 $176 $85 $85 $107 $106 Ratio of expenses to average net assets (%) 1.60 1.46 1.63 1.89 1.98 1.71 6 Ratio of adjusted expenses to average net assets 7 (%) -- -- -- -- -- 1.74 6 Ratio of net investment loss to average net assets (%) (1.14) (1.08) (1.13) (1.52) (1.62) (1.42) 6 Portfolio turnover (%) 153 146 211 267 8 183 40 See notes to financial statements. 14 FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.72 $12.22 $15.08 $7.13 $5.98 $7.74 Net investment loss 2 (0.18) (0.27) (0.18) (0.16) (0.15) (0.08) Net realized and unrealized gain (loss) on investments 3.68 4.01 (7.00) (0.99) 1.91 0.05 Total from investment operations 3.50 3.74 (7.18) (1.15) 1.76 (0.03) Less distributions From net realized gain -- (0.88) (0.77) -- -- -- Net asset value, end of period $12.22 $15.08 $7.13 $5.98 $7.74 $7.71 Total return 3 (%) 40.14 32.30 (50.24) (16.13) 29.43 (0.39) 4,5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $146 $241 $101 $46 $48 $42 Ratio of expenses to average net assets (%) 2.23 2.16 2.33 2.56 2.67 2.41 6 Ratio of adjusted expenses to average net assets 7 (%) -- -- -- -- -- 2.44 6 Ratio of net investment loss to average net assets (%) (1.77) (1.78) (1.83) (2.20) (2.31) (2.11) 6 Portfolio turnover (%) 153 146 211 267 8 183 40 See notes to financial statements. 15 FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 10-31-00 10-31-01 10-31-02 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.72 $12.21 $15.07 $7.13 $5.99 $7.74 Net investment loss 2 (0.19) (0.27) (0.18) (0.16) (0.15) (0.08) Net realized and unrealized gain (loss) on investments 3.68 4.01 (6.99) (0.98) 1.90 0.05 Total from investment operations 3.49 3.74 (7.17) (1.14) 1.75 (0.03) Less distributions From net realized gain -- (0.88) (0.77) -- -- -- Net asset value, end of period $12.21 $15.07 $7.13 $5.99 $7.74 $7.71 Total return 3 (%) 40.02 32.32 (50.21) (15.99) 29.22 (0.39) 4,5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) -- 9 $5 $3 $2 $3 $3 Ratio of expenses to average net assets (%) 2.30 2.16 2.33 2.58 2.68 2.41 6 Ratio of adjusted expenses to average net assets 7 (%) -- -- -- -- -- 2.44 6 Ratio of net investment loss to average net assets (%) (1.82) (1.80) (1.83) (2.21) (2.32) (2.12) 6 Portfolio turnover (%) 153 146 211 267 8 183 40 See notes to financial statements. 16 FINANCIAL HIGHLIGHTS CLASS I SHARES PERIOD ENDED 10-31-02 10 10-31-03 4-30-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $8.16 $6.51 $8.54 Net investment loss 2 (0.06) (0.06) (0.03) Net realized and unrealized gain (loss) on investments (1.59) 2.09 0.07 Total from investment operations (1.65) 2.03 0.04 Net asset value, end of period $6.51 $8.54 $8.58 Total return 3 (%) (20.22) 4 31.18 0.47 4,5 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 $3 Ratio of expenses to average net assets (%) 1.46 6 1.22 0.98 6 Ratio of net investment loss to average net assets (%) (1.00) 6 (0.85) (0.69) 6 Portfolio turnover (%) 267 8 183 40 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Not annualized. 5 Total return would have been lower had certain expenses not been reduced during the period shown. 6 Annualized. 7 Does not take into consideration expense reductions during the period shown. 8 Excludes merger activity. 9 Less than $500,000 10 Class I shares began operations on 3-1-02. See notes to financial statements. 17 NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Mid Cap Growth Fund (the "Fund") is a diversified series of John Hancock Investment Trust III, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to seek long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B, Class C and Class I shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under the terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value, as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of John Hancock Financial Services, Inc., 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. 18 Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net asset value of the respective classes. Distribution and service fees, if any, and transfer agent fees for Class I shares, are calculated daily at the class level based on the appropriate net asset value of each class and the specific expense rate(s) applicable to each class. Expenses The majority of expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consider ation, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate, with other funds managed by the Adviser, in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit, and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2004. 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 April 30, 2004, the Fund loaned securities having a market value of $49,244,911 collateralized by cash in the amount of $50,978,712. The cash collateral was invested in a short-term instrument. Securities lending expenses are paid by the Fund to the Adviser. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $109,741,917 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2008 -- $2,538,691, October 31, 2009 -- $82,196,780 and October 31, 2010 -- $25,006,446. Availability of a certain amount of loss carryforward, which was acquired on September 7, 2002, in a merger, may be limited in a given year. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. 19 The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.80% of the first $500,000,000 of the Fund's average daily net asset value, (b) 0.75% of the next $500,000,000 and (c) 0.70% of the Fund's average daily net asset value in excess of $1,000,000,000. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C, pursuant to Rule 12b-1 under the Investment Company Act of 1940, to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net 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 period ended April 30, 2004, JH Funds received net up-front sales charges of $57,330 with regard to sales of Class A shares. Of this amount, $7,295 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $37,322 was paid as sales commissions to unrelated broker-dealers and $12,713 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2004, JH Funds received net up-front sales charges of $1,192 with regard to sales of Class C shares. Of this amount, $1,118 was paid as sales commissions to unrelated broker-dealers and $74 was paid as sales commissions to sales personnel of Signator Investors. 20 Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used, in whole or in part, to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2004, CDSCs received by JH Funds amounted to $33,766 for Class B shares and $174 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. ("Signature Services"), an indirect subsidiary of JHLICo. For Class A, Class B and Class C shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of each class's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses, aggregated and allocated to each class on the basis of its relative net asset value. For Class I shares, the Fund pays a monthly transfer agent fee at an annual rate of 0.05% of Class I average daily net asset value. Signature Services reduced the transfer agent fee for Class A, Class B and Class C shares by $20,461 during the period ended April 30, 2004. Signature Services reserves the right to terminate this limitation in the future. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average daily net asset value of the Fund. The Fund also paid the Adviser the amount of $161 for certain publishing services, included in the printing fees. Mr. James A. Shepherdson is a director and/or officer of the Adviser and/or its affiliates, as well as Trustee 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 Compensa tion Plan investments had no impact on the operations of the Fund. 21 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 10-31-03 PERIOD ENDED 4-30-04 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 2,334,794 $16,511,673 1,179,926 $10,369,689 Repurchased (2,850,728) (19,782,837) (1,295,997) (11,367,229) Net decrease (515,934) ($3,271,164) (116,071) ($997,540) CLASS B SHARES Sold 913,561 $6,171,951 418,504 $3,350,124 Repurchased (2,400,880) (15,429,942) (1,174,526) (9,414,289) Net decrease (1,487,319) ($9,257,991) (756,022) ($6,064,165) CLASS C SHARES Sold 128,247 $829,129 67,349 $536,952 Repurchased (122,444) (789,063) (61,290) (492,306) Net increase 5,803 $40,066 6,059 $44,646 CLASS I SHARES Shares sold 173,708 $1,227,046 37,113 $331,487 Shares reinvested (259,133) (1,814,225) (66,483) (596,332) Net decrease (85,425) ($587,179) (29,370) ($264,845) NET DECREASE (2,082,875) ($13,076,268) (895,404) ($7,281,904) 1 Semiannual period from 11-1-03 through 4-30-04. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2004, aggregated $64,747,217 and $70,235,498, respectively. The cost of investments owned on April 30, 2004, including short-term investments, for federal income tax purposes, was $188,977,259. Gross unrealized appreciation and depreciation of investments aggregated $26,797,323 and $10,612,500, respectively, resulting in net unrealized appreciation of $16,184,823. 22 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 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. 23 ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of sending annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhancock.com/funds/edelivery 24 FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove Richard A. Farrell William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt James A. Shepherdson *Members of the Audit Committee OFFICERS James A. Shepherdson President and Chief Executive Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 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 25 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Mid Cap Growth Fund. 390SA 4/04 6/04 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds - Administration Committee Charter". ITEM 10. 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 11. EXHIBITS. (a)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (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) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds - Administration Committee Charter". (c)(2) 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. John Hancock Investment III Trust By: - --------------------------------- James A. Shepherdson President and Chief Executive Officer Date: June 24, 2004 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: - --------------------------------- James A. Shepherdson President and Chief Executive Officer Date: June 24, 2004 By: - --------------------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: June 24, 2004